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, 2023

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, 2023, reporting Investors Title Company's financial results for the fiscal quarter ended March 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 May 5, 2023

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, 2023	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, 2023

104                   Cover Page Interactive Data File (embedded within the Inline XBRL document)

EX-99.1

Exhibit 99.1

INVESTORS TITLE COMPANY ANNOUNCES

FIRST QUARTER 2023 RESULTS

  Contact:  Elizabeth B. Lewter

May 5, 2023

Telephone: (919) 968-2200

        Nasdaq Symbol: ITIC

FOR IMMEDIATE RELEASE:

Chapel Hill, NC – Investors Title Company (Nasdaq: ITIC) today announced results for the quarter ended March 31, 2023.  The Company reported net income of $1.2 million, or $0.62 per diluted share, compared with net income of $6.2 million, or $3.25 per diluted share, for the prior year period.

Revenues decreased 25.6% to $51.3 million, compared to $69.0 million in the prior year period, primarily as a result of decreases of 38.3% in revenues related to our title insurance business.  The reductions in net premiums written and escrow and other title-related fees are attributable to an overall decline in the level of real estate transaction volumes resulting from higher average mortgage interest rates and ongoing housing supply constraints.  The decline in title insurance revenues was partially offset by increases in non-title services, primarily like-kind exchanges, and net realized investment gains.  The sale of appreciated investment securities during the period resulted in a reduction in unrealized gains as they were reclassified to net realized investment gains, which is not indicative of a decline in estimated fair value.

Operating expenses decreased 18.7% compared to the prior year period, mainly due to a $10.5 million decline in commissions to agents commensurate with the decrease in agent premium volume.  The decrease in operating expenses was partially offset by an $892 thousand increase in the provision for claims, which resulted primarily from a lower level of favorable loss development as compared to the prior year period.  Personnel, office, and technology expenses remained relatively consistent with the prior year period, primarily due to growth initiatives and continued expansion of our geographic footprint.

Chairman J. Allen Fine commented, “The title insurance industry continued to experience economic headwinds in the first quarter.  While mortgage rates declined slightly from the prior quarter, the overall higher level continued to negatively impact home sales and commercial real estate activity.  Higher interest rates in the financial markets did help partially offset the decline in real estate activity by providing the ability to increase our investment income.

“Regardless of the recent softness in the real estate market, we are still finding opportunities to enhance our operational capabilities and expand our presence in new and existing markets.  We possess a very strong balance sheet which affords us the strength to continue to make investments in the future, even in market downturns.   As always, we strive to maintain a disciplined financial approach, balancing the need for short-term expense management with long-term investments in our business.”

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; the potential impact of inflation and responses by government regulators, including the Federal Reserve; the impact of the COVID-19 pandemic (including any of its variants) on the economy and the Company’s business; 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 Months Ended March 31, 2023 and 2022

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended March 31,
	2023			2022
Revenues:
Net premiums written	$	38,966		$	63,125
Escrow and other title-related fees		3,125			5,064
Non-title services		5,842			2,426
Interest and dividends		2,074			915
Other investment income		753			1,337
Net realized investment gains		7,233			1,747
Changes in the estimated fair value of equity security investments		(6,790	)		(5,915	)
Other		140			299
Total Revenues		51,343			68,998
Operating Expenses:
Commissions to agents		19,326			29,857
Provision for claims		1,068			176
Personnel expenses		20,820			21,254
Office and technology expenses		4,400			4,368
Other expenses		4,168			5,550
Total Operating Expenses		49,782			61,205
Income before Income Taxes		1,561			7,793
Provision for Income Taxes		380			1,608
Net Income	$	1,181		$	6,185
Basic Earnings per Common Share	$	0.62		$	3.26
Weighted Average Shares Outstanding – Basic		1,897			1,896
Diluted Earnings per Common Share	$	0.62		$	3.25
Weighted Average Shares Outstanding – Diluted		1,897			1,903

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2023 and December 31, 2022

(in thousands)

(unaudited)

	March 31,2023		December 31,2022
Assets
Cash and cash equivalents	$	29,555	$	35,311
Investments:
Fixed maturity securities, available-for-sale, at fair value		52,210		53,989
Equity securities, at fair value		42,800		51,691
Short-term investments		105,662		103,649
Other investments		18,948		18,368
Total investments		219,620		227,697
Premiums and fees receivable		16,827		19,047
Accrued interest and dividends		915		872
Prepaid expenses and other receivables		11,315		11,095
Property, net		19,154		17,785
Goodwill and other intangible assets, net		17,265		17,611
Lease assets		6,671		6,707
Other assets		2,475		2,458
Current income taxes recoverable		—		1,174
Total Assets	$	323,797	$	339,757
Liabilities and Stockholders’ Equity
Liabilities:
Reserve for claims	$	36,918	$	37,192
Accounts payable and accrued liabilities		31,216		47,050
Lease liabilities		6,826		6,839
Current income taxes payable		1,148		—
Deferred income taxes, net		5,851		7,665
Total liabilities		81,959		98,746
Stockholders’ Equity:
Common stock – no par value (10,000 authorized shares; 1,898 and 1,897 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively, excluding in each period 292 shares of common stock held by the Company's subsidiary)		—		—
Retained earnings		241,278		240,811
Accumulated other comprehensive income		560		200
Total stockholders’ equity		241,838		241,011
Total Liabilities and Stockholders’ Equity	$	323,797	$	339,757

Investors Title Company and Subsidiaries

Direct and Agency Net Premiums Written

For the Three Months Ended March 31, 2023 and 2022

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2023		%		2022		%
Direct	$	12,714		32.6	$	22,692		35.9
Agency		26,252		67.4		40,433		64.1
Total	$	38,966		100.0	$	63,125		100.0

Investors Title Company and Subsidiaries

Appendix A

Non-GAAP Measures Reconciliation

For the Three Months Ended March 31, 2023 and 2022

(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 the Company's 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.  Note that, in periods with significant sales of investment securities, unrealized gains/losses as presented may not necessarily reflect portfolio performance due to reclassifications of unrealized gains/losses to realized gains/losses when such sales are made.  Management believes that these non-GAAP 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 EndedMarch 31,
	2023		2022
Revenues
Total revenues (GAAP)	$	51,343	$	68,998
Add:  Changes in the estimated fair value of equity security investments		6,790		5,915
Adjusted revenues (non-GAAP)	$	58,133	$	74,913
Income before Income Taxes
Income before income taxes (GAAP)	$	1,561	$	7,793
Add:  Changes in the estimated fair value of equity security investments		6,790		5,915
Adjusted income before income taxes (non-GAAP)	$	8,351	$	13,708

XML

Document and Entity Information	May 05, 2023
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 05, 2023
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