-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VjSUhlj5VOCwhCVDJaLMjIbFCG9A0ecYgK8IDQENzkjHgVxkRvljFa9rcJmBqX9M HEWVa+rt1dGBx2UtNuPu5Q== 0000921768-00-000008.txt : 20000516 0000921768-00-000008.hdr.sgml : 20000516 ACCESSION NUMBER: 0000921768-00-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKATLANTIC BANCORP INC CENTRAL INDEX KEY: 0000921768 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 650507804 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13133 FILM NUMBER: 631054 BUSINESS ADDRESS: STREET 1: 1750 E SUNRISE BLVD CITY: FORT LAUDERDALE STATE: FL ZIP: 33304 BUSINESS PHONE: 9547605000 MAIL ADDRESS: STREET 1: 1750 EAST SUNRISE BOULEVARD CITY: FORT LAUDERVALE STATE: FL ZIP: 33304 10-Q 1 MARCH 31, 2000 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 34-027228 BankAtlantic Bancorp, Inc. (Exact name of registrant as specified in its Charter) Florida 65-0507804 ------------------------ -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1750 East Sunrise Boulevard Ft. Lauderdale, Florida 33304 ----------------------- -------- (Address of principal executive offices) (Zip Code) (954) 760-5000 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of preferred and common stock as of the latest practicable date. Outstanding at Title of Each Class May 8, 2000 ------------------- ------------ Class A Common Stock, par value $0.01 per share 31,626,705 Class B Common Stock, par value $0.01 per share 9,773,726 TABLE OF CONTENTS FINANCIAL INFORMATION Page Reference Financial Statements ........................................... 1-14 Consolidated Statements of Financial Condition - March 31, 2000 and 1999 and December 31, 1999 - Unaudited ...... 1 Consolidated Statements of Operations - For the Three Months Ended March 31, 2000 and 1999 - Unaudited ........... 2-3 Consolidated Statements of Stockholders' Equity and Comprehensive Income - For the Three Months Ended March 31, 2000 and 1999 - Unaudited ............................. 4 Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2000 and 1999 - Unaudited ................ 5-7 Notes to Consolidated Financial Statements - Unaudited ........... 8-14 Management's Discussion and Analysis of Financial Condition and Results of Operations ............................. 15-29 OTHER INFORMATION Exhibits and Reports on Form 8K ............................... 30 Signatures .................................................... 31 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
March 31, December 31, March 31, (In thousands, except share data) 2000 1999 1999 - --------------------------------- ---------- ----------- ---------- ASSETS Cash and due from depository institutions .......... $ 93,989 $ 90,070 $ 96,430 Interest bearing deposits in other banks ........... - - 5,167 Federal Funds sold and securities purchased under resell agreements ................................ 9,318 313 5,914 Tax certificates, net, held to maturity, at cost which approximates market value ................... 107,717 91,576 49,681 Other investments, at cost which approximates market value ...................................... 21,506 21,424 2,822 Loans receivable, net .............................. 2,458,512 2,469,472 2,375,633 Loans held for sale ................................ 287,399 220,236 257,628 Securities available for sale, at market value ..... 847,407 818,308 1,000,235 Trading securities, at market value ................ 8,177 23,311 17,254 Accrued interest receivable ........................ 33,960 30,594 28,750 Real estate held for development and sale and joint ventures .................................... 147,919 149,964 60,966 Real estate owned, net ............................. 4,268 3,951 6,884 Office properties and equipment, net ............... 56,301 55,473 57,157 Federal Home Loan Bank stock, at cost which approximates market value ......................... 57,160 56,410 49,155 Mortgage servicing rights, net ..................... 792 879 42,804 Deferred tax asset, net ............................ 40,049 41,487 21,462 Cost over fair value of net assets acquired, net ... 52,541 53,553 54,530 Other assets ....................................... 32,635 32,880 101,134 ---------- ---------- ---------- Total assets ....................................... $ 4,259,650 $ 4,159,901 $ 4,233,606 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits ........................................... $ 2,179,709 $ 2,027,892 $ 2,115,559 Advances from FHLB ................................. 1,143,188 1,098,186 983,074 Federal Funds purchased ............................ 4,000 5,900 - Securities sold under agreements to repurchase ..... 328,588 423,223 409,232 Subordinated debentures, notes and bonds payable ... 217,394 228,773 176,966 Guaranteed preferred beneficial interests in the Company's Junior Subordinated Debentures .......... 74,750 74,750 74,750 Advances by borrowers for taxes and insurance ...... 4,788 2,595 52,208 Other liabilities .................................. 66,602 62,696 185,022 ---------- ---------- ---------- Total liabilities .................................. 4,019,019 3,924,015 3,996,811 ---------- ---------- ---------- Stockholders' equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized: none issued and outstanding .......... - - - Class A Common Stock, $0.01 par value, authorized 80,000,000 shares; issued and outstanding, 31,633,138, 32,418,470 and 31,254,379 shares ...... 316 324 258 Class B Common Stock, $0.01 par value, authorized 45,000,000 shares; issued and outstanding, 9,830,146, 10,264,516 and 10,359,994 shares ...... 98 102 104 Additional paid in capital ......................... 134,727 145,399 139,532 Unearned compensation restricted stock grants ...... (542) (5,633) (6,720) Retained earnings .................................. 129,786 122,639 103,019 ---------- ---------- ---------- Total stockholders' equity before accumulated other comprehensive income (loss) ....................... 264,385 262,831 236,193 ---------- ---------- ---------- Accumulated other comprehensive income (loss) - net unrealized (depreciation) appreciation on securities available for sale - net of deferred income taxes ...................................... (23,754) (26,945) 602 ---------- ---------- ---------- Total stockholders' equity ......................... 240,631 235,886 236,795 ---------- ---------- ---------- Total liabilities and stockholders' equity ......... $ 4,259,650 $ 4,159,901 $ 4,233,606 ========== ========== ========== See Notes to Consolidated Financial Statements - Unaudited 1
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months Ended March 31, (In thousands, except share data) -------------------- Interest income: 2000 1999 ------- ------- Interest and fees on loans and leases ............. $ 58,884 $ 53,566 Interest on banker's acceptances .................. 240 187 Interest and dividends on securities available for sale ......................................... 13,639 10,053 Interest and dividends on other investments and trading securities ............... 4,461 2,606 ------- ------- Total interest income ............................. 77,224 66,412 ------- ------- Interest expense: Interest on deposits .............................. 19,838 16,591 Interest on advances from FHLB .................... 15,848 13,497 Interest on securities sold under agreements to repurchase and federal funds purchased ........ 6,582 4,044 Interest on subordinated debentures, guaranteed preferred interest in the Company's Junior Subordinated Debentures and notes and bonds payable ...................... 4,904 4,612 ------- ------- Total interest expense ............................ 47,172 38,744 ------- ------- Net interest income ............................... 30,052 27,668 Provision for loan losses ......................... 10,787 5,164 ------- ------- Net interest income after provision for loan losses ...................................... 19,265 22,504 Non-interest income: Loan late fees and other loan income .............. 1,038 1,130 Gains on loans held for sale, net of writedown .... 78 633 Gains on sales of property and equipment .......... 182 - Gains on securities available for sale, net of writedown ........................................ 12 579 Trading securities gains (losses) ................. 38 (69) Gains on sales of real estate held for sale and joint venture activities ......................... 3,111 5,395 Utility expansion receivable sale ................. 3,902 - Principal transactions ............................ 4,958 3,000 Investment banking ................................ 2,007 3,117 Commissions ....................................... 6,235 2,676 Transaction fees .................................. 3,251 3,591 ATM fees .......................................... 