First American Financial announces fifth consecutive record-breaking quarterly ...
October 20, 1998, SANTA ANA, CALIFORNIA
Record net income for the third quarter of 1998 was $55.8 million, or 93 cents per diluted share, representing a 171 percent increase over net income of $20.6 million, or 39 cents per diluted share, for the same period in 1997. Record revenues for the third quarter of 1998 were $753.3 million, a 50 percent increase when compared with the same period last year. Record third quarter results can be attributed to the strong volume in real estate transactions nationwide, recent acquisitions, market share improvements and an expanded product mix.
Net income for the nine months ended September 30, 1998, (excluding a previously announced first quarter investment gain of $32.4 million, $19.6 million on an after-tax basis, or 34 cents per diluted share, relating to the joint venture agreement with Experian) was $126.3 million, or $2.22 per diluted share. This compares with $42.0 million, or 79 cents per diluted share for the comparable period last year. Revenues for the first nine months of 1998 (excluding the investment gain mentioned above) totaled $2.03 billion, an increase of 51 percent when compared with revenues of $1.34 billion for the nine months of 1997.
"The Company continues to benefit from the boom in home sales and refinancing," said Parker S. Kennedy, president of First American Financial. "Most of our fees are earned when a real estate transaction closes; therefore, the current large backlog of orders still open at lending institutions, caused primarily by the recent surge in refinance transactions, should generate a steady revenue stream through the end of the year. With continued strength in the real estate markets and interest rates at historically low levels, we would expect a strong fourth quarter with favorable comparisons from a year ago, despite the inevitable seasonal slowdown in new home sales and residential resales."
Kennedy added: "Our diversified strategy includes the newly formed consumer risk management organization which is expected to produce consistent, high-margin income not dependent on factors such as mortgage interest rates and the real estate economy. We are committed to providing unparalleled information services to the real estate industry and to our expanding customer base, which now includes employers, landlords and consumers. Our goal is to continue our growth through aggressive market share expansion, increased efficiencies and enhanced technological capabilities."
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, property data services, flood certification, field inspection services, appraisal services, mortgage loan origination and servicing systems, and mortgage document preparation 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 17,000 employees in over 400 branches in the United States and abroad. Information about the company's subsidiaries and an archive of its press releases can be found a http://www.firstam.com on the Internet.
Any statements in this release looking forward in time involve risks and uncertainties, including but not limited to the following risks: the effect of interest rate fluctuations; changes in the performance of the real estate markets; the effect of changing economic conditions; the demand for and the acceptance of the company's products; and contingencies associated with the Year 2000 issue.
|Quarter Ended September 30:||1998*||1997|
|Revenues||$ 753,301,000||$ 501,848,000|
|Income before income taxes and minority interests||$ 101,540,000||$ 34,565,000|
|Net income||$ 55,848,000||$ 20,572,000|
|Net income per share:|
| ||$ 0.97||$ 0.40|
| ||$ 0.93||$ 0.39|
|Weighted average shares outstanding:|
|Nine Months Ended September 30:|
|Revenues||$ 2,062,633,000||$ 1,335,099,000|
|Income before income taxes and minority interests||$ 267,082,000||$ 70,841,000|
|Net income||$ 145,919,000||$ 41,954,000|
|Net income per share:|
| ||$ 2.67||$ 0.81|
| ||$ 2.56||$ 0.79|
|Weighted average shares outstanding:|
All per share amounts and shares outstanding have been adjusted for the 3-for-2 stock split distributed on January 15, 1998, and the 3-for-1 stock split distributed on July 17, 1998.
*Results for the nine months ended September 30, 1998, include an investment gain of $32.4 million relating to the joint venture with Experian.
|SELECTED FINANCIAL DATA|
|For the Three Months Ended||For the Nine Months Ended|
|September 30||September 30|
|RESULTS OF OPERATIONS|
|Operating revenues||$ 742,978,000||$ 495,181,000||$ 2,000,055,000||$ 1,315,053,000|
|Investment and other income||10,323,000||6,667,000||62,578,000||*||20,046,000|
|Salaries and other personnel costs||231,893,000||168,434,000||650,082,000||467,033,000|
|Premiums retained by agents||217,587,000||144,959,000||552,614,000||396,114,000|
|Other operating expenses||148,878,000||114,768,000||433,214,000||290,417,000|
|Provision for title losses and other claims||29,358,000||24,540,000||88,889,000||65,589,000|
|Depreciation and amortization||14,020,000||7,437,000||42,323,000||25,578,000|
|Income before income taxes and minority interests|| |
|Direct operations||$ 286,264,000||$ 205,882,000||$ 786,810,000||$ 540,432,000|
|Agency operations||269,983,000 ||179,940,000 ||690,038,000 ||492,706,000 |
|Real Estate Information||164,828,000||91,620,000||461,683,000||233,323,000|
|Trust and Banking||6,323,000||5,169,000||18,497,000||14,740,000|
|Total operating revenues|
|INCOME BEFORE INCOME TAXES|
|AND MINORITY INTERESTS|
|Title Insurance||$ 67,703,000||$ 28,257,000||$ 154,359,000||$ 49,638,000|
|Real Estate Information||35,805,000||11,672,000||91,773,000||32,639,000|
|Trust and Banking||2,037,000 ||1,171,000 ||5,647,000 ||3,023,000 |
|Total before corporate expenses||107,815,000||43,308,000||260,386,000||91,588,000|
|Income before income taxes and minority interests|
|TITLE INSURANCE ORDER COUNTS|
|FROM DIRECT OPERATIONS|
|Title orders opened||391,200||309,500||1,175,400||874,500|
|Title orders closed||310,900||235,900||873,500||646,700|
|* Includes an investment gain of $32.4 million relating to the joint venture agreement with Experian.|