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Stewart Sets Second Quarter Record Highs

Stewart sets second quarter record highs

HOUSTON, July 25, 2003 -- Stewart Information Services Corporation (NYSE-STC) reported revenues, earnings, earnings per share and title orders at the highest level of any second quarter. Revenues and title orders also set new all-time record highs for any quarter in the history of the company.

Earnings for the three months ended June 30, 2003 were $41.0 million, or $2.29 per diluted share, compared to $17.7 million, or $.99 per diluted share, for the second quarter of 2002. Revenues in the second quarter increased 39 percent to $565 million from $407 million for the same period last year.

Title orders in the second quarter of 2003 at an all-time high for any quarter in the company's history and a gain of 83 percent from the same period one year ago. Orders for the month of June 2003 were 94 percent higher than June 2002. This indicates a strong carry-over of business into the third quarter of 2003. Orders per work day are used when making comparisons.

Total revenue for the first half of 2003 was $1.0 billion, up 33 percent from the same period a year ago. Earnings for the first two quarters totaled $60.9 million, or $3.40 per diluted share, compared to $29.1 million, or $1.62 per share, for the first six months of 2002.

"Record low interest rates driving refinance activity and record home sales combined to create the best second quarter in the history of the company," said Malcolm S. Morris, chairman and co-chief executive officer. "This has not distracted us, however, from our continuing push in growing the higher-margin commercial title business market share.

"Stewart's Board of Directors, in light of the reduction in the tax rate payable on dividends received by stockholders effected by the Jobs and Growth Tax Relief Reconciliation Act of 2003, voted to reinstate a cash dividend. This action is intended to enhance the company's long-term value and encourage long-term investment by a diverse stockholder base," added Morris. "The company intends to declare and pay dividends annually. The amount, record date and payment date of the next dividend will be determined by the Board in the fourth quarter of 2003. The amount of the dividend will depend on the company's financial condition and results of operations at that time."

"We remain focused on continuing growth in market share, increased profitability and improving margins," said Stewart Morris, Jr., president and co-chief executive officer. "We adjust our operations to trends in interest rates, construction and sales levels of real estate. We also refine the manner in which we create and deliver our products and services. As we optimize the use of technology, work process flows are being reviewed and improved in offices across the country to boost productivity, improve accuracy and reduce turn-time and costs.

"SureCloseᆴ, Stewart's e-delivery and e-commerce transaction management platform, is now installed and running at 266 locations across the country. SureClose provides the Realtorᆴ, lender, buyer and seller detailed information as to the progress of the transaction. SureClose also provides a dramatic improvement in customer service and results in informed participants and a more seamless real estate transaction process. The critical documents for closing are made available via the Internet in advance," said Morris.

Stewart Information Services Corporation is a technology driven, strategically competitive, global real estate information company. Stewart provides title insurance and related information services through more than 6,800 issuing locations in the United States and several international markets. Stewart meets the needs of the real estate and mortgage industries through the delivery of information services required for settlement using e-commerce. These services include title reports, flood determinations, document preparation, property reports, background checks and online property auctions. Stewart also supplies post-closing services to lenders, automated county clerk land records, property and land ownership mapping, and GIS for governmental entities. Stewart also provides expertise in tax-deferred exchanges. More information about Stewart can be found at www.stewart.com.

  Stewart Information Services Corporation

                                                        Three months

                                                        ended June 30

                                                     2003           2002

    Revenues                                    $564,692,000   $407,128,000

    Net earnings                                 $41,030,000    $17,711,000

    Average shares - diluted                      17,951,000     17,935,000

    Earnings per share:

      Basic                                            $2.30          $1.00

      Diluted                                          $2.29           $.99

 

                                                          Six months

                                                        ended June 30

                                                     2003           2002

    Revenues                                  $1,005,616,000  $ 755,102,000

    Net earnings                                 $60,905,000    $29,055,000

    Average shares - diluted                      17,895,000     17,945,000

    Earnings per share:

      Basic                                            $3.42          $1.63

      Diluted                                          $3.40          $1.62

 

 

     STEWART INFORMATION SERVICES CORPORATION

     STATEMENTS OF EARNINGS

     (In thousands of dollars, except per share amounts)

 

   

                               Three months                Six months

                              ended June 30              ended June 30

                            2003          2002         2003          2002

    Revenues

    Title insurance:

      Direct operations    241,181       152,823      434,474       299,228

      Agency operations    298,836       232,271      522,838       412,543

    Real estate

     information services   19,598        17,206       38,648        33,248

    Investment income        4,535         4,739        9,318         9,642

    Investment gains - net     542            89          338           441

                           564,692       407,128    1,005,616       755,102

    Expenses

    Amounts retained by

     agencies              245,652       188,560      430,401       336,849

    Employee costs         147,178       105,979      279,180       210,544

    Other operating

     expenses               72,599        59,107      139,447       114,311

    Title losses and

     related claims         22,711        16,702       40,667        31,068

    Depreciation             6,168         5,243       12,077        10,628

    Interest                   146           260          361           515

    Minority interests       4,144         2,534        6,482         4,064

                           498,598       378,385      908,615       707,979

 

    Earnings before taxes   66,094        28,743       97,001        47,123

    Income taxes            25,064        11,032       36,096        18,068

    Net earnings            41,030        17,711       60,905        29,055

 

    Average number shares

     outstanding (000)      17,951        17,935       17,895        17,945

 

    Earnings per share

     - diluted                2.29           .99         3.40          1.62

 

    Segment information:

      Title revenues       545,094       389,922      966,968       721,854

      Title pretax

       earnings             61,520        26,740       89,416        43,682

 

      REI revenues          19,598        17,206       38,648        33,248

      REI pretax earnings    4,574         2,003        7,585         3,441

 

    Selected financial

     information (000):

      Cash flow from

       operations           62,373        25,470       84,911        42,585

      Title loss

       payments - net

       of recoveries        12,186        13,342       23,776        23,646

      Other comprehensive

       income - net of

       taxes                 5,770         3,684        6,642         1,354

      Average number

       basic shares         17,833        17,777       17,788        17,793

      Number of title

       orders opened           314           175          577           346

 

 

     STEWART INFORMATION SERVICES CORPORATION

     BALANCE SHEETS (condensed)

     (In thousands of dollars)

                                                    June 30      December 31

                                                      2003           2002

    Assets

    Cash and cash equivalents                        168,190        139,156

    Short-term investments                            50,610         50,673

    Investments - statutory reserve funds            350,744        306,501

    Investments - other                               66,470         69,260

    Receivables                                       69,957         69,041

    Property and equipment                            65,762         60,592

    Title plants                                      41,823         40,307

    Goodwill                                          79,366         66,885

    Other assets                                      42,213         39,858

                                                     935,135        842,273

 

    Liabilities

    Notes payable                                     21,086         14,195

    Accounts payable and accrued liabilities          72,618         82,248

    Estimated title losses                           248,149        230,058

    Deferred income taxes                             16,971         11,284

    Minority interests                                12,156         10,896

 

    Contingent liabilities and commitments

 

    Stockholders' equity

    Common and Class B Common Stock and

     additional paid-in capital