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 March 31, 1999
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 May 7. 1999
Class A Common Stock, par value $0.01 per share
Class B Common Stock, par value $0.01 per share
<PAGE>
BankAtlantic Bancorp, Inc.
TABLE OF CONTENTS
FINANCIAL INFORMATION Page Reference
Financial Statements...................................................... 1-12
Consolidated Statements of Financial Condition -
March 31, 1999 and 1998 and December 31, 1998 - Unaudited..................1
Consolidated Statements of Operations - For the Three Months
Ended March 31, 1999 and 1998 - Unaudited................................2-3
Consolidated Statements of Stockholders' Equity and Comprehensive
Income for the Three Months Ended March 31, 1999
and 1998 - Unaudited.......................................................4
Consolidated Statements of Cash Flows - For the Three Months
Ended March 31, 1999 and 1998 - Unaudited................................5-7
Notes to Consolidated Financial Statements - Unaudited.....................8-12
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................13-27
OTHER INFORMATION
Exhibits and Reports on Form 8K............................................. 28
Signatures.................................................................. 29
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(In thousands, except share data) 1999 1998 1998
---- ---- ----
ASSETS
<S> <C> <C> <C>
Cash and due from depository institutions ......................................... $ 96,430 $ 100,823 $ 72,102
Interest bearing deposits in other banks........................................... 5,167 0 0
Federal Funds sold and securities purchased under resell agreements................ 5,914 0 21,000
Loans receivable, net ............................................................. 2,375,633 2,466,488 2,496,510
Loans held for sale ............................................................... 257,628 168,881 139,903
Investment securities-net, held to maturity, at cost which approximates
market value ..................................................................... 49,681 51,811 48,499
Securities available for sale, at market value .................................... 1,003,057 597,520 458,123
Trading securities, at market value................................................ 17,254 30,005 7,804
Accrued interest receivable ....................................................... 28,750 27,771 26,601
Real estate held for development and sale and joint ventures ...................... 60,966 67,845 17,736
Real estate owned, net ............................................................ 6,884 5,503 5,660
Office properties and equipment, net .............................................. 57,157 58,090 51,342
Federal Home Loan Bank stock, at cost which approximates market value ............. 49,155 52,230 48,587
Mortgage servicing rights, net .................................................... 42,804 44,315 45,159
Deferred tax asset, net ........................................................... 21,462 20,148 3,322
Cost over fair value of net assets acquired, net .................................. 54,530 55,493 35,063
Other assets ...................................................................... 101,134 42,052 49,097
------- ------ ------
Total assets ...................................................................... $ 4,233,606 $ 3,788,975 $ 3,526,508
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits .......................................................................... $ 2,115,559 $ 1,925,772 $ 1,830,083
Advances from FHLB ................................................................ 983,074 1,044,572 971,709
Federal Funds purchased ........................................................... 0 18,500 0
Securities sold under agreements to repurchase .................................... 409,232 162,093 117,389
Subordinated debentures, notes and bonds payable .................................. 176,966 177,114 179,596
Guaranteed preferred beneficial interests in the Company's Junior
Subordinated Debentures............................................................ 74,750 74,750 74,750
Advances by borrowers for taxes and insurance ..................................... 52,208 62,346 72,762
Other liabilities ................................................................. 185,022 83,388 63,176
------- ------ ------
Total liabilities ................................................................. 3,996,811 3,548,535 3,309,465
--------- --------- ---------
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 80,000,000 shares;
issued and outstanding, 25,826,417, 26,799,368 and 22,383,185 shares ......... 258 268 224
Class B Common Stock, $0.01 par value, authorized 45,000,000 shares;
issued and outstanding, 10,359,994, 10,356,431 and 10,612,664 shares ......... 104 104 106
Additional paid-in capital ........................................................ 139,532 147,686 104,373
Unearned compensation - restricted stock grants................................... (6,720) (7,062) 0
Retained earnings ................................................................. 103,019 95,818 112,052
Total stockholders' equity before accumulated other comprehensive income .......... 236,193 236,814 216,755
Accumulated other comprehensive income - net unrealized appreciation
on securities available for sale - net of deferred income taxes ................ 602 3,626 288
--- ----- ---
Total stockholders' equity ........................................................ 236,795 240,440 217,043
------- ------- -------
Total liabilities and stockholders' equity ........................................ $ 4,233,606 $ 3,788,975 $ 3,526,508
=========== =========== ===========
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
For the Three Months
(In thousands, except share data) Ended March 31,
Interest income: 1999 1998
---- ----
<S> <C> <C>
Interest and fees on loans and leases .................................................$ 53,566 $ 47,139
Interest on banker's acceptances ...................................................... 187 460
Interest and dividends on securities available for sale ............................... 10,053 9,987
Interest and dividends on investment securities held to maturity and trading securities 2,606 2,224
----- -----
Total interest income ................................................................. 66,412 59,810
------ ------
Interest expense:
Interest on deposits .................................................................. 16,591 16,367
Interest on advances from FHLB ........................................................ 13,497 10,712
Interest on securities sold under agreements to repurchase and federal funds purchased 4,044 3,318
Interest on subordinated debentures, guaranteed preferred interest
in the Company's Junior Subordinated Debentures and notes and bonds payable ......... 4,787 4,939
Capitalized interest on investments in and advances to real estate joint ventures ..... (175) 0
---- -
Total interest expense ................................................................ 38,744 35,336
------ ------
Net interest income ................................................................... 27,668 24,474
Provision for loan losses ............................................................. 5,164 3,407
----- -----
Net interest income after provision for loan losses ................................... 22,504 21,067
------ ------
Non-interest income:
Loan late fees and other loan income .................................................. 1,130 899
Gains on sales of loans held for sale ................................................. 633 1,747
Gains on sales of securities available for sale ....................................... 579 1,720
Trading securities gains (losses) ..................................................... (69) 171
Gains on sales of real estate held for sale ........................................... 3,666 100
Equity in earnings of unconsolidated real estate joint ventures ....................... 1,729 0
Principal transactions - RBCO ......................................................... 3,000 0
Investment banking - RBCO ............................................................. 3,117 0
Commissions - RBCO .................................................................... 2,676 0
Transaction fees ...................................................................... 3,591 2,600
ATM fees .............................................................................. 2,199 1,297
Other ................................................................................. 1,218 1,030
----- -----
Total non-interest income ............................................................. 23,469 9,564
------ -----
Non-interest expense:
Employee compensation/benefits excluding RBCO and real estate operations .............. 9,641 10,827
Employee compensation/benefits for RBCO ............................................... 6,450 0
Employee compensation/benefits for real estate operations ............................. 152 165
Occupancy and equipment ............................................................... 5,674 4,847
Federal insurance premium ............................................................. 273 262
Advertising and promotion ............................................................. 756 634
Amortization of cost over fair value of net assets acquired ........................... 983 659
Other excluding RBCO and real estate operations ....................................... 5,572 4,705
Other for RBCO ........................................................................ 1,976 0
Other for real estate operations ...................................................... 818 880
--- ---
Total non-interest expense ............................................................ 32,295 22,979
------ ------
Income before income taxes and discontinued operations ................................ 13,678 7,652
Provision for income taxes ........................................................... 5,507 2,806
----- -----
Income from continuing operations ..................................................... 8,171 4,846
Income from discontinued operations, net of taxes .................................... 0 410
- ---
Net Income ............................................................................$ 8,171 $ 5,256
========== ==========
See Notes to Consolidated Financial Statements - Unaudited (Continued)
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1999 1998
---- ----
Class A common shares
<S> <C> <C>
Basic earnings per share from continuing operations ...... $ 0.24 $ 0.15
Basic earnings per share from discontinued operations .... 0.00 0.02
---- ----
Basic earnings per share ................................. $ 0.24 $ 0.17
================== ==============
Diluted earnings per share from continuing operations .... $ 0.19 $ 0.13
Diluted earnings per share from discontinued operations .. 0.00 0.01
---- ----
Diluted earnings per share ............................... $ 0.19 $ 0.14
================== ==============
Basic weighted average number of common shares outstanding 25,342,390 21,809,903
========== ==========
Diluted weighted average number of common and common
equivalent shares outstanding ............................ 41,203,707 38,764,353
============= ==========
Class B common shares
Basic earnings per share from continuing operations ...... $ 0.21 $ 0.14
Basic earnings per share from discontinued operations .... 0.00 0.01
---- ----
Basic earnings per share ................................. $ 0.21 $ 0.15
================== ==============
Diluted earnings per share from continuing operations .... $ 0.18 $ 0.12
Diluted earnings per share from discontinued operations .. 0.00 0.01
---- ----
Diluted earnings per share ............................... $ 0.18 $ 0.13
================== ==============
Basic weighted average number of common shares outstanding 10,359,717 10,768,956
========== ==========
Diluted weighted average number of common and common
equivalent shares outstanding ............................ 10,997,899 11,879,110
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements - Unaudited
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Net
Unearned Unrealized
Compen- Appreci-
Addi- sation - ation on
Compre- tional Restricted Securities
hensive Common Paid-in Retained Stock Available
