BFC FINANCIAL CORP, 10-K, 1996-04-01

BFC FINANCIAL CORP
10-K, 1996-04-01
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Fiscal Year Ended Commission File Number
December 31, 1995 0-9811
- ------------------------- ----------------------

BFC FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Florida 59-2022148
- ----------------------- ---------------------------------------
(State of Organization) (I.R.S. Employer Identification Number)

1750 E. Sunrise Boulevard
Ft. Lauderdale, Florida 33304
- ------------------------- --------
(Address of Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (954) 760-5200
Securities registered pursuant to Section 12(b) of the Act:

Common Stock $.01 par Value NONE
- --------------------------- --------------------------------------
(Title of Class) (Name of Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

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 amendments to
this form 10-K. [X]

State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant: As of March 22, 1996, $6,776,000

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:

Common stock of $.01 par value, 2,305,682 shares outstanding.

Documents Incorporated by Reference in Part IV of this Form 10-K:

Proxy Statement - Prospectus dated June 20, 1980; Annual Report on Form 10-K for
the year ended December 31, 1987 of BFC Financial Corporation; Annual Report on
Form 10-K for the year ended December 31, 1995 of BankAtlantic Bancorp, Inc.

<PAGE>

PART I

ITEM 1. BUSINESS

General Description of Business

BFC Financial Corporation is a savings bank holding company owning, at December
31, 1995, approximately 46% of BankAtlantic Bancorp, Inc. ("BBC"). BFC Financial
Corporation and its subsidiaries are collectively identified herein as the
"Registrant", "BFC" or the "Company". BBC was formed in April 1994 under the
laws of the State of Florida and is the holding company for BankAtlantic, A
Federal Savings Bank ("BankAtlantic"). On July 13, 1994 BankAtlantic consummated
a reorganization into a holding company structure and BBC became a unitary
savings bank holding company. The reorganization resulted in BankAtlantic
becoming a wholly-owned subsidiary of BBC and in BFC becoming a shareholder of
BBC on the same proportionate basis as the Company's prior ownership in
BankAtlantic. In February 1996, shareholders of BBC approved a proposal to
create a new class of non-voting common stock designated as Class A Common
Stock. BBC's existing common stock was redesignated Class B Common Stock. Class
A Common Stock is entitled to receive cash dividends equal to at least 110% of
any cash dividends declared and paid on the Class B Common Stock. In March 1996,
BBC sold 1,150,000 shares of Class A Common Stock in a public offering. BFC
holds no shares of the newly issued Class A Common Stock.

The Company acquired control of BankAtlantic in 1987 for a total investment of
approximately $43 million. During the period 1987 through June 1993, BFC
increased its ownership in BankAtlantic and BankAtlantic was consolidated in the
Company's financial statements from October 1987 through November 1993. During
November 1993, a public offering of 3,234,375 million shares of BankAtlantic
common stock at a price of $8.64 per common share was consummated. Of the shares
sold, 2,187,500 shares were sold by BFC Financial Corporation. Net proceeds to
BFC Financial Corporation from the sale amounted to approximately $17.7 million.
Upon the sale of the BankAtlantic shares, BFC Financial Corporation's ownership
of BankAtlantic decreased from 77.83% to 48.17%. (Where applicable, all BBC
share and per share amounts have been adjusted for the May 1993 15% stock
dividend, and the June 1995 and January 1996 five for four common share stock
splits effected in the form of 25% stock dividends.) With the Company's
ownership position less than 50%, BankAtlantic was no longer consolidated in the
Company's financial statements. BankAtlantic represented approximately 97% of
the Company's consolidated assets when it was consolidated with the Company. Now
based on the equity method of accounting for the Company's investment in BBC,
the investment represents approximately 54% of the Company's consolidated
assets.

As reported by an independent statistical reporting service, BankAtlantic is
currently the largest independent financial institution headquartered in Broward
County, Florida and third in size among all savings institutions headquartered
in the State of Florida, based on consolidated assets at September 30, 1995, the
most recent date utilized by such reporting services. BankAtlantic is regulated
and examined by the OTS and the Federal Deposit Insurance Corporation ("FDIC")
and its deposit accounts are insured up to applicable limits by them.

In addition to its investment in BankAtlantic, the Company owns and manages real
estate. Since its inception in 1980, and prior to the acquisition of control of
BankAtlantic, the Company's primary business was the organization, sale and
management of real estate investment programs. Subsidiaries of the Company
continue to serve as the corporate general partners of two public limited
partnerships which file periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Subsidiaries of the Company also serve as corporate general partners of a
number of private limited partnerships formed in prior years. Effective as of
December 31, 1987, the Company ceased the organization and sale of new real
estate investment programs, but continues to manage the real estate assets owned
by its existing programs as well as real estate and mortgages held by the
Company.

During 1989, the Company exchanged (the "1989 Exchange") approximately $30
million of its subordinated unsecured debentures for all of the assets and
liabilities of three affiliated limited partnerships, I.R.E. Real Estate Fund,
Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23 and I.R.E. Real
Estate Fund, Ltd. - Series 24. The major assets and liabilities of these
partnerships consisted principally of fourteen commercial real estate properties
(of which one is still owned by the Company) and related non-recourse mortgage
debt.

During 1991, the Company exchanged (the "1991 Exchange") approximately $15.4
million of its subordinated unsecured debentures for all of the assets and
liabilities of three affiliated limited partnerships, I.R.E. Real Estate Fund,
Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. - Series 27 and I.R.E. Real
Estate Income Fund, Ltd. The major assets and liabilities of these partnerships
consisted principally of eight commercial real estate properties (of which one
is still owned by the Company) and related non-recourse mortgage debt.

Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange offers. Settlement of the litigation against the Company
that arose in connection with the 1991 Exchange was approved by the District
Court in May 1994. The settlements required BFC Financial Corporation to
establish a settlement fund equal to 81.359% of the original face amount of the
debentures distributed in connection with the 1991 Exchange to the 1991 Exchange
Class Members. Settlement of the litigation brought against the Company in
connection with the 1989 Exchange by the plaintiffs who either voted against the
transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. The settlement required BFC to establish a
settlement fund equal to 56% of the original face amount of the debentures
issued to the class members in the Purcell Litigation (the Purcell Class").
Settlement of the litigation brought against the Company in connection with the
1989 Exchange by the plaintiffs who voted yes (the "Meador Litigation") was
approved by the District Court in December 1994. The settlement agreement in the
Meador litigation contains the same financial terms as those in the description
of the settlement of the Purcell Litigation. As discussed above, BFC sold
2,187,500 BBC shares in November 1993. The proceeds from such sale provided BFC
with the cash resources required by these settlements.

As indicated above, during 1987, the Company acquired a controlling interest in
BankAtlantic and became a savings bank holding company. Although the Company's
current ownership in BBC is less than 50%, the Company's principal business is
still the ownership of the savings bank through BBC. A description of BBC and
BankAtlantic is incorporated herein by reference to the Annual Report on Form
10-K of BBC for the year ended December 31, 1995.

Holding Company Regulation

As the holder of approximately 46% of BBC's Common Stock, BFC is a
non-diversified savings and loan holding company within the meaning of the
National Housing Act of 1934, as amended. As such, BFC is registered with and is
subject to examination and supervision by the OTS as well as subject to certain
reporting requirements. As an FDIC-insured subsidiary of a savings bank holding
company, BankAtlantic is subject to certain restrictions in dealing with BFC and
with persons affiliated with BFC.

Management of BBC has been considering converting BankAtlantic's charter to that
of a commercial bank. If BankAtlantic's charter were to be converted, the impact
to BankAtlantic's statement of operation under current regulations would be a
charge to income of approximately $3.2 million relating to the recapture of the
bad debt deduction for Federal income tax purposes. Management of BBC is not
presently pursuing a conversion of BankAtlantic's charter since it is awaiting
the outcome of the legislative proposals relating to the disparity of the
BIF/SAIF premiums, which include a consideration of the treatment of the
recapture of the bad debt deduction as well as the possible consolidation of
bank and thrift charters. In the event that BankAtlantic's charter is converted,
BFC would be required to register as a bank holding company under the Bank
Holding Company Act. As a consequence of such registration, BFC might be
required to divest itself of non-bank activities over a divestiture period
established by applicable regulators.

Dividend Restrictions

Prior to 1993, BankAtlantic had not paid any regular dividend on its common
stock. In August 1993, BankAtlantic declared a cash dividend payable to its
common stockholders and has paid a regular quarterly dividend since that time.
Subject to the results of operations and regulatory capital requirements,
management of BankAtlantic has stated that it will seek to declare regular
quarterly cash dividends on its common stock.

At the present time BBC has no significant operations other than those related
to its ownership of BankAtlantic and does not require funds other than to pay
certain operating expenses and interest expense on $21.0 million of debentures.
It is anticipated that funds for payment of these expenses will be obtained from
BankAtlantic. Additionally, the ultimate repayment by BBC of its outstanding
Debentures may be dependent upon dividends from BankAtlantic, refinancing of the
debt or raising additional equity capital by BBC. BBC has paid a regular
quarterly dividend since its formation and management of BBC has stated its
intention to pay regular quarterly cash dividends on its common stock. In March
1996, BBC issued 1,150,000 shares of Class A Common Stock which carry a dividend
preference over the BBC Class B Common Stock. The dividend paid on the Class A
Common Stock must be a least equal to 110% of the dividend paid on the Class B
Common Stock. BFC holds no shares of the Class A Common Stock. On March 21,
1996, BBC publicly announced that it had declared a dividend of $0.0506 and
$0.044 per share payable to the record holders of the Class A Common Stock and
Class B Common Stock, respectively. Funds utilized by BBC for these dividend and
interest payments are dependent upon BankAtlantic's ability to pay dividends to
BBC.

Current regulations applicable to the payment of cash dividends by savings
institutions impose limits on capital distributions based on an institution's
regulatory capital levels and net income. An institution that meets all of its
fully phased-in capital requirements (both before and after giving effect to the
distribution) and is not in need of more than normal supervision would be a
"Tier 1 association". Upon prior notice to, and non-objection by, the OTS, a
Tier 1 association may make capital distributions during a calendar year up to
the greater of (1) 100% of net income for the current calendar year plus 50% of
its capital surplus or (ii) 75% of its net income over the most recent four
quarters. Any additional capital distributions would require prior regulatory
approval.

An institution that meets its minimum regulatory capital requirements but does
not meet its fully phased-in capital requirements would be a "Tier 2
association," which may make capital distributions of between 25% and 75% of its
net income over the most recent four-quarter period, depending on the
institution's risk-based capital level. A "Tier 3 association" is defined as an
institution that does not meet all of its minimum regulatory capital
requirements and therefore may not make any capital distributions without the
prior approval of the OTS. Savings institutions must provide the OTS with at
least 30 days written notice before making any capital distribution. All capital
distributions are subject to the OTS' right to object to a distribution on
safety and soundness grounds.

BBC or its predecessor also declared a 15% stock dividend in May 1993 and five
for four stock splits effected in the form of 25% stock dividends in July 1995
and February 1996.

Real Estate and Other Activities

As discussed in "General Description of Business", the Company prior to its
investment in BankAtlantic had been primarily engaged in the real estate
business. From 1981 through 1987, eleven public real estate partnerships were
formed for which the Company provided property management for fees, and
administrative and accounting services for cost reimbursements. As discussed
above, in March 1989, February 1991 and June 1991, the assets and liabilities of
six partnerships were exchanged for subordinated debentures of the Company. The
Company has liquidated significantly all of the assets acquired in the Exchanges
and at December 31, 1995 only two of the twenty-two properties acquired in the
1989 and 1991 Exchanges remain. Three other partnerships have been liquidated.

In addition to its investment in BBC and unrelated to the public limited
partnership programs and its property management activities, the Company holds
mortgage notes receivable of approximately $5.2 million which were received in
connection with the sale of properties previously owned by the Company.

In 1994, the Company agreed to participate in certain real estate opportunities
with John E. Abdo, Vice Chairman of the Board, and certain of his affiliates
(the "Abdo Group"). Under the arrangement, the Company and the Abdo Group will
share equally in profits after any profit participation due to any other
partners in the ventures and after a priority return in favor of the Company. On
such basis, the Company has acquired interests in three properties. In June
1994, an entity controlled by the Company acquired from an independent third
party 23.7 acres of unimproved land known as the "Cypress Creek" property
located in Fort Lauderdale, Florida. In March 1996, the Cypress Creek property
was sold to an unaffiliated third party for approximately $9.7 million. In
December 1994, an entity controlled by the Company acquired from an unaffiliated
seller 60.1 acres of unimproved land known as the "Centerport" property in
Pompano Beach, Florida. A previously disclosed agreement to sell the Centerport
property was terminated during the third quarter of 1995 in accordance with its
terms and the property now serves as partial collateral for an $8.08 million
loan to the Company from an unaffiliated lender. Lastly, in May 1995, an entity
controlled by the Company contracted to acquire the Regency Golf and Beach Club
at Palm-Aire in Pompano Beach, Florida (the "Regency"). The Regency is an
existing rental apartment complex having 288 apartment suites. The acquisition
is expected to close during September 1996 and it is currently anticipated that
the Company will seek other partners in connection with the acquisition of the
property.

Federal and State Taxation

The Omnibus Budget Reconciliation Act of 1993 (the "Omnibus Act") was passed by
Congress and signed into law by the President during August 1993. The Omnibus
Act increased the maximum federal income tax rate applicable to BFC from 34% to
35% retroactive to January 1, 1993. BBC may also be impacted by other provisions
of the Omnibus Act either directly as a consequence of additional provisions
applicable to it or indirectly as a consequence of their impact on the economy
in general.

The State of Florida imposes a corporate income tax at the rate of 5.5% on
taxable income as determined for Florida income tax purposes. Taxable income for
this purpose is based on federal taxable income in excess of $5,000 as adjusted
by certain items.

Employees

At December 31, 1995, BFC Financial Corporation employed 7 full-time and 1
part-time employee. Management believes that its relations with its employees
are satisfactory. The employee benefits offered by the Company are considered by
management to be generally competitive with employee benefits provided by other
major employers in Florida. The Company's employees are not represented by any
collective bargaining group.

ITEM 2. Properties

BFC maintains its offices in approximately 1,500 square feet located in a
building owned by BankAtlantic. The space is leased on terms no less favorable
than could be obtained from an independent third party.

The properties listed below are not utilized by the Company but are held by the
Company as investments. All are zoned for their current uses. Lease terms do not
include options.

Land Approximately subject to an
Springfield, Massachusetts 5 acres estate for
years
expiring in
2006

Land 12.73 Acres owned
Birmingham, Alabama

Land (Cypress Creek) * 23.7 acres owned
Fort Lauderdale, Florida

Land (Centerport) 60.1 acres owned
Pompano Beach, Florida

Burlington Manufacturers 277,965 square owned
Outlet Center feet leasable
Burlington, NC

Delray Industrial Park 134,147 square owned
Delray Beach, Florida feet leasable

* Property was sold in March 1996.

ITEM 3. LEGAL PROCEEDINGS

The following is a description of certain lawsuits to which the Company is a
party.

Timothy J. Chelling vs. BFC Financial Corporation, Alan B. Levan, I.R.E.
Advisors Series 21, Corp. and First Equity Corporation, U.S. District Court,
Southern District of Florida Case No. 89-1850-Civ-Ryscamp. John D. Purcell and
Debra A. Purcell vs. BFC Financial Corporation, Alan B. Levan, Scott Kranz,
Frank Grieco, I.R.E. Advisors Series 23, Corp. and First Equity Corporation,
U.S. District Court, Southern District of Florida, Case No. 89-1284-Civ-Ryskamp.
William A. Smith and Else M. Smith vs. BFC Financial Corporation, Alan B. Levan
and I.R.E. Advisors Series 24, Corp. and First Equity Corporation, U.S. District
Court, Southern District of Florida, Case No. 89-1605-Civ-Ryscamp.

These actions were filed by the plaintiffs as class actions during September
1989, June 1989 and August 1989, respectively. The actions arose out of an
Exchange Offer made by the Company to the limited partners of I.R.E. Real Estate
Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23, and I.R.E.
Real Estate Fund, Ltd. - Series 24. The plaintiffs were limited partners of the
above named partnerships who did not consent to the Exchange Offer. The Exchange
Offer was made through the solicitation of consents pursuant to a Proxy
Statement/Prospectus dated February 14, 1989 and was approved by the holders of
a majority of the limited partnership interests of each of the Partnerships in
March 1989. Messrs. Levan, Grieco and Kranz served as individual general
partners of each of the Partnerships, and Mr. Levan is the President and a
director of the Company.

