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
Date of report (Date of earliest event reported): February 13, 2024
INVESTORS TITLE COMPANY
(Exact Name of Registrant as Specified in Charter)
|
North Carolina
|
0-11774
|
56-1110199
|
|
(State or Other Jurisdiction
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
of Incorporation)
|
|
|
|
121 North Columbia Street, Chapel Hill, North Carolina
27514
|
|
(Address of Principal Executive Offices) (Zip Code)
|
Registrant's telephone number, including area code: (919) 968-2200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing 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. ☐
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 February 13, 2024, reporting Investors Title Company's financial results for the fiscal quarter ended December 31,
2023.
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 February 13, 2024
Exhibit 104 - Cover Page Interactive Data File (embedded within the Inline XBRL document)
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:
|
February 13, 2024
|
By:
|
/s/ James A. Fine, Jr.
|
|
|
|
|
James A. Fine, Jr.
|
|
|
|
|
President, Principal Financial Officer and
|
|
|
|
|
Principal Accounting Officer
|
EXHIBIT INDEX
|
Exhibit No.
|
Description
|
|
|
|
|
|
|
|
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
INVESTORS TITLE COMPANY ANNOUNCES
FOURTH QUARTER AND FISCAL YEAR 2023 FINANCIAL RESULTS
Contact: Elizabeth B. Lewter
February 13, 2024
Telephone: (919) 968-2200
Nasdaq Symbol: ITIC
FOR IMMEDIATE RELEASE:
Chapel Hill, NC – Investors Title Company (Nasdaq: ITIC) today announced results for the fourth quarter and year ended December 31, 2023. For the
quarter, net income decreased 22.5% to $5.8 million, or $3.09 per diluted share, versus $7.5 million, or $3.97 per diluted share, in the prior year period. For the year, net income decreased 9.3% to $21.7 million, or $11.45 per diluted share, versus
$23.9 million, or $12.59 per diluted share, in the prior year.
Revenues for the quarter decreased 18.0% to $53.7 million, compared with $65.5 million for the prior year period, primarily as the result of decreases
in the Company’s title insurance business and net investment gains, partially offset by increases in interest and dividend income and other investment income. The reduction in title insurance revenues is attributable to an overall decline in the
level of real estate transaction volumes resulting from higher average mortgage interest rates, which started to trend downwards to some extent towards the end of the current year period, and ongoing housing inventory constraints. The decrease in net
investment gains was mostly due to a reduction in net realized gains from the sale of investments compared to the prior year period. These decreases were partially offset by increases in other investment income and interest income. Changes in other
investment income are due to fluctuations in the market value of the underlying investments and distributions received during the quarter. Interest income levels are primarily a function of general market performance, interest rates and the level of
cash balances.
Operating expenses for the quarter decreased 15.6% compared to the prior year period, primarily due to reductions in expenses which fluctuate with
title insurance volume. Commissions to agents decreased by $4.8 million, commensurate with the decrease in agent premium volume. Personnel expenses decreased by $3.3 million, primarily due to reductions in incentive compensation and reductions in
staffing levels. Other expenses were down $552 thousand, mainly due to the impact of lower title insurance volumes. The provision for claims, and office and technology expenses, remained consistent with the prior year period.
Income before income taxes decreased to $6.2 million for the current quarter, versus $9.3 million in the prior year period. Excluding the impact of
net investment gains (losses), adjusted income before income taxes (non-GAAP) decreased 13.8% to $3.5 million for the quarter, versus $4.0 million in the prior year period (see Appendix A for a reconciliation of this non-GAAP measure to the most
directly comparable GAAP measure). Income tax expense, including federal and state taxes, as a percentage of income before income taxes was 6.1% for the current year, compared with 18.8% for the prior year period. The lower effective income tax rate
was primarily due to the impact of tax adjustments and tax credits.
For the year, revenues decreased 20.7% to $224.8 million, compared with $283.4 million for the prior year. Operating expenses decreased 21.6% to
$198.5 million, compared with $253.3 million for the prior year period. Income before income taxes decreased 12.9% to $26.2 million, compared with $30.1 million for the prior year. Excluding the impact of net investment gains (losses), adjusted
income before income taxes (non-GAAP) decreased 44.9% to $22.8 million, versus $41.3 million for the prior year (see Appendix A for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure). Aside from an increase in
revenue from non-title services and an improvement in net investment gains (losses), overall results for the full year were shaped predominantly by the same factors that affected the fourth quarter. The increase in revenue from non-title services was
mainly due to an increase in like-kind exchange revenues. Positive changes in the estimated fair value of equity security investments resulted in an improvement in net investment gains (losses) compared to the prior year.
