Mark J. Morrison
Chief Operating Officer & Chief Financial Officer
817-348-1600
http://www.hallmarkgrp.com
FORT
WORTH, Texas -- August 4, 2005 -- Hallmark Financial Services, Inc. today
reported operating results for the second quarter ended June 30, 2005. During
the second quarter of fiscal 2005, total revenues of the Company were $17.8
million, representing a 13.6% increase over the $15.7 million in total revenues
for the comparable period of fiscal 2004. For the first six months of fiscal
2005, total revenues of the Company were $35.2 million, representing a 12.1%
increase over the $31.4 million in total revenues for the comparable period
in fiscal 2004. For the three months ended June 30, 2005, the Company reported
net income of $2.0 million, representing a 34.2% increase over the $1.5 million
reported in the second quarter of 2004. For the first six months of fiscal 2005,
the Company reported net income of $3.8 million, representing a 31.5% increase
over the $2.9 million reported in the comparable period in fiscal 2004. On a
diluted per share basis, net income was $0.03 and $0.07 for the three and six
months ended June 30, 2005, respectively, as compared to $0.04 and $0.07 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 second quarter of 2005 reflect the continued
success of initiatives implemented in fiscal 2003 and 2004," stated Mark
E. Schwarz, Chief Executive Officer. "We expect future operations to be
further enhanced by recent infusions of capital, which have strengthened the
financial condition and underwriting capacity of the Company, as well as by
the current restructuring of our insurance subsidiaries under each of our operating
units," Mr. Schwarz continued.
"The
increase in total revenues for the quarter ended June 30, 2005, as compared
to the second quarter of fiscal 2004, was primarily attributable to increased
premium retention by the Personal Lines Group as a result of changes in reinsurance
arrangements and to the combined impact of increased premium volume and improved
commission terms in the Commercial Lines Group," stated Mark J. Morrison,
Chief Operating Officer & Chief Financial Officer. "The increase in
net income for the second 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 by the Personal Lines Group and additional commission revenue in the
Commercial Lines Group," Mr. Morrison concluded.
Hallmark
Financial Services, Inc. engages primarily in sale of property and casualty
insurance products. The Company's business involves marketing, underwriting
and premium financing of non-standard personal automobile insurance primarily
in Texas, Arizona and New Mexico, marketing commercial insurance primarily in
Texas, New Mexico, Idaho, Oregon 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.EC".
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.
Hallmark Financial Services, Inc.
Consolidated Statements of Operations
(Unaudited)
($ in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30June 30
2005 2004 2005 2004
Gross premiums written $ 8,839 $ 7,011 $19,473 $15,764
Ceded premiums written --- 1 --- 25
Net premiums written 8,839 7,012 19,473 15,789
Change in unearned premiums 824 932 230 419
Net premiums earned 9,663 7,944 19,703 16,208
Investment income,
net of expenses 451 344 862 623
Realized loss (41) --- (41) ---
Finance charges 509 536 1,049 1,083
Commission and fees 5,628 5,295 10,440 10,490
Processing and
service fees 1,570 1,524 3,204 3,004
Other income 5 7 13 15
Total revenues 17,785 15,650 35,230 31,423
Losses and loss
adjustment expenses 5,515 4,422 11,541 9,649
Other operating costs
and expenses 9,150 9,004 17,855 17,443
Interest expense 102 21 105 45
Amortization of
intangible asset 7 7 14 14
Total expenses 14,774 13,454 29,515 27,151
Income before tax 3,011 2,196 5,715 4,272
Income tax expense 1,007 703 1,896 1,367
Net income $ 2,004 $ 1,493 $ 3,819 $ 2,905
Net income per share:
Basic $ 0.03 $ 0.04 $ 0.08 $ 0.07
Diluted $ 0.03 $ 0.04 $ 0.07 $ 0.07
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