FORM 10Q
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 June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 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 (Zip Code)
offices)
(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 August 2, 1997
- ------------------- --------------
Class A Common Stock, par value $0.01 per share 7,171,559
Class B Common Stock, par value $0.01 per share 10,533,671
<PAGE>
BANKATLANTIC BANCORP, INC.
TABLE OF CONTENTS
PAGE
FINANCIAL INFORMATION REFERENCE
Financial Statements.................................................. 1-7
Consolidated Statements of Financial Condition - June 30, 1997
and December 31, 1996 - Unaudited....................................... 1
Consolidated Statements of Operations - For the Three and
Six Months Ended June 30, 1997 and 1996 - Unaudited.. ................ 2
Consolidated Statements of Cash Flows - For the Six Months
Ended June 30, 1997 and 1996 - Unaudited............................ 3-4
Notes to Consolidated Financial Statements - Unaudited................ 5-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 8-14
OTHER INFORMATION
Submission of Matters to Vote of Security Holders...................... 15
Exhibits and Reports on Form 8K........................................ 15
Signatures............................................................. 16
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BANKATLANTIC BANCORP, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
June 30, December 31,
1997 1996
---------- -----------
ASSETS
(In thousands, except share data)
<S> <C> <C>
Cash and due from depository institutions .................................... $ 82,490 $ 102,995
Federal Funds sold ........................................................... 7,808 6,148
Loans receivable, net ........................................................ 1,933,980 1,824,856
Investment securities-net, held to maturity, at cost which approximates market
value ...................................................................... 68,587 54,511
Securities available for sale, at market value ............................... 449,422 439,345
Accrued interest receivable .................................................. 21,254 20,755
Real estate owned, net ....................................................... 4,618 4,918
Office properties and equipment, net ......................................... 47,494 48,274
Federal Home Loan Bank stock, at cost which approximates market value ........ 24,637 14,787
Mortgage servicing rights .................................................... 30,491 25,002
Deferred tax asset, net ...................................................... 3,253 3,355
Cost over fair value of net assets acquired .................................. 27,414 28,591
Other assets ................................................................. 29,026 31,990
---------- ----------
Total assets ................................................................. $2,730,474 $2,605,527
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ..................................................................... $1,768,087 $1,832,780
Advances from FHLB ........................................................... 467,704 295,700
Securities sold under agreements to repurchase ............................... 105,544 190,588
Subordinated debentures ...................................................... 78,300 78,500
Guaranteed preferred beneficial interests in the Company's Junior
Subordinated Debentures .................................................... 74,750 0
Advances by borrowers for taxes and insurance ................................ 47,072 29,659
Other liabilities ............................................................ 35,442 30,596
---------- ----------
Total liabilities ............................................................ 2,576,899 2,457,823
---------- ----------
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, 11,765,117 and 12,394,602 shares ................... 118 78
Class B Common Stock, $0.01 par value, authorized 15,000,000 shares;
issued and outstanding, 10,707,671 and 10,542,116 shares ................... 107 105
Additional paid-in capital ................................................... 57,747 64,171
Retained earnings ............................................................ 94,606 82,602
Total stockholders' equity before net unrealized appreciation on securities
available for sale - net of deferred income taxes .......................... 152,578 146,956
Net unrealized appreciation on securities available for sale - net of
deferred income taxes .................................................... 997 748
---------- ----------
Total stockholders' equity ................................................... 153,575 147,704
---------- ----------
Total liabilities and stockholders' equity ................................... $2,730,474 $2,605,527
========== ==========
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
For the Three Months For the Six Months
(In thousands, except share data) Ended June 30, Ended June 30,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans ................................. $ 41,948 $ 21,877 $ 83,071 $ 42,210
Interest on securities available for sale ................. 8,246 9,226 15,788 19,726
Interest and dividends on investment securities ............ 1,852 1,655 3,631 2,914
----------- ----------- ----------- -----------
Total interest income ...................................... 52,046 32,758 102,490 64,850
----------- ----------- ----------- -----------
Interest expense:
Interest on deposits ....................................... 17,042 12,333 34,317 24,712
Interest on advances from FHLB ............................. 6,266 796 11,067 2,823
Interest on securities sold under agreements to repurchase . 2,309 1,469 4,858 2,187
Interest on subordinated debentures and guaranteed preferred
interest in the Company's Junior Subordinated Debentures . 2,775 498 4,314 994
----------- ----------- ----------- -----------
Total interest expense ..................................... 28,392 15,096 54,556 30,716
----------- ----------- ----------- -----------
Net interest income ........................................ 23,654 17,662 47,934 34,134
Provision for loan losses .................................. 2,686 1,455 5,162 2,395
----------- ----------- ----------- -----------
Net interest income after provision for loan losses ........ 20,968 16,207 42,772 31,739
----------- ----------- ----------- -----------
Non-interest income:
Loan servicing and other loan fees ......................... 1,405 1,106 2,976 1,944
Gains on sales of loans originated for resale .............. 714 122 1,165 286
Gains on sales of mortgage servicing rights ................ 2,201 0 4,634 0
Gains on sales of debt securities available for sale ....... 689 1,654 942 3,946
Transaction fees ........................................... 3,618 3,127 7,077 5,683
Other ...................................................... 1,007 705 1,864 1,689
----------- ----------- ----------- -----------
Total non-interest income .................................. 9,634 6,714 18,658 13,548
----------- ----------- ----------- -----------
Non-interest expense:
Employee compensation and benefits ......................... 9,286 7,051 18,833 14,419
Occupancy and equipment .................................... 4,245 2,906 9,037 5,691
Federal insurance premium .................................. 345 669 553 1,260
Advertising and promotion .................................. 525 730 894 1,237
Amortization of cost over fair value of net assets acquired 627 306 1,254 612
Other ...................................................... 4,415 2,023 9,272 4,981
----------- ----------- ----------- -----------
Total non-interest expense ................................. 19,443 13,685 39,843 28,200
----------- ----------- ----------- -----------
Income before income taxes ................................. 11,159 9,236 21,587 17,087
Provision for income taxes ................................. 4,338 3,687 8,425 6,828
----------- ----------- ----------- -----------
Net income ................................................. $ 6,821 $ 5,549 $ 13,162 $ 10,259
=========== =========== =========== ===========
Net income per common and common equivalent share .......... $ 0.28 $ 0.23 $ 0.54 $ 0.44
=========== =========== =========== ===========
Net income per common and common equivalent share,
assuming full dilution ................................... $ 0.24 $ 0.23 $ 0.46 $ 0.44
=========== =========== =========== ===========
Weighted average number of common and common
equivalent shares outstanding ............................ 24,262,359 24,221,381 24,286,208 23,138,348
=========== =========== =========== ===========
Weighted average number of common and common
equivalent shares outstanding, assuming full dilution ... 31,359,970 24,221,381 31,383,236 23,172,770
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
--------------------------
OPERATING ACTIVITIES: 1997 1996
<S> <C> <C>
Net income ...................................................................... $ 13,162 $ 10,259
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ....................................................... 5,162 2,395
Depreciation .................................................................... 2,410 1,703
Amortization of mortgage servicing rights ...................................... 3,647 3,177
Increase (decrease) in deferred income tax asset, net ........................... (53) 1,026
Net (accretion) amortization of securities ...................................... (247) (553)
Unrealized loss on trading account securities ................................... 12 0
Net amortization of deferred loan origination fees .............................. (510) (628)
Gains on sales of real estate owned ............................................. (161) (356)
Net losses on sales of property and equipment ................................... 16 71
Gains on sales of mortgage servicing rights ..................................... (4,634) 0
Gains on sales of debt securities available for sale ............................ (943) (3,946)
Purchases of trading account securities ......................................... (6,417) 0
Proceeds from loans originated for resale ....................................... 55,791 33,639
Fundings of loans originated for resale ......................................... (51,850) (33,664)
Gains on sales of loans originated for resale ................................... (1,165) (286)
Provision for tax certificate losses ............................................ (231) (384)
Amortization of dealer reserve .................................................. 3,947 1,427
Amortization of cost over fair value of net assets acquired ..................... 1,254 612
Net accretion of purchase accounting adjustments ................................ (231) (191)
Amortization of deferred borrowing costs ....................................... 194 52
Increase in accrued interest receivable ......................................... (499) (1,497)
Decrease (increase) in other assets ............................................. 12,995 (2,660)
Decrease in other liabilities ................................................... (1,135) (631)
----------- ----------
Net cash provided by operating activities ....................................... 30,514 9,565
----------- ----------
INVESTING ACTIVITIES:
Proceeds from redemption and maturities of investment securities ................ 28,150 25,618
Purchase of investment securities ............................................... (35,642) (46,819)
Proceeds from sales of debt securities available for sale ....................... 205,163 166,985
Principal collected on debt securities available for sale ....................... 76,178 106,091
Purchases of debt securities available for sale ................................. (283,310) (187,175)
Proceeds from sales of FHLB stock ............................................... 1,550 1,249
FHLB stock acquired ............................................................. (11,400) 0
Principal reduction on loans .................................................... 347,245 275,834
Loan fundings for portfolio ..................................................... (248,637) (356,929)
Loans purchased ................................................................. (216,156) (199,839)
Proceeds from maturities of bankers' acceptances ................................ 287 0
Fundings of bankers' acceptances ................................................ (77) 0
Additions to dealer reserve ..................................................... (5,240) (1,471)
Proceeds from sales of real estate owned ........................................ 1,591 1,721
Mortgage servicing rights acquired .............................................. (20,278) (12,277)
Proceeds from sales of mortgage servicing rights ................................ 6,628 0
Additions to office property and equipment ...................................... (1,646) (5,791)
----------- ----------
Net cash (used) by investing activities ........................................ (155,594) (232,803)
----------- ----------
See Notes to Consolidated Financial Statements - Unaudited (Continued)
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS FOR CASH FLOWS - UNAUDITED
(CONTINUED)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-------------------------
1997 1996
---------- ----------
FINANCING ACTIVITIES:
<S> <C> <C>
Net increase (decrease) in deposits ........................................... (91,978) 40,164
Interest credited to deposits ................................................. 27,202 21,466
Repayments of FHLB advances ................................................... (320,000) (388,755)
Proceeds from FHLB advances ................................................... 492,004 361,970
Net increase (decrease) in securities sold under agreements to repurchase .... (85,044) 134,476
Net decrease in federal funds purchased ....................................... (1,660) (1,200)
Repayment of note payable ..................................................... 0 (1)
Issuance of common stock relating to exercise of employee stock options ....... 1,268 265
Proceeds from issuance of guaranteed preferred interests in the Company's
junior subordinated debentures ............................................. 74,750 0
Issuance of common stock, net ................................................. 0 18,005
Payments to acquire and retire treasury stock ................................. (8,263) 0
Receipts of advances by borrowers for taxes and insurance ..................... 17,413 28,043
Common stock dividends paid ................................................... (1,117) (991)
--------- ---------
Net cash provided by financing activities .................................... 104,575 213,442
--------- ---------
Decrease in cash and cash equivalents ........................................ (20,505) (9,796)
Cash and cash equivalents at beginning of period .............................. 102,995 69,867
--------- ---------
Cash and cash equivalents at end of period .................................... $ 82,490 $ 60,071
========= =========
SUPPLEMENTARY DISCLOSURE AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Interest paid on borrowings ................................................... $ 52,600 $ 29,905
Income taxes paid ............................................................. 9,306 6,100
Loans transferred to real estate owned ........................................ 1,130 857
Proceeds receivable from sales of mortgage servicing rights ................... 9,148 0
Accrual for purchase of tax certificates paid in July ......................... 6,353 8,746
Equity securities transferred from trading to available for sale .............. 6,405 0
Issuance of Class A common stock upon conversion of subordinated debentures .. 200 0
Loan charge-offs .............................................................. 4,856 3,415
Tax certificate charge-offs, net of (recoveries) .............................. (507) 353
Common stock dividend declared and not paid until July ........................ 545 524
Increase in equity for the tax effect related to the exercise of employee stock
options ..................................................................... 365 78
Change in net unrealized appreciation (depreciation) on debt securities
available for sale .......................................................... 404 (10,515)
Change in deferred taxes on net unrealized appreciation (depreciation) on debt
securities available for sale ............................................... 155 (4,056)
Change in stockholders' equity from net unrealized appreciation (depreciation)
on debt securities available for sale, less related deferred income taxes ... 249 (6,459)
========= =========
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. PRESENTATION OF INTERIM FINANCIAL STATEMENTS
BankAtlantic Bancorp, Inc. (the "Company") is a unitary savings bank
holding company. The Company's primary asset is the capital stock of
BankAtlantic, a Federal Savings Bank ("BankAtlantic"), its wholly owned
subsidiary. Under applicable law, the Company generally has broad authority to
engage in various types of business activities with few restrictions. The
Company's activities currently 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
intercompany balances and transactions have been eliminated in consolidation.
In management's opinion, the accompanying consolidated financial statements
contain such adjustments necessary to present fairly the Company's consolidated
financial condition at June 30, 1997, the consolidated results of operations for
the three and six months ended June 30, 1997 and 1996 and the consolidated cash
flows for the six months ended June 30, 1997 and 1996. Such adjustments
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 the
Company's Annual Report on Form 10K for the year ended December 31, 1996 and the
March 31, 1997 Form 10Q.
2. EQUITY CAPITAL
On July 22, 1997, the Board of Directors declared a common stock split
effected in the form of a 25% stock dividend, payable on August 18, 1997 in
Class A Common Stock to the Company's Class A and Class B common shareholders of
record on August 1, 1997. The stock dividend is payable in Class A Common Stock
regardless of the class of shares held. Where appropriate, amounts throughout
the report have been adjusted to reflect the stock dividend.
The follow table sets forth the changes in common stockholders' equity for
the six months ended June 30, 1997 before net unrealized appreciation of
securities available for sale:
<TABLE>
<CAPTION>
Additional
Common Paid in Retained
Stock Capital Earnings
(in thousands) -------- ---------- --------
<S> <C> <C> <C>
Balance at December 31, 1996 ................................ $ 183 $ 64,171 $ 82,602
Exercise of stock options .................................. 2 1,266 0
Tax effect relating to the exercise of employee stock options 0 365 0
Payments to acquire and retire treasury stock ............... (8) (8,255) 0
Issuance of common stock upon conversion of subordinated
debentures ................................................. 0 200 0
Net income .................................................. 0 0 13,162
Dividends on common stock ................................... 0 0 (1,110)
5 for 4 stock split, July 1997 ............................. 48 0 (48)
-------- -------- --------
Balance at June 30, 1997 .................................... $ 225 $ 57,747 $ 94,606
======== ======== ========
</TABLE>
In August 1996, the Company announced a plan to purchase up to 1.56 million
shares of common stock. During the six months ended June 30, 1997, the Company
paid $7.4 million and $840,438 to repurchase 708,750 shares and 75,000 shares of
Class A and Class B common shares, respectively. As of June 30, 1997, under the
August 1996 repurchase plan, the Company has paid $9.3 million and $2.2 million
to repurchase in the secondary market 958,750 shares and 250,781 shares of Class
A and Class B common shares, respectively. These shares were retired at the time
of purchase.
During the three months ended June 30, 1997, the Company issued 24,414
shares of Class A common stock upon the conversion of $200,000 principal amount
of the 6 3/4% Convertible Subordinated Debentures at a conversion price of
$8.19.
On January 7, 1997, the Board of Directors granted pursuant to the
BankAtlantic Bancorp 1996 stock option plan 11,720 incentive stock options to
two officers of BankAtlantic at an exercise price of $8.28. Furthermore, on May
6, 1997, the Board of Directors granted pursuant to the BankAtlantic Bancorp
1996 stock option plan 320,229 of incentive stock options and 200,442 of
non-qualifying stock options with a $9.90 exercise price to officers of
BankAtlantic. All of the incentive and non-qualifying stock options are
exercisable for the Company's Class A Common Stock, with an exercise price equal
to the fair market value at the date of grant, expire ten years from the date of
grant and are exercisable any time after five years from the date of grant.
Also, on June 2, 1997, an additional 12,814 of incentive stock options were
issued to BankAtlantic officers hired after May 6, 1997. These incentive options
have an exercise price $10.80 with the same terms and conditions as the
incentive options granted on May 6, 1997. On May 1, 1997, 39,068 of
non-qualifying stock options were issued outside of the Plan to non-employee
directors with a $9.55 exercise price. The non-qualifying stock options vested
immediately and are exercisable for the Company's Class A common stock. The
stock options expire ten years from the date of grant.
<PAGE>
During July 1997, the Compensation Committee adjusted the stock options
issued pursuant to the Company's 1984, 1994 and 1996 Stock Option Plans to
reflect the 5 for 4 stock split. Due to accounting and tax considerations, the
Company will make appropriate adjustments in shares of Class B common stock with
respect to options to purchase Class B stock previously granted under the
Company's stock option plans. The following table sets forth all outstanding
options, adjusted for the July 1997, common stock split effected in the form of
a 25% stock dividend:
<TABLE>
<CAPTION>
Outstanding Outstanding
Options Options
Class B Class A
----------- -----------
<S> <C> <C>
Options Outstanding at December 31, 1996 2,188,207 743,858
Options Issued ......................... 0 584,273
Options Exercised ...................... (276,273) (13,121)
Options Canceled ....................... (26,767) (42,291)
--------- ---------
Options Outstanding at June 30, 1997 ... 1,885,167 1,272,719
========= =========
Price per share ........................ $3.76 - $5.00 $7.17-$10.80
</TABLE>
3. SALES OF FINANCIAL ASSETS
During the three and six months ended June 30, 1997, BankAtlantic sold $5.8
million and $11.1 million of mortgage servicing rights realizing gains of $2.2
million and $4.6 million, respectively. These mortgage servicing rights related
to approximately $496.1 million and $1.0 billion of loans, respectively.
Included in other assets at June 30, 1997 and December 31, 1996 were $9.1
million and $9.5 million of receivables from the sales of mortgage servicing
rights, respectively. During the three and six months ended June 30, 1997,
BankAtlantic sold $99.4 million and $190.7 million of treasury notes, for gains
of $33,000 and $286,000, respectively. Furthermore, during the three months
ended June 30, 1997, BankAtlantic sold $7.6 million and $5.9 million of federal
agency obligations and REMIC securities for gains of $220,000 and $436,000,
respectively. During the three and six months ended June 30, 1996, BankAtlantic
sold $84.0 million and $136.6 million of adjustable rate mortgage-backed
securities, $0 and $20.5 million of 15 year mortgage-backed securities and $0
and $5.9 million of seven year balloon mortgage-backed securities for gains of
$1.7 million and $3.9 million, respectively. Proceeds from the sales of these
assets were used to fund purchases of mortgage servicing rights and support loan
growth.
4. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE COMPANY'S JUNIOR
SUBORDINATED DEBENTURES
In March 1997, the Company formed BBC Capital Trust I ("BBC Capital"). BBC
Capital is a statutory business trust which was formed for the purpose of
issuing 9 1/2% Cumulative Trust Preferred Securities ("Preferred Securities")
and investing the proceeds thereof in Junior Subordinated Debentures of the
Company. In a public offering in April 1997, BBC Capital issued for $74.75
million, 2.99 million shares of Preferred Securities at a price of $25 per
share. BBC Capital used the gross proceeds received from the sale of the
Preferred Securities to purchase $74.75 million of 9 1/2% Junior Subordinated
Debentures from the Company which mature on June 30, 2027. The net proceeds to
the Company from the sale of the Junior Subordinated Debentures were $71.8
million after deduction of the underwriting discount and expenses. The net
proceeds from the sale of the Junior Subordinated Debentures are being used by
the Company for general corporate purposes, including repurchase of its common
stock. Interest on the Junior Subordinated Debentures and Distributions on the
Preferred Securities are fixed at 9 1/2% per annum and are payable quarterly in
arrears, with the first payment paid June 30, 1997. Distributions on the
Preferred Securities are cumulative and based upon the liquidation value of $25
per Preferred Security. The Company has the right, at any time, so long as no
event of default, as defined, has occurred and is continuing, to defer payments
of interest on the Junior Subordinated Debentures for a period not exceeding 20
consecutive quarters; provided, that such deferral may not extend beyond the
stated maturity of the Junior Subordinated Debentures. The Preferred Securities
are subject to mandatory redemption, in whole or in part, upon repayment of the
Junior Subordinated Debentures at maturity or their earlier redemption. The
Company has the right to redeem the Junior Subordinated Debentures in whole (but
not in part) within 180 days following certain events, as defined, whether
occurring before or after June 30, 2002, and therefore cause a mandatory
redemption of the Preferred Securities. The exercise of such right is subject to
the Company having received regulatory approval to do so if then required under
applicable capital guidelines or regulatory policies. In addition to the above
right, the Company has the right, at any time, to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than June 30, 2002.
Exercise of this right is also subject to the Company having received regulatory
approval to do so if then required under applicable capital guidelines or
regulatory policies.
<PAGE>
5. TAX CERTIFICATES
At June 30, 1997, other liabilities included a $6.4 million liability
associated with the purchase of tax certificates by BankAtlantic. The liability
was paid in July 1997.
6. NEW ACCOUNTING STANDARDS
Financial Accounting Standard Board ("FASB") Statements No. 130 and No. 131
were issued in June 1997. FASB Statement No. 130 ("FAS 130") establishes
standards for reporting comprehensive income in financial statements. This
statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Some of the items included in comprehensive income are
unrealized gains or losses on securities available for sale, underfunded pension
obligations and employee stock options. FASB Statement No. 131 ("FAS 131")
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires that those
companies report selected information about operating segments in interim
financial statements issued to shareholders. FAS 130 and FAS 131 are effective
for periods beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
Implementation of FAS 130 and FAS 131 will impact disclosure but will not have
an impact on the Company's Statement of Financial Condition or Statement of
Operations.
7. OTHER MATTERS
On August 1, 1997, the Company announced the termination of its previously
announced (June 6, 1997) proposed acquisition from certain shareholders of a
controlling interest in Oriole Homes Corp. Costs incurred for the proposed
purchase are estimated at $330,000 and will be charged to operations during the
quarter ended September 30, 1997.
8. Certain amounts for prior periods have been reclassified to conform with
statement presentation for 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Except for historical information contained herein, the matters discussed
in this report are forward-looking statements made pursuant to the safe harbor
provisions of the Securities Litigation Reform Act of 1995. These
forward-looking statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, including but not limited
to, economic, competitive and other factors affecting the Company's operations,
markets, products and services, expansion strategies, potential impact of
changes in interest rates, regulatory oversight and other factors discussed in
the Company's Annual Report on Form 10K for the year ended December 31, 1996.
Many of these factors are beyond the Company's control. Actual results could
differ materially from these forward-looking statements. In light of these risks
and uncertainties, there is no assurance that the results discussed in such
forward-looking statements contained in this report will, in fact, occur. The
Company does not undertake any obligation to publicly release the results of any
revisions to these forward looking statements to reflect future events or
circumstances.
The Company's net income for the quarter ended June 30, 1997 was $6.8
million or $0.28 and $0.24 primary and fully diluted earnings per common and
common equivalent share, respectively, compared to net income of $5.5 million or
$0.23 primary and fully diluted earnings per common and common equivalent share
for the same period in 1996. The Company's net income for the six months ended
June 30, 1997 was $13.2 million or $0.54 and $0.46 primary and fully diluted
earnings per common and common equivalent share, respectively, compared to net
income of $10.3 million or $0.44 primary and fully diluted earnings per common
and common equivalent share for the same six month period during 1996.
Net interest income after provision for loan losses was $21.0 million for
the June 30, 1997 quarter compared to $16.2 million for the quarter ended June
30, 1996. During the three months ended June 30, 1997, total interest income
increased by $19.3 million primarily due to higher interest income earned on
loans and investment securities, partially offset by lower interest income on
securities available for sale. This increase in loan interest income reflects
higher average balances resulting from the purchase of residential mortgage
loans, loan fundings and the October 1996 Bank of North America ("BNA")
acquisition. The increase in interest and dividends on investment securities was
primarily due to $208,000 of additional dividends earned on Federal Home Loan
Bank Stock due to higher average balances. Increases in Federal Home Loan Bank
("FHLB") stock were required based on increased FHLB advances. The decline in
interest income on securities available for sale resulted from lower average
balances primarily due to security sales and principal repayments. During the
three months ended June 30, 1997 total interest expense was $28.4 million
compared to $15.1 million during the comparable 1996 period. The higher interest
expense resulted primarily from the higher deposit average balances, increased
FHLB advances borrowings, issuances of the 6 3/4% Convertible Subordinated
Debentures and 9 1/2% Junior Subordinated Debentures and a generally higher
interest rate environment during 1997 than experienced in 1996. The $57.5
million of 6 3/4% Convertible Subordinated Debentures and the $74.75 million of
9 1/2% Junior Subordinated Debentures were issued in July 1996 and April 1997,
respectively. The increased FHLB advances funded the purchase of residential
loans in the secondary market and the issuance of convertible subordinated
debentures funded loan growth and the BNA acquisition. The proceeds from 9 1/2%
Junior Subordinated Debentures were deposited in BankAtlantic and subsequently
used to paydown securities sold under agreements to repurchase during the June
1997 quarter. The provision for loan losses was $2.7 million for the three
months ended June 30, 1997 compared to $1.5 million during the comparable 1996
period. The increased provision for loan losses resulted from higher consumer
loan net charge-offs and an increase in the allowance for loan losses due
primarily to consumer loan delinquency trends and the increased size of the loan
portfolio. Non-interest income was $9.6 million for the three months ended June
30, 1997 compared to $6.7 million for the comparable 1996 period. The $2.9
million net increase primarily resulted from gains on sales of financial assets,
higher transaction account fees and additional late fee income. Non-interest
expenses for the quarter ended June 30, 1997 were $19.4 million compared to
$13.7 million for the same 1996 period. The net increase of $5.8 million
primarily resulted from additional expenses associated with operating a larger
organization due to the BNA acquisition, higher legal expenses primarily
associated with the Subject Portfolio, increased consumer repossession expenses
and data processing fees and expenses associated with the conversion of a
substantial portion of its data processing functions to a service bureau during
the fourth quarter of 1996.
