ITIC Investors Title Company

J. Allen Fine, Chairman of Investors Title Company (NASDAQ:ITIC), announced that for the third quarter ended September 30, 2006, the Company reported net income of $3,672,069, a decrease of 15.2% compared with $4,329,529 for the prior year period. Net income per diluted share equaled $1.44, a decrease of 13.8% compared with $1.67 per diluted share in the same period last year. Net premiums written decreased 13.1% to $18,242,676 and revenues decreased 9.6% to $21,722,334 compared with the prior year period. For the nine-month period ended September 30, 2006, the Company reported net income of $10,862,547, an increase of 11.2%, compared with $9,772,021 for the same nine-month period in 2005. Diluted earnings per share were $4.23, an increase of 13.1% compared with $3.74 for the same nine-month period in 2005. Net premiums written decreased 7.1% to $53,997,893 and revenues decreased 1.8% to $65,027,803 compared with the prior year. Premiums written declined during the latest reporting period as mortgage originations and real estate activity continued to slow from the record levels of the prior year. Slowing real estate sales also led to a decline in tax-deferred exchange volume. Revenue in the exchange segment increased due to higher rates of interest earned on funds. Also slightly offsetting the decline in premium revenue was an increase in investment income. Chairman Fine added �As generally expected, transaction volume and mortgage loan origination has continued to slow as a result of higher interest rates, inventory imbalances and other market factors. We continue to monitor conditions in the real estate market in order to best align expenditures with changing activity levels, while looking for opportunities to extend our distribution base and further improve operating efficiencies.� 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. Investors Title Company and SubsidiariesConsolidated Statements of IncomeSeptember 30, 2006 and 2005(Unaudited) � For The Three For The Nine Months Ended Months Ended September 30 September 30 2006� 2005� 2006� 2005� Revenues: Underwriting income: Premiums written $ 18,347,342� $ 21,035,519� $ 54,315,786� $ 58,333,687� Less-premiums for reinsurance ceded 104,666� 49,419� 317,893� 234,234� Net premiums written 18,242,676� 20,986,100� 53,997,893� 58,099,453� Investment income-interest and dividends 1,036,155� 812,659� 3,064,905� 2,373,983� Net realized gain (loss) on sales of investments (55,930) 69,597� 488,527� 89,504� Exchange services revenue 1,604,992� 1,222,602� 4,541,081� 3,272,034� Other 894,441� 942,365� 2,935,397� 2,381,990� Total 21,722,334� 24,033,323� 65,027,803� 66,216,964� � Operating Expenses: Commissions to agents 6,796,146� 8,209,799� 20,368,864� 23,050,329� Provision for claims 1,992,901� 2,283,372� 5,878,592� 6,354,485� Salaries, employee benefits and payroll taxes 4,901,427� 4,540,061� 14,824,296� 14,320,940� Office occupancy and operations 1,247,299� 1,133,563� 3,978,654� 3,722,639� Business development 568,982� 591,506� 1,622,145� 1,483,367� Taxes, other than payroll and income 196,707� 67,234� 493,599� 387,218� Premium and retaliatory taxes 396,851� 411,084� 1,067,461� 1,204,399� Professional fees 554,487� 370,297� 1,879,643� 1,461,478� Other 92,435� 186,878� 531,002� 298,088� Total 16,747,235� 17,793,794� 50,644,256� 52,282,943� � Income Before Income Taxes 4,975,099� 6,239,529� 14,383,547� 13,934,021� � Provision For Income Taxes 1,303,030� 1,910,000� 3,521,000� 4,162,000� � Net Income $ 3,672,069� $ 4,329,529� $ 10,862,547� $ 9,772,021� � Basic Earnings Per Common Share $ 1.46� $ 1.69� $ 4.29� $ 3.81� � Weighted Average Shares Outstanding - Basic 2,517,691� 2,559,154� 2,534,883� 2,562,247� � Diluted Earnings Per Common Share $ 1.44� $ 1.67� $ 4.23� $ 3.74� � Weighted Average Shares Outstanding - Diluted 2,550,607� 2,600,289� 2,569,585� 2,611,073� Investors Title Company and Subsidiaries Consolidated Balance Sheets As of September 30, 2006 and December 31, 2005 (Unaudited) � September 30, 2006 December 31, 2005 Assets Cash