Investors Title Company today announced its results for the
second quarter ended June 30, 2010. Net income increased 20.0% for
the second quarter to $2,537,560, or $1.11 per diluted share,
compared with $2,115,473, or $0.92 per diluted share, for the prior
year period.
Revenues decreased 25.0% to $16,218,766 versus the prior year
period, primarily due to a 27.9% decrease in net premiums written.
Although premiums resulting from purchase transactions increased,
the continued sharp decline in refinance premiums versus the prior
year period resulted in an overall unfavorable comparison.
Investment income decreased 4.6% to $915,852 as a result of
unfavorable trends in the interest rate environment.
Operating expenses decreased 29.5% to $13,216,206 versus the
prior year period, primarily due to decreases in commissions to
agents and the provision for claims. Commissions to agents
decreased 26.7%, commensurate with the decrease in premium volume.
The provision for claims decreased 95.9% due to a combination of
lower premium volume versus the prior year period, a recovery of
approximately $942,000 from the Company’s fidelity bond against a
prior year claim, and favorable claims experience in prior policy
years. In addition, salaries and related expenses decreased 4.0%,
and office occupancy and operations expenses decreased 19.0%, due
to continued emphasis on overhead expense management.
For the six-month period ended June 30, 2010, the Company
reported net income of $2,554,975, a decrease of 28.0%, compared
with $3,550,436 for the prior year period. Diluted income per share
was $1.11, a decrease of 27.9%, compared with $1.54 for the prior
year period. Net premiums written decreased 28.0% to $25,425,252,
investment income decreased 6.5% to $1,822,474, and total revenues
decreased 25.8% to $29,916,177. Operating expenses decreased 24.6%
to $26,898,202 versus the prior year period, largely as a result of
factors noted above for the quarter.
Chairman J. Allen Fine added, “We are pleased to report an
improvement in operating results during the quarter even as overall
mortgage originations continued to decline. Although the extension
of the deadline for the homebuyer Federal tax credit contributed to
an increase in purchase originations, the spike in activity did not
completely offset an overall lower volume of mortgage refinancing.
We were pleased to see a slight reduction in our claims loss rate,
which contributed to a favorable comparison in the provision for
claims, along with the recovery from a fidelity bond. Our balance
sheet and financial condition remain strong, and operationally we
continue to emphasize efficiency improvements and the expansion of
our agency base.”
Investors Title Company is engaged through its subsidiaries in
the business of issuing and underwriting 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
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. Such risks and uncertainties include,
without limitation: 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; declines in the performance of the Company’s
investments; government regulation; 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, 2009, 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, 2010 and 2009 (Unaudited)
Three Months Ended Six Months Ended June
30 June 30
2010
2009
2010
2009
Revenues: Underwriting income: Premiums Written $
13,665,348 $ 18,945,561 $
25,495,169 $ 35,356,158
Less-premiums for reinsurance ceded
26,398 33,173
69,917 33,950 Net premiums written
13,638,950
18,912,388
25,425,252 35,322,208 Investment income-interest
and dividends
915,852 960,454
1,822,474 1,950,089 Net
realized gain (loss) on investments
325,780 9,995
350,930 (289,942 ) Other
1,338,184 1,737,722
2,317,521 3,320,613 Total Revenues
16,218,766
21,620,559
29,916,177 40,302,968
Operating
Expenses: Commissions to agents
6,476,376 8,831,742
12,075,827 16,363,951 Provision for claims
112,415
2,751,814
1,424,819 4,798,940 Salaries, employee benefits
and payroll taxes
4,345,961 4,529,066
8,830,273
9,667,242 Office occupancy and operations
