<PAGE>
<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
MARK ONE
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
_______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _____________.
Commission File Number: 0-24194
-------
HARBOR FEDERAL BANCORP, INC.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1860591
- ----------------------- -----------------
(State of incorporation) (I.R.S. Employer
Identification No.)
705 York Road, Baltimore, Maryland 21204-2562
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(410) 321-7041
--------------
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 period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past ninety days. Yes X No
------ -------
As of December 31, 1996, 1,754,420 shares of the
registrant's Common Stock, par value $0.01 per share, were issued
and outstanding.
Transitional small business disclosure format (check one):
YES NO X
------- ------<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
-----------------------------
Baltimore, Maryland
-------------------
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
Consolidated Statements of Financial Condition
-- As of December 31, 1996 (Unaudited) and
March 31, 1996
Consolidated Statements of Income -- (Unaudited)
for the nine and three months period ended
December 31, 1996 and 1995
Consolidated Statements of Cash Flows --
(Unaudited) for the nine months ended December 31,
1996 and 1995
Notes to Consolidated Financial Statements
(Unaudited)
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
--------------------------------
2<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
3<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
------------ ------------
Assets
- ------
<S> <C> <C>
Cash:
On hand and due from banks $ 1,783,017 1,814,498
Interest-bearing deposits 380,450 992,754
Short-term investments 3,547,762 3,441,969
Investment securities, fair value
of $47,903,200 and $48,286,914,
respectively 48,225,876 48,738,919
Mortgage-backed securities, fair
value of $16,400,310 and
$18,122,990 respectively 16,231,238 17,937,421
Loans receivable, net 142,001,778 116,891,985
Investment in Federal Home Loan
Bank stock, at cost 1,269,600 1,269,600
Investment in real estate, net -- 43,848
Investment in and advances to affiliated
corporation 2,775,000 2,825,000
Property and equipment, net 1,955,472 1,978,542
Prepaid expenses and other assets 551,871 621,663
Federal and state income taxes receivable 54,768 205,564
------------ ------------
Total assets $218,776,832 196,761,763
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Savings accounts $167,696,752 161,643,312
Borrowed funds 20,395,000 4,500,000
Advance payments by borrowers for taxes,
insurance and ground rents 1,266,714 1,929,535
Accrued expenses and other liabilities 1,212,358 799,822
------------ -----------
Total liabilities 190,570,824 168,872,669
------------ -----------
Stockholders' Equity:
Preferred stock $0.01 par value;
authorized 5,000,000 shares; none
issued and outstanding -- --
Common stock $0.01 par value;
authorized 20,000,000 shares;
1,754,420 and 1,754,420 shares issued 17,544 17,544
Additional paid-in capital 13,525,376 13,316,038
Contra equity - ESOP (1,136,840) (1,363,250)
Retained income, substantially
restricted 15,843,624 16,041,999
Net unrealized holding loss on
securities available for sale (43,696) (123,237)
------------ -----------
Total stockholders' equity 28,206,008 27,889,094
------------ -----------
Total liabilities and
stockholders' equity $218,776,832 196,761,763
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31,
--------------------- --------------------
1996 1995 1996 1995
---------- --------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 7,635,705 6,108,332 2,742,154 2,033,665
Mortgage-backed securities 938,516 997,156 297,682 335,193
Investment securities 2,561,385 1,270,275 848,968 382,642
Interest-earning deposits and
other short-term investments 223,279 243,466 69,453 83,270
----------- --------- --------- ---------
Total interest income 11,358,885 8,619,229 3,958,257 2,834,770
----------- --------- --------- ---------
Interest expense:
Savings accounts:
Certificates 4,726,666 3,049,066 1,617,778 1,083,430
NOW and money market deposit
accounts 805,006 581,144 265,422 192,382
