HOUSTON (October 24, 2001) -- Stewart Information Services Corporation (NYSE-STC) reported net earnings for the three months ended September 30, 2001 of $13.0 million, compared to $1.8 million for the third quarter of 2000. On a diluted per share basis, net earnings were $.78 for the third quarter of 2001 compared to $.12 for the third quarter of 2000. Revenues in the third quarter increased 42 percent to $339 million from $239 million in the same period last year. Revenues were an all-time record for any quarter in the history of the company.
For the nine months ended September 30, 2001, Stewart earned $31.5 million, or $1.99 per diluted share, compared to net earnings of $0.3 million, or $.02 per diluted share, for the same nine-month period in 2000. Revenues year-to-date increased 34 percent to $897 million.
“While none of our associates were harmed in the September 11 attack on our country, several friends and business associates were lost. We will pray for and remember the victims, their families and friends”, said Stewart Morris, Jr., president and co-chief executive officer.
“Like most businesses in the United States, we experienced a slowdown for several days after the attack. Our managers describe the market as one where homebuyers did not look at real estate for a week or more. Many closings were delayed. Others waited to determine the impact of the Fed's reduction of interest rates expected at their next meeting on October 2nd. Rates were reduced 50 basis points at the meeting. A significant number of commercial deals were put on hold. As a result, many closings expected to occur in September were postponed to October.”
While closings were slower in relation to the number of orders, the number of orders remained strong. Our title orders in the third quarter were 155,000, an all-time high for any third quarter in our history. Orders in the month and quarter ended September 30, 2001 were 60 percent and 50 percent higher, respectively, than the same periods a year ago, boding well for the fourth quarter.
Market dynamics changed significantly during the past quarter due to a continuing decline in interest rates that set the stage for a potential record in refinance activity. The 30-year fixed-rate residential mortgage rate dropped 47 basis points between July and the end of the quarter, and approached the lowest level since October 1998. “We actively monitor order counts and the resulting staffing requirements. The large increase in refinance business is an offsetting factor to the prospect of near-term seasonal decline in housing sales and residential construction activity.”
“Our balance sheet is in the best condition ever following the completion of a successful add-on stock offering in August. We sold 2.5 million shares of common stock at $19 per share netting $45 million in cash,” said Malcolm S. Morris, chairman and co-chief executive officer. “This reduced our debt to equity ratio to 5 percent putting us in a better position for our ongoing acquisition program which is guided by our determination to generate a greater return on investment for shareholders.” The addition of each new title agent drives down our average per-office technology expense while requiring no new capital investment in our stable of nine underwriters.
“We are proud to have been added to the Standard and Poor's Small Cap 600 Index in the first week of October 2001,” added Malcolm S. Morris. "The investment we made in strategic moves in 2000 continues to produce long-term benefits for our shareholders and growing recognition in the investment community.
“We reiterate our commitment to providing customers quality service through industry leading technology while at the same time enhancing shareholder value. We continue our systematic migration to TitleLogix™, one of the industry's first application service providers (ASP). Our ASP allows rapid move of a title agency to an integrated technology system increasing individual productivity with reduced costs, staffing and flexibility. Our strategy is for continued growth in market share, commercial business and international expansion while maintaining the top financial rating of the largest companies in the industry.”