(In thousands) Income Stock Capital Earnings Grants For Sale Total
- -------------- ------ ----- ------- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 .............. $ 32 $ 98,475 $ 107,650 $ 0 $ 724 $ 207,171
Net income .................................... $ 5,256 0 0 5,256 0 0 5,256
--------
Oher comprehensive income, net of tax:
Unrealized gains on securities available for sale 51
Reclassification adjustment for gains and (losses)
included in net income ......................... (487)
----
Other comprehensive loss ........................ (436)
----
Comprehensive income .............................$ 4,820
=======
Dividends on Class A common stock ................ 0 0 (599) 0 0 (599)
Dividends on Class B common stock ................ 0 0 (255) 0 0 (255)
Exercise of Class A common stock options ......... 0 93 0 0 0 93
Exercise of Class B common stock options ......... 2 760 0 0 0 762
Tax effect relating to the exercise of stock options 0 286 0 0 0 286
Purchase and retirement of Class B common stock .. (2) (4,439) 0 0 0 (4,441)
upon acquisition of Leasing Technology, Inc. ... 7 8,358 0 0 0 8,365
Issuance of Class A common stock upon
conversion of subordinated debentures, net .... 1 840 0 0 0 841
Net change in unrealized depreciation on securities
available for sale-net of deferred income taxes 0 0 0 0 (436) (436)
- - - - ---- ----
BALANCE, MARCH 31, 1998 ............................. $ 330 $ 104,373 $ 112,052 $ 0 $ 288 $ 217,043
=========== ========== ========== ========== ============= ==========
BALANCE, DECEMBER 31, 1998 ........................ $ 372$ 147,686 $ 95,818 $ (7,062)$ 3,626 $ 240,440
Net income .......................................$ 8,171 0 0 8,171 0 0 8,171
-------
Other comprehensive income, net of tax:
Unrealized losses on securities availablefor sale (3,300)
Reclassification adjustment for gains and (losses)
included in net income .......................... 276
---
Other comprehensive loss ........................(3,024)
------
Comprehensive income ............................$ 5,147
=======
Dividends on Class A common stock ........................ 0 0 (711) 0 0 (711)
Dividends on Class B common stock ........................ 0 0 (259) 0 0 (259)
Exercise of Class A common stock options ................. 0 42 0 0 0 42
Exercise of Class B common stock options ................. 0 14 0 0 0 14
Tax effect relating to the exercise of stock options ..... 0 12 0 0 0 12
Purchase and retirement of Class A common stock .......... (10) (8,384) 0 0 0 (8,394)
Forfeited Class A restricted common stock ................ 0 (89) 0 89 0 0
Unearned compensation - restricted stock grants .......... 0 251 0 (251) 0 0
Amortization of unearned compensation - restricted
stock grants .......................................... 0 0 0 504 0 504
Net change in unrealized depreciation on securities
Available for sale-net of deferred income taxes ........ 0 0 0 0 (3,024) (3,024)
- - - - ------ ------
BALANCE, MARCH 31, 1999 ..................................$ 362 $ 139,532 $ 103,019 $ (6,720)$ 602 $ 236,795
========= ========= ========== ========== ============= ==============
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
For the Three Months
(In thousands, except share data) Ended March 31,
--------------------------------- ---------------
Operating activities: 1999 1998
---- ----
<S> <C> <C>
Income from continuing operations ............................................ 8,171 4,846
Income from discontinued operations .......................................... 0 410
Adjustments to reconcile net income to net cash provided (used) by operating
activities:
Provision for loan losses .................................................... 5,164 3,407
Provision for losses on real estate owned .................................... 70 432
Depreciation, amortization and accretion, net ................................ 6,308 7,657
Gains on sales of mortgage servicing rights .................................. 0 (2,038)
Decrease (increase) in deferred tax asset, net ............................... 599 (447)
Trading account (gains) losses ............................................... 69 (171)
Purchases of trading securities .............................................. (99) (1,441)
Decrease in trading securities owned at market - RBCO ........................ 12,781 0
Gains on sales of real estate owned .......................................... (71) (724)
Gains on sales of real estate held for development and sale .................. (3,666) (100)
Gains on sales of securities available for sale .............................. (579) (1,720)
Proceeds from sales of loans held for sale ................................... 60,619 95,619
Fundings of loans held for sale .............................................. (22,702) (17,056)
Loans purchased, classified as held for sale ................................. (122,624) 0
Gains on sales of loans held for sale ........................................ (633) (1,728)
Provision for (recovery from) tax certificate losses ......................... 180 (35)
Increase in accrued interest receivable ...................................... (979) (3,977)
Decrease (increase) in other assets .......................................... 5,681 (1,546)
Equity in earnings of unconsolidated real estate joint ventures .............. (1,729) 0
Increase (decrease) in other liabilities ..................................... (13,026) 5,526
Decrease in RBCO securities sold not yet purchased ........................... (1,313) 0
------ -
Net cash provided (used) by operating activities ............................. (67,779) 86,914
------- ------
</TABLE>
See Notes to Consolidated Financial Statements - Unaudited (Continued)
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
<TABLE>
<CAPTION>
For the Three Months
(In thousands, except share data) Ended March 31,
1999 1998
---- ----
Investing activities:
<S> <C> <C>
Proceeds from redemption and maturities of investment securities ...... 8,463 11,787
Purchase of investment securities ..................................... (8,428) (5,038)
Proceeds from sales of securities available for sale .................. 0 334,836
Principal collected on securities available for sale .................. 48,174 30,159
Purchases of securities available for sale ............................ (405,474) (215,648)
Proceeds from sales of FHLB stock ..................................... 7,550 0
FHLB stock acquired ................................................... (4,475) (13,700)
Principal reduction on loans .......................................... 397,386 309,861
Loan fundings for portfolio ........................................... (289,656) (233,916)
Loans purchased for portfolio ......................................... 0 (778,401)
Proceeds from maturities of banker's acceptances ...................... 3,672 135,985
Purchases of banker's acceptances ..................................... (2,643) (91,381)
Proceeds from sales of banker's acceptances ........................... 0 24,593
Additions to dealer reserve ........................................... 0 (2,086)
Proceeds from sales of real estate owned .............................. 1,072 3,192
Purchases of real estate owned ....................................... (784) 0
Mortgage servicing rights acquired .................................... (643) (17,027)
Proceeds from sales of mortgage servicing rights ...................... 0 15,394
Cost of equipment acquired for lease .................................. (7,462) (1,657)
Additions to office property and equipment ............................ (1,108) (1,596)
Repayments of joint venture investments ............................... 3,005 0
Investment in and advances to joint ventures .......................... (16,296) (1,345)
Proceeds from sales of real estate held for development and sale ...... 7,195 840
Additional investment in real estate held for development and sale .... (2,388) (847)
Acquisition, net of cash acquired ..................................... 0 (300)
- ----
Net cash used in investing activities ................................. (262,840) (496,295)
-------- --------
Financing activities:
Net increase in deposits ............................................. 176,944 52,987
Interest credited to deposits ......................................... 12,843 13,363
Repayments of FHLB advances ........................................... (330,498) (150,998)
Proceeds from FHLB advances ........................................... 269,000 425,000
Net increase in securities sold under agreements to repurchase ........ 247,139 58,673
Net decrease in federal funds purchased ............................... (18,500) (2,500)
Repayment of notes payable ............................................ (1,480) (6,396)
Increase in notes payable ............................................. 1,332 605
Issuance of common stock relating to exercise of employee stock options 56 855
Payments to acquire and retire common stock ........................... (8,394) (4,441)
Receipts (repayments) of advances by borrowers for taxes and insurance (10,138) 33,365
Common stock dividends paid ........................................... (997) (817)
---- ----
Net cash provided by financing activities ............................ 337,307 419,696
------- -------
Increase in cash and cash equivalents ................................. 6,688 10,315
Cash and cash equivalents at beginning of period ...................... 100,823 82,787
------- ------
Cash and cash equivalents at end of period ............................ $ 107,511 $ 93,102
========= =========
See Notes to Consolidated Financial Statements - Unaudited (Continued)
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(CONTINUED)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
---- ----
Supplementary disclosure and non-cash investing and financing activities:
<S> <C> <C>
Interest paid on borrowings and deposits .............................................. $ 38,305 $ 31,744
Income taxes paid ..................................................................... 5,000 1,361
Loans transferred to real estate owned ................................................ 1,668 1,032
Purchased residential loans held for investment transferred to held for sale .......... 0 50,377
Issuance of Class A common stock upon acquisition ..................................... 0 8,365
Issuance of Class A common stock upon conversion of subordinated debentures .......... 0 841
Decrease in deferred offering costs upon conversion of subordinated debentures ........ 0 (42)
Decrease in subordinated debentures upon conversion to Class A common stock ........... 0 883
Loan charge-offs ...................................................................... 6,614 3,040
Tax certificate recoveries, net ....................................................... (78) (220)
Class A common stock dividends; not paid until April .................................. 711 599
Class B common stock dividends; not paid until April .................................. 259 255
Accrual for the purchase of mortgage servicing rights not yet paid for ................ 0 13,000
Sales of securities available for sale not yet settled ................................ 64,114 0
Purchase of securities available for sale not yet settled ............................. 116,503 0
Joint venture investments transferred to loans ........................................ 20,758 0
Increase in equity for the tax effect related to the exercise of employee stock options 12 286
Change in net unrealized depreciation on securities available for sale ................ (4,937) (718)
Change in deferred taxes on net unrealized depreciation on securities
available for sale ................................................................... (1,913) (282)
Change in stockholders' equity from net unrealized depreciation
on securities available for sale, less related deferred income taxes ................ (3,024) (436)
Increase in real estate held for development and sale resulting from St. Lucie West
Holding Company ("SLWHC") purchase accounting adjustments ......................... 0 1,009
Decrease in other assets resulting from SLWHC purchase accounting adjustments ......... 0 1,009
= =====
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 principal assets include the capital stock of:
BankAtlantic, a Federal Savings Bank ("BankAtlantic") and its subsidiaries and
Ryan Beck & Co., Inc. ("RBCO"), an investment banking firm and its subsidiaries.
