HG Holdings (STLY) returns to profit on higher Q1 2026 revenue
HG Holdings, Inc. reported stronger results for the three months ended March 31, 2026. Total revenue rose to $3.8 million from $2.7 million a year earlier, driven by higher Florida title activity and $1.5 million of management fees from related parties under a services agreement.
Net income attributable to shareholders was $0.5 million, compared with a net loss of $0.3 million in 2025, and basic and diluted EPS improved to $0.10 from ($0.09). Cash and cash equivalents totaled $10.7 million, with an additional $9.8 million of restricted cash held mainly in escrow accounts.
The title insurance segment generated $1.6 million of net premium written and $0.7 million of escrow and other fees, while the Corporate and Other segment contributed recurring advisory revenue and income from investments in related parties. The company repurchased 60,240 shares for about $0.3 million under a $1.5 million authorization and reported NCTIC statutory surplus of $9.1 million, above the $3.0 million Florida minimum.
Positive
- Return to profitability with revenue growth: Q1 2026 revenue rose to $3.8 million from $2.7 million, and net income attributable to shareholders improved to $0.5 million from a $0.3 million loss, indicating materially better operating performance year over year.
Negative
- Meaningful reliance on related-party fee income: Management fees from related parties were $1.5 million in the quarter, tied to a three-year $6 million-per-year services agreement with HP Risk, making a substantial portion of earnings dependent on a single related-party contract.
Insights
HG Holdings swings to profit on higher title volume and related-party fees.
HG Holdings delivered a notable turnaround in Q1 2026. Revenue increased to $3.816M from $2.722M, supported by stronger Florida title activity and $1.5M of management fees under a three-year services agreement with HP Risk.
Net income attributable to shareholders reached $531K versus a loss of $257K a year earlier, while EPS improved to $0.10. Operating expenses were broadly stable at $3.260M, so most of the incremental revenue flowed through to pre-tax income of $799K.
Liquidity appears solid, with $10.732M in cash and equivalents and $9.818M in restricted cash as of March 31, 2026. The title subsidiary’s statutory surplus of $9.1M exceeds the Florida minimum of $3.0M. Future filings will show how durable the $6M-per-year HP Risk fee stream and higher title volumes prove over subsequent quarters.
Key Figures
Key Terms
net operating loss carryforwards financial
IBNR financial
excess of loss reinsurance financial
statutory surplus financial
Rule 10b5-1 trading arrangement regulatory
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | 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:
HG HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, Zip Code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
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.
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 ☐
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
As of May 11, 2026, there were
TABLE OF CONTENTS
| Page |
|
| Part I – Financial Information |
3 |
| Item 1. Consolidated Financial Statements (Unaudited) |
3 |
| Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 |
3 |
| Consolidated Statements of Operations for the three months ended March 31, 2026 and March 31, 2025 |
4 |
| Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and March 31, 2025 |
5 |
| Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and March 31, 2025 |
6 |
| Notes to the Condensed Consolidated Financial Statements |
7 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
27 |
| Item 4. Controls and Procedures |
27 |
| Part II – Other Information |
28 |
| Item 1. Legal Proceedings |
28 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
28 |
| Item 3. Defaults Upon Senior Securities |
29 |
| Item 4. Mine Safety Disclosures |
29 |
| Item 5. Other Information |
29 |
| Item 6. Exhibits |
30 |
| Signatures |
31 |
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
HG HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
| As of March 31, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Investments | ||||||||
| Investments in limited partnerships | ||||||||
| Investments in related parties | ||||||||
| Accounts receivable | ||||||||
| Due from related parties | ||||||||
| Prepaid expenses | ||||||||
| Property, plant and equipment, net | ||||||||
| Lease assets | ||||||||
| Deferred tax asset, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued salaries, wages and benefits | ||||||||
| Escrow liabilities | ||||||||
| Other accrued expenses | ||||||||
| Due to related parties | ||||||||
| Reserve for title claims | ||||||||
| Lease liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (refer to Note 11) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $0.01 par value, 1,000,000 shares authorized and no shares issued and outstanding as of March 31, 2026 and December 31, 2025 | ||||||||
| Common stock, $0.02 par value, 7,000,000 shares authorized as of March 31, 2026 and December 31, 2025; 5,046,795 shares issued and outstanding as of March 31, 2026 and 5,107,035 shares issued and outstanding as of December 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Noncontrolling interests | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
HG HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months | ||||||||
| Ended | ||||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Revenues: | ||||||||
| Net premium written | $ | $ | ||||||
| Escrow and other title fees | ||||||||
| Management fees from related parties | ||||||||
| Total revenues | ||||||||
| Cost of revenues: | ||||||||
| Underwriting expenses | ||||||||
| Provision for title claim losses | ||||||||
| Search and other fees | ||||||||
| Total cost of revenues | ||||||||
| Gross underwriting profits and management fee income | ||||||||
| Operating expenses: | ||||||||
| Personnel expenses | ( | ) | ( | ) | ||||
| Other general and administrative expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Other income/expenses: | ||||||||
| Net investment income | ||||||||
| Other income, net | ||||||||
| Income from investments in related parties, net | ||||||||
| Income (loss) from operations before income taxes | ( | ) | ||||||
| Income tax expense (benefit) | ( | ) | ||||||
| Net income (loss) | ( | ) | ||||||
| Net income (loss) attributable to noncontrolling interests | ( | ) | ||||||
| Net income (loss) attributable to the Company's shareholders | $ | $ | ( | ) | ||||
| Basic and diluted per share net income (loss) attributable to the Company's shareholders: | ||||||||
| Basic | $ | $ | ( | ) | ||||
| Diluted | $ | $ | ( | ) | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
HG HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
| Additional | Retained | |||||||||||||||||||||||
| Common Stock | Paid-in | Earnings | Noncontrolling | |||||||||||||||||||||
| Shares | Common Stock | Capital | (Deficit) | Interest | Total | |||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | $ | (132 | ) | $ | |||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Distribution of noncontrolling interest | - | ( | ) | ( | ) | |||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
HG HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) attributable to the Company's shareholders | $ | $ | ( | ) | ||||
| Net income (loss) attributable to noncontrolling interests | ( | ) | ||||||
| Net income (loss) | ( | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: | ||||||||
| Depreciation expense | ||||||||
| Amortization expense | ||||||||
| Change in net asset value of investment in limited partnership | ( | ) | ||||||
| Equity method pick up - related parties | ( | ) | ||||||
| Loss from investments in related parties | ||||||||
| Non-cash lease expense | ||||||||
| Changes in assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Accounts receivable | ( | ) | ||||||
| Interest and dividends receivable | ||||||||
| Other assets | ( | ) | ( | ) | ||||
| Deferred tax asset | ||||||||
| Accounts payable | ||||||||
| Accrued salaries, wages, and benefits | ||||||||
| Escrow liabilities | ||||||||
| Reserve for title claims | ||||||||
| Other accrued expenses | ||||||||
| Due to/from related parties | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from redemptions of fixed-income securities | ||||||||
| Proceeds from sale of investments | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Repurchase of common stock | ( | ) | ||||||
| Subsidiary distributions paid to non-controlling interest shareholders | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ||||||
| Net increase in cash and cash equivalents and restricted cash | ||||||||
| Cash and cash equivalents and restricted cash at beginning of period | ||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
HG HOLDINGS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| 1. | Basis of Presentation and Nature of Operations |
These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements. However, the Company (as defined below) believes that the disclosures made are adequate for a fair statement of results of operations and financial position. In addition, the year-end consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. In the opinion of management of the Company, these statements include all adjustments necessary for a fair statement of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Operating results for the interim periods reported herein may not be indicative of the results expected for the year. These consolidated financial statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s latest Annual Report on Form 10-K filed with the SEC on March 27, 2026 (the “2025 Form 10-K”).
