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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2004

COMMISSION FILE NO. 1-13990

LANDAMERICA FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

(804) 267-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x     No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, No Par Value 18,925,812 April 29, 2004

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

INDEX

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

(Unaudited)

See Notes to Consolidated Financial Statements.

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

(Unaudited)

See Notes to Consolidated Financial Statements.

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2004 AND 2003

(In thousands of dollars except per share amounts)

(Unaudited)

See Notes to Consolidated Financial Statements.

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2004 AND 2003

(In thousands of dollars)

(Unaudited)

See Notes to Consolidated Financial Statements.

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2004 AND 2003

(In thousands of dollars except per share amounts)

(Unaudited)

See Notes to Consolidated Financial Statements.

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LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of dollars except per share amounts)

The unaudited consolidated financial information included in this report has been prepared in conformity with the accounting principles and practices reflected in the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. This report should be read in conjunction with the aforementioned Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of this information have been made. The results of operations for the interim periods are not necessarily indicative of results for a full year.

The following table sets forth the computation of basic and diluted earnings per share:

The Company had a total of 179 securities which had unrealized losses at March 31, 2004, and the duration of these securities range from one year to thirty years. There were three securities that the company owned that have been in a loss position for more than

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twelve months. The three securities with unrealized losses for more than twelve months were investment grade and had an aggregate unrealized loss of $31.

Management has concluded that none of the available-for-sale securities with unrealized losses at March 31, 2004 has experienced an other-than temporary impairment. This conclusion was based on a number of factors including: (1) there were no securities with fair values less than 80% of amortized cost at March 31, 2004, (2) there were no securities rated below investment grade, and (3) there were no securities for which fair value had been significantly below amortized cost for a period of six months or longer.

Investments totaling $22,583 are held on deposit with various state regulatory entities and are not available for use in operations.

Pro forma information regarding net income and earnings per share is required by the Financial Accounting Standards Board (“FASB”) Statements of Financial Accounting Standards No. (“SFAS”) 123, as amended by SFAS 148, Accounting for Stock-Based Compensation – Transition and Disclosure, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that statement.

The following pro forma information shows the Company’s net income and earnings per basic and diluted share:

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For additional information, see Note 15 to Consolidated Financial Statements, Pending Legal Proceedings and Part I, Item 3, Legal Proceedings of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission.

In January 2003, FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (the “Interpretation”). The Interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Previously, entities were generally consolidated by an enterprise when it had a controlling financial interest through ownership of a majority voting interest in the entity. Consistent with FASB Staff Position, FIN 46-6, Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities, the Company implemented FIN 46 in the fourth quarter of 2003 related to its ownership interests in entities entered into prior to February 1, 2003 and in the second quarter of 2003, for entities entered into subsequent to February 1, 2003. The impact of implementation was not material to the Company.

The Company, in the course of its normal day-to-day business, enters into joint ventures and partnerships related to its title operations and title plants. These entities are immaterial to its financial position and results of operations individually and in the aggregate. At March 31, 2004, the Company had no material exposure to loss associated with Variable Interest Entities to which it is a party.

The following presents the estimated net periodic pension cost recorded in the financial statements for each of the quarters ending March 31, 2004 and 2003. The 2004 information is based on preliminary data provided to the Company’s independent actuaries. The amounts are as follows:

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Weighted-average assumptions used to determine net cost for each of the quarters ending March 31, 2004 and 2003 are as follows:

On June 1, 2002, the Company entered into a joint venture agreement with The First American Corporation and combined its real estate valuation operations. Under the terms of the agreement, the Company contributed its former Primis residential appraisal production division, which it acquired in 2000, to First American’s eAppraiseIT subsidiary. In connection with the transaction, the Company exited the residential appraisal production business, which had been unprofitable, and recorded a second quarter 2002 charge of $14,132 for exit, termination and other costs in the Corporate and Other business group. This amount was comprised of $4,635 related to lease termination costs, $2,209 related to employee severance costs and a $7,288 write down to estimated net realizable value of assets determined not to be redeployable and other miscellaneous exit costs. Additionally, in the first quarter of 2002, the Company recorded $3,190 of exit and termination costs related to the closing of certain offices and reduction in workforce of its real estate valuation operations. The original amount accrued was reduced by $3,952 in the fourth quarter of 2002, and $534 during 2003. These reductions were the result of the favorable settlement of real estate, rental and other obligations. Of the remaining accrual, $10,881 had been paid as of March 31, 2004, leaving $1,955 which the Company expects to be substantially paid by March 31, 2008.