Under applicable law, the Company generally has broad authority with few
restrictions to engage in various types of business activities. The Company's
primary activities have related to the operations of BankAtlantic, RBCO and
their subsidiaries. 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 March 31, 1999 and 1998, the consolidated
results of operations for the three months ended March 31, 1999 and 1998, the
consolidated stockholders' equity and comprehensive income for the three months
ended March 31, 1999 and 1998 and the consolidated cash flows for the three
months ended March 31, 1999 and 1998. 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, 1998.
2. Equity Capital
Pursuant to previously announced plans to purchase shares of its common
stock, the Company paid $8.4 million to repurchase and retire 999,700 shares of
Class A common stock during the three months ended March 31, 1999, During the
three months ended March 31, 1998, the Company paid $4.4 million to repurchase
and retire 303,500 shares of Class B common stock. During the three months ended
March 31, 1999, 7,490 and 3,563 of Class A and Class B incentive stock options,
respectively, were exercised resulting in a $68,000 increase in stockholders'
equity. The tax effect included in the preceding amount was $12,000. During the
three months ended March 31, 1998, 10,989 and 232,247 of Class A and Class B
stock options, respectively, were exercised resulting in a $1.1 million increase
in stockholders' equity. The tax effect included in the preceding amount was
$286,000. During the three months ended March 31, 1999, the Company issued
29,356 shares of restricted Class A common stock to new employees of RBCO,
vested 3,974 shares of retention pool restricted stock granted in June 1998 to
an employee who left RBCO in March 1999, and canceled 10,098 shares of
restricted Class A common stock for terminated employees. The restricted Class A
common stock issued to new employees vests on the fourth anniversary of the
grant date and had a fair value at the grant date of $251,000. Furthermore in
March 1999, the Board of Directors granted non-qualifying stock options to
purchase 500 shares of Class A common stock with an exercise price equal to the
market price at the date of the grant ($7.375) to all employees except executive
officers of BankAtlantic and its subsidiaries resulting in the issuance of
509,500 non-qualifying stock options. During the three months ended March 31,
1998, the Company issued 134,804 shares of Class A common stock upon the
conversion of $883,000 in principal amount of the Company's 6 3/4% Convertible
Subordinated Debentures at a conversion price of $6.55. There were no
conversions during the three months ended March 31, 1999.
3. Sales of Financial Assets
On March 26, 1999, the Company sold $63.5 million of securities
available for sale for a $579,000 gain. Included in other assets was a $64.1
million receivable from the above sale. During the three months ended March 31,
1998, the Company sold $333.1 million of securities available for sale for a
$1.7 million gain. During the three months ended March 31, 1999 the Company sold
$38.5 million, $20.4 million and $1.1 million of loans originated for resale,
loans purchased and classified as held for sale and leases for gains of
$492,000, $64,000 and $77,000, respectively. During the three months ended March
31, 1998, the Company sold $43.5 million of loans originated for resale and
$50.4 million of purchased loans transferred from held for investment to held
for sale for an aggregate gain of $1.7 million. As part of its normal operations
from 1996 through the latter part of 1998, the Company purchased bulk
residential loans to be held for investment. These bulk purchased loans are
continually evaluated and such evaluations may result in transfers from the held
for investment category to the held for sale category. Such transfers, if any,
have not and are not normally expected to exceed 10% of the average annual
balance of the portfolio.
<PAGE>
4. Trading Securities
During the three months ended March 31, 1999, the Company realized a
$69,000 loss from government securities trading. The Company did not trade
government securities during the three months ended March 31, 1998. During the
three months ended March 31, 1998, the Company transferred $1.8 million of
equity securities available for sale to trading securities resulting in a
$562,000 unrealized gain on the date of transfer. The unrealized and realized
gains on the trading securities for the three months ended March 31, 1998 were
$171,000. Included in trading securities at March 31, 1999 were $17.2 million of
securities owned by RBCO and a $30,000 premium related to a futures contract to
purchase $1.5 million of Treasury notes. The government securities future
contract was settled in April at book value. The RBCO gains on trading
securities were associated with sales and trading activities conducted both as
principal and as agent on behalf of individual and institutional investor
clients of RBCO. Transactions as principal involve making markets in securities
which are held in inventory to facilitate sales to and purchases from customers.
During the three months ended March 31, 1999, RBCO realized net gains from
principal transactions of $3.0 million. Furthermore, included in other
liabilities was $1.7 million of securities sold not yet purchased relating to
RBCO trading activity.
The Company's trading securities consist of the following (in
thousands):
March 31, December 31,
1999 1998
---- ----
Debt obligations:
States and municipalities .. $ 5,925 $18,476
Corporations ............... 738 615
U.S. Government and agencies 181 172
Corporate equities ........... 10,380 10,448
Other ........................ 30 294
-- ---
$17,254 $30,005
======= =======
5. Real Estate Held for Development and Sale and Joint Venture Activities
In October 1997, the Company acquired St. Lucie West Holding Corp.
("SLWHC"), the developer of the master planned community of St. Lucie West in
St. Lucie County Florida. During the three months ended March 31, 1999 and 1998,
SLWHC land sales resulted in gains of $3.7 million and $100,000, respectively.
Since the third quarter of 1997 the Company has entered into six joint venture
partnerships with developers to develop residential, multi-family and commercial
non-residential properties. During the three months ended March 31, 1999 one of
the Company's real estate joint ventures closed on a land sale to a developer
resulting in the Company recognizing a $1.7 million gain. Additionally, during
the three months ended March 31, 1999, the Company relinquished its equity
participation rights in a loan accounted for as a joint venture in exchange for
substantial principal repayments on the loan and a guarantee from a real estate
investment trust resulting in the Company transferring $20.8 million in
investments in joint ventures to loans receivable. Included in investment in
real estate held for development and sale and joint venture activities at March
31, 1999 was $26.7 million of SLWHC land, $6.7 million of equity investments in
real estate joint ventures, $25.6 million of advances to real estate joint
ventures and $1.9 million of investments and advances to a broker/dealer joint
venture partner. During the three months ended March 31, 1999, the Company
capitalized $175,000 of interest expense in connection with investments and
advances to real estate joint ventures and deferred $224,000 of interest income
associated with loans to joint ventures. Included in investment in real estate
held for development and sale and joint venture activities at March 31, 1998 was
$17.7 million associated with the SLWHC acquisition.
6. Comprehensive Income
The income tax benefit relating to the comprehensive income
reclassification adjustment in the statement of stockholders' equity for the
three months ended March 31, 1999 and 1998 was $168,000 and $306,000,
respectively.
7. Discontinued Operations, Restructuring Charges and Other Write-downs
During December 1998, the Company commenced a restructuring of its
operations and established a restructuring liability. The table below summarizes
amounts paid associated with the restructuring liability during the three months
ended March 31, 1999.
<TABLE>
<CAPTION>
Amount paid
Type of Restructuring Charge Initial amount during period Ending Balance
- ---------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Employee severance and benefits ................ $ 1,000 $ (689) $ 311
Impairment of assets due to facility closures .. 1,085 (482) 603
Provision for lease contracts on closed branches 247 (9) 238
Other .......................................... 233 (33) 200
--- --- ---
Total restructuring charges ............... $ 2,565 $ (1,213) $ 1,352
======== ================= ==============
</TABLE>
During the three months ended March 31, 1999 there were no adjustments
to the restructuring liability.
Discontinued Operations
At December 31, 1998, the Board of Directors adopted a formal plan to
dispose of the Company's mortgage servicing business ("MSB"). It is anticipated
that the exit plan will be substantially completed by the second or third
quarter of 1999. The Company intends to exit the MSB by: (1) selling the
mortgage servicing rights ("MSR") along with the related MSB facilities to
unrelated third parties; (2) terminating 70 full-time employees and (3)
terminating contracts associated with the MSB operations. The MSB had total
assets of $44.2 million and total liabilities of $70.4 million at March 31,
1999. The assets primarily consist of MSR and receivables from previous sales of
MSR. The liabilities are primarily advances by borrowers for taxes and insurance
and collections of principal and interest payments due to investors.
Activity in the allowance established for exiting the MSB and the
operating activity from the measurement date (December 31, 1998) through March
31, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
Balance at Amounts Balance at
December 31, Paid/ March 31,
1998 Write downs 1999
---- ----------- ----
<S> <C> <C> <C>
Employee severance and benefits ...................... $ 925 $ 0 $ 925
Provision for servicing contract cancellation ........ 900 0 900
Fixed asset write-downs .............................. 430 (40) 390
Estimated cost to sell MSR ........................... 3,600 0 3,600
Anticipated loss from operations through disposal date 4,145 (257) 3,888
----- ---- -----
Total ................................................ $10,000 $ 297 $ 9,703
======= ======= =======
</TABLE>
The costs of exiting the MSB are estimates and are subject to change based
on market conditions, actual prepayment rates, completeness of underlying loan
documents, transferability issues and the amount of time necessary to complete
the exit plan. Changes in estimates will be accounted for prospectively. During
the three months ended March 31, 1999 there were no changes in the disposal cost
estimates.
The Company had a servicing valuation allowance relating to purchased
mortgage servicing rights of $10.7 million at March 31, 1999 and December 31,
1998. On April 30, 1999, the Company entered into a contract to sell the
majority of its mortgage servicing rights portfolio to an unrelated third party.
Based on the terms of the contract it is not anticipated that the portfolio sale
will result t in any significant gain or loss.
<PAGE>
8. Segment Reporting
Operating segments are defined as components of an enterprise about
which separate financial information is available that is regularly reviewed by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance. Reportable segments consist of one or more operating
segments with similar economic characteristics, products and services,
production processes, type of customer, distribution system and regulatory
environment. The information provided for Segment Reporting is based on internal
reports utilized by management. Interest expense and certain revenue and expense
items are allocated to the various segments as interest expense and overhead.