HG Holdings, Inc. (collectively with its consolidated subsidiaries, the “Company,” “we,” “us,” “our,” “it,” and “its”), operates through its subsidiaries, National Consumer Title Insurance Company (“NCTIC”), National Consumer Title Group, LLC (“NCTG”), Title Agency Ventures, LLC (“TAV”), HG Managing Agency, LLC (“HGMA”), Omega National Title Agency, LLC (“ONTA” or “Omega”), Omega National Title of Florida, LLC (“ONF”) and Omega National Title of Pensacola, LLC (“ONP”).
Description of the Business
The Company has two reportable segments: (i) Title Insurance and (ii) Corporate and Other.
Title Insurance
The Company engages in issuing title insurance through its subsidiary, NCTIC, and providing title agency services through its subsidiaries, NCTG, TAV, ONTA, ONF and ONP. Through NCTIC, the Company underwrites title insurance for owners and mortgagees as the primary insurer. The Company mainly provides title insurance services in the State of Florida.
Title insurance protects against loss or damage resulting from title defects that affect real property. When real property is conveyed from one party to another, occasionally there is an undisclosed defect in the title or a mistake or omission in a prior deed, will or mortgage that may give a third party a legal claim against such property. If a covered claim is made against real property, title insurance provides indemnification against insured defects. There are two basic types of title insurance policies – one for the mortgage lender and one for the real property owner. A lender often requires the property owner to purchase a lender’s title insurance policy to protect its position as a holder of a mortgage loan, but the lender’s title insurance policy does not protect the property owner. The property owner has to purchase a separate owner’s title insurance policy to protect its investment.
NCTIC issues title insurance policies through its home office and through a network of affiliated and independent title agents. In the State of Florida, issuing agents are independent agents or subsidiaries of community and regional mortgage lending institutions, depending on local customs and regulations. The ability to attract and retain issuing agents is a key determinant of the Company’s growth in title insurance premium written.
Revenues for the title insurance segment primarily result from purchases of new and existing residential and commercial real estate, refinance activity and certain other types of mortgage lending such as home equity lines of credit. Title insurance premiums vary from state to state and are subject to extensive regulation. Statutes generally provide that rates must not be excessive, inadequate or unfairly discriminatory. The process of implementing a rate change in most states involves pre-approval by the applicable state insurance regulator.
The substantial majority of the Company's title insurance business is dependent upon the overall level of residential and commercial real estate activity and mortgage markets, which are cyclical and seasonal. Residential purchase activity is typically slower in the winter months with increased volumes in the spring and summer months and is sensitive to interest rates. Refinance activity is not seasonal, but is generally correlated with changes in interest rates and general economic cycles. Commercial real estate volumes are less sensitive to changes in interest rates than residential real estate volumes, but fluctuate based on local supply and demand conditions and financing availability. Commercial real estate historically has elevated activity towards the end of the year. However, changes in general economic conditions in the United States and abroad can cause fluctuations in these traditional patterns of real estate activity, and changes in the general economic conditions in a geography can cause fluctuations in these traditional patterns of real estate activity in that geography. The Company’s revenues from title insurance premiums in future periods are likely to fluctuate due to these and other factors which are beyond management’s control.
In conducting its title insurance operations, the Company often holds customers’ assets in escrow, pending completion of real estate transactions. This cash is presented as restricted cash on the Company’s Consolidated Balance Sheets. The Company records an offsetting escrow liability given that we are liable for the disposition of these escrowed funds.
Corporate and Other
The Corporate and Other segment contains results of management advisory services and other investment activity, not related to title insurance.
The Company, along with its wholly-owned subsidiary, HGMA, engages in providing various management advisory services such as legal entity formation, licensure, regulatory approval, assumption of policies, and other general operational services.
Effective January 1, 2024, the Company, through HGMA, was engaged to provide management advisory services to a related captive managing general agency, HP Managing Agency, LLC ("HPMA"), and its affiliates, including but not limited to general management, legal compliance, strategy services and review of potential acquisitions and transactions. The engagement was initially for twelve months from January 1, 2024 through December 31, 2024, for a monthly fee of $
Effective April 1, 2023, the Company, through HGMA, was also engaged to provide management advisory services to a related reinsurance intermediary affiliated with HPMA. The services included legal entity formation, licensure, regulatory approval, and other general operational services to allow the intermediary to adequately perform its business functions. The engagement was initially for twelve months from April 1, 2023 through March 31, 2024, for a monthly fee of $
On April 21, 2025, the Company entered into a Master Services Agreement, effective June 1, 2025, with HP Risk Solutions, LLC (“HP Risk”), a wholly-owned subsidiary of HP Holding Company, LLC, which is wholly owned by certain affiliates of Mr. Hale, pursuant to which the Company provides certain managerial and operational services to HP Risk for consideration from HP Risk of $
Additionally, the Company owns
HC Realty is an internally-managed real estate investment trust (“REIT”) focused on acquiring, financing, owning and managing build-to-suit or renovate-to-suit, single-tenant properties leased primarily to the U.S. government and administered by the U.S. General Services Administration or directly by the federal government agencies or sub-agencies occupying such properties (referred to as “Government Properties”). HC Realty invests primarily in Government Properties ranging from
| 2. | Significant Accounting Policies |
During the three months ended March 31, 2026, there have been no material changes to the Company’s significant accounting policies as described in its 2025 Form 10-K.
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires public business entities to disclose disaggregated information about certain income statement expenses, including categories such as employee compensation, intangible asset amortization and depreciation, and selling expense, in the notes to the financial statements. Public business entities are required to apply the guidance prospectively and may apply it retrospectively. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impacts of this standard on our disclosures and is not planning to early adopt.
