Sanders Morris Harris Group Reports Third Quarter Income From Continuing Operations of $0.04 Per Share; to Sell $7.5 Million of Shares to Fletcher International, Ltd. for $7.00 Per Share

HOUSTON, Nov. 9 /PRNewswire-FirstCall/ -- Sanders Morris Harris Group Inc. (Nasdaq: SMHG) today reported third quarter income from continuing operations of $1.2 million, or $0.04 per share. In the prior year, the quarter's results were a loss of $870,000, or $0.03 per share, from continuing operations excluding the sale of the Company's interests in Salient Partners and its Endowment Fund subsidiaries.

The Company also announced that it has agreed to sell $7.5 million of its common stock to Fletcher International, Ltd., an affiliate of private investment firm Fletcher Asset Management Inc., for $7.00 per share. Fletcher will also receive a 10-year warrant to purchase up to $7.5 million worth of shares at $5.75 per share. The transaction is expected to close by November 16, 2009, subject to customary closing conditions.

Client assets increased 11% from $9.5 billion on June 30, 2009 to $10.6 billion at the end of the third quarter. The Company's Wealth Management division earned $6.1 million pretax in the period.

"Helped by strong marketing results and a recovering stock market, our operating businesses' results continued to improve. We had net client new money inflows of approximately $174 million and also saw our client assets increase by nearly 10% due to market appreciation," said George L. Ball, Chairman and Chief Executive Officer of Sanders Morris Harris Group. "The expansion of Edelman Financial Services by opening offices beyond the Washington, D.C. area is underway and proceeding as anticipated," he added. "It is a major opportunity for us."

The third quarter 2009 results from continuing operations include an after-tax loss of $413,000 related to the Company's Capital Markets business. That business is being sold to a new broker-dealer being formed by the management of the business in a transaction which has been executed and awaits formal FINRA approval. If the sale had been completed in the just-ended quarter, earnings would have been $0.06 per share.

The Company lost $8.4 million, or $0.31 per share, from continuing operations during the nine months ended September 30, 2009, compared to income of $33.9, or $1.27 per share, during the first nine months of 2008. The 2009 results reflect a $9.7 million after tax goodwill and other intangible assets impairment charge. The 2008 results include after tax investment gains of $28.0 million. Revenue was $144.1 million during the 2009 period, compared to $138.8 million during the prior year period.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities. The securities and the shares of the Company's common stock issuable upon exercise of the securities have not been registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Conference Call
The Company will host a conference call on Monday, November 9th to discuss third quarter 2009 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 (800) 446-1671 or International dial-in number (847) 413-3362 and enter pass code 25765168. 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 10 days by dialing (888) 843-8996 (U.S.), (630) 652-3044 (International) and entering the pass code 25765168.

About Sanders Morris Harris Group
Sanders Morris Harris Group is a wealth management company that manages approximately $10.6 billion in client assets. Client assets include the gross value of assets under management directly or via outside managers and assets held in brokerage accounts for clients by outside clearing firms. Its corporate philosophy of investment in common aligns its interests with those of its clients. Sanders Morris Harris has more than 600 employees in 21 states. Additional information is available at www.smhgroup.com.

About Fletcher International, Ltd.
For more than 18 years, investments from Fletcher International, Ltd. and its affiliates, structured by Fletcher Asset Management, Inc., have supported dynamic and responsible management teams leading more than 50,000 people at dozens of companies. Additional information is available at www.fletcher.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.

