UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20552

                                   ----------

                                    FORM 10-K

(MARK ONE)

[X]  ANNUAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the fiscal year ended    September 30, 1997
                                                        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 000-22817

                          HARBOR FLORIDA BANCORP, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                               65-0737675
   (STATE OR OTHER JURISDICTION                 (I.R.S. EMPLOYER
   OF INCORPORATION OR ORGANIZATION)           IDENTIFICATION NO.)

                              100 S. SECOND STREET
                              FORT PIERCE, FL 34950
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE   (561) 461-2414
                                                  --------------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                         Common Stock (par value $0.01)
                                (TITLE OF CLASS)


                                (TITLE OF CLASS)

     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 90 days. Yes X No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ X ]

         The aggregate  market value of the voting stock held by  non-affiliates
of the  Registrant  computed by  reference to the average bid and asked price of
the common stock as of December 8, 1997 ($66.75) was $117,271,206.

         The number of shares of common  stock  outstanding  on December 8, 1997
was 4,978,756.


         Documents incorporated by reference:

1.   Annual Report to Stockholders  for the fiscal year ended September 30, 1997
     (Parts II and III).

2.   Proxy Statement of Harbor Florida Bancorp, Inc. to be filed as Exhibit 99.3
     to the  Registration  Statement on Form S-1 of Harbor  Florida  Bancshares,
     Inc.(Part III). (To be filed pursuant to General Instruction G.(3)).

<PAGE>




                                TABLE OF CONTENTS



Item                                                       Page
No.                                                         No.
                                     PART I
 1   Business                                                 2
 2   Properties                                              20
 3   Legal Proceedings                                       22
 4   Submission of Matters to a Vote of
     Security-Holders                                        22

                                    PART II
 5   Market for Registrant's Common Equity
     and Related Stockholder Matters                         22
 6   Selected Financial Data                                 23
 7   Management's Discussion and Analysis of
     Financial Condition and Results of
     Operations                                              23
 8   Financial Statements and Supplementary Data             23
 9   Changes in and Disagreements with Accountants
     on Accounting and Financial Disclosure                  23

                                    PART III
10   Directors and Executive Officers of the
     Registrant                                              23
11   Executive Compensation                                  23
12   Security Ownership of Certain Beneficial Owners
     and Management                                          24
13   Certain Relations and Related Transactions              24
14   Exhibits, Financial Statement Schedules,
     and Reports on Form 8-K                                 24

                                       1
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

GENERAL

         Harbor Florida  Bancorp,  Inc. (the "Company") is the middle tier stock
holding company for Harbor Federal  Savings Bank (the "Bank").  The Company owns
100% of the Bank's common stock.  Currently,  it engages in no other significant
activities  beyond its ownership of the Bank's common stock. The Bank is engaged
in the business of attracting  deposits primarily from the communities it serves
and using these and other funds to originate primarily  one-to-four family first
mortgage loans for retention in its portfolio.  It's principal  sources of funds
are deposits and principal and interest  payments on loans. Its principal source
of income is interest  received from loans and  investment  and  mortgage-backed
securities, and its principal expenses are interest paid on deposit accounts and
employee compensation and benefits.

         On June 1, 1996,  the Company  acquired all of the  outstanding  common
stock of Treasure Coast Bank, F.S.B. ("Treasure Coast"), a Florida based federal
savings association, for approximately $6.8 million in cash. The acquisition was
accounted  for  using  the  purchase  method.   Treasure  Coast  had  assets  of
approximately $75 million.  The Treasure Coast acquisition added 1 branch to the
Company's branch network.  The results of operations of Treasure Coast from June
1,  1996 to  September  30,  1996 are  included  in the  consolidated  financial
statements of the Company.


MARKET AREA

         The Company  serves  communities  in six  growing  and diverse  Florida
counties. Its headquarters are in Fort Pierce,  Florida,  located on the eastern
coast  of  Florida  between  Stuart  and  Daytona  Beach.  In  addition  to  its
headquarters,  it has fourteen  branch  offices in St.  Lucie,  Indian River and
Martin  counties,   located  on  Florida's   "Treasure   Coast."  This  area  is
characterized  by both a large  retirement  and vacation home  population  and a
significant  agricultural economy,  primarily citrus crops. The Company has four
branch offices located in Brevard County, which encompasses the "Space Coast" of
the state.  Brevard  County has a greater  industrial  base fueled  primarily by
companies  related  to NASA  and the John F.  Kennedy  Space  Center.  Prominent
electronics concerns such as Harris Corporation are also major employers in this
area.  The Company also has one branch  office in  Okeechobee  County,  a rural,
agricultural area, and three branch offices in Volusia County, where tourism and
a large retirement population predominate.

LENDING ACTIVITIES

         GENERAL.  The Company's  principal  lending  activity has  historically
been, and will continue to be for the  foreseeable  future,  the  origination of
one-to-four family residential  mortgage loans.  Although the Company sells some
conforming  loans,  primarily  to  the  Federal  National  Mortgage  Association
("FNMA") and the Federal Home Loan Mortgage Corporation  ("FHLMC"),  and has, on
rare  occasions,  purchased  whole  loans and loan  participations,  it  focuses
primarily  on the  origination  of loans and retains them in its  portfolio  for
investment.  See " --  Lending  Activities  --  One  to  Four  Family  Permanent
Residential  Mortgage  Loans" below.  The Company also  originates a substantial
amount of one-to-four family  residential  construction and consumer loans, and,
on a limited basis, consumer installment,  commercial real estate and commercial
business loans. Substantially all of the Company's mortgage loans are secured by
property  in its  market  area and  most of its  nonmortgage  loans  are made to
borrowers in its market area.

         The Company offers both fixed-rate and adjustable rate mortgage ("ARM")
loans. The Company has sought to increase its origination of ARM loans to reduce
its interest rate risk.  However,  the Company's  ability to originate ARM loans
has been limited by borrower  preference for fixed-rate loans in many instances,
particularly in low interest rate environments.

         LOAN  AND  MORTGAGE  - BACKED  SECURITIES  PORTFOLIO  COMPOSITION.  The
following  table sets forth a summary of the  composition  of the Company's loan
and mortgage-backed securities portfolio by type of loan.


                                    2
<PAGE>
<TABLE>
<CAPTION>
                                                    September 30,
                                    1997                 1996                 1995
                                   ------               ------               -----
                                        Percent of          Percent of           Percent of
                               Amount      Total    Amount     Total     Amount     Total
                             (Dollars in thousands)
MORTGAGE LOANS
<S>                         <C>         <C>        <C>         <C>     <C>         <C>

Construction 1 - 4 Family.    $47,800       5.42%   $43,994      5.46%  $40,634      6.07%
Permanent 1 - 4 Family....    629,906      71.46    584,297     72.49    487,480    72.84
Multifamily...............     15,326       1.74     17,804      2.21     14,916     2.23
Nonresidential............     54,983       6.24     41,970      5.21     31,980     4.78
Land......................     33,182       3.76     29,034      3.60     20,460     3.06
                             --------   --------   --------  --------   --------  -------
    Total Mortgage Loans..    781,197      88.62    717,099     88.97    595,470    88.98
                              -------    -------    -------   -------    -------   ------
OTHER LOANS
Commercial Nonmortgage....     11,287       1.28      8,199      1.02      8,468     1.27
Consumer:
    Home Improvement......     20,614       2.34     20,679      2.56     19,198     2.87
    Manufactured Housing..     16,399       1.86     15,784      1.96     15,045     2.25
    Other Consumer (1)....     51,988       5.90     44,265      5.49     31,049     4.63
                             --------   --------   --------  --------    -------  -------
    Total Other Loans.....    100,288      11.38     88,927     11.03     73,760    11.02
                             --------    -------   --------   -------    -------   ------
Total Loans Receivable....    881,485     100.00%   806,026    100.00%   669,230   100.00%
                              -------     ======    -------    ======    -------   ======
LESS:
Loans in process..........     32,078                26,788               24,321
Deferred loan fees and
    discounts.............      3,446                 3,203                3,519
Allowance for loan losses.     11,691                11,016               10,083
                             --------              --------             --------
    Subtotal..............     47,215                41,007               37,923
                             --------              --------             --------
TOTAL LOANS RECEIVABLE,
     NET..................    834,270               765,019              631,307
                              -------               -------              -------
LOANS HELD FOR SALE.......        141                 4,870                1,009
                             --------              --------             --------
MORTGAGE-BACKED
    SECURITIES............    176,854               153,293              164,759
                              -------               -------              -------

TOTAL..................... $1,011,265              $923,182             $797,075
                           ==========              ========             ========
</TABLE>

------------
(1) Includes home equity and other second mortgage loans.

                                    3
<PAGE>

       The  following  table shows the  maturity or period to  repricing  of the
Company's loan and mortgage-backed  securities portfolios at September 30, 1997.
Loans that have  adjustable  rates are shown as being due in the period in which
the  interest  rates are next  subject  to change.  The table  does not  include
prepayments  or scheduled  principal  amortization.  Prepayments  and  scheduled
principal  amortization on loans totaled $163.0,  $143.5,  and $99.4 million for
fiscal years 1997, 1996 and 1995, respectively.  Loans having no stated maturity
and no schedule of repayments (including delinquent loans), and demand loans are
reported as due within one year.

