Harbor Florida Bancshares, Inc. Announces Dividend Increase and First Quarter Earnings

Harbor Florida Bancshares, Inc. Announces Dividend Increase and
First Quarter Earnings 


FORT PIERCE, Fla., Jan. 12  /PRNewswire-FirstCall/ -- Harbor Florida
Bancshares, Inc. ("the Company") (NASDAQ:HARB), the holding company for Harbor
Federal Savings Bank ("the Bank"), announced today that its Board of Directors
declared a 25% increase in the quarterly dividend to 20 cents per share for the
quarter ending December 31, 2004 from 16 cents per share.  The dividend is
payable February 18, 2005 to shareholders of record as of January 21, 2005.

The Company also announced today that diluted earnings per share for its first
fiscal quarter ended December 31, 2004, increased 12.2% to 46 cents per share
on net income of $10.8 million, compared to 41 cents per share on net income of
$9.5 million for the same period last year.  The increase was due primarily to
increased net interest income, resulting from an increase in average
interest-earning assets due to originations of loans and purchases of
mortgage-backed securities.  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 other income and an increase in other expenses.

The two hurricanes that hit the Treasure Coast in September continued to have a
negative effect on the Company's operations this quarter as a result of lower
levels of loan originations, loan sales and fee income.  The Company also
recognized approximately $186,000, after tax, gain on disposal of fixed assets
during this quarter as a result of insurance proceeds received on hurricane
damaged premises and equipment.

FINANCIAL CONDITION

Total assets increased to $2.805 billion at December 31, 2004, from $2.627
billion at September 30, 2004.  Total net loans increased to $1.933 billion at
December 31, 2004, from $1.891 billion at September 30, 2004.  Total deposits
increased to $1.941 billion at December 31, 2004, from $1.745 billion at
September 30, 2004.

Total net loans increased due primarily to net increases of $17.1 million in
residential one-to-four family mortgage loans, $8.2 million in land loans, $7.9
million in nonresidential mortgage loans, $4.3 million in consumer loans, and
$2.4 million in commercial business loans for the quarter ended December 31,
2004.  These increases were due to strong loan originations during the quarter
as compared to the same quarter last year.  Residential one-to-four mortgage
loan originations increased 13.6% from the same period last year to $182.7
million for the quarter ended December 31, 2004.  Consumer loan originations
increased 27.7% to $40.3 million for the quarter ended December 31, 2004. 
Commercial business loan originations were $13.0 million for the quarter, up
2.6% from the same period last year.  Commercial real estate loan originations
decreased 19.6% from the same period last year but remain strong at $41.2
million for the quarter ended December 31, 2004.

The significant growth in deposits for the quarter of 11.3% was due primarily
to a net increase of $177.5 million in core deposits (transaction and passbook
accounts), and $19.1 million in certificate accounts.  The increase in core
deposits includes approximately $55 million increase in public funds on
deposit, primarily due to year-end property tax collections. The increase in
core deposits also 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 will continue to emphasize
growth in transaction accounts.  However, the Company believes that much of the
current quarter's significant growth 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 for the quarter.

RESULTS OF OPERATIONS

Net interest income increased 13.9% to $25.5 million for the quarter ended
December 31, 2004, from $22.4 million for the quarter ended December 31, 2003.
This increase is primarily a result of a 14.8% increase from the quarter ended
December 31, 2003 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 $125.9 million and average interest
bearing deposits in other banks increased $66.0 million, partially offset by a
decrease of $137.6 million in investment securities from the same quarter last
year.  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.  Average total loans increased by $286.6 million. 
The average balance of core deposits and FHLB advances increased by $294.1
million and $41.4 million, respectively.  The average balance of core deposits
increased to 54.5% of total average deposits from 48.1% for the same quarter
last year.