In the fourth quarter of 2003, the Company identified two opportunities to rationalize and consolidate facilities in the Title Insurance segment. In connection with these programs, the Company incurred $796 of exit costs in the Title Insurance segment. These costs were comprised of $673 related to lease termination and $123 of other miscellaneous exit costs. Of the $796 in original accruals, $611 had been paid prior to March 31, 2004 with the remaining balance of $185 anticipated to be substantially paid by June 30, 2004.

Finally, in the first quarter of 2004, as the result of the reduced level of refinancing activities and continued streamlining of operating units, the Company recorded a charge of $1,937 for exit, termination and other costs in the Title Insurance segment. This amount was comprised of $1,718 related to lease termination costs, $42 related to employee severance costs and a $177 write-down to estimated net realizable value of assets determined not to be redeployable. As of March 31, 2004, the Company had paid $308 leaving a balance of $1,629 which the Company expects to be substantially paid by September 30, 2007.

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The Company, through its subsidiaries, is engaged in the business of providing title insurance as well as a broad array of real estate transaction related services. The Company’s principal business operations have been organized under two primary business segments, Title Insurance and Lender Services. The Company’s remaining non-reportable business segments have been aggregated for reporting purposes under the heading Corporate and Other.

Title Insurance includes residential and commercial title insurance policies and escrow and closing services.

Lender Services provides services consisting primarily of real estate tax processing, flood zone certifications, consumer mortgage credit reporting and default management services.

Corporate and Other includes Orange County Bancorp and its wholly-owned subsidiary, Centennial Bank (“Centennial”), a California industrial bank that the Company acquired in November 2003, residential inspection and commercial appraisals and assessments, as well as the unallocated portion of the corporate expenses related to the Company’s corporate offices in Richmond, Virginia and unallocated interest expense.

Selected financial information about the Company’s operations by segment for each of the quarters ending March 31, 2004 and 2003 is as follows:

In January 2004, the Company entered into a definitive agreement to purchase County Title Holding Corporation, the parent company of Southland Title Corporation, Southland Title of Orange County, Southland Title of San Diego and Southland Title Equities (“Southland Title”) for approximately $90,500 in cash. Southland Title is California’s largest independent title and escrow company. On April 1, 2004, the Company closed on the transaction.

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In April 2004, the Company became aware that it had exceeded limitations contained in certain restrictive covenants under its Revolving Credit Agreement with SunTrust Bank and other lenders due to its assumption and incurrence of additional debt in connection with the acquisition of Orange County Bancorp and its wholly-owned subsidiary, Centennial Bank, in November 2003. On April 30, 2004, the Company and its lenders entered into an amendment to the Revolving Credit Agreement that provided a waiver to the Company for such covenant non-compliance arising from the acquisition, and modified other provisions of the Revolving Credit Agreement to increase the Company’s flexibility in connection with Federal Home Loan Bank borrowings at its trust subsidiary, to increase its flexibility with regard to its debt to capital ratio and to amend certain other restrictive covenants to provide capacity for the future issuance of additional debt securities by the Company.

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General

Overview

During 2003, the Company expanded the breadth of services that it provides to its customers. As a result, during the fourth quarter of 2003, the Company began providing information with respect to the Company’s two major business segments, Title Insurance and Lender Services. Other non-reportable business segments are reported in the group Corporate and Other. These groupings of business units are used by Company management to manage the Company’s operations. As a result, the Company’s results for prior years have been restated to reflect the current segment reporting structure. A description of these segments, including certain key factors impacting these businesses, are provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on March 12, 2004.

The Company’s results of operations for the first and second quarters of 2003 benefited from record setting levels of mortgage and refinancing activities. The closings related to these activities provided the Company with record first quarter 2003 revenues and income. After falling throughout the early part of 2003, interest rates increased in the latter half of 2003 resulting in reduced refinancing volume levels.