The plaintiffs alleged that the Proxy Statement/Prospectus contained material
misstatements and omissions, that defendants violated the federal securities
laws in connection with the offer and Exchange, that the Exchange breached the
respective Limited Partners Agreement and that the defendants violated the
Florida Limited Partnership statute in effectuating the Exchange. The complaint
also alleged that the defendant general partners violated their fiduciary duties
to the plaintiffs.

In a memorandum opinion and order dated December 17, 1991, the Court granted, in
part, the defendant's motion for summary judgment, ruling that the Exchange did
not violate the partnership agreements or the Florida partnership statute. In
July 1992, the Court granted an additional summary judgment in favor of the
defendants and dismissed the plaintiffs' claims for breach of fiduciary duty.

Subsequently, the court entered summary judgment in favor of the defendants on
all claims of misrepresentations or omissions except with respect to the
statement in the Proxy Statement/Prospectus to the effect that BFC, Alan Levan
and the Managing General Partners believed the Exchange transaction was fair.
That issue was tried in December 1992, and the jury returned a verdict in favor
of the Plaintiffs in the amount of $8 million but extinguished approximately $16
million of debentures held by the plaintiffs. Both parties appealed.

In June 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately fifty-six percent (56%) of the face
amount of the outstanding debentures held by class members and the debentures
will be canceled pursuant to the procedures outlined in the agreement. Fifty
percent (50%) of the settlement amount, plus interest thereon at 7%, can be
deferred, at the option of the Company until December 1996. On September 12,
1994, the Court approved the settlement, vacated, set aside, dissolved and
nullified the earlier judgment entered following the jury verdict and entered
judgment dismissing the action with prejudice. The American Broadcasting
Companies, Inc. and William H. Wilson, who attempted and were both denied the
right to intervene in this action, appealed the Court's judgment as well as the
Court's order denying their right to intervene.

Alan B. Levan and BFC Financial Corporation v. Capital Cities/ABC, Inc. and
William H. Wilson, in the United States District Court for the Southern District
of Florida, Case No. 92-325-Civ-Atkins. On November 29, 1991, The ABC television
program 20/20 broadcast a story about Alan B. Levan and BFC which purportedly
depicted some securities transactions in which they were involved. The story
contained numerous false and defamatory statements about the Company and Mr.
Levan and, February 7, 1992, a defamation lawsuit was filed on behalf of the
Company and Mr. Levan against Capital Cities/ABC, Inc. and William H. Wilson,
the producer of the broadcast.

Mark Gallegos, et. Al., (formerly Cheryl and Wayne Hubbell, et al.) vs. I.R.E.
Advisors Series 26, Corp. et al., in the California Superior Court in Los
Angeles, California, Case No. BC049913. This action was filed as a class action
during March 1992 on behalf of all purchasers of I.R.E. Real Estate Fund, Ltd. -
Series 25, I.R.E. Real Estate Fund, Ltd. - Series 26, I.R.E. Real Estate Fund,
Ltd. - Series 27, I.R.E. Real Estate Growth Fund, Ltd. - Series 28 and I.R.E.
Real Estate Income Fund, Ltd. against the managing and individual general
partners of the above named partnerships and the officers and directors of those
entities. The plaintiffs alleged that the offering materials distributed in
connection with the promotions of these limited partnerships contained
misrepresentations of material fact and that the defendants misrepresented and
concealed material facts from the plaintiffs during the time the partnerships
were in existence. The complaint asserts two causes of action for fraud, one of
which is based on a claim for intentional misrepresentation and concealment and
one of which is based on a claim of negligent misrepresentation. The complaint
also contains a claim for breach of fiduciary duty. The complaint seeks
unspecified compensatory and punitive damages, attorneys' fees and costs.
Plaintiffs filed a third amended complaint which defendants answered in April
1993. In May 1993, a motion to dismiss was filed by the plaintiffs to dismiss
all claims relating to I.R.E. Real Estate Fund, Ltd.-Series 25, I.R.E. Real
Estate Fund, Ltd.-Series 27 and I.R.E. Real Estate Income Fund, Ltd., whether
exchange related or not only leaving claims against I.R.E. Real Estate Fund,
Ltd. - Series 26 and I.R.E. Growth Fund, Ltd. - Series 28. This motion was
approved by the Court in September 1994.

Kugler, et.al., (formerly Martha Hess, et. al.), v. I.R.E. Real Estate Income
Fund, et al. In the Appellate Court of Illinois, First District, and related
cases, App. No. 90-107. On or about May 20, 1988, an individual investor filed
the above referenced action against two individual defendants, who allegedly
sold securities without being registered as securities brokers in Illinois, two
corporations organized and controlled by such individuals, and against
approximately sixteen publicly offered limited partnerships, including two
partnerships that the Company acquired the assets and liabilities of in the 1991
Exchange transaction, (the "predecessor partnerships") interests in which were
sold by the individual and corporate broker defendants.

Plaintiff alleged that the sale of limited partnership interests in the
predecessor partnerships (among other affiliated and unaffiliated partnerships)
by persons and corporations not registered as securities brokers under the
Illinois Securities Act constitutes a violation of such Act, and that the
Plaintiff, and all others who purchased securities through the individual or
corporate defendants, should be permitted to rescind their purchases and recover
their principal plus 10% interest per year, less any amounts received. The
predecessor partnerships' securities were properly registered in Illinois and
the basis of the action relates solely to the alleged failure of the Broker
Dealer to be properly registered.

In November 1988, Plaintiff's class action claims were dismissed by the Court.
Amended complaints, including additional named plaintiffs, were filed subsequent
to the dismissal of the class action claims. Motions to dismiss were filed on
behalf of the predecessor partnerships and the other co-defendants. In December
1989, the Court ordered that the predecessor partnerships and the other
co-defendants rescind sales of any plaintiff that brought suit within three
years of the date of sale. Under the Court's order of December 1989, one of the
predecessor partnerships rescinded sales of $41,500 of units.

Plaintiffs appealed, among other items, the Court's order with respect to
plaintiffs that brought suit after three years of the date of sale. In February
1993, the Appellate court ruled that the statute of limitations was tolled
during the pendency of the class action claims. Plaintiff's claims are now
pending in Circuit Court. In March 1994, plaintiffs filed a purported Class
Action Amendment seeking to consolidate and amend their claims. The amendment
sought to continue the claims against the predecessor partnerships along with
their general partners and sought to add BFC as a defendant. In August 1995, the
Court granted plaintiffs' motion to consolidate and granted plaintiffs' leave to
file an amended complaint. According to the Court's ruling, the consolidated
class action may include the claims of all individuals who joined the individual
actions and the claims of all persons who bought relevant partnership interests
but who had not previously joined the prior actions. This ruling expanded the
number of potential claims. In September 1995, plaintiffs filed a consolidated
class action amendment. In October 1995, an answer was filed admitting certain
allegations but denying that plaintiffs had demonstrated entitlement to recovery
under the Illinois Securities Act. In December 1995, plaintiffs filed a motion
for summary judgment arguing that the Court already has ruled against defendants
on the only outstanding issue, whether class members gave the required notice
within six months of the time they learned of their rights. A hearing for
summary judgment was held in March 1996. The Court has indicated that it will
rule on the summary judgment motion during April 1996.

Approximately $2 million of limited partnership interests in the predecessor
partnerships were sold and limited partners holding approximately $1.1 million
of limited partnership interests have filed an action for recision. Under the
most recent court ruling, if recision was made to all limited partners that
purchased limited partnership interests, refunds, at March 31, 1996, (including
interest payments thereon but less payments already received) would amount to
approximately $3.6 million plus attorney's fees. A liability for $4.0 million is
included in the accompanying financial statements.

Short vs. Eden United, Inc., et al. in the Marion County Superior Court, State
of Indiana. Civil Division Case No. S382 0011. In January, 1982, an individual
filed suit against a subsidiary of the Company, Eden United, Inc. ("Eden"),
seeking return of an earnest money deposit held by an escrow agent and
liquidated damages in the amount of $85,000 as a result of the failure to close
the purchase and sale of an apartment complex in Indianapolis, Indiana. Eden was
to have purchased the apartment complex from a third party and then immediately
resell it to plaintiff. The third party was named as a co-defendant and such
third party also filed a cross claim against Eden, seeking to recover the
earnest money deposit. In September 1983, Plaintiff filed an amended complaint,
naming additional subsidiaries of the Company and certain officers of the
Company as additional defendants. The amended complaint sought unspecified
damages based upon alleged fraud and interference with contract. The case went
to trial during October 1988. On April 26, 1989, the Court entered a judgment
against Eden, the Company and certain additional subsidiaries of the Company
jointly and severally in the sum of $85,000 for liquidated damages with interest
accruing at 8% per annum from September 1, 1981, normal compensatory damages of
$1.00, and punitive damages in the sum of $100,000. The judgment also awarded
the Plaintiff the return of his $85,000 escrow deposit, and awards the third
party $85,000 in damages plus interest accruing from September 14, 1981 against
Eden. The Company has charged an expense for the above amounts. Both Short and
the Company appealed the judgment and in June 1991, the appellate court reversed
the trial court's decision on the issue of compensatory damages, determined that
Short might be entitled to an award of compensatory damages and remanded the
case to the trial court to determine the amount of compensatory damages to be
awarded. A hearing on remand was held on February 3, 1993. On February 25, 1994,
the court on remand awarded plaintiff a judgment in the amount of $85,000 for
liquidated damages for breach of contract jointly and severally from the
subsidiary, the Registrant and certain named affiliates, plus prejudgment
interest of $52,108 through May 1, 1989, plus post-judgment interest of 10% per
annum thereafter until paid. Additionally, plaintiff was awarded a judgment
against the defendants in the amount of $2,570,000 for tortious interference,
plus prejudgment interest of $469,400 through May 1, 1989, plus post-judgment
interest of 10% per annum thereafter until paid. The Company posted a $4.8
million appeal bond and appealed the February 25, 1994 judgment. Such bond was
collateralized by approximately $4.8 million of securities available for sale.
In prior years, the Company had accrued a $4.5 million provision for this
litigation. In July 1995, the Indiana Court of Appeals affirmed conditionally or
remanded in part and reversed in part the decision of the trial court on remand.
The effect of the Court of Appeals opinion was to reduce the damage award to
$1,285,000 from $2,570,000; disallow prejudgment interest, set the date for
computation of postjudgment interest and fix the rate at 8% and require the use
of a discount to compute the present value of the damage award. The reduction of
the damage award will be remanded to the trial court for verification that the
trial court used the same method of damage computation as the Court of Appeals
and for the trial court to determine the present value and enter a new final
judgment. Short has filed for a hearing before the Indiana Supreme Court and in
March 1996 such hearing was denied. Based upon the ruling, preliminary
computations by the Company indicate that the total loss to the Company could be
approximately $500,000 not the $4.5 million dollars previously established as a
provision in connection with this litigation.

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

None.

INCORPORATION BY REFERENCE

Part I - Items 1 through 3 pertaining to BFC's significant subsidiary, BBC is
incorporated herein by reference to the annual report on Form 10-K of
BankAtlantic Bancorp, Inc. for the fiscal year end December 31, 1995.

PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

a) The following table sets forth the high bid and low offer prices on the
NASD OTC Bulletin Board of Registrant's common stock for the last three quarters
in 1994 and 1995, as reported to the Registrant by the National Quotation
Bureau.

Year:
High Low
Quarter Bid Offer
------- ----- -----
1994:
1st Quarter 3.00 2.50
2nd Quarter 2.50 2.00
3rd Quarter 4.00 1.50
4th Quarter 3.75 3.25

1995:
1st Quarter 5.06 3.25
2nd Quarter 6.63 4.63
3rd Quarter 11.25 6.00
4th Quarter 9.00 6.50

b) The approximate number of shareholders of record of common stock as of
March 14, 1996 was 1,300.

c) No dividends have been paid by Registrant since its inception.

There are no restrictions on the payment of dividends by Registrant except that
no dividends may be paid to the holders of any equity securities of the Company
while any deferred interest on the Company's Exchange debentures remains unpaid.
The Company has deferred the interest payments relating to the debentures issued
in both the 1989 Exchange and the 1991 Exchange, amounting to a total of
approximately $2.7 million at December 31, 1995.

As noted in Part I, Item I under "Business - Regulation - Dividend
Restrictions," there are restrictions on the payment of dividends by
BankAtlantic to BBC. The source of funds for payment by BBC of dividends to BFC
is currently dividend payments received by BBC from BankAtlantic.

BFC FINANCIAL CORPORATION AND SUBSIDIARIES
Selected Consolidated Financial Data
(In thousands, except for per share data and percents.)

<CAPTION>
Years Ended December 31,
----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(l) (l) (l)
Revenues ................................ $ 3,123 8,790 5,051 142,236 166,645
Costs and expenses ...................... 7,312 13,917 17,118 131,026 189,230
Earnings (loss) before income tax
expense, cumulative effect of
change in accounting for income
taxes and extraordinary items .......... 4,230 2,913 (1,303) 11,210 (22,585)
Income tax expense (benefit) ............ -- (2,009) -- 9,201 (4,876)
Extraordinary items, net of income
taxes and minority interest ............ 3,702 (f) 22,744 (g) (501)(g) 548 (k) 350 (d)
Net income (loss) ....................... 7,932 27,666 (1,804) 2,557 (17,359)
Income (loss) per common and
common equivalent shares before
extraordinary items .................... 1.90 2.39 (1.18) 0.78 (10.71)
Net income (loss) per common and
common equivalent shares ............... 3.57 13.45 (1.47) 1.10 (10.51)
Income (loss) per common and
common equivalent share
assuming full dilution
before extraordinary items ............. 1.89 2.39 (1.18) 0.78 (10.71)
Net income (loss) per common and
common equivalent share
assuming full dilution ................. 3.54 13.45 (1.47) 1.10 (10.51)
Ratio of earnings to fixed charges (h) . 0.26 0.47 (0.30) (0.09) (0.21)
Dollar deficiency of earnings to
fixed charges (h) ...................... 3,370 4,374 11,796 10,126 10,783

<CAPTION>
December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(l) (l) (l)
<S> <C> <C> <C> <C> <C>
Investment in BankAtlantic
Bancorp, Inc. ("BBC") .................. 52,662 43,768 36,436 42,984 30,301
Loans receivable, net ................... 5,168 4,904 9,179 566,023 739,287
Mortgage-backed securities .............. -- -- -- 486,886 457,038
Securities available for sale ........... 5,105 5,869 20,373 125,047 110,667
Real estate acquired in
debenture exchanges, net (I) ........... 11,072 11,169 18,315 20,330 37,810
Real estate investments ............... 10,211 9,912 -- -- --
Total assets ............................ 96,896 91,291 87,495 1,340,465 1,512,146
Customer deposits ....................... -- -- -- 1,108,115 1,255,573
Advances from Federal Home Loan Bank .... -- -- -- 66,100 37,277
Securities sold under agreements to
repurchase ............................. -- -- -- 21,532 57,132
Capital notes and other
subordinated debentures ................ -- -- -- 7,928 14,856
Exchange debentures, net ................ 3,810 6,616 35,651 38,996 38,818
Mortgages payable and other borrowings .. 27,616 26,618 30,367 32,168 46,748
Deferred interest on the exchange
debentures ............................. 2,722 3,494 12,049 4,985 1,140
Redeemed debenture liability ............ 15,964 18,395 -- -- --
Redeemable common stock ................. -- -- 5,776 5,776 5,776
Stockholders' equity (deficit) .......... 35,758 26,532 (6,988) (4,916) (7,473)
Book value per share excluding
redeemable common stock ................ n/a n/a (4.11) (2.89) (4.39)
Book value per share including
redeemable common stock ................ 17.39 12.91 (0.59) 0.42 (0.83)
Return on assets (a) ................... 8.5 % 30.8 % (2.1)% 0.2 % (1.0)%
Return on equity excluding
redeemable common stock (a) ........... n/a n/a (51.0)% (30.6)% (556.7)%
Return on equity including
redeemable common stock (a) ........... 26.4 % 327.9 % (237.1)% (99.2)% (195.2)%
Equity to assets ratio excluding
redeemable common stock (a) ........... n/a n/a (5.9)% (0.6)% 0.2 %
Equity to assets ratio including
redeemable common stock (a) ............ 32.3 % 9.4 % 0.9 % (0.2)% 5.0 %

- ----------
<FN>

(a) Ratios were computed using quarterly averages.
(b) Since its inception, the Company has not paid any dividends.
(c) Represents two real estate acquisitions in Broward County, Florida.
(d) Utilization of state net operating loss carryforwards net of minority interest of $208,000.
(e) Gain on early retirement of capital notes, net of applicable income taxes of $340,000
and minority interest of $197,000.
(f) Gain from extinguishment of debt of approximately $460,000, net of income taxes
and gain on settlements of Exchange litigation of approximately $3.2 million, net of income taxes.
(g) Gain on settlements of 1991 and 1989 Exchanges litigation,
net of applicable income taxes of approximately $214,000.
(h) The operations of BBC have been eliminated since there is a dividend
restriction between BBC's primary subsidiary, BankAtlantic, and BBC.
(i) Real estate acquired in debenture exchange, net represents the properties
acquired in the 1989 and 1991 Exchange.
(j) 1992 and 1991 excludes Federal Home Loan Bank stock. Includes interest-bearing deposits
in other banks, and securities purchased under agreement to resell.
(k) Income taxes
(l) Since 1993, BBC is not included in the consolidated amounts as a consequence of the fact that the
Company's ownership position in BBC is less than 50%. BBC is now carried on the Company's
financial statements using the equity method.

