First American Corporation (New)

Greetings, and welcome to the First American Financial Corporation First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A copy of today's press release is available on First American's website at www.firstamerican.com. Investor.com forward slash investor. Please note that this call is being recorded and will be available for replay from the company's investor website for a short time by dialing 877-660-6853 or 201-612-7415 and enter a conference ID at We will now turn the call over to Mr. Craig Barbellio, Vice President, Investor Relations, to make the introductory statement.

Good morning, everyone, and welcome to First American's earnings conference call for the first quarter of 2022. Joining us on today's call will be our Chief Executive Officer, Ken DiGiorgio, and Mark Seaton, Executive Vice President and Chief Financial Officer. Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current fact. These forward-looking statements speak only as of the date they are made, and 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. Risks and uncertainties exist that may cause results to differ materially from those set forth in these four living statements. For more information on these risks and uncertainties, please refer to this morning's earnings release and the risk factors discussed in our Form 10-K and subsequent SEC filings. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into the operational efficiency and performance of the company relative to earlier periods and relative to the company's competitors. For more details on these non-GAAP financial measures, including presentation with and reconciliation to the most directly comparable GAAP financials, please refer to this morning's earnings release, which is available on our website at www.firstam.com. I will now turn the call over to our CEO, Ken DiGiorgio.

Thank you, Craig. Our company delivered good financial results in the first quarter, our seasonally slowest period, Revenue was $2 billion with earnings of 88 cents per share or $1.17 per share, excluding net investment losses. The market is currently transitioning from record low interest rates to a more normalized environment, and we believe First American will outperform for two primary reasons. 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. Based on the forward curve for Fed funds, we expect growth in investment income to add about $150 million to our annualized pre-tax income by the end of this year. In terms of our outlook for the remainder of 2022, we expect transaction levels in the purchase market to continue to be down from last year, given inventory constraints and declining affordability. However, we expect strong housing demand supported by the strong economy and labor markets to continue to drive robust home price appreciation and together with acquisitions, modest growth in purchase revenue this year. Also, Given strong fundamentals in the commercial market, we are confident our commercial business will continue to operate at an elevated level into the second half of the year. Given the current market transition to a more normalized rate environment, we're sharpening our focus on expense management. 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. We've been active with share repurchases in response to market conditions that have resulted in our stock being undervalued in recent months. This year, we have repurchased 3.25 million shares for a total of $210 million at an average price of $64.64. I'm also pleased to report that our previously announced acquisition of Motherlode Holding Company, a title agency with 92 offices across 11 states, including the key markets of California, Texas, and Arizona, is expected to close in May. We are excited to welcome Motherlode, which includes 10 highly successful regional brands and over 1,000 talented employees to our company. In closing, I want to thank our employees for all their hard work and accomplishments. It is their continuous focus on supporting each other, our customers, and our communities that, for the seventh consecutive year, resulted in First American being named to the 100 Best Companies to Work For list by Great Place to Work and Fortune Magazine. Now I'd like to turn the call over to Mark for a more detailed discussion of our financial results.