HARB Harbor Florida Bancshares

Harbor Florida Bancshares, Inc. Announces Third Quarter Earnings Increase FORT PIERCE, Fla., July 13 /PRNewswire-FirstCall/ -- Harbor Florida Bancshares, Inc. (NASDAQ:HARB) ("the Company"), the holding company for Harbor Federal Savings Bank ("the Bank"), announced today that diluted earnings per share for its third fiscal quarter ended June 30, 2005, increased 15.9% to 51 cents per share on net income of $11.9 million, compared to 44 cents per share on net income of $10.3 million for the same period last year. Diluted earnings per share for the nine months ended June 30, 2005 increased 14.0% to $1.47 per share on net income of $34.2 million, compared to $1.29 per share on net income of $29.9 million for the same period last year. The increases for both the quarter and fiscal year to date were predominately due to increased net interest income, resulting from an increase in average interest-earning assets due primarily to originations of loans. This growth was funded primarily with low cost core deposits. The Company also announced today that its Board of Directors declared a quarterly dividend of 20 cents per share for the quarter ending June 30, 2005. The dividend is payable August 19, 2005 to shareholders of record as of July 22, 2005. FINANCIAL CONDITION Total assets increased to $2.935 billion at June 30, 2005, from $2.627 billion at September 30, 2004. Total net loans increased to $2.178 billion at June 30, 2005, from $1.891 billion at September 30, 2004. Total deposits increased to $1.991 billion at June 30, 2005, from $1.745 billion at September 30, 2004. Total net loans increased due primarily to net increases of $135.9 million in residential one-to-four family mortgage loans, $76.8 million in land loans, $31.6 million in nonresidential mortgage loans, $28.6 million in consumer loans, and $10.2 million in commercial business loans for the nine months ended June 30, 2005. These increases were due to strong loan originations during the nine months ended June 30, 2005. When comparing originations for the nine months ended June 30, 2005 to the same period last year, residential one-to-four mortgage loan originations increased 20.2% to $687.4 million for the nine months ended June 30, 2005. Consumer loan originations increased 15.9% to $140.7 million for the nine months ended June 30, 2005. Commercial business loan originations increased 31.3% to $47.6 million for the nine months ended June 30, 2005. Commercial real estate loan originations increased 18.6% to $207.7 million for the nine months ended June 30, 2005. Deposits grew 14.1% during the nine months ended June 30, 2005 to $1.991 billion primarily due to a net increase of $172.4 million in core deposits (transaction and passbook accounts), and $73.9 million in certificate accounts. The Company continues to emphasize growth in transaction accounts, but believes that some of the significant growth during the nine months was attributable to short-term accumulation of disaster relief funds and insurance proceeds for the purpose of repairs to properties by homeowners and businesses. Future growth in such deposits may, therefore, be less than the amounts obtained year to date. RESULTS OF OPERATIONS Net interest income increased 15.1% to $28.0 million for the quarter ended June 30, 2005, from $24.4 million for the quarter ended June 30, 2004. This increase was primarily a result of a 14.1% increase from the quarter ended June 30, 2004 in average interest-earning assets that were funded primarily with low cost core deposits. Average total loans increased by $373.6 million, reflecting strong loan originations. The average balance of core deposits, certificate accounts and FHLB advances increased $205.8 million, $74.8 million and $57.3 million, respectively. The average balance of core deposits increased to 54.6% of total average deposits from 51.6% for the same quarter last year. Provision for loan losses was $463,000 for the quarter ended June 30, 2005, compared to $503,000 for the quarter ended June 30, 2004. The provision for the quarter ended June 30, 2005 was principally comprised of a charge of $309,000 due to increased credit risk resulting from growth in the loan portfolio and an increase of $160,000 due to an increase in the level of classified loans, partially offset by $6,000 in net recoveries. Other income decreased to $6.1 million for the quarter ended June 30, 2005, from $7.0 million for the quarter ended June 