Investors Title Company today announced results for the fourth
quarter and year ended December 31, 2021. The Company set all-time
quarterly and annual records for total revenues and net premiums
written, in addition to setting an all-time annual record for net
income.
For the quarter, net income increased 13.7% to $18.9 million, or
$9.94 per diluted share, versus $16.6 million, or $8.77 per diluted
share, in the prior year period. For the year, net income increased
70.0% to $67.0 million, or $35.28 per diluted share, versus $39.4
million, or $20.80 per diluted share, in the prior year.
Revenues for the quarter increased 18.0% to $91.0 million,
compared to $77.1 million in the prior year period. Net premiums
written increased 16.8% to $72.5 million, driven mainly by higher
average home prices and continued low mortgage interest rates.
Escrow and other title-related fees increased 53.0%, primarily due
to increases in commission income and title ancillary services.
Revenues from non-title services increased 23.4%, mainly due to
increases in income from like-kind exchanges, trust management fees
and agency income. Other investment income increased $823,000 due
to earnings from partnership investments. Changes in the estimated
fair value of equity security investments resulted in a benefit to
revenues of $7.7 million, a slight decrease compared with the prior
year quarter, as market values continued to increase.
Operating expenses increased 20.5%, mainly due to a 20.6%
increase in commissions to agents commensurate with the increase in
agent premium volume. Personnel expenses were 9.0% higher than the
prior year due primarily to staffing additions in support of
strategic growth initiatives and volume increases. Higher premium
volumes, increases in travel-related expenses and ongoing
technology initiatives drove the increases in office and technology
expenses and other operating expenses. Slightly offsetting these
increases was a relatively low level of claims activity experienced
on policies written in recent years.
Income before income taxes increased 11.6% to $23.9 million for
the current quarter versus $21.4 million in the prior year period.
Excluding the impact of changes in the estimated fair value of
equity security investments, adjusted income before income taxes
(non-GAAP) increased 18.9% to $16.2 million versus $13.6 million
for the prior year period (see Appendix A for a reconciliation of
this non-GAAP measure to the most directly comparable GAAP
measure).
For the year, revenues increased 39.4% to $329.5 million
compared with $236.4 million for the prior year. Aside from changes
in the estimated fair value of equity security investments and
other income, overall results for the year were shaped
predominantly by the same factors that affected the fourth quarter.
Changes in the estimated fair value of equity security investments
increased $10.0 million compared with the prior year, as U.S. stock
markets recorded a third straight year of growth in 2021. Other
income increased $4.1 million mainly due to a gain on the sale of
property. Income before income taxes increased 71.0% to $84.9
million compared with $49.7 million in the prior year. Excluding
the impact of changes in the estimated fair value of investments in
equity securities, adjusted income before income taxes (non-GAAP)
increased 56.4% to $70.0 million versus $44.8 million for the prior
year (see Appendix A for a reconciliation of this non-GAAP measure
to the most directly comparable GAAP measure).
Chairman J. Allen Fine commented, “We are pleased to report
another year of exceptionally strong performance. For both the
quarter and the year, the Company set all-time records for revenues
and premiums, in addition to an annual record for earnings. As the
country grapples with the ongoing pandemic for the second year, we
continued to see strong demand for housing as well as record growth
in real estate values in our operating markets during 2021.
Although refinance activity has slowed recently in light of an
uptick in mortgage interest rates relative to most of 2021, the
level of refinance activity actually surpassed 2020’s record
activity levels. As we turn our focus to 2022, we will remain
focused on enhancing our competitive strengths and profitably
expanding our market presence.”
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.
-----------------------------------------------------------------------------------------------------------------------------
Cautionary Statements Regarding
Forward-Looking Statements
Certain statements contained herein constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements may be identified by the use
of words such as “plan,” expect,” “aim,” “believe,” “project,”
“anticipate,” “intend,” “estimate,” “should,” “could,” “would,” and
other expressions that indicate future events and trends. Such
statements include, among others, any statements regarding the
Company’s expected performance for this year, projections regarding
U.S. recovery from the COVID-19 pandemic, future home price
fluctuations, changes in home purchase or refinance demand 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 severity
and duration of the COVID-19 pandemic (including any of its
variants) and its effects (and the effects of measures undertaken
to combat it) on the economy and the Company’s business; 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 regulations; changes in the economy; changes resulting
from President Biden’s administration and Congress; 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, 2020 as filed with the Securities and
Exchange Commission, and in subsequent filings.