2,515 2,199 Other ............................................. 1,422 1,218 ------- ------- Total non-interest income ......................... 28,749 23,469 ------- ------- Non-interest expense: Employee compensation/benefits excluding RBCO and real estate operations ....................... 10,885 9,641 Employee compensation/benefits for RBCO and real estate operations ........................... 11,169 6,602 Occupancy and equipment ........................... 6,500 5,674 Advertising and promotion ......................... 1,466 756 Foreclosed asset activity, net .................... 151 90 Amortization of cost over fair value of net assets acquired .................................. 1,016 983 Other excluding RBCO and real estate operations ... 5,163 5,755 Other for RBCO and real estate operations ......... 5,551 2,794 ------- ------- Total non-interest expense ........................ 41,901 32,295 ------- ------- Income before income taxes and extraordinary item . 6,113 13,678 Provision for income taxes ........................ 2,432 5,507 ------- ------- Income before extraordinary item .................. 3,681 8,171 Extraordinary item, net of taxes .................. 3,466 - ------- ------- Net income ........................................ $ 7,147 $ 8,171 ======= ======= See Notes to Consolidated Financial Statements - Unaudited (Continued) 2 CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months Ended March 31, ------------------------- 2000 1999 --------- ---------- Class A common shares Basic earnings per share before extraordinary item .......................................... $ 0.09 $ 0.20 Basic earnings per share from extraordinary item .......................................... 0.09 0.00 ---------- ---------- Basic earnings per share ....................... $ 0.18 $ 0.20 ========== ========== Diluted earnings per share before extraordinary item .......................................... $ 0.09 $ 0.16 Diluted earnings per share from extraordinary item .......................................... 0.06 0.00 ---------- ---------- Diluted earnings per share ..................... $ 0.15 $ 0.16 ========== ========== Basic weighted average number of common shares outstanding ................................... 31,499,608 30,697,706 Diluted weighted average number of common and common equivalent shares outstanding .......... 48,586,052 48,938,221 Class B common shares Basic earnings per share before extraordinary item .......................................... $ 0.08 $ 0.19 Basic earnings per share from extraordinary item .......................................... 0.08 0.00 ---------- ---------- Basic earnings per share ....................... $ 0.16 $ 0.19 ========== ========== Diluted earnings per share before extraordinary item .......................................... $ 0.08 $ 0.16 Diluted earnings per share from extraordinary item .......................................... 0.05 0.00 ---------- ---------- Diluted earnings per share ..................... $ 0.13 $ 0.16 ========== ========== Basic weighted average number of common shares outstanding ................................... 10,058,228 10,359,717 Diluted weighted average number of common and common equivalent shares outstanding .......... 10,551,290 11,093,626 See Notes to Consolidated Financial Statements - Unaudited 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 Unearned Unrealized Compen- Depreci- Addi- sation ation on Compre- tional Restricted Securities hensive Common Paid in Retained Stock Available (In thousands) Income Stock Capital Earnings Grants For Sale Total -------- -------- -------- --------- ---------- ---------- --------- BALANCE, DECEMBER 31, 1998 ........... $ 372 $ 147,686 $ 95,818 $ (7,062) $ 3,626 $ 240,440 Net income ......................... $ 8,171 - - 8,171 - - 8,171 -------- Other comprehensive income (loss), net of tax: Unrealized losses on securities available for ................... (3,300) Reclassification adjustment for net gains included in net income 276 -------- Other comprehensive loss ........... (3,024) -------- Comprehensive income ................. $ 5,147 ======== Dividends on Class A common stock .... - - (711) - - (711) Dividends on Class B common stock .... - - (259) - - (259) Exercise of Class A common stock options ............................. - 42 - - - 42 Exercise of Class B common stock options ............................. - 14 - - - 14 Tax effect relating to the exercise of stock options .................... - 12 - - - 12 Purchase and retirement of Class A common stock ........................ (10) (8,384) - - - (8,394) Forfeited Class A restricted common stock ........................ - (89) - 89 - - Unearned compensation restricted stock grants ........................ - 251 - (251) - - Amortization of unearned compensation restricted stock grants ............. - - - 504 - 504 Net change in unrealized depreciation on securities available for sale net of deferred income taxes ............ - - - - (3,024) (3,024) -------- -------- --------- --------- --------- -------- BALANCE, MARCH 31, 1999 .............. $ 362 $ 139,532 $ 103,019 $ (6,720) $ 602 $ 236,795 ======== ======== ========= ========= ========= ======== BALANCE, DECEMBER 31, 1999 ........... $ 426 $ 145,399 $ 122,639 $ (5,633) $ (26,945) $ 235,886 Net income .......................... $ 7,147 - - 7,147 - - 7,147 -------- Other comprehensive income (loss), net of tax: Unrealized gain on securities available for sale .............. 3,718 Reclassification adjustment for net losses included in net income (527) -------- Other comprehensive income ......... 3,191 -------- Comprehensive income ................. $ 10,338 ======== Exercise of Class B common stock options ............................. 1 400 - - - 401 Tax effect relating to the exercise of stock options .................... - 88 - - - 88 Purchase and retirement of Class B common stock ........................ (6) (3,258) - - - (3,264) Forfeited Class A restricted common stock ............................... - (123) - 103 - (20) Exchange of Class A restricted common stock for participation in deferred compensation plan ................... (7) (7,779) - 4,599 - (3,187) Amortization of unearned compensation restricted stock grants ............. - - - 389 - 389 Net change in unrealized appreciation on securities available for sale net of deferred income taxes ............ - - - - 3,191 3,191 -------- ------- --------- --------- --------- -------- BALANCE, MARCH 31, 2000 .............. $ 414 $134,727 $ 129,786 $ (542) $ (23,754) $ 240,631 ======== ======= ========= ========= ========= ======== See Notes to Consolidated Financial Statements - Unaudited 4
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Three Months (In thousands) Ended March 31, - -------------- --------------------- 2000 1999 -------- -------- Operating activities: Income before extraordinary item ................... $ 3,681 $ 8,171 Extraordinary item, net of tax ..................... 3,466 - Adjustments to reconcile net income to net cash used in operating activities: Provision for loan losses .......................... 10,787 5,164 Provision for losses on real estate owned .......... 70 Depreciation, amortization and accretion, net ...... 3,772 6,308 Writeoff of deferred offering cost ................. 673 - Decrease (increase) in deferred tax asset, net ..... (597) 599 Trading account (gains) losses ..................... (38) 69 Purchases of trading securities .................... - (30) Proceeds from sales of trading securities .......... 38 (69) Decrease in trading securities owned at market-RBCO. 15,134 12,781 Gains on sales of real estate owned ................ (72) (71) Change in real estate inventory .................... 4,367 1,141 Gains on sales of securities available for sale .... (793) (579) Gains on sales of property and equipment ........... (182) - Proceeds from sales of loans held for sale ......... 14,590 60,619 Fundings of loans held for sale .................... (6,513) (22,702) Loans purchased, classified as held for sale ....... (80,840) (122,624) Gains on sales of loans held for sale .............. (242) (633) Loans held for sale valuation allowance ............ 164 - Provision for tax certificate losses ............... 225 180 Writedown of securities available for sale ......... 781 - Increase in accrued interest receivable ............ (3,366) (979) Decrease (increase) in other assets ................ (1,514) 5,681 Equity in joint venture losses (earnings) .......... 284 (1,729) Increase (decrease) in other liabilities ........... 