First American Financial Corporation, a provider of title insurance, settlement services and risk solutions for real estate transactions, closed out the year on a high note and beat revenue expectations thanks to an uptick in its purchase and refinance business.
The company recorded fourth-quarter revenue of total revenue of $1.5 billion, up 11% compared with last year. This beat capital consensus of $1.4 billion.
Net income in the current quarter hit $8 million, or 73 cents per diluted share, compared with net income of $81.6 million, or 74 cents per diluted share, in the fourth quarter of 2015.
“The company had strong results in 2016, achieving earnings per share of $3.09 and a return on equity of nearly 12%,” said Dennis Gilmore, CEO at First American Financial Corporation. “Our refinance and purchase business drove revenue growth of 8%. We continued to manage the company at a high level of efficiency and, as a result, posted a pretax margin of 11.7% in our title segment, the highest in the company’s history.”
Outside of revenue and net income, the company also witnessed strong results in its title business. Total revenues for the Title Insurance and Services segment reached $1.4 billion in the fourth quarter of 2016, up 10% from the same quarter of 2015.
In addition, direct premiums and escrow fees were up 8% compared with last year, thanks to a 24% increase in the number of direct title orders closed in the quarter. However, this was partially offset by a 12% decrease in average revenue per order.
The earnings release noted that the average revenue per direct title order declined to $1,958 due to a shift in the mix toward lower-premium refinance transactions.
Gilmore added, “We closed on a number of strategic acquisitions in 2016 that strengthen our core title and settlement business and enhance the solutions we offer our customers. In addition, we raised our quarterly dividend by 31% in August, demonstrating our ongoing commitment to return capital to shareholders.”
Looking ahead, Gilmore said the company will continue to benefit from the ongoing improvement in housing and the general economy, and it remains optimistic about its performance in 2017.
“We will continue to maintain our focus on operating efficiently and deploying our capital strategically in ways that create shareholder value,” he concluded.