Harbourton Capital Group, Inc. Reports Fourth Quarter and Full Year 2005 Results
April 28 2006 - 3:34PM
Business Wire
Harbourton Capital Group, Inc. ("Harbourton" or the "Company")
(OTC:HBTC) today reported a net after tax loss of $2,781,513 or
$0.55 per common share, for the three months ended December 31,
2005, compared with net income after tax of $2,220.2, or $0.44 per
common share, for the same period in 2004. The Company reported a
loss for the twelve months ended December 31, 2005 of $2,159,614,
or $0.43 per common share, as compared with net income of
$3,642,823, or $0.72 per common share, for the respective period in
2004. Total shareholders' equity at December 31, 2005 was $25.0
million, with a corresponding book value of $4.93 per share, as
compared with total shareholders' equity at December 31, 2004 of
$27.1 million, or $5.35 per share. There were 5,061,375 shares of
common stock outstanding during the three and twelve months ended
December 31, 2005 and 2004. The company's results for the quarter
were significantly impacted by Harbourton Mortgage Investment
Corporation ("HMIC"), the Company's wholesale mortgage subsidiary,
as it continued to cope during the period with significant interest
rate increases and turmoil in the secondary market in which it
sells all the loans it funds. For the quarter ended December 31,
2005, HMIC originated $189.2 million of loans, a 33% decline as
compared with fundings for the previous quarter of $280.6 million,
reflecting the general slowdown in the national real estate market.
Sales of loans during the quarter ended December 31, 2005 were
$202.7 million, with an average gain on sale of 2.07%, as compared
with sales in the prior quarter of $250.5 million with a comparable
gain on sale of 2.53%. Harbourton Financial Corporation (HFC), the
Company's mezzanine lending subsidiary, reported a loss for the
fourth quarter after recording a one time charge to adjust the
carrying value of selected mezzanine loans and acquired real
estate. The non-recurring charge reflects management's assessment
of the change in valuation for the specific projects, including two
residential condominium projects on which the Company foreclosed in
2005. To date the Company has subsequently sold 23 of the original
26 units received in the first foreclosure and is completing the
construction of the 8 units received in the second foreclosure,
with delivery expected in the third quarter 2006. Never the less
the Company's investment in real estate owned negatively impacted
HFC's interest revenue during the fourth quarter 2005. J. Kenneth
McLendon, president and CEO stated, "Regarding HMIC, the national
mortgage market was difficult in the fourth quarter, as increased
interest rates led to subdued real estate activity. The turmoil in
the secondary market, combined with an unusually large supply of
loans offered for sale, led to the decline in the gain on sale
received by HMIC during the quarter from investors in the secondary
market." He continued, "The board and management acknowledge and
regret the company's poor operating performance during the fourth
quarter, however we are committed to achieving profitable growth in
both business segments during 2006. The board and management are
dedicated to the goal of accomplishing efficiencies in all areas of
our business, and adjusting operating expenses where necessary to
provide maximum return for our shareholders." Harbourton is a
holding company comprising two main 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) December 31,
2005 December 31, 2004 ----------------- ----------------- Total
Assets $122,805.0 $ 90,430.3 Total Liabilities 87,852.2 63,327.9
Shareholders' Equity 24,952.8 27,102.3 Book Value Per Share $ 4.93
$ 5.35 Common Shares Outstanding 5,061.4 5,061.4 Three Months Ended
Twelve Months Ended December 31, December 31,
------------------------------------------- 2005 2004 2005 2004
---------- ---------- ---------- ---------- Revenues: Interest
income $ 2,368.4 $ 1,789.6 $ 8,425.8 $ 6,029.7 Interest expense
(1,573.3) (769.6) (5,070.3) (2,233.5) ---------- ----------
---------- ---------- Net interest income before provision 795.1
1,020.0 3,355.6 3,796.2 Provision for loss (1,351.8) (476.5)
(2,263.0) (1,085.6) ---------- ---------- ---------- ---------- Net
interest income after provision (556.7) 543.4 1,092.6 2,710.6 Fees
and other income 1,521.5 4,971.2 12,799.1 13,227.2 ----------
---------- ---------- ---------- Total net revenues 964.8 5,514.6
13,891.7 15,937.8 Expenses Compensation and benefits 2,750.3
2,795.6 11,509.7 8,460.2 General & administrative 1,050.2 406.5
570.9 2,237.0 Professional fees 175.7 189.7 603.7 344.2
Depreciation 139.4 79.6 367.0 202.0 ---------- ----------
---------- ---------- Total Expenses 4,115.6 3,471.5 16,051.3
11,243.4 Income (loss) before income tax (3,150.8) 2,043.1
(2,159.6) 4,694.4 Income tax expense (benefit) (369.1) (177.0) -
1,051.6 ---------- ---------- ---------- ---------- Net income
(loss) ($2,781.7) $ 2,220.2 $(2,159.6) $ 3,642.8 ==========
========== ========== ========== Income (loss) per common share
($0.55) $ 0.44 ($0.43) $ 0.72 Weighted average shares outstanding
5,061.4 5,061.4 5,061.4 5,061.4 Return on average equity ("ROAE")
(42.2%) 33.9% (8.0%) 14.8% *T
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