<PAGE>
Net interest income after provision for loan losses was $42.8 million for
the six months ended June 30, 1997 compared to $31.7 million for the comparable
1996 period. Changes related to the individual components of net interest income
after provision for loan losses for the six months ended June 30, 1997, compared
to June 30, 1996 were primarily related to the items discussed above as well as
$746,000 of tax certificate interest reserve reversals during 1997 compared to
$438,000 of reversals during 1996. The interest reserve reversals reflect higher
than anticipated tax certificate repayments. Non-interest income was $18.7
million for the 1997 six month period compared to $13.5 million during the
comparable 1996 period. As discussed under quarterly results, higher gains on
the sales of financial assets, increased transaction account fees and additional
loan servicing and late fee income were the primary reasons for the increase.
Non-interest expense was $39.8 million for the six months ended June 30, 1997
compared to $28.2 million during the comparable 1996 period. The increase was
associated with items discussed above for the current quarter.
<TABLE>
<CAPTION>
Net Interest Income
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------ --------------------------------
(In thousands) 1997 1996 Change 1997 1996 Change
-------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans ............................... $ 41,948 $ 21,877 $ 20,071 $ 83,071 $ 42,210 $ 40,861
Interest on securities available for sale ................ 8,246 9,226 (980) 15,788 19,726 (3,938)
Interest and dividends on investment securities .......... 1,852 1,655 197 3,631 2,914 717
Interest on deposits ..................................... (17,042) (12,333) (4,709) (34,317) (24,712) (9,605)
Interest on advances from FHLB ........................... (6,266) (796) (5,470) (11,067) (2,823) (8,244)
Interest on securities sold under agreements to repurchase (2,309) (1,469) (840) (4,858) (2,187) (2,671)
Interest on subordinated debentures and guaranteed
preferred interest in The Company's Junior Subordinated
Debentures ............................................. (2,775) (498) (2,277) (4,314) (994) (3,320)
-------- -------- -------- --------- -------- --------
Net interest income ................................. $ 23,654 $ 17,662 $ 5,992 $ 47,934 $ 34,134 $ 13,800
======== ======== ======== ========= ======== ========
</TABLE>
The increase in interest and fees on loans during the three months ended
June 30, 1997 compared to the same period in 1996 reflects higher average
balances resulting from loans acquired in connection with the BNA acquisition,
residential loan purchases, and loan fundings. The higher loan average balances
were partially offset by lower rates earned on consumer loans. Loan average
balances increased from $933.6 million during the three months ended June 30,
1996 to $1.9 billion during the comparable period during 1997. The BNA
acquisition originally increased loan balances by $395.0 million. Average
balances of purchased residential loans increased from $29.5 million during the
three months ended June 30, 1996 to $492.8 million during the comparable 1997
period. Loan fundings for portfolio were $248.6 million for the six months ended
June 30, 1997, compared to $356.9 million during the same period in 1996. The
lower fundings during the 1997 compared to the same period during 1996 resulted
from a significant reduction in marketing direct consumer loans since the fourth
quarter of 1996 and lower residential loan fundings. The decrease in yields
earned on consumer loans reflects the funding of new loans bearing lower
interest rates than portfolio loan rates and the acquisition of BNA's consumer
loan portfolio. The decline in interest on securities available for sale
resulted from lower average balances and yields which declined from $593.4
million and 6.22% for the three months ended June 30, 1996 to $540.7 million and
6.10% for the comparable 1997 period. The decline in securities available for
sale average balances and yields resulted from principal repayments and sales of
securities. Sales of securities were $204.2 million and $368.5 million during
the six months ended June 30, 1997 and the year ended December 31, 1996,
respectively. The decline in securities available for sale average balances was
partially offset by purchases of $148.8 million of treasury notes, $121.3
million of 7 year balloon mortgage-backed securities, $1.3 million of 5 year
balloon mortgage-backed securities, $10.0 million of adjustable rate
mortgage-backed securities and $1.9 million of corporate bonds during the six
months ended June 30, 1997. The 1997 increase in interest and dividends on
investment securities was primarily due to a $208,000 increase in dividends from
FHLB stock. FHLB stock average balances increased from $8.8 million during the
three months ended June 30, 1996 to $20.3 million during the comparable 1997
period. Increases in FHLB stock were required based on higher FHLB advance
levels.
<PAGE>
The increase in interest on deposits for the quarter ended June 30, 1997
compared to the comparable 1996 quarter resulted from higher average deposit
balances and rates during 1997. Average interest bearing deposit balances
increased from $1.2 billion for the three months ended June 30, 1996 to $1.6
billion for the comparable period ended June 30, 1997, and average rates on
deposits increased from 3.99% during the 1996 quarter to 4.19% during the 1997
quarter. The increase in the rates on deposits reflects a new tiered savings
product that pays higher rates based on account balances as well as the
generally higher interest rate environment during 1997 than experienced during
1996. Saving account average balances and rates increased from $103.9 million
and 1.55% during the three months ended June 30, 1996 to $202.5 million and
2.82% during the comparable 1997 period. The remaining increase in deposit
average balances primarily resulted from the deposits acquired in connection
with the BNA acquisition. The increase in interest expense on advances from FHLB
was primarily due to higher average balances and secondarily to higher average
rates. Advances from FHLB average balances and rates increased from $53.4
million and 5.98%, respectively, during the second quarter of 1996 to $404.8
million and 6.21%, respectively during the comparable 1997 quarter. The
additional FHLB borrowings were primarily intermediate term advances.
Intermediate term advances generally carry higher rates than short term advances
and were partially used to fund the purchase of residential loans. The
additional interest expense on securities sold under agreements to repurchase
resulted from higher average balances and rates. Securities sold under
agreements to repurchase average balances increased from $125.7 million during
the three months ended June 30, 1996 to $172.3 million during the comparable
1997 three month period and average rates increased from 4.69% during the 1996
period to 5.37% during the comparable 1997 period. The increased average rates
on securities sold under agreements to repurchase resulted from the higher 1997
interest rate environment and the increased borrowings during the period were
used to fund loan growth. Interest on subordinated debentures consisted of
interest expense on $21.0 million of the Company's 9% Subordinated Debentures
during the 1996 quarter. The interest expense during the 1997 quarter includes
interest expense on the above subordinated debentures plus the interest expense
on $57.3 million of 6 3/4% Convertible Subordinated Debentures issued July 1996
and interest expense on the $74.75 million of 9 1/2% Junior Subordinated
Debentures issued in April 1997.
During the six months ended June 30, 1997, net interest income increased by
$13.8 million. The increase in total interest income was impacted by higher loan
average balances, and higher yields on earning assets, partially offset by lower
securities available for sale average balances. The yields on interest earning
assets increased from 8.20% for the 1996 six month period to 8.32% during the
same period in 1997. The higher yields reflect a change in the mix of interest
earning assets from lower yielding investments and securities available for sale
to higher yielding loans. Average total loans receivable as a percentage of
average earning assets increased from 56.8% during the 1996 six month period to
76.1% for the comparable 1997 period. Securities available for sale average
balances declined from $621.2 million during the six months ended June 30, 1996
to $516.6 million during the comparable 1997 period. The increase in total
interest expense was primarily related to the items discussed above for the
quarter.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the second quarter 1997 was $2.7 million
compared to $1.5 million during the comparable 1996 period. The higher 1997
provision for loan losses reflects a $700,000 increase in consumer loan net
charge-offs, and a $1.0 million increase in the allowance for loan losses for
the June 1997 quarter compared to a $500,000 increase in the loan loss allowance
during the June 1996 period. The increased consumer loan net charge-offs
primarily resulted from the indirect consumer loan portfolio. The allowance for
loan losses was increased during the 1997 quarter due primarily to loan growth,
increased consumer loan portfolio delinquencies, and consumer loan charge-off
trends.
The provision for loan losses for the six months ended June 30, 1997
increased $2.8 million from the comparable 1996 period. The increase primarily
related to $1.5 million of additional consumer loan net charge-offs during 1997
compared to 1996. The allowance for loan losses increased by $1.45 million
during the six months ended June 30, 1997 compared to $200,000 for the
comparable 1996 period. The increase in the allowance for loan losses was
primarily related to the items discussed above for the quarter.
<PAGE>
On the indicated dates the Company's risk elements and non-performing
assets were (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------- -----------
Nonaccrual :
<S> <C> <C>
Tax certificates .................... $ 1,208 $ 1,835
Loans ............................... 14,025 12,424
------- -------
Total nonaccrual .................... 15,233 14,259
------- -------
Repossessed Assets:
Real estate owned .................... 4,618 4,918
Repossessed assets ................... 2,460 1,992
------- -------
Total repossessed assets ............. 7,078 6,910
------- -------
Contractually past due 90 days or more (1) 2,710 2,961
------- -------
Total non-performing assets .......... 25,021 24,130
Restructured loans ....................... 5,060 3,718
------- -------
Total risk elements .................. $30,081 $27,848
======= =======
- ----------
(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.
Total risk elements at June 30, 1997 compared to December 31, 1996
increased by $2.2 million. The higher amount of risk elements primarily related
to increases in nonaccrual loans, restructured loans, and repossessed assets,
partially offset by decreases in real estate owned, nonaccrual tax certificates,
and loans contractually past due 90 days or more. The $1.6 million increase in
nonaccrual loans primarily reflects $626,000 and $811,000 of higher consumer and
residential nonaccrual loans, respectively. The $1.3 million increase in
restructured loans resulted from three loans to one borrower that were
restructured in June 1997. The $468,000 increase in repossessed assets primarily
relates to automobiles associated with the indirect consumer loan portfolio. The
$300,000 decline in real estate owned was due to a $680,000 sale of a commercial
property, partially offset by a $200,000 and $160,000 increase in residential
and commercial real estate owned, respectively. The $627,000 decline in
nonaccrual tax certificates resulted from redemptions of tax certificates.
NON-INTEREST INCOME
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
(In thousands) 1997 1996 Change 1997 1996 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Loan servicing and other loan fees ............. $ 1,405 $ 1,106 $ 299 $ 2,976 $ 1,944 $ 1,032
Gains on sales of loans originated for resale .. 714 122 592 1,165 286 879
Gains on sales of mortgage servicing rights .... 2,201 0 2,201 4,634 0 4,634
Gains on sales of securities available for sale 689 1,654 (965) 942 3,946 (3,004)
Transaction accounts ........................... 3,618 3,127 491 7,077 5,683 1,394
Other .......................................... 1,007 705 302 1,864 1,689 175
------- ------- ------- ------- -------- -------
Total non-interest income ................... $ 9,634 $ 6,714 $ 2,920 $18,658 $ 13,548 $ 5,110
======= ======= ======= ======= ======== =======
</TABLE>
<PAGE>
The increase in loan servicing and other loan fees during the three month
period in 1997 compared to the corresponding 1996 period resulted from higher
late fee income and loan fees. Late fee income increased from $299,000 during
the three months ended June 30, 1996 to $457,000 during the comparable 1997
period primarily due to larger loan portfolios. Loan fee income increased by
$170,000 due to higher prepayment penalties earned on commercial loans and
increased investor loan set-up fees on serviced loans. The increase in loan
servicing and other loan fees for the six month period in 1997 compared to the
corresponding 1996 period resulted from higher loan servicing fees, late fee
income and loan fees. Loan servicing income increased from $400,000 during the
six months ended June 30, 1996 to $726,000 during the comparable 1997 period.
The increased servicing income resulted from lower amortization rate on mortgage
servicing rights caused by reduced loan prepayments during the comparable
periods. The increase in late fee income and other loan fees primarily related
to the items discussed above.
During the three and six months ended June 30, 1997 and 1996, BankAtlantic
sold $30.0 million and $54.6 million, and $18.2 million and $33.4 million
respectively, of recently originated residential loans for gains as reported in
the preceding table.
During the three and six months ended June 30, 1997, BankAtlantic sold $5.8
million and $11.1 million of mortgage servicing rights for the gains as reported
in the above table. These rights related to approximately $496.1 million and
$1.0 billion of loans serviced for others during the respective
three and six month periods ended June 30, 1997.
During the three and six months ended June 30, 1997, BankAtlantic sold
$99.4 million and $190.7 million of treasury notes, respectively, and during the
three months ended June 30, 1997, BankAtlantic sold $7.6 million and $6.0
million of federal agency obligations and REMIC securities for gains reported in
the prior table. Proceeds from these sales were used to fund purchases of
mortgage servicing rights and support loan growth. During the three and six
months ended June 30, 1996, The Company sold $84.0 million and $136.6 million of
adjustable rate mortgage-backed securities, $0 and $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 preceding table.
The increase in transaction account fees during the three and six months
ended June 30, 1997 compared to the corresponding 1996 period resulted from
higher checking account and ATM fee income. ATM fee income increased from $1.1
million and $1.7 million during the three and six months ended June 30, 1996 to
$1.4 million and $2.7 million for the comparable three and six month periods
during 1997, respectively. Likewise, checking account fees increased from $2.0
million and $3.9 million during the three and six months ended June 30, 1996 to
$2.3 million and $4.4 million during the comparable 1997 periods, respectively.
