SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 August 8, 2000
----------------------------------------------- ----------------
Class A Common Stock, par value $0.01 per share 31,681,764
Class B Common Stock, par value $0.01 per share 9,881,585
<PAGE>
BANKATLANTIC BANCORP, INC.
TABLE OF CONTENTS
FINANCIAL INFORMATION Page Reference
Financial Statements 1-11
Consolidated Statements of Financial Condition -
June 30, 2000 and 1999 and December 31, 1999 - Unaudited 4
Consolidated Statements of Operations - for the Three and Six
Months Ended June 30, 2000 and 1999 - Unaudited 5-6
Consolidated Statements of Stockholders' Equity and
Comprehensive Income - for the Six Months Ended June 30,
2000 and 1999 - Unaudited 7-8
Consolidated Statements of Cash Flows - for the Six Months
Ended June 30, 2000 and 1999 - Unaudited 9-11
Notes to Consolidated Financial Statements - Unaudited 12-18
Management's Discussion and Analysis of Financial Condition
and Results of Operations 19-36
OTHER INFORMATION
Exhibits and Report on Form 8K 37
Signatures 38
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BANKATLANTIC BANCORP, INC.
[THIS PAGE INTENTIONALLY LEFT BLANK]
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BANKATLANTIC BANCORP, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
June 30, December 31, June 30,
(In thousands, except share data) 2000 1999 1999
---------- ------------ ----------
ASSETS
<S> <C> <C> <C>
Cash and due from depository institutions .................. $ 80,430 $ 90,070 $ 103,300
Federal Funds sold and securities purchased under
resell agreements ......................................... 1,122 313 474
Tax certificates and other securities held to maturity ..... 361,186 113,000 93,315
Loans receivable, net ...................................... 2,412,527 2,469,472 2,404,380
Loans held for sale ........................................ 368,009 220,236 278,092
Securities available for sale, at market value ............. 773,076 818,308 1,005,265
Trading securities, at market value ........................ 16,796 23,311 20,042
Accrued interest receivable ................................ 38,539 30,594 30,141
Real estate held for development and sale and joint
ventures .................................................. 156,974 149,964 68,706
Real estate owned, net ..................................... 5,465 3,951 5,399
Office properties and equipment, net ....................... 56,155 55,473 56,364
Federal Home Loan Bank stock, at cost which approximates
market value .............................................. 50,958 56,410 45,777
Deferred tax asset, net .................................... 38,469 41,487 22,581
Cost over fair value of net assets acquired, net ........... 51,913 53,553 55,669
Other assets ............................................... 26,972 33,759 59,702
---------- ---------- ----------
Total assets ............................................... $ 4,438,591 $ 4,159,901 $ 4,249,207
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ................................................... $ 2,138,319 $ 2,027,892 $ 2,230,301
Advances from FHLB ......................................... 989,140 1,098,186 915,525
Federal Funds purchased .................................... 0 5,900 13,800
Securities sold under agreements to repurchase ............. 676,502 423,223 467,360
Subordinated debentures, notes and bonds payable ........... 225,519 228,773 183,304
Guaranteed preferred beneficial interests in the Company's
Junior Subordinated Debentures ........................... 74,750 74,750 74,750
Advances by borrowers for taxes and insurance .............. 7,381 2,595 47,692
Other liabilities .......................................... 80,186 62,696 79,887
---------- ---------- ----------
Total liabilities .......................................... 4,191,797 3,924,015 4,012,619
---------- ---------- ----------
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, 31,681,764, 32,418,470
and 31,535,429 shares ................................... 317 324 260
Class B Common Stock, $0.01 par value, authorized 45,000,000
shares; issued and outstanding, 9,799,596, 10,264,516 and
10,375,215 shares ....................................... 98 102 104
Additional paid-in capital ................................. 134,606 145,399 141,243
Unearned compensation - restricted stock grants ........... (492) (5,633) (6,510)
Retained earnings .......................................... 132,994 122,639 111,477
---------- ---------- ----------
Total stockholders' equity before accumulated other
comprehensive income .................................... 267,523 262,831 246,574
Accumulated other comprehensive loss - net unrealized
depreciation on securities available for sale - net of
deferred income taxes ................................... (20,729) (26,945) (9,986)
---------- ---------- ----------
Total stockholders' equity ................................. 246,794 235,886 236,588
---------- ---------- ----------
Total liabilities and stockholders' equity ................. $ 4,438,591 $ 4,159,901 $ 4,249,207
========== ========== ==========
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 Six Months
(In thousands, except share data) Ended June 30, Ended June 30,
---------------------- ----------------------
INTEREST INCOME: 2000 1999 2000 1999
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases ............... $ 60,964 $ 55,369 $ 119,848 $ 108,933
Interest on banker's acceptances .................... 247 200 487 389
Interest and dividends on securities available
for sale .......................................... 14,361 14,618 28,000 24,671
Interest and dividends on tax certificates and
other securities held to maturity and trading
securities ........................................ 4,574 3,344 9,035 5,950
--------- --------- --------- ---------
Total interest income ............................... 80,146 73,531 157,370 139,943
--------- --------- --------- ---------
INTEREST EXPENSE:
Interest on deposits ................................ 22,267 20,529 42,105 37,120
Interest on advances from FHLB ...................... 15,692 13,337 31,540 26,834
Interest on securities sold under agreements to
repurchase and federal funds purchased ............ 7,407 4,353 13,989 8,397
Interest on subordinated debentures, guaranteed
preferred interest in the Company's Junior
Subordinated Debentures and notes and bonds payable 6,932 4,912 13,521 9,699
Capitalized interest ................................ (1,841) (157) (3,526) (332)
--------- --------- --------- ---------
Total interest expense .............................. 50,457 42,974 97,629 81,718
--------- --------- --------- ---------
Net interest income ................................. 29,689 30,557 59,741 58,225
Provision for loan losses ........................... 4,533 5,669 15,320 10,833
--------- --------- --------- ---------
Net interest income after provision for loan losses . 25,156 24,888 44,421 47,392
--------- --------- --------- ---------
NON-INTEREST INCOME:
Loan late fees and other loan income ................ 1,069 1,359 2,107 2,489
Gains (losses) on loans held for sale, net of write
down .............................................. (367) 234 (289) 867
Gains on sales of property and equipment ............ 58 1,459 240 1,459
Gains on sales of securities available for sale, net
of write down ..................................... 218 839 230 1,418
Trading securities gains (losses) ................... (16) 15 22 (54)
Levitt Corp. sales of real estate and joint venture
activities ........................................ 2,646 1,302 5,757 6,697
Levitt Corp. utility expansion receivable sale ...... 363 0 4,265 0
Ryan, Beck principal transactions ................... 4,043 1,704 9,001 4,704
Ryan, Beck investment banking ....................... 3,032 1,223 5,039 4,340
Ryan, Beck commissions .............................. 5,429 3,331 11,664 6,007
Transaction fees .................................... 3,221 3,428 6,472 7,019
ATM fees ............................................ 2,718 2,504 5,233 4,703
Other ............................................... 1,387 1,280 2,809 2,498
--------- --------- --------- ---------
Total non-interest income ........................... 23,801 18,678 52,550 42,147
--------- --------- --------- ---------
NON-INTEREST EXPENSE:
Employee compensation/benefits excluding Ryan, Beck
and Levitt Corp ................................... 11,120 9,034 22,005 18,675
Employee compensation/benefits for Ryan, Beck
and Levitt Corp ................................... 10,048 6,717 21,217 13,319
Occupancy and equipment ............................. 6,447 6,001 12,947 11,675
Advertising and promotion ........................... 2,670 937 4,136 1,693
Foreclosed asset activity, net ...................... 124 (1,355) 275 (1,265)
Amortization of cost over fair value of net assets
acquired .......................................... 1,024 986 2,040 1,969
Other excluding Ryan, Beck and Levitt Corp .......... 5,210 3,907 10,261 9,389
Other for Ryan, Beck and Levitt Corp ................ 4,850 3,437 10,513 6,504
--------- --------- --------- ---------
Total non-interest expense .......................... 41,493 29,664 83,394 61,959
--------- --------- --------- ---------
Income before income taxes, discontinued operations
and extraordinary item ............................ 7,464 13,902 13,577 27,580
Provision for income taxes .......................... 2,461 5,273 4,893 10,780
--------- --------- --------- ---------
Income from continuing operations ................... 5,003 8,629 8,684 16,800
Income from discontinued operations, net of taxes ... 259 801 259 801
--------- --------- --------- ---------
Income before extraordinary item .................... 5,262 9,430 8,943 17,601
Extraordinary item, net of taxes .................... 0 0 3,466 0
--------- --------- --------- ---------
Net Income .......................................... $ 5,262 $ 9,430 $ 12,409 $ 17,601
========= ========= ========= =========
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 Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CLASS A COMMON SHARES
Basic earnings per share from continuing operations .... $ 0.12 $ 0.22 $ 0.21 $ 0.42
Basic earnings per share from discontinued operations .. 0.01 0.02 0.01 0.02
Basic earnings per share from extraordinary item ....... 0.00 0.00 0.09 $ 0.00
---------- ---------- ---------- ----------
Basic earnings per share ............................... $ 0.13 $ 0.24 $ 0.31 $ 0.44
========== ========== ========== ==========
Diluted earnings per share from continuing operations . $ 0.11 $ 0.17 $ 0.20 $ 0.33
Diluted earnings per share from discontinued operations 0.00 0.01 0.00 0.02
Diluted earnings per share from extraordinary item .... 0.00 0.00 0.06 0.00
---------- ---------- ---------- ----------
Diluted earnings per share ............................ $ 0.11 $ 0.18 $ 0.26 $ 0.35
========== ========== ========== ==========
Basic weighted average number of common shares
outstanding .......................................... 31,546,061 30,385,075 31,522,835 30,540,788
========== ========== ========== ==========
Diluted weighted average number of common and common
equivalent shares outstanding ........................ 47,194,152 48,580,788 47,894,114 48,760,391
========== ========== ========== ==========
CLASS B COMMON SHARES
Basic earnings per share from continuing operations ... $ 0.11 $ 0.20 $ 0.19 $ 0.39
Basic earnings per share from discontinued operations .. 0.01 0.02 0.01 0.02
Basic earnings per share from extraordinary item ....... 0.00 0.00 0.08 0.00
---------- ---------- ---------- ----------
Basic earnings per share .............................. $ 0.12 $ 0.22 $ 0.28 $ 0.41
========== ========== ========== ==========
Diluted earnings per share from continuing operations .. $ 0.11 $ 0.17 $ 0.19 $ 0.32
Diluted earnings per share from discontinued operations 0.01 0.01 0.00 0.01
Diluted earnings per share from extraordinary item ..... 0.00 0.00 0.06 0.00
---------- ---------- ---------- ----------
Diluted earnings per share ............................. $ 0.12 $ 0.18 $ 0.25 $ 0.33
========== ========== ========== ==========
Basic weighted average number of common shares
outstanding .......................................... 9,774,193 10,363,216 9,916,211 10,361,476
========== ========== ========== ==========
Diluted weighted average number of common and common
equivalent shares outstanding ........................ 10,270,725 11,074,638 10,412,743 11,084,770
