HOUSTON, Aug. 11 /EMWNews/ -- Sanders Morris Harris Group

Inc. (Nasdaq: SMHG) today announced record quarterly profit of $6.2

million, or $0.23 per diluted share, during the second quarter of 2008,

compared to $1.1 million, or $0.04 per diluted share, during the prior year

quarter. Revenue increased to $56.7 million during the second quarter of

2008, compared to $46.2 million during the second quarter of 2007.



    Asset/Wealth Management, the Company's largest unit, posted second

quarter revenue and pretax earnings of $31.9 million and $8.6 million,

respectively. That compares with revenue of $26.0 million and pretax

earnings of $6.2 million during the second quarter of 2007, gains of 23%

and 40%, respectively. Asset/Wealth Management represented 84% of the

Company's pretax earnings in the latest quarter. The Company's portfolio of

equities and partnership interests, which contains a significant portion of

energy stocks, earned $3.8 million before taxes during the 2008 quarter

versus $82,000 in the year-earlier period.



    Turning around its losses from the prior two quarters, the Capital

Markets division recorded pretax earnings of $1.9 million during the second

quarter of 2008, down from $2.8 million during the second quarter of 2007,

reflecting continuing industry-wide weak capital markets conditions.



    The Company announced that it had formed subsidiaries to hold its

Asset/Wealth Management and Capital Markets units, each wholly owned by the

parent company. It is weighing offers and alternatives for the latter unit.

It expects to determine which is most advantageous and to commence the

necessary steps to effect it by the end of the third quarter.



    Revenue for the first six months of 2008 was $101.5 million compared to

$91.7 million in 2007. Net income totaled $4.1 million, or $0.16 per

diluted share, during the first half of 2008, compared to $3.8 million, or

$0.15 per diluted share, in 2007.



    Conference Call



    The Company will host a conference call on Monday, August 11th to

discuss second quarter 2008 financial and operational results. The call

will begin at 9:00 a.m. Central Time, and is open to the public. To listen

to the conference call, use U.S. dial-in number (877) 748-8103 or

International dial-in number (706) 634-7604 and enter pass code 59457466.

It is recommended that listeners phone in at least 10 minutes before the

call is scheduled to begin to avoid delay. For those unable to listen to

the live call, a replay of the conference call in its entirety will be

available approximately two hours after its completion for 30 days by

dialing (800) 642-1687 (U.S.) or (706) 645-9291 (International) and

entering the pass code 59457466.

    About Sanders Morris Harris Group



    Sanders Morris Harris Group is a financial services company that

manages $18.6 billion in client assets. It has two primary businesses.

Asset/Wealth Management, the largest, provides highly regarded wealth

advisory and asset management services to individuals and institutions. The

other, Capital Markets, offers investment banking, institutional brokerage,

trading, and research to a variety of institutions and middle market

companies. Its corporate philosophy of investment in common aligns its

interests with those of its clients. Sanders Morris Harris has over 600

employees in 21 states. Additional information is available at

http://www.smhgroup.com.



    In addition to the historical information, this press release contains

certain forward-looking statements under federal securities laws, including

statements regarding Sanders Morris Harris Group's expected future business

prospects, revenue and income. These forward-looking statements are based

upon current expectations and involve certain risks and uncertainties that

could cause actual results to differ materially from any such statement.

These risks and uncertainties, many of which are beyond the Company's

control, include, but are not limited to (1) trading volume in the

securities markets; (2) volatility of the securities markets and interest

rates; (3) changes in regulatory requirements that could affect the demand

for the Company's services or the cost of doing business; (4) general

economic conditions, both domestic and foreign, especially in the regions

where the Company does business; (5) changes in the rate of inflation and

related impact on securities markets; (6) competition from existing

financial institutions and other new participants in the securities

markets; (7) legal developments affecting the litigation experience of the

securities industry; (8) successful implementation of technology solutions;

(9) changes in valuations of the Company's trading and warrant portfolios

resulting from mark-to-market adjustments; (10) dependence on key

personnel; (11) demand for the Company's services; and (12) litigation and

securities law liabilities. The Company does not undertake any obligation

to publicly update or revise any forward-looking statements.