The presentation and allocation of interest expense and overhead and the net
contribution calculated under the management approach may not reflect the actual
economic costs, contribution or results of operations of the unit as a stand
alone business. If a different basis of allocation was utilized, the relative
contributions of the segments might differ but the relative trends in segments
would, in management's view, likely not be impacted.
The following summarizes the aggregation of the Company's operating
segments into reportable segments:
Reportable Segment Operating Segments Aggregated
- ------------------ -----------------------------
Bank Investment Operations - Other Investment Division,
Tax Certificate Department,
Government Trading, Equity Portfolio
Bank Investment Operations
- - Wholesale Residential Real Estate Capital
Services, Capital Markets
Bank Loan Operations - Commercial Commercial Lending, Syndications,
BA Factors, Inc.
Bank Loan Operations - Retail Residential Lending, CRA Lending,
BankAtlantic Mortgage, Indirect and
Direct Consumer Lending, Small Business
Lending, International and Trade
Finance, Lease financing
Real Estate Operations BankAtlantic Development Corp. (includes SLW
and real estate joint ventures)
Investment Banking Operations Ryan, Beck & Co.
The accounting policies of the segments are generally the same as those
described in the summary of significant accounting policies. Intersegment
transactions consist of borrowings by real estate operations and investment
banking operations which are recorded based upon the terms of the underlying
loan agreements and are effectively eliminated in the interest expense and
overhead allocations.
<PAGE>
The Company evaluates segment performance based on net contribution
after tax. The table below is segment information for continuing operations for
the three months ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
Bank Investment Bank Loan
Operations Operations
---------- ----------
Investment
Wholesale Com- Real Estate Banking Segment
(in thousands) Other Residential mercial Retail Operations Operations Total
- -------------- ----- ----------- ------- ------ ---------- ---------- -----
March 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income ............$ 12,008 $ 22,438 $ 18,185 $ 13,648 $ (224) $ 357 $ 66,412
Interest expense
and overhead ............. (10,025) (18,284) (10,213) (7,812) (390) (227) (46,951)
Recovery from
(provision for)
loan losses .............. 0 32 (887) (4,309) 0 0 (5,164)
Non-interest income ........ 526 64 390 1,379 3,140 8,940 14,439
Segment profits before
taxes ................... 1,714 3,202 6,419 (939) 3,643 (361) 13,678
Provision for income taxes . 683 1,276 2,559 (339) 1,385 (57) 5,507
--- ----- ----- ---- ----- --- -----
Segment net income$ ........ 1,031 $ 1,926 $ 3,860 $ (600) $ 2,258 $ (304) $ 8,171
===== ============= ============= ============= ============ ============= =============
Segment total assets ......$ 1,065,860 $ 1,387,800 $ 793,924 $ 535,059 $ 39,839 $ 55,094 $ 3,877,576
=========== ============= ============= ============= ============= ============= ==============
March 31, 1998
Interest income ............$ 12,741 $ 19,929 $ 14,101 $ 13,039 $ 0 $ 0 $ 59,810
Interest expense
and overhead ............ (12,039) (15,609) (9,276) (8,735) 381 0 (45,278)
Provision for loan losses .. 0 (679) (454) (2,274) 0 0 (3,407)
Non-interest income ........ 1,791 1,015 283 1,314 125 0 4,528
Segment profits before taxes 1,118 4,150 3,689 1 (1,306) 0 7,652
Provision for income taxes . 410 1,522 1,353 0 (479) 0 2,806
--- ----- ----- - ---- - -----
Segment net income ........$ 708 $ 2,628 $ 2,336 $ 1 $ (827) $ 0 $ 4,846
=========== ============= ============= ============= ============= ============ ==============
Segment total assets ......$ 677,919 $ 1,446,143 $ 589,279 $ 513,386 $ 26,579 $ 0 $ 3,253,306
=========== ============= ============= ============= ============= ============= ==============
</TABLE>
The difference between total segment assets and segment non-interest
income and consolidated assets, and noninterest income are as follows:
(in thousands) For the Three Months Ended
March 31,
---------
Total Assets
Total assets for reportable segments ............$ 3,877,576 $ 3,253,306
Assets in discontinued operations ............... 44,169 58,628
Assets in overhead .............................. 311,861 214,574
------- -------
Total consolidated assets .....................$ 4,233,606 $ 3,526,508
============= ===========
Noninterest Income
Total non-interest income for reportable segments$ 14,439 $ 4,528
Items included in interest expense and overhead:
Transaction fee income .......................... 3,591 2,600
ATM fees ........................................ 2,199 1,297
Other deposit related fees ...................... 3,240 1,139
----- -----
Total consolidated non-interest income ..........$ 23,469 $ 9,564
============= ===========
9. Reclassifications
Certain amounts for prior periods have been reclassified to conform with
statement presentation for 1999.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except for historical information contained herein, the matters
discussed in this report contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that involve substantial risks and uncertainties. When used in
this report, or in the documents incorporated by reference herein, the words
"anticipate", "believe", "estimate", "may", "intend", "expect" and similar
expressions identify certain of such forward-looking statements. Actual results,
performance or achievements could differ materially from those contemplated,
expressed or implied by the forward-looking statements contained herein. 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, the risks and uncertainties associated with the implementation of and the
realization of benefits from its restructuring initiatives and expense
reductions, economic, competitive and other factors affecting the Company and
its operations, markets, products and services, changes in interest rates and
economic policies, the success of new lines of business, significant growth in
banking as well as non-banking initiatives, and other factors discussed
elsewhere in this report filed by the Company with the Securities and Exchange
Commission ("SEC"). Many of these factors are beyond the Company's control.
Results of Operations
(In Thousands, except per share data) For the Three Months Ended
March 31,
---------
1999 1998
---- ----
Income from continuing operations ......................$ 8,171 $ 4,846
Income from discontinued operations net of taxes ....... 0 410
- ---
Net income .............................................$ 8,171 $ 5,256
========= =========
Class A common shares
Basic earnings per share from continuing operations ... $ 0.24 $ 0.15
Basic earnings per share from discontinued operations .. 0.00 0.02
---- ----
Basic earnings per share .............................$ 0.24 $ 0.17
========= =========
Diluted earnings per share from continuing operations $ 0.19 $ 0.13
Diluted earnings per share from discontinued operations 0.00 0.01
---- ----
Diluted earnings per share ..........................$ 0.19 $ 0.14
==== =========
Class B common shares
Basic earnings per share from continuing operations .. 0.21 $ 0.14
Basic earnings per share from discontinued operations . 0.00 0.01
---- ----
Basic earnings per share ............................$ 0.21 $ 0.15
==== =========
Diluted earnings per share from continuing operations $ 0.18 $ 0.12
Diluted earnings per share from discontinued operations 0.00 0.01
---- ----
Diluted earnings per share ...........................$ 0.18 $ 0.13
========= =========
Continuing Operations - Income from continuing operations increased by
69% during the three months ended March 31, 1999 compared to the same period
during 1998. The primary reasons for the increase in continuing operations were:
1) an improvement in net interest income resulting from an increase in
interest earning assets and recognition of interest income on a
nonaccrual loan which was completely repaid in 1999,
2) additional earnings from the Company's real estate operations,
3) higher transaction fee income resulting from changes made to the
pricing of the Company's deposit products and
4) a decline in employee compensation from bank operations due to
a reduction of the Company's full time employees by approximately
148.
The above improvements in income from continuing operations were
partially offset by:
1) an increase in the provision for loan losses resulting from small
business and indirect consumer loan charge-offs,
2) lower trading account gains and gains on the sale of securities
available for sale and loans held for sale, and
3) higher occupancy costs due to an expanded branch and ATM network.
Discontinued operations - Income from discontinued operations for the
three months ended March 31, 1999 was zero compared to $410,000, net of income
taxes for the same 1998 period. During the three months ended March 31, 1999
there were no changes in the disposal cost estimates to exit the MSB. Income
from discontinued operations during 1998 resulted from gains on sales of
mortgage servicing rights offset by expenses from servicing operations.
Net Interest Income
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------
(In thousands) 1999 1998 Change
- -------------- ---- ---- ------
<S> <C> <C> <C>
Interest and fees on loans ........................................$ 53,566 $ 47,139 $6,427
Interest on banker's acceptances .................................. 187 460 (273)
Interest and dividends on securities available for sale .......... 10,053 9,987 66
Interest and dividends on investment securities held to maturity
and trading securities .......................................... 2,606 2,224 382
Interest on deposits .............................................. (16,591) (16,367) (224)
Interest on advances from FHLB .................................... (13,497) (10,712) (2,785)
Interest on securities sold under agreements to repurchase ........ (4,044) (3,318) (726)
Interest on subordinated debentures, notes payable and guaranteed
preferred interest in the Company's Junior Subordinated Debentures (4,787) (4,939) 152
Capitalized interest .............................................. 175 0 175
--- - ---
Net interest income ...............................................$ 27,668 $ 24,474 $3,194
=========== ========== ======
</TABLE>
Net interest income increased by 13% during the three months ended March
31, 1999 compared to the same period in 1998. Total interest income increased by
$6.6 million while total interest expense increased by $3.4 million. The
increase in interest income resulted from higher average interest earning
assets, primarily higher average loan portfolio balances and the recognition of
$1.1 million of interest income resulting from the repayment of a $5.9 million
commercial loan which had been classified as nonaccrual. The higher average
interest earning assets during the period were partially offset by lower yields.
The increased loan average balances resulted from:
1) increases in corporate loans through the participation in loan
syndications,
2) higher small business loan average balances due to
loan originations,
3) purchases of wholesale residential loans during 1998,
4) higher commercial real estate loan average balances reflecting
loan originations, and
5) increases in lease financing resulting from the acquisition of
LTI in March 1998.