The additional fee income resulted from higher deposit balances and the
implementation of an ATM surcharge fee.The ATM surcharge is a fee received by
the owner of an ATM machine.
The increase in other non-interest income during the three and six months
ended June 30, 1997 compared to the 1996 period was due to generally higher
other income associated with retail banking services.
Non-Interest Expenses
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
(In thousands) 1997 1996 Change 1997 1996 Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Employee compensation and benefits .... $ 9,286 $ 7,051 $ 2,235 $ 18,833 $ 14,419 $ 4,414
Occupancy and equipment ............... 4,245 2,906 1,339 9,037 5,691 3,346
Federal insurance premium ............. 345 669 (324) 553 1,260 (707)
Advertising and promotion ............. 525 730 (205) 894 1,237 (343)
Amortization of cost over fair value of
net assets acquired ................ 627 306 321 1,254 612 642
Other ................................. 4,415 2,023 2,392 9,272 4,981 4,291
-------- -------- -------- -------- -------- --------
Total non-interest expenses ....... $ 19,443 $ 13,685 $ 5,758 $ 39,843 $ 28,200 $ 11,643
======== ======== ======== ======== ======== ========
</TABLE>
The increase in employee compensation and benefits during the three and six
months ended June 30, 1997 compared to the 1996 period resulted from the
expansion of BankAtlantic's branch network, the acquisition of eight BNA
branches and annual salary increases. Occupancy and equipment expenses increased
due to the expanded branch network and the BNA acquisition mentioned above, and
the fourth quarter conversion of a substantial portion of its data processing
functions to an outside service bureau. As a result of the conversion,
processing fees increased from $118,000 and $226,000 during the three and six
months ended June 30, 1996 to $835,000 and $1.9 million during the comparable
periods in 1997, respectively. Depreciation expense increased by $275,000 and
$707,000 during the three and six months ended June 30 1997 compared to the same
periods during 1996. The increase in depreciation expense resulted from the
purchase of item processing equipment, the implementation of a wide area network
throughout the organization, and upgrading consumer and residential loan
origination software. Management believes these expenditures will enhance
BankAtlantic's customer delivery systems.
<PAGE>
The reduction in federal insurance premium during the three and six months
ended June 30, 1997 resulted from reduced FDIC premium rates based on the SAIF
recapitalization effected in September 1996. At that time BankAtlantic incurred
a $7.2 million special one-time SAIF assessment. The decline was partially
offset by increased insured deposits in connection with the BNA acquisition.
The decline in advertising and promotion expenses during 1997 resulted from
direct consumer lending and branch expansion promotions during 1996 that were
not conducted in 1997.
The increase in the amortization of cost over fair value of net assets
acquired for the three and six months ended June 30, 1997 related to the BNA
acquisition.
The increase in other expenses during the three and six months ended June
30, 1997 as compared to the 1996 periods reflects expenses associated with the
BNA acquisition, an expanded branch network, data processing conversion losses,
higher legal fees primarily associated with the Subject Portfolio, increased
charitable contributions, a sales tax audit settlement, a decline in tax
certificate recoveries, as well as higher consumer repossession expenses. In the
1997 quarter, telephone, postage, armored car, stationery, printing and supplies
expenses increased by a total of $502,000 compared to the same 1996 quarter due
to the expanded branch network and the BNA acquisition. Check losses and teller
outages increased by a total of $229,000 largely associated with the October
1996 data processing conversion. During the three months ended June 30, 1997, a
state of Florida sales tax audit was settled for $166,000. Corporate legal
expenses increased by $146,000 during the 1997 quarter over amounts incurred in
the same 1996 quarter. Furthermore, charitable contributions increased by
$130,000 and consumer repossession expenses increased by $70,000, while tax
certificate recoveries declined by $200,000. The remaining increase in other
expenses reflects higher operating expenses generally associated with a larger
organization. During the six months ended June 30, 1997, telephone, postage,
armored car, stationery, printing and supplies expenses increased by a total of
$905,000. Check losses and teller outages, legal expenses, charitable
contributions and consumer repossession expenses increased by $617,000,
$250,000, $158,000, and $852,000, respectively. The increase in consumer
repossession expenses was primarily as a consequence of the indirect consumer
automobile loans acquired in connection with the BNA and MegaBank acquisitions.
Furthermore, tax certificate recoveries declined by $150,000.
FINANCIAL CONDITION
The Company's total assets at June 30, 1997 were $2.7 billion compared to
$2.6 billion at December 31, 1996. Loans receivable, net, securities available
for sale, investment securities held to maturity, FHLB stock, and mortgage
servicing rights increased by $109.1 million, $10.1 million, $14.1 million, $9.9
million, and $5.5 million, respectively. The above increases were partially
offset by a $20.5 million decrease in cash and due from depository institutions.
The increase in loans receivable, net reflects $216.2 million of residential
loan purchases and $300.5 million of loan fundings, partially offset by $347.2
million of loan principal repayments and $54.6 million of loan sales. The higher
securities available for sale balances reflect the purchase of $283.3 million of
securities, partially offset by the sale of $204.2 million of securities and
$76.2 million of principal repayments. The higher investment securities held to
maturity balances primarily resulted from the purchase of $35.6 million of tax
certificates. During 1997, the Company purchased additional FHLB stock to
satisfy FHLB advance requirements. The increased mortgage servicing rights
balances reflect $20.3 million of servicing acquired partially offset by $11.1
million of servicing sold and $3.6 million of mortgage servicing rights
amortization.
The Company's total liabilities at June 30, 1997 were $2.6 billion compared
to $2.5 billion at December 31, 1996. FHLB advances, guaranteed preferred
beneficial interest in the Company's Junior Subordinated Debentures and advances
by borrowers for taxes and insurance increased by $172.0 million, $74.8 million,
and $17.4 million, respectively. The above increases were partially offset by
$64.8 million of net deposit outflows and an $85.0 million decline in securities
sold under agreements to repurchase borrowings. Proceeds from the additional
FHLB advances, issuance of the Company's 9 1/2% Junior Subordinated Debentures,
loan repayments, and principal collected on securities available for sale and
investment securities held to maturity were used to repay securities sold under
agreements to repurchase, fund loan growth and deposit outflows and to purchase
securities available for sale, FHLB stock and tax certificates and to acquire
outstanding shares of common stock.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In March 1997, the Company formed BBC Capital Trust I ("BBC Capital"). BBC
Capital is a statutory business trust which was formed for the purpose of
issuing Cumulative Trust Preferred Securities ("Preferred Securities") and
investing the proceeds thereof in Junior Subordinated Debentures of the Company.
