SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 November 8, 2000
------------------- ----------------
Class A Common Stock, par value $0.01 per share 31,698,220
Class B Common Stock, par value $0.01 per share 1
<PAGE>
BankAtlantic Bancorp, Inc.
TABLE OF CONTENTS
FINANCIAL INFORMATION .................................... Page Reference
Financial Statements ................................... 1-11
Consolidated Statements of Financial Condition -
September 30, 2000 and 1999 and December 31,
1999 - Unaudited ................................... 4
Consolidated Statements of Operations - for the
Three and Nine Months Ended September 30, 2000
and 1999 - Unaudited ............................... 5-6
Consolidated Statements of Stockholders' Equity
and Comprehensive Income - for the Nine Months
Ended September 30, 2000 and 1999 - Unaudited ...... 7-8
Consolidated Statements of Cash Flows - for the
Nine Months Ended September 30, 2000 and 1999
- Unaudited ........................................ 9-11
Notes to Consolidated Financial Statements -
Unaudited .......................................... 12-19
Management's Discussion and Analysis of Financial
Condition and Results of Operations ................ 20-41
OTHER INFORMATION
Submission of Matters to Vote of Securities Holders .. 42
Exhibits and Report on Form 8K ....................... 42
Signatures ........................................... 43
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BankAtlantic Bancorp, Inc.
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
BankAtlantic Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
September 30, December 31, September 30,
2000 1999 1999
(In thousands, except share data) ------------ ----------- ------------
ASSETS
<S> <C> <C> <C>
Cash and due from depository institutions ...... $ 79,769 $ 90,070 $ 95,372
Federal Funds sold and securities purchased
under resell agreements ....................... 3,318 313 5,824
Tax certificates and other securities held
to maturity ................................... 388,568 113,000 94,130
Loans receivable, net .......................... 2,673,191 2,469,472 2,352,847
Loans held for sale, net ....................... 77,248 220,236 215,058
Securities available for sale, at market
value ......................................... 763,541 818,308 872,149
Trading securities, at market value ............ 25,879 23,311 17,985
Accrued interest receivable .................... 40,901 30,594 29,184
Real estate held for development and sale
and joint ventures ............................ 157,255 149,964 75,148
Real estate owned, net ......................... 5,282 3,951 3,327
Office properties and equipment, net ........... 59,004 55,473 56,314
Federal Home Loan Bank stock, at cost which
approximates market value ..................... 49,988 56,410 46,058
Deferred tax asset, net ........................ 31,902 41,487 26,589
Cost over fair value of net assets acquired, net 50,898 53,553 54,729
Other assets ................................... 24,941 33,759 25,915
---------- ---------- ----------
Total assets ................................... $4,431,685 $4,159,901 $3,970,629
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ........................................ $2,186,728 $2,027,892 $2,140,096
Advances from FHLB .............................. 979,749 1,098,186 921,135
Federal Funds purchased ......................... 13,500 5,900 10,200
Securities sold under agreements to repurchase .. 623,795 423,223 328,210
Subordinated debentures, notes and bonds payable 227,100 228,773 186,544
Guaranteed preferred beneficial interests in the
Company's Junior Subordinated Debentures ....... 74,750 74,750 74,750
Advances by borrowers for taxes and insurance ... 11,022 2,595 9,131
Other liabilities ............................... 83,239 62,696 63,596
---------- ---------- ----------
Total liabilities ............................... 4,199,883 3,924,015 3,733,662
---------- ---------- ----------
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,
31,698,220, 32,418,470 and 31,525,106 .......... 317 324 315
Class B Common Stock, $0.01 par value, authorized
45,000,000 shares; issued and outstanding, 1,
2 and 2 shares ................................. 0 0 0
Additional paid-in capital ...................... 103,953 145,501 140,134
Unearned compensation-restricted stock grants ... (442) (5,633) (5,934)
Retained earnings ............................... 137,410 122,639 119,701
---------- ---------- ----------
Total stockholders' equity before accumulated
other comprehensive income ..................... 241,238 262,831 254,216
Accumulated other comprehensive loss - net
unrealized depreciation on securities
available for sale-net of deferred income taxes (9,436) (26,945) (17,249)
---------- ---------- ----------
Total stockholders' equity ...................... 231,802 235,886 236,967
---------- ---------- ----------
Total liabilities and stockholders' equity ...... $4,431,685 $4,159,901 $3,970,629
========== ========== ==========
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
-4-
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BankAtlantic Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months For the Nine Months
(In thousands, except share data) Ended September 30, Ended September 30,
---------------------- ----------------------
2000 1999 2000 1999
INTEREST INCOME: --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases .................... $ 62,241 $ 54,444 $ 182,089 $ 163,378
Interest on banker's acceptances ......................... 212 348 699 736
Interest and dividends on securities available for sale .. 12,292 14,496 38,866 39,167
Interest and dividends on tax certificates and other
securities held to maturity and trading securities ...... 10,293 3,936 20,754 9,886
--------- --------- --------- ---------
Total interest income ..................................... 85,038 73,224 242,408 213,167
--------- --------- --------- ---------
INTEREST EXPENSE:
Interest on deposits ..................................... 24,070 20,525 66,175 57,645
Interest on advances from FHLB ........................... 15,158 13,227 46,698 40,061
Interest on securities sold under agreements to
repurchase and federal funds purchased .................. 10,317 4,732 24,306 13,129
Interest on subordinated debentures, guaranteed preferred
interest in the Company's Junior Subordinated Debentures
and notes and bonds payable ............................. 7,570 5,176 21,091 14,875
Capitalized interest ..................................... (1,400) (171) (4,926) (503)
--------- --------- --------- ---------
Total interest expense .................................... 55,715 43,489 153,344 125,207
--------- --------- --------- ---------
Net interest income ....................................... 29,323 29,735 89,064 87,960
Provision for loan losses ................................. 6,696 8,223 22,016 19,056
--------- --------- --------- ---------
Net interest income after provision for loan losses ....... 22,627 21,512 67,048 68,904
--------- --------- --------- ---------
NON_INTEREST INCOME:
Loan late fees and other loan income ..................... 981 1,404 3,088 3,893
Gains (losses) on loans held for sale, net of write down . (144) 759 (433) 1,626
Gains on sales of property and equipment ................. 0 34 240 1,494
Gains (losses) on sales of securities available for
sale, net of write down ................................. (8) 31 223 1,449
Trading securities gains (losses) ........................ (16) (5) 5 (59)
Levitt Corp. gains on sales of real estate and
joint venture activities ................................ 5,019 71 10,776 6,768
Levitt Corp. utility expansion receivable sale ........... 0 0 4,265 0
Ryan, Beck principal transactions ........................ 2,993 3,680 11,994 8,384
Ryan, Beck investment banking ............................ 1,314 14,475 6,353 18,815
Ryan, Beck commissions ................................... 4,875 4,422 16,539 10,429
Transaction fees ......................................... 3,351 3,480 9,823 10,499
ATM fees ................................................. 2,827 2,617 8,060 7,320
Other .................................................... 1,341 1,426 4,150 3,924
--------- --------- --------- ---------
Total non-interest income ................................. 22,533 32,394 75,083 74,542
--------- --------- --------- ---------
NON-INTEREST EXPENSE:
Employee compensation/benefits excluding Ryan, Beck
and Levitt Corp. ........................................ 11,548 9,657 33,553 28,332
Compensation in connection with corporate merger ......... 1,320 0 1,320 0
Employee compensation/benefits for Ryan, Beck and
Levitt Corp. ............................................ 9,583 12,556 30,800 25,875
Occupancy and equipment .................................. 6,956 6,370 19,903 18,045
Advertising and promotion ................................ 1,953 972 6,089 2,665
Foreclosed asset activity, net ........................... 24 (205) 299 (1,470)
Amortization of cost over fair value of net assets
acquired ................................................ 1,018 1,015 3,058 2,984
Other excluding Ryan, Beck and Levitt Corp. .............. 5,653 4,985 16,129 14,914
Other for Ryan, Beck and Levitt Corp. .................... 4,515 3,824 14,813 9,788
--------- --------- --------- ---------
Total non-interest expense ................................ 42,570 39,174 125,964 101,133
--------- --------- --------- ---------
Income before income taxes, discontinued operations
and extraordinary items ................................. 2,590 14,732 16,167 42,313
Provision for income taxes ............................... 1,391 5,842 6,284 16,622
--------- --------- --------- ---------
Income from continuing operations ........................ 1,199 8,890 9,883 25,691
Income from discontinued operations, net of taxes ........ 165 373 424 1,174
--------- --------- --------- ---------
Income before extraordinary items ........................ 1,364 9,263 10,307 26,865
Extraordinary items, net of taxes ........................ 3,966 0 7,432 0
--------- --------- --------- ---------
Net Income ................................................ $ 5,330 $ 9,263 $ 17,739 $ 26,865
========= ========= ========= =========
See Notes to Consolidated Financial Statements - Unaudited (Continued)
</TABLE>
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<PAGE>
BankAtlantic Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
CLASS A COMMON SHARES
<S> <C> <C> <C> <C>
Basic earnings per share from continuing operations ...... $ 0.03 $ 0.22 $ 0.25 $ 0.64
Basic earnings per share from discontinued operations .... 0.01 0.01 0.01 0.03
Basic earnings per share from extraordinary items ........ 0.10 0.00 0.19 0.00
----------- ----------- ----------- -----------
Basic earnings per share ................................. $ 0.14 $ 0.23 $ 0.45 0.67
=========== =========== =========== ===========
Diluted earnings per share from continuing operations ... $ 0.03$ 0.18$ 0.24$ 0.51
Diluted earnings per share from discontinued operations . 0.01 0.00 0.01 0.02
Diluted earnings per share from extraordinary items ..... 0.10 0.00 0.13 0.00
----------- ----------- ----------- -----------
Diluted earnings per share .............................. $ 0.14 $ 0.18 $ 0.38 $ 0.53
=========== =========== =========== ===========
Basic weighted average number of common shares outstanding 31,588,054 30,583,412 31,544,733 30,554,979
=========== =========== =========== ===========
Diluted weighted average number of common and common
equivalent shares outstanding .......................... 31,722,395 48,762,287 47,702,745 48,764,910
=========== =========== =========== ===========
CLASS B COMMON SHARES
Basic earnings per share from continuing operations ..... $ 106.19 $ 985.51 $ 1,074.57 $ 2,877.61
Basic earnings per share from discontinued operations .... 19.04 41.40 47.31 130.24
Basic earnings per share from extraordinary items ........ 457.63 0.00 829.30 0.00
----------- ----------- ----------- -----------
Basic earnings per share ................................ $ 582.86 $ 1,026.91 $ 1,951.18 $ 3,007.85
=========== =========== =========== ===========
Diluted earnings per share from continuing operations .... $ 103.64 $ 811.57 $ 1,143.34 $ 2,385.43
Diluted earnings per share from discontinued operations .. 18.86 28.14 33.44 88.48
Diluted earnings per share from extraordinary items ...... 453.53 0.00 586.13 0.00
----------- ----------- ----------- -----------
Diluted earnings per share ............................... $ 576.03 $ 839.71 $ 1,762.91 $ 2,473.91
=========== =========== =========== ===========
Basic weighted average number of common shares outstanding 1.53 2.11 1.86 2.12
=========== =========== =========== ===========
Diluted weighted average number of common and common
equivalent shares outstanding .......................... 1.58 2.25 1.94 2.27
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
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<PAGE>
BankAtlantic Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Net
Unrealized
Unearned Appreci-
Compen- ation
Addi- sation (Depreciation)
Compre- tional Restricted on 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, 1998 ............. $ 270 $ 147,788 $ 95,818 $ (7,062) $ 3,626 $240,440
Net income ............................ $ 26,865 0 0 26,865 0 0 26,865
--------
Other comprehensive income (loss),
net of tax:
Change in unrealized losses on
securities available for sale ........ (20,170)
Reclassification adjustment for
net gains included in net income ..... (705)
--------
Other comprehensive income ............ (20,875)
--------
Comprehensive income .................. $ 5,990
========
Dividends on Class A Common Stock ..... 0 0 (2,182) 0 0 (2,182)
Dividends on Class B Common Stock ..... 0 0 (746) 0 0 (746)
Fair value of stock options granted
to non-employees ..................... 0 69 0 0 0 69
Exercise of Class A Common Stock
options .............................. 0 262 0 0 0 262
Exercise of Class B Common Stock
options .............................. 1 301 0 0 0 302
Tax effect relating to the exercise
of stock options ..................... 0 124 0 0 0 124
Purchase and retirement of Class A
Common Stock ......................... (10) (8,384) 0 0 0 (8,394)
Purchase and retirement of Class B
Common Stock ......................... (2) (1,562) 0 0 0 (1,564)
Forfeited Class A restricted Common
Stock ................................ 0 (89) 0 89 0 0
Issuance of Class A Common Stock
upon conversion of subordinated
debentures ........................... 0 30 0 0 0 30
Stock dividend August 1999 ............ 54 0 (54) 0 0 0
Unearned compensation - restricted
stock grants ......................... 0 513 0 (513) 0 0
Amortization of unearned compensation
restricted stock grants .............. 0 0 0 1,552 0 1,552
Issuance of Class A restricted Common
Stock for acquisitions ............... 2 1,082 0 0 0 1,084
Net change in unrealized depreciation
on securities available for sale-net
of deferred income taxes ............. 0 0 0 0 (20,875) (20,875)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, September 30, 1999 ............ $ 315 $ 140,134 $119,701 $ (5,934) $(17,249) $236,967
===================================================================================================================================
See Notes to Consolidated Financial Statements - Unaudited (Continued)
</TABLE>