The above loan portfolio improvement in average balances was partially
offset by lower residential and consumer loan average balances. The decline in
consumer loan average balances resulted from the Company eliminating the
origination of indirect consumer loans as part of its December 1998
restructuring plan. The decline in residential loan average balances reflects
the sale of the majority of originated residential loans and loan sales from the
held for sale portfolio.
Interest income from banker's acceptances was lower during the three
months ended March 31, 1999 compared to the same 1998 period due to a decline
in average balances.
The lower loan yields resulted from:
1) a decline in the prime interest rate during the third and fourth
quarter of 1998,
2) lower yields on purchased residential loans reflecting the repayment
of higher yielding loans and increased premium amortization
during the 1999 quarter compared to 1998 due to increased prepayments
and
3) increased average balances of syndication loans which had lower
yields than the existing portfolio.
The slight increase in securities available for sale interest income
resulted from higher average balances, partially offset by lower yields. The
higher average balances were the result of purchases of REMIC's. The lower
yields reflect the purchase of securities at lower yields than the existing
portfolio.
The increase in interest and dividends on investment securities held to
maturity and trading securities primarily resulted from interest income
associated with the RBCO trading portfolio and higher FHLB stock average
balances. Increases in FHLB stock were required based on higher average balances
of FHLB advance.
The increase in deposit expense during the three months ended March 31,
1999 compared to the same 1998 period resulted from higher average balances,
partially offset by lower rates. The increased deposit average balances resulted
from the acquisition of brokered deposits primarily through RBCO and public
funds. The average balance of brokered deposits and public funds increased from
$29.4 million during the three months ended March 31, 1998 to $203.9 million
during the same 1999 period. The lower rates paid on deposits were due to a
lower interest rate environment throughout the 1999 period compared to the same
period during 1998.
The increase in interest expense on advances from FHLB was primarily due
to higher average balances. The additional FHLB borrowings were primarily
intermediate term advances used to fund purchases of residential loans.
The higher interest expense on securities sold under agreements to
repurchase resulted from higher average balances during 1999, partially offset
by lower rates. The higher average balances funded loan growth and the decline
in rates reflect the lower interest rate environment during 1999.
The decrease in interest on subordinated debentures, guaranteed
preferred interest in the Company's Junior Subordinated Debentures and notes and
bonds payable resulted from lower average balances of notes payable during the
three months ended March 31, 1998 compared to the same period during 1999.
Interest expense of $175,000 was capitalized in connection with
investments and advances to real estate joint venture partnerships.
<PAGE>
Provision for Loan Losses
For the Three Months Ended March 31,
1999 1998
---- ----
Balance, beginning of period ...........$ 37,950 $ 28,450
Charge-offs:
Commercial real estate loans ........... (158) (101)
Lease financing ........................ (303) (85)
Small business - real estate ........... (10) 0
Small business - non-mortgage .......... (2,093) (18)
Consumer loans - indirect .............. (3,297) (2,247)
Consumer loans - direct ................ (694) (458)
Residential real estate loans .......... (59) (61)
Purchased residential real estate loans 0 (70)
- ---
(6,614) (3,040)
------ ------
Recoveries:
Commercial real estate loans ........... 0 1
Lease financing ........................ 66 37
Small business - non-mortgage .......... 37 0
Consumer loans - indirect .............. 378 346
Consumer loans - direct ................ 228 306
Commercial business loans .............. 141 159
--- ---
850 849
--- ---
Net charge-offs ........................ (5,764) (2,191)
Additions charged to operations ........ 5,164 3,407
Allowance for loan losses acquired ..... 0 284
- ---
Balance, end of period ................. $ 37,350 $ 29,950
======== ========
The provision for loan losses increased during the three months ended
March 31, 1999 compared to the same 1998 period due to:
1) charge-offs in the indirect consumer loan portfolio,
2) charge-offs in the small business non-mortgage loan portfolio, and
3) higher aggregate loan balances,
The Company ceased the origination of indirect consumer loans
as part of its December 1998 restructuring. The charge-offs in small
business non-mortgage loans were higher than anticipated and modifications
to the program have been and will continue to be implemented in an attempt
to address the charge-offs.
<PAGE>
At the indicated dates the Company's risk elements and non-performing assets
were (in thousands):
March 31, December 31,
1999 1998
---- ----
Nonaccrual :
Tax certificates .................... $ 690 $ 765
Loans and leases .................... 24,750 23,364
------ ------
Total nonaccrual .................... 25,440 24,129
------ ------
Repossessed Assets:
Real estate owned, net of allowance . 6,100 5,503
Purchased real estate owned ......... 784 0
Vehicles and equipment .............. 2,330 1,896
----- -----
Total repossessed assets ............ 9,214 7,399
----- -----
Contractually past due 90 days or more (1) 64 3,182
-- -----
Total non-performing assets ......... 34,718 34,710
Restructured loans ....................... 5 7
- -
Total risk elements .................. $34,723 $34,717
======= =======
(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.
The increase in nonaccrual loans resulted from:
1) a $1.9 million increase in small business nonaccrual loans, and
2) the purchase of $4.6 million of nonaccrual residential loans held
for sale as part of a bulk purchase of residential loans.
The $4.6 million of nonaccrual loans and the $784,000 of REO were
acquired in connection with a $114 million bulk residential loan purchase from
the Resolution Trust Corporation. The Company intends to segregate the portfolio
and sell these loans to unrelated financial service companies. Such loans and
REO are valued individually at the lower of cost or market.
The increase in nonaccrual loans was partially offset by declines in:
1) consumer nonaccrual loans, due primarily to a change in the
Company's collection policy to aggressively repossess automobiles,
2) improvement in delinquency trends for lease financing, and
3) nonaccrual commercial real estate loans resulting from the repayment
of a $5.9 million nonaccrual loan.
The increase in repossessed assets resulted from higher consumer
repossessed automobiles and an increase in repossessed residential real estate
owned.
<PAGE>
Non-Interest Income
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------
(In thousands) 1999 1998 Change
- -------------- ---- ---- ------
Noninterest Income Excluding RBCO and Real Estate Operation
<S> <C> <C> <C>
Loan late fees and other loan income .........................$ 1,130 $ 899 $ 231
Gains on sales of loans held for sale ......................... 633 1,747 (1,114)
Trading account gains (losses) ................................ (69) 171 (240)
Gains on sales of securities available for sale ............... 579 1,720 (1,141)
Transaction accounts .......................................... 3,591 2,600 991
ATM fees ...................................................... 2,199 1,297 902
Other ......................................................... 1,049 1,005 44
----- ----- --
Non-interest income excluding RBCO and real estate operations 9,112 9,439 (327)
----- ----- ----
RBCO Operations
Principal transactions ........................................ 3,000 0 3,000
Investment banking ............................................ 3,117 0 3,117
Commissions ................................................... 2,676 0 2,676
Other ......................................................... 147 0 147
--- - ---
Non-interest income - RBCO .................................... 8,940 0 8,940
----- - -----
Real Estate Operations
Gains on sales of real estate held for development and sale ... 3,666 100 3,566
Equity in earnings of unconsolidated real estate joint ventures 1,729 0 1,729
Other ......................................................... 22 25 (3)
Non-interest income - real estate operations .................. 5,417 125 5,292
----- --- -----
Total non-interest income ...................................$ 23,469 $ 9,564 $ 13,905
========== ========== =========
</TABLE>
Non-Interest Income Excluding RBCO and Real Estate Operations
Loan late fees and other fee income increased during the three months ended
March 31, 1999 compared to the same 1998 period. The increase resulted from
higher late fees, commitment fees and loan prepayment penalties. The additional
fees earned reflect a larger loan portfolio in 1999 compared to 1998.
During the three months ended March 31, 1999 the Company sold $38.5
million, $20.4 million and $1.1 million of loans originated for sale, loans
purchased and classified as held for sale and leases for gains shown on the
above table. During the three months ended March 31, 1998, the Company sold
$43.5 million of loans originated for sale and $50.4 million of purchased loans
transferred from held for investment to held for sale for gains shown in the
above table. As part of its normal operations from 1996 through the latter part
of 1998, the Company purchased bulk residential loans to be held for investment.
These bulk purchased loans are continually evaluated and such evaluations may
result in transfers from the held for investment category to the held for sale
category. Such transfers, if any, have not and are not normally expected to
exceed 10% of the average annual balance of the portfolio.
On March 26, 1999, the Company sold $63.5 million of securities available
for sale for a gain shown in the above table. Included in other assets on the
Statement of Financial Condition was a $64.4 million receivable from the above
sale. During the three months ended March 31, 1998, the Company sold $333.1
million of securities available for sale for a gain shown in the above table.
During the three months ended March 31, 1999, the Company realized a
$69,000 loss from government securities trading. The Company did not trade
government securities during the three months ended March 31, 1998. During the
three months ended March 31, 1998, the Company transferred $1.8 million of
equity securities available for sale to trading securities resulting in a
$562,000 unrealized gain on the date of transfer. The unrealized and realized
gains on the trading securities for the three months ended March 31, 1998 were
$171,000.
The increase in transaction fee income during the three months
ended March 31, 1999 compared to the same 1998 period resulted from:
1) an increase in the Company's non-interest bearing transaction
accounts reflecting in part, an increase
in small business loans, and
2) changes made to the pricing of the Company's deposit products.
The significant increase in ATM fee income during 1999 was
primarily the result of an expanded ATM network. The Company's ATM network
increased from 261 machines at March 31, 1998 to 783 machines at March 31, 1999.
BankAtlantic established its ATM network to enhance fee income and to expand
banking services throughout Florida.
Noninterest Income RBCO Operations
RBCO revenues are generated from principal transactions, investment
banking and commissions. Principal transactions are sales and trading activities
of tax exempt debt securities, taxable debt securities and equity securities.
Investment banking revenues include management fees and underwriting fees earned
in connection with all underwriting participations and selling concessions
earned in connection with RBCO's participation in tax-exempt debt, corporate
debt and equity underwriting. Commission revenues reflect fees earned from
retail customers upon the execution of equity security and mutual fund trades.
During the three months ended March 31, 1999 RBCO earned revenues on principal
transactions, investment banking and commissions as shown in the preceding
table. As previously noted, RBCO was acquired by the Company on June 30, 1998 in
a transaction recorded under the purchase method of accounting. RBCO has
recently announced a significant expansion of its business activities including
the hiring of additional key personnel, the diversification into the healthcare,
consumer and technology industries, and the expansion of its investment banking
operations.
Noninterest Income Real Estate Operations
Real estate held for development and sale represents the net profits on
sales of real estate by SLWHC and equity earnings from the Company's six real
estate joint ventures. During the three months ended March 31, 1999 and 1998
SLWHC sold developed land for gains as reported above. Other income represents
accretion of SLWHC impact fee receivables established at the acquisition date.
The equity earnings from real estate joint ventures primarily resulted from the
sale of property in one joint venture.
<PAGE>
Non-Interest Expenses
For the Three Months Ended
March 31,
---------
(In thousands) 1999 1998 Change
- -------------- ---- ---- ------
Noninterest Expense Excluding RBCO and Real
Estate Operations
Employee compensation and benefits ....$ 9,641 $ 10,827 $ (1,186)
Occupancy and equipment ............... 5,188 4,847 341
Federal insurance premium ............. 273 262 11
Advertising and promotion ............. 326 489 (163)
Amortization of cost over fair value of
net assets acquired ................ 711 659 52
Other ................................. 5,572 4,705 867
----- ----- ---
Non-interest expenses ............. 21,711 21,789 (78)
------ ------ ---
RBCO Operations
Employee compensation and benefits .... 6,450 0 6,450
Occupancy and equipment ............... 486 0 486
Advertising and promotion ............. 248 0 248
Amortization of cost over fair value of 0
net assets acquired ................ 272 0 272
Other ................................. 1,976 0 1,976
----- - -----
Non-interest expenses ................. 9,432 0 9,432
----- - -----
Real Estate Operations
Employee compensation and benefits .... 152 165 (13)
Advertising and promotion ............. 182 145 37
Selling, general and administrative ... 818 880 (62)
Non-interest expenses ............... 1,152 1,190 (38)
----- ----- ---
Total non-interest expenses .........$ 32,295 $ 22,979 $ 9,316
========== ========== ========
The decrease in employee compensation and benefits during the three
months ended March 31, 1999 compared to the 1998 period resulted from the
Company's December 1998 restructuring which reduced the Company's number of full
time employees by approximately 115 and froze the accrual of benefits under the
defined benefit pension plan. As of March 31, 1999 compared to March 31, 1998,
the Company's number of full time employees declined by 148.
Occupancy and equipment expenses increased during the three months
ended March 31, 1999 due to the expanded ATM and branch network resulting in
higher rental and repair and maintenance expenses.
The decrease in advertising and promotion expenses during the three
months ended March 31, 1999 compared to the same 1998 period resulted from the
fact that the level of advertising and promotions during 1998 associated with
the branch expansion in Miami-Dade County, Florida and BankAtlantic's small
business banking unit was significantly reduced during the 1999 period.
The increase in amortization of cost over fair value of net assets
acquired reflects the acquisition of LTI effective March 1, 1998 and the
acquisition of RBCO on June 30, 1998.
The increase in other expenses reflects higher operating expenses
associated with an expanded branch and ATM network, partially offset by lower
legal, consulting, stationery, printing and supplies expenses.
RBCO Non-Interest Expenses
The RBCO acquisition agreement provided for the establishment of an
incentive retention pool, under which shares of the Company's Class A common
stock were allocated to key employees of RBCO. Included in employee compensation
and benefits was $504,000 of retention pool compensation amortization. The
retention pool was valued at $8.1 million at the acquisition date and the shares
vest four years after the acquisition date. As a result, the Company is
amortizing the $8.1 million value of the retention pool into compensation
expense over the vesting period. Occupancy and equipment expense primarily
consisted of $294,000 of rent and maintenance expense, $135,000 of depreciation
expense and a $57,000 charge for data processing. Other expenses were primarily
floor brokerage and clearing fees of $660,000, professional fees of $212,000 and
$328,000 for third party quotation services. The remaining expenses were general
and administrative costs.
Real Estate Operations Non-Interest Expenses
Real estate operations non-interest expenses primarily related to SLWHC
expenses. Selling, general and administrative expenses were mainly real estate
taxes on developed land.
SEGMENT REPORTING
The table below is segment information for continuing operations for the three
months ended March 31, 1999 and 1998:
(in thousands) For the Three Months Ended
March 31,
---------
1999 1998
---- ----
Net contribution after income taxes ..............
Bank investment operations - wholesale residential $ 1,926 $ 2,628
Bank investment operations - other ............... 1,031 708
Bank loan operations - retail products ........... (600) 1
Bank loan operations - commercial products ....... 3,860 2,336
Real estate operations ........................... 2,258 (827)
Investment banking operations .................... (304) 0
---- -
Net contribution ............................... $ 8,171 $ 4,846
========== ==========
Bank Investment Operations
Segment net contribution from bank investment operations - other improved
due to higher net interest margin resulting from lower interest expense and
overhead allocations. The lower allocated overhead resulted from the declining
interest rate environment during 1999 and lower operating expenses. The above
improvement in segment net income was partially offset by lower noninterest
income during 1999 compared to 1998. The lower noninterest income resulted from
a decline in gains on the sales of securities available for sale and trading
securities.
Segment net contribution from bank investment operations - wholesale
residential declined primarily from: lower gains from the sale of loans, a
decline in purchased residential loan yields due to accelerated premium
amortization resulting from repayments and a higher interest expense and
overhead allocation resulting from increased average interest earning assets,
partially offset by a lower provision for loan losses.
Bank Loan Operations
Segment net contribution from bank loan operations - commercial increased
due to an improvement in the net margin, recognition of $1.1 million of interest
income upon the repayment of a $5.9 million nonaccrual loan and higher loan fees
during the three months ended March 31, 1999 compared to the same 1998 period.
The above increases were partially offset by a higher provision for loan losses
caused by loan growth.
Segment net contribution from bank loan operations - retail increased
primarily from an increase in the provision for loan losses. The increase in the
loan loss provision was partially offset by higher yields earned on the retail
portfolio reflecting an increase in average interest earning loan balances. The
additional provision for loan losses during 1999 resulted from increased small
business and indirect charge-offs and delinquency trends.
Real Estate Operations
Segment net contribution from real estate operations during the three
months ended March 31, 1999 consisted of land sales less operating costs from
the Company's wholly owned subsidiary St. Lucie West Holding Corporation and
equity earnings from the Company's six real estate joint ventures. Real estate
operations segment net contribution during the three months ended March 31, 1998
consisted of a land sale and operating costs from St. Lucie West Holding
Corporation.
Investment Banking Operations
Investment banking operations were primarily the
operations of RBCO. RBCO was acquired on June 30, 1998.
Financial Condition
The Company's total assets at March 31, 1999 were $4.2 billion compared to
$3.8 billion at December 31, 1998. The increase in total assets primarily
resulted from increased:
1) loans held for sale balances due to the purchase of $123 million of
residential loans,
2) securities available for sale resulting from the purchase of
REMIC's,
3) other assets reflecting the receivable generated upon the sale of
$63.5 million of mortgage-backed securities that settled in April
1999,
4) federal funds sold,
5) securities purchased under agreements to resell, and
6) interest bearing deposits in other banks.
The above increases in total assets were partially offset by decreased:
1) loans receivable resulting from the repayment of consumer indirect
automobile loans and purchased residential loans held to maturity,
and
2) trading securities due to lower RBCO state and municipality
inventories.
The Company's total liabilities at March 31, 1999 were $4.0 billion
compared to $3.5 billion at December 31, 1998. The increase in total liabilities
primarily resulted from increased:
1) deposit balances reflecting the acquisition of brokered deposits
and public funds and an increase in noninterest bearing deposit
balances.
2) securities sold under agreements to repurchase used to fund
securities available for sale growth, and
3) other liabilities resulting from the purchase of $117 million of
REMIC securities that settled in April 1999.
The above increases in total liabilities were partially offset by
decreased:
1) advances from FHLB due to maturities,
2) federal funds purchased resulting from a shift in short term
borrowings to securities sold under agreements to repurchase,
3) advances by borrowers for taxes and insurance reflecting a decline
in loans serviced for others balances.
Market Risk
Market risk is defined as the risk of loss arising from adverse changes
in market valuation which arise from interest rate risk, foreign currency
exchange rate risk, commodity price risk, and equity price risk. The Company's
primary market risk is interest rate risk and its secondary market risk is
equity price risk.
Equity Price Risk
The Company (including RBCO) maintains a portfolio of trading and
available for sale securities which subjects the Company to equity pricing
risks. The change in fair values of equity securities represents instantaneous
changes in all equity prices segregated by trading securities, securities sold
not yet purchased and available for sale securities. The following are
hypothetical changes in the fair value of the Company's securities sold not yet
purchased, trading and available for sale securities at March 31, 1999 based on
percentage changes in fair value. Actual future price appreciation or
depreciation may be different from the changes identified in the table below.
