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


October 23, 1996, 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 1996 compared with the same quarter last year.

Net income for the third quarter increased to $13.8 million, or $1.20 per share, as compared with net income of $9.3 million, or 81¢ per share, for the same period in 1995. Revenues for the third quarter were $411.3 million, an increase of 24 percent from $331.3 million for the same period last year.

For the nine-month period ended September 30, 1996, the company recorded net income of $41.8 million, or $3.65 per share, compared with a net loss of $2.3 million, or 20¢ per share, for the same period in 1995. During the first nine months of 1996, revenues increased 32 percent to $1.172 billion from $885.7 million for the same period of the prior year.

A favorable real estate market positively impacted the company's revenue base during the third quarter 1996. Continuation of affordable mortgage interest rates produced stability in the marketplace and generated renewed consumer confidence which contributed to the increase in new home sales and residential resales.

"We are pleased with the overall strength of the real estate markets," said President Parker S. Kennedy. "Traditionally, the summer months are strong closing months in the real estate cycle. We expect a profitable fourth quarter 1996, despite the inevitable seasonal slowdown in order counts, particularly in the residential resale markets. The fourth quarter will benefit from renewed commercial activity and, to a lesser extent, refinance activity which has increased due to lower interest rates.

"We continue to pursue our goal of providing our customers with a cost-effective menu of services and are gratified with our progress toward integration of our newly acquired companies," Kennedy continued. "We are particularly pleased to announce that Excelis, Inc., which we acquired in June of this year, has been selected by GMAC Mortgage as its mortgage loan servicing system for its entire $54.5 billion residential first mortgage portfolio, consisting of more than 540,000 residential loans nationwide."

The First American Financial Corporation, based in Santa Ana, California, is the nation's leading provider of real estate-related financial and informational services. The corporation's subsidiaries include First American Title Insurance Company, a national and 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. Information about the company's subsidiaries and an archive of its press releases can be found at http://www.firstam.com on the Internet.

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 September 30:                1996                1995 
 
Revenues                             $  411,304,000      $ 331,328,000 
Income before income taxes           $   23,569,000      $  15,520,000 
Net income                           $   13,769,000      $   9,320,000 
Net income per share                 $         1.20      $         .81
 
Nine months ended September 30: 
 
Revenues                             $1,172,054,000     $  885,722,000 
Income (loss) before income taxes    $   71,378,000     $   (4,152,000)  
Net income (loss)                    $   41,778,000     $   (2,252,000)  
Net income (loss) per share          $         3.65     $         (.20)  
Average shares outstanding               11,440,000         11,405,000 

SELECTED FINANCIAL DATA
(Unaudited)


For the Three Months EndedFor the Nine Months Ended
September 30
September 30
1996199519961995


RESULTS OF OPERATIONS
Revenues
Operating revenues $ 405,522,000 $ 326,355,000 $ 1,151,279,000 $ 869,391,000
Investment and other income5,782,000
4,973,000
20,775,000
16,331,000
411,304,000
331,328,000
1,172,054,000
885,722,000
Expenses
Salaries and other personnel costs132,887,000 110,860,000 385,869,000 314,597,000
Premiums retained by agents134,766,000 104,502,000 372,856,000 289,149,000
Other operating expenses82,786,000 66,031,000 240,261,000 189,297,000
Provision for title losses and other claims25,025,000 23,405,000 67,488,000 67,130,000
Depreciation and amortization5,879,000 4,736,000 15,886,000 13,531,000
Interest1,273,000 1,570,000 3,783,000 4,822,000
Minority interests667,000
863,000
2,151,000
1,406,000
383,283,000
311,967,000
1,088,294,000
879,932,000
Income before premium and income taxes28,021,000 19,361,000 83,760,000 5,790,000
Premium taxes4,452,000
3,841,000
12,382,000
9,942,000
Income (loss) before income taxes $ 23,569,000
$ 15,520,000
$ 71,378,000
$ (4,152,000)
OPERATING REVENUES
Title Insurance:
Direct operations $ 160,875,000 $ 143,718,000 $ 465,113,000 $ 374,377,000
Agency operations166,893,000
130,707,000
461,361,000
362,129,000
327,768,000 274,425,000 926,474,000 736,506,000
Real Estate Information63,685,000 39,826,000 184,344,000 98,806,000
Home Warranty9,968,000 8,575,000 28,468,000 23,794,000
Trust and Banking4,101,000
3,529,000
11,993,000
10,285,000
Total operating revenues $ 405,522,000
$ 326,355,000
$ 1,151,279,000
$ 869,391,000
INCOME BEFORE INCOME TAXES
Title Insurance $ 17,112,000 $ 14,786,000 $ 48,852,000 $ 6,749,000
Real Estate Information 13,844,000 7,398,000 44,254,000 7,542,000
Home Warranty 1,908,000 1,528,000 6,595,000 4,700,000
Trust and Banking 982,000
861,000
2,599,000
2,332,000
Total before corporate expenses and
premium taxes33,846,000 24,573,000 102,300,000 21,323,000
Corporate expenses5,825,000 5,212,000 18,540,000 15,533,000
Premium taxes4,452,000
3,841,000
12,382,000
9,942,000
Income (loss) before income taxes $ 23,569,000
$ 15,520,000
$ 71,378,000
$ (4,152,000)
TITLE INSURANCE ORDER COUNTS
FROM DIRECT OPERATIONS
Title orders opened 255,800 244,200 787,400 671,200
Title orders closed 195,000 185,000 582,300 486,100


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