Provision for loan losses was $450,000 for the quarter ended December 31, 2004,
compared to $448,000 for the quarter ended December 31, 2003.  The provision
for the quarter ended December 31, 2004 was principally comprised of a charge
of $421,000 due to increased credit risk resulting from growth in the loan
portfolio, primarily commercial real estate loans, and a charge of $23,000 due
to an increase in the level of classified loans.

Other income decreased to $5.1 million for the quarter ended December 31, 2004,
from $5.3 million for the quarter ended December 31, 2003.  This decrease was
due primarily to a decrease of $311,000 in gain on sale of equity securities, a
decrease of $273,000 in gain on sale of mortgage loans and a decrease of
$121,000 in income from real estate operations, partially offset by increases
of $287,000 in fees and service charges and $303,000 in gain on disposal of
fixed assets.  The increase in fees and service charges is primarily due to
growth in transaction accounts.

Other expense increased to $12.5 million for the quarter ended December 31,
2004, from $11.6 million for the quarter ended December 31, 2003.  This
increase was due primarily to increases of $475,000 in compensation and
benefits, $163,000 in occupancy, $116,000 in advertising and promotion, and
$118,000 in other.  These increases are primarily due to growth in loans and
deposits and expenses incurred in the opening of new branches.

Income tax expense was $6.9 and $6.1 million for the quarters ended December
31, 2004 and 2003.  The effective tax rate was 39.2% for the quarter ended
December 31, 2004 and 39.1% for the same period last year.

ASSET QUALITY

Nonperforming loans increased to $3.0 million at December 31, 2004 from $2.3
million at December 31, 2003.  Net chargeoffs for the quarter ended December
31, 2004 decreased to $6,000 compared to $33,000 for the same period last year.
 The ratio of the allowance for loan losses to total net loans decreased to
.94% of loans as of December 31, 2004, from 1.01% 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.

BRANCH EXPANSION

Harbor Federal opened another branch in Martin County in south Stuart during
the quarter.  Harbor Federal currently has five branches serving Martin County.

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
524,020 shares under the current stock repurchase program.  As of December 31,
2004, the Company has a total of 8,005,130 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. are attached.


  HARBOR FLORIDA BANCSHARES, INC.
                                             December 31,     September 30,
                                                 2004              2004
                                                     (In Thousands)
  Selected Consolidated Financial Data:
       Total assets                           $2,805,294        $2,627,109

       Loans, gross                            1,951,515         1,908,971
       Allowance for loan losses                  18,246            17,802
        Net loans                              1,933,269         1,891,169

       Loans held for sale                         2,677             2,438
       Interest-bearing deposits                  93,503             7,053
       Investment securities                     149,300           130,200
       Mortgage-backed securities                473,431           443,060
       Real estate owned                              76                48
       Goodwill                                    3,591             3,591
       Deposits                                1,941,482         1,744,830
       FHLB advances                             548,489           553,492
       Stockholders' equity                      294,895           286,644
       # of common shares outstanding             23,809            23,789


                                                    Three months ended
                                                        December 31,
                                                  2004              2003
                                        (In Thousands Except per Share Data)
  Selected Consolidated Operating Data:
        Interest income                          $38,330           $34,136
        Interest expense                          12,805            11,734
        Net interest income                       25,525            22,402
        Provision for loan losses                    450               448

        Net interest income after
         provision for loan losses                25,075            21,954
        Other Income:
          Fees and service charges                 3,672             3,385
          Insurance commissions and
           fees                                      645               721
          Gain on sale of mortgage
           loans                                     468               741
          Gain on disposal of fixed
           assets                                    303                 -
          Gain on sale of equity
           securities                                  -               311
          Other                                       55               165
        Total other income                         5,143             5,323
        Other expenses:
           Compensation and benefits               7,485             7,010
           Occupancy                               1,795             1,632
           Other                                   3,198             2,949
        Total other expenses                      12,478            11,591
        Income before income taxes                17,740            15,686
        Income tax expense                         6,950             6,137
        Net income                               $10,790            $9,549

        Net income per share:
           Basic                                   $0.48             $0.42
           Diluted                                 $0.46             $0.41


        Weighted average shares
         outstanding
           Basic                                  22,684            22,568
           Diluted                                23,257            23,188


  HARBOR FLORIDA BANCSHARES, INC.