Chairman J. Allen Fine commented, “Results for the quarter reflect the ongoing slowdown in real estate transaction activity, as well as typical
seasonal patterns. Elevated levels of interest rates continue to negatively impact home sales and mortgage refinancing. At the same time, a constrained inventory of homes for sale coupled with the lowest levels of home turnover in at least a decade
has kept real estate values near their post-pandemic peaks. These factors have all converged to reduce housing affordability to historically low levels.
“Early in the fourth quarter, mortgage rates reached a 20-year high of 7.8%. After public comments made by the Federal Reserve in October, however,
rates reversed their upward trend and declined steadily over the balance of the quarter. By year-end, the average 30-year mortgage rate stood at 6.6%, more than a full percentage point below the high. We believe this decline and any accommodative
policy by the Federal Reserve should help improve affordability and provide general market support in 2024.
“Despite the most challenging economic conditions since the great financial crisis of 2008, with mortgage transaction volumes dipping to levels not
seen in over two decades, we reported another year of solid operating results in 2023, with a pre-tax profit margin of 11.7%. The level of claims activity remained low, and investment earnings continued to benefit from higher interest rates and
stock market gains. Additionally, we continue to make select investments in software and other initiatives, which will help make us a more competitive and efficient company over the course of the market 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, including those resulting from a potential shutdown of the U.S. Government; 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, 2022 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, 2023 and 2022
(in thousands, except per share amounts)
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written
|
|
$
|
38,365
|
|
|
$
|
49,223
|
|
|
$
|
171,158
|
|
|
$
|
248,632
|
|
|
Escrow and other title-related fees
|
|
|
4,167
|
|
|
|
4,853
|
|
|
|
17,109
|
|
|
|
22,314
|
|
|
Non-title services
|
|
|
4,724
|
|
|
|
5,042
|
|
|
|
19,237
|
|
|
|
13,931
|
|
|
Interest and dividends
|
|
|
2,518
|
|
|
|
1,649
|
|
|
|
9,055
|
|
|
|
4,704
|
|
|
Other investment income (loss)
|
|
|
837
|
|
|
|
(720
|
)
|
|
|
3,752
|
|
|
|
3,896
|
|
|
Net investment gains (losses)
|
|
|
2,728
|
|
|
|
5,230
|
|
|
|
3,448
|
|
|
|
(11,226
|
)
|
|
Other
|
|
|
344
|
|
|
|
217
|
|
|
|
991
|
|
|
|
1,141
|
|
|
Total Revenues
|
|
|
53,683
|
|
|
|
65,494
|
|
|
|
224,750
|
|
|
|
283,392
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions to agents
|
|
|
19,639
|
|
|
|
24,405
|
|
|
|
83,374
|
|
|
|
121,566
|
|
|
Provision for claims
|
|
|
865
|
|
|
|
803
|
|
|
|
4,762
|
|
|
|
4,255
|
|
|
Personnel expenses
|
|
|
18,255
|
|
|
|
21,593
|
|
|
|
76,706
|
|
|
|
85,331
|
|
|
Office and technology expenses
|
|
|
4,237
|
|
|
|
4,393
|
|
|
|
17,359
|
|
|
|
17,323
|
|
|
Other expenses
|
|
|
4,474
|
|
|
|
5,026
|
|
|
|
16,319
|
|
|
|
24,809
|
|
|
Total Operating Expenses
|
|
|
47,470
|
|
|
|
56,220
|
|
|
|
198,520
|
|
|
|
253,284
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes
|
|
|
6,213
|
|
|
|
9,274
|
|
|
|
26,230
|
|
|
|
30,108
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
377
|
|
|
|
1,748
|
|
|
|
4,544
|
|
|
|
6,205
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
5,836
|
|
|
$
|
7,526
|
|
|
$
|
21,686
|
|
|
$
|
23,903
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings per Common Share
|
|
$
|
3.09
|
|
|
$
|
3.97
|
|
|
$
|
11.45
|
|
|
$
|
12.60
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Basic
|
|
|
1,891
|
|
|
|
1,897
|
|
|
|
1,893
|
|
|
|
1,897
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Common Share
|
|
$
|
3.09
|
|
|
$
|
3.97
|
|
|
$
|
11.45
|
|
|
$
|
12.59
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Diluted
|
|
|
1,891
|
|
|
|
1,897
|
|
|
|
1,893
|
|
|
|
1,898
|
|