Investors Title Company Announces Second Quarter 2024 Results
Revenues increased 12.1% to
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
For the six months ended
Chairman
"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
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|||||||||||
Consolidated Statements of Operations |
|||||||||||
For the Three and Six Months Ended |
|||||||||||
(in thousands, except per share amounts) |
|||||||||||
(unaudited) |
|||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
|
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 |
|
|||||
Consolidated Balance Sheets |
|||||
As of |
|||||
(in thousands) |
|||||
(unaudited) |
|||||
|
|
|
|
||
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 |
|
|
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 |
|
||||||||||||
Direct and Agency Net Premiums Written |
||||||||||||
For the Three and Six Months Ended |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||
|
|
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 |
Appendix A
Non-GAAP Measures Reconciliation
For the Three and Six 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. 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 |
|
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