ITIC Investors Title Company

Investors Title Company (Nasdaq: ITIC) today announced results for the second quarter ended June 30, 2024. The Company reported net income of $8.9 million, or $4.70 per diluted share, compared with $7.6 million, or $4.00 per diluted share, for the prior year period.

Revenues increased 12.1% to $65.4 million, compared to $58.3 million in the prior year period, primarily due to an increase in premiums written stemming from higher activity levels in certain markets and continued increases in average home prices.

Operating expenses increased 11.7% compared to the prior year period, mostly driven by higher agent commissions and other expenses which fluctuate with the level of title-related revenues. Personnel expenses decreased due to lower staffing levels. Other categories of operating expenses were in line with the prior year period.

Income before income taxes increased to $11.3 million for the current year quarter, versus $9.8 million in the prior year period. Excluding the impact of net investment gains, adjusted income before income taxes (non-GAAP) increased to $10.0 million for the current year quarter, versus $8.8 million in the prior year period (see Appendix A for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure).

For the six months ended June 30, 2024, net income increased $4.6 million to $13.4 million, or $7.10 per diluted share, versus $8.8 million, or $4.62 per diluted share, for the prior year period. Revenues increased 8.4% to $118.8 million, compared with $109.7 million for the prior year period. Operating expenses increased 3.6% to $101.8 million, compared to $98.3 million for the prior year period. Aside from changes in net investment gains, overall results for the year-to-date period have been shaped predominantly by the same factors that affected the second quarter. Positive changes in the estimated fair value of equity security investments resulted in higher net investment gains compared to the prior year period.

Chairman J. Allen Fine commented, “We are pleased to report a 17.0% increase in net income for the second quarter as compared to the prior year period, our most profitable quarter in over two years, with profit margins comparable to pre-pandemic levels. Premiums written increased due to higher activity levels and higher average real estate sales prices. Our expense level continued to improve as a result of ongoing expense management efforts. Expenses in the quarter were also favorably impacted by relatively low claims experience versus historical norms.

"Real estate sales activity in the market improved during the quarter on a seasonal basis and relative to the prior year period. By quarter end, mortgage rates had declined over a full percentage point from their peak in the fourth quarter of 2023, and inventories of homes available for sale had increased substantially since the beginning of the year. If such trends persist, they may bring about an overall improvement to conditions in the real estate market."

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.

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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 and Six Months Ended June 30, 2024 and 2023

(in thousands, except per share amounts)

(unaudited)

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

Revenues:

 

 

 

 

 

 

 

Net premiums written

$

51,416

 

$

44,005

 

$

91,596

 

$

82,971

Escrow and other title-related fees

 

4,801

 

 

4,604

 

 

8,524

 

 

8,259

Non-title services

 

4,304

 

 

4,565

 

 

8,608

 

 

9,877

Interest and dividends

 

2,568

 

 

2,150

 

 

5,088

 

 

4,224

Other investment income

 

890

 

 

1,648

 

 

1,001

 

 

2,401

Net investment gains

 

1,242

 

 

1,092

 

 

3,664

 

 

1,535

Other

 

161

 

 

250

 

 

360

 

 

390

Total Revenues

 

65,382

 

 

58,314

 

 

118,841

 

 

109,657

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

Commissions to agents

 

26,550

 

 

20,603

 

 

46,420

 

 

39,929

Provision for claims

 

905

 

 

991

 

 

1,815

 

 

2,059

Personnel expenses

 

18,154

 

 

18,548

 

 

36,736

 

 

39,368

Office and technology expenses

 

4,308

 

 

4,513

 

 

8,773

 

 

8,913

Other expenses

 

4,198

 

 

3,813

 

 

8,033

 

 

7,981

Total Operating Expenses

 

54,115

 

 

48,468

 

 

101,777

 

 

98,250

 

 

 

 

 

 

 

 

Income before Income Taxes

 

11,267

 

 

9,846

 

 

17,064

 

 

11,407

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

2,396

 

 

2,261

 

 

3,668

 

 

2,641

 

 

 

 

 

 

 

 

Net Income

$

8,871

 

$

7,585

 

