HBTC

Harbourton Capital Group, Inc. (�Harbourton� or the �Company�) (OTC:HBTC) today reported a loss of $3.6 million, or $0.71 per common share, for the three months ended September 30, 2006, compared with net income after tax of $42,977, or $0.01 per common share, for the comparable period in 2005. The loss for the nine months ended September 30, 2006 was $7.3 million, or $1.45 per common share, compared with net income of $621,899, or $0.11 per common share, for the comparable 2005 period. There were 5,061,375 shares of common stock outstanding during the three and nine months ended September 30, 2006 and 2005. Common shareholders� equity at September 30, 2006 was $17.7 million, with a corresponding book value of $3.49 per common share, as compared with $25.0 million at December 31, 2005, or $4.93 per common share. The Company completed the acquisition of Molton Allen Williams Mortgage Company, LLC (�MAW�), headquartered in Fairfax, Virginia on August 31, 2006. In connection with the acquisition, the Company issued $2.1 million in preferred stock and a note payable in the amount of $300,000. The assets and liabilities acquired in the MAW transaction were contributed to the Company�s wholly owned subsidiary Harbourton Mortgage Investment Corporation (�HMIC�), increasing the capital position of HMIC. The transaction was recorded using purchase accounting and accordingly the results for the quarter ended September 30, 2006 include the results of operations for HMIC only for July and August and the consolidated results of both HMIC and MAW operations for the month of September. The Company�s results for the quarter were again negatively impacted by HMIC, the Company�s wholesale mortgage subsidiary. For the quarter ended September 30, 2006, HMIC recorded a provision for losses of $954,000 in response to a significant increase in the loans sold to investors that experienced an early payment default, under which HMIC may have liability to the investor. HMIC recorded a loss for the quarter ended September 30 of $1.19 million excluding the provision for losses and approximately $260,000 of one time expenses directly related to the MAW acquisition. Harbourton Financial Corporation (�HFC�), the Company�s mezzanine lending subsidiary, established additional loan loss reserves of $750,000 related to three of its projects to reflect the recent decline in real estate market values. President and CEO of Harbourton, J. Kenneth McLendon stated, �The recent decline in both real estate activity and market values significantly impacted the Company in the quarter ended September 30, 2006. Furthermore, the significant rise in early payment defaults on loans that HMIC sold to investors on which it may have liability for losses will continue to pressure earnings in the fourth quarter of 2006. Additionally, he noted the integration expenses related to the MAW acquisition would negatively impact the fourth quarter results.� 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. Selected Financial Data: (000�s except per share data) Assets: September 30, 2006 December 31, 2005 September 30, 2005 Cash & Cash Equivalents $ 1,735.0� $ 2,043.2� $ 2,221.1� Loans Receivable, Net 7,276.9� 8,574.6� 11,564.1� Loans Held for Sale, Net 121,104.5� 81,378.0� 97,348.2� Investment in Real Estate, Net 7,234.2� 12,952.3� 12,126.0� Other Assets 15,065.2� 7,857.0� 8,324.7� Total Assets $152,415.8� $112,805.0� $131,584.2� Liabilities: Notes Payable 5,816.4� 7,073.3� 7,675.4� Warehouse Line Payable 123,091.9� 78,081.2� 92,682.4� Accounts Payable 3,743.9� 2,697.6� 3,510.6� Total Liabilities 132,652.2� 87,852.2� 103,868.3� Preferred Stock 2,108.0� -� -� Common Shareholders� Equity 17,655.6� 24,952.8� 27,715.9� Total Liabilities and Shareholders Equity $152,415.8� $112,805.0� $131,584.2� Book Value Per Common Share $3.49� $4.93� $5.48� Common Shares Outstanding 5,061.4� 5,061.4� 5,061.4� Three Months Ended Nine Months Ended September 30, September 30, Revenues: 2006� 2005� 2006� 2005� Interest income $2,998.9� $2,487.2� $ 6,574.9� $ 6,057.4� Interest expense (2,093.6) (1,567.1) (4,447.1) (3,496.9) Net interest income before provision 905.3� 920.1� 2,127.8� 2,560.4� Provision for loss (1,802.8) (286.1) (2,324.0) (911.2) Net interest income after provision (897.5) 634.0� (196.1) 1,649.2� Fees and other income 2,447.5� 3,724.0� 6,055.8� 11,277.6� Total net revenues 1,550.0� 4,358.0� 5,859.6� 12,926.8� � Expenses: Compensation and benefits 3,709.9� 3,180.3� 9,307.0� 8,759.4� General & administrative 1,206.1� 861.9� 2,823.6� 2,281.2� Loan expenses (166.7) 92.0� 150.3� 239.6� Professional fees 148.1� 177.3� 402.3� 428.0� Depreciation 184.6� (21.0) 503.3� 227.6� Total Expenses 5,082.1� 4,290.5� 13,186.5� 11,935.8� Income (loss) before income tax (3,532.0) 67.5� (7,326.9) 991.1� Income tax (credit) 53.9� 24.5� (2.8) (369.1) Net income (loss) ($3,586.0) $ 43.0� ($7,329.7) $ 621.9� � Net Income (loss) available per common share ($0.71) $0.01� ($1.45) $0.11� Weighted average shares outstanding 5,061.4� 5,061.4� 5,061.4� 5,061.4