The First American Financial Corporation announces first quarter 1997 operating results


April 24, 1997, SANTA ANA, CALIFORNIA

The First American Financial Corporation (NYSE: FAF) announced today first quarter 1997 operating profits of $2.9 million, or 25¢ per share, which exceeded analysts' consensus expectations. This compares with the first quarter 1996 in which the company reported net income of $8.6 million, or 75¢ per share.

Profitability for the quarter was adversely affected by the need for title operations to maintain staffing levels, which had increased during the fourth quarter 1996, in order to service relatively strong orders scheduled for closing in the second quarter 1997. Furthermore, First American's information services operations are experiencing slightly higher overhead as they integrate recent acquisitions and transition new accounts to their systems.

Revenues for the first three months of 1997 totaled $382.9 million, an increase of 10.2 percent from the first quarter 1996 revenues of $347.4 million, but a decrease of 10.0 percent from the record-breaking $425.5 million recorded in the fourth quarter 1996.

"Despite the March rate increase by the Federal Reserve Board, we are encouraged with the relative strength of new orders as we enter the second quarter," commented President Parker S. Kennedy. "The demand for housing remains strong across the country fueled by affordable interest rates, low unemployment and high consumer confidence. However, we remain cautious regarding further rate increases which could soften real estate activity. We will continue to closely monitor staff levels to coincide with anticipated order counts.

"As previously announced, the company issued and sold on April 22, 1997, $100 million of trust preferred securities at an 8.5 percent coupon rate, due in 2012," Kennedy continued. "We were particularly pleased with the investors' demand for and acceptance of the company's financing. The proceeds will be used to pay down senior indebtedness and finance future acquisitions."

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, mortgage loan servicing systems, appraisal services and field inspection services nationally; First American Home Buyers Protection Corporation, a home warranty company; and First American Capital Management, an investment 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 March 31:	             1997                1996
				
Revenues                       $  382,877,000      $  347,376,000
Income before income taxes     $    4,766,000      $   14,982,000
Net income                     $    2,866,000      $    8,582,000
Net income per share           $         0.25      $         0.75
Average shares outstanding         11,567,000          11,428,000

Selected Financial Data (Unaudited)


For the Three Months Ended

March 31

1997 1996


RESULTS OF OPERATIONS

Revenues
Operating revenues $ 376,425,000 $ 340,879,000
Investment and other income 6,452,000
6,497,000

382,877,000
347,376,000
Expenses
Salaries and other personnel costs 140,787,000 120,240,000
Premiums retained by agents 122,193,000 109,872,000
Other operating expenses 84,470,000 73,464,000
Provision for title losses and other claims 18,592,000 18,975,000
Depreciation and amortization 6,475,000 4,449,000
Interest 1,122,000 1,229,000
Minority interests 311,000
620,000

373,950,000
328,849,000
Income before premium and income taxes 8,927,000 18,527,000
Premium taxes 4,161,000
3,545,000
Income before income taxes $ 4,766,000
$ 14,982,000
OPERATING REVENUES
Title Insurance:
Direct operations $ 147,674,000 $ 137,490,000
Agency operations 152,106,000
136,364,000

299,780,000 273,854,000
Real Estate Information 62,047,000 54,394,000
Home Warranty 10,068,000 8,739,000
Trust and Banking 4,530,000
3,892,000
Total operating revenues $ 376,425,000
$ 340,879,000
INCOME BEFORE INCOME TAXES
Title Insurance $ 3,935,000 $ 8,159,000
Real Estate Information 7,823,000 13,782,000
Home Warranty 1,805,000 2,288,000
Trust and Banking 915,000
779,000
Total before corporate expenses and premium taxes 14,478,000 25,008,000
Corporate expenses 5,551,000 6,481,000
Premium taxes 4,161,000
3,545,000
Income before income taxes $ 4,766,000
$14,982,000
TITLE INSURANCE ORDER COUNTS
FROM DIRECT OPERATIONS

Title orders opened 258,400 272,500
Title orders closed 181,500 177,600

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