Reclassifications
Certain comparative figures have been reclassified to conform to the current period presentation.
| 3. | Investments |
Investments in Related Parties
On June 30, 2025, the Company completed a non-cash equity-for-equity exchange transaction pursuant to which it acquired a
The Company accounts for its investment in ACMAT under the equity method of accounting, as the Company has concluded that it has the ability to exercise significant influence over the operating and financial policies of the investee. As of March 31, 2026 and December 31, 2025, the Company’s investment in ACMAT was $
As a result of the Company’s equity method investment in ACMAT, the Company includes the following summarized income statement information of ACMAT for the latest available period, the three months ended December 31, 2025 (in thousands):
| Three Months | ||||
| Ended | ||||
| December 31, 2025 | ||||
| Total revenue | $ | |||
| Total expense | ||||
| Pre-tax earnings | ||||
| Income tax benefit | ||||
| Net earnings | $ | |||
Additionally, the Company owns approximately
The following table summarizes the Company’s investment in HC Realty as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025 (amounts in thousands, except ratios):
| Loss recorded in the Consolidated | ||||||||||||||||||||||||
| Ownership % | Carrying Value | Statements of Operations (b) | ||||||||||||||||||||||
| For the Three | ||||||||||||||||||||||||
| As of | As of | As of | As of | Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| HC Series B Stock (a) | % | % | $ | $ | $ | $ | ( | ) | ||||||||||||||||
| HC Common Stock | % | % | ||||||||||||||||||||||
| Total | % | % | $ | $ | $ | $ | ( | ) | ||||||||||||||||
| (a) | Represents investments in shares of HC Series B Stock with a basis of $ |
| (b) | Loss from these investments is included in “Income from investments in related parties, net” in the Unaudited Consolidated Statements of Operations. Since HC Realty is a REIT and not a taxable entity, the loss is not reported net of taxes. |
The Company’s investment in HC Common Stock is accounted for under the equity method of accounting as the Company has concluded it has a significant influence over the investee. The HC Series B Stock is not deemed to be in-substance common stock and is accounted for under the cost adjusted for market observable events less impairment method. Both investments in HC Common Stock and HC Series B Stock are evaluated quarterly for impairment. During the three months ended March 31, 2026 and March 31, 2025, the Company did not recognize any impairment of HC Common Stock. During the three months ended March 31, 2026, the Company did not recognize any impairment of HC Series B Stock. During the three months ended March 31, 2025, the Company recognized impairment of HC Series B Stock of $
As a result of the Company’s holdings in HC Realty, the Company includes the following summarized income statement information of HC Realty for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months | ||||||||
| Ended | ||||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Total revenue | $ | $ | ||||||
| Total expense | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to noncontrolling interest in operating partnership | ( | ) | ( | ) | ||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | ||
The Company’s other investments in related parties totaled $
Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on our Consolidated Balance Sheets at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:
Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we can access.
Level 2: Assets and liabilities whose values are based on the following:
| a. | Quoted prices for similar assets or liabilities in active markets; |
| b. | Quoted prices for identical or similar assets or liabilities in markets that are not active; or |
| c. | Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. |
Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect our estimates of the assumptions that market participants would use in valuing the assets and liabilities.
Where available, we estimate the fair value of our investments using the closing prices on the last business day of the reporting period, obtained from active markets such as the New York Stock Exchange, Nasdaq and NYSE American. For securities for which quoted prices in active markets are unavailable, we use a third-party pricing service that utilizes quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs to estimate the fair value of those securities for which quoted prices are unavailable.
The Company’s investments in related parties are accounted for either under the equity method of accounting or, where they do not meet the criteria of accounting under the equity method, under the cost adjusted for market observable events less impairment method. For information about the Company’s investments in related parties, refer to the Investments in Related Parties section above.
The Company has elected the practical expedient for fair value for its investment in limited partnership which is estimated based on our share of the net asset value (“NAV”) of the limited partnership, as provided by the independent fund administrator. The Company’s share of the NAV represents the Company’s proportionate interest in the members’ equity of the limited partnership. As of March 31, 2026, there are
The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value as of March 31, 2026 and December 31, 2025:
| Estimated fair value | ||||||||||||||||||||||||
| (in thousands) | Carrying Amount | Total | Level 1 | Level 2 | Level 3 | NAV | ||||||||||||||||||
| March 31, 2026 | ||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Restricted cash | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Investments in limited partnerships | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Estimated fair value | ||||||||||||||||||||||||
| (in thousands) | Carrying Amount | Total | Level 1 | Level 2 | Level 3 | NAV | ||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Restricted cash | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Investments in limited partnerships | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Assets measured at fair value on a non-recurring basis
There were
The following table presents assets measured at fair value on a non-recurring basis as of December 31, 2025 (in thousands):
| Estimated Fair Value | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| HC Series B Stock | $ | $ | ||||||||||||||
Net investment income
Net investment income for the three months ended March 31, 2026 and 2025 is detailed below (in thousands):
| For the Three Months Ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Interest on: | ||||||||
| Cash equivalents | $ | $ | ||||||
| Fixed income securities | ||||||||
| Change in NAV of investment in limited partnership | ( | ) | ||||||
| Net investment income | $ | $ | ||||||
| 4. | Reserve for Title Claims |
NCTIC’s reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy claims that have been incurred but not yet reported (“IBNR”). Despite the variability of such estimates, management believes that the total reserve for claims is adequate to cover claim losses which might result from pending and future claims under title insurance policies issued through March 31, 2026. We continually update loss reserve estimates as new information becomes known, new loss patterns emerge or as other contributing factors are considered and incorporated into the analysis of reserve for claim losses. Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that additional reserve adjustments may be required in future periods in order to maintain our recorded reserve within a reasonable range of our actuary's central estimate.
