Investors Title Company Announces Third Quarter 2013 Results

Business Wire

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

Investors Title Company today announced its results for the third quarter ended September 30, 2013. Net income attributable to the Company increased 74.7% to $5,515,798, or $2.66 per diluted share, compared with $3,158,185, or $1.50 per diluted share, for the prior year quarter.

Revenues increased 4.1% to $33,605,239 versus the prior year quarter, primarily due to a 4.9% increase in net premiums written. The premium growth reflects higher levels of purchase transactions, as well as increases in average home values in many parts of the nation, driven by improvement in the overall economy. Refinance volume continued its downward trend, reflecting a rising interest rate environment over the course of 2013.

Operating expenses decreased 8.1% to $25,328,716 versus the prior year quarter due to lower claims expense, partially offset by increases in other expense categories. The provision for claims includes a reduction in the reserves for claims of approximately $2,400,000 reflecting a change in estimate related to certain actuarial assumptions that stems from improved claims experience in recent post-recession policy years. The increase in payroll expense was largely driven by higher staffing levels to support ongoing software development, and increased benefits and incentive compensation. Other operating expenses were higher than the prior year quarter mostly due to volume increases or changes in the mix of business.

For the nine months ended September 30, 2013, net income attributable to the Company increased 62.4% to $12,898,203 or $6.19 per diluted share, compared with $7,939,812, or $3.74 per diluted share, for the prior year period. Revenues increased 16.6% to $94,146,912 and operating expenses increased 8.3% to $75,248,921 versus the prior year period. Results for the first nine months of the year have been shaped predominantly by the same factors that affected the third quarter.

Chairman J. Allen Fine added, “We were pleased to see a continuation in the third quarter of recent increases in the volume of home sales as well as general increases in home prices. Despite moderation in refinance activity, these factors contributed to an all-time high level of revenue for the quarter. Earnings were impacted favorably by changes to actuarial assumptions reflecting improved claims experience in recent years. We continue to focus 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 others, any statements regarding expansion of the Company’s market presence, enhancing competitive strengths or 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; 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 Nine Months Ended September 30, 2013 and 2012
(Unaudited)
             
 
Three Months Ended

 

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Revenues:
Net premiums written $ 30,431,560 $ 29,018,123 $ 84,787,318 $ 71,927,113
Investment income - interest and dividends 990,338 962,573 2,835,870 2,949,752
Net realized gain on investments 261,938 99,790 333,554 357,819
Other 1,921,403   2,196,922   6,190,170   5,537,323  
Total Revenues 33,605,239   32,277,408   94,146,912   80,772,007  
 
Operating Expenses:
Commissions to agents 18,142,697 16,840,421 49,240,917 40,683,365
(Benefit) provision for claims (3,037,101 ) 2,432,057 (2,429,289 ) 4,424,523
Salaries, employee benefits and payroll taxes 7,133,497 5,598,722 19,533,970 16,080,639
Office occupancy and operations 1,165,772 984,303 3,266,112 2,956,470
Business development 606,549 472,436 1,487,635 1,254,691
Filing fees, franchise and local taxes 141,373 140,740 510,893 673,992
Premium and retaliatory taxes 592,717 423,626 1,563,764 1,312,906
Professional and contract labor fees 404,206 523,956 1,514,749 1,620,911
Other 179,006   143,232   560,170   481,755  
Total Operating Expenses 25,328,716   27,559,493   75,248,921   69,489,252  
 
Income Before Income Taxes 8,276,523 4,717,915 18,897,991 11,282,755
 
Provision For Income Taxes 2,733,000   1,479,000   5,944,000   3,239,000  
 
Net Income 5,543,523 3,238,915 12,953,991 8,043,755
 
Less: Net Income Attributable to Redeemable Noncontrolling Interest (27,725 ) (80,730 ) (55,788 ) (103,943 )
 
Net Income Attributable to the Company $ 5,515,798   $ 3,158,185   $ 12,898,203   $ 7,939,812  
 
Basic Earnings Per Common Share $ 2.67   $ 1.52   $ 6.26   $ 3.80  
 
Weighted Average Shares Outstanding - Basic 2,069,081   2,071,605   2,059,226   2,090,369  
 
Diluted Earnings Per Common Share $ 2.66   $ 1.50   $ 6.19   $ 3.74  
 
Weighted Average Shares Outstanding - Diluted 2,074,940   2,108,526   2,083,560   2,124,122  
 
Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2013 and December 31, 2012
(Unaudited)
         
September 30, 2013 December 31, 2012
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 86,100,498 $ 81,936,978
Equity securities, available-for-sale, at fair value 33,460,972 28,510,933
Short-term investments 15,388,647 13,567,648
Other investments 7,311,949 6,763,100
Total investments 142,262,066 130,778,659
 
Cash and cash equivalents 22,868,393 20,810,018
Premiums and fees receivable, net 9,758,749 11,037,714
Accrued interest and dividends 1,041,472 1,037,447
Prepaid expenses and other assets 7,314,187 4,651,115
Property, net 4,204,506 3,603,323
Current income taxes receivable 1,708,257 -
 
Total Assets $ 189,157,630 $ 171,918,276
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 34,816,000 $ 39,078,000
Accounts payable and accrued liabilities 21,331,255 15,477,545
Current income taxes payable - 1,336,824
Deferred income taxes, net 5,259,773 893,156
Total liabilities 61,407,028 56,785,525
 
Redeemable Noncontrolling Interest 512,749 493,861
 
Stockholders' Equity:
Common stock - no par value (shares authorized 10,000,000;

2,066,922 and 2,043,359 shares issued and outstanding as of September 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 117,418,431 105,820,459
Accumulated other comprehensive income 9,819,421 8,818,430
Total stockholders' equity 127,237,853 114,638,890
 
Total Liabilities and Stockholders' Equity $ 189,157,630 $ 171,918,276
 
Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Nine Months Ended September 30, 2013 and 2012
(Unaudited)
                   
 
Three Months Ended Nine Months Ended
September 30, September 30,
    2013   %       2012   %     2013   %   2012   %
Branch $   6,630,345 21.8 $   6,559,658 22.6 $   19,746,738 23.3 $   17,546,488 24.4
 
Agency     23,801,215   78.2       22,458,465   77.4     65,040,580   76.7       54,380,625   75.6
 
Total $   30,431,560   100.0   $   29,018,123   100.0 $   84,787,318   100.0   $   71,927,113   100.0

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