<TABLE>
<CAPTION>
Available Securities Total
Percent Trading for Sale Sold Not Dollar
Change in Securities Securities Yet Change from
Fair Value Fair Value Fair Value Purchased 0%
---------- ---------- ---------- --------- --
(dollars in thousands)
<S> <C> <C> <C> <C>
20 % $ 20,705 $ 24,943 $ 1,991 $ 7,940
10 % $ 18,979 $ 22,865 $ 1,825 $ 3,970
0 % $ 17,254 $ 20,786 $ 1,659 $ 0
-10 % $ 15,529 $ 18,707 $ 1,493 $ (3,970)
-20 % $ 13,803 $ 16,629 $ 1,327 $ (7,940)
</TABLE>
During 1998, the Company began trading government securities which are
generally bought and sold on the same day. In addition, RBCO is a market maker
in equity securities which could from time to time require them to hold
securities during declining markets. The Company attempts to manage its equity
price risk by maintaining a relatively small portfolio of securities and
evaluating equity securities as part of the Company's overall asset and
liability management process.
Interest Rate Risk
The majority of the Company's assets and liabilities are monetary in
nature subjecting the Company to significant interest rate risk. The Company has
developed a model using vendor software to quantify its interest rate risk. A
sensitivity analysis was performed measuring the Company's potential gains and
losses in net portfolio fair values of interest rate sensitive instruments at
March 31, 1999 resulting from a change in interest rates. Interest rate
sensitive instruments included in the model were the Company's:
/bullet/ loan portfolio,
/bullet/ debt securities available for sale,
/bullet/ investment securities,
/bullet/ FHLB stock,
/bullet/ Federal Funds sold,
/bullet/ deposits,
/bullet/ advances from FHLB,
/bullet/ securities sold under agreements to repurchase,
/bullet/ Federal Funds purchased,
/bullet/ Subordinated Debentures,
/bullet/ Trust Preferred Securities,
/bullet/ off-balance sheet loan commitments, and
/bullet/ mortgage servicing rights.
The Company has no off-balance sheet derivatives other than fixed rate
loan commitments aggregating $18.9 million at March 31, 1999.
The model calculates the net potential gains and losses in net
portfolio fair value by:
(i) discounting anticipated cash flows from existing assets,
liabilities and off-balance sheet contracts at market
rates to determine fair values at March 31, 1999,
(ii) discounting the above expected cash flows based on
instantaneous and parallel shifts in the yield curve to
determine fair values, and
(iii) the difference between the fair value calculated in (i)
and (ii) is the potential gains and losses in net
portfolio fair values.
Management has made estimates of fair value discount rates that it
believes to be reasonable. However, because there is no quoted market for many
of these financial instruments, management has no basis to determine whether the
fair value presented would be indicative of the value negotiated in an actual
sale. BankAtlantic's fair value estimates do not consider the tax effect that
would be associated with the disposition of the assets or liabilities at their
fair value estimates.
Presented below is an analysis of the Company's interest rate risk at
March 31, 1999 as calculated utilizing the Company's model. The table measures
changes in net portfolio value for instantaneous and parallel shifts in the
yield curve in 100 basis point increments up or down.
Net Portfolio
Changes Value Dollar
in Rate Amount Change
------- ------ ------
(Dollars in thousands)
+200 bp $ 267,588 $ (123,023)
+100 bp $ 342,592 $ (48,019)
0 bp $ 390,611 $ 0
(100) bp $ 364,857 $ (25,754)
(200) bp $ 319,095 $ (71,516)
In preparing the above table, the Company makes various assumptions to
determine the net portfolio value at the assumed changes in interest rate. These
assumptions include:
/bullet/ loan prepayment rates,
/bullet/ deposit decay rates,
/bullet/ market values of certain assets under the representative
interest rate scenarios, and
/bullet/ repricing of certain borrowings
It was also assumed that delinquency rates would not change as a result
of changes in interest rates although there can be no assurance that this would
be the case. Even if interest rates change in the designated increments, there
can be no assurance that the Company's assets and liabilities would be impacted
as indicated in the table above. In addition, a change in U.S. Treasury rates in
the designated amounts, accompanied by a change in the shape of the yield curve
could cause significantly different changes to the fair values than indicated
above. Furthermore, the result of the calculations in the preceding table are
subject to significant deviations based upon actual future events, including
anticipatory and reactive measures which the Company may take in the future.
Liquidity and Capital Resources
BankAtlantic's primary sources of funds during the first three months of
1999 were from principal collected on loans, securities available for sale and
investment securities held to maturity, and sales of securities available for
sale, FHLB stock, REO, and real estate held for development, borrowings from
FHLB advances, securities sold under agreements to repurchase, and deposit
inflows . These funds were primarily utilized to fund operating expenses,
deposit outflows, loan purchases and fundings, pay dividends, repay advances
from borrowers for taxes and insurance and to purchase FHLB stock, tax
certificates, trading securities and securities available for sale and acquire
common stock. At March 31, 1999, BankAtlantic met all applicable liquidity and
regulatory capital requirements.
During the three months ended March 31, 1999 the Company opened a $5.0
million money market account with an unrelated financial institution which was
pledged to the financial institution upon issuance of an irrevocable standby
letter of credit. The letter of credit secures a loan to one of the Company's
joint ventures. The money market account is included in interest bearing
deposits in other banks in the Company's Consolidated Statement of Financial
Condition.
The Company is currently considering various corporate alternatives
concerning its real estate operations conducted through its wholly owned
subsidiary BankAtlantic Development Corporation ("BDC"). The Company was
originally considering a spin off of BDC to shareholders; however, as a result
of potential adverse tax consequences, the Company is now exploring other
alternatives, including the possibility of selling a portion of BDC's common
stock. Any transaction would be subject to Board of Directors' and regulatory
approval.
The Company's commitments to originate loans at March 31, 1999 were
$212.7 million compared to $144.1 million at March 31, 1998. Additionally at
March 31, 1998, the Company had commitments to purchase loans and securities
available for sale of $26.5 million, and $30.1 million, respectively. The
Company did not have commitments to purchase loans and securities available for
sale at March 31, 1999. At March 31, 1999, loan commitments were 7.96% of net
loans receivable.
LTI is obligated on leases sold with full recourse by LTI to investors
prior to the Company's acquisition. Under the terms of such agreements, LTI is
subject to recourse for 100% of the remaining balance of the lease receivable
sold upon a default by the lessees. At March 31, 1999, the amount of lease
payments subject to such recourse provisions was approximately $5.6 million and
a $223,000 estimated liability on leases sold with recourse is included in other
liabilities in the Company's Statement of Financial Condition.
At the indicated date BankAtlantic's capital amounts and ratios were:
<TABLE>
<CAPTION>
To be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
------ -------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(In thousands)
At March 31, 1999:
<S> <C> <C> <C> <C> <C> <C>
Total risk-based capital $ 338,759 13.36 % > $ 202,833 > 8.00 % > $ 253,542 > 10.00 %
= = = =
Tier I risk-based capital $ 306,989 12.11 % > $ 101,417 > 4.00 % > $ 152,125 > 6.00 %
= = = =
Tangible capital $ 306,989 7.56 % > $ 60,942 > 1.50 % > $ 60,942 > 1.50 %
= = = =
Core capital $ 306,989 7.56 % > $ 162,510 > 4.00 % > $ 203,138 > 5.00 %
= = = =
At December 31, 1998:
Total risk-based capital $ 336,131 13.92 % > $ 193,150 > 8.00 % > $ 241,438 > 10.00 %
= = = =
Tier I risk-based capital $ 305,860 12.67 % > $ 96,575 > 4.00 % > $ 144,863 > 6.00 %
= = = =
Tangible capital $ 305,860 8.48 % > $ 54,111 > 1.50 % > $ 54,111 > 1.50 %
= = = =
Core capital $ 305,860 8.48 % > $ 144,297 > 4.00 % > $ 180,371 > 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,
1998.
The Company's wholly owned subsidiary, RBCO, is subject to the net
capital provision of Rule 15c3-1 under the Securities Exchange Act of 1934 which
requires that RBCO's aggregate indebtedness shall not exceed 15 times net
capital as defined under such provision. Additionally, RBCO, as a market marker,
is subject to supplemental requirements of Rule 15c3-1(a)4, which provides for
the computation of net capital to be based on the number and price of issues in
which markets are made by RBCO, not to exceed $1,000,000. At March 31, 1999,
RBCO's regulatory net capital was approximately $13.5 million, which exceeded
minimum net capital rule requirements by $12.5 million.
RBCO operates under the provisions of paragraph (K)(2)(ii) of Rule
15c3-3 of the Securities and Exchange commission as a fully-disclosed broker
and, accordingly, customer accounts are carried on the books of the clearing
broker. However, RBCO safekeeps and redeems municipal bond coupons for the
benefit of its customers. Accordingly, RBCO is subject to the provisions of SEC
Rule 15c3-3 relating to possession or control and customer reserve requirements
and was in compliance with such provisions at March 31, 1999.
Year 2000 Issues
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
year 2000. The consequences of incomplete or untimely resolution of year 2000
issues represent an uncertainty that could affect future financial results. The
year 2000 issue affects virtually all companies and organizations.
The Company has undertaken various initiatives intended to ensure that
computer applications will function properly with respect to dates in the year
2000 and thereafter. The Company has established a year 2000 action plan which
was presented to the Board of Directors on December 2, 1997. The action plan was
developed using the guidelines outlined in the Federal Financial Institutions
Examination Council's "The Effect of 2000 on Computer Systems". The six phases
of the Company's action plan are: (1) Awareness - Define the Year 2000 issues,
gain executive level support, establish a project team and develop a strategy
which encompasses technology and business issues, (2) Assessment - Assess the
size and complexity of the issues and detail the magnitude of the effort
necessary to address them, (3) Renovation - Code enhancements, hardware and
software upgrades, and system replacements, (4) Validation - Testing of
software, system components and connections between systems, (5) Implementation
- - Systems should be certified as year 2000 ready by the business users, and (6)
Contingency planning determination of strategy to handle the most likely worst
case scenarios on year 2000 issues.
