ITIC Investors Title Company

Investors Title Company (Nasdaq: ITIC) today announced results for the quarter ended March 31, 2024. The Company reported net income of $4.5 million, or $2.40 per diluted share, compared with net income of $1.2 million, or $0.62 per diluted share, for the prior year period.

Revenues increased 4.1% to $53.5 million, compared to $51.3 million in the prior year period, primarily due to increases in premiums written and higher net investment gains. The increase in premiums written is attributable to higher activity levels in some of our key markets. Positive changes in the estimated fair value of equity security investments resulted in higher net investment gains compared to the prior year period.

Operating expenses decreased 4.3% compared to the prior year period, predominantly due to a $2.2 million decline in personnel expenses resulting from reduced staffing levels and decreases in other overhead expense categories. These decreases were partially offset by an increase in commissions to agents commensurate with higher agent premium volumes. The provision for claims and office and technology expenses were in line with the prior year period.

Income before income taxes increased to $5.8 million for the current year quarter, versus $1.6 million in the prior year period. Excluding the impact of net investment gains, adjusted income before income taxes (non-GAAP) increased to $3.4 million for the current year quarter, versus $1.1 million in the prior year period (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 favorable results compared to the prior year period. Higher revenue levels, coupled with reductions in overhead expenses, resulted in improvement in earnings relative to the prior year.

“Operating conditions remained challenging for the real estate market during the quarter, although there was some improvement. Despite record low levels of housing affordability, mortgage originations on a national level increased during the first quarter, compared to the same prior year period, favorably impacting some of our key markets. We remain committed to identifying and investing in opportunities to profitably expand our market presence and improve our competitive strengths, while taking a long-term view toward disciplined expense management over the ebbs and flows of the economic cycle.”

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, 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, 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 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; the impact of inflation and responses by government regulators, including the Federal Reserve, such as changes in interest rates; 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, 2023 as filed with the Securities and Exchange Commission, and in subsequent filings.

Investors Title Company and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2024 and 2023

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

Net premiums written

 

$

40,180

 

$

38,966

Escrow and other title-related fees

 

 

3,723

 

 

3,655

 

Non-title services

 

 

4,304

 

 

5,312

 

Interest and dividends

 

 

2,520

 

 

2,074

 

Other investment income

 

 

111

 

 

753

 

Net investment gains

 

 

2,422

 

 

443

 

Other

 

 

199

 

 

140

 

Total Revenues

 

 

53,459

 

 

51,343

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

Commissions to agents

 

 

19,870

 

 

19,326

 

Provision for claims

 

 

910

 

 

1,068

 

Personnel expenses

 

 

18,582

 

 

20,820

 

Office and technology expenses

 

 

4,465

 

 

4,400

 

Other expenses

 

 

3,835

 

 

4,168

 

Total Operating Expenses

 

 

47,662

 

 

49,782

 

 

 

 

 

 

Income before Income Taxes

 

 

5,797

 

 

1,561

 

 

 

 

 

 

Provision for Income Taxes

 

 

1,272

 

 

380

 

 

 

 

 

 

Net Income

 

$

4,525

 

$

1,181

 

 

 

 

 

 

Basic Earnings per Common Share

 

$

2.40

 

$

0.62

 

 

 

 

 

 

Weighted Average Shares Outstanding – Basic

 

 

1,888

 

 

1,897

 

 

 

 

 

 

Diluted Earnings per Common Share

 

$

2.40

 

$

0.62

 

 

 

 

 

 

Weighted Average Shares Outstanding – Diluted

 

 

1,889

 

 

1,897

 

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

(in thousands)

(unaudited)

 

 

March 31, 2024

 

December 31, 2023

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

21,613

 

$

24,031

 

 

 

 

Investments:

 

 

 

Fixed maturity securities, available-for-sale, at fair value

 

62,647

 

 

63,847

 

Equity securities, at fair value

 

36,708

 

 

37,212

 

Short-term investments

 

113,379

 

 

110,224

 

Other investments

 

21,758

 

 

17,385

 

Total investments

 

234,492

 

 

228,668

 

 

 

 

 

Premiums and fees receivable

 

12,911

 

 

13,338

 

Accrued interest and dividends

 

1,090

 

 

978

 

Prepaid expenses and other receivables

 

8,843

 

 

13,525

 

Property, net

 

25,325

 

 

23,886

 

Goodwill and other intangible assets, net

 

15,910

 

 

16,249

 

Lease assets

 

6,679

 

 

6,303

 

Other assets

 

2,631

 

 

2,500

 

Current income taxes recoverable

 

—

 

 

1,081

 

Total Assets

$

329,494

 

$

330,559

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Liabilities:

 

 

 

Reserve for claims

$

37,316

 

$

37,147

 

Accounts payable and accrued liabilities

 

27,732

 

 

31,864

 

Lease liabilities

 

6,828

 

 

6,449

 

Current income taxes payable

 

282

 

 

—

 

Deferred income taxes, net

 

3,374

 

 

3,546

 

Total liabilities

 

75,532

 

 

79,006

 

 

 

 

 

Stockholders’ Equity:

 

 

 

Common stock – no par value (10,000 authorized shares; 1,884 and 1,891 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)

 

—

 

 

—

 

Retained earnings

 

253,616

 

 

250,915

 

Accumulated other comprehensive income

 

346

 

 

638

 

Total stockholders’ equity

 

253,962

 

 

251,553

 

Total Liabilities and Stockholders’ Equity

$

329,494

 

$

330,559

 

Investors Title Company and Subsidiaries

Direct and Agency Net Premiums Written

For the Three Months Ended March 31, 2024 and 2023

(in thousands)

(unaudited)

 

 

Three Months Ended March 31,

 

 

2024

%

 

2023

%

Direct

$

13,321

33.2

$

12,714

32.6

 

 

 

 

 

Agency

 

26,859

66.8

 

26,252

67.4

 

 

 

 

 

Total

$

40,180

100.0

$

38,966

100.0

Investors Title Company and Subsidiaries Appendix A Non-GAAP Measures Reconciliation For the Three Months Ended March 31, 2024 and 2023 (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 net investment gains and losses, which are recognized in net income under GAAP. Net investment gains and losses include realized gains and losses on sales of investment securities and changes in the estimated fair value of equity security investments. Beginning with the three months ended June 30, 2023, management decided to exclude realized gains and losses on sales of investment securities in addition to changes in the estimated fair value of equity security investments for consistency with a similar change in the presentation in the Consolidated Statement of Operations. The non-GAAP financial measures for prior year periods included in this Appendix have also been updated for consistency with this presentation. Therefore adjusted revenues (non-GAAP) and adjusted income before income taxes (non-GAAP) below are not comparable with previously published non-GAAP financial measures for the Company. 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 March 31,

 

 

2024

 

 

 

2023

 

 

 

 

 

Revenues

 

 

 

Total revenues (GAAP)

$

53,459

 

 

$

51,343

 

Subtract: Net investment gains

 

(2,422

)

 

 

(443

)

Adjusted revenues (non-GAAP)

$

51,037

 

 

$

50,900

 

 

 

 

 

Income before Income Taxes

 

 

 

Income before income taxes (GAAP)

$

5,797

 

 

$

1,561

 

Subtract: Net investment gains

 

(2,422

)

 

 

(443

)

Adjusted income before income taxes (non-GAAP)

$

3,375

 

 

$

1,118

 

 

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Elizabeth B. Lewter (919) 968-2200