8-K

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): May 5, 2021

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 May 5, 2021, reporting Investors Title Company's financial results for the fiscal quarter ended March 31, 2021.

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 May 5, 2021

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:  May 5, 2021	By:	/s/ James A. Fine, Jr.
		James A. Fine, Jr.
		President, Principal Financial Officer and
		Principal Accounting Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by Investors Title Company on May 5, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

                

EX-99.1

Exhibit 99.1

Investors Title Company Announces Record First Quarter 2021 Results

CHAPEL HILL, N.C.--(BUSINESS WIRE)--May 5, 2021--Investors Title Company today announced record results for the quarter ended March 31, 2021. The Company reported net income of $13.8 million, or $7.29 per diluted share, compared with a net loss of $7.0 million, or $3.71 per diluted share, for the prior year period. The Company set quarterly records for total revenues, net premiums written and net income.

Revenues for the quarter increased 141.1% to $72.1 million, compared to $29.9 million in the prior year period. Net premiums written increased 59.2% to $61.5 million, as lower average interest rates continued to drive strong levels of refinance activity and home sales. While escrow and title-related fees increased commensurate with the growth in premiums, revenues from non-title services decreased 18.4% mainly due to the impact of low interest rates on our like-kind exchange business. Changes in the estimated fair value of equity security investments resulted in a benefit to revenues of $3.2 million, $17.7 million higher than the prior year period, as equity markets continued to rally following the dip from initial impacts of the COVID-19 pandemic in the prior year period.

Operating expenses increased 42.5%, mainly due to a 51.3% increase in commissions to agents commensurate with the increase in agent premium volume. Claims expense was $685,000 higher than the prior year period due to the increase in premium volume, which was partially offset by a higher level of favorable loss development related to recent policy years. Personnel expenses were 36.8% higher due primarily to additions to staffing in support of strategic growth initiatives, additional staffing required to support volume increases, and increased levels of incentive compensation.

Income before income taxes increased $25.8 million to $17.3 million. Excluding the impact of changes in the estimated fair value of investments in equity securities, income before income taxes (non-GAAP) increased 137.4% to $14.1 million (see Appendix A for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure).

Chairman J. Allen Fine commented, “We are pleased to report another quarter of exceptional operating results. Overall, the quarter was shaped by a continuation of the trends that began last year following the onset of the pandemic. Low interest rates continued to fuel a high level of refinance activity, as well as strong demand for housing. The Company experienced revenue increases in all of its key markets, and across all channels.

“As we enter the second quarter, the outlook for the real estate market for 2021 is drawing more into focus. The view of most economists appears to be that economic growth, fueled by federal stimulus, the rollout of the COVID-19 vaccine, and job growth will increase throughout the year. Although this growth may lead to a higher interest rate environment, we believe mortgage interest rates will likely remain low by historical standards. Refinance activity will almost certainly slow as rates nudge upward, but we believe population demographics, residual demand attributable to supply shortages, and a growing economy will result in a strong housing market for 2021.”

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 Months Ended March 31, 2021 and 2020 (in thousands, except per share amounts) (unaudited)
	Three Months Ended March 31,
	2021		2020
Revenues:
Net premiums written	$	61,477	$	38,627
Escrow and other title-related fees	2,798		1,842
Non-title services	2,078		2,547
Interest and dividends	1,016		1,177
Other investment income	941		440
Net realized investment gains (losses)	321		(412		)
Changes in the estimated fair value of equity security investments	3,239		(14,458		)
Other	208		138
Total Revenues	72,078		29,901
Operating Expenses:
Commissions to agents	30,542		20,187
Provision for claims	1,591		906
Personnel expenses	16,153		11,809
Office and technology expenses	2,742		2,415
Other expenses	3,735		3,113
Total Operating Expenses	54,763		38,430
Income (Loss) before Income Taxes	17,315		(8,529		)
Provision (Benefit) for Income Taxes	3,492		(1,518		)
Net Income (Loss)	$	13,823	$	(7,011	)
Basic Earnings (Loss) per Common Share	$	7.30	$	(3.71	)
Weighted Average Shares Outstanding – Basic	1,894		1,890
Diluted Earnings (Loss) per Common Share	$	7.29	$	(3.71	)
Weighted Average Shares Outstanding – Diluted	1,897		1,890

Investors Title Company and Subsidiaries Consolidated Balance Sheets As of March 31, 2021 and 2020 (in thousands) (unaudited)
	March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	22,964	$	13,723
Investments:
Fixed maturity securities, available-for-sale, at fair value	102,970		117,713
Equity securities, at fair value	64,646		64,919
Short-term investments	30,498		15,170
Other investments	14,840		15,493
Total investments	212,954		213,295
Premiums and fees receivable	20,188		19,427
Accrued interest and dividends	1,232		1,038
Prepaid expenses and other receivables	10,622		9,418
Property, net	12,338		11,160
Goodwill and other intangible assets, net	10,119		9,771
Operating lease right-of-use assets	3,379		3,533
Other assets	1,744		1,560
Total Assets	$	295,540	$	282,925
Liabilities and Stockholders’ Equity
Liabilities:
Reserve for claims	$	34,562	$	33,584
Accounts payable and accrued liabilities	32,038		36,020
Operating lease liabilities	3,509		3,669
Current income taxes payable	3,377		638
Deferred income taxes, net	9,181		8,592
Total liabilities	82,667		82,503
Stockholders’ Equity:
Common stock – no par value (10,000 authorized shares; 1,894 and 1,892 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)	—		—
Retained earnings	209,157		196,096
Accumulated other comprehensive income	3,716		4,326
Total stockholders’ equity	212,873		200,422
Total Liabilities and Stockholders’ Equity	$	295,540	$	282,925

Investors Title Company and Subsidiaries Net Premiums Written By Branch and Agency For the Three Months Ended March 31, 2021 and 2020 (in thousands) (unaudited)
	Three Months Ended March 31,
	2021		%	2020		%
Branch	$	17,360	28.2	$	9,895	25.6
Agency	44,117		71.8	28,732		74.4
Total	$	61,477	100.0	$	38,627	100.0

Investors Title Company and Subsidiaries

Appendix A

Non-GAAP Measures Reconciliation

For the Three Months Ended March 31, 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 (loss) 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 March 31,
	2021			2020
Revenues
Total revenues (GAAP)	$	72,078		$	29,901
(Subtract) Add: Changes in the estimated fair value of equity security investments	(3,239		)	14,458
Adjusted revenues (non-GAAP)	$	68,839		$	44,359
Income (Loss) before Income Taxes
Income (loss) before income taxes (GAAP)	$	17,315		$	(8,529	)
Subtract (Add): Changes in the estimated fair value of equity security investments	(3,239		)	14,458
Adjusted income before income taxes (non-GAAP)	$	14,076		$	5,929

Contacts

Elizabeth B. Lewter
Telephone: (919) 968-2200

XML

Document and Entity Information	May 05, 2021
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 05, 2021
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
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Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
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Entity Listings [Line Items]
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	ITIC
Security Exchange Name	NASDAQ
Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Rights to Purchase Series A Junior Participating Preferred Stock
Trading Symbol	none
Security Exchange Name	NASDAQ