CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
Commission file number 0-16090
Hallmark Financial Services, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0447375
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) (Identification No.)
14651 Dallas Parkway, Suite 900
Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (972) 404-1637
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: Common Stock, par
value $.03 per share - 10,662,277 shares outstanding as of November 13,
1997.
HALLMARK FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
Gross premiums
written 9,830,845 $10,880,687 $30,639,244 $33,135,617
Ceded premiums
written (6,720,261) (7,716,384) (21,314,811) (24,404,903)
Net premiums
written $ 3,110,584 $ 3,164,303 $ 9,324,433 $8,730,714
Revenues:
Premiums
earned $ 9,827,280 $11,898,965 $30,098,572 $36,480,706
Premiums
ceded (6,849,751) (8,479,588) (21,076,427) (26,899,707)
Net pre-
miums
earned 2,977,529 3,419,377 9,022,145 9,580,999
Investment
income,
net of
expenses 164,602 224,912 563,882 671,996
Finance
interest
charges 312,084 1,194 312,084 25,509
Interest
income -
note
receivable 130,098 - 320,343 -
Processing
fees 64,428 423,584 773,433 1,477,834
Service fees 173,525 28,419 360,787 73,714
Other income 136,404 15,954 321,374 41,187
Total
revenues 3,958,670 4,113,440 11,674,048 11,871,239
Benefits,
losses and
expenses:
Losses and
loss adjust-
ment
expenses 6,420,718 8,492,819 20,149,936 24,909,437
Reinsurance
recoveries (4,672,376) (6,393,702) (14,859,824) (18,759,990)
Net losses and
loss adjust-
ment expenses 1,748,342 2,099,117 5,290,112 6,149,447
Acquisition
costs, net ( 11,549) (278,921) (504,552) (422,422)
Other acquisi-
tion and
underwrit-
ing expenses 1,219,114 1,512,525 4,056,735 3,430,840
Operating
expenses 351,092 550,664 1,194,879 1,474,115
Interest
expense 155,664 10,449 354,237 32,308
Amortization
of intan-
gible assets 74,435 40,566 198,928 123,364
Total benefits,
losses and
expenses 3,537,098 3,934,400 10,590,339 10,787,652
Income from
operations
before federal
income taxes 421,572 179,040 1,083,709 1,083,587
Federal income
tax 136,488 61,014 369,143 376,356
Net income $ 285,084 $ 118,026 $ 714,566 $ 707,231
Net income
per share
of common
stock $ .02 $ .01 $ .06 $ .06
Weighted
average
shares out-
standing 11,578,029 12,167,846 11,578,029 12,167,846
The accompanying notes are an integral part
of the consolidated financial statements.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HALLMARK FINANCIAL SERVICES, INC.
(Registrant)
Date: November 17, 1997 /s/ Ramon D. Phillips
Ramon D. Phillips, President
(Chief Executive Officer)
Date: November 17, 1997 /s/ John J. DePuma
John J. DePuma,
Chief Financial Officer