FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
-------------------------------------------------
For quarter ended JUNE 30, 1999
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Commission file number 0-20990
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HARBOR BANKSHARES CORPORATION
- -----------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 52-1786341
- -------- ----------
(State of other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
25 W. FAYETTE STREET, BALTIMORE, MARYLAND 21201
- ----------------------------------------- -----
(Address of principal executive offices) (Zip code)
(410) 528-1800
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Registrant's telephone number, including area code
NOT APPLICABLE
- --------------
Former name, address and former fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X YES NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
COMMON STOCK, NON-VOTING, $.01 PAR VALUE - 33,333 SHARES AS OF JUNE 30, 1999.
COMMON STOCK, $.01 PAR VALUE -- 653,204 SHARES AS OF JUNE 30, 1999
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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INDEX
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Consolidated Statements of Condition - June 30, 1999
(Unaudited) and December 31, 1998
Consolidated Statements of Income (Unaudited) - Six
months Ended June 30, 1999 and 1998
Consolidated Statements of Income (Unaudited) - Three
months Ended June 30, 1999 and 1998
Consolidated Statement of Cash Flows (Unaudited) - Six months
Ended June 30, 1999 and 1998
Notes to Unaudited Consolidated Financial Statements
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings
ITEM 2 Changes in Securities
ITEM 3 Defaults upon Senior Securities
ITEM 4 Submission of Matters to a Vote of Security Holders
ITEM 5 Other Information
ITEM 6 Exhibits and Reports on Form 8-K
SIGNATURES
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
JUNE 30 DEC 31
1999 1998
----- ------
(UNAUDITED)
DOLLARS IN THOUSANDS
<S><C>
ASSETS
Cash and Due from Banks $ 5,371 $ 5,027
Interest Bearing Deposits in Other Banks 662 1,055
Investment Securities:
Held to maturity (market values of $20
as of 6/30/99 and $17,163 as of 12/31/98) 20 17,168
Available for Sale 52,371 55,085
--------- ---------
Total Investment Securities 52,391 72,253
Federal Funds Sold 21,260 13,402
Loans 81,297 85,957
Unearned Income (157) (160)
Reserve for Possible Loan Losses (591) (699)
--------- ---------
Net Loans 80,549 85,098
Property and Equipment - Net 1,720 1,406
Other Real Estate Owned 766 638
Goodwill 3,334 3,500
Accrued Interest Receivable and Other Assets 3,273 2,344
--------- ---------
TOTAL ASSETS $ 169,326 $ 184,723
--------- ---------
LIABILITIES
Deposits:
Non-Interest Bearing Demand $ 15,231 $ 11,483
Interest Bearing Transaction Accounts 31,458 32,520
Savings 59,060 64,730
Time, $100,000 or more 20,845 31,351
Other Time 27,471 27,398
--------- ---------
Total Deposits 154,065 167,482
Accrued Interest and Other Liabilities 754 777
Short Term Borrowings --- ---
Notes Payable 5,796 5,796
--------- ---------
TOTAL LIABILITIES 160,615 174,055
SHAREHOLDERS' EQUITY
Common stock, - par value $.01 per share:
Authorized 10,000,000 shares; 653,204 voting shares
at 6/31/99 and 12/31/98 and 33,333
non-voting shares at 3/31/99 and 12/31/98. 7 7
Capital Surplus 6,472 6,472
Retained Earnings 4,285 4,414
Treasury Stock (8) (25)
Accumulated other comprehensive income (2,045) (200)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 8,711 10,668
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 169,326 $ 184,723
--------- ---------
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
June 30
1999 1998
------- -------
(Unaudited)
In Thousands
Except per Share Data
INTEREST INCOME
Interest and Fees on Loans $ 3,734 $ 3,718
Interest on Investment Securities (Taxable) 2,162 1,145
