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Capital Title Group Signs Definitive Merger Agreement With Nations Holding Group Headquartered in California

June 13, 2002

PHOENIX, /PRNewswire-FirstCall/ -- Capital Title Group, Inc. (Nasdaq:CTGI ) -- a  regional provider of title insurance and real estate-related services,  has signed a definitive merger agreement with privately owned Nations Holding Group, headquartered in Los Angeles, California (Nations). Nations' primary operating units are United Title Company, United Title Insurance Company and First California Title Company. Under the terms of the agreement, approved by the Board of Directors for each company, Capital Title will acquire all of the outstanding shares of Nations for $35 million in a combination of approximately $18 million in cash and approximately $17 million in preferred stock. The $35 million purchase price is subject to increase or decrease by an amount equal to 50% of the change in Nations' book equity from December 31, 2001 to the closing of the transaction. Comerica Bank has issued a commitment letter to Capital Title of up to $14 million under a seven-year term loan to assist in the financing of this transaction, and a $3 million revolving line of credit. The credit facility commitments contain certain covenants and conditions normally included in transactions of this nature. Nations, which will become a wholly-owned subsidiary of Capital Title, had audited revenue of $70.6 million and net income of $4.4 million in 2001. The closing is subject to Capital Title obtaining regulatory approvals and customary closing conditions. The transaction is currently anticipated to close during the third or fourth quarter of 2002.

Nations' principal operating subsidiaries, United Title Company operates 28 offices in Southern California and First California Title Company serves Alameda and Contra Costa counties (in the San Francisco Bay area) through 7 offices. Both United Title Company and First California Title Company provide title and escrow services and are policy issuing agents of United Title Insurance Company (UTIC), Nations' wholly-owned title insurance underwriter. UTIC is currently licensed as a title insurance underwriter in the states of California, Arizona and Nevada. In addition, Nations operates Shatto Exchange Services, Inc., which handles real estate exchange transactions and Shatto Information Systems, Inc., which provides technology services. Nations also has an 80% ownership interest in AdvantageWare, Inc., a software provider and application service provider (ASP) serving the title and escrow industry as well as governmental agencies.

Commenting on the transaction, Donald R. Head, Chairman of the Board, President and Chief Executive Officer of Capital Title Group said, "The combination of Nations with Capital Title will create a major regional player in the Western United States employing in excess of 1,500 employees. The merger will appreciably advance our significant investment in the California market, particularly in Southern California, the most highly concentrated area of Nations' operations. We currently anticipate this acquisition will more than double Capital Title's revenue and that the combined companies will be accretive to earnings within the first year. Operational synergies are added benefits anticipated to increase the bottom line.

"In addition," Head continued, "one of the key components of this corporate marriage is Nations' title insurance operations that will provide a new source of revenue for Capital Title. As a licensed title insurance company, it will enable us to capture a major portion of the insurance premiums Capital Title currently places with other title insurance carriers.

Source: Capital Title Group, Inc.



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