Harbourton Capital Group, Inc. Reports First Quarter 2006 Results

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.
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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%
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