Investors Title Company Announces Second Quarter 2015 Results

CHAPEL HILL, N.C.--()--Investors Title Company today announced its results for the second quarter ended June 30, 2015. Net income attributable to the Company increased 22.1% to $4,120,497, or $2.05 per diluted share, compared with $3,373,598, or $1.65 per diluted share, for the prior year quarter.

Revenues increased 6.8% to $35,481,807 versus the prior year quarter, primarily due to net realized gains on investments and increases in other revenues. Net premiums written also increased 2.1% to a quarterly record level of $30,464,581, even as a greater share of our policy volume originated in markets with lower average premium rates versus the prior year quarter. Real estate activity was up significantly for the quarter, driven by higher levels of home purchases and increases in mortgage refinances versus the prior year quarter.

Operating expenses increased 4.0% to $29,695,310 versus the prior year quarter, primarily due to an increase in the provision for claims, stemming from recognition of favorable loss development in the prior year. The increase in the provision for claims was partially offset by a decrease in agent commissions, reflecting a higher proportion of business written in markets with direct operations. Payroll expenses were up 6.4% to $6,866,632 due to normal inflationary increases in compensation and benefit costs, and higher staffing levels to support ongoing software development activities.

For the six months ended June 30, 2015, net income attributable to the Company increased 34.1% to $5,846,621, or $2.90 per diluted share, compared with $4,360,036, or $2.14 per diluted share, for the prior year period. Revenues increased 3.4% to $63,783,616 versus the prior year period, while operating expenses were virtually flat at $55,627,995. 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, “Purchase activity improved substantially for the first half of 2015 across all of our markets, driven partly by an increase in the share of first-time buyers, as well as continuing trends of increases in the rate of existing home sales and higher levels of home prices. With positive trends in housing affordability, unemployment, and overall economic conditions, we are optimistic that recent levels of real estate activity will continue. Over the long term, we remain focused 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 developments 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 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 subsequent filings.

Investors Title Company and Subsidiaries

Consolidated Statements of Income

For the Three and Six Months Ended June 30, 2015 and 2014

   

Three Months Ended

June 30,

 

Six Months Ended

June 30,

2015   2014   2015   2014
Revenues:    
Net premiums written $ 30,464,581 $ 29,849,853 $ 55,426,622 $ 54,759,105
Investment income - interest and dividends 1,131,487 1,039,435 2,309,526 2,065,851
Net realized gain on investments 925,164 92,082 939,967 584,219
Other 2,960,575     2,240,183     5,107,501     4,266,452  
Total Revenues 35,481,807     33,221,553     63,783,616     61,675,627  
 
Operating Expenses:
Commissions to agents 16,898,691 18,346,381 31,495,230 33,802,659
Provision for claims 2,130,810 294,281 2,917,422 2,669,664
Salaries, employee benefits and payroll taxes 6,866,632 6,454,930 14,144,081 12,640,691
Office occupancy and operations 1,443,297 1,246,644 2,747,518 2,426,971
Business development 578,194 511,763 1,065,169 1,029,657
Filing fees, franchise and local taxes 221,098 225,343 437,741 414,943
Premium and retaliatory taxes 634,747 546,091 1,111,338 840,565
Professional and contract labor fees 680,483 666,909 1,264,590 1,354,967
Other 241,358     250,167     444,906     459,951  
Total Operating Expenses 29,695,310     28,542,509     55,627,995     55,640,068  
 
Income before Income Taxes 5,786,497 4,679,044 8,155,621 6,035,559
 
Provision for Income Taxes 1,666,000     1,281,000     2,309,000     1,652,000  
 
Net Income 4,120,497 3,398,044 5,846,621 4,383,559
 
Net Income Attributable to Redeemable Noncontrolling Interest     (24,446 )       (23,523 )
 
Net Income Attributable to the Company $ 4,120,497     $ 3,373,598     $ 5,846,621     $ 4,360,036  
 
Basic Earnings per Common Share $ 2.06     $ 1.66     $ 2.91     $ 2.14  
 
Weighted Average Shares Outstanding – Basic 2,004,698     2,034,931     2,008,718     2,036,047  
 
Diluted Earnings per Common Share $ 2.05     $ 1.65     $ 2.90     $ 2.14  
 
Weighted Average Shares Outstanding – Diluted 2,009,495     2,039,202     2,013,878     2,041,268  

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2015 and December 31, 2014

(Unaudited)

   
June 30,
2015
  December 31,
2014
Assets:
Investments in securities:
Fixed maturities, available-for-sale, at fair value $ 101,686,777 $ 109,048,290
Equity securities, available-for-sale, at fair value 38,237,742 39,254,981
Short-term investments 8,588,140 2,576,993
Other investments 8,397,014     8,530,929
Total investments 156,909,673     159,411,193
 
Cash and cash equivalents 18,823,257 15,826,515
Premium and fees receivable 9,380,604 8,544,183
Accrued interest and dividends 1,039,031 1,063,837
Prepaid expenses and other assets 7,925,283 7,732,677
Property, net 6,121,707     5,460,805
Total Assets $ 200,199,555     $ 198,039,210
 
Liabilities and Stockholders’ Equity
Liabilities:
Reserves for claims $ 38,125,000 $ 36,677,000
Accounts payable and accrued liabilities 16,900,157 18,290,819
Current income taxes payable 423,908 92,192
Deferred income taxes, net 5,091,797     5,415,493
Total liabilities 60,540,862     60,475,504
 
Stockholders’ Equity:

Common stock - no par value (10,000,000 authorized shares; 2,001,030 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 128,634,895 124,707,196
Accumulated other comprehensive income 11,023,797     12,856,509
Total stockholders’ equity 139,658,693     137,563,706
Total Liabilities and Stockholders’ Equity $ 200,199,555     $ 198,039,210

Investors Title Company and Subsidiaries

Net Premiums Written By Branch and Agency

For the Three and Six Months Ended June 30, 2015 and 2014

   
Three Months Ended June 30,   Six Months Ended June 30,
2015 %   2014   %   2015   %   2014   %
Branch $ 7,707,773   25.3   $ 6,275,362   21.0 $ 13,313,537   24.0   $ 11,107,041   20.3
 
Agency 22,756,808     74.7   23,574,491     79.0   42,113,085     76.0   43,652,064     79.7
 
Total $ 30,464,581     100.0   $ 29,849,853     100.0   $ 55,426,622     100.0   $ 54,759,105     100.0

Contacts

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

Contacts

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