Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q ARE 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 MAY CONTAIN THE WORDS "BELIEVE," "ANTICIPATE," "EXPECT," "PLAN," "PREDICT," "ESTIMATE," "PROJECT," "WILL BE," "WILL CONTINUE," "WILL LIKELY RESULT," OR OTHER SIMILAR WORDS AND PHRASES.

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 THE FACTORS SET FORTH ON PAGES 3-4 OF THIS QUARTERLY REPORT. 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.

This Management's Discussion and Analysis contains the financial measure adjusted debt to capitalization ratio that is not presented in accordance with generally accepted accounting principles ("GAAP"), as it excludes the effects of secured financings payable. The Company is presenting this non-GAAP financial measure because it provides the Company's management and readers of this Quarterly Report on Form 10-Q with additional insight into the financial leverage of the Company. The Company does not intend for this non-GAAP financial measure to be a substitute for any GAAP financial information. In this Quarterly Report on Form 10-Q, this non-GAAP financial measure has been presented with, and reconciled to, the most directly comparable GAAP financial measure. Readers of this Quarterly Report on Form 10-Q should use this non-GAAP financial measure only in conjunction with the comparable GAAP financial measure. Because not all companies use identical calculations, the presentation of adjusted debt to capitalization ratio may not be comparable to other similarly titled measures of other companies.

CRITICAL ACCOUNTING ESTIMATES

A summary of the Company's significant accounting policies that it considers to be the most dependent on the application of estimates and assumptions can be found in the Management's Discussion and Analysis section of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Pending Accounting Pronouncements

See Note 1 Basis of Condensed Consolidated Financial Statements to the condensed consolidated financial statements.

Results of Operations

Summary

A substantial portion of the revenues for the Company's title insurance and services segment result from sales of, and refinancings of loans on, residential and commercial real estate. In the home warranty segment, revenues associated with the initial year of coverage are impacted by volatility in residential purchase transactions. Traditionally, the greatest volume of real estate activity, particularly residential purchase activity, occurs in the spring and summer months. However, changes in interest rates, as well as other changes in general economic conditions in the United States and abroad, can cause fluctuations in the traditional pattern of real estate activity.

The Company's total revenues for the third quarter of 2026 were $2.1 billion, which reflected an increase of $105.7 million, or 5.3%, when compared with $2.0 billion for the third quarter of 2025. This increase was primarily attributable to increases in agent premiums of $69.6 million, or 8.7%, and direct premiums and escrow fees in the title insurance business of $41.3 million, or 6.9%. In the title insurance and services segment, direct premiums and escrow fees from domestic commercial transactions increased $51.5 million, or 20.9%, and residential refinance and purchase transactions decreased $0.4 million, or 1.2%, and $6.4 million, or 2.6%, respectively, in the third quarter of 2026 when compared to the third quarter of 2025.

According to the Mortgage Bankers Association's October 11, 2026 Mortgage Finance Forecast (the "MBA Forecast"), residential mortgage originations in the United States (based on the total dollar value of the transactions) are forecasted to decrease 3.7% in the third quarter of 2026 when compared to the third quarter of 2025. According to the MBA Forecast, the dollar amount of purchase originations is forecasted to decrease 2.8% and refinance originations are forecasted to decrease 6.1%. This volume of domestic residential mortgage origination activity contributed to decreases of 2.6% in direct premiums and escrow fees for the Company's direct title operations from domestic residential purchase transactions and 1.2% from domestic refinance transactions in the third quarter of 2026 when compared to the third quarter of 2025.

During the third quarter of 2026, the level of domestic title orders opened per day by the Company's direct title operations decreased 8.2% when compared with the third quarter of 2025. Commercial opened orders per day increased 2.4%, while residential purchase and refinance opened orders per day decreased 5.1% and 16.4%, respectively, in the third quarter of 2026 when compared with the third quarter of 2025.

