Stewart Announces All-Time Record Highs In Second Quarter (2002)

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HOUSTON, July 25 2002 -- Stewart Information Services Corporation (NYSE: STC ) reported all-time record highs in the second quarter of 2002 for any quarter in its history for net earnings and revenues. Net earnings were $17.7 million compared to $15.4 million for the same period in 2001. On a diluted per share basis, net earnings were $.99 for the second quarter of 2002 compared to $1.00 for the second quarter of 2001. Revenues in the second quarter increased 29 percent to $408 million from $316 million in the same period last year.

For the six months ended June 30, 2002, Stewart earned $29.1 million, or $1.62 per diluted share, compared to $18.5 million, or $1.21 per diluted share, for the same six-month period in 2001. Revenues year-to-date increased 35 percent to $756 million.

"Very good housing demand and refinance business driven by low interest rates and ongoing strong demographic demand are continuing to produce strong earnings," said Malcolm S. Morris, chairman of the board and co-chief executive officer. "Softness in the commercial segment, which is now experiencing a gradual recovery, contributed in reducing earnings. Our commercial pipeline is once again filling as a result of the diversion of investing from lackluster equities to real estate.

"We realized a gain on the sale of investment real estate during the second quarter but it was negated by a comparable after-tax loss of $1.2 million on the sale of WorldCom bonds. We have no further exposure to WorldCom in our $338 million investment accounts.

"While lower interest rates have contributed to residential sales and refinance activity, they have also distracted and temporarily slowed our ongoing acquisition program. We reiterate our intent to continually acquire title agencies, typically using cash and debt. We believe the strength of our balance sheet positions us favorably among our competitors in making acquisitions."

"Title orders were at an all-time high for any second quarter in our history and were the second best ever for any quarter," said Stewart Morris, Jr., co-chief executive officer and president. "Orders were 8 percent higher than in the second quarter of 2001, with June orders 14 percent higher than June 2001.

"Our investments in technology to achieve greater productivity are contributing to the bottom line. As we continue to convert users to our Application Service Provider (ASP), Titlelogix.com(TM), expenses are anticipated to stabilize while productivity rises. At the same time, through our technology investments, process improvements and transaction management, our customers will receive a superior real estate transaction experience."

"Our continuing investment in transaction management technology has put us in position to focus marketing efforts on enhanced communication among the parties of the real estate transaction with the benefit of a finer experience for the consumer," added Stewart Morris, Jr. "We will be the exclusive sponsor of the Technology Learning Center at the National Association of Realtors Convention this year. We are fulfilling our mission statement of enhancing the real estate transaction process."

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 6,000 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, 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.

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SUMMARY OF OPERATIONS

 

Stewart Information Services Corporation

 

 

Three months

 

ended June 30

 

2002 2001

     

Revenues

$408,238,000

$315,660,000

Net earnings

$17,711,000

$15,438,000

Average shares - diluted

17,935,000

15,385,000

Earnings per share:

   

Basic

$ 1.00

$ 1.01

Diluted

$ 0.99

$ 1.00

 

Six months

 

U>ended June 30

 

2002 2001

     

Revenues

$756,212,000

$561,374,000

Net earnings

$29,055,000

$18,511,000

Average shares - diluted

17,945,000

15,327,000

Earnings per share:

   

Basic

$ 1.63

$ 1.22

Diluted

$ 1.62

$ 1.21

 

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

 

2002 2001

2002 2001

Revenues

Title insurance:        

Direct operations

153,775

136,326

300,338

236,614

Agency operations 232,271 157,887 412,543 283,484
  386,046 294,213 712,881 520,098

Real estate information services

17,364

16,902

33,248

30,833

Investment income

4,593

4,500

9,496

10,045

Investment gains - net

235

45

587

398

 

408,238

315,660

756,212

561,374

         

Expenses

 

Amounts retained by agents

188,560

128,858

336,849

231,315

Employee costs

105,979

90,916

210,544

170,268

Other operating expenses

60,217

50,179

115,421

92,329

Title losses and related claims

16,702

11,917

31,068

21,512

Depreciation

5,243

4,770

10,628

9,497

Goodwill

---

828

---

1,369

Interest

260

784

515

1,443

Minority interests

2,534

2,171

4,064

3,396

 

379,495

290,423

709,089

531,129

Earnings before taxes

28,743

25,237

47,123

30,245

Income taxes

11,032

9,799

18,068

11,734

Net earnings

17,711

15,438

29,055

18,511

Average number shares outstanding (000)

17,935

15,385

17,945

15,327

Earnings per share - diluted

.99

1.00

1.62

1.21

 

Segment information:

Title revenues

390,874

298,758

722,964

530,541

Title pretax earnings

26,740

22,884

43,682

27,298

REI revenues

17,364

16,902

33,248

30,833

REI pretax earnings

2,003

2,353

3,441

2,947

Selected financial information (000):

Cash flow from operations

26,725

34,346

43,840

44,566

Title loss payments - net of recoveries

13,342

12,557

23,646

20,475

Other comprehensive income (loss) - net of taxes

3,684

(1,095)

1,354

1,060

Average number of basic shares

17,777

15,246

17,793

15,178

Number of title orders opened

175

162

346

320

         
Tangible book value, excludes goodwill ($20.80 per share at June 30, 2002)        



STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)

 

 

June 30

Dec 31

 

2002

2001


Assets

 

Cash and cash equivalents

77,078

60,706

Short-term investments

58,091

56,267

Investments - statutory
reservce funds

269,093

239,084

Investments - other

68,506

86,046

Receivables

47,573

52,036

Property and equipment

47,909

48,772

Title plants

39,419

37,715

Goodwill

55,983

52,971

Deferred income taxes

---

4,288

Other

41,929

39,978

 

654,680

563,448


Liabilities

Notes payable

15,765

13,794

Accounts payable and accrued
liabilities

46,288

57,752

Deferred income taxes 859 ---

Estimated title losses

209,966

202,544

Minority interests

9,721

9,233


Contingent liabilities and commitments

Stockholders' equity

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

133,911

133,157

Retained earnings

287,299

258,746

Accumulated other comprehensive
earnings

5,503

4,149

Treasury stock

(3,731)

(1,512)

Total stockholders' equity
($23.97 per share at June 30, 2002)

422,982

394,540

 

705,581

677,863

July 25, 2002


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