and cash equivalents $ 3,957,098� $ 14,608,481� � Investments in securities: Fixed maturities: Held-to-maturity, at amortized cost 1,200,276� 1,648,708� Available-for-sale, at fair value 96,677,536� 75,472,342� Equity securities, available-for-sale at fair value 12,363,984� 9,437,678� Short-term investments 3,000,463� 7,257,734� Other investments 1,629,631� 1,336,111� Total investments 114,871,890� 95,152,573� � Premiums and fees receivable, net 7,326,398� 7,818,558� Accrued interest and dividends 1,081,266� 1,010,198� Prepaid expenses and other assets 6,796,132� 1,592,326� Property acquired in settlement of claims 417,800� 359,980� Property, net 6,119,700� 5,466,765� Deferred income taxes, net 2,011,981� 2,462,647� � Total Assets $ 142,582,265� $ 128,471,528� � Liabilities and Stockholders' Equity Liabilities: Reserves for claims $ 36,477,000� $ 34,857,000� Accounts payable and accrued liabilities 12,758,421� 7,928,384� Commissions and reinsurance payables 353,362� 442,098� Current income taxes payable 126,255� 946,790� Total liabilities 49,715,038� 44,174,272� � Stockholders' Equity: Common stock - no par value (shares authorized 10,000,000; 2,506,784 and 2,549,434 shares issued and outstanding 2006 and 2005, respectively, excluding 291,676 and 297,783 shares 2006 and 2005, respectively, of common stock held by the Company's subsidiary) � � 1� 1� Retained earnings 90,002,406� 81,477,022� Accumulated other comprehensive income (net unrealized gain on investments) 2,864,820� 2,820,233� Total stockholders' equity 92,867,227� 84,297,256� � Total Liabilities and Stockholders' Equity $ 142,582,265� $ 128,471,528� Investors Title Company and Subsidiaries Net Premiums Written By State September 30, 2006 and 2005 (Unaudited) � For the Three Months Ended For the Nine Months Ended September 30 September 30 State � 2006� � 2005� 2006� � 2005� Alabama $ 185,318� $ 304,229� $ 759,499� $ 1,034,232� Florida 359,531� 410,075� 965,822� 1,182,015� Illinois 291,810� 244,111� 819,718� 735,441� Kentucky 618,829� 616,986� 1,775,866� 1,601,826� Maryland 344,598� 471,464� 1,126,272� 1,331,992� Michigan 825,711� 1,229,606� 2,584,541� 3,614,984� Minnesota 200,469� 227,850� 842,538� 756,642� Mississippi 225,319� 249,728� 526,996� 811,321� Nebraska 172,005� 212,204� 503,451� 597,899� New York 602,667� 998,587� 1,815,458� 2,358,964� North Carolina 9,185,274� 10,111,914� 27,400,208� 27,477,382� Pennsylvania 373,498� 460,000� 1,100,005� 1,287,648� South Carolina 2,045,816� 1,748,951� 4,984,670� 5,136,939� Tennessee 686,497� 775,812� 1,967,589� 2,066,396� Virginia 1,515,282� 2,078,630� 5,087,324� 6,032,643� West Virginia 577,884� 728,273� 1,673,725� 1,740,338� Other States 135,101� 167,099� 373,945� 552,979� Direct Premiums 18,345,609� 21,035,519� 54,307,627� 58,319,641� Reinsurance Assumed 1,733� -� 8,159� 14,046� Reinsurance Ceded (104,666) (49,419) (317,893) (234,234) Net Premiums Written $ 18,242,676� $ 20,986,100� $ 53,997,893� $ 58,099,453� Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency September 30, 2006 and 2005 (Unaudited) � For The Three Months Ended For The Nine Months Ended September 30 September 30 2006� % 2005� % 2006� % 2005� % Branch $ 8,602,081� 47� $ 9,636,878� 46� $ 25,333,046� 47� $ 26,017,989� 45� � Agency $ 9,640,595� 53� $ 11,349,222� 54� $ 28,664,847� 53� $ 32,081,464� 55� � Total $ 18,242,676� 100� $ 20,986,100� 100� $ 53,997,893� 100� $ 58,099,453� 100� J. Allen Fine, Chairman of Investors Title Company (NASDAQ:ITIC), announced that for the third quarter ended September 30, 2006, the Company reported net income of $3,672,069, a decrease of 15.2% compared with $4,329,529 for the prior year period. Net income per diluted share equaled $1.44, a decrease of 13.8% compared with $1.67 per diluted share in the same period last year. Net premiums written decreased 13.1% to $18,242,676 and revenues decreased 9.6% to $21,722,334 compared with the prior year period. For the nine-month period ended September 30, 2006, the Company reported net income of $10,862,547, an increase of 11.2%, compared with $9,772,021 for the