Investors Title Company Announces Record Third Quarter 2016 Financial Results

Investors Title Company today announced its results for the third quarter ended September 30, 2016. Net income attributable to the Company increased 81.0% to an all-time record high of $8.1 million, or $4.29 per diluted share, versus $4.5 million, or $2.28 per diluted share, for the prior year period.

Revenues increased 18.7% versus the prior year quarter to an all-time record high of $41.0 million, mainly due to an 18.0% increase in net premiums written. The increase in premiums is due to higher aggregate coverage insured resulting from increased transaction volume and real estate values, as well as higher average premium rates.

Operating expenses increased 5.4% versus the prior year quarter to $29.6 million, primarily due to increases in commissions and payroll expenses, partially offset by a benefit for claims. Commissions increased commensurate with the increase in agency premium volume. Payroll expenses increased 19.3% to $8.3 million, mainly due to an increase in the accrual for incentive compensation and fluctuations in the level of capitalized salaries related to software development. There was a benefit for claims during the current quarter, stemming from favorable loss development in recent policy years. Claim experience in recent years has improved in part due to a decrease in the level of foreclosure activity. All other categories of operating expenses, in total, were up 3.0% versus the prior year period.

For the nine months ended September 30, 2016, net income attributable to the Company increased 40.0% to $14.5 million, or $7.53 per diluted share, versus $10.3 million, or $5.17 per diluted share, for the prior year period. Revenues increased 1.4% to $99.7 million versus the prior year period, while operating expenses decreased 5.4% to $79.2 million. Commissions decreased 5.1%, mainly due to a decline in agency premiums and concentration of business in markets with lower average commission rates. Variances in claims, payroll, and other categories of expenses were shaped predominantly by the same factors that affected the third quarter.

Chairman J. Allen Fine added, "We are very pleased with this quarter's results. A number of factors drove the strong revenue growth including improving economic conditions in our core markets, strong seasonal demand for housing, and solid underlying real estate fundamentals. In addition to higher levels of premiums written, our record net income resulted from a combination of items including a higher percentage of direct business, favorable claims development and stable overhead expenses."

"As always we remain focused on profitably growing our business over the long term, enhancing our competitive strengths and capitalizing on market opportunities."

Investors Title Company's subsidiaries issue and underwrite title insurance policies. The Company also provides investment management services and services in connection with tax-deferred exchanges of like-kind property.

Certain statements contained herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, among others, any statements regarding the Company's expected performance for the year, future home price fluctuations, changes in home purchase or refinance activity and the mix thereof, interest rate changes, expansion of the Company's market presence, enhancing competitive strengths, positive development in housing affordability, unemployment or overall economic conditions or statements regarding our actuarial assumptions and the application of recent historical claims experience to future periods. 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, including the limited predictive power of historical claims experience; declines in the performance of the Company's investments; government regulation; changes in the economy; loss of agency relationships, or significant reductions in agent-originated business; difficulties managing growth, whether organic or through acquisitions; possible non-satisfaction of closing conditions related to acquisitions 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, 2015, 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, 2016 and 2015

(Unaudited)
 

Three Months Ended

September 30,
 

Nine Months Ended

September 30,
2016   2015   2016 2015
Revenues:  
Net premiums written $ 36,511,373 $ 30,945,532 $ 87,810,602 $ 86,372,154
Investment income - interest and dividends 1,160,983 1,117,529 3,478,999 3,427,055
Net realized gain (loss) on investments 439,326 (338,631 ) 574,328 601,336
Other 2,890,023     2,816,828     7,827,509   7,924,329  
Total Revenues 41,001,705     34,541,258     99,691,438   98,324,874  
 
