Harbor Florida Bancshares (NASDAQ:HARB)
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FORT PIERCE, Fla., April 19 /PRNewswire-FirstCall/ -- Harbor Florida Bancshares, Inc. ("the Company") (NASDAQ:HARB), the holding company for Harbor Federal Savings Bank ("the Bank"), announced that diluted earnings per share for its second fiscal quarter ended March 31, 2006 increased 8.2% to 53 cents per share on net income of $12.4 million, compared to 49 cents per share on net income of $11.5 million for the same period last year. Diluted earnings per share for the six months ended March 31, 2006 increased 8.3% to $1.04 per share on net income of $24.4 million, compared to 96 cents per share on net income of $22.2 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 deposits, FHLB advances and repayments of mortgage-backed securities. The increases in net interest income were supplemented by increased other income and partially offset by increased other expense for both periods.
The Company also announced today that its Board of Directors declared a quarterly dividend of 27.5 cents per share for the quarter ending March 31, 2006. The dividend is payable May 19, 2006 to shareholders of record as of May 1, 2006.
FINANCIAL CONDITION
Total assets increased to $3.214 billion at March 31, 2006, from $3.012 billion at September 30, 2005. Total net loans increased to $2.497 billion at March 31, 2006, from $2.276 billion at September 30, 2005. Total deposits increased to $2.211 billion at March 31, 2006, from $2.056 billion at September 30, 2005.
For the six month period ended March 31, 2006, total net loans increased 9.7% due primarily to net increases of $134.8 million in residential one-to- four family mortgage loans, $42.6 million in land loans, $12.8 million in nonresidential mortgage loans, $10.2 million in multifamily loans, and $20.5 million in consumer loans. These increases were a result of increased expansion and growth in the Bank's primary markets. Loan originations, while strong in all markets, declined from the historically high levels of the past year. As a result, total loan originations for the six months ended March 31, 2006 were 8.3% lower than originations for the same period in 2005. This decrease was due to a combination of higher interest rates, a decline in storm related reconstruction, and somewhat lower consumer demand.
Deposits increased 7.5% to $2.211 billion from $2.056 billion at September 30, 2005 due to an increase of $159.9 million in certificate accounts partially offset by a net decrease of $5.5 million in core deposits (transaction and savings accounts). The Company has used selective programs to attract additional certificate accounts as a longer term, fixed-rate funding source to offset anticipated increases in rates. Certificate account growth also reflected customers' increased preference for longer-term deposit products in a higher interest rate environment. The Company continues to emphasize growth in transaction accounts.
RESULTS OF OPERATIONS
Net interest income increased 8.1% to $29.3 million for the quarter ended March 31, 2006, from $27.1 million for the quarter ended March 31, 2005. This increase was primarily a result of a 10.7% increase in average interest- earning assets over the comparable period in 2005. Average total loans increased by $451.2 million or 22.4%, reflecting continued strong loan originations as a result of expansion and growth in the Bank's primary markets. The average balance of deposits and FHLB advances increased $174.3 million and $89.3 million, respectively. The average balance of mortgage-backed securities and investment securities decreased $103.4 million and $43.7 million, respectively. The average balance of core deposits decreased to 46.7% of total average deposits from 55.4% for the same quarter last year, reflecting the increased demand for certificate accounts and the Company's programs designed to attract fixed rate deposits.
Provision for loan losses was $349,000 for the quarter ended March 31, 2006, compared to $538,000 for the quarter ended March 31, 2005. The provision for the quarter ended March 31, 2006 was principally comprised of a charge of $200,000 due to an increase in the level of classified loans (primarily consumer and residential loans), $138,000 due to increased credit risk resulting from growth in the loan portfolio (primarily residential and consumer loans), and $11,000 in net charge-offs.
Other income increased to $6.5 million for the quarter ended March 31, 2006, compared to $5.5 million for the quarter ended March 31, 2005. This increase was due primarily to increases of $631,000 in loan and deposit- related fees and service charges, $182,000 insurance commission and fees and $101,000 in gain on sale of mortgage loans. The increase in fees and service charges was primarily due to growth in transaction accounts. The increase in insurance commission and fees was due to fees from sale of insurance products. The increase in gain on sale of mortgage loans was primarily due to the value assigned to mortgage servicing rights on loans sold during the quarter ended March 31, 2006.