<TABLE>
<CAPTION>

                                           One        Three                     Ten
                                         through     through       Five       through    Beyond
                               Within     three       five        through     twenty     twenty
                              one year    years       years      ten years     years      years     Total
                              --------   -------     -------      -------    --------   --------   ---------
                                 (In thousands)
<S>                           <C>        <C>         <C>          <C>        <C>        <C>         <C>

Mortgage loans:
  Permanent 1 - 4 family....  $213,414   $25,164     $56,921      $55,450    $139,195   $159,380    $649,524
  Other.....................    43,501    11,404      14,034       12,074      15,631        677      97,321
Other loans:
  Consumer .................    24,464    12,576      22,609       24,811       4,358         41      88,859
  Commercial ...............     6,146       511       1,290        1,194          27      2,096      11,264
Nonperforming loans (1).....     2,580       ---         ---          ---         ---        ---       2,580
Mortgage-backed
    securities..............    58,708    25,030      20,704       54,497      17,202        713     176,854
                              --------   -------     -------      -------    --------   --------   ---------
    Sub-total...............  $348,813   $74,685    $115,558     $148,026    $176,413   $162,907  $1,026,402
                              ========   =======    ========     ========    ========   ========
Deferred loan fees and
    discounts...............                                                                          (3,446)
Allowance for loan
    losses..................                                                                         (11,691)
                                                                                                    --------
Total (2)(3)................                                                                      $1,011,265
                                                                                                  ==========
</TABLE>

(1) All  nonperforming  loans are reported as due within one year  regardless of
the  actual  maturity  term.  (2)  Amounts  reported  do not  include  principal
repayment or prepayment assumptions.  (3) Amounts include loans held for sale of
$141,000 at September 30, 1997.
                                                  --------------

       The   following   table  sets  forth  the   amount  of   fixed-rate   and
adjustable-rate loans at September 30, 1997 due after September 30, 1998.


                                             Adjustable
                             Fixed Rate         Rate      Total
                             --------      --------    --------
                                         (In thousands)
Mortgage loans:
  Permanent 1 - 4 family....  $325,483      $110,627    $436,110
  Other.....................    37,348        16,472      53,820
Other loans:
  Consumer .................    64,395           ---      64,395
  Commercial ...............     5,118           ---       5,118
                              --------      --------    --------
Total loans.................   432,344       127,099     559,443
Mortgage-backed securities..   118,146           ---     118,146
                              --------      --------    --------
Total.......................  $550,490      $127,099    $677,589
                              ========      ========    ========

                                       4
<PAGE>

    ONE-TO-FOUR  FAMILY  PERMANENT  RESIDENTIAL  MORTGAGE LOANS.  The Company's
primary  lending  activities  focus on the  origination  of  one-to-four  family
residential mortgage loans. The Company generally does not originate one-to-four
family  residential loans on properties outside of its market area. At September
30, 1997,  $629.9  million or 71.46% of the Company's  total loan  portfolio and
55.69% of total  assets  consisted of  one-to-four  family loans and over 95% of
such loans were  collateralized  by properties  located in the Company's  market
area.

     The Company's  fixed rate loans  generally are originated and  underwritten
according to standards that permit sales in the secondary market.  However,  the
decision to sell depends on a number of factors including the yield and the term
of the loan, market  conditions,  and the Company's current portfolio  position.
The  Company  sells a portion of newly  originated  30 year fixed rate  mortgage
loans,  currently $100,000 to $200,000 per month. In addition, the Company sells
loans under the single  family  Mortgage  Revenue Bond  Programs  through  local
County  Housing  Finance  Authorities.  The  servicing  on  these  loans is also
released.

     The Company currently offers one-to-four family residential  mortgage loans
with fixed,  adjustable or a combination  of  fixed/adjustable  interest  rates.
Originations  of fixed rate mortgage  loans versus ARM loans are monitored on an
ongoing  basis and are affected  significantly  by the level of market  interest
rates, customer preference,  the Company's interest rate gap position,  and loan
products  offered  by  the  Company's  competitors.   In  a  low  interest  rate
environment,  borrowers typically prefer fixed rate loans to ARM loans, and even
if  management's  strategy is to emphasize ARM loans,  market  conditions may be
such that there is greater demand for fixed rate mortgage loans.

     The Company  generates  residential  mortgage loan  activity  through local
advertising, its existing customers and referrals from local real estate brokers
and home builders.  All loans are  originated by Company loan officers,  none of
whom have underwriting authority. Independent loan brokers are not used.

     Residential  loans are authorized  and approved under central  authority by
experienced  underwriters.  Underwriters  have  individual  authority to approve
loans up to the maximum amount of $250,000. Residential mortgage loans in excess
of this amount are  approved  by  Management  individually  up to $500,000 or by
committee if above $500,000.  The Company also has direct endorsement  authority
from the Federal Housing Authority ("FHA") to allow for internal approval of FHA
insured loans. FHA loans are approved under central  authority by an underwriter
with a "Direct Endorsement" designation from the FHA. The Company's underwriting
standards are intended to ensure that borrowers are sufficiently  credit worthy,
and all of the Company's lending is subject to written underwriting policies and
guidelines  approved  by  the  Company's  Board  of  Directors.   Detailed  loan
applications are designed to determine the borrower's  ability to repay the loan
and certain information  solicited in these applications is verified through the
use of credit reports, financial statements and other confirmations. The Company
obtains an appraisal of substantially  all of the proposed  security property in
connection with  residential  mortgage loans.  Additionally,  title insurance is
required for all mortgage loans except home equity loans of $50,000 or less.

     The types, amounts, terms of and security for conventional loans (those not
insured or  guaranteed  by the U.S.  government  or agencies  thereof,  or state
housing  agency)  originated  by the Company  are  significantly  prescribed  by
federal regulation.  OTS regulations limit the amount which the Company can lend
up to specified percentages of the value of the real property securing the loan,
as determined by an appraisal at the time the loan is originated (referred to as
"loan-to-value  ratios").  The Company makes  one-to-four  family home loans and
other residential real estate loans with loan-to-value ratios generally of up to
80% of the appraised value of the security  property.  In certain  circumstances
loan-to-value  ratios  exceed 80%, in which case private  mortgage  insurance is
generally  required.  A substantial part of the Company's loan  originations are
made to  borrowers  to finance  second  homes for  vacation  use or for use as a
rental property.  Such loans may be considered to have a higher credit risk than
loans to finance a primary residence.

     ONE-TO-FOUR FAMILY RESIDENTIAL  CONSTRUCTION LOANS. A part of the Company's
loan originations are to finance the construction of one-to-four family homes in
the  Company's  market area. At September 30, 1997 the Company had $47.8 million
in such loans,  representing 5.42% of total loans. It is the Company's policy to
disburse loan proceeds as construction progresses and as inspections warrant.

     A portion  of these  loans are made  directly  to the  individual  who will
ultimately  own and occupy the home. Of these,  the vast majority are structured
at origination to guarantee the permanent financing to the Company as well. As a
result,  although in recent years the origination of these construction loans to
individuals is second in volume only to the origination of traditional  loans to
finance the purchase or refinance of an existing home, the  significance of this
type of lending to the Company is not evident  from the amount of these loans in
its portfolio at any given time because these  construction loans to individuals
usually "roll" into permanent financing.

                                       5
<PAGE>

       Approximately  one-half of the Company's  one-to-four family construction
     loans are to builders. In most instances these loans are also structured to
guarantee permanent financing by the Company.

     CONSUMER  LOANS.  The Company  originates  consumer  loans as an  essential
element  in  its  retail-oriented  strategy.   Secured  consumer  loans  include
automobile,  manufactured  housing,  boat and truck loans,  home equity and home
improvement  loans as well as loans secured by the borrower's  deposit  accounts
with the Company.  The loans for manufactured  housing are generally  originated
within  quality,  retirement  lifestyle  communities  spread  throughout the six
county  market  area  that  feature  amenities  such as full  service  clubhouse
facilities, swimming pools, and, in a number of cases, golf courses. These loans
are subject to the normal underwriting  standards of the Company. Loans are made
on either a fixed-rate or  adjustable-rate  basis, with terms generally up to 20
years. A limited  amount of unsecured  consumer  loans are also  originated.  At
September  30, 1997,  consumer-oriented  loans  accounted  for $89.0  million or
10.10% of the Company's total loan portfolio.

     NON-RESIDENTIAL  AND LAND  MORTGAGE  LOANS.  In the late 1980's the Company
curtailed its lending in  non-residential  mortgages with the exception of loans
to finance the sale of the Company's real estate acquired  through  foreclosure.
In recent years,  the Company  re-entered  this market and made a total of $18.3
million,  $12.9 million and $10.7 million of  non-residential  mortgage loans in
1997, 1996 and 1995, respectively.  At September 30, 1997,  nonresidential loans
constituted  6.24%of the Company's  total loan  portfolio.  Origination of these
loans plays a subordinate  role to the  origination of residential  mortgage and
consumer-related loans. Non-residential mortgage loans are offered on properties
within the Company's  primary  market area using both fixed or  adjustable  rate
programs.

     Loans  secured  by  non-residential  real  estate  generally  carry  larger
balances  and  involve  a  greater  degree  of  risk  than  one-to-four   family
residential  mortgage loans. This increased risk is a result of several factors,
including  the  concentration  of  principal  in a  limited  number of loans and
borrowers,  the  effects  of general  economic  conditions  on  income-producing
properties,  and the increased  difficulty of evaluating  and  monitoring  these
loans.  Furthermore,  the repayment of loans secured by non-residential property
is typically dependent upon the successful  operation of the related real estate
project. If the cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired.  See "Business -- Delinquent,  Nonperforming and
Classified Assets".

     The Company also  originates  developed  building  lot loans ("lot  loans")
secured by individual  improved lots for future  residential  construction.  Lot
loans are offered  with either a fixed or  adjustable  interest  rate and with a
maximum term of up to 15 years.  At September 30, 1997 these loans accounted for
$14.6 million or 1.66% of the Company's total loan portfolio.