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<PAGE>
BankAtlantic Bancorp, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Continued)
Net
Unrealized
Unearned Appreci-
Compen- ation
Addi- sation (Depreciation)
Compre- tional Restricted on 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, 1999 ............. $ 324 $ 145,501 $122,639 $ (5,633) $(26,945) $235,886
Net income ............................ $ 17,739 0 0 17,739 0 0 17,739
--------
Other comprehensive income (loss),
net of tax:
Change in unrealized gains on
securities available for sale ........ 18,786
Reclassification adjustment for
net gains included in net income ..... (1,277)
--------
Other comprehensive income ............ 17,509
--------
Comprehensive income .................. $ 35,248
========
Dividends on Class A Common Stock ..... 0 0 (2,402) 0 0 (2,402)
Dividends on Class B Common Stock ..... 0 0 (566) 0 0 (566)
Exercise of Class A Common Stock
options .............................. 0 37 0 0 0 37
Exercise of Class B Common Stock
options .............................. 6 2,126 0 0 0 2,132
Tax effect relating to the exercise
of stock options ..................... 0 100 0 0 0 100
Purchase and retirement of Class B
Common Stock ......................... (7) (4,357) 0 0 0 (4,363)
Retirement of publicly traded Class B
Common Stock pursuant to merger....... 0 (33,050) 0 0 0 (33,050)
Compensation in connection with
corporate merger...................... 0 1,320 0 0 0 1,320
Forfeited Class A restricted Common
Stock ................................ 0 (123) 0 103 0 (20)
Exchange of Class A restricted Common
Stock for participation in deferred
compensation plan .................... (7) (7,779) 0 4,599 0 (3,187)
Amortization of unearned compensation
restricted stock grants .............. 0 0 0 489 0 489
Issuance of Class A restricted Common
Stock for acquisitions ............... 0 178 0 0 0 178
Net change in unrealized depreciation
on securities available for sale-net
of deferred income taxes ............. 0 0 0 0 17,509 17,509
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, September 30, 2000 ............ $ 317 $ 103,953 $137,410 $ (442) $ (9,436) $231,802
===================================================================================================================================
See Notes to Consolidated Financial Statements - Unaudited
</TABLE>
-8-
<PAGE>
BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
For the Nine Months
Ended September 30,
-----------------------------
2000 1999
(In thousands, except share data) ------------ ------------
Operating activities:
Income from continuing operations ...... $ 9,883 $ 25,691
Income from discontinued operations .... 424 1,174
Extraordinary items .................... 7,432 0
Adjustments to reconcile net income to net
cash used in operating activities:
Provision for loan losses ................ 22,016 19,056
Provision for losses on real estate owned 80 193
Depreciation, amortization and accretion,
net .................................... 10,060 14,652
Write-off of deferred offering costs ..... 1,314 0
Decrease (increase) in deferred tax asset,
net .................................... (1,467) 6,657
Trading account (gains) losses ........... (5) 59
Purchases of trading securities .......... 0 (31)
Proceeds from sales of trading securities 5 (59)
Decrease (increase) in trading securities
owned - RBCO ........................... (2,568) 12,051
Losses (gains) on sales of real estate
owned .................................. 82 (1,933)
Change in real estate inventory .......... (2,976) (5,628)
Gains on sales of securities available
for sale ............................... (1,003) (1,449)
Write-down of securities available for
sale ................................... 780 0
Loans held for sale valuation allowance .. 557 56
Gains on sales of property and equipment . (240) (1,494)
Proceeds from sales of loans held for sale 42,730 118,534
Funding of loans held for sale ........... (28,093) (54,211)
Loans purchased, classified as held for
sale ................................... (92,707) (125,790)
Compensation in connection with corporate
merger ................................. 1,320 0
Gains on sales of loans held for sale .... (124) (1,682)
Provision for tax certificate losses ..... 675 373
Increase in accrued interest receivable .. (10,307) (1,413)
Decrease in other assets ................. 3,601 541
Equity in losses (earnings) of
unconsolidated real estate joint ventures (1,089) (1,140)
Increase (decrease) in other liabilities . 17,578 (26,095)
--------- ---------
Net cash used by operating activities .... (22,042) (21,888)
--------- ---------
See Notes to Consolidated Financial Statements - Unaudited (Continued)
-9-
<PAGE>
BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
For the Nine Months
Ended September 30,
--------------------------
2000 1999
(In thousands, except share data) ----------- -----------
INVESTING ACTIVITIES:
Proceeds from redemption and maturities of tax
certificates ................................... $ 85,972 $ 44,017
Principal pay-downs on mortgage-backed securities
held to maturity ............................... 10,360 0
Purchases of tax certificates and other securities (136,793) (82,475)
Proceeds from sales of securities available for
sale ........................................... 89,810 224,026
Principal collected on securities available for
sale ........................................... 135,456 196,044
Purchases of securities available for sale ....... (81,986) (687,242)
Purchases of mortgage-backed securities held to
maturity ....................................... (235,458) 0
Proceeds from sales of FHLB stock ................ 14,627 13,380
FHLB stock acquired .............................. (8,205) (7,208)
Principal reduction on loans ..................... 802,332 1,137,392
Loan fundings for portfolio ...................... (661,744) (909,755)
Loans purchased for portfolio .................... (172,445) (105,112)
Proceeds from maturities of banker's acceptances . 8,742 8,195
Purchases of banker's acceptances ................ (2,898) (16,963)
Proceeds from sales of real estate owned ......... 3,711 9,898
REO acquired in connection with bulk residential
loan purchases ................................. 0 (1,025)
Mortgage servicing rights acquired ............... 0 (897)
Proceeds from sales of mortgage servicing rights . 0 32,648
Cost of equipment acquired for lease ............. (41,864) (24,363)
Additions to office property and equipment ....... (8,816) (4,588)
Proceeds from sales of property and equipment .... 422 2,451
Investment in and advances to joint ventures, net (3,226) (15,305)
Acquisition, net of cash acquired ................ (222) (1,296)
----------- -----------
Net cash used in investing activities ............ (202,225) (188,178)
----------- -----------
Financing activities:
Net increase in deposits ......................... 101,567 157,857
Interest credited to deposits .................... 57,269 56,467
Repayments of FHLB advances ...................... (1,182,441) (502,437)
Proceeds from FHLB advances ...................... 1,064,004 379,000
Net increase in securities sold under agreements
to repurchase .................................. 200,572 166,117
Net increase (decrease) in federal funds
purchased ...................................... 7,600 (8,300)
Repayment of notes payable ....................... (47,871) (1,574)
Increase in notes payable ........................ 62,306 5,085
Issuance of common stock relating to exercise
of employee stock options ...................... 2,169 564
Issuance of common stock options to non-employees 0 69
Retirement of subordinated debentures ............ (50,786) 0
Issuance of investment notes ..................... 34,678 0
Payments to acquire and retire common stock ...... (4,363) (9,958)
Payments to acquire and retire publicly held
Class B Common Stock ........................... (33,050) 0
Receipts (repayments) of advances by borrowers
for taxes and insurance ........................ 8,427 (29,512)
Common stock dividends paid ...................... (3,110) (2,939)
----------- -----------
Net cash provided by financing activities ........ 216,971 210,439
----------- -----------
Increase (decrease) in cash and cash equivalents . (7,296) 373
Cash and cash equivalents at beginning of period . 90,383 100,823
----------- -----------
Cash and cash equivalents at end of period ....... $ 83,087 $ 101,196
=========== ===========
See Notes to Consolidated Financial Statements - Unaudited (Continued)
-10-
<PAGE>
BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
For the Nine Months
Ended September 30,
----------------------
2000 1999
(In thousands, except share data) --------- ---------
SUPPLEMENTARY DISCLOSURE AND NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Interest paid on borrowings and deposits ............. $ 156,614 $ 118,918
Income taxes paid .................................... 2,466 5,000
Loans transferred to real estate owned ............... 5,204 4,957
Commercial non-mortgage loans held for investment
transferred to held for sale ....................... 123,868 0
Residential loans held for sale transferred to held
for investment ..................................... 221,757 0
Issuance of Class A Common Stock upon acquisitions ... 178 1,084
Loan charge-offs ..................................... 20,027 18,715
Proceeds from sale of servicing offset by escrow
reductions ......................................... 0 23,703
Issuance of Class A Common Stock upon conversion
of subordinated debt ............................... 0 30
Decrease in subordinated debt upon conversion to
Class A Common Stock ............................... 0 (30)
Tax certificate charge-offs (recoveries), net ........ 458 (156)
Changes in proceeds receivable from sales of
mortgage servicing rights .......................... 0 (7,528)
Class A Common Stock dividends; not paid until October 801 758
Class B Common Stock dividends; not paid until October 113 228
Increase in equity for the tax effect related to the
exercise of employee stock options ................. 100 124
Change in net unrealized appreciation (depreciation)
on securities available for sale ................... 28,561 (33,973)
Change in deferred taxes on net unrealized
appreciation (depreciation) on securities available
for sale ........................................... 11,052 (13,098)
Change in stockholders' equity from net unrealized
appreciation (depreciation) on securities available
for sale, less deferred income taxes ............... 17,509 (20,875)
Increase in real estate held for development and sale
resulting from roadway improvement development bond 0 5,949
Reduction in stockholders' equity from the retirement
of restricted stock ................................ (3,187) 0
Increase in other liabilities from the retirement of
restricted stock ................................... 3,187 0
Loan to joint ventures transferred to loans receivable 0 20,758
Loan securitization .................................. 58,491 38,790
See Notes to Consolidated Financial Statements - Unaudited
-11-
<PAGE>
BankAtlantic Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. PRESENTATION OF INTERIM FINANCIAL STATEMENTS
BankAtlantic Bancorp, Inc. (the "Company") is a unitary savings bank
holding company. The Company's 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.
The Company's primary activities have related to the operations of BankAtlantic
and 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 September 30, 2000, December 31, 1999 and September 30,
1999 and the consolidated results of operations for the three and nine months
ended September 30, 2000 and 1999, the consolidated stockholders' equity and
comprehensive income; and the consolidated cash flows for the nine months ended
September 30, 2000 and 1999. Such adjustments consisted only of normal recurring
items except for the extraordinary items discussed in Note 2. The consolidated
financial statements and related notes are presented as permitted by Form 10-Q
and should be read in conjunction with the notes to consolidated financial
statements appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999 and the Form 10-Q for each of the periods ended March
31, 2000 and June 30, 2000.
2. SUBORDINATED DEBENTURES, INVESTMENT NOTES, REVOLVING CREDIT FACILITY AND
EQUITY CAPITAL
On August 17, 2000, the Company's Class A and Class B shareholders
approved a transaction which resulted in the redemption and retirement of all
publicly held shares of Class B Common Stock at a price of $6.00 per share and
that had the effect of converting BFC Financial Corporation's 4,876,124 shares
of Class B Common Stock into Class B Common Stock with an equivalent economic
value. Pursuant to the transaction, the Company paid $33.1 million (including
$1.4 million of transaction expenses) to retire 5,275,752 shares of Class B
Common Stock. As a result of the transaction, which was structured as a merger,
BFC Financial Corporation became the sole holder of the Class B Common Stock.
The Class B Common Stock held by BFC represents 100% of the voting rights of the
Company. Outstanding shares of Class B Common Stock were retroactively restated
to reflect the merger transaction.
Outstanding options to purchase Class A Common Stock remained exercisable
for the same number of shares of Class A Common Stock of the Company as the
surviving corporation for the same exercise price and upon the same terms as in
effect before the merger. Likewise, the Company's 6-3/4% Convertible
Subordinated Debentures due 2006 and 5-5/8% Convertible Subordinated Debentures
due 2007 remained convertible into the same number of shares of Class A Common
Stock of the Company as the surviving corporation at the same conversion price
and upon the same terms as in effect before the merger.
The redemption and retirement of all publicly held outstanding shares of
Class B Common Stock pursuant to the merger transaction resulted in compensation
expense of $1.3 million for the three and nine months ended September 30, 2000.
The compensation charge resulted from the exercise of options to acquire Class B
Common Stock six months before the merger date.
On September 29, 2000, the Company completed a tender offer and purchased
$25 million aggregate principal amount of the Company's 5-5/8% Debentures for an
aggregate purchase price of $18.25 million. The Company recognized a $3.8
million (net of income tax) extraordinary gain upon the retirement of the
Debentures. During the third quarter of 2000 the Company purchased $700,000 of
5-5/8% Debentures in the secondary market and recognized an extraordinary gain
of $158,000, net of tax.
The merger transaction and the tender offer were funded through the
issuance of investment notes and funds obtained from the revolving credit
facility discussed below.
-12-
<PAGE>
BankAtlantic Bancorp, Inc.
On August 24, 2000, the Company closed on a revolving credit facility of up
to $20 million from an independent financial institution. The credit facility
has a three year term and bears interest at prime minus 50 basis points. The
Credit facility contains customary covenants including financial covenants
relating to regulatory capital and maintenance of certain loan loss reserves and
is secured by the Common Stock of BankAtlantic. At September 30, 2000, the
credit facility had an outstanding balance of $19.96 million. The Company was in
compliance with all loan covenants at September 30, 2000.
