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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2004

or

For the transition period from              to             

COMMISSION FILE NUMBER 1-32340

AAMES INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

350 SOUTH GRAND AVENUE, LOS ANGELES, CA 90071-3459

(Address of Registrant’s principal executive offices including zip code)

(323) 210-5000

(Registrant’s telephone number,

including area code)

NO CHANGES

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act).    Yes  ¨    No  x

At November 11, 2004, Registrant had 56,060,500 shares of common stock outstanding.

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TABLE OF CONTENTS

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Item 1.    Financial Statements

AAMES FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

See accompanying notes to condensed consolidated financial statements.

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AAMES FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(UNAUDITED)

(In thousands, except per share data)

See accompanying notes to condensed consolidated financial statements.

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AAMES FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

See accompanying notes to condensed consolidated financial statements.

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AAMES FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1:    Basis of Presentation

The condensed consolidated financial statements of Aames Financial Corporation, a Delaware corporation, and its subsidiaries, (“Aames Financial”) included herein have been prepared by Aames Financial, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted.

The condensed consolidated financial statements include the accounts of Aames Financial and all of its subsidiaries after eliminating all significant intercompany transactions and reflect all normal, recurring adjustments which are, in the opinion of management, necessary to present a fair statement of the results of operations of Aames Financial in conformity with accounting principles generally accepted in the United States for the interim periods reported. The results of operations for Aames Financial for the three months ended September 30, 2004 are not necessarily indicative of the results expected for the full fiscal year.

At September 30, 2004, Specialty Finance Partners (“SFP”), a partnership controlled by Capital Z Financial Services Fund, II, L.P., a Bermuda partnership (together with SFP, “Capital Z”) owned preferred stock representing approximately 42.3% of Aames Financial’s combined voting power in the election of directors and approximately 89.9% of the combined voting power in all matters other than the election of directors. At September 30, 2004, representatives or nominees of Capital Z had five of the nine seats on the Board of Directors, and as current members’ terms expire, Capital Z had the continuing right to appoint and elect four directors and nominate one additional director. As a result of its beneficial ownership and Board representation, Capital Z had sufficient power to determine Aames Financial’s direction and policies.

Note 2:    Reorganization, Initial Public Offering and Concurrent Private Placement

On November 5, 2004, Aames Investment Corporation (“Aames Investment”) completed a $297.5 million initial public offering of 35.0 million common shares that were priced at $8.50 per share, and a $39.5 million private placement of 5.0 million common shares at a price of $8.50 per share, less certain discounts. Shares in the concurrent private placement were sold to Friedman, Billings, Ramsey Group, Inc., which is an affiliate of Friedman, Billings, Ramsey & Co., Inc., the sole book-running manager of the initial public offering.

On November 9, 2004, Aames Investment completed its reorganization with Aames Financial, formerly the parent company of Aames Investment, and two of Aames Investment’s wholly-owned subsidiaries, each created for the interim purpose of effecting the reorganization. As a result of the reorganization, the corporate successor of Aames Financial became a wholly-owned subsidiary of Aames Investment and renamed itself “Aames Financial Corporation.” Aames Financial stockholders received an aggregate of 16.1 million shares of Aames Investment common stock and $126.9 million in cash in exchange for their shares of Aames Financial stock. The reorganization transaction has been accounted for as a recapitalization—restructuring of entities under common control with no change in accounting basis.

The accompanying condensed consolidated financial statements at and for the three months ended September 30, 2004 and 2003 include the accounts of Aames Financial and all of its subsidiaries at that time. Effective November 5, 2004, the common shares of Aames Financial were fully redeemed and no longer trade on any equity market. Aames Investment has a calendar year end reporting requirement.

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AAMES FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Note 3:    Guaranty Arrangements

At September 30, 2004, Aames Financial guaranteed amounts outstanding under certain revolving warehouse and repurchase agreements pursuant to which certain of its wholly-owned operating subsidiaries are the contractual borrowers. Aames Financial also guaranteed amounts outstanding under a borrowing facility, secured by certain of the operating subsidiary’s residual interests and certain of that subsidiary’s advance receivables (the “Financing Facility”), pursuant to which that subsidiary is the contractual borrower. Aames Financial’s guarantees are full, complete and unconditional.

Note 4:    Per Share Data

The following table sets forth information regarding basic and diluted net income per common share for the three months ended September 30, 2004 and 2003 (in thousands, except per share data):