First American's Commercial Growth Cools After 34% Growth in Q2

The Tip Desk · October 26, 2026 · 4 min read

Commercial revenue rose 21% to $297 million as total revenue growth slowed to 5% and title pretax margin compressed to 12.4%.

First American Financial Corporation (FAF), a provider of title, settlement and risk solutions for real estate transactions, reported third-quarter total revenue of $2.1 billion, up 5 percent from a year earlier, a slower pace than the 15 percent increase recorded in the second quarter.

Net income was $177 million, or $1.72 a share, compared with $190 million, or $1.84 a share, in the third quarter of 2025. Adjusted net income was $183 million, or $1.78 a share. Net investment results swung to a $2 million loss, or 1 cent a share, from $26 million of gains a year earlier.

Chief executive Mark Seaton said continued growth in the commercial business and higher investment income drove earnings. He said the recent increase in mortgage rates reinforces the company’s expectation for a lower-for-longer residential origination market, and that First American will use that environment to deepen customer relationships and roll out AI-native title and settlement platforms.

Title Insurance and Services revenue was $2.0 billion, up 7 percent year over year, with adjusted revenue up 8 percent. U.S. direct title closed orders fell to 134,900 from 141,800 a year earlier; open orders were 175,600 versus 191,300. Direct premiums and escrow fees were $643 million, up 7 percent, as average revenue per closed order rose 13 percent to $4,304, offsetting a 5 percent decline in closed direct title orders. The company said the per-order increase came primarily from commercial and purchase transactions and a shift toward higher-premium commercial work. Agent premiums were $868 million, up 9 percent.

U.S. commercial revenue was $297 million, up 21 percent year over year, after 34 percent growth in the second quarter and 48 percent in the first quarter. Average revenue per commercial order rose to $18,200 from $16,100. Commercial closed orders were 16,300 and open orders 28,900.

Information and other revenues were $292 million, up 6 percent, primarily on 31 percent growth in subservicing. Title segment investment income was $169 million, up 11 percent, matching the second-quarter growth rate. The company said the increase was driven primarily by higher interest income from the investment portfolio, partially offset by a decline in interest income from escrow balances.

Title pretax margin compressed to 12.4 percent, or 12.7 percent adjusted, from 12.9 percent a year earlier, after 15.7 percent pretax and 14.0 percent adjusted in the second quarter. Pretax income was $244 million. Personnel costs were $574 million, up 6 percent, which the company attributed primarily to higher salary and incentive compensation. Other operating expenses were $306 million, up 11 percent, primarily due to higher software and production expense. Interest expense was $31 million, up 27 percent, primarily on higher interest on deposit balances at the bank subsidiary. The provision for policy losses and other claims was $45 million, or 3.0 percent of title premiums and escrow fees, unchanged from the prior year.

Home Warranty revenue was $115 million, flat year over year. Pretax income fell 30 percent to $11 million, and pretax margin compressed to 9.9 percent, or 9.7 percent adjusted, from 14.1 percent, or 13.5 percent adjusted, a year earlier, after 21.3 percent pretax and 20.2 percent adjusted in the second quarter. The company said the pretax-income decline was primarily attributable to higher marketing expense to drive growth in its direct-to-consumer sales channel. The claims loss rate was 47 percent, virtually unchanged from last year.

The Corporate segment pretax loss was $28 million, compared with a $5 million loss a year earlier. Excluding net investment gains and losses, the loss was $26 million versus $24 million.

Cash flow from operations was $238 million, compared with $273 million a year earlier. The company raised the common dividend 11 percent to an annual rate of $2.44 a share. It repurchased 23,149 shares for $1 million in the quarter; through Oct. 21 it had bought 143,254 shares for $9 million. The debt-to-capital ratio was 30.3 percent, or 22.2 percent excluding secured financings payable of $808 million.