Mark J. Morrison
Chief Financial Officer
817-348-1600
FORT WORTH, Texas -- May 11, 2004 -- Hallmark Financial
Services, Inc. (Amex: HAF.EC) ("The Company") today reported operating results for the first quarter
of fiscal 2004. Net income before extraordinary gain for the quarter ended
March 31, 2004, increased 250% to $1.4 million, or $0.04 per diluted share,
as compared to net income before extraordinary gain of $0.4 million, or $0.04
per diluted share, for the same period in 2003. Total net income for the first
quarter of fiscal 2004 was $1.4 million, or $0.04 per diluted share, as compared
to $8.6 million, or $0.75 per diluted share for the quarter ended March 31,
2003. Total revenues were $15.8 million for the quarter ended March 31, 2004,
as compared to $18.7 million for the first quarter ended March 31, 2003.
The extraordinary gain in the first quarter of fiscal 2003 related to the
acquisition of Phoenix Indemnity Insurance Company ("Phoenix").
Hallmark's weighted average shares outstanding increased to 36.6 million diluted
shares during the first quarter of fiscal 2004, compared to 11.4 million diluted
shares during the first quarter of fiscal 2003, primarily as a result of a
successful shareholder rights offering completed in the third quarter of fiscal
2003.
"We are pleased to report the highest quarterly operating earnings in
the Company's history this quarter. Our results reflect benefits achieved through
ongoing initiatives directed at improving performance as well as strong market
conditions," stated Mark E. Schwarz, Chief Executive Officer. "Current
rate levels and anticipated loss trends continue to generate improvement in
the overall margins in our businesses. The successful integration of the Phoenix
operations, more stringent underwriting guidelines and the refocusing of the
business efforts on profitable independent agency relationships have resulted
in increased profitability in our personal lines segment, despite the anticipated
decline in premium production and policies in-force. In the commercial segment,
business retention has improved over prior years, rate increases have continued
at a moderating level and new business growth has been slightly lower than in
previous quarters, resulting in increases in premium production and total revenue
of 12.8% and 17.6%, respectively, over the same quarter last year."
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. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amount)
Three Months Ended
March 31
2004 2003
Gross premiums written $8,753 $21,915
Ceded premiums written 24 (8,398)
Net premiums written 8,777 13,517
Change in unearned premiums (513) (1,015)
Net premiums earned 8,264 12,502
Investment income, net of expenses 279 194
Finance charges 547 1,089
Commission and fees 5,195 3,350
Processing and service fees 1,480 1,308
Other income 8 277
Total revenues 15,773 18,720
Losses and loss adjustment expenses 5,227 8,890
Other operating costs and expenses 8,439 8,770
Interest expense 24 443
Amortization of intangible asset 7 7
Total expenses 13,697 18,110
Income before income tax and extraordinary gain 2,076 610
Income tax expense 664 207
Income before extraordinary gain $1,412 $403
Extraordinary gain --- 8,152
Net income $1,412 $8,555
Basic earnings per share:
Income before extraordinary gain $0.04 $0.04
Extraordinary gain --- 0.73
Net income $0.04 $0.77
Diluted earnings per share:
Income before extraordinary gain $0.04 $0.04
Extraordinary gain --- 0.71
Net income $0.04 $0.75
|
Suite #1000