May 1, 2009
Executives
Jo Etta Bandy – Senior Vice President of Corporate Communications Parker S. Kennedy – Chairman & Chief Executive Officer Anthony Buddy Piszel – Chief Financial Officer & Treasurer Frank V.
McMahon – Executive Vice President & Chief Executive Officer of First American's Information Solutions Group Dennis J. Gilmore – Executive Vice President& Chief Executive Officer of First American's Financial Services Group
Analysts
Jason Deleeuw – Piper Jaffray Nikolai Fisken – Stephens Inc. Nathaniel Otis – Keefe, Bruyette & Woods
Operator
Welcome, and thank you for standing by. At this time, all participants are in a listen-only mode.
After the presentation, we will conduct a question-and-answer session. [Operator Instructions].
A copy of today’s press release and the accompanying presentation are also available on First American’s website at www.firstam.com/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 calling 402-998-1044.
We will now turn the call over to Jo Etta Bandy, Senior Vice President of Corporate Communications to make an introductory statement.
Jo Etta Bandy
Thank you and good morning everyone. And we appreciate you joining us on this morning's call.
A slide presentation which includes information will be discussed during this morning's call is available on First American's website at firstam.com/investor. At this time, we would like to remind our listeners that management's commentary and responses to your questions may contain forward-looking statements, such as those described on page two of the accompanying slides and other statements that do not relate strictly to historical or current facts.
The 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 forward-looking statements.
Factors that could cause the anticipated results to differ from those described in the forward-looking statements are described on slide two. As indicated on slide three, management's commentary and responses to your questions also contain certain financial measures that are not presented in accordance with generally accepted accounting principles.
The company does not intend for these non-GAAP financial measures to be a substitute for any GAAP financial information. In the slide presentation, these non-GAAP financial measures have been presented with and reconciled to the most directly comparable GAAP financial measures.
Investors should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. Joining us on today’s call will be our Chairman and Chief Executive Officer, Parker Kennedy; Buddy Piszel, our Chief Financial Officer; Frank McMahon, Chief Executive Officer of First American’s Information Solutions Group and Dennis Gilmore, Chief Executive Officer for our company's Financial Services Group.
At this time, it is my pleasure to turn the call over to Park Kennedy.
Parker S. Kennedy
Thank you, Jo. First American reported strong results in the first quarter.
Earnings per diluted share were $0.38, a 19% increase relative to the first quarter of 2008. Our results benefited from two primary drivers.
First, both our origination and default businesses experienced sharp increases in transaction activity. The increase began at the end of the fourth quarter and accelerated throughout the first quarter.
Our title, settlement, appraisal, flood, tax and credit products are benefiting from high refinance volumes due to favorable mortgage rates. We are also seeing modest increases in resale activity, which is a positive signal for our business.
The second key driver of our earnings was the structural changes that we have made to our organization. In 2008, we reduced our fixed costs aggressively by centralizing, streamlining and standardizing our processes.
We are beginning to see the benefit from this enhanced operating leverage. Improving the efficiency of our business remains a priority for our management team.
The outlook for 2009 remains promising. Low interest rates have created a surge in refinance activity.
We have a strong backlog of business in the mortgage system, as many of these orders are taking longer for lenders to process, resale activity is improving due to greater affordability in the housing market. In addition, we are encouraged by many of the steps Washington has taken to stabilize the economy, including the home owner affordability and stability plan.
This plan creates opportunities for First American to sell our products to lenders and homeowners who would not otherwise qualify for refinancing. We expect to begin seeing the benefits of this program in the second quarter.
First American is well positioned to benefit from trends in the mortgage industry due to our array of products, strong market shares, reduced costs structure, and financial flexibility. Now I would like to introduce Buddy Piszel, who will comment on the financial results.
Anthony Buddy Piszel
Thanks Park. I will be covering the consolidated results, liquidity and capital management, and hit some highlights for the Information Solutions and Financial Services companies.
