Investors Title Company Announces First Quarter 2018 Financial Results

CHAPEL HILL, N.C.--()--Investors Title Company (NASDAQ: ITIC) today announced its results for the quarter ended March 31, 2018. The Company reported net income attributable to the Company of $4.2 million, or $2.20 per diluted share, compared to $4.5 million, or $2.36 per diluted share, for the prior year period.

Revenues for the quarter decreased 10.6% to $33.8 million, primarily as a result of a decrease in net premiums written. Premiums decreased 9.7%, mainly due to lower levels of refinance activity following recent increases in mortgage interest rates. The volume decreases were partially offset by a continuation of increases in real estate values in our core markets. A new accounting standard which requires unrealized changes in the market value of marketable equity investments to be recognized in income resulted in recognition of a $642,000 loss for the quarter.

Operating expenses decreased 8.9% versus the prior year period, mainly due to decreases in agent commissions commensurate with the decrease in premium volume, and a benefit in claims expense resulting from favorable loss development. Personnel costs increased as a result of the effect of normal inflationary increases on salaries and benefits, as well as modest increases in staffing levels in support of growth. In addition, the effective tax rate declined to 20.1% as a result of legislative reform.

Chairman J. Allen Fine commented, “As expected, higher interest rates dampened refinance activity, particularly in our markets which rely heavily on referrals from lenders. We are encouraged, however, by the fact that purchase activity remains strong. As we enter 2018, we expect low levels of unemployment and solid wage growth to help offset the effects of higher interest rates and limited inventories of residential housing in certain markets, resulting in another year of overall healthy demand for real estate, mortgage loans, and title insurance.”

Investors Title Company’s subsidiaries issue and underwrite title insurance policies. The Company also provides investment management services and services in connection with tax-deferred exchanges of like-kind property.

Certain statements contained herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, among others, any statements regarding the Company’s expected performance for this year, future home price fluctuations, changes in home purchase or refinance activity and the mix thereof, interest rate changes, expansion of the Company’s market presence, enhancing competitive strengths, positive development in housing affordability, wages, 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; loss of agency relationships, or significant reductions in agent-originated business; difficulties managing growth, whether organic or through acquisitions 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, 2017, as filed with the Securities and Exchange Commission, and in subsequent filings.

 

Investors Title Company and Subsidiaries

Consolidated Statements of Income

For the Three Months Ended March 31, 2018 and 2017

(in thousands, except per share amounts)

(unaudited)

 
      Three Months Ended March 31,  
  2018     2017  
Revenues:      
Net premiums written $ 29,559 $ 32,738
Escrow and other title-related fees 1,504 2,015
Non-title services 1,592 1,363
Interest and dividends 1,118 1,097
Other investment income 269 229
Net realized investment gains 153 103
Net unrealized loss on equity investments (642 )
Other     223         248  
Total Revenues     33,776         37,793  
 
Operating Expenses:
Commissions to agents 14,025 16,331
(Benefit) provision for claims (1,406 ) 720
Personnel expenses 11,340 9,958
Office and technology expenses 2,069 1,939
Other expenses     2,523         2,394  
Total Operating Expenses     28,551         31,342  
 
Income before Income Taxes 5,225 6,451
 
Provision for Income Taxes     1,052         1,985  
 
Net Income 4,173 4,466
 
Net Loss Attributable to Noncontrolling Interests     3         10  
 
Net Income Attributable to the Company   $ 4,176       $ 4,476  
 
Basic Earnings per Common Share   $ 2.21       $ 2.37  
 
Weighted Average Shares Outstanding – Basic     1,886         1,886  
 
Diluted Earnings per Common Share   $ 2.20       $ 2.36  
 
Weighted Average Shares Outstanding – Diluted     1,897         1,895  
 

 

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2018 and December 31, 2017

(in thousands)

(unaudited)

 
     

March 31,
2018

   

December 31,
2017

 
Assets      
 
Cash and cash equivalents $ 22,174 $ 20,214
 
Investments:
Fixed maturities, available-for-sale, at fair value 100,389 103,341
Equity securities, at fair value 47,252 47,367
Short-term investments 21,144 23,780
Other investments     11,601       12,032  
Total investments     180,386       186,520  
 
Premiums and fees receivable 9,889 10,031
Accrued interest and dividends 1,359 1,100
Prepaid expenses and other receivables 7,904 7,730
Property, net 10,376 10,173
Goodwill and other intangible assets, net 11,176 11,357
Other assets 1,417 1,403
Current income taxes receivable           385  
Total Assets   $ 244,681     $ 248,913  
 
Liabilities and Stockholders’ Equity
 
Liabilities:
Reserve for claims $ 32,770 $ 34,801
Accounts payable and accrued liabilities 22,876 27,565
Current income taxes payable 215
Deferred income taxes, net     8,758       8,626  
Total liabilities     64,619       70,992  
 
Stockholders’ Equity:
Common stock no par value (10,000 authorized shares; 1,887 and 1,886 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)
Retained earnings 178,971 161,891
Accumulated other comprehensive income     1,009       15,945  
Total stockholders’ equity attributable to the Company 179,980 177,836
Noncontrolling interests     82       85  
Total stockholders’ equity     180,062       177,921  
Total Liabilities and Stockholders’ Equity   $ 244,681     $ 248,913  
 

 

Investors Title Company and Subsidiaries

Net Premiums Written By Branch and Agency

For the Three Months Ended March 31, 2018 and 2017

(in thousands)

(unaudited)

 
      Three Months Ended March 31,  
  2018     %     2017     %  
Branch   $ 8,617     29.2     $ 9,283     28.4
 
Agency     20,942     70.8       23,455     71.6  
 
Total   $ 29,559     100.0     $ 32,738     100.0  

Contacts

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

Contacts

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