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.”

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 and Six Months Ended June 30, 2010 and 2009
(Unaudited)
     
 
Three Months Ended Six Months Ended
June 30 June 30

2010

2009

2010

2009
Revenues:
Underwriting income:
Premiums Written $ 13,665,348 $ 18,945,561 $ 25,495,169 $ 35,356,158
Less-premiums for reinsurance ceded 26,398 33,173 69,917 33,950  
Net premiums written 13,638,950 18,912,388 25,425,252 35,322,208
Investment income-interest and dividends 915,852 960,454 1,822,474 1,950,089
Net realized gain (loss) on investments 325,780 9,995 350,930 (289,942 )
Other 1,338,184 1,737,722 2,317,521 3,320,613  
Total Revenues 16,218,766 21,620,559 29,916,177 40,302,968  
 
Operating Expenses:
Commissions to agents 6,476,376 8,831,742 12,075,827 16,363,951
Provision for claims 112,415 2,751,814 1,424,819 4,798,940
Salaries, employee benefits and payroll taxes 4,345,961 4,529,066 8,830,273 9,667,242
Office occupancy and operations 978,822 1,208,140 2,067,227 2,306,722
Business development 352,365 329,011 626,661 591,828
Filing fees and taxes, other than payroll and income 147,277 185,204 292,699 342,255
Premium and retaliatory taxes 281,784 375,510 582,730 742,772
Professional and contract labor fees 338,794 337,290 703,872 651,989
Other 182,412 204,309 294,094 189,833  
Total Operating Expenses 13,216,206 18,752,086 26,898,202 35,655,532  
 
Income Before Income Taxes 3,002,560 2,868,473 3,017,975 4,647,436  
 
Provision For Income Taxes 465,000 753,000 463,000 1,097,000  
 
Net Income $ 2,537,560 $ 2,115,473 $ 2,554,975 $ 3,550,436  
 
Basic Earnings Per Common Share $ 1.11 $ 0.92 $ 1.12 $ 1.55  
 
Weighted Average Shares Outstanding - Basic 2,285,653 2,296,644 2,285,392 2,295,298  
 
Diluted Earnings Per Common Share $ 1.11 $ 0.92 $ 1.11 $ 1.54  
 
Weighted Average Shares Outstanding - Diluted 2,293,199 2,296,644 2,293,232 2,300,017  

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of June 30, 2010 and December 31, 2009
(Unaudited)
   
June 30, 2010 December 31, 2009
Assets
Investments in securities:
Fixed maturities:
Held-to-maturity, at amortized cost $ - $ 2,000
Available-for-sale, at fair value 89,134,390 88,801,186
Equity securities, available-for-sale, at fair value 11,553,523 11,854,301
Short-term investments 23,422,684 20,717,434
Other investments 2,239,326 2,307,220
Total investments 126,349,923 123,682,141
 
Cash and cash equivalents 5,247,678 8,733,221
Premiums and fees receivable, net 5,417,917 5,170,476
Accrued interest and dividends 1,163,874 1,122,806
Prepaid expenses and other assets 2,051,941 1,815,653
Property acquired in settlement of claims 158,129 175,476
Property, net 3,697,815 3,894,724
Current income taxes receivable 949,449 -
Deferred income taxes, net 561,860 1,833,207
 
Total Assets $ 145,598,586 $ 146,427,704
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 37,752,000 $ 39,490,000
Accounts payable and accrued liabilities 8,494,940 9,008,337
Current income taxes payable - 670,290
Total liabilities 46,246,940 49,168,627
 
Stockholders' Equity:
Common stock - no par value (shares authorized 10,000,000;
2,284,909 and 2,285,289 shares issued and outstanding as of
June 30, 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
94,777,437 92,528,818
Accumulated other comprehensive income 4,574,208 4,730,258
Total stockholders' equity 99,351,646 97,259,077
 
Total Liabilities and Stockholders' Equity $ 145,598,586 $ 146,427,704

Investors Title Company and Subsidiaries
Net Premiums Written By State
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
       
Three Months Ended Six Months Ended
June 30 June 30
State     2010       2009       2010       2009  
Illinois $ 568,043 $ 765,631 $ 1,003,534 $ 1,857,221
Kentucky 869,249 949,874 1,500,047 1,820,177
Michigan 1,026,010 1,778,422 1,982,856 2,630,695
New York 472,739 880,406 874,299 1,835,843
North Carolina 5,762,751 8,293,158 10,684,455 15,857,365
Pennsylvania 667,906 876,633 1,119,533 1,485,818
South Carolina 1,377,219 1,345,921 2,746,405 2,531,851
Tennessee 530,672 752,791 1,028,510 1,318,559
Virginia 1,090,823 1,472,687 2,056,391 2,700,451
West Virginia 553,479 610,139 965,691 1,157,720
Other 746,457   1,219,899   1,523,514   2,159,658  
Direct Premiums $ 13,665,348 $ 18,945,561 $ 25,485,235 $ 35,355,358
Reinsurance Assumed - - 9,934 800
Reinsurance Ceded (26,398 ) (33,173 ) (69,917 ) (33,950 )
Net Premiums Written $ 13,638,950   $ 18,912,388   $ 25,425,252   $ 35,322,208  

Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                   
 
 
Three Months Ended Six Months Ended
June 30 June 30
  2010   %     2009     %   2010   %     2009     %
Branch $ 4,420,264 32.4 $ 6,656,374 35.2 $ 8,170,064 32.1 $ 12,699,378 36.0
 
Agency   9,218,686   67.6     12,256,014     64.8   17,255,188   67.9     22,622,830     64.0
 
Total $ 13,638,950   100.0   $ 18,912,388     100.0 $ 25,425,252   100   $ 35,322,208     100.0

Copyright Business Wire 2010

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