Title Insurance and Services

Direct premiums and escrow fees were $642.8 million and $1.9 billion for the three and nine months ended September 30, 2026, respectively, increases of $41.3 million, or 6.9%, and $227.6 million, or 13.7%, when compared with the respective periods of the prior year. The increases were due to increases in domestic average revenues per order. Domestic average revenues per order closed were $4,304 and $4,375 for the three and nine months ended September 30, 2026, increases of 13.2% and 14.5% when compared with $3,801 and $3,820 for the respective periods of the prior year. The increase in the average revenue per order closed for the three months ended September 30, 2026 was primarily due to an increase in average revenue per order on commercial and purchase transactions, and a shift in mix to higher premium commercial transactions. The increase in the average revenue per order closed for the nine months ended September 30, 2026 was primarily due to an increase in average revenues per order on commercial and purchase transactions, partially offset by a shift in mix to lower premium refinance transactions. The Company's direct title operations closed 134,900 and 392,100 domestic title orders during the three and nine months ended September 30, 2026, a decrease of 4.9% and an increase of 0.4% when compared with 141,800 and 390,376 domestic title orders closed during the respective periods of the prior year, which were generally consistent with the changes in residential mortgage origination activity in the United States as reported in the MBA Forecast. Domestic residential refinance orders closed per day increased by 2.9% and 20.9% and domestic residential purchase orders closed per day decreased by 4.6% for the three and nine months ended September 30, 2026, respectively, when compared to the respective periods of the prior year.

Agent premiums were $868.4 million and $2.4 billion for the three and nine months ended September 30, 2026, respectively, increases of $69.6 million, or 8.7%, and $277.6 million, or 12.8%, when compared with the respective periods of the prior year. Agent premiums are recorded when notice of issuance is received from the agent, which is generally when cash payment is received by the Company. As a result, there is generally a delay between the agent's issuance of a title policy and the Company's recognition of agent premiums. Therefore, current quarter agent premiums typically reflect prior quarter mortgage origination activity. The increase in agent premiums for the three months ended September 30, 2026 is generally consistent with the 14.8% increase in the Company's direct premiums and escrow fees in the second quarter of 2026 as compared with the second quarter of 2025.

Information and other revenues primarily consist of revenues generated from fees associated with title search and related reports, title and other real property records and images, other non-insured settlement services and risk mitigation products and services. These revenues generally trend with direct premiums and escrow fees but are typically less volatile since a portion of the revenues are subscription based and do not fluctuate with transaction volumes.

Information and other revenues were $292.2 million and $856.4 million for the three and nine months ended September 30, 2026, respectively, increases of $16.1 million, or 5.8%, and $80.0 million, or 10.3%, when compared with the respective periods of the prior year. The increases were primarily due to growth in the Company's subservicing business, higher demand for non-insured information products and services and growth in refinance activity in the Company's Canadian operations.

Net investment income totaled $169.3 million and $487.5 million for the three and nine months ended September 30, 2026, respectively, increases of $16.2 million, or 10.6%, and $49.6 million, or 11.3%, when compared with the respective periods of the prior year. The increases in net investment income were primarily driven by an increase in interest income from the Company's investment portfolio, partially offset by a decline in interest income from escrow balances.

Net investment gains were $0.2 million and $39.3 million for the three and nine months ended September 30, 2026, respectively. The gains for the three and nine months ended September 30, 2026 were primarily attributable to increases in the fair values of marketable equity securities. Net investment gains of $6.4 million for the three months ended September 30, 2025, were primarily attributable to changes in the fair values of marketable equity securities, which were partially offset by impairments on capitalized internal-use software totaling $12.5 million. Net investment losses of $2.5 million for the nine months ended September 30, 2025, were primarily attributable to impairments on capitalized internal-use software totaling $48.1 million and losses recognized on sales of debt securities, partially offset by increases in the fair values of marketable equity securities.

Personnel costs were $574.1 million and $1.7 billion for the three and nine months ended September 30, 2026, respectively, increases of $31.2 million, or 5.7%, and $142.3 million, or 9.2%, when compared with the respective periods of the prior year. The increases were primarily attributable to higher incentive compensation expense due to higher revenue and profitability, and higher salaries expense.