========== ========== ========== ==========
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 SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Net
Unearned Unrealized
Compen- Apppreci-
Addi- sation ation on
Compre- tional Restricted Securities
hensive Common Paid-in Retained Stock Available
(In thousands) Income Stock Capital Earnings Grants for Sale Total
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1998 ............ $ 372 $147,686 $ 95,818 $ (7,062) $ 3,626 $ 240,440
Net income ........................... $ 17,601 0 0 17,601 0 0 17,601
-------
Other comprehensive income (loss), net
of tax:
Change in unrealized losses on
securities available for sale ...... (14,323)
Reclassification adjustment for net
losses included in net income ...... 711
-------
Other comprehensive loss ............ (13,612)
-------
Comprehensive income ................. $ 3,989
=======
Dividends on Class A common stock .... 0 0 (1,424) 0 0 (1,424)
Dividends on Class B common stock .... 0 0 (518) 0 0 (518)
Fair value of stock options granted to
non-employees ...................... 0 69 0 0 0 69
Exercise of Class A common stock
options ............................ 0 206 0 0 0 206
Exercise of Class B common stock
options ............................ 0 77 0 0 0 77
Tax effect relating to the exercise of
stock options ...................... 0 45 0 0 0 45
Purchase and retirement of Class A
common stock ....................... (10) (8,384) 0 0 0 (8,394)
Issuance of Class A restricted common
stock for acquisitions ............. 2 1,082 0 0 0 1,084
Forfeited Class A restricted common
stock .............................. 0 (89) 0 89 0 0
Amortization of unearned compensation -
restricted stock grants ............ 0 0 0 1,014 0 1,014
Unearned compensation retention pool
grants ............................. 0 551 0 (551) 0 0
Net change in unrealized depreciation
on securities available for sale-net
of deferred income taxes ........... 0 0 0 0 (13,612) (13,612)
----------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1999 ................ $ 364 $141,243 $111,477 $ (6,510) $ (9,986) $ 236,588
======================================================================================================================
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 SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (Continued)
Net
Unearned Unrealized
Compen- Apppreci-
Addi- sation ation on
Compre- tional Restricted Securities
hensive Common Paid-in Retained Stock Available
(In thousands) Income Stock Capital Earnings Grants for Sale Total
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 ............ $ 426 $145,399 $ 122,639 $ (5,633) $ (26,945) $ 235,886
Net income ........................... $ 12,409 0 0 12,409 0 0 12,409
-------
Other comprehensive income (loss), net
of tax:
Change in unrealized gains on
securities available for sale ...... 6,884
Reclassification adjustment for net
gains included in net income ...... (668)
-------
Other comprehensive loss ............ 6,216
-------
Comprehensive income ................. $ 18,625
=======
Dividends on Class A common stock .... 0 0 (1,601) 0 0 (1,601)
Dividends on Class B common stock .... 0 0 (453) 0 0 (453)
Exercise of Class B common stock
options ............................ 2 634 0 0 0 636
Tax effect relating to the exercise of
stock options ...................... 0 152 0 0 0 152
Purchase and retirement of Class B
common stock ....................... (6) (3,855) 0 0 0 (3,861)
Forfeited Class A restricted common
stock .............................. 0 (123) 0 103 0 (20)
Exchange of Class A restricted common
stock for participaiton in deferred
compensation plan .................. (7) (7,779) 0 4,599 0 (3,187)
Amortization of unearned compensation -
restricted stock grants ............ 0 0 0 439 0 439
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 6,216 6,216
----------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2000 ................ $ 415 $134,606 $132,994 $ (492) $ (20,729) $ 246,794
======================================================================================================================
See Notes to Consolidated Financial Statements - Unaudited (Continued)
</TABLE>
-8-
<PAGE>
BANKATLANTIC BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
For the Six Months
Ended June 30,
-------------------
(In thousands, except share data) 2000 1999
------- -------
Operating activities:
Income from continuing operations ................... $ 8,684 $ 16,800
Income from discontinued operations ................. 259 801
Extraordinary item .................................. 3,466 0
Adjustments to reconcile net income to net cash in
operating activities:
Provision for loan losses ........................... 15,320 10,833
Provision for losses on real estate owned ........... 62 131
Depreciation, amortization and accretion, net ....... 6,458 13,989
Write-off of deferred offering costs ................ 673 0
Gain on sale of mortgage servicing rights ........... (88) 0
Decrease (increase) in deferred tax asset, net ...... (916) 6,163
Trading account (gains) losses ...................... (22) 54
Purchases of trading securities ..................... 0 (30)
Proceeds from sales of trading securities ........... 22 (54)
Decrease in trading securities owned at market - RBCO 6,515 9,993
Losses (gains) on sales of real estate owned ........ 101 (1,617)
Change in real estate inventory ..................... (97) 721
Gains on sales of securities available for sale ..... (1,011) (1,418)
Write-down of securities available for sale ......... 781 0
Gains on sales of property and equipment ............ (240) (1,459)
Proceeds from sales of loans held for sale .......... 23,824 87,633
Funding of loans held for sale ...................... (18,329) (30,337)
Loans purchased, classified as held for sale ........ (80,840) (161,448)
Loans held for sale valuation allowance ............. 821 0
Gains on sales of loans held for sale ............... (444) (867)
Provision for tax certificate losses ................ 444 193
Increase in accrued interest receivable ............. (7,945) (2,370)
Decrease in other assets ............................ 3,169 9,152
Equity in losses (earnings) of unconsolidated real
estate joint ventures ............................. 411 (1,310)
Increase (decrease) in other liabilities ............ 4,297 (2,941)
-------- --------
Net cash used by operating activities ............... (34,625) (47,388)
-------- --------
See Notes to Consolidated Financial Statements - Unaudited (Continued)
-9-
<PAGE>
BANKATLANTIC BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
For the Six Months
Ended June 30,
----------------------
(In thousands, except share data) 2000 1999
--------- --------
Investing activities:
Proceeds from redemption and maturities of tax
certificates ..................................... $ 51,292 $ 24,470
Maturities of other securities ..................... 5,195 0
Purchases of tax certificates and other securities . (110,405) (68,082)
Proceeds from sales of securities available for sale 79,040 139,899
Principal collected on securities available for sale 86,612 112,320
Purchases of securities available for sale ......... (79,874) (680,173)
Purchases of mortgage-backed securities held to
maturity ......................................... (180,396) 0
Proceeds from sales of FHLB stock .................. 13,657 12,678
FHLB stock acquired ................................ (8,205) (6,225)
Principal reduction on loans ....................... 520,298 775,188
Loan funding for portfolio ......................... (489,369) (630,712)
Loans purchased for portfolio ...................... (75,667) (58,552)
Proceeds from maturities of banker's acceptances ... 3,662 7,838
Purchases of banker's acceptances .................. (2,809) (15,370)
Proceeds from sales of real estate owned ........... 2,089 8,078
REO acquired in connection with bulk residential
loan purchases ................................... 0 (2,678)
Mortgage servicing rights acquired ................. 0 (897)
Proceeds from sales of mortgage servicing rights ... 882 12,377
Cost of equipment acquired for lease ............... (24,424) (15,547)
Additions to office property and equipment ......... (3,656) (2,723)
Proceeds from sales of property and equipment ...... 422 2,416
Investment in and advances to joint ventures, net .. (7,324) (14,373)
Acquisition, net of cash acquired .................. (210) (1,221)
--------- ---------
Net cash used in investing activities .............. (219,190) (401,289)
--------- ---------
Financing activities:
Net increase in deposits ........................... 71,333 278,302
Interest credited to deposits ...................... 39,094 26,227
Repayments of FHLB advances ........................ (805,050) (458,047)
Proceeds from FHLB advances ........................ 696,004 329,000
Net increase in securities sold under agreements
to repurchase .................................... 253,279 305,267
Net decrease in federal funds purchased ............ (5,900) (4,700)
Repayment of notes payable ......................... (12,849) (1,571)
Increase in notes payable .......................... 7,027 1,812
Issuance of common stock relating to exercise of
employee stock options ........................... 636 283
Issuance of common stock options to non-employees .. 0 69
Retirement of subordinated debentures .............. (25,083) 0
Issuance of investment notes ....................... 27,651 0
Payments to acquire and retire common stock ........ (3,861) (8,394)
Receipts (repayments) of advances by borrowers
for taxes and insurance .......................... 4,786 (14,654)
Common stock dividends paid ........................ (2,083) (1,966)
--------- ---------
Net cash provided by financing activities .......... 244,984 451,628
--------- ---------
Increase (decrease) in cash and cash equivalents ... (8,831) 2,951
Cash and cash equivalents at beginning of period ... 90,383 100,823
--------- --------
Cash and cash equivalents at end of period ......... 81,552 103,774
========= =========
See Notes to Consolidated Financial Statements - Unaudited (Continued)
-10-
<PAGE>
BANKATLANTIC BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
For the Six Months
Ended June 30,
--------------------
(In thousands, except share data) 2000 1999
-------- -------
Supplementary disclosure and non-cash investing and
financing activities:
Interest paid on borrowings and deposits .............. 103,294 $ 77,479
Income taxes paid ..................................... 2,000 5,000
Loans transferred to real estate owned ................ 3,766 4,518
Commercial non-mortgage loans held for investment
transferred to held for sale ........................ 123,868 0
Issuance of Class A common stock upon acquisitions .... 178 1,084
Loan charge-offs ...................................... 13,638 12,669
Tax certificate charge-offs, net ...................... 549 377
Changes in proceeds receivable from sales of mortgage
servicing rights .................................... 0 20,991
Class A common stock dividends; not paid until July .... 802 713
Class B common stock dividends; not paid until July .... 225 259
Increase in equity for the tax effect related to the
exercise of employee stock options .................. 152 45
Change in net unrealized depreciation on securities
available for sale .................................. 10,151 (22,208)
Change in deferred taxes on net unrealized depreciation
on securities available for sale .................... (3,935) 8,596
Change in stockholders' equity from net unrealized
depreciation on securities available for sale, less
related deferred income taxes ....................... 6,216 (13,612)
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
Accrual for purchases of tax certificates, paid in July 10,167 10,164
Loan securitization ................................... 33,577 0
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 June 30, 2000, December 31, 1999 and June 30, 1999 and
the consolidated results of operations for the three and six months ended June
30, 2000 and 1999, the consolidated stockholders' equity and comprehensive
income; and the consolidated cash flows for the six months ended June 30, 2000
and 1999. Such adjustments consisted only of normal recurring items except for
the extraordinary item 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 10K for the year ended December
31, 1999 and the March 31, 2000 Form 10-Q.
