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Investors Title Company Announces Fourth Quarter and Fiscal Year 2011 Results

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
Three Months EndedTwelve Months Ended
December 31December 31
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 Taxes2,652,459 3,589,550 9,498,936 8,615,626
Provision For Income Taxes773,000 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 - Basic2,112,675 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 - Diluted2,132,780 2,287,201 2,169,636 2,289,847

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2011 and 2010
December 31, 2011 December 31, 2010
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
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
Three Months Ended Twelve Months Ended
December 31 December 31
2011% 2010 % 2011% 2010 %
Branch$4,424,48824.3 $ 4,920,512 25.5 $16,485,97320.2 $ 17,961,144 29.2
Agency13,801,64375.7 14,367,282 74.5 65,043,36079.8 43,501,297 70.8
Total$18,226,131100.0 $ 19,287,794 100.0 $81,529,333100.0 $ 61,462,441 100.0


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