978,822 1,208,140
2,067,227 2,306,722 Business development
352,365
329,011
626,661 591,828 Filing fees and taxes, other than
payroll and income
147,277 185,204
292,699 342,255
Premium and retaliatory taxes
281,784 375,510
582,730
742,772 Professional and contract labor fees
338,794 337,290
703,872 651,989 Other
182,412 204,309
294,094
189,833 Total Operating Expenses
13,216,206
18,752,086
26,898,202 35,655,532
Income
Before Income Taxes 3,002,560 2,868,473
3,017,975
4,647,436
Provision For Income Taxes
465,000 753,000
463,000 1,097,000
Net Income $
2,537,560 $ 2,115,473 $
2,554,975
$ 3,550,436
Basic Earnings Per Common Share $
1.11 $ 0.92 $
1.12 $ 1.55
Weighted
Average Shares Outstanding - Basic 2,285,653 2,296,644
2,285,392 2,295,298
Diluted Earnings Per
Common Share $
1.11 $ 0.92 $
1.11 $ 1.54
Weighted Average Shares Outstanding - Diluted
2,293,199 2,296,644
2,293,232 2,300,017
Investors Title Company and Subsidiaries Consolidated
Balance Sheets As of June 30, 2010 and December 31, 2009
(Unaudited) June 30, 2010 December 31,
2009
Assets Investments in securities: Fixed maturities:
Held-to-maturity, at amortized cost $ - $ 2,000 Available-for-sale,
at fair value
89,134,390 88,801,186 Equity securities,
available-for-sale, at fair value
11,553,523 11,854,301
Short-term investments
23,422,684 20,717,434 Other
investments
2,239,326 2,307,220 Total investments
126,349,923 123,682,141 Cash and cash equivalents
5,247,678 8,733,221 Premiums and fees receivable, net
5,417,917 5,170,476 Accrued interest and dividends
1,163,874 1,122,806 Prepaid expenses and other assets
2,051,941 1,815,653 Property acquired in settlement of
claims
158,129 175,476 Property, net
3,697,815
3,894,724 Current income taxes receivable
949,449 - Deferred
income taxes, net
561,860 1,833,207
Total
Assets $
145,598,586 $ 146,427,704
Liabilities
and Stockholders' Equity Liabilities: Reserves for
claims $
37,752,000 $ 39,490,000 Accounts payable and
accrued liabilities
8,494,940 9,008,337 Current income taxes
payable - 670,290 Total liabilities
46,246,940 49,168,627
Stockholders' Equity: Common stock - no par value
(shares authorized 10,000,000; 2,284,909 and 2,285,289 shares
issued and outstanding as of June 30, 2010 and December 31, 2009,
respectively, excluding 291,676 shares for 2010 and 2009 of common
stock held by the Company's subsidiary)
1 1
Retained earnings
94,777,437 92,528,818 Accumulated other comprehensive income
4,574,208 4,730,258 Total stockholders' equity
99,351,646 97,259,077
Total Liabilities and
Stockholders' Equity $ 145,598,586 $ 146,427,704
Investors Title Company and Subsidiaries Net Premiums
Written By State For the Three and Six Months Ended June 30,
2010 and 2009 (Unaudited)
Three Months Ended Six Months Ended June 30
June 30 State 2010
2009
2010
2009 Illinois $
568,043 $ 765,631 $
1,003,534
$ 1,857,221 Kentucky
869,249 949,874
1,500,047
1,820,177 Michigan
1,026,010 1,778,422
1,982,856
2,630,695 New York
472,739 880,406
874,299 1,835,843
North Carolina
5,762,751 8,293,158
10,684,455
15,857,365 Pennsylvania
667,906 876,633
1,119,533
1,485,818 South Carolina
1,377,219 1,345,921
2,746,405 2,531,851 Tennessee
530,672 752,791
1,028,510 1,318,559 Virginia
1,090,823 1,472,687
2,056,391 2,700,451 West Virginia
553,479 610,139
965,691 1,157,720 Other
746,457 1,219,899
1,523,514 2,159,658
Direct
Premiums $
13,665,348 $ 18,945,561 $
25,485,235 $
35,355,358 Reinsurance Assumed
- -
9,934 800
Reinsurance Ceded
(26,398 ) (33,173 )
(69,917
) (33,950 )
Net Premiums Written $
13,638,950
$ 18,912,388 $
25,425,252 $ 35,322,208
Investors Title Company and Subsidiaries Net
Premiums Written By Branch and Agency For the Three and Six
Months Ended June 30, 2010 and 2009 (Unaudited)
Three Months Ended Six Months Ended June 30 June 30
2010 % 2009
%
2010 % 2009
% Branch $ 4,420,264 32.4
$ 6,656,374 35.2
$ 8,170,064 32.1 $ 12,699,378
36.0
Agency 9,218,686
67.6 12,256,014 64.8
17,255,188 67.9 22,622,830
64.0
Total $ 13,638,950
100.0 $ 18,912,388 100.0
$ 25,425,252 100 $ 35,322,208
100.0
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