                                      Three months ended
                                         December 31,
                                        2004      2003
  Selected Financial Ratios:

     Performance Ratios:
     Return on average assets (1)        1.56 %    1.59 %
     Return on average stockholders'
      equity (1)                        14.84 %   14.38 %
     Book value per share              $12.39    $11.28
     Net interest rate spread (1)        3.71 %    3.71 %
     Net interest margin (1)             3.88 %    3.92 %
     Non-interest expense to average
      assets (1)                         1.81 %    1.93 %
     Net interest income to non-
      interest
        expense (1)                      2.06 x    1.96 x
     Average interest-earning assets
      to
        average interest-bearing
         liabilities                   108.98 %  110.15 %
     Efficiency ratio (1)               41.48 %   43.28 %


     Asset Quality Ratios:
     Non-performing assets to total
      assets                             0.11 %    0.12 %
     Allowance for loan losses to
        total loans                      0.94 %    1.01 %
     Allowance for loan losses to
        classified loans               400.08 %  263.65 %
     Allowance for loan losses to
        non-performing loans           612.82 %  710.74 %


     Capital Ratios:
     Average shareholders' equity to
        average assets                  10.52 %   11.07 %
     Shareholders' equity to assets
        at period end                   10.51 %   11.13 %

     (1) Ratio is annualized.


                                           Three months ended
                                              December 31,
                                        2004                2003
                                             (In Thousands)
  Selected Average Balances:
      Total assets                    2,749,578           2,379,815
      Interest earning assets         2,638,442           2,297,473
      Gross loans                     1,925,404           1,638,760
      Stockholders' equity              289,215             263,534
      Deposits                        1,866,863           1,572,764

  Asset Quality:
      Nonaccrual loans                    2,977               2,338
      Net loan charge-offs                    6                  33
  Loan Originations:
     Residential                        182,717             160,778
     Commercial Real Estate              41,175              51,188
     Consumer                            40,269              31,522
     Commercial Business                 13,020              12,687

  Loan Sales:                            21,395              28,168


  HARBOR FLORIDA BANCSHARES, INC.

                                        For the three months ended
                               Dec. 31, Sept. 30,June 30, Mar. 31, Dec. 31,
                                 2004     2004     2004     2004     2003
                                   (In Thousands Except Per Share Data)
  Selected Consolidated
   Operating Data:
     Interest income            $38,330  $36,843  $36,007  $35,099  $34,136
     Interest expense            12,805   12,385   11,649   11,658   11,734
     Net interest income         25,525   24,458   24,358   23,441   22,402
     Provision for loan losses      450      350      503      351      448

     Net interest income after
      provision for loan losses  25,075   24,108   23,855   23,090   21,954
     Other Income:
       Fees and service charges   3,672    4,035    3,974    3,495    3,385
       Insurance commissions
        and fees                    645      863      923      884      721
       Gain on sale of mortgage
        loans                       468      553      297      669      741
       Gain on sale of equity
        securities                  -        -      1,379      307      311
       Gain on sale of debt
        securities                  -        -        -        248      -
       Gain (loss) on disposal
        of fixed assets             303      -        342       (2)      (6)
       Other                         55      107       50      100      171
     Total other income           5,143    5,558    6,965    5,701    5,323
     Other expenses:
        Compensation and
         benefits                 7,485    7,356    7,483    7,343    7,010
        Occupancy                 1,795    1,922    1,773    1,705    1,632
        Other                     3,198    3,279    4,205    3,210    2,949
     Total other expenses        12,478   12,557   13,461   12,258   11,591
     Income before income taxes  17,740   17,109   17,359   16,533   15,686
     Income tax expense           6,950    6,002    7,090    6,462    6,137
     Net income                 $10,790  $11,107  $10,269  $10,071   $9,549

     Net income per share:
        Basic                     $0.48    $0.49    $0.45    $0.45    $0.42
        Diluted                   $0.46    $0.48    $0.44    $0.44    $0.41


  HARBOR FLORIDA BANCSHARES, INC.