30, 2004. This decrease was due primarily to decreases of $1.4 million in gain on sale of equity securities and $313,000 in gain on disposal of premises and equipment, partially offset by increases of $304,000 in gain on sale of mortgage loans and $341,000 in fees and service charges. The increase in fees and service charges is primarily due to growth in transaction accounts. Other expense increased to $14.0 million for the quarter ended June 30, 2005, from $13.5 million for the quarter ended June 30, 2004. This increase was due primarily to increases of $647,000 in compensation and benefits, $191,000 in occupancy, and $570,000 in professional fees, partially offset by a decrease of $984,000 in other. The increases in compensation and benefits and occupancy are primarily due to growth in loans and deposits and expenses incurred in the opening of new branches. The increase in professional fees is due to additional expense related to compliance with the Sarbanes-Oxley Act of 2002 and the Bank Secrecy Act. Additional operating expenses may occur in future quarters as the Company continues to implement the requirements imposed by these regulations. The decrease in other was due primarily to the recognition in the quarter ended June 30, 2004 of a $873,000 non-deductible excise tax assessed by the Internal Revenue Service related to an operational adjustment in the Company's Employee Stock Ownership Plan. On June 17, 2005, the Company submitted a proposed compliance plan (the "Proposed Plan") to the Office of Thrift Supervision (the "OTS"). The Proposed Plan was requested by OTS to identify, correct and provide a schedule for compliance regarding selected areas of the Bank Secrecy Act and the Flood Disaster Protection Act. The Proposed Plan will be evaluated by the OTS to determine its sufficiency and will become effective upon approval by the OTS. Income tax expense was $7.7 and $7.1 million for the quarters ended June 30, 2005 and 2004. The effective tax rate was 39.1% for the quarter ended June 30, 2005 and 40.8% for the same period last year. The decrease in the tax rate was primarily due to the non-deductible ESOP excise tax recorded in the quarter ended June 30, 2004. ASSET QUALITY Nonperforming loans decreased to $1.6 million at June 30, 2005 from $2.1 million at June 30, 2004. Net recoveries for the quarter ended June 30, 2005 was $6,000 compared to $9,000 in net chargeoffs for the same period last year. The ratio of the allowance for loan losses to total net loans decreased to .89% of loans as of June 30, 2005, from .95% of total net loans for the same period last year. The allowance for loan losses remains sufficient to cover losses inherent in the loan portfolio. TREASURY STOCK REPURCHASES Harbor Florida Bancshares, Inc.'s Board of Directors has previously approved a stock repurchase plan, permitting the Company to acquire up to 1,200,000 shares of its common stock subject to market conditions. The Company has repurchased 465,200 shares under the current stock repurchase program. As of June 30, 2005, the Company has a total of 8,010,936 shares held as treasury stock. Harbor Federal is located in Fort Pierce, Florida, and has 37 offices located in a seven-county area of East Central Florida. Harbor Florida Bancshares, Inc. common stock trades on the Nasdaq National Market under the symbol HARB. Financial highlights for Harbor Florida Bancshares, Inc. are attached. HARBOR FLORIDA BANCSHARES, INC. June 30, September 30, 2005 2004 (In Thousands) Selected Consolidated Financial Data: Total assets $2,935,329 $2,627,109 Loans, gross 2,197,315 1,908,971 Allowance for loan losses 19,291 17,802 Net loans 2,178,024 1,891,169 Loans held for sale 8,687 2,438 Interest-bearing deposits 23,136 7,053 Investment securities 129,025 130,200 Mortgage-backed securities 419,269 443,060 Goodwill 3,591 3,591 Deposits 1,991,136 1,744,830 FHLB advances 600,478 553,492 Stockholders' equity 311,604 286,644 # of common shares outstanding 23,905 23,789 Three months ended Nine months ended June 30, June 30, 2005 2004 2005 2004 (In Thousands Except per Share Data) Selected Consolidated Operating Data: Interest income $42,481 $36,007 $120,727 $105,242 Interest expense 14,447 11,649 40,094 35,042 Net interest income 28,034 24,358 80,633 70,200 Provision for loan losses 463 503 1,450 1,302 Net interest income after provision for loan losses 27,571 23,855 79,183 68,898 Other Income: Fees and service charges 4,315 3,974 12,079 10,853 Insurance