1,744 (14,339) -------- -------- Net cash used in operating activities .............. (34,451) (62,972) -------- -------- See Notes to Consolidated Financial Statements - Unaudited 5 CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (continued) For the Three Months (In thousands) Ended March 31, - -------------- --------------------- 2000 1999 -------- -------- Investing activities: Proceeds from redemption and maturities of tax certificates .................................. 13,723 8,463 Purchase of tax certificates ....................... (30,089) (8,428) Proceeds from sales of securities available for sale .......................................... 1,110 - Principal collected on securities available for sale .......................................... 45,241 48,174 Proceeds from maturities of assets available for sale .......................................... 5,195 - Purchases of securities available for sale ......... (75,073) (405,474) Purchases of other investments ..................... (82) - Proceeds from sales of FHLB stock .................. 5,700 7,550 FHLB stock acquired ................................ (6,450) (4,475) Principal reduction on loans ....................... 203,213 397,386 Loan fundings for portfolio ........................ (189,398) (289,656) Proceeds from maturities of banker's acceptances ... 883 3,672 Purchases of banker's acceptances .................. - (2,643) Proceeds from sales of real estate owned ........... 1,382 1,072 REO acquired in connection with bulk residential loan purchases .................................... - (784) Mortgage servicing rights acquired ................. - (643) Cost of equipment acquired for lease ............... (10,661) (7,462) Additions to office property and equipment ......... (2,353) (1,108) Repayments of joint venture investments ............ - 3,005 Proceeds from sales of property and equipment ...... 364 - Investment in and advances to joint ventures, net .. (2,607) (16,296) -------- -------- Net cash used in investing activities .............. (39,902) (267,647) -------- -------- Financing activities: Net increase in deposits ........................... 133,542 176,944 Interest credited to deposits ...................... 18,275 12,843 Repayments of FHLB advances ........................ (290,000) (330,498) Proceeds from FHLB advances ........................ 335,002 269,000 Net increase (decrease) in securities sold under agreements to repurchase .......................... (94,635) 247,139 Net decrease in federal funds purchased ............ (1,900) (18,500) Repayment of notes payable ......................... (8,825) (1,480) Increase in notes payable .......................... 7,027 1,332 Issuance of investment notes ....................... 15,419 - Issuance of common stock relating to exercise of employee stock options ......................... 401 56 Retirement of subordinated debentures .............. (25,000) - Payments to acquire and retire common stock ........ (3,264) (8,394) (Repayments) receipts of advances by borrowers for taxes and insurance ........................... 2,193 (10,138) Common stock dividends paid ........................ (958) (997) -------- -------- Net cash provided in financing activities .......... 87,277 337,307 -------- -------- Increase in cash and cash equivalents .............. 12,924 6,688 Cash and cash equivalents at beginning of period ... 90,383 100,823 -------- -------- Cash and cash equivalents at end of period ......... $ 103,307 $ 107,511 ======== ======== See Notes to Consolidated Financial Statements - Unaudited 6 CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (continued) For the Three Months (In thousands) Ended March 31, - -------------- -------------------- 2000 1999 -------- -------- Supplementary disclosure and non cash investing and financing activities: Interest paid on borrowings and deposits ........... $ 47,435 $ 38,305 Income taxes paid .................................. - 5,000 Loans transferred to real estate owned ............. 1,627 1,668 Loan charge offs ................................... 7,587 6,614 Tax certificate chargeoffs (recoveries), net ....... 56 (78) Class A common stock dividends declared; not paid until April ....................................... - 711 Class B common stock dividends declared; not paid until April ....................................... - 259 Increase in equity for the tax effect related to the exercise of employee stock options ................ 88 12 Change in net unrealized appreciation (depreciation) on securities available for sale .................. 5,226 (4,937) Change in deferred taxes on net unrealized appreciation (depreciation) on securities available for sale ................................ 2,035 (1,913) Change in stockholders' equity from net unrealized appreciation (depreciation) on securities available for sale, less related deferred income taxes ............................................. 3,191 (3,024) Reduction in stockholders' equity from the retirement of restricted stock .................... (3,187) - Increase in other liabilities from the retirement of restricted stock ............................... 3,187 - See Notes to Consolidated Financial Statements - Unaudited 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. Presentation of Interim Financial Statements BankAtlantic Bancorp, Inc. (the "Company") is a unitary savings bank holding company. The Company's principal assets include the capital stock of BankAtlantic, a Federal Savings Bank ("BankAtlantic") and its subsidiaries and Ryan Beck & Co., Inc. ("RBCO"), an investment banking firm and its subsidiaries. The Company's primary activities have related to the operations of BankAtlantic and RBCO and their subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In management's opinion, the accompanying consolidated financial statements contain such adjustments necessary to present fairly the Company's consolidated financial condition at March 31, 2000, December 31, 1999 and March 31, 1999, the consolidated results of operations for the three months ended March 31, 2000 and 1999, the consolidated stockholders' equity and comprehensive income for the three months ended March 31, 2000 and 1999 and the consolidated cash flows for the three months ended March 31, 2000 and 1999. Such adjustments consisted only of normal recurring items except for the extraordinary item discussed in Note 2. The consolidated financial statements and related notes are presented as permitted by Form 10Q and should be read in conjunction with the notes to consolidated financial statements appearing in the Company's Annual Report on Form 10K for the year ended December 31, 1999. 2. Subordinated debentures, investment notes and equity capital On July 14, 1999, the Company's Board of Directors approved the repurchase on the open market of up to 3.5 million shares of the Company's common stock. The Board authorized the repurchase of common stock on a "time-to- time" basis, depending upon market conditions and subject to compliance with applicable securities laws. Pursuant to the above repurchase plan the Company paid $3.3 million to repurchase and retire 551,000 shares of Class B common stock during the three months ended March 31, 2000. Pursuant to a previously announced plan to repurchase shares of common stock, the Company paid $8.4 million to repurchase and retire 1,149,655 shares of Class A common stock during the three months ended March 31, 1999. During the three months ended March 31, 2000, 116,630 shares of Class B incentive and non-qualifying stock options were exercised resulting in a $489,000 increase in stockholders' equity. The tax effect included in the preceding amount was $88,000. During the three months ended March 31, 1999, 7,490 and 3,563 of Class A and Class B incentive stock options, respectively, were exercised resulting in a $68,000 increase in stockholders' equity. The tax effect included in the preceding amount was $12,000. On March 1, 2000, 749,533 restricted shares of Class A common stock issued to key employees of RBCO in connection with the acquisition of RBCO were retired in exchange for the establishment of interests in the BankAtlantic Bancorp-Ryan Beck Deferred Compensation Plan ("Plan") in the aggregate amount of $7.8 million. In January 2000, each participant in the RBCO retention pool was provided the opportunity to exchange those restricted shares that were allocated to such participant for a cash-based deferred compensation award in an amount equal to the aggregate value of the restricted shares at the date of the RBCO acquisition. The Company may at its option terminate the Plan at anytime without the consent of the participants or stockholders and distribute to the participants the amount credited to their deferred account (in whole or in part). Subject to the terms of the Plan, the participant's account will be settled by the Company in cash on the vesting date (June 28, 2002) except the Company can elect to defer payment of up to 50% of a participant's interest in the plan for up to one year following the vesting date. If the Company elects to exercise it rights to defer 50% of the cash payment, the Company will issue a note bearing interest at prime plus 1%. As a result of the exchange, stockholders' equity declined by $3.2 million with a corresponding increase in other liabilities. 