The Company believes that it has completed the awareness and assessment
phases of its action plan. Renovation, validation and implementation phases were
approximately 95% completed at March 31, 1999 and are scheduled to be 100%
completed as of June 30, 1999. The contingency planning phase was 90% completed
as of March 31, 1999, and is scheduled to be 100% completed as of June 30, 1999.
Although the Company expects to meet its action plan schedule, there is
no assurance that this timetable will be completed according to schedule.
The majority of the Company's mission critical information technology
system structure ("IT") has been outsourced to third party vendors. The
Company's internal IT primarily consists of a minicomputer for item processing
and a personal computer based wide area network. The wide area network's primary
function is to communicate with third party service bureaus and secondarily to
run non-critical personal computer applications such as E-mail, word processing
and spreadsheet programs. The Company has various non-IT systems including but
not limited to, vault security equipment, branch security equipment, telephone
systems, circuit boards on building equipment, building elevators, and
appliances. The above IT and non-IT systems could fail or create erroneous
results by or at the year 2000.
The Company relies on third party vendors to perform loan, deposit,
general ledger, clearing agent functions and other application processing. The
Company is monitoring the progress of these third party vendors in meeting their
year 2000 obligations and is actively involved in the implementation and testing
of the modified application programs. The third party vendors completed the
update of the application programs during the fourth quarter of 1998 and the
Company tested these applications during the first quarter of 1999. Although the
Company currently has no indication that its third party vendors will not be
able to operate as a result of year 2000 related problems, there is no assurance
that these third party vendors will meet their obligations to the Company.
Included in the Statement of Operations during the three months ended March 31,
1999 and 1998 were $48,000 and $1,000, respectively, of third party expenses
related to the year 2000 action plan. The Company estimates that it will spend
approximately $100,000 on year 2000 consulting services, $300,000 on software
and hardware maintenance specifically related to year 2000, $100,000 on RBCO
system upgrades and consulting services and $100,000 for contingency planning
during the year ended December 31, 1999. The above items will be expensed as
incurred and do not include employee compensation allocated for time spent on
the year 2000 project.
Risk factors associated with the year 2000 event include the risk that
the Company's business could be disrupted due to vendors, suppliers, and
customer system failures, or even the possible loss of electrical power or phone
service. The Company is currently assessing the probability of these events
occurring and has formulated a contingency plan. The Company could also be
subjected to year 2000 litigation from customers, borrowers and suppliers as a
result of both internal and third party system failures. The Company as part of
its action plan has sent brochures to customers, and questionnaires to borrowers
and suppliers, and as mentioned above is addressing both IT and non-IT year 2000
issues. Further, the credit quality of the Company's loans may be affected by
the failure of a borrower's operating or other systems as a consequence of a
year 2000 issue or the related failure of a borrower's key suppliers, customers,
or service providers resulting in higher provisions for loan losses. The
Company's underwriting and credit policies include consideration of a borrower's
potential year 2000 issues. There is no assurance that the Company's borrowers
will be able to meet their obligations to the Company if these borrowers
experience year 2000 problems.
Certain assets of the Company may have to be replaced, based on
upgrades to equipment and software that are part of the Company's normal
business needs, rapidly developing technology, and a three year capital
equipment and software replacement plan. The Company does not anticipate
impairment or significant replacement of assets related to the year 2000 issue.
There is no assurance that the foregoing has identified all costs, risks
or possible losses which the Company may experience associated with year 2000
issues. The failure to correct a material year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the year 2000 problem, resulting in part from the
uncertainty of the year 2000 readiness of third-party suppliers, borrowers and
customers, the Company is unable to determine at this time whether the
consequences of year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition. The goal of the Year
2000 Project is to significantly reduce the Company's level of uncertainty about
the year 2000 problem and, the Company believes that, with the implementation of
new business systems and completion of the project as scheduled, the possibility
of significant interruptions of normal operations should be reduced.
<PAGE>
PART II - OTHER INFORMATION
Exhibits and Reports on Form 8K
Exhibit 11 Statement re: Computation of Per Share Earnings.
<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.
May 12, 1999 By: /s/Alan B. Levan
-------------------------
Date Alan B. Levan
Chief Executive Officer/
Chairman/President
May 12, 1999 By: /s/ Frank V. Grieco
------------- -------------------------------
Date Frank V. Grieco
Senior Executive Vice President,
Principal Financial and Accounting Officer
<PAGE>
EXHIBIT 11
Earnings Per Share
The following reconciles the numerators and denominators of the basic and
diluted earnings per share computations .
<TABLE>
<CAPTION>
For the Three Months ended For the Three Months ended
(In thousands, except per share March 31, 1999 March 31, 1998
------------------------------- -------------- --------------
data and percentages) Class A Class B Total Class A Class B Total
Basic Numerator
<S> <C> <C> <C> <C> <C> <C>
Actual dividends declared ..............$ 711 $ 259 $ 970 $ 599 $ 255 $ 854
Basic allocation of undistributed
earnings from continuing operations .. 5,250 1,951 7,201 2,755 1,237 3,992
----- ----- ----- ----- ----- -----
Income from continuing operations ...... 5,961 2,210 8,171 3,354 1,492 4,846
Income from discontinued operations .... 0 0 0 281 129 410
- - - --- --- ---
Net income .............................$ 5,961 $ 2,210 $ 8,171 $ 3,635 $ 1,621 $ 5,256
============== ============== =========== =========== ============= ==============
Basic Denominator
Weighted average shares outstanding .... 25,342,390 10,359,717 21,809,903 10,768,956
========== ========== ========== ==========
Allocation percentage .................. 72.91 % 27.09 % 69.02 % 30.98 %
===== ===== ===== =====
Basic earnings per share ...............$ 0.24 $ 0.21 $ 0.17 $ 0.15
============== ============== ======== ==============
Diluted Numerator
Actual dividends declared ..............$ 711 $ 259 $ 970 $ 599 $ 255 $ 854
-------------- -------------- ----------- ------------ -------------- -------------
Basic allocation of undistributed
earnings from continuing operations .. 5,250 1,951 7,201 2,755 1,237 3,992
Reallocation of basic undistributed
earnings due to change in allocation
percentage ........................... 546 (546) 0 369 (369) 0
--- ---- - --- ---- -
Diluted allocated undistributed earnings
from continuing operations ........... 5,796 1,405 7,201 3,124 868 3,992
----- ----- ----- ----- --- -----
Interest expense on convertible debt ... 1,201 291 1,492 1,202 335 1,537
----- --- ----- ----- --- -----
Dilutive net income from continuing
operations ........................... 7,708 1,955 9,663 4,925 1,458 6,383
Dilutive net income from discontinued
operations ........................... 0 0 0 321 89 410
- - - --- -- ---
Net income .............................$ 7,708 $ 1,955 $ 9,663 $ 5,246 $ 1,547 $ 6,793
============== =============== ========== ============= ========= ===============
Diluted Denominator
Basic weighted average shares
outstanding ........................... 25,342,390 10,359,717 21,809,903 10,768,956
Convertible debentures ................. 15,542,021 0 16,314,540 0
Options ................................ 319,296 638,182 639,910 1,110,754
------- ------- ------- ---------
Diluted weighted average
shares outstanding ................... 41,203,707 10,997,899 38,764,353 11,879,710
========== ========== ========== ==========
Allocation percentage .................. 80.47% 19.53% 78.21% 21.79%
===== ===== ===== =====
Diluted earnings per share .............$ 0.19 $ 0.18 $ 0.14 $ 0.13
============== =============== ========== ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information
extracted from the Consolidated Statement of Financial
Condition at March 31, 1999 and the
Consolidated Statement of Operations for three months
ended March 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 921768
<NAME> BankAtlantic Bancorp, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 96,430
<INT-BEARING-DEPOSITS> 5,167
<FED-FUNDS-SOLD> 5,914
<TRADING-ASSETS> 17,254
<INVESTMENTS-HELD-FOR-SALE> 1,003,057
<INVESTMENTS-CARRYING> 49,681
<INVESTMENTS-MARKET> 49,681
<LOANS> 2,633,261
<ALLOWANCE> 37,350
<TOTAL-ASSETS> 4,233,606
<DEPOSITS> 2,115,559
<SHORT-TERM> 409,232
<LIABILITIES-OTHER> 237,230
<LONG-TERM> 1,234,790
0
0
<COMMON> 362
<OTHER-SE> 236,433
<TOTAL-LIABILITIES-AND-EQUITY> 4,233,606
<INTEREST-LOAN> 53,753
<INTEREST-INVEST> 12,659
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 66,412
<INTEREST-DEPOSIT> 16,591
<INTEREST-EXPENSE> 38,744
<INTEREST-INCOME-NET> 27,668
<LOAN-LOSSES> 5,164
<SECURITIES-GAINS> 510
<EXPENSE-OTHER> 32,295
<INCOME-PRETAX> 13,678
<INCOME-PRE-EXTRAORDINARY> 13,678
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,171
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.19
<YIELD-ACTUAL> 7.71
<LOANS-NON> 24,750
<LOANS-PAST> 64
<LOANS-TROUBLED> 5
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 37,950
<CHARGE-OFFS> 6,614
<RECOVERIES> 850
<ALLOWANCE-CLOSE> 37,350
<ALLOWANCE-DOMESTIC> 36,995
<ALLOWANCE-FOREIGN> 355
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
