FIRST AMERICAN FINANCIAL REPORTS RECORD-SETTING FIRST QUARTER 1999 OPERATING ...


April 22, 1999, SANTA ANA, Calif.

The First American Financial Corporation (NYSE: FAF), the leading provider of real estate-related information products and services, announced today a record-setting 1999 first quarter for operating earnings and revenues. Results exceeded analysts' estimates for the sixth consecutive quarter.

Reported net income for the first quarter of 1999 was $24.9 million, or 40 cents per diluted share, and included the effects of a previously reported accounting change for the company's tax service contracts which became effective January 1, 1999, on a prospective basis. This accounting change resulted in a decrease of $7.4 million on an after-tax basis, or 12 cents per diluted share. Thus, earnings for the first quarter of 1999 would have been 52 cents under the former accounting rules. These comparable results exceeded the previous record-setting 1998 first quarter operating net income of $25.1 million, or 44 cents per diluted share, which results exclude an investment gain of $32.4 million, $19.6 million on an after-tax basis, or 35 cents relating to the joint venture agreement with Experian. Revenues for the first three months of 1999 totaled $706.9 million, an increase of 22 percent when compared with the first quarter 1998 revenues of $579.8 million, which excludes the investment gain mentioned above.

The accounting change mentioned above provides a more ratable recognition of revenues and gross profit from tax service contracts, reducing the amount of revenue and gross profit recognized at the inception of such agreements and spreading it over the life of the contract. Although this accounting change will likely cause a reduction in tax service revenues and earnings recognized in the early years of each tax service contract, it is anticipated that starting in the second year following its adoption, this method will begin to reduce the volatility in reported financial results arising from the inherent cyclicality of the company's tax service business. This change will have no impact on cash flow from operations.

Results for 1998 have been restated to reflect the company's 1998 acquisitions accounted for as poolings of interests. In addition, 1998 per share amounts and shares outstanding have been adjusted for the three-for-one stock split distributed on July 17, 1998.

"Excellent first quarter operating results were achieved despite the recent uptick in interest rates and slower refinance business," said Parker S. Kennedy, president of The First American Financial Corporation. "We remain focused on our strategic growth plans to continue market share penetration in all business segments through acquisitions of businesses, services and products, and the development and expansion of our operations in international markets. We will continue to focus on enhancing our technological capabilities and expanding the Consumer Risk Management business segment to provide noncyclical, high margin income and significant opportunities for steady growth in 1999."

Kennedy added: "We look forward to realizing the many rewards of our successful acquisition strategy, as we integrate the acquired companies into the First American family. We are excited about our prospects for 1999, particularly with the opportunities that will result from our pending merger with National Information Group, which is expected to close by the end of May."

The First American Financial Corporation, based in Santa Ana, Calif., is the nation's leading provider of real estate-related information products and 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, mortgage credit reporting, property data services, flood certification, field inspection services, appraisal services, loss mitigation 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; and First American Trust Company and First Security Thrift Company in Southern California. The company also offers automotive and direct-to-consumer credit reporting, multifamily resident screening and pre-employment screening through its Consumer Risk Management division. First American Financial has nearly 20,000 employees in more than 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 on the Internet at http://www.firstam.com.

Any statements in this document 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; general volatility in the capital markets; the demand for and the acceptance of the company's products; changes in applicable government regulations; consolidation among the company's customers; and contingencies associated with the Year 2000 issue. The company's actual results, performance or achievement could differ materially from those expressed in or implied by forward looking statement, and, accordingly, no assurances can be given that any of the events anticipated by the forward looking statements will transpire or occur or, if any of them do so, what impact they will have on the results of operations and financial condition of the company.

Quarter ended March 31: 1999 1998
Revenues $706,926,000 $612,237,000
Income before income taxes and minority interests $45,365,000 $81,886,000
Income taxes $15,400,000 $29,400,000
Minority interest $5,088,000 $7,753,000
Net income $24,877,000 $44,733,000
Net income per share    
Basic $0.41 $0.82
Diluted $0.40 $0.79
Average shares outstanding:    
Basic 60,590,000 54,760,000
Diluted 62,907,000 56,578,000

Results for 1998 have been restated to reflect the company's 1998 acquisitions accounted for as poolings of interests.

Selected Financial Data
(Unaudited)
          For the Three Months Ended  
          March 31  

            1999   1998  

RESULTS OF OPERATIONS                      
                       
Revenues                      
Operating revenues               $ 695,545,000   $ 568,802,000  
Investment and other income               11,381,000   43,435,000 *


                706,926,000   612,237,000  


Expenses                      
Salaries and other personnel costs               246,841,000   202,846,000  
Premiums retained by agents               210,568,000   140,045,000  
Other operating expenses               152,065,000   138,587,000  
Provision for title losses and other claims               25,770,000   27,328,000  
Depreciation and amortization               16,574,000   13,809,000  
Premium taxes               5,211,000   4,154,000  
Interest               4,532,000   3,582,000  


                661,561,000   530,351,000  


Income before income taxes and minority interests               $ 45,365,000   $ 81,886,000  


                       
                       
OPERATING REVENUES                      
                       
Title Insurance:                      
Direct operations               $ 260,323,000   $ 225,719,000  
Agency operations               260,661,000   176,536,000  


                520,984,000   402,255,000  


Real Estate Information               136,738,000   134,320,000  
Home Warranty               15,224,000   13,173,000  
Consumer Risk               15,770,000   13,228,000  
Trust and Banking               6,829,000   5,826,000  


Total operating revenues               $ 695,545,000   $ 568,802,000  


                       
                       
INCOME BEFORE INCOME TAXES                      
AND MINORITY INTERESTS                      
                       
Title Insurance               $ 35,161,000   $ 30,261,000  
Real Estate Information               9,773,000   20,873,000  
Home Warranty               3,736,000   3,026,000  
Consumer Risk               3,282,000   2,430,000  
Trust and Banking               2,212,000   1,588,000  


Total before corporate expenses and                      
minority interests               54,164,000   58,178,000  
Corporate expenses               8,799,000   (23,708,000)  


Income before income taxes and minority interests               $ 45,365,000   $ 81,886,000  


                       
                       
TITLE INSURANCE ORDER COUNTS                      
FROM DIRECT OPERATIONS                      
                       
Title orders opened               367,400   397,800  
Title orders closed               295,100   260,600  
                       
                       
* Includes an investment gain of $32.4 million relating to the joint venture agreement with Experian.

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