SEC Form 3

FORM 3

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

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1. Name and Address of Reporting Person* Newcastle Focus Fund II LP (Last) (First) (Middle) 200 CRESCENT COURT SUITE 1400 (Street) DALLAS TX 75201 (City) (State) (Zip)	2. Date of Event Requiring Statement (Month/Day/Year) 11/21/2006	3. Issuer Name and Ticker or Trading Symbol HALLMARK FINANCIAL SERVICES INC [ HAF ]
		4. Relationship of Reporting Person(s) to Issuer (Check all applicable) X Director X 10% Owner X Officer (give title below) Other (specify below) Executive Chairman	5. If Amendment, Date of Original Filed (Month/Day/Year)
			6. Individual or Joint/Group Filing (Check Applicable Line) Form filed by One Reporting Person X Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Beneficially Owned
1. Title of Security (Instr. 4)	2. Amount of Securities Beneficially Owned (Instr. 4)	3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	4. Nature of Indirect Beneficial Ownership (Instr. 5)
Common Stock	14,579,129	D(1)(2)

Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 4)	2. Date Exercisable and Expiration Date (Month/Day/Year)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
	Date Exercisable	Expiration Date	Title	Amount or Number of Shares

1. Name and Address of Reporting Person* Newcastle Focus Fund II LP (Last) (First) (Middle) 200 CRESCENT COURT SUITE 1400 (Street) DALLAS TX 75201 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner X Officer (give title below) Other (specify below) Executive Chairman

1. Name and Address of Reporting Person* NEWCASTLE PARTNERS L P (Last) (First) (Middle) 200 CRESCENT COURT STE 1400 (Street) DALLAS TX 75201 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner X Officer (give title below) Other (specify below) Executive Chairman

1. Name and Address of Reporting Person* NEWCASTLE CAPITAL MANAGEMENT LP (Last) (First) (Middle) 200 CRESCENT COURT STE 1400 (Street) DALLAS TX 75201 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer Director X 10% Owner X Officer (give title below) Other (specify below) Executive Chairman

1. Name and Address of Reporting Person* NEWCASTLE CAPITAL GROUP LLC (Last) (First) (Middle) 200 CRESCENT COURT STE 1400 (Street) DALLAS TX 75201 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer Director X 10% Owner X Officer (give title below) Other (specify below) Executive Chairman

1. Name and Address of Reporting Person* SCHWARZ MARK E (Last) (First) (Middle) 200 CRESCENT COURT STE 1400 (Street) DALLAS TX 75201 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer Director X 10% Owner X Officer (give title below) Other (specify below) Executive Chairman

Explanation of Responses:

1. Newcastle Capital Management, L.P. ("NCM") is the general partner of each of Newcastle Partners, L.P. ("NP"), Newcastle Special Opportunity Fund I, L.P. ("NSOFI"), Newcastle Special Opporunity Fund II, L.P. ("NSOFII") and Newcastle Focus Fund II, L.P. ("NFF"). Newcastle Capital Group, L.L.C. ("NCG") is the general partner of NCM and Mark E. Schwarz ("Schwarz") is the managing member of NCG. Accordingly, each of NCM, NCG and Schwarz may be deemed to beneficially own the shares directly owned by any of them.

2. Includes (1) 48,821 shares owned by Mr. Schwarz and 2,084 shares which may be acquired by Mr. Schwarz pursuant to stock options exercisable on or within 60 days; (2) 11,253,394 shares owned by NP; (3) a total of 3,274,830 shares owned by NSOFI and NSOFII.

	Newcastle Focus Fund II, L.P., By: Newcastle Capital Management, L.P., its general partner, By: Newcastle Capital Group, L.L.C. its general partner, by:/s/ Mark E. Schwarz, its managing member	12/04/2006
	Newcastle Capital Management, L.P., By: Newcastle Capital Group, L.L.C. its general partner, By: /s/ Mark E. Schwarz, its managing member	12/04/2006
	Newcastle Capital Group, L.L.C., By: /s/ Mark E. Schwarz, its managing member	12/04/2006
	/s/ Mark E. Schwarz	12/04/2006
	** Signature of Reporting Person	Date
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 5 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
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