Harbourton Capital Group, Inc. ("Harbourton" or the "Company") (OTC:HBTC) today reported a loss of $1.8 million, or $0.36 per common share, for the three months ended June 30, 2006, compared with net income after tax of $59,459 or $0.01 per common share, for the comparable period in 2005. The loss for the six months ended June 30, 2006 was $3.7 million or $0.74 per common share, compared with net income of $578,900 or $0.11 per common share for the comparable 2005 period. There were 5,061,375 shares of common stock outstanding during the six months ended June 30, 2006 and December 31, 2005. Total shareholders' equity at June 30, 2006 was $21.2 million, with a corresponding book value of $4.19 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. For the quarter ended June 30, 2006, HMIC originated $176.1 million of loans, a 37.5% increase as compared with fundings for the linked quarter of $128.0 million. Sales of loans during the quarter ended June 30, 2006 were $160.2 million, with an average gain on sale of 2.11%, as compared with sales in the linked quarter of $148.8 million, and a comparable gain on sale of 1.84%. J. Kenneth McLendon, President and CEO stated, "The quarterly operating results for the Company were again disappointing. However, management believes the new sales team is making a positive impact as noted by the 37% increase in loans funded in the quarter, even in light of the softening real estate market." He noted, "The Company's acquisition of Molton Allen Williams Mortgage Company, LLC is on schedule for a late summer closing. Although there will be a short-term increase in operating expenses to accomplish merging the operations of both companies, we anticipate a meaningful decrease in the cost to originate loans as a benefit of the combination." 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 rates. -0- *T Selected Financial Data: (000's except per share data) June 30, December 31, June 30, Assets: 2006 2005 2005 ------------ ------------ ------------ Cash & Cash Equivalents $1,879.6 $2,043.2 $2,854.4 Loans Receivable, Net 7,865.6 8,574.6 5,454.8 Loans Held for Sale, Net 76,421.0 81,378.0 74,342.5 Investment in Real Estate, Net 7,000.4 12,952.3 15,964.0 Other Assets 8,425.1 7,857.0 9,099.7 ------------ ------------ ------------ Total Assets: $101,591.7 $112,805.0 $107,715.4 ============ ============ ============ Liabilities: Notes Payable 4,054.1 7,073.3 7,180.8 Warehouse Line Payable 74,195.8 78,081.2 70,442.3 Accounts Payable 2,133.4 2,697.6 2,426.2 ------------ ------------ ------------ Total Liabilities/Other Liabilities 80,383.3 87,852.2 80,049.4 Shareholders' Equity 21,208.4 24,952.8 27,666.1 ------------ ------------ ------------ Total Liabilities & Shareholders' Equity $101,591.7 $112,805.0 $107,715.4 ============ ============ ============ Book Value Per Share $4.19 $4.93 $5.47 Common Shares Outstanding 5,061.4 5,061.4 5,061.4 Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- Revenues: 2006 2005 2006 2005 ---------- ---------- ---------- ---------- Interest income $1,826.7 $1,763.1 $3,576.1 $3,570.2 Interest expense (1,231.8) (1,069.2) (2,356.5) (1,929.8) ---------- ---------- ---------- ---------- Net interest income before provision 594.8 693.9 1,219.6 1,640.3 Provision for loss (284.6) (251.3) (521.2) (625.1) ---------- ---------- ---------- ---------- Net interest income after provision 310.2 442.6 698.6 1,015.2 Fees and other income 2,004.3 3,718.3 3,608.2 7,553.6 ---------- ---------- ---------- ---------- Total net revenues $2,314.6 $4,160.8 $4,306.6 $8,568.8 Expenses: Compensation and benefits 2,891.0 2,822.0 5,597.1 5,579.2 General & administrative 844.0 865.7 1,617.5 1,419.3 Loan Expenses 131.3 67.7 317.0 147.6 Professional fees 113.8 170.4 254.2 250.7 Depreciation 159.0 134.8 318.7 248.6 ---------- ---------- ---------- ---------- Total Expenses 4,139.1 4,060.6 8,104.5 7,645.3 ---------- ---------- ---------- ---------- Income (loss) before income tax (1,824.5) 100.2 (3,797.9) 923.5 Income tax (credit) 0 40.7 (51.1) 344.6 ---------- ---------- ---------- ---------- Net income (loss) ($1,824.5) $59.5 ($3,746.7) $578.9 ========== ========== ========== ========== Income (loss) per common share ($0.36) $0.01 ($0.74) $0.11 Weighted average shares outstanding 5,061.4 5,061.4 5,061.4 5,061.4 *T