Operating Expenses:
Commissions to agents 18,739,151 16,898,323 45,946,379 48,393,553
(Benefit) provision for claims (1,067,853 ) 703,979 (403,982 ) 3,621,401
Salaries, employee benefits and payroll taxes 8,300,823 6,957,874 22,945,972 21,101,955
Office occupancy and operations 1,496,948 1,342,288 4,526,710 4,089,806
Business development 608,532 568,189 1,695,180 1,633,358
Filing fees, franchise and local taxes 191,574 134,880 688,731 572,621
Premium and retaliatory taxes 673,551 573,336 1,559,631 1,684,674
Professional and contract labor fees 523,504 661,879 1,599,603 1,926,469

Other
157,308     264,012     629,539   708,918  
Total Operating Expenses 29,623,538     28,104,760     79,187,763   83,732,755  
 
Income before Income Taxes 11,378,167 6,436,498 20,503,675 14,592,119
 
Provision for Income Taxes 3,249,000     1,941,000     6,040,000   4,250,000  
 
Net Income 8,129,167 4,495,498 14,463,675 10,342,119
 
Net (Gain) Loss Attributable to Noncontrolling
Interests (2,228 )   (4,536 )   6,684   (4,536 )
 
Net Income Attributable to the Company $ 8,126,939     $ 4,490,962     $ 14,470,359   $ 10,337,583  
 
Basic Earnings per Common Share $ 4.30     $ 2.28     $ 7.55   $ 5.18  
 
Weighted Average Shares Outstanding - Basic 1,888,870     1,967,923     1,915,468   1,995,120  
 
Diluted Earnings per Common Share $ 4.29     $ 2.28     $ 7.53   $ 5.17  
 
Weighted Average Shares Outstanding - Diluted 1,895,592     1,972,233     1,921,999   2,000,043  
 

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of September 30, 2016 and December 31, 2015

(Unaudited)
 
September 30, 2016   December 31,2015
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 111,038,924 $ 106,066,384
Equity securities, available-for-sale, at fair value 39,834,879 37,513,464
Short-term investments 3,925,296 6,865,406
Other investments 10,626,505     10,106,828
Total investments 165,425,604     160,552,082
 
Cash and cash equivalents 26,898,991 21,790,068
Premium and fees receivable 9,358,570 8,392,697
Accrued interest and dividends 1,389,526 1,004,126
Prepaid expenses and other assets 10,931,270 12,634,105
Property, net 7,843,079 7,148,951
Current income taxes recoverable 1,261,289    
Total Assets $ 223,108,329     $ 211,522,029
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 35,536,000 $ 37,788,000
Accounts payable and accrued liabilities 24,705,653 25,043,588
Current income taxes payable 210,355
Deferred income taxes, net 10,749,877     5,703,006
Total liabilities 70,991,530     68,744,949
 
Stockholders' Equity:

Common stock - no par value (10,000,000 authorized shares; 1,884,283

and 1,949,797 shares issued and outstanding 2016 and 2015,

respectively, excluding 291,676 shares for 2016 and 2015 of common

stock held by the Company's subsidiary)
1 1
Retained earnings 138,575,372 131,186,866
Accumulated other comprehensive income 13,449,558     11,483,015
Total stockholders' equity attributable to the Company 152,024,931 142,669,882
Noncontrolling interests 91,868     107,198
Total stockholders' equity 152,116,799     142,777,080
Total Liabilities and Stockholders' Equity $ 223,108,329     $ 211,522,029
 

Investors Title Company and Subsidiaries

Net Premiums Written By Branch and Agency

For the Three and Nine Months Ended September 30, 2016 and 2015

(Unaudited)
     
Three Months Ended September 30,     Nine Months Ended September 30,
2016 %   2015 %     2016 %     2015 %
Branch $ 10,860,361 29.7   $ 7,967,826 25.7 $ 24,751,134 28.2     $ 21,281,363 24.6
 
Agency 25,651,012   70.3   22,977,706   74.3     63,059,468   71.8     65,090,791   75.4
 
Total $ 36,511,373   100.0   $ 30,945,532   100.0     $ 87,810,602   100.0     $ 86,372,154   100.0

View source version on businesswire.com: http://www.businesswire.com/news/home/20161102005293/en/

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX