FORM 10Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 34-027228
BankAtlantic Bancorp, Inc.
(Exact name of registrant as specified in its Charter)
Florida 65-0507804
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1750 East Sunrise Boulevard
Ft. Lauderdale, Florida 33304
(Address of principal executive offices) (Zip Code)
(954) 760-5000
(Registrant's telephone number, including area code)
Not Applicable
Former name, former address and former fiscal year,if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
preferred and common stock as of the latest practicable date.
Outstanding at
Title of Each Class September 30 , 1996
- ------------------- --------------------
Class A Common Stock, par value $0.01 per share 4,137,353
Class B Common Stock, par value $0.01 per share 10,582,980
AMENDMENT NO.1 TO QUARTERLY REPORT ON FORM 10Q
BankAtlantic Bancorp, Inc.
TABLE OF CONTENTS
FINANCIAL INFORMATION Page Reference
Financial Statements......................................................1 - 10
Consolidated Statements of Financial Condition - September 30, 1996
(unaudited)and December 31, 1995..............................................1
Consolidated Statements of Operations - Unaudited for the Three and
Nine Months Ended September 30, 1996 and 1995.................................2
,
Consolidated Statements of Cash Flows - Unaudited for the Nine Months
Ended September 30, 1996 and 1995..........................................3 - 4
Notes to Consolidated Financial Statements - Unaudited....................5 - 10
Management's Discussion and Analysis of Results of Operations and
Financial Condition.................................................... 11 - 18
OTHER INFORMATION
Legal Proceedings............................................................ 19
Exhibits .................................................................... 19
Signatures................................................................... 20
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
---- ----
ASSETS
(In thousands, except share data)
<S> <C> <C>
Cash and due from depository institutions .............................................................$ 78,901 $ 69,867
Investment securities-net, held to maturity, at cost which approximates market value .................. 65,818 49,856
Loans receivable, net ................................................................................. 1,264,616 828,630
Debt securities available for sale, at market value ................................................... 615,726 691,803
Accrued interest receivable ........................................................................... 16,897 14,553
Real estate owned, net ................................................................................ 5,451 6,279
Office properties and equipment, net .................................................................. 47,132 40,954
Federal Home Loan Bank stock, at cost which approximates market value ................................. 10,849 10,089
Mortgage servicing rights ............................................................................. 23,421 20,738
Deferred tax asset, net ............................................................................... 2,537 0
Cost over fair value of net assets acquired ........................................................... 9,905 10,823
Other assets .......................................................................................... 29,227 7,097
----------- ---------
TOTAL ASSETS ..........................................................................................$ 2,170,480 $1,750,689
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits ..............................................................................................$ 1,352,169 $ 1,300,377
Advances from FHLB .................................................................................... 216,985 201,785
Federal funds purchased ............................................................................... 0 1,200
Securities sold under agreements to repurchase ........................................................ 290,423 66,237
Subordinated debentures and note payable .............................................................. 78,500 21,001
Drafts payable ........................................................................................ 537 796
Deferred tax liabilities, net ......................................................................... 0 744
Advances by borrowers for taxes and insurance ......................................................... 56,647 15,684
Other liabilities ..................................................................................... 35,492 22,304
--------- ---------
TOTAL LIABILITIES ..................................................................................... 2,030,753 1,630,128
--------- ---------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000 shares authorized: none issued and outstanding .......... 0 0
Class A Common Stock, $0.01 par value, authorized 30,000,000 shares; issued and outstanding,
4,137,353 and zero shares ........................................................................... 41 0
Class B Common Stock, $0.01 par value, authorized 15,000,000 shares; issued and outstanding,
10,582,980 and 10,592,999 shares .................................................................... 106 106
Additional paid-in capital ............................................................................ 64,031 48,905
Retained earnings ..................................................................................... 75,559 65,817
------ ------
Total stockholders' equity before net unrealized appreciation (depreciation) on debt securities
available for sale - net of deferred income taxes ................................................. 139,737 114,828
Net unrealized appreciation (depreciation) on debt securities available for sale - net of
deferred income taxes ............................................................................. (10) 5,733
------- -------
TOTAL STOCKHOLDERS' EQUITY ............................................................................ 139,727 120,561
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................................................$ 2,170,480 $1,750,689
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months For the Nine Months
(In thousands, except share data) Ended September 30, Ended September 30,
--------------------- ---------------------
INTEREST INCOME: 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest and fees on loans ................................. $ 27,277 $ 19,127 $ 69,487 $ 52,631
Interest on debt securities available for sale ............. 9,313 1,342 29,039 4,126
Interest and dividends on investment securities ............ 1,931 3,387 4,845 9,811
Interest on mortgage-backed securities held to maturity .... 0 9,827 0 30,155
------ ------ ------- ------
Total interest income ...................................... 38,521 33,683 103,371 96,723
------ ------ ------- ------
INTEREST EXPENSE:
Interest on deposits ....................................... 12,644 12,243 37,356 34,349
Interest on advances from FHLB ............................. 2,625 2,203 5,448 5,589
Interest on securities sold under agreements to repurchase . 2,846 2,101 5,033 8,886
Interest on subordinated debentures and other borrowings ... 1,495 157 2,489 278
------ ------ ------- ------
Total interest expense ..................................... 19,610 16,704 50,326 49,102
------ ------ ------ ------
NET INTEREST INCOME ........................................ 18,911 16,979 53,045 47,621
Provision for loan losses .................................. 1,869 1,436 4,264 2,817
------ ------ ------- ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ........ 17,042 15,543 48,781 44,804
------ ------ ------ ------
NON-INTEREST INCOME:
Loan servicing and other loan fees ......................... 956 885 2,900 2,728
Gains on sales of loans originated for resale .............. 1 49 287 202
Realized gains on trading account securities ............... 0 16 0 589
Gains on sales of mortgage servicing rights ................ 2,554 1,721 2,554 2,744
Gains on sales of debt securities available for sale ....... 0 0 3,946 0
Other ...................................................... 3,796 2,892 11,168 8,643
------ ------ ------- ------
Total non-interest income .................................. 7,307 5,563 20,855 14,906
----- ----- ------ ------
NON-INTEREST EXPENSE:
Employee compensation and benefits ......................... 7,422 6,572 21,841 19,390
Occupancy and equipment .................................... 2,980 2,772 8,671 7,964
Federal insurance premium .................................. 689 705 1,949 2,097
Advertising and promotion .................................. 394 528 1,631 1,722
Foreclosed asset activity, net ............................. (36) (495) (545) (3,319)
SAIF special assessment ................................... 7,160 0 7,160 0
Amortization of cost over fair value of net assets acquired 306 306 918 816
Other ...................................................... 3,457 2,997 8,947 8,886
------ ------ ------- ------
Total non-interest expense ................................. 22,372 13,385 50,572 37,556
------ ------ ------ ------
INCOME BEFORE INCOME TAXES ................................. 1,977 7,721 19,064 22,154
Provision for income taxes ................................. 886 2,683 7,714 7,799
------ ------ ------- ------
NET INCOME ................................................. 1,091 5,038 11,350 14,355
Dividends on non-cumulative preferred stock ................ 0 220 0 660
------ ------ ------- ------
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS ............... $ 1,091 $ 4,818 $ 11,350 $ 13,695
============ ========== =========== ============
Net income per common and common equivalent share .......... $ 0.07 $ 0.35 $ 0.76 $ 1.02
============ ========== =========== ============
Net income per common and common equivalent share,
assuming full dilution ................................... $ 0.07 $ 0.35 $ 0.72 $ 1.00
============ ========== =========== ============
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING ............................ 15,409,888 13,779,544 15,010,504 13,420,330
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING , ASSUMING FULL DILUTION .. 15,522,371 13,779,544 16,577,100 13,644,486
========== ========== ========== ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
OPERATING ACTIVITIES: 1996 1995
---- ----
<S> <C> <C>
Net income ...........................................................................$ 11,350 $ 14,355
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ............................................................ 4,264 2,817
Reversal of allowance for losses on real estate owned ................................ (200) (1,400)