In January 2000, the Company commenced an offering of up to $150 million of
subordinated investment notes. The Company currently anticipates that no more
than $50 million of investment notes will be outstanding at any time. No minimum
amount of investment notes must be sold and the Company may terminate the
offering at any time. The interest rate and maturity date are fixed upon
issuance. At September 30, 2000 the Company had issued an aggregate of $34.7
million of investment notes with interest rates between 10% and 11.75% and
maturity dates between February 2002 and September 2002.
The following table sets forth the activity of all outstanding options
issued under the Company's stock option plans:
Class B Class A
---------- -----------
Outstanding at December 31, 1999 .......... 1,759,468 3,588,336
Issued (canceled) in connection with merger
transaction............................... (1,136,108) 1,704,148
Exercised ............................... (623,360) 0
Granted ................................. 0 350,000
Canceled ................................ 0 (92,652)
---------- ----------
Outstanding at September 30, 2000 ......... 0 5,549,832
========== ==========
Exercisable at September 30, 2000 ......... - 2,157,570
========== ==========
Exercise price per share outstanding ...... - $2.26-12.23
========== ==========
In August 2000, the Company's Class B Common Stock shareholder approved the
BankAtlantic Bancorp 2000 non-qualifying stock option plan which authorized the
issuance of options to acquire up to 1,704,148 shares of Class A Common Stock.
The plan was established pursuant to the merger transaction in order to exchange
options to acquire Class B Common Stock that was converted in the merger into
options to acquire Class A Common Stock. All outstanding options to acquire
Class B Common Stock were exchanged for 1,704,148 non-qualifying options to
acquire Class A Common Stock at an exercise price ranging from $2.26 to $2.32,
based upon the exercise price of the relevant Class B option. The options issued
had the same intrinsic value as the Class B options canceled and had
substantially the same terms and conditions as the former options to purchase
shares of Class B Common Stock, including vesting and term. The 1994 option plan
for the issuance of options to acquire Class B Common Stock was terminated.
On May 2, 2000, the Board of Directors granted, pursuant to the
BankAtlantic Bancorp 1999 stock option plan, incentive stock options and
non-qualifying stock options to purchase 317,500 shares of Class A Common Stock
to selected officers and directors of the Company. The options vest in five
years and expire ten years after the grant date except for options issued to
non-officer Directors which vested immediately and 34,064 options which vest 66
months from the grant date. The exercise price for all of the above option
grants was equal to the market value of the underlying Common Stock at the date
of grant ($3.688) except for 90,000 options that were issued at 110% of the fair
market value at the date of the grant. Furthermore, during the nine months ended
September 30, 2000, 32,500 options to acquire Class A Common Stock were issued
to selected officers with exercise prices ranging from $3.94 to $4.44 The
options were issued at market value at the date of the grant, vest in five years
and expire ten years after the grant date.
3. EARNINGS PER SHARE
The Company is required to use the two-class method to report earnings per
share. Under the two-class method net income is allocated to Class A and Class B
shares first by actual dividends paid for actual shares outstanding during the
period and secondly, through the allocation of undistributed earnings. The
allocation of undistributed earnings is based on the proportionate equity
interest of Class A and Class B shares outstanding. As a consequence of the
merger transaction, the Class B Common Stock is entitled to a distribution equal
and identical to the distribution on 4,876,124 shares of Class A Common Stock.
The 110% dividend preference to Class A shareholders was not affected by the
transaction. The basic and diluted earnings per share amounts were calculated
using the actual number of Class A and Class B Common Shares outstanding divided
by the amount of net income allocated to the Class A and Class B Common shares
based on their proportionate equity interest. Outstanding shares of Class B
Common Stock during all periods were retroactively restated to reflect the
merger transaction.
-13-
<PAGE>
BankAtlantic Bancorp, Inc.
4. TRADING SECURITIES
During the three and nine months ended September 30, 2000, the Company
realized losses of $16,000 and gains of $5,000 on trading securities compared to
realized losses of $5,000 and $59,000 during the same 1999 period, respectively.
During the third quarter of 2000 the Company discontinued its government
securities and Euro-dollar trading activities closing out all option and future
contracts. These trading activities did not meet the Company's overall growth
and profit objectives.
The RBCO losses and 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. Included in other liabilities at
September 30, 2000 and 1999 and December 31, 1999 was $5.9 million and $3.5
million and $2.6 million, respectively, of securities sold not yet purchased,
relating to RBCO trading activity.
The Company's trading securities consist of the following (in thousands):
September 30, December 31, September 30,
2000 1999 1999
------------ ----------- ------------
Debt obligations:
States and municipalities .. $ 6,185 $13,961 $ 9,214
Corporations ............... 707 1,085 756
U.S. Government and agencies 4,944 29 256
Corporate equities ......... 3,004 8,236 7,728
Certificates of deposit .... 11,039 0 0
Option and future contracts 0 0 31
------- ------- -------
Total ................... $25,879 $23,311 $17,985
======= ======= =======
5. LOANS HELD FOR SALE
The Company continuously evaluates its business units for profitability,
growth and overall efficiency. As a result, the Company made a determination to
discontinue its capital markets activities and its participation in syndication
lending. BankAtlantic's Capital Markets Group purchased residential loans with
the intent to package and sell, securitize or retain these loans based on
individual characteristics. As a consequence of the Company discontinuing its
Capital Markets activities, $222 million of residential loans held for sale were
transferred from the held for sale portfolio to the held to maturity portfolio
resulting in the Company realizing a loss of $654,000 at the date of transfer.
As a result of the Company discontinuing its syndication lending activities the
entire portfolio of $123.9 million of syndication loans was transferred at June
30, 2000 from loans held to maturity to loans held for sale.
6. REAL ESTATE HELD FOR DEVELOPMENT AND SALE AND JOINT VENTURE ACTIVITIES
Levitt Corporation's real estate held for development and sale and joint
venture activities consists of the combined activities of St. Lucie West Holding
Corporation ("SLWHC"), and Levitt & Sons, Inc. SLWHC is the developer of the
master planned community of St. Lucie West in St. Lucie County Florida. Levitt &
Sons, which was acquired in December 1999, is a developer of single-family home
communities and condominium and rental apartment complexes, primarily in
Florida.
-14-
<PAGE>
BankAtlantic Bancorp, Inc.
Real estate held for development and sale and joint ventures consisted of
the following (in thousands):
September 30, December 31, September 30,
2000 1999 1999
------------ ----------- ------------
Inventory of real estate,
Levitt & Sons ............ $ 77,193 $ 73,794 $ 0
SLWHC land ................ 32,763 33,023 34,401
Loans to joint ventures ... 37,523 33,647 31,545
Equity investments in joint
ventures ................. 6,077 6,407 4,411
Other ..................... 3,699 3,093 4,791
-------- -------- --------
$157,255 $149,964 $ 75,148
======== ======== ========
7. COMPREHENSIVE INCOME
The income tax provision relating to the comprehensive income
reclassification adjustment in the Consolidated Statements of Stockholders'
Equity and Comprehensive Income for the nine months ended September 30, 2000 and
1999 was $701,000 and $468,000, respectively.
8. DISCONTINUED OPERATIONS
At December 31, 1998, the Board of Directors adopted a formal plan to
dispose of the Company's mortgage servicing business ("MSB"). During the three
and nine months ended September 30, 2000 the Company recognized income from
discontinued operations, net of tax of $165,000 and $424,000, respectively. The
$165,000 liability adjustment during the three months ended September 30, 2000
was associated with lower than projected costs associated with loans serviced in
the former mortgage loan servicing unit of BankAtlantic. The remaining liability
adjustment of $259,000, net of tax, resulted from the sale of a building used in
the Company's MSB operations at a higher than projected sales price.
During the three and nine months ended September 30, 1999 the Company
recognized income from discontinued operations of $373,000 and $1.2 million as a
consequence of lower than anticipated losses on the disposal of the servicing
portfolio. The MSB anticipated loss from operations was based upon higher
prepayment speeds and higher servicing and disposal costs than actually
occurred.
9. Derivatives
During the nine months ended September 30, 2000 the Company entered into
interest rate swap contracts with various primary brokers in an aggregate
notional amount of $275 million, of which $150 million terminate two years from
the date of issuance and are callable six months after the issue date, $75
million terminate one year from the date of issuance, $30 million terminate one
year from the date of issuance and are callable three months after the issue
date and $20.0 million terminate five years from the date of issue and are
callable one year after the issue date. The interest rate swap contracts
obligate the Company to pay the one month LIBOR index and the Company receives
an average fixed rate of interest of 7.08% for the two year interest rate swaps,
6.83% for the one year interest rate swaps, 7.10% for the one-year-callable
interest rate swaps and 7.20% for the five-year-callable interest rate swaps.
The interest rate swap contracts were executed to convert the Company's fixed
rate callable time deposits to a one-month LIBOR interest rate. The interest
rate swaps were accounted for as a synthetic alteration. The net interest
receivable or payable on the interest rate swaps was accrued and recognized as
an adjustment to interest expense in the Company's Statement of Operations for
the three and nine months ended September 30, 2000.
10. 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
-15-
<PAGE>
BankAtlantic Bancorp, Inc.
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, Trading, Equity Portfolio
Bank Investment Operations -
Wholesale Residential Real Estate Capital Services, Capital
Markets
Bank Loan Operations - Commercial Commercial Lending, Syndications,
International and Trade Finance
Bank Loan Operations - Retail Residential Lending, CRA Lending,
Indirect and Direct Consumer Lending,
Small Business Lending, Lease Financing
Real Estate Operations Levitt Corporation (includes Levitt &
Sons, SLWHC 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 or an allocated cost of funds and are effectively eliminated in
the interest expense and overhead allocations.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
-16-
<PAGE>
BankAtlantic Bancorp, Inc.
The Company evaluates segment performance based on net contribution after
tax. The following table presents segment information for income from continuing
operations for the three months ended September 30, 2000 and 1999:
<TABLE>
<CAPTION>
Bank Investment Bank Loan
Operations Operations
------------------------- -------------------------- Investment
Wholesale Real Estate Banking Segment
(in thousands) Other Residential Commercial Retail Operations Operations Total
--------------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income ............. $ 21,098 $ 24,182 $ 27,315 $ 11,196 $ 689 $ 558 $ 85,038
Interest expense and overhead (20,092) (20,884) (19,923) (7,342) (1,479) 90 (69,630)
Recovery from (provision
for) loan losses ......... 0 37 (8,185) 1,452 0 0 (6,696)
Non-interest income ......... 30 (152) 474 686 5,337 9,345 15,720
===============================================================================================
Segment profits (loss) before
taxes .................... 198 2,738 (227) 2,395 (488) (2,026) 2,590
Provision for income taxes .. 71 986 (82) 1,305 (188) (701) 1,391
---------- ---------- ---------- --------- ---------- --------- ----------
Segment net income (loss) ... $ 127 $ 1,752 $ (145)$ 1,090 $ (300) $ (1,325) $ 1,199
========== ========== ========== ========= ========== ========= ==========
Segment total assets ........ $1,075,383 $1,283,821 $1,156,124 $ 229,514 $ 159,612 $ 62,201 $3,966,655
========== ========== ========== ========== ========== ========= ==========
SEPTEMBER 30, 1999
Interest income ............. $ 17,349 $ 21,625 $ 20,215 $ 13,006 $ 588 $ 441 $ 73,224
Interest expense and overhead (14,228) (17,871) (12,505) (7,332) (976) (222) (53,134)
Recovery from (provision for)
loan losses .............. 0 42 (604) (7,661) 0 0 (8,223)
Non-interest income ......... 579 51 669 990 496 22,787 25,572
================================================================================================
Segment profits (loss) before
taxes .................... 2,655 4,075 7,615 (4,431) (1,771) 6,589 14,732
Provision for income taxes .. 1,053 1,616 3,020 (1,758) (702) 2,613 5,842
---------- ---------- ----------- ---------- ---------- --------- ----------
Segment net income (loss) ... $ 1,602 $ 2,459 $ 4,595 $ (2,673) $ (1,069) $ 3,976 $ 8,890
========== ========== =========== ========== ========== ========= ==========
Segment total assets ........ $ 937,317 $1,307,792 $ 918,070 $ 438,907 $ 72,126 $ 64,526 $3,738,738
========== ========== =========== ========== ========== ========= ==========
</TABLE>
The following table is segment information for income from continuing
operations for the nine months ended September 30, 2000 and 1999:
<TABLE>
<CAPTION>
Bank Investment Bank Loan
Operations Operations
------------------------- -------------------------- Investment
Wholesale Real Estate Banking Segment
(in thousands) Other Residential Commercial Retail Operations Operations Total
--------------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income ............. $ 56,154 $ 74,901 $ 75,722 $ 33,371 $ 761 $ 1,499 $ 242,408
Interest expense and overhead (51,225) (61,728) (51,408) (20,139) (3,804) (188) (188,492)
Provision for loan losses .. 0 (141) (10,474) (11,401) 0 0 (22,016)
Non-interest income ......... 121 368 745 2,132 15,973 35,518 54,857
================================================================================================
Segment profits (loss)
before taxes ............. 1,887 11,519 13,305 (8,153) 372 (2,763) 16,167
Provision for income taxes .. 748 4,519 5,346 (2,913) (508) (908) 6,284
---------- ---------- ---------- --------- ---------- --------- ----------
Segment net income (loss) ... $ 1,139 $ 7,000 $ 7,959 $ (5,240) $ 880 $ (1,855) $ 9,883
========== ========== ========== ========= ========== ========= ==========
SEPTEMBER 30, 1999
Interest income ............. $ 46,570 $ 66,123 $ 58,215 $ 40,379 $ 742 $ 1,138 $ 213,167
Interest expense and overhead (37,825) (53,865) (34,018) (22,352) (1,783) (671) (150,514)
Provision loan losses ....... 0 (43) (737) (18,276) 0 0 (19,056)
Non-interest income ......... 1,995 9 1,560 3,643 7,269 38,132 52,608
===============================================================================================
Segment profits (loss) before
taxes .................... 8,656 11,600 24,097 (7,250) 2,360 2,850 42,313
Provision for income taxes .. 3,362 4,532 9,395 (2,810) 868 1,275 16,622
---------- ---------- ---------- --------- ---------- --------- ----------
Segment net income (loss) ... $ 5,294 $ 7,068 $ 14,702 $ (4,440) $ 1,492 $ 1,575 $ 25,691
========== ========== ========== ========= ========== ========= ==========
</TABLE>
-17-
<PAGE>
BankAtlantic Bancorp, Inc.
