SHERMAN OAKS, Calif., August 7, 2014 – Signature Group Holdings, Inc. (OTCQX: SGGH) today reported financial results for its second quarter ended June 30, 2014.

Signature posted a net loss of $0.5 million in the second quarter of 2014, or $(0.04) per share, an improvement of $1.4 million from the $1.9 million net loss, or $(0.16) per share, reported in the second quarter of 2013. Sequentially, net earnings were lower by $0.6 million compared to the first quarter of 2014, however, adjusting for the one-time positive litigation settlement in the prior quarter, the second quarter loss was a $0.9 million improvement over the first quarter.

“The fundamentals of our Company continue to improve,” stated Chairman and CEO Craig Bouchard. “The cash position of the Company rose during the past quarter, which was not easy to accomplish. We are in active discussions to significantly grow the Company.”

Loss from continuing operations was $0.7 million in the second quarter of 2014, compared to $2.0 million in the second quarter of 2013 and $1.2 million in the first quarter of 2014. Excluding the impact of a noncash goodwill impairment charge, the loss from continuing operations in the second quarter of 2014 was $0.3 million. The improvement on a sequential basis was largely due to increased earnings from Industrial Supply during the seasonally stronger second quarter and reduced selling, general and administrative expenses in Corporate and Other from lower compensation and professional fees. Year over year comparisons are not meaningful given the significant change in our results of operations following the sale of the residential real estate loans in the second quarter of 2013 and the changes in our warrant liability.

Earnings from discontinued operations was $0.2 million in the second quarter of 2014. We continued to make progress in reducing our outstanding legacy litigation matters.

As of June 30, 2014, the Company had $44.8 million in cash and cash equivalents; $53.5 million of working capital; and $16.2 million of total debt.

Signature is a holding company seeking to invest its capital in large, well-managed and consistently profitable businesses concentrated primarily in the United States industrial and commercial marketplace. The Company has significant capital resources, and federal net operating loss tax carryforwards of nearly $900 million. For more information about Signature, visit its corporate website at www.signaturegroupholdings.com.

This earnings release contains forward-looking statements, which are based on our current expectations, estimates, and projections about the Company’s businesses and prospects, as well as management’s beliefs, and certain assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will,” and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason. These statements include, but are not limited to, statements about the Company’s expansion and business strategies and anticipated growth opportunities and the amount of fundraising necessary to achieve it, as well as future performance, growth, operating results, financial condition and prospects. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Accordingly, actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference include, but are not limited to the demand for Industrial Supply’s products; the Company’s ability to successfully identify, consummate and integrate the acquisitions of other businesses; changes in business or other market conditions; the difficulty of keeping expense growth at modest

levels while increasing revenues; the Company’s ability to successfully defend against current and new litigation matters as well as demands by investment banks for defense, indemnity, and contribution; obtaining the expected benefits of the reincorporation; and other risks detailed from time to time in the Company’s Securities and Exchange Commission filings, including but not limited to the most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.

Signature Group Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2014			2013			2014			2013
Operating revenues:
Industrial Supply	$	10,152		$	9,452		$	18,378		$	17,823
Signature Special Situations		42			5,414			84			6,617
Corporate and Other		—			14			—			32
Total operating revenues		10,194			14,880			18,462			24,472
Operating costs:
Cost of goods sold		6,560			6,005			12,295			11,297
Selling, general and administrative		3,513			5,856			7,401			9,499
Interest expense		241			1,016			487			2,007
Amortization of intangibles		341			413			606			825
Total operating costs		10,655			13,290			20,789			23,628
Operating loss		(461	)		1,590			(2,327	)		844
Other income (expense):
Change in fair value of common stock warrant liability		200			(3,700	)		1,000			(5,150	)
Goodwill impairment		(400	)		—			(400	)		—
Other, net		14			86			44			101
Total other income (expense)		(186	)		(3,614	)		644			(5,049	)
Loss from continuing operations before income taxes		(647	)		(2,024	)		(1,683	)		(4,205	)
Income tax expense		18			15			209			92
Loss from continuing operations		(665	)		(2,039	)		(1,892	)		(4,297	)
Loss from discontinued operations, net of income taxes		163			115			1,503			(393	)
Net loss		(502	)		(1,924	)		(389	)		(4,690	)
Net loss attributable to noncontrolling interest		—			—			—			—
Net loss attributable to Signature Group Holdings, Inc.	$	(502	)	$	(1,924	)	$	(389	)	$	(4,690	)
LOSS PER SHARE
Basic and diluted:
Continuing operations	$	(0.05	)	$	(0.17	)	$	(0.15	)	$	(0.37	)
Discontinued operations		0.01			0.01			0.12			(0.03	)
Basic and diluted loss per share	$	(0.04	)	$	(0.16	)	$	(0.03	)	$	(0.40	)

