Stewart Announces Third Quarter Earnings

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HOUSTON (October 25, 2000)  -  Stewart Information Services Corporation (NYSE-STC) today reported net earnings of $1.8 million, or $.12 per diluted share, for the three months ended September 30, 2000 compared to $6.1 million, or $.41 per diluted share for the third quarter of 1999. Revenues in the third quarter of 2000 decreased 10 percent to $239 million from the same period last year.

For the first nine months of 2000 net earnings were $.3 million, or $.02 per diluted share, compared to net earnings of $27.4 million, or $1.88 per diluted share, for the same period last year. Revenues year-to-date decreased 17 percent to $672 million.

The Company’s financial results were impacted by a number of factors, including continued negative trends in the economic environment.  Job growth in the U.S. slowed to the lowest third-quarter rate since 1991.  In the three months ended September 30, 2000, the U.S. added just 121,000 new jobs compared to 635,000 in the same period in 1999.  The third-quarter 2000 job growth rate was just 18 percent of the average posted for the same period in the prior eight years. The quarter started with debt service as a percentage of disposable personal income at the greatest level since the fourth quarter of 1987.  Private housing starts for July and August 2000 tallied 9 percent less than the same months in 1999.   The outlook for year 2000 new home sales is a 3.1 percent reduction, while existing home sales are estimated to decline 4.2 percent.

“The positive news is that our order counts were higher in the third quarter of 2000 (up 10 percent in September) when compared to 1999, reversing the downward trend observed earlier this year,” said Stewart Morris, Jr., president and co-chief executive officer.  “As revenues have declined, we have made the necessary decisions to cut expenses in our core offices and have closed operations in two non-title business units that failed to generate required profit levels.  However, we remain committed to going forward with an investment in technology to enhance the real estate transaction process.  Our goal is to improve production systems for the title industry and web-accessible real estate information. In addition, we are acquiring strategic agencies throughout the country to service our customers, grow market share and in the long-run enhance shareholder wealth.”

“At the beginning of this year, we made the strategic decision to continue investing to grow our commercial sector, despite the challenging economic environment, which has been pressuring our profitability,” said Malcolm S. Morris, chairman and co-chief executive officer.  “Our strong balance sheet, when coupled with industry consolidation, gives us a great opportunity to expand the more profitable commercial sector.  We are increasing our presence and market share in commercial business through the growth of Stewart’s National Title Services.  For the second consecutive quarter, although total title premiums were down, Stewart’s commercial title premiums were up significantly when compared to the same period last year.  We also are focused on continued growth and expansion in our profitable international operations.”

Stewart Information Services Corporation is a technology driven, strategically competitive, global real estate information company.  Stewart provides title insurance and related services through more than 5,300 issuing locations in the United States and several international markets. A leading provider of real estate information technology and connectivity, Stewart meets the needs of the real estate and mortgage industries through the electronic delivery of services needed for settlement. These services include title insurance, title reports, flood determinations, property appraisals, document preparation, credit reports and other real estate information. In addition, Stewart provides expertise in tax-deferred exchanges, surveys and field services.  More information about Stewart can be found at www.stewart.com.

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Stewart Information Services Corporation

 

   Three months

 

    ended Sept 30

 

          2000              1999

 

 

 

Revenues.......................

$ 239,004,000

$ 266,381,000

Net earnings...................

$   1,758,000

$   6,098,000

Average shares - diluted.......

   15,018,000

   14,762,000

Earnings per share:

 

 

  Basic........................

$        0.12

$        0.42

  Diluted......................

$        0.12

$        0.41

       

 

              Nine months

 

              ended Sept 30

 

          2000              1999

 

 

 

Revenues.......................

$ 671,877,000

$ 810,352,000

Net earnings...................

$     278,000

$  27,424,000

Average shares - diluted.......

   14,913,000

   14,562,000

Earnings per share:

 

 

  Basic........................

$        0.02

$        1.90

  Diluted......................

$        0.02

$        1.88

       

October 25, 2000

 

STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars)

 

   Three months

    Nine months

 

   ended Sept 30

    ended Sept 30

 

 2000        1999

  2000        1999

Revenues

Title premiums, fees and other revenues...

 219,459

  246,460

 616,905

  749,293

Real estate information services..........

  14,019

   14,507

  39,246

   45,823

Investment income.........................

   5,519

    5,394

  16,006

   15,186

Investment gains (losses) – net...........

       7

       20

    (280)

       50

 

 239,004

  266,381

 671,877

  810,352

 

 

 

 

 

Expenses

Amounts retained by agents................

 100,514

  124,186

  280,771

  378,582

Employee costs............................

  75,398

   72,030

  217,208

  215,493

Other operating expenses..................

  43,465

   43,321

  125,013

  122,898

Title losses..............................

   9,340

    9,937

   27,447

   31,123

Depreciation and amortization.............

   5,575

    4,968

   15,801

   13,161

Interest..................................

     497

      314

    1,364

      910

Minority interests........................

   1,341

    1,377

    3,786

    3,803

 

 236,130

  256,133

  671,390

  765,970

 

Earnings before taxes.....................

   2,874

   10,248

      487

   44,382

Income taxes..............................

   1,116

    4,150

      209

   16,958

     Net earnings.........................

   1,758

    6,098

      278

   27,424

 

Average number diluted shares(000)........

  15,018

   14,762

   14,913

   14,562

 

Earnings per share - diluted..............

              .12

   

      .41

 

      .02

 

     1.88

Segment information:

  Title revenues..........................

 224,985

  251,874

  632,631

 764,529

  Title pretax earnings...................



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