The differences between total segment assets and total consolidated assets
and the difference between segment non-interest income and total consolidated
non-interest income are as follows:
At September 30,
-----------------------
(in thousands) 2000 1999
---------- ----------
Total Assets
Total assets for reportable segments .... $3,966,655 $3,738,738
Assets in discontinued operations ....... 0 982
Assets in overhead ...................... 465,030 230,909
---------- ----------
Total consolidated assets ............... $4,431,685 $3,970,629
========== ==========
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
(in thousands) 2000 1999 2000 1999
------- ------- ------- -------
Non-interest Income
Total non-interest income for
reportable segments ............ $15,720 $25,572 $54,857 $52,608
Items included in interest
expense and overhead:
Transaction fee income ........ 3,351 3,480 9,823 10,499
ATM fees ...................... 2,827 2,617 8,060 7,320
Gains on sales of property and
equipment ................... 0 34 240 1,494
Other deposit related fees ... 635 691 2,103 2,621
------ ------- ------- -------
Total consolidated non-interest
income ........................ $22,533 $32,394 $75,083 $74,542
======= ======= ======= =======
10. NEW ACCOUNTING STANDARDS AND POLICIES
Financial Accounting Standards Board Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("FAS 133") was issued in June
1998. This statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial condition and measure those
instruments at fair value.
The Company intends to implement FAS 133, as amended by FAS 137 and 138 as
of January 1, 2001 and its potential impact on the Statement of Operations and
Statement of Condition is currently under review by management.
Financial Accounting Standards Board Statement No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
("FAS 140") was issued in September 2000. FAS 140 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities. Those standards are based on consistent
application of a financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. FAS 140 provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.
FAS 140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001 and for
recognition and reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. Disclosures about securitization and collateral accepted need
not be reported for periods ending on or before December 15, 2000, for which
financial statements are presented for comparative purposes. FAS 140 is to be
applied prospectively with certain exceptions. Other than those exceptions,
earlier or retroactive application of its accounting provisions is not
permitted.
-18-
<PAGE>
BankAtlantic Bancorp, Inc.
The potential impact on the Statement of Operations and Statement of
Condition of FAS 140 is currently under review by management.
11. RECLASSIFICATIONS
Certain amounts for prior periods have been reclassified to conform with
the statement presentation for the periods in 2000.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-19-
<PAGE>
BankAtlantic Bancorp, Inc.
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"). When used in this report 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 economic, competitive and other factors affecting
the Company and its operations, markets, products and services, credit risks
generally and the related adequacy of the allowance for loan losses, changes in
interest rates and economic policies, the success of technological, strategic
and business initiatives, significant growth in banking as well as non-banking
initiatives and other factors discussed elsewhere in this report and other
reports filed by the Company with the Securities and Exchange Commission
("SEC"). Many of these factors are beyond the Company's control.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
For the Three Months For the Nine Months
(In thousands, except per share data) Ended September 30, Ended September 30,
--------------------- -----------------------
2000 1999 2000 1999
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Income from continuing operations ........ $ 1,199 $ 8,890 $ 9,883 $ 25,691
Income from discontinued operations net of
taxes .................................... 165 373 424 1,174
Extraordinary items, net of taxes .......... 3,966 0 7,432 0
--------- --------- ---------- ----------
Net income ................................. $ 5,330 $ 9,263 $ 17,739 $ 26,865
========= ========= ========== ==========
CLASS A COMMON SHARES
Basic earnings per share from
continuing operations ..................... $ 0.03 $ 0.22 $ 0.25 $ 0.64
Basic earnings per share from discontinued
operations ............................... 0.01 0.01 0.01 0.03
Extraordinary items, net of taxes .......... 0.10 0.00 0.19 0.00
--------- --------- ---------- ----------
Basic earnings per share ................... $ 0.14 $ 0.23 $ 0.45 $ 0.67
========= ========= ========== ==========
Diluted earnings per share from continuing
operations ............................... $ 0.03 $ 0.18 $ 0.24 $ 0.51
Diluted earnings per share from discontinued
operations .............................. 0.01 0.00 0.01 0.02
Extraordinary items ........................ 0.10 0.00 0.13 0.00
--------- --------- ---------- ----------
Diluted earnings per share ................ $ 0.14 $ 0.18 $ 0.38 $ 0.53
========= ========= ========== ==========
CLASS B COMMON SHARES
Basic earnings per share from continuing
operations ............................... $ 106.19 $ 985.51 $ 1,074.57 $ 2,877.61
Basic earnings per share from discontinued
operations ............................... 19.04 41.40 47.31 130.24
Extraordinary items ........................ 457.63 0.00 829.30 0.00
--------- --------- ---------- ----------
Basic earnings per share .................. $ 582.86 $1,026.91 $ 1,951.18 $ 3,007.85
========= ========= ========== ==========
Diluted earnings per share from continuing
operations ............................... $ 103.64 $ 811.57 $ 1,143.34 $ 2,385.43
Diluted earnings per share from discontinued
operations ............................... 18.86 28.14 33.44 88.48
Extraordinary items ........................ 453.53 0.00 586.13 0.00
--------- --------- ---------- ----------
Diluted earnings per share ................. $ 576.03 $ 839.71 $ 1,762.91 $ 2,473.91
========= ========= ========== ==========
</TABLE>
-20-
<PAGE>
BankAtlantic Bancorp, Inc.
Income from continuing operations - Income from continuing operations
declined significantly during the three months ended September 30, 2000 compared
to the same period during 1999. The primary reasons for the decline were:
o a substantial decrease in RBCO investment banking income reflecting
revenues from a $544 million initial public offering that closed
during 1999 with no corresponding initial public offering closings
during 2000.
o a significant increase in bank operations compensation associated
with the formation of a new senior management team and higher labor
costs due to market competition,
o a compensation charge associated with the redemption and retirement
of all publicly traded Class B Common Stock,
o a significant increase in other real estate expenses resulting from
the acquisition of Levitt & Sons in December 1999,
o an increase in bank operations occupancy expenses associated with
repairs and maintenance on bank branches, data processing services
and maintenance contracts associated with ATM operations,
o lower gains on the sale of residential loans held for sale, net of
$436,000 in write-downs,
o an increase in advertising costs associated with the operations of
Levitt & Sons and the promotions of new deposit and loan products,
o higher other expenses excluding RBCO and real estate operations
primarily associated with consulting fees related to technology
investments, internet banking operating costs and general corporate
expenses associated with deposit and loan growth and
o a decrease in net interest income due to a decline in the net
interest margin reflecting a rising interest rate environment which
began in July 1999.
The above reductions in income from continuing operations were partially
offset by:
o an improvement in the provision for loan losses resulting from a
decline in indirect consumer loan charge-offs and lower aggregate
small business and indirect consumer loan portfolio balances,
o an increase in gains on sales of real estate held for sale due to the
December 1999 Levitt & Sons acquisition,
o an increase in RBCO commissions income due to mutual fund sales, and
o a benefit recognized in the Company's defined benefit pension plan.
Income from continuing operations - Income from continuing operations for
the nine months ended September 30, 2000 declined by 62% compared to the same
period during 1999. The primary reasons for the decline were related to the
items discussed above along with:
o an increase in the provision for loan losses attributed to charge-offs
and delinquency trends in the small business, syndication and indirect
consumer loan portfolios,
o a $695,000 realized loss on the sale of a syndication loan,
o a decline in income from foreclosed asset activity, net attributable
to the sale of a REO property during 1999 for a $1.4 million gain, and
o lower gains on the sale of property and equipment resulting from a
$1.5 million gain on the sale of a branch facility during 1999.
-21-
<PAGE>
BankAtlantic Bancorp, Inc.
The above reductions in income from continuing operations were partially
offset by a $651,000 decline in the deferred tax asset valuation allowance due
to gains on the sale of real estate from Levitt Corporation and the related
decrease in the provision for income taxes. Furthermore, SLWHC realized a $4.3
million gain from the utility expansion receivable sale during the nine months
ended September 30, 2000.
DISCONTINUED OPERATIONS - Income from discontinued operations for the three
and nine months ended September 30, 2000 was $165,000 and $424,000, net of
income taxes, respectively. The $165,000 gain represents a liability adjustment
associated with lower than projected costs associated with loans serviced in the
former mortgage loan servicing unit of BankAtlantic. The remaining liability
adjustment during the nine months ended September 30, 2000 resulted from the
sale of a building.
During the three and nine months ended September 30, 1999 the discontinued
operations gain resulted primarily from slower loan repayments than originally
estimated which were the result of rising residential loan interest rates during
the period.
EXTRAORDINARY ITEMS - The extraordinary items resulted from the early
extinguishment of debt. On February 29, 2000, the Company repurchased $25
million aggregate principal amount of its 5-5/8% Debentures for $18.75 million.
Included in the extraordinary item was $250,000 of costs associated with the
tender offer and a $673,000 writeoff of unamortized original issuance costs. On
September 29, 2000, the Company repurchased another $25 million aggregate
principal amount of its 5-5/8% Debentures for $18.25 million. Included in the
extraordinary item was $250,000 of costs associated with the tender offer and a
$641,000 writeoff of unamortized original issuance costs. Also, during the third
quarter of 2000 the Company purchased $700,000 of its 5-5/8% Debentures in the
secondary market and recognized an extraordinary gain of $158,000, net of tax.
<TABLE>
<CAPTION>
NET INTEREST INCOME
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------------- ------------------------------------
(In thousands) 2000 1999 Change 2000 1999 Change
-------- --------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans and leases $ 62,241 $ 54,444 $ 7,797 $ 182,089 $ 163,378 $ 18,711
Interest on banker's acceptances ..... 212 348 (136) 699 736 (37)
Interest and dividends on securities
available for sale ................. 12,292 14,496 (2,204) 38,866 39,167 (301)
Interest and dividends on investment
securities held to maturity and
trading securities ................. 10,293 3,936 6,357 20,754 9,886 10,868
Interest on deposits ................. (24,070) (20,525) (3,545) (66,175) (57,645) (8,530)
Interest on advances from FHLB ....... (15,158) (13,227) (1,931) (46,698) (40,061) (6,637)
Interest on securities sold under
agreements to repurchase ........... (10,317) (4,732) (5,585) (24,306) (13,129) (11,177)
Interest on subordinated debentures,
notes payable and guaranteed
preferred interest in the Company's
Junior Subordinated Debentures .... (7,570) (5,176) (2,394) (21,091) (14,875) (6,216)
Capitalized interest ................. 1,400 171 1,229 4,926 503 4,423
-------- -------- --------- --------- --------- ---------
Net interest income ................ $ 29,323 $ 29,735 $ (412) $ 89,064 $ 87,960 $ 1,104
======== ======== ========= ========= ========= =========
Net interest margin .................. 2.92% 3.13% (0.21)% 2.97% 3.17% (0.20)%
======== ======== ========= ========= ========= =========
</TABLE>
-22-
<PAGE>
BankAtlantic Bancorp, Inc.
THIRD QUARTER THIS YEAR VERSUS THE SAME QUARTER LAST YEAR:
Net interest income was slightly lower primarily resulting from a narrowing
of the net interest margin partially offset by interest earning asset growth.
The net interest margin declined 21 basis points from 3.13% to 2.92%. The
narrowing of the net interest margin was due to the rising interest rate
environment which began in July 1999. The increase in earning assets during the
period primarily resulted from the origination and purchases of commercial real
estate loans.
Total interest income increased by $11.8 million while total interest
expense increased by $12.2 million. The increase in interest income resulted
from higher average interest earning assets and average yields. The Company
experienced significant loan growth concentrated in the commercial real estate
segment of bank loan operations. Additionally, other securities held to maturity
increased due to purchases of mortgage-backed securities and tax certificate
fundings. The above increases in interest earning assets were partially offset
by declines in securities available for sale resulting from principal pay-downs
and sales. Average yields on interest earning assets increased due to a rising
interest rate environment.
The increase in total interest expense reflects the funding of the asset
growth primarily with FHLB advances and securities sold under agreements to
repurchase and an increase in associated average borrowing rates as well as
increased borrowings related to the merger transaction which resulted in the
retirement of all publicly traded Class B Common Stock. The increased average
rates on interest paying liabilities primarily resulted from competition in the
Company's deposit markets and the increasing interest rate environment discussed
above resulting in higher rates on institutional borrowings. Additionally, the
Company funded the retirement of $50.8 million of 5-5/8% Debentures and the
retirement of all publicly traded Class B Common Stock with the issuance of
$34.7 million of Investment Notes with interest rates ranging from 10% to 11.75%
and borrowings of $19.96 million from a revolving credit facility obtained from
an independent financial institution. The revolving credit facility bears
interest at prime minus 50 basis points.
