First American Posts Big Gains in Third Quarter

First American Financial Corp., continuing its strong rebound from a disastrous first quarter, erased its cumulative red ink for the year by posting a third-quarter profit of $4.3 million, or 44 cents a share.

The quarterly net income for the title insurance holding company represents a threefold increase over its third-quarter profits last year of $1.4 million, or 14 cents a share. Revenue for the three-month period ended Sept. 30 increased 3% to $191.5 million, the company’s highest ever for a third quarter, from $185.9 million last year.

The company, which owns 102-year-old First American Title Co., capitalized on the growing number of home refinancings that have been spurred by declining interest rates, said Donald P. Kennedy, the company’s president.

“It seems reasonable to assume that refinancing activity will continue through the fourth quarter,” Kennedy said. New orders, mostly for refinancings, have remained strong, he said.

The company lost $9.5 million in the first quarter partly from the real estate recession that has gripped the West Coast. The volume of business was building up, especially after the Persian Gulf War, but deals weren’t closing until the second quarter.

The third-quarter profit propelled the company into the black for the first nine months with cumulative net income of $654,000, or 7 cents a share, a 77% drop from $2.8 million, or 28 cents a share, for the same period last year. Revenue increased slightly to $536.6 million for the first nine months, from $534.9 million for the same period last year.

First American, which also owns First American Trust Co., began responding to worsening economic times more than a year ago by laying off employees, mainly in title offices throughout the country. For the eight months through last February, it let 807 employees go, reducing its staff 12.6% to nearly 5,600.