Santa Ana-based title insurer First American Financial Corp. posted a better-than-expected quarterly result on Thursday, thanks in part to cost cutting and a boost in income from its commercial real estate business.
The company reported earning $32.3 million during the second quarter, a $1.5 million decrease from a year ago. Analysts were expecting closer to $23 million in net income for the quarter.
First American, which writes insurance policies protecting real estate buyers against competing claims of ownership, saw $927.3 million in revenue for the quarter, a 4% drop from a year ago. Revenue beat analyst expectations by nearly $50 million.
While First American’s title order business saw an 18% decline in volumes from a year ago, cost savings and an $18 million year-over-year increase in revenue from the company’s commercial real estate division have helped boost earnings, according to chief executive Dennis Gilmore.
“Given the outlook for mortgage and real estate markets, we executed on an expense reduction program that is expected to yield $40 million in annualized cost savings beginning in the third quarter,” Gilmore said in a statement.
The company plans focus on “operational efficiency and on maintaining a conservative balance sheet” in the near term, while looking for growth and investment opportunities, he said.
First American counts a market value of about $1.7 billion. Shares closed up 4% on Thursday.
