Investors Title Company Announces Fourth Quarter and Fiscal Year 2021 Results

About this update from Investors Title Company

CHAPEL HILL, N.C. --(BUSINESS WIRE)-- Investors Title Company today announced results for the fourth quarter and year ended December 31, 2021 . The Company set all-time quarterly and annual records for total revenues and net premiums written, in addition to setting an all-time annual record for net income. For the quarter, net income increased 13.7% to $18.9 million , or $9.94 per diluted share, versus $16.6 million , or $8.77 per diluted share, in the prior year period. For the year, net income increased 70.0% to $67.0 million , or $35.28 per diluted share, versus $39.4 million , or $20.80 per diluted share, in the prior year. Revenues for the quarter increased 18.0% to $91.0 million , compared to $77.1 million in the prior year period. Net premiums written increased 16.8% to $72.5 million , driven mainly by higher average home prices and continued low mortgage interest rates. Escrow and other title-related fees increased 53.0%, primarily due to increases in commission income and title ancillary services. Revenues from non-title services increased 23.4%, mainly due to increases in income from like-kind exchanges, trust management fees and agency income. Other investment income increased $823,000 due to earnings from partnership investments. Changes in the estimated fair value of equity security investments resulted in a benefit to revenues of $7.7 million , a slight decrease compared with the prior year quarter, as market values continued to increase. Operating expenses increased 20.5%, mainly due to a 20.6% increase in commissions to agents commensurate with the increase in agent premium volume. Personnel expenses were 9.0% higher than the prior year due primarily to staffing additions in support of strategic growth initiatives and volume increases. Higher premium volumes, increases in travel-related expenses and ongoing technology initiatives drove the increases in office and technology expenses and other operating expenses. Slightly offsetting these increases was a relatively low level of claims activity experienced on policies written in recent years. Income before income taxes increased 11.6% to $23.9 million for the current quarter versus $21.4 million in the prior year period. Excluding the impact of changes in the estimated fair value of equity security investments, adjusted income before income taxes (non-GAAP) increased 18.9% to $16.2 million versus $13.6 million for the prior year period (see Appendix A for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure). For the year, revenues increased 39.4% to $329.5 million compared with $236.4 million for the prior year. Aside from changes in the estimated fair value of equity security investments and other income, overall results for the year were shaped predominantly by the same factors that affected the fourth quarter. Changes in the estimated fair value of equity security investments increased $10.0 million compared with the prior year, as U.S. stock markets recorded a third straight year of growth in 2021. Other income increased $4.1 million mainly due to a gain on the sale of property. Income before income taxes increased 71.0% to $84.9 million compared with $49.7 million in the prior year. Excluding the impact of changes in the estimated fair value of investments in equity securities, adjusted income before income taxes (non-GAAP) increased 56.4% to $70.0 million versus $44.8 million for the prior year (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 another year of exceptionally strong performance. For both the quarter and the year, the Company set all-time records for revenues and premiums, in addition to an annual record for earnings. As the country grapples with the ongoing pandemic for the second year, we continued to see strong demand for housing as well as record growth in real estate values in our operating markets during 2021. Although refinance activity has slowed recently in light of an uptick in mortgage interest rates relative to most of 2021, the level of refinance activity actually surpassed 2020’s record activity levels. As we turn our focus to 2022, we will remain focused on enhancing our competitive strengths and profitably expanding our market presence.” 