Wednesday July 21, 4:15 pm Eastern Time

Company Press Release

SOURCE: HomeGold Financial, Inc.

HomeGold Financial, Inc. Reports $7.1 Million Net Income in 1st Six Months of 1999

GREENVILLE, S.C., July 21 /PRNewswire/ -- HomeGold Financial, Inc. (Nasdaq/NM: HGFN - news) today announced net income of $7.1 million for the six months ended June 30, 1999, compared with a net loss of $43.6 million for the six months ended June 30, 1998. Earnings per share for the six months ended June 30, 1999 were $0.73 on 9.8 million average shares outstanding, compared to a net loss per share of $4.49 on 9.7 million average shares outstanding in the comparable period in 1998.

For the three month period ended June 30, 1999, the Company reported a net loss of $1.9 million, compared to a net loss of $23.0 million for the three month period ended June 30, 1998. The net loss per share for the three months ended June 30, 1999 was $0.19 on 9.8 million shares outstanding, compared to a net loss per share of $2.37 on 9.7 million shares outstanding for the three months ended June 30, 1998.

``We have made significant improvements in our operations from a year ago'' stated Kevin J. Mast, Chief Financial Officer for the Company. ``The benefits of the cost cutting efforts and structural reorganization implemented during 1998 are beginning to show in our financial results,'' Mast continued.

During the first six months of 1999, the Company repurchased $49.3 million of its senior unsecured debt, and realized an extraordinary gain of $21.2 million on the extinquishment of this debt. A gain of $16.9 million was recognized in the first quarter 1999 on the repurchase of $35.4 million of senior unsecured debt, while a gain of $4.3 million was recognized in the second quarter 1999 on $13.9 million of senior unsecured debt. The Company may, from time to time, continue to acquire its senior unsecured debt. The Company reported an operating loss of $6.1 million for the second quarter 1999 before consideration of the gain on the repurchase of these notes, compared to an operating loss of $7.9 million for the first quarter 1999. The improved operating results in the second quarter 1999 compared to the first quarter 1999 was due mainly to the securitization transaction completed in May 1999. This securitization transaction generated a gain of $1.7 million, and generated additional liquidity of $33.0 million for the Company. At June 30, 1999, the Company had total cash and excess availability under its line of credit of $54.7 million.

Total revenues for the three months ended June 30, 1999 were $9.2 million, an increase of 10% over the first quarter 1999 revenues of $8.3 million. One factor contributing to the increased revenues, in addition to the securitization transaction completed in May, is the improving premiums received on whole-loan sales. Premiums on whole loan sales averaged 1.2% in January 1999 compared to an average of 3.7% in June 1999.

The Company has begun to explore the internet as an alternative means of generating leads for production through its retail distribution channel, and currently has six employees dedicated full-time to this effort. The Company has entered into partnerships with a number of multi-lender sites as a means of generating additional customer leads. The Company is also exploring various other web-sites for running advertising campaigns. Customers are able to complete a mini application by visiting the Company's web-site at www.HomeGold.com . A major initiative was launched by the Company in the second quarter 1999 to install an automated underwriting system, which when complete should significantly enhance the speed and efficiency of the Company's present system. The Company has selected the Arcsystems.com product LT2K for this purpose. The addition of automated underwriting to the Company's web site should establish it as a competitive mortgage site on the internet.

Management has reduced general and administrative expenses to approximately $3.6 million per month in the first six months of 1999 compared to an average of $9.2 million per month in the first six months of 1998. These reduced costs reflect the sale of non-mortgage subsidiaries and the consolidation of mortgage operations to one location in South Carolina. According to Jack Sterling, CEO, the Company's current infrastructure, including information systems, servicing, and financial reporting and controls, is capable of supporting a much larger organization. ``We chose to protect this valuable infrastructure to support our anticipated future growth. In many ways the last eighteen months have been like starting over. But this time we are determined to build on a strong foundation, even though it delays profitability,'' Sterling commented.

The Company's asset quality for its total serviced loans showed significant improvement at June 30, 1999 from year-end. Total serviced loans delinquent 30 days or more at June 30, 1999 was $59.1 million, or 12.19% of the total serviced portfolio, compared to $74.9 million, or 13.44% of the total serviced portfolio, at December 31, 1998. Net loans charged-off, on an annualized basis, was 62 basis points during the six months ended June 30, 1999, compared to 108 basis points during the year ended December 31, 1998.