2. SUBORDINATED DEBENTURES, INVESTMENT NOTES AND EQUITY CAPITAL
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 $596,500
and $3.9 million to repurchase and retire 100,000 and 651,000 shares of Class B
common stock during the three and six months ended June 30, 2000, respectively.
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 during the six months ended June 30, 1999. There were no shares
of common stock repurchased during the three months ended June 30, 1999.
During the three and six months ended June 30, 2000, 69,450 and 186,080
shares of Class B incentive and non-qualifying stock options were exercised
resulting in a $299,000 and $788,000 increase in stockholders' equity. The tax
effect included in the preceding amount was $64,000 and $152,000, respectively.
During the three months ended June 30, 1999, 32,340 and 18,673 of Class A
and Class B incentive and non-qualifying stock options, respectively, were
exercised resulting in a $260,000 increase in stockholders' equity. The tax
effect included in the preceding amount was $33,000. During the six months ended
June 30, 1999, 40,954 and 22,770 of Class A and Class B incentive and
non-qualifying stock options, respectively, were exercised resulting in a
$328,000 increase in stockholders' equity. The tax effect included in the
preceding amount was $45,000.
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.
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. As a result of the exchange, stockholders' equity declined by $3.2
million with a corresponding increase in other liabilities.
On June 1, 2000 and 1999, pursuant to the February 1998 acquisition
agreement under which RBCO acquired Cumberland Advisors, the Company issued
55,239 and 40,968 shares of Class A common stock and made a cash payment of
$210,000 and
-12-
<PAGE>
BANKATLANTIC BANCORP, INC.
$266,000, respectively, to the former Cumberland Advisors partners. Such
additional consideration was considered an adjustment to the purchase price of
Cumberland Advisors and not compensation for services subsequent to the
acquisition date. The Class A common stock is subject to restrictions
prohibiting transfers for two years.
On June 28, 1999, RBCO acquired the assets of Southeast Research Partners,
Inc. for consideration consisting of 154,496 shares of restricted Class A common
stock and $875,000 of cash. The Company also accrued $57,000 of acquisition
costs. Southeast Research Partners, Inc. is being operated as a division of
RBCO.
On February 29, 2000 the Company completed a tender offer and purchased $25
million aggregate principal amount of the Company's 5 5/8% Convertible
Subordinated Debentures for an aggregate purchase price of $18.75 million. The
Company recognized a $3.5 million (net of income tax) extraordinary gain upon
the retirement of the Debentures.
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 $75 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 June 30, 2000 the Company had issued an aggregate of $27.7 million
of investment notes with interest rates between 10% and 11.75% and maturity
dates between February 2002 and June 2002.
3. TRADING SECURITIES
During the three and six months ended June 30, 2000, the Company realized
losses of $16,000 and gains of $22,000 on trading securities compared to a
realized gain of $15,000 and a realized loss of $54,000 during the same 1999
period.
The RBCO gains on trading securities were associated with sales and trading
activities conducted both as principal and as agent on behalf of individual and
institutional investor clients of RBCO. Transactions as principal involve making
markets in securities which are held in inventory to facilitate sales to and
purchases from customers. During the three and six months ended June 30, 2000,
RBCO realized net gains from principal transactions of $4.0 million and $9.0
million, respectively, compared to net gains of $1.7 million and $4.7 million
during the same 1999 periods. Furthermore, included in other liabilities at June
30, 2000 and December 31, 1999 was $383,000 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):
June 30, December 31, June 30,
2000 1999 1999
-------- ------------ ---------
Debt obligations:
States and municipalities .. $ 8,532 $ 13,961 $ 10,690
Corporations ............... 376 1,085 1,115
U.S. Government and agencies 3,734 29 341
Corporate equities ......... 4,154 8,236 7,866
Option and future contracts 0 0 30
------- -------- --------
Total ................... $ 16,796 $ 23,311 $ 20,042
======= ======== ========
4. LOANS HELD FOR SALE
The Company continuously evaluates its business units for profitability and
overall efficiency. As a result, the Company made a determination to discontinue
its participation in syndication lending. At June 30, 2000, the Company's entire
portfolio of syndication loans ($123.9 million) was transferred from loans held
to maturity to loans held for sale and the Company is currently seeking a
purchaser for the portfolio.
-13-
<PAGE>
BANKATLANTIC BANCORP, INC.
5. REAL ESTATE HELD FOR DEVELOPMENT AND SALE AND JOINT VENTURE ACTIVITIES
BankAtlantic Development Corporation was renamed Levitt Corporation in
March 2000. 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.
Real estate held for development and sale and joint ventures consisted of
the following (in thousands):
June 30, December 31, June 30,
2000 1999 1999
-------- ----------- --------
Inventory of real estate, Levitt & Sons $ 75,603 $ 73,794 $ 0
SLWHC land ............................ 31,318 33,023 33,906
Loans to joint ventures ............... 39,757 33,647 28,917
Equity investments in joint ventures .. 7,214 6,407 3,483
Other ................................. 3,082 3,093 2,400
-------- -------- -------
$ 156,974 $ 149,964 $ 68,706
======== ======== =======
During the three and six months ended June 30, 2000 SLWHC land sales
resulted in gains of $701,000 and $1.9 million, respectively, while Levitt &
Sons sales of real estate resulted in net gains of $2.1 million and $4.3
million, respectively. Additionally, during the three and six months ended June
30, 2000 SLWHC sold certain rights to utility impact fees to the Port St. Lucie
Service Department for a net gain of $363,000 and $4.3 million, respectively.
During the three and six months ended June 30, 1999 SLWHC land sales
resulted in gains of $1.7 million and $5.4 million, respectively.
Levitt Corporation's equity in earnings from joint ventures was a $128,000
and $412,000 loss during the three and six months ended June 30, 2000 compared
to a loss of $418,000 during the three months ended June 30, 1999 and a gain of
$1.3 million during the six months ended June 30, 1999. 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 $1.7 million gain.
Additionally, during the six months ended June 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 the three and six months ended June 30, 2000, the Company
capitalized $1.8 million and $3.5 million of interest expense associated with
real estate inventory and investments and advances to real estate joint
ventures. Furthermore, $394,000 and $618,000 of interest income associated with
loans to joint ventures was deferred. During the three and six months ended June
30, 1999 the Company capitalized $157,000 and $332,000 of interest expense and
deferred $251,000 and $475,000 of interest income from joint venture loans.
Included in other expenses in the Company's Consolidated Statements of
Operations during the three and six months ended June 30, 2000 was $155,000 and
$305,000, respectively, of consulting fees paid to the Abdo Companies, an
affiliate of the Company. John Abdo, the Vice Chairman and Director of the
Company is the President and Chief Executive Officer of the Abdo Companies.
During the three and six months ended June 30, 1999, $150,000 and $300,000 of
consulting fees were paid to the Abdo Companies. Additionally, $20,000 and
$40,000, of management fees were paid to BFC Financial Corporation, an affiliate
of the Company, during the three and six months ended June 30, 2000. BFC
Financial Corporation provides administrative and real estate advisory services
to Levitt Corporation. BFC Financial Corporation pays BankAtlantic a $9,000
quarterly administration fee and rents office space from BankAtlantic for a
monthly rent payment of $2,227.
-14-
<PAGE>
BANKATLANTIC BANCORP, INC.
6. 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 six months ended June 30, 2000 and 1999
was $359,000 and $442,000, respectively.
7. DISCONTINUED OPERATIONS AND RESTRUCTURING CHARGES
During December 1998, the Company commenced a restructuring of its
operations and established a restructuring liability. The restructuring
liability at June 30, 2000 was $155,000 and consists of the remaining lease
payments on closed branches.
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 six months ended June 30, 2000 the Company recognized income from
discontinued operations of $404,000 ($259,000 net of tax) from the sale of a
building. The Company at June 30, 2000 had a liability of $610,000 relating to
expected costs of obtaining loan documents associated with the sale of the
mortgage servicing portfolio during 1999.
During the three and six months ended June 30, 1999 the Company recognized
income from discontinued operations of $1.3 million ($801,000 net of taxes) as a
consequence of lower than anticipated losses on the disposal of the servicing
portfolio. The MSB anticipated loss from operations projected higher prepayment
speeds and higher servicing and disposal cost than actually occurred.
8. DERIVATIVES
During the six months ended June 30, 2000 the Company entered into interest
rate swap contracts with various primary brokers in an aggregate notional amount
of $240 million, of which $150 million terminates two years from the date of
issuance and $90 million terminates one year from the date of issuance. 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 and 6.88% for the one year 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.
9. SEGMENT REPORTING
Operating segments are defined as components of an enterprise about which
separate financial information is available that is regularly reviewed by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. Reportable segments consist of one or more operating
segments with similar economic characteristics, products and services,
production processes, type of customer, distribution system and regulatory
environment. The information provided for Segment Reporting is based on internal
reports utilized by management. Interest expense and certain revenue and expense
items are allocated to the various segments as interest expense and overhead.
The presentation and allocation of interest expense and overhead and the net
contribution calculated under the management approach may not reflect the actual
economic costs, contribution or results of operations of the unit as a stand
alone business. If a different basis of allocation was utilized, the relative
contributions of the segments might differ but the relative trends in segments
would, in management's view, likely not be impacted.