The increase in loan interest income primarily resulted from increases in
average loan balances and higher average yields. The Company experienced growth
in commercial real estate loans, lease financings and home equity loans. The
increase in loan average balances was partially offset by declines in the
Company's consumer, residential and small business loan portfolios. The decline
in consumer loans resulted from the Company ceasing the origination of indirect
consumer loans as part of its December 1998 restructuring plan. The decline in
small business loan average balances resulted from a significant decrease in
loan originations during the 1999 fiscal year and the nine months of 2000
compared to the 1998 fiscal year. The residential loan portfolio decline
reflects lower originations associated with the down-sizing of the residential
loan division as well as lower residential loan originations during 1999 and the
nine months of 2000 compared to prior periods. Also contributing to the increase
in loan interest income was higher yields due to the increases in the prime
interest rate.
The decline in banker's acceptances interest income resulted from lower
average balances partially offset by higher yields.
The decrease in securities available for sale interest income primarily
resulted from lower average balances partially offset by higher average yields.
The lower average balances resulted from principal pay-downs and sales of
mortgage-backed securities. The higher yields were due to new purchases of
securities at higher rates than the existing portfolio and interest rate
increases on adjustable rate mortgage-backed securities.
The increase in interest and dividends on investment securities held to
maturity and trading securities primarily resulted from interest income
associated with tax certificates and mortgage-backed securities held to
maturity. The additional tax certificate income resulted from expansion of the
Company's tax certificate operations outside of the State of Florida. The
increased mortgage-backed
-23-
<PAGE>
BankAtlantic Bancorp, Inc.
securities held to maturity average balances resulted from purchases. The
Company did not have mortgage-backed securities held to maturity during the 1999
periods.
The increase in deposit expense primarily resulted from higher rates on
deposits partially offset by lower time deposit average balances. The decline in
time deposit average balances was due to the maturity of brokered deposits. The
increased deposit average rates reflect the introduction of new transaction and
time deposit products and a rising interest rate environment during the latter
half of 1999 and the first nine months of 2000. The new deposit products have
higher interest rates than the Company's other deposits. Overall, the average
rates on interest-bearing deposits increased from 4.09% during the 1999 quarter
to 4.97% during the comparable 2000 period.
The increase in interest expense on advances from FHLB was primarily due to
higher average balances and rates. The additional FHLB advance average balances
were used to fund loan growth. The higher rates reflect the origination of new
advances during 2000 at higher rates than the existing portfolio as well as the
repricing of callable advances.
The higher interest expense on securities sold under agreements to
repurchase resulted from higher average balances and rates. The higher average
balances funded tax certificate and loan growth as well as the purchase of other
securities held to maturity. The higher rates reflect a rising interest rate
environment.
The increase in interest on subordinated debentures, guaranteed preferred
interest in the Company's Junior Subordinated Debentures and notes and bonds
payable resulted from notes payable acquired in connection with the Levitt &
Sons acquisition and borrowings to fund the redemption and retirement of all
publicly owned Class B Common Stock and the repurchase and retirement of $50.8
million of the 5-5/8% Debentures. The Levitt Corporation average notes payable
balance during the 2000 period was $51 million compared to $10.5 million during
the 1999 period. The reduction of interest expense associated with the
retirement of $50.8 million of the 5-5/8% Debentures was offset by the interest
expense related to the issuance of $34.7 million of investment notes and $19.96
million of borrowings from an independent financial institution.
Interest expense of $1.4 million was capitalized during the three months
ended September 30, 2000 associated with Levitt Corporation real estate
operations and investments and advances to joint ventures. During the three
months ended September 30, 1999 $171,000 of interest expense was capitalized in
connection with investments and advances to real estate joint ventures.
YEAR-TO-DATE THIS YEAR VERSUS YEAR-TO-DATE LAST YEAR:
Net interest income was slightly higher during the current period. Total
interest income increased by $29.2 million while total interest expense
increased by $28.1 million. The change in net interest income primarily resulted
from the items discussed above. The net interest margin declined by 20 basis
points. Yields on earning assets increased from 7.75% during the 1999 period to
8.08% during the 2000 period. Likewise, rates on interest bearing liabilities
increased from 4.86% during the 1999 period to 5.48% during the 2000 period. The
change in net interest margin primarily resulted from the items discussed above
for the three months ended September 30, 2000.
-24-
<PAGE>
BankAtlantic Bancorp, Inc.
PROVISION FOR LOAN LOSSES
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Balance, beginning of period . $ 48,650 $ 38,100 $ 44,450 $ 37,950
Charge-offs:
Commercial real estate loans 0 0 0 (211)
Non-mortgage commercial ..... 0 (26) (24) (87)
Lease financing ............. (427) (231) (1,349) (779)
Small business - real estate 0 (51) (85) (136)
Small business - non_mortgage (4,072) (3,039) (10,167) (7,870)
Consumer loans - indirect ... (1,594) (2,321) (5,988) (7,939)
Consumer loans - direct ..... (243) (368) (2,020) (1,580)
Residential real estate .... (53) (10) (394) (113)
-------- -------- -------- --------
(6,389) (6,046) (20,027) (18,715)
-------- -------- -------- --------
Recoveries:
Commercial real estate loans 0 5 0 203
Residential real estate ..... 9 0 108 0
Lease financing ............. 59 32 221 181
Non-mortgage commercial ..... 38 18 80 168
Small business - non_mortgage 330 49 617 123
Consumer loans - indirect ... 790 479 2,335 1,429
Consumer loans - direct ..... 167 140 550 605
-------- -------- -------- --------
1,393 723 3,911 2,709
-------- -------- -------- --------
Net charge-offs ............... (4,996) (5,323) (16,116) (16,006)
Additions charged to operations 6,696 8,223 22,016 19,056
-------- -------- -------- --------
Balance, end of period ........ $ 50,350 $ 41,000 $ 50,350 $ 41,000
======== ======== ======== ========
The provision for loan losses decreased during the three months ended
September 30, 2000 compared to the same 1999 period. The improvement primarily
resulted from lower credit losses in the Company's indirect loan portfolio,
declining aggregate small business and indirect loan balances and improved
delinquency trends during the 2000 quarter compared to the same period during
1999. The majority of the Company's net charge-offs were from the small business
and indirect loan portfolios. The aggregate balances in these portfolios
declined from $238.2 million at September 30, 1999 to $151.3 million at
September 30, 2000. The above positive trends were partially offset by higher
lease financings charge-offs, potential problem loans and a $3.7 million
specific reserve in the syndication loan portfolio. The increase in lease
financing charge-offs was primarily associated with portfolio growth.
The provision for loan losses increased during the nine months ended
September 30, 2000 compared to the same 1999 period primarily due to losses
experienced in the small business and consumer lending portfolios, including an
increase in direct consumer loan second mortgage charge-offs and additional
reserves assigned to the syndication and indirect consumer loan portfolios.
The increase in the allowance for loan losses for the nine months ended
September 30, 2000 resulted from small business, and consumer loan delinquency
trends, potential problem loans and a $1.3 million specific reserve assigned to
the indirect consumer loan portfolio and the syndication loan specific reserve
mentioned above.
-25-
<PAGE>
BankAtlantic Bancorp, Inc.
At the indicated dates the Company's non-performing assets were (in
thousands):
September 30, December 31,
2000 1999
------------ -----------
Nonaccrual:
Tax certificates ................... $ 2,664 $ 2,258
Loans and leases ................... 27,574 42,741
------- -------
Total nonaccrual ................... 30,238 44,999
------- -------
Repossessed Assets:
Real estate owned, net
of allowance ..................... 5,282 3,951
Vehicles and equipment ............. 1,301 1,253
------- -------
Total repossessed assets ........... 6,583 5,204
------- -------
Contractually past due 90
days or more (1) ................. 2 410
------- -------
Total non performing assets ........ $36,823 $50,613
======= =======
(1) The majority of these loans in both periods had matured but the borrowers
continued to make payments under the matured loan agreement.
The decrease in non-accrual loans and leases resulted from:
o a $4.5 million decrease in consumer non-accrual loans,
o a $8.1 million decline in non-accrual residential loans including a
$4.5 million decline in non-accrual residential loans purchased,
o a $2.0 million reduction in non-accrual small business loans and
o a $1.2 million decrease in non-accrual commercial loans.
Non-accrual and repossessed consumer loans decreased significantly due to a
change in collection procedures. Repossessed equipment associated with lease
financing increased by $437,000 primarily as a result of portfolio growth.
The improvement in residential non-accrual loans reflect that the Company
either negotiated a payoff or foreclosed and sold the collateral on non-accrual
residential loans acquired. The remaining decline in residential non-accrual
loans reflects improvements in the delinquency trends of the portfolio.
The increase in nonaccrual tax certificates was attributed to portfolio
growth.
The reduction in small business non-accrual loans resulted from a declining
portfolio and changes in the collection process resulting in improvements in the
delinquency trends.
Non-accrual commercial loans improved due to a payoff of a nonresidential
commercial real estate loan and the foreclosure of a commercial real estate
loan.
The increase in REO balances was attributed to increased residential REO
and the foreclosure mentioned above.
-26-
<PAGE>
BankAtlantic Bancorp, Inc.
Two syndication loans totaling $22 million and $5.2 million of small
business loans were not included in the above table but are considered potential
problem loans. The two syndication loans did not meet their loan covenants
resulting in management having serious doubts as to the ability of such
borrowers to comply with the present loan repayment terms. The small business
loans were considered impaired resulting in management having serious doubts
that the Company will collect all contractual principal and interest payments.
As noted previously, the Company had established allowances for loan loss
reserves for these problem loans. At September 30, 2000 both syndication loans
and the impaired loans in the small business portfolio had made all contractual
principal and interest payments.
NON-INTEREST INCOME
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
(In thousands) 2000 1999 Change 2000 1999 Change
-------- -------- -------- -------- -------- --------
NON-INTEREST INCOME
BANK OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Loan late fees and other loan income ...... $ 981 $ 1,404 $ (423) $ 3,088 $ 3,893 $ (805)
Gains on sales of loans held for sale,
net of write-down ....................... (144) 759 (903) (433) 1,626 (2,059)
Gains on sales of property and equipment .. 0 34 (34) 240 1,494 (1,254)
Trading account gains (losses) ............ (16) (5) (11) 5 (59) 64
Gains (losses)on sales of securities
available for sale ...................... (8) 31 (39) 223 1,449 (1,226)
Transaction accounts ...................... 3,351 3,480 (129) 9,823 10,499 (676)
ATM fees .................................. 2,827 2,617 210 8,060 7,320 740
Other ..................................... 860 791 69 2,586 2,919 (333)
-------- -------- -------- -------- -------- --------
Non-interest income - banking operations .. 7,851 9,111 (1,260) 23,592 29,141 (5,549)
-------- -------- -------- -------- -------- --------
RBCO OPERATIONS
Principal transactions .................... 2,993 3,680 (687) 11,994 8,384 3,610
Investment banking ........................ 1,314 14,475 (13,161) 6,353 18,815 (12,462)
Commissions ............................... 4,875 4,422 453 16,539 10,429 6,110
Other ..................................... 163 210 (47) 632 504 128
-------- -------- -------- -------- -------- --------
Non-interest income - RBCO ................ 9,345 22,787 (13,442) 35,518 38,132 (2,614)
-------- -------- -------- -------- -------- --------
LEVITT OPERATIONS
Gains on sales of real estate held for sale 3,518 241 3,277 9,687 5,628 4,059
Equity in earnings of unconsolidated
real estate joint ventures .............. 1,501 (170) 1,671 1,089 1,140 (51)
Utility expansion receivable sale ......... 0 0 0 4,265 0 4,265
Other ..................................... 318 425 (107) 932 501 431
-------- -------- -------- -------- -------- --------
Non-interest income - real estate
operations ............................... 5,337 496 4,841 15,973 7,269 8,704
-------- -------- -------- -------- -------- --------
Total non-interest income ................. $ 22,533 $ 32,394 $ (9,861) $ 75,083 $ 74,542 $ 541
======== ======== ======== ======== ======== ========
</TABLE>
-27-
<PAGE>
BankAtlantic Bancorp, Inc.
NON-INTEREST INCOME - BANK OPERATIONS
Loan late fees and other loan income decreased during the three and nine
months ended September 30, 2000 compared to the same periods during 1999. The
decrease primarily resulted from lower prepayment penalties on commercial real
estate loans, a decline in late fees on consumer and residential loans and a
decrease in renewal fee income on small business loans.
The declines in gains on sales of loans held for sale during the three and
nine months ended September 30, 2000 resulted from a decline in residential loan
originations for resale and losses associated with capital markets activities.
The realized loss on the syndication loan sale resulted from the Company
accepting an offer from the underwriter of a syndication loan to purchase the
loan at a discount. The borrower on the syndication loan received a going
concern opinion from its independent auditors. In September 2000, the Company
discontinued its capital markets activities and reclassified all its loans held
for sale to loans held to maturity.
During the three months ended September 30, 2000 the Company sold $6.4
million of residential loans and a $12.5 million syndication loan held for sale
for realized gains of $288,000 and a realized loss of $695,000, respectively.
