BANKING/FINANCE : First American Will Spend up to $5 Million to Repurchase Stock

First American Financial Corp., the parent firm of First American Title Co. in Santa Ana, will spend up to $5 million to repurchase as much as 4.5% of its shares in an effort to bolster the stock price of its two classes of common stock.

The company’s directors believe that the current stock price for both class A and class B stock is undervalued, said William G. Zaenglein Jr., the company’s corporate counsel. So First American will be buying shares on the open market from time to time.

Each class has been trading between $11 and $12 a share, and at $11 a share, he said, First American could buy back as many as 455,000 shares, or 4.5% of its stock.

Zaenglein said the corporation values each class at about $14 a share. Class A stock closed Wednesday at $12, up 50 cents from Tuesday’s close of $11.50 a share. Class B stock closed at $11.50, up 50 cents from Tuesday’s close of $11 a share.

Directors also increased the company’s quarterly dividend to a combined 20 cents a share for both classes of stock, or 10 cents a share for each class separately. Last quarter, before class B was created, the dividend was 17.5 cents a share.