Signature Group Holdings, Inc.
Consolidated Balance Sheets

	June 30,		December 31,
(Dollars in thousands)	2014		2013
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	44,844	$	47,913
Restricted cash		784		2,805
Trade accounts receivable, net		4,869		3,737
Inventory		11,614		10,777
Other current assets		716		902
Current assets of discontinued operations		144		223
Total current assets		62,971		66,357
Intangible assets, net		2,282		2,904
Goodwill		17,780		18,180
Other noncurrent assets		2,712		2,682
TOTAL ASSETS	$	85,745	$	90,123

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables	$	3,622	$	3,228
Line of credit		750		500
Long-term debt due within one year		3,800		3,600
Other current liabilities		1,070		1,094
Current liabilities of discontinued operations		230		2,264
Total current liabilities		9,472		10,686
Long-term debt		11,650		13,600
Common stock warrant liability		8,300		9,300
Other noncurrent liabilities		96		119
Noncurrent liabilities of discontinued operations		6,000		6,500
TOTAL LIABILITIES		35,518		40,205
TOTAL STOCKHOLDERS' EQUITY		50,227		49,918
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	85,745	$	90,123

A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the balance sheets, statements of operations, or statements of cash flows; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measures so calculated and presented. EBITDA and Adjusted EBITDA from continuing operations are not financial measures recognized under GAAP. EBITDA and Adjusted EBITDA from continuing operations are presented and discussed because management believes they enhance the understanding of the financial performance of the Company’s operations by investors and lenders. As a complement to financial measures recognized under GAAP, management believes that EBITDA and Adjusted EBITDA assist investors who follow the practice of some investment analysts who adjust GAAP financial measures to exclude items that may obscure underlying performance and distort comparability. Because EBITDA and Adjusted EBITDA from continuing operations are not measures recognized under GAAP, they are not intended to be presented herein as a substitute for net earnings (loss) from continuing operations as an indicator of operating performance. EBITDA and Adjusted EBITDA from continuing operations are primarily performance measurements used by our senior management and Board to evaluate certain operating results.

We calculate EBITDA and Adjusted EBITDA as earnings (loss) before interest, taxes, depreciation and amortization, or EBITDA, which is then adjusted to remove or add back certain items, or Adjusted EBITDA. These items are identified below in the reconciliation of loss from continuing operations to EBITDA and Adjusted EBITDA from continuing operations. Earnings (loss) from continuing operations is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA from continuing operations.

Our calculation of EBITDA and Adjusted EBITDA from continuing operations may be different from the calculation used by other companies for non-GAAP financial measures having the same or similar names; therefore, they may not be comparable to other companies.

The following table presents our reconciliation of loss from continuing operations to EBITDA and Adjusted EBITDA from continuing operations for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2014			2013			2014			2013
Loss from continuing operations	$	(665	)	$	(2,039	)	$	(1,892	)	$	(4,297	)
Plus:
Interest		241			1,016			487			2,007
Taxes		18			15			209			92
Depreciation		38			25			69			45
Amortization of intangibles		341			413			606			825
EBITDA from continuing operations		(27	)		(570	)		(521	)		(1,328	)
Adjustments:
Change in fair value of common stock warrant liability		(200	)		3,700			(1,000	)		5,150
Share-based compensation		232			574			749			946
Accretion of discounts		—			(57	)		—			(169	)
Amortization of other capitalized costs		17			18			35			36
Gain on sale of loans		—			(5,026	)		—			(5,026	)
Inventory impairment		—			—			432			—
Goodwill impairment		400			—			400			—
Incremental professional fees related to the Reincorporation and proxy contests		32			1,791			99			1,800
Total adjustments		481			1,000			715			2,737
Adjusted EBITDA from continuing operations	$	454		$	430		$	194		$	1,409