Florida | 59-2022148 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Alison W. Miller Michael I. Keyes Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. 150 West Flagler Street, Suite 2200 Miami, Florida 33130 (305) 789-3200 |
Ronald H. Janis Pitney Hardin LLP 7 Times Square New York, New York 10036 (212) 297-5800 |
Proposed Maximum | Proposed Maximum | |||||||
Title of Shares to | Amount to | Offering Price | Aggregate Offering | Amount of | ||||
be Registered | be Registered | per Share | Price | Registration Fee | ||||
Class A Common Stock ($0.01 par value)
|
5,175,000(1) | $10.38(1) | $53,737,200(1) | $6,324.87(1)(2) | ||||
1,642,500(3) | $8.90(3) | $14,618,250(3) | $1,720.57(3) | |||||
(1) | A total of 5,175,000 shares of Class A Common Stock, as adjusted in accordance with Rule 416(b) under the Securities Act of 1933 to reflect the issuance of a 25% stock dividend on March 14, 2005, were included in the initial filing of this Registration Statement on February 18, 2005. The initial filing fee was based upon a share price of $10.38, as adjusted to reflect the issuance of the 25% stock dividend, which was estimated pursuant to Rule 457(c) under the Securities Act of 1933. |
(2) | Previously paid in connection with the initial filing of this Registration Statement on February 18, 2005. |
(3) | An additional 1,642,500 shares of Class A Common Stock are being added with this Amendment No. 1 to Form S-3 and are being registered hereby. The filing fee for these 1,642,500 additional shares was estimated pursuant to Rule 457(c) under the Securities Act of 1933 based on the average of the high and low sales prices of the Class A Common Stock as reported on the Nasdaq National Market as of a date within five business days prior to the filing of this Amendment No. 1 to Form S-3 solely for the purpose of calculating the registration fee. |
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. |
Per Share | Total | |||||||
Public offering price
|
$ | $ | ||||||
Underwriting discounts
|
$ | $ | ||||||
Proceeds, before expenses, to the Company
|
$ | $ | ||||||
Proceeds, before expenses, to the selling shareholders
|
$ | $ |
BB&T Capital Markets |
Stifel Nicolaus & Company |
Page | ||||
PROSPECTUS SUMMARY
|
1 | |||
SUMMARY CONSOLIDATED FINANCIAL DATA
|
8 | |||
SUMMARY PARENT COMPANY ONLY FINANCIAL DATA
|
11 | |||
RISK FACTORS
|
13 | |||
FORWARD LOOKING STATEMENTS
|
28 | |||
USE OF PROCEEDS
|
30 | |||
PRICE RANGE OF COMMON STOCK
|
31 | |||
DIVIDEND POLICY
|
32 | |||
CAPITALIZATION
|
33 | |||
SELECTED CONSOLIDATED FINANCIAL DATA
|
34 | |||
SELECTED PARENT COMPANY ONLY FINANCIAL DATA
|
38 | |||
BUSINESS
|
40 | |||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
|
49 | |||
MANAGEMENT
|
130 | |||
DESCRIPTION OF CAPITAL STOCK
|
132 | |||
PRINCIPAL AND SELLING SHAREHOLDERS
|
136 | |||
UNDERWRITING
|
139 | |||
LEGAL MATTERS
|
141 | |||
EXPERTS
|
141 | |||
WHERE YOU CAN FIND MORE INFORMATION
|
141 |
i
• | management teams with extensive experience and knowledge in their industries; | |
• | solid business platforms and long-term sustainability; | |
• | growth potential which prior to our investment may have been limited by various factors inhibiting growth; and | |
• | industry, business and management characteristics conducive to and compatible with our long-term “buy and hold” investment philosophy. | |
• | investing in private and public companies; | |
• | acting as a “white knight”; | |
• | acquiring divested businesses; | |
1
• | purchasing interests in family businesses whose owners are seeking to monetize holdings but retain day-to-day management control and preserve the legacy of their businesses; and | |
• | assisting in going-private transactions and management buyouts. | |
• | Creating an environment where management of portfolio companies can develop professionally, manage for the long-term and accelerate the growth of their businesses; |
• | The top executive at each of Ryan Beck, Core Communities, Levitt and Sons and Bluegreen at the time of our respective investments remain in those positions today. |
• | Successfully managing and growing our investments. |
• | BankAtlantic had net income of $9.5 million for the fiscal year ended September 30, 1986, the year prior to our acquisition of control, versus net income of $48.5 million for the year ended December 31, 2004; | |
• | Ryan Beck’s net income in 1997, the year prior to our acquisition, was $3.9 million, versus $17.5 million for the year ended December 31, 2004; | |
• | Core Communities had a loss of $3.0 million for the period from inception (May 17, 1996) through December 31, 1996, the period prior to our acquisition, versus net income of $27.1 million for the year ended December 31, 2004; | |
• | Levitt and Sons’ net income in 1998, the year prior to our acquisition, was $4.5 million, versus $32.9 million in Levitt’s Homebuilding Division (which includes Levitt and Sons and, subsequent to its acquisition in April 2004, Bowden Homes) for the year ended December 31, 2004; and | |
• | Bluegreen’s net income for the twelve months ended December 31, 2001, the year prior to our principal share purchase, was $9.7 million, versus $36.5 million for the year ended December 31, 2004. | |
• | Assembling a strong executive management team. |
• | Our four senior officers have over 130 years of combined business experience in financial services, commercial and retail banking, investment banking, real estate, homebuilding, land development, timeshare, hospitality, travel, airlines, telecommunications, construction and national restaurant chains. |
BankAtlantic |
2
Ryan Beck |
Levitt Corporation |
Core Communities |
3
Levitt and Sons |
Bluegreen Corporation |
Benihana |
4
Shares | Percent of | Percent | |||||||||||
Owned | Ownership | of Vote | |||||||||||
BankAtlantic Bancorp
|
|||||||||||||
Class A Common Stock
|
8,329,236 | 14.96 | % | 7.93 | % | ||||||||
Class B Common Stock
|
4,876,124 | 100.00 | % | 47.00 | % | ||||||||
Total
|
13,205,360 | 21.81 | % | 54.93 | % | ||||||||
Levitt
|
|||||||||||||
Class A Common Stock
|
2,074,243 | 11.15 | % | 5.91 | % | ||||||||
Class B Common Stock
|
1,219,031 | 100.00 | % | 47.00 | % | ||||||||
Total
|
3,293,274 | 16.62 | % | 52.91 | % |
5
Common Stock offered | By the Company: 5,450,000 shares of Class A Common Stock(1) | |
By the selling shareholders: 550,000 shares of Class A Common Stock(2) | ||
Common Stock to be outstanding after the offering | 29,308,480 shares of Class A Common Stock(3) | |
4,290,355 shares of Class B Common Stock(4) | ||
Over-allotment option | 817,500 shares of Class A Common Stock(5) | |
Offering Price | $ per share | |
Voting Rights | Holders of Class A Common Stock are entitled to one vote per share, and the Class A Common Stock possesses in the aggregate a fixed 22% of the total voting power of all of our common stock. The holders of our Class B Common Stock are entitled to a number of votes per share which represents in the aggregate a fixed 78% of the total voting power of all of our common stock. Alan B. Levan, our Chairman of the Board and Chief Executive Officer, and John E. Abdo, our Vice Chairman of the Board, may be deemed under SEC rules to beneficially own shares of our Class A Common Stock and Class B Common Stock representing in the aggregate 69.3% of the total common stock and 83.4% of the total voting power of all of our common stock at March 31, 2005. The holders of our Class A Common Stock and Class B Common Stock vote as a single class, except as may be required by law or as provided in our Articles of Incorporation. | |
Dividends | Holders of Class A Common Stock and Class B Common Stock participate equally in dividends on a per share basis. Stock dividends and other non-cash distributions on Class A Common Stock are identical to those issued on Class B Common Stock, except that a stock dividend to holders of Class A Common Stock may be declared and issued in the form of Class A Common Stock while a stock dividend to holders of Class B Common Stock may be issued in either the form of Class A Common Stock or Class B Common Stock in the discretion of our Board of Directors. | |
Convertibility | Our Class A Common Stock is not convertible. Our Class B Common Stock is convertible at the holder’s discretion into Class A Common Stock on a share-for-share basis. |
6
Use of Proceeds | We currently intend to use the net proceeds of this offering to support our growth, primarily through new investments and acquisitions, and for general corporate purposes, including working capital and the repayment of debt. We intend to use a portion of the proceeds to pay down a line of credit with an independent financial institution although amounts may be drawn down again in the future. At March 31, 2005, approximately $9.5 million was outstanding under this line of credit. We may also use a portion of the proceeds of this offering to fund additional purchases of convertible preferred stock of Benihana. We will not receive any proceeds from the sale of shares of Class A Common Stock by the selling shareholders. See “Use of Proceeds.” | |
Class A Common Stock Nasdaq National Market Symbol | “BFCF” |
(1) | Does not include 817,500 shares of Class A Common Stock issuable upon exercise of the underwriters’ over-allotment option. |
(2) | Alan B. Levan and John E. Abdo are among the selling shareholders. The total shares sold by the selling shareholders as a group will not exceed 550,000. |
(3) | Does not include (i) an additional 817,500 shares of Class A Common Stock issuable upon exercise of the underwriters’ over-allotment option and (ii) 1,562,000 shares of Class A Common Stock issuable upon conversion of the Company’s 5% Cumulative Convertible Preferred Stock. |
(4) | Does not include 5,165,228 shares of Class B Common Stock issuable upon the exercise of options outstanding at May 23, 2005 with a weighted average exercise price of $2.62 per share. |
(5) | Shares covered by the over-allotment option will be sold exclusively by the Company. |
7
As of or For the Three | |||||||||||||||||||||
Months Ended March 31, | As of or For the Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||
Income Statement
|
|||||||||||||||||||||
Revenue
|
|||||||||||||||||||||
BFC Activities
|
$ | 369 | $ | 1,484 | $ | 6,185 | $ | 1,708 | $ | 1,336 | |||||||||||
Financial Services
|
159,862 | 163,241 | 601,578 | 541,910 | 492,344 | ||||||||||||||||
Homebuilding & Real Estate Development
|
200,995 | 99,971 | 558,838 | 288,686 | 212,081 | ||||||||||||||||
361,226 | 264,696 | 1,166,601 | 832,304 | 705,761 | |||||||||||||||||
Costs and Expenses
|
|||||||||||||||||||||
BFC Activities
|
2,573 | 1,534 | 7,950 | 7,809 | 5,944 | ||||||||||||||||
Financial Services
|
130,008 | 131,996 | 494,415 | 480,314 | 467,181 | ||||||||||||||||
Homebuilding & Real Estate Development
|
154,287 | 83,776 | 481,618 | 253,169 | 191,662 | ||||||||||||||||
286,868 | 217,306 | 983,983 | 741,292 | 664,787 | |||||||||||||||||
Income before income taxes and equity in earnings from
unconsolidated subsidiaries
|
74,358 | 47,390 | 182,618 | 91,012 | 40,974 | ||||||||||||||||
Equity in earnings from unconsolidated subsidiaries
|
2,359 | 5,811 | 19,603 | 10,126 | 9,327 | ||||||||||||||||
Income before income taxes, minority interest, discontinued
operations, extraordinary items and cumulative effect of a
change in accounting principle
|
76,717 | 53,201 | 202,221 | 101,138 | 50,301 | ||||||||||||||||
Provision for income taxes
|
31,951 | 22,207 | 83,997 | 44,166 | 17,993 | ||||||||||||||||
Minority interest in income of consolidated subsidiaries
|
40,366 | 26,622 | 103,994 | 51,093 | 38,294 | ||||||||||||||||
Income (loss) from continuing operations
|
4,400 | 4,372 | 14,230 | 5,879 | (5,986 | ) | |||||||||||||||
Income from discontinued operations, net of taxes
|
— | — | — | 1,143 | 2,536 | ||||||||||||||||
Income from extraordinary items, net of taxes
|
— | — | — | — | 23,749 | ||||||||||||||||
Income (loss) from cumulative effect of a change in accounting
principle, net of taxes
|
— | — | — | — | (15,107 | ) | |||||||||||||||
Net income
|
4,400 | 4,372 | 14,230 | 7,022 | 5,192 | ||||||||||||||||
5% Preferred Stock dividends
|
188 | — | 392 | — | — | ||||||||||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | $ | 13,838 | $ | 7,022 | $ | 5,192 | |||||||||||
8
As of or For the Three | |||||||||||||||||||||
Months Ended March 31, | As of or For the Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||
Common Share Data(a),(b),(c)
|
|||||||||||||||||||||
Basic earnings (loss) per share from continuing operations
|
$ | 0.16 | $ | 0.18 | $ | 0.57 | $ | 0.26 | $ | (0.27 | ) | ||||||||||
Discontinued operations
|
— | — | — | 0.05 | 0.11 | ||||||||||||||||
Extraordinary items
|
— | — | — | — | 1.06 | ||||||||||||||||
Cumulative effect of a change in accounting principle
|
— | — | — | — | (0.67 | ) | |||||||||||||||
Basic earnings per share of common stock
|
0.16 | 0.18 | 0.57 | 0.31 | 0.23 | ||||||||||||||||
Diluted earnings (loss) per share from continuing operations
|
$ | 0.14 | $ | 0.15 | $ | 0.47 | $ | 0.21 | $ | (0.28 | ) | ||||||||||
Discontinued operations
|
— | — | 0.04 | 0.11 | |||||||||||||||||
Extraordinary items
|
— | — | — | — | 1.04 | ||||||||||||||||
Cumulative effect of a change in accounting principle
|
— | — | — | — | (0.66 | ) | |||||||||||||||
Diluted earnings per share of common stock
|
$ | 0.14 | $ | 0.15 | $ | 0.47 | $ | 0.25 | $ | 0.21 | |||||||||||
Basic weighted average number of common shares outstanding
|
25,750,000 | 23,824,000 | 24,183,000 | 22,818,000 | 22,454,000 | ||||||||||||||||
Diluted weighted average number of common shares outstanding
|
28,336,000 | 27,706,000 | 27,806,000 | 26,031,000 | 22,454,000 | ||||||||||||||||
Ratio of earnings to fixed charges(d)
|
(4.67 | ) | (1.24 | ) | (2.44 | ) | 0.15 | (0.23 | ) | ||||||||||||
Dollar deficiency of earnings to fixed charges(d)
|
1,753 | 659 | 4,029 | 987 | 1,421 | ||||||||||||||||
Balance Sheet (at period end)
|
|||||||||||||||||||||
Loans and leases, net(e)
|
$ | 4,621,543 | $ | 3,623,409 | $ | 4,561,073 | $ | 3,611,612 | $ | 3,377,870 | |||||||||||
Securities
|
1,219,951 | 621,965 | 1,192,335 | 677,713 | 1,111,825 | ||||||||||||||||
Total assets
|
7,029,049 | 5,078,067 | 6,954,847 | 5,136,235 | 5,415,933 | ||||||||||||||||
Deposits
|
3,643,855 | 3,143,435 | 3,457,202 | 3,058,142 | 2,920,555 | ||||||||||||||||
Securities sold under agreements to repurchase and federal funds
purchased
|
243,121 | 112,456 | 362,002 | 120,874 | 116,279 | ||||||||||||||||
Other borrowings(f)
|
2,049,749 | 1,020,233 | 2,086,368 | 1,209,571 | 1,686,613 | ||||||||||||||||
Shareholders’ equity
|
128,088 | 92,478 | 125,251 | 85,675 | 77,411 | ||||||||||||||||
Book value per share(c)(g)
|
4.36 | 3.82 | 4.25 | 3.68 | 3.45 | ||||||||||||||||
Return on average equity(h)
|
13.88 | % | 19.64 | % | 13.16 | % | 8.63 | % | 6.85 | % | |||||||||||
BankAtlantic Asset Quality Ratios
|
|||||||||||||||||||||
Non-performing assets, net of reserves as a percent of total
loans, tax certificates and real estate owned
|
0.17 | % | 0.37 | % | 0.19 | % | 0.36 | % | 0.86 | % | |||||||||||
Loan loss allowance as a percent of non-performing loans
|
661.8 | 387.1 | % | 582.18 | % | 422.06 | % | 235.61 | % | ||||||||||||
Loan loss allowance as a percent of total loans
|
.92 | % | 1.22 | % | 1.00 | % | 1.24 | % | 1.38 | % | |||||||||||
Levitt Corporation
|
|||||||||||||||||||||
Consolidated margin on sales of real estate
|
$ | 68,277 | $ | 28,858 | $ | 143,378 | $ | 73,627 | $ | 48,133 | |||||||||||
Consolidated margin percentage
|
34.3 | % | 29.3 | % | 26.1 | % | 26.0 | % | 23.2 | % | |||||||||||
Homes delivered
|
501 | 341 | 2,126 | 1,011 | 740 | ||||||||||||||||
Backlog of homes (units)
|
1,918 | 2,186 | 1,814 | 2,053 | 824 | ||||||||||||||||
Backlog of homes (value)
|
$ | 496,006 | $ | 510,231 | $ | 448,647 | $ | 458,771 | $ | 167,526 | |||||||||||
Land division acres sold(i)
|
1,304 | 294 | 764 | 1,337 | 1,473 |
9
As of or For the Three | |||||||||||||||||||||
Months Ended March 31, | As of or For the Years Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||
Capital Ratios for BankAtlantic:
|
|||||||||||||||||||||
Total risk based capital
|
11.06 | % | 12.20 | % | 10.80 | % | 12.06 | % | 11.89 | % | |||||||||||
Tier I risk based capital
|
9.52 | % | 10.35 | % | 9.19 | % | 10.22 | % | 10.01 | % | |||||||||||
Leverage
|
7.03 | % | 8.63 | % | 6.83 | % | 8.52 | % | 7.26 | % |
(a) | Since its inception, BFC has not paid any cash dividends. | |
(b) | While the Company has two classes of common stock outstanding, the two-class method is not presented because the Company’s capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes. | |
(c) | I.R.E. Realty Advisory Group, Inc. (“RAG”) owns 4,764,282 shares of our Class A Common Stock and 500,000 shares of our Class B Common Stock. Because the Company owns 45.5% of the outstanding common stock of RAG, 2,167,748 shares of Class A Common Stock and 227,250 shares of Class B Common Stock are eliminated from the number of shares outstanding for purposes of computing earnings per share and book value per share. | |
(d) | The operations, fixed charges and dividends of BankAtlantic Bancorp and Levitt are not included in this calculation because each of those subsidiaries are separate, publicly traded companies whose Board of Directors are composed of individuals, a majority of whom are independent. Accordingly, decisions made by those Boards, including with respect to the payment of dividends, are not within our control. | |
(e) | Includes $0, $233 million, and $0 of bankers acceptances at December 31, 2004, 2003 and 2002, respectively and $0 at March 31, 2005 and 2004. | |
(f) | Other borrowings consist of FHLB advances, subordinated debentures, mortgage notes payable, bonds payable, guaranteed preferred beneficial interests in BankAtlantic Bancorp’s junior subordinated debentures and junior subordinated debentures. | |
(g) | Preferred stock redemption price is eliminated from shareholders’ equity for purposes of computing book value per share. | |
(h) | Ratios were computed using quarterly averages. | |
(i) | Land sales between Levitt’s subsidiaries were eliminated in consolidation. | |
10
As of or For the Three | ||||||||||||||||||||||
Months Ended | As of or For the Year Ended | |||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||||
Assets
|
||||||||||||||||||||||
Cash and cash equivalents
|
$ | 693 | $ | 1,361 | $ | 1,520 | $ | 1,536 | $ | 797 | ||||||||||||
Investment securities
|
12,075 | 1,451 | 11,800 | 1,218 | 1,269 | |||||||||||||||||
Investment in venture partnerships
|
963 | 718 | 971 | 626 | 2,782 | |||||||||||||||||
Investment in BankAtlantic Bancorp
|
104,912 | 95,576 | 103,125 | 91,869 | 106,017 | |||||||||||||||||
Investment in Levitt Corporation
|
53,886 | 30,727 | 48,983 | 27,885 | — | |||||||||||||||||
Investment in other subsidiaries
|
13,912 | 13,731 | 14,219 | 13,680 | 13,620 | |||||||||||||||||
Loans receivable
|
2,871 | 4,175 | 3,364 | 4,175 | 4,175 | |||||||||||||||||
Other assets
|
1,233 | 693 | 2,596 | 484 | 768 | |||||||||||||||||
Total assets
|
$ | 190,545 | $ | 148,432 | $ | 186,578 | $ | 141,473 | $ | 129,428 | ||||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||
Mortgages payable and other borrowings
|
$ | 9,483 | $ | 7,160 | $ | 10,483 | $ | 6,015 | $ | 6,015 | ||||||||||||
Other liabilities
|
23,647 | 23,570 | 23,816 | 23,234 | 22,805 | |||||||||||||||||
Deferred income taxes
|
29,327 | 25,224 | 27,028 | 26,549 | 23,197 | |||||||||||||||||
Total liabilities
|
62,457 | 55,954 | 61,327 | 55,798 | 52,017 | |||||||||||||||||
Total shareholders’ equity
|
128,088 | 92,478 | 125,251 | 85,675 | 77,411 | |||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 190,545 | $ | 148,432 | $ | 186,578 | $ | 141,473 | $ | 129,428 | ||||||||||||
Statements of Operations Data:
|
||||||||||||||||||||||
Revenues
|
300 | 183 | 1,222 | 1,051 | 763 | |||||||||||||||||
Expenses
|
2,165 | 1,327 | 6,717 | 3,954 | 3,898 | |||||||||||||||||
(Loss) before undistributed earnings from subsidiaries
|
(1,865 | ) | (1,144 | ) | (5,495 | ) | (2,903 | ) | (3,135 | ) | ||||||||||||
Equity from earnings in BankAtlantic Bancorp
|
4,368 | 4,565 | 15,694 | 15,222 | 11,380 | |||||||||||||||||
Equity from earnings in Levitt Corporation
|
4,955 | 2,902 | 10,265 | — | — | |||||||||||||||||
Equity from earnings (loss) in other subsidiaries
|
(315 | ) | 584 | 1,981 | (1,583 | ) | (633 | ) | ||||||||||||||
Income before income taxes
|
7,143 | 6,907 | 22,445 | 10,736 | 7,612 | |||||||||||||||||
Provision for income taxes
|
2,743 | 2,535 | 8,215 | 3,714 | 2,420 | |||||||||||||||||
Net income
|
4,400 | 4,372 | 14,230 | 7,022 | 5,192 | |||||||||||||||||
5% Preferred Stock dividends
|
188 | — | 392 | — | — | |||||||||||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | $ | 13,838 | $ | 7,022 | $ | 5,192 | ||||||||||||
11
As of or For the Three | ||||||||||||||||||||
Months Ended | As of or For the Year Ended | |||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Statements of Cash Flow Data:
|
||||||||||||||||||||
Operating Activities:
|
||||||||||||||||||||
Income (loss) from continuing operations
|
$ | 4,400 | $ | 4,372 | $ | 14,230 | $ | 5,879 | $ | (5,986 | ) | |||||||||
Income from discontinued operations,
net of tax |
— | — | — | 1,143 | 2,536 | |||||||||||||||
Income from extraordinary item, net of tax
|
— | — | — | — | 23,749 | |||||||||||||||
Cumulative effect of a change in accounting principle, net of tax
|
— | — | — | — | (15,107 | ) | ||||||||||||||
Other operating activities
|
(4,578 | ) | (5,401 | ) | (20,317 | ) | (9,380 | ) | (9,894 | ) | ||||||||||
Net cash used in operating activities
|
(178 | ) | (1,029 | ) | (6,087 | ) | (2,358 | ) | (4,702 | ) | ||||||||||
Net cash provided by (used in) investing activities
|
528 | 444 | (7,503 | ) | 2,815 | 1,408 | ||||||||||||||
Net cash (used in) provided by financing activities
|
(1,177 | ) | 410 | 13,574 | 282 | 1,385 | ||||||||||||||
Increase (decrease) in cash and cash equivalents
|
(827 | ) | (175 | ) | (16 | ) | 739 | (1,909 | ) | |||||||||||
Cash at beginning of period
|
1,520 | 1,536 | 1,536 | 797 | 2,706 | |||||||||||||||
Cash at end of period
|
$ | 693 | $ | 1,361 | $ | 1,520 | $ | 1,536 | $ | 797 | ||||||||||
12
13
• | fail to accomplish our strategic objectives; | |
• | not perform as expected; and | |
• | expose us to the risks of the business that we acquire. |
14
• | limit the payment of dividends by BankAtlantic to BankAtlantic Bancorp; | |
• | limit transactions between us, BankAtlantic, BankAtlantic Bancorp and the subsidiaries or affiliates of either; | |
• | limit the activities of BankAtlantic, BankAtlantic Bancorp or us; or | |
• | impose capital requirements on us or BankAtlantic Bancorp. | |
15
16
• | Riggs Bank, N.A. announced that it had consented to a $25 million civil money penalty paid to the Department of the Treasury, assessed concurrently by the Financial Crimes Enforcement Network (“FinCEN”) and the Office of the Comptroller of the Currency, for willful, systemic violation of the anti-money laundering program and suspicious activity and currency transaction requirements of the Bank Secrecy Act. Riggs Bank, N.A. also announced that it has resolved an investigation into its Bank |
17
Secrecy Act compliance by pleading guilty to a count of failing to file timely and/or accurate Suspicious Activity Reports, paid a $16 million fine and agreed to a five-year period of corporate probation. Riggs National Corporation, the holding company for Riggs Bank, N.A., also consented to the issuance of a Cease and Desist Order relating to future compliance and board oversight, which, among other things, prohibits the declaration or payment of dividends on its stock or distributions of interest, principal or other sums with respect to debentures issued in connection with its trust preferred securities, or the redemption or repurchase of any of its stock without regulatory approval. | ||
• | AmSouth Corporation (“AmSouth”) and AmSouth Bank disclosed that they entered into a deferred prosecution agreement with the U.S. Attorney relating to deficiencies in the bank’s reporting of suspicious activities under the Bank Secrecy Act. AmSouth also announced that it entered into a Cease and Desist Order with the Federal Reserve and the Alabama Department of Banking and an order with FinCEN relating to deficiencies in AmSouth’s compliance with the Bank Secrecy Act. AmSouth announced that under the deferred prosecution agreement, it agreed to make a payment of $40 million to the United States and, in connection with the Federal Reserve and FinCEN orders, was assessed a $10 million civil money penalty. AmSouth also disclosed that in connection with the Cease and Desist Order, the Federal Reserve indicated it would restrict AmSouth’s expansion activities until such time as the Federal Reserve believes the company is in substantial compliance with the requirements of the order. AmSouth further disclosed that the Cease and Desist Order requires specific actions, including steps to comply with the Bank Secrecy Act. | |
18
• | interest income on interest-earning assets, such as loans; and | |
• | interest expense on interest-bearing liabilities, such as deposits. |
• | it amortizes premiums on acquired loans, and if loans are prepaid, the unamortized premium will be charged off; and | |
• | the yields it earns on the investment of funds that it receives from prepaid loans are generally less than the yields that it earned on the prepaid loans. |
19
• | the risk characteristics of various classifications of loans; | |
• | previous loan loss experience; | |
• | specific loans that have loss potential; | |
• | delinquency trends; | |
• | estimated fair value of the collateral; | |
• | current economic conditions; | |
• | the views of its regulators; and | |
• | geographic and industry loan concentrations. |
20
• | the volatility and price levels of the securities markets; | |
• | the volume, size and timing of securities transactions generally and of equity and debt securities in inventory; | |
• | the demand for investment banking services; | |
• | the level and volatility of interest rates; | |
• | the availability of credit; | |
• | legislation, regulations and/or rules issued by self-regulatory organizations affecting the business and financial communities; | |
• | the economy in general; and | |
• | potential liability to customers. |
21
• | the availability and cost of financing; | |
• | unfavorable interest rates and increases in inflation; | |
• | overbuilding or decreases in demand; | |
• | changes in national, regional and local economic conditions; | |
• | cost overruns, inclement weather, and labor and material shortages; | |
• | the impact of present or future environmental legislation, zoning laws and other regulations; | |
• | availability, delays and costs associated with obtaining permits, approvals or licenses necessary to develop property; and | |
• | increases in real estate taxes and other local government fees. |
• | work stoppages, labor disputes and shortages of qualified trades people, such as carpenters, roofers, electricians and plumbers; | |
• | lack of availability of adequate utility infrastructure and services; | |
• | Levitt’s need to rely on local subcontractors who may not be adequately capitalized or insured; and | |
• | shortages or increases in prices of construction materials. |
22
23
• | increases in interest rates; | |
• | decreases in the availability of mortgage financing; | |
• | increasing housing costs; | |
• | unemployment; and | |
• | changes in federally sponsored financing programs. |
24
• | environmental matters; | |
• | wetland preservation; | |
• | health and safety; | |
• | zoning, land use and other entitlements; | |
• | building design; and | |
• | density levels. |
• | installation of utility services such as gas, electric, water and waste disposal; | |
• | the dedication of acreage for open space, parks and schools; | |
• | permitted land uses; and | |
• | the construction design, methods and materials used. |
• | limit the number of homes, apartments or commercial properties that may be built; | |
• | change building codes and construction requirements affecting property under construction; | |
• | increase the cost of development and construction; |
25
• | delay development and construction; and | |
• | otherwise have a material adverse effect on the real estate industry in general and on Levitt’s business, financial condition and results of operations, specifically. |
26
27
28
29
30
High | Low | ||||||||
Class A Common Stock: | |||||||||
2003
|
|||||||||
First Quarter
|
$ | 2.31 | $ | 1.78 | |||||
Second Quarter
|
3.89 | 1.87 | |||||||
Third Quarter
|
5.30 | 3.42 | |||||||
Fourth Quarter
|
7.60 | 5.07 | |||||||
2004
|
|||||||||
First Quarter
|
$ | 11.04 | $ | 6.86 | |||||
Second Quarter
|
10.99 | 8.06 | |||||||
Third Quarter
|
9.35 | 7.37 | |||||||
Fourth Quarter
|
10.65 | 8.12 | |||||||
2005
|
|||||||||
First Quarter
|
$ | 11.03 | $ | 9.05 | |||||
Second Quarter (through May 31, 2005)
|
10.29 | 7.81 |
High | Low | ||||||||
Class B Common Stock: | |||||||||
2003
|
|||||||||
First Quarter
|
$ | 2.14 | $ | 1.82 | |||||
Second Quarter
|
3.89 | 2.14 | |||||||
Third Quarter
|
4.87 | 3.44 | |||||||
Fourth Quarter
|
8.19 | 4.91 | |||||||
2004
|
|||||||||
First Quarter
|
$ | 10.88 | $ | 6.66 | |||||
Second Quarter
|
10.88 | 7.36 | |||||||
Third Quarter
|
9.04 | 7.28 | |||||||
Fourth Quarter
|
10.40 | 8.20 | |||||||
2005
|
|||||||||
First Quarter
|
$ | 11.12 | $ | 9.20 | |||||
Second Quarter (through May 31, 2005)
|
10.00 | 7.80 |
31
32
March 31, | |||||||||
2005 | As Adjusted | ||||||||
(Dollars in thousands) | |||||||||
Note payable
|
$ | 9,483 | $ | — | |||||
Shareholders’ equity:
|
|||||||||
Preferred stock, $.01 par value, 10,000,000 shares
authorized; 5% Cumulative Convertible Preferred Stock,
15,000 shares issued and outstanding, 15,000 shares
issued and outstanding, as adjusted
|
— | — | |||||||
Class A Common Stock, $.01 par value,
70,000,000 shares authorized; 23,862,830 shares issued
and outstanding, 29,312,830 shares issued and outstanding,
as adjusted
|
217 | 272 | |||||||
Class B Common Stock, $.01 par value,
20,000,000 shares authorized; 4,284,415 shares issued
and outstanding, 4,284,415 issued and outstanding, as
adjusted(1)
|
41 | 41 | |||||||
Additional paid-in capital
|
50,292 | 95,406 | |||||||
Retained earnings
|
77,301 | 77,301 | |||||||
Total shareholders’ equity before accumulated other
comprehensive income
|
127,851 | 173,020 | |||||||
Accumulated other comprehensive income
|
237 | 237 | |||||||
Total shareholders’ equity
|
128,088 | 173,257 | |||||||
Total capitalization
|
$ | 137,571 | $ | 173,257 | |||||
(1) | Does not include 5,165,228 shares of Class B Common Stock issuable upon the exercise of outstanding options at May 23, 2005 with a weighted average exercise price of $2.62 per share. |
33
As of or For the Three | |||||||||||||||||||||||||||||
Months Ended March 31, | As of or For the Years Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
Income Statement
|
|||||||||||||||||||||||||||||
Revenue
|
|||||||||||||||||||||||||||||
BFC Activities
|
$ | 369 | $ | 1,484 | $ | 6,185 | $ | 1,708 | $ | 1,336 | $ | 3,261 | $ | 9,217 | |||||||||||||||
Financial Services
|
159,862 | 163,241 | 601,578 | 541,910 | 492,344 | 412,091 | 425,538 | ||||||||||||||||||||||
Homebuilding & Real Estate Development
|
200,995 | 99,971 | 558,838 | 288,686 | 212,081 | 147,977 | 109,126 | ||||||||||||||||||||||
361,226 | 264,696 | 1,166,601 | 832,304 | 705,761 | 563,329 | 543,881 | |||||||||||||||||||||||
Costs and Expenses
|
|||||||||||||||||||||||||||||
BFC Activities
|
2,573 | 1,534 | 7,950 | 7,809 | 5,944 | 8,852 | 13,866 | ||||||||||||||||||||||
Financial Services
|
130,008 | 131,996 | 494,415 | 480,314 | 467,181 | 372,505 | 396,940 | ||||||||||||||||||||||
Homebuilding & Real Estate Development
|
154,287 | 83,776 | 481,618 | 253,169 | 191,662 | 136,885 | 98,933 | ||||||||||||||||||||||
286,868 | 217,306 | 983,983 | 741,292 | 664,787 | 518,242 | 509,759 | |||||||||||||||||||||||
Income before income taxes and equity in earnings from
unconsolidated subsidiaries
|
74,358 | 47,390 | 182,618 | 91,012 | 40,974 | 45,087 | 34,122 | ||||||||||||||||||||||
Equity in earnings from unconsolidated subsidiaries
|
2,359 | 5,811 | 19,603 | 10,126 | 9,327 | 2,888 | 1,141 | ||||||||||||||||||||||
Income before income taxes, minority interest, discontinued
operations, extraordinary items and cumulative effect of a
change in accounting principle
|
76,717 | 53,201 | 202,221 | 101,138 | 50,301 | 47,975 | 35,263 | ||||||||||||||||||||||
Provision for income taxes
|
31,951 | 22,207 | 83,997 | 44,166 | 17,993 | 25,260 | 17,642 | ||||||||||||||||||||||
Minority interest in income of consolidated subsidiaries
|
40,366 | 26,622 | 103,994 | 51,093 | 38,294 | 18,379 | 14,655 | ||||||||||||||||||||||
Income (loss) from continuing operations
|
4,400 | 4,372 | 14,230 | 5,879 | (5,986 | ) | 4,336 | 2,966 | |||||||||||||||||||||
Income from discontinued operations, net of taxes
|
— | — | — | 1,143 | 2,536 | — | 669 |
34
As of or For the Three | |||||||||||||||||||||||||||||
Months Ended March 31, | As of or For the Years Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
Income from extraordinary items, net of taxes
|
— | — | — | — | 23,749 | — | — | ||||||||||||||||||||||
Income (loss) from cumulative effect of a change in accounting
principle, net of taxes
|
— | — | — | — | (15,107 | ) | 1,138 | — | |||||||||||||||||||||
Net income
|
$ | 4,400 | $ | 4,372 | $ | 14,230 | $ | 7,022 | $ | 5,192 | $ | 5,474 | $ | 3,635 | |||||||||||||||
Amortization of goodwill, net of tax
|
— | — | — | — | — | 735 | 791 | ||||||||||||||||||||||
Net income adjusted to exclude goodwill amortization
|
4,400 | 4,372 | 14,230 | 7,022 | 5,192 | 6,209 | 4,426 | ||||||||||||||||||||||
5% Preferred Stock dividends
|
188 | — | 392 | — | — | — | — | ||||||||||||||||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | $ | 13,838 | $ | 7,022 | $ | 5,192 | $ | 6,209 | $ | 4,426 | |||||||||||||||
Common Share Data(a),(b),(c):
|
|||||||||||||||||||||||||||||
Basic earnings (loss) per share from continuing operations
|
$ | 0.16 | $ | 0.18 | $ | 0.57 | $ | 0.26 | $ | (0.27 | ) | $ | 0.19 | $ | 0.13 | ||||||||||||||
Discontinued operations
|
— | — | — | 0.05 | 0.11 | — | 0.03 | ||||||||||||||||||||||
Extraordinary items
|
— | — | — | — | 1.06 | — | — | ||||||||||||||||||||||
Cumulative effect of a change in accounting principle
|
— | — | — | — | (0.67 | ) | 0.05 | — | |||||||||||||||||||||
Basic earnings per share of common stock
|
0.16 | 0.18 | 0.57 | 0.31 | 0.23 | 0.24 | 0.17 | ||||||||||||||||||||||
Basic earnings per share from amortization of goodwill
|
— | — | — | — | — | 0.03 | 0.04 | ||||||||||||||||||||||
Basic earnings per share adjusted to exclude goodwill
amortization
|
$ | 0.16 | $ | 0.18 | $ | 0.57 | $ | 0.31 | $ | 0.23 | $ | 0.28 | $ | 0.20 | |||||||||||||||
Diluted earnings (loss) per share from continuing operations
|
$ | 0.14 | $ | 0.15 | $ | 0.47 | $ | 0.21 | $ | (0.28 | ) | $ | 0.13 | $ | 0.10 | ||||||||||||||
Discontinued operations
|
— | — | — | 0.04 | 0.11 | — | 0.03 | ||||||||||||||||||||||
Extraordinary items
|
— | — | — | — | 1.04 | — | — | ||||||||||||||||||||||
Cumulative effect of a change in accounting principle
|
— | — | — | — | (0.66 | ) | 0.05 | — | |||||||||||||||||||||
Diluted earnings per share of common stock
|
0.14 | 0.15 | 0.47 | 0.25 | 0.21 | 0.18 | 0.12 | ||||||||||||||||||||||
Diluted earnings per share from amortization of goodwill
|
— | — | — | — | — | 0.03 | 0.03 | ||||||||||||||||||||||
Diluted earnings per share adjusted to exclude goodwill
amortization
|
$ | 0.14 | $ | 0.15 | $ | 0.47 | $ | 0.25 | $ | 0.21 | $ | 0.21 | $ | 0.15 | |||||||||||||||
Basic weighted average number of common shares outstanding
|
25,750,000 | 23,824,000 | 24,183,000 | 22,818,000 | 22,454,000 | 22,341,000 | 22,341,000 | ||||||||||||||||||||||
Diluted weighted average number of common shares outstanding
|
28,336,000 | 27,706,000 | 27,806,000 | 26,031,000 | 22,454,000 | 24,631,000 | 23,925,000 | ||||||||||||||||||||||
Ratio of earnings to fixed charges(d)
|
(4.67 | ) | (1.24 | ) | (2.44 | ) | 0.15 | (0.23 | ) | 0.95 | (0.14 | ) | |||||||||||||||||
Dollar deficiency of earnings to fixed charges(d)
|
1,753 | 659 | 4,029 | 987 | 1,421 | 68 | 1,586 | ||||||||||||||||||||||
Balance Sheet (at period end)
|
|||||||||||||||||||||||||||||
Loans and leases, net(e)
|
$ | 4,621,543 | $ | 3,623,409 | $ | 4,561,073 | $ | 3,611,612 | $ | 3,377,870 | $ | 2,776,624 | $ | 2,855,015 | |||||||||||||||
Securities
|
1,219,951 | 621,965 | 1,192,335 | 677,713 | 1,111,825 | 1,356,497 | 1,315,122 |
35
As of or For the Three | |||||||||||||||||||||||||||||
Months Ended March 31, | As of or For the Years Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
Total assets
|
7,029,049 | 5,078,067 | 6,954,847 | 5,136,235 | 5,415,933 | 4,665,359 | 4,654,954 | ||||||||||||||||||||||
Deposits
|
3,643,855 | 3,143,435 | 3,457,202 | 3,058,142 | 2,920,555 | 2,276,567 | 2,234,485 | ||||||||||||||||||||||
Securities sold under agreements to repurchase and federal funds
purchased
|
243,121 | 112,456 | 362,002 | 120,874 | 116,279 | 467,070 | 669,202 | ||||||||||||||||||||||
Other borrowings(f)
|
2,049,749 | 1,020,233 | 2,086,368 | 1,209,571 | 1,686,613 | 1,326,264 | 1,351,881 | ||||||||||||||||||||||
Shareholders’ equity
|
128,088 | 92,478 | 125,251 | 85,675 | 77,411 | 74,172 | 72,615 | ||||||||||||||||||||||
Book value per share(c)(g)
|
4.36 | 3.82 | 4.25 | 3.68 | 3.45 | 3.31 | 3.25 | ||||||||||||||||||||||
Return on average equity(h)
|
13.88 | % | 19.64 | % | 13.16 | % | 8.63 | % | 6.85 | % | 7.44 | % | 5.77 | % | |||||||||||||||
BankAtlantic Asset Quality Ratios
|
|||||||||||||||||||||||||||||
Non-performing assets, net of reserves as a percent of total
loans, tax certificates and real estate owned
|
0.17 | % | 0.37 | % | 0.19 | % | 0.36 | % | 0.86 | % | 1.49 | % | 1.09 | % | |||||||||||||||
Loan loss allowance as a percent of non-performing loans
|
661.8 | % | 387.1 | % | 582.18 | % | 422.06 | % | 235.61 | % | 114.44 | % | 193.30 | % | |||||||||||||||
Loan loss allowance as a percent of total loans
|
.92 | % | 1.22 | % | 1.00 | % | 1.24 | % | 1.38 | % | 1.57 | % | 1.62 | % | |||||||||||||||
Levitt Corporation
|
|||||||||||||||||||||||||||||
Consolidated margin on sales of real estate
|
$ | 68,277 | $ | 28,858 | $ | 143,378 | $ | 73,627 | $ | 48,133 | $ | 31,455 | $ | 21,293 | |||||||||||||||
Consolidated margin percentage
|
34.3 | % | 29.3 | % | 26.1 | % | 26.0 | % | 23.2 | % | 22.0 | % | 21.2 | % | |||||||||||||||
Homes delivered
|
501 | 341 | 2,126 | 1,011 | 740 | 597 | 441 | ||||||||||||||||||||||
Backlog of homes (units)
|
1,918 | 2,186 | 1,814 | 2,053 | 824 | 584 | 487 | ||||||||||||||||||||||
Backlog of homes (value)
|
$ | 496,006 | $ | 510,231 | $ | 448,647 | $ | 458,771 | $ | 167,526 | $ | 125,041 | $ | 94,751 | |||||||||||||||
Land division acres sold(i)
|
1,304 | 294 | 764 | 1,337 | 1,473 | 253 | 145 | ||||||||||||||||||||||
Capital Ratios for BankAtlantic:
|
|||||||||||||||||||||||||||||
Total risk based capital
|
11.06 | % | 12.20 | % | 10.80 | % | 12.06 | % | 11.89 | % | 12.90 | % | 11.00 | % | |||||||||||||||
Tier I risk based capital
|
9.52 | % | 10.35 | % | 9.19 | % | 10.22 | % | 10.01 | % | 11.65 | % | 9.74 | % | |||||||||||||||
Leverage
|
7.03 | % | 8.63 | % | 6.83 | % | 8.52 | % | 7.26 | % | 8.02 | % | 6.66 | % |
(a) | Since its inception, BFC has not paid any cash dividends. | |
(b) | While the Company has two classes of common stock outstanding, the two-class method is not presented because the Company’s capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes. | |
(c) | I.R.E. Realty Advisory Group, Inc. (“RAG”) owns 4,764,282 shares of our Class A Common Stock and 500,000 shares of our Class B Common Stock. Because the Company owns 45.5% of the outstanding common stock of RAG, 2,167,748 shares of Class A Common Stock and 227,250 shares of Class B Common Stock are eliminated from the number of shares outstanding for purposes of computing earnings per share and book value per share. | |
(d) | The operations, fixed charges and dividends of BankAtlantic Bancorp and Levitt are not included in this calculation because each of those subsidiaries are separate, publicly traded companies whose Board of Directors are composed of individuals, a majority of whom are independent. Accordingly, decisions made by those Boards, including with respect to the payment of dividends, are not within our control. | |
(e) | Includes $0, $233 million, and $0 of bankers acceptances at December 31, 2004, 2003 and 2002, respectively and $0 at March 31, 2005 and 2004. | |
36
(f) | Other borrowings consist of FHLB advances, subordinated debentures, mortgage notes payable, bonds payable, guaranteed preferred beneficial interests in BankAtlantic Bancorp’s junior subordinated debentures and junior subordinated debentures. | |
(g) | Preferred stock redemption price is eliminated from shareholders’ equity for purposes of computing book value per share. | |
(h) | Ratios were computed using quarterly averages. | |
(i) | Land sales between Levitt’s subsidiaries were eliminated in consolidation. | |
37
As of or For the | |||||||||||||||||||||||||||||
Three Months Ended | As of or For the Year Ended | ||||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Balance Sheet Data:
|
|||||||||||||||||||||||||||||
Assets
|
|||||||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 693 | $ | 1,361 | $ | 1,520 | $ | 1,536 | $ | 797 | $ | 2,706 | $ | 172 | |||||||||||||||
Investment securities
|
12,075 | 1,451 | 11,800 | 1,218 | 1,269 | 859 | 827 | ||||||||||||||||||||||
Investment in venture partnerships
|
963 | 718 | 971 | 626 | 2,782 | 4,691 | 8,483 | ||||||||||||||||||||||
Investment in BankAtlantic Bancorp
|
104,912 | 95,576 | 103,125 | 91,869 | 106,017 | 98,815 | 89,603 | ||||||||||||||||||||||
Investment in Levitt Corporation
|
53,886 | 30,727 | 48,983 | 27,885 | — | — | — | ||||||||||||||||||||||
Investment in other subsidiaries
|
13,912 | 13,731 | 14,219 | 13,680 | 13,620 | 13,887 | 13,380 | ||||||||||||||||||||||
Loans receivable
|
2,871 | 4,175 | 3,364 | 4,175 | 4,175 | 1,184 | — | ||||||||||||||||||||||
Other assets
|
1,233 | 693 | 2,596 | 484 | 768 | 831 | 6,369 | ||||||||||||||||||||||
Total assets
|
$ | 190,545 | $ | 148,432 | $ | 186,578 | $ | 141,473 | $ | 129,428 | $ | 122,973 | $ | 118,834 | |||||||||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||||||
Mortgages payable and other borrowings
|
$ | 9,483 | $ | 7,160 | $ | 10,483 | $ | 6,015 | $ | 6,015 | $ | 4,515 | $ | 4,080 | |||||||||||||||
Other liabilities
|
23,647 | 23,570 | 23,816 | 23,234 | 22,805 | 22,491 | 20,511 | ||||||||||||||||||||||
Deferred income taxes
|
29,327 | 25,224 | 27,028 | 26,549 | 23,197 | 21,795 | 21,628 | ||||||||||||||||||||||
Total liabilities
|
62,457 | 55,954 | 61,327 | 55,798 | 52,017 | 48,801 | 46,219 | ||||||||||||||||||||||
Total shareholders’ equity
|
128,088 | 92,478 | 125,251 | 85,675 | 77,411 | 74,172 | 72,615 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 190,545 | $ | 148,432 | $ | 186,578 | $ | 141,473 | $ | 129,428 | $ | 122,973 | $ | 118,834 | |||||||||||||||
Statements of Operations Data:
|
|||||||||||||||||||||||||||||
Revenues
|
300 | 183 | 1,222 | 1,051 | 763 | 1,010 | 479 | ||||||||||||||||||||||
Expenses
|
2,165 | 1,327 | 6,717 | 3,954 | 3,898 | 4,022 | 4,541 | ||||||||||||||||||||||
(Loss) before undistributed earnings from subsidiaries
|
(1,865 | ) | (1,144 | ) | (5,495 | ) | (2,903 | ) | (3,135 | ) | (3,012 | ) | (4,062 | ) | |||||||||||||||
Equity from earnings in BankAtlantic Bancorp
|
4,368 | 4,565 | 15,694 | 15,222 | 11,380 | 10,551 | 8,264 | ||||||||||||||||||||||
Equity from earnings in Levitt Corporation
|
4,955 | 2,902 | 10,265 | — | — | — | — | ||||||||||||||||||||||
Equity from earnings (loss) in other subsidiaries
|
(315 | ) | 584 | 1,981 | (1,583 | ) | (633 | ) | 595 | 1,188 | |||||||||||||||||||
Income before income taxes
|
7,143 | 6,907 | 22,445 | 10,736 | 7,612 | 8,134 | 5,390 | ||||||||||||||||||||||
Provision for income taxes
|
2,743 | 2,535 | 8,215 | 3,714 | 2,420 | 2,660 | 1,755 | ||||||||||||||||||||||
Net income
|
4,400 | 4,372 | 14,230 | 7,022 | 5,192 | 5,474 | 3,635 | ||||||||||||||||||||||
5% Preferred Stock dividends
|
188 | — | 392 | — | — | — | — | ||||||||||||||||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | $ | 13,838 | $ | 7,022 | $ | 5,192 | $ | 5,474 | $ | 3,635 | |||||||||||||||
38
As of or For the | ||||||||||||||||||||||||||||
Three Months Ended | As of or For the Year Ended | |||||||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Statements of Cash Flow Data:
|
||||||||||||||||||||||||||||
Operating Activities:
|
||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
$ | 4,400 | $ | 4,372 | $ | 14,230 | $ | 5,879 | $ | (5,986 | ) | $ | 4,336 | $ | 2,966 | |||||||||||||
Income from discontinued operations, net of tax
|
— | — | — | 1,143 | 2,536 | — | 669 | |||||||||||||||||||||
Income from extraordinary item, net of tax
|
— | — | — | — | 23,749 | — | — | |||||||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax
|
— | — | — | — | (15,107 | ) | 1,138 | — | ||||||||||||||||||||
Other operating activities
|
(4,578 | ) | (5,401 | ) | (20,317 | ) | (9,380 | ) | (9,894 | ) | (4,797 | ) | 693 | |||||||||||||||
Net cash (used in) provided by operating activities
|
(178 | ) | (1,029 | ) | (6,087 | ) | (2,358 | ) | (4,702 | ) | 677 | 4,328 | ||||||||||||||||
Net cash (used in) provided by investing activities
|
528 | 444 | (7,503 | ) | 2,815 | 1,408 | 1,368 | (1,349 | ) | |||||||||||||||||||
Net cash (used in) provided by financing activities
|
(1,177 | ) | 410 | 13,574 | 282 | 1,385 | 489 | (4,000 | ) | |||||||||||||||||||
Increase (decrease) in cash and cash equivalents
|
(827 | ) | (175 | ) | (16 | ) | 739 | (1,909 | ) | 2,534 | (1,021 | ) | ||||||||||||||||
Cash at beginning of period
|
1,520 | 1,536 | 1,536 | 797 | 2,706 | 172 | 1,193 | |||||||||||||||||||||
Cash at end of period
|
$ | 693 | $ | 1,361 | $ | 1,520 | $ | 1,536 | $ | 797 | $ | 2,706 | $ | 172 | ||||||||||||||
39
Shares | Percent of | Percent | |||||||||||
Owned | Ownership | of Vote | |||||||||||
BankAtlantic Bancorp
|
|||||||||||||
Class A Common Stock
|
8,329,236 | 14.96 | % | 7.93 | % | ||||||||
Class B Common Stock
|
4,876,124 | 100.00 | % | 47.00 | % | ||||||||
Total
|
13,205,360 | 21.81 | % | 54.93 | % | ||||||||
Levitt
|
|||||||||||||
Class A Common Stock
|
2,074,243 | 11.15 | % | 5.91 | % | ||||||||
Class B Common Stock
|
1,219,031 | 100.00 | % | 47.00 | % | ||||||||
Total
|
3,293,274 | 16.62 | % | 52.91 | % |
40
BankAtlantic |
• | attracting checking and savings deposits from individuals and business customers; | |
• | originating commercial real estate and business loans, and consumer and small business loans; | |
• | purchasing wholesale residential loans from third parties; and | |
• | making other investments in mortgage-backed securities, tax certificates and other securities. |
41
• | Continuing The “Florida’s Most Convenient Bank” Initiative. BankAtlantic began its “Florida’s Most Convenient Bank” initiative in 2002. This initiative, which includes offering free checking, seven-day branch banking, extended lobby hours, a 24-hour customer service center and new products and customer service initiatives is an integral part of BankAtlantic’s strategy to position itself as a customer-oriented bank and increase its low cost deposit accounts. BankAtlantic has instituted marketing programs which include sales training programs, outbound telemarketing requirements and incentive compensation programs enabling its banking personnel to earn additional income for production of profitable business. | |
• | Increasing Low Cost Deposits. BankAtlantic’s low cost deposits are comprised of demand deposit, NOW checking accounts and savings accounts. From December 31, 2001 to December 31, 2004, the balances of its low cost deposits increased 200% from approximately $600 million to approximately $1.8 billion. These low cost deposits represented 53% of BankAtlantic’s total deposits at December 31, 2004, compared to 26% of total deposits at December 31, 2001. BankAtlantic intends to continue to increase its low cost deposits through strong sales and marketing efforts, new products offerings, commitment to customer service and the “Florida’s Most Convenient Bank” initiative. | |
• | Growing BankAtlantic’s Loan Portfolio While Concentrating On Core Lending Competencies. BankAtlantic intends to grow its core commercial and retail banking business with an emphasis on commercial real estate loans, one to four family residential loans, and small business and consumer loans. BankAtlantic attributes its success in these lending areas to several key factors, including disciplined underwriting and expertise in its markets. Further, BankAtlantic intends to limit activities in non-core lending areas, such as credit card, international, syndication and indirect lending. | |
• | Expanding BankAtlantic’s Retail Network. BankAtlantic intends to grow its retail network both internally through a branding initiative and de novo expansion and externally through acquisitions if attractive opportunities are presented which are consistent with BankAtlantic’s growth strategy. BankAtlantic generally seeks to expand into relatively faster growing and higher deposit level markets within Florida. BankAtlantic has indicated that it currently intends to open 6 new branches in 2005 and to renovate the interior of all existing branches during 2005 and 2006 with a consistent design. | |
• | Maintaining BankAtlantic’s Strong Credit Culture. BankAtlantic believes it has put in place stringent underwriting standards and has developed and instituted credit training programs for its banking officers which emphasize underwriting and credit analysis. It has also developed systems and programs which it believes will enable it to offer sophisticated products and services without exposing the Bank to unnecessary credit risks. | |
42
43
Ryan Beck |
44
• | Investment Banking. Ryan Beck has a well-established investment banking group proactively focused on financial institutions. Recently, Ryan Beck’s strategy has been to diversify its operations through the addition of investment bankers and capital markets expertise focused on other sectors, such as consumer products and services, REITs and business services. Ryan Beck’s investment banking activities include managing underwritten public offerings, serving as placement agent on institutional private financings, assisting in mutual conversion transactions and acting as an advisor in connection with mergers and acquisitions. | |
• | Private Client Group. This group provides full service brokerage and advisory services to high net worth individuals. In April 2002, Ryan Beck acquired certain of the assets and assumed certain of the liabilities of Gruntal & Co., LLC. This transaction enabled Ryan Beck to significantly increase its private client group revenues. The table below shows Ryan Beck’s private client group statistics before the Gruntal transaction and at March 31, 2005. | |
March 31, 2005 | December 31, 2001 | |||||||
Financial Consultants
|
437 | 80 | ||||||
Customer Accounts
|
144,000 | 27,000 | ||||||
Customer Assets
|
$ | 17 billion | $ | 4 billion |
• | Capital Markets. Ryan Beck operates both equity and fixed income capital markets groups. Both groups engage in trading, institutional sales and syndicate activities. Ryan Beck makes a market in over 700 equity securities, principally financial institution stocks. Ryan Beck’s institutional sales force includes 44 sales professionals. Ryan Beck’s research area currently employs 12 publishing analysts who cover approximately 37 closed end funds and 149 companies in 6 industry sectors. Additionally, it employs a Chief Market Strategist who provides economic and global market commentary. |
• | high net worth individuals; | |
• | institutional clients (including mutual funds, pension funds, trust companies, insurance companies, LBO funds, private equity sponsors, merchant banks and other long-term investors); and | |
• | financial institutions and other corporate clients. | |
45
• | Building and selling homes profitably in strong growth markets throughout the Southeastern United States. Currently, Levitt builds homes throughout Florida and in metropolitan Memphis, Tennessee (including Northern Mississippi). Additionally, Levitt has acquired land and entered into land purchase contracts to support the expansion of homebuilding activities into the metropolitan Atlanta, Georgia and Nashville, Tennessee markets. Its markets are expected to remain strong due to favorable demographic and economic trends, such as retiring “Baby Boomers” and continuing new employment opportunities. As it completes existing developments in these markets, it expects to acquire new land that will not only replenish but also increase its inventory of real estate. | |
