Timothy A. Bienek
President and COO
(817) 348-1600
FORT WORTH, Texas -- November 14, 2003 -- Hallmark Financial Services,
Inc. (Amex: HAF.EC), ("The Company") today reported operating results
for the third quarter 2003. Net income for the quarter ended September 30, 2003
was $0.2 million or $0.01 per diluted share, as compared to net income of $0.1
million or $0.01 per diluted share for the same period in 2002. For the nine
months ended September 30, 2003, the Company reported net income of $9.2 million,
or $0.71 per diluted share, as compared to a net loss of $1.3 million, or $0.12
per diluted share, for the nine months ended September 30, 2002. Income before
the extraordinary gain related to the Phoenix Indemnity Insurance Company ("Phoenix")
acquisition in the first quarter of 2003 and the cumulative effect of a change
in accounting principle recorded in 2002 was $1.1 million for the nine months
ended September 30, 2003 as compared to $0.4 million for the same period in
2002.
Total revenues were $16.4 million and $53.1 million for the third quarter and
nine months ended September 30, 2003, respectively, as compared to $6.1 million
and $17.1 million for the corresponding 2002 periods. Current year revenue includes
a $0.3 million impairment charge of a portion of Phoenix's investment portfolio.
Phoenix purchased these investments prior to being acquired by the Company.
The Company's improvement in third quarter 2003 earnings over 2002 were due
to the acquisitions of Phoenix in January 2003 and the Commercial Lines Group
in December 2002. The improvement in operating earnings also reflects improved
loss ratios at the American Hallmark Insurance Group primarily as a result of
increases in premium rates.
"The insurance operations continued to perform well in the quarter,"
stated Timothy A. Bienek, President and COO. He added, "The successful
completion of our rights offering in the quarter strengthened our capital base
and positions us for additional growth opportunities."
Hallmark Financial Services, Inc. engages primarily in the 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 CONSOLIDATED SUBSIDIARIES
(In thousands, except earnings per share and shares outstanding)
Selected Operating Results
Three Months Ended September 30
2003 2002
Gross Premiums Written $ 6,640 $ 12,122
Total Revenues $ 16,366 $ 6,080
Pretax Income $ 286 $ 111
Income Tax Expense $ 66 $ 38
Net Income before Extraordinary Gain (Loss) $ 220 $ 73
Extraordinary Gain (Loss) $ --- $ ---
Net Income $ 220 $ 73
Basic Earnings Per Share $ 0.01 $ 0.01
Diluted Earnings Per Share $ 0.01 $ 0.01
Weighted Average Shares Outstanding
- Basic 15,166,125 11,049,133
Weighted Average Shares Outstanding
- Diluted 15,372,410 11,109,849
Nine Months Ended September 30
2003 2002
Gross Premiums Written $ 36,404 $ 37,541
Total Revenues $ 53,131 $ 17,106
Pretax Income $ 1,556 $ 622
Income Tax Expense $ 498 $ 212
Net Income before Cumulative Effect
of Change in Accounting
Principle and Extraordinary Gain $ 1,058 $ 410
Cumulative Effect of Change in
Accounting Principle $ --- $ (1,694)
Extraordinary Gain $ 8,116 $ ---
Net Income (Loss) $ 9,174 $ (1,284)
Basic Earnings (Loss) Per Share $ 0.73 $ (0.12)
Diluted Earnings (Loss) Per Share $ 0.71 $ (0.12)
Weighted Average Shares Outstanding
- Basic 12,501,448 11,049,133
Weighted Average Shares Outstanding
- Diluted 12,811,343 11,147,786
Suite #1000