Investors Title Company today announced its results for the third quarter ended September 30, 2010. Net income increased 49.5% to $1,449,101, or $0.63 per diluted share, compared with $969,043, or $0.42 per diluted share, for the prior year period. The increase in net income was driven primarily by revenue growth versus the prior year period. Net premiums written increased 17.3% to $16,749,395 due to an increase in refinance activity.

Operating expenses increased 12.3% to $17,153,583 versus the prior year period, primarily due to increases in variable expenses tied to premium volumes. Commissions to agents increased 26.2% commensurate with an increase in agency premium volume. The provision for claims decreased 5.9% versus the prior year period due to unfavorable claims experience for the prior year quarter, partially offset by increases in the current provision resulting from higher premium volume.

For the nine-month period ended September 30, 2010, net income decreased 11.4% to $4,004,076, or $1.75 per diluted share, compared with $4,519,479, or $1.96 per diluted share, for the prior year period. The decline in net income for the period was driven primarily by a 15.0% decrease in net premiums written, partially offset by a 13.5% decrease in operating expenses.

Chairman J. Allen Fine added, “We are pleased to report an improvement in operating results during the quarter, driven by an increase in the volume of refinancing activity due to historically low interest rates during the quarter. We were also pleased to see a continuation of the improvement in our claims loss rate, which contributed to a favorable comparison in the provision for claims. 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 Nine Months Ended September 30, 2010 and 2009
(Unaudited)
               
 
Three Months Ended Nine Months Ended
September 30 September 30

2010

2009

2010

2009
Revenues:
Underwriting income:
Premiums Written $ 16,802,054 $ 14,306,677 $ 42,297,223 $ 49,662,835
Less-premiums for reinsurance ceded 52,659   24,062   122,576 58,012  
Net premiums written 16,749,395 14,282,615 42,174,647 49,604,823
Investment income-interest and dividends 934,754 911,982 2,757,228 2,862,071
Net realized gain (loss) on investments (44,864 ) (110,818 ) 306,066 (400,760 )
Other 1,522,399   1,278,838   3,839,920 4,599,451  
Total Revenues 19,161,684   16,362,617   49,077,861 56,665,585  
 
Operating Expenses:
Commissions to agents 8,632,083 6,838,090 20,707,910 23,202,041
Provision for claims 1,819,522 1,934,459 3,244,341 6,733,399
Salaries, employee benefits and payroll taxes 4,354,854 4,195,751 13,185,127 13,862,993
Office occupancy and operations 971,264 985,769 3,038,491 3,292,491
Business development 335,454 336,481 962,115 928,309
Filing fees, franchise and local taxes 241,774 204,819 534,473 547,074
Premium and retaliatory taxes 336,925 270,352 919,655 1,013,124
Professional and contract labor fees 334,973 330,959 1,038,845 982,948
Other 126,734   173,894   420,828 363,727  
Total Operating Expenses 17,153,583   15,270,574   44,051,785 50,926,106  
 
Income Before Income Taxes 2,008,101   1,092,043   5,026,076 5,739,479  
 
Provision For Income Taxes 559,000   123,000   1,022,000 1,220,000  
 
Net Income $ 1,449,101   $ 969,043   $ 4,004,076 $ 4,519,479  
 
Basic Earnings Per Common Share $ 0.63   $ 0.42   $ 1.75 $ 1.97  
 
Weighted Average Shares Outstanding - Basic 2,284,331   2,290,666   2,285,039 2,293,754  
 
Diluted Earnings Per Common Share $ 0.63   $ 0.42   $ 1.75 $ 1.96  
 
Weighted Average Shares Outstanding - Diluted 2,285,785   2,295,757   2,291,060 2,300,686  

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2010 and December 31, 2009
(Unaudited)
       
September 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 90,837,152 88,801,186
Equity securities, available-for-sale, at fair value 12,886,706 11,854,301
Short-term investments 24,772,235 20,717,434
Other investments 2,683,177 2,307,220
Total investments 131,179,270 123,682,141
 
Cash and cash equivalents 5,467,341 8,733,221
Premiums and fees receivable, net 6,643,333 5,170,476
Accrued interest and dividends 981,144 1,122,806
Prepaid expenses and other assets 1,613,459 1,815,653
Property acquired in settlement of claims 166,629 175,476
Property, net 3,659,136 3,894,724
Current income taxes receivable 1,047,057 -
Deferred income taxes, net - 1,833,207
 
Total Assets $ 150,757,369 $ 146,427,704
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 38,065,000 $ 39,490,000
Accounts payable and accrued liabilities 9,442,504 9,008,337
Current income taxes payable - 670,290
Deferred income taxes, net 786,863 -
Total liabilities 48,294,367 49,168,627
 
Stockholders' Equity:

Common stock - no par value (shares authorized 10,000,000; 2,284,042 and 2,285,289 shares issued and outstanding as of September 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 96,025,089 92,528,818
Accumulated other comprehensive income 6,437,912 4,730,258
Total stockholders' equity 102,463,002 97,259,077
 
Total Liabilities and Stockholders' Equity $ 150,757,369 $ 146,427,704

Investors Title Company and Subsidiaries
Net Premiums Written By State
For the Three and Nine Months Ended September 30, 2010 and 2009
(Unaudited)
       
Three Months Ended Nine Months Ended
September 30 September 30
State     2010       2009       2010       2009  
Illinois $ 1,053,060 $ 478,044 $ 2,056,594 $ 2,335,265
Kentucky 867,814 713,474 2,367,861 2,533,651
Michigan 837,384 1,123,194 2,820,240 3,753,889
New York 794,799 523,629 1,669,098 2,359,472
North Carolina 6,370,911 6,000,363 17,055,366 21,857,728
Pennsylvania 882,142 588,988 2,001,675 2,074,806
South Carolina 1,727,802 1,690,176 4,474,207 4,222,027
Tennessee 685,370 610,055 1,713,880 1,928,614
Virginia 1,157,659 1,226,751 3,214,050 3,927,202
West Virginia 700,623 572,892 1,666,314 1,730,612
Other 1,714,590   771,761   3,238,104   2,931,419  
Direct Premiums $ 16,792,154 $ 14,299,327 $ 42,277,389 $ 49,654,685
Reinsurance Assumed 9,900 7,350 19,834 8,150
Reinsurance Ceded (52,659 ) (24,062 ) (122,576 ) (58,012 )
Net Premiums Written $ 16,749,395   $ 14,282,615   $ 42,174,647   $ 49,604,823  

Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Nine Months Ended September 30, 2010 and 2009
(Unaudited)
               
 
Three Months Ended Nine Months Ended
September 30 September 30
    2010   %       2009   %     2010   %       2009   %
Branch $   4,870,568 29.1 $   4,680,845 32.8 $   13,040,632 30.9 $   17,380,223 35.0
 
Agency     11,878,827   70.9       9,601,770   67.2     29,134,015   69.1       32,224,600   65.0
 
Total $   16,749,395   100.0   $   14,282,615   100.0 $   42,174,647   100.0   $   49,604,823   100.0

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