</FN>
</TABLE>

<PAGE>

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

General - BFC Financial Corporation ("BFC" or "the Company") became a savings
bank holding company during 1987 by acquiring a controlling interest in
BankAtlantic, A Federal Savings Bank ("BankAtlantic"). On July 13, 1994
BankAtlantic consummated a reorganization into a holding company structure and
BankAtlantic Bancorp, Inc. ("BBC") became a unitary savings bank holding
company. The reorganization resulted in BankAtlantic becoming a wholly-owned
subsidiary of BBC and in BFC becoming a shareholder of BBC on the same
proportionate basis as the Company's prior ownership in BankAtlantic. Any
reference to BBC contained herein for periods prior to the July reorganization
would relate to BankAtlantic. The Company's ownership interest in BBC has been
recorded by the purchase method of accounting. (Where applicable, all BBC share
and per share amounts have been adjusted for the May 1993 15% stock dividend,
and the June 1995 and January 1996 five for four common share stock splits
effected in the form of 25% stock dividends.) During November 1993, in a public
offering, 3,234,375 shares of BankAtlantic common stock were sold. 1,046,875 of
such shares were sold by BankAtlantic and 2,187,500 shares were sold by the
Company. As a consequence of the offering, the Company's ownership of
BankAtlantic was reduced to 48.17%. At December 31, 1995, the Company's
ownership of BBC was 46%. Since 1993, the Company's ownership in BBC has been
carried on the equity method rather than consolidated because the Company's
ownership interest in BBC is less than 50%. For information relating to changes
affecting BBC, see Management's Discussion and Analysis of Financial Condition
and Results of Operations of BBC incorporated herein by reference to BBC's
Annual Report on Form 10-K. See note 2 of notes to consolidated financial
statements for a discussion of the Company's investment in BBC.

In addition to its investment in BBC, the Company owns and manages real estate.
Since its inception in 1980 and prior to the acquisition of control of
BankAtlantic in 1987, the Company's primary business was the organization, sale
and management of real estate investment programs. Effective as of December 31,
1987, the Company ceased the organization and sale of new real estate investment
programs, but continues to own and manage real estate assets. At December 31,
1995, subsidiaries of the Company continue to serve as the corporate general
partners of 2 public limited partnerships which file periodic reports with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended. Subsidiaries of the Company also serve as corporate general partners of
a number of private limited partnerships formed in prior years.

Results of Operations

Net income for the year ended December 31, 1995 was approximately $7.9 million
compared to net income of approximately $27.7 million in 1994 and compared to a
net loss of approximately $1.8 million in 1993. Operations for 1995 included
extraordinary items of $3.2 million, net of income taxes, attributable to an
adjustment related to the settlement of the 1989 and 1991 exchange litigation
and a gain of approximately $460,000, net of income taxes, from extinguishment
of debt. Operations for 1994 included an extraordinary item of approximately
$22.7 million attributable to the gain on the settlement of litigation relating
to the 1989 and 1991 Exchanges. Operations for 1993 included a charge
aggregating $501,000 for the cumulative effect of a change in accounting for
income taxes resulting from the change from APB Opinion 11 to FAS 109.

Equity in earnings of BBC for the year ended December 31, 1995, 1994 and 1993
was approximately $8.4 million, $8.0 million and $10.8 million, respectively.
Exclusive of the Company's ownership of BBC, the Company and its other
subsidiaries generated a net loss in 1995 of approximately $487,000, net income
in 1994 of approximately $19.6 million and a net loss in 1993 of approximately
$12.6 million. As indicated above the 1995 and 1994 operations included
extraordinary gains on the settlement of litigation relating to the 1989 and
1991 Exchange, net of income taxes, of approximately $3.2 million and $22.7
million, respectively. The 1995 operations also included a gain of approximately
$460,000 on extinguishment of debt, net of income taxes. Operations in 1994 also
included a gain on disposition of real estate, net, of approximately $2.8
million and insurance proceeds of $2.5 million associated with the reimbursement
of expenses incurred by the Company in connection with the 1989 and 1991
Exchange. Such expenses were incurred and expensed by the Company in prior
years. Approximately $2.0 million, $5.8 million and $6.0 million of 1995, 1994
and 1993 operations, respectively, related to interest expense on the debentures
issued in the 1989 and 1991 exchanges. Approximately $531,000 of 1994 operations
related to provisions for loss on real estate acquired in the 1991 Exchange.
Operations in 1995 and 1994 included provisions for loss on loans receivables of
approximately $335,000 and $624,000, respectively. Operations in 1993 included a
provision of approximately $4.0 million related to the Short litigation and
approximately $2.2 million in 1994 related to a provision arising in connection
with court decisions in the Hess litigation. (See Item 3. "Legal Proceedings.")
Operations for 1993 included a gain on the sale of 2,187,500 shares of
BankAtlantic common stock as discussed further in note 2 of notes to
consolidated financial statements.

Revenues - The following table shows the components of revenues and the changes
between the years (in thousands):

Increase (Decrease)
1995 1994 1993 1995/1994 1994/1993
---- ---- ---- --------- ---------
Interest on mortgage
notes and related
receivables 451 657 767 (206) (110)
Interest and dividends
on securities available
for sale and escrow
accounts 648 743 299 (95) 444
Dividend on redemption
of BBC preferred
stock 191 -- -- 191 --
Earnings on real estate
operations, net 1,033 1,735 2,617 (702) (882)
Gain on disposition of
real estate, net 206 2,791 -- (2,585) 2,791
Gain on sale of
BankAtlantic common
stock -- -- 1,050 -- (1,050)
Insurance settlement -- 2,500 -- (2,500) 2,500
Other income, net 594 364 318 230 46
----- ----- ----- ------ ------
3,123 8,790 5,051 (5,667) 3,739
===== ===== ===== ====== ======

Interest on mortgage notes and related receivables decreased in 1995 as compared
to the 1994 and 1993 periods primarily due to a reduction in the amount of
mortgage note receivables from affiliated limited partnerships.

Interest and dividends on other securities available for sale and escrow
accounts decreased in 1995 as compared with the 1994 period primarily due to
decreases in investable funds and escrow funds related with the settlement of
litigation. Interest and dividends on other investment securities increased in
1994 as compared to the 1993 period primarily due to interest earned on funds
held in escrow in connection with the settlement of litigation and an increase
in the yields of other investments.

In October 1995, BankAtlantic redeemed all of its preferred stock at $25.00 per
share. BFC's aggregate purchase price relating to its ownership of the preferred
stock was approximately $143,000 and all such preferred stock was redeemed for
approximately $334,000. Therefore, BFC reported a gain on redemption of BBC
preferred stock of approximately $191,000.

Earnings on real estate operations include earnings from the 1989 and 1991
Exchange properties, properties acquired in 1994 by subsidiaries of BFC and BFC
deferred profit recognition on sales of real estate by the Company and its
subsidiaries other than BBC (excluding the 1989 and 1991 Exchange properties).
Earnings on real estate operations for the years ended December 31, 1995, 1994
and 1993 amounted to approximately $1.0 million, $1.7 million and $2.6 million,
respectively. The 1995 decline in earnings on real estate operations, net, as
compared to the 1994 and 1993 periods was primarily due to the sale and
disposition of properties in 1994.

The 1995 gain on disposition of real estate, net of approximately $206,000 was
attributable to the sale of a property located in Galesburg, Illinois. The 1994
gain on disposition of real estate, net of approximately $2.8 million was
attributable to the gain of approximately $2.7 million on the sale of three
properties acquired in the 1991 Exchange and the net gain of approximately
$92,000 on the foreclosure of two properties acquired in the 1989 Exchange.
Prior to 1994, the net gain (loss) on disposition of real estate acquired in the
1989 and 1991 Exchange transactions was deferred.

In connection with the 1993 sale of 2,187,500 shares of BankAtlantic common
stock owned by the Company, net proceeds to BFC of approximately $17.7 million
and a net cost of approximately $16.6 million, including purchase accounting of
$1.4 million, was recorded on the sale, resulting in a net gain of approximately
$1.1 million on the sale.

Other income, net, increased for the year ended December 31, 1995 as compared
with the comparable periods in 1994 and 1993 primarily due to proceeds received
during the quarter ended March 31, 1995 from litigation regarding an investment
that the Company wrote-off in 1991 and the receipt of amounts from an affiliate
which were written-off in prior years.

Costs and Expenses - The following table shows the components of costs and
expenses and the changes between the years (in thousands):

Increase (Decrease)
1995 1994 1993 1995/1994 1994/1993
---- ---- ---- --------- ---------
Interest on Exchange
debentures 1,976 5,777 6,031 (3,801) (254)
Interest on mortgage
payables and other
borrowings 2,598 2,499 3,032 99 (533)
Provision for loss
on real estate
acquired in
debenture exchange -- 531 -- (531) 531
Provision for loan
losses 335 624 -- (289) 624
Provision for litigation -- 2,200 4,034 (2,200) (1,834)
Expenses related to
real estate
investments 93 -- -- 93 --
Employee compensation
and benefits 1,232 1,166 1,453 66 (287)
Occupancy and equipment 46 60 331 (14) (271)
General and
administrative, net 1,032 1,060 2,237 (28) (1,177)
------ ------ ------- ------ ------
7,312 13,917 17,118 (6,605) (3,201)
====== ====== ======= ====== ======

Interest on Exchange debentures decreased for the year ended December 31, 1995
as compared to the same periods in 1994 and 1993 primarily due to the 1991 and
1989 Exchange settlements during 1994 and adjustments in 1995 relating to
changes in the settlement liability. This decrease was offset in part with the
accrual of interest on the 1989 Exchange settlement liability.

Interest on mortgages payable and other borrowings increased for the year ended
December 31, 1995 as compared with the same period in 1994 primarily due to
additional borrowings in the fourth quarter of 1994 as a result of the purchase
of Cypress Creek and Centerport. This increase was offset with the elimination
of mortgage debt principally related to the sale or foreclosure of properties
acquired in the 1989 and 1991 Exchange. The decrease in interest on mortgages
payable and other borrowings for the 1994 period as compared with the 1993
period was due to the elimination of mortgage debt related to the properties
acquired in the 1989 and 1991 Exchange transactions.

During 1994, the Company established a valuation allowance of approximately
$531,000 on the 12.73 acres of unimproved land owned by it located in
Birmingham, Alabama.

In 1995 and 1994 the Company recorded a provision for loss on loan receivables
due from affiliated limited partnerships of approximately $335,000 and $624,000,
respectively. This loss was based upon management's determination regarding the
net carrying value of the loans and the estimated fair value of the underlying
loan collateral.

The 1993 provision for litigation was due to a $4.0 million provision in
connection with the court decision in the Short vs. Eden United, Inc.
litigation and the $2.2 million provision in 1994 was attributable to an
appellate court decision in the Hess litigation. (See Item 3, "Legal
Proceedings".)

The 1995 loss from real estate joint venture investments represents the
Company's prorata share of expenses, primarily real estate taxes, related to the
ownership of property acquired in 1994 by an entity controlled by the Company.

Employee compensation and benefits increased for the year ended December 31,
1995 as compared to the same period in 1994 primarily due to an increase in
salary levels. Employee compensation and benefits declined for the year ended
December 31, 1994 as compared to the 1993 period primarily due to a reduction in
personnel in December 1993.

Occupancy and equipment decreased in 1994 as compared to 1993 due to the
Company's reduction in office space after its move to its new location in Fort
Lauderdale.

General and administrative decreased in 1994 as compared to 1993 primarily due
to the reversal of approximately $348,000 in 1994 of previously accrued expenses
that will not be incurred as a result of the settlement of litigation, the
write-down in 1993 of advances to an affiliate of approximately $127,000,
decreases in legal fees associated with the 1989 and 1991 Exchange litigation
and decreases in leasing fees for the procurement of tenants for the properties
acquired in the 1989 and 1991 Exchange.

BBC's net income on common shares for the year ended December 31, 1995, 1994 and
1993 was approximately $16.4 million, $16.0 million and $15.2 million,
respectively. The Company's equity in BBC's net income for the year ended
December 31, 1995, 1994 and 1993 was approximately $8.4 million, $8.0 million
and $10.8 million, respectively. At December 31, 1995, the Company owned
approximately 46% of the outstanding common stock of BBC whereas through October
1993 the Company owned approximately 77.83% of the outstanding common stock of
BankAtlantic. In November 1993, the Company sold approximately 2,187,500 shares
of BankAtlantic and BFC's ownership of BankAtlantic decreased to 48.17% of the
outstanding common stock of BankAtlantic. The decline in the equity in earnings
of BankAtlantic that would have been reflected by the Company's decreased
ownership was partially offset by increased earnings by BankAtlantic.

Financial Condition -BFC's total assets at December 31, 1995, and at December
31, 1994, were $96.9 million and $91.3 million, respectively. The majority of
the difference at December 31, 1995 as compared to December 31, 1994 was
primarily due to increases in (i) mortgage notes and related receivables, net,
(ii) investment in BBC of approximately $8.9 million and (iii)investments in and
advances to real estate joint ventures. These increases were offset in part by
decreases in (i) securities available for sale of and (ii) escrow for redeemed
debenture liability

Mortgage notes and related receivables, net increased due to the extinguishment
of a note payable (See note 5.), and loan originations to affiliated limited
Partnerships. This increase was offset with principal reduction on loans.

In December 1994, the Company established a broker line of credit in the amount
of $850,000 which is collateralized by 170,000 shares of BBC common stock. In
the fourth quarter of 1995, the Company borrowed $514,000 from the above
account. Mortgage payables and other borrowings increased due to the
extinguishment of a note payable.

Investment in BBC increased by $8.9 million due to the equity in earnings of
BBC, the change in BBC's net unrealized appreciation on debt securities
available for sale, net of deferred income taxes, common stock dividends
declared in 1995 and the $1.3 million effect of issuance of BBC common stock by
BBC to BBC shareholders other than BFC.

In 1994, the Company agreed to participate in certain real estate opportunities
with John E. Abdo, Vice Chairman of the Board, and certain of his affiliates
(the "Abdo Group"). Under the arrangement, the Company and the Abdo Group will
share equally in profits after any profit participation due to any other
partners in the ventures and after a priority return in favor of the Company.
The Company bears the risk of loss, if any, under the arrangement. On such
basis, the Company has acquired interests in three properties. In June 1994, an
entity controlled by the Company acquired from an independent third party 23.7
acres of unimproved land known as the "Cypress Creek" property located in Fort
Lauderdale, Florida. In March 1996, the Cypress Creek property was sold to an
unaffiliated third party for approximately $9.7 million. In December 1994, an
entity controlled by the Company acquired from an unaffiliated seller 60.1 acres
of unimproved land known as the "Centerport" property in Pompano Beach, Florida.
A previously disclosed agreement to sell the Centerport property was terminated
during the third quarter of 1995 in accordance with its terms and the property
now serves as partial collateral for an $8.08 million loan to the Company from
an unaffiliated lender. Lastly, in May 1995, an entity controlled by the Company
contracted to acquire the Regency Golf and Beach Club at Palm-Aire in Pompano
Beach, Florida (the "Regency"). The Regency is an existing rental apartment
complex having 288 apartment suites. The acquisition is expected to close during
September 1996 and it is currently anticipated that the Company will seek other
partners in connection with the acquisition of the property.

The decrease in the redeemed debenture liability and the related escrow was
primarily due to payments made in accordance with the terms of the Exchange
litigation settlements.

Exchange debentures, net, and deferred interest on the Exchange debentures
decreased approximately $2.8 million and $772,000, respectively, primarily due
to an adjustment to the settlement of litigation relating to the 1991 and 1989
Exchange. The decrease in deferred interest on the Exchange debentures was
partially offset by increases in the deferred interest on the 1989 and 1991
Exchange debentures pursuant to their terms.

