Investors Title Company today announced its results for the
fourth quarter and year ended December 31, 2016.
For the year, net income attributable to the Company increased
55.8% to an all-time record high of $19.5 million, or $10.19 per
diluted share, versus $12.5 million, or $6.30 per diluted share,
for the prior year. For the quarter, net income attributable to the
Company more than doubled to $5.1 million, or $2.67 per diluted
share, versus $2.2 million, or $1.12 per diluted share, for the
prior year period.
Revenues for the year increased 8.9% to an annual record of
$138.5 million, compared with $127.2 million in the prior year.
Premiums increased as a result of growth in average real estate
values, coupled with growth in transaction volumes stemming from
higher levels of home sales and refinance activity. Non-premium
revenue sources, which amounted to $16.4 million, were up 11.4%
over the prior year.
Operating expenses increased 0.9% to $110.4 million, primarily
due to increases in payroll expense and agent commissions, largely
offset by lower claims expense. Payroll expense increased 11.9% as
a result of higher levels of incentive compensation, inflationary
increases in salaries and benefits, payroll expenses associated
with Texas title agency University Title, which was acquired in the
fourth quarter, and increases in staffing levels to accommodate
higher volume. Agent commissions increased 2.4% due to an increase
in agency premiums, while claims expense decreased to $242,953.
Claims expense continued to benefit from favorable loss development
in recent policy years, as well as lower levels of initial claims
filings.
The quarter was shaped predominantly by the same factors that
affected the year. Revenues increased 34.4%, while operating
expenses increased 21.3%, resulting in net income of $5.1 million.
Both the revenue and net income amounts are new records for any
fourth quarter in the Company’s history.
Chairman J. Allen Fine commented, “2016 marks the second
consecutive year with record levels of revenues, reflecting a
strong real estate market as well as the success of our ongoing
efforts to create and deepen relationships in the markets we serve.
In addition to consistent revenue growth, we remain pleased with
the continuation of positive claims experience in recent years,
which we think is attributable both to macroeconomic trends, such
as low levels of foreclosures, as well as our own internal risk
management efforts. Both of these factors, in addition to diligent
management of overhead expenses, led to record earnings for the
year.”
“We are optimistic that the factors which enabled this strong
revenue growth for the past couple of years will continue into
2017,” added Mr. Fine. “Even though the potential for additional
Fed rate hikes and other economic factors dampen our expectations
for refinance activity, a strengthening economy should provide a
tailwind for higher levels of home sales. Regardless of the
economic cycle, we will continue to remain focused on long-term
strategies to profitably expand our market presence, enhance our
competitive strengths, and strengthen our financial position.”
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,
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, 2015, 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 Twelve Months Ended
December 31, 2016 and 2015
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015
2016
2015
Revenues: Net
premiums written
$ 34,284,779 $ 26,103,532
$
122,095,381 $ 112,475,686 Investment income
–
interest and dividends
1,205,490 1,104,264
4,684,489
4,531,319 Net realized gain (loss) on investments
194,108
(717,499 )
768,436 (116,163 ) Other
3,116,599
2,384,901
10,944,108
10,309,230 Total Revenues
38,800,976 28,875,198
138,492,414 127,200,072
Operating Expenses: Commissions to agents
17,696,942 13,780,748
63,643,321 62,174,301 Provision
for claims
646,935 857,093
242,953 4,478,494
Salaries, employee benefits and payroll taxes
8,426,127
6,939,258
31,372,099 28,041,213 Office occupancy and
operations
1,739,198 1,795,530
6,265,908 5,885,336
Business development
816,519 739,912
2,511,699
2,373,270 Filing fees, franchise and local taxes
218,494
160,364
907,225 732,985 Premium and retaliatory taxes
642,964 476,897
2,202,595 2,161,571 Professional and
contract labor fees
516,151 764,942
2,115,754
2,691,411 Other
469,869 175,520
1,099,408 884,438
Total Operating Expenses
31,173,199
25,690,264
110,360,962
109,423,019
Income before Income Taxes
7,627,777 3,184,934
28,131,452 17,777,053
Provision for Income Taxes 2,576,000
978,000
8,616,000
5,228,000
Net Income 5,051,777
2,206,934
19,515,452 12,549,053
Net Loss (Gain)
Attributable to Noncontrolling Interests 982
(10,612 )
7,666
(15,148 )
Net Income Attributable to the
Company $ 5,052,759 $
2,196,322
$ 19,523,118
$ 12,533,905
Basic Earnings per
Common Share $ 2.68 $ 1.13
$ 10.23 $
6.32
Weighted Average Shares Outstanding –
Basic 1,884,283 1,952,077
1,907,675 1,984,360
Diluted Earnings per Common Share $
2.67 $ 1.12
$ 10.19 $ 6.30
Weighted Average Shares Outstanding – Diluted
1,893,252 1,958,484
1,915,057 1,989,799
Investors Title Company and
Subsidiaries
Consolidated Balance Sheets
As of December 31, 2016 and
2015
(Unaudited)
December 31, 2016
December 31,2015
Assets: Investments in
securities: Fixed maturities, available-for-sale, at fair value
$ 101,934,077 $ 106,066,384 Equity securities,
available-for-sale, at fair value
41,179,259 37,513,464
Short-term investments
6,558,840 6,865,406 Other investments
11,181,531 10,106,828 Total investments
160,853,707 160,552,082 Cash and
cash equivalents
27,928,472 21,790,068 Premium and fees
receivable
8,654,161 8,392,697 Accrued interest and
dividends
1,035,152 1,004,126 Prepaid expenses and other
assets
9,456,523 11,413,520 Property, net
8,753,466
7,148,951 Goodwill and other intangible assets, net
12,256,641 1,220,585
Total
Assets $ 228,938,122 $
211,522,029
Liabilities and Stockholders’ Equity
Liabilities: Reserves for claims
$ 35,305,000
$ 37,788,000 Accounts payable and accrued liabilities
26,146,480 25,043,588 Current income taxes payable
1,232,432 210,355 Deferred income taxes, net
11,118,256 5,703,006 Total liabilities
73,802,168 68,744,949
Stockholders’ Equity: Common stock
– no par value
(10,000,000 authorized shares; 1,884,283 and 1,949,797 shares
issued and outstanding 2016 and 2015, respectively, excluding
291,676 shares for 2016 and 2015 of common stock held by the
Company's subsidiary)
1 1 Retained earnings
143,283,621 131,186,866 Accumulated other comprehensive
income
11,761,447 11,483,015 Total
stockholders’ equity attributable to the Company
155,045,069
142,669,882 Noncontrolling interests
90,885
107,198 Total stockholders’ equity
155,135,954
142,777,080
Total Liabilities and Stockholders’
Equity $ 228,938,122 $
211,522,029
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch and
Agency
For the Three and Twelve Months Ended
December 31, 2016 and 2015
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31, 2016
% 2015 %
2016 % 2015
%
Branch $ 9,312,053 27.2
$ 7,119,168 27.3
$
34,063,187 27.9 $
28,400,531 25.3
Agency
24,972,726 72.8
18,984,364 72.7
88,032,194 72.1
84,075,155 74.7
Total $
34,284,779 100.0 $
26,103,532 100.0
$
122,095,381 100.0
$ 112,475,686 100.0
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version on businesswire.com: http://www.businesswire.com/news/home/20170209005243/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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