Interest on Deposits in Other Banks 22 75
Interest on Federal Funds Sold 157 351
------- -------
TOTAL INTEREST INCOME 6,075 5,289
INTEREST EXPENSE
Interest on Deposits
Savings 1,015 670
Interest Bearing Transaction Accounts 444 279
Time $100,000 or More 597 560
Other Time 671 809
Interest on Borrowed Funds 40 -
Interest on Notes Payable 139 155
------- -------
TOTAL INTEREST EXPENSE 2,906 2,473
------- -------
NET INTEREST INCOME 3,169 2,816
Provision for Possible Loan Losses 352 75
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 2,817 2,741
OTHER OPERATING INCOME
Service Charges on Deposit Accounts 347 300
Other Income 265 372
Gains Sale of Real Estate 112 -
------- -------
724 672
OTHER OPERATING EXPENSES
Salaries and Employee Benefits 1,561 1,321
Occupancy Expense of Premises 400 356
Equipment Expense 311 201
Data Processing Expense 349 301
Deposit Assessments and Related Fees 22 19
Goodwill Amortization 166 166
Other Expenses 665 576
------- -------
3,474 2,940
INCOME BEFORE INCOME TAXES 67 473
Applicable Income Taxes 23 160
------- -------
NET INCOME $ 44 $ 313
------- -------
BASIC EARNINGS PER SHARE $ .06 $ .45
DILUTED EARNINGS PER SHARE $ .05 $ .42
AVERAGE COMMON SHARES
OUTSTANDING 686 687
Dividends Declared per Share $ .25 $ .25
(See notes to unaudited consolidated Financial Statements)
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30
1999 1998
------- -------
(Unaudited)
In Thousands
Except per Share Data
INTEREST INCOME
Interest and Fees on Loans $ 1,846 $ 1,903
Interest on Investment Securities (Taxable) 1,062 606
Interest on Deposits in Other Banks 10 35
Interest on Federal Funds Sold 91 187
------- -------
TOTAL INTEREST INCOME 3,009 2,731
INTEREST EXPENSE
Interest on Deposits
Savings 464 320
Interest Bearing Transaction Accounts 228 190
Time $100,000 or More 283 299
Other Time 367 396
Interest on Borrowed Funds 18 -
Interest on Notes Payable 74 77
------- -------
TOTAL INTEREST EXPENSE 1,434 1,282
------- -------
NET INTEREST INCOME 1,575 1,449
Provision for Possible Loan Losses 201 37
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 1,374 1,412
OTHER OPERATING INCOME
Service Charges on Deposit Accounts 177 151
Other Income 152 184
Gains Sale of Real Estate 112 -
------- -------
441 335
OTHER OPERATING EXPENSES
Salaries and Employee Benefits 800 672
Occupancy Expense of Premises 201 180
Equipment Expense 181 100
Data Processing Expense 176 152
Deposit Assessments and Related Fees 12 10
Goodwill Amortization 83 83
Other Expenses 354 288
------- -------
1,807 1,485
INCOME BEFORE INCOME TAXES 8 262
Applicable Income Taxes 2 89
------- -------
NET INCOME $ 6 $ 173
------- -------
BASIC EARNINGS PER SHARE $ .01 $ .25
DILUTED EARNINGS PER SHARE $ .01 $ .23
AVERAGE COMMON SHARES
OUTSTANDING 686 687
Dividends Declared per Share $ - $ -
(See notes to unaudited consolidated Financial Statements)
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30
1999 1998
---- -----
(Unaudited)
Dollars in Thousands
<S><C>
OPERATING ACTIVITIES
Net Income $ 44 $ 313
Adjustments to Reconcile Net Income to Net Cash
and Cash Equivalents Provided by (Used in) Operating
Activities:
Gains on sales of Real Estate (112)
Gains on sales of securities -- (26)
Gains on sale of loans (1) (2)
Provision for Possible Loan Losses 352 75
Depreciation and Amortization 449 368
(Increase) in Interest Receivable and Other Assets (60) (576)
Increase in Interest Payable and Other
Liabilities (23) 65
-------- --------
Net Cash Provided by (Used in) Operating Activities 649 217
INVESTING ACTIVITIES
Net Decrease in Deposits at Other Banks 393 778
Purchase of Investments held to maturity (90) --
Purchase of Investments Securities available for sale (5,000) (22,993)
Proceeds from Investment Securities held to maturity 17,238 --
Proceeds from Called Investments Securities held
to maturity -- 11,000
Proceeds from Sale of Securities available for sale -- 1,839