Purchase Accounting - The acquisition of BankAtlantic has been accounted for as
a purchase and accordingly, the assets and liabilities acquired have been
revalued to reflect market values at the dates of acquisition. The discounts and
premiums arising as a result of such revaluation are generally being accreted or
amortized (i.e. added into income or deducted from income), using the level
yield or interest method over the remaining life of the assets and liabilities.
The net impact of such accretion, amortization and other purchase accounting
adjustments was to increase consolidated net earnings during 1995 and 1994 by
approximately $677,000 and $366,000, respectively, and decrease net loss during
1993 by approximately $191,000.

Liquidity and Capital Resources - As previously described, during 1989 and 1991,
the Company exchanged subordinated unsecured debentures for all of the assets
and liabilities of certain affiliated limited partnerships. The Company is
actively seeking buyers for the two properties received in the Exchange
transaction which it continues to hold with a view to selling the properties and
reducing mortgage indebtedness. See note 3 of notes to consolidated financial
statements for more information on these transactions.

Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange offers. Settlement of all of these lawsuits were approved
by the Courts during 1994, however one of settlements is being appealed by the
American Broadcasting Company ("ABC"). The precise amounts that will be paid
under these settlements can not be determined with certainty because the amount
of settlement depends upon whether the class member still owns the debenture
issued to them in the exchange transaction ("Class Members Still Owning
Debentures") or whether the class member sold the debenture transferred to them
in the exchange transaction ("Class Members No Longer Owning Debentures"). The
determination of which group a debenture holder falls into is complicated by the
fact that when a transfer of ownership occurs, the transfer may not be a bona
fide sale transaction (i.e., the transfer may have been made to street name or
to a family member). When a debenture is held by a Class Member Still Owning
Debentures, the amount of gain recognized on that debenture is greater because
the debenture and any related accrued interest is removed from the books whereas
if the debenture was sold to a non class member, a settlement payment is made to
the Class Member No Longer Owning the Debenture and the debenture and all
related accrued interest remains on the books in the name of the current holder
of the debenture. When the settlements were recorded, the gain recorded was
based upon the determination that if the debenture had been transferred since
issue, the debenture was classified in the group of Class Members No Longer
Owning Debentures. As debentures were presented for payment, if a determination
was made that the debenture belonged in the group of Class Members Still Owning
Debentures, an adjustment was made and additional gain was recognized.
Additionally, Class Members No Longer Owning Debentures have a specified time
period for filing a claim and as the determination of claim amounts are made, an
adjustment is made and additional gain is recognized. The time period for filing
a claim relating to the 1991 Exchange expired during 1995 and the time period
for Meador claimants expired in January 1996.

The settlement for the 1991 Exchange was approved by the District Court in May
1994. The settlements required BFC Financial Corporation to establish a
settlement fund equal to 81.359% of the original face amount of the debentures
distributed in connection with the 1991 Exchange to the 1991 Exchange Class
Members. Settlement of the litigation brought against the Company in connection
with the 1989 Exchange by the plaintiffs who either voted against the
transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. The settlement required BFC to establish a
settlement fund equal to 56% of the original face amount of the debentures
issued to the class members in the Purcell Litigation (the Purcell Class").
Settlement of the litigation brought against the Company in connection with the
1989 Exchange by the plaintiffs who voted yes (the "Meador Litigation") was
approved by the District Court in December 1994. The settlement agreement in the
Meador litigation contains the same financial terms as those in the description
of the settlement of the Purcell Litigation.

In connection with the above settlements, the Company deposited approximately
$20.3 million into settlement funds, with another deposit of approximately $4.7
million and $5.1 million required in December 1996 and March 1997, respectively.
Gains on the above settlements of $22.7 million were recognized in 1994 and $3.2
million, net of income taxes of $1.5 million, in 1995. Based upon claims made
and paid during March 1996 in the Meador Litigation, an additional gain of
approximately $1.2 million will be recognized in the first quarter of 1996
related to Class Members No Longer Owning Debentures that did not make a claim
within the specified time period. Payments are not being made under the Purcell
Litigation pending resolution of the ABC litigation.

At December 31, 1995, the redeemed debenture liability for the 1989 and 1991
Exchange litigation was approximately $13.6 million and $2.3 million,
respectively. Additionally, at December 31, 1995 the escrow for redeemed
debenture liability for the 1989 and 1991 Exchange litigation was approximately
$5.9 million and $3.1 million, respectively. The 1991 Exchange settlement
agreements provide for a release from the escrow of any balances remaining at
the end of June 1996. The Meador 1989 Exchange settlement agreement provides for
a release from the escrow of any balances remaining at January 18, 1998. No
dates are available relating to the Purcell 1989 Exchange settlement due to the
ABC litigation. (See Item 3. "Legal Proceedings.")

In connection with certain litigation related to the purchase and sale of an
apartment complex in Indiana (See item 3. "Litigation ", Short vs. Eden United,
Inc., et.al.), on February 25, 1994, the lower court on remand awarded plaintiff
a judgment totaling approximately $4.5 million, including interest. The Company
appealed the trial court's order and posted an appeal bond which is currently
collateralized by approximately $4.8 million of marketable securities. In prior
years, the Company had accrued a $4.5 million provision for this litigation and
paid a cash Bond of approximately $445,000, which is included in other
liabilities in the Company's Consolidated Statements of Financial Condition. In
July 1995, the Indiana Court of Appeals affirmed conditionally or remanded in
part and reversed in part the decision of the trial court on remand. The effect
of the Court of Appeals opinion was to reduce the damage award to $1,285,000
from $2,570,000; disallow prejudgment interest, set the date for computation of
postjudgment interest and fix the rate at 8% and require the use of a discount
to compute the present value of the damage award. The reduction of the damage
award will be remanded to the trial court for verification that the trial court
used the same method of damage computation as the Court of Appeals and for the
trial court to determine the present value and enter a new final judgment. Short
filed for a hearing before the Indiana Supreme Court but his petition was
denied. Based upon the ruling, preliminary computations by the Company indicate
that the total loss to the Company could be approximately $500,000 not the $4.5
million dollars previously established as a provision in connection with this
litigation.

A substantial portion of the funds currently required for the litigation
described above have already been provided. Other funds required, in addition to
those currently available, may come from operations, borrowings against BBC
stock, BBC dividends, return of excess funds placed in escrow for litigation
settlements, return of the bond delivered in connection with the Short lawsuit,
or sale and/or refinancing of real estate and mortgages owned.

As a result of the Exchange litigation settlements, the Company's obligation to
pay interest on debentures is limited to only those debentures held by persons
that acquired debentures in an arms length transaction prior to the date on
which settlements were reached ("Holders in Due Course"), or debentures held by
persons that opted out of the litigation. The Company's ability to meet its
obligations and to pay interest on the debentures issued in the 1989 Exchange
and the 1991 Exchange as discussed above is in part dependent on the earnings
and regulatory capital position of BBC. Pursuant to the terms of the debentures
issued in the 1989 Exchange and the 1991 Exchange, the Company may elect to
defer interest payments on its subordinated debentures if management of the
Company determines in its discretion that the payment of interest would impair
the operations of the Company. Items considered in the decision to defer the
interest payment would include, among other items, the upcoming payments due on
the Purcell and Meador Litigation, the possible outcome of the Hess Litigation,
the ability to identify which debentures are held by Holders in Due Course and
current operating expenses. Since December 31, 1991, the Company has deferred
interest payments on its subordinated debentures. The Company believes it has
sufficient current liquidity to meet its normal operating expenses, but it is
not anticipated that it will make current payments of interest on the Exchange
debentures in the near term.

At the present time, BBC has no significant operations other than those related
to its ownership of BankAtlantic and does not require funds other than to pay
certain operating expenses and interest expense on $21.0 million of BBC's
outstanding debentures. It is anticipated that funds for payment of these
expenses will be obtained from BankAtlantic. Additionally, the ultimate
repayment by BBC of its outstanding Debentures may be dependent upon dividends
from BankAtlantic, refinancing of the debt or raising additional equity capital
by BBC. BBC has stated its intention to pay regular quarterly cash dividends on
its common stock. Funds for these dividends and interest payments are dependent
upon BankAtlantic's ability to pay dividends to BBC.

In March 1996, BBC consummated a public offering of 1,150,000 shares of its
Class A Common Stock at $15 per share. Net proceeds from the sale to BBC was
approximately $16 million. With the issuance of the new Class A Common Stock,
BBC's existing common stock will remain entitled to one vote per share and will
be redesignated Class B Common Stock. Dividends on the Class A Common Stock must
be at least equal to 110% of the amount of dividends declared on the Class B
Common Stock. BFC did not acquire any shares of BBC Class A Common Stock. Upon
issuance of the 1,150,000 shares, BFC's ownership of BBC will be approximately
41.5%.

During November 1993, a public offering of 3,234,375 BankAtlantic common shares
at a price of $8.64 per common share was closed. Of the shares sold, 1,046,875
shares were sold by BankAtlantic and 2,187,500 shares were sold by BFC. Net
proceeds to BFC and BankAtlantic from the sale was approximately $17.7 million
and $8.0 million, respectively. Upon the sale of the 3,234,375 shares, BFC's
ownership of BankAtlantic decreased from 77.83% to 48.17%. Proceeds from such
sales were utilized to fund the Exchange settlements. At December 31, 1995, the
Company's ownership percentage was 46.0%. The decrease in the ownership
percentage at December 31, 1995 from 48.0% to 46.0% results from additional
shares of BBC common stock being issued in connection with BBC's stock option
plans.

BankAtlantic is required to meet all capital standards promulgated pursuant to
FIRREA and FDICIA. To be considered "well capitalized" under FDICIA, a savings
institution must generally have a core capital ratio of at least 5%, a Tier 1
risk-based capital ratio of at least 6%, and a total risk-based capital ratio of
at least 10%. At December 31, 1995, BankAtlantic met all regulatory capital
requirements and met the definition of "well capitalized."

In October 1995, BankAtlantic redeemed all of its outstanding preferred stock at
$25.00 per share. BFC's aggregate purchase price relating to its acquisition of
BBC preferred stock was approximately $143,000 and all such preferred stock was
redeemed for approximately $334,000. Therefore, in October 1995 BFC reported a
gain on redemption of BBC preferred stock of approximately $191,000.

Cash Flows - A summary of the Company's consolidated cash flows follows (in
thousands):

December 31,
-------------------------------
1995 1994 1993
---- ---- ----
Net cash provided (used) by:
Operating activities $ (1,963) 948 (523)
Investing activities 2,321 (11,438) 1,655
Financing activities 83 10,852 (932)
------ ------- -------
Increase in cash
and cash equivalents $ 441 362 200
====== ======= =======
The changes in cash flow used or provided in operating activities are affected
by the changes in operations, which are discussed elsewhere herein, and by
certain other adjustments. These adjustments include additions to operating cash
flows for non-operating charges such as depreciation, valuation allowance of
real estate acquired in the debenture exchange and provision to state mortgage
receivable at fair value. Cash flow from operating activities is also adjusted
to reflect the use or the providing of cash for increases and decreases,
respectively, in operating assets, decreases or increases, respectively of
operating liabilities, and increases in exchange debentures deferred interest.
Accordingly, the changes in cash flow from operating activities in the periods
indicated above has been impacted not only by the changes in operations during
the periods but also by these other adjustments.

The Company's primary sources of funds during the year ended December 31, 1995
were revenues from property operations, collections on mortgage receivables,
increase on borrowings, the sale of real estate, sale of securities available
for sale, deposits received in connection with the sale of real estate
investments and dividends from BBC. These funds were primarily utilized for
operating expenses at the properties, capital improvements at the properties,
loans originated, increase in investments in and advances to real estate joint
ventures, mortgage payables on the properties and general and administrative
expenses.

Investing activities for the year ended December 31, 1995 included inflows of
approximately $341,000 from the sale of real estate, a net decrease in
securities available for sale of approximately $955,000, principal reduction on
mortgage receivables of approximately $733,000, deposits received in connection
with the sale of real estate investment of approximately $750,000 and dividends
from BBC of approximately $819,000. Investing activities for the 1995 period
included outflows of approximately $475,000 from loans originated, increase in
investments in and advances to real estate joint ventures of approximately
$392,000 and improvements to real estate acquired in debenture exchange.
Financing activities for the year ended December 31, 1995 includes increase in
borrowing of approximately $513,000 and repayments of borrowing of approximately
$430,000.

Impact of Inflation - The financial statements and related financial data and
notes presented herein have been prepared in accordance with GAAP, which require
the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

Virtually all of the assets and liabilities of BBC are monetary in nature. As a
result, interest rates have a more significant impact on BBC's performance than
the effects of general price levels. Although interest rates generally move in
the same direction as inflation, the magnitude of such changes varies. The
possible effect of fluctuating interest rates is discussed more fully in BBC's
Management's Discussion and Analysis of Financial Condition and Results of
Operations under "Interest Rate Sensitivity", which is incorporated herein by
reference. BFC does not believe that inflation has had any material impact on
the Company, however, economic conditions generally have had an adverse effect
on the values and operations of its real estate assets.

New Accounting Standards and Policies - In 1995, the FASB issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." ("FAS 121"). FAS
121 requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. In performing the review for recoverability, the entity should
estimate the future cash flows expected to result from the use of the asset and
its eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Measurement of an impairment loss
for long-lived assets and identifiable intangibles that an entity expects to
hold and use should be based on the fair value of the asset. FAS 121 is
effective for financial statements for fiscal years beginning after December 15,
1995. Earlier application is encouraged. Management is of the opinion that
adoption of FAS 121 did not have a material effect on consolidated financial
position or results of operations, upon adoption on January 1, 1996.

On October 23, 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation" ("FAS 123"). This statement applies to all
transactions in which an entity acquires goods or services by issuing equity
instruments or by incurring liabilities where the payment amounts are based on
the entity's common stock price. The Statement covers transactions with
employees and non-employees and is applicable to both public and non-public
entities. Entities are allowed (1) to continue to use the Accounting Principles
Board Opinion No. 25 method ("APB 25"), or (2) to adopt the FAS 123 fair value
based method. Once the method is adopted, an entity cannot change and the method
selected applies to all of an entity's compensation plans and transactions. For
entities not adopting the FAS 123 fair value based method, FAS 123 requires pro
forma net income and earnings per share information as if the fair value based
method has been adopted. For entities not adopting the fair value based method,
the disclosure requirements of FAS 123, including the pro forma information, are
effective for financial statements for fiscal years beginning after December 15,
1995 (calendar year 1996). The pro forma disclosures are to include all awards
granted in fiscal years that begin after December 15, 1994 (calendar year 1995).
However, the disclosures, including the pro forma net income and earnings per
share disclosure, for the first fiscal year beginning after December 15, 1995
(calendar year 1995) will not be included in that year's financial statements
but will be included in the following year's (calendar year 1996) financial
statements if the first fiscal year is presented for comparative purposes.
Management intends to continue to use APB 25 and disclose proforma net income
and earnings per share information in the December 31, 1996 financial
statements.

BFC adopted prospectively Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment
of Loan - Income Recognition and Disclosures" ("FAS 114"), effective January 1,
1995. There was no impact to the consolidated statement of financial condition
or the consolidated statement of operations upon implementation.

Allowance for Loan Losses - BFC, beginning on January 1, 1995, bases the
measurement of loan impairment on the fair value of the loan's collateral in
accordance with FAS 114. Non-collateral dependent loan impairment is based on
the present value of the estimated future cash flows. Impairment losses are
included in the allowance for loan losses through a charge to the provision for
loan losses. Adjustments to impairment losses resulting from changes in the fair
value of an impaired loan's collateral or projected cash flows are included in
the provision for loan losses. Upon disposition of an impaired loan, any related
valuation allowance is relieved from the allowance for loan losses. The impact
of implementation was not material.

<PAGE>

ITEM 8. INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report

Financial Statements:

Consolidated Statements of Financial Condition - December 31, 1995 and
1994

Consolidated Statements of Operations - For each of the Years in the Three
Year Period ended December 31, 1995

Consolidated Statements of Stockholders' Equity (Deficit) - For each of
the Years in the Three Year Period ended December 31, 1995

Consolidated Statements of Cash Flows - For each of the Years in the Three
Year Period ended December 31, 1995

Notes to Consolidated Financial Statements

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
BFC Financial Corporation:

We have audited the accompanying consolidated statements of financial condition
of BFC Financial Corporation and subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the years in the three year period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of BFC Financial
Corporation and subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principals.