Investors Title Company and
Subsidiaries
Consolidated Statements of
Operations
For the Three and Twelve
Months Ended December 31, 2021 and 2020
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Revenues:
Net premiums written
$
72,536
$
62,107
$
273,885
$
205,418
Escrow and other title-related fees
3,530
2,307
13,678
8,321
Non-title services
2,735
2,217
9,667
8,693
Interest and dividends
966
1,051
3,773
4,393
Other investment income
2,310
1,487
6,920
3,723
Net realized investment gains
1,098
6
1,869
333
Changes in the estimated fair value of
equity security investments
7,668
7,771
14,934
4,904
Other
200
180
4,772
623
Total Revenues
91,043
77,126
329,498
236,408
Operating Expenses:
Commissions to agents
40,357
33,463
142,815
106,807
Provision for claims
666
752
5,686
5,204
Personnel expenses
16,669
15,297
64,193
51,929
Office and technology expenses
3,931
2,623
13,059
9,951
Other expenses
5,528
3,580
18,813
12,856
Total Operating Expenses
67,151
55,715
244,566
186,747
Income before Income Taxes
23,892
21,411
84,932
49,661
Provision for Income Taxes
4,980
4,776
17,912
10,241
Net Income
$
18,912
$
16,635
$
67,020
$
39,420
Basic Earnings per Common Share
$
9.98
$
8.79
$
35.38
$
20.84
Weighted Average Shares Outstanding –
Basic
1,895
1,892
1,894
1,892
Diluted Earnings per Common
Share
$
9.94
$
8.77
$
35.28
$
20.80
Weighted Average Shares Outstanding –
Diluted
1,903
1,897
1,900
1,896
Investors Title Company and
Subsidiaries
Consolidated Balance
Sheets
As of December 31, 2021 and
2020
(in thousands)
(unaudited)
December 31,
2021
December 31, 2020
Assets
Cash and cash equivalents
$
37,168
$
13,723
Investments:
Fixed maturity securities,
available-for-sale, at fair value
79,791
117,713
Equity securities, at fair value
76,853
64,919
Short-term investments
45,930
15,170
Other investments
20,298
15,493
Total investments
222,872
213,295
Premiums and fees receivable
22,953
19,427
Accrued interest and dividends
817
1,038
Prepaid expenses and other receivables
11,721
9,418
Property, net
13,033
11,160
Goodwill and other intangible assets,
net
15,951
9,771
Operating lease right-of-use assets
5,202
3,533
Other assets
1,771
1,560
Total Assets
$
331,488
$
282,925
Liabilities and Stockholders’
Equity
Liabilities:
Reserve for claims
$
36,754
$
33,584
Accounts payable and accrued
liabilities
43,868
36,020
Operating lease liabilities
5,329
3,669
Current income taxes payable
3,329
638
Deferred income taxes, net
13,121
8,592
Total liabilities
102,401
82,503
Stockholders’ Equity:
Common stock – no par value (10,000
authorized shares; 1,895 and 1,892 shares issued and outstanding as
of December 31, 2021 and 2020, respectively, excluding in each
period 292 shares of common stock held by the Company's
subsidiary)
—
—
Retained earnings
225,861
196,096
Accumulated other comprehensive income
3,226
4,326
Total stockholders’ equity
229,087
200,422
Total Liabilities and Stockholders’
Equity
$
331,488
$
282,925
Investors Title Company and
Subsidiaries
Net Premiums Written By Branch
and Agency
For the Three and Twelve
Months Ended December 31, 2021 and 2020
(in thousands)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
%
2020
%
2021
%
2020
%
Branch
$
15,681
21.6
$
14,840
23.9
$
68,585
25.0
$
53,204
25.9
Agency
56,855
78.4
47,267
76.1
205,300
75.0
152,214
74.1
Total
$
72,536
100.0
$
62,107
100.0
$
273,885
100.0
$
205,418
100.0
Investors Title Company and Subsidiaries
Appendix A Non-GAAP Measures Reconciliation For the Three and
Twelve Months Ended December 31, 2021 and 2020 (in thousands)
(unaudited)
Management uses various financial and operational measurements,
including financial information not prepared in accordance with
generally accepted accounting principles ("GAAP"), to analyze
Company performance. This includes adjusting revenues to remove the
impact of changes in the estimated fair value of equity security
investments, which are recognized in net income under GAAP.
Management believes that these measures are useful to evaluate the
Company's internal operational performance from period to period
because they eliminate the effects of external market fluctuations.
The Company also believes users of the financial results would
benefit from having access to such information, and that certain of
the Company’s peers make available similar information. This
information should not be used as a substitute for, or considered
superior to, measures of financial performance prepared in
accordance with GAAP, and may be different from similarly titled
non-GAAP financial measures used by other companies.
The following tables reconcile non-GAAP financial measurements
used by Company management to the comparable measurements using
GAAP:
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2021
2020
2021
2020
Revenues
Total revenues (GAAP)
$
91,043
$
77,126
$
329,498
$
236,408
Subtract: Changes in the estimated fair
value of equity security investments
(7,668
)
(7,771
)
(14,934
)
(4,904
)
Adjusted revenues (non-GAAP)
$
83,375
$
69,355
$
314,564
$
231,504
Income before Income Taxes
Income before income taxes (GAAP)
$
23,892
$
21,411
$
84,932
$
49,661
Subtract: Changes in the estimated fair
value of equity security investments
(7,668
)
(7,771
)
(14,934
)
(4,904
)
Adjusted income before income taxes
(non-GAAP)
$
16,224
$
13,640
$
69,998
$
44,757
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Elizabeth B. Lewter (919) 968-2200
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