The results of the quarter reflected the impact of a turbulent environment for refinance demand, on top of the typical seasonal slow-down in residential buy-sell activity, countered somewhat by the expected pattern of revenues reported through agency channels and the improved results of recent acquisitions. In February and March 2004, mortgage interest rates decreased again resulting in increased housing sales and refinancing activities. Accordingly, the Company experienced an increase in transaction volumes during the latter part of the first quarter of 2004.

The Company began the implementation of a cost reduction program in the fourth quarter of 2003 aimed at reducing staffing and cost levels to a level more consistent with anticipated transaction volumes. In the first quarter of 2004, the Company announced plans to reduce its cost structure by at least $70 million on an annualized basis. The Company has implemented reductions to achieve over half of the targeted cost savings.

Critical Accounting Estimates

The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures surrounding contingencies and commitments. A summary of the significant critical accounting estimates of the Company can be found in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the year ended

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December 31, 2003 as filed with the Securities and Exchange Commission. Actual results could differ from these estimates.

Results of Operations

Operating Revenues – A summary of the Company’s operating revenues for the first quarter of 2004 and 2003 is as follows:

Title Insurance – Operating revenues from direct title operations decreased 5.6% in the first quarter of 2004 over the first quarter of 2003. The decrease in 2004 was primarily the result of a 20.8% decrease in the number of title policies issued by the Company’s direct operations partially offset by an increase in the premium per policy issued. The increase in the premium per policy issued is due to a change in mix between refinance and purchase title policies. As the result of changes in real estate activities, the Company experienced a shift away from refinance policies in the first quarter of 2004. Refinance policies tend to have a lower premium per policy. The Company also experienced strong commercial activity in the first quarter of 2004 and reported increased revenues of $19.4 million related to acquisitions made in 2003. Revenues from commercial operations, which the Company has typically defined as being premiums from policies providing coverage over $1.0 million, was $126.0 million in the first quarter of 2004, an increase of approximately 41.6% over the first quarter of 2003. Policies issued by the Company’s direct title operations were 194,000 and 245,000 during the first quarter of 2004 and 2003, respectively. Average mortgage interest rates for 30-year fixed rate mortgages for the first quarter of 2004 and 2003 were 5.64% and 5.84%, respectively. The average premium per policy issued by direct operations was $963 in the first quarter of 2004 versus $816 in the first quarter of 2003. The fluctuations noted in the number of issued policies and average revenues per policy issued were primarily attributable to the relative changes in mortgage activity year-over-year, as mentioned above. Operating revenues from agency title operations increased by 10.3% in the first quarter of 2004 over the first quarter of 2003. This increase was primarily attributable to the inherent delay in the reporting of transactions by agents. The timing of policy reporting, and therefore revenue reporting by agents differs in various parts of the country.

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Lender Services – Operating revenues in the Lender Services segment increased substantially in the first quarter of 2004 as compared to the first quarter of 2003. The primary reason for the increase in 2004 was the purchase of Info1 Holding Company, Inc. (“Info1”) in August 2003 and LERETA Corp. (“LERETA”) in October 2003. LERETA, the real estate tax processing and flood certification business, receives cash in advance for products that require it to provide service over the life of the loan. In the first quarter of 2004, the Company’s real estate and tax processing services had gross receipts of $22.4 million and deferred recognition of revenue for $17.0 million of these receipts. The Company recognized into revenue approximately $15.8 million of its total deferred service obligation/revenue during the first quarter of 2004. This deferred service obligation/revenue represents the amount of revenue that will be recognized over the anticipated service life of contracts related to LERETA. Total revenue recorded for LERETA in the first quarter of 2004 was comparable to levels seen in the fourth quarter of 2003. The Company also experienced increased activity in Info1, its credit reporting business, both from organic growth as well as acquisitions. Total revenues for this business grew by 32.3% in the first quarter of 2004 over the fourth quarter of 2003. The Company anticipates continued year over year increases for the next couple of quarters in this segment due to the Company’s acquisitions in 2003.

Corporate and Other – Operating revenues in corporate and other increased by approximately $1.1 million, or 13%, between the first quarter of 2003 and the first quarter of 2004. The primary reason for the increase in revenue in this segment is related to acquisitions made by the Company’s Inspectech residential appraisal business. The Company anticipates continued year over year increases for the remainder of 2004 in this group of businesses.