• | Continuing to acquire land and to develop master-planned communities in desirable markets. Levitt intends to acquire land parcels in desirable markets that are suited for developing large master-planned communities. Generally, land sale revenues tend to be sporadic and fluctuate more than home sale revenues, but land sale transactions result in higher margins, which typically exceed 40%. Levitt’s land development activities in its master-planned communities complement its homebuilding activities by offering a potential source of land for future homebuilding. At the same time, its homebuilding activities complement its master-planned community development activities since Levitt’s management believes that its strong merchandising and quality developments support future land sales in its master-planned communities. Levitt expects that its Homebuilding Division will continue to purchase land for its residential home developments in its master-planned communities in the future. | |
• | Exploring joint ventures and/or acquisitions to expand its penetration throughout the United States. Levitt believes that its brands and its core competence as a homebuilder and real estate developer can be extended to new markets both inside and outside of Florida and the Southeastern United States. Its plans to supplement its growth through selective acquisitions and joint ventures in both new and existing markets to enable it to more rapidly extend its competencies in active adult communities and land development. | |
• | Maintaining a conservative risk profile. Levitt attempts to apply a disciplined risk management approach to its business activities. Other than its model homes, the majority of its homes are pre-sold before construction begins. Levitt generally requires customer deposits of 5% to 10% of the base sales price of its homes, and requires a higher percentage deposit for design customizations and upgrades. As a result, it strengthens its backlog and lowers its risk of cancellation. It seeks to maintain its homebuilding land inventory at levels that can be absorbed within three to five years. While its land inventory in Tradition, its newest master-planned community, can support eight to ten years of development, it can mitigate the risk associated with this investment by selling parcels to other developers throughout the development period. Alternatively, early sales can provide it with funds that allow it to assemble substantially more acreage with less required additional capital investment. It can also utilize this early sales strategy to improve the attractiveness of the development. | |
• | Utilizing community development districts to fund development costs. Levitt establishes community development or improvement districts to access bond financing to fund infrastructure and other projects at its master-planned community developments. The ultimate owners of the property within the district are responsible for amounts owed on these bonds as part of an assessment on their property tax bills. Generally, no payments under the bonds are required from property owners during the first two years after issuance. While Levitt is responsible for these amounts until the affected property is sold, this strategy allows it to more effectively manage the cash required to fund development of the project. | |
• | Pursuing other strategic real estate opportunities. Currently, Levitt owns approximately 31% of the outstanding common stock of Bluegreen. Bluegreen is an independently operated company that primarily acquires, develops, markets and sells vacation ownership interests in “drive-to” resorts and | |
46
develops and sells residential home sites around golf courses or other amenities. In the future, Levitt may pursue strategic investments in other real estate-related businesses. |
Homebuilding Division |
Land Division |
March 31, 2005 | December 31, 2004 | December 31, 2003 | ||||||||||||||||||||||
Full-time | Part-time | Full-time | Part-time | Full-time | Part-time | |||||||||||||||||||
BFC
|
18 | 1 | 16 | 1 | 7 | 1 | ||||||||||||||||||
BankAtlantic Bancorp
|
2,604 | 331 | 2,492 | 325 | 2,312 | 235 | ||||||||||||||||||
Levitt
|
551 | 26 | 527 | 32 | 353 | 34 | ||||||||||||||||||
Total
|
3,173 | 358 | 3,035 | 358 | 2,672 | 270 | ||||||||||||||||||
47
48
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Assets
|
$ | 7,029,049 | $ | 6,954,847 | ||||
Liabilities
|
$ | 6,253,819 | $ | 6,216,944 | ||||
Minority interest
|
647,142 | 612,652 | ||||||
Shareholders’ equity
|
128,088 | 125,251 | ||||||
Liabilities and shareholders’ equity
|
$ | 7,029,049 | $ | 6,954,847 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
BFC Activities
|
$ | (4,930 | ) | $ | (2,585 | ) | ||
Financial Services
|
19,878 | 20,524 | ||||||
Homebuilding & Real Estate Development
|
29,818 | 13,055 | ||||||
44,766 | 30,994 | |||||||
Minority interest in income of consolidated subsidiaries
|
40,366 | 26,622 | ||||||
Net income
|
4,400 | 4,372 | ||||||
5% Preferred Stock dividends
|
188 | — | ||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | ||||
49
Three Months Ended | ||||||||||||
March 31, | Percent | |||||||||||
Increase | ||||||||||||
2005 | 2004 | (Decrease) | ||||||||||
BFC Activities
|
(4,930 | ) | (2,869 | ) | 71.8 | % | ||||||
Financial Services
|
$ | 19,878 | $ | 13,371 | 48.7 | % | ||||||
Homebuilding & Real Estate Development
|
29,818 | 13,055 | 128.4 | % | ||||||||
44,766 | 23,557 | 90.0 | % | |||||||||
Minority interest
|
40,366 | 20,560 | 96.3 | % | ||||||||
Net income
|
4,400 | 2,997 | 46.8 | % | ||||||||
5% Preferred Stock dividends
|
188 | — | ||||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 2,997 | 40.5 | % | ||||||
Basic earnings per share of common stock
|
$ | 0.16 | $ | 0.13 | 27.2 | % | ||||||
Diluted earnings per share of common stock
|
$ | 0.14 | $ | 0.10 | 40.0 | % | ||||||
GAAP net income
|
$ | 4,372 | ||
Costs associated with debt redemption
|
1,042 | |||
Litigation settlement
|
(2,417 | ) | ||
Net income excluding the 2004 non-operating items
|
2,997 | |||
50
Shares | Percent of | Percent | |||||||||||
Owned | Ownership | of Vote | |||||||||||
BankAtlantic Bancorp
|
|||||||||||||
Class A Common Stock
|
8,329,236 | 14.96 | % | 7.93 | % | ||||||||
Class B Common Stock
|
4,876,124 | 100.00 | % | 47.00 | % | ||||||||
Total
|
13,205,360 | 21.81 | % | 54.93 | % | ||||||||
Levitt
|
|||||||||||||
Class A Common Stock
|
2,074,243 | 11.15 | % | 5.91 | % | ||||||||
Class B Common Stock
|
1,219,031 | 100.00 | % | 47.00 | % | ||||||||
Total
|
3,293,274 | 16.62 | % | 52.91 | % |
51
For the Three Months | |||||||||||||
Ended March 31, | Change | ||||||||||||
2005 vs. | |||||||||||||
2005 | 2004 | 2004 | |||||||||||
(In thousands) | |||||||||||||
Revenues
|
|||||||||||||
Interest and dividend income
|
$ | 243 | $ | 93 | $ | 150 | |||||||
Other income, net
|
154 | 1,391 | (1,237 | ) | |||||||||
397 | 1,484 | (1,087 | ) | ||||||||||
Cost and Expenses
|
|||||||||||||
Interest expense
|
309 | 294 | 15 | ||||||||||
Employee compensation and benefits
|
1,596 | 848 | 748 | ||||||||||
Other expenses
|
787 | 392 | 395 | ||||||||||
2,692 | 1,534 | 1,158 | |||||||||||
Loss before income taxes
|
(2,295 | ) | (50 | ) | (2,245 | ) | |||||||
Provision for income taxes
|
2,635 | 2,535 | 100 | ||||||||||
Loss from continuing operations before minority interest
|
(4,930 | ) | (2,585 | ) | (2,345 | ) | |||||||
Minority interest in income of consolidated subsidiaries
|
(6 | ) | 510 | (516 | ) | ||||||||
Loss from continuing operations
|
$ | (4,924 | ) | $ | (3,095 | ) | $ | (1,829 | ) | ||||
52
Three Months Ended | |||||||||
March 31, | |||||||||
2005 | 2004 | ||||||||
(In thousands) | |||||||||
Net cash provided by (used in):
|
|||||||||
Operating activities
|
$ | (556 | ) | $ | (864 | ) | |||
Investing activities
|
501 | 435 | |||||||
Financing activities
|
(1,202 | ) | 350 | ||||||
Decrease in cash and cash equivalents
|
(1,257 | ) | (79 | ) | |||||
Cash and cash equivalents at beginning of period
|
2,227 | 1,602 | |||||||
Cash and cash equivalents at end of period
|
$ | 970 | $ | 1,523 | |||||
53
BankAtlantic Compliance Matter |
54
Consolidated Assets and Liabilities |
• | Purchase of approximately $190 million of residential real estate loans; | |
• | Origination of and participation in $320 million of commercial and small business loans; | |
• | Origination of approximately $105 million of home equity loans; | |
• | Purchase of approximately $40 million of mortgage-backed securities; | |
• | Purchase of approximately $25 million of tax-exempt securities; | |
• | Purchase of approximately $55 million of managed-fund securities; | |
• | Loans, investment securities and tax certificate repayments and maturities of approximately $700 million; | |
55
• | Additions of $7 million of fixed assets associated with BankAtlantic Bancorp’s new corporate headquarter building and BankAtlantic’s branch renovation and expansion initiatives; | |
• | An increase of $3.7 million in property and equipment primarily related to the construction of an irrigation facility in Tradition; | |
• | A decline in receivable from Ryan Beck’s clearing agent and a corresponding increase in securities owned associated with Ryan Beck’s trading activities; | |
• | Levitt’s net decrease in inventory of real estate of approximately $11.6 million resulting from the bulk land sale of 1,294 acres of land adjacent to Tradition, as well as sales of homes and other land. These decreases were offset in part by land acquisitions by Levitt’s homebuilding division and increases in land development and construction costs; | |
• | BankAtlantic’s net declines in real estate inventory associated with units closed at the Riverclub real estate joint venture acquired by BankAtlantic in connection with the Community acquisition; | |
• | An increase in Levitt’s investment in Bluegreen Corporation associated primarily with its equity in Bluegreen’s earnings; | |
• | Increases in accrued interest receivable due to higher loan receivable and securities balances; | |
• | Higher Federal Home Loan Bank stock balances associated with increased stock ownership membership requirements that went into effect during the first quarter of 2005; and | |
• | Higher other assets balances related to increased fee-based deposit overdraft accounts as well as higher REO balances. | |
• | Higher deposit account balances resulting from the growth in low-cost deposits associated with “Florida’s Most Convenient Bank” and totally free checking account initiatives; | |
• | An increase in securities sold but not yet purchased associated with Ryan Beck’s trading activities; | |
• | Repayments of borrowings at BankAtlantic Bancorp, and FHLB advances caused by deposit growth at BankAtlantic; | |
• | Levitt’s decrease in notes and mortgage notes payable primarily associated with its land division bulk land sale; | |
• | Levitt’s issuance of junior subordinated debentures of $23.2 million; and | |
• | Decrease in other liabilities primarily due to BankAtlantic Bancorp securities purchased pending settlement and a reduction in accrued employee compensation and benefits reflecting the payout of 2004 annual bonuses during the first quarter of 2005. This decrease was partially offset with an increase in Levitt’s current tax liability. | |
56
Minority Interest |
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
BankAtlantic Bancorp
|
$ | 376,070 | $ | 366,140 | ||||
Levitt
|
270,356 | 245,756 | ||||||
Joint Venture Partnerships
|
716 | 756 | ||||||
$ | 647,142 | $ | 612,652 | |||||
Shareholders’ Equity |
The objective of the following discussion is to provide an understanding of the financial condition and results of operations of BankAtlantic Bancorp, Inc. and its wholly owned subsidiaries (the “Company”, which may also be referred to as “we,” “us,” or “our”) for the three months ended March 31, 2005 and 2004, respectively. The principal assets of the Company consist of its ownership of these subsidiaries, which include BankAtlantic, a federal savings bank headquartered in Fort Lauderdale, Florida, and its subsidiaries (“BankAtlantic”) and RB Holdings, Inc., the |
57
holding company for Ryan Beck & Co., Inc., a brokerage and investment banking firm located in Florham Park, New Jersey, and its subsidiaries (“Ryan Beck”). |
For the Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
(In thousands) | ||||||||||||
BankAtlantic
|
$ | 20,861 | $ | 3,720 | $ | 17,141 | ||||||
Ryan Beck
|
2,530 | 5,128 | (2,598 | ) | ||||||||
Parent Company
|
(3,513 | ) | 11,676 | (15,189 | ) | |||||||
Net income
|
$ | 19,878 | $ | 20,524 | $ | (646 | ) | |||||
The change in BankAtlantic’s segment net income was primarily due to a substantial improvement in its net interest income, net recoveries in its provision for loan losses, higher revenues from a real estate joint venture and growth in non-interest income. Also contributing to the change in BankAtlantic’s earnings between quarters was $7.6 million of after-tax costs associated with prepayment penalties incurred by BankAtlantic in connection with its prepayment of high fixed interest rate FHLB advances during the first quarter of 2004. The significant increase in BankAtlantic’s net interest income was due to earning asset growth and continued increases in BankAtlantic’s low cost deposits. The primary contributor to the net recovery in BankAtlantic’s provision for loan losses was a $1.1 million recovery of a loan partially charged off during 2003 and the continued improvement in loan portfolio credit quality. The higher real estate joint venture revenues were due to an increase in units sold during 2005. The additional non-interest income was primarily associated with higher service charges on deposit accounts directly related to growth in the number of deposit accounts from initiatives adopted in connection with BankAtlantic’s “Florida’s Most Convenient Bank” marketing campaign. The above improvements in BankAtlantic’s earnings were partially offset by higher operating expenses relating to several new initiatives associated with the “Florida’s Most Convenient Bank” campaign which were designed to enhance customer service and convenience. | ||
The decline in Ryan Beck’s segment net income primarily resulted from lower retail brokerage revenues as investors were less active in the securities markets during the 2005 period. Ryan Beck’s 2005 earnings were also unfavorably impacted by additional occupancy cost and recruitment expenses associated with Ryan Beck’s relocation and expansion of offices as well as the hiring of additional institutional professionals. | ||
Parent Company segment net income in 2005 was significantly less than segment net income in 2004 primarily as a result of a $14.8 million after-tax litigation settlement gain during 2004. | ||
58
Net Interest Income |
BankAtlantic | |||||||||||||||||||||||||
Average Balance Sheet — Yield/ Rate Analysis | |||||||||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||||||||
March 31, 2005 | March 31, 2004 | ||||||||||||||||||||||||
Average | Revenue/ | Yield/ | Average | Revenue/ | Yield/ | ||||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Loans:
|
|||||||||||||||||||||||||
Residential real estate
|
$ | 2,085,473 | $ | 25,509 | 4.89 | % | $ | 1,326,061 | $ | 15,941 | 4.81 | % | |||||||||||||
Commercial real estate
|
1,759,747 | 28,323 | 6.44 | 1,689,962 | 23,694 | 5.61 | |||||||||||||||||||
Consumer
|
487,746 | 6,776 | 5.56 | 374,222 | 3,900 | 4.17 | |||||||||||||||||||
Lease financing
|
6,242 | 151 | 9.68 | 13,642 | 382 | 11.20 | |||||||||||||||||||
Commercial business
|
94,283 | 1,640 | 6.96 | 98,959 | 1,500 | 6.06 | |||||||||||||||||||
Small business
|
195,733 | 3,491 | 7.13 | 173,891 | 3,085 | 7.10 | |||||||||||||||||||
Total loans
|
4,629,224 | 65,890 | 5.69 | 3,676,737 | 48,502 | 5.28 | |||||||||||||||||||
Investments — tax exempt(1)
|
334,029 | 4,829 | 5.78 | 3,362 | 51 | 6.04 | |||||||||||||||||||
Investments — taxable
|
732,939 | 9,555 | 5.21 | 540,460 | 7,808 | 5.78 | |||||||||||||||||||
Total interest earning assets
|
5,696,192 | 80,274 | 5.64 | % | 4,220,559 | 56,361 | 5.34 | % | |||||||||||||||||
Goodwill and core deposit intangibles
|
80,375 | 82,263 | |||||||||||||||||||||||
Other non-interest earning assets
|
283,019 | 240,068 | |||||||||||||||||||||||
Total assets
|
$ | 6,059,586 | $ | 4,542,890 | |||||||||||||||||||||
Deposits:
|
|||||||||||||||||||||||||
Savings
|
$ | 281,512 | 189 | 0.27 | % | $ | 220,005 | 144 | 0.26 | % | |||||||||||||||
NOW
|
664,313 | 602 | 0.37 | 543,619 | 491 | 0.36 | |||||||||||||||||||
Money market
|
921,382 | 2,704 | 1.19 | 866,767 | 1,876 | 0.87 | |||||||||||||||||||
Certificate of deposit
|
777,353 | 4,800 | 2.50 | 769,949 | 4,462 | 2.33 | |||||||||||||||||||
Total interest bearing deposits
|
2,644,560 | 8,295 | 1.27 | 2,400,340 | 6,973 | 1.17 | |||||||||||||||||||
Short-term borrowed funds
|
357,047 | 2,122 | 2.41 | 150,735 | 302 | 0.81 | |||||||||||||||||||
Advances from FHLB
|
1,536,434 | 13,674 | 3.61 | 760,973 | 9,098 | 4.81 | |||||||||||||||||||
Long-term debt
|
37,206 | 600 | 6.54 | 35,842 | 482 | 5.41 | |||||||||||||||||||
Total interest bearing liabilities
|
4,575,247 | 24,691 | 2.19 | 3,347,890 | 16,855 | 2.02 | |||||||||||||||||||
Demand deposits
|
913,717 | 664,796 | |||||||||||||||||||||||
Non-interest bearing other liabilities
|
44,216 | 34,025 | |||||||||||||||||||||||
Total liabilities
|
5,533,180 | 4,046,711 | |||||||||||||||||||||||
Stockholder’s equity
|
526,406 | 496,179 | |||||||||||||||||||||||
Total liabilities and stockholder’s equity
|
$ | 6,059,586 | $ | 4,542,890 | |||||||||||||||||||||
59
BankAtlantic | ||||||||||||||||||||||||
Average Balance Sheet — Yield/ Rate Analysis | ||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||
March 31, 2005 | March 31, 2004 | |||||||||||||||||||||||
Average | Revenue/ | Yield/ | Average | Revenue/ | Yield/ | |||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Net tax equivalent interest income/net interest spread
|
55,583 | 3.45 | % | 39,506 | 3.32 | % | ||||||||||||||||||
Tax equivalent adjustment
|
(1,690 | ) | (18 | ) | ||||||||||||||||||||
Capitalized interest from real estate operations
|
452 | 307 | ||||||||||||||||||||||
Net interest income
|
$ | 54,345 | $ | 39,795 | ||||||||||||||||||||
Margin
|
||||||||||||||||||||||||
Interest income/interest earning assets
|
5.64 | % | 5.34 | % | ||||||||||||||||||||
Interest expense/interest earning assets
|
1.76 | 1.61 | ||||||||||||||||||||||
Net interest margin (tax equivalent)
|
3.88 | % | 3.73 | % | ||||||||||||||||||||
|
(1) | The tax equivalent basis is computed using a 35% tax rate. |
The substantial improvement in tax equivalent net interest income primarily resulted from a 35% increase in interest earning assets and a 15 basis point improvement in the net interest margin. | ||
BankAtlantic’s average interest earning asset balances increased primarily due to the purchase of residential loans and investments during 2004 and the first quarter of 2005. During the year ended December 31, 2004 and the first quarter of 2005, we purchased $1.3 billion and $190 million of residential loans, respectively. Our investment purchases were $563 million during the year ended December 31, 2004 and $70 million during the first quarter of 2005. We also experienced growth in our home equity and commercial real estate loan portfolios. The growth in our interest earning assets was funded through deposit growth, short term borrowings and LIBOR-based FHLB advances. | ||
The improvement in our tax equivalent net interest margin primarily resulted from changes in our deposit mix to a higher percentage of low cost deposits to total deposits as well as increased yields earned on variable rate commercial and home equity loans. Low cost deposits are savings, NOW and demand deposits. Since August 2004 the prime interest rate has increased from 4.25% to 5.50%. This increase has favorably impacted the yields on consumer and commercial loans, which were partially offset by higher rates on our short term borrowings, certificate accounts, money market deposits, LIBOR-based FHLB advances and long term debt. The margin was also favorably impacted by the March 2004 prepayment of $108 million of FHLB advances which had an average interest rate of 5.55%. BankAtlantic believes that its tax equivalent net interest margin will continue to improve, although a shift in the slope of the yield curve could moderate or even prevent further margin improvement. | ||
60
Provision for Loan Losses |
For Three Months Ended | |||||||||
March 31, | |||||||||
2005 | 2004 | ||||||||
(In thousands) | |||||||||
Balance, beginning of period
|
$ | 46,010 | $ | 45,595 | |||||
Charge-offs:
|
|||||||||
Consumer loans
|
(68 | ) | (149 | ) | |||||
Residential real estate loans
|
(198 | ) | (231 | ) | |||||
Small business
|
(128 | ) | — | ||||||
Continuing loan products
|
(394 | ) | (380 | ) | |||||
Discontinued loan products
|
(324 | ) | (487 | ) | |||||
Total charge-offs
|
(718 | ) | (867 | ) | |||||
Recoveries:
|
|||||||||
Commercial business loans
|
1,110 | 68 | |||||||
Commercial real estate loans
|
— | 1 | |||||||
Small business
|
185 | 9 | |||||||
Consumer loans
|
44 | 48 | |||||||
Residential real estate loans
|
1 | 26 | |||||||
Continuing loan products
|
1,340 | 152 | |||||||
Discontinued loan products
|
326 | 1,362 | |||||||
Total recoveries
|
1,666 | 1,514 | |||||||
Net recoveries
|
948 | 647 | |||||||
Recovery from loan losses
|
(3,916 | ) | (859 | ) | |||||
Balance, end of period
|
$ | 43,042 | $ | 45,383 | |||||
Charge-offs from continuing loan products were nominal for the three months ended March 31, 2005 and 2004. The majority of the continuing loan product recoveries during the 2005 quarter resulted from a $1.1 million partial recovery of a commercial business loan that had been charged off during the third quarter of 2003. The lower charge-offs and recoveries from discontinued loan products resulted from declining portfolio balances. The remaining balance of these discontinued loan products declined to $6.7 million from $26.2 million a year earlier. Discontinued loan products are lease financing, indirect consumer lending, non-real estate syndication lending, and certain types of small business lending. | ||
The provision for loan losses was a net recovery during the current quarter due to the commercial business loan recovery, declining reserves for discontinued loan products and the repayment of a large classified loan during 2005. The provision for loan losses was a net recovery during the 2004 quarter resulting from declining reserves and net recoveries from discontinued loan products. | ||
BankAtlantic’s allowance for loan losses to total loans declined from 1.22% at March 31, 2004 to 0.92% at March 31, 2005. The lower allowance for loan losses resulted from improved credit quality, and was partially offset by an increase in loans receivable from $3.7 billion at March 31, 2004 to $4.6 billion at March 31, 2005. | ||
61
At the indicated dates, BankAtlantic’s non-performing assets and potential problem loans were (in thousands): |
March 31, | December 31, | March 31, | |||||||||||
2005 | 2004 | 2004 | |||||||||||
NONPERFORMING ASSETS
|
|||||||||||||
Nonaccrual:
|
|||||||||||||
Tax certificates
|
$ | 418 | $ | 381 | $ | 565 | |||||||
Loans and leases
|
6,504 | 7,903 | 11,724 | ||||||||||
Total nonaccrual
|
6,922 | 8,284 | 12,289 | ||||||||||
Repossessed assets:
|
|||||||||||||
Real estate owned
|
1,438 | 692 | 1,667 | ||||||||||
Total nonperforming assets
|
8,360 | 8,976 | 13,956 | ||||||||||
Specific valuation allowance
|
— | — | (956 | ) | |||||||||
Total nonperforming assets, net
|
$ | 8,360 | $ | 8,976 | $ | 13,000 | |||||||
Allowances
|
|||||||||||||
Allowance for loan losses
|
$ | 43,042 | $ | 46,010 | $ | 45,383 | |||||||
Allowance for tax certificate losses
|
3,453 | 3,297 | 3,202 | ||||||||||
Total allowances
|
46,495 | 49,307 | 48,585 | ||||||||||
POTENTIAL PROBLEM LOANS
|
|||||||||||||
Contractually past due 90 days or more
|
7,032 | — | 1 | ||||||||||
Performing impaired loans
|
216 | 320 | 188 | ||||||||||
Restructured loans
|
20 | 24 | 1,368 | ||||||||||
TOTAL POTENTIAL PROBLEM LOANS
|
$ | 7,268 | $ | 344 | $ | 1,557 | |||||||
Non-performing assets remain at historically low levels. Non-performing assets to total loans, tax certificates and repossessed assets declined from 0.37% at March 31, 2004 to 0.19% and 0.17% at December 31, 2004 and March 31, 2005, respectively. The improvement in nonaccrual loans at March 31, 2005 compared to December 31, 2004 resulted from declines in non-performing residential loans and the repossession of residential real estate associated with a home equity loan that was moved to real estate owned. | ||
Performing impaired loans at March 31, 2005 primarily consists of a $7.0 million hotel loan that is past due based on its maturity date. BankAtlantic is accruing interest on this loan and is in final negotiations with third parties for the sale of the loan. The potential buyers’ proposed purchase prices for the loan are for an amount that exceeds the outstanding loan balance and accrued interest. Management believes that the fair value of the real estate collateral substantially exceeds the outstanding loan balance. | ||
62
BankAtlantic’s Non-Interest Income |
For Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(In thousands) | |||||||||||||
Other service charges and fees
|
$ | 5,238 | $ | 4,637 | $ | 601 | |||||||
Service charges on deposits
|
12,989 | 11,277 | 1,712 | ||||||||||
Income from real estate operations
|
2,241 | 305 | 1,936 | ||||||||||
Securities activities, net
|
7 | (3 | ) | 10 | |||||||||
Other
|
3,066 | 2,004 | 1,062 | ||||||||||
Non-interest income
|
$ | 23,541 | $ | 18,220 | $ | 5,321 | |||||||
The higher other service charges and fees during 2005 reflect the opening of over 220,000 new deposit accounts since January 2004, including approximately 55,000 new accounts during the first quarter of 2005. New ATM and check cards are linked to the new checking and savings accounts and therefore the increase in accounts results in increases in interchange fees, annual fees and transaction fees on our customers’ use of other banks’ ATM’s. | ||
The higher revenues from service charges on deposits during 2005 primarily resulted from an increase in fees assessed on overdrafts and secondarily from the increased number of checking accounts discussed above. | ||
Income from real estate operations represents revenues from a real estate joint venture that was acquired in March 2002 as part of the Community acquisition. The venture is a 175 unit development consisting of single family homes, condominium units and duplexes located in Florida. Since inception of the project through March 31, 2005, sales of sixty-six units have closed. The increase in real estate income in the first quarter of 2005 reflects closings on twelve units, whereas during the first quarter of 2004, the joint venture closed on two units. | ||
Other income reported for the 2005 quarter was favorably impacted by a $935,000 gain on the sale of a branch. The branch was acquired in March 2002 in connection with the Community acquisition. The branch was not close to any other branches, and was not meeting performance expectations. Additionally, the remote location of the branch resulted in higher than average operating expenses. | ||
BankAtlantic’s Non-Interest Expense |
For Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(In thousands) | |||||||||||||
Employee compensation and benefits
|
$ | 26,398 | $ | 22,392 | $ | 4,006 | |||||||
Occupancy and equipment
|
9,117 | 7,146 | 1,971 | ||||||||||
Advertising and promotion
|
5,168 | 3,463 | 1,705 | ||||||||||
Amortization of intangible assets
|
425 | 439 | (14 | ) | |||||||||
Cost associated with debt redemption
|
— | 11,741 | (11,741 | ) | |||||||||
Professional fees
|
1,895 | 1,725 | 170 | ||||||||||
Other
|
7,261 | 6,589 | 672 | ||||||||||
Non-interest expense
|
$ | 50,264 | $ | 53,495 | $ | (3,231 | ) | ||||||
The substantial increase in employee compensation and benefits resulted primarily from the “Florida’s Most Convenient Bank” initiatives. These initiatives include: midnight hours at selected branches, extended hours at all locations, free online banking and bill pay, 24/7 customer service |
63
center and the opening of all locations seven days a week. The initiatives and the growth in low cost deposit accounts was the primary cause for the increase in the number of full time equivalent employees to 1,745 at March 31, 2005 from 1,428 at March 31, 2004. The increased number of employees and higher salaries are believed necessary to maintain satisfactory customer service standards. In addition to the increase in employees, the costs incurred under BankAtlantic’s profit sharing plan were $960,000 higher during 2005. The additional amounts accrued for the employee profit sharing plan were based on BankAtlantic exceeding targeted performance goals. | ||
During the year ended December 31, 2004, BankAtlantic adopted a plan to renovate all of its existing branches with a goal of having a consistent look or “brand.” Management anticipates that the renovation plan will be complete in 2006. This resulted in the accelerated depreciation on fixed assets and leasehold improvements that are scheduled to be replaced as well as higher repair and maintenance costs to maintain branch appearances. Additionally, as a result of extended weekend and weekday hours associated with the “Florida’s Most Convenient Bank” initiative, guard service expense increased by approximately 53%. | ||
Advertising expenses during the first quarter of 2005 increased significantly from those incurred during the comparable 2004 quarter, as a direct result of an aggressive BankAtlantic marketing campaign during the 2005 quarter that included television and radio advertising to promote the “Florida’s Most Convenient Bank” initiative. The marketing campaign is ongoing and BankAtlantic anticipates continued higher advertising and promotion expenditures during the 2005 fiscal year compared to those incurred during the 2004 fiscal year. | ||
The cost associated with debt redemption was the result of a prepayment penalty of $11.7 million incurred when BankAtlantic prepaid $108 million of FHLB advances scheduled to mature in 2007-2008 that had an average interest rate of 5.55%. The interest rates on these FHLB advances exceeded the rates that BankAtlantic was able to obtain on other available FHLB advances, and therefore BankAtlantic expects to recover this expense in future periods through the savings realized from lower borrowing costs. | ||
The higher expenses for professional fees in 2005, compared to 2004, resulted from consulting costs associated with the Bank’s compliance with anti-terrorism and anti-money laundering laws and regulations. | ||
The increase in other non-interest expense relates to higher general operating expenses related to a significant increase in the number of customer accounts and the extended hours of the branch network. | ||
64
For the Three Months | |||||||||||||
Ended March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(In thousands) | |||||||||||||
Net interest income:
|
|||||||||||||
Interest on trading securities
|
$ | 2,947 | $ | 2,796 | $ | 151 | |||||||
Interest expense
|
(502 | ) | (210 | ) | (292 | ) | |||||||
Net interest income
|
2,445 | 2,586 | (141 | ) | |||||||||
Non-interest income:
|
|||||||||||||
Principal transactions
|
18,632 | 24,443 | (5,811 | ) | |||||||||
Investment banking
|
11,882 | 12,631 | (749 | ) | |||||||||
Commissions
|
21,485 | 25,371 | (3,886 | ) | |||||||||
Other
|
2,687 | 620 | 2,067 | ||||||||||
Non-interest income
|
54,686 | 63,065 | (8,379 | ) | |||||||||
Non-interest expense:
|
|||||||||||||
Employee compensation and benefits
|
38,437 | 44,042 | (5,605 | ) | |||||||||
Occupancy and equipment
|
4,118 | 3,228 | 890 | ||||||||||
Advertising and promotion
|
1,073 | 1,161 | (88 | ) | |||||||||
Professional fees
|
1,417 | 1,045 | 372 | ||||||||||
Communications
|
3,205 | 3,128 | 77 | ||||||||||
Floor broker and clearing fees
|
2,368 | 2,802 | (434 | ) | |||||||||
Other
|
1,947 | 1,683 | 264 | ||||||||||
Non-interest expense
|
52,565 | 57,089 | (4,524 | ) | |||||||||
Income before income taxes
|
4,566 | 8,562 | (3,996 | ) | |||||||||
Income taxes
|
2,036 | 3,434 | (1,398 | ) | |||||||||
Income from continuing operations
|
$ | 2,530 | $ | 5,128 | $ | (2,598 | ) | ||||||
65
For the Three Months | |||||||||||||
Ended March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(In thousands) | |||||||||||||
Net interest income:
|
|||||||||||||
Interest income
|
$ | 678 | $ | 542 | $ | 136 | |||||||
Interest expense
|
(4,570 | ) | (4,135 | ) | (435 | ) | |||||||
Net interest income (expense)
|
(3,892 | ) | (3,593 | ) | (299 | ) | |||||||
Non-interest income:
|
|||||||||||||
Income from unconsolidated subsidiaries
|
131 | 118 | 13 | ||||||||||
Securities activities, net
|
95 | 75 | 20 | ||||||||||
Litigation settlement
|
— | 22,840 | (22,840 | ) | |||||||||
Other
|
306 | 104 | 202 | ||||||||||
Non-interest income
|
532 | 23,137 | (22,605 | ) | |||||||||
Non-interest expense:
|
|||||||||||||
Employee compensation and benefits
|
960 | 746 | 214 | ||||||||||
Professional fees
|
859 | 516 | 343 | ||||||||||
Other
|
226 | 225 | 1 | ||||||||||
Non-interest expense
|
2,045 | 1,487 | 558 | ||||||||||
(Loss) income before income taxes
|
(5,405 | ) | 18,057 | (23,462 | ) | ||||||||
Income taxes
|
(1,892 | ) | 6,381 | (8,273 | ) | ||||||||
Net income (loss)
|
$ | (3,513 | ) | $ | 11,676 | $ | (15,189 | ) | |||||
66
67
The objective of the following discussion is to provide an understanding of the financial condition and results of operations of Levitt Corporation and its wholly owned subsidiaries (“Levitt”, or the “Company”) as of and for the three months ended March 31, 2005 and 2004. The Company may also be referred to as “we,” “us,” or “our.” We engage in homebuilding, land development and other real estate activities through Levitt and Sons, LLC (“Levitt and Sons”), Bowden Building Corporation (“Bowden Homes”), Core Communities LLC (“Core Communities”) and other operations, which include Levitt Commercial, LLC (“Levitt Commercial”), an investment in Bluegreen Corporation (“Bluegreen”) and investments in real estate projects through subsidiaries and joint ventures. Acquired in December 1999, Levitt and Sons is a developer of single-family home and townhome communities and condominium and rental apartment complexes. Acquired in April 2004, Bowden Homes is a builder of single family homes based in Memphis, Tennessee. Core Communities is currently developing Tradition, its second master-planned community, which is located in St. Lucie County, Florida. Tradition is planned to ultimately include more than 8,000 total acres, including approximately five miles of frontage on Interstate 95. Levitt Commercial specializes in the development of industrial and residential properties. Bluegreen is a New York Stock Exchange-listed company engaged in the acquisition, development, marketing and sale of ownership interests in primarily “drive-to” vacation resorts, and the development and sale of golf communities and residential land. |
Management evaluates the performance and prospects of the Company and its subsidiaries using a variety of financial and non-financial measures. The key financial measures utilized to evaluate historical operating performance include revenues from sales of real estate, cost of sales of real estate, margin (which we measure as revenues from sales of real estate minus cost of sales of real estate), margin percentage (which we measure as margin divided by revenues from sales of real estate), income before taxes and net income. Non-financial measures used to evaluate historical performance include the number and value of new orders executed, the number of housing starts and the number of homes delivered. In evaluating the Company’s future prospects, management considers non-financial information such as the number of homes and acres in backlog (which we measure as homes or land subject to an executed sales contract) and the aggregate value of those contracts. Additionally, we monitor the number of properties remaining in inventory and under contract to be purchased relative to our sales and construction trends. The Company’s ratio of debt to shareholders’ equity and cash requirements are also considered when evaluating the Company’s future prospects, as are general economic factors and interest rate trends. Each of the above measures is discussed in the following sections as it relates to our operating results, financial position and liquidity. The list of measures above is not an exhaustive list, and management may from time to time utilize additional financial and non-financial information or may not use the measures listed above. |
Impact of 2004 Hurricanes |
The majority of our business operations are located in the State of Florida, which is subject to hurricanes and other tropical weather systems. In the months of August and September 2004, three hurricanes made landfall in areas where we have significant homebuilding operations |
68
(Ft. Myers, Orlando, Sarasota and Port St. Lucie). These hurricanes caused property damage in several of our communities in Central Florida, and the Company has expended considerable resources on homes under construction and previously delivered homes repairing stucco, replacing insulation and dry wall as well as other materials damaged in the storms. The Company has also expended funds to mitigate other hurricane-related damage, including replacing landscaping, fences, repairing lake beds and replacing building materials. Our consolidated statement of income for the three months ended March 31, 2005 includes insurance proceeds of $1.2 million which were offset by hurricane related expenses. |
Impact of Increasing Costs, Interest Rates and Local Government Regulation |
Our business operations are impacted by competition for labor — direct and subcontracted — raw materials, supply and delivery issues. Ongoing strength in homebuilding and other construction activities has resulted in higher prices of most building materials, including lumber, steel, concrete and asphalt. We compete with other real estate developers — regionally, nationally and globally — for raw materials and labor. In addition, local materials suppliers periodically limit the allocation of their product to their customers which slows our production process and forces us to obtain those materials from other suppliers, typically at higher prices. In particular, supplies of cement block remain tight in the Florida market and we are currently subject to allocations of deliveries in some of our Florida developments. Although these allocations have not materially disrupted our operations to date, continued allocations could adversely impact our future operations or restrict our ability to expand in certain markets. Without corresponding increases in the sales prices of our real estate inventories (both land and finished homes), increasing materials and labor costs associated with land development and home building will negatively affect our future results of operations. |
Three Months Ended March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(In thousands) | |||||||||||||
Revenues
|
|||||||||||||
Sales of real estate
|
$ | 198,866 | $ | 98,523 | $ | 100,343 | |||||||
Title and mortgage operations
|
948 | 970 | (22 | ) | |||||||||
Total revenues
|
199,814 | 99,493 | 100,321 | ||||||||||
Costs and expenses
|
|||||||||||||
Cost of sales of real estate
|
130,589 | 69,665 | 60,924 | ||||||||||
Selling, general and administrative expenses
|
23,146 | 14,047 | 9,099 | ||||||||||
Interest expense, net
|
— | 58 | (58 | ) | |||||||||
Other expenses
|
1,316 | 616 | 700 | ||||||||||
Minority interest
|
— | 25 | (25 | ) | |||||||||
Total costs and expenses
|
155,051 | 84,411 | 70,640 | ||||||||||
Earnings from Bluegreen Corporation
|
2,138 | 2,086 | 52 | ||||||||||
Earnings from joint ventures
|
90 | 3,607 | (3,517 | ) | |||||||||
Interest and other income
|
1,322 | 478 | 844 | ||||||||||
Income before income taxes
|
48,313 | 21,253 | 27,060 | ||||||||||
Provision for income taxes
|
18,495 | 8,198 | 10,297 | ||||||||||
Net income
|
$ | 29,818 | $ | 13,055 | $ | 16,763 | |||||||
69
Consolidated net income increased $16.8 million, or 128%, for the three months ended March 31, 2005 as compared to the same period in 2004. The increase in net income primarily resulted from the bulk sale of five non-contiguous parcels of land adjacent to Tradition consisting of a total of 1,294 acres for $64.7 million. Also contributing to the increase in net income were increases in sales of real estate by our Homebuilding Division and Other Operations. These increases were offset, in part, by lower earnings from joint ventures, lower margins in homebuilding and higher selling, general and administrative expenses. | ||
Our revenues from sales of real estate increased 102% to $198.9 million for the quarter ended March 31, 2005 from $98.5 million for the same 2004 period. This increase was attributable primarily to the bulk land sale discussed above, as well as from an increase in home deliveries. In the quarter ended March 31, 2005, 501 homes were delivered compared to 341 homes delivered in the first quarter of 2004. Revenues also reflect increased sales of flex warehouse properties as Levitt Commercial closed out deliveries at two warehouse developments. Profits recognized by the Land Division from sales to the Homebuilding division are deferred until the Homebuilding Division delivers homes on those properties to third parties, at which time the deferred profit is applied against consolidated cost of sales. Previously deferred profits of $1.0 million related to land sales by our Land Division to our Homebuilding Division were recognized as income during the quarter ended March 31, 2005, compared to $505,000 for the same 2004 period. | ||
Selling, general and administrative expenses increased during the first quarter of 2005 compared to the same 2004 period primarily as a result of higher employee compensation and benefits including sales commissions and accrued bonus compensation. Bonus compensation, which is tied to our profitability, increased during the first quarter of 2005 commensurate with higher earnings during the period. The increase in compensation expense is also associated with increased headcount in our new development projects in Central and South Florida, the expansion of homebuilding activities into North Florida and Georgia, and the addition of Bowden Homes (which was acquired in April 2004), as well as an increase in our home deliveries. The number of our full time employees increased to 551 at March 31, 2005 from 386 at March 31, 2004, offset in part by a decrease in the number of part time employees from 38 at March 31, 2004 to 26 at March 31, 2005. As a percentage of total revenues, selling, general and administrative expenses declined to 12% in the first quarter of 2005 from 14% in the first quarter of 2004. | ||
Interest incurred on notes and development bonds payable totaled $3.5 million for the 2005 period and $2.0 million for the 2004 period. Interest incurred was higher due to higher outstanding balances of notes and mortgage notes payable, as well as to an increase in the average interest rate on our variable-rate debt. Most of our variable-rate debt is indexed to the Prime Rate, which increased from 4.00% at March 31, 2004 to 5.75% at March 31, 2005. Interest capitalized was $3.5 million for the 2005 period and $1.9 million for the 2004 period. At the time of home closings and land sales, the capitalized interest allocated to such inventory is charged to cost of sales. Cost of sales of real estate for the three months ended March 31, 2005 and 2004 included previously capitalized interest of approximately $2.6 million and $1.8 million, respectively. | ||
The increase in other expenses was primarily attributable to a $677,000 penalty on debt prepayment incurred during the first quarter of 2005 at our Land Division. The penalty arose from the repayment of indebtedness under a line of credit using the proceeds of the bulk land sale described above. | ||
Bluegreen’s reported net income for the three months ended March 31, 2005 was $6.5 million, as compared to $4.7 million for the same period in 2004. Our interest in Bluegreen’s earnings, net of purchase accounting adjustments, was $2.1 million in each of those periods. Purchase accounting adjustments increased our interest in Bluegreen’s earnings by $110,000 for the first quarter of 2005, whereas purchase accounting and other adjustments increased our interest | ||
70
The increase in interest and other income is primarily related to an increase in rental income and higher balances of interest-earning deposits at various financial institutions, including our affiliate, BankAtlantic. At March 31, 2005, we had cash and cash equivalents of $134.8 million, as compared with $45.9 million at March 31, 2004. | ||
Earnings from real estate joint ventures in the first quarter of 2004 included earnings generated by the sale of an apartment complex and deliveries of homes and condominium units developed by joint ventures. There were no earnings generated by these joint ventures in the first quarter of 2005, as they were winding down their operations. | ||
Three Months Ended March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(Dollars in thousands) | |||||||||||||
Revenues
|
|||||||||||||
Sales of real estate
|
$ | 117,987 | $ | 78,664 | $ | 39,323 | |||||||
Title and mortgage operations
|
948 | 970 | (22 | ) | |||||||||
Total revenues
|
118,935 | 79,634 | 39,301 | ||||||||||
Costs and expenses
|
|||||||||||||
Cost of sales of real estate
|
93,579 | 61,475 | 32,104 | ||||||||||
Selling, general and administrative expenses
|
14,608 | 9,292 | 5,316 | ||||||||||
Other expenses
|
639 | 617 | 22 | ||||||||||
Total costs and expenses
|
108,826 | 71,384 | 37,442 | ||||||||||
Earnings from joint ventures
|
104 | 1,509 | (1,405 | ) | |||||||||
Interest and other income
|
214 | 43 | 171 | ||||||||||
Income before income taxes
|
10,427 | 9,802 | 625 | ||||||||||
Provision for income taxes
|
3,901 | 3,781 | 120 | ||||||||||
Net income
|
$ | 6,526 | $ | 6,021 | $ | 505 | |||||||
Homes delivered (units)
|
501 | 341 | 160 | ||||||||||
Construction starts (units)
|
347 | 701 | (354 | ) | |||||||||
Average selling price of homes delivered
|
$ | 236 | $ | 231 | $ | 5 | |||||||
Margin percentage on homes delivered
|
20.7 | % | 21.9 | % | (1.2 | )% | |||||||
New orders (units)
|
605 | 474 | 131 | ||||||||||
New orders (value)
|
$ | 165,281 | $ | 130,124 | $ | 35,157 | |||||||
Backlog of homes (units)
|
1,918 | 2,186 | (268 | ) | |||||||||
Backlog of homes (value)
|
$ | 496,006 | $ | 510,231 | $ | (14,225 | ) |
The value of new orders increased to $165.3 million for the three months ended March 31, 2005, from $130.1 million in the three months ended March 31, 2004. This increase was primarily a result of the addition of Bowden Homes, which was acquired in April 2004, and growth at Levitt |
71
and Sons, which had slightly lower unit orders but higher average selling prices. The average sales price of the homes in backlog at March 31, 2005 is approximately 11% higher than the average sales price of the homes in backlog at March 31, 2004. We are actively managing the release of new inventory and acceptance of new home orders in Florida to help assure high levels of customer satisfaction by meeting delivery schedules acceptable to our customers. This impacted Florida homebuilding operations in the first quarter of 2005 as new orders were slightly lower compared to the first quarter of 2004, but reflect an improvement over the previous two quarters as our inventory availability has improved. Construction starts in our Florida operations are also being actively managed to reduce build cycles to optimal levels. We will continue to moderate the release of new inventory in an attempt to maintain pricing flexibility and to protect against rising costs. We believe that our inventory of homes available for sale, new orders and construction starts should improve over time as we successfully implement our inventory management strategy. | ||
Revenues from home sales increased 50% to $118.0 million during the three months ended March 31, 2005, as compared to the same 2004 period. Approximately half of the increase related to the inclusion of home deliveries by Bowden Homes. During the three months ended March 31, 2005, 501 homes were delivered as compared to 341 homes delivered during the three months ended March 31, 2004. The modest increase in the average selling price of our homes was due primarily to a change in our product mix resulting from the inclusion of Bowden Homes in 2005. The average selling price of homes in our Florida operations in the first quarter of 2005 increased by $20,000 over the first quarter of 2004 to $251,000, while the average selling price of Bowden’s homes in the 2005 period was $184,000. | ||
Margin percentage (which we define as sales of real estate minus cost of sales of real estate, divided by sales of real estate) declined in the first quarter of 2005 compared with the first quarter of 2004. The decline was primarily attributable to a change in mix of community types and markets served by the Homebuilding Division. Margins in the active adult communities have historically been higher than those in primary communities, and margins in the Florida markets served by Levitt and Sons have historically been higher than those in the Tennessee market served by Bowden Homes, which historically served only the primary market. We anticipate continued pressure on margins in 2005 due to rising costs in Florida and the greater proportion of home deliveries in primary communities as compared to 2004. | ||
Cost of sales increased 52% to $93.6 million during the three months ended March 31, 2005, as compared to the same 2004 period. The increase in cost of sales was primarily due to the increase in home deliveries, but was also impacted by increased construction costs. The costs of labor and building materials continue to rise. While we may be able to increase our selling prices in future sales to absorb these increased costs, the sales prices of homes in our backlog cannot be increased and the margins on the delivery of homes in backlog may be adversely affected by this trend. Included in cost of sales for the three months ended March 31, 2005 are approximately $21,000 of purchase accounting adjustments relating to the Bowden Homes acquisition. | ||
Selling, general and administrative expenses increased 57% to $14.6 million during the three months ended March 31, 2005, as compared to the same 2004 period. The growth in selling, general and administrative expenses primarily resulted from higher compensation expense from increased headcount, higher sales commissions associated with more home deliveries and a higher average commission cost, and the addition of Bowden Homes. As a percentage of total revenues, selling, general and administrative expense was approximately 12% in both the 2005 and 2004 periods. As we expand our homebuilding activities to the Jacksonville, Florida, Atlanta, Georgia and Nashville, Tennessee markets, we expect to continue to incur administrative start-up costs well in advance of revenue recognition, which will adversely affect our operating results. We are also in the process of realigning our homebuilding operations as a single operating division by incorporating Bowden Homes’ operations into Levitt and Sons. We believe that this new structure, combined with additional investments in technological and human resources, will enable us to realize further operational synergies and strengthen our infrastructure for future growth. | ||
72
Interest incurred totaled $2.1 million and $1.2 million for the three months ended March 31, 2005 and 2004, respectively. The increase in the amount of interest incurred in the period related primarily to the assumption of debt related to the acquisition of Bowden Homes and increases in interest rates indexed to the Prime Rate. Interest capitalized for the quarters ended March 31, 2005 and 2004 totaled $2.1 million and $1.2 million, respectively. Cost of sales of real estate for the three months ended March 31, 2005 and 2004 included previously capitalized interest of approximately $1.7 million and $1.4 million, respectively. | ||
Earnings from real estate joint ventures in the first quarter of 2004 included income from the delivery of 88 residential condominium units by a joint venture that developed a condominium complex in Boca Raton, Florida. There were no residential units delivered or remaining to be delivered from that joint venture property at March 31, 2005. | ||
