The First American Corporation Reports Financial Results for the Second Quarter of...

The First American Corporation Reports Financial Results for the Second
Quarter of 2009
-Reports Earnings Per Diluted Share of 75 Cents-

SANTA ANA, Calif., July 30 /PRNewswire-FirstCall/ -- The First American
Corporation (NYSE: FAF), America's largest provider of business information,
today announced financial results for the second quarter ended June 30, 2009.

Total revenues for the second quarter of 2009 were $1.5 billion, a decrease of
9 percent relative to the second quarter of 2008 and an increase of 12 percent
relative to the first quarter of 2009. Net income was $70.3 million, or 75
cents per diluted share, compared with $19.6 million, or 21 cents per diluted
share, in the second quarter of 2008. The current quarter results include net
realized investment losses of $13.1 million, or 14 cents per diluted share,
net of tax. Results for the second quarter of 2008 include net realized
investment losses, employee separation costs and restructuring costs totaling
$32.4 million, or 35 cents per diluted share, net of tax.

Current Quarter Highlights
-- Adjusted earnings per diluted share of 89 cents, or 75 cents including
net realized investment losses
-- Financial Services and Information Solutions Groups experienced pretax
earnings growth relative to both the second quarter of 2008 and the
first quarter of 2009
-- Title Insurance and Services segment adjusted pretax margin of 8.2
percent, or 6.6 percent including net realized investment losses
-- Cash flow from operations was $170.9 million in the second quarter,
versus $71.2 million in the prior year
-- Debt-to-capital ratio was 20.8 percent as of June 30, 2009

-- Offer made to acquire minority interest in First Advantage Corporation

"First American showed meaningful revenue and earnings improvement led by
continued enhancement in the performance of our title insurance business and
steady growth in our Information Solutions Group," stated Parker S. Kennedy,
chairman and chief executive officer of The First American Corporation. "The
company continues to build its capital base and is making progress on the
split of our Financial Services and Information Solutions businesses, which we
expect to occur during the first half of 2010."

Financial Services Group
"Led by significant advances in our residential title businesses, our Title
Insurance and Services segment demonstrated considerable earnings improvement
during the quarter," stated Dennis J. Gilmore, chief executive officer of the
company's Financial Services Group. "Though encouraged by the progress we have
made, we maintained our focus on improving the profitability and efficiency of
our business."

Current Quarter Highlights:
-- Financial Services Group pretax income was $63.5 million, compared
with
$7.7 million in the prior year

-- Title Insurance and Services segment adjusted pretax margin of 8.2
percent, or 6.6 percent including net realized investment losses

Title Insurance and Services. During the second quarter of 2009, total
revenues in the Title Insurance and Services segment were $935.3 million, a 16
percent decrease from the same quarter of 2008. The decrease was due to a
decline in the average revenue per order closed, offset by an increase in the
number of title orders closed. The company's direct operations closed 438,100
title orders for the second quarter of 2009, an increase of 9 percent, when
compared with 401,200 title orders closed in the second quarter of 2008.
Average revenue per direct title order was $1,302, an 18 percent decline
relative to the second quarter of 2008.

Salary and other personnel costs were $283.5 million, an 18 percent decrease,
compared with the second quarter of 2008, primarily due to employee
reductions. Other operating expenses were $223.0 million, a decrease of 21
percent, compared with the second quarter of 2008. The decrease was primarily
due to a decline in title production costs, lower occupancy costs and other
cost-containment programs. The company continued to realize operational
efficiencies by leveraging its centralized onshore and offshore capabilities.

The loss provision for claims during the second quarter of 2009 was 6.5
percent of operating revenues, compared with 6.3 percent in the second quarter
of 2008. The current quarter rate reflects the expected claims experience for
policy year 2009, with no reserve estimate adjustments required for prior
policy years.

Pretax income for the Title Insurance and Services segment was $62.2 million
in the second quarter of 2009, compared with a pretax loss of $1.0 million in
the second quarter of 2008. Results for the current quarter include net
realized investment losses of $15.5 million. Results for the second quarter of
2008 include net realized investment losses, employee separation costs and
lease termination costs totaling $51.8 million.