For the total company, operating revenues were $1.3 billion in the first quarter, a decrease of 17% relative to the prior year, and a slight increase relative to the fourth quarter of 2008. For the sequential quarters, direct title revenues were up 7.7%.
On the agency side, sequential revenues were down 17%, but agency revenues generally lag by a few months, so given our volumes, agency revenues will be up in the second quarter. Information Solutions had total revenue growth of 12.8% driven by a strong 25% revenue growth in the information and outsourcing solutions segment.
So overall, we’ve had a positive inflection from our 2008 quarterly revenue trends. Investment and other income totaled $57.6 million for the first quarter, an increase of $7.7 million or 15% from the fourth quarter that's driven by $14 million of higher earnings from volume increases in our joint ventures with major mortgage originators, offset by continued yield pressures in the investment portfolio and on escrow deposits.
Expenses in the first quarter declined 19% relative to the prior year, and were down 2% sequentially. Salary and other expenses are up roughly $24 million sequentially, that's more of a function of a reduction in our bonus and 401K expense in the fourth quarter of 2008.
On the headcount side, title headcount is down in Q1 by 2.75%, despite increasing revenues. Headcount in the rest of the company is essentially flat.
We remain committed to improving the efficiency of the business, regardless of the market environment. The loss provision in the title insurance segment was 6.5% for the first quarter, versus 6.2% in the Q1 of 2008.
The current quarter rate reflects the expected claims experience for policy year 2009 with no reserve estimate adjustments required for prior policy years. Both paid and incurred claims were lower than our forecast during the quarter.
And we continue to believe that we are adequately reserved. So, you put all that together and consolidated net income was $36 million, or $0.38 per diluted share versus $29 million or $0.32 per diluted share in the prior year.
Finally, I will hit liquidity and capital management. As of March 31, First American had $43 million of cash at the holding company.
That's where we expect it to be. As of today we have $70 million at the holding company, and that's after making our Q1 dividend payment.
Our forecast from 331 through the balance of the year includes $213 million of dividends and distributions from our subsidiaries and $26 million of cash refunds for total cash sources of $282 million. On the use side, the company expects to use $34 million for principal and interest payments $61 million for common stock dividends and $61 million for other cash uses.
That would leave approximately $125 million of cash at the holding company by the end of the year. For the total company, we had $934 million of cash on the balance sheet as of March 31.
We believe that there is a considerable opportunity to primarily reinvest a lot of that cash into fixed income securities. We expect much of this reinvestment to incur throughout 2009.
The debt-to-capital ratio at the end the quarter was 22%. We estimate that the surplus at the regulated insurance company grew nicely in the quarter, and should end the year up significantly, even after its dividends to the holding company.
So, overall we continue to have strong financial flexibility. Now I will pass it on to Frank McMahon, who will comment on the Information Solutions company.
Frank V. McMahon
Great. Thank you, Buddy.
The first quarter of 2009 was a relatively strong one for the Information Solutions Company. I'm pleased with the progress that we're making, but not satisfied.
As we stated on our last call, we took many actions in 2008 to position us well for 2009. Those actions were a combination of expense cuts, product company integrations, product development initiatives and key hires.
Our first quarter revenues increased 12.8% on a sequential quarter basis and little over 1% relative to the first quarter of last year. With the overall mortgage origination market down from last year, our revenue growth is being driven by market share gains, and the introduction of new products.
In our Data and Analytic and Information and Outsourcing segments, we added 13 clients in the first quarter and expanded the scope of our relationship with an additional 12 clients. Annualized revenue from these client wins is expected to be over $40 million.
We experienced revenue growth in lead generation, default, collateral evaluation both the appraisal and BPOs, credit and mortgage risk analytics in the first quarter relative to last year. Conversely, the employer services and litigation support businesses at FADV, experienced meaningful declines in revenue.
Finally, our property tax outsourcing business had lower revenue in the first quarter of this year relative to last year, despite a few major market share wins. This trend will reverse itself in the second quarter as loans closed in the first quarter are boarded on our system and we begin to recognize revenue.