     OTHER LOANS. The balance of the Company's  lending consists of multi-family
mortgage and commercial  non-mortgage  loans.  At September 30, 1997 these loans
represented $15.3 million or 1.74% and $11.3 million or 1.28%, respectively,  of
the Company's total loan portfolio.  The multi-family mortgage loans are secured
primarily  by apartment  complexes.  These loans are subject to the same lending
limits as apply to the Company's  commercial real estate lending. The commercial
non-mortgage  loans  represent  primarily  equipment and other business loans to
professionals such as physicians and attorneys. These loans are an integral part
of the Company's  strategy of seeking  synergy  between its various  deposit and
loan products and as a service to existing customers.

ORIGINATION AND SALE OF LOANS

     From time to time the Company has sold  mortgage  loans,  primarily  to the
Federal  National  Mortgage  Association  and the  Federal  Home  Loan  Mortgage
Corporation.  Historically, the Company has not purchased significant amounts of
loans, particularly in light of its past policy to control asset growth.

     The Company sells a portion of newly originated 30 year fixed rate mortgage
loans,  currently $100,000 to $200,000 per month. In addition, the Company sells
loans under the single  family  Mortgage  Revenue Bond  Programs  through  local
County  Housing  Finance  Authorities.  The  servicing  on  these  loans is also
released.  The  purpose of  selling a portion  of fixed rate loans from  current
production is to reduce interest rate risk by limiting the growth of longer term
fixed rate loans in the portfolio and to generate service fee income over time.

                                       6

<PAGE>

     The  following  table  shows  total  loan  origination  activity  including
mortgage-backed securities, during the periods indicated.

<TABLE>
<CAPTION>


                                              Years Ended September 30,
                                          ==================================
                                            1997         1996         1995
                                          --------     --------     --------
                                                   (In thousands)
MORTGAGE LOANS (GROSS):
<S>                                      <C>          <C>          <C>
  At beginning of year (1).............   $722,435     $596,478     $553,135
  Mortgage loans originated:
    Construction 1-4 Family............     63,237       59,000       51,998
    Permanent 1-4 Family...............     84,853       85,853       51,334
    Multi-family.......................      2,526        2,935          158
    Nonresidential.....................     18,302       12,941       10,700
    Land...............................     12,264       13,384       11,812
                                           -------      -------      -------
  Total mortgage loans originated (2)..    181,182      174,113      126,002
  Mortgage loans acquired (3)..........        ---       60,482          ---
  Mortgage loans sold (4)..............    (8,583)      (4,653)      (9,037)
  Principal repayments.................  (111,255)    (101,359)     (72,310)
  Mortgage loans transferred to real
    estate owned.......................    (2,438)      (2,626)      (1,312)
                                        ---------    ---------    ---------
  At end of year.......................   $781,341     $722,435     $596,478
                                          ========     ========     ========
OTHER LOANS (GROSS):
  At beginning of year.................   $ 88,927     $ 73,760    $  59,436
  Other loans originated...............     63,406       52,702       40,838
  Loans acquired (3)...................        ---        4,468          ---
  Principal repayments.................   (52,045)     (42,003)     (26,514)
                                          --------     --------     --------
  At end of year.......................   $100,288     $ 88,927     $ 73,760
                                          ========     ========     ========
MORTGAGE-BACKED SECURITIES (GROSS):
  At beginning of year.................   $153,293     $164,759     $120,099
  Mortgage-backed securities purchased.     61,769       29,265       65,609
  Principal repayments.................   (38,208)     (40,731)     (20,949)
                                         --------     --------     --------
  At end of year.......................   $176,854     $153,293     $164,759
                                          ========     ========     ========
</TABLE>

     (1)  Includes loans held for sale.

     (2)  Loans originated  represent loans closed,  however all loans
          may not be fully disbursed at time of closing.

     (3)  Represents  loans  acquired  in  connection  with  the
          acquisition  of Treasure Coast Bank,  F.S.B.  in 1996.

     (4)  Includes $3 million commercial land participation loan sold in 1995.


MORTGAGE-BACKED SECURITIES

       A substantial  part of the Company's  business  involves  investments  in
mortgage-backed  securities  issued or  guaranteed  by an  agency of the  United
States  government.   Historically,  the  Company's  mortgage-backed  securities
portfolio  has  consisted  primarily  of  pass-through  mortgage   participation
certificates issued by FHLMC and FNMA. These pass-through certificates represent
a participation interest in a pool of single-family mortgages, the principal and
interest payments on which are passed from the loans'  originators,  through the
FHLMC and FNMA that pools and packages the participation interests into the form
of securities,  to investors such as the Company.  The FHLMC and FNMA guarantees
the payment of principal  and  interest.  The  underlying  pool of mortgages can
consist of either  fixed-rate or  adjustable-rate  loans. At September 30, 1997,
the Company's  portfolio of  mortgage-backed  securities  consisted  entirely of
FHLMC  and  FNMA   participation   certificates.   Of  the  $176.9   million  in
mortgage-backed  securities  at that date,  approximately  $49.0  million or 28%
represented  adjustable-rate  securities and $127.9  million or 72%  represented
fixed-rate securities with anticipated maturity dates from 3 months to 29 years.

                                       7
<PAGE>
 
   Adjustable-rate  mortgage-backed securities ("ARM Securities") have periodic
adjustments  in the coupons based on the  underlying  mortgages.  These periodic
coupon  adjustments are subject to annual and lifetime caps. The caps serve as a
limit to the amount that the coupon will change  during any coupon reset period.
As interest  rates on the  mortgages  underlying  the ARM  Securities  are reset
periodically  (one to 12 months),  the yields on these securities will gradually
adjust  to  reflect  changes  in  market  rates.  Management  believes  that the
adjustable-rate feature of ARM Securities will help to reduce sharp fluctuations
in security value that result from normal changes in interest rates.

    During periods of declining interest rates, the coupon on ARM Securities may
adjust  downward,  resulting  in lower  yields  and  reduced  income  from these
securities.   Thus,   ARM   Securities  may  have  less  potential  for  capital
appreciation as compared to fixed-rate debt securities. During periods of rising
interest  rates,  the coupon on ARM  Securities  may not fully adjust  upward in
conjunction  with  changes  in market  rates due to  annual or  lifetime  coupon
adjustment  caps.  This could result in ARM Securities  that depreciate in value
similar to long-term,  fixed-rate  mortgage securities in a rising interest rate
environment.

    The  Company's  fixed-rate   mortgage-backed   securities  consist  of  both
long-term  and  balloon  securities.  The  long-term  securities  have  original
maturity terms of ten,  fifteen and thirty years.  The balloon  securities  have
principal and interest  amortization  based on a thirty-year  maturity  schedule
with final principal  balloon payments due in five years or seven years from the
date  of the  security.  Balloon  mortgage-backed  securities  are  held  in the
portfolio as a means of reducing the average life of the fixed-rate portfolio. A
shorter  average  portfolio  life  will  help  reduce  the  interest  rate  risk
associated with these investments.  As of June 30, 1997,  long-term,  fixed-rate
mortgage-backed   securities   amounted  to  $28.9  million  and  five-year  and
seven-year  balloon  mortgage-backed  securities  amounted to $58.6  million and
$26.1 million, respectively.

    During  periods of  declining  interest  rates,  fixed-rate  mortgage-backed
securities  may  have   accelerated   principal   reductions  due  to  increased
refinancing  activity on the underlying  mortgage loans. The reinvestment of the
accelerated principal reductions at lower prevailing rates could result in lower
overall  portfolio  yields and income.  During periods of rising interest rates,
fixed-rate  mortgage-backed  securities will tend to depreciate in value.  Thus,
total returns on fixed-rate  mortgage-backed  securities are expected to decline
as market interest rates rise.

    If  the  Company   purchases   mortgage-backed   securities  at  a  premium,
accelerated principal repayments may result in some loss of principal investment
to the extent of the premium paid. Conversely, if mortgage-backed securities are
purchased at a discount,  accelerated principal reductions will increase current
and total returns.

DELINQUENT, NONPERFORMING AND CLASSIFIED ASSETS

     DELINQUENT  LOANS.  All delinquent loan results are reviewed monthly by the
Company's Board of Directors.  The Company believes it has an effective  process
and policy in dealing with delinquent loans.

     Residential  delinquencies are handled by the Loan Collections  Department.
This  department  begins  collections  efforts on residential  loans when a loan
appears on the 15-day delinquent list. Borrowers are sent a notice to accelerate
the debt when the debt is 45 days delinquent.  If the delinquent account has not
been corrected,  foreclosure  proceedings are begun generally at the 75th day of
delinquency.  At September 30, 1997,  residential  loans  delinquent 90 days and
longer represented 0.24% of the total residential loan portfolio.

       Commercial  delinquent  accounts are  processed by the Problem  Asset and
     Lending Departments. For commercial accounts classified as Substandard, as
defined below, or worse, the Problem Asset Department has jurisdiction  over the
collection efforts.  As with residential  delinquent loans, any commercial loans
90 days past due or where the  collection  of the interest or full  principal is
considered doubtful are placed on a non-accrual basis.

     If a collection  action is instituted on a consumer or commercial loan, the
Company,  in compliance  with the loan  documents and the law, may repossess and
sell the collateral security for the loan through private sales or through
judicially ordered sales when necessary.  Should the sale result in a deficiency
owing to the Company,  the borrowers  generally are pursued where such action is
deemed appropriate,  including recourse based on personal loan guarantees by the
borrower's principals.