Proceeds from Called Securities available for sale 5,000 3,000
Proceeds from the sale of loans 3,227 608
Net Decrease in Loans 969 1,278
Purchase of Premises and Equipment (630) (70)
Proceeds from the Sale of OREO 99 --
Net change in OREO (227) --
Proceeds from the Sale of Real Estate 147 --
-------- --------
Net Cash and Cash Provided by 21,126 (4,560)
(Used in) Investing Activities
FINANCING ACTIVITIES
Net Increase in Non-Interest Bearing
Transaction Accounts 3,748 3,472
Net Increase (Decrease) in Interest Bearing
Transaction Accounts (1,062) 13,856
Net Decrease in Savings Deposits (5,670) (8,754)
Net Decrease in Time Deposits (10,433) (968)
Acquisition, Sale of Treasury Stock 17 24
Payment of Cash Dividends (173) (326)
-------- --------
Net Cash (Used in) Provided by Financing Activities (13,573) 7,304
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 8,202 2,961
Cash and Cash Equivalents at Beginning of Period 18,429 18,549
-------- --------
Cash and Cash Equivalents at End of Period $ 26,631 $ 21,510
======== ========
</TABLE>
(See Notes to Unaudited Consolidated Financial Statements)
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
Note A: Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all
the information required for complete financial statements. In the
opinion of management, all adjustments and reclassifications
considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 1999, are
not necessarily indicative of the results that may be expected for
the year ending December 31, 1999. The enclosed unaudited
consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes thereto
incorporated by reference in the Corporation's Annual Report on Form
10-KSB for the year ended December 31, 1998.
Note B: Comprehensive Income
Comprehensive income is defined as the change in equity from
transactions and other events and circumstances from non-owner
sources. Presented below is a reconciliation of net income to
comprehensive income indicating the component of other comprehensive
income:
Six Months Ended June 30,
----------------------------
1999 1998
-------- -------
Net Income $ 44 $ 313
- Other Comprehensive Income:
Unrealized Holding Gains (Losses)
Arising During the period (2,775) (32)
- Less: Reclassified Adjustments for
gains included in Net Income -- (26)
-------- -------
Other Comprehensive Income, Before
Tax (2,775) (6)
Income Tax Expense (Benefit) Related to
items of Other Comprehensive Income (930) (2)
Other Comprehensive Income (1,845) (4)
-------- -------
Comprehensive Income (Loss) $ (1,801) $ 309
======== =======
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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Note C: In June 1988, the Financial Accounting Standards Board ("FASB")
issued Statement 133"Accounting for Derivative Instruments and
Hedging Activity." This Statement establishes accounting and
reporting standards for derivative instruments and hedging activity.
Under the standard, all derivatives must be measured at fair value
and recognized as either assets or liabilities in the financial
statements. The FASB recently deferred the effective date for one
year, Statement 133,will be effective for all fiscal quarters of
fiscal years beginning after June 15, 2000.
The accounting for changes in fair value (gains and losses) of a
derivative is dependent on the intended use of the derivative and
its designation. Derivatives may be used to: 1) hedge exposure to
change the fair value of a recognized asset or liability or a firm
commitment, referred to as a fair value hedge, 2) hedge exposure to
variable cash flow of forecasted transactions, referred to as a cash
flow hedge, and 3) hedge foreign currency exposure.
The Corporation only engages in fair value and cash flow hedges. In
both types of hedges, the effective portions of the hedge, although
included in earnings, do not affect corporate net income.
Ineffective portions of hedges are reported in and affect net
earnings immediately. Derivatives not designed as a hedging
instrument have the changes in their fair value recognized in
earnings in the period of change. Management is currently assessing
the potential impact of SFAS No. 133 on future corporate operations.
YEAR 2000, COMPLIANCE
The Board of Directors has established a Year 2000 committee to monitor
progress with achieving and certifying Year 2000 compliance. In addition, the
Company has utilized an external consulting firm to assist with its Year 2000
program. The majority of the Bank data systems are provided through an
outsourcing relationship with Electronic Data Systems (EDS). These systems were
upgraded during July, 1998 and validation testing with EDS was conducted during
March 1999 and no Y2-K issues were identified. Systems appeared to be ready to
function beyond the year 2000.
The Corporation and its subsidiary have no internally generated programmed
software coding to correct, as substantially all of the software utilized by the
Company and its subsidiary is purchased or licensed from external providers. An
inventory of this software has been completed and identified remedial steps will
be implemented and tested by the end of the third quarter of 1999.
The Corporation and its subsidiary have initiated formal communications
with all of its significant suppliers and borrowers to determine the extent to
which the company is vulnerable to those third parties' failure to remediate
their own Year 2000 issues. The Company is requesting that third party vendors
represent their products and services to be Year 2000 compliant and that they
have a program to test for that compliance. However, the response of certain
third parties is beyond the control of the Company. The Corporation has received
responses from the majority of its vendors, who appear to be substantially
compliant. The Corporation will continue to ensure that all of its business
partners are Y2-K ready.
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
- --------------------------------------------------------------------------------
The cost incurred to date in implementing the year 2000 Plan is approximately
$250 thousand and the estimated cost to completion is expected to be $125
thousand. The following is an update of the Corporation's strategic plan:
<TABLE>
<CAPTION>
Awareness Assessment Renovation Validation Implementation Contingency
--------- ---------- ---------- ---------- -------------- -----------
<S><C>
Internal 100% Internal 100% Internal 95% Internal 95% Internal 95% Internal 95%
External 100% External 100% External 95% External 95% External 90% External 90%
</TABLE>
The Corporation has formulated a contingency plan for its mission critical
process and is prepared to execute the same if the need arises. The progress of
the corporations' year 2000 Plan is being monitored by its regulators. A full
examination of the Corporation's plan was conducted by the FDIC during January
1999 with a follow-up in March and June 1999.
This information is provided as part of the year 2000 Readiness Disclosure under
United States Federal Law.
SUBSEQUENT EVENTS
On July 1,1999, a payment was made to the Federal Deposit Insurance Corporation
(FDIC) in the amount of $1.8 million representing one of the notes related to
the Capital Assistance program from the Resolution Trust Corporation for certain
acquisitions that took place during 1994. At that time, two notes were obtained
from the R.T.C. in the form of capital assistance, one due June 1999 in the
amount of $3.9 million and the other one for $1.8 million due September 1999.
Through an arrangement with the FDIC, the $3.9 million note due June 1999, was
extended for another year with an interest rate equal to the 13 week Treasury
Bill plus 300 basis points. As part of the agreement, the note due June 1999 in
the amount of $1.8 million was paid July 1, 1999.
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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PART I. FINANCIAL INFORMATION
Item II. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Harbor Bankshares Corporation's earnings for the second quarter of
1999 totaled $6 thousand, a decrease of $167 thousand or 96.5
percent when compared to the second quarter of 1998. Net interest
income increased by $126 thousand. Other operating income increased
by $106 thousand, mainly due to the sale of a parking lot located
next to one of the branch offices of the bank, the net gain for that
sale was $112 thousand. Total expenses for the quarter increased by
$322 thousand or 21.7 percent reflecting increases in salary and
benefits of $128 thousand or 19.0 percent as a result of a de-novo
branch facility open during January 1999, as well as additional
staff and salary increases. Equipment expense increased by $81
thousand or 81.0 percent due to the expansion and equipment cost
related to up grades and enhancements of systems related to the Y2-K
issue. The provision for loan losses was increased by $164 thousand
or 443.2 percent during the quarter in order to accommodate certain
charge-offs identified by management. The net effect of the income
and expenses variances resulted in the $167 thousand decrease.
Year-to-date earnings as of June 30, 1999, were $44 thousand or $.06
basic earnings per share, reflecting a decrease of $.39 per share
when compared to the six month ending June 30,1998, when earnings
were $313 thousand or $.45 basic earning per share. Return on
Average Assets (ROAA) and Return on Average Equity (ROAE) were.05
percent and .83 percent respectively.
Net interest income increased by $353 thousand or 12.5 percent over
last year's second quarter. Interest on investment securities
increased by $1.0 million or 88.8 percent reflecting the investment
of the proceeds from the deposit growth in that area. Interest and
fees on loans reflected an slight increase of $16 thousand or .43
percent reflecting flat loan growth. Interest expense increased by
$433 thousand or 17.5 percent. Interest expense on saving accounts
which include money market accounts increased by $345 thousand or
51.4 percent reflecting the growth of those categories. Interest
expense on bearing transaction accounts reflected an increase of
$165 thousand or 59.1 percent, indicating a sizable deposit growth
in those accounts. Interest expense on time deposits decreased by
$101 thousand or 7.3 percent. Included in total interest expense,
were $40 thousand of interest in borrowings from the Federal Home
Loan Bank of Atlanta and $139 thousand of interest on the long term
debt to the Federal Deposit Insurance Corporation.
The provision for possible Loan Losses was $352 thousand for the six
months ended June 30, 1999, an increase of $277 thousand or 369.3
percent over the same period for 1998. This increase represents an
increase allocation for certain losses identified by management in
the commercial, real estate and consumer loan portfolios.
Charge-offs as of the end of the second quarter totaled $539
thousand and recoveries $78 thousand.
Other operating income increased by $52 thousand or 7.7 percent.
Service charges on deposit accounts increased by $47 thousand or
15.6 percent as a result of increased activity. Other income
decreased by $107 thousand or 28.7 percent as a result of the
outsourcing of the Bank's ATM Network in order to mitigate the cost
of the operation.
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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Expenses related to the cost of the ATM network also decreased, offsetting
the loss of revenues from this operation. Included in other operating
income is a gain of $112 thousand related to the sale of a parking lot
adjacent to one of the Bank's offices which was acquired in December,
1998. Fee income from the subsidiary of the Bank, Harbor Financial
Services, was $78 thousand. Their operation resulted in break even
earnings for the first six months of 1999. Non-interest expense increased
by $534 thousand or 18.2 percent, mainly due to a recent expansion of a
branch facility established during January, 1999 as well as the cost
associated with purchases and up grades of equipment related to the Y2-K
compliance. Salaries and benefits increased by $240 thousand or 18.1
percent reflecting the cost of the expansion as well as additional staff
and general salary increases. Occupancy cost increased by $44 thousand
or12.4 percent mainly as a result of the new branch facility. Equipment
expense increased by $100 thousand or 49.8 percent, reflecting the up
grades and purchases mentioned above. Data processing expense increased by
$48 thousand or 15.9 percent as a result higher transaction volume and
Y2-K testing cost. Goodwill amortization at $166 thousand remained the
same as the previous year. Other expenses increased by $89 thousand or
15.4 percent basically due to the branch expansion, collection cost, and
growth in other areas of the bank.
As of June 30, 1999, total deposits were $154.1 million reflecting a
decrease of $13.4 million or 8.0 percent when compared to December 31,
1998. Non-interest bearing accounts increased by $3.7 million or 32.2
percent due to increased deposit activity in the commercial accounts
category. Saving accounts which included money market accounts decreased
by $5.7 million or 8.8 percent as a result of certain escrow deposits
withdrawals. Time deposits decreased by $10.4 million or 17.1 percent,
mainly reflected in time deposits of $100 thousand and over, which
decreased by $10.5 million or 33.5 percent. Net loans decreased by $4.6
million or 5.4 percent, reflecting the pay-off of commercial and real
estate loans.
Shareholder's equity decreased by $2.0 million or 18.7 percent. The cash
dividend during the first quarter of $172 thousand and the increase of
$1.8 million in the unrealized losses on available-for-sale securities
were the reasons for the decrease, net income for the period were $44
thousand. Primary and risk based capital for the corporation were 4.8 and
9.7 percent, respectively.
The corporation stock is traded privately. During the first halve of the
year, a few trades were registered ranging from $17.00 to $18.00 per
share.
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<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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PART II. OTHER INFORMATION
Item I. Legal Proceedings
The Corporation and its subsidiary, at times and in the
ordinary course of business, are subject to legal
actions. Management does not believe the outcome of such
matters will have a material adverse effect on the
financial condition of the Corporation.
Item II. Changes in Securities
None
Item III. Defaults Upon Senior Securities
None
Item IV. Submission of Matters to a Vote of Security Holders
None
Item V. Other Information
None
Item VI. Exhibits and Reports on Form 8-K
Exhibit II - Statement Regarding Computation of per Share
Earnings
The Company did not file any report on Form 8-K for the
period ending June 30, 1999.
-12-
<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
- --------------------------------------------------------------------------------
EXHIBIT II
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding for the period. Basic earnings per
share does not include the effect of potentially dilutive transactions or
conversions. This computation of diluted earnings per share reflects the
potential dilution of earnings per share under the treasury stock method which
could occur if contracts to issue common stock were exercised, such as stock
options, and shared in corporate earnings.
The following table presents a summary of per share data and amounts for the
period indicated:
YTD ended Qualifying Basic EPA Basic Dilutive Diluted Diluted
June 30 Net Income Shares EPS Shares Shares EPS
- --------- ---------- --------- ----- -------- ------- -------
1999 $ 43,629 686,537 $.06 173,839 860,376 $ .05
1998 $312,676 686,537 $.45 50,865 737,402 $ .42
Qtr ended
June 30
- ---------
1999 $ 5,870 686,537 $.01 173,839 860,376 $ .01
1998 $173,139 686,537 $.25 50,865 737,402 $ .23
-13-
<PAGE>
HARBOR BANKSHARES CORPORATION AND SUBSIDIARY
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARBOR BANKSHARES CORPORATION
Date: August 13, 1999 Joseph Haskins, Jr.
--------------- -------------------
Joseph Haskins, Jr.
President and Chief Executive Officer
Date: August 13, 1999 Teodoro J. Hernandez
--------------- --------------------
Teodoro J. Hernandez
Treasurer
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,371
<INT-BEARING-DEPOSITS> 662
<FED-FUNDS-SOLD> 21,260
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,371
<INVESTMENTS-CARRYING> 20
<INVESTMENTS-MARKET> 20
<LOANS> 81,140
<ALLOWANCE> 591
<TOTAL-ASSETS> 169,326
<DEPOSITS> 154,065
<SHORT-TERM> 0
<LIABILITIES-OTHER> 793
<LONG-TERM> 5,796
0
0
<COMMON> 7
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 169,326
<INTEREST-LOAN> 3,734
<INTEREST-INVEST> 2,162
<INTEREST-OTHER> 179
<INTEREST-TOTAL> 6,075
<INTEREST-DEPOSIT> 2,727
<INTEREST-EXPENSE> 2,906
<INTEREST-INCOME-NET> 3,169
<LOAN-LOSSES> 352
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,474
<INCOME-PRETAX> 67
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44
<EPS-BASIC> .06
<EPS-DILUTED> .05
<YIELD-ACTUAL> 3.93
<LOANS-NON> 1,093
<LOANS-PAST> 428
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,546
<ALLOWANCE-OPEN> 699
<CHARGE-OFFS> 538
<RECOVERIES> 78
<ALLOWANCE-CLOSE> 591
<ALLOWANCE-DOMESTIC> 591
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 206
</TABLE>