Agents retained $695.6 million and $2.0 billion of title premiums generated by agency operations for the three and nine months ended September 30, 2026, respectively, which compares with $640.1 million and $1.7 billion for the respective periods of the prior year. The percentage of title premiums retained by agents was 80.1% and 79.9% for the three and nine months ended September 30, 2026, respectively, compared to 80.1% for the respective periods of the prior year.

Other operating expenses were $306.4 million and $902.8 million for the three and nine months ended September 30, 2026, respectively, increases of $30.8 million, or 11.2%, and $103.0 million, or 12.9%, when compared with the respective periods of the prior year. The increases were primarily due to higher production expenses on higher volumes and an increase in software expense. The increase for the nine months ended September 30, 2026, was also due to the lack of a prior year credit related to the release of an acquisition-related incentive obligation, offset by a reduction in legal expense.

The provision for policy losses and other claims, expressed as a percentage of title insurance premiums and escrow fees, was 3.0% for the three and nine months ended September 30, 2026 and 2025. The 3.0% loss provision rate for the three and nine months ended September 30, 2026 reflects an ultimate loss rate of 3.75% for the 2026 policy year and reserve releases of 0.75%, or $11.4 million and $32.5 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and nine months ended September 30, 2026. The 3.0% loss provision rate for the three and nine months ended September 30, 2025 reflected an ultimate loss rate of 3.75% for the 2025 policy year and reserve releases of 0.75%, or $10.5 million and $28.8 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and nine months ended September 30, 2025.

Depreciation and amortization expense was $53.3 million and $158.7 million for the three and nine months ended September 30, 2026, respectively, a decrease of $0.2 million, or 0.4%, and an increase of $2.4 million, or 1.5%, when compared with the respective periods of the prior year. The decrease for the three months ended September 30, 2026, was primarily due to lower amortization of internal-use software licenses, partially offset by higher amortization of capitalized internal-use software. The increase for the nine months ended September 30, 2026, was primarily due to higher amortization of capitalized internal-use software from recently deployed digital settlement products, partially offset by lower amortization of internal-use software licenses.

Premium taxes were $22.8 million and $63.4 million for the three and nine months ended September 30, 2026, respectively, increases of $1.9 million, or 9.1%, and $8.2 million, or 14.9%, when compared with the respective periods of the prior year. Premium taxes as a percentage of title insurance premiums and escrow fees were 1.5% for the three and nine months ended September 30, 2026, and 1.5% and 1.4% for the three and nine months ended September 30, 2025, respectively.

Interest expense was $31.3 million and $88.4 million for the three and nine months ended September 30, 2026, respectively, increases of $6.6 million, or 26.7%, and $20.9 million, or 31.0%, when compared with the respective periods of the prior year. The increases were primarily attributable to higher interest expense on depositor funds.

Pretax margins for the title insurance business reflect the high cost of performing the essential services required before insuring title, whereas the corresponding revenues are subject to regulatory and competitive pricing restraints. Due to the relatively high proportion of fixed costs in the title insurance business, pretax margins generally improve as closed order volumes increase. Pretax margins for the segment are also impacted by (1) net investment income and net investment gains or losses, which may not move in the same direction as closed order volumes, (2) the composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity and (3) the percentage of title insurance premiums generated by agency operations as margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent. The title insurance and services segment recorded pretax margins of 12.4% and 12.7% for the three and nine months ended September 30, 2026, respectively, compared with 12.9% and 11.1% in the respective periods of the prior year.

Home Warranty

Direct premiums were $107.1 million and $315.0 million for the three and nine months ended September 30, 2026, respectively, increases of $0.5 million, or 0.5%, and $3.1 million, or 1.0%, when compared with the respective periods of the prior year. The increases were primarily attributable to an increase in the average price per policy.

Personnel costs and other operating expenses totaled $50.6 million and $140.2 million for the three and nine months ended September 30, 2026, respectively, increases of $4.8 million, or 10.5%, and $8.8 million, or 6.7%, when compared with the respective periods of the prior year. The increases were primarily attributable to higher advertising, software, legal, salaries and incentive compensation expenses.