-15-
<PAGE>
BANKATLANTIC BANCORP, INC.
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 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 June 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
---------------------------- --------- ----------- ---------- -------- ----------- ---------- ---------
June 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income ............. $ 17,939 $ 25,219 $ 25,090 $ 10,946 $ 492 $ 460 $ 80,146
Interest expense and overhead (16,435) (20,528) (17,076) (6,617) (1,294) (70) (62,020)
Recovery from (provision for)
loan losses .............. 0 4 (2,375) (2,162) 0 0 (4,533)
Non-interest income ......... 17 520 (160) 729 3,221 12,718 17,045
==========================================================================================
Segment profits before taxes 718 5,160 5,797 (2,820) (1,493) 102 7,464
Provision for income taxes .. 291 2,092 2,350 (1,143) (1,256) 127 2,461
--------- ----------- ---------- -------- --------- -------- ---------
Segment net income (loss) ... $ 427 $ 3,068 $ 3,447 $ (1,677) $ (237) $ (25) $ 5,003
========= =========== ========== ======== ========= ======== ==========
Segment total assets ........ $1,128,627 $ 1,338,429 $ 1,132,974 $ 415,747 $ 154,210 $ 38,212 $4,208,199
========= =========== ========== ======== ========= ======== ==========
JUNE 30, 1999
Interest income ............. $ 17,213 $ 22,060 $ 19,815 $ 13,725 $ 378 $ 340 $ 73,531
Interest expense and overhead (13,572) (17,710) (11,300) (7,208) (417) (222) (50,429)
Recovery from (provision for)
loan losses .............. 0 (117) 754 (6,306) 0 0 (5,669)
Non-interest income ......... 890 (106) 501 1,274 2,247 6,406 11,212
==========================================================================================
Segment profits before taxes 4,287 4,323 10,062 (1,880) 488 (3,378) 13,902
Provision for income taxes .. 1,626 1,640 3,816 (713) 185 (1,281) 5,273
--------- ----------- ---------- -------- --------- -------- ---------
Segment net income (loss) ... $ 2,661 $ 2,683 $ 6,246 $ (1,167) $ 303 $ (2,097) $ 8,629
========= =========== ========== ======== ========= ======== =========
Segment total assets ........ $1,131,549 $ 1,283,319 $ 897,299 $ 533,251 $ 66,818 $ 57,460 $3,969,696
========= =========== ========== ======== ========= ======== =========
</TABLE>
The following table is segment information for income from continuing
operations for the six months ended June 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
---------------------------- --------- ----------- ---------- -------- ----------- ---------- ---------
JUNE 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 35,056 $ 50,719 $ 48,407 $ 22,175 $ 72 $ 941 $ 157,370
Interest expense and overhead (31,133) (40,844) (31,485) (12,797) (2,325) (278) (118,862)
Recovery from (provision for)
loan losses 0 (178) (2,289) (12,853) 0 0 (15,320)
Non-interest income 91 520 271 1,446 10,636 25,918 38,882
==========================================================================================
Segment profits before taxes 1,689 8,781 13,532 (10,548) 860 (737) 13,577
Provision for income taxes 677 3,533 5,428 (4,218) (320) (207) 4,893
--------- ----------- ---------- -------- --------- -------- ---------
Segment net income (loss) $ 1,012 $ 5,248 $ 8,104 $ (6,330) $ 1,180 $ (530) $ 8,684
========= =========== ========== ======== ========= ======== =========
JUNE 30, 1999
Interest income $ 29,221 $ 44,498 $ 38,000 $ 27,373 $ 154 $ 697 $ 139,943
Interest expense and overhead (23,597) (35,994) (21,513) (15,020) (807) (449) (97,380)
Recovery from (provision for)
loan losses 0 (85) (133) (10,615) 0 0 (10,833)
Non-interest income 1,416 (42) 891 2,653 5,387 15,346 25,651
==========================================================================================
Segment profits before taxes 6,001 7,525 16,481 (2,819) 4,131 (3,739) 27,580
Provision for income taxes 2,309 2,916 6,375 (1,052) 1,570 (1,338) 10,780
--------- ----------- ---------- -------- --------- -------- ---------
Segment net income (loss) $ 3,692 $ 4,609 $ 10,106 $ (1,767) $ 2,561 $ (2,401) $ 16,800
========= =========== ========== ======== ========= ======== =========
</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 June 30,
-----------------------
(in thousands) 2000 1999
---------- ----------
Total Assets
Total assets for reportable segments $4,208,199 $3,969,697
Assets in discontinued operations .. 0 28,919
Assets in overhead ................. 230,392 250,591
---------- ----------
Total consolidated assets .......... $4,438,591 $4,249,207
========== ==========
For the For the
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
(in thousands) 2000 1999 2000 1999
------ ------ ------ ------
Non-interest Income
Total non-interest income for
reportable segments ......... $17,045 $11,212 $38,882 $25,651
Items included in interest
expense and overhead:
Transaction fee income ...... 3,221 3,428 6,472 7,019
ATM fees .................... 2,718 2,504 5,233 4,703
Other deposit related fees .. 817 1,534 1,963 4,774
------ ------ ------ ------
Total consolidated non-interest
income ...................... $23,801 $18,678 $52,550 $42,147
====== ====== ====== ======
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 as 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.
11. RECLASSIFICATIONS
Certain amounts for prior periods have been reclassified to conform with
the statement presentation for the periods in 2000.
-18-
<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, the financing and consummation of the anticipated corporate
transaction and possible debenture repurchases 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.
RESULTS OF OPERATIONS
For the For the
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
(In thousands, except per share data) 2000 1999 2000 1999
------- ------- ------- -------
Income from continuing operations . $ 5,003 $ 8,629 $ 8,684 $16,800
Income from discontinued operations
net of taxes .................... 259 801 259 801
Extraordinary item, net of taxes .. 0 0 3,466 0
------- ------- ------- -------
Net income ........................ $ 5,262 $ 9,430 $12,409 $17,601
======= ======= ======= =======
CLASS A COMMON SHARES
Basic earnings per share from
continuing operations ............ $ 0.12 $ 0.22 $ 0.21 $ 0.42
Basic earnings per share from
discontinued operations .......... 0.01 0.02 0.01 0.02
Extraordinary item, net of taxes .. 0.00 0.00 0.09 0.00
------- ------- ------- -------
Basic earnings per share .......... $ 0.13 $ 0.24 $ 0.31 $ 0.44
======= ======= ======= =======
Diluted earnings per share from
continuing operations ............ $ 0.11 $ 0.17 $ 0.20 $ 0.33
Diluted earnings per share from
discontinued operations .......... 0.00 0.01 0.00 0.02
Extraordinary item ................ 0.00 0.00 0.06 0.00
------- ------- ------- -------
Diluted earnings per share ........ $ 0.11 $ 0.18 $ 0.26 $ 0.35
======= ====== ======= =======
CLASS B COMMON SHARES
Basic earnings per share from
continuing operations ............ $ 0.11 $ 0.20 $ 0.19 $ 0.39
Basic earnings per share from
discontinued operations .......... 0.01 0.02 0.01 0.02
Extraordinary item ................ 0.00 0.00 0.08 0.00
------- ------- ------- -------
Basic earnings per share ......... $ 0.12 $ 0.22 $ 0.28 $ 0.41
======= ======= ======= =======
Diluted earnings per share from
continuing operations ............ $ 0.11 $ 0.17 $ 0.19 $ 0.32
Diluted earnings per share from
discontinued operations .......... 0.01 0.01 0.00 0.01
Extraordinary item ................ 0.00 0.00 0.06 0.00
------- ------- ------- -------
Diluted earnings per share ........ $ 0.12 $ 0.18 $ 0.25 $ 0.33
======= ======= ======= =======
-19-
<PAGE>
BANKATLANTIC BANCORP, INC.
Income from continuing operations - Income from continuing operations
declined by 42% during the three months ended June 30, 2000 compared to the same
period during 1999. The primary reasons for the decline were:
/bullet/ higher compensation expense from expanded investment banking
operations, the acquisition of Levitt & Sons and new banking
products,
/bullet/ a significant increase in other real estate expenses resulting
from Levitt & Sons during 2000 which were not included during
1999,
/bullet/ increased occupancy expenses associated with repairs and
maintenance on bank branches, data processing services and
maintenance contracts associated with ATM operations,
/bullet/ lower gains on sales of securities available for sale net
of write-downs,
/bullet/ an unrealized loss on a syndication loan,
/bullet/ 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,
/bullet/ a decline in income from foreclosed asset activity, net
reflecting the sale of a REO property during 1999 for a
$1.4 million gain,
/bullet/ a substantial increase in advertising costs due to the
acquisition of Levitt & Sons and promotions of new deposit
and loan products,
/bullet/ higher other expenses excluding RBCO and real estate
operations primarily associated with consulting fees
related to technology investments, and
/bullet/ 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 continued operations were partially
offset by:
/bullet/ an improvement in the provision for loan losses resulting
from a decline in small business and indirect consumer loan
charge-offs,
/bullet/ a significant increase in RBCO non-interest income,
/bullet/ an increase in gains on sales of real estate held for sale
due to the Levitt & Sons acquisition, and
/bullet/ 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.
INCOME FROM CONTINUING OPERATIONS - Income from continuing operations for
the six months ended June 30, 2000 declined by 48% compared to the same period
during 1999. The primary reasons for the decline were related to the items
discussed above along with an increase in the provision for loan losses
attributed to charge-offs and delinquency trends in the small business and
indirect consumer loan portfolios.
DISCONTINUED OPERATIONS - Income from discontinued operations for the three
and six months ended June 30, 2000 was $259,000 compared to $801,000, net of
income taxes, respectively for the same 1999 periods. Income from discontinued
operations during the three and six months ended June 30, 2000 resulted from the
sale of a building used in the mortgage servicing operations. Income from
discontinued operations during the three and six months ended June 30, 1999
resulted primarily from slower loan repayments than originally estimated which
were the result of caused by rising residential loan interest rates during the
period.
EXTRAORDINARY ITEM - The extraordinary item resulted from the early
extinguishment of debt. On February 29, 2000, the Company repurchased $25
million aggregate principal amount of its 5 5/8% convertible subordinated
debentures for $18.75 million. Included in the extraordinary item was $250,000
of offering costs and a $673,000 writeoff of unamortized original issuance
costs.
-20-
<PAGE>
BANKATLANTIC BANCORP, INC.
