FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Aames Financial Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AAM)") else Response.Write("(NYSE: AAM)") end if %>
3731 Wilshire Boulevard, 10th Floor
Los Angeles, CA 90010-2828
(213) 351-6100

UNION CITY, Ca., October 30, 1996/FOOLWIRE/ --- Aames Financial Corp. released first quarter 1997 operating results on Monday evening. They had income of $24.1 million, up 146% from $9.8 million a year ago. Without taking into account the non-recurring pretax charges associated primarily with the One Stop merger, they would have actually earned $0.69 per share fully diluted, up 97% from $0.35 per share a year ago. Revenue reached $65.9 million, nearly triple the revenues of $22.8 million last year.

They intend to aggressively pursue expansion of their leadership position through their growing, nationwide retail operations and their burgeoning correspondent relationships, as well as through One Stop's network of mortgage brokers.

Loan origination volume in the quarter rose to $501 million, up 253% from $142 million a year ago. One Stop contributed $141 million to the volume for the quarter. Correspondent volume increased to $259 million, a 9% increase from $237 million for the quarter ending June 30th. Retail volume increased to $92 million, a 27% increase from $72.2 million for last quarter.

They continued their program of securitizing the majority of their loans and just completed the sale for the quarter of a $527 million mortgage pool. One Stop contributed $260 million to that securitization.

As an aside, but also important during the quarter Aames opened 5 new retail branches. They entered New Jersey and Virginia, those states were not available to them until recently for retail purposes. And they are expanding the company's presence in Maryland, Florida, and Pennsylvania with additional branches opened in all of those states. One Stop opened 5 new branches in the quarter, entering Arizona, South Carolina, and Michigan and expanding its presence in California.

COMMENTS FROM ONE STOP MORTGAGE. The merger with Aames has resulted in remarkable synergies for both organizations. The management of both companies have integrated magnificently. In particular they have achieved efficiencies in joint product development and marketing economies of scale. For example, One Stop has commenced utilizing Aames outbound telemarketing program to contact their brokers nationwide and they have also engaged in joint production of print advertising. One Stop also continues to grow at a wonderful rate and in this regard they expect to open up 5 additional wholesale branch offices during the next 3-4 months.

FINANCIAL DETAILS. Expenses grew about at appropriate levels. Compensation expenses increased to 221%, mostly driven by the increase in almost 300 employees and the acquisition of One Stop Mortgage. Sales and advertising grew at 115%. G&A grew at 221% and that includes the addition of almost 28 One Stop offices and their employees. Interest expense grew at 500% and principally relates to the new convertible debt and the increased amount of loans they held on their books pending securitization. They had non-recurring charges of $28 million principally due to the termination of the financing lines that One Stop held which accounted for about $23 million in expenses, a $2 million write-off for the abandonment of a lease where their current corporate headquarters are since they will be moving next Summer to larger facilities to accommodate their growth. These write-offs enabled them to get a cash flow benefit in excess of $9 million in the quarter and in fact, the majority of those were tax deductible. The biggest driver for their increased revenues was an increase of more than 300% in the loans securitized, growing from $121 million to $527 million for the quarter ended September 1995 and September 1996 respectively.

Their balance sheet showed an increase of almost $80 million in cash and cash equivalents. Increases in loans held for sale on the Aames books and a comparable increase in the excess servicing receivable of 38% because of the securitization during the quarter. During the quarter they were able to increase their loss reserves for potential losses on the securitizations to $19.2 million from an amount just over $10 million at the end of June 1996.

Their loan service portfolio has grown to $1.77 billion, up from $703 million last year. One of the core business is the development of brand name in their retail system throughout the country. And certainly that loan service portfolio has historically acted as a source of business for all of their branches, contributing a significant volume of re-write business to each an every branch in their system. So, not only is loan servicing revenue valuable to them on it's own on a standalone basis, but as a contributor to new units of refinancing business remains a very significant part of their overall marketing program.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.