Investors Title Company Announces First Quarter 2024 Results
Revenues increased 4.1% to
Operating expenses decreased 4.3% compared to the prior year period, predominantly due to a
Income before income taxes increased to
Chairman
“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
Consolidated Statements of Operations
For the Three Months Ended (in thousands, except per share amounts) (unaudited) |
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|
Three Months Ended
|
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|
|
|
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 |
|
Consolidated Balance Sheets
As of (in thousands) (unaudited) |
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|
|
|
|
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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 |
|
|
|
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 |
|
— |
|
|
— |
|
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 |
|
Direct and Agency Net Premiums Written
For the Three Months Ended (in thousands) (unaudited) |
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|
Three Months Ended |
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|
|
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 |
Appendix A
Non-GAAP Measures Reconciliation
For the Three Months Ended
(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
The following tables reconcile non-GAAP financial measurements used by Company management to the comparable measurements using GAAP:
|
Three Months Ended
|
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|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
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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 |
|
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