Investors Title Company Announces First Quarter 2024 Results

About this update from Investors Title Company

CHAPEL HILL, N.C. --(BUSINESS WIRE)-- 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 View source version on businesswire.com : https://www.businesswire.com/news/home/20240503918568/en/ Elizabeth B. Lewter (919) 968-2200 Source: Investors Title Company

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