                                       8

<PAGE>

       The following table shows the Company's loans  delinquent 90 days or more
at the dates indicated.

                                           September 30,
                             1997               1996             1995
                            ------             ------            -----
                                        (Dollars in thousands)
                        Number     Amount  Number   Amount   Number  Amount
Mortgage loans:
  Construction and land.    2  $    162      2   $    98       2  $    89
  Permanent 1 - 4
    family..............   28     1,565     23     1,196      36    2,205
  Other mortgage........    3       689      2       423     ---      ---
                           --   -------    ---   -------     --- --------
  Total mortgage loans..   33     2,416     27     1,717      38    2,294
Other loans.............   10       164      9       132       7       70
                           --   -------    ---   -------     ---  -------
Total loans.............   43    $2,580     36    $1,849      45   $2,364
                           ==               ==                ==   ======
Delinquent loans to
    total loans.........            .31%             .24%             .37%
                                     ===             ====            ====

       As of September 30, 1997, 1996 and 1995, $0, $323,000,  and $1.2 million,
respectively,  of loans were on  nonaccrual  status  which were not 90 days past
due.

       NONPERFORMING ASSETS. The Company also places emphasis on improving asset
quality. The Company's nonperforming assets as a percentage of total assets have
decreased from .85% at September 30, 1994 to .43% at September 30, 1997.

       Loans 90 days past due are generally  placed on non-accrual  status.  The
Company  ceases to accrue  interest  on a loan once it is placed on  non-accrual
status, and interest accrued but unpaid at that time is charged against interest
income.  Additionally,  any loan where it appears evident that the collection of
interest is in doubt is also placed on a non-accrual  status.  Non-accrual loans
of  $500,000  or more  are  reviewed  monthly  by the  Board of  Directors.  The
investment in impaired loans (primarily  consisting of classified loans),  other
than those evaluated collectively for impairment, at September 30, 1997 and 1996
was $12,157,000 and $11,053,000,  respectively.  The average recorded investment
in  impaired  loans  during the years  ended  September  30,  1997 and 1996 were
approximately  $12,122,000  and  $13,651,000,  respectively.  The total specific
allowance for loan losses related to these loans was approximately  $117,000 and
$174,000,  respectively,  on  September  30, 1997 and 1996.  Interest  income on
impaired loans of approximately  $1,147,000 and $1,346,000 was recognized in the
year ended September 30, 1997 and 1996, respectively.

       If a foreclosure action is instituted on a real  estate-secured  loan and
the loan is not  reinstated,  paid in full,  refinanced,  or deeded  back to the
Company,  the property is sold at a foreclosure sale at which the Company may be
the buyer.  Thereafter,  such acquired  property is listed in the Company's real
estate  owned  ("REO")  account or that of a  subsidiary,  until the property is
sold.  The  Company  carries REO at the lower of cost or fair value less cost to
dispose.  The Company  also  finances  the sales of REO  properties.  Should the
foreclosure  sale not produce  sufficient  proceeds to pay the loan  balance and
court  costs,  the  Company's  attorneys,  where  appropriate,  may  pursue  the
collection of a deficiency judgment against the responsible borrower.

       It is the  Company's  policy to try to  liquidate  its holdings in REO or
subsidiaries on a timely basis while  considering both market conditions and the
cost of carrying REO properties. Upon acquisition the Company records all REO at
the lower of its fair value (less estimated costs to dispose), or cost. The fair
value is based upon the most recent  appraisal and management's  evaluation.  If
the fair  value of the  asset is less  than the loan  balance  outstanding,  the
difference  is  charged  against  the  Company's  loan loss  allowance  prior to
transferring the asset to REO.  Administration of REO property is handled by the
Problem Asset  Department  which is responsible  for the sale of all residential
and commercial properties.  In those instances where the property may be located
outside  the  Company's  market area or where the  property,  due to its nature,
requires  certain  expertise  (I.E.,  hotels,   apartment  complexes),   outside
management firms may be utilized.

                                       9

<PAGE>

       At the dates indicated,  nonperforming  assets in the Company's portfolio
were as follows:


                                                        September 30,
                                                        --------------
                                                  1997      1996       1995
                                                  ----      ----       ----
                                                    (Dollars in thousands)
Non-accrual mortgage loans:
  Delinquent less than 90 days...........   $      ---   $   323     $1,153
  Delinquent 90 days or more.............        2,416     1,717      2,294
                                                 -----     -----      -----
     Total...............................        2,416     2,040      3,447
                                                 -----     -----      -----
Non-accrual other loans:
  Delinquent less than 90 days...........          ---       ---        ---
  Delinquent 90 days or more.............          164       132         70
                                                ------    ------     ------
     Total...............................          164       132         70
                                                ------    ------     ------
Total non-accrual loans..................        2,580     2,172      3,517
Accruing loans 90 days or more delinquent          ---       ---        ---
                                              --------  --------    -------
  Total nonperforming loans..............        2,580     2,172      3,517
                                                 -----     -----      -----
Other nonperforming assets:
  Real estate owned......................        2,892     4,830      4,643
    Less allowance for losses............        (578)   (1,712)    (1,857)
                                               -------   -------    -------
      Total..............................        2,314     3,118      2,786
                                                ------    ------     ------

Total nonperforming assets, net..........       $4,894    $5,290     $6,303
                                                ======    ======     ======
Nonperforming loans to total net loans...         0.31%     0.28%      0.56%
Total nonperforming assets to
  total assets..........................          0.43%     0.50%      0.71%


     For the year ended  September 30, 1997,  interest  income of $131,000 would
have been recorded on loans  accounted  for on a non-accrual  basis if the loans
had been current throughout the period. No interest income was actually included
in net income regarding non-accrual loans during the same period.

       The Company's  policy requires that a general  allowance be maintained on
all REO. The  Company's  periodic  provisions to its allowance for losses on REO
     are  included  in  income  (losses)  from  real  estate  operations  on its
consolidated
statements of earnings.

     Management evaluates each REO property on no less than a quarterly basis to
assure that the net carrying value of the property on the Company's  books is no
greater  than the fair  market  value  less  estimated  costs to  dispose.  When
necessary,  the property is written down or specific  allowances are established
to reduce the carrying value.

                                            REO Allowances
                                       Years Ended September 30,
                                      1997       1996       1995
                                      ----       ----       ----
                                           (In thousands)

Beginning balance.................. $1,712     $1,857     $2,008
Provision for (recovery of) losses.   (150)       117         35
Allowance for losses on REO   
   acquired........................    ---         21        ---
Charge-offs........................   (984)      (283)      (186)
                                    ------     ------     ------
Ending balance..................... $  578     $1,712     $1,857
                                    ======     ======     ======


       Not included in the preceding table are net gains, (losses) or recoveries
on the sale of real estate  owned of  $124,000,  $(39,000)  and $180,000 for the
years ended September 30, 1997, 1996 and 1995, respectively.
                                       10

<PAGE>

     CLASSIFIED  ASSETS.  Under  OTS  regulations,  problem  assets  of  insured
institutions  are classified as either  "substandard,"  "doubtful" or "loss." An
asset is considered  "substandard"  if the current net worth and paying capacity
of the obligor and/or the value of the collateral pledged are no longer adequate
to support the loan.  "Substandard"  assets are  characterized  by the "distinct
possibility"  that the  insured  institution  will  sustain  "some  loss" if the
deficiencies are not corrected.  Assets classified as "doubtful" have all of the
weaknesses   inherent  in  those  classified   "substandard,"   with  the  added
characteristic  that the weaknesses  present make  "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable  and  improbable."  Assets  classified  "loss" are those considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without  the  establishment  of a specific  loss  reserve is not  warranted.  In
addition to the classification of assets as "substandard", "doubtful" or "loss",
the OTS  regulations  also require that assets that do not currently  expose the
Company to a  sufficient  degree of risk to warrant  one of the three  foregoing
classifications but which do possess credit deficiencies or potential weaknesses
deserving management's close attention must be designated "special mention".

     When an insured institution classifies problem assets as either substandard
or doubtful,  it is required to establish specific allowances for loan losses in
an amount  considered  appropriate  by  management.  See  "--Allowance  for Loan
Losses" below.  Additionally,  the institution establishes general allowances to
recognize  the inherent  risk  associated  with lending  activities,  but which,
unlike  specific  allowances,  have not been  allocated  to  particular  problem
assets. When an insured  institution  classifies problem assets as "loss," it is
required  either to establish a specific  allowance  for losses equal to 100% of
the  amount  of the  asset  so  classified  or to  charge-off  such  amount.  An
institution's  determination  as to the  classification  of its  assets  and the
amount of its valuation  allowances  is subject to review by the OTS,  which can
order the establishment of additional general or specific loss allowances.

       The following table presents the Company's classified assets at the dates
indicated.


                                           September 30,
                                          --------------
                             1997           1996          1995
                             ----           ----          ----
                                      (In thousands)
  Substandard:
    Real Estate Owned...   $ 2,892        $ 3,897       $ 3,483
    Loans (1)...........     9,832          8,150        16,119
                           -------        -------       -------
      Total Substandard.    12,724         12,047        19,602
  Doubtful..............       ---            192           930
  Loss..................       117            174           698
                         ---------      ---------     ---------
                           $12,841        $12,413       $21,230
                           =======        =======       =======

(1)    Includes $6 million letter of credit classified in 1995.

