Stewart Announces Outstanding Second Quarter Results and All-Time Record Quarterly Earnings, Revenues and Order Counts

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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.

###

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

 


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