HBTC

Harbourton Capital Group, Inc. ("Harbourton" or the "Company") (OTC:HBTC) today reported a loss of $1,922,222, or $0.38 per common share, for the three months ended March 31, 2006, compared with net income after tax of $519,463, or $0.10 per common share, for the same period in 2005. There were 5,061,375 shares of common stock outstanding during the three months ended March 31, 2006 and December 31, 2005. Total shareholders' equity at March 31, 2006 was $23.0 million, with a corresponding book value of $4.55 per share, as compared with total shareholders' equity at December 31, 2005 of $25.0 million, or $4.93 per share. The company's results for the quarter were negatively impacted by Harbourton Mortgage Investment Corporation ("HMIC"), the Company's wholesale mortgage subsidiary, as mortgage loan fundings declined from the previous quarter ended December 31, 2005. For the quarter ended March 31, 2006, HMIC originated $128.6 million of loans, a 32.1% decrease as compared with fundings for the previous quarter of $189.3 million. The shortfall in originations resulted from the impact of a restructuring of HMIC's sales force coupled with the extremely competitive mortgage market during the quarter. Sales of loans during the quarter ended March 31, 2006 declined $62.7 million from the previous quarter to $148.8 million, with an average gain on sale of 1.84%, as compared with sales in the prior quarter of $211.6 million, and a comparable gain on sale of 2.07%. J. Kenneth McLendon, President and CEO stated, "The quarterly operating results for the Company are not satisfactory, particularly the mortgage banking operations. However, management believes the ongoing restructuring and improvement of HMIC's sales team to hire experienced regional managers and seasoned account executives is beginning to show positive results, even in the extremely competitive market that currently exists." David W. Campbell, Chief Financial Officer reported, "Harbourton Financial Corporation, the Company's mezzanine lending subsidiary, achieved a 24.6% reduction in its investment in real estate during the quarter, resulting from the sale of condominium units acquired by foreclosure in 2005. He noted the liquidity generated from these sales is being reinvested in the Company's mezzanine loan and mortgage banking operations." Harbourton is a holding company comprising two financial businesses, mezzanine lending conducted by the HFC subsidiary and mortgage banking by HMIC. HFC's primary business is originating loans to builders and developers of residential projects. The loans include financing for acquisition, development and construction of residential single-family homes, townhouses, and condominiums. HMIC's primary business consists of originating and purchasing both conforming and non-conforming mortgage loans and the subsequent sale of these loans servicing released to investors in the secondary market. This press release may contain various "forward-looking statements," within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that represent the Company's expectations or beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing and amount of earning assets which may be originated by the Company, changes in revenue and expense trends (including trends affecting foreclosures and charge-offs) of the Company, changes in the Company's markets, changes in the economy (particularly in the markets served by The Company) and changes in interest rate. -0- *T Selected Financial Data: (000's except per share data) Assets March 31, December 31, March 31, 2006 2005 2005 ------------ ------------ ------------ Cash & Cash Equivalents $3,011.1 $2,043.2 $1,969.9 Loans Receivable, Net 8,564.1 8,574.6 6,324.6 Loans Held for Sale, Net 60,865.2 81,378.0 68,490.8 Investment in Real Estate, Net 9,760.3 12,952.3 15,278.7 Other Assets 7,834.3 7,857.0 10,518.9 ------------ ------------ ------------ Total Assets $90,035.0 $112,805.0 $100,613.0 ============ ============ ============ Liabilities Notes Payable 6,993.5 7,073.3 5,516.5 Warehouse Line Payable 57,870.4 78,081.3 65,079.8 Accounts Payable 2,138.2 2,697.6 7,933.5 ------------ ------------ ------------ Total Liabilities 67,002.1 87,852.2 73,013.3 Shareholders' Equity 23,032.9 24,952.8 27,599.7 ------------ ------------ ------------ Total Liabilities & Shareholders' Equity $90,035.0 $112,805.0 $100,613.0 ============ ============ ============ Book Value Per Share $4.55 $4.93 $5.45 Common Shares Outstanding 5,061.4 5,061.4 5,061.4 Three Months Ended March 31, Revenues: 2006 2005 ------------ ------------ Interest income $1,749.4 $1,807.1 Interest expense (1,124.7) (860.6) ------------ ------------ Net interest income before provision 624.7 946.5 Provision for loss (236.6) (373.8) ------------ ------------ Net interest income after provision 388.1 572.7 Fees and other income 1,603.9 3,835.3 ------------ ------------ Total net revenues 1,992.0 4,408.0 Expenses: Compensation and benefits 2,695.4 2,751.6 General & administrative 784.1 559.2 Loan Expenses 185.7 79.8 Professional fees 140.4 80.3 Depreciation 159.8 113.8 ------------ ------------ Total Expenses 3,965.4 3,584.7 Income (loss) before income tax (1,973.4) 823.3 Income tax (credit) (51.1) 303.8 ------------ ------------ Net income (loss) ($1,922.2) $519.5 ============ ============ Income (loss) per common share ($ 0.38) $0.10 Weighted average shares outstanding 5,061.4 5,061.4 Return on average equity ("ROAE") (28.1%) 7.6% *T