CONTACT:
Mark J. Morrison
Chief Operating Officer
(817) 348-1600
FORT WORTH, Texas -- November 7, 2005 -- Hallmark Financial Services, Inc. (Amex: HAF) today reported operating results for the third quarter ended September 30, 2005. During the third quarter of fiscal 2005, total revenues of the Company were $25.2 million, representing a 60.9% increase over the $15.6 million in total revenues for the comparable period of fiscal 2004. For the first nine months of fiscal 2005, total revenues of the Company were $60.4 million, representing a 28.3% increase over the $47.1 million in total revenues for the comparable period in fiscal 2004. For the three months ended September 30, 2005, the Company reported net income of $2.5 million, representing a 60.3% increase over the $1.5 million reported in the third quarter of 2004. For the first nine months of fiscal 2005, the Company reported net income of $6.3 million, representing a 41.5% increase over the $4.4 million reported in the comparable period in fiscal 2004. On a diluted per share basis, net income was $0.03 and $0.10 for the three and nine months ended September 30, 2005, respectively, as compared to $0.04 and $0.10 for the same period in the prior year. During the second quarter of 2005 the Company issued 50.0 million shares in a shareholder rights offering, which diluted the per share results in 2005 as compared to 2004.
"The record earnings for the third quarter of 2005 reflect the continued success of various initiatives implemented in the past two and a half years," stated Mark E. Schwarz, Chief Executive Officer.
"The increase in total revenues for the quarter ended September 30, 2005, as compared to the third quarter of fiscal 2004, was mostly attributable to the retention of the commercial insurance premium on American Hallmark Insurance Company that was previously produced for a third party insurer," stated Mark J. Morrison, Chief Operating Officer & Chief Financial Officer. "The increase in net income for the third quarter of 2005 versus the same period in 2004 reflects continuing favorable loss development as a result of ongoing initiatives to improve underwriting performance in both operating units, increased premium retention and additional investment income from the successful completion of our capital plan at the end of the second quarter," Mr. Morrison concluded.
Hallmark Financial Services, Inc. engages primarily in sale of property and casualty insurance products. The Company's business involves marketing and underwriting of non-standard personal automobile insurance primarily in Texas, Arizona and New Mexico, marketing and underwriting commercial insurance primarily in Texas, New Mexico, Idaho, Oregon, Montana and Washington, third party claims administration, and other insurance related services. The Company is headquartered in Fort Worth, Texas and its common stock is listed on the American Stock Exchange under the symbol "HAF".
Forward-looking statements in this Release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Act of 1995. Investors are cautioned that actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, continued acceptance of the Company's products and services in the marketplace, competitive factors, interest rate trends, the availability of financing, underwriting loss experience and other risks detailed from time to time in the Company's periodic report filings with the Securities and Exchange Commission.
For further information, please contact:
Mark J. Morrison, Chief Operating Officer at 817.348.1600
http://www.hallmarkgrp.com
Hallmark Financial Services, Inc.
Consolidated Statements of Operations
(Unaudited)
($ in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
Gross premiums written $43,512 $7,410 $62,985 $23,174
Ceded premiums written (552) --- (552) 25
Net premiums written 42,960 7,410 62,433 23,199
Change in unearned
premiums (23,936) 54 (23,706) 473
Net premiums earned 19,024 7,464 38,727 23,672
Investment income, net
of expenses 1,412 371 2,274 994
Realized gain (loss) 93 (57) 52 (57)
Finance charges 487 561 1,536 1,644
Commission and fees 3,094 5,745 13,534 16,235
Processing and service
fees 1,048 1,556 4,252 4,560
Other income 9 6 22 21
Total revenues 25,167 15,646 60,397 47,069
Losses and loss
adjustment expenses 11,043 4,451 22,584 14,100
Other operating costs
and expenses 9,897 8,903 27,752 26,346
Interest expense 559 16 664 61
Amortization of
intangible asset 17 7 31 21
Total expenses 21,516 13,377 51,031 40,528
Income before tax 3,651 2,269 9,366 6,541
Income tax expense 1,178 726 3,074 2,093
Net income $2,473 $1,543 $6,292 $4,448
Net income per share:
Basic $0.03 $0.04 $0.10 $0.10
Diluted $0.03 $0.04 $0.10 $0.10
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