In a public offering in April 1997, BBC Capital issued 2.99 million shares of
Preferred Securities at a price of $25 per share. BBC Capital used the gross
proceeds received from the sale of the Preferred Securities to purchase the 9
1/2% Junior Subordinated Debentures from the Company which mature on June 30,
2027. The net proceeds to the Company from the sale of the Junior Subordinated
Debentures were $71.8 million after deduction of the underwriting discount and
expenses. The net proceeds from the sale of the Junior Subordinated Debentures
are being used by the Company for general corporate purposes, including
repurchase of its common stock.
The Company's primary source of funds during the first six months of 1997
were dividends from BankAtlantic and proceeds from the issuance of the Company's
9 1/2% Junior Subordinated Debentures. The primary use of funds during the six
month period was payment of cash dividends to common stockholders, interest
expense on its outstanding 9% Subordinated Debentures, 6 3/4% Convertible
Subordinated Debentures, and 9 1/2% Junior Subordinated Debentures, the purchase
of $6.3 million of marketable equity securities, funding a $6.5 million
commercial loan participated with BankAtlantic and the repurchase of common
stock. It is anticipated that funds for interest and dividend payments will
continue to be obtained from BankAtlantic. The Company currently anticipates
that it will pay regular quarterly cash dividends on its common stock. Payment
of interest and the ultimate repayment of the 6 3/4%, 9%, and 9 1/2% Debentures
is significantly dependent upon the operations and distributions from
BankAtlantic, refinancing of the debt or raising additional equity capital.
BankAtlantic's primary sources of funds during the first six months of 1997
were from operations, principal collected on loans, securities available for
sale, investment securities held to maturity, sales of securities available for
sale, FHLB advances, mortgage servicing rights sales, and advances from
borrowers for taxes and insurance. These funds were primarily utilized to fund
deposit outflows, and loan purchases and fundings and the purchase of FHLB
stock, tax certificates, and securities available for sale and repay securities
sold under agreements to repurchase. In July 1997, the FHLB increased
BankAtlantic's $500 million line of credit to $800 million. At June 30, 1997,
BankAtlantic met all applicable liquidity and regulatory capital requirements.
BankAtlantic's commitments to originate and purchase loans at June 30, 1997
were $70.2 million compared to $90.9 million at June 30, 1996. Commitments to
purchase residential loans were $91.4 million and $0 at June 30, 1997 and 1996,
respectively, and commitments to purchase securities available for sale were $0,
and $10.0 million at June 30, 1997 and 1996, respectively. BankAtlantic expects
to fund the 1997 loan commitments from loan and securities available for sale
repayments. At June 30, 1997, loan commitments were 3.63 % of loans receivable,
net.
BankAtlantic's actual capital amounts and ratios are presented in the
table:
<TABLE>
<CAPTION>
To be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
----------------- -------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(In thousands)
As of June 30, 1997:
<S> <C> <C> <C> <C> <C> <C>
Total risk-based capital $204,880 11.28 % > $145,291 > 8.00 % > $181,614 > 10.00%
= = = =
Tier I risk-based capital $182,125 10.03 % > $ 72,645 > 4.00 % > $108,968 > 6.00%
= = = =
Tangible capital $182,125 6.79 % > $ 40,220 > 1.50 % > $ 40,220 > 1.50%
= = = =
Core capital $182,125 6.79 % > $ 80,440 > 3.00 % > $134,067 > 5.00%
= = = =
As of December 31, 1996:
Total risk-based capital $193,196 10.83 % > $142,691 > 8.00 % > $178,407 > 10.00%
= = = =
Tier I risk-based capital $170,865 9.58 % > $ 71,363 > 4.00 % > $107,004 > 6.00%
= = = =
Tangible capital $170,865 6.65 % > $ 38,547 > 1.50 % > $ 38,547 > 1.50%
= = = =
Core capital $170,865 6.65 % > $ 77,094 > 3.00 % > $128,491 > 5.00%
= = = =
</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 the Company's Annual Report on Form 10K for the year ended December 31,
1996.
<PAGE>
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The registrant held an Annual Meeting of Stockholders on July 22, 1997. At
the meeting three directors were elected by a vote of 9,824,524 for and 9,445
against.
EXHIBITS AND REPORTS ON FORM 8K
A report on Form 8K, dated June 12, 1997 was filed with the Securities and
Exchange Commission relating to the execution by the Company of an agreement to
acquire controlling interest in Oriole Homes Corp.
A report on Form 8K, dated July 22, 1997 was filed with the Securities and
Exchange Commission announcing the listing of the Company's Class A common stock
on the New York Stock Exchange, and the 5 for 4 common stock split effected in
the form of a 25% stock dividend.
A Report on Form 8K, dated August 1, 1997 was filed with the Securities and
Exchange Commission relating to the termination of the Purchase Agreement to
acquire controlling interest in Oriole Homes Corp.
<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.
August 14, 1997 By: /s/Alan B. Levan
- --------------- ------------------------
Date Alan B. Levan
Chief Executive Officer/
Chairman/President
August 14, 1997 By: /s/Jasper R. Eanes
- --------------- ------------------------
Date Jasper R. Eanes
Executive Vice President/
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted
from the Consolidated Statement of Financial Condition at June
30, 1997 (Unaudited) and the Consolidated Statement of Operations
for the six months ended June 30, 1997 (Unaudited) and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 82,490
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,808
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 449,422
<INVESTMENTS-CARRYING> 68,587
<INVESTMENTS-MARKET> 68,587
<LOANS> 1,933,980
<ALLOWANCE> 27,200
<TOTAL-ASSETS> 2,730,474
<DEPOSITS> 1,768,087
<SHORT-TERM> 105,544
<LIABILITIES-OTHER> 82,514
<LONG-TERM> 620,754
0
0
<COMMON> 225
<OTHER-SE> 153,350
<TOTAL-LIABILITIES-AND-EQUITY> 2,730,474
<INTEREST-LOAN> 83,071
<INTEREST-INVEST> 19,419
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 102,490
<INTEREST-DEPOSIT> 34,317
<INTEREST-EXPENSE> 54,556
<INTEREST-INCOME-NET> 47,934
<LOAN-LOSSES> 5,162
<SECURITIES-GAINS> 942
<EXPENSE-OTHER> 39,843
<INCOME-PRETAX> 21,587
<INCOME-PRE-EXTRAORDINARY> 21,587
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,162
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.46
<YIELD-ACTUAL> 8.32
<LOANS-NON> 14,025
<LOANS-PAST> 2,710
<LOANS-TROUBLED> 5,060
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 25,750
<CHARGE-OFFS> 4,856
<RECOVERIES> 1,144
<ALLOWANCE-CLOSE> 27,200
<ALLOWANCE-DOMESTIC> 27,200
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,472
</TABLE>
