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After a record breaking year in 2021, 2022 is off to a slow start for “big four” title insurer First American Financial. The firm generated $2 billion in total revenue during the first quarter of 2022, unchanged from a year ago.

Net income, however, was a different story. During the first quarter of 2022, First American saw $98 million in net income compared to $234 million a year ago.

“Our company delivered good financial results in the first quarter, our seasonally slowest period,” CEO Ken DeGiorgio said during the company’s first quarter 2021 earnings call with investors on Thursday. “The market is currently transitioning from record low interest rates to a more normalized environment.”

Despite this shift and other challenging market conditions such as decreasing housing affordability and low inventory, DeGiorgio remains confident that First American will be able to weather the storm.

“We believe First American will out perform for two primary reasons,” he said on the call. “First the market is shifting away from refinance transactions towards purchase and commercial transactions, which is where we have a greater market share. Second, we are the only title company that has a bank which will enable us to capitalize on higher interest rates to a greater extent than our competitors.”

DeGiorgio also stated that First American believes strong housing demand will continue despite the rising prices and mortgage rates. However, it is hard to deny that these factors are not influencing the market.

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During the first quarter of 2022, First American’s volume of closed title orders was down 29% compared to a year ago, with 205,100 closed title orders in Q1 2022 and 287,600 closed title orders in Q1 2021. This overall decline can primarily be attributed to a 62% year-over-year decreased in refinance orders and a 5% decline in purchase orders.

Like other “big four” member Stewart , First American’s commercial title volume and revenue saw big improvement from a year ago. In Q1 2022 the firm’s commercial title segment generated $242 million in revenue compared to $163 million a year ago. In addition, the average revenue per commercial order rose to $13,200 from $9,800 in 2021. This increase, plus strong residential home price appreciation, contributed to an overall increase of 40% in revenue per title order during the first quarter of 2022. At the end of the day this resulted in the title segment generating $1.998 billion in revenue, up from $1.844 billion in 2021, even as refinance revenue declined 59% compared to the first quarter of 2021. Despite this overall increase, the segment’s pretax income was down to $220 million during Q1 2022 from $280 million a year prior.

As the company looks towards the future, it still believes that its investment income will help it weather any major shifts in the market.

“Based on the forward curve for fed funds we expect growth in investment income to add about a hundred and fifty million dollars to our annualized pre-tax income by the end of this year,” DeGiorgio said.

Looking into the second and third quarters of 2022, First American executives said they are looking forward to the previously announced acquisition of Mother Lode Holding Company closing in May, as well as the wind down of the firm’s property and casualty insurance business being completed during the third quarter.

Although DeGiorgio said the firm would be “sharpening [its] focus in expense management” due to the market transition, he noted that they would continue to invest in and develop First American’s technology.

“We will however continue to invest in strategic initiatives that drive our company’s operational efficiency and future growth including through ongoing funding of our title automation and digital closing initiatives and the expansion and enhancement of the data assets that fuel them,” DeGiorgio said.