Depreciation ......................................................................... 2,608 2,366
Amortization of mortgage servicing rights ........................................... 5,041 3,149
Increase in deferred income taxes .................................................... 171 744
Net accretion (amortization) of securities ........................................... 35 (421)
Realized gains on trading account securities ......................................... 0 (589)
Proceeds from sales of trading account securities .................................... 0 9,524
Net amortization of deferred loan origination fees ................................... (1,013) (764)
Gains on sales of real estate owned .................................................. (346) (1,985)
Net (gains) losses on sales of property and equipment ................................ 66 (18)
Gains on sales of mortgage servicing rights .......................................... (2,554) (2,744)
Gains on sales of debt securities available for sale ................................. (3,946) 0
Proceeds from loans originated for resale ............................................ 45,085 20,718
Fundings of loans for resale ......................................................... (46,609) (28,399)
Gains on sales of loans originated for resale ........................................ (287) (202)
Recovery from tax certificate losses ................................................. (259) (65)
Amortization of dealer reserve ....................................................... 1,579 1,456
Amortization of cost over fair value of net assets acquired .......................... 918 816
Net accretion of purchase accounting adjustments ..................................... (244) (277)
Amortization of borrowings deferred costs ........................................... 137 72
Decrease (increase) in accrued interest receivable ................................... (2,344) 877
Decrease (increase) in other assets .................................................. (3,675) 2,480
Write-off of property and equipment .................................................. 263 0
Increase in other liabilities ........................................................ 13,184 3,085
Increase (decrease) in drafts payable ................................................ (259) 64
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ 22,965 25,659
------ ------
INVESTING ACTIVITIES:
Proceeds from redemption and maturities of investment securities ..................... 40,307 112,488
Purchase of investment securities .................................................... (56,010) (68,021)
Proceeds from sale of debt securities available for sale ............................. 166,985 852
Principal collected on debt securities available for sale ............................ 135,642 9,130
Purchase of debt securities available for sale ....................................... (231,765) 0
Mortgage-backed securities purchased ................................................. 0 (75,262)
Principal collected on mortgage-backed securities .................................... 0 74,852
Proceeds from sale of FHLB stock ..................................................... 1,249 0
FHLB stock acquired .................................................................. (2,009) 0
Principal reduction on loans ......................................................... 432,526 314,066
Loan fundings for portfolio ......................................................... (555,573) (431,343)
Loans purchased ...................................................................... (315,247) (9,930)
Additions to dealer reserve .......................................................... (2,196) (2,653)
Proceeds from sales of real estate owned ............................................. 2,611 5,488
Mortgage servicing rights acquired ................................................... (19,042) (5,117)
Proceeds from sales of mortgage servicing rights ..................................... 3,051 8,340
Repayment of advances to joint ventures .............................................. 0 1,239
Additions to office property and equipment ........................................... (9,115) (3,601)
Proceeds from sales of property and equipment ........................................ 0 18
Purchase of MegaBank, net of cash acquired ........................................... 0 (14,914)
Escrow deposit for the purchase of Bank of North America Bancorp...................... (5,000) 0
-------- -------
NET CASH USED BY INVESTING ACTIVITIES ............................................... (413,586) (84,368)
------- -------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (CONTINUED)
<PAGE>
CONSOLIDATED STATEMENTS FOR CASH FLOWS - UNAUDITED
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
1996 1995
---- ----
FINANCING ACTIVITIES:
<S> <C> <C>
Net increase in deposits ......................................................$ 19,119 $ 10,573
Interest credited to deposits ................................................. 32,688 31,588
Repayments of FHLB advances ................................................... (438,755) (432,050)
Proceeds from FHLB advances ................................................... 453,955 390,000
Net increase in securities sold under agreements to repurchase ................ 224,186 (857)
Net increase (decrease) in federal funds purchased ............................ (1,200) 3,000
Net proceeds from issuance of subordinated debentures ......................... 55,137 18,983
Proceeds from note payable ................................................... 0 3,931
Repayment of note payable ..................................................... (1) (3,999)
Issuance of common stock, net ................................................. 18,337 1,398
Payments to acquire and retire treasury stock ................................. (3,259) 0
Receipts of advances by borrowers for taxes and insurance ..................... 40,963 33,003
Preferred stock dividends paid ................................................ 0 (660)
Common stock dividends paid ................................................... (1,515) (1,205)
------- ------
NET CASH PROVIDED BY FINANCING ACTIVITIES .................................... 399,655 53,705
------- ------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................. 9,034 (5,004)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............................. 69,867 55,980
------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................................$ 78,901 $ 50,976
=========== =========
SUPPLEMENTARY DISCLOSURE AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Interest paid on borrowings ...................................................$ 47,372 $ 48,870
Income taxes paid ............................................................. 8,000 7,070
Income taxes refunded ......................................................... 0 88
Loans transferred to real estate owned ........................................ 1,237 792
Proceeds receivable from sales of mortgage servicing rights ................... 10,821 0
Loan charge-offs .............................................................. 5,518 3,803
Tax certificate charge-offs, net of recoveries ................................ 142 1,533
Common stock dividend declared and not paid until October ..................... 550 464
Increase in equity for the tax effect related to the exercise of employee stock
options ..................................................................... 89 86
Change in net unrealized appreciation (depreciation)on debt securities
available for sale .......................................................... (9,349) 2,321
Change in deferred taxes on net unrealized appreciation (depreciation)on debt
securities available for sale ............................................... (3,606) 902
Change in stockholders' equity from net unrealized appreciation (depreciation)
on debt securities available for sale, less related deferred income taxes ... (5,743) 1,419
====== =====
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
</TABLE>
<PAGE>
BankAtlantic Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. PRESENTATION OF INTERIM FINANCIAL STATEMENTS
BankAtlantic Bancorp, Inc. ("BBC") is a unitary savings bank holding
company. BBC's primary asset is the capital stock of BankAtlantic, a Federal
Savings Bank ("BankAtlantic"), its wholly owned subsidiary, and BBC's principal
activities relate to the operations of BankAtlantic and BankAtlantic's
subsidiaries. BankAtlantic's subsidiaries are primarily utilized to dispose of
real estate acquired through foreclosure. All significant inter-company balances
and transactions have been eliminated in consolidation.
In management's opinion, the accompanying consolidated financial statements
contain such adjustments necessary to present fairly BBC's consolidated
financial condition at September 30, 1996, the consolidated results of
operations for the three and nine months ended September 30, 1996 and 1995 and
the consolidated cash flows for the nine months ended September 30, 1996 and
1995. Such adjustments, exclusive of the SAIF special assessment, consisted only
of normal recurring items. The consolidated financial statements and related
notes are presented as permitted by Form 10Q and should be read in conjunction
with the notes to consolidated financial statements appearing in BBC's Annual
Report on Form 10K for the year ended December 31, 1995 and the Form 10Q for
each of the periods ended March 31, 1996 and June 30, 1996.
2. EQUITY CAPITAL
The follow table sets forth the changes in common stockholders' equity for
the nine months ended September 30, 1996 before net unrealized appreciation
(depreciation) of debt securities available for sale:
<TABLE>
<CAPTION>
Additional
Common Paid in Retained
(in thousands) Stock Capital Earnings
----- ------- --------
<S> <C> <C> <C>
Balance at December 31, 1995 ......................$ 106 $ 48,905 $ 65,817
Proceeds from issuance of Class A Common Stock, net 12 17,992 0
Exercise of 1984 stock options .................... 1 421 0
Net income ........................................ 0 0 11,350
Dividends on common stock ......................... 0 0 (1,608)
25% stock split................................... 30 (30) 0
Purchase and retirement of treasury stock ......... (2) (3,257) 0
---------- -------- --------
Balance at September 30, 1996 .....................$ 147 $ 64,031 $ 75,559
========== ======== ========
</TABLE>
On July 9, 1996, the Board of Directors declared a common stock split
effected in the form of a 25% stock dividend, payable in Class A common stock to
BBC's Class A and Class B common shareholders of record on July 19, 1996. The
stock dividend was payable in Class A common stock regardless of the class of
shares held. Where appropriate, amounts throughout this report have been
adjusted to reflect the stock dividend.
In August 1996, BBC announced a plan to purchase up to one million shares
of BBC's common stock. As of September 30, 1996, BBC repurchased in the
secondary market 160,000 and 112,500 of Class A and Class B common shares,
respectively. These shares were retired at the time of repurchase.
<PAGE>
On May 21, 1996 the shareholders approved the BankAtlantic Bancorp 1996 Stock
Option Plan (the "1996 Plan") which authorized the issuance of options to
acquire up to 1.0 million shares of Class A Common Stock. The 1996 Plan expires
on April 2, 2006. On July 9, 1996, 274,868 of incentive stock options and
219,195 of non-qualifying stock options were granted pursuant to the
BankAtlantic Bancorp 1996 Stock Option Plan to all officers of BankAtlantic. All
of the incentive and non-qualifying stock options are exercisable for BBC's
Class A Common Stock, with an exercise price equal to the fair market value at
the date of grant ($11.20), expire ten years from the date of grant and are
exercisable any time after five years from the date of grant.
During August 1996 the Compensation Committee adjusted the stock options
issued pursuant to the BankAtlantic 1984, 1994 and 1996 Stock Option Plans to
reflect the 25% stock split. The following table sets forth all outstanding
options adjusted for the July 1996 common stock split effected in the form of a
25% stock dividend:
Outstanding Outstanding
Options Options
Class B Class A
------- -------
Options Outstanding at December 31, 1995 1,254,658 0
Options Issued .......................... 0 395,250
25% stock split ......................... 314,226 123,852
Options Exercised ....................... (56,857) 0
Options Canceled ........................ (13,196) (2,188)
------- ------
Options Outstanding at September 30, 1996 1,498,831 516,914
========= =======
Price per share ......................... $4.45 - $7.81 $11.20-$12.20
3. SALES OF MORTGAGE SERVICING RIGHTS
During the nine months ended September 30, 1996 and 1995, BankAtlantic sold
$11.3 million and $5.6 million, respectively of mortgage servicing rights
realizing gains of $2.6 million and $2.7 million, respectively. These mortgage
servicing rights related to approximately $736.9 million and $492.1 million,
respectively of loans. During the three months ended September 30, 1995,
BankAtlantic sold $3.2 million of mortgage servicing rights realizing a $1.7
million gain. These mortgage servicing rights related to approximately $292.7
million of mortgage loans. Included in other assets at September 30, 1996 was a
$10.8 million receivable from the sales of mortgage servicing rights. The
receivable was collected in October 1996.
4. SAIF SPECIAL ASSESSMENT
On September 30, 1996, President Clinton signed in law H.R. 3610, which is
intended to recapitalize the SAIF and substantially bridge the assessment rate
disparity existing between SAIF and BIF insured institutions. The new law
subjects institutions with SAIF assessable deposits, including BankAtlantic, to
a one-time assessment of 0.657% of covered deposits at March 31, 1995.
BankAtlantic's one-time assessment resulted in a pre-tax charge of approximately
$7.2 million for the three and nine months ended September 30, 1996, which is
payable not later than November 29, 1996, and, under provisions of the new law,
may be treated for tax purposes as a fully deductible "ordinary and necessary
business expense" when paid.
5. ACQUISITION OF BANK OF NORTH AMERICA BANCORP, INC.
On October 11, 1996, BankAtlantic consummated its acquisition of Bank of
North America Bancorp ("BNAB") for $53.8 million in cash. The acquisition was
accounted for as a purchase for financial reporting purposes. BNAB's primary
asset was its wholly owned subsidiary, Bank of North America ("BNA"), a Florida
chartered commercial bank. BNA had assets of $524.7 million and a net loss of
$2.5 for the nine months ended September 30, 1996, and net income of $2.2
million for the year ended December 31, 1995.
The pro forma information shown below is presented for comparative purposes
only and is not necessarily indicative of the combined financial position or
results of operations in the future. The pro forma information is also not
necessarily indicative of the combined financial position or results of
operations which would have been realized had the acquisition been consummated
during the periods or as of the dates for which the pro forma financial
information is presented.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------
(In thousands, except per Adjust- COMBINED
share data) BBC BNAB ments PROFORMA
--- ---- ----- --------
ASSETS
<S> <C> <C> <C> <C>
Cash ..........................$ 78,901 $ 29,779 $ $ 108,680
Investment securities, net .... 65,818 73,175 13 (1) 139,006
Loans receivable, net ......... 1,264,616 393,246 1,604 (1) 1,659,466
Debt securities available for
sale ....................... 615,726 0 615,726
Real estate owned ............. 5,451 1,017 6,468
Office properties and equipment 47,132 8,277 (1,738)(1) 53,671
Federal Home Loan Bank stock .. 10,849 2,775 13,624
Mortgage servicing rights ..... 23,421 2,020 2,046 (1) 27,487
Deferred tax asset ............ 2,537 2,757 403 (6) 5,697
Cost over fair value of net
assets acquired ............. 9,905 129 18,951 (3) 28,985
Other assets .................. 46,124 11,547 57,671
-------- -------- -------- --------
TOTAL ASSETS ..................$ 2,170,480 $ 524,722 $ 21,279 $ 2,716,481
============ ========= ======== ============
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------
LIABILITIES AND Adjust- Combined
STOCKHOLDERS' EQUITY BBC BNAB ments Proforma
--- ---- ----- --------
<S> <C> <C> <C> <C>
Deposits ......................$ 1,352,169 $ 468,982 $ 110(1) $1,821,261
FHLB advances ................. 216,985 5,000 27(1) 222,012
Subordinated debentures ....... 78,500 0 78,500
Other borrowings .............. 290,423 2,022 53,813(2) 346,258
Advances by borrowers for taxes
and insurance ................ 56,647 8,740 65,387
Other liabilities ............. 36,029 4,096 3,211(4) 43,336
--------- ------- ------ ---------
Total Liabilities ............. 2,030,753 488,840 57,161 2,576,754
--------- ------- ------ ---------
Stockholders' Equity
Class A Common Stock .......... 41 0 0 41
Class B Common Stock .......... 106 100 (100) 106
Additional paid-in capital .... 64,031 30,000 (30,000) 64,031
Net unrealized depreciation ... (10) 0 0 (10)
Retained earnings ............. 75,559 5,782 (5,782) 75,559
------- ------ ------- -------
Total Stockholders' Equity .... 139,727 35,882 (35,882) 139,727
------- ------ ------- -------
Total Liabilities and
Stockholders'
Equity ......................$ 2,170,480 $ 524,722 $ 21,279 $2,716,481
============= ============ =========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
ADJUST- COMBINED ADJUST- COMBINED
BBC BNAB MENTS PROFORMA BBC BNAB MENTS PROFORMA
(In Thousands) --- ---- ----- -------- --- ---- ----- --------
<S> <C> <C> <C> <C><C><C> <C> <C> <C> <C><C><C>
Interest income ........$ 103,371 $ 30,708 $ (418) (1)$ 133,661 $ 130,077 $ 40,552 $ (558) (1) $170,071
Interest expense ....... 50,326 16,339 2,605 (1)(2) 69,270 65,686 23,016 3,054 (1)(2) 91,756
Provision for loan
losses................ 4,264 3,243 0 7,507 4,182 1,150 0 5,332
Noninterest income ..... 20,855 966 (422) (1) 21,399 19,388 5,204 (563) (1) 24,029
Noninterest expense (8). 50,572 16,111 294 (1)(3) 66,977 51,160 18,299 615 (1)(3) 70,074
Provision (benefit) for
income taxes.......... 7,714 (1,500) (1,054) (6) 5,160 10,018 1,113 (1,336) (6) 9,795
------------ -------- -------- --------- --------- --------- --------- --------
Net Income (loss) ......$ 11,350 $ (2,519) $ (2,685) $ 6,146 $ 18,419 $ 2,178 $ (3,454) $ 17,143
============ ======== ======== ========= ========= ========= ========= ========
Per common share
Primary(8)............$ 0.76 $ (25.19) $ 0.41 $ 1.21 $ 21.78 $ 1.11(7)
============ ======== ========= ========= ========= ==========
Fully diluted (8) ......$ 0.72 $ (25.19) $ 0.41 $ 1.20 $ 21.78 $ 1.10(7)
============ ======== ========= ========= ========= ==========
Average shares
outstanding:
Primary ................ 15,010,504 100,000 15,010,504 15,010,504 100,000 13,538,254
========== ======= ========== ========== ======= ==========
Fully diluted .......... 16,577,100 100,000 16,577,100 16,577,100 100,000 13,667,650
========== ======= ========== ========== ======= ==========
<FN>
(1) Adjustments to fair value of BNAB's loans receivable, mortgage servicing
rights, office properties and equipment, certificates of deposit,
investments and FHLB advances at September 30, 1996 were approximately $1.6
million, $2.0 million, ($1.7) million, $110,000, $13,000 and $27,000,
respectively. Adjustments to fair values are estimated to be amortized as
follows:
Loans receivable 3 years straight line method.
Mortgage servicing rights Based on projected portfolio
cash flows of 28% in year one
and 22% for the nine months
ended September 30, 1996.
Certificates of deposit Based on estimated deposit
maturities of 85% in year one
and 64% for the nine months
ended September 30, 1996.
FHLB Advances 1 year straight line.
Investments 1 year straight line.
Office properties and Equipment Straight line over remaining
life of property.
(2) The purchase price of $53.8 million was funded through securities sold
under agreements to repurchase. The weighted average interest rate of the
borrowings was 4.91% and 5.80% for the nine months ended September 30, 1996
and for the year ended December 31, 1995, respectively.
(3) Cost over fair value of net assets acquired (goodwill) will not qualify
for amortization for tax purposes based on the structure of the
acquisition. The useful life is estimated at fifteen years and is assumed
to be amortized on a straight line basis.
<PAGE>
(4) The total purchase price will include other direct acquisition costs, such
as legal, accounting and other professional fees and expenses. For purposes
of the pro forma financial information such other acquisition costs are
estimated at $500,000. Also included in other liabilities were BNA employee
retention bonuses, lease termination costs, contract buy-out fees, and
branch closure expenditures. BankAtlantic closed five of the thirteen BNAB
branches on October 11, 1996.
(5) The pro forma does not include the effect of any potential expense
reductions or revenue increases, except for a $140,000 BNA merger
expense reduction.
(6) The effective income tax rate is assumed to be 38%.
(7) Includes a reduction of $0.10 for primary and fully diluted earnings per
share, respectively, related to the October 1995 Preferred Stock
redemption.
(8) Includes BankAtlantic's and BNA's one-time SAIF special assessment of
$7.2 million and $2.3 million , respectively, for the nine months ended
September 30, 1996. The SAIF assessment reduced combined proforma
primary and fully diluted earnings per share by $0.40 and $0.36,
respectively.
</FN>
</TABLE>
The following table indicates the estimated net decrease in earnings
resulting from the net amortization/accretion of the adjustments, including the
excess of cost over fair value of net assets acquired, resulting from the use of
the purchase method of accounting during each of the next five years. The
amounts (in thousands) assume no sales or dispositions of the related assets or
liabilities.
<TABLE>
<CAPTION>
YEARS ENDING NET DECREASE OF
DECEMBER 31, NET EARNINGS
------------ ------------
<S> <C>
1996...................... $ (360)
1997...................... $ (1,588)
1998...................... $ (1,795)
1999...................... $ (1,683)
2000...................... $ (1,399)
2001...................... $ (1,374)
Thereafter................ $(11,803)
</TABLE>
6. CONVERTIBLE SUBORDINATED DEBENTURES
On July 3, 1996, BBC closed the public offering of $57.5 million of its 6
3/4% convertible debentures ("6 3/4% Debentures") due July 1, 2006. The 6 3/4%
Debentures are convertible into Class A Common Stock at an exercise price of
$12.80 per share; representing an aggregate of 4,492,188 shares of Class A
Common Stock. Net proceeds to BBC were $55.1 million net of underwriting
discount and offering expenses. BBC contributed $35.0 million of the proceeds to
BankAtlantic, and on October 11, 1996 BankAtlantic used the contribution to
acquire BNA. The remaining net proceeds will be utilized by BBC for general
corporate purposes including the repurchase of up to one million shares of BBC
common stock. As of September 30, 1996, BBC repurchased in the secondary market
160,000 and 112,500 of Class A and Class B common shares, respectively. Any
subsequent common stock repurchases are dependent upon market conditions and are
subject to compliance with all applicable securities laws. BBC cannot declare or
pay dividends on, or purchase, redeem or acquire for value its capital stock,
return any capital to holders of capital stock as such, or make any distribution
of assets to holders of capital stock as such, unless, from and after the date
of any such dividend declaration (a "Declaration Date") or the date of any such
purchase, redemption, payment of distribution specified above (a "Redemption
Date"), BBC retains cash, cash equivalents (as determined in accordance with
generally accepted accounting principles) or marketable securities (with a
market value as measured on the applicable Declaration Date or Redemption Date)
in an amount sufficient to cover the two consecutive semi-annual interest
payments that will be due and payable on the 6 3/4% Debentures and on BBC's 9%
Subordinated Debentures (the "9% Debentures") following such Declaration Date or
Redemption Date, as the case may be. Any interest payment made by BBC with
respect to the 6 3/4% Debentures or the 9% Debentures after any applicable
Declaration Date or Redemption Date shall be deducted from the aggregate amount
of cash or cash equivalents which BBC shall be required to retain pursuant to
the foregoing provision.
7. EARNINGS PER SHARE
The 6 3/4% Debentures are not common stock equivalents and therefore, will
not affect primary net income per common and common equivalent share. However,
convertible securities, if dilutive, are included in net income per common and
common equivalent share calculations assuming full dilution. For the three
months ended September 30, 1996, the hypothetical conversion of the 6 3/4%
Debentures was not included in fully diluted earnings per share as the effect of
inclusion would have been anti-dilutive. Fully diluted income per common share
for the nine months ended September 30, 1996 assumes the hypothetical conversion
of the 6 3/4% Debentures by excluding the interest charges of the 6 3/4%
Debentures from fully diluted net income and by increasing the weighted average
number of common and common equivalent shares outstanding assuming full
dilution.
8. LOANS RECEIVABLE -- NET
<TABLE>
<CAPTION>
The components of loans receivable - net:
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 1996 1995
---- ----
Real estate loans: .................................
<S> <C> <C>
Residential ......................................$ 514,890 $ 157,361
Residential held for sale ........................ 21,492 17,122
Construction and development ..................... 217,292 122,371
FHA and VA insured ............................... 4,255 5,183
Commercial ....................................... 346,789 350,256
Other loans: .......................................
Second mortgages - direct ........................ 74,178 63,052
Second mortgages - indirect ...................... 19,412 25,621
Commercial business .............................. 57,141 64,194
Deposit overdrafts ............................... 1,120 832
Consumer loans - other direct .................... 38,709 36,670
Consumer loans - other indirect .................. 109,628 96,042
------- ------
Total gross loans............................. 1,404,906 938,704
--------- -------
Deduct: ............................................
Undisbursed portion of loans in process .......... 119,841 89,896
Unearned discounts on commercial real estate loans 730 793
Unearned discounts on consumer loans ............ 194 385
Allowance for loan losses ........................ 19,525 19,000
------ ------
Loan receivable -- net........................$ 1,264,616 $ 828,630
============== ===========
</TABLE>
During the nine months ended September 30, 1996, BankAtlantic purchased
$315.2 million of residential first mortgage loans from various mortgage bankers
and financial institutions located in various states.
9. RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform with the 1996
financial statement presentation.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
BBC's net income available for common stockholders for the quarter ended
September 30, 1996 was $1.1 million or $.07 primary and fully diluted earnings
per common and common equivalent share compared to net income available for
common stockholders of $4.8 million or $.35 primary and fully diluted earnings
per common and common equivalent share for the quarter ended September 30, 1995.
