HOUSTON (July 24, 2001)--Stewart Information Services Corporation (NYSE-STC) reported net earnings for the three months ended June 30, 2001 of $15.4 million, compared to $1.9 million for the second quarter of 2000. On a diluted per share basis, net earnings were $1.00 for the second quarter of 2001 compared to $.13 for the second quarter of 2000. Revenues in the second quarter increased 40 percent to $314 million from $225 million in the same period last year. Earnings, earnings per share and revenues were an all-time record for any quarter in the history of the company.
For the six months ended June 30, 2001, Stewart earned $18.5 million, or $1.21 per diluted share, compared to a loss of $1.5 million, or $.10 per diluted share, for the same six-month period in 2000. Revenues year-to-date increased 29 percent to $559 million.
"The business reviews and the resulting managerial and operational changes we made this past year combined with low interest rates and a favorable real estate economy produced the best quarter in the history of the company," said Malcolm S. Morris, chairman of the board and co-chief executive officer. We received 155,000 title orders in the first quarter of 2001, a record high for the company. Many of these orders, including many refinancing transactions, were closed in the second quarter. Our revenues and profits in the second quarter thus improved significantly.
"Our title orders in the second quarter increased again to 161,000, another record all-time high for any quarter in our history." Orders were 52 percent higher than in the second quarter of 2000, with June orders 48 percent higher than June 2000. Although order counts continue at very high rates, the lower rate of increase in June prompted us to make changes to reduce our expense levels.
"A part of our growth is attributable to acquisitions we have made. Of the quarter-to-quarter increase of 52 percent in orders in the second quarter, approximately 14 percent was in companies we did not own a year ago and 38 percent was in ?same store? sales. Growing by acquisitions enhances our profitability by allowing us to spread the relatively fixed costs of technology over a broader base. Targeted acquisitions will continue to be a priority for us.
"Our financial strength has been reaffirmed by Fitch's issuance of an "A+" financial strength rating on both Stewart Title Guaranty Company "our flagship underwriter" and Stewart Title Insurance Company, our New York underwriter," added Morris. Fitch issued a Stable Rating Outlook and stated that its rating reflected Stewart's "strong balance sheet fundamentals, conservative operating leverage when compared to peer companies, reasonable agency monitoring and auditing controls over its agents, and good market positioning as a national title insurer."
"We continue to develop and refine our industry-leading, award-winning technology to evolve and enhance our service to customers and improve our productivity," said Stewart Morris, Jr., co-chief executive officer and president. "This past quarter we released and put into service our Application Service Provider (ASP), Titlelogix.com", which facilitates access and use of our title and escrow information software program AIM® for Windows® and other agency technology. The ASP allows our affiliated offices and agents immediate access to title office automation with reduced technology costs, IT personnel and infrastructure. It has already proven itself with almost immediate use for recent acquisitions.
"E-commerce and customer connectivity continue to grow and are important to our future," added Morris. "By design, our entire company runs on just two software systems, Windows and VMS. This common base significantly enhances e-business connections and compresses required interface time with external systems, facilitating electronic delivery of a complete bundle of our services necessary to complete real estate transactions."
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 5,600 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, property appraisals, surveys, document preparation, property reports and background checks. Stewart also supplies post-closing services to lenders, automated county clerk land records and geographic information systems for governmental entities. Stewart provides expertise in tax-deferred exchanges. More information about Stewart can be found at www.stewart.com.
This press release may contain forward-looking statements, which include all statements other than statements of historical fact. Forward-looking statements are not guarantees of performance, and no assurance can be given that Stewart?s expectations will be achieved. In particular, historical order counts do not necessarily indicate future revenues because Stewart cannot predict the number of orders that will result in closings.
