Harbor Florida Bancshares

February 18, 2003

Jonathan G. Katz, Secretary
Securities & Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549-0609

RE: file number S7-50-02

Dear Mr. Katz,

Harbor Florida Bancshares would like to take this opportunity to comment on the recent proposal to amend SEC Rule 10B-18 regarding stock buy-backs. We understand that the purpose of Rule 10B-18 is to protect investors from public companies artificially influencing the price of their stock while repurchasing shares in the market place. We believe regulations are needed for this purpose. However, we also believe that stock repurchases are a beneficial capital management tool that can used by management to provide significant long term benefits to shareholders and the economy as a whole. We therefore would like to submit the following specific comments.

III. B - Amendments to Purchasing Condition

(3)- price of purchases

Q. Has the conversion to decimal to pricing, particularly a one-cent minimum price variation, made the rule's "bid test" difficult to satisfy?

Response: Yes. Prior to decimalization, Harbor Florida Bancshares stock generally traded in one-sixteenth price intervals (6.25 cents). Since decimalization, Harbor's stock now trades in one-cent intervals. This new pricing scheme has created more frequent bid changes thus making it more difficult to demonstrate compliance with the Rule 10B-18 bid test rule.

III. B - Amendments to Purchasing Condition

(5)- volume of purchases

Harbor Florida Bancshares is strongly opposed to the proposal to include block trades under the 25% average daily volume limit. We believe this proposal will significantly reduce our ability to use stock buybacks as a capital management tool.

Like any investor, we believe that repurchasing companies have a natural incentive to reacquire shares as cheaply as possible. Most companies will tend to repurchase more shares when management perceives the share price to be low, and less, or no shares when the price is perceived to be high. The proposal to include block trades in the 25% of average daily volume will significantly reduce management's ability to acquire shares at depressed prices. This could be particularly harsh if the average daily volume falls during depressed market conditions. This proposal could result in companies paying higher prices (to the detriment of shareholders) to accomplish a given buy-back program. The proposal may also cause unnecessary delays in completing an announced buy-back program.

We understand that the SEC is concerned that the current block exception could make the volume limitation meaningless because an issuer could dominate trading volume and thus impact the price of its stock through block purchases. We disagree. We believe that the price limitation requirement of Rule10B-18 is generally sufficient prevent block trades from influencing market price. However, rather than eliminate the block purchase exception, we recommend that the SEC consider establishing a "cooling off" period for companies that acquire a large volume of stock through block purchases. For example, if a company repurchases more than 25% of average daily volume for a given period of time, say one week, they would be required to refrain from repurchasing additional shares for one to two business days. The "cooling off" period would allow time for the market pricing mechanism to correct any influence that has occurred as a result of the company reacquiring shares through block purchases.

We appreciate your consideration of these comments.

Harbor Florida Bancshares


Todd Bevan