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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 001-34580

FIRST AMERICAN FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		26-1911571
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 First American Way, Santa Ana, California		92707-5913
(Address of principal executive offices)		(Zip Code)

(714) 250-3000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.00001 par value	FAF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On July 21, 2025 there were 101.8 million shares of common stock outstanding.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

INFORMATION INCLUDED IN REPORT


PART I: FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	A. Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	5

	B. Condensed Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024	6

	C. Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024	7

	D. Condensed Consolidated Statements of Stockholders’ Equity for each of the quarters within the six months ended June 30, 2025 and 2024	8

	E. Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024	10

	F. Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE FACT THAT THEY DO NOT RELATE STRICTLY TO HISTORICAL OR CURRENT FACTS AND MAY CONTAIN THE WORDS “BELIEVE,” “ANTICIPATE,” “EXPECT,” “INTEND,” “PLAN,” “PREDICT,” “ESTIMATE,” “PROJECT,” “WILL BE,” “WILL CONTINUE,” “WILL LIKELY RESULT,” OR OTHER SIMILAR WORDS AND PHRASES OR FUTURE OR CONDITIONAL VERBS SUCH AS “WILL,” “MAY,” “MIGHT,” “SHOULD,” “WOULD,” OR “COULD.” THESE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS REGARDING FUTURE OPERATIONS, PERFORMANCE, FINANCIAL CONDITION, PROSPECTS, PLANS AND STRATEGIES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS THAT MAY PROVE TO BE INCORRECT.

RISKS AND UNCERTAINTIES EXIST THAT MAY CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE ANTICIPATED RESULTS TO DIFFER FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION:

•

INTEREST RATE FLUCTUATIONS;

•

CHANGES IN CONDITIONS OF THE REAL ESTATE MARKETS;

•

VOLATILITY IN THE CAPITAL MARKETS;

•

UNFAVORABLE ECONOMIC CONDITIONS;

•

IMPAIRMENTS IN THE COMPANY’S GOODWILL OR OTHER INTANGIBLE ASSETS;

•

FAILURES AT FINANCIAL INSTITUTIONS WHERE THE COMPANY DEPOSITS FUNDS;

•

REGULATORY OVERSIGHT AND CHANGES IN APPLICABLE LAWS AND GOVERNMENT REGULATIONS, INCLUDING PRIVACY AND DATA PROTECTION LAWS;

•

HEIGHTENED SCRUTINY BY LEGISLATORS AND REGULATORS OF THE COMPANY’S TITLE INSURANCE AND SERVICES SEGMENT AND CERTAIN OTHER OF THE COMPANY’S BUSINESSES;

•

REGULATION OF TITLE INSURANCE RATES;

•

LIMITATIONS ON ACCESS TO PUBLIC RECORDS AND OTHER DATA;

•

SEVERE WEATHER CONDITIONS, HEALTH CRISES, TERRORIST ATTACKS AND OTHER CATASTROPHES;

•

CHANGES IN RELATIONSHIPS WITH LARGE MORTGAGE LENDERS AND GOVERNMENT-SPONSORED ENTERPRISES;

•

CHANGES IN MEASURES OF THE STRENGTH OF THE COMPANY’S TITLE INSURANCE UNDERWRITERS, INCLUDING RATINGS AND STATUTORY CAPITAL AND SURPLUS;

•

LOSSES IN THE COMPANY’S INVESTMENT PORTFOLIO OR VENTURE INVESTMENT PORTFOLIO;

•

MATERIAL VARIANCE BETWEEN ACTUAL AND EXPECTED CLAIMS EXPERIENCE;

•

PROVISION OF CAPITAL TO SUBSIDIARIES THAT COULD AFFECT THE COMPANY’S LIQUIDITY POSITION;

•

DEFALCATIONS, INCREASED CLAIMS OR OTHER COSTS AND EXPENSES ATTRIBUTABLE TO THE COMPANY’S USE OF TITLE AGENTS;

•

ANY INADEQUACY IN THE COMPANY’S RISK MANAGEMENT FRAMEWORK OR USE OF MODELS;

•

SYSTEMS DAMAGE, FAILURES, INTERRUPTIONS, CYBERATTACKS AND INTRUSIONS, OR UNAUTHORIZED DATA DISCLOSURES;