BBC's net income available for common stockholders for the nine months ended
September 30, 1996 was $11.4 million or $.76 primary earnings per common and
common equivalent share and $.72 fully diluted earnings per common and common
equivalent share compared to net income available for common stockholders of
$13.7 million or $1.02 primary earnings per common and common equivalent share
and $1.00 fully diluted earnings per common and common equivalent share for the
nine months ended September 30, 1995. Included in BBC's net income for the three
and nine months ended September 30, 1996 was a one-time SAIF special assessment
which reduced net income by $4.4 million or $.29 and $.28 primary and fully
diluted earnings per common and common equivalent share for the three months
ended September 30, 1996, respectively, and $.29 and $.27 primary and fully
diluted earnings per common and common equivalent share for the nine months
ended September 30, 1996, respectively.
Net interest income after provision for loan losses was $17.0 million for
the September 30, 1996 quarter compared to $15.5 million for the quarter ended
September 30, 1995. During the 1996 quarter, total interest income increased by
$4.8 million primarily due to higher interest income earned on loans, partially
offset by lower interest income on securities and investments. This increase in
loan interest income reflects higher average balances resulting from the
purchase of $315.2 million of residential first mortgage loans as well as loan
originations. The decline in interest income on securities and investments
resulted from lower average balances primarily due to $175.9 million of
principal repayments and the sale of $163.0 million of mortgage-backed
securities available for sale during the nine months ended September 30, 1996.
During the three months ended September 30, 1996 total interest expense was
$19.6 million compared to $16.7 million during the comparable 1995 period. The
higher interest expense primarily resulted from deposit growth and increased
borrowings, partially offset by lower average rates paid on borrowings. The
increased borrowings reflect the issuance of $57.5 million of 6 3/4% convertible
subordinated debentures in July 1996 and higher average borrowings due to
increased loan balances. The decline in average rates paid on short term
borrowings reflects a lower rate environment during 1996 compared to 1995. The
provision for loan losses was $1.9 million for the three months ended September
30, 1996 compared to $1.4 million during the comparable 1995 period. The
increased 1996 provision resulted from a $325,000 increase in the allowance for
loan losses during the 1996 quarter compared to a $100,000 increase during the
comparable 1995 quarter and higher consumer and commercial net loan charge-offs
in the 1996 period compared to the same period during 1995. The increased
allowance for loan losses reflects higher loan balances during the 1996 quarter
compared to the same quarter during 1995. Non-interest income was $7.3 million
for the three months ended September 30, 1996 compared to $5.6 million for the
comparable 1995 period. The $1.7 million increase primarily related to $819,000
of higher ATM and transaction account fee income, and a $833,000 increase in
gains on sales of mortgage servicing rights. Non-interest expense for the
quarter ended September 30, 1996 was $22.4 million compared to $13.4 million for
the same period in 1995. The net increase of $9.0 million primarily resulted
from the $7.2 million one-time SAIF special assessment, $850,000 of additional
compensation expenses and $531,000 of decreased gains on the sale of foreclosed
assets. The increased employee compensation primarily related to the opening of
eight additional branches since June 30 1995. The 1995 provision for income
taxes was reduced by $319,000 due to a reduction in the deferred tax asset
valuation allowance.
Net interest income after provision for loan losses was $48.8 million for the
nine months ended September 30, 1996 compared to $44.8 million for the
comparable 1995 period. Total interest income increased due to greater interest
income earned on loans partially offset by reduced interest income from
securities. The increased loan interest income was the result of higher loan
average balances primarily related to wholesale residential loan purchases and
loan fundings. The lower securities interest income was caused by lower average
balances resulting from sales of mortgage-backed securities and principal
paydowns. The increased interest expense resulted from higher deposit average
balances and the issuance of the $57.5 million of convertible debentures
discussed above and $21.0 million of subordinated debentures issued during the
latter part of 1995. Non-interest income was $20.9 million for the 1996 nine
month period compared to $14.9 million during the comparable 1995 period.
Increased gains on the sales of assets and increased ATM and transaction fee
income were the primary reasons for the increase. Non-interest expense was $50.6
million for the nine months ended September 30, 1996 compared to $37.6 million
during the comparable 1995 period. The increase was associated with items
discussed above for the current quarter including the $7.2 million one-time SAIF
assessment. The 1995 provision for income taxes was reduced by $900,000 due to a
reduction in the deferred tax asset valuation allowance.
<PAGE>
<TABLE>
<CAPTION>
Net Interest Income
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
September 30, September 30,
------------- -------------
(In thousands) 1996 1995 CHANGE 1996 1995 CHANGE
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans ............................$ 27,277 $ 19,127 $ 8,150 $ 69,487 $ 52,631 $ 16,856
Interest on debt securities available for sale ........ 9,313 1,342 7,971 29,039 4,126 24,913
Interest and dividends on investment securities ....... 1,931 3,387 (1,456) 4,845 9,811 (4,966)
Interest on mortgage-backed securities held to maturity 0 9,827 (9,827) 0 30,155 (30,155)
Interest on deposits .................................. (12,644) (12,243) (401) (37,356) (34,349) (3,007)
Interest on advances from FHLB ........................ (2,625) (2,203) (422) (5,448) (5,589) 141
Interest on securities sold under agreements to
repurchase ......................................... (2,846) (2,101) (745) (5,033) (8,886) 3,853
Interest on subordinated debentures and note payable .. (1,495) (157) (1,338) (2,489) (278) (2,211)
------ ---- ------ ------ ---- ------
Net interest income ..............................$ 18,911 $ 16,979 $ 1,932 $ 53,045 $ 47,621 $ 5,424
========== ======== ======== ======== ======== =========
</TABLE>
The increase in interest and fees on loans during the three months ended
September 30, 1996 compared to the same period in 1995 reflected higher average
balances resulting from wholesale residential loan purchases and loan fundings
partially offset by lower rates earned on residential and consumer loans.
Residential loan average balances were $355.0 million during the three months
ended September 30, 1996 compared to $139.3 million during the comparable period
during 1995. Loan fundings for portfolio were $198.6 million for the three
months ended September 30, 1996 compared to $168.3 million for the comparable
1995 period. During the three months ended September 30, 1996 BankAtlantic
purchased for portfolio $115.43 million of residential first mortgage loans from
various mortgage bankers and financial institutions located in various states.
As a result, total loans receivable, net increased from $1.1 billion at June 30,
1996 to $1.3 billion at September 30, 1996. The decrease in yields earned on
residential loans resulted from an increase in adjustable rate loan balances and
the purchased loans discussed above. Adjustable rate residential loans increased
from $87.8 million at September 30, 1995 to $204.2 million at September 30,
1996. Yields on consumer loans were lower due to the origination of lower
yielding loans during the latter part of 1995 and 1996 as well as payoffs of
higher yielding loans. In December 1995, all mortgage-backed and investment
securities, excluding tax certificates, then classified as held-to-maturity were
reclassified as available for sale and all securities purchased during 1996 were
also classified as available for sale; therefore, during 1996 there were no
mortgage-backed securities held for investment. The decline in interest on
securities and investments resulted from lower average balances. Average
balances on investment securities declined from $793.0 million for the three
months ended September 30, 1995 to 677.5 million for the comparable 1996 period.
The decline in investment securities average balances reflected principal
repayments and the sale of $163.0 million of mortgage-backed securities
available for sale during the nine months ended September 30, 1996. The decline
in average balances of securities and investments associated with such sales was
partially offset by the $231.8 million purchase of treasury notes during the
nine months ended September 30, 1996.
The increase in interest on deposits for the quarter ended September 30,
1996 compared to the 1995 quarter resulted from higher average deposit balances
and rates during 1996. Average deposit balances increased from $1.19 billion for
the three months ended September 30, 1995 to $1.23 billion for the comparable
period ended September 30, 1996, and average rates paid on deposits increased
from 4.08% during the 1995 quarter to 4.11% during the 1996 quarter. The
increase in the rates paid on deposits reflected higher rates paid on money
market funds partially offset by lower certificate of deposit rates. The
increase in interest expense on advances from FHLB was primarily due to higher
average balances partially offset by lower average rates. Advances from FHLB
average balances during the quarter increased from $132.6 million during 1995 to
$170.3 million during 1996, and average rates paid on advances from FHLB
declined from 6.59% during the 1995 three month period to 6.16% during the same
period in 1996. The additional interest expense on securities sold under
agreements to repurchase resulted from higher average balances. Securities sold
under agreements to repurchase average balances increased from $180.9 million
during the three months ended September 30, 1995 to $216.0 million during the
comparable 1996 three month period. The higher average balance of advances from
FHLB and securities sold under agreements to repurchase resulted from increased
average loan balances discussed above. The interest on subordinated debentures
and note payable relates to the issuance of $57.5 million of convertible
subordinated debentures in July 1996, the $21.0 million of debentures issued in
September and October 1995 and a $4.0 million note issued in March 1995 which
was subsequently paid in March 1996.
During the nine months ended September 30, 1996, net interest income
increased by $5.4 million. The increase in total interest income was impacted by
higher average loan balances partially offset by lower average balances on
securities and investment. Average loan balances increased from $719.4 million
during the nine months ended September 30, 1995 to $992.3 million during the
comparable 1996 period. Securities and investments average balances declined
from $869.0 million during the nine months ended September 30, 1995 to $686.6
million during the comparable 1996 period. The yields on interest earning assets
increased from 8.12% for the 1995 nine month period to 8.21% during the same
period in 1996. The higher yields reflected a change in the mix of interest
earning assets from lower yielding securities and investments to higher yielding
loans. The average yield on loans was 9.34% for the nine months ended September
30, 1996 compared to 9.75% during the comparable 1995 period, while the average
yield on securities was 6.76% during the 1995 nine month period compared to
6.58% for the comparable 1996 period. The increase in total interest expense was
primarily related to higher deposit average balances and the issuance of the
subordinated debentures discussed above, partially offset by a decline in
average balances and rates of securities sold under agreements to repurchase.
PROVISION FOR LOAN LOSSES
The provision for loan losses for third quarter 1996 was $1.9 million
compared to $1.4 million during the comparable 1995 period. The provision for
the 1996 quarter resulted in a $325,000 increase in the allowance for loan
losses related to loan growth and $420,000 of commercial loan net charge-offs
compared to a $100,000 increase in the allowance for loan losses and $238,000 of
non-mortgage commercial loan net charge-offs during the third quarter of 1995.
In addition, residential loan net charge-offs were $27,000 during the 1996
quarter compared to net charge-offs of $14,000 during the 1995 quarter. Consumer
loan net charge-offs were $1.1 million for the three months ended September 30,
1996 and 1995. Consumer loan indirect net charge-offs increased by $292,000 and
Subject Portfolio net charge-offs declined by $164,000. The increased 1996
commercial non-mortgage loan net charge-offs resulted primarily from a $450,000
charge-off of one non-mortgage commercial loan.
The provision for loan losses for the nine months ended September 30, 1996
increased $1.4 million from the comparable 1995 period. The increase primarily
related to $1.0 million of additional consumer loan net charge-offs during 1996
compared to 1995, and $262,000 of commercial loan net charge-offs compared to
$337,000 of recoveries during 1995. Net charge-offs from indirect automobile
loans were $2.3 million during the 1996 nine month period compared to $1.0
during the comparable 1995 period. Subject Portfolio net charge-offs during the
1996 nine month period were $592,000 compared to $828,000 during the comparable
1995 period.
The following table presents the amounts of BBC's risk elements and
non-performing assets (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
---- ----
Nonaccrual
<S> <C> <C>
Tax certificates .................... $ 2,698 $ 2,044
Loans ............................... 6,585 11,174
------- -------
9,283 13,218
------- -------
Repossessed Assets:
Real estate owned .................... 5,451 6,279
Repossessed assets ................... 359 461
------- -------
5,810 6,740
Contractually past due 90 days or more (1) 812 1,536
------- -------
Total non-performing assets ..... 15,905 21,494
Restructured loans ....................... 3,672 2,533
------- -------
Total risk elements ............ $19,577 $24,027
======= =======
(1) The majority of these loans have matured and the borrower
continues to make payments under the matured loan agreement. BankAtlantic
is in the process of renewing or extending these matured loans.
</TABLE>
BankAtlantic's "risk elements" consist of restructured loans and
"non-performing" assets. The classification of loans as "non-performing" is
generally based upon non-compliance with loan performance and collateral
coverage standards, as well as management's assessment of problems relating to
the borrower's or guarantor's financial condition. BankAtlantic generally
designates any loan that is 90 days or more delinquent as non-performing.
BankAtlantic may designate loans as non-performing prior to the loan becoming 90
days delinquent, if the borrower's ability to repay is questionable. A
"non-performing" classification alone does not indicate an inherent principal
loss; however, it generally indicates that management does not expect the asset
to earn a market rate of return in the current period. Restructured loans are
loans for which BankAtlantic has modified the loan terms due to the financial
difficulties of the borrower.
The decrease in total risk elements at September 30, 1996 as compared to
December 31, 1995 primarily relates to decreases in non-accrual loans, loans
contractually past due 90 days or more, and real estate owned. The above
decreases were partially offset by increases in restructured loans and
non-accrual tax certificates. The $4.6 million decrease in nonaccrual loans
primarily resulted from the restructuring of a $1.4 million commercial real
estate loan, the pay-off of a $1.6 million commercial non-residential loan, the
foreclosure of a $680,000 office building loan, and the reinstatement of a
$391,000 commercial real estate loan to accruing status. Furthermore,
residential non-accrual loans decreased from $2.2 million at December 31, 1995
to $1.7 million at September 30, 1996. The increase in restructured loans
reflects the nonaccrual loan restructured above less cash repayments. The
decline in real estate owned balances reflects the sale of $2.3 million of
properties during the nine month period ending September 30, 1996 partially
offset by the office building foreclosure discussed above and residential loan
foreclosures. Furthermore, tax certificate nonaccrual balances increased by
$654,000 due to the aging of tax certificates in the portfolio, while loans
contractually past due 90 days or more declined by $724,000 resulting from loan
renewals and loan repayments.
<TABLE>
<CAPTION>
Non-Interest Income
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
(In thousands) 1996 1995 CHANGE 1996 1995 CHANGE
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Loan servicing and other loan fees ................. $ 956 $ 885 $ 71 $ 2,900 $ 2,728 $ 172
Gains on sale of loans originated for resale ....... 1 49 (48) 287 202 85
Realized gains on trading account
securities ...................................... 0 16 (16) 0 589 (589)
Gains on sale of mortgage servicing rights ......... 2,554 1,721 833 2,554 2,744 (190)
Gains on sales of debt securities available for sale 0 0 0 3,946 0 3,946
Other .............................................. 3,796 2,892 904 11,168 8,643 2,525
----- ----- --- ------ ----- -----
Total non-interest income ....................... $7,307 $ 5,563 $ 1,744 $ 20,855 $ 14,906 $ 5,949
====== ======= ======= ======== ======== =======
</TABLE>
The increase in loan servicing and other loan fees during the three month
period in 1996 compared to the corresponding 1995 period resulted from higher
mortgage and consumer loan late fee income. Mortgage and consumer loan late fee
income increased from $145,000 during the three months ended September 30, 1995
to $262,000 during the comparable 1996 period. The increased late fee income was
partially offset by a $58,000 decline in commercial loan commitment fees during
the comparable three month period. The increase in loan servicing and other loan
fees during the nine months ended September 30, 1996 resulted from higher
commercial loan commitment fees, and increased late fee income, partially offset
by lower loan servicing income. Commitment and late fee income increased from
$390,000 and $420,000, respectively, during the nine months ended September 30,
1996 to $492,000 and $698,000, respectively during the comparable 1996 period.
The increased commitment and late fee income was partially offset by lower loan
servicing income due to increased amortization of mortgage servicing rights
based on increased residential loan prepayments.
During the three and nine months ended September 30, 1996 and 1995,
BankAtlantic sold $11.4 million and $8.5 million and $44.8 million and $20.5
million, respectively, of recently originated residential loans for gains as
reported in the above table.
