Investors Title Company (NASDAQ: ITIC) today announced its
results for the quarter ended March 31, 2018. The Company reported
net income attributable to the Company of $4.2 million, or $2.20
per diluted share, compared to $4.5 million, or $2.36 per diluted
share, for the prior year period.
Revenues for the quarter decreased 10.6% to $33.8 million,
primarily as a result of a decrease in net premiums written.
Premiums decreased 9.7%, mainly due to lower levels of refinance
activity following recent increases in mortgage interest rates. The
volume decreases were partially offset by a continuation of
increases in real estate values in our core markets. A new
accounting standard which requires unrealized changes in the market
value of marketable equity investments to be recognized in income
resulted in recognition of a $642,000 loss for the quarter.
Operating expenses decreased 8.9% versus the prior year period,
mainly due to decreases in agent commissions commensurate with the
decrease in premium volume, and a benefit in claims expense
resulting from favorable loss development. Personnel costs
increased as a result of the effect of normal inflationary
increases on salaries and benefits, as well as modest increases in
staffing levels in support of growth. In addition, the effective
tax rate declined to 20.1% as a result of legislative reform.
Chairman J. Allen Fine commented, “As expected, higher interest
rates dampened refinance activity, particularly in our markets
which rely heavily on referrals from lenders. We are encouraged,
however, by the fact that purchase activity remains strong. As we
enter 2018, we expect low levels of unemployment and solid wage
growth to help offset the effects of higher interest rates and
limited inventories of residential housing in certain markets,
resulting in another year of overall healthy demand for real
estate, mortgage loans, and title insurance.”
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 this
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, wages,
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 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, 2017, as filed with the Securities and
Exchange Commission, and in subsequent filings.
Investors Title Company and
Subsidiaries
Consolidated Statements of
Income
For the Three Months Ended
March 31, 2018 and 2017
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended March 31,
2018 2017
Revenues: Net premiums written
$
29,559 $ 32,738 Escrow and other title-related fees
1,504 2,015 Non-title services
1,592 1,363 Interest
and dividends
1,118 1,097 Other investment income
269
229 Net realized investment gains
153 103 Net unrealized
loss on equity investments
(642 ) — Other
223 248 Total
Revenues
33,776
37,793
Operating Expenses: Commissions to
agents
14,025 16,331 (Benefit) provision for claims
(1,406 ) 720 Personnel expenses
11,340 9,958
Office and technology expenses
2,069 1,939 Other expenses
2,523 2,394
Total Operating Expenses
28,551
31,342
Income before Income
Taxes 5,225 6,451
Provision for Income
Taxes 1,052
1,985
Net Income 4,173 4,466
Net Loss Attributable to Noncontrolling Interests
3 10
Net
Income Attributable to the Company $ 4,176
$ 4,476
Basic Earnings per
Common Share $ 2.21 $
2.37
Weighted Average Shares Outstanding –
Basic 1,886
1,886
Diluted Earnings per Common Share
$ 2.20 $ 2.36
Weighted Average Shares Outstanding – Diluted
1,897 1,895
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of March 31, 2018 and
December 31, 2017
(in thousands)
(unaudited)
March 31,2018
December 31,2017
Assets Cash and cash
equivalents
$ 22,174 $ 20,214 Investments:
Fixed maturities, available-for-sale, at fair value
100,389
103,341 Equity securities, at fair value
47,252 47,367
Short-term investments
21,144 23,780 Other investments
11,601 12,032
Total investments
180,386
186,520 Premiums and fees receivable
9,889
10,031 Accrued interest and dividends
1,359 1,100 Prepaid
expenses and other receivables
7,904 7,730 Property, net
10,376 10,173 Goodwill and other intangible assets, net
11,176 11,357 Other assets
1,417 1,403 Current income
taxes receivable
— 385
Total Assets
$ 244,681 $
248,913
Liabilities and Stockholders’ Equity
Liabilities: Reserve for claims
$ 32,770 $
34,801 Accounts payable and accrued liabilities
22,876
27,565 Current income taxes payable
215 — Deferred income
taxes, net
8,758 8,626
Total liabilities
64,619
70,992 Stockholders’ Equity: Common stock
– no par value (10,000 authorized shares; 1,887 and 1,886
shares issued and outstanding as of March 31, 2018 and December 31,
2017, respectively, excluding in each period 292 shares of common
stock held by the Company's subsidiary)
— — Retained
earnings
178,971 161,891 Accumulated other comprehensive
income
1,009 15,945
Total stockholders’ equity attributable to the Company
179,980 177,836 Noncontrolling interests
82 85 Total stockholders’ equity
180,062 177,921
Total Liabilities and Stockholders’ Equity
$
244,681 $ 248,913
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three Months Ended
March 31, 2018 and 2017
(in thousands)
(unaudited)
Three Months Ended March 31,
2018 % 2017
%
Branch $ 8,617
29.2 $ 9,283 28.4
Agency 20,942
70.8 23,455 71.6
Total $ 29,559
100.0 $ 32,738 100.0
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version on businesswire.com: https://www.businesswire.com/news/home/20180508005331/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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