Investors Title Company today announced its results for the third
quarter ended September 30, 2013. Net income attributable to the Company
increased 74.7% to $5,515,798, or $2.66 per diluted share, compared with
$3,158,185, or $1.50 per diluted share, for the prior year quarter.
Revenues increased 4.1% to $33,605,239 versus the prior year quarter,
primarily due to a 4.9% increase in net premiums written. The premium
growth reflects higher levels of purchase transactions, as well as
increases in average home values in many parts of the nation, driven by
improvement in the overall economy. Refinance volume continued its
downward trend, reflecting a rising interest rate environment over the
course of 2013.
Operating expenses decreased 8.1% to $25,328,716 versus the prior year
quarter due to lower claims expense, partially offset by increases in
other expense categories. The provision for claims includes a reduction
in the reserves for claims of approximately $2,400,000 reflecting a
change in estimate related to certain actuarial assumptions that stems
from improved claims experience in recent post-recession policy years.
The increase in payroll expense was largely driven by higher staffing
levels to support ongoing software development, and increased benefits
and incentive compensation. Other operating expenses were higher than
the prior year quarter mostly due to volume increases or changes in the
mix of business.
For the nine months ended September 30, 2013, net income attributable to
the Company increased 62.4% to $12,898,203 or $6.19 per diluted share,
compared with $7,939,812, or $3.74 per diluted share, for the prior year
period. Revenues increased 16.6% to $94,146,912 and operating expenses
increased 8.3% to $75,248,921 versus the prior year period. Results for
the first nine months of the year have been shaped predominantly by the
same factors that affected the third quarter.
Chairman J. Allen Fine added, “We were pleased to see a continuation in
the third quarter of recent increases in the volume of home sales as
well as general increases in home prices. Despite moderation in
refinance activity, these factors contributed to an all-time high level
of revenue for the quarter. Earnings were impacted favorably by changes
to actuarial assumptions reflecting improved claims experience in recent
years. 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 others, any
statements regarding expansion of the Company’s market presence,
enhancing competitive strengths or 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; 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,
2012, 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, 2013 and 2012
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written
|
|
|
|
|
$
|
|
30,431,560
|
|
$
|
29,018,123
|
|
$
|
|
|
84,787,318
|
|
$
|
71,927,113
|
|
Investment income - interest and dividends
|
|
|
|
|
|
|
990,338
|
|
|
962,573
|
|
|
|
|
2,835,870
|
|
|
2,949,752
|
|
Net realized gain on investments
|
|
|
|
|
|
|
261,938
|
|
|
99,790
|
|
|
|
|
333,554
|
|
|
357,819
|
|
Other
|
|
|
|
|
|
|
1,921,403
|
|
|
2,196,922
|
|
|
|
|
6,190,170
|
|
|
5,537,323
|
|
Total Revenues
|
|
|
|
|
|
|
33,605,239
|
|
|
32,277,408
|
|
|
|
|
94,146,912
|
|
|
80,772,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions to agents
|
|
|
|
|
|
|
18,142,697
|
|
|
16,840,421
|
|
|
|
|
49,240,917
|
|
|
40,683,365
|
|
(Benefit) provision for claims
|
|
|
|
|
|
|
(3,037,101
|
)
|
|
2,432,057
|
|
|
|
|
(2,429,289
|
)
|
|
4,424,523
|
|
Salaries, employee benefits and payroll taxes
|
|
|
|
|
|
|
7,133,497
|
|
|
5,598,722
|
|
|
|
|
19,533,970
|
|
|
16,080,639
|
|
Office occupancy and operations
|
|
|
|
|
|
|
1,165,772
|
|
|
984,303
|
|
|
|
|
3,266,112
|
|
|
2,956,470
|
|
Business development
|
|
|
|
|
|
|
606,549
|
|
|
472,436
|
|
|
|
|
1,487,635
|
|
|
1,254,691
|
|
Filing fees, franchise and local taxes
|
|
|
|
|
|
|
141,373
|
|
|
140,740
|
|
|
|
|
510,893
|
|
|
673,992
|
|
Premium and retaliatory taxes
|
|
|
|
|
|
|
592,717
|
|
|
423,626
|
|
|
|
|
1,563,764
|
|
|
1,312,906
|
|
Professional and contract labor fees
|
|
|
|
|
|
|
404,206
|
|
|
523,956
|
|
|
|
|
1,514,749
|
|
|
1,620,911
|
|
Other
|
|
|
|
|
|
|
179,006
|
|
|
143,232
|
|
|
|
|
560,170
|
|
|
481,755
|
|
Total Operating Expenses
|
|
|
|
|
|
|
25,328,716
|
|
|
27,559,493
|
|
|
|
|
75,248,921
|
|
|
69,489,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes
|
|
|
|
|
|
|
8,276,523
|
|
|
4,717,915
|
|
|
|
|
18,897,991
|
|
|
11,282,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision For Income Taxes
|
|
|
|
|
|
|
2,733,000
|
|
|
1,479,000
|
|
|
|
|
5,944,000
|
|
|
3,239,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
5,543,523
|
|
|
3,238,915
|
|
|
|
|
12,953,991
|
|
|
8,043,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net Income Attributable to Redeemable Noncontrolling
Interest
|
|
|
|
|
|
|
(27,725
|
)
|
|
(80,730
|
)
|
|
|
|
(55,788
|
)
|
|
(103,943
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to the Company
|
|
|
|
|
$
|
|
5,515,798
|
|
$
|
3,158,185
|
|
$
|
|
|
12,898,203
|
|
$
|
7,939,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Common Share
|
|
|
|
|
$
|
|
2.67
|
|
$
|
1.52
|
|
$
|
|
|
6.26
|
|
$
|
3.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic
|
|
|
|
|
|
|
2,069,081
|
|
|
2,071,605
|
|
|
|
|
2,059,226
|
|
|
2,090,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Common Share
|
|
|
|
|
$
|
|
2.66
|
|
$
|
1.50
|
|
$
|
|
|
6.19
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Diluted
|
|
|
|
|
|
|
2,074,940
|
|
|
2,108,526
|
|
|
|
|
2,083,560
|
|
|
2,124,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investors Title Company and Subsidiaries
|
Consolidated Balance Sheets
|
As of September 30, 2013 and December 31, 2012
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
|
|
|
|
December 31, 2012
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments in securities:
|
|
|
|
|
|
|
|
|
|
Fixed maturities, available-for-sale, at fair value
|
$
|
86,100,498
|
|
|
|
|
$
|
|
81,936,978
|
Equity securities, available-for-sale, at fair value
|
|
33,460,972
|
|
|
|
|
|
|
28,510,933
|
Short-term investments
|
|
15,388,647
|
|
|
|
|
|
|
13,567,648
|
Other investments
|
|
7,311,949
|
|
|
|
|
|
|
6,763,100
|
Total investments
|
|
142,262,066
|
|
|
|
|
|
|
130,778,659
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
22,868,393
|
|
|
|
|
|
|
20,810,018
|
Premiums and fees receivable, net
|
|
9,758,749
|
|
|
|
|
|
|
11,037,714
|
Accrued interest and dividends
|
|
1,041,472
|
|
|
|
|
|
|
1,037,447
|
Prepaid expenses and other assets
|
|
7,314,187
|
|
|
|
|
|
|
4,651,115
|
Property, net
|
|
4,204,506
|
|
|
|
|
|
|
3,603,323
|
Current income taxes receivable
|
|
1,708,257
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
189,157,630
|
|
|
|
|
$
|
|
171,918,276
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Reserves for claims
|
$
|
34,816,000
|
|
|
|
|
$
|
|
39,078,000
|
Accounts payable and accrued liabilities
|
|
21,331,255
|
|
|
|
|
|
|
15,477,545
|
Current income taxes payable
|
|
-
|
|
|
|
|
|
|
1,336,824
|
Deferred income taxes, net
|
|
5,259,773
|
|
|
|
|
|
|
893,156
|
Total liabilities
|
|
61,407,028
|
|
|
|
|
|
|
56,785,525
|
|
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interest
|
|
512,749
|
|
|
|
|
|
|
493,861
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
Common stock - no par value (shares authorized 10,000,000;
|
|
|
|
|
|
|
|
|
|
2,066,922 and 2,043,359 shares issued and outstanding as of
September 30, 2013 and
|
|
|
|
|
|
|
December 31, 2012, respectively, excluding 291,676 shares for 2013
and 2012
|
|
|
|
|
|
|
|
|
of common stock held by the Company's subsidiary)
|
|
1
|
|
|
|
|
|
|
1
|
Retained earnings
|
|
117,418,431
|
|
|
|
|
|
|
105,820,459
|
Accumulated other comprehensive income
|
|
9,819,421
|
|
|
|
|
|
|
8,818,430
|
Total stockholders' equity
|
|
127,237,853
|
|
|
|
|
|
|
114,638,890
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
$
|
189,157,630
|
|
|
|
|
$
|
|
171,918,276
|
|
|
|
|
|
|
|
|
|
|
Investors Title Company and Subsidiaries
|
Net Premiums Written By Branch and Agency
|
For the Three and Nine Months Ended September 30, 2013 and 2012
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
2013
|
|
%
|
|
|
|
2012
|
|
%
|
|
|
|
|
|
2013
|
|
%
|
|
2012
|
|
%
|
Branch
|
|
$
|
|
6,630,345
|
|
21.8
|
|
$
|
|
6,559,658
|
|
22.6
|
|
|
|
$
|
|
19,746,738
|
|
23.3
|
|
$
|
|
17,546,488
|
|
24.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency
|
|
|
|
23,801,215
|
|
78.2
|
|
|
|
22,458,465
|
|
77.4
|
|
|
|
|
|
65,040,580
|
|
76.7
|
|
|
|
54,380,625
|
|
75.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
30,431,560
|
|
100.0
|
|
$
|
|
29,018,123
|
|
100.0
|
|
|
|
$
|
|
84,787,318
|
|
100.0
|
|
$
|
|
71,927,113
|
|
100.0
|
Copyright Business Wire 2013