Investors Title Company today announced its results for the
third quarter ended September 30, 2016. Net income attributable to
the Company increased 81.0% to an all-time record high of $8.1
million, or $4.29 per diluted share, versus $4.5 million, or $2.28
per diluted share, for the prior year period.
Revenues increased 18.7% versus the prior year quarter to an
all-time record high of $41.0 million, mainly due to an 18.0%
increase in net premiums written. The increase in premiums is due
to higher aggregate coverage insured resulting from increased
transaction volume and real estate values, as well as higher
average premium rates.
Operating expenses increased 5.4% versus the prior year quarter
to $29.6 million, primarily due to increases in commissions and
payroll expenses, partially offset by a benefit for claims.
Commissions increased commensurate with the increase in agency
premium volume. Payroll expenses increased 19.3% to $8.3 million,
mainly due to an increase in the accrual for incentive compensation
and fluctuations in the level of capitalized salaries related to
software development. There was a benefit for claims during the
current quarter, stemming from favorable loss development in recent
policy years. Claim experience in recent years has improved in part
due to a decrease in the level of foreclosure activity. All other
categories of operating expenses, in total, were up 3.0% versus the
prior year period.
For the nine months ended September 30, 2016, net income
attributable to the Company increased 40.0% to $14.5 million, or
$7.53 per diluted share, versus $10.3 million, or $5.17 per diluted
share, for the prior year period. Revenues increased 1.4% to $99.7
million versus the prior year period, while operating expenses
decreased 5.4% to $79.2 million. Commissions decreased 5.1%, mainly
due to a decline in agency premiums and concentration of business
in markets with lower average commission rates. Variances in
claims, payroll, and other categories of expenses were shaped
predominantly by the same factors that affected the third
quarter.
Chairman J. Allen Fine added, “We are very pleased with this
quarter’s results. A number of factors drove the strong revenue
growth including improving economic conditions in our core markets,
strong seasonal demand for housing, and solid underlying real
estate fundamentals. In addition to higher levels of premiums
written, our record net income resulted from a combination of items
including a higher percentage of direct business, favorable claims
development and stable overhead expenses.”
“As always we remain focused on profitably growing our business
over the long term, enhancing our competitive strengths and
capitalizing on market opportunities.”
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; difficulties managing growth, whether organic or through
acquisitions; possible non-satisfaction of closing conditions
related to 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, 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 Nine Months Ended
September 30, 2016 and 2015
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015
2016 2015
Revenues:
Net premiums written
$ 36,511,373 $ 30,945,532
$ 87,810,602 $ 86,372,154 Investment income
–
interest and dividends
1,160,983 1,117,529
3,478,999
3,427,055 Net realized gain (loss) on investments
439,326
(338,631 )
574,328 601,336 Other
2,890,023
2,816,828
7,827,509 7,924,329
Total Revenues
41,001,705 34,541,258
99,691,438 98,324,874
Operating Expenses: Commissions to agents
18,739,151
16,898,323
45,946,379 48,393,553 (Benefit) provision for
claims
(1,067,853 ) 703,979
(403,982 )
3,621,401 Salaries, employee benefits and payroll taxes
8,300,823 6,957,874
22,945,972 21,101,955 Office
occupancy and operations
1,496,948 1,342,288
4,526,710 4,089,806 Business development
608,532
568,189
1,695,180 1,633,358 Filing fees, franchise and local
taxes
191,574 134,880
688,731 572,621 Premium and
retaliatory taxes
673,551 573,336
1,559,631 1,684,674
Professional and contract labor fees
523,504 661,879
1,599,603 1,926,469
Other
157,308 264,012
629,539
708,918 Total Operating Expenses
29,623,538
28,104,760
79,187,763
83,732,755
Income before Income Taxes
11,378,167 6,436,498
20,503,675 14,592,119
Provision for Income Taxes 3,249,000
1,941,000
6,040,000 4,250,000
Net Income 8,129,167 4,495,498
14,463,675 10,342,119
Net (Gain) Loss Attributable
to Noncontrolling Interests (2,228 )
(4,536 )
6,684 (4,536 )
Net
Income Attributable to the Company $ 8,126,939
$ 4,490,962
$ 14,470,359
$ 10,337,583
Basic Earnings per Common
Share $ 4.30 $ 2.28
$ 7.55 $ 5.18
Weighted
Average Shares Outstanding – Basic 1,888,870
1,967,923
1,915,468 1,995,120
Diluted Earnings per Common Share $
4.29 $ 2.28
$ 7.53
$ 5.17
Weighted Average Shares Outstanding
– Diluted 1,895,592 1,972,233
1,921,999 2,000,043
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of September 30, 2016 and
December 31, 2015
(Unaudited)
September 30, 2016 December 31,2015
Assets: Investments in securities: Fixed maturities,
available-for-sale, at fair value
$ 111,038,924 $
106,066,384 Equity securities, available-for-sale, at fair value
39,834,879 37,513,464 Short-term investments
3,925,296 6,865,406 Other investments
10,626,505
10,106,828 Total investments
165,425,604
160,552,082 Cash and cash equivalents
26,898,991 21,790,068 Premium and fees receivable
9,358,570 8,392,697 Accrued interest and dividends
1,389,526 1,004,126 Prepaid expenses and other assets
10,931,270 12,634,105 Property, net
7,843,079
7,148,951 Current income taxes recoverable
1,261,289
—
Total Assets $ 223,108,329
$ 211,522,029
Liabilities and Stockholders’
Equity Liabilities: Reserves for claims
$
35,536,000 $ 37,788,000 Accounts payable and accrued
liabilities
24,705,653 25,043,588 Current income taxes
payable
— 210,355 Deferred income taxes, net
10,749,877 5,703,006 Total liabilities
70,991,530 68,744,949
Stockholders’
Equity:
Common stock – no par value (10,000,000
authorized shares; 1,884,283
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
138,575,372 131,186,866
Accumulated other comprehensive income
13,449,558
11,483,015 Total stockholders’ equity attributable to the
Company
152,024,931 142,669,882 Noncontrolling interests
91,868 107,198 Total stockholders’ equity
152,116,799 142,777,080
Total Liabilities
and Stockholders’ Equity $ 223,108,329
$ 211,522,029
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three and Nine Months Ended
September 30, 2016 and 2015
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30, 2016 %
2015 %
2016 % 2015
%
Branch $ 10,860,361 29.7 $
7,967,826 25.7
$ 24,751,134 28.2
$ 21,281,363 24.6
Agency 25,651,012
70.3 22,977,706 74.3
63,059,468 71.8 65,090,791
75.4
Total $ 36,511,373
100.0 $ 30,945,532 100.0
$ 87,810,602 100.0 $
86,372,154 100.0
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version on businesswire.com: http://www.businesswire.com/news/home/20161102005293/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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