Specialty Insurance. Total revenues at First American's Specialty Insurance
segment were $64.4 million in the second quarter of 2009, a 16 percent
decrease relative to the second quarter of 2008, reflecting a decline in
business volume at both the property and casualty insurance business and the
home warranty business. Pretax income was $1.3 million in the second quarter
of 2009, compared with $8.7 million in the second quarter of 2008. Results for
the second quarter of 2008 include net realized investment losses of $6.3
million.

Information Solutions Group
"The Information Solutions Group increased pretax earnings by more than 27
percent as we experienced revenue growth from market share gains, adoption of
new products and higher origination-related transaction levels, while
maintaining our keen focus on efficiency," stated Frank V. McMahon, chief
executive officer of the company's Information Solutions Group. "We also
announced the intention to acquire the minority interest in First Advantage
and completed our acquisition of BasePoint Analytics, both of which will
enhance our ability to develop cutting-edge analytic solutions for our
clients."

Current Quarter Highlights:
-- Information Solutions Group generated revenues of $570.7 million, an
8.1
percent increase relative to the prior year
-- Information Solutions Group pretax income was $115.3 million, a 27.2
percent increase relative to the prior year
-- Information and Outsourcing Solutions segment pretax margin of 24.9
percent
-- Data and Analytic Solutions segment pretax margin of 21.8 percent

-- Offer made to acquire minority interest in First Advantage Corporation

Information and Outsourcing Solutions. Total revenues at the Information and
Outsourcing Solutions segment were $259.7 million in the second quarter of
2009, a 34 percent increase from the prior year. The increase was primarily
due to an acquisition of a previously unconsolidated investment, as well as
market share gains and an increase in volume at the appraisal and the
default-related businesses. Pretax income during the quarter was $64.6
million, a 43 percent increase from the prior year.

Data and Analytic Solutions. Total revenues at the Data and Analytic Solutions
segment were $133.0 million in the second quarter of 2009, a 3 percent
decrease relative to the second quarter of 2008. Revenues associated with
sales of property information, as well as analytic products were down relative
to the same period in the prior year. These decreases were primarily due to
the continued deterioration of the segment's customer base due to economic
conditions, the ongoing tightening of the credit markets and the higher
cancellation rate from clients on subscription revenues. These decreases were
offset in part by increased demand for title and document products due to
improved loan origination activity. Pretax income was $29.0 million in the
second quarter of 2009, an 18 percent increase relative to the second quarter
of 2008.

Risk Mitigation and Business Solutions. Total revenues at the Risk Mitigation
and Business Solutions segment were $178.0 million in the second quarter of
2009, a 10 percent decrease relative to the second quarter of 2008. The
overall decrease in revenue is directly related to the downturn in domestic
and international hiring, the decline in the mortgage industry, weakness in
the credit markets and the overall economic slowdown. These events led, in
particular, to revenue decline in the credit, employer, multifamily and
investigative/litigation support lines of business. These declines were offset
to an extent by increased revenues in 2009 due to improvements in the
segment's lead generation business. Pretax income was $21.7 million in the
second quarter of 2009, compared with $21.0 million in the second quarter of
2008.

Teleconference/Webcast
First American's second quarter results will be discussed in more detail on
Thursday, July 30, 2009, at 11 a.m. ET, via teleconference. The toll-free
dial-in number is (888) 790-3384. Callers from outside the United States may
dial (630) 395-0148. The pass code for the event is FIRST AMERICAN.
The live audio webcast of the call and the accompanying slide presentation
will be available on First American's Web site at www.firstam.com/investor. An
audio replay of the conference call will be available through Aug. 7, 2009, by
dialing (203) 369-1047. An audio archive of the call and the accompanying
financial presentation will also be available for replay on First American's
investor Web site.

About First American
The First American Corporation (NYSE: FAF) is a FORTUNE 500((R)) company that
traces its history to 1889. With total revenues of approximately $6.2 billion
in 2008, it is America's largest provider of business information. First
American combines advanced analytics with its vast data resources to supply
businesses and consumers with valuable information products to support the
major economic events of people's lives, such as getting a job, renting an
apartment, buying a car or house, securing a mortgage and opening or buying a
business. The First American Family of Companies, many of which command
leading market share positions in their respective industries, operate within
five primary business segments, including: Title Insurance and Services,
Specialty Insurance, Information and Outsourcing Solutions, Data and Analytic
Solutions, and Risk Mitigation and Business Solutions. More information about
the company and an archive of its press releases can be found at
www.firstam.com.