NET INTEREST INCOME
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
(In thousands) 2000 1999 Change 2000 1999 Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans and leases $ 60,964 $ 55,369 $ 5,595 $119,848 $108,933 $ 10,915
Interest on banker's acceptances .... 247 200 47 487 389 98
Interest and dividends on securities
available for sale ................ 14,361 14,618 (257) 28,000 24,671 3,329
Interest and dividends on investment
securities held to maturity and
trading securities ................ 4,574 3,344 1,230 9,035 5,950 3,085
Interest on deposits ................ (22,267) (20,529) (1,738) (42,105) (37,120) (4,985)
Interest on advances from FHLB ...... (15,692) (13,337) (2,355) (31,540) (26,834) (4,706)
Interest on securities sold under
agreements to repurchase .......... (7,407) (4,353) (3,054) (13,989) (8,397) (5,592)
Interest on subordinated debentures,
notes, payable and guaranteed
preferred interest in the Company's
Junior Subordinated Debentures .... (6,932) (4,912) (2,020) (13,521) (9,699) (3,822)
Capitalized interest ................ 1,841 157 1,684 3,526 332 3,194
-------- -------- -------- -------- -------- --------
Net interest income ............... $ 29,689 $ 30,557 $ (868) $ 59,741 $ 58,225 $ 1,516
======== ======== ======== ======== ======== ========
Net interest margin ................. 2.95% 3.22% (0.27)% 3.01% 3.17% (0.16)%
======== ======== ======== ======== ======== ========
</TABLE>
SECOND QUARTER THIS YEAR VERSUS THE SAME QUARTER LAST YEAR:
Net interest income decreased by 3%. The net interest income decline
primarily resulted from a decline in the net interest margin partially offset by
interest earning asset growth. Total interest income increased by $6.6 million
while total interest expense increased by $7.5 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. The increased average rates on interest
paying liabilities primarily resulted from competition in the Company's deposit
markets and the increasing interest rate environment mentioned above driving up
rates on institutional borrowings. Additionally, the Company retired $25.0
million of 5 5/8% Convertible Subordinated Debentures and issued $27.7 million
of Investment Notes with interest rates ranging from 10% to 11.75%.
The increase in loan interest income primarily resulted from increases in
average balances as a consequence of the origination of commercial real estate
loans, lease financings, home equity and syndication loans as well as the
purchase of wholesale residential loans and commercial real estate loans. The
above increases in loan average balances were partially offset by declines in
the Company's consumer 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 average balances resulted from a significant decrease in loan
originations during the 1999 fiscal year and the six months of 2000 compared to
the 1998 fiscal year. Also contributing to the increase in loan interest income
was higher yields due to the increases in the prime interest rate.
-21-
<PAGE>
BANKATLANTIC BANCORP, INC.
The increase in banker's acceptances interest income resulted from higher
average balances and 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 securities held to maturity average balances resulted
from purchases during the second quarter of 2000.
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 resulted from 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 six months of 2000. The new deposit products
have higher interest rates than the Company's existing deposits. As a result the
average rates on interest-bearing deposits increased from 4.09% during the 1999
quarter to 4.64% during the comparable 2000 period. Two of the deposit products
were a one and two-year fixed rate callable certificate of deposit. The Company
synthetically altered the interest rate characteristics of these deposit
accounts from fixed-rate borrowings to floating-rate borrowings with one and two
year interest rate swaps. The Company originated approximately $232 million of
these one and two year time deposit products during the first six months of
2000.
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 then the existing portfolio.
The higher interest expense on securities sold under agreements to
repurchase resulted from higher average balances and rates. The higher average
balances funded loan growth and the purchase of other securities held to
maturity and 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 primarily from notes payable acquired in connection with the
Levitt & Sons acquisition. The Levitt Corporation average notes payable balance
during the 2000 period was $51 million with no corresponding balance during the
1999 period. The reduction of interest expense associated with the retirement of
$25.0 million of the 5 5/8% Convertible Subordinated Debentures was offset by
the interest expense related to the issuance of $27.7 million of investment
notes.
Interest expense of $1.8 million was capitalized during the three months
ended June 30, 2000 associated with Levitt Corporation real estate operations
and investments and advances to joint ventures. During the three months ended
June 30, 1999 $157,000 of interest expense was capitalized in connection with
investments and advances to real estate joint ventures.
The net interest margin declined to 2.95% during 2000 compared to 3.22%
during 1999 as rate increases in liabilities exceeded the increase in yields on
earning assets. Yields on earning assets increased from 7.78% during the 1999
period to 8.04% during the 2000 period. Likewise, the ratio of interest expense
income to interest earning assets increased from 4.56% during the 1999 period to
5.09% during the 2000 period. The increased earning asset yields and increased
ratio of interest expense to interest earning assets were primarily the result
of the rising interest rate environment.
-22-
<PAGE>
BANKATLANTIC BANCORP, INC.
YEAR-TO-DATE THIS YEAR VERSUS YEAR-TO-DATE LAST YEAR:
Net interest income increased by 3%. Total interest income increased by
$17.4 million while total interest expense increased by $15.9 million. The
change in net interest income primarily resulted from the items discussed above
for the three months ended June 30, 2000 except for an increase in interest
income on securities available for sale. The higher securities available for
sale interest income reflects higher average balances and yields resulting from
the purchase of REMIC securities during 1999. The net interest margin declined
by 16 basis points. Yields on earning assets increased from 7.76% during the
1999 period to 7.99% during the 2000 period. Likewise, rates on interest bearing
liabilities increased from 4.59% during the 1999 period to 4.98% during the 2000
period. The change in net interest margin primarily resulted from the items
discussed above for the three months ended June 30, 2000.
PROVISION FOR LOAN LOSSES
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Balance, beginning of period .. $ 47,650 $ 37,350 $ 44,450 $ 37,950
Charge-offs:
Commercial real estate loans 0 (53) 0 (211)
Non-mortgage commercial ..... 0 (61) (24) (61)
Lease financing ............. (402) (245) (922) (548)
Small business - real estate (67) (75) (85) (85)
Small business - non-mortgage (2,964) (2,738) (6,095) (4,831)
Consumer loans - indirect ... (1,025) (2,322) (4,394) (5,618)
Consumer loans - direct ..... (283) (517) (1,777) (1,212)
Residential real estate .... (241) (44) (341) (103)
-------- -------- -------- --------
(4,982) (6,055) (13,638) (12,669)
-------- -------- -------- --------
Recoveries:
Commercial real estate loans 0 198 2 198
Residential real estate ..... 96 0 97 0
Lease financing ............. 108 83 162 149
Non-mortgage commercial ..... 28 10 42 150
Small business - non-mortgage 174 38 287 74
Consumer loans - indirect ... 847 570 1,545 950
Consumer loans - direct ..... 196 237 383 465
-------- -------- -------- --------
1,449 1,136 2,518 1,986
-------- -------- -------- --------
Net charge-offs ............... (3,533) (4,919) (11,120) (10,683)
Additions charged to operations 4,533 5,669 15,320 10,833
-------- -------- -------- --------
Balance, end of period ........ $ 48,650 $ 38,100 $ 48,650 $ 38,100
======== ======== ======== ========
The provision for loan losses decreased during the three months ended June
30, 2000 compared to the same 1999 period due to a $1.4 million decline in net
charge-offs primarily associated with the indirect loan portfolio. 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 $287.4
million at June 30, 1999 to $176.1 million at June 30, 2000. The increase in the
allowance for loan losses during the quarter resulted from a $1.3 million
specific reserve assigned to the indirect consumer loan portfolio.
The provision for loan losses increased during the six months ended June 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
-23-
<PAGE>
BANKATLANTIC BANCORP, INC.
consumer loan second mortgage charge-offs. The increase in the allowance for
loan losses for the six months ended June 30, 2000 resulted from small business
and consumer loan charge-offs, delinquency trends and the specific reserve
mentioned above.
At the indicated dates the Company's non-performing assets were (in
thousands):
June 30, December 31,
2000 1999
------- -----------
Nonaccrual:
Tax certificates .................... $ 3,364 $ 2,258
Loans and leases .................... 27,651 42,741
------- -------
Total nonaccrual .................... 31,015 44,999
------- -------
Repossessed Assets:
Real estate owned, net of allowance .. 5,465 3,951
Vehicles and equipment ............ 1,179 1,253
------- -------
Total repossessed assets ............. 6,644 5,204
------- -------
Contractually past due 90 days or more (1) 865 410
------- -------
Total non performing assets ...... $38,524 $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:
/bullet/ a $4.7 million decrease in consumer non-accrual loans,
/bullet/ a $6.8 million decline in non-accrual residential loans
including a $3.0 million decline in non-accrual residential
loans purchased,
/bullet/ a $2.1 million reduction in non-accrual small business loans,
/bullet/ a $1.2 million decrease in non-accrual commercial loans, and
/bullet/ a $232,000 decrease in non-accrual lease financing.
The increase in non-accrual tax certificates was primarily the result of
the increased size of the tax certificate portfolio.
Non-accrual and repossessed consumer loans decreased significantly
resulting from more aggressive disposition, repossession and collection
procedures. Repossessed equipment associated with lease financing increased
$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 reduction in small business non-accrual loans resulted from changes in
the collection process resulting in improvements in the delinquency trends.
-24-
<PAGE>
BANKATLANTIC BANCORP, INC.
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 REO balances was attributed to increased residential REO and
the foreclosure mentioned above.
