Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

August 6, 2024

Date of Report (Date of earliest event reported)

Investors Title Company

(Exact name of registrant as specified in its charter)

North Carolina

0-11774

56-1110199

(State or Other Jurisdiction of

(Commission

(I.R.S. Employer

Incorporation or Organization)

File Number)

Identification No.)

121 North Columbia Street

Chapel Hill,

North Carolina

27514

(Address of Principal Executive Offices)

(Zip Code)

(919)

968-2200

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

ITIC

The Nasdaq Stock Market LLC

Rights to Purchase Series A Junior Participating Preferred Stock

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02. Results of Operations and Financial Condition

Attached as Exhibit 99.1 and incorporated herein by reference is a copy of the press release of Investors Title Company, dated August 6, 2024, reporting Investors Title Company's financial results for the fiscal quarter ended June 30, 2024.

The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits. The following exhibit accompanies this Report:

Exhibit 99.1 - Press Release of Investors Title Company dated August 6, 2024

Exhibit 104 - Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

INVESTORS TITLE COMPANY

Date:

August 6, 2024

By:

/s/ James A. Fine, Jr.

James A. Fine, Jr.

President, Principal Financial Officer and

Principal Accounting Officer

 

 

 

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EXHIBIT INDEX

Exhibit No.    Description

99.1        Press release issued by Investors Title Company on August 6, 2024

104        Cover Page Interactive Data File (embedded within the Inline XBRL document)

INVESTORS TITLE COMPANY ANNOUNCES

SECOND QUARTER 2024 RESULTS

Contact: Elizabeth B. Lewter

August 6, 2024

Telephone: [phone]

Nasdaq Symbol: ITIC

FOR IMMEDIATE RELEASE:

Chapel Hill, NC – 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.

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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.

# # # #

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Investors Title Company and Subsidiaries

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2024 and 2023

(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

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Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

(in thousands)

(unaudited)

			June 30, 2024						December 31, 2023
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 and outstanding as of June 30, 2024 and December 31, 2023, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)			—						—
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

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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

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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 June 30,									Six Months Ended June 30,
			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

Cover Page	Aug. 06, 2024
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Aug. 06, 2024
Entity Registrant Name	Investors Title Company
Entity Incorporation, State or Country Code	NC
Entity File Number	0-11774
Entity Tax Identification Number	56-1110199
Entity Address, Address Line One	121 North Columbia Street
Entity Address, City or Town	Chapel Hill,
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27514
City Area Code	(919)
Local Phone Number	968-2200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000720858
Amendment Flag	false
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	ITIC
Security Exchange Name	NASDAQ
Rights To Purchase Series A Junior Participating Preferred Stock
Entity Information [Line Items]
Title of 12(b) Security	Rights to Purchase Series A Junior Participating Preferred Stock
No Trading Symbol Flag	true
Security Exchange Name	NASDAQ

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