Passbook and statement savings 789,272 565,660 253,905 183,208
---------- --------- --------- ---------
6,320,944 4,195,870 2,137,105 1,459,020
Borrowed funds 630,625 203,530 303,333 83,628
---------- --------- --------- ---------
Total interest expense 6,951,569 4,399,400 2,440,438 1,542,648
---------- --------- --------- ---------
Net interest income 4,407,316 4,219,829 1,517,819 1,292,122
Provision for loan losses 32,605 -- -- --
---------- --------- --------- ---------
Net interest income after
provision for losses 4,374,711 4,219,829 1,517,819 1,292,122
---------- --------- --------- ---------
Noninterest income:
Loan fees and service charges 50,566 50,122 17,464 19,353
Other 138,109 55,830 24,741 16,124
---------- --------- --------- ---------
Total noninterest income 188,675 105,952 42,205 35,477
---------- --------- --------- ---------
Noninterest expense:
Compensation and benefits 1,782,121 1,907,142 628,365 680,305
Occupancy and equipment 325,972 229,537 108,232 79,467
SAIF deposit insurance premiums 1,008,023 212,886 56,747 73,169
Advertising 133,058 109,324 52,801 49,207
Other 494,119 485,341 179,558 174,809
---------- --------- --------- ---------
Total noninterest expenses 3,743,293 2,944,230 1,025,703 1,056,957
---------- --------- --------- ---------
Income (loss) before income taxes 820,093 1,381,551 534,321 270,642
Income tax provision (benefit) 316,700 533,550 206,350 104,500
---------- --------- --------- ---------
Net income (loss) $ 503,393 848,001 327,971 166,142
========== ========= ========= =========
Net income (loss) per share
of common stock
Primary $ .30 .45 .20 .09
========== ========= ========= =========
Fully-diluted $ .30 .45 .20 .09
========== ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities
Net income 503,393 848,001
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 111,406 108,883
Provision for losses 32,605 --
Amortization of premium on savings deposits 286,038 --
Gains on sales of investments in real estate -- (945)
Non-cash compensation under stock-based
benefit plans 444,735 595,128
Amortization of loan fees, premiums and
discounts, net (47,855) (112,738)
Increase (decrease) in prepaid expenses
and other assets (25,957) (183,693)
Increase in accrued expenses and
other liabilities 606,529 86,736
Federal and state income taxes receivable 150,796 (76,755)
Increase in accrued interest receivable (198,233) 10,490
Increase (decrease) in accrued interest
payable (193,993) (9,063)
---------- ---------
Net cash provided by operating
activities 1,669,464 1,266,044
---------- ----------
Cash flows from investing activities:
Maturities of investment securities 5,000,000 8,000,000
Purchases of investment securities (3,997,969) (4,990,200)
Purchases of mortgage-backed securities (4,996,875) (10,484,123)
Sale of mortgage-backed securities available
for sale 3,538,099 --
Mortgage-backed securities principal
repayments held to maturity 2,169,877 3,031,872
Mortgage-backed securities principal
repayments available for sale 949,250 --
Increase in investment in real estate 43,848 --
Loan principal disbursements,
net of repayments (17,114,378) 3,035,804
Loan purchases (8,049,798) (1,000,882)
Additions to real estate owned -- (3,213)
Purchases of property and equipment, net (88,336) (37,137)
Increase in investments in and advances
to affiliated corporation, net 50,000 (200,000)
---------- ----------
Net cash used in investing activities (22,496,282) (2,647,879)
----------- ----------
</TABLE>
(Continued)
6<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-------------------------
1996 1995
---------- ---------
<S> <C> <C>
Cash flows from financing activities:
Net increase in savings deposits 5,767,402 6,917,100
Repayment of borrowed funds (18,520,000) (8,000,000)
Increase in borrowed funds 34,415,000 10,500,000
Decrease in advance payments by borrowers
for taxes, insurance and ground rents (662,821) (995,016)
Purchase of treasury stock -- (4,553,120)
Purchase of stock for management
recognition trust -- (1,242,522)
Purchase of stock for stock option and
incentive plan trust (8,987) (856,724)
Dividends paid (701,768) (310,935)
Stock option shares exercised -- 92,650
---------- -----------
Net cash provided by financing activities 20,288,826 1,542,433
---------- -----------
Net decrease in cash and cash equivalents (537,992) 160,598