Web Site Disclosure
First American posts information of interest to investors at
www.firstam.com/investor. This includes opened and closed title insurance
order counts for its direct title insurance operations, which are posted
approximately 20 days after the end of each month.

Additional Information
First American intends to file a Registration Statement on Form S-4 and may
file other documents with the Securities and Exchange Commission (SEC) in
connection with the proposed First Advantage transaction. First Advantage
stockholders should read those filings, and any other filings made by the
company with the SEC in connection with the transaction, as they will contain
important information. These documents, once filed, as well as the company's
other public SEC filings, can be obtained without charge at the SEC's Web site
at www.sec.gov and at the company's Web site at www.firstam.com.

Forward-Looking Statements
Certain statements made in this press release, including but not limited to
those related to the consummation and timing of the split of the company's
Financial Services and Information Solutions businesses, and the effect of the
company's proposed acquisition of the minority interest in First Advantage
Corporation and completed acquisition of BasePoint Analytics, are forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements may contain the words "believe,"
"anticipate," "expect," "plan," "predict," "estimate," "project," "will be,"
"will continue," "will likely result," or other similar words and phrases.
Risks and uncertainties exist that may cause results to differ materially from
those set forth in these forward-looking statements. Factors that could cause
the anticipated results to differ from those described in the forward-looking
statements include: interest rate fluctuations; changes in the performance of
the real estate markets; limitations on access to public records and other
data; general volatility in the capital markets; changes in applicable
government regulations; heightened scrutiny by legislators and regulators of
the company's Title Insurance and Services segment and certain other of the
company's businesses; the inability to consummate the spin-off transaction or
to consummate it in the form originally proposed as a result of, among other
factors, the inability to obtain necessary regulatory approvals, the failure
to obtain the final approval of the company's board of directors, the
inability to obtain third-party consents or undesirable concessions or
accommodations required to be made to obtain such consents, the landscape of
the real estate and mortgage credit markets, market conditions, the inability
to transfer assets into the entity being spun-off or unfavorable reactions
from customers, ratings agencies, investors or other interested persons; the
inability to realize the benefits of the proposed spin-off transaction as a
result of the factors described immediately above, as well as, among other
factors, increased borrowing costs, competition between the resulting
companies, unfavorable reactions from employees, the inability of the
financial services company to pay the anticipated level of dividends, the
triggering of rights and obligations by the transaction or any litigation
arising out of or related to the separation; consolidation among the company's
significant customers and competitors; changes in the company's ability to
integrate businesses which it acquires; unfavorable economic conditions;
impairments in the company's goodwill or other intangible assets; losses in
the company's investment portfolio; expenses of and funding obligations to the
company's pension plan; weakness in the commercial real estate market and
increases in the amount or severity of commercial real estate transaction
claims; the inability to satisfy the conditions to the consummation of the
First Advantage transaction, including obtaining any necessary approvals;
failure to realize or delay in the realization of the expected cost savings
and other synergies from the First Advantage transaction; operational
disruption during the pendency of the First Advantage transaction; and other
factors described in Part I, Item 1A of the company's annual report on Form
10-K for the year ended Dec. 31, 2008, as updated in Part II, Item 1A of the
company's quarterly reports on Form 10-Q for the quarters ended March 31 and
June 30, 2009, in each case as filed with the Securities and Exchange
Commission. The forward-looking statements speak only as of the date they are
made. The company does not undertake to update forward-looking statements to
reflect circumstances or events that occur after the date the forward-looking
statements are made.

Use of Non-GAAP Financial Measures
This news release contains certain financial measures that are not presented
in accordance with generally accepted accounting principles (GAAP). The
company is presenting these non-GAAP financial measures because they provide
the company's management and investors with additional insight into the
operational performance of the company relative to earlier periods and
relative to the company's competitors. The company does not intend for these
non-GAAP financial measures to be a substitute for any GAAP financial
information. In this news release, these non-GAAP financial measures have been
presented with, and reconciled to, the most directly comparable GAAP financial
measures. Investors should use these non-GAAP financial measures only in
conjunction with the comparable GAAP financial measures.

