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| 8-K - INVESTORS TITLE COMPANY 8-K - INVESTORS TITLE CO | a50463657.htm |
Exhibit 99.1
Investors Title Company Announces Third Quarter 2012 Results
CHAPEL HILL, N.C.--(BUSINESS WIRE)--November 6, 2012--Investors Title Company (NASDAQ:ITIC) announced its results for the third quarter ended September 30, 2012. Net income increased 29.4% to $3,158,185, or $1.50 per diluted share, compared with $2,440,465, or $1.14 per diluted share, for the prior year quarter.
Revenues increased 23.6% versus the prior year quarter to $32,277,408, primarily due to a 21.0% increase in net premiums written. The premium growth reflects widespread volume increases across multiple markets, as overall mortgage activity increased substantially. New industry-wide premium charges and rate increases for certain markets also contributed to the increase in premiums. Premiums in the third quarter from both refinance and purchase transactions increased compared with the prior year quarter, while the proportion of refinance transactions remained relatively constant.
Operating expenses increased 21.6% to $27,559,493 versus the prior year quarter, primarily due to increases in the provision for claims, commissions to agents, and payroll expense. The loss provision rate as a percentage of net premiums written was higher compared with the prior year quarter primarily due to less favorable loss development experience, and an increase in the relative share of North Carolina premiums as a percentage of the total versus the prior year period. Average loss provision rates are normally higher in North Carolina than our other markets due to relatively low premium rates. Commissions to agents increased 11.1% commensurate with the increase in agency premiums. The increase in payroll expense is primarily due to staff additions in our Information Systems department.
For the nine months ended September 30, 2012, net income increased 57.1% to $7,939,812, or $3.74 per diluted share, compared with $5,054,477, or $2.32 per diluted share, for the prior year period. Revenues increased 15.6% to $80,772,007 as a result of factors noted above, while operating expenses increased 10.3% versus the prior year period.
Chairman J. Allen Fine added, “We are pleased to report a strong quarter, as we benefitted from continued strength in refinance and purchase activity and further expansion of our agent base. Claims experience remains generally positive, and we continue to closely monitor operating expenses even as we make targeted investments in improvements to our client-facing technology. We continue to focus on enhancing our competitive strengths and capitalizing on opportunities to profitably expand our market presence.”
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, among other statements, any predictions regarding future agency expansion or increasing operational efficiency. 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; 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, 2011, as filed with the Securities and Exchange Commission, and in subsequent filings.
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Investors Title Company and Subsidiaries |
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| Consolidated Statements of Income | ||||||||||||
| For the Three and Nine Months Ended September 30, 2012 and 2011 | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30 |
September 30 |
|||||||||||
|
2012 |
2011 |
2012 |
2011 |
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| Revenues: | ||||||||||||
| Net premiums written | $ | 29,018,123 | $ | 23,986,592 | $ | 71,927,113 | $ | 63,303,202 | ||||
| Investment income - interest and dividends | 962,573 | 887,055 | 2,949,752 | 2,665,245 | ||||||||
| Net realized gain (loss) on investments | 99,790 | (200,087) | 357,819 | (79,172) | ||||||||
| Other | 2,196,922 | 1,443,310 | 5,537,323 | 3,968,828 | ||||||||
| Total Revenues | 32,277,408 | 26,116,870 | 80,772,007 | 69,858,103 | ||||||||
| Operating Expenses: | ||||||||||||
| Commissions to agents | 16,840,421 | 15,161,823 | 40,683,365 | 39,335,237 | ||||||||
