HARB Harbor Florida Bancshares

Harbor Florida Bancshares, Inc. Announces Second Quarter Earnings Increase FORT PIERCE, Fla., April 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 second fiscal quarter ended March 31, 2005, increased 11.4% to 49 cents per share on net income of $11.5 million, compared to 44 cents per share on net income of $10.1 million for the same period last year. Diluted earnings per share for the six months ended March 31, 2005 increased 12.9% to 96 cents per share on net income of $22.2 million, compared to 85 cents per share on net income of $19.6 million for the same period last year. The increases for both the quarter and fiscal year to date were due primarily 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 increases in net interest income were partially offset by decreases in other income and increases in other expenses for both periods. The Company also announced today that its Board of Directors declared a quarterly dividend of 20 cents per share for the quarter ending March 31, 2005. The dividend is payable May 20, 2005 to shareholders of record as of April 22, 2005. Financial Condition Total assets increased to $2.913 billion at March 31, 2005, from $2.627 billion at September 30, 2004. Total net loans increased to $2.076 billion at March 31, 2005, from $1.891 billion at September 30, 2004. Total deposits increased to $2.009 billion at March 31, 2005, from $1.745 billion at September 30, 2004. Total net loans increased due primarily to net increases of $81.7 million in residential one-to-four family mortgage loans, $45.0 million in land loans, $31.4 million in nonresidential mortgage loans, $12.9 million in consumer loans, and $7.6 million in commercial business loans for the six months ended March 31, 2005. These increases were due to strong loan originations during the six months ended March 31, 2005 as compared to the same period last year. Residential one-to-four mortgage loan originations increased 21.0% from the same period last year to $395.0 million for the six months ended March 31, 2005. Consumer loan originations increased 18.9% to $85.1 million for the six months ended March 31, 2005. Commercial business loan originations were $30.5 million for the six months ended March 31, 2005, up 53.9% from the same period last year. Commercial real estate loan originations increased 33.6% from the same period last year to $140.0 million for the six months ended March 31, 2005. Deposits grew 15.1% during the six months ended March 31, 2005 to $2.009 billion primarily due to a net increase of $206.1 million in core deposits (transaction and passbook accounts), and $58.0 million in certificate accounts. The increase in core deposits reflects disaster relief funds and insurance proceeds flowing into the Company's market area, as well as the customer's continued preference for shorter-term investments in a low interest rate environment and growth in the Company's market area. The Company continues to emphasize growth in transaction accounts. However, the Company believes that some of the significant growth during the six months was attributable to short-term accumulation of funds 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 15.5% to $27.1 million for the quarter ended March 31, 2005, from $23.4 million for the quarter ended March 31, 2004. This increase was primarily a result of a 13.8% increase from the quarter ended March 31, 2004 in average interest-earning assets that were funded primarily with low cost core deposits. Average total loans increased by $317.9 million, reflecting strong loan originations. The average balance of core deposits and FHLB advances increased by $308.3 million and $17.8 million, respectively. The average balance of core deposits increased to 55.4% of total average deposits from 49.9% for the same quarter last year. Provision for loan losses was $538,000 for the quarter ended March 31, 2005, compared to $351,000 for the quarter ended March 31, 2004. The provision for the quarter ended March 31, 2005 was