Sec Form 4 Filing - SCHWARZ MARK E @ HALLMARK FINANCIAL SERVICES INC - 2022-04-03

FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person SCHWARZ MARK E 2. Issuer Name and Ticker or Trading Symbol HALLMARK FINANCIAL SERVICES INC [ HALL] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) X __ Director X __ 10% Owner X __ Officer (give title below) _____ Other (specify below) Chairman & CEO (Last) (First) (Middle) 5420 LYNDON B JOHNSON FREEWAY, SUITE 1100 3. Date of Earliest Transaction (MM/DD/YY) 04/03/2022 (Street) DALLAS, TX75240-2345 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) _____ Form filed by One Reporting Person __ X __ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 202,580 D( 1 ) Common Stock 949,702 I Shares directly owned by NCM Services, Inc.( 2 ) Common Stock 172,776 I Shares directly owned by Newcastle Capital Management, L.P.( 2 ) Common Stock 3,730,432 I Shares directly owned by Newcastle Partners, L.P.( 2 )

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares Restricted Stock Units ( 3 ) 12/21/2021 A 127,374 ( 3 ) 03/31/2026 Common Stock ( 3 ) $ 0 127,374 D( 1 ) Restricted Stock Units ( 4 ) 04/03/2022 A 123,968 ( 4 ) 03/31/2027 Common Stock ( 4 ) $ 0 123,968 D( 1 )

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other SCHWARZ MARK E 5420 LYNDON B JOHNSON FREEWAY SUITE 1100 DALLAS, TX75240-2345 X X Chairman & CEO Schwarz 2012 Family Trust 5420 LYNDON B. JOHNSON FREEWAY SUITE 1100 DALLAS, TX75240-2345 X NCM SERVICES, INC. 5420 LYNDON B. JOHNSON FREEWAY SUITE 1100 DALLAS, TX75240-2345 X NEWCASTLE CAPITAL GROUP LLC 5420 LYNDON B. JOHNSON FREEWAY SUITE 1100 DALLAS, TX75240-2345 X NEWCASTLE CAPITAL MANAGEMENT LP 5420 LYNDON B. JOHNSON FREEWAY SUITE 1100 DALLAS, TX75240-2345 X NEWCASTLE PARTNERS L P 5420 LYNDON B. JOHNSON FREEWAY SUITE 1100 DALLAS, TX75240-2345 X Signatures Steven D. Davidson, as Attorney-In-Fact for all Reporting Persons 04/05/2022 Signature of Reporting Person Date

Explanation of Responses:

( 1 )Direct ownership by Mr. Schwarz. ( 2 )Mr. Schwarz is the sole trustee of the Schwarz 2012 Family Trust (the "Trust") and a director and officer of NCM Services, Inc. ("NCMS"). The Trust is the sole shareholder of NCMS, which is the sole member of Newcastle Capital Group, L.L.C. ("NCG"), which is the general partner of Newcastle Capital Management, L.P. ("NCM"), which is the general partner of Newcastle Partners, L.P. ("NP"). Accordingly, Mr. Schwarz may be deemed the beneficial owner of all shares held by any of the Trust, NCMS, NCG, NCM or NP, and each of these entities may be deemed the beneficial owner of all shares held by the entities which they directly or indirectly own or control. ( 3 )Each restricted stock unit represents the right to receive shares of common stock upon satisfaction of vesting requirements and performance criteria. Up to 50% of the shares may become issuable as of March 31, 2024, a cumulative of 80% of the shares may become issuable as of March 31, 2025, and a cumulative of 100% of the shares may become issuable as of March 31, 2026. The performance criteria for 63,687 of the restricted stock units is based on the gross 2021 accident year combined ratio ("2021 AYCR%") for the period from from January 1, 2021 to the December 31 preceding each vesting date, and earns a percentage of a share of common stock per restricted stock unit, as follows: (a) 100.0% or greater 2021 AYCR% earns 0%; (b) 99.2% 2021AYCR% earns 20%; (c) 98.4% 2021 AYCR% earns 40%; (d) 97.6% 2021 AYCR% earns 60%; (e) 96.8% 2021 AYCR% earns 80%; (f) 96.0% 2021 AYCR% earns 100%; (g) 95,2% 2021 AYCR% earns 110%; (h) 94.4% 2021 AYCR% earns 120%; (i) 93.6% 2021 AYCR% earns 130%; (j) 92.8% 2021 AYCR% earns 140%; and (k) 92.0% or less 2021 AYCR% earns 150%. The performance criteria for 63,687 of the restricted stock units is based on the compound average annual growth rate ("CAAGR") in book value per share from January 1, 2021 to the December 31 preceding each vesting date and earns a percentage of a share of common stock per restricted stock unit, as follows: (i) 1.0% or less CAAGR earns 0%; (ii) 1.8% CAAGR earns 20%; (iii) 2.6% CAAGR earns 40%; (iv) 3.4% CAAGR earns 60%; (v) 4.2% CAAGR earns 80%; (vi) 5.0% CAAGR earns 100%; (vii) 5.8% CAAGR earns 110%; (viii) 6.6% CAAGR earns 120%; (ix) 7.4% CAAGR earns 130%; (xi) 8.2% CAAGR earns 140%; and (xii) 10.0% or greater CAAGR earns 150%. ( 4 )Each restricted stock unit represents the right to receive shares of common stock upon satisfaction of vesting requirements and performance criteria. Up to 50% of the shares may become issuable as of March 31, 2025, a cumulative of 80% of the shares may become issuable as of March 31, 2026, and a cumulative of 100% of the shares may become issuable as of March 31, 2027. The performance criteria for 61,984 of the restricted stock units is based on the gross 2022 accident year combined ratio ("2022 AYCR%") for the period from from January 1, 2022 to the December 31 preceding each vesting date, and earns a percentage of a share of common stock per restricted stock unit, as follows: (a) 95.4% or greater 2022 AYCR% earns 0%; (b) 94.6% 2022 AYCR% earns 20%; (c) 93.8% 2022 AYCR% earns 40%; (d) 93.0% 2022 AYCR% earns 60%; (e) 92.2% 2022 AYCR% earns 80%; (f) 91.4% 2022 AYCR% earns 100%; (g) 90.6% 2022 AYCR% earns 110%; (h) 89.8% 2022 AYCR% earns 120%; (i) 89.0% 2022 AYCR% earns 130%; (j) 88.2% 2022 AYCR% earns 140%; and (k) 87.4% or less 2022 AYCR% earns 150%. The performance criteria for 61,984 of the restricted stock units is based on the compound average annual growth rate ("CAAGR") in book value per share from January 1, 2022 to the December 31 preceding each vesting date and earns a percentage of a share of common stock per restricted stock unit, as follows: (i) 1.0% or less CAAGR earns 0%; (ii) 1.8% CAAGR earns 20%; (iii) 2.6% CAAGR earns 40%; (iv) 3.4% CAAGR earns 60%; (v) 4.2% CAAGR earns 80%; (vi) 5.0% CAAGR earns 100%; (vii) 5.8% CAAGR earns 110%; (viii) 6.6% CAAGR earns 120%; (ix) 7.4% CAAGR earns 130%; (xi) 8.2% CAAGR earns 140%; and (xii) 10.0% or greater CAAGR earns 150%.

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).

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