                                                        Sanders Morris Harris
                                     Selected Condensed Operating Information
                                     (in thousands, except per share amounts)
                                                                  (unaudited)

                                     Three Months Ended     Nine Months Ended
                                        September 30,          September 30,
                                      2009        2008       2009       2008
                                      ----        ----       ----       ----

    Revenue                         $47,860     $46,014   $144,134   $138,813
    Expenses                         46,249      43,214    156,181    123,257
                                     ------      ------    -------    -------
         Net                          1,611       2,800    (12,047)    15,556
    Equity in income of
     limited partnerships             1,772      43,285      2,760     46,556
                                      -----      ------      -----     ------
         Income (loss) from
          continuing operations
          before income taxes         3,383      46,085     (9,287)    62,112
    (Provision) benefit for
     income taxes                      (856)    (17,829)     4,335    (21,152)
                                       ----     -------      -----    -------
    Income (loss) from
     continuing operations,
     net of income taxes              2,527      28,256     (4,952)    40,960
    Loss from discontinued
     operations, net of tax
     of $238, $94, $1,362 and
     $563, respectively                (355)       (238)    (2,043)      (904)
                                       ----        ----     ------       ----
    Net income (loss)                 2,172      28,018     (6,995)    40,056
         Less: Net (income) loss
          attributable to the
          noncontrolling interest    (1,329)        942     (3,473)    (7,011)
                                     ------         ---     ------     ------
    Net income (loss)
     attributable to Sanders
     Morris Harris Group Inc.          $843     $28,960   $(10,468)    33,045
                                       ====     =======  =========     ======

    Basic income (loss) per
     common share:
         Continuing operations        $0.04       $1.04     $(0.31)     $1.28
         Discontinued operations      (0.01)      (0.01)     (0.07)     (0.04)
                                      -----       -----      -----      -----
         Net income (loss)            $0.03       $1.03     $(0.38)     $1.24
                                      =====       =====     ======      =====

    Diluted income (loss) per
     common share:
         Continuing operations        $0.04       $1.04     $(0.31)     $1.27
         Discontinued operations      (0.01)      (0.01)     (0.07)     (0.04)
                                      -----       -----      -----      -----
         Net income (loss)            $0.03       $1.03     $(0.38)     $1.23
                                      =====       =====     ======      =====

    Weighted average shares
     outstanding:
         Basic                       27,797      28,033     27,689     26,583
         Diluted                     28,497      28,192     27,689     26,764

    Amounts attributable to
     Sanders Morris Harris
     Group Inc. common
     shareholders:
         Income (loss) from
          continuing operations,
          net of tax                 $1,198     $29,198    $(8,425)   $33,949
         Discontinued operations,
          net of tax                   (355)       (238)    (2,043)      (904)
                                       ----        ----     ------       ----
         Net income (loss)             $843     $28,960   $(10,468)   $33,045
                                       ====     =======  =========    =======

    GAAP to Non-GAAP
     Reconciliation:
    (in thousands, except per
     share data)
    (unaudited)                     Three Months Ended     Nine Months Ended
                                    September 30, 2009     September 30, 2009
                                                 Diluted              Diluted
                                     Amount        EPS      Amount      EPS
    Income (loss) from
     continuing operations,
     net of tax, attributable
     to Sanders Morris Harris
     Group Inc.                      $1,198       $0.04    $(8,425)    $(0.31)
    Addback:
         Goodwill/other intangible
          assets impairment
          charge, net of tax              -           -      9,667       0.35
         Investment portfolio
          gains, net of tax          (1,380)      (0.05)    (2,137)     (0.08)
         Loss attributed to the
          Capital Markets
          business, net of tax          413        0.02      1,884       0.07
                                        ---        ----      -----       ----
    Net operating income of
     business to be retained           $231       $0.01       $989      $0.03
                                       ====       =====       ====      =====

    Diluted weighted average
     shares outstanding                          28,497                27,689
                                                 ======                ======

                                    Three Months Ended     Nine Months Ended
                                    September 30, 2008     September 30, 2008
                                                 Diluted              Diluted
                                     Amount        EPS     Amount       EPS
    Income from continuing
     operations, net of tax,
     attributable to Sanders
     Morris Harris Group Inc.       $29,198       $1.04    $33,949      $1.27
    Addback:
         Investment portfolio
          gains, net of tax         (25,039)      (0.90)   (27,989)     (1.05)
         Loss attributed to the
          Capital Markets
          business, net of tax        1,039        0.04      3,322       0.12
                                      -----        ----      -----       ----
    Net operating income of
     business to be retained         $5,198       $0.18     $9,282      $0.34
                                     ======       =====     ======      =====