A reconciliation of the activity in the reserves account for the three-month periods ended March 31, 2026 and 2025 is as follows (in thousands):
| For the Three | For the Three | |||||||
| Months Ended | Months Ended | |||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Beginning Reserves | $ | $ | ||||||
| Provision for claims related to: | ||||||||
| Current year | ||||||||
| Prior years | ( | ) | ||||||
| Total provision for claim losses | ||||||||
| Claims paid related to: | ||||||||
| Current year | ( | ) | ||||||
| Prior years | ( | ) | ( | ) | ||||
| Total title claims paid | ( | ) | ( | ) | ||||
| Ending Reserves | $ | $ | ||||||
At March 31, 2026, there were
For the three months ended March 31, 2026, the Company recognized favorable title claims loss and loss adjustment expense development of $
A summary of the Company’s loss reserves at March 31, 2026 and December 31, 2025 is as follows (in thousands):
| As of March 31, 2026 | As of December 31, 2025 | |||||||
| Known title claims | $ | $ | ||||||
| IBNR title claims | ||||||||
| Total title claims | ||||||||
| Non-title claims | ||||||||
| Total reserve for title claims | $ | $ |
| |||||
| 5. | Reinsurance |
Certain premiums and benefits at NCTIC are ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide NCTIC with increased capacity to write more risk and maintain its exposure to loss within its capital resources. For the three-month periods ended March 31, 2026 and 2025, NCTIC's reinsurance program consisted of excess of loss reinsurance treaties. The following is a summary of the reinsurance coverage:
Effective February 1, 2026, NCTIC entered into a per risk excess of loss reinsurance agreement that provides coverage of $
Effective January 1, 2025, NCTIC entered into a per risk excess of loss reinsurance agreement that provided coverage of $
NCTIC’s reinsured risks are treated, to the extent of reinsurance, as though they are risks for which the Company is not liable. However, NCTIC remains contingently liable in the event its reinsurers do not meet their obligations under these reinsurance contracts. NCTIC uses a broker to place its reinsurance through Lloyd’s syndicates, a group of underwriters who work together to provide insurance coverage for a variety of risks. Chaucer Syndicates Ltd. (“Chaucer Syndicates”) and Beazley Syndicate (“Beazley”) are each
The effects of reinsurance on the title premium written and earned at NCTIC for the three-month periods ended March 31, 2026 and 2025 are as follows (in thousands):
| Three Months | ||||||||
| Ended | ||||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Direct title premium | $ | $ | ||||||
| Ceded title premium | ( | ) | ( | ) | ||||
| Net title premium written (1) | $ | $ | ||||||
| (1) | Net title premium written disclosed in the table above is of NCTIC only and is included as part of the "Net premium written" on the Unaudited Consolidated Statements of Operations. |
| 6. | Statutory Reporting and Requirements |
NCTIC's assets, liabilities, and results of operations have been reported in accordance with U.S. GAAP, which varies from statutory accounting practices (“SAP”) prescribed or permitted by insurance regulatory authorities. Prescribed SAP are found in a variety of publications of the National Association of Insurance Commissioners, state laws and regulations, as well as through general practices. The principal differences between SAP and U.S. GAAP are that under SAP: (1) certain assets that are not admitted assets are eliminated from the balance sheet, (2) a supplemental reserve for claims is charged directly to unassigned surplus rather than provision for claims under U.S. GAAP, and (3) differences may arise in the computation of deferred income taxes. The Company must file with applicable state insurance regulatory authorities an “Annual Statement” which reports, among other items, net income (loss) and stockholders' equity (called “surplus as regards policyholders” in statutory reporting).
NCTIC is subject to regulations and standards of the Florida Office of Insurance Regulation. These standards and regulations include a requirement that the insurance entities domiciled in the State of Florida maintain specified levels of statutory capital and restrict the timing and amount of dividends and other distributions that may be paid by the insurance entities to the parent company. As of March 31, 2026, NCTIC’s statutory surplus is $
| 7. | Segment Information |
The Company has two reportable segments: (i) Title Insurance and (ii) Corporate and Other. This presentation of reportable segments is aligned with the manner in which the Company's chief operating decision maker, Steven A. Hale II, Chief Executive Officer, monitors the performance of the Company's operations. The measure of the Company's segment performance is income (loss) before income taxes.
Title Insurance
Our title insurance segment issues title insurance policies and provides title agency services on residential and commercial real estate transactions. This segment also provides closing and/or escrow services to facilitate real estate transactions.
Corporate and Other
Activity in the Corporate and Other segment primarily consists of management advisory services that the Company performs through its Services Agreement with HP Risk. Pursuant to this agreement, the Company provides certain managerial and operational services that include, but are not limited to: reinsurance brokerage services; the review and improvement of financial goals; compliance with legal and regulatory mandates; maintenance of an ethical business environment; investment and asset manager compliance; cash and equity management; corporate tax management; personnel management; related party transaction oversight; tax preparation administration; strategic capital modeling; the review of potential acquisitions and transactions involving affiliates and third parties, including but not limited to, renewal rights deals, loss portfolio transfers or entity acquisitions; execution of (or provision for the execution of) all general corporate legal matters; and provision of internal control management services.
The Corporate and Other segment also includes results of the Company's investment in a related party - HC Realty. HC Realty is an internally-managed REIT focused on acquiring, financing, owning and managing build-to-suit or renovate-to-suit, single-tenant properties leased primarily to the U.S. government and administered by the U.S. General Services Administration or directly by the federal government agencies or sub-agencies occupying such properties. As of March 31, 2026, the Company owns approximately
Provided below is selected financial information about the Company’s operations by segment for the three months ended March 31, 2026 (in thousands):
| Title | Corporate | |||||||||||
| Insurance | and Other | Total | ||||||||||
| Revenues: | ||||||||||||
| Net premium written | $ | $ | $ | |||||||||
| Escrow and other title fees | ||||||||||||
| Management fees from related parties | ||||||||||||
| Total revenues | $ | $ | $ | |||||||||
| Cost of revenues: | ||||||||||||
| Underwriting expenses | ( | ) | ( | ) | ||||||||
| Provision for title claim losses | ( | ) | ( | ) | ||||||||
| Search and other fees | ( | ) | ( | ) | ||||||||
| Total cost of revenue | ( | ) | ( | ) | ||||||||
| Gross profit | $ | $ | $ | |||||||||
| Operating expenses: | ||||||||||||
| Personnel costs | ( | ) | ( | ) | ( | ) | ||||||
| Other operating expense (1) | ( | ) | ( | ) | ( | ) | ||||||
| Amortization and depreciation | ( | ) | ( | ) | ||||||||
| Total operating expense | ( | ) | ( | ) | ( | ) | ||||||
| Other income, net | ||||||||||||
| (Loss) income before income taxes | $ | ( | ) | $ | $ | |||||||
| Goodwill and intangible assets, net (2) | $ | $ | $ | |||||||||
| (1) | Other operating expense primarily consists of rent and other occupancy expenses, software and equipment expense, corporate insurance and other regulatory and professional fees. | |
| (2) | The Company does not allocate its assets by segment, with the exception of Goodwill and Intangible assets. |
Provided below is selected financial information about the Company’s operations by segment for the three months ended March 31, 2025 (in thousands):
| Title | Corporate | |||||||||||
| Insurance | and Other | Total | ||||||||||
| Revenues: | ||||||||||||
| Net premium written | $ | $ | $ | |||||||||
| Escrow and other title fees | ||||||||||||
| Management fees from related parties | ||||||||||||
| Insurance and other services revenue | $ | $ | $ | |||||||||
| Cost of revenues: | ||||||||||||
| Underwriting expenses | ( | ) | ( | ) | ||||||||
| Provision for title claim losses | ( | ) | ( | ) | ||||||||
| Search and other fees | ( | ) | ( | ) | ||||||||
| Total cost of revenue | ( | ) | ( | ) | ||||||||
| Gross profit | $ | $ | $ | |||||||||
| Operating expenses: | ||||||||||||
| Personnel costs | ( | ) | ( | ) | ( | ) | ||||||
| Other operating expense (1) | ( | ) | ( | ) | ( | ) | ||||||
| Amortization and depreciation | ( | ) | ( | ) | ||||||||
| Total operating expense | ( | ) | ( | ) | ( | ) | ||||||
| Other income, net | ||||||||||||
| (Loss) income before income taxes | $ | ( | ) | $ | $ | ( | ) | |||||
| Goodwill and intangible assets, net (2) | $ | $ | $ | |||||||||
| (1) | Other operating expense primarily consists of rent and other occupancy expenses, software and equipment expense, corporate insurance and other regulatory and professional fees. | |
| (2) | The Company does not allocate its assets by segment, with the exception of Goodwill and Intangible assets. |
| 8. | Income Taxes |
The Company’s effective tax rate for the three-month period ended March 31, 2026 of
During the three months ended March 31, 2026, the Company recorded a non-cash credit to its valuation allowance of $
As of March 31, 2026, the Company maintained a partial valuation allowance against its deferred tax assets. A valuation allowance is recorded to reduce the gross deferred tax assets to an amount management believes is more likely than not to be realized. The valuation allowance is primarily attributable to the uncertainty regarding the realization of net operating losses, which is dependent upon future taxable income.
