Exhibit 99.1

FOR IMMEDIATE RELEASE

HALLMARK FINANCIAL SERVICES, INC.

ANNOUNCES SECOND QUARTER 2014 EARNINGS RESULTS

FORT WORTH, Texas, (August 7, 2014) - Hallmark Financial Services, Inc. (NASDAQ: HALL) today reported second quarter 2014 net income of $1.7 million, or $0.09 per diluted share, compared to a net loss of $3.2 million, or $0.16 per diluted share, reported for second quarter 2013. Year to date, Hallmark reported net income of $6.2 million, or $0.32 per diluted share, compared to a net loss of $1.5 million, or $0.08 per diluted share for the same period the prior year. Total revenues were $80.8 million for the second quarter of 2014 as compared to $99.3 million for the second quarter of 2013. Year to date total revenues for 2014 were $167.9 million as compared to $192.4 million reported for the same period the prior year.

“I am pleased to report our fourth consecutive quarter of profitable underwriting results as evidenced by our reported quarterly combined ratio of 97.4%,” said Mark J. Morrison, President and Chief Executive Officer. “We achieved these results despite the worst quarter for catastrophe losses in our history. A high frequency of severe convective storms resulted in over $13 million in net incurred losses that added 17% to our combined ratio for the quarter. On a pre-catastrophe loss basis, the quarter marked the best operating results in Hallmark’s history.”

Mr. Morrison continued, “Apart from the unprecedented level of catastrophe losses, underlying trends during the quarter continued to reflect the positive momentum in our businesses. Our Specialty Commercial Segment, which now accounts for approximately two-thirds of our total premium volume, continues to generate profitable premium growth and outstanding results. The Specialty Commercial Segment reported a combined ratio of 88.9% and pre-tax income of $9.5 million for the current quarter, and has generated a combined ratio of 90.5% and pre-tax income of $34.7 million over a trailing four quarter period. Additionally, the corrective actions taken in our Personal Segment over that past couple of years have clearly made a positive impact and this business once again contributed to our profitable underwriting results for the quarter on both a gross and net basis. Our Standard Commercial Segment also continues to produce acceptable results before catastrophe losses. Despite reducing large property risks and implementing aggressive rate increases in catastrophe prone areas, this business once again incurred heavy catastrophe losses during the quarter of $12.5 million, net of reinsurance. We will continue to take steps to reduce our exposure to catastrophic events by further refining our property pricing, underwriting criteria and utilization of catastrophe reinsurance coverage.”

Mark E. Schwarz, Executive Chairman of Hallmark, stated, “Book value per share was $12.78 at the end of the quarter, an increase of 9% since a year ago. Total cash and investments have increased 6% during the first half of 2014 to $651.5 million, or $33.95 per share, due in part to cash flow from operations of $19.6 million. Hallmark’s cash balances totaled $171.8 million as of June 30, 2014.”

Second Quarter
	2014			2013			% Change
	($ in thousands, unaudited)
Gross premiums written		124,440			119,467			4	%
Net premiums written		73,703			99,545			-26	%
Net premiums earned		78,046			92,844			-16	%
Investment income, net of expenses		2,986			3,278			-9	%
Net realized (losses) gains		(284	)		1,597			NM
Total revenues		80,836			99,299			-19	%
Net income (loss)		1,651			(3,151	)		NM
Net income (loss) per share - basic	$	0.09		$	(0.16	)		NM
Net income (loss) per share - diluted	$	0.09		$	(0.16	)		NM
Book value per share	$	12.78		$	11.68			9	%
Cash flow from operations		14,474			18,208			-21	%

