Investors Title Company (NASDAQ: ITIC) today announced its
results for the second quarter ended June 30, 2017. Net income
attributable to the Company increased 25.3% to a new second quarter
record of $5.7 million, or $2.99 per diluted share, versus $4.5
million, or $2.35 per diluted share, for the prior year period.
Revenues also set a new second quarter record, increasing 18.6%
to $40.1 million, compared with $33.8 million in the prior year
period. Net premiums written benefitted from higher real estate
purchase volumes, partially offset by lower refinance activity.
Rising average real estate values and new agency distribution also
contributed to the increase in premiums. Other income sources,
including revenue from ancillary services coincident with providing
title insurance, increased 83.5% to $5.5 million.
Operating expenses increased 16.5% versus the prior year
quarter, mainly driven by volume and higher payroll expense, but
partially offset by lower claims expense. In addition, the
inclusion of expenses for a title insurance agency acquired in the
fourth quarter of 2016 contributed to the higher expense level.
Agent commissions increased versus the prior year commensurate with
the increase in agent premium volumes, while payroll expenses
increased as a result of growth in our staff level, and increases
in base and incentive compensation. The provision for claims was
lower in the current quarter primarily due to fewer initial claim
filings and favorable prior year loss development as compared to
the prior year quarter.
For the six months ended June 30, 2017, net income attributable
to the Company increased 60.0% to $10.2 million, or $5.35 per
diluted share, versus $6.3 million, or $3.28 per diluted share, for
the prior year period. Revenues increased 32.8% to $77.9 million,
while operating expenses increased 27.4% to $63.1 million. Results
for the first half of the year have been shaped predominantly by
the same factors that affected the second quarter.
Chairman J. Allen Fine added, “High levels of mortgage lending
activity, coupled with favorable claims experience, resulted in the
strongest second quarter in the Company’s history. Favorable
economic conditions, as indicated by low unemployment rates and
relatively high consumer confidence levels, have supported higher
transaction volumes, in spite of certain headwinds such as supply
constraints and recent policy actions by the Federal Reserve.
Regardless of the ebbs and flows of the business cycle, however, we
will remain focused on profitably growing our business by 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 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, 2016, 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 Six Months Ended
June 30, 2017 and 2016
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2017 2016
2017
2016
Revenues: Net
premiums written
$ 33,450,241 $ 29,686,120
$
65,748,900 $ 51,051,450 Investment income
– interest
and dividends
1,113,989 1,167,005
2,210,580 2,318,016
Net realized gain (loss) on investments
82,841 (14,828 )
186,180 135,002 Other
5,484,651
2,989,414
9,787,251
5,185,265 Total Revenues
40,131,722
33,827,711
77,932,911
58,689,733
Operating Expenses:
Commissions to agents
16,597,590 15,674,346
32,928,700 27,207,228 Provision for claims
140,827
647,912
860,224 663,871 Salaries, employee benefits and
payroll taxes
9,741,975 7,173,198
19,644,246
14,645,149 Office occupancy and operations
2,197,250
1,535,902
4,136,305 3,029,762 Business development
734,158 606,258
1,347,105 1,086,648 Filing fees,
franchise and local taxes
578,008 267,103
731,564
497,157 Premium and retaliatory taxes
600,440 574,249
1,245,825 886,080 Professional and contract labor fees
488,464 537,446
927,640 1,076,099 Other
706,987 269,250
1,314,099 472,231 Total Operating
Expenses
31,785,699 27,285,664
63,135,708 49,564,225
Income before Income Taxes 8,346,023 6,542,047
14,797,203 9,125,508
Provision for Income
Taxes 2,672,000 2,012,000
4,657,000 2,791,000
Net Income 5,674,023 4,530,047
10,140,203 6,334,508
Net Loss (Gain) Attributable
to Noncontrolling Interests 1,169
(667 )
11,044 8,912
Net Income Attributable to the Company $
5,675,192 $ 4,529,380
$ 10,151,247 $ 6,343,420
Basic Earnings per Common Share $ 3.01
$ 2.36
$
5.38 $ 3.29
Weighted Average
Shares Outstanding – Basic 1,886,735
1,923,213
1,886,161
1,928,766
Diluted Earnings per Common
Share $ 2.99 $ 2.35
$ 5.35 $ 3.28
Weighted Average Shares Outstanding – Diluted
1,896,581 1,928,625
1,895,840 1,935,325
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of June 30, 2017 and
December 31, 2016
(Unaudited)
June 30, 2017 December 31,2016
Assets: Investments in securities: Fixed maturities,
available-for-sale, at fair value
$ 93,049,522 $
101,934,077 Equity securities, available-for-sale, at fair value
43,562,703 41,179,259 Short-term investments
17,845,956 6,558,840 Other investments
11,427,988
11,181,531 Total investments
165,886,169 160,853,707 Cash and
cash equivalents
29,068,106 27,928,472 Premium and fees
receivable
9,701,506 8,654,161 Accrued interest and
dividends
912,316 1,035,152 Prepaid expenses and other
assets
9,489,454 9,456,523 Property, net
10,018,368
8,753,466 Goodwill and other intangible assets, net
11,789,465 12,256,641 Current income taxes receivable
1,088,787 —
Total Assets
$ 237,954,171 $ 228,938,122
Liabilities and Stockholders’ Equity
Liabilities: Reserves for claims
$ 34,141,000
$ 35,305,000 Accounts payable and accrued liabilities
24,322,986 26,146,480 Current income taxes payable
—
1,232,432 Deferred income taxes, net
13,259,875
11,118,256 Total liabilities
71,723,861
73,802,168
Stockholders’ Equity: Common
stock
– no par value (10,000,000 authorized shares;
1,887,256 and 1,884,283 shares issued and outstanding as of June
30, 2017 and December 31, 2016, respectively, excluding in each
period 291,676 shares of common stock held by the Company's
subsidiary)
1 1 Retained earnings
152,482,193
143,283,621 Accumulated other comprehensive income
13,668,275 11,761,447 Total
stockholders’ equity attributable to the Company
166,150,469
155,045,069 Noncontrolling interests
79,841
90,885 Total stockholders’ equity
166,230,310
155,135,954
Total Liabilities and Stockholders’
Equity $ 237,954,171 $
228,938,122
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three and Six Months Ended
June 30, 2017 and 2016
(Unaudited)
Three Months Ended June 30, Six
Months Ended June 30, 2017 %
2016 %
2017
% 2016 %
Branch $
9,619,869 28.8 $
8,236,630 27.7
$ 18,868,228
28.7 $ 13,630,485 26.7
Agency 23,830,372
71.2 21,449,490 72.3
46,880,672 71.3
37,420,965 73.3
Total $ 33,450,241
100.0 $ 29,686,120 100.0
$ 65,748,900
100.0 $ 51,051,450 100.0
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version on businesswire.com: http://www.businesswire.com/news/home/20170804005053/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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