Media Contact: Investor Contact:
Carrie Gaska Mark Seaton
Corporate Communications Investor Relations
The First American Corporation The First American Corporation
(714) 250-3298 * cgaska@firstam.com (714) 250-4264 * mseaton@firstam.com

The First American Corporation
Summary of Financial Results and Selected Information
(in thousands, except per share amounts and title orders)
(unaudited)

For the Three Months For the Six Months
Ended June 30 Ended June 30
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----

Total revenues $1,537,382 $1,685,051 $2,915,194 $3,344,176
Income before income taxes $152,413 $63,609 $235,426 $133,183
Income taxes provision $58,478 $26,876 $86,533 $48,993
Net income $93,935 $36,733 $148,893 $84,190
Less: Net income
attributable to
noncontrolling interests 23,663 17,128 42,596 35,267
------ ------ ------ ------
Net income attributable to
The First American
Corporation (FAC) $70,272 $19,605 $106,297 $48,923
======= ======= ======== =======
Net income attributable to FAC
stockholders:
Basic $0.75 $0.21 $1.14 $0.53
Diluted $0.75 $0.21 $1.13 $0.53
Weighted average common shares
outstanding:
Basic 93,260 92,503 93,141 92,252
Diluted 94,005 93,205 93,758 92,951

Title orders opened 566,300 532,300 1,129,300 1,127,600

Title orders closed 438,100 401,200 807,300 790,800

Paid title claims 78,173 76,590 148,908 141,930

The First American Corporation
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)

June 30, December 31,
2009 2008
-------- ---------

Assets
Cash and cash equivalents $1,022,931 $934,945
---------- --------
Accounts and accrued income receivable, net 537,913 558,946
------- -------
Income tax receivable 45,013 61,678
------ ------
Investments:
Deposits with savings and loan associations
and banks 118,523 182,117
Debt securities 1,608,650 1,718,320
Equity securities 140,192 110,126
Other long-term investments 378,802 371,157
------- -------
2,246,167 2,381,720
--------- ---------
Loans receivable, net 152,494 151,692
------- -------
Property and equipment, net 629,141 665,305
------- -------
Title plants and other indexes 690,511 685,090
------- -------
Deferred income taxes 100,923 149,473
------- -------
Goodwill 2,620,582 2,594,738
--------- ---------
Other intangible assets, net 276,562 298,411
------- -------
Other assets 244,485 248,057
------- -------
$8,566,722 $8,730,055
========== ==========

Liabilities and Stockholders' Equity
Demand deposits $1,167,857 $1,298,221
Accounts payable and accrued liabilities 890,973 994,093
Deferred revenue 702,738 728,844
Reserve for known and incurred but not
reported claims 1,310,524 1,355,392
Notes and contracts payable 833,553 868,274
Deferrable interest subordinated notes 100,000 100,000
------- -------
5,005,645 5,344,824
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares; outstanding - none
Common stock, $1 par value
Authorized - 180,000,000 shares
Outstanding - 93,357,000 and 92,963,000
shares 93,357 92,963
Additional paid-in capital 817,388 801,228
Retained earnings 2,166,054 2,099,654
Accumulated other comprehensive loss (221,236) (290,362)
-------- --------
Total FAC stockholders' equity 2,855,563 2,703,483
--------- ---------
Noncontrolling interests 705,514 681,748
------- -------
Total equity 3,561,077 3,385,231
--------- ---------
$8,566,722 $8,730,055
========== ==========

The First American Corporation
Condensed Consolidated Statement of Income and Comprehensive Income
(in thousands, except per share amounts)
(unaudited)

For the Three Months For the Six Months
Ended June 30 Ended June 30
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----

Revenues
Operating revenues $1,503,799 $1,668,548 $2,822,968 $3,263,817
Investment and other
income 55,342 56,516 112,955 126,248
Gain on stock issued by
subsidiary - 1,325 - 1,325
Net realized investment
losses (21,759) (41,338) (20,729) (47,214)
------- ------- ------- -------
1,537,382 1,685,051 2,915,194 3,344,176
--------- --------- --------- ---------
Expenses
Salaries and other
personnel costs 475,943 562,900 938,803 1,140,514
Premiums retained by
agents 278,604 377,062 518,163 741,113
Other operating expenses 449,911 478,980 877,041 928,620
Provision for policy
losses and other claims 104,616 114,883 194,007 221,982
Depreciation and
amortization 51,532 59,703 103,534 117,226
Premium taxes 8,650 12,270 16,416 24,286
Interest 15,713 15,644 31,804 37,252
------ ------ ------ ------
1,384,969 1,621,442 2,679,768 3,210,993
--------- --------- --------- ---------

