-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CPb9MwUwr0TjDUNnknK2cyQOl7TZlsNnFuJD8/+pdD2ikM9LGFBpTn0moljuPxMP yegUNRfXLzKFdKTnrBaD0A== 0000926236-04-000175.txt : 20041112 0000926236-04-000175.hdr.sgml : 20041111 20041112114726 ACCESSION NUMBER: 0000926236-04-000175 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041111 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041112 DATE AS OF CHANGE: 20041112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALLMARK FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000819913 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE CARRIERS, NEC [6399] IRS NUMBER: 870447375 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16090 FILM NUMBER: 041136906 BUSINESS ADDRESS: STREET 1: 777 MAIN STREET, SUITE 1000 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173481600 MAIL ADDRESS: STREET 1: 777 MAIN STREET STREET 2: STE 1000 CITY: FORT WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: ACOI INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CREDIT OPTICAL INC /DE/ DATE OF NAME CHANGE: 19910611 FORMER COMPANY: FORMER CONFORMED NAME: PYRAMID GROWTH INC DATE OF NAME CHANGE: 19890124 8-K 1 hfs04q3-8k.txt CURRENT REPORT - RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): November 11, 2004 HALLMARK FINANCIAL SERVICES, INC. --------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Nevada --------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-16090 87-0447375 --------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 777 Main Street, Suite 1000, Fort Worth, Texas 76102 --------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 817-348-1600 --------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable --------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On November 11, 2004, the Registrant issued a press release announcing its financial results for the third quarter ended September 30, 2004. A copy of the Registrant's press release is attached as Exhibit 99.1 to this Current Report. Item 9.01 Financial Statements and Exhibits ( c) Exhibits. 99.1 Press release dated November 11, 2004 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. HALLMARK FINANCIAL SERVICES, INC. Date: November 12, 2004 By: /s/ Mark E. Schwarz ----------------------------------------- Mark E. Schwarz, Chief Executive Officer Date: November 12, 2004 By: /s/ Mark J. Morrison ----------------------------------------- Mark J. Morrison, Chief Financial Officer EX-99.1 2 exh99-1.txt PRESS RELEASE THIRD QUARTER 2004 EARNINGS RESULTS Exhibit 99.1 FOR IMMEDIATE RELEASE HALLMARK FINANCIAL SERVICES, INC. THIRD QUARTER 2004 EARNINGS RESULTS FORT WORTH, Texas, (November 11, 2004) - Hallmark Financial Services, Inc. today reported operating results for the third quarter of fiscal 2004. Net income for the quarter ended September 30, 2004 increased 601% to $1.5 million, or $0.04 per diluted share, as compared to net income of $0.2 million, or $0.01 per diluted share, for the same period in 2003. Net income before extraordinary gain for the nine months ended September 30, 2004 increased 320% to $4.4 million, or $0.12 per diluted share, as compared to net income before extraordinary gain of $1.1 million, or $0.08 per diluted share, for the same period in 2003. Total net income for the nine months ended September 30, 2004 was $4.4 million, or $0.12 per diluted share, as compared to $9.2 million, or $0.71 per diluted share for the same period in 2003. The extraordinary gain of $8.1 million in 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 nine months of fiscal 2004, compared to 12.8 million diluted shares during the first nine months of fiscal 2003, primarily as a result of a successful shareholder rights offering completed in the third quarter of fiscal 2003. "For the third consecutive quarter, we are pleased to report the highest operating earnings in the Company's history for the quarter and year to date periods. The continued improvement in financial results for the third quarter is indicative of the quality of our core books of business. The Company's record third quarter 2004 earnings were driven by continued bottom line improvement across both of our reporting segments and demonstrate that our on-going strategic initiatives are working to create greater shareholder value," stated Mark E. Schwarz, Chief Executive Officer. "These results continue to reflect benefits achieved through ongoing initiatives directed at improving performance, as well as sustained favorable market conditions. As we go forward, we will continue to execute our strategy of disciplined underwriting and expense controls, while focusing on selectively expanding the business in areas that offer the best opportunities to increase profitability." "Our strong financial results reflect improved underwriting performances in both of our business segments," stated Mark J. Morrison, Executive Vice- President & Chief Financial Officer. "In our personal lines segment, the actions commenced in 2003 to restructure the existing book of business have resulted in significantly improved underwriting results and increased statutory surplus. The loss and loss adjustment expense ratio for this segment for the nine months ended September 30, 2004, was 60% compared to 68% for the same period of 2003, resulting in an increase in income before tax and extraordinary gain of more than 86% for the period. These results have allowed us to decrease our use of outside reinsurance and to leverage our increasing statutory surplus base, thus providing additional margin on business produced going forward. In the commercial segment, revenue for the nine month period ended September 30, 2004, increased by more than 22% over the same period in 2003. This improvement is a result of increased premium production arising mostly from premium rate increases on renewal business and increased commission rates as a result of improved underwriting performance on policies produced on behalf of the outside insurance carrier. We anticipate that these favorable trends will continue at moderating levels for the balance of 2004." 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 HALLMARK FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------ 2004 2003 2004 2003 ------- ------- ------- ------- Gross premiums written $ 7,410 $ 6,640 $ 23,174 $ 36,404 Ceded premiums written - 246 25 (6,934) ------- ------- ------- ------- Net premiums written 7,410 6,886 23,199 29,470 Change in net unearned premiums 54 2,509 473 3,855 ------- ------- ------- ------- Net premiums earned 7,464 9,395 23,672 33,325 Investment income, net of expenses 371 360 994 822 Realized gain (loss) (57) (305) (57) (313) Finance charges 561 856 1,644 2,936 Commission and fees 5,745 4,709 16,235 12,406 Processing and service fees 1,556 1,224 4,560 3,509 Other income 6 127 21 446 ------- ------- ------- ------- Total revenues 15,646 16,366 47,069 53,131 Losses and loss adjustment expenses 4,451 6,155 14,100 22,596 Other operating costs and expenses 8,903 9,559 26,346 27,724 Interest expense 16 359 61 1,234 Amortization of intangible asset 7 7 21 21 ------- ------- ------- ------- Total expenses 13,377 16,080 40,528 51,575 Income before income tax and extraordinary gain 2,269 286 6,541 1,556 Income tax expense 726 66 2,093 498 ------- ------- ------- ------- Income before extraordinary gain $ 1,543 $ 220 $ 4,448 $ 1,058 Extraordinary gain - - - 8,116 ------- ------- ------- ------- Net income $ 1,543 $ 220 $ 4,448 $ 9,174 ======= ======= ======= ======= Basic earnings per share: Income before extraordinary gain $ 0.04 $ 0.01 $ 0.12 $ 0.08 Extraordinary gain - - - 0.65 ------- ------- ------- ------- Net income $ 0.04 $ 0.01 $ 0.12 $ 0.73 ======= ======= ======= ======= Diluted earnings per share: Income before extraordinary gain $ 0.04 $ 0.01 $ 0.12 $ 0.08 Extraordinary gain - - - 0.63 ------- ------- ------- ------- Net income $ 0.04 $ 0.01 $ 0.12 $ 0.71 ======= ======= ======= ======= -----END PRIVACY-ENHANCED MESSAGE-----