MEGO FINANCIAL CORP. REPORTS PROFIT FOR THIRD QUARTER OF FISCAL 1999
Company Achieves Expected Positive Turnaround Due To Aggressive Focus on Expense Controls and Higher Sales Volume
Highlights -- Company reports $0.05 per share profit for Q3 FY '99. -- Net loss per share narrows 92% to $0.01 in first nine months of fiscal 1999 vs. $0.13 last year. -- Marketing and sales costs and G&A expenses drop. -- Wholly-owned timeshare and land sales subsidiary maintains profitability trend which began in February 1999. -- Company continues to pursue disposition of non-core assets in Pahrump, Nevada, with values well in excess of book value. -- Company expects to be profitable for full year, excluding the sale of any non-core assets.

Press Release: Mego Financial Corporation

Financial Summary Table (in 000's, except per share data)

	Three Months Ended		Nine Months Ended
	5/31/99	5/31/98	5/31/99	5/31/98
Total Revenues	$20,327	$17,511	$53,078	$49,526
Income (Loss) Before Income Taxes	1,143	(1,841)	(769)	(4,489)
Income Taxes (Benefit)	--	(1,728)	(650)	(1,728)
Net Income (Loss) Applicable to Common Stock	1,143	(113)	(119)	(2,761)
Net Income (Loss) Per Common Share (basic and diluted)	0.05	(0.01)	(0.01)	(0.13)
Weighted Avg. Number of Common Shares and Common Share Equivalents Outstanding (basic and diluted)	21,009,506	21,009,506	21,009,506	21,009,506

LAS VEGAS-- Mego Financial Corp. (Nasdaq: MEGO) announced today significantly improved results for the third quarter and first nine months of fiscal 1999 ended May 31, 1999.

Higher Volume and Lower Marketing Costs Contribute to Company Turnaround. Mego Financial Reports Profit for the Fiscal 1999 Third Quarter.

For the three months ended May 31, 1999, Mego Financial reported total revenues of $20,327,000, up 16% from $17,511,000 in the same period of fiscal 1998. The increase in revenues was primarily generated by a 20% increase in timeshare and land sales, net.

For the three months ended May 31, 1999, Mego Financial reported income before income taxes of $1,143,000. This compares to a loss before income taxes of $1,841,000 in the third quarter of fiscal 1998, of which $1,338,000 was the operating loss of the Company's wholly-owned timeshare and land sales subsidiary, Preferred Equities Corporation (PEC). It also compares favorably to the loss before income taxes of $1,121,000 and $791,000 in the first and second quarters of fiscal 1999 (ended November 30, 1998 and February 28, 1999), of which approximately $719,000 and $427,000 were the operating losses of PEC for those periods, respectively.

In particular, the significant improvement for the fiscal 1999 third quarter versus the same period last year was due chiefly to a $1.2 million decrease in general and administrative expenses and as a result of PEC's aggressive and ongoing efforts to lower its marketing and sales expenses as a percentage of net sales.

As a result of these improvements, the Company reported net income applicable to common stock of $1,143,000, or $0.05 per common share based on 21,009,506 weighted average common shares and common share equivalents outstanding for the three months ended May 31, 1999. In the same period of fiscal 1998, Mego Financial reported a net loss applicable to common stock of $113,000, inclusive of an income tax benefit of $1,728,000, or $0.01 per common share based on the same number of weighted average common shares and common share equivalents outstanding. Recent results also reflect a positive trend from the first and second quarters of fiscal 1999, during which Mego Financial reported a net loss applicable to common stock of $0.04 and $0.02, inclusive of an income tax benefit of $381,000 and $269,000 respectively, based on 21,009,506 weighted average common shares and common share equivalents outstanding in both periods.

Nine Month Loss Narrows Substantially

For the nine months ended May 31, 1999, Mego Financial reported a 7% rise in total revenues, to $53,078,000, compared to $49,526,000 in the same period of fiscal 1998.