Other expense increased to $15.0 million for the quarter ended March 31, 2006, from $13.3 million for the quarter ended March 31, 2005. This increase was due primarily to increases of $721,000 in compensation and benefits, $479,000 in occupancy, $180,000 in data processing services, $180,000 in professional fees and $173,000 in advertising and promotion. The increase in compensation and benefits was primarily due to additional staff required to support the growth in loans and deposits, a $94,000 increase in pension expense and $106,000 in stock option expense. The increases in occupancy, data processing services and advertising and promotion were primarily due to growth in loans and deposits and expenses incurred in the opening of new branches. The increase in professional fees was primarily due to additional audit fees.
Income tax expense was $8.0 and $7.4 million for the quarters ended March 31, 2006 and 2005. The effective tax rate was 39.0% for the quarter ended March 31, 2006 and 39.1% for the same period last year.
ASSET QUALITY
Nonperforming loans increased to $2.9 million at March 31, 2006 from $2.2 million at September 30, 2005. Net charge-offs for the quarter ended March 31, 2006 were $11,000 compared to $6,000 for the same period last year. The ratio of the allowance for loan losses to total net loans decreased to .82% as of March 31, 2006, from .91% for the same period last year. This decrease reflects the Company's continued history of low net charge-offs and a loan mix high in residential 1-4 family loans. The allowance for loan losses remains sufficient to cover losses inherent in the loan portfolio.
BRANCH EXPANSION
During the first fiscal quarter of 2006, Harbor Federal expanded its branch network to include two new branches in Sanford and one new branch in Clermont on State Route 50. In the second fiscal quarter, Harbor Federal opened new branch facilities for its Virginia Avenue branch in Fort Pierce. The Bank intends to continue to expand its branch network by opening between three and five additional offices each year for the next several years.
TREASURY STOCK REPURCHASES
Harbor Florida Bancshares, Inc.'s Board of Directors approved on October 13, 2005 an extension of the Company's stock repurchase plan to October 13, 2006, 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 March 31, 2006, the Company has a total of 8,031,402 shares held as treasury stock.
Harbor Federal is located in Fort Pierce, Florida and has 40 offices located in an eight-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.
March 31, September 30,
2006 2005
(In Thousands)
Selected Consolidated Financial
Data:
Total assets $3,213,758 $3,012,185
Loans, gross 2,517,821 2,295,609
Allowance for loan losses 20,532 19,748
Net loans 2,497,289 2,275,861
Loans held for sale 7,936 10,695
Interest-bearing deposits 46,463 23,689
Investment securities 119,173 128,871
Mortgage-backed securities 352,183 388,458
Goodwill 3,591 3,591
Deposits 2,210,762 2,056,307
FHLB advances 640,463 595,473
Stockholders' equity 338,063 320,511
# of common shares
outstanding 24,080 23,977
Three months ended Six months ended
March 31, March 31,
2006 2005 2006 2005
(In Thousands Except per Share Data)
Selected Consolidated Operating
Data:
Interest income $48,485 $39,916 $94,944 $78,246
Interest expense 19,208 12,841 37,168 25,646
Net interest income 29,277 27,075 57,776 52,600
Provision for loan losses 349 538 701 988
Net interest income after
provision for loan losses 28,928 26,537 57,075 51,612
Other Income:
Fees and service charges 4,722 4,091 9,300 7,763
Insurance commissions and
fees 1,032 850 1,715 1,495
Gain on sale of mortgage
loans 665 564 1,542 1,032
(Loss) gain on disposal of
premises and equipment (12) (8) (15) 295
Other 69 52 131 107