The provision for home warranty losses, expressed as a percentage of home warranty premiums, was 46.9% and 41.0% for the three and nine months ended September 30, 2026, respectively, compared with 46.9% and 41.8% for the respective periods of the prior year. The decrease in the loss provision rate for the nine months ended September 30, 2026, was primarily attributable to lower claims severity, partially offset by higher claims frequency.

A large part of the revenues for the home warranty segment is generated by renewals and are not dependent on the level of real estate activity in the year of renewal. With the exception of the provision for losses, the majority of the expenses for this segment are variable in nature and, therefore, generally fluctuate with revenue. Accordingly, pretax margins (before provision for losses) are relatively constant, although, as a result of some fixed expenses, profit margins (before provision for losses) should nominally improve as premium revenues increase. Pretax margins are also impacted by net investment income and net investment gains or losses, which may not move in the same direction as premium revenues. The home warranty segment recorded pretax margins of 9.9% and 18.1% for the three and nine months ended September 30, 2026, respectively, compared with 14.1% and 19.0% in the respective periods of the prior year.

Corporate

Information and other revenues of $6.7 million for the nine months ended September 30, 2026 was attributable to an insurance recovery.

Net investment income (loss) totaled losses of $0.8 million and income of $14.5 million for the three and nine months ended September 30, 2026, respectively, compared with income of $9.3 million and $17.9 million in the respective periods of the prior year. The decreases were primarily attributable to fluctuations in earnings on investments associated with the Company's deferred compensation plan.

Net investment gains (losses) totaled losses of $2.0 million and $39.2 million for the three and nine months ended September 30, 2026, respectively, compared with gains of $19.1 million and $8.9 million in the respective periods of the prior year. The losses for the three and nine months ended September 30, 2026, were due to impairment charges on non-marketable equity investments within the Company's venture investment portfolio and, for the nine months ended September 30, 2026, were partially offset by earnings on an equity method investment. The gains for the respective periods of the prior year were primarily related to changes in the fair values of the Company's investment in Offerpad Solutions, Inc. ("Offerpad"), a tech-enabled real estate company.

Personnel costs and other operating expenses totaled $10.4 million and $50.5 million for the three and nine months ended September 30, 2026, respectively, compared with $19.9 million and $67.8 million for the respective periods of the prior year. The decreases for the three and nine months ended September 30, 2026 were primarily attributable to lower returns on participant investments within the Company's deferred compensation plan. The decrease for the nine months ended September 30, 2026, was also due to lower share-based compensation and severance expenses.

Eliminations

The Company's inter-segment eliminations were not material for the three and nine months ended September 30, 2026 and 2025.

INCOME TAXES

The Company's effective income tax rates (income tax expense as a percentage of income before income taxes) were 22.4% and 22.7% for the three and nine months ended September 30, 2026, respectively, compared with 23.1% and 23.6% for the respective periods of the prior year. The differences in the effective tax rates are primarily due to the impact on state income taxes resulting from the relative proportion of income derived from the Company's insurance and non-insurance businesses as well as permanent differences between amounts reported for financial statement purposes and amounts reported for income tax purposes.

The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and making adjustments to the allowance as necessary. The factors used in assessing the likelihood of realization include forecasts of future taxable income and available tax planning strategies that could be implemented. The Company's ability to achieve forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of its deferred tax assets. Based on future operating results in certain jurisdictions, it is possible that the current valuation allowance positions of those jurisdictions could be adjusted during the next 12 months.

