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): August 5, 2022

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 August 5, 2022, reporting Investors Title Company's financial results for the fiscal quarter ended June 30, 2022.

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 5, 2022

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:     August 5, 2022	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 August 5, 2022
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

EX-99.1

Exhibit 99.1

INVESTORS TITLE COMPANY ANNOUNCES SECOND QUARTER 2022 FINANCIAL RESULTS

     Contact:  Elizabeth B. Lewter

August 5, 2022

Telephone:    (919) 968-2200

        Nasdaq Symbol: ITIC

FOR IMMEDIATE RELEASE:

Chapel Hill, NC – Investors Title Company today announced results for the second quarter ended June 30, 2022.  The Company reported net income of $2.3 million, or $1.20 per diluted share, compared to $19.8 million, or $10.42 per diluted share, for the prior year period.

Revenues for the quarter decreased 16.5% to $70.9 million, compared with $85.0 million for the prior year quarter.  Total revenues were offset by the recognition of a $12.2 million unrealized loss in the Company’s equity portfolio.  Net premiums written increased 3.1% versus the prior year period, driven by higher average home values and growth of our footprint in the Texas market, setting a second quarter record.  Escrow and title-related fees increased 78.1% due to a larger share of business that generates escrow income, and fee income associated with commercial activity.  Revenues from non-title services increased 17.8% due primarily to higher levels of property exchange transaction volumes.  Realized gains from sales of equity securities were $1.9 million higher, while other income decreased $3.8 million due to a non-recurring gain on the sale of property which occurred in the prior year quarter.

Operating expenses increased 13.9%, compared to the prior year period, primarily due to increases in personnel costs, title fees, and office and technology expenses.  Personnel costs were 31.3% higher than the prior year period due to staffing of new offices, hiring to support growth initiatives, and increased employee benefit costs.  Office, technology, and other operating expenses increased 49.4% in support of expanding our geographic footprint and various ongoing technology initiatives.

Income before income taxes decreased $22.3 million to $3.0 million for the current quarter versus $25.3 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) decreased 26.1% to $15.1 million for the current quarter versus $20.5 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, 2022, net income decreased $25.1 million to $8.5 million, or $4.45 per diluted share, versus $33.6 million, or $17.70 per diluted share, for the prior year period.  Net premiums written increased 2.9% to $132.8 million, versus $129.0 million in the prior year period.  Operating expenses increased 12.9% to $129.2 million, mainly due to increases in personnel and office, technology, and other operating expenses.  Overall results for the first six months have been shaped predominantly by the same factors that affected the second quarter.

Chairman J. Allen Fine added, “We are pleased to report a new record level of premiums written for the second quarter.  Although net income is down for the quarter, much of the negative comparison is attributable to market losses in our equity portfolio and the gain on the sale of property in the prior year quarter.

The impact of higher mortgage rates has been varied as we have seen some slowing of activity in some markets but ongoing strength in others. Refinance activity has been more significantly impacted by higher rates than activity generated by home sales.  We remain optimistic about the Company’s prospects for solid financial results and continue to focus on identifying opportunities to profitably expand our market presence, regardless of cyclical changes 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.

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, 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; the potential impact of inflation and responses by government regulators, including the Federal Reserve; 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, 2021 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 Six Months Ended June 30, 2022 and 2021

