First American Financial third-quarter net income falls to $177 million as revenue rises 5%

First American Financial Corporation (FAF) said Wednesday that third-quarter net income fell to $177 million, or $1.72 per diluted share, from $190 million a year earlier. Total revenue rose 5% to $2.1 billion over the same period.

The figures were released in a press release attached to a regulatory filing. The quarter ended Sept. 30.

Here's how the company did:

• Earnings per diluted share: $1.72 vs. $1.84 a year earlier
• Adjusted earnings per diluted share: $1.78 vs. $1.70 a year earlier
• Revenue: $2,084.6 million vs. $1,978.9 million a year earlier
• Net income: $177.0 million vs. $189.6 million a year earlier

Adjusted net income was $183 million, or $1.78 per diluted share, compared with $175 million, or $1.70, a year earlier. Adjusted total revenue rose 7% to $2.1 billion.

Net investment losses were $2 million, or 1 cent per diluted share, compared with gains of $26 million, or 20 cents, in the third quarter of 2025.

Purchase-related intangible amortization, which covers noncompete agreements, customer relationships and trademarks acquired in business combinations, was $7 million, or 5 cents per diluted share, in both periods.

The company's effective tax rate was 22.4% this quarter. Cash flow from operations was $238 million, compared with $273 million last year.

“Continued growth in our commercial business and higher investment income drove our earnings this quarter,” said CEO Mark Seaton.

Title Insurance and Services

Segment revenue was $1,972.9 million, up 7% from a year earlier. Pretax income was $244.1 million, compared with $236.2 million, and the pretax margin was 12.4%, compared with 12.9%.

Commercial revenues were $297 million, up 21% from a year earlier. Average revenue per commercial order was $18,200, up from $16,100.

Direct title open orders were 175,600, down from 191,300, and closed orders were 134,900, down from 141,800. Direct premiums and escrow fees were $643 million, up 7%, driven by a 13% increase in average revenue per order closed and partially offset by a 5% decline in the number of direct title orders closed.

Investment income was $169 million, up 11% from a year earlier, mainly from higher interest income on the company's investment portfolio. Interest income from escrow balances declined.

Personnel costs were $574 million, up 6%, mainly from higher salary and incentive compensation. Other operating expenses were $306 million, up 11%, due to higher software expense and production expense.

The provision for policy losses and other claims was $45 million, or 3.0% of title premiums and escrow fees, unchanged from a year earlier. The company said the rate reflects an ultimate loss rate of 3.75% for the current policy year and a net decrease of $11 million in loss reserve estimates for prior policy years.

Interest expense was $31 million, up 27%, primarily due to higher interest expense on deposit balances at the company's bank subsidiary.

Information and other revenues were $292 million, up 6%, driven by 31% growth in the company's subservicing business.

Home Warranty

Home Warranty revenue was $115 million, flat from a year earlier. Pretax income fell 30% to $11 million, primarily because of higher marketing expense to drive continued growth in the company's direct-to-consumer sales channel. The pretax margin was 9.9%, compared with 14.1%.

The claims loss rate was 47%, virtually unchanged from a year earlier.

Corporate

The Corporate segment posted a pretax loss of $28 million, compared with a loss of $5 million a year earlier.

Capital and shareholder returns

The company raised its common stock dividend by 11% to an annual rate of $2.44 per share. Cash dividends declared were $0.61 per share in the quarter, compared with $0.55 a year earlier.

The company repurchased 23,149 shares for $1 million at an average price of $64.24 in the quarter. Through Oct. 21, it had repurchased 143,254 shares in the fourth quarter for $9 million, at an average price of $62.40.

The debt-to-capital ratio was 30.3%, or 22.2% excluding $808 million of secured financings payable.

Outlook

The release gave no guidance figures. Seaton tied the company's view to mortgage rates.

“The recent increase in mortgage rates reinforces our expectation for a lower-for-longer residential origination market,” Seaton said. “We will use this environment to deepen our customer relationships and execute the rollout of our new AI-native title and settlement platforms, which will enhance the customer experience, improve operating efficiency and position First American for stronger earnings growth as the market recovers.”

The company will discuss the results on a teleconference on Oct. 22 at 11 a.m. EDT.