HARB Harbor Florida Bancshares

Harbor Florida Bancshares, Inc. Announces Second Quarter Earnings Increase FORT PIERCE, Fla., April 14 /PRNewswire-FirstCall/ -- Harbor Florida Bancshares, Inc. ("the Company"), the holding company for Harbor Federal Savings Bank ("Harbor Federal"), announced today that diluted earnings per share for its second fiscal quarter ended March 31, 2004, increased 10.0% to 44 cents per share on net income of $10.1 million, compared to 40 cents per share on net income of $9.3 million for the same period last year. Diluted earnings per share for the six months ended March 31, 2004, increased 6.25% to 85 cents per share on net income of $19.6 million, compared to 80 cents per share on net income of $18.6 million for the same period last year. The increases for both the quarter and fiscal year to date were due primarily to an increase in net interest income resulting from an increase in average interest-earning assets due to purchases of mortgage-backed securities and originations of loans. This growth was funded with low cost core deposits and FHLB advances. The increase in net interest income was partially offset by a decrease in gain on sale of mortgage loans and an increase in other expenses. Harbor Florida Bancshares, Inc.'s Board of Directors declared a quarterly dividend of 16 cents per share for the second quarter. The dividend is payable May 20, 2004 to shareholders of record as of April 23, 2004. Total assets increased to $2.541 billion at March 31, 2004, from $2.352 billion at September 30, 2003. Total net loans increased to $1.713 billion at March 31, 2004, from $1.611 billion at September 30, 2003. Total deposits increased to $1.691 billion at March 31, 2004, from $1.550 billion at September 30, 2003. Net interest income increased 11.3% to $23.4 million for the quarter ended March 31, 2004, from $21.1 million for the quarter ended March 31, 2003 as a result of a 15.1% increase in average interest-earning assets that were funded primarily with low cost core deposits and FHLB advances. The average balance of mortgage-backed securities increased $306.7 million, partially offset by a decrease of $66.6 million in investment securities and $50.4 million in interest-bearing deposits. The Company's investment strategy has been to shift the securities portfolio from lower yielding, shorter term investment securities into higher yielding balloon mortgage-backed securities, with expected average lives in the three to four year range. Total loans increased by $122.2 million. The average balance of core deposits increased by $204.5 million and FHLB advances increased by $93.5 million. The average balance of core deposits increased to 49.9% of total average deposits from 42.9% for the same quarter last year. Provision for loan losses was $351,000 for the quarter ended March 31, 2004, compared to $502,000 for the quarter ended March 31, 2003. The provision for the quarter ended March 31, 2004 was principally comprised of a charge of $500,000 due to increased credit risk resulting from growth in the loan portfolio, primarily commercial real estate loans, partially offset by a decrease in the level of classified loans. Other income increased to $5.7 million for the quarter ended March 31, 2004, from $5.4 million for the quarter ended March 31, 2003. This increase was due primarily to increases of $272,000 in insurance commissions and fees, $248,000 in gains on sale of debt securities and $209,000 in other fees and service charges, partially offset by a decrease of $449,000 in gain on sale of mortgage loans. The gain on sale of debt securities was primarily due to the sale of numerous small-dollar mortgage-backed-securities where a substantial portion of the principal had been repaid. Other expenses increased to $12.3 million for the quarter ended March 31, 2004, from $10.5 million for the quarter ended March 31, 2003. This increase is due primarily to increases of $1.1 million in compensation and benefits, $228,000 in occupancy, $121,000 in data processing services, and $267,000 in other expenses. Income tax expense increased to $6.5 million for the quarter ended March 31, 2004, from $6.0 million for the quarter ended March 31, 2003. The effective tax rate was 39.1% for the quarter ended March 31, 2004 and 39.2% for the same period last year. Harbor Federal is expanding and improving its branch network to include a relocation of its north Port St. Lucie branch into new facilities at Prima Vista Crossing Shopping Center, a new branch in south Vero Beach on Oslo Road and a new branch