Investors Title Company (NASDAQ: ITIC) today announced its
results for the second quarter ended June 30, 2018. Net income
attributable to the Company increased 22.4% to a new second quarter
record of $6.9 million, or $3.66 per diluted share, versus $5.7
million, or $2.99 per diluted share, for the prior year period.
Revenues also set a new second quarter record, increasing 4.5%
to $41.9 million, compared with $40.1 million in the prior year
period. Net premiums written increased due to higher real estate
values, as well as a shift to higher-premium purchase activity,
which offset the decline in refinance activity that has occurred
over the past year. Other investment income increased primarily due
to higher earnings from partnership investments. Implementation of
a new accounting standard in 2018 resulted in recognition of a $0.3
million net unrealized gain on equity investments.
Operating expenses increased 4.2% versus the prior year quarter,
mainly driven by higher personnel and claims expenses. Personnel
costs increased as a result of higher staffing levels related to
the support of growth, increases in contract services related to
software initiatives, and normal inflationary increases in salaries
and benefits. The provision for claims was higher in the current
quarter mainly due to comparison to a prior year period which
included a significant amount of favorable loss development from
earlier policy years. In addition, the Company’s net income
benefitted from recent tax reform legislation.
For the six months ended June 30, 2018, net income attributable
to the Company increased 9.6% to $11.1 million, or $5.87 per
diluted share, versus $10.2 million, or $5.35 per diluted share,
for the prior year period. Revenues decreased 2.8% to $75.7
million, while operating expenses decreased 2.3% to $61.7 million.
Results for the first half of the year have been shaped
predominantly by the same factors that affected the second quarter,
with the exception of more favorable claims experience for the six
months ended June 30, 2018 versus the prior year period.
Chairman J. Allen Fine added, “We are pleased to report a record
level of revenue and earnings for the second quarter. Revenue
growth from purchase activity was strong enough to offset the
impact of lower levels of refinance activity. In addition, we
continued to benefit from stable levels of claims experience. We
remain optimistic that low unemployment levels and wage growth will
continue to offset headwinds resulting from the effects of rising
interest rates and housing supply constraints, resulting in another
strong year for real estate, mortgage lending, and title
insurance.”
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, 2017, as filed with the Securities and
Exchange Commission, and in subsequent filings.
Investors Title Company and
SubsidiariesConsolidated Statements of IncomeFor the
Three and Six Months Ended June 30, 2018 and 2017(in
thousands, except per share amounts)(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2018 2017
2018
2017
Revenues:
Net premiums written
$ 35,142 $ 34,672
$ 64,701 $ 67,410 Escrow and other title-related fees
2,149 1,942
3,653 3,957 Non-title services
1,696 1,515
3,288 2,878 Interest and dividends
1,125 1,114
2,243 2,211 Other investment income
1,181 766
1,450 995 Net realized investment gains
288 83
441 186 Net unrealized gain (loss) on equity
investments
348 —
(294 ) — Other
7
33
230
281 Total Revenues
41,936
40,125
75,712
77,918
Operating Expenses: Commissions to agents
16,427
16,598
30,452 32,929 Provision (benefit) for claims
564 140
(842 ) 860 Personnel expenses
10,798 9,942
22,138 19,900 Office and technology
expenses
2,326 1,984
4,395 3,923 Other expenses
3,007 3,115
5,530 5,509 Total Operating
Expenses
33,122 31,779
61,673 63,121
Income before Income Taxes 8,814 8,346
14,039
14,797
Provision for Income Taxes 1,894
2,672
2,946
4,657
Net Income 6,920 5,674
11,093 10,140
Net Loss Attributable to
Noncontrolling Interests 27 1
30 11
Net Income Attributable to the Company $
6,947 $ 5,675
$ 11,123 $ 10,151
Basic Earnings per Common Share $ 3.68
$ 3.01
$ 5.90
$ 5.38
Weighted Average
Shares Outstanding – Basic 1,887
1,887
1,886 1,886
Diluted Earnings per Common Share $
3.66 $ 2.99
$ 5.87 $ 5.35
Weighted Average Shares Outstanding – Diluted 1,897
1,897
1,896
1,896
Investors Title Company and
SubsidiariesConsolidated Balance SheetsAs of
June 30, 2018 and December 31, 2017(in
thousands)(unaudited)
June 30,
2018
December 31,
2017
Assets Cash and cash equivalents
$ 29,289 $ 20,214
Investments: Fixed maturities, available-for-sale, at fair value
94,578 103,341 Equity securities, at fair value
48,026 47,367 Short-term investments
24,950 23,780
Other investments
11,622 12,032
Total investments
179,176 186,520
Premiums and fees receivable
11,008 10,031
Accrued interest and dividends
1,015 1,100 Prepaid expenses
and other receivables
7,974 7,730 Property, net
10,820 10,173 Goodwill and other intangible assets, net
11,032 11,357 Other assets
1,457 1,403 Current income
taxes receivable
1,427 385 Total
Assets
$ 253,198
$ 248,913
Liabilities and Stockholders’
Equity Liabilities: Reserve for claims
$
32,484 $ 34,801 Accounts payable and accrued liabilities
25,140 27,565 Deferred income taxes, net
9,461
8,626 Total liabilities
67,085
70,992 Stockholders’ Equity:
Common stock – no par value (10,000
authorized shares; 1,887 and 1,886 shares issued and outstanding as
of June 30, 2018 and December 31, 2017, respectively, excluding in
each period 292 shares of common stock held by the Company's
subsidiary)
— — Retained earnings
185,252 161,891 Accumulated
other comprehensive income
806 15,945
Total stockholders’ equity attributable to the Company
186,058 177,836 Noncontrolling interests
55
85 Total stockholders’ equity
186,113
177,921 Total Liabilities and
Stockholders’ Equity
$ 253,198
$ 248,913
Investors Title Company and
SubsidiariesNet Premiums Written By Branch and
AgencyFor the Three and Six Months Ended June 30, 2018
and 2017(in thousands)(unaudited)
Three Months Ended June
30, Six Months Ended June 30, 2018
% 2017 %
2018 % 2017
%
Branch $ 10,736
30.6 $ 10,394 30.0
$ 19,353 29.9 $
19,677 29.2
Agency 24,406
69.4 24,278
70.0
45,348
70.1 47,733 70.8
Total $ 35,142
100.0 $ 34,672
100.0
$ 64,701
100.0 $ 67,410
100.0
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version on businesswire.com: https://www.businesswire.com/news/home/20180806005134/en/
Investors Title CompanyElizabeth B. Lewter, 919-968-2200
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