On the expense side, our adjustable, controllable costs, which are all costs, except cost of goods sold and depreciation and interest were down 11.5% relative to last year, and down 1.2% on a sequential quarter basis. We continue to take a disciplined approach to managing our costs and infrastructure in an effort to increase our margins.
And in fact we are increasing our margins, our adjusted EBITDA and pre-tax margins did expand with our EBITDA margin coming in at 24.8%, a 4.6% improvement relative to the first quarter of 2008. Our adjusted pre-tax margin came in at 17%, and that represented a 17.1% improvement relative to last year.
Now let me talk for a moment about our second quarter outlook. Our pipelines in tax, loss mitigation and mortgage risk analytics grew in the first quarter.
Our origination related products are expected to benefit from a strong refinanced market. Our mortgage credit orders are up over 10% in April, relative to the entire first quarter of 2009.
And credit orders as you probably know are the best leading indicator, since they are typically ordered as soon as the application is taken. In addition, as services rollout modification programs consistent with the government's Home Affordable Modification Program, we are seeing opportunities for data analytics, fulfillment, QC and tracking services.
In fact, we have been hired by three banks as designated component servicers and three large servicers in direct relationships. We believe the revenue opportunity to provide data and outsourced services related to loan modifications will be over $20 million for our company.
We should begin to see revenue from these activities in Q2. In terms of our full year outlook, on the fourth quarter call, we commented on our long-term financial goals and expectations for 2009, relative to those goals.
And to recap, 2008 adjusted revenue was $2 billion, adjusted EBITDA was $444 million and our adjusted EBITDA margin was 22.7%. Our long-term financial goals use our adjusted 2000 results, as the base amounts.
Our long-term goal related to revenue growth is 7%. We expect positive revenue growth in 2009, but do not expect to achieve revenue growth in excess of 7%.
Our long-term goal related to EBITDA growth is 10%. We indicated that we will make considerable progress in 2009 towards that goal, even if we fall short of the revenue goal.
Our EBITDA increased 4.6% in the first quarter relative to the adjusted amount a year ago. Our long-term goal related EBITDA margin improvement is 5%, to be clear not 5 percentage points but 5%.
We stated that we expect to meet or exceed this goal in 2009. And our EBITDA margin improvement was 4.6% in the first quarter.
Based on our performance year-to-date, and our expectations for the balance of the year, we remain comfortable with the expectations we communicated for 2009, relative to our long-term financial goals. I would now like to turn the call over to Dennis to discuss our financial services results.
Dennis J. Gilmore
Thanks, Frank. The demand for title insurance increased dramatically, due to favorable mortgage rates and improved homeowner affordability.
Our open orders were up 47% higher than the fourth quarter, and we continue to reduce employees. If orders continue to rise, employees may be added, but in fewer numbers than previous cycles due to our disciplined expense management and our offshore capacity.
First quarter pre-tax income was comparable to last year despite a 26% decline in revenue. Low open order volumes at the end of 2008, created a weak pipeline of closed orders entering 2009.
Although volumes increased significantly in the first quarter, many of these orders are taking longer to close, due to backlogs with mortgage lenders. However, we believe the closing ratios of these orders will be in line with our historical averages.
As we discussed last quarter, two of our key strategic objectives in 2009 are the centralization of agency and claims administration. Centralized agency collection and remittances is complete and the consolidation of our claims administration will be complete by the end of the third quarter.
The centralized approach to claims handling will help us reduce our outside legal costs, improve our recovery rates and standardize our overall claims processes. Both of these projects are very consistent with overall strategy of simplifying and standardizing our operations.
In the first quarter, we opened 563,000 orders, including 10,000 orders per day in January, 8,600 orders in February; 9,000 orders in March, and in April we are opening approximately 10,000 orders per day. The sharp increase in the fourth quarter is the primary result of refinance activity, which accounted for 51% of our open orders in the first quarter, versus 40% of our fourth quarter orders.