Three Months Ended March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(Dollars in thousands) | |||||||||||||
Revenues
|
|||||||||||||
Sales of real estate
|
$ | 66,551 | $ | 19,321 | $ | 47,230 | |||||||
Total revenues
|
66,551 | 19,321 | 47,230 | ||||||||||
Costs and expenses
|
|||||||||||||
Cost of sales of real estate
|
27,090 | 7,968 | 19,122 | ||||||||||
Selling, general and administrative expenses
|
4,446 | 2,588 | 1,858 | ||||||||||
Interest expense, net
|
— | 58 | (58 | ) | |||||||||
Other expense
|
677 | — | 677 | ||||||||||
Total costs and expenses
|
32,213 | 10,614 | 21,599 | ||||||||||
Interest and other income
|
421 | 405 | 16 | ||||||||||
Income before income taxes
|
34,759 | 9,112 | 25,647 | ||||||||||
Provision for income taxes
|
13,436 | 3,515 | 9,921 | ||||||||||
Net income
|
$ | 21,323 | $ | 5,597 | $ | 15,726 | |||||||
Acres sold
|
1,304 | 294 | 1,010 | ||||||||||
Margin percentage
|
59.3 | % | 58.8 | % | 0.5 | % | |||||||
Unsold acres
|
7,045 | 4,822 | 2,223 | ||||||||||
Acres subject to firm sales contracts
|
543 | 1,268 | (725 | ) | |||||||||
Acres subject to firm sales contracts (value)
|
$ | 59,624 | $ | 97,482 | $ | (37,858 | ) |
Land Division revenues have historically been generated primarily from two master-planned communities located in St. Lucie County, Florida — St. Lucie West and Tradition. Development activity in St. Lucie West is winding down, with 29 acres of inventory remaining at March 31, 2005, of which 24 acres were subject to firm sales contracts as of that date. With the acquisition of approximately 3,150 acres during the second quarter of 2004, the Tradition master-planned community now encompasses more than 8,200 total acres, including approximately 5,900 net saleable acres. Approximately 1,750 acres had been sold or were subject to firm sales contracts with various homebuilders as of March 31, 2005. Notwithstanding the current sustained interest and activity at Tradition, a significant reduction of future demand in the residential real estate market could negatively impact our land development operations. | ||
We calculate margin as sales of real estate minus cost of sales of real estate, and margin percentage as the ratio of margin to sales of real estate. We have historically realized between 40% | ||
73
and 60% margin percentage on Land Division sales. Margins fluctuate based upon changing sales prices and costs attributable to the land sold. The sales price of land sold varies depending upon the location, the parcel size, whether the parcel is sold as raw land, partially developed land or individually developed lots, the degree to which the land is entitled, and whether the ultimate use of land is residential or commercial. The cost of sales of real estate is dependent upon the original cost of the land acquired, the timing of the acquisition of the land, and the amount of development and carrying costs capitalized to the particular land parcel. Future margins will continue to vary in response to these and other market factors. |
Revenues increased 244% to $66.6 million during the three months ended March 31, 2005, as compared to $19.3 million during the same 2004 period. The margin percentage on land sales in both the 2005 and 2004 periods was approximately 59%. In January 2005, we consummated the bulk sale of five non-continuous parcels of land adjacent to Tradition consisting of a total of 1,294 acres for $64.7 million, or $50,000 per acre. These parcels, which were acquired in May 2004 for $20,000 per acre, were sold after we determined that their specific locations and the timeline for obtaining land use approvals were not compatible with the master strategic plan for Tradition. The funds generated by the sale were used to reduce indebtedness and to provide additional liquidity for the Land Division operations and investments. | ||
Selling, general and administrative expenses increased 72% to $4.4 million during the three months ended March 31, 2005 as compared to $2.6 million for the same 2004 period, primarily as a result of higher incentive compensation associated with the increase in profitability. As a percentage of total revenues, selling, general and administrative expenses declined to 7% in the first quarter of 2005 from 13% in the first quarter of 2004. | ||
Interest incurred for the three months ended March 31, 2005 and 2004 was $456,000 and $164,000, respectively. Interest capitalized for the quarters ended March 31, 2005 and 2004 totaled $456,000 and $106,000, respectively. Cost of sales of real estate for the three months ended March 31, 2005 included previously capitalized interest of approximately $65,000, as compared to $16,000 for the three months ended March 31, 2004. | ||
The increase in other expenses was attributable to a $677,000 penalty on debt prepayment incurred during the 2005 period arising from the repayment of indebtedness under a line of credit using the proceeds of the bulk land sale described above. | ||
74
Three Months Ended March 31, | |||||||||||||
2005 | 2004 | Change | |||||||||||
(In thousands) | |||||||||||||
Revenues
|
|||||||||||||
Sales of real estate
|
$ | 14,709 | $ | 538 | $ | 14,171 | |||||||
Total revenues
|
14,709 | 538 | 14,171 | ||||||||||
Costs and expenses
|
|||||||||||||
Cost of sales of real estate
|
11,326 | 727 | 10,599 | ||||||||||
Selling, general and administrative expenses
|
4,092 | 2,167 | 1,925 | ||||||||||
Other expenses
|
— | (1 | ) | 1 | |||||||||
Minority interest
|
— | 25 | (25 | ) | |||||||||
Total costs and expenses
|
15,418 | 2,918 | 12,500 | ||||||||||
Earnings from Bluegreen Corporation
|
2,138 | 2,086 | 52 | ||||||||||
(Loss) earnings from real estate joint ventures
|
(14 | ) | 2,098 | (2,112 | ) | ||||||||
Interest and other income
|
687 | 30 | 657 | ||||||||||
Income before income taxes
|
2,102 | 1,834 | 268 | ||||||||||
Provision for income taxes
|
763 | 707 | 56 | ||||||||||
Net income
|
$ | 1,339 | $ | 1,127 | $ | 212 | |||||||
Other Operations include all other Company operations, including Levitt Commercial, Levitt Corporation general and administrative expenses, earnings from our investment in Bluegreen and earnings from investments in various real estate projects and trusts. We currently own approximately 9.5 million shares of the common stock of Bluegreen, which represented approximately 31% of Bluegreen’s outstanding shares as of March 31, 2005. Under equity method accounting, we recognize our pro-rata share of Bluegreen’s net income or loss (net of purchase accounting adjustments) as pre-tax earnings. Bluegreen has not paid dividends to its shareholders; therefore, our earnings represent only our claim to the future distributions of Bluegreen’s earnings. Accordingly, we record a tax liability on our portion of Bluegreen’s net income. Should Bluegreen’s financial performance deteriorate, our earnings in Bluegreen would decrease concurrently and our results of operations would be adversely affected. Furthermore, a significant reduction in Bluegreen’s financial position could result in an impairment charge against our future results of operations. |
During the three months ended March 31, 2005, Levitt Commercial delivered the 44 remaining flex warehouse units at two of its development projects, generating revenues of $14.7 million. Levitt Commercial delivered one flex warehouse unit during the three months ended March 31, 2004. Deliveries of individual flex warehouse units by Levitt Commercial generally occur in rapid succession upon the completion of a warehouse building. Accordingly, revenues from Levitt Commercial’s development in any one quarter are not expected to be representative of the following quarters or the full year. Levitt Commercial has two flex warehouse projects currently in development that are expected to be completed at the end of 2005 or the first half of 2006, at which time additional revenues are expected to be generated. | ||
Cost of sales of real estate in Other Operations includes the expensing of interest previously capitalized in this business segment, which totaled $837,000 and $329,000 for the three months ended March 31, 2005 and 2004, respectively. Bluegreen’s reported net income for the three months ended March 31, 2005 was $6.5 million as compared to $4.7 million for the same period of | ||
75
2004. Our ownership interest in Bluegreen’s earnings during the three month periods ended March 31, 2005 and 2004 was approximately $2.1 million in each period, net of purchase accounting adjustments. Purchase accounting adjustments increased our interest in Bluegreen’s earnings by $110,000 for the first quarter of 2005, whereas purchase accounting and other adjustments increased our interest in Bluegreen’s earnings by $294,000 for the first quarter of 2004. | ||
Selling, general and administrative and other expenses increased to $4.1 million during the three months ended March 31, 2005 as compared to $2.2 million during the three months ended March 31, 2004. This increase was primarily associated with increases in employee compensation and benefits (including commissions on flex warehouse deliveries), fees paid by the Company for administrative and other services provided pursuant to an agreement with BankAtlantic Bancorp, and audit and other expenses related to complying with the requirements of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 2004, which were incurred in connection with the 2004 audit in the first quarter of 2005. | ||
Our real estate joint ventures incurred losses of $14,000 in the first quarter of 2005 as compared to earnings of $2.1 million in the first quarter of 2004. The earnings in the first quarter of 2004 were primarily related to the gain recognized by a joint venture on the sale of a rental apartment property in Vero Beach, Florida. As of March 31, 2005, the joint ventures in which this operating segment participates had essentially completed their operations and were winding down. | ||
Interest incurred in Other Operations was approximately $891,000 and $637,000 for the three months ended March 31, 2005 and 2004, respectively. The increase in interest incurred was primarily associated with an increase in mortgage notes payable associated with Levitt Commercial’s development activities. Interest capitalized for this business segment totaled $891,000 and $637,000 for the three months ended March 31, 2005 and 2004, respectively. Those amounts include adjustments to reconcile the amount of interest eligible for capitalization on a consolidated basis with the amounts capitalized in the Company’s other business segments. | ||
The increase in interest and other income was primarily attributable to the income generated by the rental of an office building in Fort Lauderdale, Florida which was acquired in October 2004, as well as an increase in interest income related to higher balances of interest-bearing deposits. | ||
76
December 31, | ||||||||
2004 | 2003 | |||||||
Assets
|
$ | 6,954,847 | $ | 5,136,235 | ||||
Liabilities
|
$ | 6,216,944 | $ | 4,630,626 | ||||
Minority interest
|
612,652 | 419,934 | ||||||
Shareholders’ equity
|
125,251 | 85,675 | ||||||
Liabilities and shareholders’ equity
|
$ | 6,954,847 | $ | 5,136,235 | ||||
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
BFC Activities
|
$ | (9,906 | ) | $ | (9,601 | ) | $ | (6,849 | ) | |||
Financial Services
|
70,768 | 38,597 | 19,150 | |||||||||
Homebuilding & Real Estate Development
|
57,362 | 26,820 | 19,512 | |||||||||
Eliminations
|
— | 1,156 | 495 | |||||||||
118,224 | 56,972 | 32,308 | ||||||||||
Minority interest
|
103,994 | 51,093 | 38,294 | |||||||||
Income (loss) from continuing operations
|
14,230 | 5,879 | (5,986 | ) | ||||||||
Income from discontinued operations, less income taxes
|
— | 1,143 | 2,536 | |||||||||
Income from extraordinary item, less income taxes
|
— | — | 23,749 | |||||||||
Cumulative effect of a change in accounting principle less
income taxes
|
— | — | (15,107 | ) | ||||||||
Net income
|
$ | 14,230 | $ | 7,022 | $ | 5,192 | ||||||
77
Shares | Percent of | Percent | |||||||||||
Owned | Ownership | of Vote | |||||||||||
BankAtlantic Bancorp
|
|||||||||||||
Class A Common Stock
|
8,329,236 | 15.09 | % | 8.00 | % | ||||||||
Class B Common Stock
|
4,876,124 | 100.00 | % | 47.00 | % | ||||||||
Total
|
13,205,360 | 21.98 | % | 55.00 | % | ||||||||
Levitt
|
|||||||||||||
Class A Common Stock
|
2,074,243 | 11.15 | % | 5.91 | % | ||||||||
Class B Common Stock
|
1,219,031 | 100.00 | % | 47.00 | % | ||||||||
Total
|
3,293,274 | 16.62 | % | 52.91 | % |
For the Years Ended December 31, | Change | Change | |||||||||||||||||||
2004 vs. | 2003 vs. | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Revenues
|
|||||||||||||||||||||
Interest and dividend income
|
$ | 680 | $ | 390 | $ | 354 | $ | 290 | $ | 36 | |||||||||||
Other income, net
|
5,837 | 1,532 | 1,161 | 4,305 | 371 | ||||||||||||||||
6,517 | 1,922 | 1,515 | 4,595 | 407 | |||||||||||||||||
Cost and Expenses
|
|||||||||||||||||||||
Interest expense
|
1,171 | 1,163 | 1,153 | 8 | 10 | ||||||||||||||||
Employee compensation and benefits
|
3,865 | 2,553 | 2,332 | 1,312 | 221 | ||||||||||||||||
Impairment of securities
|
363 | 3,071 | 1,583 | (2,708 | ) | 1,488 | |||||||||||||||
Other expenses, net
|
2,959 | 1,022 | 876 | 1,937 | 146 | ||||||||||||||||
8,358 | 7,809 | 5,944 | 549 | 1,865 | |||||||||||||||||
Loss before income taxes
|
(1,841 | ) | (5,887 | ) | (4,429 | ) | 4,046 | (1,458 | ) | ||||||||||||
Provision for income taxes
|
8,065 | 3,714 | 2,420 | 4,351 | 1,294 | ||||||||||||||||
Loss from continuing operations
|
$ | (9,906 | ) | $ | (9,601 | ) | $ | (6,849 | ) | $ | (305 | ) | $ | (2,752 | ) | ||||||
78
79
Assets and Liabilities |
• | BFC’s direct purchase of $10 million of Benihana Series B Convertible Preferred Stock; | |
• | BankAtlantic’s purchase of approximately $1.3 billion of residential real estate loans; | |
• | BankAtlantic’s origination of and participation in $1.6 billion of commercial real estate loans; | |
• | BankAtlantic’s origination of approximately $400 million of home equity loans; | |
• | BankAtlantic’s purchase of approximately $800 million of securities available for sale and investment securities; | |
• | BankAtlantic Bancorp’s additions of $49 million of fixed assets associated with BankAtlantic Bancorp’s new corporate headquarters building and BankAtlantic’s branch renovation and expansion initiatives; | |
• | Levitt’s increase of $26.8 million associated with its acquisition of an office building in Fort Lauderdale, Florida and the construction of an irrigation facility in Tradition; | |
• | Receivable from Ryan Beck’s clearing agent associated with Ryan Beck’s trading activities; | |
• | Levitt’s net increase in real estate held for development and sale of approximately $158.5 million resulting from land acquisitions in Florida, the acquisition of Bowden Homes and land acquisitions in Tennessee by Levitt, as well as increases in land development and construction costs. These increases in inventory of real estate were partially offset by Levitt’s sales of homes and land. | |
• | Higher real estate inventory related to increased construction activity by the Riverclub real estate joint venture acquired by BankAtlantic in connection with the Community acquisition; | |
• | BankAtlantic’s increases in accrued interest receivable due to higher loan receivable and securities balances; and | |
• | BankAtlantic’s higher Federal Home Loan Bank stock balances associated with a substantial increase in FHLB advance borrowings. | |
• | BankAtlantic’s higher deposit account balances resulting from the growth in low-cost deposits associated with the “Florida’s Most Convenient Bank” and totally free checking account initiatives. | |
• | BankAtlantic’s increases in short-term borrowings and FHLB advances to fund loan and securities growth; | |
• | Increases in notes and mortgage notes payable at Levitt of $94.1 million, primarily related to land acquisitions, the assumption of debt in connection with the Bowden Homes acquisition and a $16.5 million bridge loan used to finance the purchase of an office building by Levitt; | |
• | Increases in other liabilities primarily due to securities purchased by BankAtlantic Bancorp pending settlement in January 2005 and increases in accounts payable and accrued liabilities of $28.1 million related to increased construction and development activity at Levitt, as well as the assumption of liabilities in connection with the Bowden Homes acquisition and liabilities recorded relating to | |
80
Hurricanes Frances and Jeanne, offset in part by a $9.1 million reduction in customer deposits and a $1.4 million reversal of a litigation reserve related to the successful appeal of a 2002 lawsuit. |
Minority Interest |
December 31, | ||||||||
2004 | 2003 | |||||||
BankAtlantic Bancorp
|
$ | 366,140 | $ | 321,583 | ||||
Levitt
|
245,756 | 97,567 | ||||||
Joint Venture Partnerships
|
756 | 784 | ||||||
$ | 612,652 | $ | 419,934 | |||||
Shareholders’ Equity |
81
BankAtlantic Bancorp, Inc. is a Florida-based financial services holding company offering a full range of products and services through BankAtlantic, our wholly-owned banking subsidiary, and RB Holdings, Inc., the wholly-owned parent company of our broker-dealer subsidiary, Ryan Beck. As of December 31, 2004, we had total consolidated assets of approximately $6.4 billion, deposits of approximately $3.5 billion and shareholders’ equity of approximately $469 million. | ||
The following events have occurred during the past three years that have had a significant impact on the Company’s results of operations: | ||
• | In March 2002, BankAtlantic acquired Community Savings Bancshares, Inc., the parent company of Community Savings, F.A. (“Community”), and immediately merged Community into BankAtlantic. Community had its headquarters and branches in our South Florida market and had approximately $909 million in assets and $637 million in deposits on the date of acquisition. | ||
• | In April 2002, Ryan Beck acquired certain of the assets and assumed certain liabilities of the former broker-dealer known as Gruntal & Co., LLC. Before this acquisition, Ryan Beck had 130 account executives located in 9 offices, principally in the New Jersey/ New York metropolitan area and southeast Florida. This transaction added over 400 additional consultants and 25 new offices to Ryan Beck’s operations. Ryan Beck currently has approximately 500 financial consultants in 40 offices and now has a substantial east coast presence, along with offices in the mid-west and west coast. | ||
• | Effective December 31, 2003, we spun-off our wholly-owned real estate development subsidiary, Levitt Corporation (“Levitt”), which is now traded on the New York Stock Exchange under the symbol “LEV”. Levitt had approximately $393 million in total assets and $126 million in shareholders’ equity at December 31, 2003. This transaction was effected by means of a distribution to our stockholders of all of the outstanding capital stock of Levitt. | ||
• | In April 2002, BankAtlantic embarked upon its “Florida’s Most Convenient Bank” initiative to attract retail customers. This campaign includes seven-day branch banking and extended weekday hours, along with a 24/7 live customer service center, Totally Free Checking, free online banking, Totally Free Change Exchange coin counters, and dozens of additional product and service initiatives. During 2004 BankAtlantic began an initiative to extend branch operating hours to midnight and began offering free internet bill-paying services. BankAtlantic also announced a plan to grow its retail network through de novo expansion while renovating its existing branches to further its branding as Florida’s Most Convenient Bank. While the initiatives have resulted in increased expenses, we believe this marketing campaign has contributed to significant new deposit account openings and growth in low cost deposits at BankAtlantic. | ||
82
Net income increased to $70.8 million in 2004 from $67.7 million in 2003 and $50.3 million in 2002. Included in these totals is income from discontinued operations (primarily relating to Levitt) of $29.1 million in 2003 and $22.5 million in 2002. Additionally, in 2002, the Company realized an extraordinary gain of $23.7 million associated with the Gruntal transaction because the fair value of the assets acquired exceeded the purchase price. Also in 2002, the Company realized a loss of $15.1 million due to the initial implementation of FAS 142 concerning goodwill impairment. The Company performed the required goodwill impairment test and determined that the goodwill assigned to the Ryan Beck subsidiary was impaired. The Company performed its annual goodwill impairment test again in 2004 and 2003 and concluded that no further goodwill impairment existed. | ||
Income from continuing operations increased to $70.8 million in 2004 from $38.6 million in 2003 and $19.1 million in 2002. A reconciliation of income from continuing operations from each of the Company’s primary business segments follows (in thousands): | ||
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
BankAtlantic
|
$ | 48,540 | $ | 42,129 | $ | 45,109 | |||||||
Ryan Beck
|
17,483 | 9,645 | (2,448 | ) | |||||||||
Parent Co.
|
4,745 | (13,177 | ) | (23,511 | ) | ||||||||
Total
|
$ | 70,768 | $ | 38,597 | $ | 19,150 | |||||||
A detailed discussion of the results of operations of each of these business segments follows. |
In April 2002, BankAtlantic launched its “Florida’s Most Convenient Bank” marketing campaign, and this initiative continues to drive growth in new customer generation. Since the beginning of 2002, BankAtlantic has opened nearly 410,000 new checking and savings accounts, and the fourth quarter of 2004 marked the twelfth consecutive quarter of double-digit growth in new low cost checking and savings account openings. Since January 1, 2002, total low cost deposits have increased from approximately $600 million to approximately $1.8 billion, an increase of 200%. Non-interest bearing demand deposits now constitute 26% of deposit funding, up from 21% at December 31, 2003 and 13% before initiation of the campaign. We expect these trends to continue as we increase our advertising expenditures, create other marketing programs and maintain our commitment to superior customer service. | ||
Subject to changes in the interest rate environment, we expect our net interest income to improve in 2005. During 2004, the net interest margin was positively impacted by management’s decision to prepay certain of our high rate FHLB Advances in 2003 and 2004. Although we incurred penalties that decreased earnings in those periods, we prepaid these fixed rate advances with the expectation that it would lower our funding costs and improve our net interest margin in future periods. We believe the impact of this decision will be realized to an increasing extent beginning in 2005. We also believe that our “Florida’s Most Convenient Bank” campaign will contribute to decreasing the average cost of our deposit funding as balances of non-interest bearing and other low cost deposits continue to grow and increasingly constitute a larger percentage of our total deposit funding. | ||
Our credit quality continued to improve. The ratio of non-performing loans to total loans declined to 0.17% at year-end. In 2004, we had net recoveries of $5.5 million vs. net charge offs of | ||
83
$1.1 million for 2003 and $19.8 million for 2002, and the associated ratio of net charge-offs (recoveries) to average outstanding loans declined during each of these respective years to (0.14%), 0.03% and 0.57%. In addition to lower loan charge-offs, in 2004 we were successful in recovering and collecting loans in our commercial real estate loan and leasing portfolios which had been charged off. We cannot assure that we will have similar success in future periods and expect to experience higher net charge-off ratios. | ||
Also, because of our continued emphasis on the origination and purchase of loans collateralized by real estate, which have lower historical loss experiences than our discontinued loan products and our non-real estate loans, the trend in our ratio of the allowance for loan losses to total loans outstanding has declined to 1.00% at December 31, 2004 from 1.62% at the 2000 year-end. This trend, combined with net recoveries from loans charged off during prior periods, necessitated a negative provision for loan losses of $5.1 million in 2004. We believe that our credit ratios reflect the improving credit quality of our loans. Although we do not foresee significant changes in the quality of our loan portfolio, we caution that changes in the local or national economy, or changes within certain industries, could have a dramatic impact on the performance of our loans. | ||
Our non-interest income continued to improve during 2004, due primarily to increased fees associated with the additional new deposit accounts opened during the year. We believe that we will continue to experience an increase in non-interest income during 2005 as we continue our “Florida’s Most Convenient Bank” initiatives and expand and renovate our branch network. | ||
Our non-interest expenses increased significantly during 2004 due primarily to the costs linked to our marketing initiatives, including the hiring of new employees to service customers and advertising expenditures to promote our “Florida’s Most Convenient Bank” campaign. We also incurred higher expenses associated with regulatory compliance and internal audit costs relating to compliance with the Sarbanes-Oxley Act. We believe that expenses related to compliance will be less in 2005 than 2004, but that expenses related to our marketing initiatives will continue to increase during 2005 as we continue to implement the “Florida’s Most Convenient Bank” initiatives. Additionally, our branch expansion and renovation plans will also result in increased non-interest expense. | ||
The following table is a condensed income statement summarizing BankAtlantic’s results of operations (in thousands): | ||
For the Years Ended December 31, | ||||||||||||||||||||
Change 2004 | Change 2003 | |||||||||||||||||||
2004 | 2003 | 2002 | vs. 2003 | vs. 2002 | ||||||||||||||||
Net interest income
|
$ | 176,858 | $ | 154,100 | $ | 164,122 | $ | 22,758 | $ | (10,022 | ) | |||||||||
(Provision for) recovery from loan losses
|
5,109 | 547 | (14,077 | ) | 4,562 | 14,624 | ||||||||||||||
Net income after provision for loan losses
|
181,967 | 154,647 | 150,045 | 27,320 | 4,602 | |||||||||||||||
Non-interest income
|
85,724 | 70,686 | 53,317 | 15,038 | 17,369 | |||||||||||||||
Non-interest expense
|
(193,621 | ) | (161,615 | ) | (134,408 | ) | (32,006 | ) | (27,207 | ) | ||||||||||
Income from continuing operations before income taxes
|
74,070 | 63,718 | 68,954 | 10,352 | (5,236 | ) | ||||||||||||||
Income taxes
|
(25,530 | ) | (21,589 | ) | (23,845 | ) | (3,941 | ) | 2,256 | |||||||||||
Income from continuing operations
|
$ | 48,540 | $ | 42,129 | $ | 45,109 | $ | 6,411 | $ | (2,980 | ) | |||||||||
84
A discussion of each component of income and expense follows: |
The following table summarizes net interest income: |
For the Years Ended | |||||||||||||||||||||||||||||||||||||
December 31, 2004 | December 31, 2003 | December 31, 2002 | |||||||||||||||||||||||||||||||||||
Average | Revenue/ | Yield/ | Average | Revenue/ | Yield/ | Average | Revenue/ | Yield/ | |||||||||||||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||
Interest earning assets
|
|||||||||||||||||||||||||||||||||||||
Loans:(a)
|
|||||||||||||||||||||||||||||||||||||
Residential real estate
|
$ | 1,527,911 | $ | 72,758 | 4.76 | % | $ | 1,639,504 | $ | 78,535 | 4.79 | % | $ | 1,429,022 | $ | 88,808 | 6.21 | % | |||||||||||||||||||
Commercial real estate
|
1,683,068 | 96,585 | 5.74 | 1,610,707 | 94,193 | 5.85 | 1,500,744 | 96,836 | 6.45 | ||||||||||||||||||||||||||||
Consumer
|
421,167 | 17,959 | 4.26 | 316,113 | 14,177 | 4.48 | 253,044 | 14,165 | 5.60 | ||||||||||||||||||||||||||||
Lease financing
|
10,771 | 1,125 | 10.44 | 21,930 | 2,490 | 11.35 | 43,496 | 5,307 | 12.20 | ||||||||||||||||||||||||||||
Commercial business
|
101,288 | 6,423 | 6.34 | 107,371 | 6,126 | 5.71 | 99,852 | 5,935 | 5.94 | ||||||||||||||||||||||||||||
Small business
|
183,642 | 13,118 | 7.14 | 161,245 | 11,973 | 7.43 | 146,468 | 11,565 | 7.90 | ||||||||||||||||||||||||||||
Total loans
|
3,927,847 | 207,968 | 5.29 | 3,856,870 | 207,494 | 5.38 | 3,472,626 | 222,616 | 6.41 | ||||||||||||||||||||||||||||
Tax exempt securities(c)
|
110,748 | 5,988 | 5.41 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Taxable investment securities(b)
|
635,129 | 34,948 | 5.50 | 789,451 | 43,741 | 5.54 | 1,180,100 | 74,419 | 6.31 | ||||||||||||||||||||||||||||
Federal funds sold
|
6,282 | 47 | 0.75 | 16,499 | 166 | 1.01 | 3,929 | 57 | 1.45 | ||||||||||||||||||||||||||||
Total investment securities
|
752,159 | 40,983 | 5.45 | 805,950 | 43,907 | 5.45 | 1,184,029 | 74,476 | 6.29 | ||||||||||||||||||||||||||||
Total interest earning assets
|
4,680,006 | $ | 248,951 | 5.32 | % | 4,662,820 | $ | 251,401 | 5.39 | % | 4,656,655 | $ | 297,092 | 6.38 | % | ||||||||||||||||||||||
Non-interest earning assets
|
|||||||||||||||||||||||||||||||||||||
Total non-interest earning assets
|
333,253 | 324,598 | 316,085 | ||||||||||||||||||||||||||||||||||
Total assets
|
$ | 5,013,259 | $ | 4,987,418 | $ | 4,972,740 | |||||||||||||||||||||||||||||||
Interest bearing liabilities
|
|||||||||||||||||||||||||||||||||||||
Deposits:
|
|||||||||||||||||||||||||||||||||||||
Savings
|
$ | 243,906 | $ | 652 | 0.27 | % | $ | 190,506 | $ | 856 | 0.45 | % | $ | 140,961 | $ | 1,362 | 0.97 | % | |||||||||||||||||||
NOW, money funds and checking
|
1,489,442 | 10,861 | 0.73 | 1,315,747 | 11,142 | 0.85 | 1,078,298 | 15,338 | 1.42 | ||||||||||||||||||||||||||||
Certificate accounts
|
733,717 | 16,842 | 2.30 | 882,736 | 24,191 | 2.74 | 1,230,013 | 46,077 | 3.75 | ||||||||||||||||||||||||||||
Total interest bearing deposits
|
2,467,065 | 28,355 | 1.15 | 2,388,989 | 36,189 | 1.51 | 2,449,272 | 62,777 | 2.56 | ||||||||||||||||||||||||||||
Securities sold under agreements to repurchase and federal funds
purchased
|
252,718 | 3,349 | 1.33 | 285,284 | 3,089 | 1.08 | 400,376 | 6,845 | 1.71 | ||||||||||||||||||||||||||||
Advances from FHLB
|
959,588 | 37,689 | 3.93 | 1,195,653 | 57,299 | 4.79 | 1,198,463 | 62,412 | 5.21 | ||||||||||||||||||||||||||||
Subordinated debentures and notes payable
|
36,220 | 2,002 | 5.53 | 35,457 | 1,917 | 5.41 | 14,805 | 936 | 6.32 | ||||||||||||||||||||||||||||
Total interest bearing liabilities
|
3,715,591 | 71,395 | 1.92 | 3,905,383 | 98,494 | 2.52 | 4,062,916 | 132,970 | 3.27 | ||||||||||||||||||||||||||||
Non-interest bearing liabilities
|
|||||||||||||||||||||||||||||||||||||
Demand deposit and escrow accounts
|
765,084 | 551,866 | 405,599 | ||||||||||||||||||||||||||||||||||
Other liabilities
|
29,111 | 55,261 | 70,187 | ||||||||||||||||||||||||||||||||||
Total non-interest bearing liabilities
|
794,195 | 607,127 | 475,786 | ||||||||||||||||||||||||||||||||||
Stockholders’ equity
|
503,473 | 474,908 | 434,038 | ||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 5,013,259 | $ | 4,987,418 | $ | 4,972,740 | |||||||||||||||||||||||||||||||
Tax equivalent net interest income/net interest spread
|
177,556 | 3.40 | % | 152,907 | 2.87 | % | 164,122 | 3.11 | % | ||||||||||||||||||||||||||||
Tax equivalent adjustment
|
(2,096 | ) | — | — | |||||||||||||||||||||||||||||||||
Capitalized interest from real estate operations
|
1,398 | 1,193 | — | ||||||||||||||||||||||||||||||||||
Net interest income
|
$ | 176,858 | $ | 154,100 | $ | 164,122 | |||||||||||||||||||||||||||||||
Margin
|
|||||||||||||||||||||||||||||||||||||
Interest income/interest earning assets
|
5.32 | % | 5.39 | % | 6.38 | % | |||||||||||||||||||||||||||||||
Interest expense/interest earning assets
|
1.53 | 2.11 | 2.86 | ||||||||||||||||||||||||||||||||||
Tax equivalent net interest margin
|
3.79 | % | 3.28 | % | 3.52 | % | |||||||||||||||||||||||||||||||
85
|
(a) | Includes non-accruing loans | |
(b) | Average balances were based on amortized cost. | |
(c) | The tax equivalent basis is computed using a 35% tax rate. | |
The following table summarizes the changes in tax equivalent net interest income (in thousands): |
Year Ended December 31, 2004 | Year Ended December 31, 2003 | ||||||||||||||||||||||||
Compared to Year Ended | Compared to Year Ended | ||||||||||||||||||||||||
December 31, 2003 | December 31, 2002 | ||||||||||||||||||||||||
Volume(a) | Rate | Total | Volume(a) | Rate | Total | ||||||||||||||||||||
Increase (decrease) due to:
|
|||||||||||||||||||||||||
Loans
|
$ | 3,758 | $ | (3,284 | ) | $ | 474 | $ | 20,672 | $ | (35,794 | ) | $ | (15,122 | ) | ||||||||||
Tax exempt securities
|
5,988 | — | 5,988 | — | — | — | |||||||||||||||||||
Taxable investment securities(b)
|
(8,492 | ) | (301 | ) | (8,793 | ) | (21,645 | ) | (9,033 | ) | (30,678 | ) | |||||||||||||
Federal funds sold
|
(76 | ) | (43 | ) | (119 | ) | 126 | (17 | ) | 109 | |||||||||||||||
Total earning assets
|
1,178 | (3,628 | ) | (2,450 | ) | (847 | ) | (44,844 | ) | (45,691 | ) | ||||||||||||||
Deposits:
|
|||||||||||||||||||||||||
Savings
|
143 | (347 | ) | (204 | ) | 223 | (729 | ) | (506 | ) | |||||||||||||||
NOW, money funds, and checking
|
1,267 | (1,548 | ) | (281 | ) | 2,011 | (6,207 | ) | (4,196 | ) | |||||||||||||||
Certificate accounts
|
(3,421 | ) | (3,928 | ) | (7,349 | ) | (9,517 | ) | (12,369 | ) | (21,886 | ) | |||||||||||||
Total deposits
|
(2,011 | ) | (5,823 | ) | (7,834 | ) | (7,283 | ) | (19,305 | ) | (26,588 | ) | |||||||||||||
Securities sold under agreements to repurchase
|
(432 | ) | 692 | 260 | (1,246 | ) | (2,510 | ) | (3,756 | ) | |||||||||||||||
Advances from FHLB
|
(9,272 | ) | (10,338 | ) | (19,610 | ) | (135 | ) | (4,978 | ) | (5,113 | ) | |||||||||||||
Subordinated debentures
|
42 | 43 | 85 | 1,117 | (136 | ) | 981 | ||||||||||||||||||
(9,662 | ) | (9,603 | ) | (19,265 | ) | (264 | ) | (7,624 | ) | (7,888 | ) | ||||||||||||||
Total interest bearing liabilities
|
(11,673 | ) | (15,426 | ) | (27,099 | ) | (7,547 | ) | (26,929 | ) | (34,476 | ) | |||||||||||||
Change in tax equivalent net interest income
|
$ | 12,851 | $ | 11,798 | $ | 24,649 | $ | 6,700 | $ | (17,915 | ) | $ | (11,215 | ) | |||||||||||
|
(a) | Changes attributable to rate/volume have been allocated to volume. | |
(b) | Average balances were based on amortized cost. | |
The improvement in our tax equivalent net interest margin primarily resulted from a significant decrease in interest expense caused by management’s decision to prepay certain of our high rate FHLB advances and the increased percentage of low cost deposits in our deposit mix. In late 2003, we repaid $325 million of advances with an average rate of 5.57%. We recognized expenses of $10.9 million in connection with these prepayments and recognized a $1.9 million loss on the termination of interest rate swap contracts. In early 2004, we repaid $108 million of fixed rate advances with an average interest rate of 5.55% and incurred penalties of $11.7 million. During the year ended December 31, 2004, approximately $960 million, or 26% of average interest bearing liabilities, consisted of advances from the FHLB with an average rate of 3.93% versus an average rate of 4.79% during 2003. |
86
Our deposit mix changed with decreased higher rate certificate of deposit accounts and increased low cost deposits. We believe this is primarily the result of our “Florida’s Most Convenient Bank” initiatives. Low cost deposits are comprised of checking and savings accounts. Balances in low cost deposits increased 31% at December 31, 2004, to $1.8 billion, or 53% of total deposits, versus $1.4 billion, or 45% of total deposits, at December 31, 2003. In 2004, new checking (DDA/ NOW) and savings account openings were approximately 166,000, compared to 145,000 in 2003 and 99,000 in 2002. Non-interest bearing account balances increased approximately $245 million and now constitute 26% of total deposits, up from 21% last year and 16% at December 2002. | ||
Partially offsetting the decreases in interest expense on advances and deposits were increases in interest expense on short-term borrowings. Although average balances were slightly lower, the average rate on these borrowings was higher, reflecting the short-term interest rate environment. | ||
Interest expense on subordinated debentures and notes payable represents interest expense associated with mortgage-backed bonds acquired in connection with our acquisition of Community Savings in 2002, $22 million of subordinated debentures issued in October 2002 and joint venture construction loans. These borrowings all have variable interest rates. | ||
Interest income on average loans increased slightly as the small decline in average loan yields was offset by an increase in average loan balances. The growth in balances primarily resulted from the origination of commercial real estate and home equity consumer loans. During 2004, the Bank originated over $1.3 billion of corporate and commercial loans and over $400 million of home equity loans. Beginning in July 2004 the prime rate of interest increased from 4.00% to 5.25% at December 31, 2004, while long term loan rates declined slightly from the December 2003 levels. The increase in short term interest rates contributed to average loan yields only declining slightly from the prior period. | ||
Tax-equivalent interest income on investment securities declined $2.9 million, primarily due to a decline in the average balance of the investment portfolio. Maturities and prepayments on U.S. agency obligations, primarily mortgage-backed securities, were only partially replaced by purchases of new agency securities and purchases of tax exempt securities. | ||
During 2004, BankAtlantic began investing in tax exempt securities as the after tax yields on these securities were more attractive than alternative investments. | ||
Capitalized interest represents interest capitalized on qualifying assets associated with the Riverclub real estate joint venture acquired as part of the Community acquisition. | ||
Net interest income decreased by $11.2 million, or 6%, from 2002. The decline reflects a substantial decrease in yields on earning assets partially offset by lower rates on interest bearing liabilities resulting in a 24 basis point decline in our net interest margin. The net interest margin was negatively impacted by the historically low interest rates during 2003 and high rates associated with our advances from the FHLB. The yield on the 10-year Treasury bond declined from approximately 5.5% in early 2002 to almost 3.0% in mid-2003. For most of 2002, the prime rate stood at 4.75%. The prime rate declined to 4.25% in November 2002 and declined again to 4.00% in June 2003. Short-term LIBOR and Treasury based indices also declined during this period, leading to less interest income earned on adjustable rate loans and investments. Additionally, this low interest rate environment resulted in accelerated prepayments of mortgage loans and mortgage-backed securities as homeowners took advantage of the refinancing opportunities. We experienced accelerated amortization of premiums associated with some of these assets, and we were faced with investing the proceeds from these repayments primarily in residential and commercial loans at lower yields. |
87
Interest income on average loans declined as the significant decline in average loan yields was partially offset by an increase in average loan balances. The growth in balances resulted from the purchase and origination of commercial real estate, residential and home equity loans. During 2003, the Bank purchased $1.1 billion of residential loans and originated over $1.0 billion of commercial loans and $317 million of home equity loans. The net loan growth was funded primarily by the reduction in the average balances of our securities portfolios. | ||
Interest income on investment securities declined primarily due to the accelerated repayment of high yielding securities resulting from the historically low interest rate environment. | ||
As a consequence of lower average yields on earning assets and a slight increase in average earning asset balances, interest income decreased by $45.7 million. | ||
Rates on interest bearing liabilities did not decline as rapidly as rates on interest earning assets as 30% of average interest bearing liabilities consisted of long term advances from the FHLB that, either directly or indirectly via interest rate swaps, had fixed interest rates. These advances were primarily originated in order to fund the purchase of fixed rate residential loans. In September 2003 we repaid $185 million of high rate advances and in December 2003 we repaid $140 million of high rate advances. The advances repaid had an average rate of 5.57%. | ||
The lower deposit rates reflect the historically low interest rate environment during 2003 plus a change in our deposit mix from higher rate certificate of deposit accounts to low cost deposits and insured money fund accounts, as discussed above. | ||
Interest expense on short-term borrowings was substantially lower during 2003 due to lower average balances and average rates. | ||
Interest expense on FHLB advances declined resulting from maturities and repayments of advances at higher rates than the advances outstanding. | ||
In total, BankAtlantic’s interest expense declined by $34.5 million primarily due to declining average rates and, secondarily, due to lower average balances on interest bearing liabilities. | ||
88
Changes in the allowance for loan losses were as follows (in thousands): |
For the Years Ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
Balance, beginning of period
|
$ | 45,595 | $ | 48,022 | $ | 44,585 | $ | 47,000 | $ | 44,450 | |||||||||||
Charge-offs:
|
|||||||||||||||||||||
Commercial business loans
|
— | (2,394 | ) | — | — | (24 | ) | ||||||||||||||
Commercial real estate loans
|
(645 | ) | — | (6,998 | ) | — | |||||||||||||||
Small business
|
(238 | ) | (771 | ) | (953 | ) | (88 | ) | — | ||||||||||||
Consumer loans
|
(585 | ) | (1,563 | ) | (1,006 | ) | (2,629 | ) | (2,233 | ) | |||||||||||
Residential real estate loans
|
(582 | ) | (681 | ) | (827 | ) | (244 | ) | (715 | ) | |||||||||||
Continuing loan products
|
(2,050 | ) | (5,409 | ) | (9,784 | ) | (2,961 | ) | (2,972 | ) | |||||||||||
Discontinued loan products
|
(2,026 | ) | (6,314 | ) | (18,879 | ) | (24,955 | ) | (29,249 | ) | |||||||||||
Total charge-offs
|
(4,076 | ) | (11,723 | ) | (28,663 | ) | (27,916 | ) | (32,221 | ) | |||||||||||
Recoveries:
|
|||||||||||||||||||||
Commercial business loans
|
536 | 95 | 76 | 331 | 94 | ||||||||||||||||
Commercial real estate loans
|
4,052 | 3 | 20 | 10 | 8 | ||||||||||||||||
Small business
|
418 | 559 | 7 | 4 | — | ||||||||||||||||
Consumer loans
|
370 | 622 | 477 | 769 | 645 | ||||||||||||||||
Residential real estate loans
|
486 | 726 | 331 | 223 | 106 | ||||||||||||||||
Continuing loan products
|
5,862 | 2,005 | 911 | 1,337 | 853 | ||||||||||||||||
Discontinued loan products
|
3,738 | 8,572 | 7,968 | 7,259 | 4,786 | ||||||||||||||||
Total recoveries
|
9,600 | 10,577 | 8,879 | 8,596 | 5,639 | ||||||||||||||||
Net (charge-offs) recoveries
|
5,524 | (1,146 | ) | (19,784 | ) | (19,320 | ) | (26,582 | ) | ||||||||||||
Provision for (recovery from) loan losses
|
(5,109 | ) | (547 | ) | 14,077 | 16,905 | 29,132 | ||||||||||||||
Allowance for loan losses, acquired
|
— | (734 | ) | 9,144 | — | — | |||||||||||||||
Balance, end of period
|
$ | 46,010 | $ | 45,595 | $ | 48,022 | $ | 44,585 | $ | 47,000 | |||||||||||
89
The outstanding loan balances related to our discontinued loan products and the amount of allowance for loan losses (“ALL”) assigned to each discontinued loan product was as follows (in thousands): |
As of December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
Allocation | Allocation | Allocation | ||||||||||||||||||||||
Amount | of ALL | Amount | of ALL | Amount | of ALL | |||||||||||||||||||
Lease finance
|
$ | 6,551 | $ | 1,429 | $ | 14,442 | $ | 3,425 | $ | 31,279 | $ | 7,396 | ||||||||||||
Syndication loans
|
— | — | 9,114 | 185 | 14,499 | 294 | ||||||||||||||||||
Small business(1)
|
— | — | 9,569 | 873 | 17,297 | 2,143 | ||||||||||||||||||
Consumer — indirect
|
1,734 | 2 | 2,402 | 70 | 8,105 | 457 | ||||||||||||||||||
$ | 8,285 | $ | 1,431 | $ | 35,527 | $ | 4,553 | $ | 71,180 | $ | 10,290 | |||||||||||||
As of December 31, | ||||||||||||||||
2001 | 2000 | |||||||||||||||
Allocation | Allocation | |||||||||||||||
Amount | of ALL | Amount | of ALL | |||||||||||||
Lease finance
|
$ | 54,969 | $ | 8,639 | $ | 75,918 | $ | 2,879 | ||||||||
Syndication loans
|
40,774 | 8,602 | 80,016 | 8,480 | ||||||||||||
Small business(1)
|
32,123 | 4,105 | 66,989 | 9,965 | ||||||||||||
Consumer — indirect
|
25,400 | 1,247 | 62,475 | 5,388 | ||||||||||||
$ | 153,266 | $ | 22,593 | $ | 285,398 | $ | 26,712 | |||||||||
|
(1) | Small business loans originated before January 1, 2000. |
During prior periods we discontinued the origination of syndication, lease financings and indirect consumer loans and made major modifications to the underwriting process for small business loans (collectively, “discontinued loan products”.) The loans associated with the discontinued loan products gave rise to a significant portion of our net charge-offs during each of the years in the three year period ended December 31, 2002. The decline in those portfolios during the past three years has contributed to the reduction of our allowance for loan losses. Additionally, we were able to realize net recoveries associated with previously charged-off loans during the years ended December 31, 2004 and 2003 which favorably impacted our provision for loan losses. | ||
The provision for (recovery from) loan losses improved in each of the years in the three year period ended December 31, 2004. This improvement resulted from several factors including the discontinuation of the loan products mentioned above and changes in our credit policies which focused our loan production on collateral based loans with lower loss experiences than our other loan products. The discontinued loan products accounted for approximately 80.1% of our net charge-offs in the past five years. In 2003 and 2004, we saw noticeable benefits from our change in policy, as the balances and the associated losses in discontinued loan products declined, while we experienced substantially lower losses from our loans originated under our new credit policy. | ||
Additionally, during 2003, our loan provision was a recovery due to significant recoveries from our discontinued loan products. The majority of these recoveries were from bankruptcy settlements associated with syndication loans charged-off in prior periods. In 2004, our provision for loan losses was a recovery primarily resulting from a $4.1 million recovery of a commercial real estate loan that was charged off in 2002, as well as continued net recoveries from our discontinued loan products. | ||
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BankAtlantic’s total charge-offs from continuing loan products during 2004 consisted of a $645,000 charge-down of one commercial real estate loan and various smaller charges-offs associated with small business, residential and consumer loans. BankAtlantic’s total recoveries from continuing products during 2004 related primarily from its $4.1 million recovery of the commercial real estate loan mentioned above. BankAtlantic’s improvement in net charge-offs during 2003 compared to 2002 resulted from commercial real estate loan charge-offs during 2002 and lower discontinued loan product net charge-offs during 2003. The commercial real estate loan charge-offs during 2002 were associated with two loans. The amount charged off on one of the loans was partially recovered from the loan guarantor during 2004. The other loan was sold without recourse at book value (less the amount charged-down) to an unrelated third party. | ||
BankAtlantic acquired Community Savings’ $9.1 million allowance for loan losses in connection with the Community Savings acquisition in March 2002. In 2003, the acquired allowance for loan losses was reduced by $734,000 with a corresponding reduction in goodwill for loans acquired in connection with the Community acquisition that had either matured or were prepaid and which had been assigned a valuation allowance. | ||
The table below presents the allocation of the allowance for loan losses by various loan classifications (“Allowance for Loan Losses”), the percent of allowance to each loan category (“ALL to gross loans percent”) and sets forth the percentage of loans in each category to gross loans excluding banker’s acceptances (“Loans to gross loans percent”). The allowance shown in the table should not be interpreted as an indication that charge-offs in future periods will occur in these amounts or percentages or that the allowance indicates future charge-off amounts or trends (dollars in thousands): | ||
December 31, 2004 | December 31, 2003 | December 31, 2002 | ||||||||||||||||||||||||||||||||||
ALL to | Loans | ALL to | Loans | ALL to | Loans | |||||||||||||||||||||||||||||||
Allowance | Gross | to Gross | Allowance | Gross | to gross | Allowance | Gross | to Gross | ||||||||||||||||||||||||||||
for Loan | Loans | Loans | for Loan | Loans | loans | for Loan | Loans | Loans | ||||||||||||||||||||||||||||
Losses | Percent | Percent | Losses | Percent | Percent | Losses | Percent | Percent | ||||||||||||||||||||||||||||
Commercial business
|
$ | 2,507 | 2.94 | 1.59 | $ | 1,715 | 2.15 | 1.81 | $ | 1,437 | 1.75 | 2.06 | ||||||||||||||||||||||||
Commercial real estate
|
23,345 | 0.92 | 47.28 | 24,005 | 0.99 | 55.12 | 21,124 | 1.05 | 50.75 | |||||||||||||||||||||||||||
Small business
|
2,403 | 1.26 | 3.55 | 2,300 | 1.44 | 3.63 | 2,863 | 1.99 | 3.61 | |||||||||||||||||||||||||||
Residential real estate
|
2,565 | 0.12 | 38.57 | 2,111 | 0.16 | 30.56 | 2,512 | 0.18 | 34.60 | |||||||||||||||||||||||||||
Consumer
|
4,281 | 0.90 | 8.86 | 3,900 | 1.10 | 8.07 | 3,239 | 1.13 | 7.19 | |||||||||||||||||||||||||||
Discontinued loan products
|
1,431 | 17.26 | 0.15 | 4,553 | 12.81 | 0.81 | 10,290 | 14.46 | 1.79 | |||||||||||||||||||||||||||
Total assigned
|
36,532 | 38,584 | 41,465 | |||||||||||||||||||||||||||||||||
Unassigned
|
9,478 | N/A | N/A | 7,011 | N/A | N/A | 6,557 | N/A | N/A | |||||||||||||||||||||||||||
$ | 46,010 | 0.86 | 100.00 | $ | 45,595 | 1.04 | 100.00 | $ | 48,022 | 1.21 | 100.00 | |||||||||||||||||||||||||
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December 31, 2001 | December 31, 2000 | |||||||||||||||||||||||
ALL to | Loans | ALL to | Loans | |||||||||||||||||||||
Allowance | Gross | to Gross | Allowance | Gross | to Gross | |||||||||||||||||||
for Loan | Loans | Loans | for Loan | Loans | Loans | |||||||||||||||||||
Losses | Percent | Percent | Losses | Percent | Percent | |||||||||||||||||||
Commercial business
|
$ | 1,563 | 2.02 | 2.37 | $ | 1,502 | 1.00 | 4.64 | ||||||||||||||||
Commercial real estate
|
13,682 | 0.82 | 50.87 | 10,072 | 0.77 | 40.25 | ||||||||||||||||||
Small business
|
1,073 | 1.53 | 2.14 | 785 | 2.56 | 0.94 | ||||||||||||||||||
Residential real estate
|
1,304 | 0.12 | 34.08 | 1,540 | 0.12 | 40.52 | ||||||||||||||||||
Consumer — direct
|
2,064 | 1.07 | 5.86 | 2,989 | 1.89 | 4.86 | ||||||||||||||||||
Discontinued loan products
|
22,593 | 14.74 | 4.68 | 26,712 | 9.36 | 8.79 | ||||||||||||||||||
Total assigned
|
42,279 | 43,600 | ||||||||||||||||||||||
Unassigned
|
2,306 | N/A | N/A | 3,400 | N/A | N/A | ||||||||||||||||||
$ | 44,585 | 1.36 | 100.00 | $ | 47,000 | 1.45 | 100.00 | |||||||||||||||||
The assigned portion of the allowance for loan losses primarily related to commercial real estate loans at December 31, 2004, 2003 and 2002 and to discontinued loan products in prior periods. The allowance for commercial real estate loans increased from $10.1 million at December 31, 2000 to $23.3 million at December 31, 2004. This increase primarily reflects portfolio growth associated with high balance loans and additional reserves associated with loans to borrowers in the hospitality industry. This industry was designated to have higher credit risk than the other industries in our portfolio. The allowance for loan losses to total gross loan percent has declined for each loan category during the three year period ended December 31, 2004, except for commercial business and discontinued loan products. The decline reflects improving credit quality of the loan portfolio due, in part, to changes in our credit policies and procedures which began in 2000. The increase in the ratio for discontinued loan products reflects a high percentage of aviation leases due to lease repayments and charge-offs in this portfolio. Aviation leases have a higher loss experience than other discontinued loan products. Commercial business allowance to gross loans percent increased due to an increase in the allowance for loans collateralized by time-sharing properties during 2004. | ||