Income before income taxes 152,413 63,609 235,426 133,183
Income taxes provision 58,478 26,876 86,533 48,993
------ ------ ------ ------
Net income 93,935 36,733 148,893 84,190
Less: Net income
attributable to
noncontrolling interests 23,663 17,128 42,596 35,267
------ ------ ------ ------
Net income attributable
to FAC 70,272 19,605 106,297 48,923
------ ------ ------- ------

Net income attributable to
FAC stockholders:
Basic $0.75 $0.21 $1.14 $0.53
===== ===== ===== =====
Diluted $0.75 $0.21 $1.13 $0.53
===== ===== ===== =====
Cash dividends per share $0.22 $0.22 $0.44 $0.44
===== ===== ===== =====
Weighted average number of
shares:
Basic 93,260 92,503 93,141 92,252
====== ====== ====== ======
Diluted 94,005 93,205 93,758 92,951
====== ====== ====== ======

Net Income 93,935 36,733 148,893 84,190
------ ------ ------- ------
Other comprehensive income
(loss), net of tax
Unrealized gain
(loss) on securities 49,625 (23,483) 50,249 (50,809)
Unrealized gain
(loss) on securities
for which credit-
related portion was
recognized in net
realized investment
gains (losses) 3,521 - (1,199) -
Foreign currency
translation
adjustments 22,152 3,156 17,575 3,900
Minimum pension
liability adjustment 3,771 2,083 7,378 4,166
----- ----- ----- -----
Total other
comprehensive income
(loss), net of tax 79,069 (18,244) 74,003 (42,743)
------ ------- ------ -------
Comprehensive income 173,004 18,489 222,896 41,447
Less: Comprehensive
income attributable to
noncontrolling interests 26,897 13,171 47,473 26,240
------ ------ ------ ------
Comprehensive income
attributable to FAC $146,107 $5,318 $175,423 $15,207
======== ====== ======== =======

The First American Corporation
Segment Information
(in thousands, except percentages)
(unaudited)

For the Three Months Ended June 30
----------------------------------
Total revenues Pretax (A) Margins
-------------- ---------- -------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Financial Services

Title
Insurance and
Services $935,345 $1,107,561 $62,183 $(1,022) 6.6% -0.1%
Specialty
Insurance 64,402 76,537 1,312 8,685 2.0% 11.3%
------ ------ ----- ----- --- ----
$999,747 $1,184,098 $63,495 $7,663 6.4% 0.6%
======== ========== ======= ====== === ===

Information Solutions

Information
and
Outsourcing
Solutions $259,747 $193,863 $64,592 $45,037 24.9% 23.2%
Data and
Analytic
Solutions 133,016 137,543 28,979 24,622 21.8% 17.9%
Risk
Mitigation and
Business
Solutions 177,967 196,644 21,697 20,950 12.2% 10.7%
------- ------- ------ ------ ---- ----
$570,730 $528,050 $115,268 $90,609 20.2% 17.2%
======== ======== ======== ======= ==== ====

For the Six Months Ended June 30
--------------------------------
Total revenues Pretax (A) Margins
-------------- ---------- -------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----

Financial Services

Title
Insurance and
Services $1,727,338 $2,181,375 $62,355 $6,196 3.6% 0.3%
Specialty
Insurance 134,618 152,618 9,424 17,175 7.0% 11.3%
------- ------- ----- ------ --- ----
$1,861,956 $2,333,993 $71,779 $23,371 3.9% 1.0%
========== ========== ======= ======= === ===

Information Solutions

Information
and
Outsourcing
Solutions $466,618 $390,558 $120,500 $93,682 25.8% 24.0%
Data and
Analytic
Solutions 265,080 274,748 56,488 44,480 21.3% 16.2%
Risk
Mitigation and
Business
Solutions 381,156 400,264 40,376 43,088 10.6% 10.8%
------- ------- ------ ------ ---- ----
$1,112,854 $1,065,570 $217,364 $181,250 19.5% 17.0%
========== ========== ======== ======== ==== ====

(A) - (Loss) income before income tax, minority interest and corporate
expenses

SOURCE The First American Corporation

Media, Carrie Gaska, Corporate Communications, +1-714-250-3298,
cgaska@firstam.com, or Investors, Mark Seaton, Investor Relations,
+1-714-250-4264, mseaton@firstam.com, both of The First American Corporation