Investors Title Company (NASDAQ: ITIC) today announced its
results for the second quarter ended June 30, 2016. Net income
attributable to the Company increased 9.9% to $4.5 million, or
$2.35 per diluted share, versus $4.1 million, or $2.05 per diluted
share, for the prior year period.
Revenues decreased 4.7% versus the prior year quarter to $33.8
million, mainly due to a slight reduction in net premiums written
and a net realized loss on investments. Net premiums written
decreased 2.2% to $29.8 million, as a greater share of policy
volume originated in markets with lower average premium rates. The
unfavorable geographic mix was partially offset by higher levels of
purchase transactions, as generally improving economic conditions
and increases in real estate values drove higher mortgage volumes.
Lower average interest rates drove refinance activity up versus the
first quarter, although volumes were down slightly versus the prior
year period.
Operating expenses decreased 8.1% versus the prior year quarter
to $27.3 million, primarily due to a decrease in the provision for
claims, stemming from favorable loss development in recent policy
years, and a decrease in agent commissions, reflecting a higher
proportion of business written in markets with direct operations.
Payroll expenses were up 4.5% to $7.2 million due to normal
inflationary increases and an increase in the accrual for incentive
compensation. In total, all other categories of operating expenses
were down marginally versus the prior year period.
For the six months ended June 30, 2016, net income attributable
to the Company increased 8.5% to $6.3 million, or $3.28 per diluted
share, versus $5.8 million, or $2.90 per diluted share, for the
prior year period. Revenues decreased 8.0% to $58.7 million versus
the prior year period, while operating expenses decreased 10.9% to
$49.6 million. 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, “We are pleased to report a record
level of earnings for the quarter, driven by a higher proportion of
direct business, favorable loss development trends, and stable
overhead expenses. An improving economy, coupled with an unexpected
drop in mortgage interest rates, resulted in the continuation of an
active real estate market. We remain optimistic that these positive
economic trends will continue to bring strong transaction volumes
and sustained levels of home prices throughout the remainder of the
year.”
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 the
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,
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 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, 2015, 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, 2016 and 2015
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015
2016 2015
Revenues:
Net premiums written
$ 29,790,232 $ 30,464,581
$ 51,299,229 $ 55,426,622 Investment income
–
interest and dividends
1,167,005 1,131,487
2,318,016
2,309,526 Net realized (loss) gain on investments
(14,828
) 925,164
135,002 939,967 Other
2,885,302
2,960,575
4,937,486
5,107,501 Total Revenues
33,827,711 35,481,807
58,689,733 63,783,616
Operating Expenses: Commissions to agents
15,674,346
16,898,691
27,207,228 31,495,230 Provision for claims
647,912 2,130,810
663,871 2,917,422 Salaries,
employee benefits and payroll taxes
7,173,198 6,866,632
14,645,149 14,144,081 Office occupancy and operations
1,535,902 1,443,297
3,029,762 2,747,518 Business
development
606,258 578,194
1,086,648 1,065,169
Filing fees, franchise and local taxes
267,103 221,098
497,157 437,741 Premium and retaliatory taxes
574,249
634,747
886,080 1,111,338 Professional and contract labor
fees
537,446 680,483
1,076,099 1,264,590 Other
269,250 241,358
472,231
444,906 Total Operating Expenses
27,285,664
29,695,310
49,564,225 55,627,995
Income before Income Taxes 6,542,047 5,786,497
9,125,508 8,155,621
Provision for Income Taxes
2,012,000 1,666,000
2,791,000 2,309,000
Net Income
4,530,047 4,120,497
6,334,508 5,846,621
Net
(Gain) Loss Attributable to Noncontrolling Interests
(667 ) —
8,912 —
Net Income Attributable to the Company $
4,529,380 $ 4,120,497
$
6,343,420 $ 5,846,621
Basic Earnings per
Common Share $ 2.36 $ 2.06
$ 3.29 $ 2.91
Weighted
Average Shares Outstanding – Basic 1,923,213
2,004,698
1,928,766 2,008,718
Diluted Earnings per Common Share $
2.35 $ 2.05
$ 3.28
$ 2.90
Weighted Average Shares Outstanding –
Diluted 1,928,625 2,009,495
1,935,325 2,013,878
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of June 30, 2016 and December
31, 2015
(Unaudited)
June 30, 2016 December
31,2015
Assets: Investments in securities: Fixed maturities,
available-for-sale, at fair value
$ 113,672,233 $
106,066,384 Equity securities, available-for-sale, at fair value
38,961,905 37,513,464 Short-term investments
2,665,302 6,865,406 Other investments
9,240,525
10,106,828 Total investments
164,539,965
160,552,082 Cash and cash equivalents
22,619,643 21,790,068 Premium and fees receivable
8,027,953 8,392,697 Accrued interest and dividends
1,067,546 1,004,126 Prepaid expenses and other assets
7,709,195 12,634,105 Property, net
7,827,159
7,148,951 Current income taxes recoverable
1,767,406
—
Total Assets $ 213,558,867
$ 211,522,029
Liabilities and Stockholders’
Equity Liabilities: Reserves for claims
$
37,205,000 $ 37,788,000 Accounts payable and accrued
liabilities
18,393,997 25,043,588 Current income taxes
payable
— 210,355 Deferred income taxes, net
9,772,206 5,703,006 Total liabilities
65,371,203 68,744,949
Stockholders’
Equity:
Common stock – no par value (10,000,000
authorized shares; 1,916,216 and
1,949,797 shares issued and outstanding
2016 and 2015, respectively,
excluding 291,676 shares for 2016 and 2015
of common stock held by the
Company's subsidiary)
1 1 Retained earnings
133,878,480 131,186,866
Accumulated other comprehensive income
14,219,544
11,483,015 Total stockholders’ equity attributable to the
Company
148,098,025 142,669,882 Noncontrolling interests
89,639 107,198 Total stockholders’ equity
148,187,664 142,777,080
Total Liabilities
and Stockholders’ Equity $ 213,558,867
$ 211,522,029
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three and Six Months Ended June
30, 2016 and 2015
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30, 2016 %
2015 %
2016 %
2015 %
Branch $ 8,413,116
28.2 $ 7,707,773 25.3
$
13,890,773 27.1 $ 13,313,537
24.0
Agency 21,377,116
71.8 22,756,808 74.7
37,408,456 72.9 42,113,085
76.0
Total $ 29,790,232
100.0 $ 30,464,581 100.0
$ 51,299,229 100.0
$ 55,426,622 100.0
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version on businesswire.com: http://www.businesswire.com/news/home/20160803005243/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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