ITIC Investors Title Company

Investors Title Company today announced results for the third quarter ended September 30, 2021. The Company reported net income of $14.5 million, or $7.63 per diluted share, for the three months ended September 30, 2021, compared to $15.3 million, or $8.07 per diluted share, for the prior year period. The Company set an all-time record for net premiums written in a quarter.

Revenues increased 20.4% to $81.4 million, compared with $67.6 million for the prior year quarter. Net premiums written increased 26.5% to $72.3 million, driven mainly by higher average home prices and continued low mortgage interest rates. Escrow and other title-related fees increased 79.3% primarily due to increases in commission income and title ancillary services. Revenue from non-title services increased 25.2%, mainly due to an increase in like-kind exchange activity. Changes in the estimated fair value of equity security investments resulted in the recognition of an $802 thousand loss, which was $4.4 million lower than the prior year quarter, as market values declined from the previous year’s rebound.

Operating expenses increased 29.1% compared to the prior year quarter. Commissions to agents increased commensurate with the increase in agent premium volume. Personnel costs were 22.9% higher than the prior year due 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 increase in other operating expenses.

Income before income taxes decreased 2.2% to $18.4 million for the current quarter versus $18.9 million in the prior year period. Excluding the impact of changes in the estimated fair value of equity security investments, income before income taxes (non-GAAP) increased 26.3% to $19.2 million for the current quarter versus $15.2 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 nine months ended September 30, 2021, net income increased $25.3 million to $48.1 million, or $25.34 per diluted share, versus $22.8 million, or $12.02 per diluted share, for the prior year period. Revenues increased 49.7% to $238.5 million compared with $159.3 million for the prior year period. Operating expenses increased 35.4% to $177.4 million, mainly due to increases in agent commissions, personnel costs and other expenses. Aside from changes in the estimated fair value of equity security investments and a decrease in like-kind exchange activity, overall results for the year-to-date period have been shaped predominantly by the same factors that affected the third quarter.

Chairman J. Allen Fine added, “We are pleased to report a record level of net premiums written for the ninth consecutive quarter. Our results for the quarter and the year have been influenced predominately by continued strength in residential real estate demand as well as high levels of refinance activity. In addition, we have benefitted from recent investments to expand our market presence in key markets.”

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 Nine Months Ended September 30, 2021 and 2020

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

 

Net premiums written

 

$

72,345

 

 

$

57,205

 

 

$

201,349

 

 

$

143,311

 

Escrow and other title-related fees

 

3,863

 

 

2,154

 

 

10,148

 

 

6,014

 

Non-title services

 

2,446

 

 

1,954

 

 

6,932

 

 

6,476

 

Interest and dividends

 

893

 

 

1,060

 

 

2,807

 

 

3,342

 

Other investment income

 

2,186

 

 

1,270

 

 

4,610

 

 

2,236

 

Net realized investment gains

 

268

 

 

186

 

 

771

 

 

327

 

Changes in the estimated fair value of equity security investments

 

(802

)

 

3,619

 

 

7,266

 

 

(2,867

)

Other

 

217

 

 

185

 

 

4,572

 

 

443

 

Total Revenues

 

81,416

 

 

67,633

 

 

238,455

 

 

159,282

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

Commissions to agents

 

37,570

 

 

29,068

 

 

102,458

 

 

73,344

 

Provision for claims

 

1,993

 

 

1,552

 

 

5,020

 

 

4,452

 

Personnel expenses

 

15,457

 

 

12,575

 

 

47,524

 

 

36,632

 

Office and technology expenses

 

3,175

 

 

2,456

 

 

9,128

 

 

7,328

 

Other expenses

 

4,784

 

 

3,125

 

 

13,285

 

 

9,276

 

Total Operating Expenses

 

62,979

 

 

48,776

 

 

177,415

 

 

131,032

 

 

 

 

 

 

 

 

 

 

Income before Income Taxes

 

18,437

 

 

18,857

 

 

61,040

 

 

28,250

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

3,934

 

 

3,556

 

 

12,932

 

 

5,465

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

14,503

 

 

$

15,301

 

 

$

48,108

 

 

$

22,785

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Common Share

 