At December 31, 2004, our commercial real estate portfolio included several large lending relationships, including 24 relationships with unaffiliated borrowers involving individual lending commitments in excess of $30 million with an aggregate outstanding balance of $1.0 billion. | ||
The unassigned portion of the allowance for loan losses addresses certain individual industry conditions, general economic conditions and geographic concentration. The major factors contributing to the increase in our unassigned allowance for loan losses during the past three years were the expanded geographical area in which we originate commercial real estate loans, the growth in our consumer and purchased residential loan portfolios and adverse economic trends associated with small business loans. During 2003 we opened commercial loan offices in Orlando and Jacksonville, Florida. The loans originated outside our primary markets may have substantially different loss experiences than our loans secured by collateral in South Florida. Loans originated in commercial lending branch offices outside of South Florida amounted to $531 million at December 31, 2004. Also contributing to our increase in the unassigned portion of the allowance during 2004 was the growth in our purchased residential and home equity loan products. We purchased $1.3 billion of residential loans during 2004 of which 34% were secured by properties located in California, many of which were hybrid loans with interest only payments for a period of three to ten years, followed by conversion to a fully amortizing loan at the then prevailing interest rates for the remaining term of the loan. These types of delayed amortizing loans may have a greater default or recovery risk than existing traditional amortizing loans in our portfolio. During 2004, we modified our underwriting policies to allow for higher loan-to-value ratios based on Beacon scores for home equity loans, and we originated approximately $400 million of home equity loans during 2004 primarily in our South Florida market. The charge-offs for home equity loans in | ||
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the Southeastern United States during the four quarters ended September 30, 2004 exceeded all other regions in the country. Additionally, the Southeastern United States losses on non-real estate secured small business loans were more than double any other region in the country during the last six months of 2004. These types of loans generally have a higher degree of credit risk than other loans in our portfolio as repayment is dependent on the success of the business, many of which are relatively newer businesses without an established operating history or are family-owned firms. |
BankAtlantic’s Non-performing Assets and Potential Problem Loans: |
December 31, | ||||||||||||||||||||||
NONPERFORMING ASSETS | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Tax certificates
|
$ | 381 | $ | 894 | $ | 1,419 | $ | 1,727 | $ | 2,491 | ||||||||||||
Residential
|
5,538 | 9,777 | 14,237 | 10,908 | 16,618 | |||||||||||||||||
Syndication
|
— | — | — | 10,700 | — | |||||||||||||||||
Commercial real estate and business
|
340 | 52 | 1,474 | 13,066 | 1,705 | |||||||||||||||||
Small business — real estate
|
88 | 155 | 239 | 905 | 2,532 | |||||||||||||||||
Lease financing
|
727 | 25 | 3,900 | 2,585 | 1,515 | |||||||||||||||||
Consumer
|
1,210 | 794 | 532 | 796 | 1,944 | |||||||||||||||||
Total non-accrual assets
|
8,284 | 11,697 | 21,801 | 40,687 | 26,805 | |||||||||||||||||
Residential real estate owned
|
309 | 1,474 | 1,304 | 2,033 | 2,562 | |||||||||||||||||
Commercial real estate owned
|
383 | 948 | 8,303 | 1,871 | 1,937 | |||||||||||||||||
Consumer
|
— | — | 4 | 17 | 95 | |||||||||||||||||
Lease financing
|
— | — | — | — | 1,647 | |||||||||||||||||
Total repossessed assets
|
692 | 2,422 | 9,611 | 3,921 | 6,241 | |||||||||||||||||
Total nonperforming assets
|
8,976 | 14,119 | 31,412 | 44,608 | 33,046 | |||||||||||||||||
Specific valuation allowances
|
— | — | (1,386 | ) | (9,936 | ) | (819 | ) | ||||||||||||||
Total nonperforming assets, net
|
$ | 8,976 | $ | 14,119 | $ | 30,026 | $ | 34,672 | $ | 32,227 | ||||||||||||
Total nonperforming assets as a percentage of:
|
||||||||||||||||||||||
Total assets
|
0.15 | 0.31 | 0.64 | 1.03 | 0.76 | |||||||||||||||||
Loans, tax certificates and repossessed assets
|
0.19 | 0.36 | 0.86 | 1.49 | 1.09 | |||||||||||||||||
TOTAL ASSETS
|
$ | 6,044,988 | $ | 4,566,850 | $ | 4,903,886 | $ | 4,330,690 | $ | 4,361,043 | ||||||||||||
Total loans, tax certificates and repossessed assets
|
$ | 4,771,682 | $ | 3,872,473 | $ | 3,673,110 | $ | 2,989,979 | $ | 3,029,833 | ||||||||||||
Allowance for loan losses
|
$ | 46,010 | $ | 45,595 | $ | 48,022 | $ | 44,585 | $ | 47,000 | ||||||||||||
Total tax certificates
|
$ | 170,028 | $ | 193,776 | $ | 195,947 | $ | 145,598 | $ | 124,289 | ||||||||||||
Allowance for tax certificate losses
|
$ | 3,297 | $ | 2,870 | $ | 1,873 | $ | 1,521 | $ | 1,937 | ||||||||||||
POTENTIAL PROBLEM LOANS
|
||||||||||||||||||||||
Loans contractually past due 90 days or more(1)
|
$ | — | $ | 135 | $ | 100 | $ | — | $ | 7,086 | ||||||||||||
Performing impaired loans, net of specific allowance
|
320 | 180 | — | — | 15,001 | |||||||||||||||||
Restructured loans
|
24 | 1,387 | 1,882 | 743 | — | |||||||||||||||||
Total potential problem loans
|
$ | 344 | $ | 1,702 | $ | 1,982 | $ | 743 | $ | 22,087 | ||||||||||||
|
(1) | The majority of these loans have matured and the borrower continues to make payments under the matured loan agreement. The 2000 amount represents one loan that was repaid during February 2001. |
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Non-performing assets significantly declined at December 31, 2004 and 2003 compared to the prior years. We attribute this reduction in non-performing assets to the strengthening of BankAtlantic’s underwriting policies by focusing our loan production on collateral based loans as well as discontinuing the origination of loan products with high historical loss experiences. In 2004, non-accrual assets improved due primarily to lower residential non-performing loans, delinquent tax certificates and real estate owned balances in our portfolio, resulting from favorable economic conditions in the real estate industry. The improvement in non-performing assets was partially offset by higher non-accrual lease financing lending arrangements in the aviation industry and higher non-accruing home equity loans. | ||
The specific valuation allowances on non-performing assets at December 31, 2002, 2001 and 2000 consisted of specific valuation allowances on non-performing loans. At each period end, BankAtlantic individually evaluates the non-homogenous loans in its portfolio to identify those which it deems probable that the borrower will be unable to meet the contractual terms of the loan agreements. A specific valuation allowance is established for these loans, primarily based on cash flow valuation models. At year-end 2004 and 2003, there were no specific valuation allowances assigned to non-performing loans, as the present values of the expected cash flows was in excess of the carrying amount of the non-homogenous, non-performing loans. | ||
The decline in potential problem assets at December 31, 2004 compared to the prior year was due to a lease in the aviation industry transferring to a non-accrual status and subsequently charged down by $600,000. | ||
The following table summarizes the changes in non-interest income (in thousands): |
For the Years Ended December 31, | Change | Change | |||||||||||||||||||
2004 vs. | 2003 vs. | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
Other service charges and fees
|
$ | 23,620 | $ | 19,318 | $ | 14,087 | $ | 4,302 | $ | 5,231 | |||||||||||
Service charges on deposits
|
51,435 | 40,569 | 26,479 | 10,866 | 14,090 | ||||||||||||||||
Income from real estate operations
|
2,405 | 5,642 | 1,293 | (3,237 | ) | 4,349 | |||||||||||||||
Gains on sales of loans
|
483 | 122 | 1,840 | 361 | (1,718 | ) | |||||||||||||||
Securities activities, net
|
37 | (1,957 | ) | 4,741 | 1,994 | (6,698 | ) | ||||||||||||||
Other
|
7,744 | 6,992 | 4,877 | 752 | 2,115 | ||||||||||||||||
Non-interest income
|
$ | 85,724 | $ | 70,686 | $ | 53,317 | $ | 15,038 | $ | 17,369 | |||||||||||
Other service charges and fees increased 22% during 2004 compared to 2003. The additional fee income reflects the opening of 410,000 new deposit accounts since January 2002 that are associated with our “Florida’s Most Convenient Bank” campaign. New ATM and check cards are linked to the new checking and savings accounts and therefore the increase in accounts results in increases in interchange fees, annual fees and foreign transaction fees. Other service charges and fees increased 37% during 2003 compared to 2002, reflecting the opening of 244,000 new deposit accounts from January 2002 though December 2003. New deposit accounts increased by 31% and 35% during the years ended December 31, 2004 and 2003, respectively. | ||
Revenues from service charges on deposits increased 27% in 2004 and 53% in 2003. This is primarily the result of increased overdraft fee income associated with the increased number of checking accounts attributed to our high performance checking products and “Florida’s Most Convenient Bank” initiatives and to higher fees assessed on overdrafts. | ||
Income from real estate operations represents revenues from the Riverclub joint venture. This is a 50% owned real estate joint venture acquired in connection with the Community acquisition in | ||
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March 2002. This venture consists of a development of single family homes, condominium units and duplexes located on 117 acres of land in Florida. During 2004 and 2003, the Riverclub joint venture closed on the sale of 14 and 26 units, respectively. Prior to 2003, this joint venture was accounted for as an unconsolidated subsidiary, and the income from real estate operations represented the Bank’s equity in the undistributed earnings of Riverclub. During 2002, there were 11 closings on the sale of units. | ||
During 2002, BankAtlantic had a gain on the sale of a commercial loan of $2.1 million. The gain was partially offset by losses on the sale of CRA loans. In 2004 and 2003, BankAtlantic had gains on sales of residential loans of $483,000 and $122,000, respectively. | ||
Securities activity, net in 2004 was the result of the fair value adjustment on a forward contract held for trading purposes. Losses on securities in 2003 were primarily due to the termination of interest rate swaps. The swaps had a total notional amount of $75 million and were settled at a loss of $1.9 million in connection with prepayments of FHLB advances discussed above. In 2002, gains on securities activities resulted from the sale of $152 million of mortgage-backed securities and $9.4 million of corporate bonds for gains. The securities were sold to reposition the portfolio in response to the significant decline in interest rates. | ||
Other income in 2004 was favorably impacted by higher miscellaneous customer fees such as wire fees, research charges and cash management services associated with the substantial increase in the number of customer accounts. In 2003, other income was also favorably impacted by the expansion of our branch brokerage business unit which earned $1.4 million in commissions versus $342,000 in commissions in 2002. | ||
The following table summarizes the changes in non-interest expense (in thousands): |
For the Years Ended December 31, | Change | Change | |||||||||||||||||||
2004 vs. | 2003 vs. | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
Employee compensation and benefits
|
$ | 93,154 | $ | 79,492 | $ | 65,130 | $ | 13,662 | $ | 14,362 | |||||||||||
Occupancy and equipment
|
32,713 | 27,329 | 29,852 | 5,384 | (2,523 | ) | |||||||||||||||
Advertising and promotion
|
16,012 | 9,434 | 7,470 | 6,578 | 1,964 | ||||||||||||||||
Restructuring charges and impairment write-downs
|
— | 257 | 1,007 | (257 | ) | (750 | ) | ||||||||||||||
Amortization of intangible assets
|
1,715 | 1,772 | 1,360 | (57 | ) | 412 | |||||||||||||||
Acquisition related charges
|
— | — | 864 | — | (864 | ) | |||||||||||||||
Professional fees
|
9,743 | 4,390 | 2,723 | 5,353 | 1,667 | ||||||||||||||||
Cost associated with debt redemption
|
11,741 | 10,895 | — | 846 | 10,895 | ||||||||||||||||
Other
|
28,543 | 28,046 | 26,002 | 497 | 2,044 | ||||||||||||||||
Non-interest expense
|
$ | 193,621 | $ | 161,615 | $ | 134,408 | $ | 32,006 | $ | 27,207 | |||||||||||
Compensation and benefit expenses increased 17% in 2004. In addition to standard annual employee salary increases, the growth in this expense category primarily resulted from: |
• | An increase in the number of employees resulting from “Florida’s Most Convenient Bank” initiatives. The number of full time equivalent BankAtlantic employees increased to 1,650 at year-end 2004 versus 1,403 at year-end 2003 and 1,244 at year-end 2002. In 2002, 172 employees were added as a result of the Community acquisition. The remainder of personnel growth during the past three years primarily related to the additional personnel |
95
required to implement BankAtlantic’s commitment to provide extended banking hours and high service levels to the increased number of BankAtlantic customers resulting from the “Florida’s Most Convenient Bank” campaign. | |||
• | The higher cost of employee benefits. In addition to the increase in the number of employees, the cost of our regular benefit programs also increased, primarily due to rising health insurance costs. | ||
• | The higher expense associated with our employee profit sharing plan. Approximately $5.7 million in bonuses were paid in 2004 to employees of BankAtlantic for exceeding targeted performance goals, versus $3.6 million in 2003 and zero in 2002. | ||
In 2004, occupancy and equipment expenses increased 20% from 2003. During the year, we adopted a plan to renovate all of our existing stores with a goal to have a consistent look or “brand.” Management anticipates that the renovation plan will be complete in 2006. This resulted in the accelerated depreciation on $2.8 million of fixed assets and leasehold improvements that are scheduled to be replaced. These items are being depreciated over their remaining useful life. Also in 2004, Florida experienced unprecedented hurricane activity, and repair and maintenance expenses increased approximately 29% primarily as a result of damage to facilities and equipment. Additionally, as a result of extended weekend and weekday store hours associated with the “Florida’s Most Convenient Bank” initiative, guard service expense increased over 120% as we provided added security for the protection of both our customers and our employees. | ||
In 2003, occupancy and equipment expenses decreased 8% from 2002. This decline primarily resulted from lower data processing costs and depreciation expense. Lower data processing expenses resulted from the renewal of a vendor contract at significantly lower rates than experienced during the prior period. The decrease in depreciation expense reflects $1.9 million of accelerated depreciation expense during 2002, most of which was associated with a reduction in the estimated life of our on-line banking platform as we upgraded the technology. | ||
Advertising expenses during 2004 and 2003 reflect marketing initiatives to promote our “high performance” account products and our “Florida’s Most Convenient Bank” initiatives. These promotions included print, radio and billboard advertising periodic customer gifts and events associated with seven- day banking. | ||
Restructuring charges and impairment write-downs during 2002 were the result of a plan to discontinue certain ATM relationships. As a consequence, an $801,000 restructuring charge and a $206,000 impairment write-down were recognized. These relationships were primarily with convenience stores and gas stations which did not meet our performance expectations and were unlikely to meet our future profitability goals. The remaining ATM machines are primarily located in our branch network, cruise ships, Native American reservation gaming facilities and other retail outlets. | ||
Amortization of intangible assets consisted of the amortization of core deposit intangible assets acquired in connection with the Community acquisition. The core deposit intangible assets are being amortized over an estimated life of ten years. | ||
Acquisition related charges and impairments during 2002 include various data conversion and system integration expenses as well as facilities impairment write-downs associated with the Community acquisition. As a consequence of the acquisition, BankAtlantic closed two of its branches that competed directly with two of the former Community offices. | ||
The higher expenses for professional fees in 2004, compared to 2003, resulted from deficiencies that were identified in the Bank’s compliance with anti-terrorism and anti-money laundering laws and regulations. BankAtlantic is taking steps to correct identified deficiencies in its compliance with the USA Patriot Act, anti-money laundering laws and the Bank Secrecy Act, and is cooperating with regulators and other federal agencies concerning those deficiencies. BankAtlan- | ||
96
tic has incurred substantial costs to improve its compliance systems and procedures, including costs associated with engaging attorneys and compliance consultants, acquiring new software and hiring additional compliance staff. Compliance costs in 2004 were approximately $5.0 million. These compliance-related costs were primarily one-time and are not expected to recur at these levels in 2005. However, 2005 on-going costs will be higher than our previous general compliance costs by an estimated $2.5 million annually. | ||
The higher expenses for professional fees in 2003, compared to 2002, were primarily associated with legal fees incurred in connection with a lawsuit filed against BankAtlantic in October 2002 relating to our “Florida’s Most Convenient Bank” initiative which was settled without payments to either party. | ||
Costs associated with debt redemption resulted from the prepayment penalties associated with the repayment of $108 million of FHLB advances in 2004 and $325 million of advances in 2003. We prepaid these high rate advances with the expectation that it would improve our net interest margin in future periods. | ||
Overall, other non-interest expense was generally flat in 2004 versus 2003. Increases in branch operating expenses related to an increased number of customer accounts and general operating expenses were offset by a decrease in our provision for tax certificate losses as actual loss history on these investments improved from prior periods. | ||
The increase in other expenses in 2003 versus 2002 primarily resulted from higher ATM interchange expenses, check loss charges, and higher general operating expenses. These increases in other expenses relate to a substantial increase in the number of deposit accounts and the related increase in transaction volume associated with “Florida’s Most Convenient Bank” initiative. Expenses of the Riverclub joint venture as well as costs related to converting check cards from Visa to MasterCard are also reflected in 2003 results and contributed to higher other expenses. | ||
The integration of the assets that were acquired from Gruntal has enabled Ryan Beck to significantly increase its distribution capabilities and revenues since the latter half of 2003. The increase to approximately 450 financial consultants enables the investment banking and trading lines of business to distribute their products to an increased client base of over 136,000 clients. | ||
Principal transaction revenue is primarily generated from the purchase and sale of fixed income and equity securities which are closely related to Ryan Beck’s customer activities. Investment banking revenue is principally derived from transactions with financial institution and emerging growth and middle market company clients. Commission revenue is primarily derived from the purchase and sale of securities on behalf of individual and institutional investors. | ||
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The following table is a condensed income statement summarizing Ryan Beck’s results of operations (in thousands): |
For the Years Ended | ||||||||||||||||||||||
December 31, | Change | Change | ||||||||||||||||||||
2004 vs. | 2004 vs. | |||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2003 | ||||||||||||||||||
Net interest income:
|
||||||||||||||||||||||
Interest on trading securities
|
$ | 11,351 | $ | 10,437 | $ | 7,512 | $ | 914 | $ | 2,925 | ||||||||||||
Interest expense
|
(924 | ) | (1,283 | ) | (1,444 | ) | 359 | 161 | ||||||||||||||
Net interest income
|
10,427 | 9,154 | 6,068 | 1,273 | 3,086 | |||||||||||||||||
Non-interest income:
|
||||||||||||||||||||||
Principal transactions
|
90,415 | 95,519 | 49,106 | (5,104 | ) | 46,413 | ||||||||||||||||
Investment banking
|
48,245 | 27,728 | 19,119 | 20,517 | 8,609 | |||||||||||||||||
Commissions
|
89,289 | 85,176 | 62,924 | 4,113 | 22,252 | |||||||||||||||||
Other
|
3,855 | 2,516 | 2,696 | 1,339 | (180 | ) | ||||||||||||||||
Non-interest income
|
231,804 | 210,939 | 133,845 | 20,865 | 77,094 | |||||||||||||||||
Non-interest expense:
|
||||||||||||||||||||||
Employee compensation and benefits
|
158,868 | 147,358 | 100,909 | 11,510 | 46,449 | |||||||||||||||||
Occupancy and equipment
|
15,429 | 12,707 | 9,344 | 2,722 | 3,363 | |||||||||||||||||
Advertising and promotion
|
4,735 | 3,291 | 2,977 | 1,444 | 314 | |||||||||||||||||
Professional fees
|
5,482 | 10,467 | 3,994 | (4,985 | ) | 6,473 | ||||||||||||||||
Communications
|
12,527 | 13,783 | 10,152 | (1,256 | ) | 3,631 | ||||||||||||||||
Floor broker and clearing fees
|
9,835 | 9,227 | 8,192 | 608 | 1,035 | |||||||||||||||||
Acquisition related charges and Impairments
|
— | — | 4,061 | — | (4,061 | ) | ||||||||||||||||
Other
|
6,184 | 6,691 | 4,865 | (507 | ) | 1,826 | ||||||||||||||||
Non-interest expense
|
213,060 | 203,524 | 144,494 | 9,536 | 59,030 | |||||||||||||||||
Income (loss) from continuing operations before income taxes
|
29,171 | 16,569 | (4,581 | ) | 12,602 | 21,150 | ||||||||||||||||
Income taxes
|
(11,688 | ) | (6,924 | ) | 2,133 | (4,764 | ) | (9,057 | ) | |||||||||||||
Income from continuing operations
|
$ | 17,483 | $ | 9,645 | $ | (2,448 | )* | $ | 7,838 | $ | 12,093 | |||||||||||
* g Does not include an extraordinary gain realized by BankAtlantic Bancorp of $23.7 million associated with the Gruntal transaction. h |
The improvement in income from continuing operations was primarily the result of higher investment banking revenues as well as increased revenue from the activities of Ryan Beck’s financial consultants. | ||
Investment banking revenue increased 74% from 2003. The improvement was largely attributable to the increase in merger and acquisition and advisory business in 2004 in both the financial institutions group and the middle market investment banking group. Ryan Beck’s Financial Institutions Group completed 22 transactions during 2004, versus 17 during 2003. | ||
The decrease in principal transaction revenue was primarily the result of reductions in trading revenue associated with the firm’s fixed income proprietary trading activity. | ||
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Net interest income increased 14% from 2003. The improvement in net interest income primarily resulted from Ryan Beck’s participation in interest income associated with approximately $237 million of customer margin debit balances and fees earned in connection with approximately $1.2 billion in customer money market account balances. | ||
Commission revenue increased 5% in 2004. The improvement is largely due to the increased activity on the part of the firm’s retail client base as well as the increase in average production per financial consultant from $335,000 of gross revenues per financial consultant during 2003 to $373,000 during 2004. | ||
The increase in employee compensation and benefits of 8% from 2003 is primarily due to the increase in the firm’s bonuses which is correlated to the increased investment banking revenues from 2003. | ||
Occupancy and rent expenses have increased 21% from 2003. This increase is primarily due to the additional offices opened in 2004 and the leasing of back-office space associated with the relocation of Ryan Beck’s corporate headquarters. | ||
The increase in advertising and promotion expense was mainly attributable to expenses associated with the launch of Ryan Beck’s first formal advertising campaign designed to expand Ryan Beck’s exposure through print and television media. | ||
Professional fees decreased by 48% in 2004. The decrease is primarily due to legal settlements reached in 2004, including the settlement of the former Gruntal’s bankruptcy case, which has resulted in a decrease in Ryan Beck’s legal reserve for 2004. Offsetting this decrease is the increase in professional fees associated with higher internal audit costs related to Ryan Beck’s compliance with the Sarbanes-Oxley Act of 2002. | ||
The decrease in communications and other expenses from 2003 related primarily to decreased communication costs due to the elimination of duplicate vendors and services carried as a result of the Gruntal transaction. | ||
The improvement in income from continuing operations was primarily the result of the full year impact of increased revenue from Ryan Beck’s additional financial consultants, as well as the improvement in investment banking revenue. | ||
Investment banking revenue increased 45% from 2002. The improvement was largely attributable to the increased distribution capabilities discussed above along with an increase in merger and acquisition and advisory business in 2003. | ||
Net interest income increased 51% from 2002. The improvement in net interest income primarily resulted from the expansion of municipal bond trading and the associated spread between the interest on the municipal bonds and the financing costs incurred. Also included in interest income was Ryan Beck’s participation in interest income associated with approximately $259 million of customer margin debit balances and fees earned in connection with approximately $1.3 billion in customer money market account balances. This improvement in interest income was partially offset by the interest expense associated with a $5.0 million subordinated borrowing from the Company, which was repaid in full on September 3, 2003, as well as an increased level of borrowings from Ryan Beck’s clearing agent as a result of a higher volume of trading activity. | ||
Principal transactions revenue increased 95% from 2002. The improvement in principal transaction revenue was primarily the result of additional financial consultants and trading personnel hired in connection with the Gruntal transaction on April 26, 2002. This increase was aided by the improved operating environment of the U.S. securities industry in the second half of fiscal 2003. | ||
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Commission revenue increased 35% in 2003. The improvement is largely due to the additional financial consultants, as well as the improvement in equity and fixed income markets. | ||
The increase in employee compensation and benefits of 46% from 2002 is primarily due to the additional personnel. Also, the increase in Ryan Beck’s revenue resulted in an increase in compensation in the form of commission expense and discretionary bonuses. | ||
Occupancy and rent expenses have increased 36% from 2002. This increase is primarily due to the additional offices operated as a result of the Gruntal transaction. | ||
Professional fees increased by 162% in 2003. The increase was primarily due to additional legal expense associated with the successor liability issues related to the Gruntal transaction, as well as an NASD ruling against Ryan Beck in the amount of $2.7 million which resulted in a $1.7 million increase in professional fees. Additionally, broker registration fees were higher associated with the additional financial consultants added as a result of the Gruntal transaction. | ||
Acquisition-related charges during 2002 included branch closures, professional fees, and regulatory costs incurred in connection with the Gruntal transaction. | ||
The increase in communications, floor broker and clearing fees and other expenses from 2002 related primarily to increased commission revenue and principal transactions revenue associated with the additional financial consultants. | ||
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The following table is a condensed income statement summarizing the parent company’s results of operations (in thousands): |
For the Years Ended | ||||||||||||||||||||||
December 31, | Change | Change | ||||||||||||||||||||
2004 vs. | 2003 vs. | |||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||
Net interest income:
|
||||||||||||||||||||||
Interest on loans
|
$ | 1,751 | $ | 1,488 | $ | 1,716 | $ | 263 | $ | (228 | ) | |||||||||||
Interest on investments
|
756 | 234 | 29 | 522 | 205 | |||||||||||||||||
Interest on Junior Subordinated Debentures
|
(16,958 | ) | (16,344 | ) | (17,439 | ) | (614 | ) | 1,095 | |||||||||||||
Net interest income (expense)
|
(14,451 | ) | (14,622 | ) | (15,694 | ) | 171 | 1,072 | ||||||||||||||
Non-interest income:
|
||||||||||||||||||||||
Income from unconsolidated subsidiaries
|
485 | 425 | — | 60 | 425 | |||||||||||||||||
Securities activities, net
|
3,693 | 404 | 3,837 | 3,289 | (3,433 | ) | ||||||||||||||||
Impairment of securities
|
— | — | (18,801 | ) | — | 18,801 | ||||||||||||||||
Litigation settlement
|
22,840 | — | — | 22,840 | — | |||||||||||||||||
Investment banking expense
|
— | (635 | ) | — | 635 | (635 | ) | |||||||||||||||
Other
|
512 | — | (359 | ) | 512 | 359 | ||||||||||||||||
Non-interest income (expense)
|
27,530 | 194 | (15,323 | ) | 27,336 | 15,517 | ||||||||||||||||
Non-interest expense:
|
||||||||||||||||||||||
Employee compensation and benefits
|
3,042 | 90 | 940 | 2,952 | (850 | ) | ||||||||||||||||
Professional fees
|
1,146 | 1,500 | 810 | (354 | ) | 690 | ||||||||||||||||
Cost associated with debt redemption
|
— | 1,648 | 3,125 | (1,648 | ) | (1,477 | ) | |||||||||||||||
Other
|
1,454 | 600 | 280 | 854 | 320 | |||||||||||||||||
Non-interest expense
|
5,642 | 3,838 | 5,155 | 1,804 | (1,317 | ) | ||||||||||||||||
Income (loss) before income taxes
|
7,437 | (18,266 | ) | (36,172 | ) | 25,703 | 17,906 | |||||||||||||||
Income taxes
|
(2,692 | ) | 5,089 | 12,661 | (7,781 | ) | (7,572 | ) | ||||||||||||||
Income (loss) from continuing operations
|
$ | 4,745 | $ | (13,177 | ) | $ | (23,511 | ) | $ | 17,922 | $ | 10,334 | ||||||||||
Interest income on loans during the 2004 period represents interest income on loans to Levitt. In April 2004, Levitt repaid one of those loans in the amount of $5.5 million. Interest on loans for each of the years in the two year period ended December 31, 2003 represent interest income associated with a $5 million loan to Ryan Beck and a $30 million loan to Levitt. The $30 million loan to Levitt was originated in April 2002. The $5 million Ryan Beck loan was fully repaid in September 2003. | ||
Interest on investments during 2004 was primarily interest and dividends associated with a debt and equity portfolio managed by a money manager as well as earnings from a reverse repurchase account with BankAtlantic. Interest income on investments during the comparable 2003 and 2002 periods were primarily interest income recognized by the Company on the BankAtlantic reverse repurchase account. | ||
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Interest expense for the years ended December 31, 2004 and 2003 consisted primarily of debt service on the Company’s junior subordinated debentures. The average balance associated with the Company’s junior subordinated debentures was $263.3 million during the years ended December 31, 2004 and 2003. The higher interest expense during 2004 compared to 2003 was primarily due to higher rates on variable rate junior subordinated debentures during 2004. | ||
The decrease in interest expense during 2003 compared to 2002 resulted from lower rates on borrowings partially offset by higher average balances. During 2002 and 2003, we redeemed higher rate trust preferred securities and subordinated debentures with the proceeds from the issuance of lower rate junior subordinated debentures. During the years ended December 31, 2003 and 2002, we issued $77.3 million and $186.0 million, respectively, of junior subordinated debentures, all of which were issued in connection with the issuance of trust preferred securities. The average rate of these debentures was 5.94%. A portion of the proceeds from the issuance of those debentures were used to retire $74.8 million of 9.50% fixed rate trust preferred securities and $21.0 million of 9.00% subordinated debentures. | ||
Income from unconsolidated subsidiaries represents the equity earnings from trusts formed to issue trust preferred securities. Prior to January 1, 2003, the trusts were consolidated for financial reporting. This change in accounting methodology was required due to a change in applicable accounting rules. | ||
The securities activities during 2004 primarily represent gains from sales of exchanged traded mutual funds. The Company sold these mutual funds in order to invest the proceeds with a money manager. Securities activities during 2003 represent a gain realized on a liquidating dividend from an equity security. Securities activities during 2002 reflect gains from the sales of equity securities. | ||
During 2002, the Company recognized a $15 million impairment charge associated with its investment in a privately held technology company. The Company charged off the carrying value of this investment as the ability of the technology company to continue as a “going concern” was in doubt. Additionally, during 2002, the Company recognized impairment charges of $3.8 million on publicly traded equity securities resulting from significant declines in value that were other than temporary. The determinations were based on the length of time that the carrying amount of an investment was significantly above its market value and on the near term prospects of the issuers. The Company did not recognize impairments on securities during 2003 or 2004. | ||
The litigation settlement reflects proceeds from the settlement of litigation related to the Company’s prior investment of $15 million in the technology company discussed above. Pursuant to that settlement, the Company sold its stock in the technology company to a third party investor group for $15 million in cash, the Company’s original cost, and the Company received consideration from the technology company for legal expenses and damages, which consisted of $1.7 million in cash and 378,160 shares of the Company’s Class A Common Stock returned by the technology company to the Company. | ||
The Company’s investment banking expense during the year ended December 31, 2003 resulted from fees paid by it to Ryan Beck in connection with Ryan Beck’s underwriting of offerings of trust preferred securities by the Company in 2003. These fees are included in Ryan Beck’s investment banking income in Ryan Beck’s business segment results of operations but were eliminated in the Company’s consolidated financial statements. | ||
The Company recorded compensation expense during 2004 as a result of the allocation of investor relations, corporate and risk management compensation cost to the Company from BankAtlantic effective January 1, 2004. This expense was partially offset by fees received by the Company for investor relations and risk management services provided by the Company to Levitt and BFC Financial Corporation, which are included in other income during 2004. Compensation expense during the 2003 periods primarily resulted from the issuance of Class A restricted stock to BankAtlantic employees and the amortization of a forgivable loan related to executive recruiting. | ||
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The compensation expense during 2002 was primarily related to the Ryan Beck retention pool established upon the acquisition of Ryan Beck in June 1998. | ||
Cost associated with debt redemption during 2003 resulted from the Company redeeming its 5.625% convertible debentures at a redemption price of 102% of the principal amount. The loss on the redemption reflects a $732,000 write-off of deferred offering costs and a $916,000 call premium. During 2002, we recognized a $3.1 million loss associated with the redemption of debentures. | ||
The decreased professional fees during 2004 primarily resulted from lower legal fees incurred in connection with the technology company litigation, which was settled in the first quarter of 2004. This decline in professional fees was partially offset by expenses associated with compliance with the Sarbanes-Oxley Act of 2002. The increase in professional fees during 2003 consisted of higher fees associated with the technology company litigation and legal, accounting and tax advice associated with the Levitt spin-off. | ||
The increase in other expenses during 2004 relates to administrative expense associated with the departments transferred to the Company as well as higher regulatory compliance costs. | ||
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Our principal real estate activities are conducted through our Homebuilding and Land Divisions. Our Homebuilding Division consists of the operations of our wholly-owned homebuilding subsidiaries Levitt and Sons and Bowden Homes, while our Land Division consists of the operations of Core Communities. We also engage in commercial real estate activities through Levitt Commercial and we invest in real estate projects through subsidiaries and joint ventures. In addition, we own approximately 31% of Bluegreen Corporation. Levitt and Sons is primarily a developer of single-family home communities predominantly located in Florida. Core Communities owns the unsold land and other entitlements of the 4,600 acre master-planned community known as St. Lucie West in St. Lucie County, Florida. Core Communities also owns approximately 8,300 acres in and around Tradition, our second master-planned community, which encompasses a total of more than 8,000 acres, including approximately five miles of frontage on Interstate 95. Tradition is in the initial development stage in St. Lucie County, Florida. | ||
In April 2002, we acquired 8.3 million shares of the outstanding common stock of Bluegreen for approximately $53.8 million. In connection with the spin-off, BankAtlantic Bancorp transferred 1.2 million shares of Bluegreen’s common stock to us in exchange for a $5.5 million promissory note and additional shares of our common stock (which additional shares were subsequently distributed in the spin-off). Bluegreen is a New York Stock Exchange-listed company that acquires, develops, markets and sells vacation ownership interests in “drive-to” resorts and develops and sells residential homesites around golf courses or other amenities. The investment in Bluegreen was recorded at cost and the carrying amount of the investment is adjusted to recognize our interest in the earnings or loss of Bluegreen after the acquisition date. At December 31, 2004 and December 31, 2003, our investment in Bluegreen was approximately $80.6 million and $70.9 million, respectively. The 9.5 million shares of Bluegreen common stock that we own comprise approximately 31% of the common stock of Bluegreen outstanding as of December 31, 2004. | ||
Management evaluates the performance and prospects of the Company and its subsidiaries using a variety of financial and non-financial measures. The key financial measures utilized to evaluate historical operating performance include revenues from sales of real estate, cost of sales of real estate, margin (which we measure as revenues from sales of real estate minus cost of sales of real estate), margin percentage (which we measure as margin divided by revenues from sales of real estate), income before taxes and net income. Non-financial measures used to evaluate historical performance include the number and value of new orders executed, the number of housing starts, the number of homes delivered and the length of the homebuilding production cycle (which we measure from contract execution to home delivery). In evaluating the Company’s future prospects, management considers non-financial information such as the number of homes and acres in backlog (which we measure as homes or land subject to an executed sales contract) and the aggregate value of those contracts. Additionally, we monitor the number of properties remaining in inventory and under contract to be purchased relative to our sales and construction trends. The Company’s ratio of debt to shareholders’ equity and cash requirements are also considered by management when evaluating the Company’s future prospects, as are general economic factors and interest rate trends. Each of the above measures is discussed in the following |
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sections as it relates to our operating results, financial position and liquidity. The list of measures above is not an exhaustive list, and management may from time to time utilize additional financial and non-financial information or may not use the measures listed above. |
Impact of Florida Hurricanes in 2004 |
The majority of our business operations are located in the State of Florida, which is subject to hurricanes and other tropical weather systems. In the months of August and September 2004, five named storms made landfall in the State of Florida — Tropical Storm Bonnie and Hurricanes Charley, Frances, Ivan and Jeanne. Hurricane Charley passed through the southwestern and central areas of Florida, including areas where we have significant homebuilding operations (Ft. Myers, Sarasota and Orlando). Hurricanes Frances and Jeanne both made landfall on the east coast of the state near our St. Lucie County homebuilding and land development operations before passing to the northwest over Orlando. These three hurricanes caused property damage in several of our communities in Central Florida, and the Company has expended considerable resources on homes under construction and previously delivered homes repairing stucco, replacing insulation and dry wall as well as other materials damaged in the storms. The Company has also expended funds to mitigate other hurricane-related damage, including replacing landscaping, fences, repairing lake beds and replacing building materials. Our consolidated statements of income for the year ended December 31, 2004 include charges (recorded as other expenses) related to hurricane damage and the repairs noted above of approximately $4.4 million, net of projected insurance recoveries. | ||
In addition to property damage, hurricanes cause disruptions to our business operations. New home buyers cannot obtain insurance until after named storms have passed, creating delays in new home deliveries. As a storm approaches, we will suspend sales, development and construction operations in favor of storm preparation activities such as securing construction materials and equipment. After a storm has passed, construction-related resources such as sub-contracted labor and building materials are likely to be redeployed to hurricane recovery efforts around the state. Governmental permitting and inspection activities may similarly be focused primarily on returning displaced residents to homes damaged by the storms, rather than on new construction activity. Depending on the severity of the damage caused by the storms, disruptions such as these could last for several months. We experienced a number of these disruptions following the unprecedented series of hurricanes which struck Florida in 2004, including permitting and delivery delays, reduced customer orders and labor and materials constraints. Although the disruptions are not expected to have a material impact on the profitability of our operations over the long term, we expect the delays in new home deliveries and governmental permitting and inspection activities resulting from the hurricanes to continue through the second quarter of 2005. | ||
Impact of Increasing Labor and Materials Costs, Interest Rates and Local Government Regulation |
Our business operations are impacted by competition for labor — direct and subcontracted — raw materials, supply and delivery issues. Throughout 2004, supply and delivery issues resulted in higher prices of most building materials. The costs of lumber, steel, concrete, asphalt and other building materials all rose significantly in 2004. We compete with other real estate developers — regionally, nationally and globally — for raw materials and labor. Labor shortages were particularly acute in Central Florida following the 2004 hurricane season; home builders were obliged to compete with businesses,, municipalities and existing homeowners for the available labor, much of which was diverted to hurricane clean-up and repair of windstorm and wind-driven rain damage. In addition, Chinese demand for cement in 2004 combined with supply bottlenecks and rising prices in global shipping contributed to regional shortages in cement. Without corresponding increases in the sales prices of our real estate inventories (both land and finished homes), increasing materials |
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and labor costs associated with land development and home building could negatively affect our results of operations. | ||
Rising construction costs and delays in the delivery of homes may negatively affect our margins in the future, because we enter into fixed-priced sales contracts for most of our homes before we start construction. Owing to the strong demand for our housing products and the overall robust condition of the real estate markets where we build, we have historically been able to offset increases in construction costs and land prices by periodically raising the prices on our homes. However, if we are unable to raise our home prices to offset increased costs of production in the future, our operating results would be adversely affected. | ||
We rely on third party financing of our land purchases, land development, and product development costs. The majority of our financing consists of variable rate debt and rising interest rates therefore increase our borrowing costs. Historically, rising interest rates have also negatively impacted housing demand. Were demand for housing to decline, land may remain in our inventory longer and our corresponding borrowing costs would increase. Also, rising interest rates increase the mortgage costs of our customers who finance their purchases of our homes. Similarly, rising interest rates may affect our customers’ ability to sell the homes they currently occupy, the proceeds of which may be needed to fund, in whole or in part, their purchases of our homes. Although we are not currently experiencing any adverse effects from higher interest rates, higher rates may adversely affect our results of operations in the future. | ||
We are required to obtain various permitting approvals of numerous governmental authorities in developing a project and building homes. Local governments have had difficulty responding to the rapid growth and continued demand for land and housing in the real estate markets in which we operate, resulting in delays in permitting approvals. In some areas where we build and develop land, local governments have refused to issue building permits until all infrastructure and land development is substantially complete. The inability to obtain building permits during early stage development prevents homebuilders from conducting land development simultaneous with housing construction, contributing in some instances to longer production cycles. In the aftermath of the Florida hurricanes, the demands on local government were intensified as government staff mobilized to support construction repairs, restore basic community services and emergency relief. Delays in permitting approvals will affect our business, as well as the businesses of our Land Division’s customers, and may affect our results of operations in the future. | ||
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Year Ended December 31, | 2004 vs. | 2003 vs. | |||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||
2004 | 2003 | 2002 | Change | Change | |||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
Revenues
|
|||||||||||||||||||||
Sales of real estate
|
$ | 549,652 | $ | 283,058 | $ | 207,808 | $ | 266,594 | $ | 75,250 | |||||||||||
Title and mortgage operations
|
4,798 | 2,466 | 1,595 | 2,332 | 871 | ||||||||||||||||
Total revenues
|
554,450 | 285,524 | 209,403 | 268,926 | 76,121 | ||||||||||||||||
Costs and expenses
|
|||||||||||||||||||||
Cost of sales of real estate
|
406,274 | 209,431 | 159,675 | 196,843 | 49,756 | ||||||||||||||||
Selling, general and administrative expenses
|
71,001 | 42,027 | 30,549 | 28,974 | 11,478 | ||||||||||||||||
Interest expense, net
|
259 | 233 | 389 | 26 | (156 | ) | |||||||||||||||
Other expenses
|
7,367 | 1,605 | 1,121 | 5,762 | 484 | ||||||||||||||||
Minority interest
|
(26 | ) | 86 | — | (112 | ) | 86 | ||||||||||||||
Total costs and expenses
|
484,875 | 253,382 | 191,734 | 231,493 | 61,648 | ||||||||||||||||
69,575 | 32,142 | 17,669 | 37,433 | 14,473 | |||||||||||||||||
Earnings from Bluegreen Corporation(a)
|
13,068 | 7,433 | 4,570 | 5,635 | 2,863 | ||||||||||||||||
Earnings from joint ventures
|
6,050 | 483 | 849 | 5,567 | (366 | ) | |||||||||||||||
Interest and other income
|
4,619 | 3,162 | 2,678 | 1,457 | 484 | ||||||||||||||||
Income before income taxes
|
93,312 | 43,220 | 25,766 | 50,092 | 17,454 | ||||||||||||||||
Provision for income taxes
|
35,897 | 16,400 | 6,254 | 19,497 | 10,146 | ||||||||||||||||
Net income
|
$ | 57,415 | $ | 26,820 | $ | 19,512 | $ | 30,595 | $ | 7,308 | |||||||||||
Basic earnings per share
|
$ | 3.10 | $ | 1.81 | $ | 1.32 | $ | 1.29 | $ | 0.49 | |||||||||||
Diluted earnings per share(b)
|
$ | 3.04 | $ | 1.77 | $ | 1.30 | $ | 1.27 | $ | 0.47 | |||||||||||
Weighted average shares outstanding
|
18,518 | 14,816 | 14,816 | 3,702 | — | ||||||||||||||||
Diluted shares outstanding
|
18,600 | 14,816 | 14,816 | 3,784 | — |
|
(a) | Levitt Corporation acquired its initial interest in Bluegreen Corporation in April 2002. | |
(b) | Diluted earnings per share takes into account the dilution in earnings we recognize from Bluegreen as a result of outstanding securities issued by Bluegreen that enable the holders thereof to acquire shares of Bluegreen’s common stock. | |
Consolidated net income increased $30.6 million, or 114%, for the year ended December 31, 2004 as compared to 2003. The increase in net income primarily resulted from an increase in sales of real estate by our Homebuilding and Land Divisions, from higher earnings from Bluegreen Corporation and from an increase in our earnings from our real estate joint venture activities. | ||
Our revenues from sales of real estate increased 94% to $549.7 million for the year ended December 31, 2004 from $283.1 million for the same 2003 period. This increase is attributable primarily to an increase in home deliveries from 1,011 homes delivered in 2003 to 2,126 homes delivered in 2004. Land sale revenues in 2004 included sales to the Homebuilding Division of $24.4 million. These inter-segment transactions were eliminated in consolidation and the profit recognized by the Land Division from these sales will be deferred until the Homebuilding Division delivers homes on these properties to third parties. At that time, consolidated cost of sales will be reduced by amount of Land Division profits that were deferred. Consolidated cost of sales was | ||
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reduced by approximately $3.9 million in 2004 as a result of the recognition of previously deferred profits related to sales of land by our Land Division to our Homebuilding Division. Approximately $1.0 million of similarly deferred profits were recognized during 2003. | ||
