First American Financial's Q1 2025: Contradictions Unveiled on Revenue Growth, Macroeconomic Impact, and Deposit Strategy

Commercial revenue growth expectations, title revenue growth expectations, impact of macroeconomic uncertainty on commercial and residential businesses, commercial business momentum, and deposit stability and bank strategy are the key contradictions discussed in First American Financial's latest 2025Q1 earnings call.



Revenue and Market Performance:
- First American Financial Corporation reported revenue for Q1 2025 of $1.5 billion in the Title segment, up 12% compared to the same quarter of 2024, with commercial revenue increasing by 29%.
- The growth was driven by improvements in both residential and commercial markets, despite macro uncertainties with tariffs and interest rates.

Margin and Earnings Trends:
- The company's pretax margin in the Title segment was 7.2%, or 7.9% on an adjusted basis, with earnings per diluted share at $0.71 in GAAP and $0.84 adjusted.
- Margin improvement was due to increased revenue per order, partly offset by lower closed orders, and favorable loss reserve adjustments.

Commercial Market Strength:
- Commercial revenue increased by 29%, with strength across various asset classes and geographic regions.
- The improvement is due to narrowing bid-ask spreads, and new office deals, although macro uncertainty has not yet affected business momentum.

Investment Income and Share Repurchase:
- Investment income increased by $21 million, driven by higher interest income from the company's investment portfolio and growing deposit balances.
- The company repurchased 448,000 shares for $28 million and an additional 323,000 shares for $19 million in April.
- These actions reflect confidence in the company's stock valuation and a commitment to returning capital to shareholders.