Investors Title Company Announces Third Quarter 2011 Results

Investors Title Company today announced its results for the third quarter ended September 30, 2011. Net income increased 68.4% to $2,440,465, or $1.14 per diluted share, compared with $1,449,101, or $0.63 per diluted share, for the prior year period.

Revenues increased 36.3% to $26,116,870 versus the prior year period primarily due to a 43.2% increase in net premiums written. The premium growth was mainly attributable to the Company’s recent expansion into Texas. Premium growth in Texas was partially offset by declines in other markets. In addition, premiums in the third quarter were comprised of a larger percentage of higher-margin purchase transactions relative to the prior year period.

Operating expenses increased 32.1% to $22,655,405 versus the prior year period, primarily due to increases in commissions to agents. Commissions to agents increased 75.6%, commensurate with the growth in agency premiums and reflective of an increase in agent business from markets with higher premium rates, primarily Texas. The provision for claims was substantially lower in the current quarter compared with the prior year primarily due to an adjustment for favorable loss development in prior policy years, as well as a decline in the relative share of North Carolina business as a percentage of the total versus the prior year period. Since North Carolina’s premium rates are less than half the national average, the resulting loss ratio for North Carolina business is higher than for our other markets.

For the nine months ended September 30, 2011, net income increased 26.2% to $5,054,477, or $2.32 per diluted share, compared with $4,004,076, or $1.75 per diluted share, for the prior year period. Revenues increased 42.3% to $69,858,103, while operating expenses increased 43.0% 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 increase in revenues for the quarter and year-to-date, driven by our entry into the Texas market and continued expansion of our agent base. Although commission expense has increased as we have grown our agent base, other operating expense categories, in total, are favorable to last year due to positive developments in claims loss rates and the continued impact of cost reduction initiatives from the past several years. We will continue to focus on enhancing our competitive strengths by emphasizing growth in market presence and careful management of expenses.”

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, among other statements, any predictions regarding future market expansion or expense management. 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, 2010, 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, 2011 and 2010
(Unaudited)
               
 

 

Three Months EndedSeptember 30

Nine Months EndedSeptember 30

2011

2010

2011

2010
Revenues:
Net premiums written $ 23,986,592 $ 16,749,395 $ 63,303,202 $ 42,174,647
Investment income - interest and dividends 887,055 934,754 2,665,245 2,757,228
Net realized (loss) gain on investments (200,087) (44,864) (79,172) 306,066
Other 1,443,310 1,522,399 3,968,828 3,839,920
Total Revenues 26,116,870 19,161,684 69,858,103 49,077,861
 
Operating Expenses:
Commissions to agents 15,161,823 8,632,083 39,335,237 20,707,910
Provision for claims 349,672 1,819,522 2,301,259 3,244,341
Salaries, employee benefits and payroll taxes 4,778,542 4,354,854 14,110,213 13,185,127
Office occupancy and operations 919,681 971,264 2,836,068 3,038,491
Business development 363,731 335,454 1,123,517 962,115
Filing fees, franchise and local taxes 79,638 241,774 411,897 534,473
Premium and retaliatory taxes 459,711 336,925 1,368,168 919,655
Professional and contract labor fees 412,227 334,973 1,132,308 1,038,845
Other 130,380 126,734 392,959 420,828
Total Operating Expenses 22,655,405 17,153,583 63,011,626 44,051,785
 
Income Before Income Taxes 3,461,465 2,008,101 6,846,477 5,026,076
 
Provision For Income Taxes 1,021,000 559,000 1,792,000 1,022,000
 
Net Income $ 2,440,465 $ 1,449,101 $ 5,054,477 $ 4,004,076
 
Basic Earnings Per Common Share $ 1.15 $ 0.63 $ 2.34 $ 1.75
 
Weighted Average Shares Outstanding - Basic 2,124,078 2,284,331 2,164,240 2,285,039
 
Diluted Earnings Per Common Share $ 1.14 $ 0.63 $ 2.32 $ 1.75
 
Weighted Average Shares Outstanding - Diluted 2,143,327 2,285,785 2,180,455 2,291,060
 

 
Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2011 and December 31, 2010
(Unaudited)
 
   

September 30,2011
   

December 31,2010
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 83,603,960 $ 86,033,557
Equity securities, available-for-sale, at fair value 17,770,019 13,872,370
Short-term investments 21,723,492 27,203,550
Other investments 3,104,683 2,888,958
Total investments 126,202,154 129,998,435
 
Cash and cash equivalents 14,692,102 8,117,031
Premiums and fees receivable, net 6,606,031 7,253,786
Accrued interest and dividends 913,234 1,150,602
Prepaid expenses and other assets 2,941,765 2,816,661
Property, net 3,635,006 3,672,317
Current income taxes receivable 506,717 -
Deferred income taxes, net - 476,534
 
Total Assets $ 155,497,009 $ 153,485,366
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 37,548,000 $ 38,198,700
Accounts payable and accrued liabilities 13,141,854 10,301,495
Current income taxes payable - 1,056,356
Deferred income taxes, net 958,657 -
Total liabilities 51,648,511 49,556,551
 
Stockholders' Equity:

Common stock - no par value (shares authorized 10,000,000; 2,121,630 and 2,282,596 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively, excluding 291,676 shares for 2011 and 2010 of common stock held by the Company's subsidiary)
1 1
Retained earnings 97,729,595 98,240,109
Accumulated other comprehensive income 6,118,902 5,688,705
Total stockholders' equity 103,848,498 103,928,815
 
Total Liabilities and Stockholders' Equity $ 155,497,009 $ 153,485,366

 
Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Nine Months Ended September 30, 2011 and 2010
(Unaudited)
                               
 
 

Three Months EndedSeptember 30

Nine Months EndedSeptember 30
2011 % 2010 % 2011 % 2010 %
Branch $ 4,387,971 18.3 $ 4,870,568 29.1 $ 12,061,485 19.1 $ 13,040,632 30.9
 
Agency   19,598,621 81.7   11,878,827 70.9   51,241,717 80.9   29,134,015 69.1
 
Total $ 23,986,592 100.0 $ 16,749,395 100.0 $ 63,303,202 100.0 $ 42,174,647 100.0

Copyright Business Wire 2010

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