The Company had established a $700,000 valuation allowance associated with the
syndicated loan in a prior period. Additionally, the Company transferred $222
million of residential loans held for sale to loans held to maturity and
recorded a $654,000 writedown on the transfer date. The Company had established
a $217,000 valuation allowance associated with the residential loans in prior
periods. During the nine months ended September 30, 2000 the Company sold $42.6
million of loans held for sale for a $819,000 gain and recorded a $557,000 loss
related to residential loans held for sale and a $695,000 loss associated with
the syndication loan sale mentioned above.
During the three months ended September 30, 1999 the Company sold $30.1
million of loans held for sale for a $759,000 gain. During the nine months ended
September 30, 1999 the Company sold $95.1 million of loans held for sale, $20.4
million of loans purchased and classified as held for sale and $1.4 million of
leases for a $1.6 million gain.
During the nine months ended September 30, 2000, the Company sold ATM
equipment and a parcel of land for gains of $58,000 and $182,000, respectively.
There were no sales of properties and equipment during the three months ended
September 30, 2000.
During the three and nine months ended September 30, 1999, two branches
were consolidated and the vacated property was sold for a gain of $1.5 million.
During the three and nine months ended September 30, 2000, the Company's
trading operations resulted in a $16,000 loss and a $5,000 gain, respectively,
compared to a $5,000 and a $59,000 loss during the same 1999 periods. During the
third quarter of 2000 the Company discontinued its government securities and
Euro-dollar trading activities closing out all option and future contracts.
These trading activities did not meet the Company's overall growth and profit
objectives.
During the three months ended September 30, 2000 the Company sold $2.8
million of equity securities for a $75,000 loss and $1.5 million of securitized
mortgage-backed securities for a $67,000 gain.
During the nine months ended September 30, 2000, the Company securitized
$58.5 million of loans held for sale and sold $31.4 million of the resulting
securities for a $379,000 gain. The Company also sold $49.9 million of treasury
notes for a $18,000 gain, $2.3 million of corporate bonds for a $112,000 loss
and $6.2 million of securities available for sale for a $62,000 loss. The
$62,000 loss includes a $781,000 write-down of marketable equity securities
available for sale. The write-down was made due to a significant decline in the
market value of the security. The decline was considered other than temporary
due to the magnitude
-28-
<PAGE>
BankAtlantic Bancorp, Inc.
and length of time of the decline and the financial condition and the near term
prospects for the issuer of the security. The securities was sold in September
2000.
During the three and nine months ended September 30, 1999 the Company sold
$84.1 million and $222.6 million of securities available for sale for gains as
shown on the above table. Included in the sales of securities available for sale
were $24.1 million of securitized loans.
Transaction fee income declined during the three and nine months ended
September 30, 2000. The Company experienced lower analysis charges and monthly
transaction fee income during the three and nine months ended September 30, 2000
compared to the same periods in 1999. Overdraft charges were slightly higher
during the three months ended September 30, 2000 compared to the same 1999
period.
The increase in ATM fee income during the three and nine months ended
September 30, 2000 was primarily the result of a renegotiated profit sharing
agreement for certain locations and increased ATM activity at the Company's
branch locations.
The increase in other income during the three months ended September 30,
2000 was due to higher fees earned on deposit customer services and additional
fee income from the Company's lease financing operations.
The decrease in other income during the nine months ended September 30,
2000 resulted from lower commissions earned from teller check outsourcing and
deposit customer services.
NON-INTEREST INCOME - RBCO OPERATIONS
The decline in principal transaction income during the three months ended
September 30, 2000 compared to the same 1999 period was due to a volatile equity
market and overall negative market sentiment exhibited by investors during the
current quarter. Furthermore, RBCO realized approximately $500,000 of trading
gains in connection with a $544 million initial public offering that it managed
during 1999.
The increase in principal transaction income during the nine months ended
September 30, 2000 compared to the same 1999 period reflects revenues generated
in general market research and internet stocks during the first half of this
year. Additionally, RBCO absorbed a significant one-day trading loss during the
second quarter of 1999.
The significant decrease in investment banking revenues during the three
and nine months ended September 30, 2000 compared to the same 1999 period
resulted from the effect of a $544 million initial public offering during the
1999 quarter while investment banking revenues during the current quarter were
at their lowest level since the quarter ended June 30, 1999.
-29-
<PAGE>
BankAtlantic Bancorp, Inc.
The significant increase in commission income during the three months ended
September 30, 2000 compared to the same 1999 period was attributed to mutual
fund sales which was due to increased interest in the various mutual fund
products offered to RBCO clients. The increase in commission income during the
nine months ended September 30, 2000 compared to the same 1999 period resulted
from commissions from general market research stocks and BankAtlantic Bank
Brokerage.
The decrease in other income during the three months ended September 30,
2000 resulted from lower fees from insurance sales. The increased other income
during the nine months ended September 30, 2000 compared to the same 1999 period
resulted from increased transaction fee income and an unrealized gain in a hedge
fund investment.
NON-INTEREST INCOME - LEVITT OPERATIONS
During the three and nine months ended September 30, 2000 SLWHC land sales
resulted in gains of $266,000 and $2.1 million, respectively, while Levitt &
Sons sales of real estate resulted in net gains of $3.2 million and $7.6
million, respectively.
During the three and nine months ended September 30, 1999 SLWHC land sales
resulted in gains of $241,000 and $5.6 million, respectively.
Levitt Corporation's equity in earnings from joint ventures was $1.5
million and $1.1 million during the three and nine months ended September 30,
2000 compared to a loss of $170,000 during the three months ended September 30,
1999 and a gain of $1.1 million during the nine months ended September 30, 1999.
During the quarter ended September 30, 2000, a real estate joint venture closed
on the sale of a multi-family apartment complex for a gain allocable to the
Company of $664,000. During the first quarter of 1999, one of the real estate
joint ventures closed on a land sale to an unaffiliated developer resulting in
the recognition of a gain allocable to the Company of $1.7 million.
Additionally, during the nine months ended September 30, 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.
The loan was repaid in full in 1999.
During February 2000, SLWHC received a cash payment of $8.5 million
representing the full satisfaction of a receivable from a public municipality
providing water and wastewater services to St. Lucie West resulting in a $3.9
million gain. The gain was subsequently adjusted upward during the second
quarter of 2000 by $363,000. The adjustment related to the finalization of
proceeds due to minority participants. The cash payment is in full settlement of
a receivable pursuant to the agreement dated December 1991 between SLWHC and the
municipality. The 1991 agreement required the municipality to reimburse SLWHC
for its cost of increasing the service capacity of the utility plant via payment
to SLWHC of the future connection fees generated from such capacity.
During the three and nine months ended September 30, 2000, the Company
capitalized $1.4 million and $4.9 million of interest expense associated with
real estate inventory and investments and advances to real estate joint
ventures. During the three and nine months ended September 30, 1999 the Company
capitalized $171,000 and $503,000 of interest expense.
Other income during the three and nine months ended September 30, 2000
represents other revenues from Levitt & Sons and storage income from a marina
property. Other income during the three months and nine months ended September
30, 1999 primarily represents accretion of SLWHC impact fee receivables
established at the acquisition date. Levitt & Sons was acquired in December
1999.
-30-
<PAGE>
BankAtlantic Bancorp, Inc.
NON-INTEREST EXPENSES
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------- ------------------------------
(In thousands) 2000 1999 Change 2000 1999 Change
------- -------- --------- -------- -------- --------
NON-INTEREST EXPENSE BANK OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Employee compensation and benefits . $11,548 $ 9,657 $ 1,891 $ 33,553 $ 28,332 $ 5,221
Compensation related to merger ..... 1,320 0 1,320 1,320 0 1,320
Occupancy and equipment ............ 6,053 5,497 556 17,292 16,086 1,206
Foreclosed asset activity, net ..... 24 (205) 229 299 (1,470) 1,769
Advertising and promotion .......... 914 483 431 2,947 1,282 1,665
Amortization of cost over fair value
of net assets acquired ............ 708 709 (1) 2,125 2,130 (5)
Other .............................. 5,653 4,985 668 16,129 14,914 1,215
------- -------- -------- -------- -------- -------
Non-interest expense ............. 26,220 21,126 5,094 73,665 61,274 12,391
------- -------- -------- -------- -------- -------
RBCO Operations
Employee compensation and benefits . 7,957 12,415 (4,458) 26,533 25,346 1,187
Occupancy and equipment ............ 903 873 30 2,611 1,959 652
Advertising and promotion .......... 384 337 47 1,039 846 193
Amortization of cost over fair value
of net assets acquired ............ 310 306 4 933 854 79
Other .............................. 2,271 2,542 (271) 8,209 6,524 1,685
------- -------- -------- -------- -------- -------
Non-interest expenses .............. 11,825 16,473 (4,648) 39,325 35,529 3,796
------- -------- -------- -------- -------- -------
Real Estate Operations
Employee compensation and benefits . 1,626 141 1,485 4,267 529 3,738
Advertising and promotion .......... 655 152 503 2,103 537 1,566
Selling, general and administrative 2,244 1,282 962 6,604 3,264 3,340
------- -------- -------- -------- -------- -------
4,525 1,575 2,950 12,974 4,330 8,644
------- -------- -------- -------- -------- -------
Total non-interest expense ......... $42,570 $ 39,174 $ 3,396 $125,964 $101,133 $24,831
======= ======== ======== ======== ======== =======
</TABLE>
NON-INTEREST EXPENSE - BANK OPERATIONS
The significant increase in compensation expense during the three and nine
months ended September 30, 2000 primarily resulted from the hiring of a new
senior management team, as well as annual salary and benefit increases and
recruiting expenses. Due to competitive local labor market conditions, the
Company substantially increased its employee health insurance and 401(k)
retirement benefits. Additionally, increased loan and deposit growth resulted in
significant increases in bonuses and incentive compensation. The above
compensation increases were partially offset by a recognized benefit of $538,000
and $931,000 for the three and nine months ended September 30, 2000 associated
with the Company's defined benefit pension plan. The benefit was recognized due
to a change in actuarial assumptions during 2000 associated with the rising
interest rate enviornment. There was no corresponding benefit recognized during
the 1999 periods.
The redemption and retirement of all publicly held outstanding shares of
Class B Common Stock pursuant to the merger transaction resulted in compensation
expense of $1.3 million for the three and nine months ended September 30, 2000.
The compensation charge resulted from the exercise of options to acquire Class B
Common Stock six months before the merger date.
-31-
<PAGE>
BankAtlantic Bancorp, Inc.
The increase in occupancy and equipment expenses during the three and nine
months ended September 30, 2000 resulted from higher ATM equipment repair and
maintenance, additional data processing fees, higher costs associated with
branch network repairs and maintenance, and additional rental expense associated
with new data processing facilities.
Higher advertising and promotion expense related to promotions associated
with BankAtlantic's new deposit and loan products as well as promotional costs
associated with internet banking.
The foreclosed asset activity, net primarily reflects residential loan REO
operations during the three and nine months ended September 30, 2000.
The foreclosed asset activity, net included during the three months ended
September 30, 1999 a $316,000 gain from the sale of foreclosed land acquired in
connection with the acquisition of the Bank of North America in 1996. The
foreclosed asset activity, net included a $1.3 million gain from the sale of one
parcel of previously foreclosed commercial real estate property during the nine
months ended September 30, 1999.
The increase in other expenses during the three and nine months ended
September 30, 2000 resulted from:
o higher consulting fees primarily associated with internet banking
and upgrades to the Company's technology infrastructure,
o increased provision for tax certificates attributed to the growth
in the portfolio, and
o additional operating expenses such as postage, telephone and
general corporate expenses associated with deposit and loan
growth.
The above increases in other expense were partially offset by lower ATM
expenses. The decline in ATM expenses primarily resulted from a review and
renegotiation of various contracts with ATM vendors and suppliers.
RBCO NON-INTEREST EXPENSE
The decrease in compensation and benefits expense during the three months
ended September 30, 2000 compared to the same 1999 period was primarily due to
the $544 million initial public offering that closed in July 1999. RBCO did not
close on any initial public offerings during the 2000 quarter.
The increase in compensation and benefits for the nine months ended
September 30, 2000 compared to the same 1999 period resulted form higher
commission expenses associated with the higher commission revenues referred to
above and increases in salary, bonus, payroll taxes, profit sharing and
insurance expenses associated with nearly 60 additional employees. RBCO during
1999 significantly expanded its business activities including the
diversification into the healthcare, consumer and technology industries, the
expansion of investment banking activities, the expansion of retail operations
into BankAtlantic branches and the acquisition of the Southeast Research Group.
The increases in occupancy and equipment during the three and nine months
ended September 30, 2000 compared to the same periods in 1999 reflects
additional rent and depreciation expenses associated with the expansion of
business activities indicated above and significant additions to assets related
to upgrades of information hardware and software systems.
-32-
<PAGE>
BankAtlantic Bancorp, Inc.
The higher amortization of cost over fair value of net assets acquired for
the nine months ended September 30, 2000 compared to the same 1999 period was
attributable to the June 28, 1999 acquisition of the Southeast Research Group.
The decrease in other expenses during the three months ended September 30,
2000 resulted from lower professional fees and clearing fees. During the
September 2000 quarter RBCO renegotiated its clearing agreement which reduced
its clearing fees.
The increase in other expense during the nine months ended September 30,
2000 resulted from additional telephone, quotation and postage expenses
associated with the expanded business activities as well as a significant
increase in floor brokerage and clearing fees associated with a 73% increase in
the number of trades.
REAL ESTATE OPERATIONS NON-INTEREST EXPENSE
The increase in real estate operations non-interest expenses primarily
related to the December 1999 acquisition of Levitt & Sons.
