CONTACT:
Timothy A. Bienek
President and COO
(817) 348-1600
FORT WORTH, Texas -- August 7, 2003 -- Hallmark Financial
Services, Inc., (Amex: HAF.EC) ("The Company") today reported operating
results for the second quarter 2003. Net income for the quarter ended June
30, 2003 was $0.4 million or $0.03 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 six months ended June 30, 2003, the Company reported net income of $9.0
million, or $0.77 per diluted share, as compared to a net loss of $1.4 million,
or $0.12 per diluted share, for the six months ended June 30, 2002. Excluding
the extraordinary gain related to the Phoenix acquisition in the first quarter
of 2003 and the cumulative effect of a change in accounting principle recorded
in 2002, net income for the six months ended June 30, 2003 was $0.8 million,
as compared to net income of $0.3 million for the same period in 2002.
Total revenues were $18.0 million and $36.8 million for the
second quarter and six months ended June 30, 2003, respectively, as compared
to $5.9 million and $11.0 million for the corresponding 2002 periods.
The Company's improvement in second quarter 2003 earnings over
2002 were due to the acquisitions of Phoenix Indemnity Insurance Company 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 Commercial Lines and Personal Lines Groups both performed
well in the quarter benefiting from favorable market conditions as well as
expense reduction efforts that are starting to be reflected in the financial
results," stated Timothy A. Bienek, President and COO. He added, "The
completion of our rights offering will provide the Company with a strong foundation
as we look for additional growth opportunities."
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 CONSOLIDATED SUBSIDIARIES
(In thousands, except earnings per share and shares outstanding)
Selected Operating Results
Three Months Ended June 30
2003 2002
Gross Premiums Written $ 7,849 $ 11,468
Total Revenues $ 18,045 $ 5,878
Pretax Income $ 660 $ 212
Income Tax Expense $ 225 $ 70
Net Income before Extraordinary
Gain (Loss) $ 435 $ 142
Extraordinary Gain (Loss) $ (36) $ ---
Net Income $ 399 $ 142
Basic Earnings Per Share $ 0.04 $ 0.01
Diluted Earnings Per Share $ 0.03 $ 0.01
Weighted Average Shares
Outstanding - Basic 11,237,738 11,049,133
Weighted Average Shares
Outstanding - Diluted 11,580,394 11,251,500
Six Months Ended June 30
2003 2002
Gross Premiums Written $ 29,764 $ 25,419
Total Revenues $ 36,765 $ 11,026
Pretax Income $ 1,270 $ 511
Income Tax Expense $ 432 $ 174
Net Income before Cumulative
Effect of Change in Accounting
Principle and Extraordinary Gain $ 838 $ 337
Cumulative Effect of Change in
Accounting Principle $ --- $ (1,694)
Extraordinary Gain $ 8,116 $ ---
Net Income (Loss) $ 8,954 $ (1,357)
Basic Earnings (Loss) Per Share $ 0.80 $ (0.12)
Diluted Earnings (Loss) Per Share $ 0.77 $ (0.12)
Weighted Average Shares
Outstanding - Basic 11,147,026 11,049,133
Weighted Average Shares
Outstanding - Diluted 11,691,357 11,251,500
For further information, please contact:
Timothy A. Bienek, President and COO at (817) 348-1600
www.hallmarkgrp.com
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