NON-INTEREST INCOME
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 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 ...................... $ 1,069 $ 1,359 $ (290) $ 2,107 $ 2,489 $ (382)
Gains on sales of loans
held for sale, net of write-down (367) 234 (601) (289) 867 (1,156)
Gains on sales of property
and equipment .................... 58 1,459 (1,401) 240 1,459 (1,219)
Trading account gains (losses) ..... (16) 15 (31) 22 (54) 76
Gains on sales of securities
available for sale .............. 218 839 (621) 230 1,418 (1,188)
Transaction accounts ............... 3,221 3,428 (207) 6,472 7,019 (547)
ATM fees ........................... 2,718 2,504 214 5,233 4,703 530
Other ............................ 961 1,079 (118) 1,726 2,128 (402)
-------- -------- -------- -------- -------- --------
Non-interest income - banking
operations ....................... 7,862 10,917 (3,055) 15,741 20,029 (4,288)
-------- -------- -------- -------- -------- --------
RBCO Operations
Principal transactions ............. 4,043 1,704 2,339 9,001 4,704 4,297
Investment banking ................. 3,032 1,223 1,809 5,039 4,340 699
Commissions ........................ 5,429 3,331 2,098 11,664 6,007 5,657
Other .............................. 214 146 68 469 293 176
-------- -------- -------- -------- -------- --------
Non-interest income - RBCO ......... 12,718 6,404 6,314 26,173 15,344 10,829
-------- -------- -------- -------- -------- --------
Levitt Operations
Gains on sales of real estate
held for sale .................... 2,774 1,720 1,054 6,169 5,387 782
Equity in earnings of unconsolidated
real estate joint ventures ....... (128) (418) 290 (412) 1,310 (1,722)
Utility expansion receivable sale .. 363 0 363 4,265 0 4,265
Other .............................. 212 55 157 614 77 537
-------- -------- -------- -------- -------- --------
Non-interest income - real estate
operations ........................ 3,221 1,357 1,864 10,636 6,774 3,862
-------- -------- -------- -------- -------- --------
Total non-interest income .......... $ 23,801 $ 18,678 $ 5,123 $ 52,550 $ 42,147 $ 10,403
======== ======== ======== ======== ======== ========
</TABLE>
NON-INTEREST INCOME - BANK OPERATIONS
Loan late fees and other loan income decreased during the three and six
months ended June 30, 2000 compared to the same periods during 1999. The
decrease resulted from lower late fees on consumer and residential loans and a
decline in renewal fee income on small business loans.
During the three months ended June 30, 2000 the Company securitized $33.6
million of loans held for sale and sold $25.9 million of the resulting
securities available for sale for a $312,000 gain. Additionally the Company sold
$49.9 million of treasury notes for a $18,000 gain and sold $2.3 million of
corporate bonds for a $112,000 loss. During the six months ended June 30, 2000
the Company sold $78.8 million of securities available for sale for a $230,000
gain inclusive of a write-down of marketable equity securities available for
sale of $781,000. The write-down was made due to a significant decline in the
market value of the security. The decline was considered other than temporary
-25-
<PAGE>
BANKATLANTIC BANCORP, INC.
due to the magnitude and length of time of the decline and the financial
condition and the near term prospects for the issuer of the security.
During the three and six months ended June 30, 1999 the Company sold $78.2
million and $138.5 million of securities available for sale for gains as shown
on the above table.
During the three months ended June 30, 2000 the Company sold $9.1 million
of loans held for sale for a $247,000 gain, recognized a $86,000 decrease in the
valuation allowance on residential loans held for sale, and recorded a $700,000
unrealized loss on a syndicated loan. The borrower on a $12.0 million syndicated
loan received a going concern opinion from its independent auditors'. The
underwriter of the syndicate offered to purchase the loan from the Company at a
discount. On July 7, 2000, the Company completed the sale of the syndication
loan to the syndicate underwriter realizing the $700,000 loss.
During the six months ended June 30, 2000, the Company sold $23.4 million
of loans held for sale for a $532,000 gain, recognized a $121,000 increase in
the valuation allowance on residential loans held for sale and recorded a
$700,000 unrealized loss on a syndication loan.
During the three months ended June 30, 1999 the Company sold $23.9 million
and $457,000 of loans and leases held for sale for gains of $197,000 and
$37,000, respectively. During the six months ended June 30, 1999 the Company
sold $80.7 million of loans held for sale and $1.4 million of leases for gains
of $753,000 and $114,000, respectively.
During the three months ended June 30, 2000 the Company sold ATM equipment
for a gain as shown on the above table. During the six months ended June 30,
2000, the Company sold a parcel of land for a $182,000 gain.
During the three and six months ended June 30, 1999, two branches were
consolidated and the vacated property was sold for a gain as shown on the above
table.
During the three and six months ended June 30, 2000, the Company realized
gains (losses) of $(16,000) and $22,000, respectively on securities trading
compared to realized gains (losses) of $15,000 and $(54,000), respectively,
during the same 1999 periods. Trading activities consisted of options and
futures on government securities and Eurodollar time deposits.
The Company experienced a decline in all transaction fee income categories
during the three and six months ended June 30, 2000 compared to the same periods
in 1999. The reduction in transaction fee income primarily resulted from
declines in transaction accounts associated with small business loans and the
Company's increased monitoring of deposit account activity in order to prevent
check kiting and check fraud activities.
The increase in ATM fee income during the three and six months ended June
30, 2000 was primarily the result of a renegotiated profit sharing agreement and
increased ATM activity at the Company's branch locations.
The decline in other income during the three and six months ended June 30,
2000 was due to lower commissions earned from teller check outsourcing and
deposit customer services such as teller check fees and account research fees.
NON-INTEREST INCOME - RBCO OPERATIONS
The increased principal transaction income during the three and six months
ended June 30, 2000 compared to the same 1999 period resulted from improved
equity trading results. During the 1999 quarter RBCO principal transaction
revenues were adversely affected by unfavorable market conditions and a lack of
retail and institutional interest in small and mid size financial service
companies as well as losses associated with RBCO's trading activities. During
2000, market conditions were favorable and RBCO experienced trading gains
associated with general market research stocks and its new wholesale fixed
income trading desk.
-26-
<PAGE>
BANKATLANTIC BANCORP, INC.
The increase in investment banking revenues during the three and six months
ended June 30, 2000 compared to the same 1999 period resulted from increased
merger and acquisition consulting fees as well as investment banking revenues
from the middle markets group which began operations in April 1999.
The significant increase in commission income during the three and six
months ended June 30, 2000 compared to the same 1999 period was attributed to
growth in RBCO's retail and institutional clients. The growth reflects fees from
the brokerage operations conducted in various BankAtlantic branches and income
from the Southeast Research Group which was acquired by RBCO in June 1999.
The increased other income during the three and six months ended June 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 six months ended June 30, 2000 SLWHC land sales
resulted in gains of $701,000 and $1.9 million, respectively, while Levitt &
Sons sales of real estate resulted in net gains of $2.1 million and $4.3
million, respectively.
During the three and six months ended June 30, 1999 SLWHC land sales
resulted in gains of $1.7 million and $5.4 million, respectively.
During February 2000, SLWHC received a cash payment of $8.5 million
representing the full satisfaction of a certain 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 an 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.
Levitt Corporation's equity in earnings from joint ventures was a $128,000
and $412,000 loss during the three and six months ended June 30, 2000 compared
to a loss of $418,000 during the three months ended June 30, 1999 and a gain of
$1.3 million during the six months ended June 30, 1999. During the first quarter
of 1999, one of the real estate joint ventures consummated a land sale to a
third party developer resulting in the recognition of a $1.7 million gain.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-27-
<PAGE>
BANKATLANTIC BANCORP, INC.
NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
For the Three Month Ended For the Six Months Ended
June 30, June 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 . $ 11,120 $ 9,034 $ 2,086 $ 22,005 $ 18,675 $ 3,330
Occupancy and equipment ............ 5,638 5,400 238 11,239 10,589 650
Foreclosed asset activity, net ..... 124 (1,355) 1,479 275 (1,265) 1,540
Advertising and promotion .......... 1,452 473 979 2,033 799 1,234
Amortization of cost over fair value
of net assets acquired ........... 709 709 0 1,417 1,421 (4)
Other .............................. 5,210 4,174 1,036 10,261 9,929 332
-------- -------- -------- -------- -------- --------
Non-interest expense .............. 24,253 18,435 5,818 47,230 40,148 7,082
-------- -------- -------- -------- -------- --------
RBCO OPERATIONS
Employee compensation and benefits . 8,732 6,481 2,251 18,576 12,931 5,645
Occupancy and equipment ............ 809 601 208 1,708 1,086 622
Advertising and promotion .......... 383 261 122 655 509 146
Amortization of cost over fair value
of net assets acquired ........... 315 277 38 623 548 75
Other .............................. 2,753 2,006 747 5,938 3,982 1,956
----- ----- --- ----- ----- -----
Non-interest expenses .............. 12,992 9,626 3,366 27,500 19,056 8,444
-------- -------- -------- -------- -------- --------
REAL ESTATE OPERATIONS
Employee compensation and benefits . 1,316 236 1,080 2,641 388 2,253
Advertising and promotion .......... 835 203 632 1,448 385 1,063
Selling, general and administrative 2,097 1,164 933 4,575 1,982 2,593
----- ----- --- ----- ----- -----
4,248 1,603 2,645 8,664 2,755 5,909
-------- -------- -------- -------- -------- --------
Total non-interest expense ......... $ 41,493 $ 29,664 $ 11,829 $ 83,394 $ 61,959 $ 21,435
======== ======== ======== ======== ======== ========
</TABLE>
NON-INTEREST EXPENSE - BANK OPERATIONS
The significant increase in compensation expense during the three and six
months ended June 30, 2000 primarily resulted from the hiring of personnel for
several lines of business, including personnel for internet banking, 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 increase in occupancy and equipment expenses during the three and six
months ended June 30, 2000 resulted from higher ATM equipment repair and
maintenance, additional data processing fees and higher costs associated with
branch network repairs and maintenance.
Higher advertising and promotion expense related to promotions associated
with BankAtlantic's new deposit and loan products that were introduced during
the first quarter of 2000 and advertising and promotional costs during the
second quarter associated with the internet banking.
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 three months ended June 30, 1999.
-28-
<PAGE>
BANKATLANTIC BANCORP, INC.
The increase in other expenses during the three and six months ended June
30, 2000 resulted from:
/bullet/ higher consulting fees primarily associated with internet
banking,
/bullet/ increased provision for tax certificates attributed to the
growth in the portfolio and
/bullet/ 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
All categories of non-interest expense increased during the three and six
months ended June 30, 2000 compared to the same 1999 periods. Compensation and
benefits accounted for the majority of the increase. The increase in
compensation and benefits 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 50 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 six months
ended June 30, 2000 compared to the same periods in 1999 reflects additional
rent and depreciation expenses associated with the expansion of business
activities indicated above.
The higher amortization of cost over fair value of net assets acquired was
attributable to the June 28, 1999 acquisition of the Southeast Research Group.
The increase in other expense 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
81% 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.
