Investors Title Company Announces Second Quarter 2013 Results

Business Wire

CHAPEL HILL, N.C.--(BUSINESS WIRE)--

Investors Title Company announced its results for the second quarter ended June 30, 2013. Net income attributable to the Company increased 19.6% to $4,005,675, or $1.92 per diluted share, compared with $3,349,488, or $1.57 per diluted share, for the prior year quarter.

Revenues increased 29.2% to $33,693,400 versus the prior year quarter, primarily due to a 30.9% increase in net premiums written. The premium growth reflects substantially higher levels of purchase transactions, as well as increases in average home values in many parts of the nation, driven by improvements in the overall economy. Refinance volume was also up slightly as interest rates remained near historically low levels.

Operating expenses increased 29.6% to $27,823,350 versus the prior year quarter, primarily due to increases in agent commissions and other variable expenses which fluctuate with premium volumes. Claims expense was higher than the prior year quarter, but both periods were abnormally low due to adjustments for favorable loss development. Favorable claims expense trends are also impacted by the absence of large fraud-related claims in recent years, as well as an increase in business in states with historically lower loss provision rates. The increase in payroll expense was largely driven by higher staffing levels to support ongoing software development initiatives.

For the six months ended June 30, 2013, net income attributable to the Company increased 54.4% to $7,382,405, or $3.54 per diluted share, compared with $4,781,627, or $2.24 per diluted share, for the prior year period. Revenues increased 24.8% to $60,541,673 and operating expenses increased 19.1% to $49,920,205 versus the prior year period. Results for the first half of the year have been shaped predominantly by the same factors that affected the second quarter.

Chairman J. Allen Fine added, “After a lengthy period of sluggishness in the economy, we are pleased to see the recent increase in home sales, as well as a developing trend of overall increases in real estate prices. Both of these factors, coupled with an active mortgage refinance market, contributed to all-time high revenue for the second quarter. With housing affordability still favorable and consumer confidence improving, we are optimistic that recent trends in home sales will continue. Over the long term, we remain focused on enhancing our competitive strengths and capitalizing on opportunities to profitably expand our 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 base 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, 2012, 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 Six Months Ended June 30, 2013 and 2012
(Unaudited)
         
 
Three Months Ended Six Months Ended

June 30,

June 30,

2013 2012 2013 2012
Revenues:
Net premiums written $ 30,429,761 $ 23,241,570 $ 54,355,758 $ 42,908,990
Investment income - interest and dividends 925,047 1,009,918 1,845,532 1,987,179
Net realized gain on investments 55,272 65,148 71,616 258,029
Other 2,283,320   1,763,689   4,268,767   3,340,401  
Total Revenues 33,693,400   26,080,325   60,541,673   48,494,599  
 
Operating Expenses:
Commissions to agents 17,608,789 12,650,817 31,098,220 23,842,944
Provision for claims 996,870 361,107 607,812 1,992,466
Salaries, employee benefits and payroll taxes 6,248,492 5,489,107 12,398,153 10,479,739
Office occupancy and operations 1,011,050 1,037,835 2,059,715 1,964,873
Business development 453,653 404,718 878,686 798,165
Filing fees, franchise and local taxes 188,950 181,330 369,520 533,252
Premium and retaliatory taxes 530,524 474,486 971,047 889,280
Professional and contract labor fees 560,146 706,690 1,174,589 1,107,227
Other 224,876   154,534   362,463   321,813  
Total Operating Expenses 27,823,350   21,460,624   49,920,205   41,929,759  
 
Income Before Income Taxes 5,870,050 4,619,701 10,621,468 6,564,840
 
Provision For Income Taxes 1,846,000   1,247,000   3,211,000   1,760,000  
 
Net Income 4,024,050 3,372,701 7,410,468 4,804,840
 
Less: Net Income Attributable to Redeemable Noncontrolling Interest (18,375 ) (23,213 ) (28,063 ) (23,213 )
 
Net Income Attributable to the Company $ 4,005,675   $ 3,349,488   $ 7,382,405   $ 4,781,627  
 
Basic Earnings Per Common Share $ 1.94   $ 1.60   $ 3.59   $ 2.28  
 
Weighted Average Shares Outstanding - Basic 2,063,797   2,098,666   2,054,300   2,099,751  
 
Diluted Earnings Per Common Share $ 1.92   $ 1.57   $ 3.54   $ 2.24  
 
Weighted Average Shares Outstanding - Diluted 2,089,674   2,132,732   2,087,229   2,131,164  
 
 
Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of June 30, 2013 and December 31, 2012
(Unaudited)
     

  June 30, 2013  

December 31, 2012
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 75,228,040 $ 81,936,978
Equity securities, available-for-sale, at fair value 31,208,595 28,510,933
Short-term investments 16,078,465 13,567,648
Other investments 7,216,155 6,763,100
Total investments 129,731,255 130,778,659
 
Cash and cash equivalents 26,402,136 20,810,018
Premiums and fees receivable, net 10,807,083 11,037,714
Accrued interest and dividends 915,703 1,037,447
Prepaid expenses and other assets 8,053,251 4,651,115
Property, net 3,844,487 3,603,323
Current income taxes receivable 771,419 -
 
Total Assets $ 180,525,334 $ 171,918,276
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 38,767,000 $ 39,078,000
Accounts payable and accrued liabilities 16,825,629 15,477,545
Current income taxes payable - 1,336,824
Deferred income taxes, net 2,647,827 893,156
Total liabilities 58,240,456 56,785,525
 
Redeemable Noncontrolling Interest 485,025 493,861
 
Stockholders' Equity:

Common stock - no par value (shares authorized 10,000,000;
  2,073,648 and 2,043,359 shares issued and outstanding as of June 30, 2013 and
  December 31, 2012, respectively, excluding 291,676 shares for 2013 and 2012

  of common stock held by the Company's subsidiary)

1 1
Retained earnings 112,538,851 105,820,459
Accumulated other comprehensive income 9,261,001 8,818,430
Total stockholders' equity 121,799,853 114,638,890
 
Total Liabilities and Stockholders' Equity $ 180,525,334 $ 171,918,276
 
 
Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Six Months Ended June 30, 2013 and 2012
(Unaudited)
                               
 
Three Months Ended Six Months Ended

June 30,

June 30,

2013     %     2012     % 2013     %     2012     %
Branch $ 7,332,764 24.1 $ 6,164,038 26.5 $ 13,116,393 24.1 $ 10,986,830 25.6
 
Agency   23,096,997     75.9       17,077,532     73.5   41,239,365     75.9       31,922,160     74.4
 
Total $ 30,429,761     100.0     $ 23,241,570     100.0 $ 54,355,758     100.0     $ 42,908,990     100.0

Contact:
Investors Title Company
Elizabeth B. Lewter, 919-968-2200

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