1st American Financial Posts Gains Despite Real Estate Lag

The slumping real estate economy might be giving many other companies fits, but First American Financial Corp. has rebounded with record revenue and strong second-quarter earnings of $5.9 million, or 60 cents a share.

The net income for the title insurance holding company was more than 10 times greater than last year’s second-quarter profit of $558,000, or 5 cents per share. And the increased sales activity prompted new hirings, reversing a 9-month-long series of layoffs.

But it wasn’t enough to erase the company’s $9.5-million loss in the first quarter of this year. It was left with a six-month loss of $3.6 million, or 37 cents a share. The company earned $1.4 million, or 14 cents per share, in the first six months last year.

The second-quarter spurt in the residential resale market, reinvigorated after the Persian Gulf War, gave the company record quarterly revenue of $197.4 million, an increase of 6.5% from $185.3 million in last year’s second quarter. Revenue for the first six months dipped to $345 million from $348.9 million in the same period last year.

The big jump in business after the war has subsided a bit, according to Jack Derloshon, the company’s chief financial officer, but orders for title insurance should remain fairly level for the rest of the year and eventually allow the company to post an annual profit. Stable interest rates and increased consumer confidence should halt further softening, he predicted.

The long real estate slump that started last year forced First American to lay off more than 10% of its work force nationwide. From a peak of 7,260 employees, the company laid off 734 workers but has since added 454 employees.

The company has more than 5,500 offices or agents in all 50 states and in several other countries.