During the three and nine months ended September 30, 1996, BankAtlantic sold
$11.3 million of mortgage servicing rights for gains as reported in the above
table. These rights related to approximately $736.9 million of loans serviced
for others. During the three and nine months ended September 30, 1995,
BankAtlantic sold $3.2 million and $5.6 million of mortgage servicing rights for
gains as reported in the above table. These rights related to approximately
$292.7 million and $492.1 million of loans serviced for others
During the nine months ended September 30, 1996, BankAtlantic sold from its
available for sale portfolio $136.6 million of adjustable rate mortgage-backed
securities, $20.5 million of 15 year mortgage-backed securities and $5.9 million
of seven year balloon mortgage-backed securities for gains, as reported in the
above table.
The realized gains on trading account securities during 1995 related to two
$5.0 million U.S. treasury notes acquired upon the exercise of European put
options in 1993. The treasury notes were subsequently sold during August 1995.
The increase in other non-interest income during the three months ended
September 30, 1996 compared to the 1995 period was due to higher fees earned on
checking accounts and ATM services. Checking account income and ATM fees were
$2.0 million and $1.1 million for the third quarter 1996, respectively, compared
to $1.8 million and $513,000, respectively, during the comparable 1995 period.
Furthermore, lease income increased by $89,000 due to additional rents received
on a leased property. In April 1996 BankAtlantic's ATM network initiated
surcharge fees for non-customers. The significant increase in ATM fee income was
primarily the result of this surcharge fee. The additional checking account
income reflects higher fees earned on overdrafts and demand deposit accounts
based on higher balances of transaction accounts.
The increase in other non-interest income during the nine months ended
September 30, 1996 compared to the 1995 period was due to the items discussed
above. Checking account income and ATM fees were $6.0 million and $2.8 million
for nine months ended September 30, 1996, respectively, compared to $5.1 million
and $1.5 during the comparable 1995 period, respectively. Lease income increased
from $427,000 during the 1995 nine month period to $724,000 during the
comparable 1996 period.
NON-INTEREST EXPENSES
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
(IN THOUSANDS) 1996 1995 CHANGE 1996 1995 CHANGE
- -------------- ---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Employee compensation and benefits .... $ 7,422 $ 6,572 $ 850 $ 21,841 $ 19,390 $ 2,451
Occupancy and equipment ............... 2,980 2,772 208 8,671 7,964 707
Federal insurance premium ............. 689 705 (16) 1,949 2,097 (148)
Advertising and promotion ............. 394 528 (134) 1,631 1,722 (91)
Foreclosed asset activity, net ........ (36) (495) 459 (545) (3,319) 2,774
SAIF special assessment ............... 7,160 0 7,160 7,160 0 7,160
Amortization of cost over fair value of
net assets acquired ................ 306 306 0 918 816 102
Other ................................. 3,457 2,997 460 8,947 8,886 61
-------- --------- ------- --------- -------- --------
Total non-interest expenses ....... $ 22,372 $ 13,385 $ 8,987 $ 50,572 $ 37,556 $ 13,016
======== ========= ======= ========= ======== ========
</TABLE>
The increase in employee compensation and benefits during the three and nine
months ended September 30, 1996 reflected an increase in the number of full time
equivalent employees from 746 at December 31, 1995 to 775 at September 30, 1996
as well as annual salary increases and additional temporary employees. The
increase in the number of employees primarily related to the opening of five
branches since December 31, 1995. Occupancy and equipment expenses increased due
to the new branches mentioned above, higher data equipment maintenance costs and
increased depreciation expenses. Depreciation expense increased during the three
and nine month period by $105,000, and $242,000, respectively. The additional
depreciation expense resulted from the purchase of $9.1 million of fixed assets
during the nine months ended September 30, 1996.
The amortization of cost over fair value of net assets acquired for the three
and nine months ended September 30, 1996 related to the acquisition of MegaBank
in 1995.
The components of "Foreclosed asset activity, net" were (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
Real estate acquired in settlement of loans: 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating income, net ...................$ 151 $ 152 $ 1 $ 66
Provision for (reversal of) losses on REO (200) (400) (200) (1,400)
Net loss (gains) on sales ............... 13 (247) (346) (1,985)
---------- ------- ------- -------
Foreclosed asset activity, net ..........$ (36) $ (495) $ (545) $(3,319)
========== ======= ======= =======
</TABLE>
The lower earnings in foreclosed asset activity, net during the three
months ended September 30, 1996 were primarily due to decreases in gains on sale
of real estate owned and lower REO loss reversals. During the three months ended
September 30, 1995, BankAtlantic sold a non-residential real estate property
with a book value of $900,000 for a $26,000 loss and recognized gains of $13,000
on sales of various residential REO properties. The reversal of the REO
allowances related to the sales mentioned above. During the three months end
September 30, 1995, BankAtlantic sold various residential properties for gains
as shown on the above table and reversed REO reserves based on sales of several
parcels of vacant land. The lower foreclosed asset activity, net for the nine
months ended September 30, 1996 resulted from a $1.3 million gain on the sale of
nonresidential real estate owned, acquired through tax certificate operations
during the 1995 period and a reversal of the allowance for losses on real estate
owned during the nine months ended September 30, 1995 due to the sale of the
vacant land referred to above.
The increase in other non-interest expenses during the three months ended
September 30, 1996 was caused by a $263,000 write-off of data equipment due to
the conversion of BankAtlantic's data processing functions to a third party
vendor in October 1996. Installment loan and telephone expenses increased by
$108,000 and $89,000, respectively. The higher installment loan expenses
reflected an increase in repossession and loan origination expenses during the
1996 quarter compared to the same 1995 period. The higher telephone expenses
were primarily caused by additional branch locations. Other non-interest
expenses were $8.9 million for the nine months ended September 30, 1996 and
1995. Expense increases associated with the opening of branches such as
stationery, printing , supplies, telephone and ATM operations were offset by
recoveries in the tax certificate provision and lower general corporate
expenses.
FINANCIAL CONDITION
BankAtlantic's total assets at September 30, 1996 were $2.2 billion compared
to $1.75 billion at December 31, 1995. Loans receivable, net and tax
certificates increased by $436.0 million and $16.0 million, respectively. The
increase in loans receivable, net reflects $315.2 million of residential loan
purchases and $555.6 million of loan fundings for portfolio. The loan fundings
were partially offset by $432.5 million of loan principal repayments. The higher
tax certificate balances reflected $56.0 million of tax certificate purchases
($49.8 million at auction) partially offset by $40.3 million of tax certificate
redemptions. Debt securities available for sale decreased by $76.1 million. The
decline in debt securities available for sale reflected the sale of $163.0
million of mortgage-backed securities and $135.6 million of principal
reductions, partially offset by the purchase of $231.8 million of treasury
notes.
At September 30, 1996 total deposits, FHLB advances and securities sold
under agreements to repurchase increased by $51.8 million, $15.2 million and
$224.2 million, respectively. The increase in deposits resulted from money fund
deposit and interest free checking growth. Money fund deposits and interest free
checking increased from $249.3 million and $99.0 million at December 31, 1995 to
$312.1 million and $104.3 million at September 30, 1996, respectively, The
deposit inflows, additional securities sold under agreements to repurchase,
proceeds from mortgage-backed securities sales, principal repayments, and the
$49.0 million contributed to BankAtlantic's capital by BBC from the issuance of
Class A common stock and the 6 3/4% convertible subordinated debentures which
were used to fund loan growth, tax certificate purchases, and treasury note
purchases. On October 11, 1996, BankAtlantic used capital contributions from BBC
to acquire Bank of North America Bancorp, Inc. for $53.8 million.
