We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

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Friday, August 15, 2008

Comstock Homebuilding Companies, Inc. Reports Results for Three and Six Months Ended June 30, 2008

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Comtex

RESTON, VA, Aug 15, 2008 (MARKET WIRE via COMTEX) ----Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or the "Company") today announced its unaudited results for three and six months ended June 30, 2008 as follows:

For the three months ended June 30, 2008, the Company reported a net loss of $16.6 million or ($1.00) per share basic and diluted on total revenue of $12.0 million compared to a net loss of $4.7 million or ($0.29) per share basic and diluted on total revenue of $114.3 million for the three months ended June 30, 2007. In connection with these results, the Company announced that it had elected to record a non-cash impairment and write-off charge of $13.7 million for the three months ended June 30, 2008, compared to a $7.5 million charge for the three months ended June 30, 2007.

For the six months ended June 30, 2008, the Company reported a net loss of $10.1 million or ($0.61) per share basic and diluted on total revenue of $28.4 million, compared to a net loss of $6.3 million or ($0.40) per share basic and diluted on total revenue of $161.0 million for the six months ended June 30, 2007. In connection with these results, the Company announced that it had elected to record a non-cash impairment and write-off charge of $14.6 million for the six months ended June 30, 2008 as compared to an $8.4 million charge for the six months ended June 30, 2007.

During the period, the Company continued to execute on its debt reduction initiative. Outstanding debt at June 30, 2008 was $153.0 million (net of a $4.2 million deferred gain on the restructuring of its senior unsecured notes); a reduction of $5.3 million as compared to March 31, 2008, a reduction of $18.2 million as compared to December 31, 2007, and a reduction of $77.1 million as compared to June 30, 2007. The company's net debt-to-cap ratio at June 30, 2008 (adjusted for the deferred gain) was 73.5%.

For the six months ended June 30, 2008, the Company generated positive cash flow from operating activities of $8.4 million as compared to $64.1 million of positive cash flow from operating activities during the six months ended June 30, 2007.

The Company reported the following orders, cancellations and backlog by segment for the three and six months ended June 30, 2008:

 Three months ended June 30, 2008 North All (dollars in 000s) DC Metro Carolina Georgia Markets
   -------- -------- -------- -------- Gross new orders 18 12 4 34 Cancellations 8 3 3 14 Net new orders 10 9 1 20 Gross new
   order revenue $ 5,971 $ 3,502 $ 1,395 $ 10,868 Cancellation revenue $ 1,761 $ 899 $ 975 $ 3,635 Net new order revenue $ 4,210
   $ 2,603 $ 420 $ 7,233 Backlog units 10 21 9 40 Backlog revenue $ 3,094 $ 6,732 $ 3,174 $ 13,000 Average backlog revenue per
   unit $ 309 $ 321 $ 353 $ 325 Six months ended June 30, 2008 North All (dollars in 000s) DC Metro Carolina Georgia Markets
   -------- -------- -------- -------- Gross new orders 42 30 13 85 Cancellations 12 11 7 30 Net new orders 30 19 6 55 Gross
   new order revenue $ 14,206 $ 7,711 $ 4,188 $ 26,105 Cancellation revenue $ 3,140 $ 3,625 $ 1,930 $ 8,695 Net new order revenue
   $ 11,066 $ 4,086 $ 2,258 $ 17,410 Backlog units 10 21 9 40 Backlog revenue $ 3,094 $ 6,732 $ 3,174 $ 13,000 Average backlog
   price $ 309 $ 321 $ 353 $ 325

Additional results of the three months ended June 30, 2008 include:

 -- At
   June 30, 2008, the Company's reported shareholder equity was $37.4 million or $2.08 per share based on 17.9 million shares
   issued and outstanding. -- Cash on hand at June 30, 2008 was $9.9 million, with receivables, representing settlement proceeds
   in transit, of $0.1 million. -- Gross profit on all revenue was $1.7 million, representing a gross margin of 14.5% on all
   revenue, compared to $7.7 million or 6.7% for the three months ended June 30, 2007. -- Gross profit from homebuilding revenue
   was $1.2 million representing a gross margin of 10.3%, compared to gross profit from homebuilding of $7.4 million or 6.7%
   for the three months ended June 30, 2007. -- SG&A decreased by $3.2 million or 39.0% to $5.0 million, compared to $8.2
   million for the three months ended June 30, 2007. SG&A for the three months ended June 30, 2008 included $0.6 million
   of interest and real estate taxes related to inactive projects, an increase of $0.6 million compared to the three months ended
   June 30, 2007 when there were no inactive projects. -- Operating loss was ($17.0) million or (141.9%) of total revenue, as
   compared to ($7.9) million or (6.9%) of total revenue for the three months ended June 30, 2007.

Additional results of the six months ended June 30, 2008 include:

 -- Gross profit was $4.2 million, representing a gross margin of
   14.6% on all revenue, compared to $14.0 million or 8.7% for the six months ended June 30, 2007. Gross profit from homebuilding
   was $3.2 million representing a gross margin of 11.6%, compared to gross profit from homebuilding of $13.6 million or 8.9%
   for the six months ended June 30, 2007. -- SG&A decreased by $6.8 million or 41.5% to $9.6 million, compared to $16.4
   million for the six months ended June 30, 2007. SG&A included $1.4 million of interest and real estate taxes related to
   inactive projects, an increase of $1.4 million compared to the six months ended June 30, 2007 when there were no inactive
   projects. -- Operating loss was ($20.0) million or (70.4%) of total revenue, as compared to ($10.8) million or (6.7%) of total
   revenue for the six months ended June 30, 2007. -- The Company recorded an $8.4 million gain on the restructuring of it senior
   unsecured notes and deferred and additional $4.4 million of gain to be recorded over the remaining five-year life of the notes.