                                 ---------------

     At September 30, 1997, in addition to the Company's  classified loans noted
above,  the Company had five  commercial  real  estate and  commercial  business
loans, aggregating  approximately $3.9 million, which were currently performing,
where management had obtained  information about possible credit problems of the
borrowers  or  had  been  seriously   delinquent  in  the  past  and  had  other
characteristics  which  caused  management  to  question  the  ability  of  such
borrowers to comply with present loan repayment  terms.  Subsequent to September
30,  1997,  one of these loans which had a net book value prior to  allowance of
$2.6 million was paid off in full.

ALLOWANCE FOR LOAN LOSSES

     Provisions  for loan  losses are  charged to  operations  to  establish  an
allowance for loan losses;  recognized loan losses (recoveries) are then charged
(credited)  to  the  allowance.  The  Company  evaluates  the  outstanding  loan
portfolio with respect to the adequacy of the allowance for loan losses at least
quarterly.

                                       11

<PAGE>

     Management's  policy is to provide for  estimated  losses on the  Company's
loan portfolio based on management's evaluation of the probable losses (existing
and  inherent).  Such  evaluations  are made for all major  loans on which  full
collectibility of interest and/or principal may not be reasonably  assured.  The
factors which the Company  considers are the estimated  value of the  underlying
collateral,  the  management of the  borrower,  and current  operating  results,
trends and cash flow. In addition to analyzing individual loans, management also
analyzes on a regular basis its asset  classification and recent loss experience
on other loans to help insure that prudent general  allowances are maintained on
one-to-four  family loans,  automobile  loans and home equity loans.  Management
periodically  evaluates the allowance percentages utilized for general allowance
purposes based upon delinquencies, charge-off, underwriting, and other trends.

     The Company  segregates  the loan portfolio for loan loss purposes into the
following  broad  segments:  commercial  real estate;  residential  real estate;
commercial business; and consumer loans.

     The Company  provides for a general  allowance  for losses  inherent in the
portfolio by the above  categories,  which consists of two  components.  General
loss percentages are calculated based upon historical  analyses.  A supplemental
portion of the allowance is calculated for inherent  losses which probably exist
as of the evaluation date even though they might not have been identified by the
more objective  processes used for the portion of the allowance described above.
This is due to the risk of error  and/or  inherent  imprecision  in the process.
This portion of the allowance is particularly  subjective and requires judgments
based on qualitative  factors which do not lend themselves to exact mathematical
calculations such as: trends in delinquencies and nonaccruals;  migration trends
in the  portfolio;  trends in  volume,  terms,  and  portfolio  mix;  new credit
products  and/or  changes  in the  geographic  distribution  of those  products;
changes in lending policies and procedures;  loan review reports on the efficacy
of the risk identification  process;  changes in the outlook for local, regional
and  national  economic  conditions;  concentrations  of credit;  and peer group
comparisons.

     Specific  allowances are provided in the event that the specific collateral
analysis  on  each  classified  loan  indicates  that  the  probable  loss  upon
liquidation  of  collateral  would  be  in  excess  of  the  general  percentage
allocation. The provision for loan loss is debited or credited in order to state
the allowance for loan losses to the required level as determined above.

                                       12
<PAGE>

       The following tables set forth an analysis of the Company's allowance for
loan losses at the dates indicated.


                                        Years Ended September 30,
                                      1997         1996         1995
                                      ----         ----         ----

                                         (Dollars in thousands)

Balance at beginning of year...     $11,016      $10,083       $9,434
Provision for (recovery of)
    losses.....................         782         (76)          460
Allowance for loan losses
    acquired (1)...............         ---          885          ---
Charge-offs:
    Residential................       (134)        (137)        (109)
    Commercial real estate.....         ---          ---        (145)
    Consumer...................       (125)         (48)        (130)
    Other......................         (3)        (180)          ---
                                    -------    ---------    ---------
       Total charge-offs.......       (262)        (365)        (384)

Recoveries:
    Residential................          44          149          117
    Commercial real estate.....          19           86          270
    Consumer...................          62           79          133
    Other......................          30          175           53
                                    -------     --------    ---------
       Total recoveries........         155          489          573

Balance at end of year.........     $11,691      $11,016      $10,083
                                    =======      =======      =======

Allowance for loan losses to
    total loans................      1.40%         1.44%        1.60%
Allowance for loan losses to
    total non-performing loans.    453.11%       507.25%      286.70%
Allowance for loan losses and
    allowance for REO to total
    non- performing assets.....    224.21%       181.78%      146.32%
Net charge-offs (recoveries) to
    average loans outstanding
    during the period..........      0.01%       (0.02)%      (0.03)%
Classified loans to total net        1.19%        1.11 %        2.78%
    loans


(1)  Represents allowance acquired in conjunction with
     acquisition of Treasure Coast Bank, F.S.B. in 1996.

                                       13

<PAGE>

       The following  table  presents an allocation of the entire  allowance for
loan losses among various loan  classifications and sets forth the percentage of
loans in each category to total loans.  The allowance  shown in the table should
not be  interpreted  as an indication  that  charge-offs  in future periods will
occur in these  amounts or  proportions  or that the analysis  indicates  future
charge-off trends.

<TABLE>
<CAPTION>
                                             September 30,
                                1997              1996             1995
                               ------            ------           -----
                          Amount    %(1)    Amount    %(1)   Amount    %(1)
                                        (Dollars in thousands)
<S>                      <C>      <C>      <C>      <C>      <C>     <C>
Allowance at end of period
    applicable to:
Residential............  $ 2,141   76.88%  $ 2,077   77.95%  $1,625   78.91%
Commercial real estate.    6,487   11.74     6,088   11.02    6,158   10.07
Consumer ..............    2,068   10.10     1,802   10.01    1,280    9.75
Commercial business....      995    1.28     1,049    1.02    1,020    1.27
                          ------  ------    ------  ------  -------  ------
    Total..............  $11,691  100.00%  $11,016  100.00% $10,083  100.00%
                          ======  ======    ======  ======   ======  ======
</TABLE>

------------------
(1) Percent of loans in each category to total loans at the dates indicated.


INVESTMENT ACTIVITIES

     The Company  invests  primarily in overnight  funds,  U.S.  Government  and
agency  obligations,  and Federal Home Loan Bank of Atlanta  capital stock.  The
Company does not invest in derivatives,  collateralized  mortgage obligations or
other hedging instruments.

     The table below summarizes the carrying value and estimated market value of
the Company's portfolio of investment securities at the dates indicated.

<TABLE>
<CAPTION>

                                                         September 30,
                                    1997                      1996                     1995
                                   ------                    ------                   -----
                                                                   (In thousands)
                          Carrying       Market       Carrying    Market       Carrying    Market
                            Value         Value        Value       Value        Value      Value

Available for sale:
<S>                            <C>           <C>          <C>         <C>       <C>        <C>     
  U.S. Treasury notes.....     $17,985       $17,985      $23,347     $23,347   $    ---   $    ---
  FHLB notes..............      29,486        29,486       10,031      10,031        ---        ---
  Other securities........          82            82          115         115        ---        ---
                               -------       -------      -------     -------     ------     ------
      Total                    $47,553       $47,553      $33,493     $33,493   $    ---   $   ----
                                ======        ======       ======      ======     ======    =======
Held to maturity:
  U.S. Treasury notes.....    $    ---      $    ---     $    ---    $    ---    $15,028    $14,970
  FHLB notes..............       5,000         4,993       20,000      20,016     10,000     10,159
  Other securities........       ---           ---          ---         ---          158        158
                                ------       -------      -------     -------    -------    -------
      Total...............     $ 5,000       $ 4,993      $20,000     $20,016    $25,186    $25,287
                                ======        ======       ======      ======    =======    =======

FHLB stock................    $  7,595      $  7,595     $  7,158    $  7,158   $  6,064   $  6,064
</TABLE>

                                       14

<PAGE>

     On November 15, 1995,  the FASB issued Special Report No. 155-B, A GUIDE TO
IMPLEMENTATION  OF STATEMENT 115 ON ACCOUNTING  FOR CERTAIN  INVESTMENTS IN DEBT
AND EQUITY SECURITIES,  (the "Special Report").  Pursuant to the Special Report,
the  Company  was   permitted  to  conduct  a  one-time   reassessment   of  the
classifications of all securities held at that time. Any reclassifications  from
the  held-to-maturity  category made in conjunction with that reassessment would
not call into question an  enterprise's  intent to hold other debt securities to
maturity in the future. The Company undertook such a reassessment and, effective
December 31, 1995, all investment  securities were reclassified as available for
sale. On the effective date of the reclassification,  the securities transferred
had a  carrying  value of $25.8  million  and an  estimated  fair value of $26.0
million,  resulting  in a net  increase  to  stockholders'  equity  for  the net
unrealized appreciation of $126,000,  after deducting applicable income taxes of
$76,000.

      The table below presents the contractual  maturities and weighted  average
yields of investment securities at September 30, 1997, excluding FHLB stock:

<TABLE>
<CAPTION>

                            One year           One to             More than    
                            or Less          Five Years           Five Years           Total Investment Securities
                       ----------------    -----------------   -----------------       ----------------------------
                             (Dollars in thousands)
                                                                                   Average
                                Weighted             Weighted           Weighted  Remaining                      Weighted
                     Carrying   Average    Carrying  Average   Carrying  Average  Years to   Carrying   Market   Average
                       Value     Yield      Value     Yield      Value    Yield   Maturity    Value      Value    Yield
<S>                 <C>          <C>      <C>         <C>        <C>     <C>        <C>      <C>         <C>      <C>  
Treasury notes..    $17,985      5.41%    $   ---      0.00%     $ ---   0.00%       .3      $17,985     $17,985   5.41%
FHLB notes......      4,497      5.94      29,989      6.00        ---   0.00       1.3       34,486      34,479   5.99
Other securities        ---      0.00          82     10.00        ---   0.00       1.6           82          82  10.00

</TABLE>


SOURCES OF FUNDS

     DEPOSITS.  The  Company  offers a number  of  different  deposit  accounts,
including   regular   savings,   interest-bearing   checking  or  NOW  accounts,
non-interest  checking,  money market  deposit,  term  certificate  accounts and
individual retirement accounts.