•

INNOVATION EFFORTS OF THE COMPANY AND OTHER INDUSTRY PARTICIPANTS AND ANY RELATED MARKET DISRUPTION;

•

ERRORS AND FRAUD INVOLVING THE TRANSFER OF FUNDS;

•

FAILURES TO RECRUIT AND RETAIN QUALIFIED EMPLOYEES;

•

THE COMPANY’S USE OF A GLOBAL WORKFORCE;

•

INABILITY OF THE COMPANY TO FULFILL PARENT COMPANY OBLIGATIONS AND/OR PAY DIVIDENDS;

•

INABILITY TO REALIZE ANTICIPATED SYNERGIES OR PRODUCE RETURNS THAT JUSTIFY INVESTMENT IN ACQUIRED BUSINESSES;

•

A REDUCTION IN THE DEPOSITS AT THE COMPANY’S FEDERAL SAVINGS BANK SUBSIDIARY;

•

CLAIMS OF INFRINGEMENT OR INABILITY TO ADEQUATELY PROTECT THE COMPANY’S INTELLECTUAL PROPERTY; AND

•

OTHER FACTORS DESCRIBED IN THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING UNDER THE CAPTION RISK FACTORS IN ITEM 1A OF PART II.

THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE THEY ARE MADE. 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.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Balance Sheets

(in millions, except par values)

(unaudited)


	June 30, 2025			December 31, 2024
Assets
Cash and cash equivalents	$	2,031.2		$	1,718.1
Accounts and accrued income receivable, less allowance for credit losses of $23.5 and $21.5		412.6			374.8
Income taxes receivable		26.3			61.3
Investments:
Deposits with banks		82.7			85.4
Debt securities (amortized cost of $8,334.2 and $7,730.9; pledged of $108.8 and $92.4)		8,018.9			7,265.9
Equity securities		715.4			691.3
	$	8,817.0		$	8,042.6
Secured financings receivable		975.1			690.0
Property and equipment, net		714.7			745.1
Operating lease assets		209.4			214.7
Title plants and other indexes		683.2			673.9
Deferred income taxes		43.8			43.8
Goodwill		1,814.0			1,804.3
Other intangible assets, net		115.0			125.2
Other assets		431.6			414.8
	$	16,273.9		$	14,908.6
Liabilities and Equity
Deposits		5,959.7			5,048.1
Accounts payable and accrued liabilities		883.6			943.3
Deferred revenue		204.3			210.4
Reserve for known and incurred but not reported claims		1,189.3			1,193.4
Income taxes payable		95.3			27.0
Deferred income taxes		139.1			139.1
Operating lease liabilities		222.7			229.9
Secured financings payable		883.8			643.8
Notes and contracts payable		1,546.8			1,546.6
	$	11,124.6		$	9,981.6
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.00001 par value; Authorized—0.5 shares; Outstanding—none		—			—
Common stock, $0.00001 par value; Authorized—300.0 shares; Outstanding—102.3 shares and 103.0 shares		—			—
Additional paid-in capital		1,747.3			1,787.6
Retained earnings		3,724.5			3,617.3
Accumulated other comprehensive loss		(345.6	)		(496.4	)
Total stockholders’ equity	$	5,126.2		$	4,908.5
Noncontrolling interests		23.1			18.5
Total equity	$	5,149.3		$	4,927.0
	$	16,273.9		$	14,908.6

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income

(in millions, except per share amounts)