                                     Selected Condensed Operating Information

                                     (in thousands, except per share amounts)

                                                                  (unaudited)



                                     Three Months Ended    Six Months Ended

                                           June 30,             June 30,

                                       2008       2007       2008      2007

    Net income calculation:

    Revenue                          $56,711    $46,197   $101,527   $91,680

    Expenses                          45,527     43,765     88,842    82,772

        Net                           11,184      2,432     12,685     8,908

    Equity in income of limited

     partnerships                      4,501      3,902      2,752     3,587

    Minority interests                (5,371)    (4,521)    (8,472)   (6,360)

        Income before income taxes    10,314      1,813      6,965     6,135

    Provision for income taxes        (4,122)      (708)    (2,880)   (2,289)

    Net income                        $6,192     $1,105     $4,085    $3,846



    Earnings per common share:

        Basic                          $0.23      $0.04      $0.16     $0.16

        Diluted                        $0.23      $0.04      $0.16     $0.15



    Weighted average shares

     outstanding:

        Basic                         26,760     24,731     25,739    24,671

        Diluted                       26,918     25,075     25,932    25,007







                                           June 30,

                                       2008       2007

    Balance sheet data:

    Cash and cash equivalents        $20,087    $43,711

    Other tangible net assets         82,748     89,296

        Tangible net assets         $102,835   $133,007

    Shareholders' equity            $250,815   $222,062







                                      Selected Condensed Operating Information

                                                                (in thousands)

                                                                   (unaudited)



                                     Three Months Ended     Six Months Ended

                                          June 30,              June 30,

                                       2008        2007      2008       2007

    Revenue:

        Asset/Wealth Management     $31,918     $26,021   $62,537    $49,705

        Capital Markets:

            Investment banking        4,742       6,580     5,398     13,804

            Institutional brokerage   4,981       3,721     8,738      8,365

            Prime brokerage services 10,664       8,802    21,184     17,671

              Capital Markets Total  20,387      19,103    35,320     39,840

        Corporate Support and Other   4,406       1,073     3,670      2,135

                            Total   $56,711     $46,197  $101,527    $91,680



    Income from continuing

     operations before equity

     in income (loss) of limited

     partnerships, minority

     interests and income taxes:

        Asset/Wealth Management      $9,605      $6,773   $18,801    $13,205

        Capital Markets:

            Investment banking          542       1,634    (2,630)     3,205

            Institutional brokerage     382         185       373        811

            Prime brokerage services    940         936     1,447      2,009

              Capital Markets Total   1,864       2,755      (810)     6,025

        Corporate Support and Other    (285)     (7,096)   (5,306)   (10,322)

                            Total   $11,184      $2,432   $12,685     $8,908



    Equity in income (loss) of

     limited partnerships:

        Asset/Wealth Management      $4,395      $3,907    $4,858     $3,319

        Capital Markets:

            Investment banking            -           -         -          -

            Institutional brokerage       -           -         -          -

            Prime brokerage services      -           -         -          -

              Capital Markets Total       -           -         -          -

        Corporate Support and Other     106          (5)   (2,106)       268

                            Total    $4,501      $3,902    $2,752     $3,587



    Minority interests in net

     income of consolidated

     companies:

        Asset/Wealth Management     $(5,371)    $(4,521)  $(8,472)   $(6,360)

        Capital Markets:

            Investment banking            -           -         -          -

            Institutional brokerage       -           -         -          -

            Prime brokerage services      -           -         -          -

              Capital Markets Total       -           -         -          -

        Corporate Support and Other       -           -         -          -

                            Total   $(5,371)    $(4,521)  $(8,472)   $(6,360)



    Income (loss) from continuing

     operations before income taxes:

        Asset/Wealth Management      $8,629      $6,159   $15,187    $10,164

        Capital Markets:

            Investment banking          542       1,634    (2,630)     3,205

            Institutional brokerage     382         185       373        811

            Prime brokerage services    940         936     1,447      2,009

              Capital Markets Total   1,864       2,755      (810)     6,025

        Corporate Support and Other    (179)     (7,101)   (7,412)   (10,054)

                            Total   $10,314      $1,813    $6,965     $6,135