Aames Investment Corporation Reports Second Quarter Results

Market Wire, August, 2006

Aames Investment Corporation (NYSE: AIC), a nationwide subprime mortgage lender, today reported core net income of $16.7 million, or $0.27 per diluted share and GAAP net income of $7.2 million, or $0.11 per diluted share for the second quarter of 2006. During the quarter, the Company recorded a mark-to-market derivative loss under FASB 133 of $9.5 million equal to a pretax loss per common share of $0.15.

Second Quarter 2006 Operational Highlights

--  Net cost to originate was 2.08%, compared with 2.33% in the second
    quarter of 2005;
--  Weighted average interest rate on loan production was 8.72%, compared
    with 8.39% for the first quarter of 2006;
--  Taxable portfolio net interest margin was 1.17%;
--  Retail Channel production increased by 22.3% from the second quarter
    of 2005 and 2.4% from the first quarter of 2006 and
--  Total loan production was $1.2 billion, 25.2% below year-ago volume,
    reflecting current market conditions and the absorption of Aames wholesale
    lending operations by Accredited Home Lenders during the quarter.
    

Mr. A. Jay Meyerson, Chairman and CEO of Aames, said, "We are pleased with our strong second quarter results which clearly demonstrate the strength of our core retail franchise. Our retail production increased 22.3% over last year and accounted for 63.9% of total production during the quarter. Our results were also positively impacted by increased loan coupons that generated higher net gain on sale of loans, as well as lower than expected origination and credit costs."

On May 25, Aames announced a definitive agreement to be acquired by Accredited Home Lenders Co. (NASDAQ: LEND). The deal is expected to close in October 2006. The Company also completed the sale of its wholesale operation to Accredited in July. The Company and Accredited also announced that their joint proxy statement was mailed to Aames shareholders on August 4th and that Aames has set a shareholder meeting date of September 14th, 2006 to vote on the approval of the merger with Accredited.

Financial Disclosure

The Company has included measurements of core financial metrics, including core net interest income, core net income and loss and core diluted earnings and loss per share, which are non-GAAP financial metrics. Core earnings exclude the mark-to-market derivative gain or loss under FASB 133, as well as non-core charges or credits to income. The Company does not account for its derivative financial instruments as cash flow or fair value hedges under the provisions of Statement of Financial Accounting Standards No. 133 (Accounting for Derivative Financial Instruments and Hedging Activities) and, as a result, the unrealized mark-to-market gains or losses on the derivative financial instruments are recorded as income or losses, even though the cash flows will not be received until sometime in the future. By excluding the impact of the mark-to-market gain or loss from the net income or net loss, management believes that core net interest income and core net income or loss can provide a useful measurement of the Company's operating performance.

Throughout this press release, the Company will provide comparisons between the second quarter of 2006 and the first quarter of 2006 and the second quarter of 2005. Due to certain changes mentioned in our March 17, 2006 earnings announcement, including expansion of corporate cost reductions, a corporate reorganization making Aames Financial, our current TRS, our parent company and a C Corp for tax purposes, management believes that some comparisons to prior periods do not provide the best measurement of the Company's financial performance.

Core Revenue and Expense

The following table details the components of total and core revenue and expense and core net income or loss for the quarters ended June 30, 2006 and 2005 and March 31, 2006.

(dollars in thousands)          Quarter Ended           Percentage Change
                        ------------------------------  ------------------
                                                                  Sequen-
                       6/30/2006  6/30/2005  3/31/2006    Y-Y      tial
                       ---------  ---------  ---------  --------  --------

Net interest income
 after provision
 for loan losses (1)   $  25,509  $  16,632  $  26,497      53.4%     -3.7%
Noninterest income        25,075      6,030      8,418     315.8%    197.9%
                       ---------  ---------  ---------
Total revenue             50,584     22,662     34,915     123.2%     44.9%
   Mark-to-market loss
    on derivative
    financial
    instruments            9,499     11,495      5,187     -17.4%     83.1%
                       ---------  ---------  ---------
Total core revenue        60,083     34,157     40,102      75.9%     49.8%

Noninterest expense       43,370     44,572     48,415      -2.7%    -10.4%
  Non core noninterest
   expense                     -     (3,700)    (2,323)       nm        nm
                       ---------  ---------  ---------
Total core expenses       43,370     40,872     46,092       6.1%     -5.9%

Core pretax income
 (loss)                   16,713     (6,715)    (5,990)    348.9%    379.0%
Income tax provision          40        665         17     -94.0%    135.3%
                       ---------  ---------  ---------
Core net income (loss)    16,673     (7,380) $  (6,007)    325.9%    377.6%
                       =========  =========  =========

Core EPS               $    0.27  $   (0.12) $   (0.10)    325.0%    370.0%
                       =========  =========  =========

(1) NII for all  periods includes the FASB 133 mark-to-market gain or loss
on derivative financial instruments.