Selling, general and administrative expenses increased during 2004 compared to the same 2003 period primarily as a result of higher employee compensation and benefits (including sales commissions and incentive bonuses), and increased insurance and professional service expenses. The increase in employee compensation and benefits expense was directly related to our new development projects in Central and South Florida, the expansion of homebuilding activities into North Florida and Georgia, the addition of Bowden Homes and the increase in our home deliveries. The number of our full time employees increased to 527 at December 31, 2004 from 353 at December 31, 2003, and the number of part time employees declined slightly to 32 at December 31, 2004 from 34 at December 31, 2003. The increase in insurance and professional service expenses related primarily to costs associated with operating as an independent public company since the spin-off from BankAtlantic Bancorp. As a percentage of total revenues, selling, general and administrative expenses declined to 13% for 2004 from 15% in 2003. | ||
Interest incurred on notes and development bonds payable totaled $11.1 million and $7.9 million for 2004 and 2003, respectively. Interest incurred was higher due to higher outstanding balances of notes and mortgage notes payable related to increases in our inventory of real estate. Interest capitalized was $10.8 million for 2004 and $7.7 million for 2003. Cost of sales of real estate for the year ended December 31, 2004 and 2003 included previously capitalized interest of approximately $9.9 million and $6.4 million, respectively. | ||
The increase in other expenses was primarily attributable to a $4.4 million charge, net of projected insurance recoveries, recorded to account for the estimated costs of remediating hurricane-related damage in our Florida Homebuilding and Land operations, as previously discussed. | ||
Bluegreen’s reported net income for the year ended December 31, 2004 was $36.5 million, as compared to $25.8 million for 2003. Our interest in Bluegreen’s earnings, net of purchase accounting adjustments, was $13.1 million for 2004 versus $7.4 million for 2003. | ||
Earnings from real estate joint ventures was $6.0 million during 2004 as compared to $483,000 for 2003. This increase in earnings in our real estate joint venture activities primarily resulted from gains recognized upon the sale of a joint venture’s property in Vero Beach, Florida, earnings associated with the delivery of condominium units by a joint venture project in Boca Raton, Florida and earnings associated with the delivery of homes by a joint venture project in West Palm Beach, Florida. All three joint venture projects are sold out and their operations are essentially completed. | ||
The increase in interest and other income is primarily related to a $1.4 million reduction of a litigation reserve as a result of the Company’s successful appeal of a 2002 judgment, as discussed in the Notes to our consolidated financial statements. | ||
The provision for income taxes increased $19.6 million, or 120%, to $36.0 million for 2004, due to increased earnings before taxes. The provision for income taxes for the year ended December 31, 2003 was net of a reduction in the deferred tax asset valuation allowance of approximately $418,000. Reductions in the deferred tax asset valuation allowance reduce the provision for income taxes for the year, thereby reducing the effective tax rate. | ||
Consolidated net income increased $7.3 million, or 37%, to $26.8 million for the year ended December 31, 2003 from $19.5 million for the same 2002 period. The increase in net income resulted primarily from an increase in sales of real estate by Levitt and Sons, Core Communities, and Levitt Commercial, as well as from increased earnings from Bluegreen Corporation. These |
108
increases in income were partially offset by a decrease in earnings in joint ventures of $366,000, an increase in selling, general and administrative expenses of $11.4 million, and an increase in the provision for income taxes of $10.1 million. | ||
Revenues from sales of real estate increased $75.3 million, or 36%, to $283.1 million for the year ended December 31, 2003 from $207.8 million for 2002. Home deliveries in 2003 increased 37% to 1,011 homes from 740 homes delivered in 2002. This increase in deliveries resulted in a $59.9 million increase in revenues from sales of real estate in the Homebuilding Division over 2002. Revenues from land sales in 2003 increased to $55.0 million from $53.9 million in 2002. Land sale revenues in 2002 included sales to the Homebuilding Division of $8.5 million, which inter-segment transactions were eliminated in consolidation. Consolidated cost of sales in 2003 was reduced by $1.0 million as previously deferred profits on inter-segment transactions were recognized at the time of home sales to third parties. There was no reduction in consolidated cost of sales in 2002 relating to deferred profits from inter-segment transactions. Levitt Commercial commenced deliveries of its flex warehouse units in 2003, and revenues from sales of these units in 2003 totaled $5.8 million. Earnings from Bluegreen for the year ended December 31, 2003 were $7.4 million, as compared with $4.6 million for the period of our ownership in 2002. Bluegreen’s net income for 2003 was $25.8 million, as compared to $15.4 million for the period of our ownership ended December 31, 2002. | ||
The increase in selling, general and administrative expenses for the year ended December 31, 2003 as compared to 2002 primarily related to higher employee compensation and benefits, increased advertising expenses and costs relating to our public offering of investment notes. The increase in employee compensation and benefits and advertising expenses was directly related to our new development projects in central and southeast Florida and to the increase in home deliveries at Levitt and Sons. As a result of these new projects and higher number of home deliveries, our full time employees increased to 353 at December 31, 2003 from 221 at December 31, 2002, and the number of part time employees increased to 34 at December 31, 2003 from 28 at December 31, 2002. | ||
Interest incurred totaled $7.9 million and $8.1 million for 2003 and 2002, respectively. The decrease in interest incurred was primarily due to a decline in average interest rates from 6.0% for 2002 to 4.8% for 2003. These decreases were partially offset by increases in borrowings associated with several new development projects as well as interest accruing on the Company’s $30.0 million note payable to BankAtlantic Bancorp for twelve months in 2003, as compared to only nine months in 2002. Interest capitalized totaled $7.7 million for both 2003 and 2002. Cost of sales of real estate for the years ended December 31, 2003 and 2002 included previously capitalized interest of approximately $6.4 million and $6.2 million, respectively. | ||
Earnings from joint ventures decreased $366,000 in 2003 as compared to 2002. The decrease in earnings from joint ventures primarily resulted from completion of a joint venture project during 2002. | ||
The provision for income taxes increased $10.1 million, or 162%, to $16.4 million for 2003, due to increased earnings before taxes, and an increase in the effective tax rate from 24.2% in 2002 to 37.9% in 2003. The provision for income taxes for the years ended December 31, 2003 and 2002 was net of a reduction in the deferred tax asset valuation allowance of approximately $418,000 and $2.6 million, respectively. Reductions in the deferred tax asset valuation allowance reduce the provision for income taxes for the year, thereby reducing the effective tax rate. |
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Year Ended December 31, | 2004 vs. | 2003 vs. | ||||||||||||||||||||
2003 | 2002 | |||||||||||||||||||||
2004 | 2003 | 2002 | Change | Change | ||||||||||||||||||
(Dollars in thousands, except average price data) | ||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||
Sales of real estate
|
$ | 472,296 | $ | 222,257 | $ | 162,359 | $ | 250,039 | $ | 59,898 | ||||||||||||
Title and mortgage operations
|
4,798 | 2,466 | 1,595 | 2,332 | 871 | |||||||||||||||||
Total revenues
|
477,094 | 224,723 | 163,954 | 252,371 | 60,769 | |||||||||||||||||
Costs and expenses
|
||||||||||||||||||||||
Cost of sales of real estate
|
371,097 | 173,072 | 131,281 | 198,025 | 41,791 | |||||||||||||||||
Selling, general and administrative expenses
|
50,806 | 29,478 | 21,100 | 21,328 | 8,378 | |||||||||||||||||
Interest expense, net
|
198 | — | — | 198 | — | |||||||||||||||||
Other expenses
|
6,867 | 1,606 | 1,121 | 5,261 | 485 | |||||||||||||||||
Minority interest
|
(50 | ) | (113 | ) | — | 63 | (113 | ) | ||||||||||||||
Total costs and expenses
|
428,918 | 204,043 | 153,502 | 224,875 | 50,541 | |||||||||||||||||
48,176 | 20,680 | 10,452 | 27,496 | 10,228 | ||||||||||||||||||
Earnings from joint ventures
|
3,518 | 480 | 1,171 | 3,038 | (691 | ) | ||||||||||||||||
Interest and other income
|
1,944 | 560 | 1,053 | 1,384 | (493 | ) | ||||||||||||||||
Income before income taxes
|
53,638 | 21,720 | 12,676 | 31,918 | 9,044 | |||||||||||||||||
Provision for income taxes
|
20,658 | 7,964 | 3,364 | 12,694 | 4,600 | |||||||||||||||||
Net income
|
$ | 32,980 | $ | 13,756 | $ | 9,312 | $ | 19,224 | $ | 4,444 | ||||||||||||
Domestic
|
||||||||||||||||||||||
Homes delivered
|
2,126 | 1,011 | 740 | 1,115 | 271 | |||||||||||||||||
Construction starts
|
2,294 | 1,593 | 796 | 701 | 797 | |||||||||||||||||
Average selling price of homes delivered
|
$ | 222,000 | $ | 220,000 | $ | 219,000 | $ | 2,000 | $ | 1,000 | ||||||||||||
Margin percentage on homes delivered(a)
|
21.4 | % | 22.1 | % | 19.1 | % | (0.7 | )% | 3.0 | % | ||||||||||||
New orders (units)
|
1,679 | 2,240 | 980 | (561 | ) | 1,260 | ||||||||||||||||
New orders (value)
|
$ | 427,916 | $ | 513,436 | $ | 204,730 | $ | (85,520 | ) | $ | 308,706 | |||||||||||
Backlog of homes (units)
|
1,814 | 2,053 | 824 | (239 | ) | 1,229 | ||||||||||||||||
Backlog of homes (value)
|
$ | 448,647 | $ | 458,771 | $ | 167,526 | $ | (10,124 | ) | $ | 291,245 | |||||||||||
Joint Ventures:
|
||||||||||||||||||||||
Homes delivered
|
146 | 18 | 140 | 128 | (122 | ) | ||||||||||||||||
Construction starts
|
— | 43 | 177 | (43 | ) | (134 | ) | |||||||||||||||
New orders (units)
|
42 | 61 | 61 | (19 | ) | — | ||||||||||||||||
New orders (value)
|
$ | 13,967 | $ | 15,957 | $ | 16,027 | $ | (1,990 | ) | $ | (70 | ) | ||||||||||
Backlog of homes (units)
|
— | 104 | 61 | (104 | ) | 43 | ||||||||||||||||
Backlog of homes (value)
|
$ | — | $ | 27,478 | $ | 16,027 | $ | (27,478 | ) | $ | 11,451 |
|
(a) | Margin percentage is calculated by dividing margin (sales of real estate minus cost of sales of real estate) by sales of real estate. | |
At December 31, 2004, our Homebuilding Division had a delivery backlog of 1,814 homes representing $448.6 million of future sales. The average sales price of the homes in backlog at December 31, 2004 is approximately 11% higher than the average sales price of the homes in backlog at December 31, 2003. While the strong demand and backlog are encouraging for our |
110
2005 results, adverse economic trends such as rising interest rates, continued inflationary pressures or labor shortages could impact our Homebuilding Division in future periods. In 2004 the costs of lumber, steel, concrete and other building materials rose significantly. Additionally, labor costs rose reflecting a shortage of sub-contractors in some of the markets in which we build. The redeployment of labor in Florida following the 2004 hurricanes exacerbated the labor shortage in these markets. While we may be able to increase our selling prices to absorb these increased costs in future sales, the sales prices of homes in our backlog cannot be increased and the margins on the delivery of homes in backlog may be adversely affected by this trend. | ||
Our sales performance in Florida in 2003 and the first half of 2004 exceeded our projections and existing production capacity. As a result, our delivery cycle extended beyond our 12 month target. We are currently focused on selling homes that we can deliver within 12 months. We believe that active growth management will permit us to increase customer satisfaction and reduce the amount of time contracted homes are in backlog, thereby reducing our exposure to rising costs. | ||
We believe we own or control sufficient land to meet our current growth goals. In the shorter-term, we expect the number of signed new orders for homes in our Florida operations to level off and perhaps decline slightly through the second quarter of 2005 as we transition from the older, established communities at which sales are reaching completion to new communities that we expect will open for sale to the public over the next 18 months. If we are not able to open new communities in a timely fashion, our available inventory will remain below historical levels and our results will be adversely impacted. | ||
We are also currently expanding our homebuilding activities to the Jacksonville, Florida, Atlanta, Georgia and Nashville, Tennessee markets, and expect to expand into other markets in the Southeastern United States. We have not previously operated in these markets and may not recognize any revenues from these operations during the next twelve months or longer. As a result, costs associated with this expansion prior to revenue recognition will adversely affect our operating results, as will costs exceeding revenues during the start up phase in each new market. | ||
The value of new orders declined to $427.9 million for 2004, from $513.4 million in 2003. The decline in new orders was primarily the result of the absence of new community openings to offset stronger than expected order growth in prior periods and our intentional slowing of the pace of new home orders to help assure higher levels of customer satisfaction by meeting delivery schedules acceptable to our customers. Some of our Florida communities sold out faster than originally anticipated and new communities were not yet ready for sales. While this strengthened our backlog, we experienced a short-term decline in saleable inventory. New orders were also impacted by the adverse impact of four hurricanes in Florida during August and September. These factors led to a slowdown in sales in our Florida homebuilding operations in the third and fourth quarters of 2004, when new orders were placed for 489 homes, as compared with the record 1,212 new orders placed in the third and fourth quarters of 2003. As discussed above, we believe that our inventory of homes available for sale and new orders should improve as we open new communities to the public. | ||
Revenues from home sales increased 112% to $472.3 million in 2004 from $222.3 million in 2003, due primarily to increased home deliveries. This increase is attributable primarily to an increase in home deliveries in communities that commenced deliveries in 2003 and from Bowden Homes’ operations. During 2004, 2,126 homes were delivered at an average selling price of approximately $222,000, as compared to 1,011 homes delivered in 2003 at an average selling price of approximately $220,000. The modest increase in the average selling price of our homes was due primarily to a change in our product mix resulting from the inclusion of Bowden Homes in 2004. The average selling price of homes in our Florida operations increased by $15,000 over 2003 to $235,000, while the average selling price of Bowden’s homes was $157,000. | ||
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Cost of sales increased by approximately 114% to $371.1 million in 2004 from $173.1 million in 2003. The increase in cost of sales was associated primarily with the increased number of home deliveries. Cost of sales as a percentage of related revenue was approximately 79% for the year ended December 31, 2004, as compared to approximately 78% for the year ended December 31, 2003. Increases in labor and raw material costs in 2004 were largely offset by increases in the selling prices of our homes. Cost of sales for 2004 also includes approximately $1.8 million of purchase accounting adjustments relating to the acquisition of Bowden Homes. | ||
Selling, general and administrative expenses increased 72% to $50.8 million in 2004 from $29.5 million for 2003. The increase in selling, general and administrative expenses primarily resulted from the increase in home deliveries and the addition of Bowden Homes, as well as an increase in compensation and benefits resulting from the continued expansion of our homebuilding operations. As a percentage of revenues, selling general and administrative expense was approximately 11% and 13% of total revenues in 2004 and 2003, respectively. | ||
Interest incurred totaled $6.5 million and $5.0 million for 2004 and 2003, respectively. The increase in interest incurred was primarily due to increases in borrowings associated with the assumption of debt in the Bowden Homes acquisition and financing associated with new development projects. Interest capitalized for 2004 and 2003 totaled $6.3 million and $5.0 million, respectively. At the time of a home sale, the related capitalized interest is charged to cost of sales. Cost of sales of real estate for 2004 and 2003 included previously capitalized interest of approximately $8.0 million and $4.3 million, respectively. | ||
The increase in other expenses was primarily attributable to a $3.9 million charge recorded to account for the estimated costs of remediating hurricane-related damage in our Florida homebuilding operations, as previously discussed. | ||
The increase in earnings in joint ventures resulted primarily from the completion of home deliveries by a joint venture developing a condominium complex in Boca Raton, Florida. The joint venture’s initial inventory was 164 residential units and the remaining 146 units were delivered during 2004. As of December 31, 2004, approximately 4,100 square feet of commercial space remained in the joint venture’s inventory. | ||
The increase in interest and other income is primarily related to a $1.4 million reduction of a litigation reserve as a result of our successful appeal of a 2002 judgment. The appellate court reversed the damages awarded by the trial jury and ordered a new trial to determine damages. The litigation reserve was reduced based on our assessment of the potential liability. | ||
Revenues from home sales increased 37% to $222.3 million in 2003 from $162.4 million in 2002, due primarily to increased home deliveries. The increase in homes delivered was the result of communities nearing completion and the introduction of new projects and product lines. During 2003, 1,011 homes were delivered at an average selling price of approximately $220,000, as compared to 740 homes delivered in 2002 at an average selling price of approximately $219,000. | ||
Cost of sales increased by approximately 32% to $173.1 million in 2003 from $131.3 million in 2002. The increase in cost of sales was associated primarily with the increased number of home deliveries. Cost of sales as a percentage of related revenue was approximately 78% for the year ended December 31, 2003, as compared to approximately 81% for the year ended December 31, 2002. The improvement in margin as a percentage of sales was primarily due to changes in product mix and the higher average selling price. | ||
Selling, general and administrative expenses increased 40% to $29.5 million in 2003 from $21.1 million for 2002. The increase in selling, general and administrative expenses was primarily associated with the increase in sales and the addition of several new development projects in central and southwest Florida, as well as an increase in employee compensation and benefits | ||
112
resulting from the addition of several new projects. As a percentage of revenues, selling general and administrative expense was approximately 13% of total revenues in both 2003 and 2002. | ||
Interest incurred totaled $5.0 million and $4.1 million for 2003 and 2002, respectively. The increase in interest incurred was primarily due to the increases in borrowings associated with new development projects. This increase was partially offset by a decline in average interest rates from 5.5% for 2002 to 4.9% for 2003 as a result of a decrease in the interest rates applicable to our variable interest rate debt. Interest capitalized for 2003 and 2002 totaled $5.0 million and $4.1 million, respectively. Throughout 2003 and 2002, real estate inventory under active development was greater than the interest-bearing debt. Therefore, all interest incurred during both 2003 and 2002 was capitalized. At the time of a home sale, the related capitalized interest is charged to cost of sales. Cost of sales of real estate for 2003 and 2002 included previously capitalized interest of approximately $4.3 million and $3.6 million, respectively. | ||
The decrease in earnings in joint ventures resulted primarily from the completion of home deliveries by one joint venture. The joint venture’s initial inventory was 600 units and the last 140 homes were delivered during 2002. | ||
Year Ended December 31, | 2004 vs. | 2003 vs. | |||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||
2004 | 2003 | 2002 | Change | Change | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Revenues
|
|||||||||||||||||||||
Sales of real estate
|
$ | 96,200 | $ | 55,038 | $ | 53,919 | $ | 41,162 | $ | 1,119 | |||||||||||
Total revenues
|
96,200 | 55,038 | 53,919 | 41,162 | 1,119 | ||||||||||||||||
Costs and expenses
|
|||||||||||||||||||||
Cost of sales of real estate
|
42,838 | 31,362 | 28,722 | 11,476 | 2,640 | ||||||||||||||||
Selling, general and administrative expenses
|
10,373 | 7,549 | 5,867 | 2,824 | 1,682 | ||||||||||||||||
Interest expense, net
|
61 | 224 | 451 | (163 | ) | (227 | ) | ||||||||||||||
Other expenses
|
500 | — | — | 500 | — | ||||||||||||||||
Total costs and expenses
|
53,772 | 39,135 | 35,040 | 14,637 | 4,095 | ||||||||||||||||
42,428 | 15,903 | 18,879 | 26,525 | (2,976 | ) | ||||||||||||||||
Interest and other income
|
1,671 | 2,261 | 1,413 | (590 | ) | 848 | |||||||||||||||
Income before income taxes
|
44,099 | 18,164 | 20,292 | 25,935 | (2,128 | ) | |||||||||||||||
Provision for income taxes
|
17,031 | 7,149 | 5,414 | 9,882 | 1,735 | ||||||||||||||||
Net income
|
$ | 27,068 | $ | 11,015 | $ | 14,878 | $ | 16,053 | $ | (3,863 | ) | ||||||||||
Acres sold
|
1,212 | 1,337 | 1,715 | (125 | ) | (378 | ) | ||||||||||||||
Margin percentage(a)
|
55.5 | % | 43.0 | % | 46.7 | % | 12.5 | % | (3.7 | )% | |||||||||||
Unsold acres
|
8,349 | 5,116 | 4,490 | 3,233 | 626 | ||||||||||||||||
Acres subject to firm sales contracts
|
1,833 | 1,433 | 1,845 | 400 | (412 | ) | |||||||||||||||
Acres subject to firm sales contracts (value)
|
121,095 | 103,174 | 72,767 | 17,921 | 30,407 |
|
(a) | Margin percentage is calculated by dividing margin (sales of real estate minus cost of sales of real estate) by sales of real estate. | |
Land Division revenues are primarily generated from two master-planned communities located in St. Lucie County, Florida — St. Lucie West and Tradition. Development activity in St. |
113
Lucie West is winding down, with 39 acres of inventory remaining at December 31, 2004, of which 21 acres were subject to firm sales contracts as of that date. With the acquisition of approximately 3,150 acres during the second quarter of 2004, the Tradition master-planned community now encompasses more than 8,200 total acres, including approximately 5,900 net saleable acres. Approximately 1,700 acres have been sold or were subject to firm sales contracts with various homebuilders as of December 31, 2004. Notwithstanding the sustained interest and activity at Tradition, a significant reduction of demand in the residential real estate market could negatively impact our land development operations. | ||
We calculate margin as sales of real estate minus cost of sales of real estate, and have historically realized between 40% and 60% margin on Land Division sales. Margins fluctuate based upon changing sales prices and costs attributable to the land sold. The sales price of land sold varies depending upon: the location; the parcel size; whether the parcel is sold as raw land, partially developed land or individually developed lots; the degree to which the land is entitled; and whether the ultimate use of land is residential or commercial. The cost of sales of real estate is dependent upon the original cost of the land acquired, the timing of the acquisition of the land, and the amount of development and carrying costs capitalized to the particular land parcel. Future margins will continue to vary in response to these and other market factors. | ||
In January 2005, we consummated the bulk sale of five non-contiguous parcels of land adjacent to Tradition consisting of a total of 1,294 acres for $64.7 million, or $50,000 per acre. These parcels, which were acquired in May 2004 for $20,000 per acre, were liquidated after we determined that their specific locations and the timeline for obtaining land use approvals would not fit in the master plan for Tradition. The funds generated by the sale will be used to reduce indebtedness and to provide additional liquidity for Land Division operations and investments. | ||
Revenues from land sales increased 75% to $96.2 million in 2004 from $55.0 million in 2003. Margin on land sales in 2004 was approximately $53.4 million as compared to $23.7 million in 2003. During 2004, 1,212 acres were sold with an average margin of 55%, as compared to 1,337 acres sold with an average margin of 43% in 2003. The lower margin percentage in 2003 was primarily the result of the bulk sale in July of approximately 1,000 acres of undeveloped land adjacent to Tradition in a single transaction to a developer that we believe will utilize the property for the development of one or more golf courses. During 2004, the Land Division sold approximately 448 acres in Tradition to the Homebuilding Division which, for segment reporting purposes, generated revenue of $23.4 million and margin of $14.4 million. This transaction, which is included in the above table, is eliminated in consolidation. There were no sales to the Homebuilding Division in 2003. | ||
Selling, general and administrative expenses increased 37% to $10.4 million during the year ended December 31, 2004 as compared to $7.5 million for the same 2003 period. As a percentage of total revenues, selling, general and administrative expenses declined to 11% in 2004 from 14% in 2003. | ||
Interest incurred for 2004 and 2003 was approximately $2.0 million and $1.2 million, respectively. The increase in interest incurred was primarily due to an increase in outstanding borrowings related to acquisition of land for Tradition. During 2004, interest capitalized was approximately $1.9 million, as compared with $927,000 for 2003. At the time of land sales, the related capitalized interest is charged to cost of sales. Cost of sales of real estate for 2004 and 2003 included previously capitalized interest of approximately $87,000 and $318,000, respectively. | ||
The increase in other expenses was primarily attributable to a $500,000 charge, net of projected insurance recoveries, recorded to account for the estimated costs of remediating hurricane-related damage, as previously discussed. | ||
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Revenues from land sales increased 2% to $55.0 million in 2003 from $53.9 million in 2002. Margin on land sales in 2003 was approximately $23.7 million as compared to $25.2 million in 2002. The decrease in margin was primarily attributable to an increase in sales of residential land and residential lots in 2003 as compared to 2002. This was primarily a result of growth in the residential home sales market during 2003. The proportional increase in residential property sales in 2003 has resulted in a decrease in margin as a percentage of revenue, as commercial and industrial properties generally provide a higher margin than residential properties. In the year ended December 31, 2002, land sales to the Homebuilding Division totaled $8.5 million and the gain recognized was $6.5 million. These inter-segment transactions were eliminated in consolidation. There were no sales to the Homebuilding Division in 2003. | ||
Selling, general and administrative expenses increased 29% to $7.5 million during the year ended December 31, 2003 as compared to 2002. This increase was primarily associated with an increase in advertising expenses as a result of the launch of the Tradition community during the first quarter of 2003. | ||
Interest incurred for 2003 and 2002 was approximately $1.2 million and $2.4 million, respectively. The decrease in interest incurred was primarily due to the satisfaction of indebtedness formerly associated with Live Oak Preserve, which was repaid in 2002. During2003, interest capitalized was approximately $927,000, as compared with $1.9 million for 2002. At the time of land sales, the related capitalized interest is charged to cost of sales. Cost of sales of real estate for 2003 and 2002 included previously capitalized interest of approximately $318,000 and $980,000, respectively. | ||
Year Ended December 31, | 2004 vs. | 2003 vs. | |||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||
2004 | 2003 | 2002 | Change | Change | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Revenues
|
|||||||||||||||||||||
Sales of real estate
|
$ | 5,555 | $ | 5,763 | $ | — | $ | (208 | ) | $ | 5,763 | ||||||||||
Total revenues
|
5,555 | 5,763 | — | (208 | ) | 5,763 | |||||||||||||||
Costs and expenses
|
|||||||||||||||||||||
Cost of sales of real estate
|
6,255 | 6,021 | 1,601 | 234 | 4,420 | ||||||||||||||||
Selling, general and administrative expenses
|
9,822 | 5,000 | 3,582 | 4,822 | 1,418 | ||||||||||||||||
Interest expense, net
|
— | 9 | (6 | ) | (9 | ) | 15 | ||||||||||||||
Other expenses
|
— | (1 | ) | — | 1 | (1 | ) | ||||||||||||||
Minority interest
|
24 | 199 | — | (175 | ) | 199 | |||||||||||||||
Total costs and expenses
|
16,101 | 11,228 | 5,177 | 4,873 | 6,051 | ||||||||||||||||
(10,546 | ) | (5,465 | ) | (5,177 | ) | (5,081 | ) | (288 | ) | ||||||||||||
Earnings from Bluegreen Corporation
|
13,068 | 7,433 | 4,570 | 5,635 | 2,863 | ||||||||||||||||
Earnings (loss) from joint ventures
|
2,532 | 3 | (322 | ) | 2,529 | 325 | |||||||||||||||
Interest and other income
|
1,004 | 341 | 268 | 663 | 73 | ||||||||||||||||
Income (loss) before income taxes
|
6,058 | 2,312 | (661 | ) | 3,746 | 2,973 | |||||||||||||||
Provision (benefit) for income taxes
|
2,198 | 891 | (177 | ) | 1,307 | 1,068 | |||||||||||||||
Net income (loss)
|
$ | 3,860 | $ | 1,421 | $ | (484 | ) | $ | 2,439 | $ | 1,905 | ||||||||||
115
Other Operations include all other activities, including Levitt Commercial, Levitt Corporation general and administrative expenses, earnings from our investment in Bluegreen and earnings from investments in various real estate projects. We currently own approximately 9.5 million shares of the common stock of Bluegreen, which represented approximately 31% of Bluegreen’s outstanding shares as of December 31, 2004. Under equity method accounting, we recognize our pro-rata share of Bluegreen’s net income or loss (net of purchase accounting adjustments) as pre-tax earnings. Bluegreen has not paid dividends to its shareholders; therefore, our earnings represent only our claim to the future distributions of Bluegreen’s earnings. Accordingly, we record a tax liability on our portion of Bluegreen’s net income. Should Bluegreen’s financial performance deteriorate, our earnings in Bluegreen would deteriorate concurrently and our results of operations would be adversely affected. Furthermore, a significant reduction in Bluegreen’s financial position might require that we test our investment in Bluegreen for impairment, which could result in charges against our future results of operations. For a complete discussion of Bluegreen’s results of operations and financial position, we refer you to Bluegreen’s Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC. |
During the year ended December 31, 2004, Levitt Commercial delivered 18 flex warehouse units as compared to 13 units delivered during the year ended December 31, 2003. Cost of sales of real estate includes amortization of interest previously capitalized in this business segment. The amount of previously capitalized interest amortized in cost of sales for the year ended December 31, 2004 and 2003 was $1.8 million and $1.5 million, respectively. | ||
Bluegreen’s reported net income for the year ended December 31, 2004 and 2003 was $36.5 million and $25.8 million, respectively. Our ownership interest in Bluegreen’s earnings during the years ended December 31, 2004 and 2003 was approximately $13.1 million and $7.4 million, respectively, net of purchase accounting adjustments. Purchase accounting adjustments decreased our interest in Bluegreen’s earnings by $473,000 for 2004, as compared to a $1.1 million reduction of earnings in 2003. Additionally, Bluegreen issued approximately 4.1 million shares of common stock during 2004 in connection with the redemption of $34.1 million of its 8.25% Convertible Subordinated Debentures (the “Debentures”). Our investment in Bluegreen was reduced by $1.9 million to reflect the dilutive effect of the issuance of these shares as a result of the elimination of purchase accounting adjustments resulting from the difference between the fair value and book value of the Debentures originally recorded at acquisition. In addition, during the year ended December 31, 2004, approximately 1.2 million shares of Bluegreen common stock were issued upon the exercise of stock options which reduced our investment in Bluegreen by approximately $1.0 million. At December 31, 2004 and 2003, our ownership interest in Bluegreen was 31% and 38%, respectively. | ||
Selling, general and administrative and other expenses increased to $9.8 million during the year ended December 31, 2004 as compared to $5.0 million during the year ended December 31, 2003. This increase was primarily associated with increases in employee compensation and benefits resulting from higher average headcount, fees paid by the Company for administrative and other services provided pursuant to an agreement with BankAtlantic Bancorp, and other expenses related to being a public company. We did not incur significant costs associated with being a public company in 2003 because we were not subject to SEC reporting requirements at that time, or the requirements of the Sarbanes-Oxley Act of 2002. | ||
Earnings from real estate joint ventures in 2004 were $2.5 million as compared to $3,000 in 2003. The increase in earnings was due primarily to the gain recognized by a joint venture on the sale of a rental apartment project in Vero Beach, Florida and earnings associated with the delivery of homes by a joint venture project in West Palm Beach, Florida. Both joint venture projects are sold out and their operations are essentially completed. | ||
116
Interest incurred in Other Operations was approximately $2.6 million and $1.7 million for the year ended December 31, 2004 and 2003, respectively. The increase in interest incurred was primarily associated with increases in outstanding borrowings related to Levitt Commercial’s development activities, interest obligations under the $8.0 million note to BankAtlantic Bancorp relating to the spin-off, and the $3.2 million of outstanding Subordinated Investment Notes. Interest capitalized for this business segment totaled $2.6 million and $1.7 million for the year ended December 31, 2004 and 2003, respectively. Those amounts include adjustments to reconcile the amount of interest eligible for capitalization on a consolidated basis with the amounts capitalized in the Company’s other business segments. |
During the first quarter of 2003, Levitt Commercial commenced the delivery of its flex warehouse units and the revenue and margin on the sales of its inventory for the year ended December 31, 2003 were approximately $5.8 million and $1.2 million, respectively. No sales of real estate were recognized by this business segment in 2002. Cost of sales of real estate includesthe amortization of interest previously capitalized in this business segment. The amount of previously capitalized interest amortized in cost of sales for 2003 and 2002 was $1.5 million and $1.6 million, respectively. | ||
Bluegreen’s reported net income for the year ended December 31, 2003 was $25.8 million and, for the period of our ownership during 2002, income before the cumulative effect of a change in accounting principle was $15.4 million. Our ownership interest in Bluegreen’s earnings during 2003 was approximately $7.4 million, as compared to $4.6 million for the period of our ownership in 2002. Our interest in Bluegreen’s earnings was reduced by $1.1 million in 2003 due to the effects of purchase accounting adjustments, as compared with a reduction of $353,000 during the period of our ownership from April to December 2002. The purchase accounting adjustments for 2002 primarily related to Bluegreen’s sale of notes receivable which existed at the acquisition date. At the acquisition date, the notes receivable were adjusted to reflect unrealized gain in our carrying amount of the asset, and accordingly, when such gain was recorded by Bluegreen, we recognized no gain. The purchase accounting adjustments for 2003 primarily related to Bluegreen’s sale of retained interests in notes receivable which existed at the acquisition date. As with the underlying notes receivable, at the acquisition date the retained interests were adjusted to reflect unrealized gain in our carrying amount of the asset, and, when such gain was recorded by Bluegreen, we recognized no gain. | ||
Selling, general and administrative and other expenses in this segment primarily relate to holding company operations and expenses incurred by Levitt Commercial. Selling, general and administrative and other expenses increased to $5.0 million during the year ended December 31, 2003 as compared to $3.6 million for 2002. This increase was primarily associated with increases in employee compensation and benefits relating to our expansion and costs related to our public offering of investment notes. | ||
Interest incurred was approximately $1.7 million and $1.6 million for the year ended December 31, 2003 and 2002, respectively. The increase in interest incurred is primarily associated with a $30.0 million loan from BankAtlantic Bancorp in connection with the acquisition of Levitt Corporation’s investment in Bluegreen Corporation, which was outstanding for the entire twelve months of 2003 as compared with only nine months during 2002. Partially offsetting this increase was a reduction in average interest rates for 2003 to approximately 4.1%, as compared to 5.3% for 2002. Interest capitalized for this business segment totaled $1.7 million and $1.6 million for the year ended December 31, 2003 and 2002, respectively. Interest capitalized in this business segment includes adjustments to reconcile the amount of interest eligible for capitalization on a consolidated basis with the amounts capitalized in the other business segments. | ||
Minority interest for the 2003 period is associated with a joint venture’s margin from the sale of its flex warehouse units in which we have a majority interest. | ||
117
118
119
National | |||||||||||||||||
Market | Price | Valuation | |||||||||||||||
Price Quotes | Matrix | Model | Total | ||||||||||||||
Investment securities
|
|||||||||||||||||
Mortgage-backed securities
|
$ | — | $ | 500,517 | $ | — | $ | 500,517 | |||||||||
Tax exempt securities
|
— | 353,441 | — | 353,441 | |||||||||||||
Other securities
|
— | — | 585 | 585 | |||||||||||||
Equity securities
|
27,545 | — | — | 27,545 | |||||||||||||
Total investment securities
|
27,545 | 853,958 | 585 | 882,088 | |||||||||||||
Trading securities
|
|||||||||||||||||
Securities owned
|
125,443 | — | — | 125,443 | |||||||||||||
Securities sold not yet purchased
|
(39,462 | ) | — | — | (39,462 | ) | |||||||||||
Total Trading securities
|
85,981 | — | — | 85,981 | |||||||||||||
Derivatives
|
— | — | 49 | 49 | |||||||||||||
Total
|
$ | 113,526 | $ | 853,958 | $ | 634 | $ | 968,118 | |||||||||
120
121
122
123
Available for | ||||||||
Sale Equity | ||||||||
Securities Fair | Dollar | |||||||
Percent Change in Fair Value | Value | Change | ||||||
20%
|
$ | 45,953 | $ | 7,659 | ||||
10%
|
$ | 42,123 | $ | 3,829 | ||||
0%
|
$ | 38,294 | $ | — | ||||
-10%
|
$ | 34,465 | $ | (3,829 | ) | |||
-20%
|
$ | 30,635 | $ | (7,659 | ) |
Ryan Beck Market Risk |
124
High | Low | Average | ||||||||||
VaR
|
$ | 359 | $ | 55 | $ | 193 | ||||||
Aggregate Long Value
|
123,209 | 67,388 | 94,685 | |||||||||
Aggregate Short Value
|
$ | 187,412 | $ | 36,440 | $ | 69,471 |
High | Low | Average | ||||||||||
VaR
|
$ | 1,747 | $ | 11 | $ | 336 | ||||||
Aggregate Long Value
|
112,494 | 43,431 | 72,787 | |||||||||
Aggregate Short Value
|
$ | 167,987 | $ | 23,851 | $ | 65,006 |
• | Loans, | |
• | Debt securities available for sale, | |
• | Investment securities, | |
• | FHLB stock, | |
• | Federal funds sold, | |
• | Deposits, | |
• | Advances from FHLB, | |
• | Securities sold under agreements to repurchase, | |
• | Federal funds purchased, | |
• | Subordinated debentures, | |
• | Notes and bonds payable, and | |
• | Junior subordinated debentures. | |
i. Discounting anticipated cash flows from existing assets and liabilities at market rates to determine fair values at March 31, 2005 and December 31, 2004; | |
ii. Discounting the above expected cash flows based on instantaneous and parallel shifts in the yield curve to determine fair values; and | |
iii. Calculating the difference between the fair value calculated in (i) and (ii). | |
125
• | Interest rates, | |
• | Loan prepayment rates, | |
• | Deposit runoff rates, | |
• | Non-maturing deposit servicing rates, | |
• | Market values of certain assets under various interest rate scenarios, and | |
• | Re-pricing of certain borrowings. |
Dollar | |||||||||
Changes in Rate | Value Amount | Change | |||||||
+200 bp
|
$ | 896,729 | $ | 81,604 | |||||
+100 bp
|
$ | 884,664 | $ | 69,539 | |||||
0
|
$ | 815,125 | $ | — | |||||
-100 bp
|
$ | 682,632 | $ | (132,493 | ) | ||||
-200 bp
|
$ | 489,550 | $ | (325,575 | ) |
Dollar | |||||||||
Changes in Rate | Value Amount | Change | |||||||
+200 bp
|
$ | 813,332 | $ | 77,676 | |||||
+100 bp
|
$ | 803,501 | $ | 67,845 | |||||
0
|
$ | 735,656 | $ | — | |||||
-100 bp
|
$ | 596,126 | $ | (139,530 | ) | ||||
-200 bp
|
$ | 406,938 | $ | (328,718 | ) |
126
Within | 1-3 | 3-5 | Over 5 | |||||||||||||
1 Year | Years | Years | Years | |||||||||||||
Savings
|
16 | % | 10 | % | 10 | % | 10 | % | ||||||||
Money market
|
83 | 15 | 15 | 15 | ||||||||||||
NOW
|
7 | 6 | 6 | 6 | ||||||||||||
Demand
|
14 | 6 | 6 | 6 |
127
128
129
Term as | ||||||||||
Director | ||||||||||
Name | Age | Position | Expires | |||||||
Alan B. Levan
|
60 | Chairman of the Board, Chief Executive Officer and President of the Company, BankAtlantic Bancorp and BankAtlantic, Chairman of the Board and Chief Executive Officer of Levitt and Chairman of the Board of Bluegreen | 2007 | |||||||
John E. Abdo
|
61 | Vice Chairman of the Company, BankAtlantic Bancorp and BankAtlantic, Vice-Chairman and President of Levitt | 2008 | |||||||
Phil Bakes
|
58 | Managing Director and Executive Vice President | — | |||||||
Glen R. Gilbert
|
60 | Executive Vice-President, Chief Financial and Accounting Officer and Secretary of the Company and Levitt | — | |||||||
D. Keith Cobb
|
63 | Director of the Company and BankAtlantic Bancorp | 2006 | |||||||
Oscar Holzmann
|
62 | Director | 2008 | |||||||
Earl Pertnoy
|
78 | Director | 2006 | |||||||
Neil Sterling
|
53 | Director | 2007 |
130
131
Voting Rights |
• | increase or decrease the authorized number of shares of Class A Common Stock; | |
• | effect an exchange or reclassification of all or part of the shares of Class A Common Stock into shares of another class of stock; | |
• | effect an exchange or reclassification, or create a right of exchange, of all or part of all of the shares of another class into shares of Class A Common Stock; | |
• | change the designation, rights, preferences, or limitations of all or a part of the shares of Class A Common Stock; | |
• | change all or a portion of the shares of Class A Common Stock into a different number of shares of Class A Common Stock; | |
• | create a new class of shares which have rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of Class A Common Stock; or | |
• | increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of Class A Common Stock. |
132
• | the issuance of any additional shares of Class B Common Stock, other than a stock dividend issued to holders of Class B Common Stock; | |
• | the reduction of the number of outstanding shares of Class B Common Stock (other than upon conversion of the Class B Common Stock into Class A Common Stock or upon a voluntary disposition to us); or | |
• | any amendments of the capital stock provisions of our Articles of Incorporation. |
Convertibility of Class B Common Stock and 5% Cumulative Convertible Preferred Stock |
Dividends and Other Distributions; Liquidation Rights |
133
Preemptive or Payment Rights; Redemption of 5% Cumulative Convertible Preferred Stock |
Certain Anti-Takeover Effects |
• | the provisions in our Articles of Incorporation regarding the voting rights of our Class B Common Stock; | |
• | the authority of the Board of Directors to issue additional shares of preferred stock and to fix the relative rights and preferences of the preferred stock without additional shareholder approval; | |
• | the division of our Board of Directors into three classes of directors with three-year staggered terms; and | |
• | advance notice procedures to be complied with by shareholders in order to make shareholder proposals or nominate directors. | |
• | The terms of the Series A Preferred Stock and the Series A Preferred Stock purchase rights discussed below. | |
Description of Series A Preferred Stock |
134
Description of Series A Preferred Stock Purchase Rights |
135
• | the number and percentage of outstanding shares of Class A Common Stock and Class B Common Stock each selling shareholder owns as of May 25, 2005; | |
• | the number of shares of Class A Common Stock offered by each selling shareholder for sale pursuant to this prospectus; and | |
• | the number and percentage of outstanding shares of Class A Common Stock and Class B Common Stock each selling shareholder will own after the offering, assuming all shares covered by this prospectus are sold. | |
136
Beneficial Ownership | ||||||||||||||||||||||||||||||||||||
Beneficial Ownership as of May 25, 2005 | After Offering | |||||||||||||||||||||||||||||||||||
Shares of | ||||||||||||||||||||||||||||||||||||
Shares of | Percent of | Shares of | Percent of | Class A | Shares of | Percent of | Shares of | Percent of | ||||||||||||||||||||||||||||
Class A | Class A | Class B | Class B | Common | Class A | Class A | Class B | Class B | ||||||||||||||||||||||||||||
Name and Address of | Common | Common | Common | Common | Stock | Common | Common | Common | Common | |||||||||||||||||||||||||||
Beneficial Owner | Stock | Stock | Stock | Stock | Offered | Stock | Stock | Stock | Stock | |||||||||||||||||||||||||||
Directors and executive officers:
|
||||||||||||||||||||||||||||||||||||
Alan B. Levan(1)(3)(5)(6)
|
507,073 | 2.1% | 2,786,464 | 45.1% | 90,467 | 416,606 | 1.4% | 2,786,464 | 45.1% | |||||||||||||||||||||||||||
John E. Abdo(1)(3)(5)(6)
|
4,242,198 | 17.8% | 3,347,210 | 54.2% | 90,467 | 4,151,731 | 14.2% | 3,347,210 | 54.2% | |||||||||||||||||||||||||||
Glen R. Gilbert(1)(5)(7)
|
13,578 | 0.1% | 368,743 | 8.0% | 90,467 | 13,578 | 0.0% | 278,276 | 6.1% | |||||||||||||||||||||||||||
Earl Pertnoy(1)(5)
|
95,025 | 0.4% | 188,635 | 4.2% | 0 | 95,025 | 0.3% | 188,635 | 4.2% | |||||||||||||||||||||||||||
Oscar Holzmann(1)(5)
|
— | 0.0% | 20,290 | 0.5% | 0 | — | 0.0% | 20,290 | 0.5% | |||||||||||||||||||||||||||
Neil Sterling(1)(5)
|
— | 0.0% | 20,290 | 0.5% | 0 | — | 0.0% | 20,290 | 0.5% | |||||||||||||||||||||||||||
D. Keith Cobb(1)(5)
|
3,017 | 0.0% | 6,250 | 0.1% | 0 | 3,017 | 0.0% | 6,250 | 0.1% | |||||||||||||||||||||||||||
Phil J. Bakes(5)
|
— | 0.0% | — | 0.0% | — | — | 0.0% | — | 0.0% | |||||||||||||||||||||||||||
5% shareholders:
|
||||||||||||||||||||||||||||||||||||
I.R.E. Realty Advisory Group, Inc.(2)(3)(5)
|
4,764,284 | 20.0% | 500,000 | 11.7% | 0 | 4,764,284 | 16.3% | 500,000 | 11.7% | |||||||||||||||||||||||||||
Florida Partners Corporation(3)(5)
|
1,270,294 | 5.3% | 133,314 | 3.1% | 0 | 1,270,294 | 4.3% | 133,314 | 3.1% | |||||||||||||||||||||||||||
I.R.E. Properties, Inc.(3)(5)(8)
|
1,302,233 | 5.5% | 136,666 | 3.2% | 140,110 | 1,162,123 | 4.0% | 136,666 | 3.2% | |||||||||||||||||||||||||||
I.R.E. Realty Advisors, Inc.(3)(5)(8)
|
2,308,019 | 9.7% | 242,221 | 5.7% | 138,490 | 2,169,539 | 7.4% | 242,221 | 5.7% | |||||||||||||||||||||||||||
Levan Enterprises, Ltd.(3)(5)
|
532,314 | 2.2% | 55,865 | 1.3% | 0 | 532,314 | 1.8% | 55,865 | 1.3% | |||||||||||||||||||||||||||
Dr. Herbert A. Wertheim(4)
|
3,968,157 | 16.6% | 416,448 | 9.7% | 0 | 3,968,157 | 13.5% | 416,448 | 9.7% | |||||||||||||||||||||||||||
All executive officers and directors as a group
(8 persons)(1)(3)
|
15,038,035 | 63.0% | 7,805,948 | 90.2% | 550,000 | 14,578,511 | 49.7% | 7,715,481 | 90.1% |
(1) | Amount and nature of beneficial ownership and percent of class include shares that may be acquired within 60 days pursuant to exercise of stock options to purchase Class B Common Stock as follows: Alan B. Levan — 1,895,150 shares, John E. Abdo — 1,895,150 shares, Glen R. Gilbert — 350,743 shares, Earl Pertnoy — 181,735 shares, Oscar Holzmann — 20,290 shares, D. Keith Cobb — 6,250 shares and Neil Sterling — 20,290 shares. |
(2) | The Company owns 45.5% of I.R.E. Realty Advisory Group, Inc. |
(3) | The Company may be deemed to be controlled by Alan B. Levan and John E. Abdo who collectively may be deemed to have an aggregate beneficial ownership of 69.3% of the outstanding common stock of the Company. Levan Enterprises, Ltd. is a controlling and majority shareholder of I.R.E. Realty Advisors, Inc. and I.R.E. Properties, Inc. and may be deemed to be the controlling shareholder of I.R.E. Realty Advisory Group, Inc. and Florida Partners Corporation. Levan Enterprises, Ltd. is a limited partnership whose sole general partner is Levan General Corp., a corporation 100% owned by Alan B. Levan. Therefore, Mr. Levan may be deemed to be the beneficial owner of the shares of common stock owned by each of such entities. In addition to his personal holdings of common stock, Mr. Levan may be deemed to be the beneficial owner of 11,435 shares of Class A Common Stock and 1,200 shares of Class B Common Stock held of record by Mr. Levan’s wife and 1,895,150 shares of Class B Common Stock which can be acquired within 60 days pursuant to stock options, for an aggregate beneficial ownership of 10,684,217 shares (44.8%) of Class A Common Stock and 3,854,531 shares (62.4%) of Class B Common Stock. |
(4) | Dr. Wertheim’s ownership was reported in a Rebuttal of Control Agreement filed on December 20, 1996 with the Office of Thrift Supervision (as adjusted for stock splits since the date of filing). The Rebuttal of Control Agreement indicates that Dr. Wertheim has no intention to manage or control, directly or indirectly, the Company. Dr. Wertheim’s mailing address is 191 Leucadendra Drive, Coral Gables, Florida 33156. |
(5) | Mailing address is 1750 East Sunrise Boulevard, Fort Lauderdale, Florida 33304. |
(6) | Messrs. Levan and Abdo have entered into a Shareholders Agreement and Irrevocable Proxy with respect to the shares of Class B Common Stock controlled by them. Under the agreement, they have agreed to vote their shares of Class B Common Stock in favor of the election of each other to the Company’s Board of Directors for so long as Mr. Levan and Mr. Abdo are willing and able to serve as directors of the Company. Additionally, Mr. Abdo will grant an irrevocable proxy to an entity controlled by Mr. Levan |
137
and obtain the consent of Mr. Levan prior to the sale or conversion of certain of his shares of Class B Common Stock. | |
(7) | Mr. Gilbert intends to exercise options which he holds to acquire Class B Common Stock and convert those shares into Class A Common Stock in connection with the sale pursuant to this offering. |
(8) | A portion of the shares of Class A Common Stock to be sold by I.R.E. Properties, Inc. and I.R.E. Realty Advisors, Inc. may be distributed to shareholders of those entities (other than Levan Enterprises, Ltd.) prior to completion of this offering in redemption of their interests in such entities and then sold by such shareholders in this offering. |
138
Underwriter: | No. of Shares | |||
Ryan Beck & Co.
|
||||
BB&T Capital Markets, a division of Scott &
Stringfellow, Inc.