| 9. | Stockholders’ Equity |
Basic earnings (loss) per share of common stock are based upon the weighted average shares outstanding. Outstanding stock options and restricted stock are treated as potential common stock for purposes of computing diluted earnings (loss) per share. Basic and diluted earnings (loss) per share are calculated using the following share data (in thousands):
| Three Months | ||||||||
| Ended | ||||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Weighted average shares outstanding for basic calculation | ||||||||
| Add: Effect of dilutive stock awards | ||||||||
| Weighted average shares outstanding, adjusted for diluted calculation | ||||||||
For the three-month periods ended March 31, 2026 and 2025, there were no stock options or restricted stock awards outstanding.
In May 2024, the Company’s board of directors (the “Board”) authorized the repurchase of up to $
In December 2025, the Board authorized a new share repurchase program pursuant to which the Company may repurchase up to $
During the three months ended March 31, 2026, the Company repurchased
During the three months ended March 31, 2025, the Company did not repurchase any shares of common stock.
During the three months ended March 31, 2026 and 2025, the Company did not declare or pay any dividends to its holders of common stock.
In addition to common stock, authorized capital includes 1,000,000 shares of Blank Check Preferred Stock. None were outstanding during the three months ended March 31, 2026 and the year ended December 31, 2025. The Board is authorized to issue such stock in series and to fix the designation, powers, preferences, rights, limitations and restrictions with respect to any series of such shares. Such Blank Check Preferred Stock may rank prior to common stock as to dividend rights, liquidation preferences or both, may have full or limited voting rights and may be convertible into shares of common stock.
Effective September 2, 2025, the Company amended its Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”) to reduce the number of authorized shares to
| 10. | Goodwill and Intangible Assets |
Goodwill
Goodwill as of March 31, 2026 and December 31, 2025 was $
Intangible Assets
Intangible assets subject to amortization consisted of the following as of March 31, 2026 (dollars in thousands):
| Weighted-average | ||||||||||||||||
| remaining | ||||||||||||||||
| amortization period | Gross carrying | Accumulated | Net carrying | |||||||||||||
| (in years) | amount | amortization | amount | |||||||||||||
| Noncompetition agreement | $ | $ | ( | ) | $ | |||||||||||
| Total | $ | $ | ( | ) | $ | |||||||||||
Intangible assets subject to amortization consisted of the following as of December 31, 2025 (dollars in thousands):
| Weighted-average | ||||||||||||||||
| remaining | ||||||||||||||||
| amortization period | Gross carrying | Accumulated | Net carrying | |||||||||||||
| (in years) | amount | amortization | amount | |||||||||||||
| Noncompetition agreement | $ | $ | ( | ) | $ | |||||||||||
| Total | $ | $ | ( | ) | $ | |||||||||||
Amortization expense of the intangible assets for the three-month periods ended March 31, 2026 and 2025 was $
Estimated amortization expense of the intangible assets to be recognized by the Company during the remainder of 2026 and over the following years is as follows (in thousands):
| Estimated Amortization | ||||
| Year ending December 31, | Expense | |||
| Remaining in 2026 | $ | |||
| 2027 | ||||
| Total | $ | |||
| 11. | Commitments and Contingencies |
The Company and its subsidiaries are parties to claims and lawsuits related to the normal course of business operations. When the Company determines that a loss is both probable and reasonably estimable, a liability representing the best estimate of the Company’s financial exposure is recorded. Actual losses may materially differ from the Company’s estimates. With respect to our title insurance operations, this customary litigation includes but is not limited to a wide variety of cases arising out of or related to title and escrow claims, for which we make provisions through our loss reserves. See Note 4, Reserve for Title Claims, for further information. None of these claims and lawsuits, in management’s opinion, will have a material adverse effect on our Consolidated Financial Statements.
Litigation
The Company’s subsidiaries are parties to legal actions incidental to their business. As of March 31, 2026, management believed that the resolution of these matters would not materially affect our financial condition or results of operations.
Omega and ONF Litigation
During the first quarter of 2026, one of the Company’s subsidiaries, Omega, was served with litigation in the Circuit Court in and for Lee County, Florida. The case, instituted by Citizens Bank (“Plaintiff”), is a mortgage foreclosure action filed against multiple parties, including the current owner and a prior borrower. Plaintiff filed Affirmative Defenses and Counter Claims in the foreclosure action alleging a count of negligence and a count of breach of fiduciary duty against Omega and naming Omega as a Third-Party Defendant. Plaintiff alleges that Omega was negligent and breached its fiduciary duty to Plaintiff in performing its duty as a closing agent when Omega performed a closing and paid off the existing loan, but failed to check a box on Plaintiff’s form stating the loan was to be closed and terminated. After the loan was paid off, the prior borrower continued using the loan and defaulted on the payment obligations. The Company believes it is unlikely that the case will result in a material adverse effect on the Company's consolidated financial statements.