The Company's total mortgage loan originations increased 11% in the second quarter of 1999 compared to the first quarter of 1999, growing from $52.6 million for the three months ended March 31, 1999 to $58.4 million for the three months ended June 30, 1999. The June loan volume was the highest month so far in 1999, with originations of $25.3 million compared to $16.5 million in the previous month. The mix of production between retail and wholesale has remained fairly constant, with the retail component producing approximately 57% of the volume while wholesale contributed the remaining 43%. The Company currently has 66 retail loan officers and 29 wholesale account executives. Productivity levels per loan officer and account executive continue to be an area of focus for the Company. The Company's biggest challenge is to continue increasing loan origination volume without increasing costs. To help achieve this goal, the Company hired a new Executive Vice President in July 1999. This individual, Mr. John Crisler, has been active in management positions in the financial services industry for approximately 19 years. Most recently, Mr. Crisler was with Advanta Corporation where he served as the Senior Vice President of Direct Originations and Vice President of Marketing.

The Company showed considerable improvement in its balance sheet from year-end, increasing shareholders' equity from $5.8 million at December 31, 1998 to $13.1 million at June 30, 1999. The Company's equity-to- assets ratio improved from 2.3% at December 31, 1998 to 6.5% at June 30, 1999.

HomeGold Financial, Inc. is a financial services company, which originates, services, and sells non-prime first and second lien residential mortgage loans. HomeGold currently has approximately 400 employees.

``Safe Harbor'' statement under the Private Securities Litigation Reform Act of 1995: From time to time the Company may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance and results of the Company's business include the following: lower origination volume due to market conditions; inability to achieve desired efficiency levels; higher losses due to economic downturn or lower real estate values; loss of key employees; negative cash flows and capital needs; delinquencies and losses in securitization trusts; right to terminate mortgage servicing and related negative impact on cash flow; adverse consequences of changes in the interest rate environment; year 2000 compliance and technological enhancement; prepayment risk; credit risk, including deterioration of creditworthiness of borrowers and risk of default; risk of adverse changes in the secondary market for mortgage loans; dependence on funding sources; dependence on broker network; competition; timing of loan sales; economic conditions; contingent risks; government regulation; adverse impact of lawsuits; losses due to breach of representation or warranties under previous agreements; and lower than anticipated loan origination fees. For more complete information concerning factors which could affect the Company's financial results, reference is made to the Company's registration statements, reports and other documents filed with the U.S. Securities and Exchange Commission.

                 HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES
                   Consolidated Condensed Balance Sheets
                           (Dollars in thousands)

                                          June 30,         December 31,
                                            1999            1998
                                        (Unaudited)        (Audited)

                            Assets
    Cash and cash equivalents            $ 36,203            $ 36,913
    Restricted cash                         5,169               5,100

    Loans receivable                       65,303             124,740
    Less allowance for loan losses         (4,842)             (6,659)
    Less deferred loan fees                (1,166)             (2,071)
    Plus deferred loan costs                  640                 888
     Net loans receivable                  59,935             116,898

    Accrued interest receivable and other
     receivables                           14,494              15,541
    Residual receivables (net of allowance
     for loss of $7,313 and $7,165
     respectively)                         49,120              43,857
    Property and equipment, net            18,656              19,665

    Real estate and personal property
     acquired through foreclosure           4,949               5,881

    Excess of cost over net assets of
     acquired businesses, net               1,613               1,660
    Debt origination costs, net             2,676               4,681
    Deferred income tax asset               4,151               4,151
    Servicing asset                           945                 940
    Other assets                            2,823               1,921

     Total assets                        $200,734            $257,208

              Liabilities and Shareholders' Equity

    Revolving warehouse lines of credit  $     --            $ 16,736
    Investor savings debentures           141,420             135,890
    Senior unsecured debt                  37,364              86,650
    Other liabilities                       8,851              12,108

     Total liabilities                    187,635             251,384

    Minority interest                          17                  23

    Shareholders' equity                   13,082               5,801

     Total liabilities and shareholders'
      equity                             $200,734            $257,208



                  HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES
               Consolidated Condensed Statements of Operations
           (Dollars in thousands, except share and per share data)



                           Six months ended    Three months ended   Year ended
                                  June 30,            June 30,    December 31,
                             1999       1998       1999      1998      1998
                                (Unaudited)         (Unaudited)     (Audited)

    Revenues:
     Interest income      $  4,956   $  19,190   $ 1,618   $ 10,516  $ 35,075
     Servicing income        5,010       7,601     2,608      3,379    12,239
     Gain on sale of loans:
      Gain on sale of loans  4,389      13,291     3,216      6,773     9,472
      Loan fees, net         2,373       6,830     1,416      3,228    11,745
     Total net gain on sale
      of loans               6,762      20,121     4,632     10,001    21,217
     Gain on sale of
       subsidiaries             --          --        --         --    18,964
     Other revenues            750       2,418       354        880     4,230
       Total revenues       17,478      49,330     9,212     24,776    91,725

    Expenses:
     Interest expense        8,987      18,385     4,189      9,952    35,968
     Provision for credit
      losses                  (349)      6,940      (430)     2,111    11,906
     Fair value adjustment
      of residuals             775       8,910       828      7,330    13,638
     Restructuring charges      --          --        --         --     6,838
     General & administrative
      expense               21,537      55,444    10,595     25,791    96,366
        Total expenses      30,950      89,679    15,182     45,184   164,716

