Stewart sets third quarter records

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HOUSTON, Oct. 24, 2003 -- Stewart Information Services Corporation (NYSE-STC) reported revenues, earnings and earnings per share at the highest level of any third quarter in our history. Book value increased to $33.75 per share, also a record. Earnings for the three months ended September 30, 2003 were $42.1 million, or $2.34 per diluted share, compared to $21.6 million, or $1.22 per diluted share, for the third quarter of 2002. Revenues in the third quarter increased 33 percent to $630 million from $473 million for the same period last year. Record orders in the second quarter of 2003 provided strong volume in the third quarter.

Earnings for the three months ended September 30, 2003 were $42.1 million, or $2.34 per diluted share, compared to $21.6 million, or $1.22 per diluted share, for the third quarter of 2002. Revenues in the third quarter increased 33 percent to $630 million from $473 million for the same period last year. Record orders in the second quarter of 2003 provided strong volume in the third quarter.

Title orders in the third quarter of 2003 were 4 percent lower than the same quarter a year ago. Orders dropped below prior-year totals in August. September was 29% below the same month a year ago. The decline in orders was the result of a rise in mortgage interest rates and consisted mostly of refinance transactions. Interest rates have leveled off at about the 6 percent level. The real estate market remains fundamentally strong.

Total revenues for the first nine months of 2003 were $1.6 billion, up 33 percent from $1.2 billion for the same period a year ago. Earnings for the first three quarters totaled $103.0 million, or $5.74 per diluted share, compared to $50.7 million, or $2.84 per share, for the first nine months of 2002.

"We are committed enhancing shareholder value. Year to date we have increased our book value per share from $27.84 to $33.75," said Stewart Morris, Jr., president and co-chief executive officer. "Our book value per share has increased approximately 190 percent in the past ten years, up from $11.64 in the third quarter of 1993. Our earnings and liquidity position allows us to resume a cash dividend in the fourth quarter, as announced previously," added Morris.

"Our expansion into South Korea this past quarter continues our international growth strategy. In addition, we remain committed to further increasing higher-margin commercial business and growing market share," added Morris.

Stewart is again serving as the exclusive program sponsor of the Technology Learning Center (TLC), presented at the National Association of Realtors® (NAR) Conference in San Francisco this November. This is the fifth consecutive year for Stewart to sponsor the TLC. Through the courses presented at the NAR and an array of technology resources, Stewart enables Realtors to provide the best service to their buyers and sellers.

"We were extremely pleased to announce this past quarter the election of Robert L. Clarke as an advisory director," said Malcolm S. Morris, chairman and co-CEO. "Mr. Clarke joins our stellar board of directors in providing guidance and vision to further augment shareholder value." Mr. Clarke served as Comptroller of the Currency of the United States from 1985 to 1992. In March 1992, he rejoined the prominent Houston law firm Bracewell & Patterson LLP where he serves as senior partner and is the founder of its financial services practice.

"Our technology workhorse platform, AIM® for Windows®, is now in use by more than 11,000 users at 1,000 sites, increasing the productivity of our associates and agents," said Morris. AIM for Windows is a powerful title and escrow system for order entry, document preparation, closing, escrow accounting, file tracking and management. The software is available as a traditional desktop installation or with access on the Internet through Titlelogix®. It is the product of Landata Systems, Inc., Stewart's wholly-owned technology subsidiary.

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 7,000 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 and background checks. 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.

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 September 30

2003   2002


Revenues

$629,675,000

$473,345,000

Net earnings

$42,068,000

$21,597,000

Average shares - diluted

18,006,000

17,729,000

Earnings per share:

   

Basic

$2.35

$1.22

Diluted

$2.34

$1.22


Nine months

ended September 30

2003   2002


Revenues

$1,635,291,000

$1,228,447,000

Net earnings

$102,973,000

$50,652,000

Average shares - diluted

17,937,000

17,836,000

Earnings per share:

   

Basic

$5.78

$2.86

Diluted

$5.74

$2.84

STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)

 

Three months

Nine months

 

ended Sept 30

ended Sept 30

 

2003 2002

2003 2002

Revenues

Title Insurance

       
Direct operations
261,583

175,395

694,821

474,623

Agency operations

340,728

275,398

863,566

687,941



 

 

 

 

Real estate information services

21,683

18,376

61,567

51,624

Investment income
5,262
5,597
14,580
15,093
Investment (losses) gains - net
419
(1,421)
757
(834)
 

629,675

473,345

1,635,291

1,228,447

Expenses

Amounts retained by agencies

279,965

228,384

710,366

565,233

Employee costs

157,192

114,898

436,372

325,442

Other operating expenses

86,727

65,925

226,174

180,236

Title losses and related claims

25,894

20,882

66,561

51,950

Depreciation

6,422

5,196

18,499

15,824

Interest

202

178

563

693

Minority interests

4,755

2,445

11,237

6,509

 

561,157

437,908

1,469,772

1,145,887


Earnings before
taxes

68,518

35,437

165,519

82,560

Income taxes

26,450

13,840

62,546

31,908

Net earnings

42,068

21,597

102,973

50,652


Average number shares outstanding (000)

18,006

17,729

17,937

17,836

Earnings per share - diluted

2.34

1.22

5.74

2.84

Segment information:

Title revenues

607,992

454,969

1,573,724

1,176,823

Title pretax earnings

63,865

32,064

153,281

75,746


REI revenues

21,683

18,376

61,567

51,624

REI pretax earnings

4,653

3,373

12,238

6,814

Selected financial information (000):

Cash flow from operations

73,073

49,833

157,984

92,418

Title loss payments - net
of recoveries

15,564

9,490

39,340

33,136

Other comprehensive earnings-net of taxes

(2,316)

5,857

4,326

7,211

Average number of basic shares

17,893

17,637

17,826

17,740

Number of title orders opened

239

248

816

593


 

Sept 30

Dec 31

 

2003

2002

     
Stockholder's equity 604,254 493,592
Number of shares outstanding 17,903 17,731
Book value per share 33.75 27.84

STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)

(In thousands of dollars)

 

Sept 30

Dec 31

 

2003

2002

Assets

Cash and cash equivalents

132,962

139,156

Short-term investments

118,986

50,673

Investments-statutory reserve funds

373,288

306,501

Investments-other

63,462

69,260

Receivables

71,101

69,041

Property and equipment

70,837

60,592

Title plants

41,793

40,307

Goodwill

76,873

66,885

Other

52,078

39,858

 

1,001,380

842,273

Liabilities

Notes payable

24,715

14,195

Accounts payable and accrued liabilities

79,164

82,248

Estimated title losses
258,479
230,058

Deferred income taxes

20,646

11,284

Minority interests

14,122

10,896

Contingent liabilities and commitments

Stockholders' equity

Common and Class B Common Stock and
additional paid-in capital

138,290

134,927

Retained earnings

456,199

353,226

Accumulated other comprehensive
earnings

13,670

9,344

Treasury stock

(3,905)

(3,905)


Total stockholders' equity

604,254

493,592

 

1,001,380

842,273

October 24, 2003


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