===============================================================================
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 September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 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 OCTOBER 23, 1997
------------------- ----------------
Class A Common Stock, par value $0.01 per share 11,597,914
Class B Common Stock, par value $0.01 per share 10,677,778
===============================================================================
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
FINANCIAL INFORMATION PAGE REFERENCE
<S> <C>
Financial Statements....................................................................... 1-7
Consolidated Statements of Financial Condition - September 30, 1997,
December 31, 1996 and September 30, 1996 - Unaudited................................ 1
Consolidated Statements of Operations - For the Three and Nine Months Ended
September 30, 1997 and 1996 - Unaudited............................................... 2
Consolidated Statements of Cash Flows - For the Nine Months Ended
September 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
Exhibits and Reports on Form 8K.......................................................... 15
Signatures............................................................................... 16
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
- -------------------------------------------------------------------------------
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
SEPTEMBER DECEMBER SEPTEMBER
(IN THOUSANDS, EXCEPT SHARE DATA) 30, 31, 30,
--------- --------- ---------
1997 1996 1996
--------- --------- ---------
ASSETS
<S> <C> <C> <C>
Cash and due from depository institutions $ 113,734 $ 102,995 $ 78,901
Federal Funds sold 1,534 6,148 0
Loans receivable, net 1,963,227 1,824,856 1,264,616
Investment securities-net, held to maturity, at cost which approximates
market value 59,953 54,511 65,818
Securities available for sale, at market value 495,093 439,345 615,726
Trading securities 4,237 0 0
Accrued interest receivable 21,432 20,755 16,897
Real estate owned, net 5,909 4,918 5,451
Office properties and equipment, net 50,283 48,274 47,132
Federal Home Loan Bank stock, at cost which approximates market value 27,437 14,787 10,849
Mortgage servicing rights 31,952 25,002 23,421
Deferred tax asset, net 3,718 3,355 2,537
Cost over fair value of net assets acquired 26,815 28,591 9,905
Other assets 39,672 31,990 29,227
--------- --------- ---------
Total assets $2,844,996 $2,605,527 $2,170,480
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $1,763,373 $1,832,780 $1,352,169
Advances from FHLB 548,706 295,700 216,985
Securities sold under agreements to repurchase 128,369 190,588 290,423
Subordinated debentures 78,300 78,500 78,500
Guaranteed preferred beneficial interests in the Company's Junior
Subordinated Debentures 74,750 0 0
Advances by borrowers for taxes and insurance 57,467 29,659 56,647
Other liabilities 37,473 30,596 36,029
--------- --------- ---------
Total liabilities 2,688,438 2,457,823 2,030,753
--------- --------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized:
none issued and outstanding 0 0 0
Class A Common Stock, $0.01 par value, authorized 30,000,000 shares; issued
and outstanding, 11,597,914, 12,394,602 and 12,417,540 shares 116 78 41
Class B Common Stock, $0.01 par value, authorized 15,000,000 shares; issued
and outstanding, 10,677,778, 10,542,116 and 10,582,980 shares 107 105 106
Additional paid-in capital 54,857 64,171 64,031
Retained earnings 100,352 82,602 75,559
--------- --------- ---------
Total stockholders' equity before net unrealized appreciation (depreciation)
on securities available for sale - net of deferred income taxes 155,432 146,956 139,737
Net unrealized appreciation (depreciation) on securities available for sale -
net of deferred income taxes 1,126 748 (10)
--------- --------- ---------
Total stockholders' equity 156,558 147,704 139,727
--------- --------- ---------
Total liabilities and stockholders' equity $2,844,996 $2,605,527 $2,170,480
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements - Unaudited
- -------------------------------------------------------------------------------
1
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
<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: 1997 1996 1997 1996
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Interest and fees on loans $ 44,333 $ 27,277 $ 127,404 $ 69,487
Interest and dividends on securities available for sale 7,139 9,313 22,927 29,039
Interest and dividends on investment securities held to maturity 2,048 1,931 5,679 4,845
----------- ----------- ------------ -----------
Total interest income 53,520 38,521 156,010 103,371
----------- ----------- ------------ -----------
INTEREST EXPENSE:
Interest on deposits 17,193 12,644 51,510 37,356
Interest on advances from FHLB 7,685 2,625 18,752 5,448
Interest on securities sold under agreements to repurchase 1,496 2,846 6,354 5,033
Interest on subordinated debentures and guaranteed
preferred interest in the Company's Junior Subordinated Debentures 3,320 1,495 7,634 2,489
----------- ----------- ------------ -----------
Total interest expense 29,694 19,610 84,250 50,326
----------- ----------- ------------ -----------
NET INTEREST INCOME 23,826 18,911 71,760 53,045
Provision for loan losses 3,671 1,869 8,833 4,264
----------- ----------- ------------ -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 20,155 17,042 62,927 48,781
----------- ----------- ------------ -----------
NON-INTEREST INCOME:
Loan servicing and other loan fees 797 956 3,773 2,900
Gains on sales of loans available for sale 1,488 1 2,653 287
Gains on sales of mortgage servicing rights 1,914 2,554 6,548 2,554
Gains on sales of securities available for sale 194 0 1,136 3,946
Trading account gains and losses, net 1,508 0 1,495 0
Gains (losses) on sales of property and equipment, net 868 0 852 (329)
Transaction fees 3,710 3,093 10,787 8,776
Other 794 703 2,687 2,721
----------- ----------- ------------ -----------
Total non-interest income 11,273 7,307 29,931 20,855
----------- ----------- ------------ -----------
NON-INTEREST EXPENSE:
Employee compensation and benefits 10,033 7,422 28,866 21,841
Occupancy and equipment 4,773 2,980 13,810 8,671
Federal insurance premium 269 689 822 1,949
Advertising and promotion 667 394 1,561 1,631
SAIF special assessment 0 7,160 0 7,160
Amortization of cost over fair value of net assets acquired 627 306 1,881 918
Other 4,532 3,421 13,804 8,402
----------- ----------- ------------ -----------
Total non-interest expense 20,901 22,372 60,744 50,572
----------- ----------- ------------ -----------
INCOME BEFORE INCOME TAXES 10,527 1,977 32,114 19,064
Provision for income taxes 4,098 886 12,523 7,714
----------- ----------- ------------ -----------
NET INCOME $ 6,429 $ 1,091 $ 19,591 $ 11,350
=========== =========== ============ ===========
Net income per common and common equivalent share $ 0.27 $ 0.05 $ 0.81 $ 0.48
=========== =========== ============ ===========
Net income per common and common equivalent share,
assuming full dilution $ 0.23 $ 0.04 $ 0.68 $ 0.46
=========== =========== ============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 23,838,836 24,077,950 24,134,372 23,453,913
=========== =========== ============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING, ASSUMING FULL DILUTION 31,106,198 24,253,705 31,606,424 25,901,719
=========== =========== ============ ===========
</TABLE>
See Notes to Consolidated Financial Statements - Unaudited
- -------------------------------------------------------------------------------
2
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE NINE MONTHS
(IN THOUSANDS, EXCEPT SHARE DATA) ENDED SEPTEMBER 30,
------------------------
OPERATING ACTIVITIES: 1997 1996
----------- ----------
<S> <C> <C>
Net income ...................................................................... $ 19,591 $ 11,350
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ....................................................... 8,833 4,264
Reversal of allowance for losses on real estate owned ........................... 0 (200)
Depreciation .................................................................... 3,577 2,608
Amortization of mortgage servicing rights ....................................... 5,767 5,041
Gains on sales of mortgage servicing rights ..................................... (6,548) (2,554)
Increase (decrease) in deferred income tax asset, net ........................... (600) 171
Net (accretion) amortization of securities ...................................... (302) 35
Unrealized gains on trading account securities, net ............................. (823) 0
Gains on sales of trading securities ........................................... (672) 0
Purchases of trading account securities ......................................... (6,243) 0
Proceeds from sales of trading securities ....................................... 3,501 0
Net amortization of deferred loan origination fees .............................. (801) (1,013)
Gains on sales of real estate owned ............................................. (328) (346)
Gains on sales of securities available for sale ................................ (1,136) (3,946)
Proceeds from sales of loans available for sale ................................. 137,549 45,085
Fundings of loans available for sale ............................................ (67,715) (46,609)
Gains on sales of loans available for resale .................................... (2,653) (287)
Recovery from tax certificate losses ............................................ (164) (259)
Amortization of dealer reserve .................................................. 6,054 1,579
Amortization of cost over fair value of net assets acquired ..................... 1,881 918
Net accretion of purchase accounting adjustments ................................ (335) (244)
Amortization of deferred borrowing costs ....................................... 303 137
Increase in accrued interest receivable ......................................... (677) (2,344)
Decrease (increase) in other assets ............................................. 6,793 (3,675)
Net losses (gains) on sales of property and equipment ........................... (852) 329
Increase in other liabilities ................................................... 7,580 12,925
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ....................................... 111,580 22,965
--------- ---------
INVESTING ACTIVITIES:
Proceeds from redemption and maturities of investment securities ................ 34,232 40,307
Purchase of investment securities ............................................... (39,510) (56,010)
Proceeds from sales of securities available for sale ............................ 273,770 166,985
Principal collected on securities available for sale ............................ 106,138 135,642
Purchases of securities available for sale ..................................... (433,495) (231,765)
Proceeds from sales of FHLB stock ............................................... 1,550 1,249
FHLB stock acquired ............................................................. (14,200) (2,009)
Principal reduction on loans .................................................... 493,109 432,526
Loan fundings for portfolio ..................................................... (331,578) (555,573)
Loans purchased ................................................................. (376,502) (315,247)
Proceeds from maturities of bankers' acceptances ................................ 287 0
Fundings of bankers' acceptances ................................................ (77) 0
Additions to dealer reserve ..................................................... (7,522) (2,196)
Proceeds from sales of real estate owned ........................................ 2,558 2,611
Mortgage servicing rights acquired .............................................. (43,199) (19,042)
Proceeds from sales of mortgage servicing rights ................................ 26,554 3,051
Proceeds from sales of property and equipment ................................... 1,144 0
Additions to office property and equipment ...................................... (5,878) (9,115)
Investment and advances to Florida Atlantic Securities, Inc. .................... (1,738) 0
Escrow deposit from the purchase of Bank of North America Bancorp ............... 0 (5,000)
-------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES ........................................ (314,357) (413,586)
-------- ---------
</TABLE>
See Notes to Consolidated Financial Statements - Unaudited (Continued)
- -------------------------------------------------------------------------------
3
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS FOR CASH FLOWS - UNAUDITED
(CONTINUED)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
------------------------
1997 1996
----------- ---------
<S> <C> <C>
FINANCING ACTIVITIES:
Net increase (decrease) in deposits (110,525) 19,119
Interest credited to deposits 41,008 32,688
Repayments of FHLB advances (320,000) (438,755)
Proceeds from FHLB advances 573,006 453,955
Net increase (decrease) in securities sold under agreements to repurchase (62,219) 224,186
Net decrease in federal funds purchased 0 (1,200)
Repayment of note payable 0 (1)
Issuance of common stock relating to exercise of employee stock options 1,805 333
Net proceeds from issuance of subordinated debentures 0 55,137
Proceeds from issuance of guaranteed preferred interests in the Company's
junior subordinated debentures 74,750 0
Deferred offering costs from issuance of guaranteed preferred interests in the
Company's junior subordinated debentures (2,908) 0
Issuance of common stock, net 0 18,004
Payments to acquire and retire common stock (12,188) (3,259)
Receipts of advances by borrowers for taxes and insurance 27,808 40,963
Common stock dividends paid (1,635) (1,515)
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 208,902 399,655
----------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 6,125 9,034
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 109,143 69,867
----------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 115,268 $ 78,901
----------- ---------
SUPPLEMENTARY DISCLOSURE AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Interest paid on borrowings $ 83,087 $ 47,372
Income taxes paid 10,825 8,000
Loans transferred to real estate owned 3,221 1,237
Proceeds receivable from sales of mortgage servicing rights 10,476 10,821
Residential loans held to maturity transferred to available for sale 245,703 0
Issuance of Class A Common Stock upon conversion of subordinated debentures 200 0
Loan charge-offs 8,322 5,518
Tax certificate charge-offs, net of (recoveries) (755) 142
Common stock dividend; not paid until October 703 550
Increase in equity for the tax effect related to the exercise of employee stock options 861 89
Change in net unrealized appreciation (depreciation) on securities
available for sale 615 (9,349)
Change in deferred taxes on net unrealized appreciation (depreciation) on
securities available for sale 237 (3,606)
Change in stockholders' equity from net unrealized appreciation (depreciation)
on securities available for sale, less related deferred income taxes 378 (5,743)
=========== =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
- -------------------------------------------------------------------------------
4
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
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 with
few restrictions to engage in various types of business activities, including
investments in real estate, real estate development and real estate related
businesses. In June 1997 the Company entered into an agreement to acquire the
controlling interest in a builder of residential communities in South Florida.
While the Company elected in August 1997 not to proceed with this acquisition,
the Company has indicated that it may in the future pursue an acquisition for
initiating its real estate activities as a means to diversify the Company's
sources of non-interest income and to increase non-interest revenues. At present
the Company's primary 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. The
Company's recent activities include formation of BBC Capital Trust I, a wholly
owned subsidiary (See Note 5) and purchasing 50% of the voting common stock of
Florida Atlantic Securities Inc., ("FASI") a full-service investment banking and
securities brokerage firm (See Note 6). 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 September 30, 1997, the consolidated results
of operations for the three and nine months ended September 30, 1997 and 1996
and the consolidated cash flows for the nine months ended September 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 Form 10Q for each of the periods ended
March 31, 1997 and June 30, 1997.
2. EQUITY CAPITAL
The follow table sets forth the changes in common stockholders' equity
for the nine months ended September 30, 1997 before net unrealized appreciation
of securities available for sale:
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED
(IN THOUSANDS) STOCK PAID IN CAPITAL EARNINGS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1996 $ 183 $ 64,171 $82,602
Exercise of stock options 3 1,802 0
Tax effect relating to the exercise of employee stock options 0 861 0
Payments to acquire and retire treasury stock (11) (12,177) 0
Issuance of common stock upon conversion of subordinated
debentures 0 200 0
Net income 0 0 19,591
Dividends on common stock 0 0 (1,793)
5 for 4 stock split, August 1997 48 0 (48)
--------- --------- ---------
Balance at September 30, 1997 $ 223 $ 54,857 $ 10,0352
========= ========= =========
</TABLE>
In August 1996, the Company announced a plan to purchase up to 1.56
million shares of common stock. During the nine months ended September 30, 1997,
the Company paid $8.9 million and $3.3 million to repurchase 832,500 shares and
292,500 shares of Class A and Class B common shares, respectively. As of
September 30, 1997, under the August 1996 repurchase plan, the Company has paid
$10.7 million and $4.7 million to repurchase in the secondary market 1,082,500
shares and 468,281 shares of Class A and Class B common shares, respectively.
These shares were retired at the time of purchase.
During the nine months ended September 30, 1997, the Company issued
24,414 shares of Class A Common Stock upon the conversion of $200,000 principal
amount of the Company's 6 3/4% Convertible Subordinated Debentures due 2006 (the
"6 3/4% Convertible Debentures") at a conversion price of $8.19.
- -------------------------------------------------------------------------------
5
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
3. SALES OF FINANCIAL ASSETS
During the three and nine months ended September 30, 1997, BankAtlantic
sold $8.9 million and $20.0 million of mortgage servicing rights realizing gains
of $1.9 million and $6.5 million, respectively. These mortgage servicing rights
related to approximately $562.1 million and $1.6 billion of loans, respectively.
Included in other assets at September 30, 1997 and December 31, 1996 were $10.5
million and $9.5 million of receivables from the sales of mortgage servicing
rights, respectively. During the three and nine months ended September 30, 1997,
BankAtlantic sold $39.7 million and $230.4 million of treasury notes, for gains
of $190,000 and $476,000, respectively, and $7.6 million and $5.9 million of
federal agency obligations and REMIC securities during the nine months ended
September 30, 1997 for gains of $220,000 and $436,000, respectively. During the
three months ended, September 30, 1997, $28.7 million of 5 year balloon
mortgage-backed securities were sold for a $4,000 gain. During the nine months
ended September 30, 1996, BankAtlantic sold $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
totaling $3.9 million. All debt securities sold were classified as securities
available for sale. Proceeds from the sales of these assets were used to fund
purchases of mortgage servicing rights and support loan growth.
4. TRADING ACCOUNT SECURITIES
During the three months ended September 30, 1997, the Company sold $2.8
million of marketable equity securities for a $672,000 gain. The unrealized
holding gain on marketable equity securities for the three and nine months ended
September 30, 1997 was $836,000 and $823,000, respectively.
5. 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 "9 1/2% Junior
Subordinated Debentures"). 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.
6. INVESTMENT IN FLORIDA ATLANTIC SECURITIES INC.
In September 1997, the Company entered into a joint ownership agreement
with a newly formed company, FASI. FASI is a full-service investment banking and
securities brokerage firm. Included in other assets is the Company's investment
of $237,500 to acquire 50% of FASI's voting stock and a $1.5 million five year
loan to FASI. The investment is accounted for under the equity method. Included
in the Company's statement of operations in other non-interest expenses during
the three and nine months ended September 30, 1997 is a $24,000 loss from FASI's
operations.
- -------------------------------------------------------------------------------
6
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
7. LOANS RECEIVABLE, NET ARE SUMMARIZED BELOW:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1997 1996 1996
------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Real estate loans:
Residential ........................................................... $ 838,616 $ 869,843 $ 514,891
Residential available for sale ........................................ 205,400 16,207 21,491
Construction and development .......................................... 330,579 301,813 217,292
FHA and VA insured .................................................... 1,143 4,013 4,255
Commercial ............................................................ 403,371 427,235 346,789
Other loans:
Second mortgages ...................................................... 83,432 96,128 93,590
Commercial business ................................................... 51,219 78,384 57,141
Consumer .............................................................. 255,635 248,562 149,263
------------- ------------- -------------
Total gross loans ............................................. 2,169,395 2,042,185 1,404,712
------------- ------------- -------------
Adjustments:
Undisbursed portion of loans in process ............................... 177,910 190,874 119,841
Unearned discounts on commercial real estate loans .................... (92) 705 730
Allowance for loan losses ............................................. 28,350 25,750 19,525
------------- ------------- -------------
Loan receivable -- net ........................................ $ 1,963,227 $ 1,824,856 $ 1,264,616
============= ============= =============
</TABLE>
BankAtlantic, in an effort to reduce its interest sensitivity and react
to recent changes in interest rates transferred during September 1997 $245.7
million of originated residential loans from loans held to maturity to loans
available for sale. It is anticipated that the remaining transferred loans may
be sold in the foreseeable future.
8. SUBSEQUENT EVENTS
On October 27, 1997 the Company filed a registration statement with the
Securities and Exchange Commission relating to proposed public offerings of 3.0
million shares of the Class A Common Stock, and $100.0 million of Convertible
Subordinated Debentures. The offering price of Class A Common Stock and the
terms of the Convertible Subordinated Debentures will be determined at the time
the offerings become effective and will be subject to, among other things,
market conditions. There is no assurance that the proposed offerings will be
completed.
9. RECLASSIFICATIONS
Certain amounts for prior periods have been reclassified to conform with
statement presentation for 1997.
- -------------------------------------------------------------------------------
7
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
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 September 30, 1997 was
$6.4 million or $0.27 and $0.23 primary and fully diluted earnings per common
and common equivalent share, respectively, compared to net income of $1.1
million or $0.05 and $0.04 primary and fully diluted earnings per common and
common equivalent share for the same period in 1996. The Company's net income
for the nine months ended September 30, 1997 was $19.6 million or $0.81 and
$0.68 primary and fully diluted earnings per common and common equivalent share,
respectively, compared to net income of $11.4 million or $0.48 and $0.46 primary
and fully diluted earnings per common and common equivalent share for the same
nine month period during 1996. Included in the Company'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 $0.19 and $0.18 primary
and fully diluted earnings per common and common equivalent share for the three
months ended September 30, 1996, respectively, and $0.19 and $0.17 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 $20.2 million
for the September 30, 1997 quarter compared to $17.0 million for the quarter
ended September 30, 1996. During the three months ended September 30, 1997
compared to the same period in 1996, total interest income was $53.5 million
compared to $38.5 million and total interest expense was $29.7 million compared
to $19.6 million, respectively. The provision for loan losses was $3.7 million
for the three months ended September 30, 1997 compared to $1.9 million during
the comparable 1996 period. Non-interest income was $11.3 million for the three
months ended September 30, 1997 compared to $7.3 million for the comparable 1996
period and non-interest expenses for the quarter ended September 30, 1997 were
$20.9 million compared to $22.4 million for the same 1996 period.
Net interest income after provision for loan losses was $62.9 million
for the nine months ended September 30, 1997 compared to $48.8 million for the
comparable 1996 period. Non-interest income was $29.9 million for the 1997 nine
month period compared to $20.9 million during the comparable 1996 period and
non-interest expense was $60.7 million for the nine months ended September 30,
1997 compared to $50.6 million during the comparable 1996 period.
NET INTEREST INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- -------------------------------
(In thousands) 1997 1996 Change 1997 1996 Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans ............................... $ 44,333 $ 27,277 $ 17,056 $127,404 $ 69,487 $ 57,917
Interest and dividends on securities available for sale . 7,139 9,313 (2,174) 22,927 29,039 (6,112)
Interest and dividends on investment securities .......... 2,048 1,931 117 5,679 4,845 834
Interest on deposits ..................................... (17,193) (12,644) (4,549) (51,510) (37,356) (14,154)
Interest on advances from FHLB ........................... (7,685) (2,625) (5,060) (18,752) (5,448) (13,304)
Interest on securities sold under agreements to repurchase (1,496) (2,846) 1,350 (6,354) (5,033) (1,321)
Interest on subordinated debentures and guaranteed
preferred interest in the Company's Junior
Subordinated Debentures ............................... (3,320) (1,495) (1,825) (7,634) (2,489) (5,145)
-------- -------- -------- -------- -------- --------
Net interest income ................................. $ 23,826 $ 18,911 $ 4,915 $ 71,760 $ 53,045 $ 18,715
======== ======== ======== ======== ======== ========
</TABLE>
- -------------------------------------------------------------------------------
8
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
The increase in interest and fees on loans during the three months ended
September 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 commercial real estate loan growth. The higher
loan average balances were partially offset by lower rates earned on consumer
loans. Loan average balances increased from $1.2 billion during the three months
ended September 30, 1996 to $2.0 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 $228.4 million
during the three months ended September 30, 1996 to $659.1 million during the
comparable 1997 period. Average commercial real estate loans for the 1997
quarter increased to $542.7 million from $425.1 million during the comparable
1996 period. The commercial real estate loan growth primarily resulted from loan
fundings and the BNA acquisition. The above increases in loan interest income
were partially offset by lower yields earned on consumer loans resulting from
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
and dividends on securities available for sale resulted from lower average
balances and yields reflecting the sale of $272.6 million of securities
available for sale and $2.8 million of trading securities. The above security
sales were partially offset by the purchase of $148.8 million of treasury notes,
$217.2 million of 7 year balloon mortgage-backed securities, $55.1 million of 5
year balloon mortgage-backed securities, $10.0 million of adjustable rate
mortgage-backed securities and $2.4 million of corporate bonds during the nine
months ended September 30, 1997. The 1997 increases in interest and dividends on
investment securities was primarily due to a $287,000 increase in dividends from
FHLB stock partially offset by a $228,000 decrease in tax certificate interest
income. FHLB stock average balances increased from $8.8 million during the three
months ended September 30, 1996 to $25.0 million during the comparable 1997
period. Increases in FHLB stock were required based on higher FHLB advance
levels. The decrease in tax certificate interest income reflects higher
recoveries and a $100,000 interest reserve reversal during the 1996 three month
period compared to $0 the same period during 1997.
The increase in interest on deposits for the quarter ended September 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 September 30,
1996 to $1.6 billion for the comparable period ended September 30, 1997, and
average rates on deposits increased from 4.05 % during the 1996 quarter to 4.20
% during the 1997 quarter. The increase in the rates on deposits reflects a new
savings product which pays higher rates based on account balances as well as the
generally higher interest rate environment experienced during 1997 than during
1996. Saving account average balances and rates increased from $102.9 million
and 1.44 % during the three months ended September 30, 1996 to $249.3 million
and 3.31 % 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 $170.3
million and 6.13%, respectively, during the third quarter of 1996 to $491.4
million and 6.22%, 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 purchases of residential loans. The lower
interest expense on securities sold under agreements to repurchase resulted from
lower average balances. Securities sold under agreements to repurchase average
balances decreased from $217.7 million during the three months ended September
30, 1996 to $114.9 million during the comparable 1997 three month period.
Substantially all of the 9 1/2% Junior Subordinated Debenture proceeds were
placed by the Company in a depository account at BankAtlantic where these
proceeds were utilized by BankAtlantic to reduce securities sold under
agreements to repurchase. During the 1996 quarter interest on subordinated
debentures consisted of interest expense on $21.0 million of the Company's 9%
Subordinated Debentures and $57.5 million of 6 3/4% Convertible Subordinated
Debentures. The interest expense during the 1997 quarter includes interest
expense on the above Subordinated Debentures and Convertible Subordinated
Debentures plus $1.8 million of interest expense on $74.75 million on the 9 1/2%
Junior Subordinated Debentures issued in April 1997.
During the nine months ended September 30, 1997, net interest income
increased by $20.5 million primarily due to the reasons discussed above for the
September 30, 1997 quarter. 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 8.21 % for the 1996 nine 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 59.1% during the 1996 nine
month period to 76.8% for the comparable 1997 period. Securities available for
sale average balances declined from $616.7 million during the nine months ended
September 30, 1996 to $498.4 million during the comparable 1997 period. The
increase in total interest expense was impacted by higher average balances and
yields for all categories of interest bearing liabilities. Total average
interest bearing liabilities and yields increased from $1.5 billion and 4.39%
during the nine months ended September 30, 1997 to $2.3 billion and 4.84% during
the comparable 1997 period. Included in the interest expense increase was $3.0
million of interest on 9 1/2% Junior Subordinated Debentures and the effect of
the 6 3/4% Convertible Subordinated Debentures being outstanding for all of 1997
compared to approximately six months during the 1996 comparable period.
- -------------------------------------------------------------------------------
9
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
Provision for Loan Losses
The provision for loan losses for the third quarter 1997 was $3.7
million compared to $1.9 million during the comparable 1996 period. The higher
1997 provision for loan losses reflects a $1.5 million increase in consumer loan
net charge-offs, and a $1.1 million increase in specific reserves, partially
offset by $300,000 of higher commercial loan recoveries and $285,000 of lower
commercial loan charge-offs. During the 1997 quarter $750,000 and $350,000 of
specific reserves were established for a commercial real estate loan and a
commercial business loan specifically associated with the BNA acquisition. The
decline in commercial loan charge-offs resulted primarily from a $450,000
charge-off of one commercial business loan during 1996.
The provision for loan losses for the nine months ended September 30,
1997 increased $4.6 million from the comparable 1996 period. The increase
primarily related to $3.0 million of additional consumer loan net charge-offs
during 1997 compared to 1996. The increase for the period in the allowance for
loan losses was related to the acquisition of BNA, loan growth, increased
consumer loan portfolio delinquencies, and increased consumer loan charge-off
trends as well as the items discussed above for the quarter. The change in
specific reserves during the nine months ended September 30, 1997 included a
$325,000 reduction relating to the payoff of a commercial business loan.
<TABLE>
<CAPTION>
FOR THE THREE ENDED FOR THE NINE ENDED
(IN THOUSANDS) SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- --------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance, beginning of period ....................... $ 27,200 $ 19,200 $ 25,750 $ 19,000
Charge-offs:
Commercial business loans ........................ (118) (451) (177) (566)
Commercial real estate loans ..................... (48) 0 (49) (238)
Consumer loans ................................... (3,196) (1,625) (7,916) (4,684)
Residential real estate loans .................... (104) (27) (180) (30)
-------- -------- -------- --------
Total charge-offs .................................. (3,466) (2,103) (8,322) (5,518)
-------- -------- -------- --------
Recoveries:
Commercial business loans ........................ 148 31 234 304
Commercial real estate loans ..................... 180 0 206 41
Consumer loans ................................... 617 528 1,649 1,434
Residential real estate loans .................... 0 0 0 0
-------- -------- -------- --------
Total recoveries ................................... 945 559 2,089 1,779
-------- -------- -------- --------
Net charge-offs .................................... (2,521) (1,544) (6,233) (3,739)
Provision for loan losses .......................... 3,671 1,869 8,833 4,264
-------- -------- -------- --------
Balance, end of period ............................. $ 28,350 $ 19,525 $ 28,350 $ 19,525
======== ======== ======== ========
On the indicated dates the Company's risk elements and non-performing
assets were (in thousands):
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1997 1996 1996
------------- ------------ -------------
<S> <C> <C> <C>
Nonaccrual :
Tax certificates ............................................... $ 986 $ 1,835 $ 2,698
Loans .......................................................... 12,487 12,424 6,585
------- ------- -------
Total nonaccrual ............................................... 13,473 14,259 9,283
------- ------- -------
Repossessed Assets:
Real estate owned ............................................... 5,909 4,918 5,451
Repossessed assets .............................................. 2,419 1,992 359
------- ------- -------
Total repossessed assets ........................................ 8,328 6,910 5,810
------- ------- -------
Contractually past due 90 days or more (1) .......................... 580 2,961 812
------- ------- -------
Total non-performing assets ..................................... 22,381 24,130 15,905
Restructured loans .................................................. 3,855 3,718 3,672
------- ------- -------
Total risk elements ............................................. 26,236 27,848 19,577
======= ======= =======
</TABLE>
(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.
- -------------------------------------------------------------------------------
10
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
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 September 30, 1997 compared to December 31, 1996
decreased by $1.6 million. The reduction in risk elements primarily relates to
decreases in nonaccrual tax certificates and loans contractually past due 90
days or more, partially offset by increases in real estate owned ("REO") and
repossessed assets. The $849,000 decrease in nonaccrual tax certificates
primarily relates to redemptions. The $2.3 million decline in loans
contractually past due 90 days or more resulted from loan payoffs or loan
renewals. The $427,000 increase in repossessed assets primarily relates to
automobiles associated with the indirect consumer loan portfolio. The $991,000
increase in real estate owned was due to higher residential REO associated with
the wholesale residential loan portfolio partially offset by the sales of
$900,000 and $1.3 million of commercial and residential REO properties,
respectively.
<TABLE>
<CAPTION>
NON-INTEREST INCOME
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ------------------------------
(In thousands) 1997 1996 Change 1997 1996 Change
------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Loan servicing and other loan fees ........................ $ 797 $ 956 $ (159) 3,773 $ 2,900 $ 873
Gains on sales of loans available for resale .............. 1,488 1 1,487 2,653 287 2,366
Trading account gains and losses, net ..................... 1,508 0 1,508 1,495 0 1,495
Gains on sales of mortgage servicing rights ............... 1,914 2,554 (640) 6,548 2,554 3,994
Gains on sales of securities available for sale .......... 194 0 194 1,136 3,946 (2,810)
Gain (losses) on sales of property and equipment, net ..... 868 0 868 852 (329) 1,181
Transaction accounts ...................................... 3,710 3,093 617 10,787 8,776 2,011
Other ..................................................... 794 703 91 2,687 2,721 (34)
------- ------- ------- ------- -------- -------
Total non-interest income .............................. $11,273 $ 7,307 $ 3,966 $29,931 $ 20,855 $ 9,076
======= ======= ======= ======= ======== =======
</TABLE>
The decrease in loan servicing and other loan fees during the three
month period in 1997 compared to the corresponding 1996 period resulted from a
decline in loan servicing income due to higher amortization of mortgage
servicing rights, partially offset by an increase in late fee income and loan
fees. Loan servicing income declined by $350,000 due to higher amortization of
mortgage servicing rights caused by decreased interest rates during the period
resulting in loan prepayments. Late fee income increased from $340,000 during
the three months ended September 30, 1996 to $463,000 during the comparable 1997
period primarily due to larger loan portfolios. Loan fee income increased by
$62,000 due to increased investor loan set-up fees on serviced loans. The
increase in loan servicing and other loan fees for the nine month period in 1997
compared to the corresponding 1996 period resulted from higher late fee income
and loan fees. The increase in late fee income and other loan fees primarily
related to the items discussed above.
During the three and nine months ended September 30, 1997 and 1996,
BankAtlantic sold $80.2 million and $134.9 million, and $11.4 million and $44.8
million, respectively, of residential loans available for sale for gains
reported in the preceding table. BankAtlantic, in an effort to reduce its
interest sensitivity and react to the recent changes in interest rates,
transferred during September 1997 $245.7 million of originated residential loans
from loans held to maturity to loans available for sale. It is anticipated that
the transferred loans may be sold in the foreseeable future.
During the three and nine months ended September 30, 1997, BankAtlantic
sold $ 8.9 million and $20.0 million of mortgage servicing rights for the gains
reported in the above table. These rights related to approximately $562.1
million and $1.6 billion of loans serviced for others during the respective
three and nine month periods ended September 30, 1997. During the three and nine
months ended September 30, 1996, BankAtlantic sold $11.3 million of mortgage
servicing rights for gains 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, 1997, BankAtlantic
sold $39.7 million and $230.4 million of treasury notes for gains of $190,000
and $476,000, respectively, and $7.6 million and $5.9 million of federal agency
obligations and REMIC securities during the nine months ended September 30, 1997
for gains of $220,000 and $436,000, respectively. During the three months
- -------------------------------------------------------------------------------
11
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
ended, September 30, 1997, $28.7 million of 5 year balloon mortgage-backed
securities were sold for a $4,000 gain. During the nine months ended September
30, 1996, BankAtlantic sold $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 total gains of $3.9
million, respectively. Proceeds from the sales of these assets were used to fund
purchases of mortgage servicing rights and support loan growth.
During the three months ended September 30, 1997, the Company sold $2.8
million of marketable equity securities for a $672,000 gain. The unrealized
holding gain on marketable equity securities for the three and nine months ended
September 30, 1997 was $836,000 and $823,000, respectively.
During the three months ended September 30, 1997, BankAtlantic sold
vacant land which had been acquired in 1989 realizing a $882,000 gain. The
remaining gains and losses on sales of property and equipment for the three and
nine months ended September 30, 1997 and 1996 relate to sales or disposals of
furniture and equipment.
