Exhibit 99.1
FOR IMMEDIATE RELEASE
HALLMARK FINANCIAL SERVICES, INC.
FIRST QUARTER 2004 EARNINGS RESULTS
FORT WORTH, Texas, (May 11, 2004) - Hallmark Financial Services, Inc. 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.
For further information, please contact:
Mark J. Morrison, Chief Financial Officer at 817.348.1600
www.hallmarkgrp.com
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HALLMARK FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amount)
Three Months Ended
March 31
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2004 2003
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Gross premiums written $ 8,753 $ 21,915
Ceded premiums written 24 (8,398)
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Net premiums written 8,777 13,517
Change in unearned premiums (513) (1,015)
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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
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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
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Total expenses 13,697 18,110
Income before income tax and extraordinary gain 2,076 610
Income tax expense 664 207
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Income before extraordinary gain $ 1,412 $ 403
Extraordinary gain - 8,152
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Net income $ 1,412 $ 8,555
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Basic earnings per share:
Income before extraordinary gain $ 0.04 $ 0.04
Extraordinary gain - 0.73
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Net income $ 0.04 $ 0.77
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Diluted earnings per share:
Income before extraordinary gain $ 0.04 $ 0.04
Extraordinary gain - 0.71
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Net income $ 0.04 $ 0.75
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