Investors Title Company Announces First Quarter 2012 Financial Results

Investors Title Company (NASDAQ: ITIC) today announced its results for the quarter ended March 31, 2012. The Company reported net income of $1,432,139, or $0.67 per diluted share, compared with $1,019,207, or $0.46 per diluted share, for the prior year period.

Total revenues increased 11.9% versus the prior year period to $22,414,274, primarily due to a 10.1% increase in net premiums written. Historically low interest rates drove a substantial increase in refinance activity versus the prior year period. Purchase activity was up as well, although to a lesser extent. New industry-wide premium charges for North Carolina that went into effect during the quarter also contributed to growth in premium revenue.

Total expenses increased 9.6% versus the prior year period, primarily due to increases in variable expenses such as commissions and the provision for claims, which fluctuate with premium volumes. The provision for claims as a percentage of net premiums written was 8.3% versus 4.0% in the prior year period due to an increase in volume in states with a higher average loss ratio, and an abnormally low claims expense in the prior year period. In addition, the Company continues to benefit from long-term reductions in operating expenses such as occupancy and operating costs in its branches due to an emphasis on expense control over the past few years.

Chairman J. Allen Fine added, “We are pleased with the uptick in mortgage lending activity and our first quarter results. Operating expenses were largely in line with recent quarterly trends adjusting for the improvement in activity levels, although we expect them to trend higher as we increase our investment in a number of software development initiatives. Our balance sheet remains very strong, and we continue to focus on long-term opportunities to enhance our competitive strengths and market 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, among other statements, any predictions regarding future agency expansion or increasing operational efficiency. 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: the 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, 2011, 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, 2012 and 2011
(Unaudited)
       
Three Months Ended
March 31

2012

2011
Revenues:
Net premiums written $ 19,667,420 $ 17,865,588
Investment income - interest and dividends 977,261 899,372
Net realized gain (loss) on investments 192,881 (26,160 )
Other   1,576,712   1,283,220  
Total Revenues   22,414,274   20,022,020  
 
Operating Expenses:
Commissions to agents 11,192,127 10,879,586
Provision for claims 1,631,359 721,626
Salaries, employee benefits and payroll taxes 4,990,632 4,691,996
Office occupancy and operations 927,038 963,927
Business development 393,447 387,547
Filing fees, franchise and local taxes 351,922 214,113
Premium and retaliatory taxes 414,794 405,473
Professional and contract labor fees 400,537 308,524
Other   167,279   103,021  
Total Operating Expenses   20,469,135   18,675,813  
 
Income Before Income Taxes   1,945,139   1,346,207  
 
Provision For Income Taxes   513,000   327,000  
 
Net Income $ 1,432,139 $ 1,019,207  
 
Basic Earnings Per Common Share $ 0.68 $ 0.46  
 
Weighted Average Shares Outstanding - Basic   2,100,835   2,234,480  
 
Diluted Earnings Per Common Share $ 0.67 $ 0.46  
 
Weighted Average Shares Outstanding - Diluted   2,128,788   2,239,500  
 

 
Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of March 31, 2012 and December 31, 2011
(Unaudited)
       
March 31, 2012 December 31, 2011
Assets
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 87,142,860 $ 85,407,365
Equity securities, available-for-sale, at fair value 26,824,431 22,549,975
Short-term investments 8,571,468 14,112,262
Other investments   5,628,864   3,631,714
Total investments 128,167,623 125,701,316
 
Cash and cash equivalents 16,465,383 18,042,258
Premiums and fees receivable, net 7,143,066 6,810,000
Accrued interest and dividends 962,560 1,108,156
Prepaid expenses and other assets 2,713,752 2,743,517
Property, net   3,469,310   3,553,216
 
Total Assets $ 158,921,694 $ 157,958,463
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 38,285,000 $ 37,996,000
Accounts payable and accrued liabilities 10,513,737 12,330,383
Current income taxes payable 148,262 640,533
Deferred income taxes, net   1,445,108   479,363
Total liabilities   50,392,107   51,446,279
 
Stockholders' Equity:
Common stock - no par value (shares authorized 10,000,000;
2,097,564 and 2,107,681 shares issued and outstanding as
of March 31, 2012 and December 31, 2011, respectively,
excluding 291,676 shares for 2012 and 2011 of common stock
held by the Company's subsidiary) 1 1
Retained earnings 99,841,101 99,003,018
Accumulated other comprehensive income   8,688,485   7,509,165
Total stockholders' equity   108,529,587   106,512,184
 
Total Liabilities and Stockholders' Equity $ 158,921,694 $ 157,958,463
 

 
Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three Months Ended March 31, 2012 and 2011
(Unaudited)
       
 
Three Months Ended
March 31
2012   %   2011   %
Branch $ 4,822,792 24.5 $ 3,696,280 20.7
 
Agency   14,844,628   75.5     14,169,308   79.3
 
Total $ 19,667,420   100.0   $ 17,865,588   100.0
 

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