At December 31, 2007, the Company established a $29.9 million valuation allowance against its deferred tax asset. The Company is currently projecting a tax loss for 2008 after recognizing current year tax deductions associated with prior period impairments charges. As a result, an effective tax rate of zero was assumed in calculating the Company's current income tax expense for the three and six months ended June 30, 2008.

As previously reported, during the three months ended June 30, 2008 the Company retained FTI Consulting to act as an advisor in exploring and developing a plan of debt restructuring. The Company announced that it will delay holding an investor conference call until certain milestones in the process of renegotiating its debts have been achieved.

About Comstock Homebuilding Companies, Inc.

Established in 1985, Comstock Homebuilding Companies, Inc. is a publicly traded, diversified real estate development firm with a focus on affordably priced for-sale residential products. Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The company currently markets its products under the Comstock Homes brand in the Washington, D.C.; Raleigh, North Carolina and Atlanta, Georgia metropolitan areas. Comstock Homebuilding Companies, Inc. trades on NASDAQ under the symbol CHCI. For more information on the Company or its projects, please visit www.comstockhomebuilding.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains "forward-looking" statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Additional information concerning these and other important risks and uncertainties can be found under the heading "Risk Factors" in the Company's most recent form 10-K, as filed with the Securities and Exchange Commission on March 24, 2008. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

 Comstock
   Homebuilding Companies, Inc. Three Months Ended, Three Months Ended, June 30, June 30, -------------------- --------------------
   Income Statement 2008 2007 2008 2007 --------- --------- --------- --------- Revenue - homebuilding $ 11,435 $ 110,313 $ 27,375
   $ 153,338 Revenue - other 568 3,987 1,004 7,685 --------- --------- --------- --------- Total revenue 12,003 114,300 28,379
   161,023 Expenses Cost of sales - homebuilding 10,260 102,876 24,200 139,743 Cost of sales - other -- 3,680 28 7,304 Impairments
   and write-offs 13,746 7,492 14,577 8,383 Selling, general and administrative 5,029 8,151 9,575 16,376 --------- ---------
   --------- --------- Operating loss (17,032) (7,899) (20,001) (10,783) Gain on troubled debt restructuring -- -- (8,325) --
   Other income, net (413) (302) (1,598) (646) --------- --------- --------- --------- Loss before minority interest (16,619)
   (7,597) (10,078) (10,137) Minority interest (1) (3) (3) (5) --------- --------- --------- --------- Total pre tax loss (16,618)
   (7,594) (10,075) (10,132) Income taxes benefit -- (2,926) -- (3,796) --------- --------- --------- --------- Net loss $ (16,618)
   $ (4,668) $ (10,075) $ (6,336) Basic loss per share $ (1.00) $ (0.29) $ (0.61) $ (0.40) Basic weighted average shares outstanding
   16,541 16,095 16,502 15,992 --------- --------- --------- --------- Diluted loss per share $ (1.00) $ (0.29) $ (0.61) $ (0.40)
   Diluted weighted average shares outstanding 16,541 16,095 16,502 15,992 Comstock Homebuilding Companies, Inc. Balance Sheet
   June 30, December 31, 2008 2007 ASSETS Cash and cash equivalent $ 9,939 $ 6,822 Restricted cash 4,400 4,985 Receivables 118
   370 Due from related parties 91 92 Real estate held for development and sale 186,512 203,860 Inventory not owned - variable
   interest entities 19,250 19,250 Property, plant and equipment, net 1,184 1,539 Other assets 2,817 22,058 ------------ ------------
   TOTAL ASSETS $ 224,311 $ 258,976 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued
   liabilities $ 10,477 $ 21,962 Obligations related to inventory not owned 19,050 19,050 Notes payable 144,006 141,214 Senior
   unsecured debt 13,182 30,000 ------------ ------------ TOTAL LIABILITIES 186,715 212,226 ------------ ------------ Commitments
   and contingencies (Note 10) Minority interest 228 231 ------------ ------------ SHAREHOLDERS' EQUITY Class A common stock,
   $0.01 par value, 77,266,500 shares authorized, 15,209,075 and 15,120,955 issued and outstanding, respectively 152 151 Class
   B common stock, $0.01 par value, 2,733,500 shares authorized, 2,733,500 issued and outstanding 27 27 Additional paid-in capital
   156,922 155,998 Treasury stock, at cost (391,400 Class A common stock) (2,439) (2,439) Accumulated deficit (117,294) (107,219)
   ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 37,368 46,519 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS'
   EQUITY $ 224,311 $ 258,976 ============ ============

 CONTACT: Comstock Homebuilding Companies, Inc. Bruce Labovitz
   703.230.1131 Email Contact

SOURCE: Comstock Homebuilding Companies, Inc.

http://www2.marketwire.com/mw/emailprcntct?id=239BE79F7510A723

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