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| 8-K - INVESTORS TITLE COMPANY 8-K - INVESTORS TITLE CO | a50177172.htm |
Exhibit 99.1
Investors Title Company Announces Fourth Quarter and Fiscal Year 2011 Results
CHAPEL HILL, N.C.--(BUSINESS WIRE)--February 23, 2012--Investors Title Company today announced its results for the fourth quarter and year ended December 31, 2011. For the quarter, net income decreased 20.6% to $1,879,459, or $0.88 per diluted share, compared with $2,368,550, or $1.04 per diluted share, for the prior year period. For the year, net income increased 8.8% to $6,933,936, or $3.20 per diluted share, compared with $6,372,626, or $2.78 per diluted share, for the prior year.
The decrease in net income for the quarter was driven primarily by lower premium volumes, partially offset by lower operating expenses and a reduction in the effective income tax rate. Operating expenses decreased 2.5% to $18,174,594 versus the prior year period due both to lower levels of variable expenses which follow premiums as well as reductions in certain overhead expenses.
The increase in net income for the year was driven primarily by premium revenue growth and favorable claims experience. Net premiums written increased 32.6% to $81,529,333 versus the prior year, mainly as a result of the Company’s expansion into Texas in late 2010. Operating expenses increased 29.5% to $81,186,220 versus the prior year period, primarily due to an increase in commissions to agents and other expenses which fluctuate with revenues. Commissions to agents increased 59.0%, commensurate with the growth in agency premiums and reflective of an increase in agent business from markets with higher premium rates, primarily Texas. The provision for claims as a percentage of net premiums written was lower compared with the prior year due to an adjustment for favorable loss development in prior policy years, as well as a decline in the relative share of North Carolina business as a percentage of the total versus the prior year period. Since North Carolina’s premium rates are less than half the national average, the resulting loss ratio for North Carolina business is higher than for our other markets.
Chairman J. Allen Fine added, “We are pleased to report a substantial improvement in operating results for 2011. Although we did experience a slowdown in the fourth quarter, premiums written for the year increased 32.6% versus last year largely due to our expansion into Texas. Operating expenses in total increased 29.5%; however, we continued to see year-over-year improvement in our claims loss rate as well as reductions in other operating expense categories which do not fluctuate directly with premium levels. Our balance sheet and financial condition remain very strong, and in the coming year we plan to continue to enhance our competitive strengths and market position by emphasizing the expansion of our agency base and operational efficiency.”
Investors Title Company is engaged through its subsidiaries in the business of issuing and underwriting title insurance policies. The Company also provides investment management services to individuals, companies, banks and trusts, as well as services in connection with tax-deferred exchanges of like-kind property.
Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, among other statements, any predictions regarding future agency base expansion or increasing operational efficiency. 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; declines in the performance of the Company’s investments; government regulation; 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, 2010, 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, 2011 and 2010 | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31 | December 31 | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Revenues: | ||||||||||||
| Net premiums written | $ | 18,226,131 | $ | 19,287,794 | $ | 81,529,333 | $ | 61,462,441 | ||||
| Investment income - interest and dividends | 929,791 | 913,950 | 3,595,036 | 3,671,178 | ||||||||
| Net realized gain on investments | 107,731 | 348,608 | 28,559 | 654,674 | ||||||||
| Other | 1,563,400 | 1,681,142 | 5,532,228 | 5,521,062 | ||||||||
| Total Revenues | 20,827,053 | 22,231,494 | 90,685,156 | 71,309,355 | ||||||||
