First American Earnings Top Expectations, Revenue Down

Santa Ana-based title insurer and business data provider First American Corp. reported first-quarter earnings that beat analyst expectations on Thursday, thanks to big cuts in corporate expenses and an increase in loan origination and default-related transaction business.

The company posted a profit of $55 million, a 16% increase from a year earlier. Analysts were expecting earnings closer to $40 million.

The improved earnings were due in large part to a 26% cut in expenses compared to a year earlier, rather than an overall jump in revenue. More than 40 offices were closed by the company in the quarter.

Revenue fell 17% to $1.38 billion; analysts had been expecting about $1.43 billion for the quarter.

Regardless, First American said all of its business segments saw improved earnings and profit margins compared to the fourth quarter.

First American’s dominant title insurance division saw the volume of orders it processed in the first quarter increase 47% from the fourth.

Title division revenue fell 26% year-over-year to $792 million, while the average revenue per order dropped 15% from a year earlier.

“The company benefited from a surge in origination and default-related transaction activity, as well as continued expense reductions,” Chief Executive Parker Kennedy said in a statement.

The company didn't provide second-quarter guidance in its earnings announcement.

Shares were up about 7% at close of trading. The company counts a market value of about $2.7 billion.

Kennedy noted that low mortgage rates and the effects of recent government actions should help to create a healthy operating environment for the company in 2009.