March 29, 2013 Dear Shareholder:
The banking industry has continued to improve and so have Harbor Bankshares Corporation (The Corporation) and its primary subsidiary, The Harbor Bank of Maryland (The Bank). In fact, The Bank celebrated 30 years in September 2012, while the holding company, Harbor Bankshares Corporation, formed in September 1992, marked its 20th anniversary. Even more significant, five other dedicated directors listed below have joined me in serving during the entire life span of the organization making invaluable contributions:
· Louis J. Grasmick
|· John Paterakis|
|· Delores G. Kelley||· George F. Vaeth, Jr.|
|· Erich W. March|
Our work in 2012 resulted in other worthy accomplishments. The Corporation continues to achieve growth. Assets grew 3.6% to $249.8 million up from $241.1 million as of December 31, 2011. The Bank’s capital level exceeded 8% of assets, which is above the minimum capital requirement (5%) to be considered well capitalized. This is a key achievement for the Bank because it reflects, in part, the financial soundness of the organization. Although earnings were down, and increased regulatory oversight remains an industry concern, prosperity is anticipated in the near future.
As two of the leading U.S. Treasury Department’s certified Community Development Financial Institutions (CDFIs) in our market, both The Corporation and The Bank maintain a commitment to development in the distressed communities of the Baltimore-Washington metropolitan area. The CDFI Fund’s Bank Enterprise Award Program continues to recognize and propel our excellence in that mission with consecutive awards in 2010, 2011, and 2012 totaling over $1.4MM in income. This makes our institution and the market we serve stronger and poised for growth in 2013 and beyond.
There is great optimism as the organization has established itself as a prospering and innovative financial institution primarily serving the urban community. Its significance can be seen by its being the first financial institution in some of the most promising “new” areas, including:
· University of Maryland
|· Canton's emerging technology-focused community|
· Inner harbor East
· Science & Technology Park at Johns Hopkins
Innovation can be seen via the activities with New Market Tax Credits’ use of $141 million to leverage over $500 million in urban development. Having survived the great recession, we have grown stronger. As the economy continues to improve, Harbor Bankshares Corporation and The Harbor Bank of Maryland are well-positioned to prosper. Accordingly, we will continue to develop products and services that best address the needs of our market and provide the best opportunities for attractive returns to our shareholders.
Thank you for your continued support.
Sincerely,Joseph Haskins, Jr. Chairman, President & CEO