The First American Financial Corporation announces significantly improved profitability ...


October 25, 1995, SANTA ANA, CALIFORNIA

The First American Financial Corporation (NYSE: FAF) announced today a significant improvement in profits and earnings per share for the third quarter of 1995 when compared with the same quarter last year.

Net income for the third quarter increased to $9.3 million, or 81¢ per share, when compared with net income of $4.8 million, or 42¢ per share, for the same period in 1994. Revenues of $331.3 million for the third quarter 1995 declined marginally from the $334.9 million reported for the same period last year.

For the nine-month period ended September 30, 1995, the company recorded a net loss of $2.3 million, or 20¢ per share, compared to net income of $21.8 million, or $1.91 per share, for the same period in 1994. During the first nine months of 1995, revenues decreased 18 percent to $885.7 million from $1.076 billion for the same period of the prior year.

Lower mortgage interest rates and an improved real estate economy began to positively impact the company by spring 1995, and remained the primary factors contributing to increased revenues in the third quarter as compared to the second quarter 1995.

"It is encouraging to see a return to more traditional order patterns which enable us to more effectively anticipate and monitor expenses, thereby maximizing profit," said President Parker S. Kennedy. "Although closings in our direct title operations improved 12 percent when compared to the second quarter 1995, we are experiencing a seasonal reduction in new order counts. Despite this downturn, we expect a profitable fourth quarter 1995 leading into slower first quarter business.

"First American leads the industry in design and implemention of a fully integrated approach to provide services to the lending community," Kennedy continued. "We are focused on systems development to assist our customers in becoming more cost and time effective. We have all the major components of our system in place and we are working diligently to coordinate, customize and package our services to the mortgage lenders."

The First American Financial Corporation, based in Santa Ana, California, is a leading provider of real estate-related financial services, including title insurance, tax monitoring, home warranty, credit reporting, flood certification and property information services, to real property buyers and mortgage lenders. The company also operates a trust and banking business in Southern California. The company offers its title services through a network of more than 300 offices and 4,000 agents throughout the United States. It also provides title services abroad in the Bahama Islands, Bermuda, Canada, Guam, Mexico, Puerto Rico, the U.S. Virgin Islands and the United Kingdom.

Synopsis:

 
Quarter ended September 30:		1995		1994 
 
Revenues			  $  331,328,000  $  334,870,000 
Income before income taxes	  $   15,520,000  $    7,090,000 
Net income			  $    9,320,000  $    4,790,000 
Net income per share		  $	     .81  $ 	     .42 
 
Nine months ended September 30:	 
 
Revenues			  $  885,722,000  $1,076,317,000 
Income (loss) before  
  income taxes			  $   (4,152,000) $   37,022,000 
Net income (loss)		  $   (2,252,000) $   21,822,000 
Net income (loss) per share	  $	    (.20) $	    1.91 
Average shares outstanding	      11,405,000      11,453,000 

SELECTED FINANCIAL DATA
(Unaudited)





For the Three Months EndedFor the Nine Months Ended
September 30September 30







19951994 19951994


RESULTS OF OPERATIONS
Revenues
Operating revenues $326,355,000 $329,802,000 $869,391,000 $1,062,537,000
Investment and other income4,973,000 5,068,000 16,331,000 13,780,000









331,328,000 334,870,000 885,722,000 1,076,317,000









Expenses
Salaries and other personnel costs110,860,000 102,311,000 314,597,000 322,309,000
Premiums retained by agents104,502,000 131,292,000 289,149,000 420,984,000
Other operating expenses66,031,000 55,945,000 189,297,000 173,591,000
Provision for title losses and other claims 23,405,000 27,232,000 67,130,000 88,830,000
Depreciation and amortization4,736,000 5,238,000 13,531,000 14,846,000
Interest1,570,000 1,430,000 4,822,000 4,405,000
Minority interests863,000 719,000 1,406,000 2,521,000









311,967,000 324,167,000 879,932,000 1,027,486,000









Income before premium and income taxes19,361,000 10,703,000 5,790,000 48,831,000
Premium taxes 3,841,000 3,613,000
9,942,000 11,809,000
Income (loss) before income taxes$15,520,000 $7,090,000 $(4,152,000)$37,022,000









OPERATING REVENUES
Title Insurance:
Direct operations $143,718,000 $133,825,000 $374,377,000 $ 438,882,000
Agency operations130,707,000 163,108,000 362,129,000 518,948,000









274,425,000 296,933,000 736,506,000 957,830,000
Real Estate Information39 ,826,000 22,444,000 98,806,000 75,546,000
Home Warranty8,575,000 7,548,000 23,794,000 20,572,000
Trust and Banking 3,529,000 2,877,000 10,285,000 8,589,000









Total operating revenues$326,355,000 $329,802,000 $869,391,000 $1,062,537,000









INCOME BEFORE INCOME TAXES
Title Insurance $ 14,786,000 $ 9,441,000 $ 6,749,000 $ 37,209,000
Real Estate Information 7,398,000 2,755,000 7,542,000 17,735,000
Home Warranty1,528,000 1,413,000 4,700,000 4,642,000
Trust and Banking861,000 571,000 2,332,000 1,789,000
Total before corporate expenses and
premium taxes24,573,000 14,180,000 21,323,000 61,375,000
Corporate expenses5,212,000 3,477,000 15,533,000 12,544,000
Premium taxes3,841,000 3,613,000 9,942,000 11,809,000









Income (loss) before income taxes$15,520,000 $7,090,000$(4,152,000) $37,022,000









TITLE INSURANCE ORDER COUNTS
FROM DIRECT OPERATIONS
Title orders opened244,200 204,200 671,200 695,500
Title orders closed 185,000 165,300 486,100 572,100

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