8 In January 2000, the Company announced a tender offer for up to $25 million in principal amount of the Company's outstanding 5 5/8% Convertible Subordinated Debentures due 2007 for a cash price of $750 per $1,000 principal amount of Debentures. On February 29, 2000 the Company accepted for purchase the maximum $25 million aggregate principal amount of Debentures for an aggregate purchase price of $18.75 million under the terms of the tender offer. Upon expiration of the tender offer, approximately $60 million aggregate principal amount of the Debentures had been validly tendered, and since this amount exceeded the $25 million principal amount tendered by the Company, the Debentures tendered were purchased on a pro-rata basis (at a ratio of approximately 41%) in accordance with the terms of the tender offer. The Company recognized a $3.5 million (net of income tax) extraordinary gain upon the retirement of the Debentures. In January 2000, the Board of Directors of the Company approved a corporate transaction which would result in the redemption and retirement of all publicly held outstanding shares of Class B common stock at a price of $6.00 per share payable in cash. The Class B common stock represents 100% of the voting rights of the Company. BFC Financial Corporation and its affiliates currently beneficially own in excess of 50% of BankAtlantic Bancorp's Class B common stock. As a result of the transaction, which is structured as a merger, BFC Financial Corporation would be the sole holder of the Class B common stock. The Company's Class A common stock will be unaffected by the transaction and will remain outstanding as shares of Class A common stock of the Company as the surviving corporation. Outstanding options to purchase Class A common stock will remain exercisable for the same number of shares of Class A common stock of the Company as the surviving corporation for the same exercise price and upon the same terms as in effect before the merger. Likewise, the Company's 6-3/4% Convertible Subordinated Debentures due 2006 and 5-5/8% Convertible Subordinated Debentures due 2007 will remain convertible into the same number of shares of Class A common stock of the Company as the surviving corporation at the same conversion price and upon the same terms as in effect before the merger. All outstanding options to acquire Class B common stock will automatically be exchanged for options to acquire Class A common stock on a basis which preserves the intrinsic value of the option on the effective date of the corporate transaction. The options will otherwise be on substantially the same terms and conditions as the former options to purchase shares of Class B common stock, including vesting and term. The proposed transaction is subject to approval of the Company's Class A and Class B shareholders, receipt of all required regulatory approvals, and obtaining financing for the transaction. In January 2000, the Company began an offering of up to $150 million of subordinated investment notes. The Company currently anticipates that only $50 million of investment notes will be outstanding at any time. No minimum amount of investment notes must be sold and the Company may terminate the offering at any time. The interest rate and maturity date are fixed upon issuance. At March 31, 2000 the Company had issued an aggregate of $15.4 million of investment notes with interest rates between 10% and 11% and maturity dates between February 2002 and April 2002. The Company used a portion of the proceeds to pay a portion of the purchase price for the debentures tendered pursuant to the tender offer described above and also intends to use the proceeds to fund the proposed merger and for general corporate purposes. The Company may elect at any time prior to maturity to automatically extend the maturity date of the investment notes for an additional one year. The investment notes are subordinated to all existing and future senior indebtedness. 3. Sales of Financial Assets During the three months ended March 31, 2000 the Company sold $317,000 of securities available for sale for a $793,000 gain and recognized a writedown on marketable equity securities available for sale of $781,000. The writedown was made due to a significant decline in the market value of the security. The decline was considered other than temporary due to the magnitude and length of time of the decline and the financial condition and the near term prospects for the issuer of the security. On March 26, 1999, the Company sold $63.5 million of securities available for sale for a $579,000 gain. Included in other assets was a $64.1 million receivable from the above sale. During the three months ended March 31, 2000 the Company sold $6.5 million of loans held for sale for a $242,000 gain. Included in gains on sales of loans held for sale was a $164,000 writedown to the lower of cost or market associated with loans held for sale. 9 During the three months ended March 31, 1999 the Company sold $38.5 million, $20.4 million and $1.1 million of loans originated for resale, loans purchased and classified as held for sale and leases for gains of $492,000, $64,000 and $77,000, respectively. 4. Trading Securities During the three months ended March 31, 2000, the Company realized gains of $38,000 on trading securities compared to a realized loss of $69,000 during the same 1999 period. The RBCO gains on trading securities were associated with sales and trading activities conducted both as principal and as agent on behalf of individual and institutional investor clients of RBCO. Transactions as principal involve making markets in securities which are held in inventory to facilitate sales to and purchases from customers. During the three months ended March 31, 2000, RBCO realized net gains from principal transactions of $5.0 million compared to net gains of $3.0 million during the same 1999 period. Furthermore, included in other liabilities at March 31, 2000 and December 31, 1999 was $750,000 and $2.6 million, respectively, of securities sold not yet purchased, relating to RBCO trading activity. The Company's trading securities consist of the following (in thousands): March 31, December 31, March 31, 2000 1999 1999 --------- ------------ ---------- Debt obligations: States and municipalities $ 3,324 $ 13,961 $ 5,925 Corporations 898 1,085 738 U.S. Government and agencies 153 29 181 Corporate equities 3,802 8,236 10,410 -------- ------------ ---------- $ 8,177 $ 23,311 $ 17,254 ======== ============ ========== 5. Real Estate Held for Development and Sale and Joint Venture Activities BankAtlantic Development Corporation was renamed Levitt Corporation in March 2000. Real estate held for development and sale and joint venture activities consists of the combined activities of St. Lucie West Holding Corporation ("SLWHC"), and Levitt and Sons. SLWHC is the developer of the master planned community of St. Lucie West in St. Lucie County Florida. Levitt and Sons, which was acquired in December 1999, is a developer of single-family home communities and condominium and rental apartment complexes primarily in Florida. Real estate held for development and sale and joint ventures consisted of the following: March 31, December 31, March 31, 2000 1999 1999 --------- ----------- --------- Inventory of real estate, Levitt and Sons ................. $ 71,518 $ 73,794 $ -- SLWHC land ....................... 30,932 33,023 26,700 Loans to joint ventures .......... 34,947 33,647 25,600 Equity investments in joint ventures .................. 7,436 6,407 8,666 Other ............................ 3,086 3,093 -- -------- --------- -------- $ 147,919 $ 149,964 $ 60,966 ======== ========= ======== During the three months ended March 31, 2000 and 1999, SLWHC land sales resulted in gains of $1.2 million and $3.7 million, respectively. Levitt and Sons sales of real estate resulted in net gains of $2.2 million. Additionally, during the three months ended March 31, 2000 SLWHC sold its rights to utility impact fees to the Port St. Lucie Service Department for a net gain of $3.9 million. 