    Diluted weighted average
     shares outstanding                          28,192                26,764
                                                 ======                ======

    Balance sheet data:
    Cash and cash equivalents       $24,851
    Other tangible net assets        89,697
                                     ------
      Tangible net assets          $114,548
                                   ========
    Shareholders' equity           $210,418
                                   ========



                                                        Sanders Morris Harris
                                     Selected Condensed Operating Information
                                                               (in thousands)
                                                                  (unaudited)

                                      Three Months Ended    Nine Months Ended
                                        September 30,         September 30,
                                       2009       2008       2009       2008
                                       ----       ----       ----       ----
    Revenue:
    Wealth Management                $26,359    $26,328    $72,098    $80,137
    Capital Markets:
         Investment banking            2,087      3,373      6,090      8,771
         Institutional brokerage       5,602      5,039     16,674     13,777
         Prime brokerage services     12,566     14,116     46,929     35,300
                                      ------     ------     ------     ------
              Capital Markets Total   20,255     22,528     69,693     57,848
    Corporate Support                  1,246     (2,842)     2,343        828
                                       -----     ------      -----        ---
         Total                       $47,860    $46,014   $144,134   $138,813
                                     =======    =======   ========   ========

    Income (loss) from continuing
     operations before equity in
     income (loss) of limited
     partnerships and income
     taxes:
    Asset/Wealth Management           $7,069     $9,872    $18,669    $28,744
    Capital Markets:
         Investment banking           (1,165)    (1,033)    (3,706)    (3,663)
         Institutional brokerage       1,002        828      2,200      1,201
         Prime brokerage services       (416)     1,303        361      2,750
                                        ----      -----        ---      -----
              Capital Markets Total     (579)     1,098     (1,145)       288
    Corporate Support                 (4,879)    (8,170)   (29,571)   (13,476)
                                      ------     ------    -------    -------
         Total                        $1,611     $2,800   $(12,047)   $15,556
                                      ======     ======  =========    =======

    Equity in income (loss) of
     limited partnerships:
    Wealth Management                   $356    $46,820      $(799)   $52,197
    Capital Markets:                       -          -          -          -
         Investment banking                -          -          -          -
         Institutional brokerage           -          -          -          -
         Prime brokerage services          -          -          -          -
                                         ---        ---        ---        ---
              Capital Markets Total        -          -          -          -
    Corporate Support                  1,416     (3,535)     3,559     (5,641)
                                       -----     ------      -----     ------
         Total                        $1,772    $43,285     $2,760    $46,556
                                      ======    =======     ======    =======

    Income (loss) from continuing
     operations before income
     taxes:
    Wealth Management                 $7,425    $56,692    $17,870    $80,941
    Capital Markets:
         Investment banking           (1,165)    (1,033)    (3,706)    (3,663)
         Institutional brokerage       1,002        828      2,200      1,201
         Prime brokerage services       (416)     1,303        361      2,750
                                        ----      -----        ---      -----
              Capital Markets Total     (579)     1,098     (1,145)       288
    Corporate Support                 (3,463)   (11,705)   (26,012)   (19,117)
                                      ------    -------    -------    -------
         Total                        $3,383    $46,085    $(9,287)   $62,112
                                      ======    =======    =======    =======

    Net (income) loss
     attributable to the
     noncontrolling interest in
     consolidated companies:
    Wealth Management                $(1,329)      $942    $(3,473)   $(7,011)
    Capital Markets:
         Investment banking                -          -          -          -
         Institutional brokerage           -          -          -          -
         Prime brokerage services          -          -          -          -
                                         ---        ---        ---        ---
              Capital Markets Total        -          -          -          -
    Corporate Support                      -          -          -          -
                                         ---        ---        ---        ---
         Total                       $(1,329)      $942    $(3,473)   $(7,011)
                                     =======       ====    =======    =======