     The Company has twenty-two branch offices in addition to its home office in
Fort  Pierce.  The  Company's  strategy  has been to have  conveniently  located
offices in growth  markets as one of its main methods of attracting  funds.  The
Company's  deposits  primarily are obtained from areas  surrounding its offices.
Certificate  accounts in excess of $100,000 are not actively  solicited  nor are
brokers used to obtain deposits.

     The Company had a decline in deposit  balances  for several  years prior to
1993.  This was a strategy that the Company used to improve its capital  ratios.
Much of the decline was accomplished by the closing of less profitable branches.
With the Company's  improved  capital position in the beginning of 1993, it made
an effort to stabilize  deposits and increase account balances.  As part of this
strategy,  the Company has upgraded a number of branch facilities and moved from
leased storefronts to full service free-standing offices.

     Management believes that demand and passbook accounts are less sensitive to
changes in interest rates than other types of accounts,  such as certificates of
deposit.  As of September  30,  1997,  the Company had 23.34% of its deposits in
passbook  and demand  accounts,  75.67% in  certificates  of deposit and .99% in
official checks.  Due to the recent low interest rate  environment,  the Company
has also been pricing its  certificates  of deposit to encourage  lengthening of
maturities.  When  management  determines  the  levels  of  its  deposit  rates,
consideration is given to local competition, U.S. Treasury securities offerings,
and anticipated funding requirements.

                                       15

<PAGE>

     The following table sets forth the  distribution  of the Company's  deposit
accounts at the dates indicated and the weighted  average interest rates on each
category  of deposits  presented.  Management  does not believe  that the use of
year-end  balances  instead of average  monthly  balances  produces any material
difference in the information presented:
<TABLE>
<CAPTION>
                                                       September 30,
                                1997                       1996                           1995
                      -------------------------  -------------------------     -----------------------          -----
                                       Weighted                    Weighted                    Weighted
                                       Average                     Average                      Average
                                       Nominal                     Nominal                      Nominal
                      Amount Percent    Rate     Amount   Percent   Rate       Amount  Percent    Rate
                      ------ -------   -----     ------   -------   ----       ------  -------    ----
                                                  (Dollars in thousands)
Demand accounts:
<S>                 <C>        <C>      <C>    <C>        <C>       <C>      <C>        <C>        <C>
  Non-interest
    bearing demand. $ 40,749    4.47%   N/A    $ 33,613     3.95%   N/A      $ 21,001    2.91%     N/A
  NOW accounts.....   52,045    5.71    1.32%    54,806     6.43    1.51%      44,814     6.22     1.57%
  Money market
     accounts.......   43,401   4.76    2.51     42,561     5.00    2.58       36,863     5.11     2.37
                     -------   -----    ----    -------    --- -   ----       -------    -----     ---
    Subtotal.......  136,195   14.94    1.30    130,980    15.38    1.46      102,678    14.24     1.53
Savings accounts:
  Passbook.........   76,540    8.40    1.69     77,305     9.07    1.78       80,720    11.20     1.97
  Certificates of
    deposit........  689,760   75.67    5.47    636,907    74.77    5.37      531,601    73.73     5.60
Official checks....    9,081     .99     N/A      6,661      .78    N/A         5,982      .83      N/A
                    -------- -------    ----    -------   -------   ----     --------  -------     ----
Total deposits..... $911,576  100.00%   4.47%  $851,853   100.00%   4.41%    $720,981   100.00%    4.57%
                    ========  ======    ====   ========   ======    ====     ========   ======     ====
</TABLE>

    The following table presents, by various categories,  information concerning
the amounts and maturities of the Company's time deposits.

<TABLE>
<CAPTION>

                                       September 30,
                               1997           1996          1995
                               ----           ----          ----
                                   (Dollars in thousands)
<S>                         <C>           <C>          <C>
  0.00 - 3.00%............  $     545     $      307   $      199
  3.01 - 4.00%............         --              1        4,360
  4.01 - 5.00%............     88,472        155,121      100,834
  5.01 - 6.00%............    553,986        378,999      234,126
  6.01 - 7.00%............     46,333        101,780      182,299
  7.01 - 8.00%............        424            603        9,174
  8.01 - 9.00%............        ---              3           61
  Over 9.01%..............        ---            ---          548
  Premiums on deposits
    acquired                       --             93          ---
                             --------       --------     --------
Total Certificate Accounts   $689,760       $636,907     $531,601
                             ========       ========     ========
</TABLE>
                                       16

<PAGE>

    At September 30, 1997, the Company had certificates of deposit in amounts of
$100,000 or more maturing as follows:


                                     Amount
Maturity Period                  (In thousands)
---------------
3 Months or Less.......             $16,131
Over 3 to 6 Months.....              11,687
Over 6 to 12 Months....              14,744
Over 12 Months.........              19,444
                                    -------
Total..................             $62,006
                                    =======

    The following table contains information  regarding deposit account activity
for the periods shown.


                                      Years Ended September 30,
                                     1997         1996        1995
                                     ----         ----        ----
                                        (Dollars in thousands)
 Net increase (decrease)
    before interest credited.      $ 25,563    $ 30,644    $ 21,118
 Interest credited...........        34,160      30,035      26,033
 Deposits acquired...........           ---      70,193         ---
                                   --------    --------    --------

 Deposit account increase
    (decrease)...............      $ 59,723    $130,872    $ 47,151
                                   ========    ========    ========
 Weighted average cost
    of deposits during the
    year.....................        4.42%       4.44%       4.24%
                                     ====        ====        ==== 
 Weighted average cost of
    deposits at end of year..        4.47%       4.41%       4.57%
                                     ====        ====        ==== 


      BORROWINGS.  The  Company  is a member  of the  Federal  Home Loan Bank of
Atlanta  ("FHLB of Atlanta").  The FHLB of Atlanta offers various fixed rate and
variable  rate  advances to its members.  Requests for advances with an original
term to maturity of five years or less may be  approved  for any sound  business
purpose in which the member is authorized to engage.  Requests for advances with
original  maturity in excess of five years may be approved  only for the purpose
of enabling that member to provide funds for residential  housing  finance.  The
FHLB of Atlanta  underwrites  each  advance  request  based on  factors  such as
adequacy and stability of capital  position,  quality and composition of assets,
liquidity  management,  level of  borrowings  from all  sources  and other  such
factors.  Pursuant to a collateral agreement with the FHLB, advances are secured
by all stock in the FHLB and a blanket  floating  lien that requires the Company
to maintain  qualifying first mortgage loans as pledged  collateral in an amount
equal to, when discounted at 75% of the unpaid principal balances, the advances.

      As of September 30, 1997, the Company had $100 million of outstanding FHLB
advances.   Of  this  amount  $70  million  have  remaining  maturity  dates  of
thirty-three  months or longer.  The  remaining $30 million of FHLB advances are
short-term,  with maturity dates of six months or less. The Company has used the
short-term  FHLB  advances  as  funding  for  investment   securities  that  are
classified  as  "available  for sale."  Management  expects  that the  Company's
short-term advances will be renewed at similar rates and terms.  However, in the
event  that  interest  rates rise in the near  term,  management  would have the
option of renewing the advances at higher rates or selling the  investments  and
using the proceeds to pay off the short term FHLB advances. This could result in
higher borrowing costs or possibly losses on the sale of investment securities.

                                       17

<PAGE>

      As of  September  30,  1997,  the Company had a total credit limit of $157
million and an availability limit of $57 million with the FHLB of Atlanta.

      In addition to FHLB advances,  the Company had $174.4 million of unpledged
mortgage-backed    securities   at   September   30,   1997.   These   unpledged
mortgage-backed  securities could be used as collateral under reverse repurchase
transactions with various security dealers.  Such borrowing  transactions  could
provide  additional  cash and liquidity to the Company in the event of sudden or
unforeseen deposit withdrawals.

      The Company  recognizes the maturity  characteristics  of its time deposit
portfolio.  Management  believes that unused FHLB  advances and other  borrowing
sources would provide sufficient funding for potential deposit withdrawals.

      In  addition to  advances  from the FHLB of Atlanta,  the Company has also
borrowed funds from Northwest Company to fund its Employee Stock Ownership Plan.
At September 30, 1997, the Company had $375,000 in that obligation  outstanding,
which  matures in  December,  1998.  At September  30,  1997,  the Company had a
$100,000  Note  Payable  relating  to the  purchase  of land,  which  matures in
January,  1998.  From time to time the  Company has also  entered  into sales of
securities  under  agreements  to  repurchase.  At  September  30,  1997 no such
agreements were outstanding.