$

7.66

 

 

$

8.09

 

 

$

25.40

 

 

$

12.04

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding – Basic

 

1,894

 

 

1,892

 

 

1,894

 

 

1,892

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Common Share

 

$

7.63

 

 

$

8.07

 

 

$

25.34

 

 

$

12.02

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding – Diluted

 

1,900

 

 

1,895

 

 

1,899

 

 

1,896

 

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of September 30, 2021 and December 31, 2020

(in thousands)

(unaudited)

 

 

September 30, 2021

 

December 31, 2020

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

48,510

 

 

$

13,723

 

 

 

 

 

Investments:

 

 

 

Fixed maturity securities, available-for-sale, at fair value

82,306

 

 

117,713

 

Equity securities, at fair value

69,525

 

 

64,919

 

Short-term investments

51,231

 

 

15,170

 

Other investments

15,957

 

 

15,493

 

Total investments

219,019

 

 

213,295

 

 

 

 

 

Premiums and fees receivable

22,939

 

 

19,427

 

Accrued interest and dividends

990

 

 

1,038

 

Prepaid expenses and other receivables

13,745

 

 

9,418

 

Property, net

15,310

 

 

11,160

 

Goodwill and other intangible assets, net

9,841

 

 

9,771

 

Operating lease right-of-use assets

3,306

 

 

3,533

 

Other assets

1,770

 

 

1,560

 

Total Assets

$

335,430

 

 

$

282,925

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Liabilities:

 

 

 

Reserve for claims

$

36,755

 

 

$

33,584

 

Accounts payable and accrued liabilities

37,927

 

 

36,020

 

Operating lease liabilities

3,424

 

 

3,669

 

Current income taxes payable

704

 

 

638

 

Deferred income taxes, net

11,315

 

 

8,592

 

Total liabilities

90,125

 

 

82,503

 

 

 

 

 

Stockholders’ Equity:

 

 

 

Common stock – no par value (10,000 authorized shares; 1,894 and 1,892 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)

—

 

 

—

 

Retained earnings

241,833

 

 

196,096

 

Accumulated other comprehensive income

3,472

 

 

4,326

 

Total stockholders’ equity

245,305

 

 

200,422

 

Total Liabilities and Stockholders’ Equity

$

335,430

 

 

$

282,925

 

Investors Title Company and Subsidiaries

Net Premiums Written By Branch and Agency

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands)

(unaudited)

 

 

Three Months Ended September 30,

Nine Months Ended September 30,

 

2021

%

2020

%

2021

%

2020

%

Branch

$

18,496

 

25.6

$

15,496

 

27.1

$

52,904

 

26.3

$

38,364

 

26.8

 

 

 

 

 

 

 

 

 

Agency

53,849

 

74.4

41,709

 

72.9

148,445

 

73.7

104,947

 

73.2

 

 

 

 

 

 

 

 

 

Total

$

72,345

 

100.0

$

57,205

 

100.0

$

201,349

 

100.0

$

143,311

 

100.0

Investors Title Company and Subsidiaries

Appendix A

Non-GAAP Measures Reconciliation

For the Three and Nine Months Ended September 30, 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 September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Total revenues (GAAP)

$

81,416

 

 

$

67,633

 

 

$

238,455

 

 

$

159,282

 

Add (Subtract): Changes in the estimated fair value of equity security investments

802

 

 

(3,619

)

 

(7,266

)

 

2,867

 

Adjusted revenues (non-GAAP)

$

82,218

 

 

$

64,014

 

 

$

231,189

 

 

$

162,149

 

 

 

 

 

 

 

 

 

Income before Income Taxes

 

 

 

 

 

 

 

Income before income taxes (GAAP)

$

18,437

 

 

$

18,857

 

 

$

61,040

 

 

$

28,250

 

Add (Subtract): Changes in the estimated fair value of equity security investments

802

 

 

(3,619

)

 

(7,266

)

 

2,867

 

Adjusted income before income taxes (non-GAAP)

$

19,239

 

 

$

15,238

 

 

$

53,774

 

 

$

31,117

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104005237/en/

Elizabeth B. Lewter (919) 968-2200