same nine-month period in 2005. Diluted earnings per share were $4.23, an increase of 13.1% compared with $3.74 for the same nine-month period in 2005. Net premiums written decreased 7.1% to $53,997,893 and revenues decreased 1.8% to $65,027,803 compared with the prior year. Premiums written declined during the latest reporting period as mortgage originations and real estate activity continued to slow from the record levels of the prior year. Slowing real estate sales also led to a decline in tax-deferred exchange volume. Revenue in the exchange segment increased due to higher rates of interest earned on funds. Also slightly offsetting the decline in premium revenue was an increase in investment income. Chairman Fine added "As generally expected, transaction volume and mortgage loan origination has continued to slow as a result of higher interest rates, inventory imbalances and other market factors. We continue to monitor conditions in the real estate market in order to best align expenditures with changing activity levels, while looking for opportunities to extend our distribution base and further improve operating efficiencies." 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 September 30, 2006 and 2005 (Unaudited) For The Three For The Nine Months Ended Months Ended September 30 September 30 ------------------------ ------------------------ 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Revenues: Underwriting income: Premiums written $18,347,342 $21,035,519 $54,315,786 $58,333,687 Less-premiums for reinsurance ceded 104,666 49,419 317,893 234,234 ----------- ----------- ----------- ----------- Net premiums written 18,242,676 20,986,100 53,997,893 58,099,453 Investment income- interest and dividends 1,036,155 812,659 3,064,905 2,373,983 Net realized gain (loss) on sales of investments (55,930) 69,597 488,527 89,504 Exchange services revenue 1,604,992 1,222,602 4,541,081 3,272,034 Other 894,441 942,365 2,935,397 2,381,990 ----------- ----------- ----------- ----------- Total 21,722,334 24,033,323 65,027,803 66,216,964 ----------- ----------- ----------- ----------- Operating Expenses: Commissions to agents 6,796,146 8,209,799 20,368,864 23,050,329 Provision for claims 1,992,901 2,283,372 5,878,592 6,354,485 Salaries, employee benefits and payroll taxes 4,901,427 4,540,061 14,824,296 14,320,940 Office occupancy and operations 1,247,299 1,133,563 3,978,654 3,722,639 Business development 568,982 591,506 1,622,145 1,483,367 Taxes, other than payroll and income 196,707 67,234 493,599 387,218 Premium and retaliatory taxes 396,851 411,084 1,067,461 1,204,399 Professional fees 554,487 370,297 1,879,643 1,461,478 Other 92,435 186,878 531,002 298,088 ----------- ----------- ----------- ----------- Total 16,747,235 17,793,794 50,644,256 52,282,943 ----------- ----------- ----------- ----------- Income Before Income Taxes 4,975,099 6,239,529 14,383,547 13,934,021 ----------- ----------- ----------- ----------- Provision For Income Taxes 1,303,030 1,910,000 3,521,000 4,162,000 ----------- ----------- ----------- ----------- Net Income $ 3,672,069 $ 4,329,529 $10,862,547 $ 9,772,021 =========== =========== =========== =========== Basic Earnings Per Common Share $ 1.46 $ 1.69 $ 4.29 $ 3.81 =========== =========== =========== =========== Weighted Average Shares Outstanding - Basic 2,517,691 2,559,154 2,534,883 2,562,247 =========== =========== =========== =========== Diluted Earnings Per Common Share $ 1.44 $ 1.67 $ 4.23 $ 3.74 =========== =========== =========== =========== Weighted Average Shares Outstanding - Diluted 2,550,607 2,600,289 2,569,585 2,611,073 =========== =========== =========== =========== *T -0- *T Investors Title Company and Subsidiaries Consolidated Balance Sheets As of September 30, 2006 and December 31, 2005 (Unaudited) September 30, December 31, 2006 2005 -------------- ------------ Assets Cash and cash equivalents $ 3,957,098 $ 14,608,481 Investments in securities: Fixed maturities: Held-to-maturity, at amortized cost 1,200,276 1,648,708 Available-for-sale, at fair value 96,677,536 75,472,342 