Investment and Other Income – Investment and other income totaled $16.5 million and $13.4 million for the first quarter of 2004 and 2003, respectively. The increase of $3.1 million, or 23.1%, is the result of two factors. The Company had an increase in investment income resulting from the acquisition of Centennial Bank in December 2003. This acquisition increased interest income in the first quarter of 2004 compared to the first quarter of 2003 by approximately $4.7 million. Partially offsetting this increase was a decrease in interest income related to lower yields on the Company’s remaining cash equivalent and investment portfolio. The Company anticipates that the changes seen in the first quarter of 2004 will continue throughout 2004. The Company’s investment portfolio consists primarily of fixed maturity securities as well as loans receivable related to Centennial Bank.

Net Realized Investment Gains – Net realized investment gains totaled $3.1 million and $2.2 million in the first quarter of 2004 and 2003, respectively. The $0.9 million increase in the first quarter of 2004 is primarily due to the repositioning of a portion of the Company’s municipal bond portfolio.

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Salaries and Employee Benefits – A summary of the Company’s salaries and other personnel costs for the first quarter of 2004 and 2003 is as follows:

Title Insurance – Title Insurance salaries and employee benefit costs increased by $6.8 million, or 3.8%, in the first quarter of 2004 over the first quarter of 2003. The increase of $6.8 million in the first quarter of 2004 is related to the addition of personnel as the result of 2003 acquisitions of $10.9 million offset in part by reduced staffing in other operations due to reduced volume levels. Additionally, the Company incurred higher levels of payroll taxes due to higher state assessments. Finally, there was an increase of approximately $1.5 million associated with lower discount rates related to the Company’s cash balance pension plan. For additional information regarding the impact of the Company’s pension plans on results of operations, see Note 7 to the Consolidated Financial Statements. Average Full Time Equivalent (“FTE”) counts averaged 9,825 in the first quarter of 2004 (including 573 associated with 2003 acquisitions) versus 9,644 in the first quarter of 2003, down from their peak of 11,530 in the third quarter of 2003.

Lender Services – Lender Services compensation expenses increased in the first quarter of 2004 versus the first quarter of 2003. The Company acquired LERETA and Info1 in October and August 2003, respectively. Personnel costs in the Lender Services segment tend to increase during periods of increased sales volume and decrease when sales volume is lower. This is the case because a significant amount of work is required to set up new accounts. Once accounts are established, monitoring and maintenance activities are less labor intensive. The Company anticipates that Lender Services’ salary expense will continue to be higher than 2003 throughout 2004.

Corporate and Other – Corporate and Other salary and benefit costs increased $1.1 million, or 9.7% in the first quarter of 2004 over the first quarter of 2003. The increase relates primarily to a $0.6 million increase in staffing as the result of acquisitions in the Company’s Inspectech subsidiary as well as $0.5 million in compensation related to the Company’s acquisition of Centennial Bank in December 2003.

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Agent Commissions – A summary of agent commissions and related revenues in the Title Insurance segment for the first quarter of 2004 and 2003 is as follows:

The commission rate varies by the geographic area in which the commission was paid and by individual agent agreement. The trend of increasing commission rates is attributable to increased competition for agents. The Company anticipates that it will continue to see year over year increases in this rate during the first half of 2004.

Provision for Policy and Contract Claims – The loss ratio (the provision for policy and contract claims as a percentage of operating revenues for the Title Insurance segment) was 5.5% and 5.0% in the first quarter of 2004 and 2003, respectively. The Company reviews its claims experience quarterly, and in conjunction with its outside actuaries, evaluates the adequacy of its provisions for estimated claims. The Company has determined that its recent claims incurred experience necessitated an increase in the provision for policies issued in the current year. Claims experience will continue to be monitored quarterly and adjustments in claims rates related to policies issued will be made as appropriate.

Exit and Termination Costs – The Company incurred exit and termination costs on a pre-tax basis of $1.9 million in the first quarter of 2004.

In the first quarter of 2004, the Company announced plans to reduce its cost structure by at least $70.0 million on an annualized basis. As a result of this program, the Company has identified 32 offices at the end of the first quarter that it will consolidate into other offices. The Company has provided for the facility downsizing costs of these offices as well as $0.04 million in severance accruals related to these plans. Additionally, as a result of the adoption of Financial Accounting Standards Board Statement 146, Accounting for Costs Associated with Exit or Disposal Activities, in 2003, the Company anticipates recording additional exit and termination costs in 2004, primarily associated with leased facilities as the Company vacates space.