|
||||
Stifel, Nicolaus & Company, Incorporated
|
||||
Total
|
• | We and the selling shareholders will pay to the underwriters assuming no exercise of the underwriters’ over-allotment option; and | |
• | We and the selling shareholders will pay to the underwriters assuming the full exercise of the underwriters’ over-allotment option. | |
Paid by Selling | ||||||||||||||||
Paid by Us, No | Paid by Us, Full | Shareholders, No | Paid by Selling | |||||||||||||
Exercise of | Exercise of | Exercise of | Shareholders, Full | |||||||||||||
Over-Allotment | Over-Allotment | Over-Allotment | Exercise of Over- | |||||||||||||
Option | Option | Option | Allotment Option | |||||||||||||
Per Share
|
||||||||||||||||
Total
|
139
• | shares of Class A or Class B Common Stock; | |
• | options or warrants to purchase any shares of Class A or Class B Common Stock; or | |
• | securities convertible into or exchangeable for shares of Class A or Class B Common Stock. | |
140
141
• | our Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 16, 2005; | |
• | our Quarterly Report on Form 10-Q for the period ended March 31, 2005, filed with the SEC on May 10, 2005; | |
• | our Current Report on Form 8-K filed with the SEC on May 10, 2005; | |
• | the description of our Class A Common Stock, par value $0.01 per share, contained in our Registration Statement on Form 8-A, filed with the SEC on October 16, 1997; and | |
• | any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) under the Securities Exchange Act of 1934 until we sell all of the Class A Common Stock under this prospectus. |
142
March 31, 2005 — Financial Statements:
|
||||||
Consolidated Statements of Financial Condition as of
March 31, 2005 and December 31, 2004 —
Unaudited
|
F-2 | |||||
Consolidated Statements of Operations for the three months ended
March 31, 2005 and 2004 — Unaudited
|
F-3 | |||||
Consolidated Statements of Comprehensive Income for the three
months ended March 31, 2005 and 2004 — Unaudited
|
F-5 | |||||
Consolidated Statements of Shareholders’ Equity for the
three months ended March 31, 2005 — Unaudited
|
F-6 | |||||
Consolidated Statements of Cash Flows for the three months ended
March 31, 2005 and 2004 — Unaudited
|
F-7 | |||||
Notes to Unaudited Consolidated Financial Statements
|
F-9 | |||||
December 31, 2004 — Financial Statements
|
||||||
Management’s Report on Internal Control Over Financial
Reporting
|
F-28 | |||||
Report of Independent Registered Certified Public Accounting
Firm of PricewaterhouseCoopers LLP
|
F-29 | |||||
Report of Independent Registered Public Accounting Firm of Ernst
& Young LLP
|
F-31 | |||||
Report of Independent Registered Public Accounting Firm of KPMG
LLP
|
F-32 | |||||
Financial Statements:
|
||||||
Consolidated Statements of Financial Condition as of
December 31, 2004 and 2003
|
F-33 | |||||
Consolidated Statements of Operations for each of the years in
the three year period ended December 31, 2004
|
F-34 | |||||
Consolidated Statements of Comprehensive Income for each of the
years in the three year period ended December 31, 2004
|
F-36 | |||||
Consolidated Statements of Shareholders’ Equity for each of
the years in the three year period ended December 31, 2004
|
F-37 | |||||
Consolidated Statements of Cash Flows for each of the years in
the three year period ended December 31, 2004
|
F-38 | |||||
Notes to Consolidated Financial Statements
|
F-42 |
F-1
March 31, | December 31, | |||||||||
2005 | 2004 | |||||||||
(In thousands, except | ||||||||||
share data) | ||||||||||
ASSETS | ||||||||||
Cash and due from depository institutions
|
$ | 207,840 | $ | 208,627 | ||||||
Federal funds sold and other short-term investments
|
16,832 | 16,093 | ||||||||
Securities owned (at fair value)
|
142,294 | 125,443 | ||||||||
Securities available for sale (at fair value)
|
764,730 | 749,001 | ||||||||
Investment securities and tax certificates (approximate fair
value: $309,379 and $317,416)
|
312,927 | 317,891 | ||||||||
Federal Home Loan Bank stock, at cost which approximates
fair value
|
80,600 | 78,619 | ||||||||
Loans receivable, net of allowance for loan losses of $44,114
and $47,082
|
4,621,543 | 4,561,073 | ||||||||
Accrued interest receivable
|
38,884 | 35,995 | ||||||||
Real estate held for development and sale
|
429,969 | 444,631 | ||||||||
Investments in unconsolidated subsidiaries
|
91,845 | 89,090 | ||||||||
Properties and equipment, net
|
167,350 | 160,997 | ||||||||
Goodwill
|
77,981 | 77,981 | ||||||||
Core deposit intangible asset
|
9,597 | 10,270 | ||||||||
Due from clearing agent
|
1,120 | 16,619 | ||||||||
Other assets
|
65,537 | 62,517 | ||||||||
Total assets
|
$ | 7,029,049 | $ | 6,954,847 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Liabilities:
|
||||||||||
Deposits
|
||||||||||
Demand
|
$ | 960,063 | $ | 890,398 | ||||||
NOW
|
676,945 | 658,137 | ||||||||
Savings
|
296,485 | 270,001 | ||||||||
Money market
|
913,434 | 875,422 | ||||||||
Certificates of deposits
|
796,928 | 763,244 | ||||||||
Total deposits
|
3,643,855 | 3,457,202 | ||||||||
Customer deposits on real estate held for sale
|
41,524 | 43,022 | ||||||||
Advances from FHLB
|
1,524,881 | 1,544,497 | ||||||||
Securities sold under agreements to repurchase
|
168,121 | 257,002 | ||||||||
Federal funds purchased
|
75,000 | 105,000 | ||||||||
Subordinated debentures, notes and bonds payable
|
238,406 | 278,605 | ||||||||
Junior subordinated debentures
|
286,462 | 263,266 | ||||||||
Securities sold not yet purchased
|
60,276 | 39,462 | ||||||||
Deferred tax liabilities, net
|
7,704 | 8,455 | ||||||||
Other liabilities
|
207,590 | 220,433 | ||||||||
Total liabilities
|
6,253,819 | 6,216,944 | ||||||||
Minority interest
|
647,142 | 612,652 | ||||||||
Shareholders’ equity:
|
||||||||||
Preferred stock of $.01 par value; authorized
10,000,000 shares; 5% Cumulative Convertible Preferred
Stock (“5% Preferred Stock”) issued and outstanding
15,000 shares in 2005 and 2004
|
— | — | ||||||||
Class A common stock of $.01 par value, authorized
70,000,000 shares; issued and outstanding 23,862,830 in
2005 and 23,861,542 in 2004
|
217 | 217 | ||||||||
Class B common stock of $.01 par value, authorized
20,000,000 shares; issued and outstanding 4,284,415 in 2005
and 4,279,656 in 2004
|
41 | 41 | ||||||||
Additional paid-in capital
|
50,292 | 50,962 | ||||||||
Retained earnings
|
77,301 | 73,089 | ||||||||
Total shareholders’ equity before accumulated other
comprehensive income
|
127,851 | 124,309 | ||||||||
Accumulated other comprehensive income
|
237 | 942 | ||||||||
Total shareholders’ equity
|
128,088 | 125,251 | ||||||||
Total liabilities and shareholders’ equity
|
$ | 7,029,049 | $ | 6,954,847 | ||||||
F-2
Three Months Ended | ||||||||||
March 31, | ||||||||||
2005 | 2004 | |||||||||
(In thousands, | ||||||||||
except per share | ||||||||||
data) | ||||||||||
Revenues
|
||||||||||
BFC Activities
|
||||||||||
Interest and dividend income
|
$ | 236 | $ | 93 | ||||||
Other income, net
|
133 | 1,391 | ||||||||
369 | 1,484 | |||||||||
Financial Services
|
||||||||||
Interest and dividend income
|
81,573 | 58,994 | ||||||||
Broker/dealer revenue
|
54,680 | 63,065 | ||||||||
Other income, net
|
23,609 | 41,182 | ||||||||
159,862 | 163,241 | |||||||||
Homebuilding & Real Estate Development
|
||||||||||
Sales of real estate
|
198,866 | 98,523 | ||||||||
Interest and dividend income
|
376 | 166 | ||||||||
Other income, net
|
1,753 | 1,282 | ||||||||
200,995 | 99,971 | |||||||||
361,226 | 264,696 | |||||||||
Costs and Expenses
|
||||||||||
BFC Activities
|
||||||||||
Interest expense
|
309 | 294 | ||||||||
Employee compensation and benefits
|
1,596 | 848 | ||||||||
Other expenses, net
|
668 | 392 | ||||||||
2,573 | 1,534 | |||||||||
Financial Services
|
||||||||||
Interest expense, net of interest capitalized
|
29,139 | 20,841 | ||||||||
Recovery of loan losses
|
(3,916 | ) | (859 | ) | ||||||
Employee compensation and benefits
|
65,795 | 67,180 | ||||||||
Occupancy and equipment
|
13,237 | 10,375 | ||||||||
Advertising and promotion
|
6,298 | 4,694 | ||||||||
Cost associated with debt redemption
|
— | 11,741 | ||||||||
Other expenses
|
19,455 | 18,024 | ||||||||
130,008 | 131,996 | |||||||||
Homebuilding & Real Estate Development
|
||||||||||
Cost of sales of real estate
|
129,976 | 69,030 | ||||||||
Interest expense, net of interest capitalized
|
— | 58 | ||||||||
Employee compensation and benefits
|
11,781 | 7,666 | ||||||||
Selling, general and administrative expenses
|
11,214 | 6,381 | ||||||||
Other expenses
|
1,316 | 641 | ||||||||
154,287 | 83,776 | |||||||||
286,868 | 217,306 | |||||||||
Income before income taxes and equity in earnings from
unconsolidated subsidiaries
|
74,358 | 47,390 | ||||||||
Equity in earnings from unconsolidated subsidiaries
|
2,359 | 5,811 | ||||||||
Income before income taxes and minority interest
|
76,717 | 53,201 | ||||||||
Provision for income taxes
|
31,951 | 22,207 | ||||||||
Minority interest in income of consolidated subsidiaries
|
40,366 | 26,622 | ||||||||
Net income
|
4,400 | 4,372 | ||||||||
5% Preferred Stock dividends
|
188 | — | ||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | ||||||
F-3
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands, | ||||||||
except per share data) | ||||||||
Earnings per share of common stock:
|
||||||||
Basic earnings per share of common stock
|
$ | 0.16 | $ | 0.18 | ||||
Diluted earnings per share of common stock
|
$ | 0.14 | $ | 0.15 | ||||
Basic weighted average number of common shares outstanding
|
25,750 | 23,824 | ||||||
Diluted weighted average number of common and common equivalent
shares outstanding
|
28,336 | 27,706 |
F-4
Three Months Ended | |||||||||
March 31, | |||||||||
2005 | 2004 | ||||||||
(In thousands, | |||||||||
except per share data) | |||||||||
Net income
|
$ | 4,400 | $ | 4,372 | |||||
Other comprehensive (loss) income, net of tax:
|
|||||||||
Unrealized loss on securities available for sale, net of income
tax
|
(706 | ) | 336 | ||||||
Unrealized gain (loss) associated with investment in
unconsolidated real estate subsidiary, net of income tax
|
9 | (13 | ) | ||||||
Reclassification adjustment for net gain included in net income
|
(8 | ) | (6 | ) | |||||
(705 | ) | 317 | |||||||
Comprehensive income
|
$ | 3,695 | $ | 4,689 | |||||
F-5
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Class A | Class B | Additional | Comprehensive | |||||||||||||||||||||
Common | Common | Paid-In | Retained | Income | ||||||||||||||||||||
Stock | Stock | Capital | Earnings | (Loss) | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Balance, December 31, 2004
|
$ | 217 | $ | 41 | $ | 50,962 | $ | 73,089 | $ | 942 | $ | 125,251 | ||||||||||||
Net income
|
— | — | — | 4,400 | — | 4,400 | ||||||||||||||||||
Other comprehensive loss, net of tax
|
— | — | — | — | (705 | ) | (705 | ) | ||||||||||||||||
Net effect of subsidiaries’ capital transactions, net of
income taxes
|
— | — | (419 | ) | — | — | (419 | ) | ||||||||||||||||
Issuance of Common Stock
|
— | — | 11 | — | — | 11 | ||||||||||||||||||
Cash dividends on 5% Preferred Stock
|
— | — | — | (188 | ) | — | (188 | ) | ||||||||||||||||
Tax effect relating to the exercise of stock options
|
— | — | (262 | ) | — | — | (262 | ) | ||||||||||||||||
Balance, March 31, 2005
|
$ | 217 | $ | 41 | $ | 50,292 | $ | 77,301 | $ | 237 | $ | 128,088 | ||||||||||||
F-6
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Net income
|
$ | 4,400 | $ | 4,372 | ||||
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
|
||||||||
Minority interest in income of consolidated subsidiaries
|
40,366 | 26,622 | ||||||
Recovery of loan losses, REO and tax certificates
|
(4,016 | ) | (555 | ) | ||||
Depreciation, amortization and accretion, net
|
4,924 | 3,970 | ||||||
Amortization of intangible assets
|
425 | 439 | ||||||
Gains on securities activities, net
|
(102 | ) | (81 | ) | ||||
(Gain) losses on sales of REO
|
(137 | ) | 60 | |||||
Gain on sale of loans
|
(110 | ) | (129 | ) | ||||
Gain on sale of branch
|
(935 | ) | — | |||||
Equity in earnings from unconsolidated subsidiaries
|
(2,359 | ) | (5,811 | ) | ||||
(Increase) decrease in securities owned activities, net
|
(16,851 | ) | 2,451 | |||||
Increase (decrease) in securities sold but not yet purchased
|
20,814 | (3,563 | ) | |||||
Litigation settlements
|
— | (23,938 | ) | |||||
Cost associated with debt redemption
|
— | 11,741 | ||||||
Issuance of forgivable notes receivable
|
(1,806 | ) | (4,816 | ) | ||||
Originations and repayments of loans held for sale, net
|
(28,185 | ) | (8,506 | ) | ||||
Decrease in other notes receivable
|
729 | 220 | ||||||
Proceeds from sales of loans held for sale
|
29,412 | 11,333 | ||||||
Decrease (increase) in real estate inventory
|
14,538 | (12,614 | ) | |||||
(Increase) decrease in accrued interest receivable
|
(2,889 | ) | 1,111 | |||||
Decrease in due from clearing agent
|
15,499 | 9,745 | ||||||
Increase in other assets
|
(7,975 | ) | (1,173 | ) | ||||
Increase in deferred tax liabilities, net
|
3,358 | 7,927 | ||||||
(Decrease) increase in other liabilities
|
(26,039 | ) | 15,672 | |||||
Net cash provided by operating activities
|
43,061 | 34,477 | ||||||
Investing activities:
|
||||||||
Proceeds from redemption and maturities of investment securities
and tax certificates
|
55,989 | 60,353 | ||||||
Purchase of investment securities and tax certificates
|
(35,496 | ) | (7,022 | ) | ||||
Purchases of securities available for sale
|
(97,669 | ) | (32,313 | ) | ||||
Proceeds from sales and maturities of securities available for
sale
|
72,404 | 51,004 | ||||||
(Purchases) redemptions of FHLB stock, net
|
(1,981 | ) | 9,985 | |||||
Net repayments (purchases and originations) of loans
|
(54,241 | ) | 9,407 | |||||
(Contributions to) distribution from unconsolidated
subsidiaries, net
|
(345 | ) | 1,556 | |||||
Proceeds from sales of real estate owned
|
500 | 1,065 | ||||||
Net additions to property and equipment
|
(10,902 | ) | (8,918 | ) | ||||
Purchase of BankAtlantic Bancorp subsidiary common stock
|
(491 | ) | — | |||||
Net cash outflows from the sale of branch
|
(13,592 | ) | — | |||||
Net cash used in investing activities
|
(85,824 | ) | 85,117 | |||||
F-7
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Financing activities:
|
||||||||
Net increase in deposits
|
$ | 204,369 | $ | 85,293 | ||||
Repayments of FHLB advances
|
(259,583 | ) | (202,449 | ) | ||||
Proceeds from FHLB advances
|
240,000 | — | ||||||
Net increase in securities sold under agreements to repurchase
|
(88,881 | ) | (33,418 | ) | ||||
Net (decrease) increase in federal funds purchased
|
(30,000 | ) | 25,000 | |||||
Proceeds from notes and bonds payable
|
74,984 | 37,815 | ||||||
Repayment of notes and bonds payable
|
(115,183 | ) | (36,414 | ) | ||||
Proceeds from junior subordinated debentures
|
23,196 | — | ||||||
Payments of debt offering costs
|
(926 | ) | — | |||||
Change in minority interest
|
— | 289 | ||||||
Issuance of BFC common stock upon exercise of stock options
|
11 | 627 | ||||||
5% Preferred Stock dividends paid
|
(188 | ) | — | |||||
Issuance of BankAtlantic Bancorp Class A common stock
|
422 | 680 | ||||||
Retirement of BFC common stock
|
— | (1,362 | ) | |||||
Retirement of BankAtlantic Bancorp Class A common stock
|
(3,519 | ) | — | |||||
Levitt common stock dividends paid to non-BFC shareholders
|
(330 | ) | — | |||||
BankAtlantic Bancorp common stock dividends paid to non-BFC
shareholders
|
(1,657 | ) | (1,518 | ) | ||||
Net cash provided by financing activities
|
42,715 | (125,457 | ) | |||||
Decrease in cash and cash equivalents
|
(48 | ) | (5,863 | ) | ||||
Cash and cash equivalents at beginning of period
|
224,720 | 143,542 | ||||||
Cash and cash equivalents at end of period
|
$ | 224,672 | $ | 137,679 | ||||
Supplemental cash flow information:
|
||||||||
Interest paid, net of amounts capitalized
|
$ | 28,727 | $ | 22,422 | ||||
Income taxes paid
|
4,534 | 1,409 | ||||||
Supplemental disclosure of non-cash operating, investing and
financing activities:
|
||||||||
Loans transferred to real estate owned
|
1,109 | 374 | ||||||
Net loan recoveries
|
948 | 647 | ||||||
Tax certificate net recoveries
|
255 | 31 | ||||||
Securities purchased pending settlement
|
15,873 | — | ||||||
Net decrease in shareholders’ equity from the effect of
subsidiaries’ capital transactions, net of income taxes
|
(419 | ) | (743 | ) | ||||
Increase (decrease) in accumulated other comprehensive income,
net of taxes
|
(705 | ) | 317 | |||||
Increase (decrease) in shareholders’ equity for the tax
effect related to the exercise of employee stock options
|
(262 | ) | 3,592 | |||||
Tax effect related to the exercise of BankAtlantic Bancorp
employee stock option
|
3,953 | 1,522 | ||||||
Decrease in minority interest resulting from the retirement of
BankAtlantic Bancorp Class A common stock obtained from
litigation settlement
|
— | 6,058 |
F-8
1. | Presentation of Interim Financial Statements |
F-9
Shares | Percent of | Percent | |||||||||||
Owned | Ownership | of Vote | |||||||||||
BankAtlantic Bancorp
|
|||||||||||||
Class A Common Stock
|
8,329,236 | 14.96 | % | 7.93 | % | ||||||||
Class B Common Stock
|
4,876,124 | 100.00 | % | 47.00 | % | ||||||||
Total
|
13,205,360 | 21.81 | % | 54.93 | % | ||||||||
Levitt
|
|||||||||||||
Class A Common Stock
|
2,074,243 | 11.15 | % | 5.91 | % | ||||||||
Class B Common Stock
|
1,219,031 | 100.00 | % | 47.00 | % | ||||||||
Total
|
3,293,274 | 16.62 | % | 52.91 | % |
2. | Segment Reporting |
F-10
F-11
Homebuilding | Adjustment | ||||||||||||||||||||
BFC | Financial | & Real Estate | and | ||||||||||||||||||
2005 | Activities | Services | Development | Eliminations | Total | ||||||||||||||||
Revenues:
|
|||||||||||||||||||||
Sales of real estate
|
$ | — | $ | — | $ | 198,866 | $ | — | $ | 198,866 | |||||||||||
Interest and dividend income
|
243 | 82,186 | 518 | (762 | ) | 82,185 | |||||||||||||||
Broker/dealer revenue
|
— | 54,686 | — | (6 | ) | 54,680 | |||||||||||||||
Other income
|
154 | 23,853 | 1,752 | (265 | ) | 25,494 | |||||||||||||||
397 | 160,725 | 201,136 | (1,033 | ) | 361,225 | ||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||
Cost of sale of real estate
|
— | — | 130,589 | (613 | ) | 129,976 | |||||||||||||||
Interest expense, net
|
309 | 29,288 | — | (149 | ) | 29,448 | |||||||||||||||
Recovery for loan losses
|
— | (3,916 | ) | — | — | (3,916 | ) | ||||||||||||||
Other expenses
|
2,383 | 104,785 | 24,462 | (271 | ) | 131,359 | |||||||||||||||
2,692 | 130,157 | 155,051 | (1,033 | ) | 286,867 | ||||||||||||||||
(2,295 | ) | 30,568 | 46,085 | — | 74,358 | ||||||||||||||||
Equity in earnings from unconsolidated subsidiaries
|
— | 131 | 2,228 | — | 2,359 | ||||||||||||||||
Income (loss) before income taxes
|
(2,295 | ) | 30,699 | 48,313 | — | 76,717 | |||||||||||||||
Provision for income taxes
|
2,635 | 10,821 | 18,495 | — | 31,951 | ||||||||||||||||
Income (loss) from continuing operations before minority interest
|
(4,930 | ) | 19,878 | 29,818 | — | 44,766 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
(6 | ) | 15,510 | 24,862 | — | 40,366 | |||||||||||||||
Income (loss) from continuing operations
|
$ | (4,924 | ) | $ | 4,368 | $ | 4,956 | $ | — | $ | 4,400 | ||||||||||
Total assets at March 31, 2005
|
$ | 23,535 | $ | 6,418,351 | $ | 683,543 | $ | (96,380 | ) | $ | 7,029,049 | ||||||||||
F-12
Homebuilding | Adjustment | ||||||||||||||||||||
BFC | Financial | & Real Estate | and | ||||||||||||||||||
2004 | Activities | Services | Development | Eliminations | Total | ||||||||||||||||
Revenues:
|
|||||||||||||||||||||
Sales of real estate
|
$ | — | $ | — | $ | 98,523 | $ | — | $ | 98,523 | |||||||||||
Interest and dividend income
|
93 | 59,629 | 166 | (635 | ) | 59,253 | |||||||||||||||
Broker/dealer
|
— | 63,065 | — | — | 63,065 | ||||||||||||||||
Other income
|
1,391 | 41,182 | 1,282 | — | 43,855 | ||||||||||||||||
1,484 | 163,876 | 99,971 | (635 | ) | 264,696 | ||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||
Cost of sale of real estate
|
— | — | 69,665 | (635 | ) | 69,030 | |||||||||||||||
Interest expense, net
|
294 | 20,841 | 58 | — | 21,193 | ||||||||||||||||
Recovery for loan losses
|
— | (859 | ) | — | — | (859 | ) | ||||||||||||||
Other expenses
|
1,240 | 112,014 | 14,688 | — | 127,942 | ||||||||||||||||
1,534 | 131,996 | 84,411 | (635 | ) | 217,306 | ||||||||||||||||
(50 | ) | 31,880 | 15,560 | — | 47,390 | ||||||||||||||||
Equity in earnings from unconsolidated subsidiaries
|
— | 118 | 5,693 | — | 5,811 | ||||||||||||||||
Income (loss) before income taxes
|
(50 | ) | 31,998 | 21,253 | — | 53,201 | |||||||||||||||
Provision for income taxes
|
2,535 | 11,474 | 8,198 | — | 22,207 | ||||||||||||||||
Income (loss) from continuing operations before minority interest
|
(2,585 | ) | 20,524 | 13,055 | — | 30,994 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
510 | 15,959 | 10,153 | — | 26,622 | ||||||||||||||||
Income (loss) from continuing operations
|
$ | (3,095 | ) | $ | 4,565 | $ | 2,902 | $ | — | $ | 4,372 | ||||||||||
Total assets at March 31, 2004
|
$ | 14,815 | $ | 4,750,483 | $ | 418,729 | $ | (109,389 | ) | $ | 5,074,638 | ||||||||||
3. | Stock Based Compensation |
F-13
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands, | ||||||||
except per share | ||||||||
data) | ||||||||
Pro forma net income
|
||||||||
Net income available to common shareholders, as reported
|
$ | 4,212 | $ | 4,372 | ||||
Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects and minority
interest
|
9 | 9 | ||||||
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net of
related income tax effects and minority interest
|
(209 | ) | (251 | ) | ||||
Pro forma net income available to common shareholders
|
$ | 4,012 | $ | 4,130 | ||||
Earnings per share:
|
||||||||
Basic as reported
|
$ | 0.16 | $ | 0.18 | ||||
Basic pro forma
|
$ | 0.16 | $ | 0.17 | ||||
Diluted as reported
|
$ | 0.14 | $ | 0.15 | ||||
Diluted pro forma
|
$ | 0.14 | $ | 0.14 | ||||
4. | Advances from the Federal Home Loan Bank |
5. | Defined Benefit Pension Plan |
F-14
Three Months | ||||||||
Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
Service cost benefits earned during the period
|
$ | — | $ | — | ||||
Interest cost on projected benefit obligation
|
376 | 383 | ||||||
Expected return on plan assets
|
(500 | ) | (500 | ) | ||||
Amortization of unrecognized net gains and losses
|
181 | 110 | ||||||
Net periodic pension expense (benefit)
|
$ | 57 | $ | (7 | ) | |||
6. | Securities Owned |
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
States and municipalities
|
$ | 18,181 | $ | 10,824 | ||||
Corporations
|
8,201 | 10,093 | ||||||
U.S. Government and agencies
|
59,430 | 57,659 | ||||||
Corporate equity
|
17,645 | 18,042 | ||||||
Deferred compensation assets
|
28,535 | 27,898 | ||||||
Certificates of deposits
|
10,302 | 927 | ||||||
$ | 142,294 | $ | 125,443 | |||||
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
Corporate equity
|
$ | 7,586 | $ | 3,498 | ||||
Corporate bonds
|
4,383 | 9,958 | ||||||
States and municipalities
|
67 | 269 | ||||||
U.S. Government agencies
|
48,232 | 25,384 | ||||||
Certificates of deposits
|
8 | 353 | ||||||
$ | 60,276 | $ | 39,462 | |||||
F-15
7. | Loans Receivable |
March 31, | December 31, | |||||||||
2005 | 2004 | |||||||||
Real estate loans:
|
||||||||||
Residential
|
$ | 2,140,431 | $ | 2,065,658 | ||||||
Construction and development
|
1,423,892 | 1,454,048 | ||||||||
Commercial
|
1,070,678 | 1,082,294 | ||||||||
Small business
|
129,921 | 123,740 | ||||||||
Other loans:
|
||||||||||
Home equity
|
469,804 | 457,058 | ||||||||
Commercial business
|
91,332 | 91,505 | ||||||||
Small business — non-mortgage
|
72,861 | 66,679 | ||||||||
Consumer loans
|
12,804 | 14,540 | ||||||||
Deposit overdrafts
|
6,959 | 3,894 | ||||||||
Residential loans held for sale
|
3,824 | 4,646 | ||||||||
Other loans
|
2,871 | 3,364 | ||||||||
Discontinued loans products(1)
|
6,718 | 8,285 | ||||||||
Total gross loans
|
5,432,095 | 5,375,711 | ||||||||
Adjustments:
|
||||||||||
Undisbursed portion of loans in process
|
(767,380 | ) | (767,804 | ) | ||||||
Premiums related to purchased loans
|
6,532 | 6,609 | ||||||||
Deferred fees
|
(5,051 | ) | (5,812 | ) | ||||||
Deferred profit on commercial real estate loans
|
(539 | ) | (549 | ) | ||||||
Allowance for loan and lease losses
|
(44,114 | ) | (47,082 | ) | ||||||
Loans receivable — net
|
$ | 4,621,543 | $ | 4,561,073 | ||||||
(1) | Discontinued loan products consist of non-mortgage syndication loans, lease financings, indirect consumer loans and certain small business loans originated before 2002. These loan products were discontinued during prior periods. |
8. | Real Estate Held for Development and Sale |
F-16
March 31, | December 31, | ||||||||
2005 | 2004 | ||||||||
Land and land development costs
|
$ | 306,096 | $ | 302,076 | |||||
Construction costs
|
91,724 | 112,292 | |||||||
Other capitalized costs
|
26,329 | 24,327 | |||||||
Other real estate
|
5,820 | 5,936 | |||||||
Total
|
$ | 429,969 | $ | 444,631 | |||||
9. | Investments in Unconsolidated Subsidiaries |
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
Investment in Bluegreen Corporation
|
$ | 82,761 | $ | 80,572 | ||||
Investments in real estate joint ventures
|
475 | 608 | ||||||
BankAtlantic Bancorp’s investment in statutory business
trusts
|
7,910 | 7,910 | ||||||
Levitt’s investment in statutory business trusts (See
Note 12)
|
699 | — | ||||||
$ | 91,845 | $ | 89,090 | |||||
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
Total assets
|
$ | 671,266 | $ | 634,809 | ||||
Total liabilities
|
$ | 392,052 | 363,933 | |||||
Minority interest
|
6,782 | 6,009 | ||||||
Total shareholders’ equity
|
272,432 | 264,867 | ||||||
Total liabilities and shareholders’ equity
|
$ | 671,266 | $ | 634,809 | ||||
F-17
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2005 | 2004 | |||||||
Revenues and other income
|
$ | 130,048 | 107,144 | |||||
Cost and other expenses
|
118,776 | 98,672 | ||||||
Income before minority interest and provision for income taxes
|
11,272 | 8,472 | ||||||
Minority interest
|
773 | 829 | ||||||
Income before provision for income taxes
|
10,499 | 7,643 | ||||||
Provision for income taxes
|
4,042 | 2,943 | ||||||
Net income
|
$ | 6,457 | 4,700 | |||||
10. | Minority Interest |
March 31, | December 31, | |||||||
2005 | 2004 | |||||||
BankAtlantic Bancorp
|
$ | 376,070 | $ | 366,140 | ||||
Levitt
|
270,356 | 245,756 | ||||||
Joint Venture Partnerships
|
716 | 756 | ||||||
$ | 647,142 | $ | 612,652 | |||||
11. | BankAtlantic Branch Sale |
Amount | |||||
Assets sold:
|
|||||
Loans
|
$ | 2,235 | |||
Property and equipment
|
733 | ||||
Core deposit intangible assets
|
248 | ||||
Liabilities transferred: | |||||
Deposits
|
(17,716 | ) | |||
Accrued interest payable
|
(27 | ) | |||
Net assets sold
|
(14,527 | ) | |||
Gain on sale of branch(1)
|
935 | ||||
Net cash outflows from sale of branch
|
$ | (13,592 | ) | ||
(1) | The gain on sale of branch is included in other income in the Company’s Consolidated Statements of Operations. |
F-18
12. | Interest expense of consolidated entities, net of interest capitalized |
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
Interest expense
|
$ | 33,394 | $ | 23,436 | ||||
Interest capitalized
|
(3,946 | ) | (2,243 | ) | ||||
Interest expense, net
|
$ | 29,448 | $ | 21,193 | ||||
13. | Junior Subordinated Debentures |
F-19
14. | Contingencies and Financial Instruments with off-Balance Sheet Risk |
March 31, | December 31, | ||||||||
2005 | 2004 | ||||||||
BFC
|
|||||||||
Commitment to acquire Benihana Preferred Stock
|
$ | 10,000 | $ | 10,000 | |||||
BankAtlantic Bancorp
|
|||||||||
Commitments to sell fixed rate residential loans
|
16,985 | 19,537 | |||||||
Commitments to sell variable rate residential loans
|
5,399 | 6,588 | |||||||
Forward contract to purchase mortgage-backed securities
|
3,826 | 3,947 | |||||||
Commitments to purchase variable rate residential loans
|
291,143 | 40,015 | |||||||
Commitments to originate loans held for sale
|
18,753 | 21,367 | |||||||
Commitments to originate loans held to maturity
|
312,628 | 238,429 | |||||||
Commitments to extend credit, including the undisbursed portion
of loans in process
|
1,197,861 | 1,170,191 | |||||||
Standby letters of credit
|
55,590 | 55,605 | |||||||
Commercial lines of credit
|
135,603 | 121,688 |
F-20
15. | Certain Relationships and Related Party Transactions |
F-21
BFC | Levitt | Total | ||||||||||
Service fees and rent
|
$ | 80 | $ | 119 | $ | 199 | ||||||
BFC | Levitt | Total | ||||||||||
Service fees and rent
|
$ | 21 | $ | 95 | $ | 116 | ||||||
16. | Earnings per share |
F-22
Three Months Ended | ||||||||||
March 31, | ||||||||||
2005 | 2004 | |||||||||
(In thousands, except | ||||||||||
per share data) | ||||||||||
Basic earnings per share
|
||||||||||
Numerator:
|
||||||||||
Net income
|
$ | 4,400 | $ | 4,372 | ||||||
Less: Preferred stock dividends
|
188 | — | ||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | ||||||
Denominator:
|
||||||||||
Weighted average number of common shares outstanding
|
28,143 | 26,217 | ||||||||
Eliminate RAG weighted average number of common shares
|
(2,393 | ) | (2,393 | ) | ||||||
Basic weighted average number of common shares outstanding
|
25,750 | 23,824 | ||||||||
Basic earnings per share
|
$ | 0.16 | $ | 0.18 | ||||||
Diluted earnings per share
|
||||||||||
Numerator
|
||||||||||
Net income available to common shareholders
|
$ | 4,212 | $ | 4,372 | ||||||
Effect of securities issuable by subsidiaries
|
(174 | ) | (173 | ) | ||||||
Net income available after assumed dilution
|
$ | 4,038 | $ | 4,199 | ||||||
Denominator
|
||||||||||
Weighted average number of common shares outstanding
|
28,143 | 26,217 | ||||||||
Eliminate RAG weighted average number of common shares
|
(2,393 | ) | (2,393 | ) | ||||||
Common stock equivalents resulting from stock-based compensation
|
2,586 | 3,882 | ||||||||
Diluted weighted average shares outstanding
|
28,336 | 27,706 | ||||||||
Diluted earnings per share
|
$ | 0.14 | $ | 0.15 | ||||||
F-23
17. | Parent Company Financial Information |
March 31, | December 31, | ||||||||
2005 | 2004 | ||||||||
(In thousands) | |||||||||
Assets | |||||||||
Cash and cash equivalents
|
$ | 693 | $ | 1,520 | |||||
Investment securities
|
12,075 | 11,800 | |||||||
Investment in venture partnerships
|
963 | 971 | |||||||
Investment in BankAtlantic Bancorp
|
104,912 | 103,125 | |||||||
Investment in Levitt
|
53,886 | 48,983 | |||||||
Investment in other subsidiaries
|
13,912 | 14,219 | |||||||
Loans receivable
|
2,871 | 3,364 | |||||||
Other assets
|
1,233 | 2,596 | |||||||
Total assets
|
$ | 190,545 | $ | 186,578 | |||||
Liabilities and Shareholders’ Equity | |||||||||
Mortgages payable and other borrowings
|
$ | 9,483 | $ | 10,483 | |||||
Other liabilities
|
23,647 | 23,816 | |||||||
Deferred income taxes
|
29,327 | 27,028 | |||||||
Total liabilities
|
62,457 | 61,327 | |||||||
Total shareholders’ equity
|
128,088 | 125,251 | |||||||
Total liabilities and shareholders’ equity
|
$ | 190,545 | $ | 186,578 | |||||
F-24
Three Months Ended | ||||||||
March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revenues
|
$ | 300 | $ | 183 | ||||
Expenses
|
2,165 | 1,327 | ||||||
(Loss) before undistributed earnings from subsidiaries
|
(1,865 | ) | (1,144 | ) | ||||
Equity from earnings in BankAtlantic Bancorp
|
4,368 | 4,565 | ||||||
Equity from earnings in Levitt
|
4,955 | 2,902 | ||||||
Equity from (loss) earnings in other subsidiaries
|
(315 | ) | 584 | |||||
Income before income taxes
|
7,143 | 6,907 | ||||||
Provision for income taxes
|
2,743 | 2,535 | ||||||
Net income
|
4,400 | 4,372 | ||||||
5% Preferred Stock dividends
|
188 | — | ||||||
Net Income available to common shareholders
|
$ | 4,212 | $ | 4,372 | ||||
F-25
For the Three Months | ||||||||
Ended March 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Operating Activities:
|
||||||||
Net cash used in operating activities
|
$ | (178 | ) | $ | (1,029 | ) | ||
Investing Activities:
|
||||||||
Dividends from subsidiaries
|
528 | 435 | ||||||
Decrease in securities available for sale
|
— | 9 | ||||||
Net cash provided by investing activities
|
528 | 444 | ||||||
Financing Activities:
|
||||||||
Borrowings
|
(1,000 | ) | 1,145 | |||||
Retirement of common stock
|
— | (1,362 | ) | |||||
Issuance of common stock upon exercise of stock options
|
11 | 627 | ||||||
Preferred stock dividends paid
|
(188 | ) | — | |||||
Net cash (used in) provided by financing activities
|
(1,177 | ) | 410 | |||||
Decrease in cash and cash equivalents
|
(827 | ) | (175 | ) | ||||
Cash at beginning of period
|
1,520 | 1,536 | ||||||
Cash at end of period
|
$ | 693 | $ | 1,361 | ||||
Supplementary disclosure of non-cash investing and financing
activities
|
||||||||
Interest paid on borrowings
|
$ | 92 | $ | 90 | ||||
Net decrease in shareholders’ equity from the effect of
subsidiaries’ capital transactions, net of income taxes
|
(419 | ) | (743 | ) | ||||
(Decrease) increase in accumulated other comprehensive income,
net of taxes
|
(705 | ) | 317 | |||||
(Decrease) increase in shareholders’ equity for the tax
effect related to the exercise of employee stock options
|
(262 | ) | 3,592 |
18. | New Accounting Pronouncements |
F-26
19. | Subsequent Event |
F-27
/s/ Alan B. Levan Chief Executive Officer March 15, 2005 |
/s/ Glen R. Gilbert ----------------------------------------------------- Glen R. Gilbert Chief Financial Officer March 15, 2005 |
F-28
F-29
F-30
ERNST & YOUNG LLP | |
Certified Public Accountants | |
F-31
F-32
December 31, | ||||||||||
2004 | 2003 | |||||||||
(In thousands, | ||||||||||
except share data) | ||||||||||
ASSETS | ||||||||||
Cash and due from depository institutions
|
$ | 208,627 | $ | 143,542 | ||||||
Federal funds sold and securities purchased under resell
agreements
|
16,093 | — | ||||||||
Securities owned (at fair value)
|
125,443 | 124,565 | ||||||||
Securities available for sale (at fair value)
|
749,001 | 360,442 | ||||||||
Investment securities and tax certificates (approximate fair
value: $317,416 and $192,706)
|
317,891 | 192,706 | ||||||||
Federal Home Loan Bank stock, at cost which approximates
fair value
|
78,619 | 40,325 | ||||||||
Loans receivable, net of allowance for loan losses of $47,082
and $46,667
|
4,561,073 | 3,611,612 | ||||||||
Accrued interest receivable
|
35,995 | 27,912 | ||||||||
Properties and equipment, net
|
160,997 | 98,340 | ||||||||
Real estate held for development and sale
|
444,631 | 280,708 | ||||||||
Investments in and advances to unconsolidated subsidiaries
|
89,090 | 106,048 | ||||||||
Goodwill
|
77,981 | 76,674 | ||||||||
Core deposit intangible asset
|
10,270 | 11,985 | ||||||||
Due from clearing agent
|
16,619 | — | ||||||||
Other assets
|
62,517 | 61,376 | ||||||||
Total assets
|
$ | 6,954,847 | $ | 5,136,235 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Liabilities:
|
||||||||||
Interest bearing deposits
|
$ | 2,566,804 | $ | 2,413,106 | ||||||
Non-interest bearing deposits
|
890,398 | 645,036 | ||||||||
Total deposits
|
3,457,202 | 3,058,142 | ||||||||
Customer deposits on real estate held for sale
|
43,022 | 52,134 | ||||||||
Advances from FHLB
|
1,544,497 | 782,205 | ||||||||
Securities sold under agreements to repurchase
|
257,002 | 120,874 | ||||||||
Federal funds purchased
|
105,000 | — | ||||||||
Subordinated debentures, notes and bonds payable
|
278,605 | 164,100 | ||||||||
Junior subordinated debentures
|
263,266 | 263,266 | ||||||||
Securities sold not yet purchased
|
39,462 | 37,813 | ||||||||
Due to clearing agent
|
— | 8,583 | ||||||||
Deferred tax liabilities, net
|
8,455 | 2,895 | ||||||||
Other liabilities
|
220,433 | 140,614 | ||||||||
Total liabilities
|
6,216,944 | 4,630,626 | ||||||||
Minority interest
|
612,652 | 419,934 | ||||||||
Shareholders’ equity:
|
||||||||||
Preferred stock of $.01 par value; authorized
10,000,000 shares; 5% Cumulative Convertible Preferred
Stock (“5% Preferred Stock”) issued and outstanding
15,000 shares in 2004 and none in 2003
|
— | — | ||||||||
Class A common stock of $.01 par value, authorized
70,000,000 shares; issued and outstanding 23,861,542 in
2004 and 17,989,194 in 2003
|
217 | 163 | ||||||||
Class B common stock of $.01 par value, authorized
20,000,000 shares; issued and outstanding 4,279,656 in 2004
and 2,534,426 in 2003
|
41 | 23 | ||||||||
Additional paid-in capital
|
50,962 | 24,654 | ||||||||
Retained earnings
|
73,089 | 59,305 | ||||||||
Total shareholders’ equity before accumulated other
comprehensive income
|
124,309 | 84,145 | ||||||||
Accumulated other comprehensive income
|
942 | 1,530 | ||||||||
Total shareholders’ equity
|
125,251 | 85,675 | ||||||||
Total liabilities and shareholders’ equity
|
$ | 6,954,847 | $ | 5,136,235 | ||||||
F-33
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Revenues
|
|||||||||||||
Financial Services:
|
|||||||||||||
Interest and dividend income
|
$ | 258,181 | $ | 260,621 | $ | 303,087 | |||||||
Investment banking
|
227,669 | 207,788 | 130,738 | ||||||||||
Other income, net
|
115,728 | 73,501 | 58,519 | ||||||||||
601,578 | 541,910 | 492,344 | |||||||||||
Homebuilding and Real Estate Development:
|
|||||||||||||
Sales of real estate
|
549,652 | 283,058 | 207,808 | ||||||||||
Interest and dividend income
|
1,108 | 863 | 1,259 | ||||||||||
Other income
|
8,078 | 4,765 | 3,014 | ||||||||||
558,838 | 288,686 | 212,081 | |||||||||||
Other Operations:
|
|||||||||||||
Interest and dividend income
|
659 | 390 | 354 | ||||||||||
Other income, net
|
5,526 | 1,318 | 982 | ||||||||||
6,185 | 1,708 | 1,336 | |||||||||||
1,166,601 | 832,304 | 705,761 | |||||||||||
Costs and Expenses
|
|||||||||||||
Financial Services:
|
|||||||||||||
Interest expense, net of interest capitalized
|
87,471 | 111,989 | 150,336 | ||||||||||
(Recovery) provision for loan losses
|
(5,109 | ) | (547 | ) | 14,077 | ||||||||
Employee compensation and benefits
|
255,064 | 226,940 | 166,979 | ||||||||||
Occupancy and equipment
|
48,146 | 40,036 | 39,196 | ||||||||||
Advertising and promotion
|
21,036 | 12,724 | 10,447 | ||||||||||
Amortization of intangible assets
|
1,715 | 1,772 | 1,360 | ||||||||||
Impairment of securities
|
— | — | 18,801 | ||||||||||
Cost associated with debt redemption
|
11,741 | 12,543 | 3,125 | ||||||||||
Acquisition related charges and impairments
|
— | — | 4,925 | ||||||||||
Other expenses
|
74,351 | 74,857 | 57,935 | ||||||||||
494,415 | 480,314 | 467,181 | |||||||||||
Homebuilding and Real Estate Development:
|
|||||||||||||
Cost of sales of real estate
|
403,900 | 209,431 | 159,675 | ||||||||||
Interest expense, net of interest capitalized
|
259 | 233 | 389 | ||||||||||
Employee compensation and benefits
|
35,321 | 19,845 | 13,983 | ||||||||||
Selling, general and administrative expenses
|
34,797 | 21,968 | 16,083 | ||||||||||
Other expenses
|
7,341 | 1,692 | 1,532 | ||||||||||
481,618 | 253,169 | 191,662 | |||||||||||
Other Operations:
|
|||||||||||||
Interest expense
|
1,171 | 1,163 | 1,153 | ||||||||||
Employee compensation and benefits
|
3,865 | 2,553 | 2,332 | ||||||||||
Impairment of securities
|
363 | 3,071 | 1,583 | ||||||||||
Other expenses
|
2,551 | 1,022 | 876 | ||||||||||
7,950 | 7,809 | 5,944 | |||||||||||
983,983 | 741,292 | 664,787 | |||||||||||
Income before income taxes and equity in earnings from
unconsolidated subsidiaries
|
182,618 | 91,012 | 40,974 | ||||||||||
Equity in earnings from unconsolidated subsidiaries
|
19,603 | 10,126 | 9,327 | ||||||||||
F-34
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Income before income taxes, minority interest, discontinued
operations, extraordinary items and cumulative effect of a
change in accounting principle
|
202,221 | 101,138 | 50,301 | ||||||||||
Provision for income taxes
|
83,997 | 44,166 | 17,993 | ||||||||||
Minority interest in income of consolidated subsidiaries
|
103,994 | 51,093 | 38,294 | ||||||||||
Income from continuing operations
|
14,230 | 5,879 | (5,986 | ) | |||||||||
Discontinued operations, less income tax (benefit) provision of
$(517) in 2003 and $303 in 2002
|
— | 1,143 | 2,536 | ||||||||||
Extraordinary items, less income taxes of $2,771
|
— | — | 23,749 | ||||||||||
Cumulative effect of a change in accounting principle, less
income tax (benefit) provision of $(1,246) in 2002
|
— | — | (15,107 | ) | |||||||||
Net income
|
14,230 | 7,022 | 5,192 | ||||||||||
5% Preferred Stock dividends
|
392 | — | — | ||||||||||
Net income available to common shareholders
|
$ | 13,838 | $ | 7,022 | $ | 5,192 | |||||||
Earnings per share:
|
|||||||||||||
Basic earnings (loss) per share before discontinued operations,
extraordinary items and cumulative effect of
|
|||||||||||||
a change in accounting principle
|
$ | 0.57 | $ | 0.26 | $ | (0.27 | ) | ||||||
Basic earnings per share from discontinued operations
|
— | 0.05 | 0.11 | ||||||||||
Basic earnings per share from extraordinary items
|
— | — | 1.06 | ||||||||||
Basic loss per share from cumulative effect of a change in
accounting principle
|
— | — | (0.67 | ) | |||||||||
Basic earnings per share
|
$ | 0.57 | $ | 0.31 | $ | 0.23 | |||||||
Diluted earnings (loss) per share before discontinued
operations, extraordinary items and cumulative effect of a
change in accounting principle
|
$ | 0.47 | $ | 0.21 | $ | (0.28 | ) | ||||||
Diluted earnings per share from discontinued operations
|
— | 0.04 | 0.11 | ||||||||||
Diluted earnings per share from extraordinary items
|
— | — | 1.04 | ||||||||||
Diluted loss per share from cumulative effect of a change in
accounting principle
|
— | — | (0.66 | ) | |||||||||
Diluted earnings per share
|
$ | 0.47 | $ | 0.25 | $ | 0.21 | |||||||
Basic weighted average number of common shares outstanding
|
24,183 | 22,818 | 22,454 | ||||||||||
Diluted weighted average number of common and common equivalent
shares outstanding
|
27,806 | 26,031 | 22,454 |
F-35
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Net income
|
$ | 14,230 | $ | 7,022 | $ | 5,192 | ||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized gains (loss) on securities available for sale, net of
income tax provision (benefit) $281 in 2004, $ in $(620) in 2003
and $153 in 2002
|
448 | (988 | ) | 244 | ||||||||
Minimum pension liability net of income tax provision (benefit)
$(416) in 2004, $639 in 2003 and $(650) in 2002
|
(662 | ) | 1,018 | (1,035 | ) | |||||||
Unrealized gain (loss) associated with investment in
unconsolidated real estate subsidiary, net of income tax
provision (benefit) $(17) in 2004, $79 in 2003 and $(39) in 2002
|
(42 | ) | 121 | (62 | ) | |||||||
Accumulated gains associated with cash flow hedges, net of
income tax $198 in 2003 and $(80) in 2002
|
— | 315 | (127 | ) | ||||||||
Reclassification adjustment for cash flow hedges
|
— | 70 | (74 | ) | ||||||||
Reclassification adjustment for net gain included in net income
|
(332 | ) | 126 | (770 | ) | |||||||
(588 | ) | 662 | (1,824 | ) | ||||||||
Comprehensive income
|
$ | 13,642 | $ | 7,684 | $ | 3,368 | ||||||
F-36
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Class A | Class B | Additional | Comprehensive | |||||||||||||||||||||
Common | Common | Paid-In | Retained | Income | ||||||||||||||||||||
Stock | Stock | Capital | Earnings | (Loss) | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Balance, December 31, 2001
|
$ | 58 | $ | 21 | $ | 24,206 | $ | 47,195 | $ | 2,692 | $ | 74,172 | ||||||||||||
Net income
|
— | — | — | 5,192 | — | 5,192 | ||||||||||||||||||
Other comprehensive loss, net of tax
|
— | — | — | — | (1,824 | ) | (1,824 | ) | ||||||||||||||||
Net effect of Bancorp capital transactions, net of income taxes
|
— | — | (15 | ) | — | — | (15 | ) | ||||||||||||||||
Retirement of Class B common stock
|
— | (1 | ) | (318 | ) | — | — | (319 | ) | |||||||||||||||
Issuance of Class B common stock
|
— | 1 | 144 | — | — | 145 | ||||||||||||||||||
Tax effect relating to the exercise of stock options
|
— | — | 60 | — | — | 60 | ||||||||||||||||||
Balance, December 31, 2002
|
$ | 58 | $ | 21 | $ | 24,077 | $ | 52,387 | $ | 868 | $ | 77,411 | ||||||||||||
Net income
|
— | — | — | 7,022 | — | 7,022 | ||||||||||||||||||
Other comprehensive income
|
— | — | — | — | 662 | 662 | ||||||||||||||||||
Net effect of subsidiaries capital transactions, net of income
taxes
|
— | — | (252 | ) | — | — | (252 | ) | ||||||||||||||||
Common stock splits
|
104 | — | — | (104 | ) | — | — | |||||||||||||||||
Issuance of common stock
|
1 | 2 | 279 | — | — | 282 | ||||||||||||||||||
Tax effect relating to the exercise of stock options
|
— | — | 550 | — | — | 550 | ||||||||||||||||||
Balance, December 31, 2003
|
$ | 163 | $ | 23 | $ | 24,654 | $ | 59,305 | $ | 1,530 | $ | 85,675 | ||||||||||||
Net income
|
— | — | — | 14,230 | — | 14,230 | ||||||||||||||||||
Other comprehensive loss, net of tax
|
— | — | — | — | (588 | ) | (588 | ) | ||||||||||||||||
Net effect of subsidiaries’ capital transactions, net of
income taxes
|
— | — | 5,812 | — | — | 5,812 | ||||||||||||||||||
Retirement of Common Stock
|
— | (6 | ) | (7,276 | ) | — | — | (7,282 | ) | |||||||||||||||
Issuance of Common Stock
|
— | 24 | 1,767 | — | — | 1,791 | ||||||||||||||||||
Issuance of 5% Preferred Stock
|
— | — | 14,988 | — | — | 14,988 | ||||||||||||||||||
Cash dividends on 5% Preferred Stock
|
— | — | — | (392 | ) | — | (392 | ) | ||||||||||||||||
Common stock split
|
54 | — | — | (54 | ) | — | — | |||||||||||||||||
Tax effect relating to the exercise of stock options
|
— | — | 11,017 | — | — | 11,017 | ||||||||||||||||||
Balance, December 31, 2004
|
$ | 217 | $ | 41 | $ | 50,962 | $ | 73,089 | $ | 942 | $ | 125,251 | ||||||||||||
F-37
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Operating activities:
|
||||||||||||
Income from continuing operations
|
$ | 14,230 | $ | 5,879 | $ | (5,986 | ) | |||||
Income from discontinued operations, net of tax
|
— | 1,143 | 2,536 | |||||||||
Income from extraordinary item, net of tax
|
— | — | 23,749 | |||||||||
Cumulative effect of a change in accounting principle, net of tax
|
— | — | (15,107 | ) | ||||||||
Adjustment to reconcile net income to net cash provided by
operating activities:
|
||||||||||||
Minority interest in income of consolidated subsidiaries
|
103,994 | 51,093 | 38,294 | |||||||||
Provision for loan losses, real estate owned and tax certificates
|
(5,105 | ) | 1,465 | 17,019 | ||||||||
Depreciation, amortization and accretion, net
|
17,577 | 19,167 | 11,128 | |||||||||
Amortization of intangible assets
|
1,715 | 1,772 | 1,360 | |||||||||
Securities activities, net
|
(7,198 | ) | 1,110 | (8,578 | ) | |||||||
Gains on sale of REO
|
(694 | ) | (1,984 | ) | (117 | ) | ||||||
Gain on Gruntal transaction
|
— | — | (26,520 | ) | ||||||||
Equity in earnings from unconsolidated subsidiaries
|
(19,603 | ) | (10,126 | ) | (9,327 | ) | ||||||
Restructuring charges and impairment write-downs, net
|
— | 257 | 4,852 | |||||||||
Impairment of goodwill
|
— | — | 16,353 | |||||||||
Impairment of securities
|
362 | 3,071 | 20,384 | |||||||||
Litigation settlements
|
(23,987 | ) | — | — | ||||||||
Cost associated with debt redemption
|
11,741 | 12,543 | 3,125 | |||||||||
Issuance of forgivable notes receivable to Ryan Beck employees
|
(8,079 | ) | (6,260 | ) | (10,463 | ) | ||||||
Originations and repayment of loans held for sale, net
|
(162,410 | ) | (32,305 | ) | (24,091 | ) | ||||||
Proceeds from sales of loans held for sale
|
170,709 | 44,617 | 41,602 | |||||||||
(Decrease) increase in securities owned activities, net
|
(878 | ) | (43,194 | ) | 33,751 | |||||||
Increase in real estate inventory
|
(142,511 | ) | (52,642 | ) | (57,131 | ) | ||||||
(Increase) decrease in accrued interest receivable
|
(8,093 | ) | 6,124 | 2,557 | ||||||||
Decrease (increase) in deferred tax liabilities, net
|
17,894 | 13,073 | (1,954 | ) | ||||||||
(Increase) decrease in other assets
|
(2,085 | ) | (7,651 | ) | (849 | ) | ||||||
Increase (decrease) in other liabilities
|
47,525 | 78,397 | (25,399 | ) | ||||||||
(Decrease) increase in due to clearing agent
|
(25,202 | ) | 10,353 | (32,876 | ) | |||||||
Increase (decrease) in securities sold but not yet purchased
|
1,649 | 3,591 | (1,629 | ) | ||||||||
Net cash (used in) provided by operating activities
|
$ | (18,449 | ) | $ | 99,493 | $ | (3,317 | ) | ||||
Investing activities:
|
||||||||||||
Purchase of investment securities and tax certificates
|
(319,256 | ) | (205,209 | ) | (238,700 | ) | ||||||
Proceeds from redemption and maturity of investment securities
and tax certificates
|
220,414 | 205,677 | 239,176 | |||||||||
Purchase of securities available for sale
|
(677,050 | ) | (279,127 | ) | (356,795 | ) | ||||||
Proceeds from sales and maturities of securities available for
sale
|
308,529 | 631,350 | 772,339 | |||||||||
Net purchases and (originations) repayments of loans and
leases
|
(928,493 | ) | (235,735 | ) | (23,776 | ) | ||||||
Proceeds from sales of real estate owned
|
3,821 | 10,807 | 6,015 |
F-38
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Purchase of properties and net additions to office properties
and equipment
|
(75,759 | ) | (16,104 | ) | (23,676 | ) | ||||||
Proceeds from sales of properties and equipment
|
— | — | 1,986 | |||||||||
Proceeds from sales of bank facilities real estate held for sale
|
852 | — | 6,012 | |||||||||
(Investments) and repayments from unconsolidated subsidiaries,
net
|
10,442 | 1,044 | (49,902 | ) | ||||||||
(Purchases) redemptions of FHLB stock, net
|
(38,294 | ) | 24,618 | (452 | ) | |||||||
Net cash proceeds from the sale of Ryan Beck’s subsidiaries
|
— | 9,955 | — | |||||||||
Acquisitions, net of cash acquired
|
(6,109 | ) | — | (52,783 | ) | |||||||
Net cash (used in) provided by investing activities
|
$ | (1,500,903 | ) | $ | 147,276 | $ | 279,444 | |||||
Financing activities:
|
||||||||||||
Net increase in deposits
|
$ | 399,060 | $ | 137,587 | $ | 47,858 | ||||||
Reduction in deposits from sale of in-store branches, net
|
— | — | (42,597 | ) | ||||||||
Proceeds from FHLB advances
|
1,220,000 | 275,000 | 227,499 | |||||||||
Repayments of FHLB advances
|
(469,323 | ) | (799,991 | ) | (172,736 | ) | ||||||
Net increase (decrease) in federal funds purchased
|
105,000 | — | (61,000 | ) | ||||||||
Proceeds from notes and bonds payable
|
325,401 | 134,016 | 158,831 | |||||||||
Issuance of trust preferred securities
|
— | — | 180,375 | |||||||||
Issuance of junior subordinated debentures
|
— | 77,320 | — | |||||||||
Repayment of notes and bonds payable
|
(227,621 | ) | (112,563 | ) | (95,772 | ) | ||||||
Retirement of subordinated notes and debentures
|
— | (70,855 | ) | (21,716 | ) | |||||||
Retirement of trust preferred securities
|
— | — | (74,750 | ) | ||||||||
Net increase (decrease) in securities sold under agreements to
repurchase
|
133,119 | 4,767 | (289,791 | ) | ||||||||
Change in minority interest
|
— | — | (61 | ) | ||||||||
Issuance of 5% Preferred Stock, net of issuance cost
|
14,988 | — | — | |||||||||
5% Preferred Stock dividends paid
|
(392 | ) | — | — | ||||||||
Issuance of BFC common stock upon exercise of stock options
|
1,791 | 282 | 205 | |||||||||
Retirement of BFC Class B common stock accepted as
consideration for the minimum withholding tax upon the exercise
of stock options
|
(7,282 | ) | — | (319 | ) | |||||||
Issuance of Levitt Corporation common stock, net of issuance cost
|
114,769 | — | — | |||||||||
Levitt common stock dividends paid to non-BFC shareholders
|
(661 | ) | — | — | ||||||||
BankAtlantic Bancorp common stock dividends paid to non-BFC
shareholders
|
(6,331 | ) | (5,839 | ) | (5,411 | ) | ||||||
Venture Partnerships distribution paid to non-BFC partners
|
(1,376 | ) | — | — | ||||||||
Issuance of BankAtlantic Bancorp common stock
|
2,334 | 4,472 | 1,296 |
F-39
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Retirement of BankAtlantic Bancorp Class A common stock
accepted as consideration for the minimum withholding tax upon
the exercise of stock options
|
(2,946 | ) | — | — | ||||||||
Net cash provided by (used in) financing activities
|
1,600,530 | (355,804 | ) | (148,089 | ) | |||||||
Increase (decrease) in cash and cash equivalents
|
81,178 | (109,035 | ) | 128,038 | ||||||||
Cash and cash equivalents at the beginning of period
|
143,542 | 252,577 | 124,539 | |||||||||
Cash and cash equivalents at end of period
|
$ | 224,720 | $ | 143,542 | $ | 252,577 | ||||||
Cash paid for:
|
||||||||||||
Interest paid on borrowings and deposits, net of capitalized
interest
|
$ | 89,193 | $ | 121,384 | $ | 160,069 | ||||||
Income taxes paid
|
56,044 | 31,115 | 36,790 | |||||||||
Supplementary disclosure of non-cash investing and financing
activities:
|
||||||||||||
Loans transferred to REO
|
1,401 | 2,450 | 13,067 | |||||||||
Net loan recoveries (charge-offs)
|
5,524 | (1,146 | ) | (19,784 | ) | |||||||
Tax certificate net charge-offs
|
(427 | ) | (203 | ) | (1,123 | ) | ||||||
Decrease in minority interest resulting from the retirement of
BankAtlantic Bancorp Class A common stock obtained from
litigation settlement
|
6,058 | — | — | |||||||||
BankAtlantic Bancorp decreases in current income taxes payable
from the tax effect of fair value of employee stock options
|
6,610 | 2,264 | 440 | |||||||||
Securities purchased pending settlement
|
25,546 | — | — | |||||||||
Increase (decrease) in accumulated other comprehensive income,
net of taxes
|
(588 | ) | 662 | (1,824 | ) | |||||||
Net increase (decrease) in shareholders’ equity from the
effect of subsidiaries’ capital transactions, net of income
taxes
|
5,812 | (252 | ) | (15 | ) | |||||||
Increase in shareholders’ equity for the tax effect related
to the exercise of employee stock options
|
11,017 | 550 | 60 | |||||||||
Fair value of assets acquired from acquisition of Bowden
Building Corporation
|
26,463 | — | — | |||||||||
Fair value of liabilities assumed from acquisition of Bowden
Building Corporation
|
20,354 | — | — | |||||||||
Note receivable issued in connection with the GMS sale
|
— | 13,681 | — | |||||||||
Increase in joint venture investment resulting from unrealized
gain on non-monetary exchange
|
409 | — | — | |||||||||
Adjustment to goodwill related to the allowance for loan losses
|
— | 734 | 9,144 | |||||||||
Securities held to maturity transferred to available for sale
|
— | 14,505 | — | |||||||||
Transfer of fixed assets to real estate held for sale
|
— | 1,000 | — | |||||||||
Increase in investments in unconsolidated subsidiaries related
to deconsolidation of trusts formed to issue trust preferred
securities
|
— | 7,910 | — | |||||||||
Increase in junior subordinated debentures related to trust
deconsolidation
|
— | 7,910 | — |
F-40
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Transfer of guaranteed preferred beneficial interest in
BankAtlantic Bancorp’s junior subordinated debentures to
junior subordinated debentures
|
— | 180,375 | — | |||||||||
Change in minority interest resulting from issuance of
BankAtlantic Bancorp Class A common stock upon conversion
of subordinated debentures
|
— | 211 | 25 | |||||||||
Issuance of notes payable under the Ryan Beck deferred
compensation plan
|
— | — | 3,675 | |||||||||
Decrease in minority interest resulting from the distribution of
securities investment
|
— | — | (8,655 | ) |
F-41
1. | Summary of Significant Accounting Policies |
F-42
Shares | Percent of | Percent | |||||||||||
Owned | Ownership | of Vote | |||||||||||
BankAtlantic Bancorp
|
|||||||||||||
Class A Common Stock
|
8,329,236 | 15.09 | % | 8.00 | % | ||||||||
Class B Common Stock
|
4,876,124 | 100.00 | % | 47.00 | % | ||||||||
Total
|
13,205,360 | 21.98 | % | 55.00 | % | ||||||||
Levitt
|
|||||||||||||
Class A Common Stock
|
2,074,243 | 11.15 | % | 5.91 | % | ||||||||
Class B Common Stock
|
1,219,031 | 100.00 | % | 47.00 | % | ||||||||
Total
|
3,293,274 | 16.62 | % | 52.91 | % |
F-43
F-44
F-45
F-46
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Interest expense
|
$ | 101,139 | $ | 122,269 | $ | 159,546 | ||||||
Interest capitalized
|
(12,238 | ) | (8,884 | ) | (7,668 | ) | ||||||
Interest expense, net
|
$ | 88,901 | $ | 113,385 | $ | 151,878 | ||||||
F-47
F-48
F-49
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands, except | ||||||||||||
per share data) | ||||||||||||
Pro forma net income
|
||||||||||||
Net income available to common shareholders, as reported
|
$ | 13,838 | $ | 7,022 | $ | 5,192 | ||||||
Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects and minority
interest
|
38 | 52 | 55 | |||||||||
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net of
related income tax effects and minority interest
|
(897 | ) | (639 | ) | (477 | ) | ||||||
Pro forma net income
|
$ | 12,979 | $ | 6,435 | $ | 4,770 | ||||||
Earnings per share:
|
||||||||||||
Basic as reported
|
$ | 0.57 | $ | 0.31 | $ | 0.23 | ||||||
Basic pro forma
|
$ | 0.54 | $ | 0.28 | $ | 0.21 | ||||||
Diluted as reported
|
$ | 0.47 | $ | 0.25 | $ | 0.21 | ||||||
Diluted pro forma
|
$ | 0.44 | $ | 0.23 | $ | 0.19 | ||||||
New Accounting Pronouncements: |
F-50
2. | Discontinued Operations and Acquisitions |
Discontinued Operations |
F-51
For the Years Ended | ||||||||
December 31, | ||||||||
2003 | 2002 | |||||||
(In thousands) | ||||||||
Revenues:
|
||||||||
Interest income
|
$ | 6,279 | $ | 5,424 | ||||
Investment banking income
|
17,782 | 20,418 | ||||||
Other
|
1,375 | 1,706 | ||||||
25,436 | 27,548 | |||||||
Expenses:
|
||||||||
Interest expense
|
1,039 | 1,237 | ||||||
Employee compensation and benefits
|
17,377 | 17,986 | ||||||
Other
|
6,394 | 5,486 | ||||||
24,810 | 24,709 | |||||||
Income before income taxes
|
626 | 2,839 | ||||||
(Benefit) provision for income taxes
|
(517 | ) | 303 | |||||
Income from discontinued operations, net of tax
|
$ | 1,143 | $ | 2,536 | ||||
F-52
Cash
|
$ | 815 | ||
Securities owned
|
105,083 | |||
Property and equipment
|
559 | |||
Goodwill
|
1,204 | |||
Other assets
|
5,479 | |||
Securities sold but not yet purchased
|
(3,781 | ) | ||
Due to clearing agent
|
(80,561 | ) | ||
Other liabilities
|
(4,347 | ) | ||
Net assets sold or transferred
|
24,451 | |||
Notes receivable — GMS Holdings, Inc.