During the third quarter of 2025, one of the Company’s subsidiaries, ONF, was included as a defendant in connection with litigation in the County Court in and for Lee County, Florida. ONF was served with the initial summons on October 2, 2025. The case, instituted by Delta Build Services, Inc., a sub-contractor who provided labor and supplies, and Gretchel De Los Milagros Castaneda-Vazquez, the purchaser of the property (collectively "Lee County Plaintiffs”), is a multi-count civil lawsuit filed against multiple parties, including the general contractor, its managers and managing members, ONF, a former employee of Delta Build Services, Inc., the buyer’s realtor and supervising broker. The single alleged count against ONF is a claim of negligence. Lee County Plaintiffs allege that ONF breached a duty of care owed to Lee County Plaintiffs by accepting an allegedly forged document at closing. ONF has retained outside counsel. On January 29, 2026, ONF filed its Motion for Ex Parte Order of Involuntary Dismissal of the case. The Company believes it is unlikely that the case will result in a material adverse effect on the Company's consolidated financial statements.
During the fourth quarter of 2024, Omega was served with litigation in the Circuit Court in and for Charlotte County, Florida. The case, instituted by ABL RPC Residential Credit Acquisition, LLC, is a mortgage foreclosure action filed against multiple parties including the borrower, the current UCC lien holder, the current owners of the collateralized properties, and unknown tenants of the properties (collectively "Charlotte County Defendants”). Two of the Charlotte County Defendants, 760 Anatalya Holding LLC and 562 Monaco Holding LLC (“Anatalya and Monaco”), through their majority owners, filed Affirmative Defenses and Counter Claims in the foreclosure action alleging a count of negligence against Omega and naming Omega as a Third-Party Defendant. Anatalya and Monaco allege that Omega was negligent in conducting the closing of the mortgage transaction when Omega allowed the Manager of Anatalya and Monaco to execute all documents on their behalf including deeds transferring the properties into the name of the borrowing entity. Omega has retained outside counsel. Omega entered into a settlement agreement resolving all counts against it, effective February 12, 2026. The monetary amount conveyed under the settlement agreement did not result in a material adverse effect on the Company's consolidated financial statements.
Citibank Foreclosure Against Unrelated Third Party
On May 13, 2024, the Company was served with a foreclosure action filed by Citibank, N.A., primarily against two individually named defendants. The Company was identified as a co-defendant in this matter as the Company has a recorded judgment against one of the primary defendants. The Company has retained outside counsel in this matter in efforts to preserve any claim the Company may have to said recorded judgment against the primary defendant. Given the posture of the litigation, management does not believe this matter will result in a material adverse effect on the Company’s consolidated financial statements.
| 12. | Leases |
Right-of-use assets and lease liabilities related to operating leases are recorded when the Company and its subsidiaries are party to a contract, which conveys the right for it to control an asset for a specified period of time. Substantially all of our operating lease arrangements relate to rented office space and real estate for our title operations. The Company is not a party to any material contracts considered finance leases. Right-of-use assets and lease liabilities are recorded as Lease assets and Lease liabilities, respectively, on the Unaudited Consolidated Balance Sheets.
The Company’s operating leases range in term from one to five years. As of March 31, 2026 and December 31, 2025, the weighted-average remaining lease term of our operating leases was 1.8 years and
The Company’s lease agreements do not contain material variable lease payments, buyout options, residual value guarantees or restrictive covenants.
Most of the Company’s leases include one or more options to renew, with renewal terms that can extend the lease term by varying amounts. The exercise of lease renewal options is at our sole discretion. We do not include options to renew in our measurement of lease assets and lease liabilities as they are not considered reasonably assured of exercise as of March 31, 2026.
The lease liability is determined by discounting future lease payments using a discount rate based on the Company’s incremental borrowing rate for a fully collateralized fully amortizing loan with maturity similar to the lease term. As of March 31, 2026 and December 31, 2025, the weighted-average discount rate used to determine our operating lease liability was
Lease expense included in general and administrative expenses on the Unaudited Consolidated Statements of Operations was $184,000 and $
The following table details lease cost for the three-month periods ended March 31, 2026 and 2025 (in thousands):
| For the Three Months | For the Three Months | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
During the three months ended March 31, 2026 and 2025, lease liabilities recognized in exchange for operating lease right-of-use assets were $
Future minimum rental commitments as of March 31, 2026 under these leases are expected to be as follows (in thousands):
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total lease payments, undiscounted | $ | |||
| Less: present value discount | ( | ) | ||
| Lease liabilities, at present value | $ |
|
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the accompanying Unaudited Consolidated Financial Statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the audited consolidated financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2026. The terms the “Company”, “we”, “our” or “us” refer to HG Holdings, Inc., together with its consolidated subsidiaries, and unless otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in our accompanying Unaudited Consolidated Financial Statements and the notes thereto.
Forward-Looking Statements
Certain statements made in this report are not based on historical facts, but are forward-looking statements. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “may,” “will,” “should,” “could,” "would," "intends" or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These statements reflect our reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include the occurrence of events that negatively impact the Company’s liquidity in such a way as to limit or eliminate the Company’s ability to use its cash on hand to fund further asset acquisitions, an inability on the part of the Company to identify additional suitable businesses to acquire or develop, and the occurrence of events that negatively impact the title insurance operations of the Company’s subsidiaries and/or the business or assets of HC Realty and the value of our investment in HC Realty, such as HC Realty’s dependence on leases by the U.S. government and its agencies for substantially all of its revenues, and the risk that the U.S. government reduces its spending on real estate or that it changes its preference away from leased properties. Any forward-looking statement speaks only as of the date of this filing and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
Overview
For a description of our business, including descriptions of segments and recent business developments, see the discussion in Note 1, Basis of Presentation and Nature of Operations – Description of the Business in the accompanying Unaudited Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I, Item 2.
As of March 31, 2026, our sources of income include earnings from our title insurance subsidiaries, management service fees and interest earned on invested assets. The Company believes that the revenue generated from these sources and cash on hand is sufficient to fund operating expenses for at least 12 months from the date of the accompanying Unaudited Consolidated Financial Statements.
The Company will continue to pursue acquisition opportunities which will allow us to potentially derive benefit from the Company’s net operating loss carryforwards and also create appropriate risk adjusted returns for stockholders.