The Company reported a loss before income taxes of $769,000, of which approximately $350,000 was operating income of PEC. This compares to a loss before income taxes of $4,489,000 in the first nine months of fiscal 1998, of which $2,941,000 was the operating loss of PEC. General and administrative expenses declined 23% to $10.5 million, compared to $13.6 million in the nine months ended May 31, 1998. Marketing and sales expenses also showed a decrease as a percentage of net sales when compared to the same period last year.

For the nine months ended May 31, 1999, Mego Financial had an income tax benefit of $650,000, resulting in a net loss applicable to common stock of $119,000, or $0.01 per common share based on 21,009,506 weighted average common shares and common share equivalents outstanding. This compares with a net loss applicable to common stock of $2,761,000 (inclusive of an income tax benefit of $1,728,000), or $0.13 per common share based on the same number of weighted average common shares and common share equivalents outstanding in the same period of fiscal 1998.

It is important to note that the Company's fiscal 1999 nine month net loss applicable to common stock of $119,000, or $0.01 per common share, including a $650,000 income tax benefit, is a substantial improvement over the first six months of this fiscal year, during which Mego Financial reported a net loss applicable to common stock of $1,262,000 or $0.06 per common share also including a $650,000 income tax benefit, based on 21,009,506 weighted average common shares and common share equivalents outstanding.

Management Comments on the Recent Reporting Period; Expects to be Profitable for the Full Year

Commenting on the Company's improved results, Jerome J. Cohen, President of Mego Financial, said, ``We are delighted to be able to report to our shareholders a return to profitability in the third quarter -- a trend we saw developing in February of this year and which is continuing into the fourth quarter. We attribute this milestone to a number of factors, including our unyielding focus on reducing marketing and sales costs, coupled with last year's management reorganization; a reduced workforce, and additional training and improved sales programs implemented throughout the organization. These efforts have led to increased sales accompanied by significant reductions in general and administrative expenses and marketing and sales costs.

``As it relates to our timeshare properties, we continue to believe that Mego Financial offers potential purchasers, as well as our existing customer base of 68,000, a comprehensive array of vacation choices. Currently, we have nine strategically located timeshare resorts, all of which continue to meet or exceed our expectations. This includes our flagship Ramada Vacation Suites resort located in Las Vegas, which continues to report strong sales, despite a major increase in competition due to the growing popularity of the area. To keep up with demand, we recently opened 18 new 'Fountains' units at this location, adding inventory representing approximately $14 million of potential sales.''

Mr. Cohen continued, ``Our land sales also remain brisk, especially at our Hartsel Springs Ranch, located about 70 miles west of Colorado Springs, Colorado. To date, about 26% of the 2,300 land parcels have been sold and we anticipate that the Hartsel Springs Ranch will continue to produce revenues for the next several years.

``Looking ahead, with our continued focus on growing earnings, as well as positive industry dynamics, we expect to report even better results in our fiscal fourth quarter, ended August 31, 1999. As a result, we anticipate being profitable for the full year, excluding the sale of any of our non-core assets.'' The non-core assets include the Central Nevada Utility Company, two golf courses and numerous major parcels of land in Pahrump, Nevada, all with values well in excess of their book value. Management expects to conclude a sale of at least one of these assets during calendar 1999.

Management also noted that its investment bankers, Friedman, Billings, Ramsey & Co. Inc., continue to review strategic alternatives for Mego Financial, including potential offers, mergers and financing transactions, as appropriate.

Mego Financial is a premier developer and operator of timeshare properties and a provider of consumer financing to purchasers of timeshare interests and land parcels through its wholly-owned subsidiary, Preferred Equities Corporation, established in 1970. Mego Financial is headquartered in Las Vegas, Nevada and has properties it operates under the banner of Ramada Vacation Suites in Nevada, New Jersey, Colorado, Florida, Hawaii and Louisiana. Mego Financial also owns Central Nevada Utilities, serving a large portion of the fast-growing Pahrump Valley, near Las Vegas.

