First American Corporation (New)

And welcome to the First American Financial Corporation second 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 .firstam.com forward slash investor. Please note that the call is being recorded and will be available for replay from the company's investor website and for a short time by dialing -660-6853 or -612-7415 and enter the conference ID of 1375-4701. We will now turn the call over to Craig Barbario, Vice President in Recipe Relations to make an introductory statement.

Good morning everyone and welcome to First American's earnings conference call for the second quarter of 2025. Joining us today on the call will be our Chief Executive Officer, Mark Seaton and Matt Waschner, 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. Risk and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these risk and uncertainties, please refer to yesterday's earnings release and the risk factors discussed in our Form 10K 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 width and reconciliation to the most directly comparable GAAP financials, please refer to yesterday's earnings release, which is available on our website at .firstam.com. I will now turn the call over to Mark Seaton.

Thank you, Craig. And thank you to everyone joining our call. Today, I will provide a brief review of our earnings, discuss our market outlook, and conclude with some thoughts on capital management. Today, we announced our second quarter adjusted earnings per share of $1.53. This result includes the impact of 12 cents per share related to executive separation costs. Our earnings were strong despite continued challenges in the US housing market. Our performance this quarter was highlighted by continued strength in our commercial business. Commercial revenue was up 33%, and we set an all-time record in our National Commercial Services Division for fee per file in a quarter. We are seeing broad-based strength in commercial again this quarter, led by industrial, which includes data center transactions, and multifamily. We're also seeing a continued shift toward refinance in commercial. Historically, our revenue was roughly 30% refinance, but this quarter, it was 46%. The sales, underwriting, closing, and operations teams that drive our commercial business are the best in the industry. They deal with complex, multi-site, multi-state, and sometimes cross-border transactions, while skillfully underwriting risk and providing amazing service and transparency to our clients. Our commercial business also drives much of our escrow deposits, which help drive investment income. Investment income grew 17% this quarter. Investment income, and our bank in particular, continues to be a counter-cyclical earnings driver while the residential market is at the trough. The residential side of our business continues to navigate through difficult market conditions. Our purchase revenue declined 3%, driven by lower demand for new homes. It's been a tough purchase market for the last three years, due primarily to home affordability issues and elevated mortgage rates. But as purchase volumes return to the trend line, we are very well positioned, given our operating leverage and strength with local real estate professionals who drive purchase volumes. Refance revenue was up 54% this quarter, but it's growing off a low base and represents just 5% of our direct revenue. The opened orders we are seeing in July tell a similar story to what we have experienced so far this year, with strong commercial activity outpacing a sluggish residential market. For the first three weeks in July, our open purchase orders are down 8%, while our refinance orders are up 29%. Commercial orders are up 13% so far this month, setting us up well for a strong back half of the year. Our home warranty business posted very strong results. Our pre-tax income was up 35%, driven by a lower loss rate, and we continue to drive revenue growth through our direct to consumer channel. This quarter, we ramped up our share repurchases, and in July, our board of directors approved a new $300 million share repurchase authorization. We are at the very beginning of the next cycle and are poised to outperform, given our unique assets and the productivity improvements we expect to achieve related to our investments in data technology and AI. Now, I would like to turn the call over to Matt for a more detailed review of our financial results. Thank