Harbor Florida Bancshares, Inc. Announces Third Quarter Earnings Increase

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, [phone], or H.

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

[phone], all of Harbor Florida Bancshares



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

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