ITIC Investors Title Company

J. Allen Fine, Chairman of Investors Title Company, (NASDAQ: ITIC) announced that for the second quarter ended June 30, 2006, the Company reported net income of $4,315,537, an increase of 11.7% compared with $3,861,998 for the prior year period. Net income per diluted share equaled $1.68, an increase of 13.5% compared with $1.48 per diluted share in the same period last year. Net premiums written decreased 4.4% to $19,123,591 and revenues increased 1.2% to $23,126,621 compared with the prior year period. For the six-month period ended June 30, 2006, the Company reported net income $7,190,478, an increase of 32.1%, compared with $5,442,492 for the same six-month period in 2005. Diluted earnings per share were $2.79, an increase of 34.1% compared with $2.08 for the same six-month ended period in 2005. Net premiums written decreased 3.7% to $35,755,217 and revenues increased 2.7% to $43,305,469 compared with the prior year. Growth in the fee income generated in the exchange services segment and the Trust division coupled with an increase in investment income drove the overall increase in total revenue. Offsetting these increases was a decline in premiums written resulting primarily from a lower level of real estate activity. Operating expenses remained flat as the decline in commissions paid to agents was offset by an increase in personnel costs. The effective tax rate declined resulting primarily from higher interest rates and higher balances invested in tax-exempt securities. Chairman Fine added, "The decline in our premium revenue has followed the overall softening in the residential housing market this year. As generally expected, transaction volume and mortgage loan originations have trended down as a result of higher mortgage rates. Countering this trend slightly has been ongoing strength in the commercial real estate sector." Investors Title Company is engaged through its subsidiaries in the business of issuing and underwriting title insurance policies. The Company also provides services in connection with tax-deferred exchanges of like-kind property as well as investment management services to individuals, trusts, foundations and businesses. Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include any predictions regarding activity in the U.S. real estate market. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from anticipated and historical results. For more details on risk, uncertainties and other factors that could affect expectations, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission. -0- *T Investors Title Company and Subsidiaries Consolidated Statements of Income June 30, 2006 and 2005 (Unaudited) For The For The Three Months Six Months Ended Ended June 30 June 30 -------------------- -------------------- 2006 2005 2006 2005 --------- --------- --------- ----------- Revenues: Underwriting income: Premiums Written $19,222,175 $20,052,131 $35,968,444 $37,298,168 Less-premiums for reinsurance ceded 98,584 45,736 213,227 184,815 ----------- ----------- ----------- ----------- Net premiums written 19,123,591 20,006,395 35,755,217 37,113,353 Investment income- interest and dividends 1,034,696 808,559 2,028,750 1,561,324 Net realized gain (loss) on sales of investments (17,190) 30,801 544,457 19,907 Exchange services revenue 1,908,357 1,239,793 2,936,089 2,049,432 Other 1,077,167 768,514 2,040,956 1,439,625 ----------- ----------- ----------- ----------- Total 23,126,621 22,854,062 43,305,469 42,183,641 ----------- ----------- ----------- ----------- Operating Expenses: Commissions to agents 7,289,322 7,848,781 13,572,718 14,840,530 Provision for claims 2,030,412 2,172,108 3,885,691 4,071,113 Salaries, employee benefits and payroll taxes 4,917,022 4,413,567 9,922,869 9,780,879 Office occupancy and operations 1,266,042 1,239,870 2,731,355 2,589,076 Business development 547,505 464,388 1,053,163 891,861 Taxes, other than payroll and income 146,007 209,230 296,892 319,984 Premium and retaliatory taxes 328,542 393,770 670,610 793,315 Professional fees 737,534 653,251 1,325,156 1,091,181 Other 219,728 66,099 438,567 111,210 ----------- ----------- ----------- ----------- Total 17,482,114 17,461,064 33,897,021 34,489,149 ----------- ----------- ----------- ----------- Income Before Income Taxes 5,644,507 5,392,998 9,408,448 7,694,492 ----------- ----------- ----------- ----------- Provision For Income Taxes 1,328,970 1,531,000 2,217,970 2,252,000 ----------- ----------- ----------- ----------- Net Income $ 4,315,537 $ 3,861,998 $ 7,190,478 $ 5,442,492 =========== =========== =========== =========== Basic Earnings Per Common Share $ 1.70 $ 1.51 $ 2.83 $ 2.12 =========== =========== =========== =========== Weighted Average Shares Outstanding - Basic 2,537,883 2,563,094 2,543,475 2,563,793 =========== =========== =========== =========== Diluted Earnings Per Common Share $ 1.68 $ 1.48 $ 2.79 $ 2.08 =========== =========== =========== =========== Weighted Average Shares Outstanding - Diluted 2,572,062 2,607,611 2,578,743 2,616,418 =========== =========== =========== =========== Investors Title Company and Subsidiaries Consolidated Balance Sheets As of June 30, 2006 and December 31, 2005 (Unaudited) June 30, Dec. 31, 2006 2005 -------------------------- Assets Cash and cash equivalents $ 3,691,551 $ 14,608,481 Investments in securities: Fixed maturities: Held-to-maturity, at amortized cost 1,199,924 1,648,708 Available-for-sale, at fair value 91,429,904 75,472,342 Equity securities, available-for-sale at fair value 11,872,205 9,437,678 Short-term investments 4,386,825 7,257,734 Other investments 1,662,557 1,336,111 ------------ ------------ Total investments 110,551,415 95,152,573 Premiums receivable, net 7,680,380 7,818,558 Accrued interest and dividends 1,102,015 1,010,198 Prepaid expenses and other assets 2,021,482 1,592,326 Property acquired in settlement of claims 413,480 359,980 Property, net 5,907,523 5,466,765 Deferred income taxes, net 2,917,684 2,462,647 ------------ ------------ Total Assets $134,285,530 $128,471,528 ============ ============ Liabilities and Stockholders' Equity Liabilities: Reserves for claims $ 35,866,000 $ 34,857,000 Accounts payable and accrued liabilities 8,579,869 7,928,384 Commissions and reinsurance payables 358,385 442,098 Current income taxes payable 279,123 946,790 ------------ ------------ Total liabilities 45,083,377 44,174,272 ------------ ------------ Stockholders' Equity: Common stock - no par value (shares authorized 10,000,000; 2,534,036 and 2,549,434 shares issued and outstanding 2006 and 2005, respectively, excluding 291,792 and 297,783 shares 2006 and 2005, respectively, of common stock held by the Company's subsidiary) 1 1 Retained earnings 87,591,774 81,477,022 Accumulated other comprehensive income (net unrealized gain on investments) 1,610,378 2,820,233 ------------ ------------ Total stockholders' equity 89,202,153 84,297,256 ------------ ------------ Total Liabilities and Stockholders' Equity $134,285,530 $128,471,528 ============ ============ Investors Title Company and Subsidiaries Net Premiums Written By State June 30, 2006 and 2005 (Unaudited) For the Three Months For the Six Months Ended Ended June 30 June 30 ----------------------- ----------------------- State 2006 2005 2006 2005 ---------------------------------------------- ----------------------- Alabama $ 330,545 $ 379,273 $ 574,181 $ 730,003 Florida 327,956 462,331 606,291 771,940 Illinois 280,013 278,550 527,908 491,330 Kentucky 583,539 545,873 1,157,037 984,840 Maryland 407,905 487,882 781,674 860,528 Michigan 881,521 1,273,971 1,758,830 2,385,378 Minnesota 304,900 259,992 642,069 528,792 Mississippi 167,225 298,242 301,677 561,593 Nebraska 197,136 180,377 331,446 385,695 New York 709,195 774,372 1,212,791 1,360,377 North Carolina 9,773,452 9,606,689 18,214,934 17,365,468 Pennsylvania 410,595 448,823 726,507 827,648 South Carolina 1,536,781 1,340,095 2,938,854 3,387,988 Tennessee 614,769 722,736 1,281,092 1,290,584 Virginia 1,897,939 2,211,161 3,572,042 3,954,013 West Virginia 640,423 582,511 1,095,841 1,012,065 Other 158,281 199,253 238,844 385,880 ----------- ----------- ----------- ----------- Direct Premiums 19,222,175 20,052,131 35,962,018 37,284,122 Reinsurance Assumed - - 6,426 14,046 Reinsurance Ceded (98,584) (45,736) (213,227) (184,815) ----------- ----------- ----------- ----------- Net Premiums Written $19,123,591 $20,006,395 $35,755,217 $37,113,353 =========== =========== =========== =========== Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency June 30, 2006 and 2005 (Unaudited) For The Three Months Ended June 30 ------------------------------------------ 2006 % 2005 % ------------------------------------------ Branch $9,004,581 47 $9,131,282 46 Agency 10,119,010 53 10,875,113 54 ------------------------------------------ Total $19,123,591 100 $20,006,395 100 ========================================== Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency June 30, 2006 and 2005 (Unaudited) For The Six Months Ended June 30 ----------------------------------------------- 2006 % 2005 % ----------------------------------------------- Branch $16,730,965 47 $16,381,111 44 Agency 19,024,252 53 20,732,242 56 ------------------------- ----------------------- Total $35,755,217 100 $37,113,353 100 ================================================== *T