Included in other expenses in the Company's Consolidated Statements of
Operations during the three and six months ended June 30, 2000 was $155,000 and
$305,000, respectively, of consulting fees paid to the Abdo Companies, an
affiliate of the Company. John Abdo, the Vice Chairman and Director of the
Company is the President and Chief Executive Officer of the Abdo Companies.
During the three and six months ended June 30, 1999 $150,000 and $300,000 of
consulting fees were paid to the Abdo Companies. Additionally, $20,000 and
$40,000, respectively, of management fees were paid to BFC Financial
Corporation, an affiliate of the Company, during the three and six months ended
June 30, 2000. BFC Financial Corporation provides administrative and real estate
advisory services to the Levitt Corporation. BFC Financial Corporation pays
BankAtlantic a $9,000 quarterly administration fee and rents office space from
BankAtlantic for a monthly rent payment of $2,227.
-29-
<PAGE>
BANKATLANTIC BANCORP, INC.
SEGMENT REPORTING
The table below provides segment information for continuing operations:
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- ---------------------
Net contribution after income
taxes 2000 1999 2000 1999
-------- -------- -------- --------
Bank investment operations -
wholesale residential ......... $ 3,068 $ 2,683 $ 5,248 $ 4,609
Bank investment operations
- other ....................... 427 2,661 1,012 3,692
Bank loan operations - retail
products ...................... (1,677) (1,167) (6,330) (1,767)
Bank loan operations - commercial
products ...................... 3,447 6,246 8,104 10,106
Real estate operations .......... (237) 303 1,180 2,561
Investment banking operations ... (25) (2,097) (530) (2,401)
-------- -------- -------- --------
Net contributions ............... $ 5,003 $ 8,629 $ 8,684 $ 16,800
======== ======== ======== ========
BANK INVESTMENT OPERATIONS
Segment net contribution from bank investment operations - wholesale
residential increased during the three and six months ended June 30, 2000
compared to the same 1999 period primarily from an increase in earning assets
and higher average yields. The additional earning assets represent loans
purchased during the period and the improvement in yield reflects rate
adjustments on adjustable rate loans. The additional overhead allocation
reflects the increase in segment assets and higher bankwide allocated overhead.
Segment net contribution from bank investment operations - other declined
during the three and six months ended June 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 writedown of a marketable equity security. The increase in interest
income during the six months ended June 30, 2000 compared to the same 1999
period resulted from increased earning assets relating primarily to the purchase
of securities during the period. The higher interest expense and overhead
resulted from an increase in allocated overhead reflecting a significant
increase in non-interest expenses as well as higher bankwide interest expense
primarily due to deposit and other borrowing rate increases.
BANK LOAN OPERATIONS
Segment net contribution from bank loan operations - retail declined during
the three months ended June 30, 2000 due to a decrease in interest income
attributed to lower earning asset 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.
The above decreases in segment net contribution were partially offset by an
improved provision for loan losses due to a decline in indirect loan
charge-offs. Segment net contribution during the six months ended June 30, 2000
compared to the same 1999 period decreased due to the items discussed above and
an increase in the provision for loan losses. The additional provision for loan
losses during 2000 was the result of increased small business charge-offs and
delinquency trends.
Segment net contribution from bank loan operations - commercial declined
during the three and six months ended June 30, 2000 compared to the same periods
during 1999 due to a significant increase in the provision for loan losses, a
$700,000 unrealized loss associated with a syndicated loan, and higher allocated
overhead. The provision for loan losses increase resulted from higher loan
balances and increased classified assets in the syndicated loan portfolio.
REAL ESTATE OPERATIONS
Segment net contribution from real estate operations during the three and
six months ended June 30, 2000 compared to the same 1999 period decreased due to
a decline in earnings from joint venture operations, a loss in Levitt & Sons
operations and higher overhead allocations. The above net contribution declines
-30-
<PAGE>
BANKATLANTIC BANCORP, INC.
were partially offset by the sale of by SLWHC of a utility expansion receivable
and a reduction in the deferred tax asset valuation allowance. The additional
overhead allocation reflects a significant increase in intercompany borrowings
during 2000 compared to 1999.
INVESTMENT BANKING OPERATIONS
Segment net contribution from investment banking operations during the
three and six months ended June 30, 2000 compared to the same 1999 period
improved resulting from a significant increase in commission, investment banking
and trading revenues, partially offset by higher compensation, communication and
occupancy expenses. The increased compensation expense reflects higher
commission expense associated with the commission revenue. The higher
communication and occupancy expenses resulted from the expansion of RBCO
operations and the acquisition of the Southeast Research Group.
FINANCIAL CONDITION
The Company's total assets at June 30, 2000 were $4.4 billion compared to
$4.2 billion at December 31, 1999. The increase in total assets primarily
resulted from increased:
/bullet/ loans held for sale balances due to the transfer of a $12.0
million syndicated loan from loans held to maturity to loans
held for sale,
/bullet/ 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,
/bullet/ real estate held for development and sale and joint ventures
due to the funding of loan commitments to real estate joint
ventures,
/bullet/ loans receivable reflecting the origination and purchase of
commercial real estate loans, and
/bullet/ accrued interest receivable reflecting the caused by growth
in earnings assets.
The above increases in total assets were partially offset by decreased:
/bullet/ securities available for sale resulting from principal
pay-downs and sales of mortgage-backed securities and
REMICs,
/bullet/ trading securities related to RBCO operations,
/bullet/ FHLB stock reflecting sales during the period,
/bullet/ other assets reflecting lower balances in broker-dealer
receivable, dealer reserve and prepaid expenses, and
/bullet/ deferred tax asset, net attributed to a decline in
unrealized depreciation on securities available for sale.
The Company's total liabilities at June 30, 2000 were $4.2 billion compared
to $3.9 billion at December 31, 1999. The increase in total liabilities
primarily resulted from increased:
/bullet/ deposit balances reflecting the introduction of new deposit
products,
/bullet/ securities sold under agreements to repurchase used to
fund growth in loans receivable and other securities held
to maturity and to pay-down FHLB advances, and
/bullet/ other liabilities resulting from tax certificate purchases
and increased teller check balances.
The above increases in total liabilities were partially offset by
decreased:
/bullet/ FHLB advances, and
/bullet/ subordinated debentures, notes and bond payable.
The repurchase of $25 million of 5 5/8% convertible subordinated debentures
was offset by the issuance of $27.7 million of investment notes.
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<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, trading and
available for sale securities at June 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 % $ 20,155 $ 31,622 $ 460 $ 8,706
10 % $ 18,476 $ 28,987 $ 421 $ 4,353
- % $ 16,796 $ 26,352 $ 383 $ 0
(10)% $ 15,116 $ 23,717 $ 345 $ (4,353)
(20)% $ 13,437 $ 21,082 $ 306 $ (8,706)
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 1998, the
Company began trading government securities which are generally bought and sold
on the same day. During the second quarter of 1999 the Company's trading
activities were expanded beyond trading in government securities to trading in
options and futures on Eurodollar time deposits which expire in six months or
less. Eurodollar time deposits are indexed to the LIBOR. During the six months
ended June 30, 2000 the Company has entered into 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 June 30, 2000 resulting from a change in interest
rates. Interest rate sensitive instruments included in the model were the
Company's:
/bullet/ loan portfolio,
/bullet/ debt securities available for sale,
/bullet/ investment securities,
/bullet/ FHLB stock,
/bullet/ Federal Funds sold,
/bullet/ government securities,
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BANKATLANTIC BANCORP, INC.
/bullet/ Eurodollar time deposit options and futures
/bullet/ deposits, including brokered deposits and public funds,
/bullet/ advances from FHLB,
/bullet/ securities sold under agreements to repurchase,
/bullet/ Federal Funds purchased,
/bullet/ Notes and Bonds payable
/bullet/ Subordinated Debentures and investment notes,
/bullet/ Trust Preferred Securities,
/bullet/ Interest rate swaps, and
/bullet/ Off-balance sheet loan commitments.
The Company had fixed rate loan commitments aggregating $40.1 million at
June 30, 2000.
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 June 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 June
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 $ 133,991 $ (101,641)
+100 bp $ 188,910 $ (46,722)
0 bp $ 235,632 $ 0
(100) bp $ 280,058 $ 44,426
(200) bp $ 272,897 $ 37,265
In preparing the above table, the Company makes various assumptions to
determine the net portfolio value at the assumed changes in interest rate. These
assumptions include:
/bullet/ loan prepayment rates,
/bullet/ deposit decay rates,
/bullet/ market values of certain assets under the representative
interest rate scenarios, and
/bullet/ repricing of certain 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
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<PAGE>
BANKATLANTIC BANCORP, INC.
indicated in the table above. In addition, a change in U.S. Treasury rates in
the designated amounts, accompanied by a change in the shape of the yield curve
could cause significantly different changes to the fair values than indicated
above. Furthermore, the result of the calculations in the preceding table are
subject to significant deviations based upon actual future events, including
anticipatory and reactive measures which the Company may take in the future.
LIQUIDITY AND CAPITAL RESOURCES
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 and investment notes, acquire its
common stock and to fund the repurchase of Debentures under the tender offer.
Dividends from BankAtlantic to the Company are currently subject to regulatory
approval.
BankAtlantic's primary sources of funds during the first six 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 outflows, loan purchases and
fundings, repay advances from borrowers for taxes and insurance and to purchase
FHLB stock, tax certificates, trading securities, real estate inventory, joint
venture investments and securities available for sale. At June 30, 2000,
BankAtlantic met all applicable liquidity and regulatory capital requirements.
The Company's commitments to originate loans at June 30, 2000 were $155.9
million compared to $150.0 million at June 30, 1999. Additionally, the Company
had commitments to purchase $931,000 of mortgage-backed securities at June 30,
2000 compared to zero during the same 1999 period. At June 30, 2000, loan
commitments were 5.61% 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 sold upon a default by the lessees. At June 30, 2000,
the amount of lease payments subject to such recourse provisions was
approximately $1.6 million and a $62,000 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 will
consider and vote on a transaction which would result in the redemption and
retirement of all publicly held outstanding shares of Class B common stock at a
price of $6.00 per share payable in cash. Based on the number of Class B common
shares outstanding at June 30, 2000 and assuming 25% of outstanding Class B
stock options are exercised prior to the effective date of the corporate
transaction, approximately $32 million in cash will be required to consummate
the corporate transaction. The Class B common stock represents 100% of the
voting rights of the Company. BFC Financial Corporation and its affiliates
currently beneficially own in excess of 50% of BankAtlantic Bancorp's Class B
common stock. As a result of the transaction which is structured as a merger,
BFC Financial Corporation would be the sole holder of the Class B common stock.
