Investors Title Company (NASDAQ: ITIC) today announced its
results for the fourth quarter and year ended December 31,
2017.
For the year, net income attributable to the Company increased
31.7% to an all-time record high of $25.7 million, or $13.56 per
diluted share, versus $19.5 million, or $10.19 per diluted share,
for the prior year. For the quarter, net income attributable to the
Company increased 90.6% to an all-time record high of $9.6 million,
or $5.08 per diluted share, versus $5.1 million, or $2.67 per
diluted share, for the prior year period.
Revenues for the year increased 16.7% to a record $161.6
million, compared with $138.5 million in the prior year. The
majority of the revenue increase is attributable to higher
premiums. Even though refinance activity dropped from the prior
year, net premiums written increased 14.9% to $138.6 million as a
result of higher levels of home sales in our core markets, a
continuation of the multi-year trend of increases in the underlying
values of real estate, and business from newly-signed agents. Other
income sources, including revenue from ancillary services
coincident with providing title insurance as well as premiums
written for other title companies, increased 40.9% to $17.6
million.
Operating expenses increased 19.0% to $131.4 million, compared
with $110.4 million in the prior year. Expenses which fluctuate
directly with revenues, including agent commissions and claims
expense, were up commensurate with the increases in associated
revenues. Although claims expense for the year was low by
historical standards, it increased over the prior year due to lower
levels of favorable loss development. In addition to normal
inflationary increases, the primary factor contributing to the
increase in other categories of operating expenses is the inclusion
of expenses for a title insurance agency acquired in the fourth
quarter of 2016.
The quarter was shaped predominantly by the same factors that
affected the year, with the exception of claims expense, which was
slightly more favorable in the current quarter. Revenues increased
4.6% to a fourth quarter record, while operating expenses increased
9.1%.
On December 22, 2017, the Tax Cuts and Jobs Act was enacted into
law, reducing the federal corporate income tax rate from 35% to
21%, effective January 1, 2018. Accordingly, the Company’s deferred
tax assets and liabilities were revalued at the new tax rate, and
the impact was recognized in the provision for income taxes in the
fourth quarter. The revaluation resulted in a benefit to the year
and the quarter of approximately $5.3 million, or $2.82 per diluted
share.
Chairman J. Allen Fine commented, “We are pleased to report the
third consecutive year with record levels of revenues, reflecting a
growing national economy, a strong real estate market, and the
success of our long-term business model, which is centered on
building mutually successful relationships with like-minded
business partners. In addition to consistently strong revenue
growth, 2017 marks a new Company record for net income, and the
third consecutive year of net income growth.
“Aided by macroeconomic factors such as historically low
foreclosure rates, the Company continues to be successful in
maintaining a relatively low level of claims through a combination
of a proactive approach to risk management and investments in
education programs designed to improve the Company’s risk profile
as well as that of our business partners.
“As we head into 2018, we are optimistic about the prospects for
another strong year of real estate activity, and remain focused on
expanding our presence in the marketplace.”