10 Levitt Corporation's equity in earnings from joint ventures was a $284,000 loss during the three months ended March 31, 2000 and $1.7 million of earnings during the same 1999 period. During the 1999 quarter, one of the real estate joint ventures closed on a land sale to a developer resulting in the recognition of a $1.7 million gain. Additionally, during the three months ended March 31, 1999, the Company relinquished its equity participation rights in a loan accounted for as a joint venture in exchange for substantial principal repayments on the loan and a guarantee from a real estate investment trust resulting in the Company transferring $20.8 million in investments in joint ventures to loans receivable. The loan was paid in full in 1999. During the three months ended March 31, 2000, the Company capitalized $1.7 million of interest expense associated with real estate inventory and investments and advances to real estate joint ventures. Furthermore, $336,000 of interest income associated with loans to joint ventures was deferred. During the three months ended March 31, 1999 the Company capitalized $175,000 of interest expense and deferred $224,000 of interest income from joint venture loans. Included in other expenses in the Company's Consolidated Statements of Operations during the three months ended March 31, 2000 and 1999 was $150,000 of consulting fees paid to the Abdo Companies, an affiliate of the Company. John Abdo, the Vice Chairman and Director of the Company is the President and Chief Executive Officer of the Abdo Companies. Additionally, $20,000 of management fees was paid to BFC Financial Corporation, an affiliate of the Company, during the three months ended March 31, 2000. BFC Financial Corporation provides administrative and real estate advisory services to the Levitt Corporation. 6. Comprehensive Income The income tax provision relating to the comprehensive income reclassification adjustment in the Consolidated Statements of Stockholders' Equity and Comprehensive Income for the three months ended March 31, 2000 was $271,000 compared to a tax benefit for the 1999 quarter of $168,000. 7. Discontinued operations and restructuring charges During December 1998, the Company commenced a restructuring of its operations and established a restructuring liability. The restructuring liability at March 31, 2000 was $213,000 and consists of the remaining lease payments on closed branches. At December 31, 1998, the Board of Directors adopted a formal plan to dispose of the Company's mortgage servicing business ("MSB"). All the assets of the MSB were sold except for a building which is currently held for sale. The building has a book value of $785,000 at March 31, 2000. The Company at March 31, 2000 had a liability of $550,000 relating to expected costs of obtaining loan documents associated with the sale of the mortgage servicing portfolio during 1999. There were no adjustments to the restructuring liability or discontinued operations reserve during the three months ended March 31, 2000 and 1999. 8. Derivatives During the three months ended March 31, 2000 the Company entered into interest rate swap contracts with an aggregate notional amount of $125 million. The interest rate swaps terminate during the first quarter of 2002. The interest rate swap contracts obligate the Company to pay the one-month LIBOR index and the Company receives an average fixed rate of interest of 7.08%. The interest rate swap contracts were executed to convert the Company's 7% fixed rate callable time deposits to a one-month LIBOR interest rate. The Company has elected hedge accounting treatment for the interest rate swaps; therefore, any adjustment to the carrying amount of the interest rate swaps shall be recognized in the carrying amount of the callable time deposits. 11 9. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system and regulatory environment. The information provided for Segment Reporting is based on internal reports utilized by management. Interest expense and certain revenue and expense items are allocated to the various segments as interest expense and overhead. The presentation and allocation of interest expense and overhead and the net contribution calculated under the management approach may not reflect the actual economic costs, contribution or results of operations of the unit as a stand alone business. If a different basis of allocation was utilized, the relative contributions of the segments might differ but the relative trends in segments would, in management's view, likely not be impacted. The following summarizes the aggregation of the Company's operating segments into reportable segments: Reportable Segment Operating Segments Aggregated ------------------ ----------------------------- Bank Investment Operations - Other Investment Division, Tax Certificate Department, Trading, Equity Portfolio Bank Investment Operations - Wholesale Real Estate Capital Services, Residential Capital Markets Bank Loan Operations - Commercial Commercial Lending, Syndications, International and Trade Finance Bank Loan Operations - Retail Residential Lending, CRA Lending, Indirect and Direct Consumer Lending, Small Business Lending, Lease financing Real Estate Operations Levitt Corporation (includes Levitt and Sons, SLWHC and real estate joint ventures) Investment Banking Operations Ryan, Beck & Co. The accounting policies of the segments are generally the same as those described in the summary of significant accounting policies. Intersegment transactions consist of borrowings by real estate operations and investment banking operations which are recorded based upon the terms of the underlying loan agreements and are effectively eliminated in the interest expense and overhead allocations. 12 The Company evaluates segment performance based on net contribution after tax. The table below is segment information for income before extraordinary item for the three months ended March 31, 2000 and 1999:
Bank Investment Bank Loan Operations Operations ------------------------ ----------------------- Investment Wholesale Real Estate Banking (in thousands) Other Residential Commercial Retail Operations Operations Total - -------------- --------- ----------- ---------- -------- ----------- ---------- ---------- March 31, 2000 Interest income ..... $ 17,117 $ 25,500 $ 23,317 $ 11,229 $ (420) $ 481 $ 77,224 Interest expense and overhead ...... (14,698) (20,316) (14,409) (6,180) (1,031) (208) (56,842) Recovery from (provision for) loan losses ........ - (182) 86 (10,691) - - (10,787) Non-interest income . 74 - 431 717 7,415 13,200 21,837 Segment profits before taxes ....... 971 3,621 7,735 (7,728) 2,353 (839) 6,113 Provision for income taxes ....... 386 1,441 3,078 (3,075) 936 (334) 2,432 --------- ---------- --------- -------- --------- -------- --------- Segment net income .. $ 585 $ 2,180 $ 4,657 $ (4,653) $ 1,417 $ (505) $ 3,681 ========= ========== ========= ======== ========= ======== ========= Segment total assets $1,016,471 $ 1,416,360 $1,002,163 $ 417,087 $ 152,743 $ 42,520 $4,047,344 ========= ========== ========= ======== ========= ======== ========= March 31, 1999 Interest income ..... $ 12,008 $ 22,438 $ 18,185 $ 13,648 $ (224) $ 357 $ 66,412 Interest expense and overhead ....... (10,025) (18,284) (10,213) (7,812) (390) (227) (46,951) Recovery from (provision for) loan losses ........ - 32 (887) (4,309) - - (5,164) Non-interest income . 526 64 390 1,379 5,417 8,940 16,716 Segment profits before taxes ....... 1,714 3,202 6,419 (939) 3,643 (361) 13,678 Provision for income taxes ....... 683 1,276 2,559 (339) 1,385 (57) 5,507 --------- ---------- ---------- ---------- ---------- ---------- ---------- Segment net income .. $ 1,031 $ 1,926 $ 3,860 $ (600) $ 2,258 $ (304) $ 8,171 ========= ========== ========= ======== ========= ========= ========= Segement total asset. $1,065,860 $ 1,387,800 $ 793,924 $ 535,059 $ 39,839 $ 55,094 $3,877,576 ========= ========== ========= ======== ========= ========= ========= 13
