First American Financial Corporation (NYSE:FAF) Q2 2019 Earnings Conference Call Transcript

Jul 25, 2019 • 11:00 am ET

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First American Financial Corporation (NYSE:FAF) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mark DeVries from Barclays, please.

Analyst
Mark DeVries

Yeah, thanks, Mark how should we think about expenses in the back half of the year. I know you guys had late last year, early this year been cutting costs and then had the surge in refinance activity that obviously helped the margin this quarter. Should we expect, all other things being equal, a little bit of pressure on the margin as you need to staff up or are you in a good position right now on expense side?

Executive
Dennis J. Gilmore

Yeah, Mark this is actually Dennis. We did to manage our expenses aggressively in the second half and our headcount is down 8% from last year. Right now, our staffing levels are up fairly relative to our current quarter activities and we continue to utilize our seasonal workforce very aggressively by utilizing temps and over time. So right now with the current order volumes, we do not expect to increase our head count significantly in the third quarter.

Analyst
Mark DeVries

Okay, great. And then are there any kind of residual issues that you need to deal with here from the information security issues that we need to think about?

Executive
Dennis J. Gilmore

Really, I'll put it in two buckets. We'll have some small costs, we'll roll through in the third quarter, but our intent will not to be to highlight them. We'll actively -- because of the headline nature of what happened, we'll be very actively aggressively defending the lawsuit. And we work cooperatively with the regulators. So that will be the tail event .

Analyst
Mark DeVries

Okay, got it. All right, thank you.

Operator
Operator

Our next question comes from line of Bose George from KBW. Please proceed with your question.

Analyst
Bose George

Hey, guys. Good morning. I just wanted to follow up on the margin outlook really for the back half of the year and for the year. Your historic range, you've talked about 11% to 13%, with the expenses potentially pretty stable in the back half of the year, I mean could you hit the 14% level for the full-year?

Executive
Dennis J. Gilmore

Yeah, I probably won't give you the exact number, but we, I think as you know, we've been very focused on growing our margin over the last five years and we've been successful really regardless of the market outlook, and I think when we enter the second half right now purchase is going to be less of a headwind, which is good for us and there is no question we're benefiting from, I would call a little bit of a surprise the refinance and we have a very strong commercial market going forward. So right now sitting here, we think we can exceed last year's margin in '19.

Analyst
Bose George

Okay, great, thanks. And then actually just on the other segment, the corporate segment, what's a good run rate for the just the expenses of that segment?

Executive
Mark E. Seaton

Bose, it's Mark. So when you look historically, we've been