Cash and cash equivalents at beginning of period 6,249,221 3,813,070
---------- -----------
Cash and cash equivalents at end of period $5,711,229 $ 3,973,668
========== ===========
Supplemental information -- noncash
investing activities:
Increase in unrealized holding loss on
securities available for sale, net of
income tax effect $ (79,541) $ (4,489)
========== ===========
Transfer of loans receivable to real estate owned $ -- $ 49,381
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Nine Months Ended December 31, 1996
(Unaudited)
Note 1 -- Business. The accompanying unaudited consolidated
financial statements include the accounts of Harbor Federal
Bancorp, Inc. (the "Company") and wholly-owned subsidiaries,
including Harbor Federal Savings Bank ("Harbor Federal"). All
significant intercompany items have been eliminated. Harbor
Federal provides a full range of banking services to individual
and corporate customers through its subsidiaries and branch banks
in Maryland. Harbor Federal is subject to competition from other
financial institutions. Harbor Federal is subject to the
regulations of certain federal agencies and undergoes periodic
examinations by those regulatory authorities.
Note 2 -- Basis of Presentation. The accompanying unaudited
consolidated financial statements were prepared in accordance
with instructions for Form 10-QSB and, therefore, do not include
information or footnotes necessary for a complete presentation of
financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles.
However, all adjustments, consisting of normal recurring
adjustments which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements
at and for the nine and three months ended December 31, 1996 have
been recorded.
The results of operations for the nine and three months ended
December 31, 1996 are not necessarily indicative of the results
that may be expected for the entire year ending March 31, 1997.
Note 3 -- Retained Income. Harbor Federal is required to
maintain certain levels of regulatory capital. At December 31,
1996, Harbor Federal was in compliance with all regulatory
capital requirements. In addition to these requirements, since
the conversion Harbor Federal must maintain sufficient capital
for the "liquidation account" for the benefit of eligible account
holders. In the event of a complete liquidation of Harbor
Federal, eligible depositors would have an interest in the
account.
Note 4 -- Earnings per Common Share. Primary and fully-diluted
net income per share for the nine and three months ended December
31, 1996 have been computed based on the weighted average number
of shares of common stock and common stock equivalents
outstanding of 1,655,755 shares and 1,661,850 shares for the nine
month periods and 1,660,385 shares and 1,661,850 shares for three
month periods, respectively.
Note 5 -- Investment Securities. Investment securities available
for sale included in investment securities have a book and fair
market value of $21,901,591 at December 31, 1996 and $21,787,305
at March 31, 1996. Related accrued interest was $439,378 at
December 31, 1996 and $82,399 at March 31, 1996.
Note 6 -- Mortgage-Backed Securities. Mortgage-backed securities
available for sale included in mortgage-backed securities have a
book and fair market value of $8,429,461 at December 31, 1996 and
$7,950,214 at March 31, 1996. Related accrued interest was
$71,986 at December 31, 1996 and $76,833 at March 31, 1996.
8<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion analyzes the financial condition of
the Company at December 31, 1996 and the results of operations of
the Company for the nine and three months ended December 31, 1996
and 1995.
Financial Condition
- -------------------
The Company's total assets increased by $22.0 million or
11.2% to $218.8 million at December 31, 1996 from $196.8 million
at March 31, 1996.
Net loans receivable increased $25.1 million or 21.5% to
$142.0 million at December 31, 1996 from $116.9 million at March
31, 1996. This increase was due primarily to a higher level of
loan originations which were funded primarily by an increase in
borrowed funds of $15.9 million.
During the nine months ended December 31, 1996 Harbor
Federal Bancorp, Inc. did not repurchase any shares of common
stock.
