Aided by record fourth-quarter revenue, century-old First American Financial Corp. posted net income of $13.5 million last year, up 9.8% from $12.3 million earned in 1988.
First American, one of the nation's largest title insurance companies, took advantage of lower fixed mortgage rates during the last half of the year to boost its revenue to $699.4 million in 1989, an 8.6% increase from $643.9 million in 1988. It was the seventh consecutive year of record revenue for the Santa Ana-based firm.
A healthy West Coast housing market helped First American to more than double its earnings for the fourth quarter ended Dec. 31 to $7.4 million, from $3.4 million in the year-earlier quarter. Fourth-quarter revenue rose 1% to $186.9 million, from $184.9 million in the corresponding 1988 quarter.
"Our strongest markets last year were in the West and the Northwest, particularly the state of Washington, which has been an extremely strong state," said Jack Derloshon, First American's chief financial officer. "The East, particularly the Northeast, has been very weak. It's been impacted by the dislocation in the financial markets, among other things."
He said that the company is doing better during the current quarter than it did at the same time last year but that the first quarter is traditionally the slowest quarter for the title industry.
First American has been a steady performer in a very competitive business that is closely tied to the cyclical real estate market, analysts say. It has paid cash dividends in 91 of its last 92 years and had only five money-losing years this century.
The company conducts its title insurance activities through its primary subsidiary, First American Title Insurance Co. It also offers trust services through its First American Trust Co. unit.
First American Title operates through a network of more than 4,500 branches, subsidiaries, affiliates or agents throughout the United States. The company also provides title services in Guam, Mexico, Puerto Rico, the Virgin Islands and the United Kingdom.
FIRST AMERICAN PERFORMANCE (In millions of dollars)
1989 1988 4th Qtr. 1989 4th Qtr. 1988 Revenue $699.4 $643.9 $186.9 $184.9 Net Income 13.5 12.3 7.4 3.4 Per Share (in dollars) $1.35 $1.25(a) 0.74 0.35*
* Restated to reflect 100% stock dividend of Class B Common shares on Nov. 20, 1989.
Source: First American Financial Corp.