Year-to-Date
	2014			2013			% Change
	($ in thousands, unaudited)
Gross premiums written		240,522			227,614			6	%
Net premiums written		156,624			193,441			-19	%
Net premiums earned		160,623			179,332			-10	%
Investment income, net of expenses		6,227			6,906			-10	%
Net realized (losses) gains		(99	)		2,773			NM
Total revenues		167,945			192,440			-13	%
Net income (loss)		6,199			(1,457	)		NM
Net income (loss) per share - basic	$	0.32		$	(0.08	)		NM
Net income (loss) per share - diluted	$	0.32		$	(0.08	)		NM
Book value per share	$	12.78		$	11.68			9	%
Cash flow from operations		19,581			24,033			-19	%

Second Quarter 2014 Commentary

During the three and six months ended June 30, 2014, Hallmark’s total revenues were $80.8 million and $167.9 million, representing a decrease of 19% and 13%, respectively, from the $99.3 million and $192.4 million in total revenues for the same periods of 2013. This decrease in revenue was primarily attributable to lower net earned premiums in the Personal Segment due to a quota share reinsurance contract entered into during the fourth quarter of 2013 on non-standard automobile risks produced in certain states. Further contributing to the decrease in revenue were net realized losses recognized during the three and six months ended June 30, 2014 as compared to net realized gains recognized during the same periods of 2013, lower net investment income and an increase in adverse profit share commission revenue adjustments in the Standard Commercial Segment for the three and six months ended June 30, 2014 as compared to the same periods of 2013.

The decrease in revenue for the three and six months ended June 30, 2014 was offset by decreased loss and loss adjustment expenses (“LAE”) of $22.6 million and $31.5 million, respectively, as compared to the same periods in 2013. During the three months ended June 30, 2014, the Company recorded $5.6 million of favorable prior year loss development. During the three months ended June 30, 2013, the Company recorded $5.4 million unfavorable prior year loss development. During the six months ended June 30, 2014, the Company recorded $6.8 million of favorable prior year loss development. During the six months ended June 30, 2013, the Company recorded $7.4 million of unfavorable prior year loss development. The decrease in loss and LAE occurred despite a $7.8 million increase in net catastrophe losses to $13.3 million during the three months ended June 30, 2014 from $5.5 million reported for the same period of 2013. Other operating expenses also decreased due mostly to decreased production related expenses in the Personal Segment, partially offset by higher salary and related expenses due primarily to changes in incentive compensation accruals.

Hallmark reported net income of $1.7 million and $6.2 million for the three and six months ended June 30, 2014 as compared to a net loss of $3.2 million and $1.5 million for the three and six months ended June 30, 2013. On a diluted basis per share, the Company reported net income of $0.09 per share for the three months ended June 30, 2014, as compared to net loss of $0.16 per share for the same period in 2013. On a diluted basis per share, net income per share was $0.32 for the six months ended June 30, 2014 as compared to net loss per share of $0.08 for the same period during 2013.

Hallmark's consolidated net loss ratio was 67.3% and 65.5% for the three and six months ended June 30, 2014, as compared to 80.8% and 76.3% for the same periods in 2013. Hallmark's net expense ratio was 30.1% and 30.2% for the three and six months ended June 30, 2014 as compared to 28.6% and 29.4% for the same periods in 2013. Hallmark’s net combined ratio was 97.4% and 95.7% for the three and six months ended June 30, 2014 as compared to 109.4% and 105.7% for the same periods in 2013.

About Hallmark Financial Services, Inc.

Hallmark Financial Services, Inc. is an insurance holding company which, through its subsidiaries, engages in the sale of property/casualty insurance products to businesses and individuals. Hallmark’s business involves marketing, distributing, underwriting and servicing commercial and personal lines of property/casualty insurance products, as well as providing other insurance related services. Hallmark is headquartered in Fort Worth, Texas and its common stock is listed on NASDAQ under the symbol "HALL."

