The First American Corporation Reports Results for the Second Quarter 2006
July 26, 2006
SANTA ANA, Calif., -- The First American Corporation (NYSE: FAF) today announced results for the second quarter ended June 30, 2006:
| Three Months Ende June 30 | Six Months Ended June 30 | |||
| 2006 (A) | 2005 (B) | 2006 (A) | 2005 (B) | |
| Total revenues | $2.17 billion | $1.98 billion | $4.17 billion | $3.69 billion |
| Income before income taxes and minority interests |
$220.7 million | $265.6 million | $358.4 million | $419.3 million |
| Net income | $114.7 million | $139.5 million | $184.4 million | $218.7 million |
| Net income per diluted share | $1.16 | $1.43 | $1.86 | $2.27 |
| (A) | Results for the three and six months ended June 30, 2006, include a $22.0 million pretax charge, $13.7 million, or $0.14 per diluted share on an after-tax basis, for certain title insurance regulatory/litigation matters. | |||
| (B) | Results for the three and six months ended June 30, 2005, include a $6.0 million pretax charge, $3.4 million, or $0.03 per diluted share on an after-tax basis, merger and relocation-related charges at First Advantage Corporation. | |||
"Second quarter revenues were $2.17 billion, an increase of 9 percent over the same quarter of 2005, setting an all-time company high for second quarter revenues," stated Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. "Year-to-date revenues of $4.17 billion increased 13 percent over the same period last year and also set an all-time company high for first-half-of-the-year revenues. This growth in revenues was achieved despite a drop in mortgage originations."
Summary of Operations
Mortgage originations decreased in the second quarter of 2006 when compared with the same period of the prior year. However, as a result of increases in market share and in the average revenues per title order closed at the company's title insurance operations, as well as acquisition activity and organic growth at the company's specialty insurance, property information, and risk mitigation and business solutions segments, total operating revenues increased when compared with the second quarter of 2005. Though strong, profits for the second quarter of 2006 did not keep pace with the revenue growth. Factors affecting results included a quarter-over-quarter increase in the loss provision rate for the title insurance operations, a $22.0 million charge for certain title insurance regulatory/litigation matters and continued investments in new business initiatives. Operating revenues for the three and six months ended June 30, 2006, were $2.10 billion and $4.05 billion, respectively. Operating revenues for the three and six months ended June 30, 2005, were $1.92 billion and $3.59 billion, respectively. Net income for the three and six months ended June 30, 2006, was $114.7 million, or $1.16 per diluted share, and $184.4 million, or $1.86 per diluted share. Net income for the three and six months ended June 30, 2005, was $139.5 million, or $1.43 per diluted share, and $218.7 million, or $2.27 per diluted share, respectively.
| Operating Revenues (in thousands) | ||||
|
Three Months Ended June 30 |
Six Months Ended June 30 |
|||
| 2006 | 2005 | 2006 | 2005 | |
| Financial Services Title Insurance and Services: | ||||
| --- Direct operations | $806,979 | $740,203 | $1,492,301 | $1,352,220 |
| --- Agency operations | 747,685 | 681,354 | 1,488,064 | 1,281,101 |
| 1,554,664 | 1,421,837 | 2,980,365 | 2,633,321 | |
| Specialty Insurance | 77,181 | 63,785 | 151,754 | 124,294 |
| 1,631,845 | 1,485,622 | 3,132,119 | 2,757,615 | |
| Information Technology Mortgage Information | 137,643 | 150,499 | 272,069 | 292,972 |
| --- Property Information | 144,649 | 131,834 | 279,550 | 246,627 |
| --- Risk Mitigation and Business Solutions | 204,470 | 161,253 | 398,191 | 299,443 |
| 486,762 | 443,586 | 949,810 | 839,042 | |
| ---Eliminations | (18,194) | (4,309) | (29,543) | (8,200) |
| Total operating revenues | $2,100,413 | $1,924,899 | $4,052,386 | $3,588,457 |
Source: First American Corporation Corporation
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