| Provision for claims | 2,432,057 | 349,672 | 4,424,523 | 2,301,259 | ||||||||
| Salaries, employee benefits and payroll taxes | 5,597,634 | 4,778,542 | 16,077,373 | 14,110,213 | ||||||||
| Office occupancy and operations | 954,876 | 919,681 | 2,919,749 | 2,836,068 | ||||||||
| Business development | 488,401 | 363,731 | 1,286,566 | 1,123,517 | ||||||||
| Filing fees, franchise and local taxes | 140,740 | 79,638 | 673,992 | 411,897 | ||||||||
| Premium and retaliatory taxes | 423,626 | 459,711 | 1,312,906 | 1,368,168 | ||||||||
| Professional and contract labor fees | 548,052 | 412,227 | 1,655,279 | 1,132,308 | ||||||||
| Other | 133,686 | 130,380 | 455,499 | 392,959 | ||||||||
| Total Operating Expenses | 27,559,493 | 22,655,405 | 69,489,252 | 63,011,626 | ||||||||
| Income Before Income Taxes | 4,717,915 | 3,461,465 | 11,282,755 | 6,846,477 | ||||||||
| Provision For Income Taxes | 1,479,000 | 1,021,000 | 3,239,000 | 1,792,000 | ||||||||
| Net Income | 3,238,915 | 2,440,465 | 8,043,755 | 5,054,477 | ||||||||
| Less: Net Income Attributable to Redeemable Noncontrolling Interests |
80,730 |
- |
103,943 |
- | ||||||||
| Net Income Attributable to the Company | $ | 3,158,185 | $ | 2,440,465 | $ | 7,939,812 | $ | 5,054,477 | ||||
| Basic Earnings Per Common Share | $ | 1.52 | $ | 1.15 | $ | 3.80 | $ | 2.34 | ||||
| Weighted Average Shares Outstanding - Basic | 2,071,605 | 2,124,078 | 2,090,369 | 2,164,240 | ||||||||
| Diluted Earnings Per Common Share | $ | 1.50 | $ | 1.14 | $ | 3.74 | $ | 2.32 | ||||
| Weighted Average Shares Outstanding - Diluted | 2,108,526 | 2,143,327 | 2,124,122 | 2,180,455 | ||||||||
| Investors Title Company and Subsidiaries | ||||||
| Consolidated Balance Sheets | ||||||
| As of September 30, 2012 and December 31, 2011 | ||||||
| (Unaudited) | ||||||
| September 30, 2012 | December 31, 2011 | |||||
| Assets: | ||||||
| Investments in securities: | ||||||
| Fixed maturities, available-for-sale, at fair value | $ | 85,167,066 | $ | 85,407,365 | ||
| Equity securities, available-for-sale, at fair value | 28,081,485 | 22,549,975 | ||||
| Short-term investments | 11,231,113 | 14,112,262 | ||||
| Other investments | 5,925,020 | 3,631,714 | ||||
| Total investments | 130,404,684 | 125,701,316 | ||||
| Cash and cash equivalents | 19,982,759 | 18,042,258 | ||||
| Premiums and fees receivable, net | 10,208,947 | 6,810,000 | ||||
| Accrued interest and dividends | 919,443 | 1,108,156 | ||||
| Prepaid expenses and other assets | 4,938,693 | 2,743,517 | ||||
| Property, net | 3,555,510 | 3,553,216 | ||||
| Total Assets | $ | 170,010,036 | $ | 157,958,463 | ||
| Liabilities and Stockholders' Equity | ||||||
| Liabilities: | ||||||
| Reserves for claims | $ | 39,006,000 | $ | 37,996,000 | ||
| Accounts payable and accrued liabilities | 13,869,604 | 12,330,383 | ||||
| Current income taxes payable | 283,595 | 640,533 | ||||
| Deferred income taxes, net | 2,701,940 | 479,363 | ||||
| Total liabilities | 55,861,139 | 51,446,279 | ||||
| Redeemable Noncontrolling Interest | 550,193 | - | ||||
| Stockholders' Equity: | ||||||
|
Common stock - no par value (shares authorized 10,000,000; |
1 | 1 | ||||
| Retained earnings | 103,908,636 | 99,003,018 | ||||
| Accumulated other comprehensive income | 9,690,067 | 7,509,165 | ||||
| Total stockholders' equity | 113,598,704 | 106,512,184 | ||||
| Total Liabilities and Stockholders' Equity | $ | 170,010,036 | $ | 157,958,463 | ||
| Investors Title Company and Subsidiaries | ||||||||||||||||||||
| Net Premiums Written By Branch and Agency | ||||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2012 and 2011 | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30 | September 30 | |||||||||||||||||||
| 2012 | % | 2011 | % | 2012 | % | 2011 | % | |||||||||||||
| Branch | $ | 6,559,658 | 22.6 | $ | 4,387,971 | 18.3 | $ | 17,546,488 | 24.4 | $ | 12,061,485 | 19.1 | ||||||||
| Agency | 22,458,465 | 77.4 | 19,598,621 | 81.7 | 54,380,625 | 75.6 | 51,241,717 | 80.9 | ||||||||||||
| Total | $ | 29,018,123 | 100.0 | $ | 23,986,592 | 100.0 | $ | 71,927,113 | 100.0 | $ | 63,303,202 | 100.0 | ||||||||
CONTACT:
Investors Title Company
Elizabeth B. Lewter, 919-968-2200