Investors Title Company (NASDAQ: ITIC) today announced its
results for the quarter ended March 31, 2019. The Company reported
net income attributable to the Company of $6.6 million, or $3.49
per diluted share, compared to $4.2 million, or $2.20 per diluted
share, for the prior year period.
Income before income taxes increased 59.1% to $8.3 million for
the current quarter versus $5.2 million in the prior year period,
primarily due to the January 1, 2018 implementation of a new
accounting standard requiring unrealized changes in the market
value of equity investments to be included in income. The Company
recorded a $4.7 million net unrealized gain on equity investments
for the current quarter versus a $642 thousand net unrealized loss
in the prior year period. Excluding the impact of the unrealized
changes in the market value of equity investments, income before
income taxes (non-GAAP) would have decreased 37.9% to $3.6 million
for the current quarter versus $5.9 million for the prior year
period (see Appendix A).
Revenues for the quarter increased 18.3% to $39.9 million,
primarily as a result of a $5.3 million increase in net unrealized
gains on equity investments. Although premiums from agent business
increased from the prior year period, overall net premiums written
decreased slightly during the quarter as the mix shifted toward
agent business. Revenue from ancillary non-title businesses
increased 50.0%.
Operating expenses increased 10.8% versus the prior year period,
mainly due to increases in agent commissions commensurate with the
increase in premium volume, and a prior year benefit for claims
resulting from favorable loss development in the prior year period.
Personnel expenses increased slightly, as a result of the effect of
normal inflationary increases on salaries and benefits. Office and
technology expenses increased mainly due to ongoing investments in
client-facing technology applications.
Chairman J. Allen Fine commented, “Although real estate activity
was slightly softer for the quarter, we were pleased to see growth
in our agency business versus the prior year. Claims experience
continued to run favorable by historical standards, despite a
difficult comparison as a result of the level of favorable loss
development in the prior year quarter. As we look forward to the
balance of 2019, we are optimistic that the decline in mortgage
interest rates over the past quarter, coupled with a recent uptick
in the level of mortgage applications, will result in another year
of solid real estate activity.”
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, 2018, 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, 2019 and 2018
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended March
31,
2019 2018
Revenues: Net premiums
written
$ 28,795 $ 29,559 Escrow and other
title-related fees
1,322 1,504 Non-title services
2,388 1,592 Interest and dividends
1,256 1,118 Other
investment income
410 269 Net realized investment gains
790 153 Net unrealized gain (loss) on equity investments
4,670 (642 ) Other
315 223 Total
Revenues
39,946 33,776
Operating Expenses: Commissions to agents
15,058
14,025 Provision (benefit) for claims
226 (1,406 ) Personnel
expenses
11,612 11,340 Office and technology expenses
2,223 2,069 Other expenses
2,514 2,523
Total Operating Expenses
31,633 28,551
Income before Income Taxes 8,313 5,225
Provision for Income Taxes 1,687
1,052
Net Income 6,626 4,173
Net Loss Attributable to Noncontrolling Interests —
3
Net Income Attributable to the
Company $ 6,626 $ 4,176
Basic Earnings per Common Share $ 3.51
$ 2.21
Weighted Average Shares
Outstanding – Basic 1,887 1,886
Diluted Earnings per Common Share $
3.49 $ 2.20
Weighted Average
Shares Outstanding – Diluted 1,896 1,897
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of March 31, 2019 and
December 31, 2018
(in thousands)
(unaudited)
March 31, 2019 December 31,2018
Assets Cash and cash equivalents
$
22,052 $ 18,694 Investments: Fixed maturity
securities, available-for-sale, at fair value
89,232 88,957
Equity securities, at fair value
53,959 48,489 Short-term
investments
29,696 32,787 Other investments
11,577
12,436 Total investments
184,464
182,669 Premiums and fees receivable
10,744 12,128
Accrued interest and dividends
1,368 946 Prepaid expenses
and other receivables
7,216 7,288 Property, net
10,092 10,304 Goodwill and other intangible assets, net
10,654 10,780 Operating lease right-of-use assets
4,925 — Other assets
1,475 1,459 Total
Assets
$ 252,990 $ 244,268
Liabilities and Stockholders’ Equity Liabilities:
Reserve for claims
$ 31,384 $ 31,729 Accounts payable
and accrued liabilities
22,791 27,735 Operating lease
liabilities
4,927 — Current income taxes payable
5,840 4,981 Deferred income taxes, net
5,319
4,184 Total liabilities
70,261 68,629
Stockholders’ Equity: Common stock
– no par value
(10,000 authorized shares; 1,889 and 1,887 shares issued and
outstanding as of March 31, 2019 and December 31, 2018,
respectively, excluding in each period 292 shares of common stock
held by the Company's subsidiary)
— — Retained earnings
180,637 174,690 Accumulated other comprehensive income
2,092 949 Total stockholders’ equity
182,729 175,639 Total Liabilities and
Stockholders’ Equity
$ 252,990 $
244,268
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three Months Ended
March 31, 2019 and 2018
(in thousands)
(unaudited)
Three Months Ended March 31, 2019
% 2018 %
Branch
$ 7,166 24.9 $
8,617 29.2
Agency
21,629 75.1 20,942
70.8
Total $
28,795 100.0 $
29,559 100.0
Investors Title Company and
Subsidiaries
Appendix A
Non-GAAP Measures
Reconciliation
For the Three Months Ended March 31,
2019 and 2018
(in thousands)
(unaudited)
Management uses various financial and operational measurements,
including financial information not prepared in accordance with
generally accepted accounting principles ("GAAP"), to analyze
Company performance. This includes adjusting revenues to remove the
impact of unrealized investment gains and losses reported under
GAAP. Management believes that these measures are useful to
evaluate the Company's internal operational performance from period
to period because they eliminate the effects of external market
fluctuations. The Company also believes users of the financial
results would benefit from having access to such information, and
that certain of the Company’s peers make available similar
information. This information should not be used as a substitute
for, or considered superior to, measures of financial performance
prepared in accordance with GAAP, and may be different from
similarly titled non-GAAP financial measures used by other
companies.
The following tables reconcile non-GAAP financial measurements
used by Company management to the comparable measurements using
GAAP:
Three Months Ended March 31, 2019
2018
Revenues Total revenues
(GAAP)
$ 39,946 $ 33,776 (Subtract) Add: Net
unrealized (gain) loss on equity investments
(4,670 )
642 Adjusted revenues (non-GAAP)
$
35,276 $ 34,418
Income before
Income Taxes Income before income taxes (GAAP)
$
8,313 $ 5,225 (Subtract) Add: Net unrealized (gain) loss on
equity investments
(4,670 ) 642
Adjusted income before income taxes (non-GAAP)
$
3,643 $ 5,867
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version on businesswire.com: https://www.businesswire.com/news/home/20190503005039/en/
Elizabeth B. Lewter(919) 968-2200
Investors Title (NASDAQ:ITIC)
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