(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Revenues
Direct premiums and escrow fees	$	704.2		$	632.7		$	1,265.3		$	1,133.6
Agent premiums		716.5			616.3			1,371.1			1,180.1
Information and other		270.1			246.6			512.3			469.6
Net investment income		160.2			129.9			295.4			257.8
Net investment losses (realized of $(5.4), $(1.0), $(6.9), $(4.4))		(9.7	)		(13.2	)		(20.5	)		(4.2	)
		1,841.3			1,612.3			3,423.6			3,036.9
Expenses
Personnel costs		571.1			509.0			1,077.8			993.9
Premiums retained by agents		573.5			492.2			1,099.0			940.0
Other operating expenses		309.4			277.0			587.7			542.8
Provision for policy losses and other claims		81.9			79.5			152.0			149.0
Depreciation and amortization		53.0			52.1			105.5			102.2
Premium taxes		19.2			15.5			36.6			29.4
Interest		38.0			35.4			73.2			69.7
		1,646.1			1,460.7			3,131.8			2,827.0
Income before income taxes		195.2			151.6			291.8			209.9
Income taxes		48.1			35.2			69.9			46.8
Net income		147.1			116.4			221.9			163.1
Less: Net income attributable to noncontrolling interests		1.0			0.4			1.6			0.4
Net income attributable to the Company	$	146.1		$	116.0		$	220.3		$	162.7
Net income per share attributable to the Company's stockholders (Note 10):
Basic	$	1.41		$	1.11		$	2.12		$	1.56
Diluted	$	1.41		$	1.11		$	2.12		$	1.56
Cash dividends per share	$	0.54		$	0.53		$	1.08		$	1.06
Weighted-average common shares outstanding (Note 10):
Basic		103.5			104.1			103.7			104.1
Diluted		103.8			104.3			104.0			104.4

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2025		2024			2025		2024
Net income	$	147.1	$	116.4		$	221.9	$	163.1
Other comprehensive income (loss), net of tax:
Change in unrealized gains (losses) on debt securities		19.0		(5.8	)		111.3		(56.4	)
Change in foreign currency translation adjustment		34.9		(3.8	)		38.8		(18.3	)
Change in pension benefit adjustment		0.3		0.4			0.7		0.8
Total other comprehensive income (loss), net of tax		54.2		(9.2	)		150.8		(73.9	)
Comprehensive income		201.3		107.2			372.7		89.2
Less: Comprehensive income attributable to noncontrolling interests		1.0		0.4			1.6		0.4
Comprehensive income attributable to the Company	$	200.3	$	106.8		$	371.1	$	88.8

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Stockholders’ Equity

(in millions)

(unaudited)


	First American Financial Corporation Stockholders
	Shares			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total stockholders’ equity			Noncontrolling interests		Total
Balance at December 31, 2024		103.0		$	—	$	1,787.6		$	3,617.3		$	(496.4	)	$	4,908.5		$	18.5	$	4,927.0
Net income for the three months ended March 31, 2025		—			—		—			74.2			—			74.2			0.6		74.8
Dividends on common shares		—			—		—			(55.7	)		—			(55.7	)		—		(55.7	)
Repurchases of Company shares		(0.4	)		—		(28.2	)		—			—			(28.2	)		—		(28.2	)
Shares issued in connection with share-based compensation		0.6			—		(5.7	)		(1.0	)		—			(6.7	)		—		(6.7	)
Share-based compensation		—			—		30.6			—			—			30.6			—		30.6
Net activity related to noncontrolling interests		—			—		—			—			—			—			2.5		2.5
Other comprehensive income		—			—		—			—			96.6			96.6			—		96.6
Balance at March 31, 2025		103.2			—		1,784.3			3,634.8			(399.8	)		5,019.3			21.6		5,040.9
Net income for the three months ended June 30, 2025		—			—		—			146.1			—			146.1			1.0		147.1
Dividends on common shares		—			—		—			(55.3	)		—			(55.3	)		—		(55.3	)
Repurchases of Company shares		(1.1	)		—		(60.5	)		—			—			(60.5	)		—		(60.5	)
Shares issued in connection with share-based compensation		0.2			—		6.3			(1.1	)		—			5.2			—		5.2
Share-based compensation		—			—		17.2			—						17.2			—		17.2
Net activity related to noncontrolling interests		—			—		—			—			—			—			0.5		0.5
Other comprehensive income		—			—		—			—			54.2			54.2			—		54.2
Balance at June 30, 2025		102.3		$	—	$	1,747.3		$	3,724.5		$	(345.6	)	$	5,126.2		$	23.1	$	5,149.3

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Stockholders’ Equity – (Continued)

(in millions)

(unaudited)


	First American Financial Corporation Stockholders
	Shares			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total stockholders’ equity			Noncontrolling interests			Total
Balance at December 31, 2023		103.1		$	—	$	1,793.3		$	3,710.6		$	(655.8	)	$	4,848.1		$	14.7		$	4,862.8
Net income for the three months ended March 31, 2024		—			—		—			46.7			—			46.7			—			46.7
Dividends on common shares		—			—		—			(54.9	)		—			(54.9	)		—			(54.9	)
Repurchases of Company shares		(0.1	)		—		(3.5	)		—			—			(3.5	)		—			(3.5	)
Shares issued in connection with share-based compensation		0.7			—		(7.2	)		(0.8	)		—			(8.0	)		—			(8.0	)
Share-based compensation		—			—		23.4			—			—			23.4			—			23.4
Net activity related to noncontrolling interests		—			—		—			—			—			—			4.1			4.1
Other comprehensive loss		—			—		—			—			(64.7	)		(64.7	)		—			(64.7	)
Balance at March 31, 2024		103.7			—		1,806.0			3,701.6			(720.5	)		4,787.1			18.8			4,805.9
Net income for the three months ended June 30, 2024		—			—		—			116.0			—			116.0			0.4			116.4
Dividends on common shares		—			—		—			(54.7	)		—			(54.7	)		—			(54.7	)
Repurchases of Company shares		(0.7	)		—		(40.7	)		—			—			(40.7	)		—			(40.7	)
Shares issued in connection with share-based compensation		0.1			—		6.7			(1.0	)		—			5.7			—			5.7
Share-based compensation		—			—		9.4			—			—			9.4			—			9.4
Net activity related to noncontrolling interests		—			—		—			—			—			—			(0.2	)		(0.2	)
Other comprehensive loss		—			—		—			—			(9.2	)		(9.2	)		—			(9.2	)
Balance at June 30, 2024		103.1		$	—	$	1,781.4		$	3,761.9		$	(729.7	)	$	4,813.6		$	19.0		$	4,832.6

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	Six Months Ended June 30,
	2025			2024
Cash flows from operating activities:
Net income	$	221.9		$	163.1
Adjustments to reconcile net income to cash provided by operating activities:
Provision for policy losses and other claims		152.0			149.0
Depreciation and amortization		105.5			102.2
Amortization of premiums and accretion of discounts on debt securities, net		(20.9	)		4.0
Net investment losses		20.5			4.2
Share-based compensation		47.8			32.8
Equity in earnings of affiliates, net		(5.1	)		(3.0	)
Dividends from equity method investments		3.4			3.3
Changes in assets and liabilities excluding effects of acquisitions and noncash transactions:
Claims paid, including assets acquired, net of recoveries		(164.5	)		(179.4	)
Net change in income tax accounts		62.7			47.8
(Increase) decrease in accounts and accrued income receivable		(34.7	)		124.1
Decrease in accounts payable and accrued liabilities		(61.4	)		(63.1	)
Decrease in deferred revenue		(6.5	)		(6.3	)
Other, net		(11.7	)		(42.7	)
Cash provided by operating activities		309.0			336.0
Cash flows from investing activities:
Acquisitions/dispositions, net of cash acquired/divested		(3.9	)		(6.3	)
Net decrease (increase) in deposits with banks		6.4			(2.7	)
Purchases of debt securities		(1,393.7	)		(592.2	)
Proceeds from sales of debt securities		507.0			361.9
Proceeds from maturities of debt securities		312.3			291.3
Purchases of equity securities		(19.4	)		(34.2	)
Proceeds from sales of equity securities		17.3			57.8
Net change in other investments		(6.5	)		0.3
Advances under secured financing agreements		(18,613.4	)		(10,879.5	)
Collections of secured financings receivable		18,328.3			10,778.5
Capital expenditures		(94.1	)		(108.4	)
Proceeds from sales of property and equipment		0.1			—
Proceeds from insurance settlement		1.9			2.9
Cash used for investing activities		(957.7	)		(130.6	)
Cash flows from financing activities:
Net change in deposits		911.6			(1,691.9	)
Borrowings under secured financing agreements		18,071.3			10,709.2
Repayments of secured financings payable		(17,831.3	)		(10,621.0	)
Repayments of other notes and contracts payable		(1.3	)		(1.5	)
Net activity related to noncontrolling interests		(1.7	)		4.1
Net payments in connection with share-based compensation		(1.1	)		(2.3	)
Repurchases of Company shares		(88.7	)		(44.2	)
Payments of cash dividends		(111.0	)		(109.6	)
Cash provided by (used for) financing activities		947.8			(1,757.2	)
Effect of exchange rate changes on cash		14.0			(4.9	)
Net increase (decrease) in cash and cash equivalents		313.1			(1,556.7	)
Cash and cash equivalents—Beginning of period		1,718.1			3,605.3
Cash and cash equivalents—End of period	$	2,031.2		$	2,048.6
Supplemental information:
Cash paid (received) during the period for:
Interest	$	71.6		$	78.1
Premium taxes	$	42.6		$	31.0
Income taxes paid	$	21.5		$	11.7
Income tax refunds	$	(14.3	)	$	(12.8	)

