Investors Title Company (NASDAQ:ITIC) announced its results for the third quarter ended September 30, 2012. Net income increased 29.4% to $3,158,185, or $1.50 per diluted share, compared with $2,440,465, or $1.14 per diluted share, for the prior year quarter.
Revenues increased 23.6% versus the prior year quarter to $32,277,408, primarily due to a 21.0% increase in net premiums written. The premium growth reflects widespread volume increases across multiple markets, as overall mortgage activity increased substantially. New industry-wide premium charges and rate increases for certain markets also contributed to the increase in premiums. Premiums in the third quarter from both refinance and purchase transactions increased compared with the prior year quarter, while the proportion of refinance transactions remained relatively constant.
Operating expenses increased 21.6% to $27,559,493 versus the prior year quarter, primarily due to increases in the provision for claims, commissions to agents, and payroll expense. The loss provision rate as a percentage of net premiums written was higher compared with the prior year quarter primarily due to less favorable loss development experience, and an increase in the relative share of North Carolina premiums as a percentage of the total versus the prior year period. Average loss provision rates are normally higher in North Carolina than our other markets due to relatively low premium rates. Commissions to agents increased 11.1% commensurate with the increase in agency premiums. The increase in payroll expense is primarily due to staff additions in our Information Systems department.
For the nine months ended September 30, 2012, net income increased 57.1% to $7,939,812, or $3.74 per diluted share, compared with $5,054,477, or $2.32 per diluted share, for the prior year period. Revenues increased 15.6% to $80,772,007 as a result of factors noted above, while operating expenses increased 10.3% versus the prior year period.
Chairman J. Allen Fine added, “We are pleased to report a strong quarter, as we benefitted from continued strength in refinance and purchase activity and further expansion of our agent base. Claims experience remains generally positive, and we continue to closely monitor operating expenses even as we make targeted investments in improvements to our client-facing technology. We continue to focus on enhancing our competitive strengths and capitalizing on opportunities to profitably expand our market presence.”