principally comprised of a charge of $633,000 due to increased credit risk resulting from growth in the loan portfolio, partially offset by a decrease of $57,000 due to a decrease in the level of classified loans and $38,000 in net recoveries. Other income decreased to $5.5 million for the quarter ended March 31, 2005, from $5.7 million for the quarter ended March 31, 2004. This decrease was due primarily to decreases of $307,000 in gain on sale of equity securities, $248,000 in gain on sale of debt securities, and $105,000 in gain on sale of mortgage loans, partially offset by an increase of $596,000 in fees and service charges. The increase in fees and service charges is primarily due to growth in transaction accounts. Other expense increased to $13.3 million for the quarter ended March 31, 2005, from $12.3 million for the quarter ended March 31, 2004. This increase was due primarily to increases of $485,000 in compensation and benefits, $172,000 in occupancy, $92,000 in advertising and promotion, and $205,000 in other. These increases are primarily due to growth in loans and deposits and also expenses incurred in the opening of new branches. The Company has also incurred additional expense related to compliance with the Sarbanes-Oxley Act of 2001 and the Bank Secrecy Act during the quarter ended March 31, 2005. The Company anticipates that additional increases in operating expense are also likely in future quarters as the Company continues to implement the additional requirements imposed by these regulations. Income tax expense was $7.4 and $6.5 million for the quarters ended March 31, 2005 and 2004. The effective tax rate for both quarters was 39.1%. Asset Quality Non-performing loans decreased to $1.3 million at March 31, 2005 from $1.9 million at March 31, 2004. Net recoveries for the quarter ended March 31, 2005 was $38,000 compared to $6,000 in net recoveries for the same period last year. The ratio of the allowance for loan losses to total net loans decreased to .91% of loans as of March 31, 2005, from .99% 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 528,020 shares under the current stock repurchase program. As of March 31, 2005, the Company has a total of 8,009,130 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. follow. HARBOR FLORIDA BANCSHARES, INC. March 31, September 30, 2005 2004 (In Thousands) Selected Consolidated Financial Data: Total assets $2,913,280 $2,627,109 Loans, gross 2,095,214 1,908,971 Allowance for loan losses 18,822 17,802 Net loans 2,076,392 1,891,169 Loans held for sale 2,268 2,438 Interest-bearing deposits 58,033 7,053 Investment securities 158,548 130,200 Mortgage-backed securities 451,632 443,060 Goodwill 3,591 3,591 Deposits 2,008,993 1,744,830 FHLB advances 578,483 553,492 Stockholders' equity 302,655 286,644 # of common shares outstanding 23,867 23,789 Three months ended Six months ended March 31, March 31, 2005 2004 2005 2004 (In Thousands Except per Share Data) Selected Consolidated Operating Data: Interest income $39,916 $35,099 78,246 $69,235 Interest expense 12,841 11,658 25,646 23,393 Net interest income 27,075 23,441 52,600 45,842 Provision for loan losses 538 351 988 799 Net interest income after provision for loan losses 26,537 23,090 51,612 45,043 Other Income: Fees and service charges 4,091 3,495 7,763 6,879 Insurance commissions and fees 850 884 1,495 1,606 Gain on sale of mortgage loans 564 669 1,032 1,410 Gain (loss) on disposal of premises and equipment (8) (1) 295 (3) Gain on sale of equity securities -- 307 -- 619 Gain on sale of debt securities -- 248 -- 248 Other 52 99 107 265 Total other income 5,549 5,701 10,692 11,024 Other expenses: Compensation and benefits 7,828 7,343 15,313 14,353 Occupancy 1,877 1,705 3,672 3,336 Other 3,568 3,210 6,766 6,160 Total other expenses 13,273 12,258 25,751 23,849 Income before income taxes 18,813 16,533 36,553 32,218 Income tax expense 7,358 6,462 14,308 12,599 Net income $11,455 $10,071 22,245 $19,619 Net income per share: Basic $0.50 $0.45 0.98 $0.87 Diluted $0.49 $0.44 