EXHIBIT 99.1
FOR IMMEDIATE RELEASE
HALLMARK FINANCIAL SERVICES, INC.
FIRST QUARTER 2003 EARNINGS RESULTS
DALLAS, Texas, (May 6, 2003) - Hallmark Financial Services, Inc, today
reported operating results for the first quarter ended March 31, 2003. Net
income for the quarter ended March 31, 2003 was $8.6 million, or $0.75 on a
diluted per share basis, as compared to a net loss of $1.5 million, or $0.14
on a diluted per share basis for the same period in 2002. Excluding the
extraordinary gain and the cumulative effect of a change in accounting
principle described below, net income for the quarter ended March 31, 2003
was $0.4 million, as compared to net income of $0.2 million for the same
period in 2002.
Total revenues were $18.7 million for the quarter ended March 31, 2003, as
compared to $5.1 million for the corresponding 2002 period.
Hallmark's first quarter 2003 earnings were favorably impacted by its recent
acquisitions of Phoenix Indemnity Insurance Company ("Phoenix"), effective
January 1, 2003, and Millers General Agency ("MGA"), effective December 1,
2002. The acquisition of Phoenix was accounted for in accordance with
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations." This statement requires that the Company estimate the fair
value of assets acquired and liabilities assumed by the Company as of the
date of the acquisition. In accordance with the application of SFAS 141,
the Company recognized an extraordinary gain of $8.2 million from the
acquisition of Phoenix. In addition, the Company has shown improvements in
its normal operating earnings for the first quarter of 2003, as compared to
2002, due to improved loss ratios as a result of increases in premium rates
in the Company's various insurance operations.
During fiscal 2002, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." This statement requires that the Company identify its
reporting units and then, at least annually, measure the amount of
impairment, if any, based on a comparison of the fair value of a reporting
unit to its carrying value. In connection with the adoption of SFAS No.
142, the Company determined that goodwill as of January 1, 2002, had been
impaired by $1.7 million. This goodwill adjustment was made during the
fourth quarter of 2002, but is required to be disclosed in the first quarter
of 2002 for comparative purposes. The adjustment is a non-cash charge
recorded as a cumulative effect of a change in accounting principle.
"The assimilation of our recent acquisitions and the operational
enhancements at our existing Texas non-standard auto insurance operation are
proceeding according to the Company's plan," stated Mark E. Schwarz,
Chairman and CEO.
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, commercial insurance
in Texas, New Mexico, Idaho, Oregon and Washington, third party claims
administration, and other insurance related services. The Company is
headquartered in Dallas, 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.
For further information, please contact:
Timothy A. Bienek, President and COO at 972.866.5708
www.hallmarkgrp.com
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HALLMARK FINANCIAL SERVICES, INC.
AND CONSOLIDATED SUBSIDIARIES
(In thousands, except earnings per share and shares outstanding)
Selected Operating Results
Three Months Ended March 31
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2003 2002
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Gross Premiums Written $ 21,752 $ 13,952
Total Revenues $ 18,721 $ 5,148
Pretax Income $ 611 $ 299
Income Tax Expense $ 208 $ 104
Net Income before Cumulative Effect of
a Change in Accounting Principle and
Extraordinary Gain $ 403 $ 195
Cumulative Effect of a Change in Accounting
Principle $ - $ (1,694)
Extraordinary Gain $ 8,152 $ -
Net Income (Loss) $ 8,555 $ (1,499)
Basic Earnings Per Share $ 0.77 $ ( 0.14)
Diluted Earnings Per Share $ 0.75 $ (0.14)
Weighted Average Shares Outstanding, Basic 11,055,307 11,049,133
Weighted Average Shares Outstanding, Diluted 11,444,911 11,049,133