EFH Empire Financial Holding

LONGWOOD, Fla., March 21 /PRNewswire-FirstCall/ -- Empire Financial Holding Company (AMEX:EFH), a financial brokerage services firm serving retail and institutional clients, today reported financial results for the year ended December 31, 2005. Net income for the year, including a one time gain from recognition of a deferred tax asset of $2,117,000, was $2,462,481 or $.44 basic and $.38 fully diluted per share, compared to a net loss of ($1,599,695) or ($0.50) loss per share in 2004. The combination of operating income, recognition of the deferred tax asset, sale of its underperforming discount brokerage business, conversion of debt to equity and sales of equity securities in 2005 increased shareholder equity by $7,064,867, to $5,167,258 at December 31, 2005, compared to a shareholder deficit of $1,897,609 at December 31, 2004. Revenues for the year ended December 31, 2005 increased by 4.9% to $22,485,731 from $21,425,783 in 2004. Operating expenses were reduced by $693,773 to $22,373,382 compared to $23,067,155 in 2004. The decrease in expenses was primarily due to lower general and administrative expenses. For the fourth quarter ended December 31, 2005 the company earned $572,282 including one time gains related to the sale of its discount business and the recognition of a deferred tax asset or 11 cents per basic share and 9.4 cents per fully diluted share. This compared to a net loss of ($441,284), or a loss of (13.7) cents per basic and diluted share, during the same period in 2004. Revenues for the fourth quarter ended December 31, 2005 decreased by 10.9% to $5.7 million from $6.4 million in 2004. Operating expenses were reduced by $1,096,595 to $5,693,140 compared to $6,789,735 in 2004. The decrease in expenses was primarily due to lower general and administrative expenses and commission expense paid on lower commission revenues. "We are extremely pleased with our results in 2005," commented Donald A. Wojnowski, President and CEO. "The company has returned to profitability and improved its balance sheet in 2005." Wojnowski added, "2005 was a year of transition in which we had notable accomplishments, including regaining full compliance with all American Stock Exchange listing standards, an increase in shareholders equity of approximately $7 million, reversing our auditors' negative opinion and making significant investments in our infrastructure. This sets the stage for what we hope to be a successful 2006." About Empire Financial Holding Company Empire Financial Holding Company, through its wholly owned subsidiary, Empire Financial Group, Inc., provides full-service retail brokerage services through its network of independently owned and independently operated offices. Through its market-making and trading division, the Company offers securities order execution services for unaffiliated broker dealers and makes markets in domestic and international securities. Empire Financial also provides Investment Banking services for clients as well as turn-key fee based investment advisory and registered investment advisor custodial services through its wholly owned subsidiary, Empire Investment Advisors, Inc. Forward-Looking Statement Disclaimer 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 the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, without limitation, fluctuations in the volume of transactional services provided by the Company, competition with respect to financial services commission rates, the effect of general economic and market conditions, factors affecting the securities brokerage industry as well as other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. Contact. Donald A. Wojnowski Jr. President Empire Financial Holding Company Phone: 407-774-1300 EXT 1141 Fax: 407-774-1300 EMPIRE FINANCIAL HOLDING COMPANY CONSOLIDATED STATEMENT OF FINANCIAL CONDITION December 31, 2005 Assets Cash and cash equivalents $380,599 Marketable securities owned, at market value 2,612,037 Securities not readily marketable, at estimated fair value 165,909 Commissions and other receivables from clearing organization 551,816 Deposits at clearing organization 1,173,688 Furniture and equipment, net 223,727 Prepaid expenses and other assets 483,089 Deferred tax asset 2,117,000 Cash in escrow 350,000 Notes receivable 1,791,568 9,849,433 Liabilities and stockholders' equity Liabilities Notes payable $979,167 Line of credit payable 350,000 Accrued expenses and other liabilities 1,021,487 Securities sold, but not yet purchased, at market value 261,683 Due to clearing organization 2,069,838 Total liabilities $4,682,175 Commitments and Contingencies Stockholders' equity Convertible preferred stock, series B, C, D and E, $.01 par value 1,000,000 shares authorized 29,395 issued and outstanding $294 Common stock, $.01 par value 100,000,000 shares authorized 6,599,005 shares issued and outstanding 65,990 Additional paid-in capital 10,840,349 Accumulated deficit (5,739,375) Total stockholders' equity $5,167,258 Total liabilities and stockholders' equity $9,849,433 See accompanying notes to the consolidated financial statements. EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS December 31, 2005 TWELVE MONTHS TWELVE MONTHS ENDED ENDED December 31, December 31, 2005 2004 Revenues Commissions and fees $16,374,914 $16,154,705 Equity market making trading revenues, net 5,451,815 5,063,633 Investment banking income 266,410 - Other 392,593 207,445 22,485,731 21,425,783 Expenses Employee compensation and benefits 4,789,976 4,667,564 Clearing and execution costs 15,070,113 14,505,969 General and administrative 2,287,449 3,438,657 Communications and data processing 225,844 454,965 22,373,382 23,067,155 Income from operations 112,349 (1,641,372) Other income (expenses) Gain on sale of online trading discount business 452,000 -- Interest income 210,386 170,327 Provision for SEC settlement (275,000) -- Interest expense (154,254) (100,525) 233,132 69,802 Income before income taxes 345,481 (1,571,570) Income tax benefit 2,117,000 -- Net income 2,462,481 (1,571,570) Accrued preferred stock dividends (167,512) (28,125) Net income (loss) applicable to common shareholders $2,294,969 $(1,599,695) Basic and diluted earnings per share applicable to common shareholders: Earnings (loss) per share- basic and diluted $0.44 $(0.50) Earnings (loss) per share diluted $0.38 $(0.50) Weighted average shares outstanding: Basic 5,160,133 3,221,753 Diluted 6,084,538 3,221,753 See accompanying notes to the consolidated financial statements. DATASOURCE: Empire Financial Holding Company CONTACT: Donald A. Wojnowski Jr., President of Empire Financial Holding Company, +1-407-774-1300, ext. 1141, or Fax, +1-407-774-1300,

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