| Operating Expenses: | ||||||||||||
| Commissions to agents | 10,261,013 | 10,481,297 | 49,596,250 | 31,189,207 | ||||||||
| Provision for claims | 1,041,168 | 1,190,725 | 3,342,427 | 4,435,066 | ||||||||
| Salaries, employee benefits and payroll taxes | 4,442,291 | 4,510,829 | 18,552,504 | 17,695,956 | ||||||||
| Office occupancy and operations | 886,735 | 897,072 | 3,722,803 | 3,935,563 | ||||||||
| Business development | 583,317 | 582,473 | 1,706,834 | 1,544,588 | ||||||||
| Filing fees, franchise and local taxes | 104,483 | 38,602 | 516,380 | 573,075 | ||||||||
| Premium and retaliatory taxes | 361,662 | 359,745 | 1,729,830 | 1,279,400 | ||||||||
| Professional and contract labor fees | 381,158 | 472,438 | 1,513,466 | 1,511,283 | ||||||||
| Other | 112,767 | 108,763 | 505,726 | 529,591 | ||||||||
| Total Operating Expenses | 18,174,594 | 18,641,944 | 81,186,220 | 62,693,729 | ||||||||
| Income Before Income Taxes | 2,652,459 | 3,589,550 | 9,498,936 | 8,615,626 | ||||||||
| Provision For Income Taxes | 773,000 | 1,221,000 | 2,565,000 | 2,243,000 | ||||||||
| Net Income | $ | 1,879,459 | $ | 2,368,550 | $ | 6,933,936 | $ | 6,372,626 | ||||
| Basic Earnings Per Common Share | $ | 0.89 | $ | 1.04 | $ | 3.22 | $ | 2.79 | ||||
| Weighted Average Shares Outstanding - Basic | 2,112,675 | 2,283,513 | 2,151,350 | 2,284,657 | ||||||||
| Diluted Earnings Per Common Share | $ | 0.88 | $ | 1.04 | $ | 3.20 | $ | 2.78 | ||||
| Weighted Average Shares Outstanding - Diluted | 2,132,780 | 2,287,201 | 2,169,636 | 2,289,847 | ||||||||
| Investors Title Company and Subsidiaries | ||||||
| Consolidated Balance Sheets | ||||||
| As of December 31, 2011 and 2010 | ||||||
| (Unaudited) | ||||||
| December 31, 2011 | December 31, 2010 | |||||
| Assets: | ||||||
| Investments in securities: | ||||||
| Fixed maturities, available-for-sale, at fair value | $ | 85,407,365 | $ | 86,033,557 | ||
| Equity securities, available-for-sale, at fair value | 22,549,975 | 13,872,370 | ||||
| Short-term investments | 14,112,262 | 27,203,550 | ||||
| Other investments | 3,631,714 | 2,888,958 | ||||
| Total investments | 125,701,316 | 129,998,435 | ||||
| Cash and cash equivalents | 18,042,258 | 8,117,031 | ||||
| Premiums and fees receivable, net | 6,810,000 | 7,253,786 | ||||
| Accrued interest and dividends | 1,108,156 | 1,150,602 | ||||
| Prepaid expenses and other assets | 2,743,517 | 2,816,661 | ||||
| Property, net | 3,553,216 | 3,672,317 | ||||
| Deferred income taxes, net | - | 476,534 | ||||
| Total Assets | $ | 157,958,463 | $ | 153,485,366 | ||
| Liabilities and Stockholders' Equity | ||||||
| Liabilities: | ||||||
| Reserves for claims | $ | 37,996,000 | $ | 38,198,700 | ||
| Accounts payable and accrued liabilities | 12,330,383 | 10,301,495 | ||||
| Current income taxes payable | 640,533 | 1,056,356 | ||||
| Deferred income taxes, net | 479,363 | - | ||||
| Total liabilities | 51,446,279 | 49,556,551 | ||||
| Stockholders' Equity: | ||||||
|
Common stock - no par value (shares authorized 10,000,000; 2,107,681 and 2,282,596 shares issued and outstanding as of December 31, 2011 and 2010, respectively, excluding 291,676 shares for 2011 and 2010 of common stock held by the Company's subsidiary) |
1 | 1 | ||||
| Retained earnings | 99,003,018 | 98,240,109 | ||||
| Accumulated other comprehensive income | 7,509,165 | 5,688,705 | ||||
| Total stockholders' equity | 106,512,184 | 103,928,815 | ||||
| Total Liabilities and Stockholders' Equity | $ | 157,958,463 | $ | 153,485,366 | ||
| Investors Title Company and Subsidiaries | ||||||||||||||||||||
| Net Premiums Written By Branch and Agency | ||||||||||||||||||||
| For the Three and Twelve Months Ended December 31, 2011 and 2010 | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31 | December 31 | |||||||||||||||||||
| 2011 | % | 2010 | % | 2011 | % | 2010 | % | |||||||||||||
| Branch | $ | 4,424,488 | 24.3 | $ | 4,920,512 | 25.5 | $ | 16,485,973 | 20.2 | $ | 17,961,144 | 29.2 | ||||||||
| Agency | 13,801,643 | 75.7 | 14,367,282 | 74.5 | 65,043,360 | 79.8 | 43,501,297 | 70.8 | ||||||||||||
| Total | $ | 18,226,131 | 100.0 | $ | 19,287,794 | 100.0 | $ | 81,529,333 | 100.0 | $ | 61,462,441 | 100.0 | ||||||||
CONTACT:
Investors Title Company
Elizabeth B. Lewter, 919-968-2200