SEGMENT REPORTING
The table below provides segment information for continuing operations:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
Net contribution after income taxes 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Bank investment operations-wholesale
residential ........................ $ 1,752 $ 2,459 $ 7,000 $ 7,068
Bank investment operations - other ... 127 1,602 1,139 5,294
Bank loan operations - retail products 1,090 (2,673) (5,240) (4,440)
Bank loan operations - commercial
products ........................... (145) 4,595 7,959 14,702
Real estate operations ............... (300) (1,069) 880 1,492
Investment banking operations ........ (1,325) 3,976 (1,855) 1,575
-------- -------- -------- --------
Net contributions .................... $ 1,199 $ 8,890 $ 9,883 $ 25,691
======== ======== ======== ========
</TABLE>
BANK INVESTMENT OPERATIONS
BANK INVESTMENT OPERATIONS - WHOLESALE RESIDENTIAL
Segment net contribution decreased during the three months ended September
30, 2000 compared to the same 1999 period primarily from a substantial increase
in allocated overhead partially offset by higher interest income associated with
a larger portfolio. The higher allocated overhead resulted from a significant
increase in non-interest expenses as well as higher bank-wide interest expense
primarily due to deposit and other borrowing rate increases. The additional
interest income resulted from improvement in yields on interest earning assets.
Segment net contribution during the nine months remained at 1999 levels due
to higher average earnings assets and average yields during the nine month
period of 2000 compared to the same 1999 period. The additional interest income
from increased average assets and yields was offset by the substantially higher
allocated overhead.
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<PAGE>
BankAtlantic Bancorp, Inc.
BANK INVESTMENT OPERATIONS - OTHER
Segment net contribution declined during the three and nine months ended
September 30, 2000 compared to the same 1999 period due to lower gains on the
sale of loans and securities available for sale as well as a realized loss on
the sales of marketable equity securities. The increase in interest income
during the three and nine months ended September 30, 2000 compared to the same
1999 period resulted from increased average earning assets relating primarily to
the purchase of securities during the period. The higher interest income was
offset by allocated overhead.
BANK LOAN OPERATIONS
BANK LOAN OPERATIONS - RETAIL
Segment net contribution increased during the three months ended September
30, 2000 due primarily to a substantial decrease in the provision for loan
losses partially offset by lower earning asset balances, higher allocated
overhead and lower fee income. The decline in the provision for loan losses
reflects lower credit losses in the Company's indirect loan portfolio and
declining aggregate small business and indirect loan balances. The decline in
portfolio balances reflects lower fundings of small business loans and the
Company's decision to cease the origination of indirect consumer loans during
1998. Additionally, non-interest income declined reflecting lower small business
renewal fee income.
Segment net contribution during the nine months ended September 30, 2000
compared to the same 1999 period decreased due to lower earning asset balances
and a decline in fee income. The above decreases in net contributions were
partially offset by an improvement in the provision for loan losses.
BANK LOAN OPERATIONS - COMMERCIAL
Segment net contribution declined substantially during the three and nine
months ended September 30, 2000 compared to the same periods during 1999 due to
a significant increase in the provision for loan losses, a $695,000 realized
loss associated with a syndicated loan, and higher allocated overhead. The
provision for loan losses increase resulted from higher loan balances and
increased classified and problem assets in the syndicated loan portfolio.
REAL ESTATE OPERATIONS
Segment net contribution from real estate operations during the three
months ended September 30, 2000 compared to the same 1999 period increased due
to higher earnings from joint venture operations, and earnings from Levitt &
Sons operations partially offset by additional overhead allocations. The decline
in net contribution during the nine months ended September 30, 2000 reflects
additional overhead allocations due to increased inter-company borrowings
partially offset by the sale of a utility expansion receivable and a reduction
in the deferred tax asset valuation allowance.
INVESTMENT BANKING OPERATIONS
Segment net contribution from investment banking operations during the
three and nine months ended September 30, 2000 compared to the same 1999 period
declined primarily due to the $544 million initial public offering that closed
in July 1999 and higher operating expenses resulting from the expansion of RBCO
operations and the acquisition of Southeast Research Group in June 1999.
-34-
<PAGE>
BankAtlantic Bancorp, Inc.
The Company's total assets at September 30, 2000 were $4.4 billion compared
to $4.2 billion at December 31, 1999. The increase in total assets primarily
resulted from increased:
o tax certificates and other securities held to maturity due to
purchases of mortgage-backed securities held to maturity and the
funding of tax certificate acquisitions,
o loans receivable, net resulting primarily from the origination and
purchase of commercial real estate loans,
o real estate held for development and sale and joint ventures due
to the funding of loan commitments to real estate joint ventures,
o accrued interest receivable reflecting the growth in earning
assets and payments receivable on interest rate swaps,
o office properties and equipment resulting from computer hardware
and software expenditures,
o real estate owned reflecting a commercial nonresidential loan
foreclosure, and
o trading securities related to RBCO operations
The above increases in total assets were partially offset by decreased:
o securities available for sale resulting from principal pay-downs and
sales of mortgage-backed securities, REMICs, and equity securities,
o FHLB stock reflecting sales during the period,
o other assets reflecting lower balances in broker-dealer receivable,
dealer reserve and prepaid expenses, and
o deferred tax asset, net attributed to a decline in unrealized
depreciation on securities available for sale.
The Company's total liabilities at September 30, 2000 were $4.2 billion
compared to $3.9 billion at December 31, 1999. The increase in total liabilities
primarily resulted from increased:
o deposit balances reflecting the introduction of new deposit products,
o securities sold under agreements to repurchase and federal funds
purchased used to fund growth in loans receivable, and other
securities held to maturity and to pay-down FHLB advances,
o advances by borrowers for taxes and insurance due to an increase in
commercial real estate escrow balances, and
o other liabilities resulting from increased teller check balances,
higher current taxes payable and the establishment of a deferred
compensation liability associated with the BankAtlantic Bancorp-
Ryan Beck Deferred Compensation Plan.
The retirement of $50.8 million of the Company's 5.625% convertible
subordinated debenture during the nine months ended September 30, 2000 was
offset by the Company issuing $34.7 million of investment notes and borrowing
$19.96 million from an independent financial institution.
-35-
<PAGE>
BankAtlantic Bancorp, Inc.
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 maintains a portfolio of trading and available for sale equity
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, and trading and
available for sale securities at September 30, 2000 based on percentage changes
in fair value. Actual future price appreciation or depreciation may be different
from the changes identified in the table below.
Available
for Sale Securities
Percent Trading Equity Sold Not Total
Change in Securities Securities Yet Appreciation
Fair Value Fair Value Fair Value Purchased (Depreciation)
---------- ---------- ---------- --------- --------------
20 % $ 31,055 $ 34,406 $ (7,058) $ 9,734
10 % $ 28,467 $ 31,539 $ (6,470) $ 4,867
- % $ 25,879 $ 28,672 $ (5,882) $ 0
(10)% $ 23,291 $ 25,805 $ (5,294) $(4,867)
(20)% $ 20,703 $ 22,938 $ (4,706) $(9,734)
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. During the nine months
ended September 30, 2000 the Company has entered into callable and noncallable
interest rate swap contracts to change fixed rate time deposits to floating rate
borrowings.
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 September 30, 2000 resulting from a change in interest
rates. Interest rate sensitive instruments included in the model include the
Company's loans, securities, other earning assets, deposits, other borrowings,
debentures, financial derivatives and off balance sheet loan commitments.
The Company had fixed rate loan commitments aggregating $16.7 million at
September 30, 2000.
-36-
<PAGE>
BankAtlantic Bancorp, Inc.
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 September 30, 2000,
(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 gain or loss 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
September 30, 2000 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
------- ------------- ---------
In thousands
+200 bp $184,072 $(110,100)
+100 bp $242,857 $ (51,315)
0 bp $294,172 $ 0
(100)bp $332,765 $ 38,593
(200)bp $321,771 $ 27,599
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 loan prepayment rates, deposit decay rates, market values of
certain assets under the assumed interest rate scenarios, and repricing of
certain deposits and 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.
-37-
<PAGE>
BankAtlantic Bancorp, Inc.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash flow is dividends from BankAtlantic,
sales of securities available for sale, borrowings from financial service
companies, and proceeds from the issuance of debt and equity securities. Such
funds were utilized by the Company to pay dividends on its outstanding common
stock, interest payments on its Debentures, investment notes and notes payable,
acquire its common stock, fund purchases of securities available for sale, and
repurchases of its 5-5/8% Debentures. Dividends from BankAtlantic to the Company
are subject to regulatory approval.
BankAtlantic's primary sources of funds during the first nine months of
2000 were from principal collected on loans, securities available for sale and
investment securities held to maturity, sales of securities available for sale,
loans held for sale, FHLB stock, REO, and real estate held for development,
borrowings from FHLB advances, securities sold under agreements to repurchase,
sales of property and equipment, and deposit inflows. These funds were primarily
utilized to fund operating expenses, deposit maturities, loan purchases and
fundings, purchases of FHLB stock, and increases in tax certificates, trading
securities, real estate inventory, joint venture investments, securities held to
maturity and securities available for sale. At September 30, 2000, BankAtlantic
met all applicable liquidity and regulatory capital requirements.
The Company's commitments to originate loans at September 30, 2000 were
$164.9 million compared to $173.8 million at September 30, 1999. Additionally,
the Company had commitments to purchase $21.0 million of mortgage-backed
securities at September 30, 2000 compared to zero during the same 1999 period.
At September 30, 2000, loan commitments were 6.00% of net loans receivable.
Leasing Technology Inc. ("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 of LTI sold upon a default by the lessees. At September
30, 2000, the amount of lease payments subject to such recourse provisions was
approximately $1.2 million and a $47,000 estimated liability on leases sold with
recourse is included in other liabilities in the Company's Statement of
Financial Condition.
On August 17, 2000, the Company's Class A and Class B shareholders approved
a transaction which resulted in the redemption and retirement of all publicly
held shares of Class B Common Stock at a price of $6.00 per share and that had
the effect of converting BFC Financial Corporation's 4,876,124 shares of Class B
Common Stock into Class B Common Stock with an equivalent economic value.
Pursuant to the transaction, the Company paid $33.1 million (including $1.4
million of transaction expenses) to retire 5,275,752 shares of Class B Common
Stock. As a result of the transaction, which was structured as a merger, BFC
Financial Corporation became the sole holder of the Class B Common Stock. The
Class B Common Stock held by BFC represents 100% of the voting rights of the
Company.
Outstanding options to purchase Class A Common Stock remained exercisable
for the same number of shares of Class A Common Stock of the Company as the
surviving corporation for the same exercise price and upon the same terms as in
effect before the merger. Likewise, the Company's 6-3/4% Convertible
Subordinated Debentures due 2006 and 5-5/8% Convertible Subordinated Debentures
due 2007 remained convertible into the same number of shares of Class A Common
Stock of the Company as the surviving corporation at the same conversion price
and upon the same terms as in effect before the merger.
-38-
<PAGE>
BankAtlantic Bancorp, Inc.
All outstanding options to acquire Class B Common Stock were exchanged
for 1,704,148 non-qualifying options to acquire Class A Common Stock at an
exercise price ranging from $2.26 to $2.32. The Class A options issued had the
same intrinsic value as the Class B options canceled and had substantially the
same terms and conditions as the former options to purchase shares of Class B
Common Stock, including vesting and term. The 1994 option plan for the issuance
of options to acquire Class B Common Stock was terminated.
In August 2000, the Company announced a tender offer for up to $25 million
in principal amount of the Company's outstanding 5-5/8% Debentures due 2007 for
a cash price of $730 per $1,000 principal amount of 5-5/8% Debentures. On
September 29, 2000 the Company accepted for purchase the maximum $25 million
aggregate principal amount of 5-5/8% Debentures for an aggregate purchase price
of $18.25 million under the terms of the tender offer. Upon expiration of the
tender offer, approximately $45 million aggregate principal amount of the 5-5/8%
Debentures had been validly tendered, and since this amount exceeded the $25
million principal amount tendered by the Company, the 5-5/8% Debentures tendered
were purchased on a pro_rata basis (at a ratio of approximately 56%) in
accordance with the terms of the tender offer. The Company recognized a $3.8
million (net of income tax) extraordinary gain upon the retirement of the
Debentures. Subject to market conditions and other factors, the Company may seek
to repurchase additional 5-5/8% Debentures in the future.
In January 2000, the Company announced a tender offer for up to $25 million
in principal amount of the Company's outstanding 5-5/8% Debentures due 2007 for
a cash price of $750 per $1,000 principal amount of 5-5/8% Debentures. On
February 29, 2000 the Company accepted for purchase the maximum $25 million
aggregate principal amount of 5-5/8% Debentures for an aggregate purchase price
of $18.75 million under the terms of the tender offer. Upon expiration of the
tender offer, approximately $60 million aggregate principal amount of the 5-5/8%
Debentures had been validly tendered, and since this amount exceeded the $25
million principal amount tendered by the Company, the 5-5/8% Debentures tendered
were purchased on a pro_rata basis (at a ratio of approximately 41%) in
accordance with the terms of the tender offer. The Company recognized a $3.5
million (net of income tax) extraordinary gain upon the retirement of the
Debentures.
During the third quarter of 2000 the Company purchased $700,000 of 5-5/8%
Debentures in the secondary market and recognized an extraordinary gain of
$158,000 net of tax.
