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 SubsidiariesConsolidated Statements of OperationsFor 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 SubsidiariesConsolidated Balance SheetsAs 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 SubsidiariesDirect and Agency Net Premiums WrittenFor 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 | |||
