FIRST AMERICAN FINANCIAL REPORTS RECORD-BREAKING REVENUES AND NET INCOME Results ...


October 22, 1997, SANTA ANA, CALIFORNIA

The First American Financial Corporation (NYSE: FAF), the leading provider of real estate-related financial and information services, announced its third quarter 1997 results today, which included the highest quarterly revenues and net income in the company’s history. These record-breaking results were achieved despite a $2.0 million pre-tax charge (or $1.2 million on an after-tax basis) associated with the relocation and consolidation of certain operations of the Information Services segment in Dallas, Texas.

Revenues for the quarter totaled $501.8 million, an increase of 22 percent when compared with revenues of $411.3 million for the same period in 1996. Net income of $20.6 million, or $1.77 per share, increased 49 percent when compared with net income of $13.8 million, or $1.20 per share, for the third quarter 1996.

For the nine-month period ended September 30, 1997, the company reported revenues of $1.335 billion, an increase of 14 percent from the $1.172 billion reported in the same period of the prior year. Net income for the period was $42.0 million, or $3.62 per share, compared with $41.8 million, or $3.65 per share, for last year’s comparable period.

The favorable real estate market positively impacted the company’s revenue base during the third quarter 1997. Continued affordable mortgage interest rates and a high level of consumer confidence contributed to the increase in new home sales and residential resales. In addition, stability in the marketplace has prompted an increase in refinance and home equity transactions.

"We are encouraged with the continued strength of new orders, particularly in California, as we enter the fourth quarter," said President Parker S. Kennedy. "With our current inventory levels, we expect a profitable fourth quarter 1997, with favorable comparisons from a year ago, despite the inevitable seasonal slowdown in new home sales and residential resales.

"We are excited about the future prospects and earnings potential of our joint venture with Experian, which is expected to close by year-end," Kennedy continued. "The combination, over time, will redefine the mortgage lending services industry and provide a unique opportunity to combine the largest property data provider (Experian) with the biggest repackager and reseller of property information (First American). The opportunities will be significant.

"We continue to pursue our goal of providing our customers a cost-efficient menu of services and increasing market share in all of our primary businesses," Kennedy concluded.

The First American Financial Corporation, based in Santa Ana, California, is the nation’s leading provider of real estate-related financial and information 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, mortgage loan servicing systems, appraisal services, mortgage document preparation and field inspection services nationally; First American Home Buyers Protection Corporation, a home warranty company; and First American Capital Management, an investment advisory firm. 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:            1997               1996
Revenues                         $   501,848,000    $   411,304,000
Income before income taxes       $    33,572,000    $    23,569,000
Net income                       $    20,572,000    $    13,769,000
Net income per share             $          1.77    $          1.20
					
Nine months ended September 30:					
Revenues                         $ 1,335,099,000    $ 1,172,054,000
Income before income taxes       $    68,554,000    $    71,378,000
Net income                       $    41,954,000    $    41,778,000
Net income per share             $          3.62    $          3.65
Average shares outstanding            11,575,000         11,440,000

Selected Financial Data (Unaudited)

For the Three Months Ended For the Nine Months Ended
September 30
September 30
1997
1996
1997
1996
RESULTS OF OPERATIONS
Revenues
Operating revenues $ 495,181,000 $ 405,522,000 $ 1,315,053,000 $ 1,151,279,000
Investment and other income 6,667,000 5,782,000 20,046,000 20,775,000

501,848,000

411,304,000

1,335,099,000

1,172,054,000
Expenses
Salaries and other personnel costs 168,434,000 132,887,000 467,033,000 385,869,000
Premiums retained by agents 144,959,000 134,766,000 396,114,000 372,856,000
Other operating expenses 115,229,000 82,786,000 295,897,000 240,261,000
Provision for title losses and other claims 24,540,000 25,025,000 65,589,000 67,488,000
Depreciation and amortization 6,976,000 5,879,000 20,098,000 15,886,000
Interest 3,312,000 1,273,000 6,972,000 3,783,000
Minority interests 993,000 667,000 2,287,000 2,151,000

464,443,000

383,283,000

1,253,990,000

1,088,294,000
Income before premium and income taxes 37,405,000 28,021,000 81,109,000 83,760,000
Premium taxes 3,833,000 4,452,000 12,555,000 12,382,000
Income before income taxes
$ 33,572,000

$ 23,569,000

$ 68,554,000

$ 71,378,000
OPERATING REVENUES
Title Insurance:
Direct operations $ 205,882,000 $ 160,875,000 $ 540,432,000 $ 465,113,000
Agency operations 179,940,000 166,893,000 492,706,000 461,361,000
385,822,000 327,768,000 1,033,138,000 926,474,000
Real Estate Information 91,620,000 63,685,000 233,323,000 184,344,000
Home Warranty 12,570,000 9,968,000 33,852,000 28,468,000
Trust and Banking 5,169,000 4,101,000 14,740,000 11,993,000
Total operating revenues
$ 495,181,000

$ 405,522,000

$ 1,315,053,000

$ 1,151,279,000
INCOME BEFORE INCOME TAXES
Title Insurance $ 31,844,000 $ 17,112,000 $ 61,545,000 $ 48,852,000
Real Estate Information 11,672,000 13,844,000 32,639,000 44,254,000
Home Warranty 2,454,000 1,908,000 6,936,000 6,595,000
Trust and Banking 1,171,000
982,000
3,023,000
2,599,000
Total before corporate expenses and
premium taxes 47,141,000 33,846,000 104,143,000 102,300,000
Corporate expenses 9,736,000 5,825,000 23,034,000 18,540,000
Premium taxes 3,833,000 4,452,000 12,555,000 12,382,000
Income before income taxes
$ 33,572,000

$ 23,569,000

$ 68,554,000

$ 71,378,000
               
TITLE INSURANCE ORDER COUNTS                
FROM DIRECT OPERATIONS
Title orders opened 309,500 255,800 874,500 787,400
Title orders closed 235,900 195,500 646,700 582,300

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