UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
February 7, 2018 |
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Date of Report (Date of earliest event reported) |
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Investors Title Company |
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(Exact name of registrant as specified in its charter) |
North Carolina |
0-11774 |
56-1110199 |
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(State or Other Jurisdiction of |
(Commission |
(I.R.S. Employer |
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Incorporation or Organization) |
File Number) |
Identification No.) |
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121 North Columbia Street |
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Chapel Hill, North Carolina |
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27514 |
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(Address of Principal Executive Offices) |
(Zip Code) |
(919) 968-2200 |
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Registrant's telephone number, including area code |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition
Attached as Exhibit 99.1 and incorporated herein by reference is a copy of the press release of Investors Title Company, dated February 7, 2018, reporting Investors Title Company's financial results for the fiscal quarter ended December 31, 2017.
The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. The following exhibit accompanies this Report:
Exhibit 99.1 - Press Release of Investors Title Company dated February 7, 2018.
SIGNATURE
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INVESTORS TITLE COMPANY |
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Date: | February 7, 2018 | By: |
/s/ James A. Fine, Jr. |
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James A. Fine, Jr. |
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President, Principal Financial Officer and |
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Principal Accounting Officer |
EXHIBIT INDEX
Exhibit No. |
Description |
Press release issued by Investors Title Company on February 7, 2018 |
Exhibit 99.1
Investors Title Company Announces Record Fourth Quarter and Fiscal Year 2017 Results
CHAPEL HILL, N.C.--(BUSINESS WIRE)--February 7, 2018--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 |
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(Unaudited) |
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Three Months Ended |
Twelve Months Ended |
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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 |
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(Unaudited) |
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December 31, 2017 |
December 31, 2016 |
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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 |
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(Unaudited) |
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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 |
CONTACT:
Investors Title Company
Elizabeth B. Lewter, 919-968-2200