Amortization – Amortization expense increased by $4.6 million in the first quarter of 2004 compared to the first quarter of 2003 as the result of the acquisitions it made in 2003. During 2003, the Company acquired businesses with an initial purchase price in excess of $350.0 million. The Company is amortizing the intangible assets acquired as part of these businesses over their estimated useful lives.

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Interest Expense – Interest expense increased by $2.8 million in the first quarter of 2004 compared to the first quarter of 2003. $1.6 million of the increase was related to the Company’s acquisition of Orange County Bancorp in December 2003 and the remainder of the increase is related to the Company’s issuance in November 2003 of $115.0 million of its 3.125% Convertible Senior Debentures due 2033 used to fund a portion of the acquisitions in 2003. The Company anticipates that interest expense will continue to exceed prior period levels throughout 2004.

Premium Taxes – Insurers are generally not subject to state income or franchise taxes. They are, however, subject to a “premium tax” on certain operating revenues, depending on the state. Tax rates and the amounts that are subject to tax vary from state to state. Premium taxes as a percentage of total title insurance revenues remained relatively constant during the past year. This percentage was 1.3% in the first quarters of 2004 and 2003.

General, Administrative and Other – A summary of the Company’s general, administrative and other costs for the three months ending March 31, 2004 and 2003 is as follows:

Title Insurance – Title Insurance general and administrative expenses increased by $10.4 million or 12.0% in the first quarter of 2004 over the first quarter of 2003. This increase is primarily related to a $5.6 million increase related to acquisitions that occurred during 2003, an increase in depreciation expense of approximately $1.0 million associated with assets purchased in 2003 and an increase in office rental expense of approximately $3.0 million.

Lender Services – Lender Services general and administrative expenses increased by $17.1 million in the first quarter of 2004 over the comparable period in 2003. This increase was primarily due to the purchase of LERETA and Info1 in 2003 as noted above.

Corporate and Other – Corporate and Other general and administrative expenses increased by $0.9 million, or 6.7%, in the first quarter of 2004 over the comparable period in 2003. The increase in these expenses is primarily related to the Company’s purchase of Centennial Bank in December 2003.

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Operating Income

Title Insurance –The Title Insurance segment reported operating revenue of $710.3 million and pretax earnings of $46.8 million in the first quarter of 2004. This compares to $687.3 million in operating revenue and $83.0 million in pretax income for the first quarter of 2003. While revenues increased in the segment slightly from prior years, the Company experienced a decline in the percentage of operating revenues generated by direct title operations compared to agency business. This mix change resulted in less net premium dollars retained by the Company. Additionally, the Title Insurance segment reported reduced income from its investment portfolio due to lower investment yields on the segment’s investment portfolio.

Lender Services – The Lender Services segment had operating revenue of $40.2 million and pretax earnings of $3.8 million in the first quarter of 2004 compared to $0.9 million and $0.5 million in operating revenues and pre-tax losses for the first quarter of 2003. Revenue in this segment was positively impacted by the reduction in interest rates in the first quarter of 2004 and the acquisitions made in the third and fourth quarters of 2003. The tax and flood and mortgage credit reporting businesses showed strong results with an operating margin, adjusted for amortization, of approximately 17.7%.

Income Taxes – The Company’s effective income tax rate, which includes a provision for state income and franchise taxes for non-insurance subsidiaries, was 35.5% and 35% for the first quarter of 2004 and 2003, respectively. The differences in the effective tax rate were primarily due to changes in the ratio of permanent differences to income before taxes and state taxes related to the Company’s non-insurance subsidiaries.

Net Income – The Company reported net income of $20.9 million or $1.11 per share on a diluted basis for the first quarter of 2004, compared to a net income of $42.0 million or $2.28 per share on a diluted basis for the first quarter of 2003. The first quarter of 2004 was negatively impacted by $1.9 million pretax of exit and termination costs. Exclusive of these items, net income was $22.1 million or $1.18 per diluted share for the first quarter of 2004.