The difference between total segment assets and total consolidated assets and segment non-interest income, and total non-interest income is as follows: At or for the Three Months Ended March 31, ------------------------ (in thousands) 2000 1999 --------- --------- Total Assets Total assets for reportable segments . $4,047,344 $3,877,576 Assets in discontinued operations .... 785 44,169 Assets in overhead ................... 211,521 311,861 ---------- ---------- Total consolidated assets ............ $4,259,650 $4,233,606 ========== ========== Non-interest Income Total non-interest income for reportable segments ................. $ 21,837 $ 16,716 Items included in inteest expense and overhead: Transaction fee income ............... 3,251 3,591 ATM fees ............................. 2,515 2,199 Other ................................ 1,146 963 ---------- ---------- Total consolidated non-interest income $ 28,749 $ 23,469 ========== ========== 10. Reclassifications Certain amounts for prior periods have been reclassified to conform with the statement presentation for 2000. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for historical information contained herein, the matters discussed in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), When used in this report the words "anticipate", "believe", "estimate", "may", "intend", "expect" and similar expressions identify certain of such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, including but not limited to, the risks and uncertainties associated with the implementation of and the realization of benefits from its restructuring initiatives and expense reductions, economic, competitive and other factors affecting the Company and its operations, markets, products and services, credit risks and the related adequacy of the allowance for loan losses, changes in interest rates and economic policies, the success of technological, strategic and business initiatives, significant growth in banking as well as non-banking initiatives, the ability of the Company to obtain financing for the merger and other factors discussed elsewhere in this report and other reports filed by the Company with the Securities and Exchange Commission ("SEC"). Many of these factors are beyond the Company's control. Results of Operations For the Three Months Ended, March 31, ------------------- (In thousands) 2000 1999 - -------------- ------- -------- Income before extraordinary item .. $ 3,681 $ 8,171 Extraordinary item, net of taxes .. 3,466 - ------- ------- Net income ........................ $ 7,147 $ 8,171 ======= ======= CLASS A COMMON SHARES Diluted earnings per share before extraordinary item ............... $ 0.09 $ 0.16 Diluted earnings per share from extraordinary item ............... 0.06 - ------- ------- Diluted earnings per share ........ $ 0.15 $ 0.16 ======= ======= CLASS B COMMON SHARES Diluted earnings per share before extraordinary item ............... $ 0.08 $ 0.16 Diluted earnings per share from extraordinary item ............... 0.05 - ------- ------- Diluted earnings per share ........ $ 0.13 $ 0.16 ======= ======= Income before extraordinary item - Income before extraordinary item declined by 55% during the three months ended March 31, 2000 compared to the same period during 1999. The primary reasons for the decline were: 1) an increase in the provision for loan losses resulting from historical loss experiences in the small business and consumer loan portfolios, 2) higher compensation expense from expanded investment banking operations, the acquisition of Levitt and Sons and new banking products, 3) a significant increase in other real estate expenses resulting from Levitt and Sons and selling general and administrative expenses during 2000 which were not included during 1999, 4) increased occupancy expenses associated with repairs and maintenance on bank branches and maintenance contracts associated with ATM operations, and 5) lower gains on sales of securities available for sale net of writedowns were due to a reduction in securities sales caused by a rising rate environment, and 6) lower gains on sales of loans held for sale were due to a decline in loans originated for sale and an increase in the valuation allowance. 15 The above reductions in income from before extraordinary item were partially offset by: 1) an improvement in net interest income resulting from an increase in interest earning assets reflecting higher loan receivable and securities available for sale average balances, partially offset by a decline in the net margin. 2) the sale of one parcel of land for a $182,000 gain, 3) trading securities profits during 2000 compared to losses during 1999, and 4) a gain on the sale of a utility expansion receivable from real estate operations. Extraordinary item - The extraordinary item resulted from the early extinguishment of debt. On February 29, 2000, the Company repurchased $25 million aggregate principal amount of its 5 5/8% convertible subordinated debentures for $18.75 million. Included in the extraordinary item was $250,000 of offering costs and a $673,000 writeoff of the original unamortized issuance costs. Net Interest Income For the Three Months Ended March 31, ------------------------------- (In thousands) 2000 1999 Change - -------------- ------- ------- ------- Interest and fees on loans and banker's acceptances ....... $ 59,124 $ 53,753 $ 5,371 Interest on securities available for sale ............. 13,639 10,053 3,586 Interest and dividends on investment, tax certificates and trading securities ......... 4,461 2,606 1,855 Interest on deposits ............ (19,838) (16,591) (3,247) Interest on advances from FHLB .. (15,848) (13,497) (2,351) Interest on securities sold under agreements to repurchase . (6,582) (4,044) (2,538) Interest on subordinated debentures, notes and bonds payable and guaranteed preferred interests in the Company's Junior Subordinated Debentures ..................... (4,904) (4,612) (292) ------- -------- ------- Net interest income ............. $ 30,052 $ 27,668 $ 2,384 ======= ======== ======= First quarter this year versus the same quarter last year: Net interest income increased by 9%. Total interest income increased by $10.8 million while total interest expense increased by $8.4 million. The increase in interest income resulted from higher average interest earning assets and average yields. The Company experienced asset growth in all categories of earning assets. The increase in total interest expense reflects the funding of the asset growth primarily with time deposits and securities sold under agreements to repurchase and higher borrowing rates. The increased average rates on earning assets and rate paying liabilities primarily resulted from an increasing interest rate environment beginning in July 1999. The increase in loan interest income primarily resulted from the origination of commercial real estate, lease financing and syndication loans as well as the purchase of residential loans held for sale. The above increases in loan average balances were partially offset by declines in the Company's wholesale residential, consumer and small business loan portfolios. The decline in consumer loans resulted from the Company ceasing the origination of indirect consumer loans as part of its December 1998 restructuring plan. The decline in small business average balances resulted from a significant decrease in loan originations during the 1999 fiscal year and the first quarter of 2000 compared to the 1998 fiscal year. Also contributing to the increase in loan interest income was higher loan average yields due to the prime interest rate rising 125 basis points since July 1999. 16 The increase in securities available for sale interest income primarily resulted from higher average balances and yields. The higher average balances and yields were caused by purchases of mortgage-backed securities and REMICs during 1999 and the first quarter of 2000. The higher yields were due to new purchases of securities at higher rates than the existing portfolio. The increase in interest and dividends on investment securities held to maturity and trading securities primarily resulted from interest income associated with tax certificates and FHLB stock. The additional tax certificate income resulted from expansion of the Company's tax certificate operations outside of the State of Florida. The increased FHLB stock dividend income reflects higher FHLB advance average balances due to the required FHLB stock balances needed for the current period. The increase in deposit expense resulted from higher time deposit average balances and increased deposit rates. Higher time deposit average balances resulted from the introduction of new deposit products and the use of public funds and brokered deposits. The average balance of brokered deposits and public funds increased from $203.9. million in 1999 to $286.9 million in 2000. The increased deposit average balances and rates reflect the introduction of new transaction and time deposit products and a rising interest rate environment during the latter half of 1999 and the first quarter of 2000. The new deposit products have higher interest rates than the Company's existing deposits. As a result of the new deposit products, total deposits increased by $152 million or 7.5% from the fourth quarter of 1999. One of the deposit products was a two-year fixed rate callable certificate of deposit. The Company hedged the interest rate of these deposit accounts with two year interest rate swaps. The Company originated approximately $108 million of this deposit product during the first quarter of 2000. The increase in interest expense on advances from FHLB was primarily due to higher average balances and rates. The additional FHLB advance average balances were used