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[LOGO] Aames
Annual Meeting of Stockholders
November 8, 2000
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COMPETITIVE ENVIRONMENT
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o Home equity sector volatility continued in '99 - '00 constraining capital and
liquidity for many lenders
- Conditions forced many to attempt to sell, restructure, or file for
bankruptcy
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Bankrupt/Closed
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Sold Unit
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Long Beach ContiFinancial
Financial Associates First Plus
Advanta Southern Pacific
The United Companies
First Alliance
Money Store
WMC
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o Current competitive environment rationalizing as competitors exit or reduce
focus on sector
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<PAGE>
TURNAROUND STRATEGY - Progress Report
What we said we were going to do
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o Strengthen Management Team
o Address capital and liquidity requirements
o Improve cost efficiencies and production economics
o Increase core retail and wholesale production, including internet origination
o Eliminate undesirable products and lines of business
o Implement risk-based pricing discipline
o Improve access to the securitization markets
o Invest in technology and build new infrastructure to compete in the new age
of subprime mortgage banking
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<PAGE>
TURNAROUND STRATEGY - Management Changes
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Position Previous
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A. Jay Meyerson CEO Key Bank USA
James Huston CFO Banc One
Geoff Sanders CCO Home Savings
Barry Levine CIO Contifinancial, Chase
John Kohler Capital Markets Greenwich Capital
Peter Yaskowitz CMO Contifinancial, Banc One
Joe Grimes CQO Fremont, GECC
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<PAGE>
TURNAROUND STRATEGY
Recent Accomplishments
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<TABLE>
<CAPTION>
-----------------
Turnaround Effort
-----------------
------------------- --------------------- ---------------------- ----------------------
Solidify Establish Financial Reduce Grow Profitably
Capital Structure & Risk Management Cost & Prudently
------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
o $665MM o Write-down of o Consolidated retail o New technology
Committed residuals & platform investments
warehouse servicing
facilities receivable o Regionalized o Exit correspondent
wholesale business, U.K. &
o $75MM Servicing o Advanced, loan- processing commercial
advance facility level analytics
o Streamlined / o Launch broker &
o $35MM Residual o More conservative integrated retail internet
finance facility securitization GOS corporate OH platforms
assumptions functions
o $75MM Residual o Improve quality of
sale facility o New credit & o Aggressive production
pricing corporate expense
o $175MM Equity management initiatives & - Pricing
infusions policies discipline
o Disciplined budget o Focused vendor - Eliminate low-
& performance management return programs
management
</TABLE>
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<PAGE>
PRODUCTION HISTORY
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Loan Originations By Channel Volume (Fiscal Year Ending June) $ B
o Correspondent
CORE CHANNELS o Retail
o Broker
[The following table was depicted as a bar chart in the printed material.]
<TABLE>
<CAPTION>
($ in millions)
<S> <C> <C> <C> <C> <C> <C>
$355.0 $1,168.9 $2,347.9 $2,383.6 $2,193.6 $2,079.3
FY '95 FY '96 FY '97 FY '98 FY '99 FY 00
In-house Servicing ($ B): $.6 $1.4 $3.2 $4.1 $3.8 $3.5
</TABLE>
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<PAGE>
REDUCED COSTS
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[The following table was depicted as a bar chart in the printed material.]
Number of Employees
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1,642 Headcount 1,476
Reduction
[down arrow]
10%
12/31/98 6/30/00
Key Highlights
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o Closed unprofitable branches
o Consolidated 48 broker branches into 5 regional centers
o Consolidated back-office functions in Retail and Retail Direct channels
o Eliminated correspondent division
o Eliminated business lines (UK, 125 LTV, Commercial)
o Streamlined corporate overhead functions
o Implemented aggressive corporate expense reduction policies
o Reduced senior management compensation and modified compensation philosophy
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6/30/00 Direct operating cost
2.80% vs. 3.78% 9/30/99
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<PAGE>
ORIGINATIONS BY CHANNEL
Quarter Ending September 2000
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[The following information was depicted as a pie chart in the printed material.]
Quarter Ending September 2000
Total $518 Mil.
NLC
5%
$21 Mil.
Retail
43%
$211 Mil.
Wholesale
52%
$286 Mil.
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<PAGE>
CONSOLIDATED INCOME STATEMENT
September 2000 Quarter Operating Results
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Quarter Ended Quarter Ended Variance
Sep-00 Jun-00 Better/(worse)
Gain on sale $ 19,921,000 $ 7,695,000 $ 12,226,000
Origination fees 12,332,000 8,521,000 3,811,000
Loan service 4,306,000 3,521,000 785,000
Interest income 23,353,000 22,182,000 1,171,000
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Total Revenue 59,912,000 41,919,000 17,993,000
Compensation 26,072,000 (1) 21,836,000 (2) (4,236,000)
Production 4,514,000 5,298,000 784,000
General and administrative 13,588,000 14,984,000 1,396,000
Interest expense 15,009,000 12,894,000 (2,115,000)
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Total Expenses 59,183,000 55,012,000 (4,171,000)
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Pretax income (loss) 729,000 (13,093,000) 13,822,000
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Income taxes 36,000 910,000 874,000
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Net income (loss) $ 693,000 $(14,003,000) $ 14,696,000
============ ============ ============
Production:
Wholesale $285,937,000 $306,033,000 $(20,096,000)
Retail 211,355,000 206,336,000 5,019,000
NLC 20,845,000 15,845,000 5,000,000
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Total Production $518,137,000 $528,214,000 $(10,077,000)
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(1) Includes a FASB 91 recognition of $2.4 million
(2) Includes a FASB 91 deferral of $1.1 million
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<PAGE>
STRATEGIC INITIATIVES
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Upgrade Technology Leverage Technology
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o Enterprise wide loan o New business rules and
origination system, Unifi management reporting
o Development of new Data o Implement hybrid branch
Warehouse marketing model combining
branch telemarketing with
o Implement new contact [right arrow] new agency data modeling
management system
o Complete re-engineering of
o Install Autodialer in call wholesale channel
center and servicing
collections unit o Execute retail quality
process & roll-out company
wide
o Developing infrastructure
for web-enabled
private-label partnership
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<PAGE>
RIGHTS OFFERING
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o SHARES: Approximately 19 million
o PRICE: $0.85 per share
o SUBSCRIPTION RATE: 2.56 Shares of Series D Preferred
Stock for Each Share of Common
Stock and Series C Convertible
Preferred Stock
o TIMING:
o SEC Comments Received
o Company Preparing Responses
o Record Date will be Set When SEC Authorizes Registration Statement
(expected in early 2001)
o Press Release will be Issued to Inform Stockholders of Record Date
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<PAGE>
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Questions and Answers
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