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
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