Title Insurance Segment Trends and Conditions
Our title insurance segment revenue is closely related to the level of real estate activity, such as sales, mortgage financing and mortgage refinancing. Declines in the level of real estate activity or the average price of real estate sales will adversely affect our title insurance revenues. The industry as a whole saw declined levels in total real estate transactions in the last several years, largely due to higher mortgage interest rates as compared to pre-2022 levels. During its September, October and December 2025 meetings, the Federal Reserve lowered the federal funds rate by a total of 75 basis points to a current range of 3.50% to 3.75%; however, amid renewed inflationary pressures and ongoing macroeconomic uncertainty, the Federal Reserve held the federal funds rate steady at its January 2026, March 2026 and April 2026 meetings, and recent Federal Open Market Committee projections suggest a more limited pace of additional rate reductions over the remainder of 2026. While additional federal funds rate decreases, if and when implemented, may positively impact the title insurance market, ongoing geopolitical tensions, evolving federal government policy initiatives, and persistent inflationary pressures have created elevated volatility in domestic and global markets, making it challenging to forecast industry trends. Per the Mortgage Bankers Association's ("MBA") Mortgage Finance Forecast as of April 2026, interest rates on a Freddie Mac 30-year, fixed-rate mortgage reached a recent high of 6.57% in the last week of March 2026, as longer-term rates jumped on anticipated higher inflation and the 10-year Treasury Yield briefly approached 4.5%, before declining by approximately 20 basis points. Despite continued elevated mortgage rates, the MBA projects a gradual recovery in the housing market. Per the April 2026 MBA Forecast Commentary, total single-family mortgage origination volume is now forecast to increase by approximately 6% in 2026 as compared to 2025, from approximately $2.05 trillion in origination value to a little less than $2.2 trillion. Purchase mortgage origination volume is expected to total approximately $1.42 trillion in origination value in 2026, up from approximately $1.36 trillion in 2025, while refinance origination volume is expected to increase to approximately $769 billion in origination value from approximately $694 billion in 2025.
Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space and occupancy rates in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business. Commercial real estate transaction volume is also often linked to the availability of financing. Factors including U.S. tax reform and a shift in U.S. monetary policy have had, or are expected to have, varying effects on availability of financing in the U.S. Lower corporate and individual tax rates, and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate.
Historically, real estate transactions have produced seasonal revenue fluctuations in the real estate industry. The first calendar quarter is typically the weakest quarter in terms of revenue due to the generally low volume of home sales during January and February. The second and third calendar quarters are typically the strongest quarters in terms of revenue, primarily due to a higher volume of residential transactions in the spring and summer months. The fourth quarter is typically strong due to the desire of commercial entities to complete transactions by year-end. Seasonality in recent years deviated from historical patterns due to changes in interest rates and other market conditions.
Results from Operations
(in thousands)
| Three Months Ended |
||||||||||||
| March 31, |
March 31, |
|||||||||||
| 2026 |
2025 |
Change |
||||||||||
| Net title premium written |
$ | 1,578 | $ | 1,388 | $ | 190 | ||||||
| Escrow and other title fees |
738 | 584 | 154 | |||||||||
| Management fees |
1,500 | 750 | 750 | |||||||||
| Total revenue |
3,816 | 2,722 | 1,094 | |||||||||
| Cost of revenues |
(140 | ) | (100 | ) | (40 | ) | ||||||
| Gross profit |
$ | 3,676 | $ | 2,622 | $ | 1,054 | ||||||
| Operating expenses |
(3,260 | ) | (3,171 | ) | (89 | ) | ||||||
| Other income, net |
383 | 268 | 115 | |||||||||
| Income (loss) before income taxes |
$ | 799 | $ | (281 | ) | $ | 1,080 | |||||
Comparison of three months ended March 31, 2026 and 2025
The Company’s net title premium written for the three-month periods ended March 31, 2026 and March 31, 2025 were $1.6 million and $1.4 million, respectively. The increase in net title premium written was due to higher volume of affiliated title business written and expansion of the Company’s market share in the State of Florida. Escrow and other title fees revenue also increased by $0.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, due to higher volume of affiliated title business.
Management fees increased to $1.5 million for the three months ended March 31, 2026, as compared to $0.8 million for the three months ended March 31, 2025. The increase was due to the Services Agreement with HP Risk becoming effective June 1, 2025. HP Risk is a wholly-owned subsidiary of HP Holding Company, LLC, which, in turn, is wholly owned by certain affiliates of Steven A. Hale II, our Chairman and Chief Executive Officer, pursuant to which the Company is providing certain managerial and operational services to HP Risk for consideration from HP Risk of $6.0 million per year over the course of three years. Such services include, but are not limited to: reinsurance brokerage services; the review and improvement of financial goals; compliance with legal and regulatory mandates; maintenance of an ethical business environment; investment and asset manager compliance; cash and equity management; corporate tax management; personnel management; related party transaction oversight; tax preparation administration; strategic capital modeling; the review of potential acquisitions and transactions involving affiliates and third parties, including but not limited to, renewal rights deals, loss portfolio transfers or entity acquisitions; execution of (or provision for the execution of) all general corporate legal matters; and provision of internal control management services.
Total revenue was $3.8 million and $2.7 million for the three-month periods ended March 31, 2026 and March 31, 2025, respectively. The increase in revenue was primarily a result of the management fees derived from the Services Agreement with HP Risk and higher title affiliated business volume written in 2026 as compared to the same period of the prior year.
The Company’s cost of revenues consists primarily of a provision for title claim losses and underwriting expenses, which are largely comprised of commissions to unaffiliated title agencies. Cost of revenues for the three-month periods ended March 31, 2026 and March 31, 2025 was $0.1 million. The minimal increase in cost of revenues for the three months ended March 31, 2026, as compared to the same period of the prior year, was attributable to loss adjustment expenses reserve established for a title insurance claim. Original estimates of ultimate loss exposures are decreased or increased as additional information becomes known during the adjustment process regarding individual claims.
The Company’s operating expenses primarily consist of general and administrative expenses such as personnel expenses, office and technology expenses, and professional fees. Operating expenses were generally flat at $3.3 million for the three months ended March 31, 2026 as compared to $3.2 million for the three months ended March 31, 2025.
Other income, net primarily consists of net interest income, change in the net asset value of investment in limited partnership as well as changes in value and income or loss from our related party investments. Other income, net was $0.4 million for the three-month period ended March 31, 2026, compared to $0.3 million for the three-month period ended March 31, 2025. The increase was primarily a result of higher income from related parties and change in the net asset value of investment in limited partnership for the three-month period ended March 31, 2026, that included $86,000 of income pick up from ACMAT and a $55,000 increase in the net asset value of investment in limited partnership, as compared to an impairment taken on the Company's investments in HC Series B Stock of $41,000 and a negative change in the net asset value of investment in limited partnership during the three-month period ended March 31, 2025.
Financial Condition, Liquidity and Capital Resources
Sources of liquidity include cash on hand, earnings from our title insurance subsidiaries, management service fees and interest earned on invested assets. At March 31, 2026, we had $10.7 million in cash and cash equivalents and an additional $9.8 million in restricted cash, substantially all of which is cash held in escrow for title insurance transactions. A portion of our unrestricted and restricted cash is currently held in savings accounts earning interest at approximately 3.3% annually. During the second quarter of 2025, the Company entered into the Services Agreement with HP Risk under which the Company earns a management advisory fee of $6.0 million per year over the course of three years. We believe that the sources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months.