commissions and fees 899 923 2,393 2,529 Gain on sale of mortgage loans 601 297 1,633 1,707 Gain on disposal of premises and equipment 29 342 324 334 Gain on sale of equity securities -- 1,379 -- 1,998 Gain on sale of debt securities 41 -- 41 248 Other 171 50 278 320 Total other income 6,056 6,965 16,748 17,989 Other expenses: Compensation and benefits 8,130 7,483 23,443 21,836 Occupancy 1,964 1,773 5,636 5,109 Other 3,893 4,205 10,659 10,365 Total other expenses 13,987 13,461 39,738 37,310 Income before income taxes 19,640 17,359 56,193 49,577 Income tax expense 7,701 7,090 22,009 19,689 Net income $11,939 $10,269 $34,184 $29,888 Net income per share: Basic $0.52 $0.45 $1.50 $1.32 Diluted $0.51 $0.44 $1.47 $1.29 Weighted average shares outstanding Basic 22,839 22,610 22,763 22,606 Diluted 23,358 23,139 23,271 23,150 HARBOR FLORIDA BANCSHARES, INC. Three months ended Nine months ended June 30, June 30, 2005 2004 2005 2004 Selected Financial Ratios: Performance Ratios: Return on average assets (1) 1.64% 1.62% 1.61% 1.62% Return on average stockholders' equity (1) 15.67 15.05% 15.37% 14.82% Book value per share $13.04 $11.68 $13.04 $11.68 Net interest rate spread (1) 3.83% 3.80% 3.80% 3.76% Net interest margin (1) 4.01% 3.97% 3.97% 3.95% Non-interest expense to average assets (1) 1.92% 2.12% 1.87% 2.02% Net interest income to non- interest expense (1) 2.00 x 1.81 x 2.03 x 1.88 x Average interest-earning assets to average interest-bearing liabilities 108.51% 109.32% 108.58% 109.62% Efficiency ratio (1) 42.07% 43.10% 41.78 43.52% Asset Quality Ratios: Non-performing assets to total assets 0.06% 0.09% 0.06% 0.09% Allowance for loan losses to total loans 0.89% 0.95% 0.89% 0.95% Allowance for loan losses to classified loans 616.90% 322.92% 616.90% 322.92% Allowance for loan losses to non-performing loans 1,192.22% 838.13% 1,192.22% 838.13% Capital Ratios: Average shareholders' equity to average assets 10.44% 10.73% 10.49% 10.91% Shareholders' equity to assets at period end 10.62% 10.72% 10.62% 10.72% (1) Ratio is annualized. Three months ended Nine months ended June 30, June 30, 2005 2004 2005 2004 (In Thousands) Selected Average Balances: Total assets 2,928,038 2,556,386 2,833,720 2,468,301 Interest earning assets 2,807,917 2,460,283 2,717,669 2,378,975 Gross loans 2,153,949 1,780,361 2,030,148 1,704,192 Stockholders' equity 305,686 274,343 297,362 269,364 Deposits 1,989,835 1,709,192 1,934,857 1,640,571 Asset Quality: Nonaccrual loans 1,618 2,083 1,618 2,083 Net loan charge-offs (recovery) (6) 9 (39) 47 Loan Originations: Residential 292,369 245,395 687,385 571,769 Commercial Real Estate 67,640 70,346 207,662 175,143 Consumer 55,591 49,822 140,738 121,448 Commercial Business 17,061 16,413 47,595 36,254 Loan Sales: 36,367 17,806 78,223 71,118 HARBOR FLORIDA BANCSHARES, INC. For the three months ended June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2005 2005 2004 2004 2004 (In Thousands Except Per Share Data) Selected Consolidated Operating Data: Interest income $42,481 $39,916 $38,330 $36,843 $36,007 Interest expense 14,447 12,841 12,805 12,385 11,649 Net interest income 28,034 27,075 25,525 24,458 24,358 Provision for loan losses 463 538 450 350 503 Net interest income after provision for loan losses 27,571 26,537 25,075 24,108 23,855 Other Income: Fees and service charges 4,315 4,091 3,672 4,035 3,974 Insurance commissions and fees 899 850 645 863 923 Gain on sale of mortgage loans 601 564 468 553 297 Gain (loss) on disposal of premises and equipment 29 (8) 303 -- 342 Gain on sale of equity securities -- -- -- -- 1,379 Gain on sale of debt securities 41 -- -- -- -- Other 171 52 55 107 50 Total other income 6,056 5,549 5,143 5,558 6,965 Other expenses: Compensation and benefits 8,130 7,828 7,485 7,356 7,483 Occupancy 1,964 1,877 1,795 1,922 1,773 Other 3,893 3,568 3,198 3,279 4,205 Total other expenses 13,987 13,273 12,478 12,557 13,461 Income before income taxes 19,640 18,813 17,740 17,109 17,359 Income tax expense 7,701 7,358 6,950 6,002 7,090 Net income $11,939 $11,455 $10,790 $11,107 $10,269 Net income per share: Basic $0.52 $0.50 $0.48 $0.49 $0.45 Diluted $0.51 $0.49 $0.46 $0.48 $0.44 HARBOR FLORIDA BANCSHARES, INC. Three months ended June 30, 2005 Average Interest & Yield/ Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets: Interest-bearing deposits $37,719 $267 2.80% Investment securities 179,477 1,337 2.98 Mortgage-backed securities 436,772 4,137 3.79 Mortgage loans 1,847,647 31,133 6.74 Other loans 306,302 5,607 7.34 Total interest-earning assets 2,807,917 42,481 6.06 Total noninterest-earning assets 120,121 Total assets $2,928,038 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts $875,119 $1,297 0.43% Passbook savings 195,868 194 0.40 Official checks 16,305 -- -- Certificate accounts 902,543 6,452 2.87 Total deposits 1,989,835 7,943 1.60 FHLB advances 597,755 6,504 4.31 Other borrowings -- -- -- Total interest-bearing liabilities 2,587,590 14,447 2.23 Noninterest-bearing liabilities 34,762 Total liabilities 2,622,352 Stockholders' equity 305,686 Total liabilities and stockholders' equity $2,928,038 Net interest income/ interest rate spread $28,034 3.83% Net interest-earning assets/ net interest margin $220,327 4.01% Interest-earning assets to interest-bearing liabilities 108.51% HARBOR FLORIDA BANCSHARES, INC. Three months ended June 30, 2004 Average Interest & Yield/ Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets: Interest-bearing deposits $7,047 $17 0.94% Investment securities 186,089 1,216 2.62 Mortgage-backed securities 486,786 4,726 3.88 Mortgage loans 1,520,536 25,677 6.76 Other loans 259,825 4,371 6.77 Total interest-earning assets 2,460,283 36,007 5.86 Total noninterest-earning assets 96,103 Total assets $2,556,386 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts $706,976 $646 0.37% Passbook savings 158,790 102 0.26 Official checks 15,690 -- -- Certificate accounts 827,736 5,067 2.46 Total deposits 1,709,192 5,815 1.37 FHLB advances 540,478 5,822 4.27 Other borrowings 814 12 6.00 Total interest-bearing liabilities 2,250,484 11,649 2.05 Noninterest-bearing liabilities 31,559 Total liabilities 2,282,043 Stockholders' equity 274,343 Total liabilities and stockholders' equity $2,556,386 Net interest income/ interest rate spread $24,358 3.80% Net interest-earning assets/ net interest margin $209,799 3.97% Interest-earning assets to interest-bearing liabilities 109.32% HARBOR FLORIDA BANCSHARES, INC. Nine months ended June 30, 2005 Average Interest & Yield/ Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $54,042 $912 2.22% Investment securities 177,846 3,748 2.81 Mortgage-backed securities 455,633 13,072 3.83 Mortgage loans 1,736,988 87,277 6.70 Other loans 293,160 15,718 7.17 Total interest-earning assets 2,717,669 120,727 5.93 Total noninterest-earning assets 116,051 Total assets $2,833,720 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts $845,610 $3,421 0.51% Passbook savings 193,523 460 0.32 Official checks 22,235 -- -- Certificate accounts 873,489 17,576 2.69 Total deposits 1,934,857 21,457 1.48 FHLB advances 567,584 18,620 4.33 Other borrowings 423 17 5.45 Total interest-bearing liabilities 2,502,864 40,094 2.13 Noninterest-bearing liabilities 33,494 Total liabilities 2,536,358 Stockholders' equity 297,362 Total liabilities and stockholders' equity $2,833,720 Net interest income/ interest rate spread $80,633 3.80% Net interest-earning assets/ net interest margin $214,806 3.97% Interest-earning assets to interest-bearing liabilities 108.58% HARBOR FLORIDA BANCSHARES, INC. Nine months ended June 30, 2004 Average Interest & Yield/ Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $10,444 $72 0.91% Investment securities 236,774 4,578 2.58 Mortgage-backed securities 427,564 12,719 3.97 Mortgage loans 1,457,801 75,324 6.89 Other loans 246,391 12,549 6.80 Total interest-earning assets 2,378,974 105,242 5.90 Total noninterest-earning assets 89,327 Total assets $2,468,301 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts $651,243 $1,929 0.40% Passbook savings 151,376 298 0.26 Official checks 15,838 -- -- Certificate accounts 822,114 15,334 2.49 Total deposits 1,640,571 17,561 1.43 FHLB advances 528,719 17,444 4.34 Other borrowings 832 37 6.01 Total interest-bearing liabilities 2,170,122 35,042 2.14 Noninterest-bearing liabilities 28,815 Total liabilities 2,198,937 Stockholders' equity 269,364 Total liabilities and stockholders' equity $2,468,301 Net interest income/ interest rate spread $70,200 3.76% Net interest-earning assets/ net interest margin $208,853 3.95 Interest-earning assets to interest-bearing liabilities 109.62% DATASOURCE: Harbor Florida Bancshares, Inc. CONTACT: Michael J. Brown, Sr., President, +1-772-460-7000, or H. Michael Callahan, CFO, +1-772-460-7009, or Toni Santiuste, Investor Relations, +1-772-460-7002, all of Harbor Florida Bancshares Web site: http://www.harborfederal.com/

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