NET INCOME AND NET INCOME ATTRIBUTABLE TO THE COMPANY

Net income for the three and nine months ended September 30, 2026 was $176.6 million and $520.5 million, respectively, compared with $189.9 million and $411.8 million for the respective periods of the prior year. Net income attributable to the Company for the three and nine months ended September 30, 2026 was $177.0 million, or $1.72 per diluted share, and $520.6 million, or $5.04 per diluted share, respectively, compared with $189.6 million, or $1.84 per diluted share, and $409.9 million, or $3.95 per diluted share, for the respective periods of the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Cash requirements. The Company generates cash primarily from sales of its products and services and from investment income. The Company's current cash requirements include operating expenses, taxes, payments of principal and interest on its debt, capital expenditures, dividends on its common stock, and may include business acquisitions, investments in and loans to private companies and repurchases of its common stock. Management forecasts the cash needs of the holding company and its primary subsidiaries and regularly reviews their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts. Based on the Company's ability to generate cash flows from operations, its liquid-asset position and amounts available on its revolving credit facility, management believes that its resources are sufficient to satisfy its anticipated operational cash requirements and obligations for at least the next twelve months.

The substantial majority of the Company's business is dependent upon activity in the real estate and mortgage markets, which are cyclical and seasonal. Periods of increasing interest rates and reduced affordability, supply and mortgage financing availability generally have an adverse effect on residential real estate activity and, therefore, typically decrease the Company's revenues. In contrast, periods of declining interest rates and increased affordability, supply and mortgage financing availability generally have a positive effect on residential real estate activity, which typically increases the Company's revenues. Residential purchase activity is typically slower in the winter months with increased volumes in the spring and summer months. Residential refinance activity is typically more volatile than purchase activity and is highly impacted by changes in interest rates. Commercial real estate volumes are less sensitive to changes in interest rates but fluctuate based on local supply and demand conditions for space and financing availability.

Cash provided by operating activities totaled $600.2 million and $581.5 million for the nine months ended September 30, 2026 and 2025, respectively, after claim payments, net of recoveries, of $287.1 million and $261.4 million, respectively. The principal nonoperating uses of cash and cash equivalents for the nine months ended September 30, 2026 and 2025 were advances and repayments related to secured financing transactions, purchases of debt and equity securities, capital expenditures, dividends to common stockholders, and repurchases of company common shares. The principal nonoperating sources of cash and cash equivalents for the nine months ended September 30, 2026 and 2025 were borrowings and collections related to secured financing transactions, proceeds from the sales and maturities of debt and equity securities and increases in the deposit balances at the Company's banking operations. The net effects of all activities on cash and cash equivalents were increases of $343.8 million and $1.2 billion for the nine months ended September 30, 2026 and 2025, respectively.

The Company continually assesses its capital allocation strategy, including decisions relating to dividends, stock repurchases, capital expenditures, acquisitions and investments. In September 2026, the Company's board of directors declared a quarterly cash dividend of 61 cents per common share, representing an 11 percent increase. The dividend increase was effective for the September 2026 dividend and paid in October 2026. Management expects that the Company will continue to pay quarterly cash dividends at or above the current level. The timing, declaration and payment of future dividends, however, fall within the discretion of the Company's board of directors and will depend upon many factors, including the Company's financial condition and earnings, the capital requirements of the Company's businesses, restrictions imposed by applicable law and any other factors the board of directors deems relevant from time to time.

The Company maintains a stock repurchase plan with authorization up to $300 million of the Company's common stock, of which $244.5 million remained as of September 30, 2026. Purchases may be made from time to time by the Company in the open market at prevailing market prices or in privately negotiated transactions. During the nine months ended September 30, 2026, the Company repurchased and retired 0.9 million shares of its common stock for a total purchase price of $55.5 million.

Holding Company. First American Financial Corporation is a holding company that conducts all of its operations through its subsidiaries. The holding company's current cash requirements include payments of principal and interest on its debt, taxes, payments in connection with employee benefit plans, dividends on its common stock and other expenses. The holding company is dependent upon dividends and other payments from its operating subsidiaries to meet its cash requirements. The Company's target is to maintain a cash balance at the holding company equal to at least twelve months of estimated cash requirements. At certain points in time, the actual cash balance at the holding company may vary from this target due to, among other factors, the timing and amount of cash payments made and dividend payments received. Pursuant to insurance and other regulations under which the Company's insurance subsidiaries operate, the amount of dividends, loans and advances available to the holding company is limited, principally for the protection of policyholders. As of September 30, 2026 under such regulations, the maximum amount available to the holding company from its insurance subsidiaries for the remainder of 2026, without prior approval from applicable regulators, was dividends of $277.9 million and loans and advances of $113.6 million. However, the timing and amount of dividends paid by the Company's insurance subsidiaries to the holding company falls within the discretion of each insurance subsidiary's board of directors and will depend upon many factors, including the level of total statutory capital and surplus required to support minimum financial strength ratings by certain rating agencies. Such restrictions have not had, nor are they expected to have, an impact on the holding company's ability to meet its cash obligations.

As of September 30, 2026 the holding company's sources of liquidity included $355.4 million of cash and cash equivalents and $900.0 million available on the Company's revolving credit facility. Management believes that liquidity at the holding company is sufficient to satisfy anticipated cash requirements and obligations for at least the next twelve months.

Financing. The Company maintains a senior unsecured credit agreement with JPMorgan Chase Bank, N.A., in its capacity as administrative agent, and the lenders party thereto that provides for a $900.0 million revolving credit facility. The credit agreement includes an expansion option that permits the Company, subject to satisfaction of certain conditions, to increase the revolving commitments and/or add term loan tranches in an aggregate amount not to exceed $450.0 million. The obligations of the Company under the credit agreement are neither secured nor guaranteed. Proceeds from borrowings made from time to time under the credit agreement may be used for general corporate purposes. Unless terminated earlier, the credit agreement will terminate on May 17, 2028. At September 30, 2026, the Company had no outstanding borrowings under the facility.

In addition to amounts available under its credit facility, certain subsidiaries of the Company maintain separate financing arrangements. The primary financing arrangements maintained by subsidiaries of the Company are as follows:

The Company's debt to capitalization ratios were 30.3% and 30.7% at September 30, 2026 and December 31, 2025, respectively. The Company's adjusted debt to capitalization ratios, excluding secured financings payable of $807.5 million and $906.5 million at September 30, 2026 and December 31, 2025, were 22.2% and 21.9%, respectively.

Investment Portfolio. The Company maintains a high quality, liquid investment portfolio that is primarily held at its insurance and banking subsidiaries. As of September 30, 2026, 95% of the Company's investment portfolio consisted of debt securities, of which 74% were either United States government-backed or rated AAA and 98% were either rated or classified as investment grade or better. Percentages are based on the estimated fair values of the securities. Credit ratings reflect published ratings obtained from globally recognized securities rating agencies. If a security was rated differently among the rating agencies, the lowest rating was selected. For further information on the credit quality of the Company's debt securities portfolio at September 30, 2026, see Note 3 Debt Securities to the condensed consolidated financial statements.

In addition to its debt and marketable equity securities portfolio, the Company maintains investments in non-marketable equity securities and securities accounted for under the equity method. For further information on the Company's equity securities, see Note 4 Equity Securities to the condensed consolidated financial statements.

Off-balance sheet arrangements. The Company administers escrow deposits as a service to customers in its direct title operations. Escrow deposits totaled $10.0 billion and $9.3 billion at September 30, 2026 and December 31, 2025, respectively, of which $4.1 billion and $3.7 billion, respectively, were held at 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 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 $6.1 billion and $5.6 billion at September 30, 2026 and December 31, 2025, respectively, of which $155.2 million and $173.9 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 that are not considered assets of the Company and 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 $2.6 billion and $2.7 billion at September 30, 2026 and December 31, 2025, respectively, of which $1.1 billion and $93.6 million, respectively, were held at FA Trust. The like-kind exchange deposits held at third-party financial institutions are not included in the accompanying condensed consolidated balance sheets as the proceeds and property are not considered assets of the Company due to the structure utilized to facilitate these transactions. 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 $2.1 billion and $1.6 billion at September 30, 2026 and December 31, 2025, respectively, of which $1.5 billion and $1.0 billion, 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. In connection with a mortgage loan subservicing agreement, the Company maintains certain debt securities on deposit with a fair value of $52.2 million at September 30, 2026 for which it has provided a secured interest as collateral.

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.