Investors Title Company (NASDAQ: ITIC) today announced its
results for the third quarter ended September 30, 2018. Net income
attributable to the Company was $10.6 million, or $5.61 per diluted
share, versus $5.9 million, or $3.13 per diluted share, for the
prior year period. The Company set all-time quarterly records for
revenues, net premiums written, and net income.
Revenues increased 11.9% to $48.3 million, compared with $43.1
million in the prior year quarter. Net premiums written increased
5.3%, primarily due to higher real estate values, as well as a
shift to higher-premium purchase activity, which offset the decline
in refinance activity. The addition of new agencies over the past
year also contributed to the higher level of net premiums written.
In accordance with a new accounting standard adopted in 2018,
market gains resulted in recognition of a $2.9 million net
unrealized gain on equity investments.
Operating expenses increased 4.3% versus the prior year quarter,
mainly as a result of increases in personnel expenses and
commissions, partially offset by a decline in the provision for
claims. Personnel costs increased as a result of higher staffing
levels related to the support of growth, an increase in contract
services related to software initiatives, normal inflationary
increases in salaries and benefits, and an increase in the accrual
for incentive compensation. Commissions were up commensurate with
the increase in agency premiums. Claims expense declined primarily
due to favorable loss experience in the current reporting period.
In addition, the Company’s net income benefitted from recent tax
reform legislation.
For the nine months ended September 30, 2018, net income
attributable to the Company increased 35.3% to $21.8 million, or
$11.47 per diluted share, versus $16.1 million, or $8.48 per
diluted share, for the prior year period. Revenues increased 2.4%
to $124.0 million, mainly due to an increase in the net unrealized
gain on equity investments and higher earnings from partnership
investments. Results for the year-to-date period have been shaped
predominantly by the same factors that affected the third quarter,
with the exception of lower commissions due to a decrease in agency
premiums.
Chairman J. Allen Fine added, “We are pleased to report that in
the third quarter, we set a new record level of quarterly revenues
and earnings. Overall economic strength and record-low levels of
unemployment continue to drive strong demand in the housing market
as well as higher average real estate values. These factors
overcame reductions in refinance activity, which remains suppressed
as interest rates continue to rise, resulting in an increase in net
premiums written for the quarter. The combination of solid revenue
growth, stable levels of claims experience, and management of
overhead expenses drove a record level of earnings for the
quarter.”
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 and Nine Months Ended
September 30, 2018 and 2017
(in thousands, except per share
amounts)
(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017
2018 2017
Revenues: Net premiums written
$
39,422 $ 37,428
$ 104,123 $ 104,838 Escrow and
other title-related fees
1,812 1,470
5,465 5,427
Non-title services
1,795 1,620
5,083 4,498 Interest
and dividends
1,138 1,087
3,381 3,298 Other
investment income
829 610
2,279 1,605 Net realized
investment gains
188 804
629 990 Net unrealized gain
on equity investments
2,920 —
2,626 — Other
157 116
387
397 Total Revenues
48,261 43,135
123,973 121,053
Operating
Expenses: Commissions to agents
18,490 17,641
48,942 50,570 Provision for claims
997 1,855
155 2,715 Personnel expenses
11,096 10,082
33,234 29,982 Office and technology expenses
2,208
2,062
6,603 5,985 Other expenses
2,910
2,578
8,440 8,087 Total
Operating Expenses
35,701 34,218
97,374 97,339
Income before Income
Taxes 12,560 8,917
26,599 23,714
Provision for Income Taxes 1,927 2,990
4,873 7,647
Net
Income 10,633 5,927
21,726 16,067
Net
Loss Attributable to Noncontrolling Interests 1
—
31 11
Net
Income Attributable to the Company $ 10,634
$ 5,927
$ 21,757
$ 16,078
Basic Earnings per Common Share
$ 5.64 $ 3.14
$
11.53 $ 8.52
Weighted Average Shares
Outstanding – Basic 1,887 1,887
1,886 1,886
Diluted Earnings
per Common Share $ 5.61 $ 3.13
$ 11.47 $ 8.48
Weighted Average Shares Outstanding – Diluted 1,897
1,896
1,896 1,896
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of September 30, 2018 and
December 31, 2017
(in thousands)
(unaudited)
September 30, 2018
December 31,2017
Assets Cash and cash
equivalents
$ 36,862 $ 20,214 Investments:
Fixed maturities, available-for-sale, at fair value
91,827
103,341 Equity securities, at fair value
51,372 47,367
Short-term investments
27,693 23,780 Other investments
11,997 12,032 Total investments
182,889
186,520 Premiums and fees receivable
12,588 10,031 Accrued interest and dividends
1,242
1,100 Prepaid expenses and other receivables
7,601 7,730
Property, net
10,454 10,173 Goodwill and other intangible
assets, net
10,906 11,357 Other assets
1,459 1,403
Current income taxes receivable
2,575 385
Total Assets
$ 266,576 $ 248,913
Liabilities and Stockholders’ Equity Liabilities:
Reserve for claims
$ 32,375 $ 34,801 Accounts payable
and accrued liabilities
27,437 27,565 Deferred income taxes,
net
11,223 8,626 Total liabilities
71,035 70,992 Stockholders’ Equity:
Common stock
– no par value (10,000 authorized shares; 1,887
and 1,886 shares issued and outstanding as of September 30, 2018
and December 31, 2017, respectively, excluding in each period 292
shares of common stock held by the Company's subsidiary)
— —
Retained earnings
195,220 161,891 Accumulated other
comprehensive income
319 15,945 Total
stockholders’ equity attributable to the Company
195,539
177,836 Noncontrolling interests
2 85 Total
stockholders’ equity
195,541 177,921 Total
Liabilities and Stockholders’ Equity
$ 266,576
$ 248,913
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three and Nine Months Ended
September 30, 2018 and 2017
(in thousands)
(unaudited)
Three Months Ended September 30, Nine
Months Ended September 30, 2018 %
2017 %
2018 % 2017
%
Branch $ 11,905 30.2 $
11,227 30.0
$ 31,258 30.0
$ 30,904 29.5
Agency 27,517
69.8 26,201 70.0
72,865 70.0 73,934
70.5
Total $ 39,422
100.0 $ 37,428 100.0
$
104,123 100.0 $ 104,838
100.0
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version on businesswire.com: https://www.businesswire.com/news/home/20181102005047/en/
Investors Title CompanyElizabeth B. Lewter919-968-2200
Investors Title (NASDAQ:ITIC)
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