    Income (loss) before
     income taxes,
     minority interest
     and extraordinary
     item                  (13,472)    (40,349)   (5,970)   (20,408)  (72,991)

    Provision (benefit)
     for income taxes          620       3,244       170      2,566     3,017

    Income (loss) before
     minority interest and
     extraordinary item    (14,092)    (43,593)   (6,140)   (22,974)  (76,008)

    Minority interest in
     (earnings) loss of
      subsidiaries              (4)          2        (7)        (2)       47

    Income (loss) before
     extraordinary item    (14,096)    (43,591)   (6,147)   (22,976)  (75,961)

    Extraordinary item -
     gain on extinguishment
     of debt                21,227          --     4,281         --    18,216

    Net income (loss)    $   7,131   $ (43,591) $ (1,866) $ (22,976) $(57,745)

    Basic earnings (loss) per share:
     Income (loss) before
      extraordinary item $   (1.44)  $   (4.49) $  (0.63) $   (2.37) $  (7.81)
     Extraordinary item       2.16          --      0.44         --      1.87
     Net income (loss)   $    0.72   $   (4.49) $  (0.19) $   (2.37) $  (5.94)

    Weighted average number
     of shares
     outstanding         9,809,798   9,705,055 9,827,228  9,708,083 9,719,262

    Diluted earnings (loss) per share:
     Income (loss) before
      extraordinary
      item               $   (1.42)  $   (4.49) $  (0.62) $   (2.37) $ (7.81)
     Extraordinary item       2.14          --      0.43         --     1.87
     Net income (loss)   $    0.72   $   (4.49) $  (0.19) $   (2.37) $ (5.94)

    Weighted average number
     of shares And options
     outstanding         9,899,649   9,705,055 9,990,357  9,708,083 9,719,262




                     HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES
                  Consolidated Condensed Statements of Cash Flows
                              (Dollars in thousands)

                                    Six months ended        Year ended
                                       June 30,             December 31,
                                    1999       1998             1998
                                      (Unaudited)            (Unaudited)

    Operating cash income:
      Servicing fees received
       and excess cash flow from
       securitization trusts       $  8,309   $  4,870         $ 16,548
      Interest received               5,784     20,234           36,127
      Cash gain on sale of loans      2,673      7,979            1,343
      Cash loan origination fees
       received                       2,925      9,843           18,255
      Other cash income                 750      2,603            5,388

        Total operating cash income  20,441     45,529           77,661

    Operating cash expenses:
      Securitization costs              593        851              851
      Cash operating expenses        19,966     53,635           99,551
      Interest paid                  10,674     18,770           37,519
      Taxes paid                      1,049      1,466            2,515

        Total operating cash
         expenses                    32,282     74,722          140,436

    Cash flow due to operating cash
     income and expenses            (11,841)   (29,193)         (62,775)

    Other cash flows from operating activities:
      Cash provided by (used in)
       other payables and
       receivables                   (7,043)       638          (12,541)
      Cash provided by (used in)
       loans held for sale           44,840    (51,058)         123,674
      Cash proceeds on sale of
       residual assets                   --         --           16,958
      Cash gain on sale of subsidiary
       assets                            --         --           18,964

    Net cash provided by (used in)
     operating activities            25,956    (79,613)          84,280

    Net cash provided by investing
     activities                      12,451     18,173           24,327

    Net cash provided by (used in)
     financing activities           (39,117)    97,505          (79,255)

    Net increase (decrease) in cash
     and cash equivalents              (710)    36,065           29,352

    Cash and cash equivalents,
     beginning of period             36,913      7,562            7,561

    Cash and cash equivalents,
     end of period                 $ 36,203   $ 43,627         $ 36,913



                      HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES
                              Asset Quality Statistics
                               (Dollars in thousands)
                                     (Unaudited)

                                        June 30,             December 31,
                                          1999                  1998
                                   Dollars    Percent    Dollars    Percent


    Delinquencies as a % of total
     unguaranteed serviced loans:
        30-59 days                $ 20,160     4.16%    $ 28,174      5.05%
        60-89 days                $  7,216     1.49%    $  8,647      1.55%
        90 days or more and loans
         in foreclosure process   $ 31,678     6.54%    $ 38,109      6.84%
        Total greater than 30
         days                     $ 59,054    12.19%    $ 74,930     13.44%

    YTD net charge-offs as percentage
     of average unguaranteed
     serviced loans (annualized)  $  1,607     0.62%    $  8,938      1.08%

    Total allowances for credit losses
     as percentage of total
     unguaranteed serviced loans  $ 12,155     2.51%    $ 13,824      2.48%

SOURCE: HomeGold Financial, Inc.