in Merritt Island at the Publix Shopping Center at Courtenay Parkway (Route 3) and Florida Boulevard. All three branches are scheduled to open during the third fiscal quarter. During the fourth fiscal quarter, Harbor Federal will expand into Lake County with a new branch in Clermont at US 27 and Citrus Tower Boulevard. Harbor Federal closed its West Melbourne branch in the Wal-Mart Supercenter in March of this year. Harbor Florida Bancshares, Inc.'s Board of Directors has previously approved a stock repurchase program permitting the Company to acquire up to 1,200,000 shares of its common stock subject to market conditions. The Company has repurchased 485,519 shares under the current stock repurchase program. As of March 31, 2004, the Company has a total of 7,966,629 shares held as treasury stock. Harbor Federal is located in Fort Pierce, Florida and has 33 offices located in a six-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, 2004 2003 (In Thousands) Selected Consolidated Financial Data: Total assets $2,541,218 $2,352,071 Loans, gross 1,730,204 1,627,584 Allowance for loan losses 16,960 16,199 Net loans 1,713,244 1,611,385 Loans held for sale 2,816 2,648 Interest-bearing deposits 7,940 4,432 Investment securities 174,706 296,935 Mortgage-backed securities 501,335 308,075 Real estate owned 602 906 Goodwill 3,591 3,718 Deposits 1,691,149 1,550,260 FHLB advances 553,502 503,511 Stockholders' equity 273,189 261,883 # of common shares outstanding 23,780 23,780 Three months ended Six months ended March 31, March 31, 2004 2003 2004 2003 (In Thousands) Selected Average Balances: Total assets 2,469,674 2,142,928 2,424,499 2,123,163 Interest earning assets 2,380,064 2,068,100 2,338,543 2,050,830 Gross loans 1,694,176 1,571,956 1,666,317 1,562,993 Stockholders' equity 270,278 247,552 266,888 244,501 Deposits 1,640,502 1,431,504 1,606,448 1,408,941 Asset Quality: Nonaccrual loans 1,918 2,594 1,918 2,594 Net charge-offs 6 10 38 138 Three months ended Six months ended March 31, March 31, 2004 2003 2004 2003 (In Thousands Except per Share Data) Selected Consolidated Operating Data: Interest income $35,099 $33,411 $69,235 $67,484 Interest expense 11,658 12,353 23,393 25,937 Net interest income 23,441 21,058 45,842 41,547 Provision for loan losses 351 502 799 953 Net interest income after provision for loan losses 23,090 20,556 45,043 40,594 Other Income: Fees and service charges 3,495 3,286 6,879 6,437 Insurance commissions and fees 884 612 1,606 1,182 Gain on sale of mortgage loans 669 1,118 1,410 2,432 Gain on sale of equity securities 307 305 619 610 Gain on sale of debt securities 248 -- 248 -- Other 98 34 262 92 Total other income 5,701 5,355 11,024 10,753 Other expenses: Compensation and benefits 7,343 6,238 14,353 12,263 Occupancy 1,705 1,477 3,336 2,913 Other 3,210 2,827 6,160 5,564 Total other expenses 12,258 10,542 23,849 20,740 Income before income taxes 16,533 15,369 32,218 30,607 Income tax expense 6,462 6,024 12,599 11,986 Net income $10,071 $9,345 $19,619 $18,621 Net income per share: Basic $0.45 $0.41 $0.87 $0.82 Diluted $0.44 $0.40 $0.85 $0.80 Weighted average shares outstanding Basic 22,641 22,569 22,605 22,574 Diluted 23,221 23,181 23,183 23,155 HARBOR FLORIDA BANCSHARES, INC. Three months ended Six months ended March 31, March 31, 2004 2003 2004 2003 Selected Financial Ratios: Performance Ratios: Return on average assets (1) 1.64 % 1.77 % 1.62 % 1.76 % Return on average stockholders' equity (1) 14.99 % 15.31 % 14.70 % 15.27 % Book value per share $11.49 $10.55 $11.49 $10.55 Net interest rate spread (1) 3.77 % 3.83 % 3.74 % 3.79 % Net interest margin (1) 3.95 % 4.08 % 3.94 % 4.06 % Non-interest expense to average assets (1) 2.00 % 2.00 % 1.97 % 1.96 % Net interest income to non- interest expense (1) 1.91 x 1.97 x 1.93 x 2.00 x Average interest-earning assets to average interest-bearing liabilities 109.42 % 110.45 % 109.78 % 110.73 % Efficiency ratio (1) 44.14 % 42.65 % 43.75 % 42.17 % Asset Quality Ratios: Non-performing assets to total assets 0.10 % 0.15 % 0.10 % 0.15 % Allowance for loan losses to total loans 0.99 % 0.97 % 0.99 % 0.97 % Allowance for loan losses to classified loans 291.31 % 191.40 % 291.31 % 191.40 % Allowance for loan losses to non-performing loans 884.36 % 585.61 % 884.36 % 585.61 % Capital Ratios: Average shareholders' equity to average assets 10.94 % 11.55 % 11.01 % 11.52 % Shareholders' equity to assets at period end 10.75 % 11.58 % 10.75 % 11.58 % (1) Ratio is annualized. HARBOR FLORIDA BANCSHARES, INC. For the Three Months Ended Mar. 31, Dec. 31, Sept. 30,June 