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Investors Title Company Announces Second Quarter 2011 Results

Investors Title Company today announced its results for the second quarter ended June 30, 2011. Net income decreased 37.2% to $1,594,805, or $0.74 per diluted share, compared with $2,537,560, or $1.11 per diluted share, for the prior year period.

Revenues increased 46.2% to $23,719,213 versus the prior year period, primarily due to a 57.3% increase in net premiums written. The premium growth is mainly attributable to the Company’s recent expansion into Texas. In addition, premiums in the second quarter shifted slightly from refinancing transactions toward higher-margin purchase transactions relative to the prior year period and the trailing quarter.

Operating expenses increased 64.0% to $21,680,408 versus the prior year period, primarily due to increases in commissions to agents and the provision for claims. Commissions to agents increased 105.3%, 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 was higher in the current quarter compared with the prior year primarily due to a $942,000 recovery in the second quarter of 2010 on a fraud-related claim. The impact of the unfavorable comparison was partially offset by 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.

For the six months ended June 30, 2011, net income increased 2.3% to $2,614,012, or $1.19 per diluted share, compared with $2,554,975, or $1.11 per diluted share, for the prior year period. Revenues increased 46.2% to $43,741,233, while operating expenses increased 50.0% versus the prior year period, largely as a result of factors noted above for the quarter.

Chairman J. Allen Fine added, “We are pleased to report an increase in revenues driven by continued expansion of our agent base. Although operating expenses have increased as we have invested in growing our agent base, the impact has been partially offset by positive developments in claims loss rates and the continued impact of cost reduction initiatives from the past several years. While a robust recovery of the U.S. economy appears unlikely in the near term, our balance sheet remains very strong, and we will continue to focus on enhancing our competitive strengths by emphasizing growth in market presence and careful management of expenses.”

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 activity in the U.S. real estate market, future enhancement of our operational efficiency or agency-based expansion. 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: 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 Six Months Ended June 30, 2011 and 2010
(Unaudited)
Three Months EndedSix Months Ended
June 30June 30

2011

2010

2011

2010

Revenues:
Net premiums written $ 21,451,022 $ 13,638,950 $ 39,316,610 $ 25,425,252

Investment income - interest and dividends

878,818 915,852 1,778,190 1,822,474
Net realized gain on investments 147,075 325,780 120,915 350,930
Other 1,242,298 1,338,184 2,525,518 2,317,521
Total Revenues 23,719,213 16,218,766 43,741,233 29,916,177
Operating Expenses:
Commissions to agents 13,293,828 6,476,376 24,173,414 12,075,827
Provision for claims 1,229,961 112,415 1,951,587 1,424,819
Salaries, employee benefits and payroll taxes 4,639,675 4,345,961 9,331,671 8,830,273
Office occupancy and operations 952,460 978,822 1,916,387 2,067,227
Business development 372,239 352,365 759,786 626,661
Filing fees, franchise and local taxes 118,146 147,277 332,259 292,699
Premium and retaliatory taxes 502,984 281,784 908,457 582,730
Professional and contract labor fees 411,557 338,794 720,081 703,872
Other 159,558 182,412 262,579 294,094
Total Operating Expenses 21,680,408 13,216,206 40,356,221 26,898,202
Income Before Income Taxes2,038,805 3,002,560 3,385,012 3,017,975
Provision For Income Taxes444,000 465,000 771,000 463,000
Net Income $ 1,594,805 $ 2,537,560 $ 2,614,012 $ 2,554,975
Basic Earnings Per Common Share $ 0.75 $ 1.11 $ 1.20 $ 1.12
Weighted Average Shares Outstanding - Basic2,134,164 2,285,653 2,184,323 2,285,392
Diluted Earnings Per Common Share $ 0.74 $ 1.11 $ 1.19 $ 1.11
Weighted Average Shares Outstanding - Diluted2,155,116 2,293,199 2,201,398 2,293,232

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of June 30, 2011 and December 31, 2010
(Unaudited)
June 30, 2011 December 31, 2010

Assets:

Investments in securities:
Fixed maturities:
Available-for-sale, at fair value $ 84,442,518 $ 86,033,557
Equity securities, available-for-sale, at fair value 15,268,038 13,872,370
Short-term investments 22,212,440 27,203,550
Other investments 2,995,116 2,888,958
Total investments 124,918,112 129,998,435
Cash and cash equivalents 12,652,920 8,117,031
Premiums and fees receivable, net 5,490,826 7,253,786
Accrued interest and dividends 1,114,632 1,150,602
Prepaid expenses and other assets 4,910,571 2,816,661
Property, net 3,574,593 3,672,317
Current income taxes receivable 730,356 -
Deferred income taxes, net - 476,534
Total Assets $ 153,392,010 $ 153,485,366
Liabilities and Stockholders' Equity
Liabilities:
Reserves for claims $ 37,605,000 $ 38,198,700
Accounts payable and accrued liabilities 12,414,679 10,301,495
Current income taxes payable - 1,056,356
Deferred income taxes, net 994,169 -
Total liabilities 51,013,848 49,556,551
Stockholders' Equity:

Common stock - no par value (shares authorized 10,000,000; 2,127,735 and 2,282,596 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively, excluding 291,676 shares for 2011 and 2010 of common stock held by the Company's subsidiary)

1 1
Retained earnings 95,599,613 98,240,109
Accumulated other comprehensive income 6,778,548 5,688,705
Total stockholders' equity 102,378,162 103,928,815
Total Liabilities and Stockholders' Equity$153,392,010 $ 153,485,366

Investors Title Company and Subsidiaries
Net Premiums Written By Branch and Agency
For the Three and Six Months Ended June 30, 2011 and 2010
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2011% 2010 % 2011% 2010 %
Branch$3,977,23418.5 $ 4,420,264 32.4 $7,673,51419.5 $ 8,170,064 32.1
Agency17,473,78881.5 9,218,686 67.6 31,643,09680.5 17,255,188 67.9
Total$21,451,022100.0 $ 13,638,950 100.0 $39,316,610100.0 $ 25,425,252 100.0

Contacts:

Investors Title Company
Elizabeth B. Lewter, 919-968-2200
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