Results of Operations
- ---------------------
The earnings of the Company depend primarily on its level of
net interest income, which is the difference between interest
earned on Harbor Federal's interest-earning assets, consisting
primarily of mortgage loans, mortgage-backed securities,
interest-bearing deposits at other institutions, investment
securities and other investments, and the interest paid on
interest-bearing liabilities consisting primarily of savings
accounts.
Net income for the nine months ended December 31, 1996
decreased by $345,000 compared to the corresponding period in
1995. This decrease was caused primarily by a one time charge
for SAIF deposit insurance premium of 65.7 basis points on
deposits as of March 31, 1995. This one time charge of $806,000
was recorded during the three months ended September 30, 1996 and
reduced after tax earnings by $495,000 for the nine months ended
December 31, 1996. Net income for the three months ended
December 31, 1996 increased by $162,000 compared to the
corresponding period in 1995. This increase was due primarily to
an increase in net interest income of $226,000.
9<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Interest Income. Total interest income for the nine months
ended December 31, 1996 increased by $2.7 million or 31.8% to
$11.4 million from $8.6 million for the same period in 1995.
Total interest income for the three months ended December 31,
1996 increased by $1.1 million or 39.6% to $4.0 million from $2.8
million for the same period in 1995. The increase in interest
income resulted from a $51.9 million or 34.6% increase in average
interest-earning assets for the nine months ended December 31,
1996 as compared to the same period in 1995, partially offset by
a decrease in the average yield on Harbor Federal's average
interest-earning assets to 7.50% for the nine months ended
December 31, 1996 from 7.66% for the nine months ended December
31, 1995. The increase in interest income resulted from a $59.7
million or 39.7% increase in average interest-earning asets for
the three months ended December 31, 1996 as compared to the same
period in 1995.
Interest on loans for the nine months ended December 31,
1996 increased $1.5 million or 25.0% as compared to the same
period in 1995. Interest on loans for the three months ended
December 31, 1996 increased $708,000 or 34.8% as compared to the
same period in 1995. The increases were the result of increases
in the average loans receivable of $28.3 million or 27.8% and
$37.1 million or 36.6%, respectively, during the periods due
primarily to higher levels of loan originations and the effect of
the branch acquisitions completed in the fourth quarter of the
year ended March 31, 1996.
Interest on investment securities for the nine and three
months ended December 31, 1996 increased $1.3 million or 101.6%
and $466,000 or 121.9%, respectively, as compared to the same
periods in 1995. The increases were the result of increases in
the average investment balance of $25.7 million or 108.2% and
$26.7 million or 120.9%, respectively, as compared to the same
periods in 1995 due to the investment of cash received in the
branch acquisitions referred to above.
Interest Expense. Total interest expense for the nine and
three months ended December 31, 1996 increased by $2.6 million or
58.0% and $898,000 or 58.2% to $7.0 million and $2.4 million from
$4.4 million and $1.5 million for the same periods in 1995. The
increases were attributable to increases in the weighted average
cost of Harbor Federal's deposits and borrowings to 5.26% and
5.30%, respectively, for the nine and three months ended December
31, 1996 from 4.91% and 5.04%, respectively, for the same periods
in 1995. In addition, the weighted average balance of deposits
and borrowings for the nine and three months ended December 31,
1996 increased $56.5 million or 47.3% and $61.7 million or 50.4%,
respectively, over the same periods in 1995 due to the effect of
the branch acquisitions referred to above.
Net Interest Income. Net interest income increased for the
nine and three months ended December 31, 1996 by $187,000 or 4.4%
and $226,000 or 17.5% to $4.4 million and $1.5 million from $4.2
million and $1.3 million, respectively, for the same periods in
1995.
Provision for Losses. The Company maintains an allowance
for loan losses based on management's review and classification
of the loan portfolio and analyses of borrowers' ability to pay,
past collection experience, risk characteristics of individual
loans or groups of similar loans and underlying collateral,
current and prospective economic conditions, the status of non-
performing loans and reviews conducted in the regulatory
examination process. Provisions for loan losses of $32,600 were
made during the nine months ended December 31, 1996 as compared
to no provisions for loan losses during the same period in 1995.
No provisions for loan losses were made during the three months
ended December 31, 1996 or 1995. Based on the results of
managements' review and analysis, it was concluded that the level
of the allowance for losses on loans as of December 31, 1996, net
of charge offs and recoveries during the nine and three months
ended December 31, 1996, remained adequate.
10<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
Noninterest Income. Noninterest income for the nine and
three months ended December 31, 1996 increased by $83,000 and
$7,000 compared to the same periods in 1995. These increases
were due primarily to fees earned from ATM machines installed at
three locations.
Noninterest Expense. Noninterest expense for the nine
months ended December 31, 1996 increased by $799,000 or 27.1%
compared to the same period in 1995. The increase in non-
interest expense was due primarily to the one-time charge for
SAIF deposit insurance premium discussed above. Non-interest
expense for the three months ended December 31, 1996 decreased by
$31,000 or 3.0% compared to the same period in 1995. This
decrease in noninterest expense was due to a reduction in
compensation and benefits and SAIF deposit insurance premiums
partly offset by an increase in occupancy and equipment expense.
Liquidity and Capital Resources
- -------------------------------
Harbor Federal is required to maintain minimum levels of
liquid assets as defined by OTS regulations. This requirement,
which varies from time to time depending upon economic conditions
and deposit flows, is based upon a percentage of deposits and
short-term borrowings. The required ratio currently is 5.0%.
Liquidity ratios averaged 10.37% and 10.39% for the nine and
three months ended December 31, 1996. Harbor Federal adjusts its
liquidity levels in order to meet funding needs of deposit
outflows, payment of real estate taxes on mortgage loans,
repayment of borrowings and loan commitments. Harbor Federal
also adjusts liquidity as appropriate to meet its asset and
liability management objectives.
The Company's primary sources of funds are deposits,
amortization and prepayment of loans and mortgage-backed
securities, maturities of investment securities and other
investments and earnings and funds provided from operations and
borrowings. While scheduled principal repayments on loans and
mortgage-backed securities are a relatively predictable source of
funds, deposit flows and loan prepayments are greatly influenced
by general interest rates, economic conditions, and competition.
The Company manages the pricing of its deposits to maintain a
desired deposit balance. In addition, the Company invests in
short-term interest-earning assets, which provide liquidity to
meet lending requirements.
During the nine months ended December 31, 1996, the
Company's cash and cash equivalents (cash and short-term
investments with maturities less than 90 days) decreased by
$538,000. This decrease was due primarily to the use of cash and
cash equivalents to fund a portion of the net loan purchases and
originations during the period.
The Company had $2,184,200 in outstanding loan commitments
at December 31, 1996. Harbor Federal expects to fund its loan
origination's through principal and interest payments on loans
and mortgage-backed securities, proceeds from investment and
other securities as maturities occur, and to the extent
necessary, borrowed funds. Management expects that funds
provided from these sources will be adequate to meet the
Company's needs.
11<PAGE>
<PAGE>
Impact of New Accounting Standards
- ----------------------------------
Impairment of Long-Lived Assets. In March 1995, the FASB
issued SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of." The Statement
is effective for years beginning after December 15, 1995 and
requires, among other things, recognition of impairment of long-
lived assets, to be held and used based upon the difference, if
any, between the undiscounted expected future cash flows and the
carrying value. Further, the Statement requires that long-lived
assets to be disposed of be reported at the lower of carrying
amount or fair value less costs to sell. The Company adopted the
provisions of SFAS No. 121 on April 1, 1996 and adoption did not
have a material effect on the Company's financial position or
results of operations.
Mortgage Servicing Rights. In May 1995, the FASB issued
Statements of Financial Accounting Standards No. 122, "Accounting
for Mortgage Servicing Rights" ("SFAS No. 122"). SFAS No. 122 is
effective for years beginning after December 15, 1995. Earlier
application is permitted. The Statement requires, among other
things, that the Company capitalize the estimated fair value of
servicing rights on loans originated for sale, and amortize such
amount over the estimated servicing life of the loan. The
Company adopted the provisions of SFAS No. 122 on April 1, 1996
and adoption did not have a material effect on the Company's
financial condition or results of operations.
Accounting for Stock-Based Compensation. In November 1995,
the FASB issued Statement of Financial Accounting Standards No.
123 "Accounting for Awards of Stock-Based Compensation to
Employees" ("SFAS No. 123"). SFAS No. 123 is effective for years
beginning after December 15, 1995. Earlier application is
permitted. The Statement defines a fair value based method of
accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure
compensation cost for those plans using the intrinsic value based
method of accounting prescribed by APB Opinion No. 25.
"Accounting for Stock Issued to Employees" ("Opinion 25"). Under
the fair value based method, compensation cost is measured at the
grant date based on the value of the award and is recognized over
the service period, which is usually the vesting period. Under
the intrinsic value based method, compensation cost is the
excess, if any, of the quoted market price of the stock at the
grant date or other measurement date over the amount an employee
must pay to acquire the stock. Most fixed stock option plans --
the most common type of stock compensation plan -- have no
intrinsic value at grant date, and under Opinion 25 no
compensation cost is recognized for them. Compensation cost is
recognized for other types of stock based compensation plans
under Opinion 25, including plans with variable, usually
performance-based, features. This Statement requires that an
employer's financial statements include certain disclosures about
stock-based employee compensation arrangements regardless of the
method used to account for them. The Company intends to continue
using the intrinsic value method and will provide the pro forma
disclosures about its stock-based employee compensation plans in
its 1997 financial statements, as required by SFAS No. 123.
12<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
From time to time Harbor Federal is a party
to various legal proceedings incident to its
business. At December 31, 1996, there were
no legal proceedings to which the Company,
Harbor Federal or its subsidiary was a party,
or to which any of their property was
subject, which were expected by management to
result in a material loss.
Item 2. Changes in Securities
--------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security
Holders
--------------------------------------------
None
Item 5. Other Information
-----------------
None
13
<PAGE>
<PAGE>
HARBOR FEDERAL BANCORP, INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION - continued
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) List of Exhibits
* 3.1 Articles of Incorporation of Harbor
Federal Bancorp, Inc.
* 3.2 Bylaws of Harbor Federal Bancorp,
Inc.
* 4 Form of Common Stock Certificate of
Harbor Federal Bancorp, Inc.
** 10.1 Employment Agreements between Harbor
Federal Bancorp, Inc. and Harbor
Federal Savings Bank and Robert A.
Williams, as amended (see page 17)
** 10.2 Severance Agreements between Harbor
Federal Bancorp, Inc. and Harbor
Federal Savings Bank and Norbert J.
Luken, and Lawrence W. Williams (see
page 35)
** 10.3 Harbor Federal Savings Bank Non-
Employee Director Retirement Plan
(see page 65)
* 10.4 Harbor Federal Savings Bank Deferred
Compensation Plan
* 10.5 Harbor Federal Savings Bank Supple-
mental Executive Retirement
Agreement
* 10.6 Harbor Federal Bancorp, Inc.
Employee Stock Ownership Plan, as
amended
* 10.7 Harbor Federal Bancorp, Inc.
Incentive Compensation Plan, as
amended
27 Financial Data Schedule
* Incorporated by reference to Registration Statement on Form
S-1, No. 33-75624.
** Incorporated by reference to Quarterly Report on Form 10-QSB
for Quarter Period ended June 30, 1994.
(b) Form 8-K
None
14
<PAGE>
<PAGE>
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.
Date: February 5, 1997 By /s/ Robert A. Williams
-----------------------------
Robert A. Williams
President
(Duly Authorized Representative)
Date: February 5, 1997 By /s/ Norbert J. Luken
-----------------------------
Norbert J. Luken
Treasurer
(Principal Financial Officer)
15
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