Equity securities, available-for- sale at fair value 12,363,984 9,437,678 Short-term investments 3,000,463 7,257,734 Other investments 1,629,631 1,336,111 -------------- ------------ Total investments 114,871,890 95,152,573 Premiums and fees receivable, net 7,326,398 7,818,558 Accrued interest and dividends 1,081,266 1,010,198 Prepaid expenses and other assets 6,796,132 1,592,326 Property acquired in settlement of claims 417,800 359,980 Property, net 6,119,700 5,466,765 Deferred income taxes, net 2,011,981 2,462,647 -------------- ------------ Total Assets $ 142,582,265 $128,471,528 ============== ============ Liabilities and Stockholders' Equity Liabilities: Reserves for claims $ 36,477,000 $ 34,857,000 Accounts payable and accrued liabilities 12,758,421 7,928,384 Commissions and reinsurance payables 353,362 442,098 Current income taxes payable 126,255 946,790 -------------- ------------ Total liabilities 49,715,038 44,174,272 -------------- ------------ Stockholders' Equity: Common stock - no par value (shares authorized 10,000,000; 2,506,784 and 2,549,434 shares issued and outstanding 2006 and 2005, respectively, excluding 291,676 and 297,783 shares 2006 and 2005, respectively, of common stock held by the Company's subsidiary) 1 1 Retained earnings 90,002,406 81,477,022 Accumulated other comprehensive income (net unrealized gain on investments) 2,864,820 2,820,233 -------------- ------------ Total stockholders' equity 92,867,227 84,297,256 -------------- ------------ Total Liabilities and Stockholders' Equity $ 142,582,265 $128,471,528 ============== ============ *T -0- *T Investors Title Company and Subsidiaries Net Premiums Written By State September 30, 2006 and 2005 (Unaudited) For the Three Months For the Nine Months Ended Ended September 30 September 30 ----------------------- ----------------------- State 2006 2005 2006 2005 ---------------------------------------------- ----------------------- Alabama $ 185,318 $ 304,229 $ 759,499 $ 1,034,232 Florida 359,531 410,075 965,822 1,182,015 Illinois 291,810 244,111 819,718 735,441 Kentucky 618,829 616,986 1,775,866 1,601,826 Maryland 344,598 471,464 1,126,272 1,331,992 Michigan 825,711 1,229,606 2,584,541 3,614,984 Minnesota 200,469 227,850 842,538 756,642 Mississippi 225,319 249,728 526,996 811,321 Nebraska 172,005 212,204 503,451 597,899 New York 602,667 998,587 1,815,458 2,358,964 North Carolina 9,185,274 10,111,914 27,400,208 27,477,382 Pennsylvania 373,498 460,000 1,100,005 1,287,648 South Carolina 2,045,816 1,748,951 4,984,670 5,136,939 Tennessee 686,497 775,812 1,967,589 2,066,396 Virginia 1,515,282 2,078,630 5,087,324 6,032,643 West Virginia 577,884 728,273 1,673,725 1,740,338 Other States 135,101 167,099 373,945 552,979 ----------- ----------- ----------- ----------- Direct Premiums 18,345,609 21,035,519 54,307,627 58,319,641 Reinsurance Assumed 1,733 - 8,159 14,046 Reinsurance Ceded (104,666) (49,419) (317,893) (234,234) ----------- ----------- ----------- ----------- Net Premiums Written $18,242,676 $20,986,100 $53,997,893 $58,099,453 =========== =========== =========== =========== *T -0- *T Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency September 30, 2006 and 2005 (Unaudited) For The Three Months Ended September 30 ------------------------------------------------------- 2006 % 2005 % ------------------------------------------------------- Branch $8,602,081 47 $9,636,878 46 Agency $9,640,595 53 $11,349,222 54 ------------------------------------------------------- Total $18,242,676 100 $20,986,100 100 ======================================================= Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency September 30, 2006 and 2005 (Unaudited) For The Nine Months Ended September 30 -------------------------------------------------------- 2006 % 2005 % -------------------------------------------------------- Branch $25,333,046 47 $26,017,989 45 Agency $28,664,847 53 $32,081,464 55 -------------------------------------------------------- Total $53,997,893 100 $58,099,453 100 ======================================================== *T