Forward-looking statements in this release are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform 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, general economic conditions, the availability of financing, underwriting loss experience and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

For further information, please contact:

Mark J. Morrison, President and Chief Executive Officer at 817.348.1600

www.hallmarkgrp.com

Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Balance Sheets
($ in thousands, except share amounts)	Jun. 30			Dec. 31
	2014			2013
	(unaudited)
ASSETS
Investments:
Debt securities, available-for-sale, at fair value (cost: $424,760 in 2014 and $408,627 in 2013)	$	427,147		$	410,095
Equity securities, available-for-sale, at fair value (cost: $24,830 in 2014 and $24,902 in 2013)		52,553			51,230
Total investments		479,700			461,325
Cash and cash equivalents		156,365			141,666
Restricted cash		15,421			12,190
Ceded unearned premiums		60,652			44,988
Premiums receivable		79,789			71,157
Accounts receivable		3,205			2,382
Receivable for securities		1,165			1,320
Reinsurance recoverable		99,756			76,818
Deferred policy acquisition costs		19,757			22,586
Goodwill		44,695			44,695
Intangible assets, net		18,675			19,953
Prepaid expenses		2,051			1,531
Other assets		6,307			8,412
Total Assets	$	987,538		$	909,023
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Revolving credit facility payable	$	-		$	1,473
Subordinated debt securities		56,702			56,702
Reserves for unpaid losses and loss adjustment expenses		415,297			382,640
Unearned premiums		196,968			185,303
Reinsurance balances payable		34,182			20,598
Pension liability		1,116			1,433
Payable for securities		17,908			206
Deferred federal income taxes, net		2,545			2,825
Federal income tax payable		844			719
Accounts payable and other accrued expenses		16,662			19,006
Total Liabilities		742,224			670,905
Commitments and contingencies
Stockholders’ equity:
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2014 and 2013		3,757			3,757
Additional paid-in capital		123,048			122,827
Retained earnings		112,408			106,209
Accumulated other comprehensive income		18,379			16,883
Treasury stock (1,684,149 shares in 2014 and 1,609,374 shares in 2013), at cost		(12,278	)		(11,558	)
Total Stockholders’ Equity		245,314			238,118
	$	987,538		$	909,023

Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Statements of Operations	Three Months Ended						Six Months Ended
($ in thousands, except share amounts; unaudited)	June 30						June 30
	2014			2013			2014			2013
Gross premiums written	$	124,440		$	119,467		$	240,522		$	227,614
Ceded premiums written		(50,737	)		(19,922	)		(83,898	)		(34,173	)
Net premiums written		73,703			99,545			156,624			193,441
Change in unearned premiums		4,343			(6,701	)		3,999			(14,109	)
Net premiums earned		78,046			92,844			160,623			179,332
Investment income, net of expenses		2,986			3,278			6,227			6,906
Net realized (losses) gains		(284	)		1,597			(99	)		2,773
Finance charges		1,383			1,487			2,767			2,912
Commission and fees		(1,309	)		79			(1,599	)		420
Other income		14			14			26			97
Total revenues		80,836			99,299			167,945			192,440
Losses and loss adjustment expenses		52,502			75,059			105,272			136,797
Other operating expenses		24,510			27,578			50,646			54,772
Interest expense		1,143			1,150			2,295			2,299
Amortization of intangible assets		639			829			1,278			1,726
Total expenses		78,794			104,616			159,491			195,594
Income (loss) before tax		2,042			(5,317	)		8,454			(3,154	)
Income tax expense (benefit)		391			(2,166	)		2,255			(1,697	)
Net income (loss)	$	1,651		$	(3,151	)	$	6,199		$	(1,457	)
Net income (loss) per share:
Basic	$	0.09		$	(0.16	)	$	0.32		$	(0.08	)
Diluted	$	0.09		$	(0.16	)	$	0.32		$	(0.08	)

Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Segment Data
Three Months Ended Jun. 30	(unaudited)
	Standard Commercial Segment						Specialty Commercial Segment						Personal Segment						Corporate						Consolidated
($ in thousands)	2014			2013			2014			2013			2014			2013			2014			2013			2014			2013
Gross premiums written	$	22,646		$	23,687		$	85,807		$	76,361		$	15,987		$	19,419		$	-		$	-		$	124,440		$	119,467
Ceded premiums written		(2,262	)		(2,102	)		(35,497	)		(16,368	)		(12,978	)		(1,452	)		-			-			(50,737	)		(19,922	)
Net premiums written		20,384			21,585			50,310			59,993			3,009			17,967			-			-			73,703			99,545
Change in unearned premiums		(946	)		(1,978	)		5,090			(7,269	)		199			2,546			-			-			4,343			(6,701	)
Net premiums earned		19,438			19,607			55,400			52,724			3,208			20,513			-			-			78,046			92,844
Total revenues		19,341			20,709			58,702			55,660			4,882			22,387			(2,089	)		543			80,836			99,299
Losses and loss adjustment expenses		16,129			16,447			35,242			40,953			1,131			17,659			-			-			52,502			75,059
Pre-tax income (loss)		(3,147	)		(1,999	)		9,465			566			1,285			(1,654	)		(5,561	)		(2,230	)		2,042			(5,317	)
Net loss ratio (1)		83.0	%		83.9	%		63.6	%		77.7	%		35.3	%		86.1	%								67.3	%		80.8	%
Net expense ratio (1)		33.0	%		31.8	%		25.3	%		26.8	%		43.0	%		24.6	%								30.1	%		28.6	%
Net combined ratio (1)		116.0	%		115.7	%		88.9	%		104.5	%		78.3	%		110.7	%								97.4	%		109.4	%
Favorable (Unfavorable) Prior Year Development		3,942			1,496			417			(5,667	)		1,249			(1,250	)		-			-			5,608			(5,421	)

¹ The net loss ratio is calculated as incurred losses and loss adjustment expenses divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated as total underwriting expenses offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio.

Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Segment Data
Six Months Ended Jun. 30	(unaudited)
	Standard Commercial Segment						Specialty Commercial Segment						Personal Segment						Corporate						Consolidated
($ in thousands)	2014			2013			2014			2013			2014			2013			2014			2013			2014			2013
Gross premiums written	$	43,627		$	45,329		$	160,729		$	141,667		$	36,166		$	40,618		$	-		$	-		$	240,522		$	227,614
Ceded premiums written		(4,231	)		(4,097	)		(49,726	)		(27,300	)		(29,941	)		(2,776	)		-			-			(83,898	)		(34,173	)
Net premiums written		39,396			41,232			111,003			114,367			6,225			37,842			-			-			156,624			193,441
Change in unearned premiums		(558	)		(3,095	)		3,670			(12,790	)		887			1,776			-			-			3,999			(14,109	)
Net premiums earned		38,838			38,137			114,673			101,577			7,112			39,618			-			-			160,623			179,332
Total revenues		39,682			40,997			121,184			107,340			10,474			43,365			(3,395	)		738			167,945			192,440
Losses and loss adjustment expenses		28,952			29,030			72,183			75,389			4,137			32,378			-			-			105,272			136,797
Pre-tax income (loss)		(1,926	)		(522	)		19,389			4,264			1,254			(1,718	)		(10,263	)		(5,178	)		8,454			(3,154	)
Net loss ratio (1)		74.5	%		76.1	%		62.9	%		74.2	%		58.2	%		81.7	%								65.5	%		76.3	%
Net expense ratio (1)		32.8	%		32.7	%		25.9	%		27.2	%		40.0	%		25.8	%								30.2	%		29.4	%
Net combined ratio (1)		107.3	%		108.8	%		88.8	%		101.4	%		98.2	%		107.5	%								95.7	%		105.7	%
Favorable (Unfavorable) Prior Year Development		5,135			2,222			(231	)		(8,657	)		1,907			(997	)		-			-			6,811			(7,432	)

¹ The net loss ratio is calculated as incurred losses and loss adjustment expenses divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated as total underwriting expenses offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio.