Investors Title Company today announced its results for the second quarter ended June 30, 2010. Net income increased 20.0% for the second quarter to $2,537,560, or $1.11 per diluted share, compared with $2,115,473, or $0.92 per diluted share, for the prior year period.
Revenues decreased 25.0% to $16,218,766 versus the prior year period, primarily due to a 27.9% decrease in net premiums written. Although premiums resulting from purchase transactions increased, the continued sharp decline in refinance premiums versus the prior year period resulted in an overall unfavorable comparison. Investment income decreased 4.6% to $915,852 as a result of unfavorable trends in the interest rate environment.
Operating expenses decreased 29.5% to $13,216,206 versus the prior year period, primarily due to decreases in commissions to agents and the provision for claims. Commissions to agents decreased 26.7%, commensurate with the decrease in premium volume. The provision for claims decreased 95.9% due to a combination of lower premium volume versus the prior year period, a recovery of approximately $942,000 from the Company’s fidelity bond against a prior year claim, and favorable claims experience in prior policy years. In addition, salaries and related expenses decreased 4.0%, and office occupancy and operations expenses decreased 19.0%, due to continued emphasis on overhead expense management.
For the six-month period ended June 30, 2010, the Company reported net income of $2,554,975, a decrease of 28.0%, compared with $3,550,436 for the prior year period. Diluted income per share was $1.11, a decrease of 27.9%, compared with $1.54 for the prior year period. Net premiums written decreased 28.0% to $25,425,252, investment income decreased 6.5% to $1,822,474, and total revenues decreased 25.8% to $29,916,177. Operating expenses decreased 24.6% to $26,898,202 versus the prior year period, largely as a result of factors noted above for the quarter.
Chairman J. Allen Fine added, “We are pleased to report an improvement in operating results during the quarter even as overall mortgage originations continued to decline. Although the extension of the deadline for the homebuyer Federal tax credit contributed to an increase in purchase originations, the spike in activity did not completely offset an overall lower volume of mortgage refinancing. We were pleased to see a slight reduction in our claims loss rate, which contributed to a favorable comparison in the provision for claims, along with the recovery from a fidelity bond. Our balance sheet and financial condition remain strong, and operationally we continue to emphasize efficiency improvements and the expansion of our agency base.”