-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CE9jOgjikiXdnMwrl0AoWZZgHPLPlktnozQWo21UmpJ0H2B/zzo62vsoqt1u2KHT UMjord+rEDUG4BgB7zIDGA== 0000950168-99-002221.txt : 19990816 0000950168-99-002221.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950168-99-002221 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARBOR BANKSHARES CORP CENTRAL INDEX KEY: 0000889608 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 521786341 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-20990 FILM NUMBER: 99688862 BUSINESS ADDRESS: STREET 1: 25 WEST FAYETTE ST CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4105281885 MAIL ADDRESS: STREET 2: 25 W FAYETTE ST CITY: BALTIMORE STATE: MD ZIP: 21201 10QSB 1 HARBOR BANKSHARES CORP. 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 ------------- Commission file number 0-20990 ------- 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 - -------------- 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 - ------------------------------------------------------------------ HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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 -2- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CONDITION
JUNE 30 DEC 31 1999 1998 ----- ------ (UNAUDITED) DOLLARS IN THOUSANDS 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 --------- ---------
See Notes to Unaudited Consolidated Financial Statements -3- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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) -4- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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) -5- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30 1999 1998 ---- ----- (Unaudited) Dollars in Thousands 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 ======== ========
(See Notes to Unaudited Consolidated Financial Statements) -6- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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 ======== ======= -7- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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. -8- 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:
Awareness Assessment Renovation Validation Implementation Contingency --------- ---------- ---------- ---------- -------------- ----------- Internal 100% Internal 100% Internal 95% Internal 95% Internal 95% Internal 95% External 100% External 100% External 95% External 95% External 90% External 90%
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. -9- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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. -10- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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. -11- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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- 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- HARBOR BANKSHARES CORPORATION AND SUBSIDIARY - -------------------------------------------------------------------------------- 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- EX-27 2 FDS
9 1,000 6-MOS DEC-31-1999 JUN-30-1999 5,371 662 21,260 0 52,371 20 20 81,140 591 169,326 154,065 0 793 5,796 0 0 7 0 169,326 3,734 2,162 179 6,075 2,727 2,906 3,169 352 0 3,474 67 0 0 0 44 .06 .05 3.93 1,093 428 0 1,546 699 538 78 591 591 0 206
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