itic-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 0-11774

INVESTORS TITLE COMPANY

(Exact name of registrant as specified in its charter)

North Carolina

56-1110199

(State of incorporation)

(I.R.S. Employer 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)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 24, 2024, there were 1,883,860 common shares of the registrant outstanding.

INVESTORS TITLE COMPANY

AND SUBSIDIARIES

INDEX


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):

	Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	1

	Consolidated Statements of Operations For the Three Months Ended March 31, 2024 and 2023	2

	Consolidated Statements of Comprehensive Income For the Three Months Ended March 31, 2024 and 2023	3

	Consolidated Statements of Stockholders’ Equity For the Three Months Ended March 31, 2024 and 2023	4

	Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2024 and 2023	5

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	35

Item 6.	Exhibits	36

SIGNATURE		37

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

(in thousands)

(unaudited)


	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	21,613	$	24,031
Investments:
Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2024: $62,277; December 31, 2023: $63,106)	62,647		63,847
Equity securities, at fair value (cost: March 31, 2024: $22,647; December 31, 2023: $22,981)	36,708		37,212
Short-term investments	113,379		110,224
Other investments	21,758		17,385
Total investments	234,492		228,668

Premiums and fees receivable	12,911		13,338
Accrued interest and dividends	1,090		978
Prepaid expenses and other receivables	8,843		13,525
Property, net	25,325		23,886
Goodwill and other intangible assets, net	15,910		16,249
Lease assets	6,679		6,303
Other assets	2,631		2,500
Current income taxes recoverable	—		1,081
Total Assets	$	329,494	$	330,559

Liabilities and Stockholders’ Equity
Liabilities:
Reserve for claims	$	37,316	$	37,147
Accounts payable and accrued liabilities	27,732		31,864
Lease liabilities	6,828		6,449
Current income taxes payable	282		—
Deferred income taxes, net	3,374		3,546
Total liabilities	75,532		79,006

Commitments and Contingencies	—		—

Stockholders’ Equity:
Preferred stock (1,000 authorized shares; no shares issued)	—		—
Common stock – no par value (10,000 authorized shares; 1,884 and 1,891 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively, excluding in each period 292 shares of common stock held by the Company)	—		—
Retained earnings	253,616		250,915
Accumulated other comprehensive income	346		638
Total stockholders' equity	253,962		251,553
Total Liabilities and Stockholders’ Equity	$	329,494	$	330,559

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2024 and 2023

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Revenues:
Net premiums written	$	40,180	$	38,966
Escrow and other title-related fees	3,723		3,655
Non-title services	4,304		5,312
Interest and dividends	2,520		2,074
Other investment income	111		753
Net investment gains	2,422		443
Other	199		140
Total Revenues	53,459		51,343

Operating Expenses:
Commissions to agents	19,870		19,326
Provision for claims	910		1,068
Personnel expenses	18,582		20,820
Office and technology expenses	4,465		4,400
Other expenses	3,835		4,168
Total Operating Expenses	47,662		49,782

Income before Income Taxes	5,797		1,561

Provision for Income Taxes	1,272		380

Net Income	$	4,525	$	1,181

Basic Earnings per Common Share	$	2.40	$	0.62

Weighted Average Shares Outstanding – Basic	1,888		1,897

Diluted Earnings per Common Share	$	2.40	$	0.62

Weighted Average Shares Outstanding – Diluted	1,889		1,897

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2024 and 2023

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Net income	$	4,525	$	1,181
Other comprehensive (loss) income, before income tax:
Accumulated postretirement benefit obligation adjustment	—		141
Net unrealized (losses) gains on investments arising during the period	(424)		233
Reclassification adjustment for write-down of securities included in net income	53		82
Other comprehensive (loss) income, before income tax	(371)		456
Income tax expense related to postretirement health benefits	—		30
Income tax (benefit) expense related to net unrealized (losses) gains on investments arising during the period	(91)		47
Income tax expense related to reclassification adjustment for write-down of securities included in net income	12		19
Net income tax (benefit) expense on other comprehensive (loss) income	(79)		96
Other comprehensive (loss) income	(292)		360
Comprehensive Income	$	4,233	$	1,541

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2024 and 2023

(in thousands, except per share amounts)

(unaudited)


	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2022	1,897	$	—	$	240,811	$	200	$	241,011
Net income				1,181				1,181
Dividends paid ($0.46 per share)				(873)				(873)
Exercise of stock appreciation rights	1			—				—
Share-based compensation expense related to stock appreciation rights				159				159
Accumulated postretirement benefit obligation adjustment						111		111
Net unrealized gain on investments						249		249
Balance, March 31, 2023	1,898	$	—	$	241,278	$	560	$	241,838

Balance, December 31, 2023	1,891	$	—	$	250,915	$	638	$	251,553
Net income				4,525				4,525
Dividends paid ($0.46 per share)				(867)				(867)
Shares of common stock repurchased and retired	(7)			(1,053)				(1,053)
Share-based compensation expense related to stock appreciation rights				96				96
Net unrealized loss on investments						(292)		(292)
Balance, March 31, 2024	1,884	$	—	$	253,616	$	346	$	253,962

Refer to notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2024 and 2023

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Operating Activities
Net income	$	4,525	$	1,181
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	787		639
Accretion of investments, net	(1,232)		(865)
Amortization of other intangible assets, net	339		332
Share-based compensation expense related to stock appreciation rights	96		159
Net (gain) loss on disposals of property	(13)		50
Net investment gains	(2,422)		(443)
Net losses (earnings) from other investments	14		(568)
Provision for claims	910		1,068
Benefit for deferred income taxes	(92)		(1,910)
Changes in assets and liabilities:
Decrease in premium and fees receivable	427		2,220
Decrease (increase) in other assets	3,354		(265)
(Increase) decrease in lease assets	(376)		36
Decrease in current income taxes receivable	1,081		1,174
Decrease in accounts payable and accrued liabilities	(5,881)		(15,693)
Increase (decrease) in lease liabilities	379		(13)
Increase in current income taxes payable	282		1,148

SEC Form 10-Q filed by Investors Title Company