First American Financial Expects 1st-Quarter Profit

Title insurance companies typically see red during the first quarter, but First American Financial Corp. in Santa Ana expects to be profitable for the first three months of the year, Donald P. Kennedy, the company’s president, said Wednesday.

Speaking at the annual shareholders meeting, Kennedy said the century-old firm will avoid the red ink that it posted in last year’s first quarter when it lost $1.3 million. The company also lost money in the corresponding quarter in 1988.

Final results for the first quarter have not yet been released.

“Our first quarter is usually the poorest quarterly period of the year,” Kennedy said, “but new orders and closings are up about 7% over last year, and this trend should bode well for the second quarter as well.”

Kennedy said the company, which operates through First American Title Insurance Co. and its subsidiaries, should be able to take advantage of a generally favorable year for title firms in spite of a recent California court ruling that could result in a title loss of up to $6.1 million.

He warned, though, that the softening real estate market could hurt future profits, especially as the troubled savings and loan industry continues to reduce the number of mortgages it makes.

“Whether the banks and other financial institutions can make up that shortfall is somewhat questionable at this time,” he said. “However, in spite of these reservations, we feel First American is well-positioned to increase market share and revenues this year.”