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 Sept 30 | |||
| 2001 2000 | |||
| Revenues................ | $338,741,000 | $239,004,000 | |
| Net earnings............ | $13,003,000 | $1,758,000 | |
| Average shares - diluted.. | 16,751,000 | 15,018,000 | |
| Earnings per share: | |||
| Basic................... | $ 0.78 | $ 0.12 | |
| Diluted................. | $ 0.78 | $ 0.12 | |
| Nine months | |||
| ended Sept 30 | |||
| 2001 2000 | |||
| Revenues................. | $897,289,000 | $671,877,000 | |
| Net earnings | $ 31,514,000 | $278,000 | |
| Average shares - diluted....... | 15,806,000 | 14,913,000 | |
| Earnings (loss) per share: | |||
| Basic................... | $ 2.01 | $ 0.02 | |
| Diluted................. | $ 1.21 | $ 0.02 | |
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 | |
| 2001 2000 | 2001 2000 |
Revenues
| Title premiums, fees and other revenues.... | 316,600 | 220,201 | 832,814 | 618,663 |
| Real estate information services.............. | 17,021 | 14,019 | 48,912 | 39,246 |
| Investment income................ | 4,748 | 4,777 | 14,793 | 14,248 |
| Investment gains (losses) - net........... | 372 | 7 | 770 | (280) |
| 338,741 | 239,004 | 897,289 | 671,877 | |
Expenses
| Amounts retained by agents................ | 150,417 | 100,514 | 378,906 | 280,771 |
| Employee costs................. | 94,453 | 75,398 | 264,721 | 217,208 |
| Other operating expenses.............. | 50,241 | 43,465 | 142,570 | 125,013 |
| Title losses and related claims........... | 13,243 | 9,340 | 34,755 | 27,447 |
| Depreciation.......... | 5,171 | 5,172 | 14,668 | 14,444 |
| Goodwill | 540 | 403 | 1,909 | 1,357 |
| Interest.............. | 605 | 497 | 2,048 | 1,364 |
| Minority interests............. | 1,792 | 1,341 | 5,188 | 3,786 |
| 316,462 | 236,130 | 844,765 | 671,390 |
| Earnings before taxes.............. | 22,279 | 2,874 | 52,524 | 487 |
| Income taxes................. | 9,276 | 1,116 | 21,010 | 209 |
| Net earnings.................. | 13,003 | 1,758 | 31,514 | 278 |
| Average number shares outstanding (000).... | 16,751 | 15,018 | 15,806 | 14,913 |
| Earnings per share - diluted....... | .78 | .12 | 1.99 | .02 |
Segment information:
| Title revenues.............. | 321,720 | 224,985 | 848,377 | 632,631 |
| Title pretax earnings.............. | 20,194 | 3,945 | 47,325 | 4,392 |
| REI revenues............. | 17,021 | 14,019 | 48,912 | 39,246 |
| REI pretax earnings (loss)............. | 2,085 | (1,071) | 5,199 | (3,905) |
Selected financial information (000):
| Premiums earned from agents............. | 182,018 | 124,581 | 461,752 | 347,873 |
| Title loss payments ? net............... | 5,998 | 10,542 | 26,473 | 26,133 |
| Change in unrealized investment gains - net of taxes............... | 2,633 | 1,701 | 3,693 | 2,097 |
| Average number of basic shares.......... | 16,600 | 14,921 | 15,657 | 14,815 |
| Number of title orders opened........... | 155 | 103 | 475 | 311 |
STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)
| Sept 30 | Dec 31 | |
| 2001 | 2000 |
Assets
| Cash and cash equivalents............................. | 59,762 | 35,728 |
| Short-term investments............................. | 61,031 | 53,748 |
| Investments - statutory reserve funds................................... | 235,410 | 206,150 |
| Investments - other.............................. | 85,405 | 52,242 |
| Receivables............................. | 44,749 | 57,039 |
| Property and equipment.................. | 45,235 | 45,459 |
| Title plants............................ | 37,668 | 32,491 |
| Goodwill................................ | 44,956 | 36,693 |
| Deferred income taxes................... | 3,370 | 7,352 |
| Other................................... | 37,094 | 36,546 |
| 654,680 | 563,448 |
Liabilities
| Notes payable................................. | 16,614 | 32,543 |
| Accounts payable and accrued liabilities......... | 52,418 | 38,617 |
| Estimated title losses.................................. | 199,094 | 190,298 |
| Minority interests............................... | 7,921 | 6,901 |
Contingent liabilities and commitments
Stockholders' equity
| Common and Class B Common Stock and additional paid-in capital............. | 132,990 | 84,653 |
| Retained earnings...................... | 241,574 | 210,060 |
| Accumulated other comprehensive earnings............................... | 5,581 | 1,888 |
| Treasury stock................................... | (1,512) | (1,512) |
| Total stockholders' equity ($21.30 per share at Sept 30, 2001)............ | 378,633 | 295,089 |
| 654,680 | 563,448 |
October 24, 2001