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, projections regarding U.S. recovery from the COVID-19 pandemic, 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, positive 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 severity and duration of the COVID-19 pandemic (including any of its variants) and its effects (and the effects of measures undertaken to combat it) on the economy and the Company’s business; 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; changes resulting from President Biden’s administration and Congress ; 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, 2020 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 Twelve Months Ended December 31, 2021 and 2020 (in thousands, except per share amounts) (unaudited) Three Months Ended December 31 , Twelve Months Ended December 31 , 2021 2020 2021 2020 Revenues: Net premiums written $ 72,536 $ 62,107 $ 273,885 $ 205,418 Escrow and other title-related fees 3,530 2,307 13,678 8,321 Non-title services 2,735 2,217 9,667 8,693 Interest and dividends 966 1,051 3,773 4,393 Other investment income 2,310 1,487 6,920 3,723 Net realized investment gains 1,098 6 1,869 333 Changes in the estimated fair value of equity security investments 7,668 7,771 14,934 4,904 Other 200 180 4,772 623 Total Revenues 91,043 77,126 329,498 236,408 Operating Expenses: Commissions to agents 40,357 33,463 142,815 106,807 Provision for claims 666 752 5,686 5,204 Personnel expenses 16,669 15,297 64,193 51,929 Office and technology expenses 3,931 2,623 13,059 9,951 Other expenses 5,528 3,580 18,813 12,856 Total Operating Expenses 67,151 55,715 244,566 186,747 Income before Income Taxes 23,892 21,411 84,932 49,661 Provision for Income Taxes 4,980 4,776 17,912 10,241 Net Income $ 18,912 $ 16,635 $ 67,020 $ 39,420 Basic Earnings per Common Share $ 9.98 $ 8.79 $ 35.38 $ 20.84 Weighted Average Shares Outstanding – Basic 1,895 1,892 1,894 1,892 Diluted Earnings per Common Share $ 9.94 $ 8.77 $ 35.28 $ 20.80 Weighted Average Shares Outstanding – Diluted 1,903 1,897 1,900 1,896 Investors Title Company and Subsidiaries Consolidated Balance Sheets As of December 31, 2021 and 2020 (in thousands) (unaudited) December 31 , 2021 December 31 , 2020 Assets Cash and cash equivalents $ 37,168 $ 13,723 Investments: Fixed maturity securities, available-for-sale, at fair value 79,791 117,713 Equity securities, at fair value 76,853 64,919 Short-term investments 45,930 15,170 Other investments 20,298 15,493 Total investments 222,872 213,295 Premiums and fees receivable 22,953 19,427 Accrued interest and dividends 817 1,038 Prepaid expenses and other receivables 11,721 9,418 Property, net 13,033 11,160 Goodwill and other intangible assets, net 15,951 9,771 Operating lease right-of-use assets 5,202 3,533 Other assets 1,771 1,560 Total Assets $ 331,488 $ 282,925 Liabilities and Stockholders’ Equity Liabilities: Reserve for claims $ 36,754 $ 33,584 Accounts payable and accrued liabilities 43,868 36,020 Operating lease liabilities 5,329 3,669 Current income taxes payable 3,329 638 Deferred income taxes, net 13,121 8,592 Total liabilities 102,401 82,503 Stockholders’ Equity: Common stock – no par value (10,000 authorized shares; 1,895 and 1,892 shares issued and outstanding as of December 31, 2021 and 2020, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary) — — Retained earnings 225,861 196,096 Accumulated other comprehensive income 3,226 4,326 Total stockholders’ equity 229,087 200,422 Total Liabilities and Stockholders’ Equity $ 331,488 $ 282,925 Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency For the Three and Twelve Months Ended December 31, 2021 and 2020 (in thousands) (unaudited) Three Months Ended December 31 , Twelve Months Ended December 31 , 2021 % 2020 % 2021 % 2020 % Branch $ 15,681 21.6 $ 14,840 23.9 $ 68,585 25.0 $ 53,204 25.9 Agency 56,855 78.4 47,267 76.1 205,300 75.0 152,214 74.1 Total $ 72,536 100.0 $ 62,107 100.0 $ 273,885 100.0 $ 205,418 100.0 Investors Title Company and Subsidiaries Appendix A Non-GAAP Measures Reconciliation For the Three and Twelve Months Ended December 31, 2021 and 2020 (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 changes in the estimated fair value of equity security investments, which are recognized in net income under GAAP. 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 December 31 , Twelve Months Ended December 31 , 2021 2020 2021 2020 Revenues Total revenues (GAAP) $ 91,043 $ 77,126 $ 329,498 $ 236,408 Subtract: Changes in the estimated fair value of equity security investments (7,668 ) (7,771 ) (14,934 ) (4,904 ) Adjusted revenues (non-GAAP) $ 83,375 $ 69,355 $ 314,564 $ 231,504 Income before Income Taxes Income before income taxes (GAAP) $ 23,892 $ 21,411 $ 84,932 $ 49,661 Subtract: Changes in the estimated fair value of equity security investments (7,668 ) (7,771 ) (14,934 ) (4,904 ) Adjusted income before income taxes (non-GAAP) $ 16,224 $ 13,640 $ 69,998 $ 44,757 View source version on businesswire.com : https://www.businesswire.com/news/home/20220211005447/en/ Elizabeth B. Lewter (919) 968-2200 Source: Investors Title Company

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