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES

Notes to Condensed Consolidated Financial Statements
(unaudited)

Note 1 – Basis of Condensed Consolidated Financial Statements

Basis of Presentation

The condensed consolidated financial information included in this report has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Securities and Exchange Commission Regulation S-X. The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the First American Financial Corporation (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2024. The condensed consolidated financial statements included herein are unaudited; however, in the opinion of management, they contain all normal recurring adjustments necessary for a fair statement of the consolidated results for the interim periods. All material intercompany transactions and balances have been eliminated upon consolidation.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued updated guidance intended to enhance the transparency and decision usefulness of income tax disclosures. The updated guidance requires disclosure of specific categories and greater disaggregation of information included in the rate reconciliation and additional disclosures related to income taxes paid. The updated guidance, which was adopted on January 1, 2025, and is effective for annual reporting periods, had no impact on the Company's condensed consolidated financial statements.

In August 2023, the FASB issued updated guidance intended to provide decision-useful information to investors and reduce diversity in practice in accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. The updated guidance requires joint ventures to recognize and initially measure their assets and liabilities at fair value, with certain exceptions to fair value measurement consistent with business combination guidance. The updated guidance, which was adopted on January 1, 2025, had no impact on the Company's condensed consolidated financial statements.

Pending Accounting Pronouncements

In November 2024, the FASB issued updated guidance intended to improve financial reporting by requiring entities to disclose additional information in the notes to the financial statements about specific expense categories within the income statement. The updated guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The updated disclosures can be applied either prospectively or retrospectively in the Company's financial statements. Except for the disclosure requirements, the Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 2 –Trust Assets, Escrow and Other Deposits

The Company administers escrow deposits as a service to customers in its direct title operations. Escrow deposits totaled $10.7 billion and $8.9 billion at June 30, 2025 and December 31, 2024, respectively, of which $4.5 billion and $4.0 billion, respectively, were held at First American Trust, FSB (“FA Trust”). The remaining deposits were held at third-party financial institutions. Escrow deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets.

Trust assets administered by FA Trust totaled $4.9 billion and $4.8 billion at June 30, 2025 and December 31, 2024, respectively, of which $150.3 million and $169.4 million, respectively, were held at FA Trust. The remaining trust assets were held at third-party financial institutions. Trust assets administered by FA Trust and held at third-party institutions are fiduciary client assets. Trust assets held at third-party institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. The Company could be held contingently liable if FA Trust were to breach any of its fiduciary duties.

In conducting its operations, the Company often holds customers’ assets in escrow, pending completion of real estate transactions and, as a result, the Company has ongoing programs for realizing economic benefits with various financial institutions. The results from these programs are included as either income or as a reduction in expense, as appropriate, in the condensed consolidated statements of income based on the nature of the arrangement and benefit received.

The Company facilitates tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of each such exchange, the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds administered by the Company totaled $2.3 billion at June 30, 2025 and December 31, 2024. The like-kind exchange deposits are held at third-party financial institutions and, due to the structure utilized to facilitate these transactions, the proceeds and property are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable to the customer for the transfers of property, disbursements of proceeds and the returns on such proceeds.