This press release contains ``forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause actual results, performance or achievements of Mego Financial to be materially different from any future results, performance or achievements express or implied by such forward-looking statements. Factors that might cause such a difference, include, but are not limited to those discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations in Mego Financial's Annual Report on Form 10-K for the year ended August 31, 1998, and in documents subsequently filed by Mego Financial with the Securities and Exchange Commission.

MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands of dollars, except per share amounts)
(unaudited)

	Three Months Ended May 31,		Nine Months Ended May 31,
REVENUES	1999	1998	1999	1998
Timeshare interest sales, net	$10,885	$9,579	$28,494	$26,872
Land sales, net	4,869	3,530	11,878	10,114
Gain on sale of investments	--	--	513	--
Interest income	2,672	1,931	6,616	5,248
Financial income	321	769	1,030	2,773
Incidental operations	694	821	1,970	2,242
Other	886	881	2,577	2,277
Total revenues	20,327	17,511	53,078	49,526
COSTS AND EXPENSES
Direct cost of:
Timeshare interest sales	2,483	1,755	5,917	5,206
Land sales	777	421	2,039	1,234
Incidental operations	549	652	1,661	1,949
Marketing and Sales	9,014	9,143	25,629	24,739
General and administrative	3,502	4,675	10,473	13,561
Interest expense	2,374	2,157	6,635	5,635
Depreciation	485	549	1,493	1,691
Total costs and expenses	19,184	19,352	53,847	54,015
INCOME (LOSS) BEFORE INCOME TAXES	1,143	(1,841)	(769)	(4,489)
INCOME TAXES (BENEFIT)	--	(1,728)	(650)	(1,728)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK	$1,143	$(113)	$(119)	$(2,761)
EARNINGS (LOSS) PER COMMON SHARE
Basic:
Net income (loss) applicable to common stock	$0.05	$(0.01)	$(0.01)	$(0.13)
Weighted-average number of common shares	21,009,506	21,009,506	21,009,506	21,009,506
Diluted:
Net income (loss) applicable to common stock	$0.05	$(0.01)	$(0.01)	$(0.13)
Weighted-average number of common shares and common share equivalents outstanding	21,009,506	21,009,506	21,009,506	21,009,506

MEGO FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars, except per share amounts)
(unaudited)

ASSETS	May 31, 1999	August 31, 1998
Cash and cash equivalents	$1,944	$1,813
Restricted cash	1,552	1,694
Notes receivable, net of allowance for cancellations and discounts of $13,915 at May 31, 1999 and $12,403 at August 31, 1998	62,050	47,789
Interest only receivables, at fair value	2,788	3,367
Timeshare interests held for sale	31,798	35,798
Land and improvements inventory	7,003	7,965
Other investments	4,982	4,395
Property and equipment, net of accumulated depreciation of $15,797 at May 31,1999 and $14,119 at August 31, 1998	23,825	23,950
Deferred selling costs	3,876	3,719
Prepaid debt expenses	1,561	1,431
Other assets	13,070	9,830
TOTAL ASSETS	$154,449	$141,751
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and contracts payable	$97,768	$81,986
Accounts payable and accrued liabilities	20,583	18,773
Reserve for notes receivable sold with recourse	4,953	6,620
Deposits	2,456	4,877
Accrued income taxes	3,685	4,468
Total liabilities before subordinated debt	129,445	116,724
Subordinated debt	4,335	4,348
Stockholders' equity:
Preferred stock, $.01 par value (authorized -- 5,000,000 shares, none outstanding)	--	--
Common stock, $.01 par value (authorized -- 50,000,000 shares); 21,009,506 shares issued and outstanding	210	210
Additional paid-in capital	12,898	12,789
Retained earnings	7,561	7,680
Total stockholders' equity	20,669	20,679
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$154,449	$141,751

SOURCE: Mego Financial Corporation