Direct revenues declined 19% over the prior year, due to decreases in the number of title orders closed and lower average revenue per order. Our average revenue per order declined 15% relative to the prior year, primarily due to a shift in the order mix, as well as decline in home values.
Our agency revenue declined 35% over the prior year. The decline was the result of the same factors affecting our direct operations, as well as continued termination of on profitable agency relationships.
Our salary and other personnel costs decreased 23% over the prior year. During the first quarter, the title segment reduced its employee count by 365, which is expected to produce an annualized cost savings of $21 million.
Other operating revenues declined 18% over the prior year. The primary driver of the decline was the successful implementation of our cost containment programs including reducing our occupancy costs.
The company closed 41 offices during the quarter, and our continued effort to rationalize our footprint. Total revenues in our commercial division were $41 million, a 49% decline relative to the prior year.
The commercial outlet for 2009 remains challenging due to the weaknesses in the credit markets, however First American is very well positioned when the commercial market recovers, due to our strong balance sheet and healthy financial ratings. Total revenues in our international division were $57 million, a 45% decline relative to the prior year.
And our international operations are experiencing the impact of the global recession. But our relationships with the large foreign lenders remain strong and the long-term growth outlook remains promising.
Total revenues at our special insurance segment were $70 million, an 8% decrease over the prior year. Primarily due to declines in business volumes impacting the property and casualty and home warranty divisions.
Our pre-tax margins improved to 12%. A slight improvement to the prior year.
To summarize, we are very encouraged by the recent increase in order volumes and remain focused on disciplined expense management and streamlining our operations and we expect significant margin expansion in the Q2 with higher closed orders and enhanced operating leverage. I would now like to open the line up for questions.
Operator
Thank you. (Operator Instructions).
Our first question comes from Jason Deleeuw of Piper Jaffray.
Jason Deleeuw – Piper Jaffray
Good morning, everyone.
Parker S. Kennedy
Good morning.
Jason Deleeuw – Piper Jaffray
First I want to touch on the open orders we have seen in April here, looks like we are back to January levels, but do you guys have any insights into how quickly the lenders are ramping up for Obama's refinance plan? It seems like the lenders have been slow to ramp up on this with some saying they are not even going to be ready to do these reifies until May.
So I am wondering what you guys are seeing on that front?
Dennis J. Gilmore
Sure, Jason, this is Dennis. Our open orders right now in April are running at approximately 10,000 orders per day.
Up over March, and consistent with what we see going forward. And at this point, we are really not experiencing any uplift from the homeowner affordability refinance programs.
So, this is just general volume going through the system right now. We are seeing the orders take longer to close, both resale and our refinance orders and that's because the backlog is in the system and difficulty of closing the orders.
But still, it doesn't matter, we are very focused on our overall operating expenses and even though orders are continuing to up tick in April, we are continuing holding our staff counts flat.
Jason Deleeuw – Piper Jaffray
Have any of the big name lenders done any of the reifies under the plan?
Dennis J. Gilmore
I can't answer specifically on any of the lenders. I can tell you they are starting to gear up for the efforts.
Jason Deleeuw – Piper Jaffray
Okay. And then you are expecting nice margin improvement, how high do you believe your title pre-tax margins can go just one I just look at, you did a lot of open orders so you incurred a lot of expenses in the first quarter, but your salaries and your other operating expenses didn't increase a whole lot, so it would seem like you're now going to have a lot of revenue coming on in the second quarter and some of the expenses were recognized in the first quarter.
So trying to gauge what you guys think could be possible for title pre-tax margins?
Dennis J. Gilmore
Sure. Let me take that question.
A couple of things, first we don't give guidance and that's going to stay our policy. But when I look at over the cycle, it’s clearly we want to run this business in a double-digit environment, when we get a normalized cycle.
First when we go back and look over the first quarter, we ended January with a weak inventory level, we were losing money in January. We’ve returned to profitability in February, that profitability increased in March and we see upward trends in April.
So all the trends are good, as we look going into the second quarter. Again, I think we will see a significant signature margin expansion in the second quarter and I am encouraged and we are focused again running the business efficiently, getting the operating leverage out of the business we think we can get leveraging some of our key strengths both onshore and offshore.
So bottom line, I'm very encouraged as I look into the second quarter and third quarter.
Jason Deleeuw – Piper Jaffray
Okay, and on the Info and outsourcing business. The margins were better, I mean a lot better, and you are just trying to, there is cost cutting going on there, and there is a change in the revenue mix.
So, can you give me some color on, can those margins go higher from what we have seen right now and how much is it on being impacted by the change in the revenue mix?
Frank V. McMahon
Hi Jason, it's Frank. Basically, it's really being driven by two things.
One is obviously we did see a higher level of refinance activity in the first quarter. And we think that refinance activity has some legs to it, based on what we are seeing in terms of pipelines.
But we are also very, very disciplined in terms of managing our expenses and we still have a continuous cost reduction program underway, less around head count and more around non-personnel related expenses, just trying to be more efficient in everything we do. So, we think, there is a lot of operating leverage in the business.
And if we can continue to see revenue increase, we saw a nice sequential pop and a modest year-over-year pop, but if we can see revenue growth, we are very confident that we can expand our margins.
Jason Deleeuw – Piper Jaffray
Okay. And then my last question is, the loan modification or the appraisals and other work you do for loan modifications, where is that showing up for revenue.
Is that in the collateral valuation predominantly?
Frank V. McMahon
Well, there is very little of that in the first quarter. That would be in our defaults area.
Jason Deleeuw – Piper Jaffray
Okay.
Frank V. McMahon
So, it’s part of our loss mitigation product suite. And the loan modification work as I said earlier, it’s a combination of data and analytics, fulfillment and tracking capabilities and we are actively engaged with both the agencies who are looking at what are called designated component servicers for loans where they have the credit exposure as well as direct relationships with all the large servicers.
Jason Deleeuw – Piper Jaffray
And then so what drove that increase in revenue for collateral valuation?
Frank V. McMahon
Both, an increase in traditional appraisal work related to refinance activity, and an increase in our BPOs, which was really driven more by an increase in foreclosure activity, more servicing related.
Jason Deleeuw – Piper Jaffray
Okay. And then on the revenue you expect from the loan mod business.
Have you guys factored in the loan mods that potentially could be occurring on seconds that was recently announced with some of those incentives that are going to be provided for in servicers to modify second mortgages?
Anthony Buddy Piszel
Yeah, our estimate that we came up with there Jason was really based on just discussions we are having with lenders today, or servicers today. It wasn't really a top down, let’s assume there is $4 million to $5 million loan modifications and you put some dollar amount related to each one of that.
So it is really, that estimate is really based on direct conversations that we are having with servicers as opposed to an overall view around how big the program could be and what the ultimate success rates would be.
Jason Deleeuw – Piper Jaffray
All right.
Anthony Buddy Piszel
So to answer your question more directly, the news that came out around the modifications is, we don't expect that to, we think that’s a positive, but it won’t change that number that we put out there.
Jason Deleeuw – Piper Jaffray
Thank you very much.
Anthony Buddy Piszel
You're welcome.
Operator
(Operator Instructions). Our next question comes from Nik Fisken of Stephens, Inc.
Nikolai Fisken – Stephens, Inc.
Hi, good morning everybody.
Parker S. Kennedy
Good morning.
Nikolai Fisken – Stephens, Inc.
Park, can you give us an update on the split of the company, please?
Parker S. Kennedy
Yes. As I've said in the past, we are awaiting clarity both in the real estate markets and in the markets in general.
And certainly a part of that clarity would include the earnings of First American. It is a factor and our Q1 09 earnings certainly were a positive step in that direction and we do remain committed, very committed to separating the companies.
Nikolai Fisken -- Stephens Inc.
So, the Q1 earnings made you more confident -- happened sooner than later.
Parker S. Kennedy
Yeah. I think it was a step, a positive step in the direction of splitting the companies.
Nikolai Fisken -- Stephens Inc.
I didn't get it down, Dennis, can you give us the split in reifies versus purchase kind of starting in December going through April. So we can kind of get an outlook on fee per file.
Dennis J. Gilmore
Sure. Right now, we are running at approximately 50%, 51% in the refinance range, and you want me to go back; we were running back in the fourth quarter in the 40% range of refinances.
So it is really going on from around the 40% range refinance to currently around 50% to 55%. That’s on openings by the way.
Nikolai Fisken -- Stephens Inc.
Okay. Thank you.
Buddy, is the 27 million of corporate, a good run rate?
Anthony Buddy Piszel
Yes, it is in the zone.
Nikolai Fisken -- Stephens Inc.
And how about the reserve provision outlook?
Anthony Buddy Piszel
Well, we feel pretty good. I mean, in the first quarter our pays and incurs came in about 6% below the forecast that we have for the prior year reserves.
In ‘09 it is trending, it's early but trending in line with what our expectations were. So at this point we don't see any need to strengthen the reserves.
We feel that we have made the right adjustments at the end of the year and continue to believe that.
Nikolai Fisken -- Stephens Inc.
And last thing I’ve got following from Jason's question. On the log jam that you got with lenders, trying to get these orders closed.
Is that log jam showing any signs of breaking? Are they hiring more people?
Dennis J. Gilmore
Let me take the first cut, this is Dennis, I will answer that question. I think they are ramping up, but we’ve seen for example our refinances have gone from an average close to 35 day to 40 days to up in the 50-day range right now.
So give you a feeling that kind of what the expansion has been. On sale orders, we’ve seen an average close of about 2 months up to about 2.5 months to 3 months.
And the reason we are seeing an expansion and sale, I mean sale closings, is a lot of these closings are OREOs and they are just inherently more complicated close. So overall, we’ve seen expansions on both.
From a modeling perspective, I would think that that will continue for at least the next two quarters. It is kind of elongated closing cycles, I don’t see anything short-term that will short bring them back to historical average from a time perspective.
So, what we are seeing is closing, they are closing. It is just taking longer.
Nikolai Fisken -- Stephens Inc.
Perfect. Thanks so much.
Dennis J. Gilmore
Okay.
Operator
Our next question comes from Jason Deleeuw of Piper Jaffray
Jason Deleeuw – Piper Jaffray
Yeah, I'm back for some more questions. The revenue per order, those down a lot in first quarter as expected with the refi mix.
But can we expect some improvement, probably a modest improvement in the second quarter, just with the spring selling season and more home purchase getting into the mix possibly and maybe some improved commercial?
Dennis J. Gilmore
Yes, this is Dennis again. Yeah, I do expect a slight improvement in our revenue per order going in to the second and third quarters, but as you have mentioned a lot of it is driven by the refinance, but we are an seeing up tick geographically on the west coast or the south, southwest, which typically has a higher overall premium and we are seeing an up tick in resale and so those two will be positive factors, commercial will stay soft all year long though.
Jason Deleeuw – Piper Jaffray
Okay. And on the split with the agents, it looks like the agents took more of a split this quarter than previous quarters.
And I thought you guys had more of an effort to take more back from that. So, I'm just wondering if there was anything unique this quarter that drove the split?
Dennis J. Gilmore
No, there is nothing unique at all. It is a key objective for us to continue to rationalize the splits.
Really what’s going on in the quarter by in large is the geographic distribution, where our orders are coming from. We are getting increased order volumes from lower split states.
And that's being offset by lower volumes from high split states. Overall, though, I see a lot of opportunities in the agency business, we are very focused on the profitability of the business, but there is also a lot of disruption in that channel right now.
And I think there is really great opportunities for us to partner with key agents and bring them in at our current split requirements and average remittances et cetera. So, we’re encouraged by what we see in the agency business right now.
Jason Deleeuw – Piper Jaffray
Okay. And then specialty insurance, now that's, are you guys seeing much of an up tick there with the increase in refies.
I mean is there a good correlation with higher refi volumes in the business you do in the revenue…
Dennis J. Gilmore
Really, there really isn't. That business is primarily driven off of resale, not refinance.
Jason Deleeuw – Piper Jaffray
Okay and the improved pre-tax margins, what drove that?
Dennis J. Gilmore
Like we done across the whole business segment. We sat down at that business segment and we readjusted the management structure.
We streamlined it. And we are just driving very efficient operations running off a very consistent set of metrics.
Jason Deleeuw – Piper Jaffray
All right. Thank you very much.
Dennis J. Gilmore
Thank you.
Operator
Our next question comes from Nat Otis of KBW.
Nathaniel Otis – Keefe, Bruyette & Woods
Good morning.
Parker S. Kennedy
Good morning.
Nathaniel Otis – Keefe, Bruyette & Woods
Just back to that spin-off issue, any way to give any color, will the focus be primarily on separating out that financial services business or do you think, at the same time, you might be able to do something with respect to FADV. Or would you maybe want to do them in two separate instances?
Parker S. Kennedy
I think it's probably not a good idea to speculate about what’s going to happen to FADV. It's a separate public company, and we really shouldn't talk about any of our intentions relative to buying in those shares.
But as I said earlier, the Q1 earnings were a positive step in the direction of a split. And we will just keep looking, and after Q2, during the earnings call, we’ll give you an update on what our thinking is relative to the split.
Nathaniel Otis – Keefe, Bruyette & Woods
Right, fair enough, and then just one quick follow-up on the title side of things. Any instances of maybe growing commercial losses in anyway, have you seen any type of signs there, or everything remains relatively status quo?
Parker S. Kennedy
Everything remains stable right now.
Nathaniel Otis – Keefe, Bruyette & Woods
Okay, great. Thank you.
Parker S. Kennedy
Thank you, Nat.
Operator
Our next question comes from Nik Fisken of Stephens Inc.
Nikolai Fisken – Stephens Inc.
Quick follow-up, Dennis, can you frame up your initiatives to raise price and title and kind of what's been accomplished so far. And what the outlook is?
Dennis J. Gilmore
Yeah. Sure.
First, we are committed to remain competitive across all states. And as I’ve said in prior quarters, we are always in the process of evaluating our rates.
We have to make sure our rates are adequate, and not excessive, and not discriminatory. When we look back over the quarter, we’ve filed or in the process of finalizing our filings in 17 states.
And for example, at the end of March, we have gotten our rate increase approved in California. So again, it just an ongoing effort that to continue to monitor our rate structures.
Nikolai Fisken – Stephens Inc.
And how about on agency splits? Anything changed there?
Dennis J. Gilmore
Well, different question, but yeah, regarding agency split. As I’ve said earlier, our efforts are to continue to attract and maintain the best agents in the business.
I think we see really good opportunities in the agency world right now with all the disruption going on in the marketplace. And, we are having a lot of success bringing on quality agents at our required splits, at our required [reminisce] et cetera.
So, what’s going on right now in the quarter is primarily a geographic issue. It’s where we’re getting the business, and what markets are picking up versus which markets were still flat.
Nikolai Fisken - Stephens Inc.
Great, thank you.
Dennis J. Gilmore
Thank you.
Operator
There are no more questions at this time. That concludes this morning's call.
We’d like to remind listeners that today's call will be available for replay on the company’s website or by dialing 402-998-1044. Copies of the press release announcing First American's first quarter results and the accompanying slide presentation are also available on First American’s website at www.firstam.com/investor.
The company would like to thank you for your participation. This concludes today's conference call.
You may now disconnect.