The increase in transaction account fees during the three and nine
months ended September 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 $2.8 million during the three and nine months
ended September 30, 1996 to $1.3 million and $4.0 million for the comparable
three and nine month periods during 1997, respectively. Checking account fees
increased from $ 2.0 million and $6.0 million during the three and nine months
ended September 30, 1996 to $2.4 million and $6.8 million during the comparable
1997 periods, respectively. The additional fee income resulted from higher
average deposit balances and the implementation of an ATM surcharge fee ( a fee
received by an ATM owner).
<TABLE>
<CAPTION>
NON-INTEREST EXPENSES
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- -------------------------------
(IN THOUSANDS) 1997 1996 Change 1997 1996 Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Employee compensation and benefits .... $ 10,033 $ 7,422 $ 2,611 $ 28,866 $ 21,841 $ 7,025
Occupancy and equipment ............... 4,773 2,980 1,793 13,810 8,671 5,139
Federal insurance premium ............. 269 689 (420) 822 1,949 (1,127)
Advertising and promotion ............. 667 394 273 1,561 1,631 (70)
SAIF special assessment ............... 0 7,160 (7,160) 0 7,160 (7,160)
Amortization of cost over fair value of
net assets acquired ................ 627 306 321 1,881 918 963
Other ................................. 4,532 3,421 1,111 13,804 8,402 5,402
-------- -------- -------- -------- -------- --------
Total non-interest expenses ....... $ 20,901 $ 22,372 $ (1,471) $ 60,744 $ 50,572 $ 10,172
======== ======== ======== ======== ======== ========
</TABLE>
The increase in employee compensation and benefits during the three and
nine months ended September 30, 1997 compared to the 1996 period resulted from
the expansion of BankAtlantic's branch network, the acquisition of eight
branches as a result of the BNA acquisition and annual salary increases. During
the three months ended September 30, 1997, BankAtlantic opened two full service
branches, one in-store branch and began two new business units (International
Lending and Small Business Lending). These business units are expected to be
fully operational by the end of 1997. Occupancy and equipment expenses increased
due to the expanded branch network and the BNA acquisition mentioned above, and
the fourth quarter 1996 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 $281,000 and $498,000 during the
three and nine months ended September 30, 1996 to $1.1 million and $3.0 million
during the comparable periods in 1997, respectively. Depreciation expense
increased by $262,000 and $969,000 during the three and nine months ended
September 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.
The reduction in federal insurance premium during the three and nine
months ended September 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.
- -------------------------------------------------------------------------------
12
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
The increase in advertising and promotion expenses during the September
1997 quarter resulted primarily from branch expansion in Dade County, Florida.
The decline in advertising and promotions for the nine months ended September
30, 1997 reflects direct consumer lending 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 nine months ended September 30, 1997 related to the
BNA acquisition.
The increase in other expenses during the three months ended September
30, 1997 compared to the 1996 periods reflects expenses associated with the BNA
acquisition, an expanded branch network, higher consumer repossession expenses
and a $305,000 write-off of due diligence costs incurred in connection with an
abandoned acquisition. In the 1997 quarter, telephone, postage, stationery,
printing and supplies expenses increased by a total of $505,000 compared to the
same 1996 quarter due to the expanded branch network and the BNA acquisition.
Repossession expenses increased $234,000 relating to costs associated with
indirect consumer automobile loans. The increase in other expenses during the
nine months ended September 30, 1997 reflects the items discussed above,
charitable contributions, settlement of a sales tax audit and higher check
losses and teller outages. During the nine months ended September 30, 1997
telephone, postage, stationery, printing and supplies expenses increased by a
total of $1.3 millionand check losses and teller outages, charitable
contributions and consumer repossession expenses increased by $642,000, $171,000
and $1.1 million, respectively. A state of Florida sales tax audit resulted in
a $166,000 payment. The remaining increase in other expenses reflects higher
operating expenses generally associated with a larger organization.
FINANCIAL CONDITION
The Company's total assets at September 30, 1997 were $2.8 billion
compared to $2.6 billion at December 31, 1996. Loans receivable, net, securities
available for sale, investment securities held to maturity, FHLB stock, mortgage
servicing rights and cash and due from depository institutions increased by
$138.4 million, $55.7 million, $5.4 million, $12.7 million, $7.0 million and
$10.7 million, respectively. The increase in loans receivable, net reflects
$376.5 million of residential loan purchases and $399.3 million of loan
fundings, partially offset by $493.1 million of loan principal repayments and
$134.9 million of loan sales. The higher securities available for sale balances
reflect the purchase of $433.5 million of securities, partially offset by the
sale of $272.6 million of securities and $106.1 million of principal repayments.
The higher investment securities held to maturity balances primarily resulted
from the purchase of $39.5 million of tax certificates, partially offset by
$34.2 million of security redemptions and maturities. During 1997, the Company
purchased additional FHLB stock to satisfy FHLB advance requirements. The
increased mortgage servicing rights balances reflect $43.2 million of servicing
acquired partially offset by $20.0 million of mortgage servicing rights sold and
$5.8 million of mortgage servicing rights amortization.
The Company's total liabilities at September 30, 1997 were $ 2.7 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 $253.0 million,
$74.8 million, and $27.8 million, respectively. The above increases were
partially offset by $69.4 million of net deposit outflows and a $62.2 million
decline in securities sold under agreements to repurchase. Proceeds from the
additional FHLB advances, issuance of the Company's 9 1/2% Junior Subordinated
Debentures, loan repayments, sales of financial assets and properties 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, trading securities, mortgage servicing rights, FHLB stock
and tax certificates and to acquire outstanding shares of common stock.
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 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 9 1/2% Junior Subordinated Debentures were
$71.8 million after deduction of the underwriting discount and expenses.
Substantially all of the net proceeds from the sale of the Junior Subordinated
Debentures are in a depository account at BankAtlantic to provide for liquidity
for potential acquisitions or longer term investment opportunities by either the
Company or BankAtlantic.
- -------------------------------------------------------------------------------
13
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
On October 27, 1997 the Company filed a registration statement with the
Securities and Exchange Commission relating to proposed public offerings of 3.0
million shares of Class A Common Stock, and $100.0 million of Convertible
Subordinated Debentures. The offering price of Class A Common Stock and the
terms of the Convertible Subordinated Debentures will be determined at the time
the offerings become effective and will be subject to, among other things,
market conditions. There is no assurance that the proposed offerings will be
completed.