KPMG PEAT MARWICK LLP

Fort Lauderdale, Florida
March 26, 1996

<PAGE>

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Financial Condition

December 31, 1995 and December 31, 1994
(in thousands, except share data)

ASSETS
-------

1995 1994

Cash and cash equivalents $ 1,152 711
Securities available for sale 5,105 5,869
Investment in BankAtlantic Bancorp, Inc. ("BBC") 52,662 43,768
Mortgage notes and related receivables, net 5,168 4,904
Real estate acquired in debenture exchanges, net 11,072 11,169
Real estate investments 10,211 9,912
Escrow for redeemed debenture liability 8,982 12,223
Other assets 2,544 2,735
-------- -------
Total assets $ 96,896 91,291
======== =======

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Exchange debentures, net 3,810 6,616
Deferred interest on the exchange debentures 2,722 3,494
Redeemed debenture liability 15,964 18,395
Mortgage payables and other borrowings 27,616 26,618
Other liabilities 9,393 9,636
Deferred income taxes 1,633 --
-------- -------
Total liabilities 61,138 64,759

Commitments and contingencies -- --

Stockholders' equity:
Preferred stock of $.01 par value; authorized
10,000,000 shares; none issued -- --
Special class A common stock of $.01 par value;
authorized 20,000,000 shares; none issued -- --
Common stock of $.01 par value; authorized
20,000,000 shares; issued 2,351,021
in 1995 and 1994 17 17
Additional paid-in capital 19,773 21,025
Retained earnings 13,609 5,677
Less: treasury stock
(45,339 shares for 1995 and 1994) (280) (280)
-------- -------
Total stockholders' equity before
BBC net unrealized appreciation on
debt securities available for sale,
net of deferred income taxes 33,119 26,439

BBC net unrealized appreciation
on debt securities available for
sale-net of deferred income taxes 2,639 93
-------- -------
Total stockholders' equity 35,758 26,532
-------- -------
Total liabilities and stockholders' equity $ 96,896 91,291
======== =======

See accompanying notes to consolidated financial statements

<PAGE>

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Operations
For each of the years in the three year period ended
December 31,1995
(in thousands, except per share data)

1995 1994 1993
---- ---- ----
Revenues:
Interest on mortgage notes and
related receivables $ 451 657 767
Interest and dividends on securities
available for sale and escrow
accounts 648 743 299
Dividend on redemption of BBC
preferred stock 191 -- --
Earnings on real estate
operations, net 1,033 1,735 2,617
Gain on disposition of
real estate, net 206 2,791 --
Gain on sale of BankAtlantic
common stock -- -- 1,050
Insurance settlement -- 2,500 --
Other income, net 594 364 318
------- ------- -------
Total revenues 3,123 8,790 5,051
------- ------- -------
Costs and expenses:
Interest on exchange debentures 1,976 5,777 6,031
Interest on mortgages payable
and other borrowings 2,598 2,499 3,032
Provision for loss on real estate
acquired in debenture exchange -- 531 --
Provision for loan losses 335 624 --
Provision for litigation -- 2,200 4,034
Expenses related to real estate
investments 93 -- --
Employee compensation and benefits 1,232 1,166 1,453
Occupancy and equipment 46 60 331
General and administrative, net 1,032 1,060 2,237
------- ------- -------
Total cost and expenses 7,312 13,917 17,118
------- ------- -------
(Loss) before equity in earnings
of BBC, income taxes, cumulative
effect of change in accounting
for income taxes and extraordinary
items (4,189) (5,127) (12,067)

Equity in earnings of BBC 8,419 8,040 10,764
------- ------- -------
Income (loss) before income taxes,
cumulative effect of change in
accounting for income taxes
and extraordinary items 4,230 2,913 (1,303)
(Benefit) for income taxes -- (2,009) --
------- ------- -------
Income (loss) before cumulative
effect of change in accounting for
income taxes and extraordinary items 4,230 4,922 (1,303)
Cumulative effect of change in
accounting for income taxes -- -- (501)
Extraordinary items:
Net gain from extinguishment of debt,
net of income taxes of $218,000 460 -- --
Gain on settlements of Exchange
litigation, net of income
taxes of $1,461,000 in 1995 and
$214,000 in 1994 3,242 22,744 --
------- ------- -------
Net income (loss) $ 7,932 27,666 (1,804)
======= ======= =======

Income (loss) per common and
common equivalent share:
Before cumulative effect of change
in accounting for income taxes
and extraordinary items $ 1.90 2.39 (1.18)
Cumulative effect of change in
accounting for income taxes -- -- (0.29)
Extraordinary items 1.67 11.06 --
------- ------- -------
Net income (loss) per common and
common equivalent share $ 3.57 13.45 (1.47)
======= ======= =======

Income (loss) per common and
common equivalent share
assuming full dilution:
Before cumulative effect of change
in accounting for income taxes
and extraordinary items $ 1.89 2.39 (1.18)
Cumulative effect of change in
accounting for income taxes -- -- (0.29)
Extraordinary items 1.65 11.06 .00
------- ------- -------
Net income (loss) per common and
common equivalent share
assuming full dilution $ 3.54 13.45 (1.47)
======= ======= =======
Weighted average number of common
and common equivalent shares
outstanding 2,222 2,056 1,702
======= ======= =======

Weighted average number of common
and common equivalent shares
outstanding assuming full dilution 2,243 2,056 1,702
======= ======= =======

See accompanying notes to consolidated financial statements

<PAGE>

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
For each of the years in the three year period ended December 31, 1995
(in thousands)

Addi- Retained
tional Earnings Trea-
Common Paid-in Accumulated sury
Stock Capital (Deficit) Stock Other Total
------- ------- ------- ------ ------ -------
Balance at
December 31, 1992 $ 17 15,532 (20,185) (280) 999 (4,916)

Effect of issuance
of BBC's common
stock by BBC to
shareholders other
than BFC -- (268) -- -- -- (268)

Net (loss) -- -- (1,804) -- -- (1,804)
------- ------- ------- ------- ------- -------
Balance at
December 31, 1993 17 15,264 (21,989) (280) -- (6,988)

Transfer from
redeemable
common stock -- 5,776 -- -- -- 5,776

Effect of issuance
of BBC's common
stock by BBC
to shareholders
other than
BFC Financial
Corporation -- (15) -- -- -- (15)

Change in BBC net
unrealized
appreciation on
debt securities
available for
sale-net of
deferred income
taxes -- -- -- -- 93 93

Net income -- -- 27,666 -- -- 27,666
------- ------- ------- ------- ------- -------

Balance at
December 31, 1994 17 21,025 5,677 (280) 93 26,532

Effect of issuance
of BBC's common
stock by BBC
to shareholders
other than
BFC Financial
Corporation -- (1,252) -- -- -- (1,252)

Change in BBC net
unrealized
appreciation on
debt securities
available for
sale-net of
deferred income
taxes -- -- -- -- 2,546 2,546

Net income -- -- 7,932 -- -- 7,932
------- ------- ------- ------- ------- -------
Balance at
December 31, 1995 17 19,773 13,609 (280) 2,639 35,758
======= ======= ======= ======= ======= =======

See accompanying notes to consolidated financial statements.

<PAGE>

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flow
For each of the years in the three year period ended
December 31, 1995
(In thousands)

1995 1994 1993
---- ---- ----

Operating activities:
Income (loss) before extraordinary items
and cumulative effect of change in
accounting for income taxes $ 4,230 4,922 (1,303)
Adjustments to reconcile income (loss)
before extraordinary items and
cumulative effect of change in
accounting for income taxes to net cash
provided (used) by operating activities:
Equity in earnings of BBC (8,419) (8,040) (10,764)
Provision for declines in real estate owned -- 531 --
Depreciation 762 1,441 1,658
Expenses related to real estate investments 93 -- --
Decrease in deferred income taxes -- (2,009) --
Accretion on exchange debentures
and mortgages payable 29 118 285
Tax effect of real estate acquired
in debenture exchange -- (20) (92)
Amortization of discount on
loans receivable (168) (58) (70)
Gain on disposition of real estate, net (206) (2,791) --
Gain on redemption of BBC preferred
stock (191) -- --
Provision to state mortgage
receivable at fair value 335 624 --
Provision for litigation -- 2,200 4,034
Gain on sale BankAtlantic common stock -- -- (1,050)
Increase in deferred interest on the
exchange debentures 1,423 5,604 5,923
Accrued interest income on escrow accounts (272) (307) --
Interest accrued regarding redeemed
debenture liability 524 63 --
Increase (decrease) in other liabilities 89 (887) 354
Decrease (increase) in other assets (192) (443) 502
------- ------- -------
Net cash provided (used) by
operating activities (1,963) 948 (523)
------- ------- -------

Investing activities:
Proceeds from the sales of real estate
acquired in debenture exchanges -- 4,283 --
Proceeds from the sale of
BankAtlantic common stock -- -- 17,691
Increase in BankAtlantic investment
in common stock -- -- (1,971)
Common stock dividends received
from BBC 819 753 271
Purchase of securities available
for sale (20,091) (62,346) (24,460)
Proceeds from redemption and maturities
of securities available for sale 21,046 76,850 10,486
Increase in the Exchange escrow
to fund settlement liability -- (20,840) --
Principal reduction on loans 733 220 252
Loans originated (475) -- --
Deposits received for sale of
real estate held by joint venture 750 -- --
Proceeds from sales of real estate 341 -- --
Increase in investments in and advances
to real estate joint ventures (392) (9,912) --
Additions to office
properties and equipment (35) (12) (32)
Improvements to real estate acquired in
debenture exchanges (375) (434) (582)
------- ------- -------
Net cash provided (used) by investing
activities 2,321 (11,438) 1,655
------- ------- -------

Financing activities:
Increase in borrowings 513 11,500 --
Repayments of borrowings (430) (648) (932)
------- ------- -------
Net cash provided (used) by
financing activities 83 10,852 (932)
------- ------- -------
Increase in cash and
cash equivalents 441 362 200
Cash and cash equivalents at
beginning of period 711 349 149
------- ------- -------
Cash and cash equivalents at
end of period $ 1,152 711 349
======= ======= =======

See accompanying notes to consolidated financial statements.

<PAGE>

BFC Financial Corporation
Notes to Consolidated Financial Statements
For the years ended December 31, 1995, 1994 and 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation - The financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP").
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the statements of consolidated financial condition and income and
expenses for the periods presented. Actual results could differ significantly
from those estimates.

Material estimates that are particularly susceptible to significant change in
the next year relate to the determination of the allowance for real estate, in
connection with the settlements of exchange litigation, the percentages used to
estimate class members no longer owning debentures and the allowance for
mortgage notes and related receivables.

The financial statements and notes to consolidated financial statements of
BankAtlantic Bancorp, Inc. and Subsidiaries ("BBC"), are incorporated herein by
reference.

Principles of Consolidation - BFC Financial Corporation is a savings bank
holding company as a consequence of its ownership of the common stock of
BankAtlantic Bancorp, Inc. On July 13, 1994 BankAtlantic, A Federal Savings Bank
("BankAtlantic") consummated a reorganization into a holding company structure
and BankAtlantic Bancorp, Inc. acquired all the capital stock of BankAtlantic
thereby becoming a unitary savings bank holding company. The reorganization
resulted in BankAtlantic becoming a wholly-owned subsidiary of BBC with BFC
becoming a shareholder of BBC on the same proportionate basis as was the
Company's ownership in BankAtlantic. The consolidated financial statements
reflect the activities of BFC Financial Corporation and its wholly owned
subsidiaries ("BFC"). Because the Company's ownership in BBC was less than 50%
beginning in 1993, the Company's investment in BBC has been carried on the
equity method since the year 1993. Prior to 1993 the adjustments to operations
relating to changes in the Company's percentage ownership of BBC were reflected
in minority interest. All significant intercompany accounts and transactions
have been eliminated in consolidation.

Cash Equivalents - Cash equivalents include liquid investments with original
maturities of three months or less.

Securities Available for Sale - The Company's securities are available for sale.
In accordance with Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities ("FAS 115")
issued in May 1993 by the Financial Accounting Standards Board ("FASB"), these
securities are carried at fair value, with any related unrealized appreciation
or and depreciation reported as a separate component of stockholders' equity,
net of income taxes. A write-down is reflected in the statement of operations to
the extent that securities are permanently impaired.

Mortgage Notes and Related Receivables, net - Mortgage notes and related
receivables, net, are carried at the lower of cost or fair value.

Real Estate - Real estate acquired in the Exchange transactions and real estate
investments are stated at the lower of cost or fair value in the accompanying
statements of financial condition. Land is carried at the lower of cost or fair
value in the accompanying statements of financial condition.

Depreciation is computed on the straight-line method over the estimated useful
lives of the assets which generally range up to 31.5 years for buildings and 5
years for tenant improvements.

Income Taxes - The Company does not include BBC and its subsidiaries in its
consolidated income tax return with its wholly-owned subsidiaries, since the
Company owns less than 80% of the outstanding stock of BBC. Deferred income
taxes are provided on elements of income that are recognized for financial
accounting purposes in periods different than such items are recognized for
income tax purposes.

The Company utilizes the asset and liability method to account for income taxes.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to the differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect of a change in tax rates on deferred tax assets and
liabilities is recognized in the period that includes the statutory enactment
date.

Excess Cost Over Fair Value of Net Assets Acquired (Goodwill) - The ownership
position in BankAtlantic was acquired at different times. At the February 1987,
October 1989, June 1990, October 1990 and November 1991 acquisitions, the fair
market value of the net assets of BankAtlantic were greater than the Company's
cost. At other increases in ownership, the Company's cost was in excess of the
fair market value of BankAtlantic's net assets. The excess of fair market value
over cost was recorded as a reduction to the fair market value of non-current
assets, including identified intangible assets. The excess of cost over fair
market value was recorded as goodwill and is being amortized on the straight
line basis over a 15 year period. Identified intangibles consist of loan
servicing and escrows. These intangibles are amortized over the remaining life
of the applicable loan and escrow accounts using the level yield method and at
the end of 1993 had been completely amortized. The minor 3.3%, 4%, 0.5% and 2.4%
increases in ownership of BankAtlantic in October 1989, June 1990, October 1990
and November 1991 were recorded utilizing BankAtlantic's cost basis of assets
and liabilities as fair market value. The excess of such cost basis over the
Company's purchase price was recorded as a reduction to property and equipment
and is being amortized on a straight-line basis over a ten year period. Cost
over fair value of net assets acquired and other intangible assets is evaluated
by management for impairment on an on-going basis based on the facts and
circumstances related to the net assets acquired.

Redeemable Common Stock - In May 1989, the Company exchanged with Mr. Abdo, a
member of the Company's Board of Directors, and certain members of his family
(the "Abdos"), among other things, 353,478 shares of its common stock (including
117,483 shares of treasury stock) for 282,782 shares of common stock of
BankAtlantic. (See also Note 2). The exchange ratio for the shares was 1.25 to
1. The Abdos had the right to require the Company, at any time, to purchase such
shares for the higher of (i) their book value as of the date of notice or (ii)
the average market value of such shares. The Company and Alan B. Levan,
individually, had the right to buy and to require the Abdos to sell such shares
to each, respectively, on the same terms indicated above. At the transaction
date the book value of the shares was greater than their market value.
Accordingly, the amount initially recorded for this redeemable common stock,
$5,776,000, was at book value. Amounts subsequently reflected in the Company's
statements of financial condition were to be adjusted to reflect the maximum
liability based on the higher of either the market price or the book value of
the shares. However, such liability was not to be reduced from the amount
initially reflected at the time of acquisition. There were no adjustments to the
amount stated since the May 1989 acquisition date. In February 1994, the parties
mutually agreed to cancel the agreement with respect to the requirement to buy
and or sell shares. Therefore, during the first quarter of 1994, the amount
classified as redeemable common stock was reclassified to the stockholders'
equity section of the statement of financial condition.

Income Per Share - Income per common share and common equivalent share was
computed by dividing net income by the weighted average number of shares of
common stock and common stock equivalents outstanding during the period. The
number of common shares was increased by the number of shares issuable on the
exercise of options when the market price of the common stock exceeds the
exercise price of the options. This increase in the number of common shares was
reduced by the number of common shares that are assumed to have been purchased
with the proceeds from the exercise of the options; those purchases were assumed
to have been made at the average price of the common stock during the period
when the market price of the common stock exceeded the exercise price of the
options. For income per common share assuming full dilution, those purchases
were assumed to be made at the market price at the end of the period, if higher
than the average price during the period.

For all periods, the shares issued in connection with a 1984 acquisition are
considered outstanding after elimination of 250,000 shares, representing the
Company's 50% ownership of the shares issued in the acquisition.

Reclassifications - For comparative purposes, certain prior year balances have
been reclassified to conform with the 1995 financial statement presentation.

New Accounting Standards - In 1995, the FASB issued Statement of Financial
Accounting Standard SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." ("FAS 121"). FAS 121
requires that long-lived assets, assets held for sale and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In performing the review for recoverability, the entity
should estimate the future cash flows expected to result from the use of the
asset and its eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Measurement of an impairment loss
for long-lived assets and identifiable intangibles that an entity expects to
hold and use should be based on the fair value of the asset. FAS 121 is
effective for financial statements for fiscal years beginning after December 15,
1995. Earlier application is encouraged. Management is of the opinion that
adoption of FAS 121 did not have a material effect on consolidated financial
position or results of operations, upon adoption on January 1, 1996.

2. INVESTMENTS IN BANKATLANTIC BANCORP, INC.

The Company has acquired its current 46% ownership of BBC through various
acquisitions and sales as follows (Where applicable, all BBC share and per share
amounts have been adjusted for the May 1993 15% stock dividend, and the June
1995 and January 1996 five for four common share stock splits effected in the
form of 25% stock dividends.):

Cumulative
Shares Ownership %
---------- ------------
Prior to 1987 520,555 9.9%
February 1987 1,898,363 43.7%
October 1987 539,063 53.4%
May 1989 508,123 62.3%
October 1989 774,228 65.6%
June 1990 845,984 69.6%
October 1990 37,734 70.1%
November 1991 179,688 72.5%
June 1993 1,759,887 77.8%
November 1993 (2,187,500) 48.2%
December 1994 - 48.0%
December 1995 - 46.0%

The Company's ownership of BankAtlantic has been recorded by the purchase method
of accounting. From January 1, 1987 to December 1992, the accounts of
BankAtlantic were consolidated with those of the Company. The shares in the May
1989 acquisition were acquired from Mr. John Abdo, vice chairman of the
Company's Board of Directors and certain members of his family ("Mr. Abdo") in
exchange for, among other things, 353,478 shares of the Company's common stock.

The shares in the October 1989 acquisition were acquired directly from
BankAtlantic in connection with an offering by BankAtlantic of 898,438 units, at
$6.68 per unit, to its existing stockholders. Each unit consisted of one share
of its common stock and three warrants, with each warrant entitling the holder
to purchase one share of common stock at an exercise price of $5.57 at any time
prior to May 31, 1991.

On June 30, 1990, BFC exercised its warrants and converted $2.5 million of
subordinated debt of BankAtlantic to 845,984 shares of BankAtlantic common
stock, increasing BFC's ownership percentage of BankAtlantic to 69.6%.

In October 1990, the Company increased its ownership of BankAtlantic to 70.12%
by purchasing 37,734 shares of BankAtlantic common stock from the BankAtlantic
Security Plus Plan (the "Plan") at a cost of $1.04 per share (average of bid and
asked price on date of purchase). The Plan disposed of these shares in order to
meet employees withdrawal requests.

In November 1991, BFC purchased 179,688 shares of BankAtlantic common stock from
an unaffiliated third party at a cost of approximately $0.487 per share,
increasing BFC's ownership of BankAtlantic to 72.5%.

In June 1993, the Company exercised its right to purchase 1,759,886 shares of
BankAtlantic's common stock at the exercise price of $1.12 per share, for a
total purchase price of $1,971,072. The payment of $1,971,072 was through the
tender of subordinated debentures held by BFC as of February 28, 1993 and the
related accrued interest as of that date. The debentures were issued to BFC in
connection with the use of funds from an escrow account established by BFC to
make preferred stock dividend payments, and in connection with the related
accrued interest on the debentures through February 1993. As a result of the
above transaction, BFC increased its ownership in BankAtlantic to 77.83% of
BankAtlantic's outstanding common stock. During July 1993, BFC received $83,704
for the interest accrued on the subordinated debentures from February 28, 1993
to June 30, 1993. Share and exercise price were adjusted subject to the dilution
provisions contained in the subordinated debt agreement to reflect
BankAtlantic's 15% common stock dividend of June 7, 1993.

During November 1993, a public offering of 3,234,375 BankAtlantic common shares
at a price of $8.64 per common share was closed. Of the shares sold, 1,046,875
shares were sold by BankAtlantic and 2,187,500 shares were sold by BFC. Net
proceeds to BFC and BankAtlantic from the sale were approximately $17.7 million
and $8.0 million, respectively. Upon the sale of the 3,234,375 shares, BFC's
ownership of BankAtlantic decreased to 48.17%. The sale of the BankAtlantic
shares provided the Company with the current liquidity to enable it to hold
settlement discussions on the Exchange litigation discussed in note 3 of notes
to the consolidated financial statements.

The decrease in the ownership percentage at December 31, 1995 from 48.0% to
46.0% results from additional shares of BBC common stock being issued in
connection with BBC's stock option plan.

The acquisition of BankAtlantic has been accounted for as a purchase and
accordingly, the assets and liabilities acquired have been revalued to reflect
market values at the dates of acquisition. The discounts and premiums arising as
a result of such revaluation are generally being accreted or amortized (i.e.
added into income or deducted from income), net of tax, using the level yield or
interest method over the remaining life of the assets and liabilities. The net
impact of such accretion, amortization and other purchase accounting adjustments
was to increase consolidated net earnings during 1995 and 1994 by approximately
$677,000 and $366,000, respectively, and decrease net loss during 1993 by
approximately $191,000. Assuming no sales or dispositions of the related assets
or liabilities, the Company does not believe the net increase (decrease) in
earnings resulting from the net amortization/accretion of the adjustments to net
assets acquired resulting from the use of the purchase method of accounting will
be significant in future years.

Excess cost over fair value of net assets acquired at December 31, 1995 and
1994, was approximately $822,000 and $945,000, respectively. As a result of the
deconsolidation in 1993, excess cost over fair value of net assets acquired at
December 31, 1995 and 1994 is included in the investment of BBC in the
accompanying statements of financial condition.

A reconciliation of the carrying value in BBC to BBC's Stockholders equity at
December 31, 1995 and December 31, 1994 is as follows:
December 31,
1995 1994

BBC stockholders' equity $ 120,561 105,520
Preferred stock - (7,030)
------- -------
BankAtlantic common stockholders' equity 120,561 98,490
Partnership percentage 46.03% 48.00%
------- ------
55,494 47,275
Purchase accounting adjustments (2,832) (3,507)
------- ------
Investment in BankAtlantic $ 52,662 43,768
======= =======

BFC owned 5,600 shares of BBC 12.25% Series A Preferred Stock, 529 shares of BBC
10.00% Series B Preferred Stock and 7,245 shares of BBC 8.00% Series C Preferred
Stock. The aggregate purchase price relating to the acquisition of these shares
was approximately $143,000 and is included in securities available for sale, net
in the accompanying 1994 statement of financial condition. All such preferred
stock was redeemed by BBC in October 1995 for approximately $334,000. The
redemption proceeds in excess of carrying value, aggregating approximately
$191,000 was recognized as a dividend in the 1995 consolidated statement of
operations.

Prior to 1993, BankAtlantic had not paid any regular dividend on its common
stock. In August 1993, BankAtlantic declared and paid a quarterly cash dividend
to its common stockholders and has paid a regular quarterly dividend since that
time. A 15% common stock dividend was declared in May 1993. In June 1995 and
January 1996, the Board of Directors of BBC declared five for four stock split
effected in the form of a 25% stock dividends issued in July 1995 and February
1996, respectively.

In February 1996, shareholders of BBC approved a proposal to create a new class
of non-voting common stock designated as Class A Common Stock. BBC's existing
common stock was redesignated Class B Common Stock. Class A Common Stock is
entitled to receive cash dividends equal to at least 110% of any cash dividends
declared and paid on the Class B Common Stock. In March 1996, BBC sold 1,150,000
shares of Class A Common Stock in a public offering reducing BFC's total
ownership in BBC to approximately 41.5%. BFC does not own any of the Class A
Common Stock.

3. EXCHANGE TRANSACTIONS

During 1991, the Company exchanged (the "1991 Exchange") approximately $15.4
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series 25,
I.R.E. Real Estate Fund, Ltd. - Series 27 and I.R.E. Real Estate Income Fund,
Ltd. The major assets and liabilities of these partnerships consisted
principally of eight commercial real estate properties and related
non-recourse mortgage debt, of which one is still owned by the Company.

During 1989, the Company exchanged (the "1989 Exchange") approximately $30
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series 21,
I.R.E. Real Estate Fund, Ltd. - Series 23 and I.R.E. Real Estate Fund, Ltd. -
Series 24. The major assets and liabilities of these partnerships consisted
principally of fourteen commercial real estate properties, and related
non-recourse mortgage debt, of which one is still owned by the company.

Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange offers. Settlement of all of these lawsuits were approved
by the Courts during 1994, however one of settlements is being appealed by the
American Broadcasting Company ("ABC"). The precise amounts that will be paid
under these settlements can not be determined with certainty because the amount
of settlement depends upon whether the class member still owns the debenture
issued to them in the exchange transaction ("Class Members Still Owning
Debentures") or whether the class member sold the debenture transferred to them
in the exchange transaction ("Class Members No Longer Owning Debentures"). The
determination of which group a debenture holder falls into is complicated by the
fact that when a transfer of ownership occurs, the transfer may not be a bona
fide sale transaction (i.e., involved a transfer to street name or to a family
member). When a debenture is held by a Class Member Still Owning Debentures, the
amount of gain recognized on that debenture is greater because the debenture and
any related accrued interest is removed from the books whereas if the debenture
was sold to a non class member, a settlement payment is made to the Class Member
No Longer Owning the Debenture and the debenture and all related accrued
interest remains on the books in the name of the current holder of the
debenture. When the settlements were recorded, the gain recorded was based upon
the determination that if the debenture had been transferred since issue, the
debenture was classified in the group of Class Members No Longer Owning
Debentures. As debentures were presented for payment, if a determination was
made that the debenture belonged in the group of Class Members Still Owning
Debentures, an adjustment was made and additional gain was recognized.
Additionally, Class Members No Longer Owning Debentures had/have a specified
time period for filing a claim and as the determination of the claim amounts are
made and when the time period expires an adjustment is made and additional gain
is recognized. The time period for filing a claim for the 1991 Exchange has
expired and the time period for Meador claimants expired in January 1996.

The settlement for the 1991 Exchange was approved by the District Court in May
1994. The settlements required BFC Financial Corporation to establish a
settlement fund equal to 81.359% of the original face amount of the debentures
distributed in connection with the 1991 Exchange to the 1991 Exchange Class
Members. Settlement of the litigation brought against the Company in connection
with the 1989 Exchange by the plaintiffs who either voted against the
transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. The settlement required BFC to establish a
settlement fund equal to 56% of the original face amount of the debentures
issued to the class members in the Purcell Litigation (the "Purcell Class").
Settlement of the litigation brought against the Company in connection with the
1989 Exchange by the plaintiffs who voted yes (the "Meador Litigation") was
approved by the District Court in December 1994. The settlement agreement in the
Meador litigation contains the same financial terms as those in the description
of the settlement of the Purcell Litigation.

In connection with the above settlements, the Company deposited approximately
$20.3 million into settlement funds, with another deposit of approximately $4.7
million and $5.1 million required in December 1996 and March 1997, respectively.
Gains on the above settlements of $22.7 million were recognized in 1994 and $3.2
million, net of income taxes of approximately $1.5 million in 1995. Based upon
claims made and paid during March 1996 in the Meador Litigation, an additional
gain of approximately $1.2 million will be recognized in the first quarter of
1996 related to Class Members No Longer Owning Debentures that did not make a
claim within the specified time period. Payments are not being made under the
Purcell Litigation pending resolution of the ABC litigation.

At December 31, 1995, the redeemed debenture liability for the 1989 and 1991
Exchange litigation was approximately $13.6 million and $2.3 million,
respectively. Additionally, at December 31, 1995 the escrow for redeemed
debenture liability for the 1989 and 1991 Exchange litigation was approximately
$5.9 million and $3.1 million, respectively, for payment under the above
settlements. The 1991 Exchange settlement agreements provide for a release from
the escrow any balances remaining at the end of June 1996. The Meador 1989
Exchange settlement agreement provides for a release from the escrow any
balances remaining at January 18, 1998. No dates are available for the Purcell
1989 Exchange settlement due to the ABC litigation.

The components of the gain from the settlement of the 1991 Exchange litigation
are as follows (in thousands):

1995 1994
Adjustment of basis in the properties acquired in
debenture exchange, net $ 273 6,713
Decrease in other assets (9) (323)
Decrease in exchange debentures, net 286 9,630
Decrease in deferred interest on the exchange debentures 262 5,454
------- -------
812 21,474
Redeemed debenture liability 103 (12,240)
------- -------
Pre-tax gain on the 1991 Exchange settlement $ 915 9,234
======= =======

The components of the gain from the settlement of the 1989 Exchange litigation
are as follows (in thousands):
1995 1994

Adjustment of basis in the properties acquired
in debenture exchange, net $ - 756
Decrease in other assets (34) (292)
Decrease in exchange debentures, net 2,549 19,515
Decrease in deferred interest on exchange debentures 1,934 8,705
------- -------
4,449 28,684
Redeemed debenture liability (661) (14,960)
------- -------
Pre-tax gain on the 1989 Exchange litigation $ 3,788 13,724
====== =======

In connection with the settlements of the above litigation, the Company
collected $2.5 million from its insurance carrier under its liability coverage.
Such insurance proceeds were utilized to reimburse the Company for expenses
previously incurred and expensed with respect to the above litigation.

In June 1994, ABC Broadcasting Companies, Inc. and William H. Willson
(collectively "ABC") attempted to intervene in the Purcell Litigation. By
attempting to intervene, ABC sought, for the purposes of defending their conduct
in a defamation lawsuit brought against them by BFC and Alan B. Levan, to
prevent the settlement of the Purcell Litigation and to obtain the protection of
the judgment by the District Court following the jury's verdict. On June 30,
1994, the District Court entered an order denying ABC's motion to intervene. On
September 12, 1994, the District Court entered a final judgment which approved
and ratified the settlement agreement and set aside, vacated, dissolved and
nullified the December 18, 1992 jury verdict and the District Court's December
18, 1992 judgment (the "Final Judgment"). On October 5, 1994, ABC filed an
appeal of the Final Judgment and an appeal of the order entered by the District
Court denying ABC the right to intervene in the Purcell Litigation. Oral
arguments on the appeal are scheduled for April 1996. All parties to the Purcell
Litigation believe that the appeals filed by ABC are without merit.
Nevertheless, until these appeals have been dismissed or are finally resolved
and the Final Judgment becomes final for appellate purposes, the payment of
amounts due to the Purcell Class pursuant to the settlement will be delayed.

As a result of the exchange litigation settlements, the Company's obligation to
pay interest on debentures is limited to only those debentures held by persons
that acquired debentures in an arms length transaction prior to the date on
which settlements were reached ("Holders in Due Course"), or debentures held by
persons that opted out of the litigation. The Company's ability to meet its
obligations and to pay interest on the debentures issued in the 1989 Exchange
and the 1991 Exchange as discussed above is substantially dependent on the
earnings and regulatory capital position of BBC. However, pursuant to the terms
of the debentures issued in the 1989 Exchange and the 1991 Exchange, the Company
may elect to defer interest payments on its subordinated debentures if
management of the Company determines in its discretion that the payment of
interest would impair the operations of the Company. Items considered in the
decision to defer the interest payment would include, among other items, the
upcoming second half payment on the Purcell and Meador Litigation, the possible
outcome of the Hess Litigation, the ability to identify which debentures are
held by Holders in Due Course and current operating expenses. Since December 31,
1991, the Company has deferred interest payments on its subordinated debentures.
The Company, not considering BBC, has sufficient current liquidity to meet its
normal operating expenses, but it is not anticipated that it will make current
payments of interest on the Exchange debentures in the near term.

The Debentures in the 1991 Exchange bear interest at a rate equal to 10.5% per
annum until March 31, 1992, 11.5% per annum thereafter until March 31, 1993 and
12.5% per annum thereafter until maturity on July 1, 2011. The Debentures in the
1989 Exchange bear interest at a rate equal to 8% per annum until June 30, 1990,
9% per annum thereafter until June 30, 1991, and 10% thereafter until maturity
on July 1, 2009. For financial statement purposes, the Debentures in the 1991
and 1989 Exchange have been discounted to yield 19% and 12%, respectively, over
their term. Any interest not paid quarterly by the Company ("Deferred Interest")
will accrue interest at the same rate as the Debentures until paid and after
eight quarter of interest not paid by the Company the interest rate on the
Debentures in the 1991 and 1989 Exchanges will increase to, and remain at, 13%
and 12%, respectively, per annum until maturity. No dividends may be paid to the
holders of any equity securities of the Company while any deferred interest
remains unpaid. Since December 31, 1991, the Company has deferred the interest
payments relating to the debentures issued in both the 1989 Exchange and the
1991 Exchange and therefore, the interest on the debentures in the 1991 and 1989
Exchange is now 13% and 12%, respectively per annum. The deferred interest on
the exchange debentures was approximately $2.7 million and $3.5 million at
December 31, 1995 and 1994, respectively.

Through December 31, 1995, six properties acquired in the 1991 Exchange were
sold to unaffiliated third parties. The properties had an aggregate sales price
of approximately $41.6 million. Stated mortgage debt of approximately $25.7
million was eliminated including the remaining $2.0 million balance on a $5.0
million note that was also secured by 2,370,846 shares of BankAtlantic stock
owned by BFC. Cash proceeds from the sales, after prorations and closing costs,
of approximately $12.5 million was received.

Through December 31, 1995, ten properties acquired in the 1989 Exchange were
sold to unaffiliated third parties. The properties had an aggregate sales price
of approximately $42.3 million. Stated mortgage debt of approximately $21.1
million was eliminated and cash proceeds, after prorations and closing costs, of
approximately $20.0 million was received.

4. SECURITIES AVAILABLE FOR SALE

Included in securities available for sale at December 31, 1995 and 1994 was
approximately $5,105,000 and $5,869,000 of U.S. Treasury Bills and other
investments, respectively. Market value at December 31, 1995 and 1994
approximates book value. At December 31, 1995 and 1994, approximately $4.8
million was pledged as collateral to secure a Letter of Credit issued in
connection with the Short vs. Eden United, Inc. litigation.

5. MORTGAGE NOTES AND RELATED RECEIVABLES - NET

Mortgage notes and related receivables as of December 31, 1995 and 1994 are
summarized below (in thousands):

1995 1994
------- -------
Originating from:
Investment properties $ 7,156 6,021
Less: Principally, deferred profit (2,121) (1,625)
Valuation allowance (934) (575)
------- -------
4,101 3,821
Other 1,067 1,083
------- -------
Total $ 5,168 4,904
======= =======

Through September 1994, the Company had attempted to negotiate an extension of a
$1.0 million balloon payment on a note payable that matured in June 1993.
However, the lender exercised the acceleration provision on the note and in
September 1994, the underlying security that consisted of five wrap mortgage
receivables from affiliated limited partnerships was transferred to an affiliate
of the lender. In September 1994, the Company removed the related receivables
and payables from its books but deferred the gain because negotiations with the
lender were ongoing. At that time the Company remained liable to the lender for
the difference between the balance owed at the time of the acceleration and the
amount the lender sold the underlying security for. The Company continued
negotiations with the lender and in September 1995, an agreement was reached
whereby the lender was paid $500,000, two of the wrap mortgage receivables were
transferred to the affiliated limited partnerships and three of the wrap
mortgage receivables were transferred to the Company. Further, the Company was
released from any further liability to the lender. The three wrap mortgage
receivables transferred to the Company were reinstated on the Company's books at
their former carrying value reduced by payments made between September 1994 and
September 1995. The Company has accounted for this transaction as a debt
extinguishment and accordingly reflected the gain on the transaction as an
extraordinary item in its financial statements. The components of the deferred
gain in 1994 and the gain recognized in 1995 are as follows:

1995 1994
---------- --------
Mortgage notes and related receivables, net $(1,728,527) (3,212,862)
Underlying mortgage payables 1,520,607 2,757,299
Other liabilities 52,648 91,345
Credit from lender on sale of receivables 720,000 720,000
Balance forgiven by lender 260,768 --
----------- -----------
Gain deferred -- 355,782
----------- ===========
Pre-Tax Gain recognized 825,496
===========

In December 1995, the Company recorded a pre-tax loss on forgiveness of debt of
approximately $147,000 and accordingly removed the mortgage receivable, net due
from an affiliated limited Partnership. This limited Partnership in November
1995 sold its property and the remaining mortgage payable due to a subsidiary
of BFC was forgiven. The Company has accounted for this transaction as an
extraordinary item.

6. REAL ESTATE ACQUIRED IN DEBENTURE EXCHANGE

Real estate acquired in debenture exchange consists of the following (in
thousands):

December 31
Estimated Lives 1995 1994
--------------- ---- ----

Land - $ 1,414 1,414
Buildings and improvements 4 to 31.5 years 13,426 13,052
-------- -------
14,840 14,466
Less:
Accumulated depreciation 3,355 2,610
Deferred profit 413 687
-------- -------
3,768 3,297
-------- -------
$ 11,072 11,169
======== =======

In 1994 two properties were deeded back to their respective lender, the
following 1994 non-cash items were removed from the financial statements:

1994
-------
Land $ 236
Building 7,493
Less: accumulated depreciation 2,256
-----
5,473
Less: allowance for real
estate owned 1,854
-----
3,619
Mortgage payables eliminated 3,494
Other liabilities and receivables 217
-----
Net gain on disposition of real estate $ 92
=====

Condensed operations and significant cash flows for real estate acquired in the
debenture Exchange is as follows for the year ended December 31, 1995, 1994 and
1993 (in thousands) (a):

1995 1994 1993
-------- -------- -------
Operating Information:
- ----------------------
Revenues:
Property operations $ 2,590 5,079 6,805
Net gain on dispositions
of real estate - 2,988 -
Deferred gain on dispositions
of real estate - (197) -
-------- -------- -------
Net revenues 2,590 7,870 6,805
-------- -------- -------

Cost and expenses:
Mortgage interest 1,257 1,951 2,514
Depreciation 746 1,403 1,633
Property operating expenses 986 2,217 3,483
Provision to state real estate
at fair value - 531 -
-------- -------- -------
Total costs and expenses 2,989 6,102 7,630
-------- -------- -------
Excess (deficit) of revenues
over expenses (399) 1,768 (825)
======== ======== =======

Cash Flow Information:
Operating activities:
Excess (deficit) of revenues
over expenses $ (399) 1,768 (825)
Depreciation 746 1,403 1,633
Net gain on dispositions of
real estate - (2,791) -
Write down of real estate - 531 -
------- ------- ------
Cash provided by
operating activities 347 911 808
------- ------- ------
Investing activities:
Proceeds from sales of
real estate - 4,283 -
Property improvements (375) (436) (582)
------- -------- ------
Net cash provided (used) by
investing activities (375) 3,847 (582)
------- -------- ------
Total cash provided (used) $ (28) 4,758 226
======= ======== ======

(a) Operating and cash flow information does not include interest expense for
the debentures issued in connection with the acquisition of this real estate.
Interest on mortgages payable, interest on other investment securities, gain on
dispositions of real estate, provision for loss on real estate and legal fees
associated with the 1989 and 1991 Exchange are not included in "Earnings on real
estate operation, net" in the accompanying statements of consolidated
operations. See also note 3 for additional information on the debenture Exchange
and sale of properties.

7. Real Estate Investments

In 1994, the Company agreed to participate in certain real estate opportunities
with John E. Abdo, Vice Chairman of the Board, and certain of his affiliates
(the "Abdo Group"). Under the arrangement, the Company and the Abdo Group will
share equally in profits after any profit participation due to any other
partners in the ventures and after a priority return in favor of the Company.
The Company bears the risk of loss, if any, under the arrangement. On such
basis, the Company has acquired interests in three properties. In June 1994, an
entity controlled by the Company acquired from an independent third party 23.7
acres of unimproved land known as the "Cypress Creek" property located in Fort
Lauderdale, Florida. In March 1996, the Cypress Creek property was sold to an
unaffiliated third party for approximately $9.7 million. In December 1994, an
entity controlled by the Company acquired from an unaffiliated seller 60.1 acres
of unimproved land known as the "Centerport" property in Pompano Beach, Florida.
A previously disclosed agreement to sell the Centerport property was terminated
during the third quarter of 1995 in accordance with its terms and the property
now serves as partial collateral for an $8.08 million loan to the Company from
an unaffiliated lender. Lastly, in May 1995, an entity controlled by the Company
contracted to acquire the Regency Golf and Beach Club at Palm-Aire in Pompano
Beach, Florida (the "Regency"). The Regency is an existing rental apartment
complex having 288 apartment suites. The acquisition is expected to close during
September 1996 and it is currently anticipated that the Company will seek other
partners in connection with the acquisition of the property.

8. MORTGAGES PAYABLE AND OTHER BORROWINGS

Mortgages payable and other borrowings at December 31, 1995 and 1994 are
summarized as follows (in thousands):

Approximate
Type of Debt Maturity Interest Rate 1995 1994
- ------------ -------- ------------- ---- ----
Related to mortgage 6% - Prime
receivables 1996-2010 plus 1% $ 3,088 2,118
Related to real estate 1996-1997 7.75%- Prime
plus 1.5% 20,630 20,759
Other borrowings 1996 Prime-Prime
plus 1% 3,898 3,741
------ ------
$ 27,616 26,618
======= ======

All mortgage payables and other borrowings above are from unaffiliated parties.
Included in 1995 and 1994 amounts related to other borrowings is approximately
$3.4 and $3.7 million, respectively, due to financial institutions.

As indicated on the above table, mortgage payable and other borrowings related
to mortgage receivables increased due to the extinguishment of a note payable.
(See note 5.)

At December 31, 1995 the aggregate principal amount of the above indebtedness
maturing in each of the next five years is approximately as follows (in
thousands):
Years ended
December 31, Amount
---------- -------
1996 $11,496
1997 11,806
1998 555
1999 2,492
2000 172
Thereafter 1,095
-------
$27,616
=======

The majority of the Company's marketable securities, mortgage receivables and
real estate acquired in the 1989 and 1991 debenture Exchange are as to real
estate and marketable securities, encumbered by, or, as to mortgages receivable,
subordinate to mortgages payable and other debt.

In May 1994, the Company borrowed $3.5 million that was utilized to fund
Exchange litigation settlements. The loan bears interest at a rate of 1% above
the prime rate, matures in September 1999 and is collateralized by 435,252
shares of BBC common stock.

In December 1994, the Company established a broker line of credit in the amount
of $850,000 which is collateralized by 170,000 shares of BankAtlantic Bancorp,
Inc. common stock. At December 31, 1995, the outstanding balance on the above
line was approximately $514,000.

9. INCOME TAXES

The provision for income tax expense (benefit) consists of the following (in
thousands):
For the Years Ended
December 31,
--------------------------------
1995 1994 1993
---- ---- ----
Current:
Federal $ - 29 -
State - - -
------ ----- -----
- 29 -
------ ----- -----
Deferred :
Federal - (2,038) -
State - -
------ ----- -----
- (2,038) -
------ ------ -----
- -
------ ----- -----
Total $ - (2,009) -
====== ===== ======

In 1995 and 1994, current taxes applicable to extraordinary items were $46,000
and none, respectively, and deferred taxes applicable to extraordinary items
were $1,633,000 and $214,000, respectively.

A reconciliation from the statutory federal income tax rates of 35% in 1995,
1994 and 1993, to the effective tax rate is as follows (in thousands):

Year ended December 31,
-----------------------
1995 (1) 1994 (1) 1993 (1)
-------- -------- --------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Expected tax expense
(benefit) 1,481 35.0 1,020 35.0 (456) (35.0)
Provision for state
taxes net of federal
benefit 151 3.6 104 3.6 -- --
Tax exempt interest
and dividend
received deduction (253) (5.8) -- -- -- --
Change in the
valuation allowance
as a result of items
other than
extraordinary (2) (1,377) (31.6) (3,133) (107.6) -- --
Other, net (2) (1.2) -- -- 456 35.0
------ ---- ------ ----- ---- ----
-- -- (2,009) (69.0) -- --
====== ==== ====== ===== ==== ====

(1) Expected tax is computed based upon earnings (loss) before income taxes,
cumulative effect of change in accounting for income taxes and
extraordinary items.

(2) The remaining charge in the deferred tax asset valuation allowance in 1995
and 1994 relates to income generated from the extraordinary item.

The tax effects of temporary differences that give rise to significant
components of the deferred tax assets and tax liabilities at December 31, 1995
and 1994 were (in thousands):

1995 1994
Deferred tax assets:
Alternative Minimum Tax Credit carryforward $ 143 244
Real estate, net - 893
Deferred interest on the exchange debentures - 519
Mortgages receivable 361 460
Litigation accruals 3,107 3,107
Other liabilities 135 224
Other assets 231 -
Net operating loss carryforwards 5,716 3,634
----- ------
Total gross deferred tax assets 9,693 9,081
Less:
Valuation allowance - 2,314
------ ------
Deferred tax assets after
valuation allowance 9,693 6,767

Deferred tax liabilities:
Other assets - 391
Real estate, net 1,745 -
Investment in BankAtlantic 9,304 5,885
Exchange Debentures 277 491
------ ------
Total gross deferred tax liabilities 11,326 6,767
------ ------
Net deferred tax liability 1,633 -
====== ======

At December 31, 1995, the Company believes it will utilize its deferred tax
assets through taxable income generated in future years by the reversal of
deferred tax liabilities existing as of December 31, 1995. BFC adopted FAS 109
as of January 1, 1993. The cumulative effect of this change in accounting for
income taxes was a charge aggregating approximately $501,000.

At December 31, 1995, the Company had estimated state net operating loss carry
forwards for state income tax purposes of approximately $12,234,000 of which
$3,081,000 expires in 2004, $585,000 expires in 2005, $2,001,000 expires in
2006, $4,235,000 expires in 2007 and $2,332,000 expires in 2008. The Company
also has a net operating loss carry forward for federal income tax purposes of
approximately $14,820,000 of which $7,199,000 expires in 2006, $4,299,000
expires in 2007 and $3,322,000 expires in 2008. BBC is not included in the
Company's consolidated tax return.

The Company received a net income tax refund of $15,000 during the year ended
December 31, 1995 and made income tax payments of approximately $117,000 during
the year ended December 31, 1994.

10. STOCKHOLDERS' EQUITY

The Company's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of $.01 par value preferred stock. The Board of Directors has
the authority to divide the authorized preferred stock into series or classes
having the relative rights, preferences and limitations as may be determined by
the Board of Directors without the prior approval of shareholders. The Board of
Directors has the power to issue this preferred stock on terms which would
create a preference over the Company's common stock with respect to dividends,
liquidation and voting rights. No further vote of security holders would be
required prior to the issuance of the shares.

The Company's Articles of Incorporation authorize the Company to issue
20,000,000 shares of Special Class A Common Stock, par value $.01 per share. To
the extent permitted by law, the Special Class A Common Stock may be issued in
one or more series as determined from time to time by the Board of Directors and
having the relative rights and preferences determined by the Board of Directors
which are set forth in the Articles of Incorporation. However, in no event will
the voting rights of shares of Special Class A Common Stock equal or exceed the
voting rights of the Company's present Common Stock. At such time as the Board
of Directors authorizes the issuance of the newly created Special Class A Common
Stock the Company's presently outstanding Common Stock will be automatically
redesignated Class B Common Stock and holders thereof shall have the right at
any time to convert their shares to shares of the Special Class A Common Stock
on a one-for-one basis at the holder's sole election.

11. EARNINGS ON REAL ESTATE OPERATIONS

Following are the components of earnings on real estate operations for each of
the years in the three year period ending December 31, 1995 (in thousands) (a):

1995 1994 1993
------ ------ ------
Deferred profit recognized $ 161 58 70
Operations of properties acquired in
debenture Exchange (see note 6) 872 1,648 2,547
Other property operations - 29 -
------ ------ ------
$ 1,033 1,735 2,617
====== ====== ======

(a) The above amounts relate entirely to the company and its subsidiaries
other than BankAtlantic.

12. RELATED PARTY TRANSACTIONS

(a) Related party transactions arise from transactions with affiliated
entities. In addition to transactions described in notes elsewhere herein,
a summary of significant originating related party transactions is as
follows (in thousands):

Year Ended December 31,
------------------------
1995 1994 1993
------ ------ ------
Property management fee revenue $ 78 76 69
===== ====== ======

Reimbursement revenue for
administrative, accounting
and legal services $ 91 112 114
====== ====== ======

(b) The Company has a 49.5% interest and affiliates and third parties have
a 50.5% interest in a limited partnership formed in 1979, for which the
Company's Chairman serves as the individual General Partner. The
partnership's primary asset is real estate subject to net lease
agreements. The Company's cost for this investment (approximately
$441,000) and was written off in 1990 due to the bankruptcy of the
entity leasing the real estate. Any recovery will be recognized in
income when received.

(c) Included in other assets at December 31, 1995 and 1994, was approximately
$704,000 and $201,000, respectively due from affiliates.