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, 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 Twelve Months Ended
December 31, 2017 and 2016
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2017 2016
2017 2016
Revenues: Net premiums written
$
35,180,588 $ 33,211,179
$ 138,588,877 $
120,569,151 Investment income
– interest and dividends
1,146,813 1,205,490
4,444,447 4,684,489 Net realized
gain on investments
50,783 194,108
1,040,901 768,436
Other
4,200,736 4,190,199
17,575,071 12,470,338 Total Revenues
40,578,920 38,800,976
161,649,296 138,492,414
Operating
Expenses: Commissions to agents
18,073,248 17,696,942
68,643,220 63,643,321 Provision for claims
596,363
646,935
3,311,080 242,953 Salaries, employee benefits and
payroll taxes
9,547,530 8,426,127
39,012,354
31,372,099 Office occupancy and operations
2,520,743
1,739,198
8,966,623 6,265,908 Business development
1,177,702 816,519
3,164,730 2,511,699 Filing fees,
franchise and local taxes
283,176 218,494
1,198,013
907,225 Premium and retaliatory taxes
732,444 642,964
2,672,034 2,202,595 Professional and contract labor fees
450,307 516,151
1,825,598 2,115,754 Other
640,655 469,869
2,585,074
1,099,408 Total Operating Expenses
34,022,168
31,173,199
131,378,726
110,360,962
Income before Income Taxes
6,556,752 7,627,777
30,270,570 28,131,452
(Benefit) Provision for Income Taxes (3,077,000
) 2,576,000
4,570,000
8,616,000
Net Income 9,633,752
5,051,777
25,700,570 19,515,452
Net (Gain) Loss Attributable to
Noncontrolling Interests
(4,954 ) 982
5,932
7,666
Net Income Attributable to the Company
$ 9,628,798 $ 5,052,759
$ 25,706,502 $ 19,523,118
Basic Earnings per Common Share $ 5.11
$ 2.68
$ 13.63 $
10.23
Weighted Average Shares Outstanding – Basic
1,885,992 1,884,283
1,886,354 1,907,675
Diluted Earnings
per Common Share $ 5.08 $ 2.67
$ 13.56 $ 10.19
Weighted Average Shares Outstanding – Diluted
1,895,390 1,893,252
1,895,871 1,915,057
Investors Title Company and Subsidiaries Consolidated
Balance Sheets
As of December 31, 2017 and
2016
(Unaudited)
December 31, 2017 December 31,2016
Assets: Investments in securities: Fixed maturities,
available-for-sale, at fair value
$ 103,341,083 $
101,934,077 Equity securities, available-for-sale, at fair value
47,366,826 41,179,259 Short-term investments
23,779,672 6,558,840 Other investments
12,032,426
11,181,531 Total investments
186,520,007
160,853,707 Cash and cash equivalents
20,214,468 27,928,472 Premium and fees receivable
10,159,519 8,654,161 Accrued interest and dividends
1,099,879 1,035,152 Prepaid expenses and other assets
9,003,683 9,456,523 Property, net
10,172,904
8,753,466 Goodwill and other intangible assets, net
11,357,290 12,256,641 Current income taxes receivable
385,109 —
Total Assets $
248,912,859 $ 228,938,122
Liabilities and Stockholders’ Equity Liabilities:
Reserves for claims
$ 34,801,000 $ 35,305,000
Accounts payable and accrued liabilities
27,565,660
26,146,480 Current income taxes payable
— 1,232,432 Deferred
income taxes, net
8,625,759 11,118,256 Total
liabilities
70,992,419 73,802,168
Stockholders’ Equity: Common stock
– no par value
(10,000,000 authorized shares; 1,885,993 and 1,884,283 shares
issued and outstanding as of December 31, 2017 and 2016,
respectively, excluding in each period 291,676 shares of common
stock held by the Company's subsidiary)
1 1 Retained
earnings
161,890,660 143,283,621 Accumulated other
comprehensive income
15,944,826 11,761,447
Total stockholders’ equity attributable to the Company
177,835,487 155,045,069 Noncontrolling interests
84,953 90,885 Total stockholders’ equity
177,920,440 155,135,954
Total Liabilities
and Stockholders’ Equity $ 248,912,859
$ 228,938,122
Investors Title Company and Subsidiaries Net Premiums
Written By Branch and Agency
For the Three and Twelve Months Ended
December 31, 2017 and 2016
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31, 2017 %
2016 %
2017 %
2016 %
Branch $ 9,457,862
26.9 $ 9,179,050 27.6
$
40,244,394 29.0 $ 33,482,154
27.8
Agency 25,722,726
73.1 24,032,129 72.4
98,344,483 71.0 87,086,997
72.2
Total $ 35,180,588
100.0 $ 33,211,179 100.0
$ 138,588,877
100.0 $ 120,569,151 100.0
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version on businesswire.com: http://www.businesswire.com/news/home/20180207005237/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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