In September 1997, the Company entered into a joint ownership agreement
with a newly formed company, FASI. FASI is a full-service investment banking and
securities brokerage firm. Included in other assets is the Company's investment
of $237,500 to acquire 50% of FASI's voting stock and a $1.5 million five year
loan to FASI. The investment is accounted for under the equity method. Included
in the Company's statement of operations in other non-interest expenses during
the three and nine months ended September 30, 1997 is a $24,000 loss from FASI's
operations.
BankAtlantic's primary sources of funds during the first nine months of
1997 were from operations, principal collected on loans, securities available
for sale and investment securities held to maturity, and sales of securities
available for sale, trading securities and property and equipment, FHLB
advances, mortgage servicing rights sales, and advances from borrowers for taxes
and insurance. These funds were primarily utilized to fund deposit outflows,
loan purchases and fundings and the purchase of FHLB stock, tax certificates,
trading securities and securities available for sale and repay to securities
sold under agreements to repurchase. At September 30, 1997, BankAtlantic met all
applicable liquidity and regulatory capital requirements.
BankAtlantic's commitments to originate loans at September 30, 1997 were
$80.0 million compared to $101.1 million at September 30, 1996. Commitments to
purchase residential loans were $67.0 million and $62.5 million at September 30,
1997 and 1996, respectively, and commitments to purchase securities available
for sale were $50.2 million, and $0 at September 30, 1997 and 1996,
respectively. BankAtlantic expects to fund the 1997 loan commitments from loan
and securities available for sale repayments. At September 30, 1997, loan
commitments were 7.49% of loans receivable, net.
BankAtlantic's actual capital amounts and ratios are presented in the
table: To be Well
<TABLE>
<CAPTION>
FOR CAPITAL
ADEQUACY
ACTUAL PURPOSES
------------------- -------------------------------
AMOUNT RATIO AMOUNT RATIO
--------- ------ -------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
As of September 30, 1997:
Total risk-based capital 209,025 11.31 % /greater than/ $ 147,789 /greater than/ 8.00 % /greater than/
Tier I risk-based capital 185,881 10.06 % /greater than/ $ 73,894 /greater than/ 4.00 % /greater than/
Tangible capital 185,881 6.65 % /greater than/ $ 41,919 /greater than/ 1.50 % /greater than/
Core capital 185,881 6.65 % /greater than/ $ 83,838 /greater than/ 3.00 % /greater than/
As of December 31, 1996:
Total risk-based capital 193,196 10.83 % /greater than/ $ 142,691 /greater than/ 8.00 % /greater than/
Tier I risk-based capital 170,865 9.58 % /greater than/ $ 71,363 /greater than/ 4.00 % /greater than/
Tangible capital 170,865 6.65 % /greater than/ $ 38,547 /greater than/ 1.50 % /greater than/
Core capital 170,865 6.65 % /greater than/ $ 77,094 /greater than/ 3.00 % /greater than/
CAPITALIZED UNDER
PROMPT CORRECTIVE
ACTION PROVISIONS
-------------------------------------
AMOUNT RATIO
-------- ------
<S> <C> <C>
As of September 30, 1997:
Total risk-based capital 184,736 /greater than/ 10.00 %
Tier I risk-based capital 110,841 /greater than/ 6.00 %
Tangible capital 41,919 /greater than/ 1.50 %
Core capital 139,730 /greater than/ 5.00 %
As of December 31, 1996:
Total risk-based capital 178,407 /greater than/ 10.00 %
Tier I risk-based capital 107,004 /greater than/ 6.00 %
Tangible capital 38,547 /greater than/ 1.50 %
Core capital 128,491 /greater than/ 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.
- -------------------------------------------------------------------------------
14
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8K
None
- -------------------------------------------------------------------------------
15
<PAGE>
BANKATLANTIC BANCORP, INC.
- -------------------------------------------------------------------------------
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.
October 29, 1997 By: /s/ ALAN B. LEVAN
---------------- --------------------------------
Date Alan B. Levan
Chief Executive Officer/
Chairman/President
October 29, 1997 By: /s/ JASPER R. EANES
---------------- ---------------------------------
Date Jasper R. Eanes
Executive Vice President/
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997
(UNAUDITED) AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 113,734
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,534
<TRADING-ASSETS> 4,237
<INVESTMENTS-HELD-FOR-SALE> 495,093
<INVESTMENTS-CARRYING> 59,953
<INVESTMENTS-MARKET> 59,953
<LOANS> 1,963,227
<ALLOWANCE> 28,350
<TOTAL-ASSETS> 2,844,996
<DEPOSITS> 1,763,373
<SHORT-TERM> 128,369
<LIABILITIES-OTHER> 94,940
<LONG-TERM> 701,756
0
0
<COMMON> 223
<OTHER-SE> 156,335
<TOTAL-LIABILITIES-AND-EQUITY> 2,844,996
<INTEREST-LOAN> 127,404
<INTEREST-INVEST> 28,606
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 156,010
<INTEREST-DEPOSIT> 51,510
<INTEREST-EXPENSE> 84,250
<INTEREST-INCOME-NET> 71,760
<LOAN-LOSSES> 8,833
<SECURITIES-GAINS> 2,631
<EXPENSE-OTHER> 60,744
<INCOME-PRETAX> 32,114
<INCOME-PRE-EXTRAORDINARY> 32,114
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,591
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.68
<YIELD-ACTUAL> 8.32
<LOANS-NON> 12,487
<LOANS-PAST> 580
<LOANS-TROUBLED> 3,855
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 25,750
<CHARGE-OFFS> 8,322
<RECOVERIES> 2,089
<ALLOWANCE-CLOSE> 28,350
<ALLOWANCE-DOMESTIC> 28,350
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,726
</TABLE>
