Investors Title Company today announced its results for the quarter ended March 31, 2010. The Company reported net income of $17,415, or $0.01 per diluted share, compared with $1,434,963, or $0.62 per diluted share, for the prior year period.

Total revenues decreased 26.7% to $13,697,411 versus the prior year period, primarily due to a 28.2% decrease in net premiums written. Although premiums resulting from purchase transactions increased versus the prior year period, a sharp decline in refinance premiums resulted in an overall unfavorable comparison. Investment income decreased 8.4% to $906,622 due to an overall unfavorable interest rate environment.

Operating expenses decreased 19.1% to $13,681,996 versus the prior year period, primarily due to a 25.7% decrease in commissions to agents commensurate with lower premium volume, and a 35.9% decrease in provision for claims resulting from both lower premium volumes and a slight improvement in the Company’s claims experience loss rate. In addition, salaries and related expenses were 12.7% lower compared with the prior year period as a result of a continued emphasis on expense management.

Chairman J. Allen Fine added, “The declining volume of mortgage refinancing activity was the primary influence on operating results in the quarter. After declining in late 2008, mortgage rates have remained in a relatively narrow range and we believe much of the anticipated refinancing has taken place. On a positive note we were pleased to see a modest reduction in our claims experience loss rate which resulted primarily from a reduction in mechanic liens from the prior year period.

The current operating environment remains challenging as overall mortgage origination continues to decline. We continue to monitor the market and search for opportunities to improve efficiency and expand our presence.”

Investors Title Company is engaged through its subsidiaries in the business of issuing and underwriting title insurance policies. The Company also provides investment management services to individuals, companies, banks and trusts, as well as services in connection with tax-deferred exchanges of like-kind property.

Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include any predictions regarding activity in the U.S. real estate market. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from anticipated and historical results. Such risks and uncertainties include, without limitation: cyclical demand for title insurance due to changes in the residential and commercial real estate markets; the occurrence of fraud, defalcation or misconduct; variances between actual claims experience and underwriting and reserving assumptions; declines in the performance of the Company’s investments; government regulation; and other considerations set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission, and in subsequent filings.

Investors Title Company and Subsidiaries
Consolidated Statements of Income
For the Three Months Ended March 31, 2010 and 2009
(Unaudited)
 
For The Three
Months Ended
March 31
2010 2009
Revenues:
Underwriting income:
Premiums Written $ 11,829,821 $ 16,410,597
Less-premiums for reinsurance ceded 43,519 777
Net premiums written 11,786,302 16,409,820
Investment income-interest and dividends 906,622 989,635
Net realized gain (loss) on investments 25,150 (299,937)
Other 979,337 1,582,891
Total Revenues 13,697,411 18,682,409
 
Operating Expenses:
Commissions to agents 5,599,451 7,532,209
Provision for claims 1,312,404 2,047,126
Salaries, employee benefits and payroll taxes 4,484,312 5,138,176
Office occupancy and operations 1,088,405 1,098,582
Business development 274,296 262,817
Filing fees and taxes, other than payroll and income 145,422 157,051
Premium and retaliatory taxes 300,946 367,262
Professional and contract labor fees 365,078 314,699
Other 111,682 (14,476)
Total Operating Expenses 13,681,996 16,903,446
 
Income Before Income Taxes 15,415 1,778,963
 
(Benefit) Provision For Income Taxes (2,000) 344,000
 
Net Income $ 17,415 $ 1,434,963
 
Basic Earnings Per Common Share $ 0.01 $ 0.63
 
Weighted Average Shares Outstanding - Basic 2,285,134 2,293,951
 
Diluted Earnings Per Common Share $ 0.01 $ 0.62
 
Weighted Average Shares Outstanding - Diluted 2,295,164 2,296,041
 

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of March 31, 2010 and December 31, 2009
(Unaudited)
 
March 31, 2010 December 31, 2009
Assets
Investments in securities:
Fixed maturities:
Held-to-maturity, at amortized cost $ - $ 2,000
Available-for-sale, at fair value 91,357,127 88,801,186
Equity securities, available-for-sale, at fair value 13,287,540 11,854,301
Short-term investments 20,095,531 20,717,434
Other investments 2,196,660 2,307,220
Total investments 126,936,858 123,682,141
 
Cash and cash equivalents 4,521,474 8,733,221
Premiums and fees receivable, net 4,448,951 5,170,476
Accrued interest and dividends 956,860 1,122,806
Prepaid expenses and other assets 1,747,437 1,815,653
Property acquired in settlement of claims 158,129 175,476
Property, net 3,824,017 3,894,724
Current income taxes receivable 706,026 -
Deferred income taxes, net 1,085,707 1,833,207
 
Total Assets $ 144,385,459 $ 146,427,704
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 38,830,000 $ 39,490,000
Accounts payable and accrued liabilities 8,188,773 9,008,337
Current income taxes payable - 670,290
Total liabilities 47,018,773 49,168,627
 
Stockholders' Equity:
Common stock - no par value (shares authorized 10,000,000; 2,285,486 and 2,285,289 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively, excluding 291,676 shares for 2010 and 2009 of common stock held by the Company's subsidiary)
 
 
1 1
Retained earnings 92,396,850 92,528,818
Accumulated other comprehensive income 4,969,835 4,730,258
Total stockholders' equity 97,366,686 97,259,077
 
Total Liabilities and Stockholders' Equity $ 144,385,459 $ 146,427,704
 

Investors Title Company and Subsidiaries
Net Premiums Written By State
For the Three Months Ended March 31, 2010 and 2009
(Unaudited)
 
For The Three
Months Ended
March 31
2010 2009
Illinois $ 435,491 $ 1,091,590
Kentucky 630,798 870,303
Michigan 956,846 852,273
New York 401,560 955,437
North Carolina 4,921,704 7,564,207
Pennsylvania 451,627 609,185
South Carolina 1,369,186 1,185,930
Tennessee 497,838 565,768
Virginia 965,568 1,227,764
West Virginia 412,212 547,581
Other States 777,057 939,759
Direct Premiums 11,819,887 16,409,797
Reinsurance Assumed 9,934 800
Reinsurance Ceded (43,519) (777)
Net Premiums Written $ 11,786,302 $ 16,409,820
 
Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three Months Ended March 31, 2010 and 2009
(Unaudited)
 
 
For The Three Months Ended
March 31
  2010 %   2009 %
Branch $ 3,749,800 31.8 $ 6,043,004 36.8
 
Agency   8,036,502 68.2   10,366,816 63.2
 
Total $ 11,786,302 100 $ 16,409,820 100

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