$

13,396

 

$

8,766

 

 

 

 

 

 

 

 

Basic Earnings per Common Share

$

4.71

 

$

4.00

 

$

7.10

 

$

4.62

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding – Basic

 

1,884

 

 

1,895

 

 

1,886

 

 

1,896

 

 

 

 

 

 

 

 

Diluted Earnings per Common Share

$

4.70

 

$

4.00

 

$

7.10

 

$

4.62

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding – Diluted

 

1,886

 

 

1,896

 

 

1,887

 

 

1,896

 

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

(in thousands)

(unaudited)

 

June 30, 2024

 

December 31, 2023

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

26,686

 

$

24,031

 

 

 

 

Investments:

 

 

 

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

 

93,479

 

 

63,847

Equity securities, at fair value

 

36,837

 

 

37,212

Short-term investments

 

84,480

 

 

110,224

Other investments

 

21,670

 

 

17,385

Total investments

 

236,466

 

 

228,668

 

 

 

 

Premiums and fees receivable

 

13,478

 

 

13,338

Accrued interest and dividends

 

1,321

 

 

978

Prepaid expenses and other receivables

 

10,829

 

 

13,525

Property, net

 

26,516

 

 

23,886

Goodwill and other intangible assets, net

 

15,630

 

 

16,249

Lease assets

 

6,205

 

 

6,303

Other assets

 

2,643

 

 

2,500

Current income taxes recoverable

 

558

 

 

1,081

Total Assets

$

340,332

 

$

330,559

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Liabilities:

 

 

 

Reserve for claims

$

37,204

 

$

37,147

Accounts payable and accrued liabilities

 

31,469

 

 

31,864

Lease liabilities

 

6,427

 

 

6,449

Deferred income taxes, net

 

3,416

 

 

3,546

Total liabilities

 

78,516

 

 

79,006

 

 

 

 

Stockholders’ Equity:

 

 

 

Common stock – no par value (10,000 authorized shares; 1,884 and 1,891 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)

 

—

 

 

—

Retained earnings

 

261,648

 

 

250,915

Accumulated other comprehensive income

 

168

 

 

638

Total stockholders’ equity

 

261,816

 

 

251,553

Total Liabilities and Stockholders’ Equity

$

340,332

 

$

330,559

 

Investors Title Company and Subsidiaries

Direct and Agency Net Premiums Written

For the Three and Six Months Ended June 30, 2024 and 2023

(in thousands)

(unaudited)

 

Three Months Ended June 30,

Six Months Ended June 30,

 

 

2024

%

 

2023

%

 

2024

%

 

2023

%

Direct

$

15,531

30.2

$

15,776

35.9

$

28,852

31.5

$

28,490

34.3

 

 

 

 

 

 

 

 

 

Agency

 

35,885

69.8

 

28,229

64.1

 

62,744

68.5

 

54,481

65.7

 

 

 

 

 

 

 

 

 

Total

$

51,416

100.0

$

44,005

100.0

$

91,596

100.0

$

82,971

100.0

Investors Title Company and Subsidiaries Appendix A Non-GAAP Measures Reconciliation For the Three and Six Months Ended June 30, 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. 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 June 30,

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

Total revenues (GAAP)

$

65,382

 

 

$

58,314

 

$

118,841

 

 

$

109,657

 

Subtract: Net investment gains

 

(1,242

)

 

 

(1,092

)

 

(3,664

)

 

 

(1,535

)

Adjusted revenues (non-GAAP)

$

64,140

 

 

$

57,222

 

$

115,177

 

 

$

108,122

 

 

 

 

 

 

 

 

Income before Income Taxes

 

 

 

 

 

 

Income before income taxes (GAAP)

$

11,267

 

 

$

9,846

 

$

17,064

 

 

$

11,407

 

Subtract: Net investment gains

 

(1,242

)

 

 

(1,092

)

 

(3,664

)

 

 

(1,535

)

Adjusted income before income taxes (non-GAAP)

$

10,025

 

 

$

8,754

 

$

13,400

 

 

$

9,872

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240805438678/en/

Elizabeth B. Lewter (919) 968-2200