In conducting its residential mortgage loan subservicing operations, the Company administers cash deposits on behalf of its clients. Cash deposits totaled $1.3 billion and $901.0 million at June 30, 2025 and December 31, 2024, respectively, of which $908.6 million and $606.5 million, respectively, were held at FA Trust. The remaining deposits were held at third-party financial institutions. Cash deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets. In connection with certain accounts, the Company has ongoing programs for realizing economic benefits with various financial institutions whereby it earns economic benefits either as income or as a reduction in expense.

Deposit balances held at FA Trust are temporarily invested in cash and cash equivalents and debt securities, with offsetting liabilities included in deposits in the accompanying condensed consolidated balance sheets.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 3 – Debt Securities

Investments in debt securities, classified as available-for-sale, are as follows:


	Amortized		Gross unrealized					Estimated
(in millions)	cost		Gains		Losses			fair value
June 30, 2025
U.S. Treasury bonds	$	171.2	$	1.1	$	(2.1	)	$	170.2
Municipal bonds		946.6		4.6		(74.5	)		876.7
Foreign government bonds		229.8		1.5		(5.8	)		225.5
Governmental agency bonds		214.1		0.2		(8.0	)		206.3
Governmental agency mortgage-backed securities		5,265.4		17.9		(245.4	)		5,037.9
U.S. corporate debt securities		1,016.2		12.3		(18.5	)		1,010.0
Foreign corporate debt securities		490.9		8.6		(7.2	)		492.3
	$	8,334.2	$	46.2	$	(361.5	)	$	8,018.9
December 31, 2024
U.S. Treasury bonds	$	180.7	$	0.1	$	(5.2	)	$	175.6
Municipal bonds		844.9		5.3		(73.7	)		776.5
Foreign government bonds		217.1		1.6		(7.1	)		211.6
Governmental agency bonds		203.8		—		(14.0	)		189.8
Governmental agency mortgage-backed securities		4,844.4		1.7		(343.8	)		4,502.3
U.S. corporate debt securities		948.4		5.6		(28.4	)		925.6
Foreign corporate debt securities		491.6		5.3		(12.4	)		484.5
	$	7,730.9	$	19.6	$	(484.6	)	$	7,265.9

Sales of debt securities resulted in realized gains of $1.4 million and $2.5 million, realized losses of $6.8 million and $9.4 million and proceeds of $240.2 million and $507.0 million for the three and six months ended June 30, 2025, respectively. Sales of debt securities resulted in realized gains of $0.3 million and $1.1 million, realized losses of $1.3 million and $5.5 million and proceeds of $137.4 million and $361.9 million for the three and six months ended June 30, 2024, respectively.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Investments in debt securities in an unrealized loss position, and their respective length of time in such position, are as follows:


	Less than 12 months					12 months or longer					Total
(in millions)	Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses
June 30, 2025
U.S. Treasury bonds	$	9.4	$	(0.2	)	$	41.8	$	(1.9	)	$	51.2	$	(2.1	)
Municipal bonds		228.1		(9.5	)		391.6		(65.0	)		619.7		(74.5	)
Foreign government bonds		29.7		—			62.1		(5.8	)		91.8		(5.8	)
Governmental agency bonds		104.1		(0.4	)		37.2		(7.6	)		141.3		(8.0	)
Governmental agency mortgage-backed securities		2,290.7		(47.0	)		1,246.4		(198.4	)		3,537.1		(245.4	)
U.S. corporate debt securities		258.6		(2.9	)		105.6		(15.6	)		364.2		(18.5	)
Foreign corporate debt securities		96.7		(0.6	)		87.9		(6.6	)		184.6		(7.2	)
	$	3,017.3	$	(60.6	)	$	1,972.6	$	(300.9	)	$	4,989.9	$	(361.5	)
December 31, 2024
U.S. Treasury bonds	$	81.8	$	(1.8	)	$	52.9	$	(3.4	)	$	134.7	$	(5.2	)
Municipal bonds		248.3		(4.4	)		417.0		(69.3	)		665.3		(73.7	)
Foreign government bonds		29.8		(0.2	)		72.7		(6.9	)		102.5		(7.1	)
Governmental agency bonds		144.4		(5.3	)		37.9

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Non-accelerated filer

Smaller reporting company

Emerging growth company

First American Financial Corp 10-Q