CHAPEL HILL, N.C.--(BUSINESS WIRE)--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 |
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Consolidated Statements of Operations |
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For the Three and Six Months Ended June 30, 2024 and 2023 |
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(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 |
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Consolidated Balance Sheets |
|||||
As of June 30, 2024 and December 31, 2023 |
|||||
(in thousands) |
|||||
(unaudited) |
|||||
|
June 30,
|
|
December 31,
|
||
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
|
|
— |
|
|
— |
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
|
Six Months Ended
|
||||||||||||
|
|
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 |
|