The Company's Class A common stock will be unaffected by the transaction and
will remain outstanding. Outstanding options to purchase Class A common stock
will remain 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 will remain 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. All
outstanding options to acquire Class B common stock will automatically be
exchanged for options to acquire Class A common stock on a basis which preserves
the intrinsic value of the option on the effective date of the corporate
transaction. The options will otherwise be on substantially the same terms and
conditions as the former options to purchase shares of Class B common stock,
including vesting and term. The Company intends to finance the proposed
transaction through the issuance of investment notes and from a $20 million
revolving line of credit with a floating interest rate equal to the prime rate
minus 50 basis points with a maturity date of three years from the date of
issuance. The proposed transaction is subject to approval of the Company's Class
A and Class B shareholders, receipt of all required regulatory approvals, and
obtaining financing for the transaction.
-34-
<PAGE>
BANKATLANTIC BANCORP, INC.
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% Convertible Subordinated
Debentures due 2007 for a cash price of $750 per $1,000 principal amount of
Debentures. On February 29, 2000 the Company accepted for purchase the maximum
$25 million aggregate principal amount of 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
Debentures had been validly tendered, and since this amount exceeded the $25
million principal amount tendered by the Company, the 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. 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 began an offering of up to $150 million of its
subordinated investment notes. The Company currently anticipates that only $75
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 June
30, 2000 the Company had issued an aggregate of $27.7 million of investment
notes with interest rates between 10% and 11.75% and maturity dates between
February 2002 and June 2002. The Company used a portion of the proceeds to pay a
portion of the purchase price for the debentures tendered pursuant to the tender
offer described above and intends to use the proceeds to fund a portion of the
consideration payable in the proposed merger and for general corporate purposes.
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 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 $3.9
million to repurchase and retire 651,000 shares of Class B common stock during
the six months ended June 30, 2000.
During the six months ended June 30, 2000 the Company entered into interest
rate swap contracts with various primary brokers in an aggregate notional amount
of $240 million, of which $150 million terminates two years from the date of
issuance and $90 million terminates one year from the date of issuance. 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 and 6.88% for the one year 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 Company continuously evaluates its business units for profitability and
overall efficiency. The Company concluded that the profit margins earned on
syndicated lending did not meet the Company's strategic objectives. As a result,
the Company made a determination to discontinue the its participation in
syndicated lending.
-35-
<PAGE>
BANKATLANTIC BANCORP, INC.
At the indicated date BankAtlantic's capital amounts and ratios were:
Adequately Well
Actual Capitalized Capitalized
Amount Ratio Ratio Ratio
-------- ------ ----------- -----------
(In thousands)
AT JUNE 30, 2000:
Total risk-based capital $356,302 12.24% 8.00% 10.00%
Tier I risk-based capital $319,765 10.98% 4.00% 6.00%
Tangible capital ........ $319,765 7.47% 1.50% 1.50%
Core capital ............ $319,765 7.47% 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%
Savings institutions are also subject to the provisions of the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). Regulations
implementing the prompt corrective action provisions of FDICIA define specific
capital categories based on FDICIA's defined capital ratios, as discussed more
fully in the Company's Annual Report on Form 10K for the year ended December 31,
1999.
The Company's wholly owned subsidiary, RBCO, is subject to the net capital
provisions of the Securities Exchange Act of 1934. At June 30, 2000, RBCO's
regulatory net capital was approximately $7.9 million, which exceeded minimum
net capital rule requirements by $6.9 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 June 30, 2000.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
BANKATLANTIC BANCORP, INC.
PART II - OTHER INFORMATION
Exhibits and Report on Form 8-K
(a) Exhibits
Exhibit 11 Statement re Computation of Per Share Earnings
(b) Reports on Form 8k
None
-37-
<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: August 14, 2000 By: /s/Alan B. Levan
--------------- ------------------------
Alan B. Levan
Chief Executive Officer/
Chairman/President
Date: August 14, 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.
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended June 30, 2000 Ended June 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 ............ $ 1,599 $ 450 $ 2,049 $ 713 $ 259 $ 972
Basic allocation of undistributed
earnings from continuing operations . 2,305 649 2,954 5,845 1,812 7,657
----------- ----------- ----------- ----------- ----------- ----------
Income from continuing operations .... 3,904 1,099 5,003 6,558 2,071 8,629
Income from discontinued operations .. 202 57 259 611 190 801
----------- ----------- ----------- ----------- ----------- -----------
Net income ........................... $ 4,106 $ 1,156 $ 5,262 $ 7,169 $ 2,261 $ 9,430
=========== =========== =========== =========== =========== ===========
BASIC DENOMINATOR
Weighted average shares outstanding .. 31,546,061 9,774,193 30,385,075 10,363,216
=========== =========== =========== ===========
Allocation percentage ................ 78.02% 21.98% 76.33% 23.67%
=========== =========== =========== ===========
Basic earnings per share ............. $ 0.13 $ 0.12 $ 0.24 $ 0.22
=========== =========== =========== ===========
DILUTED NUMERATOR
Actual dividends declared ............ $ 1,599 $ 450 $ 2,049 $ 713 $ 259 $ 972
----------- ----------- ----------- ----------- ----------- -----------
Basic allocation of undistributed
earnings from continuing operations 3,904 1,099 5,003 6,558 2,071 8,629
----------- ----------- ----------- ----------- ----------- -----------
Reallocation of basic undistributed
earnings due to change in allocation
percentage ......................... 162 (162) 0 498 (498) 0
----------- ----------- ------------ ---------- ----------- -----------
Diluted allocated undistributed
earnings from continuing operations . 4,066 937 5,003 7,056 1,573 8,629
----------- ----------- ------------ ---------- ----------- -----------
Interest expense on convertible debt . 1,045 207 1,252 1,225 255 1,480
----------- ----------- ------------ ---------- ----------- -----------
Dilutive net income from continuing
operations .......................... 5,111 1,144 6,255 8,281 1,828 10,109
Dilutive net income from discontinued
operations .......................... 216 43 259 663 138 801
----------- ----------- ------------ ---------- ----------- -----------
Net income ........................... $ 5,327 $ 1,187 $ 6,514 $ 8,944 $ 1,966 $ 10,910
=========== =========== ============ ========== =========== ===========
DILUTED DENOMINATOR
Basic weighted average shares
outstanding ........................ 31,546,061 9,774,193 30,385,075 10,363,216
Convertible debentures ............... 15,640,702 0 17,873,324 0
Options .............................. 7,389 496,532 322,389 711,422
----------- ----------- ----------- -----------
Diluted weighted average shares
outstanding ......................... 47,194,152 10,270,725 48,580,788 11,074,638
=========== =========== =========== ===========
Allocation percentage ................ 83.48% 16.52% 82.83% 17.17%
=========== =========== =========== ===========
Diluted earnings per share ........... $ 0.11 $ 0.12 $ 0.18 $ 0.18
=========== =========== =========== ===========
</TABLE>
<PAGE>
BANKATLANTIC BANCORP, INC.
<TABLE>
<CAPTION>
For the Six Months For the Six Months
Ended June 30, 2000 Ended June 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 ............. $ 1,599 $ 450 $ 2,049 $ 1,423 $ 518 $ 1,941
Basic allocation of undistributed
earnings from continuing operations .. 5,160 1,475 6,635 11,356 3,503 14,859
----------- ---------- ---------- ----------- ----------- -----------
Income from continuing operations ..... 6,759 1,925 8,684 12,779 4,021 16,800
Income from discontinued operations ... 202 57 259 613 188 801
Extraordinary item .................... 2,694 772 3,466 0 0 0
----------- ----------- ---------- ----------- ----------- -----------
Net income ............................ $ 9,655 $ 2,754 $ 12,409 $ 13,392 $ 4,209 17,601
=========== =========== ========== =========== =========== ===========
BASIC DENOMINATOR
Weighted average shares outstanding ... 31,522,835 9,916,221 30,540,788 10,361,476
=========== =========== =========== ============
Allocation percentage ................. 77.76% 24.24% 76.43% 23.57%
=========== =========== =========== ===========
Basic earnings per share .............. $ 0.31 $ 0.28 $ 0.44 $ 0.41
=========== =========== =========== ===========
Diluted Numerator
Actual dividends declared ............. $ 1,599 $ 450 $ 2,049 $ 1,423 $ 518 $ 1,941
----------- ----------- ---------- ----------- ----------- -----------
Basic allocation of undistributed
earnings from continuing operations . 6,759 1,925 8,684 12,779 4,021 16,800
----------- ----------- ---------- ----------- ----------- -----------
Reallocation of basic undistributed
earnings due to change in allocation
percentage .......................... 395 (395) 0 958 (958) 0
----------- ----------- ---------- ----------- ----------- -----------
Diluted allocated undistributed
earningsfrom continuing operations ... 7,154 1,530 8,684 13,737 3,063 16,800
----------- ----------- ---------- ----------- ----------- -----------
Interest expense on convertible debt .. 2,216 438 2,654 2,462 509 2,971
----------- ----------- ---------- ----------- ----------- -----------
Dilutive income from continuing
operations ........................... 9,370 1,968 11,338 16,199 3,572 19,771
Dilutive income from discontinued
operations ........................... 217 42 259 664 137 801
Dilutive income from extraordinary item 2,894 572 3,466 0 0
----------- ----------- ---------- ----------- ----------- -----------
Net income ............................ $ 12,481 $ 2,582 $ 15,063 $ 16,863 $ 3,709 $ 20,572
=========== =========== ========== =========== =========== ===========
DILUTED DENOMINATOR
Basic weighted average shares
outstanding ......................... 31,522,835 9,916,211 30,540,788 10,361,476
Convertible debentures ................ 16,361,092 0 17,873,324 0
Options ............................... 10,187 496,532 346,279 723,294
----------- ----------- ----------- -----------
Diluted weighted average shares
outstanding .......................... 47,894,114 10,412,743 48,760,391 11,084,770
=========== =========== =========== ===========
Allocation percentage ................. 83.50% 16.50% 82.87% 17.13%
=========== =========== =========== ===========
Diluted earnings per share ............ $ 0.26 $ 0.25 $ 0.35 $ 0.33
=========== =========== =========== ===========
</TABLE>