Total other income 6,476 5,549 12,673 10,692
Other expenses:
Compensation and benefits 8,550 7,828 17,080 15,313
Occupancy 2,356 1,877 4,654 3,672
Other 4,109 3,568 7,833 6,766
Total other expenses 15,015 13,273 29,567 25,751
Income before income taxes 20,389 18,813 40,181 36,553
Income tax expense 7,954 7,358 15,775 14,308
Net income $12,435 $11,455 $24,406 $22,245
Net income per share:
Basic $0.54 $0.50 $1.06 $0.98
Diluted $0.53 $0.49 $1.04 $0.96
Weighted average shares
outstanding
Basic 23,081 22,766 23,039 22,725
Diluted 23,480 23,302 23,436 23,259
Three months ended Six months ended
March 31, March 31,
2006 2005 2006 2005
Selected Financial
Ratios:
Performance Ratios:
Return on
average assets (1) 1.61 % 1.64 % 1.58 % 1.60 %
Return on
average
stockholders'
equity (1) 15.20 % 15.63 % 14.95 % 15.22 %
Book value per
share $14.04 $12.68 $14.04 $12.68
Net interest
rate spread (1) 3.70 % 3.85 % 3.69 % 3.78 %
Net interest
margin (1) 3.92 % 4.01 % 3.91 % 3.95 %
Non-interest
expense to
average assets (1) 1.95 % 1.91 % 1.92 % 1.85 %
Net interest
income to non-
interest
expense (1) 1.93 x 2.02 x 1.95 x 2.04 x
Average
interest-
earning assets
to average
interest-
bearing
liabilities 108.40 % 108.26 % 108.49 % 108.62 %
Efficiency ratio (1) 43.28 % 41.82 % 42.97 % 41.60 %
Asset Quality
Ratios:
Non-performing
assets to total
assets 0.09 % 0.04 % 0.09 % 0.04 %
Allowance for
loan losses to
total loans 0.82 % 0.91 % 0.82 % 0.91 %
Allowance for
loan losses to
classified
loans 356.61 % 556.58 % 356.61 % 556.58 %
Allowance for
loan losses to
non-performing
loans 718.51 % 1,504.25 % 718.51 % 1,504.25 %
Capital Ratios:
Average
shareholders'
equity to
average
assets 10.62 % 10.53 % 10.58 % 10.52 %
Shareholders'
equity to assets
at period end 10.52 % 10.39 % 10.52 % 10.39 %
(1) Ratio is annualized.
Three months ended Six months ended
March 31, March 31,
2006 2005 2006 2005
(In Thousands)
Selected Average
Balances:
Total assets $3,125,199 $2,824,365 $3,095,583 $2,786,560
Interest
earning assets 2,995,963 2,707,407 2,967,203 2,672,545
Gross loans 2,463,261 2,012,043 2,405,004 1,968,247
Stockholders'
equity 331,783 297,274 327,442 293,200
Deposits 2,123,089 1,948,772 2,098,206 1,907,367
Asset Quality:
Nonaccrual
loans 2,858 1,251 2,858 1,251
Net loan
charge-offs
(recoveries) 11 (38) (83) (32)
Loan Originations:
Residential $170,915 $212,299 $381,949 $395,016
Commercial Real
Estate 63,823 98,847 109,225 140,022
Consumer 40,077 44,878 85,252 85,147
Commercial
Business 9,984 17,514 20,204 30,534
Total loan
originations $284,799 $373,538 $596,630 $650,719
Loan Sales: $28,405 $20,462 $61,574 $41,857
For the three months ended
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2006 2005 2005 2005 2005
(In Thousands Except Per Share Data)
Selected Consolidated
Operating Data:
Interest income $48,485 $46,458 $44,158 $42,481 $39,916
Interest expense 19,208 17,959 15,971 14,447 12,841
Net interest income 29,277 28,499 28,187 28,034 27,075
Provision for loan
losses 349 352 464 463 538
Net interest income
after provision for
loan losses 28,928 28,147 27,723 27,571 26,537
Other Income:
Fees and service
charges 4,722 4,578 4,639 4,315 4,091
Insurance commissions
and fees 1,032 683 843 899 850
Gain on sale of
mortgage loans 665 877 656 601 564
(Loss) gain on
disposal of
premises
and equipment (12) (3) 476 29 (8)
Gain on sale of debt
securities -- -- -- 41 --
Other 69 62 76 171 52
Total other income 6,476 6,197 6,690 6,056 5,549
Other expenses:
Compensation and
benefits 8,550 8,530 8,330 8,130 7,828
Occupancy 2,356 2,298 2,187 1,964 1,877
Data processing
services 1,146 1,060 1,098 930 966
Advertising and
promotion 647 453 650 455 474
Professional fees 470 339 431 770 290
Other 1,846 1,872 1,965 1,738 1,838
Total other expenses 15,015 14,552 14,661 13,987 13,273
Income before income
taxes 20,389 19,792 19,752 19,640 18,813
Income tax expense 7,954 7,821 7,740 7,701 7,358
Net income $12,435 $11,971 $12,012 $11,939 $11,455
Net income per share:
Basic $0.54 $0.52 $0.52 $0.52 $0.50
Diluted $0.53 $0.51 $0.51 $0.51 $0.49
Three months ended March 31, 2006
Average Interest & Yield/
Balance Dividend Rate
(Dollars in Thousands)
Analysis of Net Interest Income:
Assets:
Interest-earning assets:
Interest-bearing deposits $27,443 $299 4.36%
Investment securities 145,558 1,285 3.55
Mortgage-backed securities 359,701 3,432 3.82
Mortgage loans 2,110,170 36,687 6.98
Other loans 353,091 6,782 7.79
Total interest-earning assets 2,995,963 48,485 6.50
Total noninterest-earning assets 129,236
Total assets 3,125,199
Liabilities and
Stockholders' Equity:
Interest-bearing liabilities
Deposits:
Transaction accounts $779,497 $1,584 0.82%
Savings 192,037 362 0.76
Official checks 20,103 0 0
Certificate accounts 1,131,452 10,374 3.72
Total deposits 2,123,089 12,320 2.35
FHLB advances 640,820 6,888 4.30
Other borrowings 0 0 0.00
Total interest-bearing liabilities 2,763,909 19,208 2.80
Noninterest-bearing liabilities 29,507
Total liabilities 2,793,416
Stockholders' equity 331,783
Total liabilities and
stockholders' equity $3,125,199
Net interest income/
interest rate spread $29,277 3.70%
Net interest-earning
assets/net interest margin $232,054 3.92%
Interest-earning assets to
interest-bearing liabilities 108.40%
Three months ended March 31, 2005
Average Interest & Yield/
Balance Dividend Rate
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 $857,918 $1,072 0.51%
Savings 199,859 139 0.28
Official checks 21,807 0 0
Certificate accounts 869,188 5,657 2.64
Total deposits 1,948,772 6,868 1.43
FHLB advances 551,541 5,967 4.33
Other borrowings 488 6 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%
Six months ended March 31, 2006
Average Interest & Yield/
Balance Dividend Rate
(Dollars in Thousands)
Analysis of Net Interest Income:
Assets:
Interest-earning assets:
Interest-bearing deposits $45,222 $930 4.07%
Investment securities 148,178 2,491 3.37
Mortgage-backed securities 368,799 7,021 3.81
Mortgage loans 2,058,798 71,202 6.92
Other loans 346,206 13,300 7.70
Total interest-earning assets 2,967,203 94,944 6.40
Total noninterest-earning assets 128,380
Total assets 3,095,583
Liabilities and
Stockholders' Equity:
Interest-bearing liabilities
Deposits:
Transaction accounts $806,645 $3,392 0.84%
Savings 192,040 681 0.71
Official checks 23,127 0 0
Certificate accounts 1,076,394 19,163 3.57
Total deposits 2,098,206 23,236 2.22
FHLB advances 636,814 13,932 4.33
Other borrowings 0 0 0.00
Total interest-bearing liabilities 2,735,020 37,168 2.71
Noninterest-bearing liabilities 33,121
Total liabilities 2,768,141
Stockholders' equity 327,442
Total liabilities and
stockholders' equity $3,095,583
Net interest income/
interest rate spread $57,776 3.69%
Net interest-earning
assets/net interest margin $232,184 3.91%
Interest-earning assets to
interest-bearing liabilities 108.49%
Six months ended March 31, 2005
Average Interest & Yield/
Balance Dividend Rate
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%
Savings 192,350 267 0.28
Official checks 21,841 0 0
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 555 16 6.24
Total interest-bearing liabilities 2,460,420 25,646 2.08
Noninterest-bearing liabilities 32,940
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 $212,126 3.95%
Interest-earning assets to
interest-bearing liabilities 108.62%
DATASOURCE: Harbor Florida Bancshares, Inc.
CONTACT: Michael J. Brown, Sr., President, +1-772-460-7000, or H.
Michael Callahan, CFO, +1-771-460-7009, or Toni Santiuste, Investor Relations,
+1-772-460-7002, all of Harbor Florida Bancshares
Web site: http://www.harborfederal.com/