|
(13,681 | ) | ||
Cash sold
|
(815 | ) | ||
Net cash proceeds received
|
$ | 9,955 | ||
Acquisitions |
Cash, cash equivalents and restricted cash
|
$ | 1,335 | ||
Inventory
|
21,927 | |||
Property and equipment
|
409 | |||
Other assets
|
2,820 | |||
Goodwill
|
1,307 | |||
Fair value of assets acquired
|
27,798 | |||
Accounts payable and accrued liabilities
|
2,747 | |||
Customer deposits
|
287 | |||
Notes payable
|
16,725 | |||
Deferred tax liability
|
595 | |||
Fair value of liabilities assumed
|
20,354 | |||
Purchase price
|
7,444 | |||
Cash acquired
|
(1,335 | ) | ||
Purchase of Bowden, net of cash acquired
|
$ | 6,109 | ||
F-53
Community | Gruntal | Total | |||||||||||
Cash and interest-earning deposits
|
$ | 124,977 | $ | 886 | $ | 125,863 | |||||||
Securities available for sale
|
79,768 | — | 79,768 | ||||||||||
Securities owned
|
— | 151,909 | 151,909 | ||||||||||
Loans receivable, net
|
623,469 | — | 623,469 | ||||||||||
FHLB stock
|
8,063 | — | 8,063 | ||||||||||
Investments and advances in unconsolidated subsidiaries
|
16,122 | — | 16,122 | ||||||||||
Goodwill
|
55,068 | — | 55,068 | ||||||||||
Core deposit intangible asset
|
15,117 | — | 15,117 | ||||||||||
Other assets
|
46,620 | 12,597 | 59,217 | ||||||||||
Fair value of assets acquired
|
969,204 | 165,392 | 1,134,596 | ||||||||||
Deposits
|
639,111 | — | 639,111 | ||||||||||
FHLB advances
|
138,981 | — | 138,981 | ||||||||||
Other borrowings
|
14,291 | 3,427 | 17,718 | ||||||||||
Securities sold, but not yet purchased
|
— | 1,201 | 1,201 | ||||||||||
Due to clearing agent
|
— | 101,705 | 101,705 | ||||||||||
Other liabilities
|
6,022 | 27,463 | (1) | 33,485 | |||||||||
Fair value of liabilities assumed
|
798,405 | 133,796 | 932,201 | ||||||||||
Fair value of net assets acquired over cost
|
— | (23,749 | )(2) | (23,749 | ) | ||||||||
Purchase price
|
170,799 | 7,847 | 178,646 | ||||||||||
Cash acquired
|
(124,977 | ) | (886 | ) | (125,863 | ) | |||||||
Purchase price net of cash acquired
|
$ | 45,822 | $ | 6,961 | $ | 52,783 | |||||||
F-54
(1) | Included in Gruntal’s other liabilities were a $21 million deferred compensation plan obligation, of which $18.3 million was vested. Also included in other liabilities was $675,000 of termination costs for contract obligations related to leased equipment and $654,000 of contract termination obligations associated with closing certain Gruntal branches. |
(2) | The Company recognized an extraordinary gain of $23.7 million, net of income taxes of $2.8 million, and reduced the carrying amount of non-financial assets by $11.2 million as a result of the fair value of the assets acquired exceeding the cost of the Gruntal transaction. BankAtlantic Bancorp did not establish a deferred tax liability for the extraordinary gain associated with the GMS membership interest acquired because BankAtlantic Bancorp acquired the GMS membership interest rather than the net assets. |
2002 | ||||||||
Historical | Pro Forma | |||||||
(In thousands, except per | ||||||||
share data) | ||||||||
Interest income
|
$ | 304,700 | $ | 320,654 | ||||
Interest expense
|
151,878 | 158,598 | ||||||
Provision for loan losses
|
14,077 | 16,121 | ||||||
Loss from continuing operations
|
$ | (5,986 | ) | $ | (6,498 | ) | ||
Basic loss per share from continuing operations
|
$ | (0.27 | ) | $ | (0.29 | ) | ||
Diluted loss per share from continuing operations
|
$ | (0.28 | ) | $ | (0.30 | ) | ||
F-55
3. | Available for Sale Securities, Investment Securities, Tax Certificates and Short-Term Investments |
Available for Sale December 31, 2004 | Available for Sale December 31, 2003 | |||||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | Amortized | Unrealized | Unrealized | Estimated | |||||||||||||||||||||||||||
Cost | Appreciation | Depreciation | Fair Value | Cost | Appreciation | Depreciation | Fair Value | |||||||||||||||||||||||||||
Mortgage-Backed Securities:
|
||||||||||||||||||||||||||||||||||
Mortgage-backed securities
|
$ | 401,566 | $ | 3,848 | $ | 1,587 | $ | 403,827 | $ | 315,520 | $ | 6,262 | $ | 529 | $ | 321,253 | ||||||||||||||||||
Real estate mortgage investment conduits
|
96,938 | 188 | 436 | 96,690 | 17,378 | 120 | — | 17,498 | ||||||||||||||||||||||||||
Total mortgage-backed securities
|
498,504 | 4,036 | 2,023 | 500,517 | 332,898 | 6,382 | 529 | 338,751 | ||||||||||||||||||||||||||
Investment Securities:
|
||||||||||||||||||||||||||||||||||
Tax-exempt securities
|
219,322 | 2,062 | 1,030 | 220,354 | — | — | — | — | ||||||||||||||||||||||||||
Other bonds
|
585 | — | — | 585 | 585 | — | — | 585 | ||||||||||||||||||||||||||
Equity securities
|
23,141 | 4,404 | — | 27,545 | 16,635 | 4,471 | — | 21,106 | ||||||||||||||||||||||||||
Total investment securities
|
243,048 | 6,466 | 1,030 | 248,484 | 17,220 | 4,471 | — | 21,691 | ||||||||||||||||||||||||||
Total
|
$ | 741,552 | $ | 10,502 | $ | 3,053 | $ | 749,001 | $ | 350,118 | $ | 10,853 | $ | 529 | $ | 360,442 | ||||||||||||||||||
Investment Securities and Tax Certificates | |||||||||||||||||||||||||||||||||
December 31, 2004 | December 31, 2003 | ||||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | Amortized | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||
Cost | Appreciation | Depreciation | Fair Value | Cost | Appreciation | Depreciation | Fair Value | ||||||||||||||||||||||||||
Tax certificates(1) —
|
|||||||||||||||||||||||||||||||||
Net of allowance of $3,297
|
$ | 166,731 | $ | — | $ | — | $ | 166,731 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Net of allowance of $2,870
|
— | — | — | — | 190,906 | — | — | 190,906 | |||||||||||||||||||||||||
Tax-exempt securities
|
133,562 | 302 | 777 | 133,087 | — | — | — | — | |||||||||||||||||||||||||
Limited partnership(2)
|
5,000 | 345 | — | 5,345 | — | — | — | — | |||||||||||||||||||||||||
Investment securities(3)
|
12,253 | — | — | 12,253 | 1,800 | — | — | 1,800 | |||||||||||||||||||||||||
$ | 317,546 | $ | 647 | $ | 777 | $ | 317,416 | $ | 192,706 | $ | — | $ | — | $ | 192,706 | ||||||||||||||||||
(1) | Management considers estimated fair value equivalent to book value for tax certificates since these securities have no readily traded market and are deemed to approximate fair value. |
(2) | The limited partnership invests in companies in the financial service industry and is recorded at fair value in Investment Securities and Tax Certificates. |
(3) | Investment securities consist of equity instruments purchased through private placements and are accounted for at historical cost adjusted for other-than-temporary declines in value. Also included in investment securities is BFC’s investment in Benihana of $10.0 million as discussed in Note 4. |
F-56
Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||||
Available for sale securities:
|
|||||||||||||||||||||||||
Mortgage-backed securities
|
$ | 91,091 | $ | (1,256 | ) | $ | 52,253 | $ | (331 | ) | $ | 143,344 | $ | (1,587 | ) | ||||||||||
Real estate mortgage investment conduits
|
71,705 | (436 | ) | — | — | 71,705 | (436 | ) | |||||||||||||||||
Tax exempt securities
|
71,523 | (1,030 | ) | — | — | 71,523 | (1,030 | ) | |||||||||||||||||
Total available for sale securities
|
234,319 | (2,722 | ) | 52,253 | (331 | ) | 286,572 | (3,053 | ) | ||||||||||||||||
Investment securities
|
|||||||||||||||||||||||||
Tax exempt securities
|
78,585 | (777 | ) | — | — | 78,585 | (777 | ) | |||||||||||||||||
Total
|
$ | 312,904 | $ | (3,499 | ) | $ | 52,253 | $ | (331 | ) | $ | 365,157 | $ | (3,830 | ) | ||||||||||
Debt Securities | Tax Certificates and | ||||||||||||||||
Available for Sale | Investment Securities | ||||||||||||||||
Amortized | Estimated | Amortized | Estimated | ||||||||||||||
Cost | Fair Value | Cost | Fair Value | ||||||||||||||
December 31, 2004(1)(2)
|
|||||||||||||||||
Due within one year
|
$ | 4,419 | $ | 4,398 | $ | 118,725 | $ | 118,725 | |||||||||
Due after one year, but within five years
|
6,285 | 6,226 | 48,006 | 48,006 | |||||||||||||
Due after five years, but within ten years
|
86,136 | 86,051 | — | — | |||||||||||||
Due after ten years(3)
|
621,571 | 624,781 | 133,562 | 133,087 | |||||||||||||
Total
|
$ | 718,411 | $ | 721,456 | $ | 300,293 | $ | 299,818 | |||||||||
(1) | Scheduled maturities in the above table may vary significantly from actual maturities due to prepayments. |
F-57
(2) | Except for tax certificates, maturities are based upon contractual maturities. Tax certificates do not have stated maturities, and estimates in the above table are based upon historical repayment experience (generally 1 to 2 years). |
(3) | Amounts include $294 million of callable tax exempt securities with call dates ranging from 2008 to 2015. |
For the Years Ended | ||||||||||||
December 31 | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Balance, beginning of period
|
$ | 2,870 | $ | 1,873 | $ | 1,521 | ||||||
Charge-offs
|
(491 | ) | (869 | ) | (1,783 | ) | ||||||
Recoveries
|
918 | 666 | 660 | |||||||||
Net recoveries (charge-offs)
|
427 | (203 | ) | (1,123 | ) | |||||||
Provision charged to operations
|
— | 1,200 | 1,475 | |||||||||
Balance, end of period
|
$ | 3,297 | $ | 2,870 | $ | 1,873 | ||||||
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Gross gains on securities activities
|
$ | 7,162 | $ | 900 | $ | 8,711 | ||||||
Gross losses on securities activities
|
— | (1,961 | ) | (67 | ) | |||||||
Realized gain on future contract
|
36 | — | — | |||||||||
Realized loss on future contract
|
— | (49 | ) | (66 | ) | |||||||
Net (losses) gains on securities activities
|
$ | 7,198 | $ | (1,110 | ) | $ | 8,578 | |||||
F-58
December 31, | ||||||||||
2004 | 2003 | |||||||||
Debt obligations:
|
||||||||||
States and municipalities
|
$ | 10,824 | $ | 9,903 | ||||||
Corporations
|
10,093 | 5,159 | ||||||||
U.S. Government and agencies
|
57,659 | 62,229 | ||||||||
Corporate equity
|
18,042 | 15,072 | ||||||||
Mutual funds
|
27,898 | 24,639 | ||||||||
Certificates of deposits
|
927 | 7,563 | ||||||||
Total
|
$ | 125,443 | $ | 124,565 | ||||||
December 31, | ||||||||
2004 | 2003 | |||||||
Corporate equity
|
$ | 3,498 | $ | 3,544 | ||||
Corporate bonds
|
9,958 | 1,963 | ||||||
State and municipalities
|
269 | 67 | ||||||
U.S. Government agencies
|
25,384 | 32,231 | ||||||
Certificates of deposits
|
353 | 8 | ||||||
$ | 39,462 | $ | 37,813 | |||||
F-59
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Ending Balance
|
$ | — | $ | — | $ | 30,145 | ||||||
Maximum outstanding at any month end within period
|
$ | — | $ | 160,000 | $ | 30,145 | ||||||
Average amount invested during period
|
$ | — | $ | 31,589 | $ | 4,558 | ||||||
Average yield during period
|
— | 0.60 | % | 0.73 |
For the Years Ended | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Ending Balance
|
$ | 5,100 | $ | — | $ | 20,000 | ||||||
Maximum outstanding at any month end within period
|
$ | 54,530 | $ | 83,000 | $ | 20,000 | ||||||
Average amount invested during period
|
$ | 6,282 | $ | 16,499 | $ | 3,928 | ||||||
Average yield during period
|
0.75 | % | 1.01 | % | 1.45 | % |
December 31, | ||||||||
2004 | 2003 | |||||||
Treasury tax and loan
|
$ | 1,784 | $ | 1,724 | ||||
Repurchase agreements
|
312,171 | 144,984 | ||||||
Public deposits
|
53,838 | — | ||||||
Interest rate swap and forward contracts
|
— | 174 | ||||||
$ | 367,793 | $ | 146,882 | |||||
4. | Benihana Convertible Preferred Stock Investment |
F-60
F-61
5. | Loans Receivable |
December 31, | ||||||||||
2004 | 2003 | |||||||||
Real estate loans:
|
||||||||||
Residential
|
$ | 2,065,658 | $ | 1,343,657 | ||||||
Construction and development
|
1,454,048 | 1,322,268 | ||||||||
Commercial
|
1,082,294 | 1,071,787 | ||||||||
Small business
|
123,740 | 107,835 | ||||||||
Other loans:
|
||||||||||
Home equity
|
457,058 | 333,655 | ||||||||
Commercial business
|
91,505 | 91,724 | ||||||||
Small business — non-mortgage
|
66,679 | 51,898 | ||||||||
Consumer loans
|
14,540 | 17,892 | ||||||||
Deposit overdrafts
|
3,894 | 4,036 | ||||||||
Residential loans held for sale
|
4,646 | 2,254 | ||||||||
Other loans
|
3,364 | 4,175 | ||||||||
Discontinued loans products(1)
|
8,285 | 35,544 | ||||||||
Total gross loans
|
5,375,711 | 4,386,725 | ||||||||
Adjustments:
|
||||||||||
Undisbursed portion of loans in process
|
(767,804 | ) | (728,100 | ) | ||||||
Premiums related to purchased loans
|
6,609 | 6,898 | ||||||||
Deferred fees
|
(5,812 | ) | (6,655 | ) | ||||||
Deferred profit on commercial real estate loans
|
(549 | ) | (589 | ) | ||||||
Allowance for loan and lease losses
|
(47,082 | ) | (46,667 | ) | ||||||
Loans receivable — net
|
$ | 4,561,073 | $ | 3,611,612 | ||||||
(1) | Discontinued loan products consist of non-mortgage syndication loan, lease financings, indirect consumer loans and certain small business loans originated before 2002. These loan products were discontinued during prior periods. |
Florida
|
56 | % | ||
California
|
12 | % | ||
Northeast
|
8 | % | ||
Other
|
24 | % | ||
100 | % | |||
F-62
Allowance for Loan Losses (in thousands): |
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Balance, beginning of period
|
$ | 46,667 | $ | 49,094 | $ | 45,657 | ||||||
Loans charged-off
|
(4,076 | ) | (11,723 | ) | (28,663 | ) | ||||||
Recoveries of loans previously charged-off
|
9,600 | 10,577 | 8,879 | |||||||||
Net recoveries (charge-offs)
|
5,524 | (1,146 | ) | (19,784 | ) | |||||||
Allowance for loan losses, acquired
|
— | (734 | ) | 9,144 | ||||||||
Net provision charged (credited) to operations
|
(5,109 | ) | (547 | ) | 14,077 | |||||||
Balance, end of period
|
$ | 47,082 | $ | 46,667 | $ | 49,094 | ||||||
December 31, 2004 | December 31, 2003 | ||||||||||||||||
Gross | Gross | ||||||||||||||||
Recorded | Specific | Recorded | Specific | ||||||||||||||
Investment | Allowances | Investment | Allowances | ||||||||||||||
Impaired loans with specific valuation allowances
|
$ | 247 | $ | 123 | $ | 361 | $ | 181 | |||||||||
Impaired loans without specific valuation allowances
|
8,123 | — | 12,325 | — | |||||||||||||
Total
|
$ | 8,370 | $ | 123 | $ | 12,686 | $ | 181 | |||||||||
F-63
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Contracted interest income
|
$ | 464 | $ | 666 | $ | 1,575 | ||||||
Interest income recognized
|
(192 | ) | (396 | ) | (768 | ) | ||||||
Foregone interest income
|
$ | 272 | $ | 270 | $ | 807 | ||||||
December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
Non-accrual — tax certificates
|
$ | 381 | $ | 894 | $ | 1,419 | ||||||||
Non-accrual — loans
|
||||||||||||||
Residential
|
5,538 | 9,777 | 14,237 | |||||||||||
Commercial real estate and business
|
340 | 52 | 1,474 | |||||||||||
Small business
|
88 | 155 | 239 | |||||||||||
Lease financing
|
727 | 25 | 3,900 | |||||||||||
Consumer
|
1,210 | 794 | 532 | |||||||||||
Real estate owned
|
692 | 2,422 | 9,607 | |||||||||||
Other repossessed assets
|
— | — | 4 | |||||||||||
Total non-performing assets
|
8,976 | 14,119 | 31,412 | |||||||||||
Specific valuation allowance
|
— | — | (1,386 | ) | ||||||||||
Total non-performing assets, net
|
$ | 8,976 | $ | 14,119 | $ | 30,026 | ||||||||
Other potential problem loans (in thousands): |
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Loans contractually past due 90 days or more and still
accruing
|
$ | — | $ | 135 | $ | 100 | ||||||
Performing impaired loans, net of specific allowances
|
320 | 180 | — | |||||||||
Restructured loans
|
24 | 1,387 | 1,882 | |||||||||
Total potential problem loans
|
$ | 344 | $ | 1,702 | $ | 1,982 | ||||||
F-64
For the Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Real estate acquired in settlement of loans and tax certificates:
|
|||||||||||||
Operating expenses, net
|
$ | 137 | $ | 1,122 | $ | 872 | |||||||
Provisions for losses on REO
|
5 | 812 | 1,467 | ||||||||||
Net (gains) losses on sales
|
(694 | ) | (1,984 | ) | (117 | ) | |||||||
Total (income) loss
|
$ | (552 | ) | $ | (50 | ) | $ | 2,222 | |||||
For the Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Balance, beginning of period
|
$ | — | $ | — | $ | — | |||||||
Net charge-offs:
|
|||||||||||||
Commercial real estate
|
— | (750 | ) | (1,500 | ) | ||||||||
Residential real estate
|
(5 | ) | (62 | ) | 33 | ||||||||
Total net charge-offs
|
(5 | ) | (812 | ) | (1,467 | ) | |||||||
Provision for losses on REO
|
5 | 812 | 1,467 | ||||||||||
Balance, end of period
|
$ | — | $ | — | $ | — | |||||||
6. | Accrued Interest Receivable |
December 31, | |||||||||
2004 | 2003 | ||||||||
Loans receivable
|
$ | 22,141 | $ | 15,746 | |||||
Investment securities and tax certificates
|
9,527 | 10,269 | |||||||
Securities available for sale
|
4,327 | 1,897 | |||||||
Accrued interest receivable
|
$ | 35,995 | $ | 27,912 | |||||
F-65
7. | Properties and Equipment |
December 31, | |||||||||
2004 | 2003 | ||||||||
Land
|
$ | 31,208 | $ | 28,749 | |||||
Buildings and improvements
|
95,005 | 64,119 | |||||||
Furniture, fixtures and equipment
|
79,455 | 52,211 | |||||||
Other
|
13,763 | 3,505 | |||||||
Total
|
219,431 | 148,584 | |||||||
Less accumulated depreciation
|
58,434 | 50,245 | |||||||
Office properties and equipment — net
|
$ | 160,997 | $ | 98,340 | |||||
8. | Real Estate Held for Development and Sale |
December 31, | |||||||||
2004 | 2003 | ||||||||
Land and land development costs
|
$ | 302,076 | $ | 172,172 | |||||
Construction costs
|
112,292 | 74,936 | |||||||
Other capitalized costs
|
13,509 | 11,903 | |||||||
Other real estate
|
16,754 | 21,697 | |||||||
Total
|
$ | 444,631 | $ | 280,708 | |||||
F-66
9. | Investments in and Advances to Unconsolidated Subsidiaries |
December 31, | ||||||||
2004 | 2003 | |||||||
Investment in Bluegreen Corporation
|
$ | 80,572 | $ | 70,852 | ||||
Investments in and loans to real estate joint ventures
|
608 | 27,286 | ||||||
Investment in statutory business trusts
|
7,910 | 7,910 | ||||||
Investments in and advances to unconsolidated subsidiaries
|
$ | 89,090 | $ | 106,048 | ||||
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Equity in Bluegreen earnings
|
$ | 13,068 | $ | 9,085 | $ | 5,349 | ||||||
Equity in joint ventures earnings
|
6,050 | 616 | 3,978 | |||||||||
Earnings from statutory business trusts
|
485 | 425 | — | |||||||||
$ | 19,603 | $ | 10,126 | $ | 9,327 | |||||||
F-67
December 31, | ||||||||
2004 | 2003 | |||||||
(In thousands) | ||||||||
Total assets
|
$ | 634,809 | $ | 551,022 | ||||
Total liabilities
|
363,933 | 359,494 | ||||||
Minority interest
|
6,009 | 4,648 | ||||||
Total shareholders’ equity
|
264,867 | 186,880 | ||||||
Total liabilities and shareholders’ equity
|
$ | 634,809 | $ | 551,022 | ||||
Nine Months | ||||||||||||
Year Ended | Year Ended | Ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Revenues
|
$ | 601,623 | $ | 438,454 | $ | 271,973 | ||||||
Cost and expenses
|
538,282 | 393,129 | 247,302 | |||||||||
Provision for income taxes
|
22,821 | 16,168 | 8,479 | |||||||||
Minority interest
|
4,065 | 3,330 | 816 | |||||||||
Income before cumulative effect of a change in accounting
principle
|
36,455 | 25,827 | 15,376 | |||||||||
Cumulative effect of change in accounting principle, net of
income taxes
|
— | — | (5,929 | ) | ||||||||
Minority interest in cumulative effect of change in accounting
principle, net of income taxes
|
— | — | (350 | ) | ||||||||
Net income
|
$ | 36,455 | $ | 25,827 | $ | 9,797 | ||||||
F-68
December 31, | ||||||||||
2004 | 2003 | |||||||||
(In thousands) | ||||||||||
Real estate assets
|
$ | 1,785 | $ | 57,402 | ||||||
Other assets
|
1.686 | 5,931 | ||||||||
Total assets
|
$ | 3,471 | $ | 63,333 | ||||||
Mortgage notes payable to BankAtlantic
|
$ | — | $ | 22,726 | ||||||
Mortgage notes payable non-affiliates
|
— | 25,628 | ||||||||
Other liabilities
|
1,055 | 6,879 | ||||||||
Total liabilities
|
1,055 | 55,233 | ||||||||
Partners’ capital
|
2,416 | 8,100 | ||||||||
Total liabilities and partners’ capital
|
$ | 3,471 | $ | 63,333 | ||||||
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
Revenues
|
$ | 54,738 | $ | 18,893 | $ | 43,924 | |||||||
Cost and expenses
|
42,666 | 18,332 | 41,963 | ||||||||||
Net income
|
$ | 12,072 | $ | 561 | $ | 1,961 | |||||||
December 31, | |||||||||
Statement of Financial Condition | 2004 | 2003 | |||||||
Junior subordinated debentures
|
$ | 263,266 | $ | 263,266 | |||||
Other assets
|
694 | 637 | |||||||
Total Assets
|
$ | 263,960 | $ | 263,903 | |||||
Trust preferred securities
|
$ | 255,375 | $ | 255,375 | |||||
Other liabilities
|
675 | 618 | |||||||
Total Liabilities
|
256,050 | 255,993 | |||||||
Common securities
|
7,910 | 7,910 | |||||||
Total Liabilities and Equity
|
$ | 263,960 | $ | 263,903 | |||||
F-69
For the Years Ended December 31, | ||||||||||||
Statement of Operations | 2004 | 2003 | 2002(1) | |||||||||
Interest income from subordinated debentures
|
$ | 16,161 | $ | 14,534 | $ | — | ||||||
Revenue from the sale of real estate
|
— | — | 7,942 | |||||||||
Selling, general and administrative expenses
|
— | — | (6,775 | ) | ||||||||
Interest expense
|
(15,676 | ) | (14,109 | ) | — | |||||||
Net income
|
$ | 485 | $ | 425 | $ | 1,167 | ||||||
(1) | The above Condensed Combined Statements of Operation for 2002 includes the operation of a joint venture that was consolidated in the Company’s financial statements as of January 1, 2003. |
10. | Investment in BankAtlantic Bancorp and Levitt, and Equity Transactions |
Dividends from BankAtlantic Bancorp and Levitt |
Issuance and Redemption of BankAtlantic Bancorp Class A Common Stock |
F-70
BankAtlantic Bancorp Restricted Stock: |
BankAtlantic Bancorp Retention Pool: |
BankAtlantic Bancorp Stock Option Plans: |
Stock Option Plans | ||||||||||||||||||||
Maximum | Shares | Class of | Vesting | Type of | ||||||||||||||||
Term(3) | Authorized(6) | Stock | Requirements | Options(5) | ||||||||||||||||
1996 Stock Option Plan
|
10 years | 2,246,094 | A | 5 Years | (1) | ISO, NQ | ||||||||||||||
1998 Ryan Beck Option Plan
|
10 years | 362,417 | A | (4) | ISO, NQ | |||||||||||||||
1998 Stock Option Plan
|
10 years | 920,000 | A | 5 Years | (1) | ISO, NQ | ||||||||||||||
1999 Non-qualifying Stock Option Plan
|
10 years | 862,500 | A | (2) | NQ | |||||||||||||||
1999 Stock Option Plan
|
10 years | 862,500 | A | (2) | ISO, NQ | |||||||||||||||
2000 Non-qualifying Stock Option Plan
|
10 years | 1,704,148 | A | Immediately | NQ | |||||||||||||||
2001 Amended and Restated Stock Option Plan
|
10 years | 3,918,891 | A | 5 Years | (1) | ISO, NQ |
F-71
(1) | Vesting is established by the BankAtlantic Bancorp Compensation Committee in connection with each grant of options. All directors’ stock options vest immediately. |
(2) | Vesting is established by the BankAtlantic Bancorp Compensation Committee. |
(3) | All outstanding options must be exercised no later than 10 years after their grant date. |
(4) | Upon acquisition of Ryan Beck, BankAtlantic Bancorp assumed all options outstanding under Ryan Beck’s existing stock option plans at various exercise prices based upon the exercise prices of the assumed option. No new options will be issued under the 1998 Ryan Beck option plan and the plan will terminate when the outstanding options are exercised or expire. |
(5) | ISO — Incentive Stock Option; NQ — Non-qualifying Stock Option |
(6) | During 2001 shares underlying options available for grant under all stock options plans except the 2001 stock option plan were canceled. BankAtlantic Bancorp’s shareholders increased the number of shares authorized under the 2001 stock option plan to 3,000,000 at the 2002 Annual Meeting and in January 2004, in connection with the Levitt spin-off, BankAtlantic Bancorp adjusted the shares authorized under the 2001 Amended and Restated Stock Option Plan to 3,918,891. |
F-72
Class A | ||||
Outstanding | ||||
Options | ||||
Outstanding at December 31, 2001
|
7,127,260 | |||
Exercised
|
(351,953 | ) | ||
Forfeited
|
(318,222 | ) | ||
Issued
|
992,263 | |||
Outstanding at December 31, 2002
|
7,449,348 | |||
Exercised
|
(1,301,470 | ) | ||
Forfeited
|
(224,781 | ) | ||
Issued
|
1,015,123 | |||
Outstanding at December 31, 2003
|
6,938,220 | |||
Exercised
|
(1,461,678 | ) | ||
Forfeited
|
(77,797 | ) | ||
Issued
|
776,100 | |||
Outstanding at December 31, 2004
|
6,174,845 | |||
Available for grant at December 31, 2004
|
596,393 | |||
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Weighted average exercise price of options outstanding
|
$ | 6.79 | $ | 4.62 | $ | 4.17 | ||||||
Weighted average exercise price of options exercised
|
2.56 | 4.10 | 3.81 | |||||||||
Weighted average price of options forfeited
|
$ | 8.15 | $ | 5.14 | $ | 6.76 |
Weighted Average | ||||||||||||||||||||||||
Number of | Risk Free | Expected | ||||||||||||||||||||||
Options | Grant Date | Exercise | Interest | Expected | Dividend | |||||||||||||||||||
Year of Grant | Granted | Fair Value | Price | Rate | Volatility | Yield | ||||||||||||||||||
2002
|
992,263 | $ | 4.25 | $ | 8.56 | 4.65% | 47.00% | 1.04% | ||||||||||||||||
2003
|
1,015,123 | $ | 3.66 | $ | 7.45 | 3.34% | 50.00% | 1.27% | ||||||||||||||||
2004
|
776,100 | $ | 8.42 | $ | 18.20 | 4.32% | 41.00% | 0.73% |
F-73
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted- | Weighted- | Number | Weighted- | |||||||||||||||||||
Number | Average | Average | Exercisable | Average | ||||||||||||||||||
Range of | Outstanding | Remaining | Exercise | at | Exercise | |||||||||||||||||
Class of Common Stock | Exercise Prices | at 12/31/04 | Contractual Life | Price | 12/31/04 | Price | ||||||||||||||||
A
|
$1.73 to 1.91 | 620,358 | 0.3 years | $ | 1.77 | 620,358 | $ | 1.77 | ||||||||||||||
A
|
$1.92 to 3.83 | 1,533,561 | 4.3 years | 3.19 | 469,150 | 3.71 | ||||||||||||||||
A
|
$3.84 to 6.70 | 1,347,449 | 3.4 years | 4.94 | 1,345,947 | 4.94 | ||||||||||||||||
A
|
$6.71 to 9.36 | 1,897,377 | 7.6 years | 8.00 | 108,416 | 8.03 | ||||||||||||||||
A
|
$9.37 to 18.20 | 776,100 | 9.5 years | 18.20 | 35,000 | 18.20 | ||||||||||||||||
6,174,845 | 5.4 years | $ | 6.79 | 2,578,871 | $ | 4.28 | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted- | Weighted- | Number | Weighted- | |||||||||||||||||||
Number | Average | Average | Exercisable | Average | ||||||||||||||||||
Range of | Outstanding | Remaining | Exercise | at | Exercise | |||||||||||||||||
Class of Common Stock | Exercise Prices | at 12/31/03 | Contractual Life | Price | 12/31/03 | Price | ||||||||||||||||
A
|
$1.73 to 1.91 | 1,673,384 | 0.9 years | $ | 1.77 | 1,281,013 | $ | 1.77 | ||||||||||||||
A
|
$1.92 to 3.83 | 1,563,844 | 5.3 years | 3.19 | 368,829 | 3.71 | ||||||||||||||||
A
|
$3.84 to 6.70 | 1,752,835 | 4.5 years | 4.89 | 725,370 | 5.00 | ||||||||||||||||
A
|
$6.71 to 9.36 | 1,948,157 | 8.7 years | 8.00 | 82,995 | 8.38 | ||||||||||||||||
6,938,220 | 5.0 years | $ | 4.62 | 2,458,207 | $ | 3.23 | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted- | Weighted- | Number | Weighted- | |||||||||||||||||||
Number | Average | Average | Exercisable | Average | ||||||||||||||||||
Range of | Outstanding | Remaining | Exercise | at | Exercise | |||||||||||||||||
Class of Common Stock | Exercise Prices | at 12/31/02 | Contractual Life | Price | 12/31/02 | Price | ||||||||||||||||
A
|
$1.73 to 1.91 | 1,985,110 | 1.8 years | $ | 1.77 | 1,985,110 | $ | 1.77 | ||||||||||||||
A
|
$1.92 to 3.83 | 1,749,837 | 6.1 years | 3.22 | 618,093 | 3.71 | ||||||||||||||||
A
|
$3.84 to 6.70 | 2,659,407 | 5.5 years | 4.88 | 985,046 | 4.87 | ||||||||||||||||
A
|
$6.71 to 9.36 | 1,054,994 | 8.5 years | 8.47 | 120,202 | 7.99 | ||||||||||||||||
7,449,348 | 5.1 years | $ | 4.17 | 3,708,451 | $ | 3.11 | ||||||||||||||||
Ryan Beck Stock Option Plan: |
F-74
Ryan Beck | ||||
Outstanding | ||||
Options | ||||
Outstanding at December 31, 2001
|
— | |||
Issued
|
1,477,500 | |||
Outstanding at December 31, 2002
|
1,477,500 | |||
Exercised
|
— | |||
Forfeited
|
(22,500 | ) | ||
Issued
|
75,000 | |||
Outstanding at December 31, 2003
|
1,530,000 | |||
Exercised
|
(90,000 | ) | ||
Forfeited
|
(15,000 | ) | ||
Issued
|
820,500 | |||
Outstanding at December 31, 2004
|
2,245,500 | |||
Available for grant at December 31, 2004
|
102,000 | |||
F-75
Stock Incentive Plan |
2004 | ||||||||
Weighted | ||||||||
Average | ||||||||
Number of | Exercise | |||||||
Options | Price | |||||||
Options outstanding at beginning of year
|
— | $ | — | |||||
Granted
|
757,500 | $ | 20.52 | |||||
Exercised
|
— | $ | — | |||||
Forfeited
|
(32,250 | ) | $ | 20.15 | ||||
Options outstanding at end of year
|
725,250 | $ | 20.54 | |||||
Options exercisable at end of year
|
45,000 | $ | 20.15 | |||||
Options available for grant at end of year
|
774,750 | |||||||
Weighted average fair market value per share of options granted
during the year under SFAS No. 123
|
$ | 11.94 | ||||||
Options Outstanding | Options Exercisable | |||||||||||||||||
Remaining | Exercise | |||||||||||||||||
Exercise Price | Options | Contractual Life | Options | Price | ||||||||||||||
$ | 20.15 | 642,000 | 9.00 years | 45,000 | $ | 20.15 | ||||||||||||
$ | 23.40 | 25,000 | 9.64 years | — | — | |||||||||||||
$ | 23.53 | 50,000 | 9.57 years | — | — | |||||||||||||
$ | 24.15 | 8,250 | 9.22 years | — | — |
F-76
11. | Deposits |
December 31, | |||||||||||||||||
2004 | 2003 | ||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Interest free checking
|
$ | 890,398 | 25.75 | % | $ | 645,036 | 21.09 | % | |||||||||
Insured money fund savings
|
|||||||||||||||||
1.05% at December 31, 2004
|
|||||||||||||||||
0.83% at December 31, 2003
|
875,422 | 25.32 | 865,590 | 28.31 | |||||||||||||
NOW accounts
|
|||||||||||||||||
0.30% at December 31, 2004
|
|||||||||||||||||
0.30% at December 31, 2003
|
658,137 | 19.04 | 533,888 | 17.46 | |||||||||||||
Savings accounts
|
|||||||||||||||||
0.28% at December 31, 2004
|
|||||||||||||||||
0.28% at December 31, 2003
|
270,001 | 7.81 | 208,966 | 6.83 | |||||||||||||
Total non-certificate accounts
|
2,693,958 | 77.92 | 2,253,480 | 73.69 | |||||||||||||
Certificate accounts:
|
|||||||||||||||||
Less than 2.00%
|
302,319 | 8.74 | 455,709 | 14.90 | |||||||||||||
2.01% to 3.00%
|
327,958 | 9.49 | 147,446 | 4.82 | |||||||||||||
3.01% to 4.00%
|
74,439 | 2.15 | 45,546 | 1.49 | |||||||||||||
4.01% to 5.00%
|
21,357 | 0.62 | 51,379 | 1.68 | |||||||||||||
5.01% and greater
|
34,988 | 1.01 | 102,382 | 3.35 | |||||||||||||
Total certificate accounts
|
761,061 | 22.01 | 802,462 | 26.24 | |||||||||||||
Total deposit accounts
|
3,455,019 | 99.93 | 3,055,942 | 99.93 | |||||||||||||
Premium on brokered deposits
|
(308 | ) | (0.01 | ) | (798 | ) | (0.03 | ) | |||||||||
Fair value adjustment related to acquisitions
|
16 | 0.00 | 472 | 0.02 | |||||||||||||
Interest earned not credited to deposit accounts
|
2,475 | 0.08 | 2,526 | 0.08 | |||||||||||||
Total
|
$ | 3,457,202 | 100.00 | % | $ | 3,058,142 | 100.00 | % | |||||||||
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Money fund savings and NOW accounts
|
$ | 10,860 | $ | 11,142 | $ | 15,338 | |||||||
Savings accounts
|
652 | 856 | 1,362 | ||||||||||
Certificate accounts — below $100,000
|
8,126 | 10,914 | 24,177 | ||||||||||
Certificate accounts, $100,000 and above
|
8,873 | 13,457 | 22,140 | ||||||||||
Less early withdrawal penalty
|
(156 | ) | (180 | ) | (240 | ) | |||||||
Total
|
$ | 28,355 | $ | 36,189 | $ | 62,777 | |||||||
F-77
For the Years Ending December 31, | |||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | ||||||||||||||||||||
0.00% to 2.00%
|
$ | 288,852 | $ | 10,462 | $ | 2,348 | $ | 276 | $ | 369 | $ | 13 | |||||||||||||
2.01% to 3.00%
|
215,061 | 90,250 | 18,025 | 3,444 | 1,179 | — | |||||||||||||||||||
3.01% to 4.00%
|
19,589 | 3,192 | 23,442 | 18,982 | 8,819 | 415 | |||||||||||||||||||
4.01% to 5.00%
|
2,977 | 7,655 | 3,901 | 638 | 6,183 | 2 | |||||||||||||||||||
5.01% and greater
|
29,625 | 3,073 | 1,988 | 298 | — | 3 | |||||||||||||||||||
Total
|
$ | 556,104 | $ | 114,632 | $ | 49,704 | $ | 23,638 | $ | 16,550 | $ | 433 | |||||||||||||
December 31, | |||||
2004 | |||||
3 months or less
|
$ | 71,277 | |||
4 to 6 months
|
90,051 | ||||
7 to 12 months
|
138,019 | ||||
More than 12 months
|
97,872 | ||||
Total
|
$ | 397,219 | |||
2004 | 2003 | ||||||||
Brokered deposits
|
$ | 140,116 | $ | 145,559 | |||||
Public deposits
|
114,052 | 180,241 | |||||||
Total institutional deposits
|
$ | 254,168 | $ | 325,800 | |||||
F-78
12. | Advances from Federal Home Loan Bank and Federal Funds Purchased |
Advances from Federal Home Loan Bank (“FHLB”) (dollars in thousands): |
December 31, | |||||||||||||||||
Payable During Year | Year | ||||||||||||||||
Ending December 31, | Callable | Interest Rate | 2004 | 2003 | |||||||||||||
2004
|
2.80% to 5.68% | $ | — | $ | 6,250 | ||||||||||||
2005
|
1.86% | 7,500 | 17,500 | ||||||||||||||
2006
|
1.89% | 10,417 | 18,750 | ||||||||||||||
2007
|
5.68% | — | 25,000 | ||||||||||||||
2008
|
5.14% to 5.67% | 409,000 | 492,000 | ||||||||||||||
2010
|
5.84% to 6.34% | 32,000 | 32,000 | ||||||||||||||
2011
|
4.50% to 4.90% | 50,000 | — | ||||||||||||||
Total fixed rate advances
|
508,917 | 591,500 | |||||||||||||||
2008
|
2004 | 1.31% | — | 25,000 | |||||||||||||
2011
|
2004 | 4.50% to 4.90% | — | 50,000 | |||||||||||||
2011
|
2005 | 5.05% | 30,000 | 30,000 | |||||||||||||
Total callable fixed rate advances — European
|
30,000 | 105,000 | |||||||||||||||
2009
|
2004 | 5.06% | — | 10,000 | |||||||||||||
2009
|
2005 | 4.46% | 10,000 | — | |||||||||||||
Total callable fixed rate advances — Bermuda
|
10,000 | 10,000 | |||||||||||||||
Adjustable rate advances
|
|||||||||||||||||
2004
|
1.17% to 1.40% | — | 50,000 | ||||||||||||||
2005
|
2.13% to 2.57% | 870,000 | — | ||||||||||||||
2006
|
1.18% to 2.39% | 125,000 | 25,000 | ||||||||||||||
Total adjustable rate advances
|
995,000 | 75,000 | |||||||||||||||
Purchase accounting fair value adjustments
|
580 | 705 | |||||||||||||||
Total FHLB advances
|
$ | 1,544,497 | $ | 782,205 | |||||||||||||
Average cost during period
|
3.93% | 4.79 | % | ||||||||||||||
Average cost end of period
|
3.41% | 4.67 | % | ||||||||||||||
F-79
Federal Funds Purchased: |
2004 | 2003 | 2002 | ||||||||||
Ending balance
|
$ | 105,000 | $ | — | $ | — | ||||||
Maximum outstanding at any month end within period
|
$ | 105,000 | $ | 180,000 | $ | 85,000 | ||||||
Average amount outstanding during period
|
$ | 47,661 | $ | 60,179 | $ | 47,704 | ||||||
Average cost during period
|
2.47 | % | 1.29 | % | 1.85 | % |
13. | Securities Sold Under Agreements to Repurchase |
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Maximum borrowing at any month-end within the period
|
$ | 374,824 | $ | 365,042 | $ | 540,880 | ||||||
Average borrowing during the period
|
$ | 189,398 | $ | 193,068 | $ | 327,001 | ||||||
Average interest cost during the period
|
1.26 | % | 1.11 | % | 1.73 | % | ||||||
Average interest cost at end of the period
|
2.16 | % | 0.73 | % | 1.08 | % |
F-80
Weighted | |||||||||||||||||
Average | |||||||||||||||||
Amortized | Estimated | Repurchase | Interest | ||||||||||||||
Cost | Fair Value | Balance | Rate | ||||||||||||||
December 31, 2004(1)
|
|||||||||||||||||
Mortgage-backed securities
|
$ | 213,824 | $ | 215,904 | $ | 175,316 | 2.09 | % | |||||||||
REMIC
|
96,644 | 96,267 | 81,686 | 2.30 | |||||||||||||
Total
|
$ | 310,468 | $ | 312,171 | $ | 257,002 | 2.16 | % | |||||||||
December 31, 2003(1)
|
|||||||||||||||||
Mortgage-backed securities
|
$ | 124,759 | $ | 128,118 | $ | 106,813 | 0.73 | % | |||||||||
REMIC
|
16,846 | 16,866 | 14,061 | 0.73 | |||||||||||||
Total
|
$ | 141,605 | $ | 144,984 | $ | 120,874 | 0.73 | % | |||||||||
(1) | At December 31, 2004 and 2003, all securities were classified as available for sale and were recorded at fair value in the consolidated statements of financial condition. |
F-81
14. | Subordinated Debentures, Notes and Bonds Payable and Trust Preferred Securities |
December 31, | |||||||||||||||
Issue | Interest | Maturity | |||||||||||||
Date | 2004 | 2003 | Rate | Date | |||||||||||
BankAtlantic Bancorp Borrowings
|
|||||||||||||||
Bank line of credit
|
8/24/2000 | $ | 100 | $100 | Prime -.50% | March 1, 2005 | |||||||||
BankAtlantic Borrowings
|
|||||||||||||||
Subordinated debentures
|
10/29/2002 | 22,000 | 22,000 | LIBOR + 3.45% | November 7, 2012 | ||||||||||
Development notes
|
3/22/2002 | 1,036 | 856 | Prime + 1.00% | August 28, 2006 | ||||||||||
Development notes
|
3/22/2002 | 4,647 | 1,883 | Prime + 0.75% | May 1, 2006 | ||||||||||
Mortgage-backed bond
|
3/22/2002 | 9,958 | 10,954 | (2) | September 30, 2013 | ||||||||||
Total BankAtlantic Borrowings
|
37,641 | 35,693 | |||||||||||||
Levitt Borrowings
|
|||||||||||||||
Homebuilding
|
Various | 141,697 | 84,346 | From Prime — 0.50% to Prime + 1.00% | Range from January 2005 to November 2009 | ||||||||||
Homebuilding borrowings to BankAtlantic(1)
|
8,621 | 18,118 | Prime | Range from October 2005 to March 2006 | |||||||||||
Land development
|
Various | 52,475 | 13,983 | From LIBOR +2.00% to LIBOR + 2.80% | Range from May 2007 to June 2011 | ||||||||||
Land development
|
Various | 254 | 341 | Fixed from 5.99% to 7.00% | Range from March 2007 to April 2007 | ||||||||||
Development bonds
|
Various | — | 850 | Various | Various | ||||||||||
Other operations land acquisition and construction
|
Various | 7,447 | 11,646 | LIBOR + 3.00% and prime +.50% | Range from April 2005 to February 2006 | ||||||||||
Other operations promissory note payable
|
16,500 | — | LIBOR + 1.50% | March 2005 | |||||||||||
Other operations borrowings to BankAtlantic Bancorp(1)
|
38,000 | 43,500 | Prime + 0.25% escalation every six months | December 2008 |
F-82
December 31, | |||||||||||||||
Issue | Interest | Maturity | |||||||||||||
Date | 2004 | 2003 | Rate | Date | |||||||||||
Subordinated investment notes
|
3,232 |
1,309 |
Fixed from 6.50% to 8.75% | Range from October 2005 to February 2008 | |||||||||||
Total Levitt borrowings
|
268,226 | 174,093 | |||||||||||||
RB Holdings, Inc. Borrowings
|
|||||||||||||||
Notes Payable
|
4/26/2002 | — | 802 | LIBOR + 2.65 | May 1, 2004 | ||||||||||
BFC Borrowings
|
|||||||||||||||
Revolving Line of Credit
|
Various | 10,483 | 6,015 | LIBOR +2.80 | May 3, 2005 | ||||||||||
Mortgage payables
|
Various | 8,776 |
9,015 |
Fixed from 6.00% to 9.20% | May 2007 — December 2010 | ||||||||||
Total BFC borrowings
|
19,259 | 15,030 | |||||||||||||
Inter-company borrowings eliminated(1)
|
(46,621 | ) | (61,618) | ||||||||||||
Total
|
$ | 278,605 | $164,100 | ||||||||||||
(1) | Loans between Levitt and BankAtlantic amounting to $46.6 and $61.6 million at December 31, 2004 and 2003, respectively were eliminated in consolidation. |
(2) | The bonds adjust semi-annually to the ten year treasury constant maturity rate minus 23 basis points. |
Beginning | |||||||||||||||||||||
Optional | |||||||||||||||||||||
Outstanding | Interest | Redemption | |||||||||||||||||||
Junior Subordinated Debentures | Issue Date | Amount | Rate | Maturity Date | Date | ||||||||||||||||
Subordinated Debentures Trust II
|
3/5/2002 | $ | 57,088 | 8.50 | % | 3/31/2032 | 3/31/2007 | ||||||||||||||
Subordinated Debentures Trust III
|
6/26/2002 | 25,774 | LIBOR + 3.45 | % | 6/26/2032 | 6/26/2007 | |||||||||||||||
Subordinated Debentures Trust IV
|
9/26/2002 | 25,774 | LIBOR + 3.40 | % | 9/26/2032 | 9/26/2007 | |||||||||||||||
Subordinated Debentures Trust V
|
9/27/2002 | 10,310 | LIBOR + 3.40 | % | 9/30/2032 | 9/27/2007 | |||||||||||||||
Subordinated Debentures Trust VI
|
12/10/2002 | 15,450 | LIBOR + 3.35 | % | 12/10/2032 | 12/10/2007 | |||||||||||||||
Subordinated Debentures Trust VII
|
12/19/2002 | 25,774 | LIBOR + 3.25 | % | 12/19/2032 | 12/19/2007 | |||||||||||||||
Subordinated Debentures Trust VIII
|
12/19/2002 | 15,464 | LIBOR + 3.35 | % | 1/07/2033 | 12/19/2007 | |||||||||||||||
Subordinated Debentures Trust IX
|
12/19/2002 | 10,310 | LIBOR + 3.35 | % | 1/07/2033 | 12/19/2007 | |||||||||||||||
Subordinated Debentures Trust X
|
3/26/2003 | 51,548 | 6.40 | %(2) | 3/26/2033 | 3/26/2008 | |||||||||||||||
Subordinated Debentures Trust XI
|
4/10/2003 | 10,310 | 6.45 | %(2) | 4/24/2033 | 4/24/2008 | |||||||||||||||
Subordinated Debentures Trust XII
|
3/27/2003 | 15,464 | 6.65 | %(2) | 4/07/2033 | 4/07/2008 | |||||||||||||||
Total Subordinated Debentures(1)
|
$ | 263,266 | |||||||||||||||||||
F-83
(1) | LIBOR interest rates are indexed to 3-month LIBOR and adjust quarterly. |
(2) | Adjusts to floating LIBOR rate five years from the issue date. |
Year Ending December 31, | Amount | |||
2005
|
$ | 64,576 | ||
2006
|
12,986 | |||
2007
|
62,172 | |||
2008
|
27,985 | |||
2009
|
38,846 | |||
Thereafter
|
335,306 | |||
$ | 541,871 | |||
Junior Subordinated Debentures: |
F-84
BankAtlantic Bancorp: |
Revolving Credit Facility: |
BankAtlantic: |
Indentures |
Levitt: |