                                         Three months ended December 30,
                                                          2004
                                                        Interest
                                            Average         &      Yield/
                                            Balance     Dividend    Rate
                                               (Dollars in Thousands)
  Analysis of Net Interest Income:
            Assets:
            Interest-earning assets :
               Interest-bearing
                deposits                     $81,021       $397      1.92 %
               Investment securities         165,023      1,060      2.57
               Mortgage-backed
                securities                   466,994      4,493      3.85
               Mortgage loans              1,645,005     27,466      6.67
               Other loans                   280,399      4,914      6.97
            Total interest-earning
             assets                        2,638,442     38,330      5.80
            Total noninterest-earning
             assets                          111,136
            Total assets                  $2,749,578

            Liabilities and
             Stockholders' Equity:
            Interest-bearing
             liabilities
               Deposits:
                  Transaction accounts      $811,025      1,052      0.51 %
                  Passbook savings           185,005        128      0.28
                  Official checks             21,875        -         -
                  Certificate accounts       848,958      5,467      2.56
                  Total deposits           1,866,863      6,647      1.42
               FHLB advances                 553,436      6,146      4.35
               Other borrowings                  778         12      6.00
            Total interest-bearing
             liabilities                   2,421,077     12,805      2.09
            Noninterest-bearing
             liabilities                      39,286
            Total liabilities              2,460,363
            Stockholders' equity             289,215
            Total liabilities and
               stockholders' equity       $2,749,578
            Net interest income/
                interest rate spread                    $25,525      3.71 %
            Net interest-earning
             assets/
                net  interest margin        $217,365                 3.88 %
            Interest-earning assets to
                interest-bearing
                 liabilities                                       108.98 %

  HARBOR FLORIDA BANCSHARES, INC.


                                         Three months ended December 30,
                                                        2003
                                                      Interest
                                          Average         &       Yield/
                                          Balance     Dividend     Rate
                                               (Dollars in Thousands)
  Analysis of Net Interest Income:
            Assets:
            Interest-earning assets :
               Interest-bearing
                deposits                    $14,978        $34      0.89  %
               Investment securities        302,641      1,939      2.56
               Mortgage-backed
                securities                  341,095      3,462      4.06
               Mortgage loans             1,403,326     24,664      7.02
               Other loans                  235,434      4,037      6.80
            Total interest-earning
             assets                       2,297,474     34,136      5.93
            Total noninterest-earning
             assets                          82,341
            Total assets                  2,379,815

            Liabilities and
             Stockholders' Equity:
            Interest-bearing
             liabilities
               Deposits:
                  Transaction accounts      594,580        609      0.41 %
                  Passbook savings          144,785         97      0.27
                  Official checks            17,076        -         -
                  Certificate accounts      816,323      5,205      2.53
                  Total deposits          1,572,764      5,911      1.49
               FHLB advances                512,074      5,810      4.44
               Other borrowings                 849         13      6.02
            Total interest-bearing
             liabilities                  2,085,687     11,734      2.22
            Noninterest-bearing
             liabilities                     30,594
            Total liabilities             2,116,281
            Stockholders' equity            263,534
            Total liabilities and
               stockholders' equity       2,379,815
            Net interest income/
                interest rate spread                   $22,402      3.71 %
            Net interest-earning
             assets/
                net  interest margin       $211,787                 3.92 %
            Interest-earning assets to
                interest-bearing
                 liabilities                                      110.15 %


DATASOURCE: Harbor Florida Bancshares, Inc.



CONTACT:  Michael J. Brown, Sr., President, [phone], or H.

Michael Callahan, CFO, [phone], or Toni Santiuste, Investor Relations,

[phone] all of Harbor Federal



Web site:  http://www.harborfederal.com/

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