Liquidity and Capital Resources

Cash provided by operating activities for the first quarter of 2004 and 2003, respectively, was $2.0 million and $21.0 million. The principal non-operating uses of cash and cash-equivalents for the quarters ending March 31, 2004 and 2003 were acquisitions, capital expenditures, additions to the investment portfolio, loans receivable and the repayment of debt. The net of all activities was to decrease cash and invested cash by $64.2 million and $52.4 million for the first quarter of 2004 and 2003, respectively. As of March 31, 2004, the Company held cash and invested cash of $166.4 million and fixed-maturity securities of $1,080.8 million.

The Company has acquired, or entered into agreements to acquire, several businesses. During the first quarter of 2004 and 2003, the Company completed acquisitions totaling approximately $21.5 million and $28.9 million, respectively. The 2004 and 2003 purchases were

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funded through a mixture of cash, invested cash and investments. The Company purchased a title and escrow company in the Southern California marketplace (“Southland Title”) for a purchase price of approximately $90.5 million effective April 1, 2004 using funds borrowed under its line of credit agreement. The Company will continue to selectively evaluate additional acquisitions should attractive candidates be identified.

In the fourth quarter of 2003, the Company issued $115.0 million of its 3.125% Convertible Senior Debentures due 2033. In February 2004, the Company filed a registration statement on Form S-3 to register both the debentures and common stock associated with this transaction.

In April 2004, the Company became aware that it had exceeded limitations contained in certain restrictive covenants under its Revolving Credit Agreement with SunTrust Bank and other lenders due to its assumption and incurrence of additional debt in connection with the acquisition of Orange County Bancorp and its wholly-owned subsidiary, Centennial Bank, in November 2003. On April 30, 2004, the Company and its lenders entered into an amendment to the Revolving Credit Agreement that provided a waiver to the Company for such covenant non-compliance arising from the acquisition, and modified other provisions of the Revolving Credit Agreement to increase the Company’s flexibility in connection with Federal Home Loan Bank borrowings at its trust subsidiary, to increase its flexibility with regard to its debt to capital ratio and to amend certain other restrictive covenants to provide capacity for the future issuance of additional debt securities by the Company.

The Company intends to issue long-term convertible debt securities as market conditions permit. The net proceeds are intended to be utilized for funding the Company’s purchase of Southland Title on a long-term basis as well as for investment and general corporate purposes.

In February 2003 and 2004, the Board of Directors approved one-year authorization programs allocating $50.0 million in each year to repurchase up to 1.25 million shares or 7% of the Company’s existing common stock over the following twelve months. In the first quarter of 2004, the Company acquired 59,300 shares of the Company’s common stock for an aggregate purchase price of $2.7 million. The Company did not purchase any shares in the first quarter of 2003. Additionally, the Company maintains an Executive Voluntary Deferral Plan and an Outside Directors Deferral Plan. These plans allow executives and directors to defer eligible compensation into deferred stock units or a cash account bearing interest at a fixed rate of return. Shares of common stock to be used to fulfill the Company’s payment obligation under the plans are held by a trust that the Company maintains. The trust purchased 42,806 shares in the first quarter of 2004. Further information on these plans can be found in Note 6 to the Company’s financial statements as shown in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission. Further information on the Company’s purchases of common stock in the first quarter of 2004 is provided in Part II, Item 2(e) of this report.

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The Company’s industrial thrift bank maintains an allowance for loan losses related to the Company’s loans receivable. During the first quarter of 2004, the Company did not experience a significant change in the underlying components of the allowance for loan losses or the balance in total. There have been no significant changes in the underlying rationale for management’s provision for loan losses or significant changes in asset quality.

Off-Balance Sheet Arrangements and Contractual Obligations

During the first quarter of 2004, the Company entered into an agreement with a service provider for telecommunications services with a minimum commitment of $11.0 million per year between March 1, 2004 and February 28, 2007. See additional information regarding the Company’s contractual obligations and commercial commitments in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission.

Interest Rate Risk

The following table provides information about the Company’s financial instruments that are sensitive to changes in interest rates. For investment securities, the table presents principal cash flows and related weighted interest rates by expected maturity dates. Actual cash flows could differ from the expected amounts.

Interest Rate Sensitivity

Principal Amount by Expected Maturity

Average Interest Rate

(dollars in thousands)