(d) Alan B. Levan, President and Chairman of the Board of the Company also
serves as Chairman of the Board and Chief Executive Officer of
BankAtlantic Bancorp, Inc. and BankAtlantic.

(e) John E. Abdo, a director of the Company also serves as Vice Chairman of
the Board of Directors of BankAtlantic and President of BankAtlantic
Development Corporation a wholly owned subsidiary of BankAtlantic.

(f) In May 1986, the Company issued 895 shares of stock to an officer. The
aggregate price, which was at the then market value of $19.00 per share,
was approximately $17,000 and payment for the shares is in the form of a
non-interest bearing note that matures in May 1996 and is secured by
collateral other than the stock issued.

(g) Florida Partners Corporation acquired 100,000 of the 850,000 shares of the
common stock sold by the Company in February 1987 and, in June 1990,
acquired in a privately negotiated transaction, an additional 33,314
shares of the Company's common stock. Alan B. Levan is the principal
shareholder and Chairman of the Board of Florida Partners Corporation.
Other members of the Company's Board of Directors also hold positions with
Florida Partners Corporation.

(h) The trustee for the escrow account with respect to the redeemed debenture
liability maintains such account at BankAtlantic.

13 EMPLOYEE BENEFIT PLANS

The Company's Stock Option Plan provides for the grant of stock options to
purchase up to 500,000 shares of Company's common stock. The plan provided for
the grant of both incentive stock options and non-qualifying options. The
exercise price of a stock option will not be less than the fair market value of
the common stock on the date of the grant. At December 31, 1995, non-qualifying
stock options for 410,000 shares of common stock have been granted including
10,000 shares to non-employee directors and incentive stock options for 25,000
shares of common stock have been granted. The exercise price of the options
issued is from $4.25 to $4.95 per share. At December 31, 1995, options for
223,331 shares of common stock were exercisable. 10,000 of the options expire in
2003 and 215,000 of the options expire in 2004 and 210,000 of the options expire
in 2005.

The Company has an employee's profit-sharing plan which provides for
contributions to a fund of a sum as defined, but not to exceed the amount
permitted under the Internal Revenue Service Code as deductible expense. The
provision charged to operations was approximately $10,000 for the year ended
December 31, 1995 and $2,500 for the year ended December 31, 1994 and $5,000 for
the year ended December 31, 1993. Contributions are funded on a current basis.

14. LITIGATION

The following is a description of certain lawsuits to which the Company is or
has been a party.

Mark Gallegos, et. Al., (formerly Cheryl and Wayne Hubbell, et al.) vs.
I.R.E. Advisors Series 26, Corp. et al., in the California Superior Court in
Los Angeles, California, Case No. BC049913. This action was filed as a class
action during March 1992 on behalf of all purchasers of I.R.E. Real Estate
Fund, Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. - Series 26, I.R.E.
Real Estate Fund, Ltd. - Series 27, I.R.E. Real Estate Growth Fund, Ltd. -
Series 28 and I.R.E. Real Estate Income Fund, Ltd. against the managing and
individual general partners of the above named partnerships and the officers
and directors of those entities. The plaintiffs alleged that the offering
materials distributed in connection with the promotions of these limited
partnerships contained misrepresentations of material fact and that the
defendants misrepresented and concealed material facts from the plaintiffs
during the time the partnerships were in existence. The complaint asserts two
causes of action for fraud, one of which is based on a claim for intentional
misrepresentation and concealment and one of which is based on a claim of
negligent misrepresentation. The complaint also contains a claim for breach
of fiduciary duty. The complaint seeks unspecified compensatory and punitive
damages, attorneys' fees and costs. Plaintiffs filed a third amended
complaint which defendants answered in April 1993. In May 1993, a motion to
dismiss was filed by the plaintiffs to dismiss all claims relating to I.R.E.
Real Estate Fund, Ltd.-Series 25, I.R.E. Real Estate Fund, Ltd.-Series 27 and
I.R.E. Real Estate Income Fund, Ltd., whether exchange related or not only
leaving claims against I.R.E. Real Estate Fund, Ltd. - Series 26 and I.R.E.
Growth Fund, Ltd. - Series 28. This motion was approved by the Court in
September 1994.

Kugler, et.al., (formerly Martha Hess, et. al.), v. I.R.E. Real Estate Income
Fund, et al. In the Appellate Court of Illinois, First District, and related
cases, App. No. 90-107. On or about May 20, 1988, an individual investor
filed the above referenced action against two individual defendants, who
allegedly sold securities without being registered as securities brokers in
Illinois, two corporations organized and controlled by such individuals, and
against approximately sixteen publicly offered limited partnerships,
including two partnerships that the Company acquired the assets and
liabilities of in the 1991 Exchange transaction, (the "predecessor
partnerships") interests in which were sold by the individual and corporate
broker defendants.

15. QUARTERLY FINANCIAL INFORMATION (unaudited)

Following is quarterly financial information for the years ended 1995 and 1994
(in thousands, except per share data):

Quarter Ended
-----------------------------------------
1995 Mar 31, Jun 30, Sep 30, Dec 31, Total
------- ------- ------- ------ -----
Revenues $ 543 1,004 571 1,005 3,123
Costs and expenses 1,746 1,692 1,616 2,258 7,312
Income (loss) before
extraordinary item 964 1,744 1,361 161 4,230
Net income 964 1,744 2,416 2,808 7,932
====== ====== ====== ====== ======

Income per common and common
equivalent share before
extraordinary items $ .47 .81 .60 .07 1.90
Extraordinary items -- -- .46 1.16 1.67
------ ------ ------ ------ ------
Net income per common and
common equivalent sha .47 .81 1.06 1.23 3.57
====== ====== ====== ====== ======

Income per common and common
equivalent share assuming full
dilution before extraordinary items .47 .79 .59 .07 1.89
Extraordinary items -- -- .46 1.16 1.65
------ ------ ------ ------ ------
Net income per common and
common equivalent share
assuming full dilution .47 .79 1.05 1.23 3.54
====== ====== ====== ====== ======

Quarter Ended
-----------------------------------------
1994 Mar 31, Jun 30, Sep 30, Dec 31, Total
------- ------- ------- ------ -----
Revenues $1,008 3,610 1,902 2,270 8,790
Costs and expenses 2,968 4,625 2,418 3,906 13,917
Income (loss) before
extraordinary item 28 889 1,540 2,465 4,922
Net income 28 8,643 7,972 11,023 27,666
====== ====== ====== ====== ======

Income per common and common
equivalent share before
extraordinary item $ .01 .43 .75 1.20 2.39
Extraordinary item -- 3.77 3.13 4.16 11.06
------ ------ ------ ------ ------
Net income per common and
common equivalent share $ .01 4.20 3.88 5.36 13.45
====== ====== ====== ====== ======

Income per common and common
equivalent share assuming full
dilution before extraordinary
items $ .01 .43 .75 1.20 2.39
Extraordinary item -- 3.77 3.13 4.16 11.06
------ ------ ------ ------ ------
Net income per common and
common equivalent share $ .01 4.20 3.88 5.36 13.45
assuming full dilution ====== ====== ====== ===== =====

During the fourth quarter of 1994, the Courts approved the settlement of
litigation in connection with the 1989 Exchange. In connection therewith, the
Company recognized an extraordinary gain of approximately $7.8 million.

During the third quarter of 1995, the Company recognized an extraordinary gain
of approximately $230,000 related to revising the estimate of the amount of the
settlement liability on the 1991 Exchange transaction and an extraordinary gain
of approximately $825,000 attributable to the extinguishment of debt on a note
payable.

During the fourth quarter of 1995, the Company recognized an extraordinary gain
of approximately $3.0 million related to revising the estimate of the amount of
the settlement liability on the 1989 and 1991 Exchange transactions and an
extraordinary loss of approximately $365,000 related to the forgiveness of debt
on a mortgage receivable due from an affiliate.

16. Consolidated Statements of Cash Flows

In addition to the non-cash investing and financing activities described
elsewhere herein, other non-cash investing and financing activities are as
follows:

December 31,
--------------------
1995 1994 1993
------ ------ ------
The reclassification of redeemable
common stock to additional paid-in
capital due to the cancellation
of a shareholder agreement - 5,776 -
The net gains associated with the
settlements of the Exchange
litigation, net of income taxes 3,242 22,744 -
The increase in stockholders' equity
resulting from the Company's
proportionate share of BBC's net
unrealized appreciation on
securities available for
sale, less related deferred income taxes 2,546 93 -
Deferred gain from debt restructuring - 356 -
Gain from extinguishment of debt,
net of income taxes 460 - -
Reinstatement of mortgage receivables
related to extinguishment of debt 1,484 - -
Reinstatement of mortgage payables
related to extinguishment of debt 976 - -
Transfers from escrow accounts to
reflect payments on the redeemed
debenture liability 3,697 8,923 -
Effect of issuance of BBC's
common stock by BBC to Shareholders
other than BFC 1,252 15 268
Mortgages eliminated in connection with the
disposition of real estate acquired
in debenture Exchanges - 11,112 -
BankAtlantic dividends on common stock
declared and not received 215 191 187
Interest paid on borrowings 2,520 2,323 2,948

17. Estimated Fair Value of Financial Instruments

The information set forth below provides disclosure of the estimated fair value
of the Company's financial instruments presented in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" (FAS 107) issued by the
FASB.

Management has made estimates of fair value discount rates that it believes to
be reasonable. However, because there is no market for many of these financial
instruments, management has no basis to determine whether the fair value
presented would be indicative of the value negotiated in an actual sale. The
Company's fair value estimates do not consider the tax effect that would be
associated with the disposition of the assets or liabilities at their fair value
estimates. Due to the lack of an active trading market on the exchange
debentures, fair value is presumed to equal carrying value.

The following table presents information for the Company's financial instruments
as of December 31, 1995 and 1994 (in thousands):

1995 1994
-------------- --------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- ------- -------
Financial assets:
Cash and cash equivalents $ 1,152 1,152 711 711
Securities available for sale 5,105 5,105 5,869 5,869
Mortgage notes and related
receivables, net 5,168 5,168 4,904 4,904

Financial liabilities:
Mortgage payables and other
borrowings 27,616 27,616 26,618 26,618
Exchange debentures, net 3,810 3,810 6,616 6,616
======== ====== ======= =======

==============================================================================

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

None.

PART III
--------

Items 10 through 13 is incorporated by reference to the Company's definitive
proxy statement to be filed with the Securities and Exchange Commission, no
later than 120 days after the end of the year covered by this Form 10-K, or,
alternatively, by amendment to this Form 10-K under cover of Form 10K/A not
later than the end of such 120 day period.

Item 14 (d), financial statements of subsidiaries not consolidated and fifty
percent or less owned persons, is incorporated by reference to the annual report
on Form 10-K of BankAtlantic Bancorp, Inc. for the fiscal year end December 31,
1995, Commission File Number 33-81972, filed with the Securities
and Exchange Commission.

PART IV
-------

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

(a)-1 Financial Statements - See Item 8

(a)-2 Financial Statement Schedules - All schedules are omitted as the required
information is either not applicable or presented in the financial
statements or related notes.

(a)-3 Index to Exhibits

(3) Articles of Incorporation, as amended - See Exhibit (3) of Registrant's
Annual Report on Form 10-K for the year ended December 31, 1989. By-laws -
See Exhibit E of Proxy Statement/Prospectus dated June 20, 1980.

(4) Instruments defining the rights of security holders, including indentures
- Not applicable.

(9) Voting trust agreement - Not applicable.

(10) Material contracts: - Not applicable.

(11) Statement re computation of per share earnings - Not applicable.

(12) Statement re computation of ratios - Ratio of earnings to fixed charges
- attached as Exhibit 12.

(13) Annual Report to security holders, Form 10-Q or quarterly report to
security holders - Not applicable.

(16) Letter re change in certifying accountant - Not applicable.

(18) Letter re change in accounting principles - Not applicable.

(19) Previously unfiled documents - Not applicable.

(22) Subsidiaries of the registrant:
State of
Name Organization
---- ------------
BankAtlantic Bancorp, Inc. Florida
Realty 2000 Corporation Florida
Eden Services, Inc. Florida
Eden United, Inc. Florida
First Pensacola Mortgage Company, Inc. Florida
U.S. Capital Securities, Inc. Florida
I.R.E. Property Analysts, Inc. Florida
I.R.E. Realty Advisory Group, Inc. Florida
I.R.E. Real Estate Investments, Inc. Florida
I.R.E. Real Estate Investments, Series 2, Inc. Florida
I.R.E. Property Management, Inc. Florida
I.R.E. Real Estate Funds, Inc. Florida
I.R.E. Advisors Series 21, Corp. Florida
I.R.E. Advisors Series 23, Corp. Florida
I.R.E. Advisors Series 24, Corp. Florida
I.R.E. Advisors Series 25, Corp. Florida
I.R.E. Advisors Series 26, Corp. Florida
I.R.E. Advisors Series 27, Corp. Florida
I.R.E. Advisors Series 28, Corp. Florida
I.R.E. Advisors Series 29, Corp. Florida
I.R.E. Income Advisors Corp. Florida
I.R.E. Pension Advisors, Corp. Florida
I.R.E. Pension Advisors II, Corp. Florida
Cypress Creek Partners, Inc Delaware
Center Port Development, Inc. Florida

(23) Published report regarding matters submitted to vote of security holders -
Not applicable.

(24) Consents of experts and counsel - Not applicable.

(25) Power of attorney - Not applicable.

(27) Financial data schedule - Attached as Exhibit 27.

(28) Additional exhibits - Not applicable.

(b) Reports on Form 8-K

No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.

(d) Financial statements of subsidiaries not consolidated and fifty percent or
less owned persons:

Annual report on Form 10-K for the fiscal year end December 31, 1995 of
BankAtlantic Bancorp, Inc.

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.

BFC FINANCIAL CORPORATION
Registrant

By: /S/ Alan B. Levan
------------------------------
Alan B. Levan, President

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 dates indicated.

/S/ Alan B. Levan March 26, 1996
- ----------------------------------------
ALAN B. LEVAN, Director and
Principal Executive Officer

/S/ Glen R. Gilbert March 26, 1996
- ----------------------------------------
GLEN R. GILBERT, Chief Financial Officer

/S/ John E. Abdo March 26, 1996
- ----------------------------------------
JOHN E. ABDO, Director

/S/ Earl Pertnoy March 26, 1996
- ----------------------------------------
EARL PERTNOY, Director

/S/ Carl E.B. McKenry, Jr. March 26, 1996
- ----------------------------------------
CARL E. B. McKENRY, JR., Director

<PAGE>

BFC FINANCIAL CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES_
(In thousands)

Year ended December 31,
----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(1) (1)
FIXED CHARGES:
INTEREST $ 4,574 8,276 9,063 64,883 99,944
ELIMINATE BANKATLANTIC -- -- -- (55,567) (90,998)
------- ------- ------- ------- -------
4,574 8,276 9,063 9,316 8,946
======= ======= ======= ======= =======

EARNINGS (LOSS):
PRETAX EARNINGS 4,230 2,913 (1,303) 11,210 (22,585)
MINORITY INTEREST IN
BANKATLANTIC -- -- -- 3,964 (2,977)
------- ------- ------- ------- -------
PRETAX EARNINGS (LOSS) BEFORE
MINORITY INTEREST 4,230 2,913 (1,303) 15,174 (25,562)
ELIMINATE BANKATLANTIC (8,419) (8,040) (10,764) (25,300) 14,779
BANKATLANTIC DIVIDENDS 819 753 271 -- --
FIXED CHARGES 4,574 8,276 9,063 9,316 8,946
------- ------- ------- ------- -------
$ 1,204 3,902 (2,733) (810) (1,837)
======= ======= ======= ======= =======

RATIO 0.26 0.47 (0.30) (0.09) (0.21)
======= ======= ======= ======= =======
COVERAGE DEFICIENCY $ 3,370 4,374 11,796 10,126 10,783
======= ======= ======= ======= =======

(1) The operations of BBC have been eliminated since there is a dividend
restriction between BBC's primary subsidiary, BankAtlantic, and BBC.

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1995 FORM 10-K AND IS QUALIFIED IN ITS EVTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000315858
<NAME> BFC Financial Corporation
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1152
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5105
<INVESTMENTS-CARRYING> 5105
<INVESTMENTS-MARKET> 5105
<LOANS> 6102
<ALLOWANCE> 934
<TOTAL-ASSETS> 96896
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 9393
<LONG-TERM> 31426
0
0
<COMMON> 17
<OTHER-SE> 35758
<TOTAL-LIABILITIES-AND-EQUITY> 96896
<INTEREST-LOAN> 451
<INTEREST-INVEST> 648
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<INTEREST-INCOME-NET> (3475)
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</TABLE>