Cash Flows
(in thousands)
| Three Months Ended |
Three Months Ended |
|||||||
| March 31, 2026 |
March 31, 2025 |
|||||||
| Net cash provided by operating activities |
$ | 3,748 | $ | 3,556 | ||||
| Net cash provided by investing activities |
50 | 1,145 | ||||||
| Net cash used in financing activities |
(327 | ) | - | |||||
| Net increase in cash and cash equivalents and restricted cash |
3,471 | 4,701 | ||||||
| Cash and cash equivalents and restricted cash at beginning of period |
$ | 17,079 | $ | 20,409 | ||||
| Cash and cash equivalents and restricted cash at end of period |
$ | 20,550 | $ | 25,110 | ||||
Cash flows provided by operating activities differ from net income (loss) due to adjustments for non-cash items, such as gains and losses on investments, the timing of disbursements for taxes, claims and other accrued liabilities, and collections or changes in receivables and other assets. Net cash provided by operating activities of $3.7 million differs from operating results for the three-month period ended March 31, 2026, primarily due to an increase of $3.2 million in escrow liabilities on the title insurance subsidiaries. Net cash provided by operating activities of $3.6 million differs from operating results for the three-month period ended March 31, 2025, primarily due to an increase of $3.6 million in escrow liabilities on the title insurance subsidiaries.
Cash flows provided by investing activities include effects of purchases of investments and proceeds from sales or maturities of investments. During the three-month period ended March 31, 2026, the Company received proceeds from its investments in limited partnership of $50,000. During the three-month period ended March 31, 2025, the Company's fixed income portfolio matured, resulting in $1.0 million in proceeds. Additionally, the Company received proceeds of $145,000 related to its investments in limited partnership.
Cash flows used in financing activities include share repurchases and effects of changes in noncontrolling interest. Cash flows used in financing activities for the three-month period ended March 31, 2026 of $327,000 consisted of $287,000 of repurchases of common stock and $40,000 of distributions to non-controlling interest shareholders. There was no cash provided by or used in financing activities for the three-month period ended March 31, 2025.
Critical Accounting Policies
Our critical accounting policies and estimates are provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the year ended December 31, 2025. We believe there have been no new critical accounting policies or material changes to our existing critical accounting policies and estimates during the three months ended March 31, 2026.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Not required to be provided by a smaller reporting company.
ITEM 4. Controls and Procedures
Evaluation of disclosure controls and procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of March 31, 2026 was conducted under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures, as of March 31, 2026, were effective at the reasonable assurance level.
Changes in internal controls over financial reporting.
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The information required for this Part II, Item 1 is incorporated by reference to the discussion under the heading “Litigation” in Note 11, Commitments and Contingencies in the accompanying Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Issuer Purchases of Equity Securities
In December 2025, the Board authorized a new share repurchase program pursuant to which the Company may repurchase up to $1.5 million of its outstanding common stock (the “2025 Repurchase Program”), which replaced a similar share repurchase program that was adopted by the Board in 2024. The authorization does not obligate the Company to acquire a specific number of shares during any period and does not have an expiration date. Repurchases under the 2025 Repurchase Program may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in such quantities, at such prices, in such manner and on such terms and conditions as the authorized officers of the Company determine are in the best interests of the Company. Repurchases may also be made under a plan adopted pursuant to Rule 10b5-1 promulgated under the Exchange Act.
During the three months ended March 31, 2026, the Company repurchased 60,240 shares of common stock, at a weighted average price per share of $4.75 under the 2025 Repurchase Program. The total cost of shares repurchased, inclusive of fees and commissions, during the three months ended March 31, 2026 was approximately $0.3 million or $4.75 per share.
The following table summarizes the Company’s repurchase activity, including activity under the 2025 Share Repurchase Program, for the three months ended March 31, 2026:
| Total number of shares |
Maximum dollar value |
|||||||||||||||
| Total number of |
purchased as part of |
of shares that may yet |
||||||||||||||
| shares |
Average price paid |
publicly announced |
be purchased under the |
|||||||||||||
| Period |
purchased |
per share |
plans or programs |
plans or programs |
||||||||||||
| January 2026 |
- | $ | - | - | $ | 1,084,869 | ||||||||||
| February 2026 |
- | $ | - | - | $ | 1,084,869 | ||||||||||
| March 2026 |
60,240 | $ | 4.75 | 60,240 | $ | 798,729 | ||||||||||
| Total |
60,240 | $ | 4.75 | 60,240 | $ | 798,729 | ||||||||||
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
During the three months ended March 31, 2026, none of our directors or officers, as defined in Section 16 of the Exchange Act, adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K of the Exchange Act.
ITEM 6. Exhibits
| 3.1 |
Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q (Commission File No. 001-34964) filed August 6, 2021). |
| 3.2 |
By-laws of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K (Commission File No. 001-34964) filed November 20, 2017). |
| 3.3 |
Certificate of Designation of Series A Participating Preferred Stock of Stanley Furniture Company, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K (Commission File No. 001-34964) filed December 6, 2016). |
| 3.4 | Certificate of Amendment of Restated Certificate of Incorporation of HG Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K (Commission File No. 001-34964) filed June 30, 2025). |
| 3.5 | Certificate of Amendment of Restated Certificate of Incorporation of HG Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K (Commission File No. 001-34964) filed September 3, 2025). |
| 31.1 |
Certification by Steven A. Hale II, our Chief Executive Officer, pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1) |
| 31.2 |
Certification by Anna Lieb, our Principal Financial and Accounting Officer, pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1) |
| 32.1 |
Certification of Steven A. Hale II, our Chief Executive Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) |
| 32.2 |
Certification of Anna Lieb, our Principal Financial and Accounting Officer, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) |
| 101.INS |
Inline XBRL INSTANCE DOCUMENT (1) |
| 101.SCH |
Inline XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT (1) |
| 101.CAL |
Inline XBRL TAXONOMY EXTENSION CALCULATION LINKBASE (1) |
| 101.DEF |
Inline XBRL TAXONOMY EXTENSION DEFINITION LINKBASE (1) |
| 101.LAB |
Inline XBRL TAXONOMY EXTENSION LABELS LINKBASE (1) |
| 101.PRE |
Inline XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE (1) |
| 104 |
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) (1) |
| (1) |
Filed herewith |
| (2) |
In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: May 13, 2026 |
HG HOLDINGS, INC. |
|
| By: /s/ Anna Lieb |
||
| Name: Anna Lieb |
||
| Title: Principal Financial and Accounting Officer |