In January 2000, the Company began an offering of up to $150 million of its
subordinated investment notes. The Company currently anticipates that no more
than $50 million of investment notes will be outstanding at any time. No minimum
amount of investment notes must be sold and the Company may terminate the
offering at any time. The interest rate and maturity date are fixed upon
issuance. At September 30, 2000 the Company had issued an aggregate of $34.7
million of investment notes with interest rates between 10% and 11.75% and
maturity dates between February 2002 and September 2002. The Company may elect
at any time prior to maturity to automatically extend the maturity date of the
investment notes for an additional one year. The investment notes are
subordinated to all existing and future senior indebtedness.
On August 24, 2000, the Company closed on a revolving credit facility of up
to $20 million from an independent financial institution. The credit facility
has a three year term and bears interest at prime minus 50 basis points. The
Credit facility contains customary covenants including financial covenants
relating to regulatory capital and maintenance of certain loan loss reserves and
is secured by the common stock of BankAtlantic. At September 30, 2000, the
credit facility had an outstanding balance of $19.96 million. The Company was in
compliance with all loan covenants at September 30, 2000.
The Company used the proceeds from the investment notes and the revolving
credit facility to fund the tender offer and the merger transaction.
-39-
<PAGE>
BankAtlantic Bancorp, Inc.
On March 1, 2000, 749,533 restricted shares of Class A Common Stock issued
to key employees of RBCO in connection with the acquisition of RBCO were retired
in exchange for the establishment of interests in the BankAtlantic Bancorp_Ryan
Beck Deferred Compensation Plan ("Plan") in the aggregate amount of $7.8
million. In January 2000, each participant in the RBCO retention pool was
provided the opportunity to exchange those restricted shares that were allocated
to such participant for a cash_based deferred compensation award in an amount
equal to the aggregate value of the restricted shares at the date of the RBCO
acquisition. The Company may at its option terminate the Plan at anytime without
the consent of the participants or stockholders and distribute to the
participants the amount credited to their deferred account (in whole or in
part). Subject to the terms of the Plan, the participant's account will be
settled by the Company in cash on the vesting date (June 28, 2002) except the
Company can elect to defer payment of up to 50% of a participant's interest in
the plan for up to one year following the vesting date. If the Company elects to
exercise it rights to defer 50% of the cash payment, the Company will issue a
note bearing interest at prime plus 1%. As a result of the exchange,
stockholders' equity declined by $3.2 million with a corresponding increase in
other liabilities.
On July 14, 1999, the Company's Board of Directors approved the repurchase
on the open market of up to 3.5 million shares of the Company's common stock.
The Board authorized the repurchase of common stock on a "time-to-time" basis,
depending upon market conditions and subject to compliance with applicable
securities laws. Pursuant to the above repurchase plan the Company paid $4.4
million to repurchase and retire 736,000 shares of Class B Common Stock during
the nine months ended September 30, 2000. Pursuant to a previously announced
plan to repurchase shares of common stock, the Company paid $8.4 million to
repurchase and retire 1,149,655 shares of Class A Common Stock and $1.6 million
to repurchase and retire 221,345 shares of Class B Common Stock during the nine
months ended September 30, 1999.
During the nine months ended September 30, 2000 the Company entered into
interest rate swap contracts with various primary brokers in an aggregate
notional amount of $275 million, of which $150 million terminate two years from
the date of issuance and are callable six months from the date of issuance, $75
million terminate one year from the date of issuance, $30 million terminate one
year from the date of issuance and are callable three months after the issue
date and $20.0 million terminate five years from the issue date and are callable
one year after the issue date. The interest rate swap contracts obligate the
Company to pay the one month LIBOR index and the Company receives an average
fixed rate of interest of 7.08% for the two year interest rate swaps, 6.83% for
the one year interest rate swaps, 7.10% for the one-year-callable interest rate
swaps and 7.20% for the five-year-callable interest rate swaps. The interest
rate swap contracts were executed to convert the Company's fixed rate callable
time deposits to a one-month LIBOR interest rate.
At the indicated date BankAtlantic's capital amounts and ratios were:
Adequately Well
Actual Capitalized Capitalized
Amount Ratio Ratio Ratio
-------- -------- ----------- ----------
(In thousands)
At September 30, 2000:
Total risk-based capital ........ $331,025 11.67 % 8.00 % 10.00 %
Tier I risk-based capital ....... $295,444 10.41 % 4.00 % 6.00 %
Tangible capital ................ $295,444 6.99 % 1.50 % 1.50 %
Core capital .................... $295,444 6.99 % 4.00 % 5.00 %
At December 31, 1999:
Total risk-based capital ........ $339,322 13.30 % 8.00 % 10.00 %
Tier I risk-based capital ....... $307,270 12.04 % 4.00 % 6.00 %
Tangible capital ................ $307,270 7.71 % 1.50 % 1.50 %
Core capital .................... $307,270 7.71 % 4.00 % 5.00 %
-40-
<PAGE>
BankAtlantic Bancorp, Inc.
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 10-K for the year ended December
31, 1999.
The Company's wholly owned subsidiary, RBCO, is subject to the net capital
provisions of the Securities Exchange Act of 1934. At September 30, 2000, RBCO's
regulatory net capital was approximately $6.3 million, which exceeded minimum
net capital rule requirements by $5.3 million.
RBCO operates 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 Securities and Exchange Commission rules
relating to possession or control and customer reserve requirements and was in
compliance with such rules at September 30, 2000.
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-41-
<PAGE>
BankAtlantic Bancorp, Inc.
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held an Annual Meeting of Shareholders on August 17, 2000. At
the meeting three Directors were elected by the following votes:
For Against
--------- ---------
John E. Abdo ................ 9,490,764 67,191
Charlie C. Winningham, II ... 9,427,400 130,555
Ira Siegel .................. 9,490,864 67,091
The following Directors terms of office continued after the meeting:
Jarett S. Levan Bruno Di Giulian
Steven M. Coldren Alan B. Levan
Mary G. Ginestra Ben A. Plotkin
Holders of Class A Common Stock and Class B Common Stock adopted the
Amended and Restated Agreement and Plan of Merger, dated March 29, 2000 by the
following votes:
Broker
For Against Abstained Non-vote
---------- --------- --------- ---------
Class A Common Shareholders 20,086,486 1,852,617 129,365 0
Class B Common Shareholders 8,073,357 200,805 43,644 1,233,049
EXHIBITS AND REPORT ON FORM 8-K
(a) EXHIBITS
Exhibit 11 - Statement re Computation of Per Share Earnings
(b) Reports on Form 8-K
None
-42-
<PAGE>
BankAtlantic Bancorp, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANKATLANTIC BANCORP, INC.
Date: November 13, 2000 By: /s/Alan B. Levan
----------------- -------------------------
Alan B. Levan
Chief Executive Officer/
Chairman/President
Date: November 13, 2000 By: /s/James A. White
----------------- -------------------------
James A. White
Executive Vice President,
Chief Financial Officer
<PAGE>
BankAtlantic Bancorp, Inc.
EXHIBIT 11
----------
EARNINGS PER SHARE
The following reconciles the numerators and denominators of the basic and
diluted earnings per share. The basic and diluted Class B weighted average
shares were restated to reflect the merger whereby each weighted average share
of Class B Common Stock before the merger was converted into .0000002051 shares
of Class B Common Stock after the merger.
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended September 30, 2000 Ended September 30, 1999
(In thousands, except share 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 ........... $ 801 $ 113 $ 914 $ 758 $ 228 $ 986
Basic allocation of undistributed
earnings from continuing operations 235 50 285 6,051 1,853 7,904
----------- ---------- ---------- ----------- ---------- ----------
Income from continuing operations ... 1,036 163 1,199 6,809 2,081 8,890
Income from discontinued operations . 136 29 165 286 87 373
Income from extraordinary item ...... 3,265 701 3,966 0 0 0
----------- ---------- ---------- ----------- ---------- ----------
Net income .......................... $ 4,437 893 5,330 7,095 2,168 9,263
=========== ========== ========== =========== ========== ==========
BASIC DENOMINATOR
Weighted average shares outstanding . 31,588,054 1.53 30,583,412 2.11
=========== ========== =========== ==========
Allocation percentage ............... 82.35% 17.65% 76.57% 23.43%
=========== ========== =========== ==========
Basic earnings per share ............ $ 0.14 $ 582.86 $ 0.23 $ 1,026.91
=========== ========== =========== ==========
DILUTED NUMERATOR
Actual dividends declared ........... $ 801 $ 113 $ 914 $ 758 $ 228 $ 986
----------- ---------- ---------- ----------- ---------- ----------
Basic allocation of undistributed
earnings from continuing operations 235 50 285 6,051 1,853 7,904
----------- ---------- ---------- ----------- ---------- ----------
Reallocation of basic undistributed
earnings due to change in allocation
percentage ......................... (1) 1 0 509 (509) 0
----------- ---------- ---------- ----------- ---------- ----------
Diluted allocated undistributed
earnings from continuing operations 234 51 285 6,560 1,344 7,904
----------- ---------- ---------- ----------- ---------- ----------
Interest expense on convertible debt 0 0 0 1,250 256 1,506
----------- ---------- ---------- ----------- ---------- ----------
Dilutive net income from continuing
operations ......................... 1,035 164 1,199 8,568 1,828 10,396
Dilutive net income from discontinued
operations ......................... 135 30 165 309 64 373
Extraordinary item .................. 3,250 716 3,966 0 0 0
----------- ---------- ---------- ----------- ---------- ----------
Net income .......................... $ 4,420 $ 910 $ 5,330 $ 8,877 $ 1,892 $ 10,769
=========== ========== ========== =========== ========== ==========
DILUTED DENOMINATOR
Basic weighted average shares
outstanding ........................ 31,588,054 1.53 30,583,412 2.11
Convertible debentures .............. 0 - 17,870,080 -
Options ............................. 134,341 0.05 308,795 0.14
----------- ---------- ----------- ----------
Diluted weighted average shares
outstanding ........................ 31,722,395 1.58 48,762,287 2.25
=========== ========== =========== ==========
Allocation percentage ............... 81.95% 18.05% 83.01% 16.99%
=========== ========== =========== ==========
Diluted earnings per share .......... $ 0.14 $ 576.03 $ 0.18 $ 839.71
=========== ========== =========== ==========
</TABLE>
<PAGE>
BankAtlantic Bancorp, Inc.
<TABLE>
<CAPTION>
For the Nine Months For the Nine Months
Ended September 30, 2000 Ended September 30, 1999
(In thousands, except share 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 ........... $ 2,402 $ 566 $ 2,968 $ 2,182 $ 746 $ 2,928
Basic allocation of undistributed
earnings from continuing operations . 5,479 1,436 6,915 17,407 5,356 22,763
----------- --------- ---------- ----------- ---------- ----------
Income from continuing operations ... 7,881 2,002 9,883 19,589 6,102 25,691
Income from discontinued operations . 336 88 424 898 276 1,174
Extraordinary item .................. 5,894 1,538 7,432 0 0 0
----------- --------- ---------- ----------- ---------- ----------
Net income .......................... $ 14,111 $ 3,628 $ 17,739 $ 20,487 $ 6,378 $ 26,865
=========== ========= ========== =========== ========== ==========
BASIC DENOMINATOR
Weighted average shares outstanding . 31,544,733 1.86 30,554,979 2.12
=========== ========= =========== ==========
Allocation percentage ............... 79.25% 20.75% 76.47% 23.53%
=========== ========= =========== ==========
Basic earnings per share ............ $ 0.45 $1,951.18 $ 0.67 $ 3,007.85
=========== ========= =========== ==========
DILUTED NUMERATOR
Actual dividends declared ........... $ 2,402 $ 566 $ 2,968 $ 2,182 $ 746 $ 2,928
----------- --------- ---------- ----------- ---------- ----------
Basic allocation of undistributed
earnings from continuing operations 5,479 1,436 6,915 17,407 5,356 22,763
----------- --------- ---------- ----------- ---------- ----------
Reallocation of basic undistributed
earnings due to change in allocation
percentage ......................... 378 (378) 0 1,468 (1,468) 0
----------- --------- ---------- ----------- ---------- ----------
Diluted allocated undistributed
earnings from continuing operations 5,857 1,058 6,915 18,875 3,888 22,763
----------- --------- ---------- ----------- ---------- ----------
Interest expense on convertible debt 3,303 597 3,900 3,742 771 4,513
----------- --------- ---------- ----------- ---------- ----------
Dilutive income from continuing
operations ......................... 11,562 2,221 13,783 24,799 5,405 30,204
Dilutive income from discontinued
operations ......................... 364 60 424 973 201 1,174
Dilutive income from extraordinary
item ............................... 6,295 1,137 7,432 0 0 0
----------- --------- ---------- ----------- ---------- ----------
Net income .......................... $ 18,221 $ 3,418 $ 21,639 $ 25,772 $ 5,606 $ 31,378
============ ========= ========== =========== ========== ==========
DILUTED DENOMINATOR
Basic weighted average shares
outstanding ........................ 31,544,733 1.86 30,554,979 2.12
Convertible debentures .............. 16,107,909 - 17,872,231 -
Options ............................ 50,103 0.08 337,700 0.15
----------- --------- ----------- ----------
Diluted weighted average shares
outstanding ........................ 47,702,745 1.94 48,764,910 2.27
=========== ========= =========== ==========
Allocation percentage ............... 84.70% 15.30% 82.92% 17.08%
=========== ========= =========== ==========
Diluted earnings per share .......... $ 0.38 $1,762.91 $ 0.53 2,473.91
=========== ========= =========== ==========
</TABLE>