0.96 $0.85 Weighted average shares outstanding Basic 22,766 22,641 22,725 22,605 Diluted 23,302 23,221 23,259 23,183 HARBOR FLORIDA BANCSHARES, INC. Three months ended Six months ended March 31, March 31, 2005 2004 2005 2004 Selected Financial Ratios: Performance Ratios: Return on average assets (1) 1.64 % 1.64 % 1.60 % 1.62 % Return on average stockholders' equity (1) 15.63 % 14.99 % 15.22 % 14.70 % Book value per share $12.68 $11.49 $12.68 $11.49 Net interest rate spread (1) 3.85 % 3.77 % 3.78 % 3.74 % Net interest margin (1) 4.01 % 3.95 % 3.95 % 3.94 % Non-interest expense to average assets (1) 1.91 % 2.00 % 1.85 % 1.97 % Net interest income to non-interest expense (1) 2.02 x 1.91 x 2.04 x 1.93 x Average interest- earning assets to average interest- bearing liabilities 108.26 % 109.42 % 108.62 % 109.78 % Efficiency ratio (1) 41.82 % 44.14 % 41.60 % 43.75 % Asset Quality Ratios: Non-performing assets to total assets 0.04 % 0.10 % 0.04 % 0.10 % Allowance for loan losses to total loans 0.91 % 0.99 % 0.91 % 0.99 % Allowance for loan losses to classified loans 556.58 % 291.31 % 556.58 % 291.31 % Allowance for loan losses to non-performing loans 1,504.25 % 884.36 % 1,504.25 % 884.36 % Capital Ratios: Average shareholders' equity to average assets 10.53 % 10.94 % 10.52 % 11.01 % Shareholders' equity to assets at period end 10.39 % 10.75 % 10.39 % 10.75 % (1) Ratio is annualized. Three months ended Six months ended March 31, March 31, 2005 2004 2005 2004 (In Thousands) Selected Average Balances: Total assets 2,824,365 2,469,674 2,786,560 2,424,499 Interest earning assets 2,707,407 2,380,064 2,672,545 2,338,543 Gross loans 2,012,043 1,694,176 1,968,247 1,666,317 Stockholders' equity 297,274 270,278 293,200 266,888 Deposits 1,948,772 1,640,502 1,907,367 1,606,448 Asset Quality: Nonaccrual loans 1,251 1,918 1,251 1,918 Net loan charge- offs (recovery) (38) 6 (32) 38 Loan Originations: Residential 212,299 165,596 395,016 326,374 Commercial Real Estate 98,847 53,610 140,022 104,798 Consumer 44,878 40,104 85,147 71,626 Commercial Business 17,514 7,154 30,534 19,841 Loan Sales: 20,462 25,144 41,857 53,312 HARBOR FLORIDA BANCSHARES, INC. For the three months ended Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 (In Thousands Except Per Share Data) Selected Consolidated Operating Data: Interest income $39,916 $38,330 $36,843 $36,007 $35,099 Interest expense 12,841 12,805 12,385 11,649 11,658 Net interest income 27,075 25,525 24,458 24,358 23,441 Provision for loan losses 538 450 350 503 351 Net interest income after provision for loan losses 26,537 25,075 24,108 23,855 23,090 Other Income: Fees and service charges 4,091 3,672 4,035 3,974 3,495 Insurance commissions and fees 850 645 863 923 884 Gain on sale of mortgage loans 564 468 553 297 669 Gain (loss) on disposal of premises and equipment (8) 303 -- 342 (1) Gain on sale of equity securities -- -- -- 1,379 307 Gain on sale of debt securities -- -- -- -- 248 Other 52 55 107 50 99 Total other income 5,549 5,143 5,558 6,965 5,701 Other expenses: Compensation and benefits 7,828 7,485 7,356 7,483 7,343 Occupancy 1,877 1,795 1,922 1,773 1,705 Other 3,568 3,198 3,279 4,205 3,210 Total other expenses 13,273 12,478 12,557 13,461 12,258 Income before income taxes 18,813 17,740 17,109 17,359 16,533 Income tax expense 7,358 6,950 6,002 7,090 6,462 Net income $11,455 $10,790 $11,107 $10,269 $10,071 Net income per share: Basic $0.50 $0.48 $0.49 $0.45 $0.45 Diluted $0.49 $0.46 $0.48 $0.44 $0.44 HARBOR FLORIDA BANCSHARES, INC. Three months ended March 31, 2005 Average Interest & Yield/ Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $42,969 $248 2.31 % Investment securities 189,305 1,350 2.86 Mortgage-backed securities 463,090 4,442 3.84 Mortgage loans 1,719,127 28,679 6.69 Other loans 292,916 5,197 7.20 Total interest-earning assets 2,707,407 39,916 5.92 Total noninterest-earning assets 116,958 Total assets $2,824,365 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts $863,419 1,073 0.43 % Passbook savings 199,859 139 0.28 Official checks 16,305 -- -- Certificate accounts 869,189 5,656 2.64 Total deposits 1,948,772 6,868 1.43 FHLB advances 551,541 5,968 4.33 Other borrowings 488 5 4.60 Total interest-bearing liabilities 2,500,801 12,841 2.07 Noninterest-bearing liabilities 26,290 Total liabilities 2,527,091 Stockholders' equity 297,274 Total liabilities and stockholders' equity $2,824,365 Net interest income/ interest rate spread $27,075 3.85 % Net interest-earning assets/ net interest margin $206,606 4.01 % Interest-earning assets to interest-bearing liabilities 108.26 % HARBOR FLORIDA BANCSHARES, INC. Three months ended March 31, 2004 Average Interest & Yield/ Balance Dividend Rate Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $9,256 $21 0.91 % Investment securities 220,869 1,423 2.58 Mortgage-backed securities 455,763 4,531 3.98 Mortgage loans 1,450,140 24,982 6.90 Other loans 244,036 4,142 6.83 Total interest-earning assets 2,380,064 35,099 5.91 Total noninterest-earning assets 89,610 Total assets 2,469,674 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts 652,794 674 0.42 % Passbook savings 150,626 99 0.27 Official checks 14,736 -- -- Certificate accounts 822,346 5,061 2.48 Total deposits 1,640,502 5,834 1.43 FHLB advances 533,790 5,811 4.31 Other borrowings 832 13 6.00 Total interest-bearing liabilities 2,175,124 11,658 2.14 Noninterest-bearing liabilities 24,272 Total liabilities 2,199,396 Stockholders' equity 270,278 Total liabilities and stockholders' equity 2,469,674 Net interest income/ interest rate spread $23,441 3.77 % Net interest-earning assets/ net interest margin $204,940 3.95 % Interest-earning assets to interest-bearing liabilities 109.42 % HARBOR FLORIDA BANCSHARES, INC. Six months ended March 31, 2005 Average Interest & Yield/ Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $62,204 $645 2.05 % Investment securities 177,030 2,410 2.72 Mortgage-backed securities 465,064 8,935 3.84 Mortgage loans 1,681,659 56,145 6.68 Other loans 286,588 10,111 7.08 Total interest-earning assets 2,672,545 78,246 5.86 Total noninterest-earning assets 114,015 Total assets $2,786,560 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts $834,214 2,124 0.51 % Passbook savings 192,350 267 0.28 Official checks 21,841 -- -- Certificate accounts 858,962 11,124 2.60 Total deposits 1,907,367 13,515 1.42 FHLB advances 552,498 12,115 4.34 Other borrowings 635 16 5.45 Total interest-bearing liabilities 2,460,500 25,646 2.08 Noninterest-bearing liabilities 32,860 Total liabilities 2,493,360 Stockholders' equity 293,200 Total liabilities and stockholders' equity $2,786,560 Net interest income/ interest rate spread $52,600 3.78 % Net interest-earning assets/ net interest margin $212,045 3.95 % Interest-earning assets to interest-bearing liabilities 108.62 % HARBOR FLORIDA BANCSHARES, INC. Six months ended March 31, 2004 Average Interest & Yield/ Balance Dividend Rate Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $12,133 $55 0.90 % Investment securities 261,978 3,362 2.57 Mortgage-backed securities 398,115 7,993 4.02 Mortgage loans 1,426,605 49,647 6.96 Other loans 239,712 8,178 6.82 Total interest-earning assets 2,338,543 69,235 5.92 Total noninterest-earning assets 85,956 Total assets 2,424,499 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts 623,528 1,283 0.41 % Passbook savings 147,690 196 0.27 Official checks 15,912 -- -- Certificate accounts 819,318 10,267 2.51 Total deposits 1,606,448 11,746 1.46 FHLB advances 522,872 11,622 4.38 Other borrowings 841 25 6.01 Total interest-bearing liabilities 2,130,161 23,393 2.18 Noninterest-bearing liabilities 27,450 Total liabilities 2,157,611 Stockholders' equity 266,888 Total liabilities and stockholders' equity 2,424,499 Net interest income/ interest rate spread $45,842 3.74 % Net interest-earning assets/ net interest margin $208,382 3.94 % Interest-earning assets to interest-bearing liabilities 109.78 % 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, Inc. Web site: http://www.harborfederal.com/

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