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Revenues:
Net premiums written	$	69,626		$	67,527	$	132,751		$	129,004
Escrow and other title-related fees		6,209			3,487		11,273			6,285
Non-title services		2,836			2,408		5,262			4,486
Interest and dividends		911			898		1,826			1,914
Other investment income		1,106			1,483		2,443			2,424
Net realized investment gains		2,038			182		3,785			503
Changes in the estimated fair value of equity security investments		(12,172	)		4,829		(18,087	)		8,068
Other		348			4,147		647			4,355
Total Revenues		70,902			84,961		139,900			157,039
Operating Expenses:
Commissions to agents		33,826			34,346		63,683			64,888
Provision for claims		1,310			1,436		1,486			3,027
Personnel expenses		20,898			15,914		42,152			32,067
Office and technology expenses		4,288			3,211		8,656			5,953
Other expenses		7,627			4,766		13,177			8,501
Total Operating Expenses		67,949			59,673		129,154			114,436
Income before Income Taxes		2,953			25,288		10,746			42,603
Provision for Income Taxes		674			5,506		2,282			8,998
Net Income	$	2,279		$	19,782	$	8,464		$	33,605
Basic Earnings per Common Share	$	1.20		$	10.44	$	4.46		$	17.74
Weighted Average Shares Outstanding – Basic		1,897			1,894		1,897			1,894
Diluted Earnings per Common Share	$	1.20		$	10.42	$	4.45		$	17.70
Weighted Average Shares Outstanding – Diluted		1,899			1,899		1,900			1,898

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2022 and December 31, 2021

(in thousands)

(unaudited)

 

	June 30,2022		December 31,2021
Assets
Cash and cash equivalents	$	35,486	$	37,168
Investments:
Fixed maturity securities, available-for-sale, at fair value		61,385		79,791
Equity securities, at fair value		54,901		76,853
Short-term investments		71,319		45,930
Other investments		19,693		20,298
Total investments		207,298		222,872
Premiums and fees receivable		25,377		22,953
Accrued interest and dividends		733		817
Prepaid expenses and other receivables		13,002		11,721
Property, net		15,698		13,033
Goodwill and other intangible assets, net		18,325		15,951
Operating lease right-of-use assets		6,561		5,202
Other assets		2,322		1,771
Current income taxes receivable		390		—
Total Assets	$	325,192	$	331,488
Liabilities and Stockholders’ Equity
Liabilities:
Reserve for claims	$	36,603	$	36,754
Accounts payable and accrued liabilities		40,044		43,868
Operating lease liabilities		6,704		5,329
Current income taxes payable		—		3,329
Deferred income taxes, net		8,662		13,121
Total liabilities		92,013		102,401
Stockholders’ Equity:
Common stock – no par value (10,000 authorized shares; 1,897 and 1,895 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)		—		—
Retained earnings		232,759		225,861
Accumulated other comprehensive income		420		3,226
Total stockholders’ equity		233,179		229,087
Total Liabilities and Stockholders’ Equity	$	325,192	$	331,488

Investors Title Company and Subsidiaries

Net Premiums Written By Branch and Agency

For the Three and Six Months Ended June 30, 2022 and 2021

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022		%	2021		%	2022		%	2021		%
Branch	$	16,161	23.2	$	17,048	25.2	$	33,579	25.3	$	34,408	26.7
Agency		53,465	76.8		50,479	74.8		99,172	74.7		94,596	73.3
Total	$	69,626	100.0	$	67,527	100.0	$	132,751	100.0	$	129,004	100.0

Investors Title Company and Subsidiaries

Appendix A

Non-GAAP Measures Reconciliation

For the Three and Six Months Ended June 30, 2022 and 2021

(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 EndedJune 30,					Six Months EndedJune 30,
	2022		2021			2022		2021
Revenues
Total revenues (GAAP)	$	70,902	$	84,961		$	139,900	$	157,039
Add (Subtract):  Changes in the estimated fair value of equity security investments		12,172		(4,829	)		18,087		(8,068	)
Adjusted revenues (non-GAAP)	$	83,074	$	80,132		$	157,987	$	148,971
Income before Income Taxes
Income before income taxes (GAAP)	$	2,953	$	25,288		$	10,746	$	42,603
Add (Subtract):  Changes in the estimated fair value of equity security investments		12,172		(4,829	)		18,087		(8,068	)
Adjusted income before income taxes (non-GAAP)	$	15,125	$	20,459		$	28,833	$	34,535

XML

Document and Entity Information	Aug. 05, 2022
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 05, 2022
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
Common Stock [Member]
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