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SUMMARY OF OPERATIONS
Stewart Information Services Corporation
| Three months | |||
| ended June 30 | |||
| 2001 2000 | |||
| Revenues................ | $314,247,000 | $224,670,000 | |
| Net earnings............ | $15,438,000 | $1,874,000 | |
| Average shares - diluted.. | 15,385,000 | 14,908,000 | |
| Earnings per share: | |||
| Basic................... | $ 1.01 | $ .13 | |
| Diluted................. | $ 1.00 | $ .13 | |
| Six months | |||
| ended June 30 | |||
| 2001 2000 | |||
| Revenues................. | $558,548,000 | $432,873,000 | |
| Net earnings (loss)................... | $ 18,511,000 | $ (1,480,000) | |
| Average shares - diluted....... | 15,327,000 | 14,860,000 | |
| Earnings (loss) per share: | |||
| Basic................... | $ 1.22 | $ (.10) | |
| Diluted................. | $ 1.21 | $ (.10) | |
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 | |
| 2001 2000 | 2001 2000 |
Revenues
| Title premiums, fees and other revenues.... | 292,273 | 206,880 | 516,214 | 398,462 |
| Real estate information services.............. | 17,429 | 13,028 | 31,891 | 25,227 |
| Investment income................ | 4,500 | 4,709 | 10,045 | 9,471 |
| Investment gains (losses) - net........... | 45 | 53 | 398 | (287) |
| 314,247 | 224,670 | 558,548 | 432,873 | |
Expenses
| Amounts retained by agents................ | 127,445 | 89,418 | 228,489 | 180,257 |
| Employee costs................. | 90,916 | 73,136 | 170,268 | 141,810 |
| Other operating expenses.............. | 50,179 | 42,487 | 92,329 | 81,548 |
| Title losses and related claims........... | 11,917 | 9,547 | 21,512 | 18,107 |
| Depreciation and amortization.......... | 5,598 | 5,135 | 10,866 | 10,226 |
| Interest.............. | 784 | 486 | 1,443 | 867 |
| Minority interests............. | 2,171 | 1,501 | 3,396 | 2,445 |
| 289,010 | 221,710 | 528,303 | 435,260 |
| Earnings (loss) before taxes.............. | 25,237 | 2,960 | 30,245 | (2,387) |
| Income taxes (benefit)................. | 9,799 | 1,086 | 11,734 | (907) |
| Net earnings (loss) .................. | 15,438 | 1,874 | 18,511 | (1,480) |
| Average number shares outstanding (000).... | 15,385 | 14,908 | 15,327 | 14,860 |
| Earnings (loss) per share - diluted....... | 1.00 | .13 | 1.21 | (.10) |
Segment information:
| Title revenues.............. | 296,818 | 211,642 | 526,657 | 407,646 |
| Title pretax earnings.............. | 22,786 | 4,103 | 27,131 | 447 |
| REI revenues............. | 17,429 | 13,028 | 31,891 | 25,227 |
| REI pretax earnings (loss)............. | 2,451 | (1,143) | 3,114 | (2,834) |
Selected financial information (000):
| Premiums earned from agents............. | 156,012 | 110,297 | 279,734 | 223,292 |
| Title loss payments net............... | 12,557 | 7,072 | 20,475 | 15,592 |
| Change in unrealized investment gains (losses) net of taxes............... | (1,095) |
(148) | 1,060 | 396 |
| Average number of basic shares.......... | 15,246 | 14,807 | 15,178 | 14,762 |
| Number of title orders opened........... | 161 | 106 | 318 | 208 |
STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)
| June 30 | Dec 31 | |
| 2001 | 2000 |
Assets
| Cash and cash equivalents............................. | 70,734 | 35,728 |
| Short-term investments............................. | 52,815 | 53,748 |
| Investments statutory reserve funds................................... | 218,602 | 206,150 |
| Investments other................................... | 40,011 | 52,242 |
| Receivables............................. | 55,554 | 57,039 |
| Property and equipment.................. | 44,436 | 45,459 |
| Title plants............................ | 37,546 | 32,491 |
| Goodwill................................ | 44,525 | 36,693 |
| Deferred income taxes................... | 4,973 | 7,352 |
| Other................................... | 40,617 | 36,546 |
| 609,813 | 563,448 |
Liabilities
| Notes payable................................. | 41,436 | 32,543 |
| Accounts payable and accrued liabilities......... | 50,794 | 38,617 |
| Estimated title losses.................................. | 191,849 | 190,298 |
| Minority interests............................... | 7,795 | 6,901 |
Contingent liabilities and commitments
Stockholders' equity
| Common and Class B Common Stock and additional paid-in capital............. | 87,932 | 84,653 |
| Retained earnings...................... | 228,571 | 210,060 |
| Accumulated other comprehensive earnings............................... | 2,948 |
1,888 |
| Treasury stock................................... | (1,512) | (1,512) |
| Total stockholders' equity ($20.84 per share at June 30, 2001)............ | 317,939 |
295,089 |
| 609,813 | 563,448 |
July 24, 2001