First American Financial reports record-breaking second quarter 1996 results


July 23, 1996, SANTA ANA, CALIFORNIA

The First American Financial Corporation (NYSE: FAF), the leading provider of real estate-related financial and information services, reported record-breaking second quarter 1996 results. Revenues for both the second quarter and the first half were at an all-time high, and earnings were the highest ever for both a second quarter and a first half. These excellent results are due to improvements in the national real estate market and the company's successful efforts to integrate its diverse businesses and create efficiencies while managing impressive growth.

First American's second quarter 1996 net income of $19.4 million, or $1.70 per share, compares with net income of $1.1 million, or $.10 per share, for the same period of 1995. The current year quarter includes realized pretax investment gains of $2.2 million, or $.11 per share on an after-tax basis, compared with same quarter 1995 pretax gains of $700,000, or $.03 per share after-tax. Revenues for the quarter totaled $413.4 million, an increase of 41 percent when compared with the second quarter 1995 revenues of $293.2 million.

For the six-month period ended June 30, 1996, the company earned $28.0 million, or $2.45 per share, compared with a net loss of $11.6 million, or $1.01 per share, for the same period in 1995. During the first half of 1996, revenues increased 37 percent to $760.8 million from $554.4 million for the same period of the prior year.

"All of our primary business segments benefited from the increased closed order volumes experienced in the quarter," said President Parker S. Kennedy. "The increased volume, coupled with our continuing emphasis on integration of services, produced record-breaking results for the quarter. However, new orders have steadily declined from the peak in March due to higher interest rates, which could weaken third quarter results. While refinance activity has declined significantly, we continue to profit from an improved mix of higher-margin commercial and residential resale and new home transactions. Labor efficiencies, measured as the ratio between new orders and personnel, will be continually monitored in order to maximize our profitability in the last half of 1996.

"We are consistently pursuing our goal of providing our customers with a cost-efficient menu of services and are pleased with the progress toward integration of our newly acquired companies: First American Appraisal Services; Excelis, Inc., our mortgage servicing systems provider; and title operations in New Mexico and Michigan," Kennedy stated.

The First American Financial Corporation is based in Santa Ana, California. The corporation's subsidiaries include First American Title Insurance Company, an international title insurer, First American Real Estate Information Services, Inc., which offers tax monitoring, credit reporting, flood certification, appraisal services, mortgage loan servicing systems and property information services nationally, and First American Home Buyers Protection Corporation, a home warranty company. The corporation also operates First American Trust Company and First Security Thrift Company in Southern California. First American Financial has more than 10,000 employees in over 400 branch offices in the United States and abroad.

Any statements looking forward in time inherently involve risks and uncertainties, including but not limited to the effect of interest rate fluctuations, changes in the performance of the real estate markets and the effect of changing economic conditions.
 
Quarter ended June 30:	     1996		1995	 
		 
Revenues	                  $413,374,000 	      $293,240,000 	 
Income before income taxes	  $ 32,827,000 	      $  1,837,000 	 
Net income	                  $ 19,427,000 	      $  1,137,000 	 
Net income per share	          $       1.70 	      $        .10 	 
					 
Six months ended June 30:				 
					 
Revenues	                   $760,750,000       $554,394,000 	 
Income (loss) before income taxes  $ 47,809,000       $(19,672,000)	 
Net income (loss)	           $ 28,009,000       $(11,572,000)	 
Net income (loss) per share	   $       2.45       $      (1.01)	 
Average shares outstanding	     11,439,000 	 11,411,000	 

SELECTED FINANCIAL DATA
(Unaudited)




For the Three Months EndedFor the Six Months Ended
June 30June 30







1996199519961995


RESULTS OF OPERATIONS
Revenues
Operating revenues $ 404,878,000 $ 286,748,000 $ 745,757,000 $ 543,036,000
Investment and other income8,496,000 6,492,000 14,993,000 11,358,000









413,374,000 293,240,000 760,750,000 554,394,000









Expenses
Salaries and other personnel costs132,742,000 103,687,000 252,982,000 203,737,000
Premiums retained by agents128,218,000 91,252,000 238,090,000 184,647,000
Other operating expenses84,011,000 63,979,000 157,475,000 123,266,000
Provision for title losses and other claims23,488,000 22,419,000 42,463,000 43,725,000
Depreciation and amortization5,558,000 4,584,000 10,007,000 8,795,000
Interest1,281,000 1,639,000 2,510,000 3,252,000
Minority interests864,000 563,000 1,484,000 543,000









376,162,000 288,123,000 705,011,000 567,965,000









Income (loss) before premium and income taxes37,212,000 5,117,000 55,739,000 (13,571,000)
Premium taxes4,385,000 3,280,000 7,930,000 6,101,000









Income (loss) before income taxes $ 32,827,000 $ 1,837,000 $ 47,809,000 $ (19,672,000)









OPERATING REVENUES
Title Insurance:
Direct operations $ 166,748,000 $ 128,714,000 $ 304,238,000 $ 230,659,000
Agency operations158,104,000 114,050,000 294,468,000 231,422,000









324,852,000 242,764,000 598,706,000 462,081,000
Real Estate Information66,265,000 32,875,000 120,659,000 58,980,000
Home Warranty9,761,000 7,830,000 18,500,000 15,219,000
Trust and Banking4,000,000 3,279,000 7,892,000 6,756,000









Total operating revenues $ 404,878,000 $ 286,748,000 $ 745,757,000 $ 543,036,000









INCOME BEFORE INCOME TAXES
Title Insurance $ 23,581,000 $ 6,524,000 $ 31,740,000 $ (8,037,000)
Real Estate Information16,628,000 1,524,000 30,410,000 144,000
Home Warranty2,399,000 1,644,000 4,687,000 3,172,000
Trust and Banking838,000 539,000 1,617,000 1,471,000









Total before corporate expenses and
premium taxes43,446,000 10,231,000 68,454,000 (3,250,000)
Corporate expenses6,234,000 5,114,000 12,715,000 10,321,000
Premium taxes4,385,000 3,280,000 7,930,000 6,101,000









Income (loss) before income taxes $ 32,827,000 $ 1,837,000 $ 47,809,000 $ (19,672,000)









TITLE INSURANCE ORDER COUNTS
FROM DIRECT OPERATIONS
Title orders opened259,100 236,400 531,600 427,000
Title orders closed 209,200 165,800 386,800 301,100

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