      The  following  table  sets  forth  information  regarding  the  Company's
borrowing at and for the periods indicated:

<TABLE>
<CAPTION>
                                               At or for the Year Ended September 30,
                                                      1997        1996       1995
                                                      ----        ----       ----
                                                        (Dollars in thousands)
FHLB Advances:
<S>                                                 <C>         <C>         <C>    
      Average Balance                               $99,342     $75,096     $58,178
      Maximum balance at any month-end              110,000      95,000      85,000
      Balance at year end                           100,000      95,000      65,000
      Weighted average interest rate during the
              year                                     6.00%       6.12%       6.10%
      Weighted average interest rate at year end       6.00%       6.02%       6.10%
Other Borrowings:
      Average Balance                                  $561        $857      $1,160
      Maximum balance at any month-end                  674         974       1,273
      Balance at year end                               475         674         974
      Weighted average interest rate during the
              year                                     9.48%       9.47%       9.27%
      Weighted average interest rate at year end       7.12%       8.50%       9.00%
Total Borrowings:
      Average Balance                               $99,903     $75,953     $59,338
      Maximum balance at any month-end              110,674      95,974      86,273
      Balance at year end                           100,475      95,674      65,974
      Weighted average interest rate during the
              year                                     6.02%       6.15%       6.16%
      Weighted average interest rate at year end       6.01%       6.04%       6.14%
</TABLE>


SUBSIDIARIES

      Federal  associations  generally  may  invest up to 2% of their  assets in
service corporations plus an additional 1% of assets for community purposes.  In
addition, federal associations such as the Company may invest up to 50% of their
regulatory capital in conforming loans to service  corporations.  In addition to
investments  in service  corporations,  federal  associations  are  permitted to
invest  an  unlimited  amount  in  operating   subsidiaries  engaged  solely  in
activities which a federal association may engage in directly.

                                       18

<PAGE>

     The Company has two active  subsidiary  corporations.  Appraisal  Analysts,
Inc.  provides  real estate  appraisal  services to the Company as well as third
parties. H. F. Development Company,  Inc. serve as repositories of the Company's
REO properties held for disposition. See "Business -- Delinquent,  Nonperforming
and Classified Assets".

      The Company  also has  inactive  subsidiaries,  one of which is  discussed
below:

     CFD, INC. One of the Company's wholly-owned  subsidiaries is CFD, Inc. CFD,
     Inc. is a Florida  corporation  which, in September 1991, filed a Chapter 7
     bankruptcy  in the  Southern  District  of  Florida.  Until  filing  in the
     bankruptcy  court CFD, Inc. had been engaged in land  development and sales
     of  land  using  land  installment  sale  contracts.  CFD,  Inc.  became  a
     subsidiary  of the  Company  in 1985 as a result  of the  restructuring  of
     certain  nonperforming  loans  made by the  Company  to CFD,  Inc.  and the
     transfer of CFD, Inc.  stock and other assets to the Company as a result of
     the restructuring of the debt.

     CFD, Inc. began land  development  operations in Sebring,  Florida and Lake
     Placid,  Florida in the early  1960's  through a  predecessor  corporation,
     Highlands County Title and Guaranty Land Company ("Highlands Guaranty"). At
     that time it had no business  relationship or affiliation with the Company.
     Between  1983 and 1985,  the  Company  extended  loans to CFD,  Inc.  which
     aggregated  approximately $20 million.  The various loans to CFD, Inc. were
     subsequently  consolidated  into a single loan and the  Company  obtained a
     first mortgage on all the land under development.

     The  Company  assumed  ownership  of  CFD,  Inc.  In  1985  as  part  of  a
     restructuring.  CFD, Inc.  Filed for  bankruptcy in  September,  1991.  The
     bankruptcy process is still underway although it is nearing conclusion. All
     of the assets of CFD, Inc. Have been transferred to the bankruptcy  trustee
     for liquidation.  In connection with the bankruptcy proceeding, the Company
     is both a secured and  unsecured  creditor of CFD,  Inc.  During the fiscal
     year 1996, the Company received a $150,000 distribution from the bankruptcy
     trustee.  The Company believes that it is unlikely that it will recover any
     significant amounts at the conclusion of the bankruptcy.

     The State of Florida has administratively dissolved CFD, Inc.

COMPETITION

      The Company encounters strong competition both in attracting  deposits and
in originating real estate and consumer loans.  Its most direct  competition for
deposits has come historically from commercial  banks,  brokerage houses,  other
savings  associations  and credit unions in its market area. The Company expects
continued strong competition from such financial institutions in the foreseeable
future.  The Company's  market area includes  branches of a number of commercial
banks that are  substantially  larger  than the  Company  in terms of  statewide
deposits.  The Company competes for savings by offering  depositors a high level
of personal service, convenient locations and a competitive interest rate.

      The  competition  for real estate and other loans comes  principally  from
commercial  banks,  mortgage banking  companies and other savings  associations.
Lending competition has increased  substantially in recent years, as a result of
the large  number of  institutions  seeking  to  benefit  from the growth in the
Company's market area.

      The Company  competes for loans  primarily  through the interest rates and
loan fees it  charges,  the types of loans it  offers,  and the  efficiency  and
quality of services it provides  borrowers,  real estate  brokers and  builders.
Factors that affect competition  include general and local economic  conditions,
current  interest rate levels and volatility of the mortgage  markets.  Based on
total  assets,  as of September  30, 1997,  the Company was the largest  savings
institution headquartered in the six county area served by the Company.

EMPLOYEES

     At September 30, 1997,  the Company had a total of 296 full-time  employees
and 65  part-time  employees,  none of whom  were  represented  by a  collective
bargaining  unit.  The Company  considers its relations with its employees to be
good.


                                       19
<PAGE>

ITEM 2.  PROPERTIES
-------------------

     The Company  conducts its business from its headquarters in Fort Pierce and
through 22 branch offices.  These offices are located in Brevard,  Indian River,
Martin, Okeechobee, St. Lucie, and Volusia counties, Florida. The net book value
at September 30, 1997 of the Company's offices was $11.2 million.  The following
table sets forth information regarding the Company's offices.


                                  Year                            Lease
       Location                  Opened      Owned/Leased    Expiration Date
       --------                  ------      ------------    ---------------

ST. LUCIE COUNTY
----------------
MAIN OFFICE                        1934          OWNED
100 SOUTH SECOND STREET
FORT PIERCE, FL 34950

VIRGINIA AVENUE                    1968          OWNED
500 VIRGINIA AVENUE
FORT PIERCE, FL 34950

PSL MAIN                           1975          OWNED
7181 SOUTH U.S. #1
PORT ST. LUCIE, FL 34952

H.F. CENTER                        1981          OWNED
2400 S.E. MIDPORT RD., 
     SUITE 300
PORT ST. LUCIE, FL 34952

LAKEWOOD PARK                      1981          OWNED
5100 TURNPIKE FEEDER RD.
FORT PIERCE, FL 34951

DARWIN SQUARE                      1991          LEASED          11/30/97
3251 S.W. PSL BLVD.
PORT ST. LUCIE, FL 34953

ORANGE BLOSSOM                     1984          OWNED
4156 OKEECHOBEE ROAD
FORT PIERCE, FL 34947

ST. LUCIE WEST                     1993          OWNED
1376 S.W. ST. LUCIE WEST BLVD.
PORT ST. LUCIE, FL 34986

INDIAN RIVER
------------
VERO MAIN                          1978          OWNED
655 21st STREET
VERO BEACH, FL 32960

CAUSEWAY                           1981          OWNED
1700 S.A1A
VERO BEACH, FL 32963

INDIAN RIVER MALL                  1997          OWNED
6080 20TH ST.
VERO BEACH, FL 32966

                                       20
<PAGE>

                                Year                            Lease
      Location                  Opened      Owned/Leased    Expiration Date
      --------                  ------      ------------    ---------------

SEBASTIAN                          1979          OWNED
13397 U.S. HIGHWAY #1
SEBASTIAN, FL 32958

MARTIN COUNTY
-------------
PALM CITY                          1978          LEASED          07/26/05
1251 S.W. 27TH STREET
PALM CITY, FL  34990

EAST OCEAN                         1981          OWNED
1500 E. OCEAN BLVD.
STUART, FL 34996

STUART MAIN                        1996          LEASED          08/15/99
789 S. FEDERAL HWY.
STUART, FL 34994

BREVARD COUNTY
--------------
PALM BAY                           1981          OWNED
5245 BABCOCK ST., N.E.
PALM BAY, FL 32905

INDIALANTIC                        1981          OWNED
305 5th AVENUE
INDIALANTIC, FL 32903

WEST MELBOURNE                     1982          OWNED
2950 W. NEW HAVEN AVENUE
MELBOURNE, FL 32904

VIERA                              1995          OWNED
100 CAPRON TRAIL
MELBOURNE, FL  32940

OKEECHOBEE COUNTY
-----------------
OKEECHOBEE                         1980          OWNED
2801 HIGHWAY #441 SOUTH
OKEECHOBEE, FL 34974

VOLUSIA COUNTY
--------------
NEW SMYRNA BEACH                   1988          LEASED          09/30/99
REGIONAL SHOPPING CENTER
1940 STATE ROAD #44
NEW SMYRNA BEACH, FL 32168

PORT ORANGE                        1983          OWNED
4035 NOVA ROAD
PORT ORANGE, FL 32127

ORMOND BEACH                       1984          OWNED
75 N. NOVA ROAD
ORMOND BEACH, FL 32174


     All leases are anticipated to renew upon their expiration.

                                       21

<PAGE>

     The Company uses a data processing service located in Orlando,  Florida for
record keeping activities.  The data processor  specializes in servicing savings
associations.  The  Company  has used  this  company  since  1969 with a current
contract  that  expires  in 2000.  All data  processing  equipment  that is used
internally  by the Company is owned by the  Company.  The net book value of such
data  processing  equipment  and related  software as of September  30, 1997 was
$922,000.


ITEM 3.  LEGAL PROCEEDINGS
--------------------------

      There are various claims and lawsuits in which the Company is periodically
involved incident to the Company's  business.  In the opinion of management,  no
material loss is anticipated from any such pending claims or lawsuits.  The most
significant of these lawsuits is described below.