F-85
F-86
BFC |
15. | Income Taxes |
For the Years Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Continuing operations
|
$ | 83,997 | $ | 44,166 | $ | 17,993 | |||||||
Discontinued operations
|
— | (517 | ) | 303 | |||||||||
Extraordinary items
|
— | — | 2,771 | ||||||||||
Cumulative effect of a change in accounting principle
|
— | — | (1,246 | ) | |||||||||
Total provision for income taxes
|
$ | 83,997 | $ | 43,649 | $ | 19,821 | |||||||
Continuing operations:
|
|||||||||||||
Current:
|
|||||||||||||
Federal
|
$ | 56,616 | $ | 27,200 | $ | 18,934 | |||||||
State
|
9,487 | 4,287 | 633 | ||||||||||
66,103 | 31,487 | 19,567 | |||||||||||
Deferred:
|
|||||||||||||
Federal
|
16,556 | 12,679 | (878 | ) | |||||||||
State
|
1,338 | — | (696 | ) | |||||||||
17,894 | 12,679 | (1,574 | ) | ||||||||||
Provision for income taxes
|
$ | 83,997 | $ | 44,166 | $ | 17,993 | |||||||
F-87
2004(1) | |||||||||||||||||||||||||||
) | |||||||||||||||||||||||||||
2003(1 | |||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||||||||||||
2002(1 | |||||||||||||||||||||||||||
Income tax provision at expected federal income tax rate of 35%
|
$ | 70,777 | 35.00 | % | $ | 35,428 | 35.00 | % | $ | 17,605 | 35.00 | % | |||||||||||||||
Increase (decrease) resulting from:
|
|||||||||||||||||||||||||||
Taxes related to subsidiaries not consolidated for income tax
purposes
|
8,423 | 4.17 | % | 5,788 | 5.72 | % | 4,214 | 8.38 | % | ||||||||||||||||||
Tax-exempt interest income
|
(1,817 | ) | (0.90 | )% | (267 | ) | (0.26 | )% | (275 | ) | (0.55 | )% | |||||||||||||||
Provision (benefit) for state taxes, net of federal effect
|
7,074 | 3.50 | % | 3,991 | 3.94 | % | (370 | ) | (0.74 | )% | |||||||||||||||||
Change in State tax valuation allowance
|
94 | (0.05 | )% | (1,168 | ) | (1.15 | )% | 1,071 | 2.13 | % | |||||||||||||||||
Change in valuation allowance for deferred tax assets
|
— | — | (418 | ) | (0.41 | )% | (3,479 | ) | (6.92 | )% | |||||||||||||||||
Levitt spin-off nondeductible
|
90 | 0.04 | % | 1,275 | 1.26 | % | — | — | |||||||||||||||||||
Low income housing tax credits
|
(468 | ) | (0.23 | )% | (555 | ) | (0.55 | )% | (416 | ) | (0.83 | )% | |||||||||||||||
Other — net
|
(176 | ) | (0.09 | )% | 92 | 0.09 | % | (357 | ) | (0.71 | )% | ||||||||||||||||
Provision for income taxes
|
$ | 83,997 | 41.54 | % | $ | 44,166 | 43.63 | % | $ | 17,993 | 35.76 | % | |||||||||||||||
(1) | Expected tax is computed based upon income (loss) before minority interest, discontinued operations, extraordinary items and cumulative effect of a change in accounting principle. |
F-88
For the Years Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
Deferred tax assets:
|
||||||||||||||
Provision for restructuring charges and write-downs
|
$ | 267 | $ | 294 | $ | 191 | ||||||||
Allowance for loans, REO, tax certificate losses and other
reserves, for financial statement purposes
|
20,899 | 27,539 | 29,884 | |||||||||||
Federal and State net operating loss carry forward
|
22,621 | 9,277 | 10,498 | |||||||||||
Compensation expensed for books and deferred for tax purposes
|
3,530 | 3,754 | 3,915 | |||||||||||
Goodwill impairment for books in excess of tax amortization
|
— | — | 1,086 | |||||||||||
Real estate held for development and sale capitalized costs for
tax purposes in excess of amounts capitalized for financial
statement purposes
|
7,100 | 6,891 | 7,554 | |||||||||||
Accumulated other comprehensive income
|
243 | — | — | |||||||||||
Other
|
5,788 | 4,896 | 4,642 | |||||||||||
Total gross deferred tax assets
|
60,448 | 52,651 | 57,770 | |||||||||||
Less valuation allowance
|
2,564 | 2,470 | 4,369 | |||||||||||
Total deferred tax assets
|
57,884 | 50,181 | 53,401 | |||||||||||
Deferred tax liabilities:
|
||||||||||||||
Subsidiary not consolidated for income tax purposes
|
48,273 | 36,006 | 30,541 | |||||||||||
Investment in Bluegreen
|
9,282 | 5,533 | — | |||||||||||
Deferred loan income
|
1,190 | 885 | 918 | |||||||||||
Change in investment of unconsolidated real estate subsidiary
|
— | — | 1,762 | |||||||||||
Purchase accounting adjustments for bank acquisitions
|
1,920 | 2,229 | 1,356 | |||||||||||
Accumulated other comprehensive income
|
— | 3,887 | 2,596 | |||||||||||
Prepaid pension expense
|
2,517 | 2,607 | 2,713 | |||||||||||
Depreciation for tax greater than book
|
2,278 | — | — | |||||||||||
Other
|
879 | 1,929 | 1,396 | |||||||||||
Total gross deferred tax liabilities
|
66,339 | 53,076 | 41,282 | |||||||||||
Net deferred tax asset (liability)
|
(8,455 | ) | (2,895 | ) | 12,119 | |||||||||
Plus (less) net deferred tax asset (liability) at
beginning of period
|
2,895 | (12,119 | ) | 3,916 | ||||||||||
Acquired net deferred tax asset, net of valuation allowance
|
595 | — | (8,175 | ) | ||||||||||
Decrease in deferred tax liability from subsidiaries other
capital transactions
|
3,650 | 776 | (9 | ) | ||||||||||
(Decrease) increase in accumulated other comprehensive income
|
(369 | ) | 416 | (1,145 | ) | |||||||||
Decrease in deferred tax liability from BFC’s tax effect
relating to exercise stock option
|
(11,016 | ) | (550 | ) | — |
F-89
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) in Levitt’s accumulated other
comprehensive income
|
(1,291 | ) | 361 | — | ||||||||
Increase (decrease) in BankAtlantic Bancorp accumulated other
comprehensive income
|
(3,903 | ) | 1,019 | (6,277 | ) | |||||||
(Provision) benefit for deferred income taxes
|
(17,894 | ) | (12,993 | ) | 429 | |||||||
(Provision) benefit for deferred income taxes —
discontinued operations
|
— | — | (380 | ) | ||||||||
Reduction in deferred tax asset associated with GMS sale
|
— | 314 | — | |||||||||
Benefit for deferred income taxes — extraordinary item
|
— | — | 2,771 | |||||||||
Provision for deferred income taxes — cumulative
effect of an accounting change
|
— | — | (1,246 | ) | ||||||||
(Provision) benefit for deferred income taxes —
continuing operations
|
$ | (17,894 | ) | $ | (12,679 | ) | $ | 1,574 | ||||
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Balance, beginning of period
|
$ | 2,470 | $ | 4,369 | $ | 7,682 | ||||||
Utilization of acquired tax benefits
|
— | (418 | ) | (2,638 | ) | |||||||
Increase (reduction) in state deferred tax valuation
allowance
|
94 | (1,168 | ) | 230 | ||||||||
Other decreases and reclassifications
|
— | (313 | ) | (905 | ) | |||||||
Balance, end of period
|
$ | 2,564 | $ | 2,470 | $ | 4,369 | ||||||
F-90
Expiration Year | State | Federal | ||||||
2006
|
$ | 429 | $ | — | ||||
2007
|
4,235 | 4,557 | ||||||
2008
|
2,332 | 3,322 | ||||||
2011
|
1,662 | 1,831 | ||||||
2012
|
669 | 984 | ||||||
2021
|
806 | 1,422 | ||||||
2022
|
824 | 1,515 | ||||||
2023
|
2,008 | 3,792 | ||||||
2024
|
18,252 | 34,457 | ||||||
$ | 31,217 | $ | 51,880 | |||||
F-91
16. | Employee Benefits Plan |
BFC’s Stock Option Plan |
Class B | |||||||||
Options | |||||||||
Outstanding | Price per Share | ||||||||
Outstanding at December 31, 2001
|
8,656,402 | $ | 0.41 to $3.68 | ||||||
Issued
|
— | ||||||||
Exercised
|
(137,575 | ) | $ | 0.41 to $1.45 | |||||
Forfeited
|
(14,040 | ) | $ | 2.14 to $2.14 | |||||
Outstanding at December 31, 2002
|
8,504,787 | $ | 0.43 to $3.68 | ||||||
Issued
|
554,547 | $ | 1.84 to $1.84 | ||||||
Exercised
|
(605,222 | ) | $ | 0.43 to $0.47 | |||||
Outstanding at December 31, 2003
|
8,454,112 | $ | 0.44 to $3.68 | ||||||
Issued
|
307,427 | $ | 7.68 to $8.40 | ||||||
Exercised
|
(3,521,419 | ) | $ | 0.44 to $3.68 | |||||
Outstanding at December 31, 2004
|
5,240,120 | $ | 1.45 to $8.40 | ||||||
Exercisable at December 31, 2004
|
4,445,266 | $ | 1.45 to $8.40 | ||||||
Available for grant at December 31, 2004
|
— | ||||||||
Number of | Risk Free | Expected | Expected | |||||||||||||||||||||||||||||
Options | Grant Date | Type of | Exercise | Interest | Life | Expected | Dividend | |||||||||||||||||||||||||
Date of Grant | Granted | Fair Value | Grant | Price | Rate | (Years) | Volatility | Yield | ||||||||||||||||||||||||
07/01/97
|
473,801 | $ | 0.58 | * | $ | 1.45 | 5.80 | % | 6.0 | 27.40 | % | 0 | % | |||||||||||||||||||
07/01/97
|
2,105,718 | $ | 0.53 | NQ | $ | 1.59 | 5.80 | % | 6.0 | 27.40 | % | 0 | % | |||||||||||||||||||
01/13/98
|
1,474,018 | $ | 2.09 | * | $ | 3.68 | 5.53 | % | 7.5 | 44.46 | % | 0 | % | |||||||||||||||||||
04/06/99
|
505,394 | $ | 1.78 | * | $ | 2.14 | 5.28 | % | 7.5 | 92.21 | % | 0 | % | |||||||||||||||||||
02/07/03
|
547,525 | $ | 1.29 | * | $ | 1.84 | 4.50 | % | 7.0 | 72.36 | % | 0 | % | |||||||||||||||||||
01/05/04
|
29,301 | $ | 4.68 | * | $ | 7.68 | 4.40 | % | 7.5 | 53.36 | % | 0 | % | |||||||||||||||||||
07/28/04
|
262,501 | $ | 6.02 | * | $ | 8.40 | 4.61 | % | 10.0 | 57.63 | % | 0 | % | |||||||||||||||||||
10/04/04
|
12,500 | $ | 4.32 | * | $ | 8.40 | 3.44 | % | 5.0 | 56.06 | % | 0 | % |
F-92
* | Both non-qualified and incentive stock options were granted. |
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Average | Average | Average | ||||||||||||||||||
Number | Remaining | Exercise | Number | Exercise | ||||||||||||||||
Range of Exercise Prices | Outstanding | Contractual Life | Price | Exercisable | Price | |||||||||||||||
$1.45 to $1.68
|
2,449,441 | 2.5 years | $ | 1.57 | 2,449,441 | $ | 1.57 | |||||||||||||
$1.68 to $2.52
|
1,030,294 | 6.3 years | $ | 1.97 | 517,867 | $ | 2.11 | |||||||||||||
$3.36 to $4.20
|
1,452,958 | 2.9 years | $ | 3.68 | 1,452,958 | $ | 3.68 | |||||||||||||
$7.68 to $8.40
|
307,427 | 9.4 years | $ | 8.33 | 25,000 | $ | 8.40 | |||||||||||||
5,240,120 | 3.8 years | $ | 2.63 | 4,445,266 | $ | 2.36 | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Average | Average | Average | ||||||||||||||||||
Number | Remaining | Exercise | Number | Exercise | ||||||||||||||||
Range of Exercise Prices | Outstanding | Contractual Life | Price | Exercisable | Price | |||||||||||||||
$0.44 to $.84
|
3,435,393 | .7 years | $ | 0.45 | 3,435,393 | $ | 0.45 | |||||||||||||
$.84 to $1.68
|
2,470,718 | 3.5 years | $ | 1.57 | 2,470,718 | $ | 1.57 | |||||||||||||
$1.68 to $2.52
|
1,052,923 | 7.2 years | $ | 1.98 | 42,120 | $ | 1.84 | |||||||||||||
$3.36 to $3.68
|
1,495,078 | 3.9 years | $ | 3.68 | 1,495,078 | $ | 3.68 | |||||||||||||
8,454,112 | 2.9 years | $ | 1.54 | 7,443,309 | $ | 1.48 | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Average | Average | Average | ||||||||||||||||||
Number | Remaining | Exercise | Number | Exercise | ||||||||||||||||
Range of Exercise Prices | Outstanding | Contractual Life | Price | Exercisable | Price | |||||||||||||||
$0.43 to $.84
|
4,040,615 | 1.6 years | $ | 0.46 | 4,040,615 | $ | 0.46 | |||||||||||||
$.84 to $1.68
|
2,470,718 | 4.5 years | $ | 1.57 | 2,470,718 | $ | 1.57 | |||||||||||||
$1.68 to $2.52
|
498,376 | 6.2 years | $ | 2.14 | — | $ | — | |||||||||||||
$3.36 to $3.68
|
1,495,078 | 4.9 years | $ | 3.68 | 1,495,078 | $ | 3.68 | |||||||||||||
8,504,787 | 3.3 years | $ | 1.44 | 8,006,411 | $ | 1.40 | ||||||||||||||
BFC Profit Sharing Plan |
F-93
BankAtlantic Pension Plan: |
December 31, | ||||||||
2004 | 2003 | |||||||
Projected benefit obligation at the beginning of the year
|
$ | 23,094 | $ | 22,276 | ||||
Interest cost
|
1,508 | 1,485 | ||||||
Actuarial loss
|
2,421 | 148 | ||||||
Benefits paid
|
(789 | ) | (815 | ) | ||||
Projected benefit obligation at end of year
|
$ | 26,234 | $ | 23,094 | ||||
December 31, | ||||||||
2004 | 2003 | |||||||
Fair value of the Pension Plan assets at the beginning of year
|
$ | 23,927 | $ | 17,860 | ||||
Actual return on the Pension Plan assets
|
1,959 | 6,132 | ||||||
Employer contribution
|
— | 750 | ||||||
Benefits paid
|
(789 | ) | (815 | ) | ||||
Fair value of the Pension Plan assets as of actuarial date
|
$ | 25,097 | $ | 23,927 | ||||
December 31, | ||||||||
2004 | 2003 | |||||||
Actuarial present value of projected benefit obligation for
service rendered to date
|
$ | (26,234 | ) | $ | (23,094 | ) | ||
Pension Plan assets at fair value as of the actuarial date
|
25,097 | 23,927 | ||||||
(Unfunded) funded accumulated benefit obligation(1)
|
(1,137 | ) | 833 | |||||
Unrecognized net loss (gain) from past experience different
from that assumed and effects of changes in assumptions
|
7,661 | 5,924 | ||||||
Prepaid pension cost(2)
|
$ | 6,524 | $ | 6,757 | ||||
(1) | The measurement date for the accumulated benefit obligation was December 31, 2004 and 2003. The December 31, 2004 unfunded accumulated benefit obligation was recorded in other liabilities in the Company’s consolidated statement of financial condition. |
(2) | The December 31, 2003 prepaid pension cost was recorded in other assets in the Company’s consolidated statement of financial condition. In 2004, the prepaid pension cost was reversed into other comprehensive income and a minimum pension liability was recorded for the unfunded accumulated benefit obligation. |
F-94
Amount | ||||
Change in prepaid pension cost in other assets
|
$ | (6,524 | ) | |
Minimum pension liability in other liabilities
|
(1,137 | ) | ||
Change in deferred tax assets
|
2,758 | |||
Decrease in other comprehensive income
|
$ | (4,903 | ) | |
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Service cost benefits earned during the period
|
$ | — | $ | — | $ | — | ||||||
Interest cost on projected benefit obligation
|
1,508 | 1,485 | 1,424 | |||||||||
Expected return on plan assets
|
(1,998 | ) | (1,470 | ) | (1,989 | ) | ||||||
Amortization of unrecognized net gains and losses
|
723 | 1,212 | 314 | |||||||||
Net periodic pension expense (benefit)(1)
|
$ | 233 | $ | 1,227 | $ | (251 | ) |
(1) | Periodic pension expense (benefit) is included as an increase/decrease in compensation expense. |
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Weighted average discount rate
|
6.00 | % | 6.75 | % | 6.75 | % | ||||||
Rate of increase in future compensation levels
|
N/A | N/A | N/A | |||||||||
Expected long-term rate of return
|
8.50 | % | 8.50 | % | 9.00 | % |
F-95
Pension Plan | ||||||||
Allocation At | ||||||||
December 31, | ||||||||
2004 | 2003 | |||||||
Equity securities
|
76.62 | % | 57.45 | % | ||||
Debt securities
|
21.57 | 38.13 | ||||||
Cash
|
1.81 | 4.42 | ||||||
Total
|
100.00 | % | 100.00 | % | ||||
Pension | ||||
Expected Future Service | Benefits | |||
2005
|
$ | 821 | ||
2006
|
895 | |||
2007
|
920 | |||
2008
|
989 | |||
2009
|
1,180 | |||
Years 2010-2014
|
$ | 7,297 |
F-96
BankAtlantic 401(k) Plan: |
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Employee Salary Contribution Limit(1)
|
$ | 13 | $ | 12 | $ | 11 | ||||||
Percentage of Salary Limitation
|
75 | % | 75 | % | 75 | % | ||||||
Total Match Contribution(2)
|
$ | 1,790 | $ | 1,558 | $ | 1,800 | ||||||
Vesting of Employer Match
|
Immediate | Immediate | Immediate |
(1) | For the 2004, 2003 and 2002 plan year, employees over the age of 50 were entitled to contribute $16,000, $14,000 and $12,000, respectively. |
(2) | The employer matched 100% of the first 3% of employee contributions and 50% of the next 2% of employee contributions. |
BankAtlantic Profit Sharing Plan |
Ryan Beck Plans: |
Retirement Plans |
F-97
Deferred Compensation Plans |
2002 Retention Program |
Performance-Based Annual Incentive Plan |
F-98
401(k) Plan |
17. | Commitments and Contingencies |
Year Ending | ||||
December 31, | Amount | |||
2005
|
$ | 14,227 | ||
2006
|
12,595 | |||
2007
|
10,565 | |||
2008
|
8,511 | |||
2009
|
6,932 | |||
Thereafter
|
22,786 | |||
Total
|
$ | 75,616 | ||
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
BFC rent expense
|
$ | 46 | $ | 31 | $ | 31 | ||||||
BankAtlantic Bancorp rental expense for premises and equipment
|
$ | 18,885 | $ | 17,697 | $ | 16,327 | ||||||
Levitt rent expense
|
$ | 1,281 | $ | 875 | $ | 435 | ||||||
F-99
December 31, | ||||||||
2004 | 2003 | |||||||
Commitments to sell fixed rate residential loans
|
$ | 19,537 | $ | 12,962 | ||||
Commitments to sell variable rate residential loans
|
6,588 | 3,740 | ||||||
Forward contract to purchase mortgage-backed securities
|
3,947 | 8,611 | ||||||
Commitments to purchase fixed rate residential loans
|
— | 40,242 | ||||||
Commitments to purchase variable rate residential loans
|
40,015 | 3,500 | ||||||
Commitments to originate loans held for sale
|
21,367 | 14,271 | ||||||
Commitments to originate loans held to maturity
|
238,429 | 370,071 | ||||||
Commitments to extend credit, including the undisbursed portion
of loans in process
|
1,170,191 | 1,034,467 | ||||||
Standby letters of credit
|
55,605 | 31,722 | ||||||
Commercial lines of credit
|
121,688 | 162,623 | ||||||
Commitment to acquire Benihana Preferred Stock
|
10,000 | — |
F-100
F-101
18. | Regulatory Matters |
For Capital | To Be Considered | |||||||||||||||||||||||
Actual | Adequacy Purposes | Well Capitalized | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
As of December 31, 2004:
|
||||||||||||||||||||||||
Total risk-based capital
|
$ | 476,600 | 10.80 | % | $ | 352,886 | 8.00 | % | $ | 441,107 | 10.00 | % | ||||||||||||
Tier I risk-based capital
|
$ | 405,482 | 9.19 | % | $ | 176,443 | 4.00 | % | $ | 264,664 | 6.00 | % | ||||||||||||
Tangible capital
|
$ | 405,482 | 6.83 | % | $ | 89,030 | 1.50 | % | $ | 89,030 | 1.50 | % | ||||||||||||
Core capital
|
$ | 405,482 | 6.83 | % | $ | 237,413 | 4.00 | % | $ | 296,766 | 5.00 | % | ||||||||||||
As of December 31, 2003:
|
||||||||||||||||||||||||
Total risk-based capital
|
$ | 447,967 | 12.06 | % | $ | 297,208 | 8.00 | % | $ | 371,509 | 10.00 | % | ||||||||||||
Tier I risk-based capital
|
$ | 379,505 | 10.22 | % | $ | 148,604 | 4.00 | % | $ | 222,906 | 6.00 | % | ||||||||||||
Tangible capital
|
$ | 379,505 | 8.52 | % | $ | 66,802 | 1.50 | % | $ | 66,802 | 1.50 | % | ||||||||||||
Core capital
|
$ | 379,505 | 8.52 | % | $ | 178,138 | 4.00 | % | $ | 222,673 | 5.00 | % |
F-102
19. | Legal Proceedings |
F-103
20. | Parent Company Financial Information |
December 31, | |||||||||
2004 | 2003 | ||||||||
(In thousands except | |||||||||
share data) | |||||||||
ASSETS | |||||||||
Cash and cash equivalents
|
$ | 1,520 | $ | 1,536 | |||||
Securities available for sale, at market value
|
11,800 | 1,218 | |||||||
Investment in venture partnerships
|
971 | 626 | |||||||
Investment in BankAtlantic Bancorp, Inc.
|
103,125 | 91,869 | |||||||
Investment in Levitt Corporation
|
48,983 | 27,885 | |||||||
Investment in other subsidiaries
|
14,219 | 13,680 | |||||||
Loans receivable
|
3,364 | 4,175 | |||||||
Other assets
|
2,596 | 484 | |||||||
Total assets
|
$ | 186,578 | $ | 141,473 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Mortgages payable and other borrowings
|
$ | 10,483 | $ | 6,015 | |||||
Other liabilities
|
23,816 | 23,234 | |||||||
Deferred income taxes
|
27,028 | 26,549 | |||||||
Total liabilities
|
61,327 | 55,798 | |||||||
Total shareholders’ equity
|
125,251 | 85,675 | |||||||
Total liabilities and shareholders’ equity
|
$ | 186,578 | $ | 141,473 | |||||
F-104
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Revenues
|
$ | 3,514 | $ | 1,051 | $ | 763 | ||||||
Expenses
|
6,717 | 3,954 | 3,898 | |||||||||
(Loss) before undistributed earnings from subsidiaries
|
(3,203 | ) | (2,903 | ) | (3,135 | ) | ||||||
Equity from earnings in BankAtlantic Bancorp
|
15,694 | 15,222 | 11,380 | |||||||||
Equity from earnings in Levitt
|
10,265 | — | — | |||||||||
Equity from loss in other subsidiaries
|
(311 | ) | (1,583 | ) | (633 | ) | ||||||
Income before income taxes
|
22,445 | 10,736 | 7,612 | |||||||||
Provision for income taxes
|
8,215 | 3,714 | 2,420 | |||||||||
Net income
|
14,230 | 7,022 | 5,192 | |||||||||
5% Preferred Stock dividends
|
392 | — | — | |||||||||
Net Income available to common shareholders
|
$ | 13,838 | $ | 7,022 | $ | 5,192 | ||||||
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Operating Activities:
|
||||||||||||
Income (loss) from continuing operations
|
$ | 14,230 | $ | 5,879 | $ | (5,986 | ) | |||||
Income from discontinued operations, net of tax
|
— | 1,143 | 2,536 | |||||||||
Income from extraordinary item, net of tax
|
— | — | 23,749 | |||||||||
Loss from cumulative effect of a change in accounting principle,
net of tax
|
— | — | (15,107 | ) | ||||||||
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
|
||||||||||||
Equity from earnings in BankAtlantic Bancorp
|
(15,694 | ) | (15,222 | ) | (11,380 | ) | ||||||
Equity from earnings in Levitt
|
(10,265 | ) | — | — | ||||||||
Equity from (earnings) loss in other subsidiaries
|
(1,981 | ) | 1,583 | 633 | ||||||||
Depreciation
|
50 | 10 | 24 | |||||||||
Provision for deferred income taxes
|
8,216 | 3,646 | 2,556 | |||||||||
Loss on investment securities
|
72 | — | 499 | |||||||||
Gain from securities activities, net
|
— | (270 | ) | — | ||||||||
Advances from other subsidiaries
|
208 | 444 | 503 | |||||||||
(Increase) decrease in loans receivable
|
737 | — | (2,991 | ) | ||||||||
(Increase) decrease in other assets
|
(2,032 | ) | 274 | 49 | ||||||||
Increase other liabilities
|
372 | 155 | 213 | |||||||||
Net cash used in operating activities
|
$ | (6,087 | ) | $ | (2,358 | ) | $ | (4,702 | ) | |||
F-105
For the Years Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Investing Activities:
|
||||||||||||
Common stock dividends received from BankAtlantic Bancorp
|
1,924 | 1,686 | 1,581 | |||||||||
Capital contribution to subsidiaries
|
(1,000 | ) | — | — | ||||||||
Dividends from other subsidiaries
|
150 | — | — | |||||||||
Distributions from venture partnerships
|
1,423 | 344 | — | |||||||||
Decrease (increase) in securities available for sale
|
(10,000 | ) | 785 | (173 | ) | |||||||
Net cash (used in) provided by investing activities
|
(7,503 | ) | 2,815 | 1,408 | ||||||||
Financing Activities:
|
||||||||||||
Borrowings
|
4,468 | — | 1,500 | |||||||||
Issuance of preferred stock
|
14,988 | — | — | |||||||||
Exercise stock options
|
1,791 | — | — | |||||||||
Retirement of common stock
|
(7,281 | ) | — | (319 | ) | |||||||
Issuance of common stock
|
— | 282 | 204 | |||||||||
Preferred stock dividends paid
|
(392 | ) | — | — | ||||||||
Net cash provided by financing activities
|
13,574 | 282 | 1,385 | |||||||||
Increase (decrease) in cash and cash equivalents
|
(16 | ) | 739 | (1,909 | ) | |||||||
Cash and cash equivalents at beginning of period
|
1,536 | 797 | 2,706 | |||||||||
Cash and cash equivalents at end of period
|
$ | 1,520 | $ | 1,536 | $ | 797 | ||||||
Supplementary disclosure of non-cash investing and financing
activities
|
||||||||||||
Interest paid on borrowings
|
$ | 357 | $ | 333 | $ | 302 | ||||||
Increase in securities available for sale resulting from venture
partnerships distribution of its securities investment
|
— | — | 506 | |||||||||
Change in shareholders’ equity resulting from net change in
other comprehensive income, net of taxes
|
(588 | ) | 662 | (1,824 | ) | |||||||
Net increase (decrease) in shareholders’ equity from the
effect of subsidiaries’ capital transactions, net of income
taxes
|
5,812 | (252 | ) | (15 | ) | |||||||
Increase in shareholders’ equity for the tax effect related
to the exercise of stock options
|
11,017 | 550 | 60 | |||||||||
Levitt investment transfer from BankAtlantic Bancorp resulting
from the spin-off transaction
|
— | 27,885 | — |
F-106
21. | Selected Quarterly Results (Unaudited) |
First | Second | Third | Fourth | |||||||||||||||||
2004 | Quarter | Quarter | Quarter | Quarter | Total | |||||||||||||||
Revenues
|
$ | 264,696 | $ | 289,684 | $ | 280,160 | $ | 332,061 | $ | 1,166,601 | ||||||||||
Costs and expenses
|
217,306 | 243,933 | 238,984 | 283,760 | 983,983 | |||||||||||||||
Income before income taxes and equity in earnings from
unconsolidated subsidiaries
|
47,390 | 45,751 | 41,176 | 48,301 | 182,618 | |||||||||||||||
Equity in earnings from unconsolidated subsidiaries
|
5,811 | 5,023 | 5,888 | 2,881 | 19,603 | |||||||||||||||
Income before income taxes and minority interest
|
53,201 | 50,774 | 47,064 | 51,182 | 202,221 | |||||||||||||||
Provision for income taxes
|
22,207 | 21,938 | 19,113 | 20,739 | 83,997 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
26,622 | 25,575 | 24,291 | 27,506 | 103,994 | |||||||||||||||
Net income
|
$ | 4,372 | $ | 3,261 | $ | 3,660 | $ | 2,937 | $ | 14,230 | ||||||||||
Basic earnings per share from continuing operations
|
$ | 0.18 | $ | 0.13 | $ | 0.14 | $ | 0.11 | $ | 0.57 | ||||||||||
Diluted earnings per share from continuing operations
|
$ | 0.15 | $ | 0.11 | $ | 0.12 | $ | 0.09 | $ | 0.47 | ||||||||||
Basic weighted average number of common shares outstanding
|
23,824 | 24,195 | 24,215 | 24,507 | 24,183 | |||||||||||||||
Diluted weighted average number of common shares outstanding
|
27,706 | 27,795 | 27,761 | 27,892 | 27,806 | |||||||||||||||
F-107
First | Second | Third | Fourth | |||||||||||||||||
2003 | Quarter | Quarter | Quarter | Quarter | Total | |||||||||||||||
Revenues
|
$ | 191,693 | $ | 210,188 | $ | 197,034 | $ | 233,389 | $ | 832,304 | ||||||||||
Costs and expenses
|
169,387 | 187,885 | 172,786 | 211,234 | 741,292 | |||||||||||||||
Income before income taxes and equity in earnings from
unconsolidated subsidiaries
|
22,306 | 22,303 | 24,248 | 22,155 | 91,012 | |||||||||||||||
Equity in (loss) earnings from unconsolidated subsidiaries
|
(114 | ) | 2,719 | 4,054 | 3,467 | 10,126 | ||||||||||||||
Income before income taxes, minority interest and discontinued
operations
|
22,192 | 25,022 | 28,302 | 25,622 | 101,138 | |||||||||||||||
Provision for income taxes
|
9,190 | 10,588 | 11,995 | 12,393 | 44,166 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
11,185 | 13,318 | 14,352 | 12,238 | 51,093 | |||||||||||||||
Income from continuing operations
|
1,817 | 1,116 | 1,955 | 991 | 5,879 | |||||||||||||||
Discontinued operations, net of taxes
|
83 | 754 | 306 | — | 1,143 | |||||||||||||||
Net income
|
$ | 1,900 | $ | 1,870 | $ | 2,261 | $ | 991 | $ | 7,022 | ||||||||||
Basic earnings per share from continuing operations
|
$ | 0.08 | $ | 0.05 | $ | 0.09 | $ | 0.04 | $ | 0.26 | ||||||||||
Basic earnings per share from discontinued operations
|
0.00 | 0.03 | 0.01 | — | 0.05 | |||||||||||||||
Basic earnings per share
|
$ | 0.08 | $ | 0.08 | $ | 0.10 | $ | 0.04 | $ | 0.31 | ||||||||||
Diluted earnings per share from continuing operations
|
$ | 0.07 | $ | 0.04 | $ | 0.07 | $ | 0.03 | $ | 0.21 | ||||||||||
Diluted earnings per share from discontinued operations
|
— | 0.03 | 0.01 | — | 0.04 | |||||||||||||||
Diluted earnings per share
|
$ | 0.07 | $ | 0.07 | $ | 0.08 | $ | 0.03 | $ | 0.25 | ||||||||||
Basic weighted average number of common shares outstanding
|
22,419 | 22,842 | 22,979 | 23,023 | 22,818 | |||||||||||||||
Diluted weighted average number of common shares outstanding
|
24,677 | 25,688 | 26,195 | 27,019 | 26,031 | |||||||||||||||
F-108
22. | Estimated Fair Value of Financial Instruments |
F-109
December 31, 2004 | December 31, 2003 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Amount | Value | Amount | Value | ||||||||||||||
Financial assets:
|
|||||||||||||||||
Cash and cash equivalents
|
$ | 224,720 | $ | 224,720 | $ | 143,542 | $ | 143,542 | |||||||||
Securities available for sale
|
749,001 | 749,001 | 360,442 | 360,442 | |||||||||||||
Securities owned
|
125,443 | 125,443 | 124,565 | 124,565 | |||||||||||||
Investment securities
|
317,891 | 317,416 | 192,706 | 192,706 | |||||||||||||
Federal Home Loan Bank stock
|
78,619 | 78,619 | 40,325 | 40,325 | |||||||||||||
Loans receivable including loans held for sale, net
|
4,561,073 | 4,568,883 | 3,611,612 | 3,620,487 | |||||||||||||
Financial liabilities:
|
|||||||||||||||||
Deposits
|
$ | 3,457,202 | $ | 3,451,853 | $ | 3,058,142 | $ | 3,062,565 | |||||||||
Short term borrowings
|
362,002 | 362,002 | 120,874 | 120,874 | |||||||||||||
Advances from FHLB
|
1,544,497 | 1,564,188 | 782,205 | 830,939 | |||||||||||||
Securities sold but not yet purchased
|
39,462 | 39,462 | 37,813 | 37,813 | |||||||||||||
Subordinated debentures, notes, mortgage notes and bonds payable
|
278,605 | 277,998 | 164,100 | 163,827 | |||||||||||||
Junior subordinated debentures
|
263,266 | 265,955 | 263,266 | 257,647 |
F-110
23. | Earnings (Loss) per Share |
For the Year Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands, | ||||||||||||||
except per share data) | ||||||||||||||
Basic earnings per share
|
||||||||||||||
Numerator:
|
||||||||||||||
Income from continuing operations
|
$ | 14,230 | $ | 5,879 | $ | (5,986 | ) | |||||||
Less: Preferred stock dividends
|
392 | — | — | |||||||||||
Income available to common shareholders
|
13,838 | 5,879 | (5,986 | ) | ||||||||||
Discontinued operations, net of taxes
|
— | 1,143 | 2,536 | |||||||||||
Extraordinary item, net of taxes
|
— | — | 23,749 | |||||||||||
Cumulative effect of a change in accounting principle, net of
taxes
|
— | — | (15,107 | ) | ||||||||||
Net income available to common shareholders
|
$ | 13,838 | $ | 7,022 | $ | 5,192 | ||||||||
F-111
For the Year Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands, | ||||||||||||||
except per share data) | ||||||||||||||
Denominator:
|
||||||||||||||
Weighted average number of common shares outstanding
|
26,576 | 25,211 | 24,847 | |||||||||||
Eliminate RAG weighted average number of common shares
|
(2,393 | ) | (2,393 | ) | (2,393 | ) | ||||||||
Basic weighted average number of common shares outstanding
|
24,183 | 22,818 | 22,454 | |||||||||||
Basic earnings per share:
|
||||||||||||||
Earnings per share from continuing operations
|
$ | 0.57 | $ | 0.26 | $ | (0.27 | ) | |||||||
Earnings per share from discontinued operations
|
— | 0.05 | 0.11 | |||||||||||
Earnings per share from extraordinary item
|
— | — | 1.06 | |||||||||||
(Loss) earnings per share from cumulative effect of a change in
accounting principle
|
— | — | (0.67 | ) | ||||||||||
Basic earnings per share
|
$ | 0.57 | $ | 0.31 | $ | 0.23 | ||||||||
Diluted earnings per share
|
||||||||||||||
Numerator
|
||||||||||||||
Income available to common shareholders
|
$ | 13,838 | $ | 5,879 | $ | (5,986 | ) | |||||||
Effect of securities issuable by subsidiaries
|
(780 | ) | (505 | ) | (206 | ) | ||||||||
Income available after assumed dilution
|
$ | 13,058 | $ | 5,374 | $ | (6,192 | ) | |||||||
Discontinued operations, net of taxes
|
$ | — | $ | 1,143 | $ | 2,536 | ||||||||
Effect of securities issuable by subsidiaries
|
— | (17 | ) | (56 | ) | |||||||||
Discontinued operations, net of taxes after assumed dilution
|
$ | — | $ | 1,126 | $ | 2,480 | ||||||||
Extraordinary items, net of taxes
|
$ | — | $ | — | $ | 23,749 | ||||||||
Effect of securities issuable by a subsidiary
|
— | — | (511 | ) | ||||||||||
Extraordinary items, net of taxes after assumed dilution
|
$ | — | $ | — | $ | 23,238 | ||||||||
Cumulative effect of a change in accounting principle, net of
taxes
|
$ | — | $ | — | $ | (15,107 | ) | |||||||
Effect of securities issuable by a subsidiary
|
— | — | 325 | |||||||||||
Cumulative effect of a change in accounting principle, net of
taxes after assumed dilution
|
$ | — | $ | — | $ | (14,782 | ) | |||||||
Net income available after assumed dilution
|
$ | 13,058 | $ | 6,500 | $ | 4,744 | ||||||||
Denominator
|
||||||||||||||
Weighted average number of common shares outstanding
|
26,576 | 25,211 | 24,847 | |||||||||||
Eliminate RAG weighted average number of common shares
|
(2,393 | ) | (2,393 | ) | (2,393 | ) | ||||||||
Common stock equivalents resulting from stock-based compensation
|
3,623 | 3,213 | — | |||||||||||
Diluted weighted average shares outstanding
|
27,806 | 26,031 | 22,454 | |||||||||||
F-112
For the Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands, | |||||||||||||
except per share data) | |||||||||||||
Diluted earnings per share
|
|||||||||||||
Earnings per share from continuing operations
|
$ | 0.47 | $ | 0.21 | $ | (0.28 | ) | ||||||
Earnings per share from discontinued operations
|
— | 0.04 | 0.11 | ||||||||||
Earnings per share from extraordinary items
|
— | — | 1.04 | ||||||||||
Loss per share from cumulative effect of a change in accounting
principle
|
— | — | (0.66 | ) | |||||||||
Diluted earnings per share
|
$ | 0.47 | $ | 0.25 | $ | 0.21 | |||||||
24. | Certain Relationships and Related Party Transactions |
BFC | Levitt | Total | ||||||||||
Service fees and rent to BankAtlantic Bancorp
|
$ | 127,327 | $ | 499,000 | $ | 627,327 | ||||||
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Levitt
|
$ | 311 | $ | 213 | $ | 170 | ||||||
Other affiliates
|
$ | 10 | $ | 10 | $ | 41 | ||||||
F-113
F-114
25. | Segment Reporting |
F-115
Financial Services |
Homebuilding and Real Estate Development |
Other Operations |
F-116
Homebuilding | Adjusting | ||||||||||||||||||||
Financial | and Real Estate | Other | and | ||||||||||||||||||
2004 | Services | Development | Operations | Eliminations | Total | ||||||||||||||||
Revenues:
|
|||||||||||||||||||||
Sales of real estate
|
$ | — | $ | 549,652 | $ | — | $ | — | $ | 549,652 | |||||||||||
Interest and dividend income
|
260,555 | 1,338 | 680 | (2,625 | ) | 259,948 | |||||||||||||||
Investment banking
|
227,949 | — | — | (280 | ) | 227,669 | |||||||||||||||
Other income
|
116,355 | 8,078 | 5,837 | (938 | ) | 129,332 | |||||||||||||||
604,859 | 559,068 | 6,517 | (3,843 | ) | 1,166,601 | ||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||
Cost of sale of real estate
|
— | 406,274 | — | (2,374 | ) | 403,900 | |||||||||||||||
Interest expense, net
|
87,722 | 259 | 1,171 | (251 | ) | 88,901 | |||||||||||||||
Recovery for loan losses
|
(5,109 | ) | — | — | — | (5,109 | ) | ||||||||||||||
Other expenses
|
412,053 | 78,269 | 7,187 | (1,218 | ) | 496,291 | |||||||||||||||
494,666 | 484,802 | 8,358 | (3,843 | ) | 983,983 | ||||||||||||||||
110,193 | 74,266 | (1,841 | ) | — | 182,618 | ||||||||||||||||
Equity in earnings from unconsolidated Subsidiaries
|
485 | 19,118 | — | — | 19,603 | ||||||||||||||||
Income before income taxes
|
110,678 | 93,384 | (1,841 | ) | — | 202,221 | |||||||||||||||
Provision for income taxes
|
39,910 | 36,022 | 8,065 | — | 83,997 | ||||||||||||||||
Income (loss) from continuing operations before minority interest
|
70,768 | 57,362 | (9,906 | ) | — | 118,224 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
55,074 | 47,098 | 1,822 | — | 103,994 | ||||||||||||||||
Income (loss) from continuing operations
|
15,694 | 10,264 | (11,728 | ) | — | 14,230 | |||||||||||||||
Total assets at December 31, 2004
|
$ | 6,356,777 | $ | 678,467 | $ | 26,596 | $ | (106,993 | ) | $ | 6,954,847 | ||||||||||
F-117
Homebuilding | Adjusting | ||||||||||||||||||||
Financial | and Real Estate | Other | and | ||||||||||||||||||
2003 | Services | Development | Operations | Eliminations | Total | ||||||||||||||||
Revenues:
|
|||||||||||||||||||||
Sales of real estate
|
$ | — | $ | 283,058 | $ | — | $ | — | $ | 283,058 | |||||||||||
Interest and dividend income
|
261,849 | 863 | 390 | (1,228 | ) | 261,874 | |||||||||||||||
Investment banking
|
207,788 | — | — | — | 207,788 | ||||||||||||||||
Other income
|
73,501 | 4,765 | 1,532 | (214 | ) | 79,584 | |||||||||||||||
543,138 | 288,686 | 1,922 | (1,442 | ) | 832,304 | ||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||
Cost of sale of real estate
|
— | 209,431 | — | — | 209,431 | ||||||||||||||||
Interest expense, net
|
113,217 | 233 | 1,163 | (1,228 | ) | 113,385 | |||||||||||||||
Recovery for loan losses
|
(547 | ) | — | — | — | (547 | ) | ||||||||||||||
Other expenses
|
368,872 | 43,718 | 6,646 | (213 | ) | 419,023 | |||||||||||||||
481,542 | 253,382 | 7,809 | (1,441 | ) | 741,292 | ||||||||||||||||
61,596 | 35,304 | (5,887 | ) | (1 | ) | 91,012 | |||||||||||||||
Equity in earnings from unconsolidated Subsidiaries
|
425 | 7,916 | — | 1,785 | 10,126 | ||||||||||||||||
Income before income taxes
|
62,021 | 43,220 | (5,887 | ) | 1,784 | 101,138 | |||||||||||||||
Provision for income taxes
|
23,424 | 16,400 | 3,714 | 628 | 44,166 | ||||||||||||||||
Income (loss) from continuing operations before minority interest
|
38,597 | 26,820 | (9,601 | ) | 1,156 | 56,972 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
31,709 | 20,785 | (1,401 | ) | — | 51,093 | |||||||||||||||
Income (loss) from continuing operations
|
6,888 | 6,035 | (8,200 | ) | 1,156 | 5,879 | |||||||||||||||
Total assets at December 31, 2003
|
$ | 4,831,549 | $ | 393,505 | $ | 14,388 | $ | (103,207 | ) | $ | 5,136,235 | ||||||||||
F-118
Homebuilding | Adjusting | ||||||||||||||||||||
Financial | and Real Estate | Other | and | ||||||||||||||||||
2002 | Services | Development | Operations | Eliminations | Total | ||||||||||||||||
Revenues:
|
|||||||||||||||||||||
Sales of real estate
|
$ | — | $ | 207,808 | $ | — | $ | — | $ | 207,808 | |||||||||||
Interest and dividend income
|
303,387 | 1,259 | 354 | (300 | ) | 304,700 | |||||||||||||||
Investment banking
|
130,738 | — | — | — | 130,738 | ||||||||||||||||
Other income
|
58,519 | 3,014 | 1,161 | (179 | ) | 62,515 | |||||||||||||||
492,644 | 212,081 | 1,515 | (479 | ) | 705,761 | ||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||
Cost of sale of real estate
|
— | 159,675 | — | — | 159,675 | ||||||||||||||||
Interest expense, net
|
148,891 | 389 | 1,153 | 1,445 | 151,878 | ||||||||||||||||
Provision for loan losses
|
14,077 | — | — | — | 14,077 | ||||||||||||||||
Other expenses
|
302,768 | 31,670 | 4,791 | (72 | ) | 339,157 | |||||||||||||||
465,736 | 191,734 | 5,944 | 1,373 | 664,787 | |||||||||||||||||
26,908 | 20,347 | (4,429 | ) | (1,852 | ) | 40,974 | |||||||||||||||
Equity in earnings from unconsolidated Subsidiaries
|
1,293 | 5,419 | — | 2,615 | 9,327 | ||||||||||||||||
Income before income taxes
|
28,201 | 25,766 | (4,429 | ) | 763 | 50,301 | |||||||||||||||
Provision for income taxes
|
9,051 | 6,254 | 2,420 | 268 | 17,993 | ||||||||||||||||
Income (loss) from continuing operations before minority interest
|
19,150 | 19,512 | (6,849 | ) | 495 | 32,308 | |||||||||||||||
Minority interest in income of consolidated subsidiaries
|
23,853 | 15,102 | (661 | ) | — | 38,294 | |||||||||||||||
Income (loss) from continuing operations
|
(4,703 | ) | 4,410 | (6,188 | ) | 495 | (5,986 | ) | |||||||||||||
Total assets at December 31, 2002
|
$ | 5,125,550 | $ | 295,461 | $ | 18,118 | $ | (23,196 | ) | $ | 5,415,933 | ||||||||||
Homebuilding | ||||||||||||
Financial | and Real Estate | |||||||||||
Services | Development | Total | ||||||||||
Balance as of December 31, 2003
|
$ | 76,674 | $ | — | $ | 76,674 | ||||||
Bowden acquisition
|
— | 1,307 | 1,307 | |||||||||
Balance as of December 31, 2004
|
$ | 76,674 | $ | 1,307 | $ | 77,981 | ||||||
26. | Shareholders’ Equity |
F-119
27. | 5% Cumulative Convertible Preferred Stock |
F-120
28. | Subsequent Event |
F-121
SEC Registration Fee
|
$ | 8,045 | ||
Legal Fees and Expenses
|
300,000 | |||
Accounting Fees and Expenses
|
100,000 | |||
Printing and Mailing Expenses
|
75,000 | |||
Miscellaneous Expenses
|
166,955 | |||
TOTAL FEES AND EXPENSES
|
$ | 650,000 | ||
Exhibits | Description | |||
1.1 | Form of Underwriting Agreement between the Registrant and the Underwriters named therein. ** | |||
5.1 | Opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. as to the validity of the shares of Class A Common Stock being offered. * | |||
12.1 | Statement Regarding Computation of Ratio of Earnings to Fixed Charges. | |||
23.1 | Consent of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. (included in Exhibit 5.1).* | |||
23.2 | Consent of KPMG LLP. | |||
23.3 | Consent of PricewaterhouseCoopers LLP. | |||
23.4 | Consent of Ernst & Young LLP. | |||
24.1 | Power of Attorney (included with signature pages to the initial filing of this Registration Statement).* |
* | Previously filed. |
** | To be filed by amendment. |
II-1
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. | |
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
II-2
BFC Financial Corporation |
By: | /s/ Alan B. Levan |
|
|
Alan B. Levan | |
Chairman of the Board of Directors, | |
Chief Executive Officer and President |
Signature | Title | Date | ||||
/s/ Alan B. Levan |
Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) |
May 26, 2005 | ||||
* |
Vice-Chairman of the Board | May 26, 2005 | ||||
/s/ Glen R. Gilbert |
Executive Vice President, Chief Financial and Accounting
Officer and Secretary (Principal Financial and Accounting Officer) |
May 26, 2005 | ||||
* |
Director | May 26, 2005 | ||||
* |
Director | May 26, 2005 | ||||
* |
Director | May 26, 2005 | ||||
* |
Director | May 26, 2005 | ||||
*By: /s/ Alan B. Levan Attorney-in-fact |
II-3
Exhibits | Description | |||
12.1 | Statement Regarding Computation of Ratio of Earnings to Fixed Charges. | |||
23.2 | Consent of KPMG LLP. | |||
23.3 | Consent of PricewaterhouseCoopers LLP. | |||
23.4 | Consent of Ernst & Young LLP. |
II-4