LIQUIDITY AND CAPITAL RESOURCES
On July 3, 1996, BBC closed the public offering of $57.5 million of its 6
3/4% Debentures due July 1, 2006. The 6 3/4% Debentures are convertible into
Class A Common Stock at an exercise price of $12.80 per share; representing an
aggregate of 4,492,188 shares of Class A Common Stock. Net proceeds to BBC were
$55.1 million net of underwriting discount and offering expenses. BBC
contributed $35.0 million of the proceeds to BankAtlantic, and on October 11,
1996 BankAtlantic used the contribution to acquire BNA. The remaining net
proceeds will be utilized by BBC for general corporate purposes including the
repurchase of up to one million shares of BBC common stock. As of September 30,
1996, BBC repurchased in the secondary market 160,000 and 112,500 of Class A and
Class B common shares, respectively. Any subsequent common stock repurchases are
dependent upon market conditions and are subject to compliance with all
applicable securities laws. BBC cannot declare or pay dividends on, or purchase,
redeem or acquire for value its capital stock, return any capital to holders of
capital stock as such, or make any distribution of assets to holders of capital
stock as such, unless, from and after the date of any such dividend declaration
(a "Declaration Date") or the date of any such purchase, redemption, payment of
distribution specified above (a "Redemption Date"), BBC retains cash, cash
equivalents (as determined in accordance with generally accepted accounting
principles) or marketable securities (with a market value as measured on the
applicable Declaration Date or Redemption Date) in an amount sufficient to cover
the two consecutive semi-annual interest payments that will be due and payable
on the 6 3/4% Debentures and on BBC's 9% Subordinated Debentures (the "9%
Debentures") following such Declaration Date or Redemption Date, as the case may
be. Any interest payment made by BBC with respect to the 6 3/4% Debentures or
the 9% Debentures after any applicable Declaration Date or Redemption Date shall
be deducted from the aggregate amount of cash or cash equivalents which BBC
shall be required to retain pursuant to the foregoing provision. Payment of
interest and ultimate repayment of the 6 3/4% and 9% Debentures is significantly
dependent upon the operations and distributions from BankAtlantic. BBC's primary
sources of funds during the nine months of 1996 were from its public offerings
of its Class A Common Stock, 6 3/4 % Debentures and dividends from BankAtlantic.
The primary use of funds during the nine month period was to contribute $49
million of capital to BankAtlantic, payment of cash dividends to common
stockholders and interest expense on its outstanding 9% Debentures. It is
anticipated that funds for interest and dividend payments will continue to be
obtained from BankAtlantic. Additionally, the ultimate repayment by BBC of its
outstanding 6 3/4% Convertible Debentures and 9% Debentures may be dependent
upon dividends from BankAtlantic, refinancing of the debt or raising additional
equity capital by BBC. BBC currently anticipates that it will pay regular
quarterly cash dividends on its common stock. Payment of interest and ultimate
repayment of the 6 3/4% and 9% Debentures is significantly dependent upon the
operations and distributions from BankAtlantic.
BankAtlantic's primary sources of funds during the nine months of 1996 were
from operations, principal collected on loans, mortgage-backed securities,
investment securities, sales of debt securities available for sale and mortgage
servicing rights, deposit inflows, proceeds from the capital contribution from
BBC, securities sold under agreements to repurchase, and advances from borrowers
for taxes and insurance. These funds were primarily utilized for loan purchases
and fundings, and the purchase of tax certificates, treasury notes and
subsequently on October 11, 1996 the acquisition of BNA. At September 30, 1996,
BankAtlantic met all applicable liquidity and regulatory capital requirements.
Commitments to originate loans at September 30, 1996 were $101.1 million
compared to $73.9 million at September 30, 1995. Commitments to purchase
residential loans were $62.5 million and $0 at September 30, 1996 and 1995,
respectively. BankAtlantic expects to fund the 1996 loan commitments from loan
and debt securities available for sale repayments. At September 30, 1996, loan
commitments were 12.9% of loans receivable, net.
At September 30, 1996, BankAtlantic's regulatory capital position was:
<TABLE>
<CAPTION>
TANGIBLE CORE TOTAL RISK-BASED
CAPITAL CAPITAL CAPITAL
------- ------- -------
(DOLLARS IN THOUSANDS) BALANCE % BALANCE % BALANCE %
------- - ------- - ------- -
<S> <C> <C> <C> <C> <C> <C>
Capital calculated under GAAP .......... $ 189,072 $ 189,072 $ 189,072
Adjustments:
Non-includable subsidiaries ........ (110) (110) (110)
Unrealized holding losses .......... 10 10 10
Non-qualifying intangible assets .. (10,392) (10,392) (10,392)
Allowable allowance for loan and tax
certificate losses ............... 17,000
------- ---- ------- ---- ------- -----
Regulatory capital ..................... 178,580 8.29% 178,580 8.29% 195,580 14.41%
Required minimum capital ............... 32,293 1.50% 64,587 3.00% 108,581 8.00%
------- ---- ------- ---- ------- -----
Excess regulatory capital .............. $ 146,287 6.79% $ 113,993 5.29% $ 86,999 6.41%
========= ==== ========= ==== ========= ====
</TABLE>
Savings institutions are also subject to the provisions of the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). Regulations
implementing the prompt corrective action provisions of FDICIA define specific
capital categories based on FDICIA's defined capital ratios, as discussed more
fully in BBC's Annual Report on Form 10K for the year ended December 31, 1995.
At September 30, 1996, BankAtlantic's core, Tier 1 risk-based and total
risk-based capital ratios were 8.29%, 13.16% and 14.41%, respectively. Based on
these capital ratios, BankAtlantic meets the definition of a well capitalized
institution.
On September 30, 1996, President Clinton signed in law H.R. 3610, which is
intended to recapitalize the SAIF and substantially bridge the assessment rate
disparity existing between SAIF and BIF insured institutions. The new law
subjects institutions with SAIF assessable deposits, including BankAtlantic, to
a one-time assessment of approximately 0.657% of covered deposits at March 31,
1995. BankAtlantic's one-time assessment resulted in a pre-tax charge of
approximately $7.2 million for the three and nine months ended September 30,
1996, which is payable not later than November 29, 1996, and, under provisions
of the new law, may be treated for tax purposes as a fully deductible "ordinary
and necessary business expense" when paid.
On August 9, 1996, Congress passed the Small Business Job Protection Act of
1996 (the "Act"). Included in the Act was the repeal of the thrift bad debt
deduction for income tax purposes, and a change in the bad debt reserve
recapture rules. As a result of the change, BankAtlantic must change from the
reserve method of accounting to the specific charge-off method. Furthermore,
BankAtlantic is required to recapture into taxable income over a six year period
the portion of its bad debt reserves that exceeds its base year reserves which
is estimated at $3.9 million. The change in the method of accounting for bad
debt deductions should have no effect on BankAtlantic's net income.
Except for the residential loan servicing operation, all data processing
functions were previously performed by BankAtlantic. On April 24, 1996,
BankAtlantic signed a contract with M&I Data Services, a division of the
Marshall & Ilsley Corporation, ("M&I") to provide data processing services for
seven years. The conversion to the M&I service bureau was completed on October
11, 1996. The purpose of the conversion is to increase capacity as well as
improve customer service. The estimated annual expense for the service bureau is
approximately $2.4 million. The additional costs associated with the conversion
are anticipated to be $2.1 million in technology upgrades, primarily associated
with the cost of new computer equipment.
<PAGE>
OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
JOSE DANIEL RUIZ CORONADO VS. BANKATLANTIC BANCORP, INC. IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA. CASE NO.
96-7115-CIV-GONZALEZ. This action was filed as a purported class action on
September 27, 1996 on behalf of certain account holders of BankAtlantic whose
bank accounts were seized by Federal Authorities. The complaint alleges that the
financial privacy rights of the account holders under various Federal and State
laws were violated. Management believes that the allegations are without merit.
EXHIBITS
Exhibit Description
------- -----------
23 Consent of KPMG Peat Marwick L.L.P.
27 Financial Data Schedule.
99.1 Bank of North America Bancorp, Inc. December 31, 1995 Financial
Statements (Audited).
99.2 Bank of North America Bancorp, Inc. September 30, 1996 Financial
Statements (Unaudited).
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BANKATLANTIC BANCORP, INC.
November 6, 1996 By: /s/Alan B. Levan
-------------------- ------------------
Date Alan B. Levan
Chief Executive Officer/
Chairman
November 6, 1996 By: /s/Jasper R. Eanes
---------------- ------------------
Jasper R. Eanes
Executive Vice President/
Chief Financial Officer
