Investors Title Company Announces Third Quarter 2015 Results

CHAPEL HILL, N.C.--()--Investors Title Company today announced its results for the third quarter ended September 30, 2015. Net income attributable to the Company increased 73.1% to $4,490,962, or $2.28 per diluted share, compared with $2,594,490, or $1.28 per diluted share, for the prior year quarter.

Revenues increased 17.1% to $34,541,258 versus the prior year quarter, primarily due to a 17.4% increase in net premiums written, setting a new quarterly record level of both revenues and premiums written. Real estate activity was up significantly for the quarter, driven mainly by higher levels of home purchases and stable levels of mortgage refinance activity.

Operating expenses increased 8.5% to $28,104,760 versus the prior year quarter, mainly due to higher agent commissions commensurate with increased premiums written, partially offset by a higher concentration of business in markets with lower average commission rates. The increase in agent commissions was partially offset by a reduction in the provision for claims, reflecting improved claims experience in recent policy years. Higher premium volumes and normal inflationary effects drove other operating expenses marginally higher versus the prior year quarter.

For the nine months ended September 30, 2015, net income attributable to the Company increased 48.6% to $10,337,583, or $5.17 per diluted share, compared with $6,954,526, or $3.41 per diluted share, for the prior year period. Revenues increased 7.8% to $98,324,874, driven by a 6.5% increase in net premiums written. Operating expenses increased 2.7% to $83,732,755 versus the prior year period, mainly due to higher payroll expenses associated with normal inflationary increases and higher staffing levels to support ongoing software development activities. Claims expense was down 13.3% due to improved claims experience in recent policy years. Agent commissions were flat versus the prior year period even as premiums grew, as a larger proportion of premiums originated in markets with lower average commission rates.

Chairman J. Allen Fine added, “We are pleased to report another quarter with record levels of revenue. Title insurance premiums were bolstered by higher levels of home sales activity as well as continued increases in real estate prices. While the pace of loan closings may slow during the fourth quarter in the wake of the October 3 TILA-RESPA Integrated Disclosure Rule (TRID) implementation, we remain encouraged that positive trends in the unemployment rate and overall economic conditions will sustain the levels of purchase activity, at least for the near future. Over the long term, we will continue to focus on enhancing our competitive strengths and profitably expanding our market presence.”

Investors Title Company’s subsidiaries issue and underwrite 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 future home price increases, changes in home purchase or refinance activity, 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; the possible loss of agency relationships, or significant reduction in agent-originated business 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, 2014, as filed with the Securities and Exchange Commission, and in its subsequent Quarterly Reports on Form 10-Q.

Investors Title Company and Subsidiaries

Consolidated Statements of Income

For the Three and Nine Months Ended September 30, 2015 and 2014

 
     

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

2015   2014   2015   2014
Revenues:      
Net premiums written $ 30,945,532 $ 26,356,835 $ 86,372,154 $ 81,115,940
Investment income - interest and dividends 1,117,529 1,064,995 3,427,055 3,130,846
Net realized (loss) gain on investments (338,631 ) 8,689 601,336 592,908
Other 2,816,828     2,077,711     7,924,329     6,344,163  
Total Revenues 34,541,258     29,508,230     98,324,874     91,183,857  
 
Operating Expenses:
Commissions to agents 16,898,323 14,440,264 48,393,553 48,242,923
Provision for claims 703,979 1,507,814 3,621,401 4,177,478
Salaries, employee benefits and payroll taxes 6,957,874 6,609,425 21,101,955 19,250,116
Office occupancy and operations 1,342,288 1,257,009 4,089,806 3,683,980
Business development 568,189 552,215 1,633,358 1,581,872
Filing fees, franchise and local taxes 134,880 233,079 572,621 648,022
Premium and retaliatory taxes 573,336 491,927 1,684,674 1,332,492
Professional and contract labor fees 661,879 621,305 1,926,469 1,976,272
Other 264,012     196,702     708,918     656,653  
Total Operating Expenses 28,104,760     25,909,740     83,732,755     81,549,808  
 
Income before Income Taxes 6,436,498 3,598,490 14,592,119 9,634,049
 
Provision for Income Taxes 1,941,000     1,004,000     4,250,000     2,656,000  
 
Net Income 4,495,498 2,594,490 10,342,119 6,978,049
 
Net Income Attributable to Noncontrolling Interests (4,536 )       (4,536 )   (23,523 )
 
Net Income Attributable to the Company $ 4,490,962     $ 2,594,490     $ 10,337,583     $ 6,954,526  
 
Basic Earnings per Common Share $ 2.28     $ 1.28     $ 5.18     $ 3.42  
 
Weighted Average Shares Outstanding – Basic 1,967,923     2,028,818     1,995,120     2,033,637  
 
Diluted Earnings per Common Share $ 2.28     $ 1.28     $ 5.17     $ 3.41  
 
Weighted Average Shares Outstanding – Diluted 1,972,233     2,032,644     2,000,043     2,038,875  
 

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of September 30, 2015 and December 31, 2014

(Unaudited)

       
September 30,
2015
  December 31,
2014
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 98,034,042 $ 109,048,290
Equity securities, available-for-sale, at fair value 35,135,885 39,254,981
Short-term investments 13,884,266 2,576,993
Other investments 10,069,708     8,530,929
Total investments 157,123,901     159,411,193
 
Cash and cash equivalents 19,290,813 15,826,515
Premium and fees receivable 9,067,775 8,544,183
Accrued interest and dividends 1,286,710 1,063,837
Prepaid expenses and other assets 8,599,846 7,732,677
Property, net 7,176,557     5,460,805
Total Assets $ 202,545,602     $ 198,039,210
 
Liabilities and Stockholders’ Equity
Liabilities:
Reserves for claims $ 37,897,000 $ 36,677,000
Accounts payable and accrued liabilities 19,441,453 18,290,819
Current income taxes payable 248,679 92,192
Deferred income taxes, net 5,635,321     5,415,493
Total liabilities 63,222,453     60,475,504
 
Stockholders’ Equity:

Common stock - no par value (10,000,000 authorized shares; 1,953,418 and 2,023,270
    shares issued and outstanding 2015 and 2014, respectively, excluding 291,676 shares
    for 2015 and 2014 of common stock held by the Company's subsidiary)

1 1
Retained earnings 129,585,111 124,707,196
Accumulated other comprehensive income 9,606,451     12,856,509
Total stockholders’ equity attributable to the Company 139,191,563 137,563,706
Noncontrolling interests 131,586    
Total stockholders’ equity 139,323,149     137,563,706
Total Liabilities and Stockholders’ Equity $ 202,545,602     $ 198,039,210
 

Investors Title Company and Subsidiaries

Net Premiums Written By Branch and Agency

For the Three and Nine Months Ended September 30, 2015 and 2014

         
Three Months Ended September 30,     Nine Months Ended September 30,
2015   %   2014   %     2015   %   2014   %
Branch $ 7,967,826  

25.7

  $ 6,815,125   25.9 $ 21,281,363  

24.6

  $ 17,922,166   22.1
 
Agency 22,977,706    

74.3

  19,541,710     74.1     65,090,791    

75.4

  63,193,774     77.9
 
Total $ 30,945,532    

100.0

  $ 26,356,835     100.0     $ 86,372,154    

100.0

  $ 81,115,940     100.0

Contacts

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

Contacts

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