30, Mar. 31, 2004 2003 2003 2003 2003 (In Thousands Except Per Share Data) Selected Consolidated Operating Data: Interest income $35,099 $34,136 $33,846 $33,575 $33,411 Interest expense 11,658 11,734 11,859 11,869 12,353 Net interest income 23,441 22,402 21,987 21,706 21,058 Provision for loan losses 351 448 334 659 502 Net interest income after provision for loan losses 23,090 21,954 21,653 21,047 20,556 Other Income: Fees and service charges 3,495 3,385 3,329 3,197 3,286 Insurance commissions and fees 884 721 726 860 612 Gain on sale of mortgage loans 669 741 473 1,266 1,118 Gain on sale of equity securities 307 311 304 389 305 Gain on sale of debt securities 248 0 361 0 0 Other 98 170 80 40 34 Total other income 5,701 5,328 5,273 5,752 5,355 Other expenses: Compensation and benefits 7,343 7,010 6,763 6,620 6,238 Occupancy 1,705 1,632 1,606 1,551 1,477 Other 3,210 2,954 2,878 2,866 2,827 Total other expenses 12,258 11,596 11,247 11,037 10,542 Income before income taxes 16,533 15,686 15,679 15,762 15,369 Income tax expense 6,462 6,137 6,015 6,187 6,024 Net income $10,071 $9,549 $9,664 $9,575 $9,345 Net income per share: Basic $0.45 $0.42 $0.43 $0.43 $0.41 Diluted $0.44 $0.41 $0.42 $0.42 $0.40 HARBOR FLORIDA BANCSHARES, INC. FQE MARCH 31, 2004 Three months ended March 31, 2004 2003 Average Interest & Yield/ Average Interest & Yield/ Balance Dividend Rate Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest- earning assets : Interest- bearing deposits $9,256 21 0.91% $59,607 $179 1.20% Investment securities 220,869 1,423 2.58 287,516 2,184 3.04 Mortgage- backed securities 455,763 4,531 3.98 149,021 2,148 5.77 Mortgage loans 1,450,140 24,982 6.90 1,368,379 25,287 7.42 Other loans 244,036 4,142 6.83 203,577 3,614 7.20 Total interest- earning assets 2,380,064 35,099 5.91 2,068,100 33,411 6.49 Total noninterest- earning assets 89,610 74,828 Total assets 2,469,674 2,142,928 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts 652,794 674 0.42% 473,287 589 0.50% Passbook savings 150,626 99 0.27 123,949 127 0.42 Official checks 14,736 0 0 16,454 0 0 Certificate accounts 822,346 5,061 2.48 817,814 6,185 3.07 Total deposits 1,640,502 5,834 1.43 1,431,504 6,901 1.96 FHLB advances 533,790 5,811 4.31 440,298 5,442 4.95 Other borrowings 832 12 6.00 618 10 6.56 Total interest- bearing liabilities 2,175,124 11,658 2.14 1,872,420 12,353 2.66 Noninterest- bearing liabilities 24,272 22,956 Total liabilities 2,199,396 1,895,376 Stockholders' equity 270,278 247,552 Total liabilities and stockholders' equity 2,469,674 2,142,928 Net interest income/ interest rate spread 23,441 3.77% $21,058 3.83% Net interest- earning assets/ net interest margin $204,940 3.95% $195,680 4.08% Interest-earning assets to interest- bearing liabilities 109.42% 110.45% HARBOR FLORIDA BANCSHARES, INC. YTD MARCH 31, 2004 Six months ended March 31, 2004 2003 Average Interest & Yield/ Average Interest & Yield/ Balance Dividend Rate Balance Dividend Rate (Dollars in Thousands) Analysis of Net Interest Income: Assets: Interest-earning assets : Interest-bearing deposits $12,133 $55 0.90% $72,882 $508 1.38% Investment securities 261,978 3,362 2.57 255,237 4,084 3.20 Mortgage-backed securities 398,115 7,993 4.02 159,718 4,666 5.84 Mortgage loans 1,426,605 49,647 6.96 1,363,483 50,968 7.48 Other loans 239,712 8,178 6.82 199,510 7,258 7.30 Total interest- earning assets 2,338,543 69,235 5.92 2,050,830 67,484 6.59 Total noninterest- earning assets 85,956 72,333 Total assets 2,424,499 2,123,163 Liabilities and Stockholders' Equity: Interest-bearing liabilities Deposits: Transaction accounts 623,528 1,283 0.41% 460,564 1,226 0.53% Passbook savings 147,690 196 0.27 121,135 268 0.44 Official checks 15,912 0 0 16,283 0 0 Certificate accounts 819,318 10,266 2.51 810,959 13,344 3.30 Total deposits 1,606,448 11,746 1.46 1,408,941 14,838 2.11 FHLB advances 522,872 11,621 4.38 442,924 11,089 4.96 Other borrowings 841 26 6.01 306 10 6.63 Total interest- bearing liabilities 2,130,161 23,393 2.18 1,852,171 25,937 2.79 Noninterest- bearing liabilities 27,450 26,491 Total liabilities 2,157,611 1,878,662 Stockholders' equity 266,888 244,501 Total liabilities and stockholders' equity 2,424,499 2,123,163 Net interest income/ interest rate spread $45,842 3.74% $41,547 3.79% Net interest- earning assets/ net interest margin $208,382 3.94% $198,659 4.06% Interest-earning assets to interest- bearing liabilities 109.78% 110.73% 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 Web site: http://www.harborfederal.com/

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