Investors Title Company Announces Fourth Quarter and Fiscal Year 2012 Results

CHAPEL HILL, N.C.--()--Investors Title Company (NASDAQ: ITIC), today announced its results for the fourth quarter and year ended December 31, 2012. For the quarter, net income increased 68.3% to $3,162,684, or $1.51 per diluted share, compared with $1,879,459, or $0.88 per diluted share, for the prior year period. For the year, net income increased 60.1% to $11,102,496, or $5.24 per diluted share, compared with $6,933,936, or $3.20 per diluted share, for the prior year period.

The increase in net income for the quarter and the year was driven primarily by increases in premium volumes, reflecting widespread increases in overall mortgage lending activity. New premium charges and rate increases in a number of our markets also contributed to the increase.

For the quarter, premium volumes increased 66.8%. Operating expenses increased 62.4% versus the prior year period, primarily due to increases in commissions to agents, claims, and payroll expense. Commissions to agents increased commensurate with the increase in agency premiums. The claims provision rate as a percentage of net premiums written tracked favorably to the long-term trend, and was virtually flat for the quarter compared with the prior year quarter. The increase in payroll expense was primarily driven by an increase in staffing levels in software development.

For the year, revenues increased 26.9% over the prior year to $115,079,092, due to high levels of overall mortgage activity, and new premium charges and rate increases. Operating expenses followed the trend for the quarter, increasing 21.9%.

Chairman J. Allen Fine added, “We are pleased to report record levels of revenue and earnings per share for 2012. A favorable interest rate environment led to high levels of mortgage lending across the industry, with increases in both purchase and refinance activity versus the prior year. In addition, we benefitted from ongoing expansion of our agent base and targeted entry into new markets. Our balance sheet and financial condition remain strong, as total assets reached an all-time high of $171.9 million as of year-end. In the coming year, we will continue to emphasize the expansion of our agency base and operational efficiency.”

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, 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 and Twelve Months Ended December 31, 2012 and 2011
(Unaudited)
                       
 
Three Months Ended Twelve Months Ended
December 31 December 31

2012

2011

2012

2011

Revenues:
Net premiums written $ 30,403,989 $ 18,226,131 $ 102,331,102 $ 81,529,333
Investment income - interest and dividends 1,030,659 929,791 3,980,411 3,595,036
Net realized gain on investments 708,420 107,731 1,066,239 28,559
Other 2,164,017   1,563,400 7,701,340 5,532,228
Total Revenues 34,307,085   20,827,053 115,079,092 90,685,156
 
Operating Expenses:
Commissions to agents 18,743,705 10,261,013 59,427,070 49,596,250
Provision for claims 1,647,592 1,041,168 6,072,115 3,342,427
Salaries, employee benefits and payroll taxes 5,799,813 4,442,291 21,877,186 18,552,504
Office occupancy and operations 1,016,904 886,735 3,936,653 3,722,803
Business development 600,832 583,317 1,887,398 1,706,834
Filing fees, franchise and local taxes 172,176 104,483 846,168 516,380
Premium and retaliatory taxes 572,854 361,662 1,885,760 1,729,830
Professional and contract labor fees 832,303 381,158 2,487,582 1,513,466
Other 123,754   112,767 579,253 505,726
Total Operating Expenses 29,509,933   18,174,594 98,999,185 81,186,220
 
Income Before Income Taxes 4,797,152   2,652,459 16,079,907 9,498,936
 
Provision For Income Taxes 1,650,000   773,000 4,889,000 2,565,000
 
Net Income 3,147,152 1,879,459 11,190,907 6,933,936
 
Less: Net (Loss) Income Attributable to Redeemable Noncontrolling Interests (15,532 ) - 88,411 -
 
Net Income Attributable to the Company $ 3,162,684   $ 1,879,459 $ 11,102,496 $ 6,933,936
 
Basic Earnings Per Common Share $ 1.54   $ 0.89 $ 5.33 $ 3.22
 
Weighted Average Shares Outstanding - Basic 2,055,703   2,112,675 2,081,703 2,151,350
 
Diluted Earnings Per Common Share $ 1.51   $ 0.88 $ 5.24 $ 3.20
 
Weighted Average Shares Outstanding - Diluted 2,093,538   2,132,780 2,116,793 2,169,636

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2012 and 2011
(Unaudited)
   
December 31, 2012   December 31, 2011
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 81,936,978 $ 85,407,365
Equity securities, available-for-sale, at fair value 28,510,933 22,549,975
Short-term investments 13,567,648 14,112,262
Other investments 6,763,100 3,631,714
Total investments 130,778,659 125,701,316
 
Cash and cash equivalents 20,810,018 18,042,258
Premiums and fees receivable, net 11,037,714 6,810,000
Accrued interest and dividends 1,037,447 1,108,156
Prepaid expenses and other assets 4,651,115 2,743,517
Property, net 3,603,323 3,553,216
 
Total Assets $ 171,918,276 $ 157,958,463
 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 39,078,000 $ 37,996,000
Accounts payable and accrued liabilities 15,477,545 12,330,383
Current income taxes payable 1,336,824 640,533
Deferred income taxes, net 893,156 479,363
Total liabilities 56,785,525 51,446,279
 
Redeemable Noncontrolling Interest 493,861 -
 
Stockholders' Equity:
Common stock - no par value (shares authorized 10,000,000;
2,043,359 and 2,107,681 shares issued and outstanding as of December 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 105,820,459 99,003,018
Accumulated other comprehensive income 8,818,430 7,509,165
Total stockholders' equity 114,638,890 106,512,184
 
Total Liabilities and Stockholders' Equity $ 171,918,276 $ 157,958,463

Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Twelve Months Ended December 31, 2012 and 2011
(Unaudited)
                 
 
 
Three Months Ended Twelve Months Ended
December 31 December 31
    2012  

%

      2011   %     2012   %       2011   %
Branch $   6,216,397 20.4 $   4,424,488 24.3 $   23,762,885 23.2 $   16,485,973 20.2
 
Agency     24,187,592   79.6       13,801,643   75.7     78,568,217   76.8       65,043,360   79.8
 
Total $   30,403,989   100.0   $   18,226,131   100.0 $   102,331,102   100.0   $   81,529,333   100.0

Contacts

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

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Contacts

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