      ROLO V. GENERAL  DEVELOPMENT  CORPORATION,  ET AL., CASE NO. 90-4420.  The
Company and certain  other  entities are  defendants  in a class action  lawsuit
which was filed in May, 1991. The plaintiffs in the litigation are purchasers of
parcels of developed and undeveloped land from General  Development  Corporation
("GDC") who allege that GDC, through fraudulent means,  induced them to buy land
at  inflated  values.  The Company is a  defendant  in this matter  along with a
number of other  financial  institutions,  purchasers  of loans in the secondary
market,  broker dealers, an insurance company and numerous other individuals and
companies.  The  involvement of the Company arises from its purchase from GDC of
land  sales  contracts  originated  by GDC.  The  Company,  along with the other
defendants, filed a motion to dismiss the case which was granted. The plaintiffs
filed an appeal with the Third Circuit Court of Appeals which  remanded the case
to the District Court for reconsideration.  The District Court entered its order
dismissing the case again.

      The plaintiffs  filed a motion  requesting the District Court to amend the
dismissal order to permit the plaintiffs to file another amended complaint.  The
District Court denied the plaintiff's motion. The plaintiffs appealed that order
to the Third  Circuit  and both  sides  were  directed  to submit  supplementary
briefs.  Management  believes  that the  position of the  plaintiffs  is without
merit.  Management also believes that a negative  outcome to the case,  although
unlikely, would not have a material adverse effect on the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
-------------------------------------------------------------

      On  February  10,  1997,   the  Bank   submitted   two  proposals  to  its
stockholders.  Both were  necessary to approve the  Reorganization  by which the
Company became a middle tier stock holding  company for the Bank.  Specifically,
the Bank submitted an Agreement and Plan of  Reorganization  to the stockholders
as well as a proposal to amend its federal  stock  charter to permit the Company
to hold 100% of the  outstanding  shares of the Bank. Both of the proposals were
approved by the Bank's  stockholders.  The Agreement and Plan of  Reorganization
received  3,845,357 votes in favor,  6,125 votes against and 8,130  abstentions.
The amendment of the federal stock charter  received  3,845,357  votes in favor,
7.775 votes against and 9,756 abstentions.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
-------------------------------------------------------------------------------

      The Company's  common stock trades on the NASDAQ National Market under the
symbol HARB. The  approximate  number of  shareholders  of record and beneficial
shareholders  of the common  stock at December 8, 1997 was 2,445,  some of which
are street name holders.

      The Company paid $1.35 in cash  dividends  per share for the twelve months
ended in fiscal 1997.  Payments were $0.30 in the first quarter and $0.35 in the
second through fourth quarters.  The Company  currently  expects that comparable
cash dividends will continue to be paid in the future.

      On December 8, 1997 the closing sales price of the Company's  common stock
was $66.75 per share. The following table sets forth the price range of the high
and low closing  sales price per share of common stock as reported by the NASDAQ
stock market for the four quarters of fiscal year 1997.

                                       22

<PAGE>

                                   FISCAL 1997
                                            Low $                High $
                                            -----                ------
First Quarter.......................        29.50                 36.25
Second Quarter .....................        33.50                 39.00
Third Quarter.......................        35.00                 46.00
Fourth Quarter......................        54.00                59.375


ITEM 6. SELECTED FINANCIAL DATA.
--------------------------------

      The information  contained in the table captioned  "Selected  Consolidated
Financial  Data" in the  Annual  Report on pages 2-4 is  incorporated  herein by
reference.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
--------------------------------------------------------------------------------

      The  information   contained  in  the  section   captioned   "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  on
pages 5 through 15 in the Annual Report is incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

      The Company's  consolidated financial statements listed in Item 14 herein,
together  with the report  thereon by KPMG Peat  Marwick  LLP,  are found in the
Annual Report on pages 16 through 47 and incorporated herein by reference.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.
--------------------------------------------------------------------------------

      Not applicable.



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
------------------------------------------------------------

      The  information   contained  under  the  sections  captioned  "Beneficial
Ownership of Common Stock" and  "Management of the Bank" in the Proxy  Statement
of Harbor Florida Bancorp,  Inc. (the "Proxy  Statement") to be filed as Exhibit
99.3 to the  Registration  Statement on Form S-1 of Harbor  Florida  Bancshares,
Inc. pursuant to General Instruction G.(3) is incorporated herein by reference.


ITEM 11.  EXECUTIVE COMPENSATION.
---------------------------------

      The information  contained under the section captioned  "Management of the
Bank" in the Proxy Statement to be filed pursuant to General  Instruction  G.(3)
is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
-------------------------------------------------------------------------

   (a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

   Information  required by this item is incorporated herein by reference to the
   sections  captioned  "Voting  Securities" and  "Beneficial  Ownership" in the
   Proxy Statement to be filed pursuant to General Instruction G.(3).

                                       23

<PAGE>

   (b)  SECURITY OWNERSHIP OF MANAGEMENT

   Information  required by this item is incorporated herein by reference to the
   section captioned  "Beneficial  Ownership" in the Proxy Statement to be filed
   pursuant to General Instruction G.(3).

   (c)  CHANGES IN CONTROL

   Management of the Company knows of no  arrangements,  including any pledge by
   any persons of  securities  of the Company,  the operation of which may, at a
   subsequent date, result in a change in control of the Registrant.


ITEM 13.  CERTAIN RELATIONS AND RELATED TRANSACTIONS
----------------------------------------------------

      The information  required by this item is incorporated herein by reference
to the sections captioned "Voting Securities",  "Beneficial  Ownership of Common
Stock"  and  "Management  of the  Bank --  Certain  Transactions"  in the  Proxy
Statement to be filed pursuant to General Instruction G.(3).


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
---------------------------------------------------------------------------

   (a)             Documents filed as a part of this Report:

   (1) The Consolidated  Financial Statements of the Registrant are attached and
are listed below:

                                                       Pages in Annual
                                                           Report
   Independent Auditors' Report                              16
   Consolidated Statements of Financial Condition            17
   Consolidated Statements of Earnings                       18
   Consolidated Statements of Stockholders' Equity           19
   Consolidated Statements of Cash Flows                   20 - 21
   Notes to Consolidated Financial Statements              22 - 47

   (2) The  Consolidated  Financial  Statement  Schedules of the  Registrant  as
   required to be filed in this Report are either not applicable or are included
   elsewhere in this Report.

(3) Exhibit Index

      The  exhibits   listed  below  are  included   with  this  Report  or  are
incorporated  herein by reference to the identified  document  previously  filed
with the Securities and Exchange Commission as set forth parenthetically.

   3(i)            Certificate of Incorporation  of Registrant  (Exhibit 3(a) to
                   Registration Statement on Form S-4 filed December 20, 1996)

   3(ii)           Bylaws of Registrant. (Exhibit 3(b) to Registration Statement
                   on Form S-4 filed December 20, 1996)

   10(i)           Employment contract with Michael J. Brown, Sr. (Exhibit 10(a)
                   to the Registration Statement on Form S-4 filed December 20,
                   1996)

   10(ii)          Recognition and Retention Plan and Trust Agreement (Exhibit
                   10(d) to the Registration Statement on Form S-4 filed 
                   December 20, 1996)

                                       24

<PAGE>

   10(iii)         Outside Directors' Recognition and Retention Plan and Trust
                   Agreement (Exhibit 10(e) to the Registration Statement on 
                   Form S-4 filed December 20, 1996)

   10(iv)          1994 Incentive Stock Option Plan (Exhibit 10(b) to the 
                   Registration Statement on Form S-4 filed December 20, 1996)

   10(v)           1994 Stock Option Plan for Outside Directors (Exhibit 10(c) 
                   to the Registration Statement on Form S-4 filed December 20,
                   1996)

   10(vi)          Harbor Federal Savings Bank Non-Employee Directors' 
                   Retirement Plan (Exhibit 10(vi) to Form 10-Q for the quarter
                   ended June 30, 1997 filed August 11, 1997)

   10(vii)         Unfunded Deferred Compensation Plan for Directors (Exhibit 
                   10(vii) to Form 10-Q for the quarter ended June 30, 1997, 
                   filed August 11, 1997)

   10(viii)        Management Incentive Compensation Plan for fiscal year ending
                   September 30, 1997 (Exhibit 10(xiii) to Form 10-Q for the 
                   quarter ended June 30, 1997 filed August 11, 1997)

   21              Subsidiaries of the Registrant

   99              Consolidated Financial Statements of the Registrant (Annual 
                   Report to Stockholders for fiscal year September 30, 1996)

(b)   Reports on Form 8-K

      None

                                       25

<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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 FLORIDA BANCORP, INC.

                                                     (Registrant)



Dated: December 19, 1997                    By:___________/s/________________
                                            Michael J. Brown, Sr.
                                            President and Chief Executive
                                            Officer and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the date indicated.


________/s/_______________                      December 19, 1997
Michael J. Brown, Sr.
President, Chief Executive
Officer and Director


________/s/_______________                      December 19, 1997
Don W. Bebber
Senior Vice President, Finance

________/s/_______________                      December 19, 1997
Bruce R. Abernethy, Sr., Director


________/s/_______________                      December 19, 1997
Richard K. Davis, Director


________/s/_______________                      December 19, 1997
Edward G. Enns, Director


________/s/_______________                      December 19, 1997
Frank H. Fee, III, Director


________/s/_______________                      December 19, 1997
Richard B. Hellstrom, Director


________/s/_______________                      December 19, 1997
Richard N. Bird, Director