to fund growth in securities available for sale. The higher rates reflect the origination of new advances during 2000. The higher interest expense on securities sold under agreements to repurchase resulted from higher average balances and rates. The higher average balances funded loan growth and the purchase of securities available for sale and the higher rates reflect a rising interest rate environment. The increase in interest on subordinated debentures, guaranteed preferred interest in the Company's Junior Subordinated Debentures and notes and bonds payable resulted primarily from notes payable acquired in connection with the Levitt and Sons acquisition. The Levitt Corporation average notes payable balance during the 2000 period was $57 million compared to $0 during the 1999 period. The reduction of interest expense associated with the retirement of $25.0 million of the 5 5/8% convertible debentures was offset by the interest expense related to the issuance of $15.4 million of investment notes. Interest expense of $1.7 million was capitalized during the three months ended March 31, 2000 associated with Levitt and Sons real estate operations and investments and advances to joint ventures. During the three months ended March 31, 1999 $175,000 of interest expense was capitalized in connection with investments and advances to real estate joint ventures. The net interest spread declined to 2.71% during 2000 compared to 2.86% during 1999 as rate increases in liabilities exceeded the increase in yields on earning assets. Yields on earning assets increased from 7.71% during the 1999 period to 7.93% during the 2000 period. Likewise, rates on interest bearing liabilities increased from 4.85% during the 1999 period to 5.22% during the 2000 period. The increased earning asset yields and interest bearing liabilities rates primarily resulted from the rising interest rate environment beginning in July 1999. 17 Provision for Loan Losses For the Three Months Ended March 31, ---------------------- 2000 1999 -------- -------- Balance, beginning of period ................. $ 44,450 $ 37,950 Charge-offs: Commercial real estate loans ............... - (158) Nonmortgage Commercial ..................... (24) - Lease financing ............................ (520) (303) Small business - real estate ............... (18) (10) Small business - non-mortgage .............. (3,131) (2,093) Consumer loans - indirect .................. (3,369) (3,297) Consumer loans - direct .................... (1,494) (694) Residential real estate loans .............. (100) (59) -------- ------- (8,656) (6,614) ------- ------- Recoveries: Commercial real estate loans ............... 2 - Lease financing ............................ 54 66 Small business - non-mortgage .............. 113 37 Consumer loans - indirect .................. 698 378 Consumer loans - direct .................... 187 228 Commercial business loans .................. 14 141 Residential real estate loans .............. 1 - ------- ------- 1,069 850 ------- ------- Net charge-offs .............................. (7,587) (5,764) Additions charged to operations .............. 10,787 5,164 ------- ------- Balance, end of period ....................... $ 47,650 $ 37,350 ======= ======= The provision for loan losses increased significantly during the three months ended March 31, 2000 compared to the same 1999 period primarily due to losses experienced in the small business and consumer lending portfolios, including an increase in direct consumer loan second mortgage charge-offs . The substantial increase in the allowance for loan losses resulted from small business and consumer loan charge-offs and delinquency trends. The Company ceased the origination of indirect consumer loans as part of its December 1998 restructuring. The high charge off and delinquency trends in the small business nonmortgage portfolio resulted in additions to the allowance for loan losses. The Company has significantly reduced the origination of small business loans and has implemented substantial modifications to the small business program including oversight of the program by the Chief Credit Officer. 18 At the indicated dates the Company's non-performing assets were (in thousands): March 31, December 31, 2000 1999 ------- ------------ Nonaccrual : Tax certificates .......................... $ 1,442 $ 2,258 Loans and leases .......................... 32,744 42,741 ------ ------ Total nonaccrual .......................... 34,186 44,999 ------ ------ Repossessed Assets: Real estate owned, net of allowance .............................. 4,268 3,951 Vehicles and equipment ..................... 894 1,253 ------ ------ Total repossessed assets ................... 5,162 5,204 Contractually past due 90 days or more (1) .. - 410 ------ ------ 39,348 50,613 Restructured loans .......................... - - ------ ------ Total non-performing assets ................ $39,348 $50,613 ====== ====== (1) The majority of these loans at December 31, 1999 had matured and the borrowers continued to make payments under the matured loan agreement. As of March 31, 2000, a commercial loan in which BankAtlantic is a participant in a nationally syndicated credit facility was in violation of certain covenants in the loan agreement. The total commitment of BankAtlantic to this borrower is $13.7 million, of which $13.4 million is outstanding. As of this date, the borrower continues to make payment under the loan agreement; however, based on the fact that the borrower is continuing to incur operating losses it is possible that this loan may be included in the above table as a non-accruing loan in subsequent periods. The Company experienced declines in all non-accrual asset categories. The decrease in non-accrual loans and leases resulted from: 1) a $3.9 million decrease in consumer non-accrual loans, 2) a $2.9 million decline in non-accrual residential loans including a $1.5 million decline in non-accrual residential loans purchased, 3) a $1.7 million reduction in non-accrual small business loans, 4) a $1.3 million decrease in non-accrual commercial loans and 5) a $190,000 decrease in non-accrual lease financing. Non-accrual and repossessed consumer loans decreased significantly resulting from more aggressive disposition, repossession and collection procedures. The improvement in residential non-accrual loans reflects the Company either negotiating a payoff or foreclosing and selling the collateral on non-accrual residential loans acquired. The remaining decline in residential non-accrual loans reflects improvements in the delinquency trends of the portfolio. The reduction in small business non-accrual loans resulted from changes in the collection process resulting in improvements in the delinquency trends. Non-accrual commercial loans improved due to a payoff of a nonresidential commercial real estate loan and the foreclosure of a commercial real estate loan. 19 Non-Interest Income For the Three Months Ended March 31, ------------------------------- (In thousands) 2000 1999 Change - -------------- ------- ------- ------- Noninterest Income Bank Operations Loan late fees and other loan income ...... $ 1,038 $ 1,130 $ (92) Gains on sales of loans held for sale, net of writedowns ......................... 78 633 (555) Gains on sales of property and equipment ... 182 - 182 Trading account gains (losses) ............. 38 (69) 107 Gains on sales of securities availabe for sale, net of writedowns ............... 12 579 (567) Transaction fees ........................... 3,251 3,591 (340) ATM fees ................................... 2,515 2,199 316 Other ...................................... 765 1,049 (284) ------- ------- ------- Non-interest income banking operations ..... 7,879 9,112 (1,233) ------- ------- ------- RBCO Operations Principal transactions ..................... 4,958 3,000 1,958 Investment banking ......................... 2,007 3,117 (1,110) Commissions ................................ 6,235 2,676 3,559 Other ...................................... 255 147 108 ------- ------- ------- Non-interest income - RBCO ................. 13,455 8,940 4,515 ------- ------- ------- Real Estate Operations ..................... Gains on sales of real estate held for sale 3,395 3,666 (271) Equity in earnings (losses) of unconsolidated real estate joint ventures . (284) 1,729 (2,013) Utility expansion receivable sale .......... 3,902 - 3,902 Other ...................................... 402 22 380 ------- ------- ------- Non-interest income - real estate operations 7,415 5,417 1,998 ------- ------- ------- Total non-interest income .................. $ 28,749 $ 23,469 $ 5,280 ======== ======== ======== Non-Interest Income - Bank Operations During the three months ended March 31, 2000 the Company sold $6.5 million of loans held for sale for a $242,000 gain. Included in gains on sales of loans held for sale was a $164,000 writedown to the lower of cost or market associated with loans held for sale. During the three months ended March 31, 1999 the Company sold $38.5 million, $20.4 million and $1.1 million of loans originated for resale, loans purchased and classified as held for sale and leases for gains of $492,000, $64,000 and $77,000, respectively. During the three months ended March 31, 2000, the Company sold a parcel of land with a book value of $182,000 for a gain as shown in the above table. During the three months ended March 31, 2000, the Company realized gains of $38,000 on securities trading compared to a realized loss of $69,000 during the same 1999 period. During the three months ended March 31, 2000 the Company sold $317,000 of securities available for sale for a gain of $793,000 and recognized a writedown on marketable equity securities available for sale of $781,000. The writedown was made due to a significant decline in the market value of the securities. The decline was considered other than temporary due to the magnitude and length of time of the decline and the financial condition and the near term prospects for the issuer of the security. During the three months ended March 31, 1999, the Company sold $63.5 million of securities available for sale for a $579,000 gain. 20 The decline in transaction fee income during the three months ended March 31, 2000 compared to the same period in 1999 primarily resulted from a decline in overdraft protection fee income reflecting the increased monitoring of deposit account activity in order to prevent check kiting and check fraud activities. The increase in ATM fee income during 2000 was primarily the result of a renegotiated profit sharing agreement and increased ATM activity at the Company's branch locations. The decline in other income during the three months ended March 31, 2000 was due to lower commissions earned from teller check outsourcing and deposit customer services such as teller check fees and account research fees. Non-Interest Income - RBCO Operations The enhanced principal transaction income during the three months ended March 31, 2000 compared to the same 1999 period resulted from improved equity trading results. The significant increase in commission income was attributed to growth in RBCO's retail and institutional clients. The growth reflects fees from the brokerage operations conducted in various BankAtlantic branches and income from the Southeast Research Group which was acquired by RBCO in June 1999. The above improvements in non-interest income were partially offset by a decline in investment banking income primarily due to a weak IPO market for bank and thrift stocks during the three months ended March 31, 2000. Non-Interest Income - Real Estate Operations During the three months ended March 31, 2000, gains on sales of real estate held for sale represented the net profits on sales of real estate by Levitt and Sons and SLWHC. During the first quarter of 2000, Levitt and Sons sold real estate inventory for a net gain of $2.2 million and SLWHC sold developed land for a net gain of $1.2 million. During the three months ended March 31, 1999 SLWHC sold developed land for a net gain of $3.7 million. Equity in earnings (losses) from unconsolidated joint ventures reflects the Company's real estate joint ventures. Other income primarily represents revenues from Levitt and Sons mortgage operations and storage income from a marina property. During February 2000, SLWHC received a cash payment of $8.5 million representing the full satisfaction of a certain receivable from a public municipality providing water and wastewater services to St. Lucie West. The cash payment is in full settlement of an agreement dated December 1991 between SLWHC and the municipality. The 1991 agreement required the municipality to reimburse SLWHC for its cost of increasing the service capacity of the utility plant via payment to SLWHC of the future connection fees generated from such capacity. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 21 Non-Interest Expenses For the Three Months Ended March 31, -------------------------- (In thousands) 2000 1999 Change - -------------- ------ ------ ------ Noninterest expense Bank Operations Employee compensation and benefits .... $10,885 $ 9,641 $ 1,244 Occupancy and equipment ............... 5,601 5,188 413 Foreclosed asset activity, net ........ 151 90 61 Advertising and promotion ............. 581 326 255 Amortization of cost over fair value of net assets acquired ................ 708 711 (3) Other ................................. 5,163 5,755 (592) ------ ------ ------ Non-interest expenses ............. 23,089 21,711 1,378 ------ ------ ------ RBCO Operations Employee compensation and benefits .... 9,844 6,450 3,394 Occupancy and equipment ............... 899 486 413 Advertising and promotion ............. 272 248 24 Amortization of cost over fair value of net assets acquired ................ 308 272 36 Other ................................. 3,185 1,976 1,209 ------ ------ ------ Non-interest expenses ................. 14,508 9,432 5,076 ------ ------ ------ Real Estate Operations Employee compensation and benefits .... 1,325 152 1,173 Advertising and promotion ............. 613 182 431 Selling, general and administrative ... 2,366 818 1,548 ------ ------ ------ Non-interest expenses ............... 4,304 1,152 3,152 ------ ------ ------ Total non-interest expenses ........... $41,901 $32,295 $ 9,606 ====== ====== ====== Non-Interest Expenses - Bank Operations Compensation expense increased due principally to the growth of several lines of business, including internet banking, annual salary and benefit increases and one-time recruiting expenses. Occupancy and equipment expenses increased due to higher ATM equipment repair and maintenance along with additional costs incurred associated with branch network building repair and maintenance. The higher advertising expense relates to promotions associated with BankAtlantic's new deposit and loan products that were introduced during the first quarter of 2000. The improvement in other expenses resulted from lower ATM, consulting and general corporate expenses. The decline in ATM expenses primarily resulted from a review and renegotiation of various vendor contracts for all ATM vendors and suppliers. Additionally, the Company experienced a decrease in the following expense categories: 1) Telephone, 2) Postage, 3) Bank charges, and 4) Teller outages. RBCO Non-Interest Expenses The significant increase in employee compensation and benefits was primarily due to higher commission expenses associated with the increase in commission revenues and a cumulative increase in salary, payroll taxes and insurance expenses associated with 58 additional employees. RBCO during 1999 significantly expanded its business activities including the diversification into the healthcare, consumer and technology industries, the expansion of 22 investment banking activities, expansion of retail operations into BankAtlantic branches and the acquisition of the Southeast Research Group. The increases in occupancy and equipment reflects additional rent and depreciation expenses associated with the expansion of business activities mentioned above. The higher amortization of cost over fair value of net assets acquired was attributable to the June 28, 1999 acquisition of the Southeast Research Group. The increase in other expenses resulted from additional telephone, quotation and postage expenses associated with the expanded business activities as well as a significant increase in floor brokerage and clearing fees reflecting a 130% increase in the number of trades. Real Estate Operations Non-Interest Expenses The increase in real estate operations non-interest expenses primarily related to the December 1999 acquisition of Levitt and Sons. Included in selling, general and administrative expenses during the three months ended March 31, 2000 and 1999 was $150,000 of consulting fees paid to the Abdo Companies, Inc., an affiliate of the Company. Additionally, included in selling, general and administrative expenses during the three months ended March 31, 2000 were $20,000 of management fees paid to BFC Financial Corporation, an affiliate of the Company. Segment Reporting The table below provides segment information for continuing operations for the three months ended March 31, 2000 and 1999: For the Three Months (in thousands) Ended March 31, - -------------- -------------------- 2000 1999 ------ ------ Net contribution after income taxes .............. Bank investment operations - wholesale residential $ 2,180 $ 1,926 Bank investment operations - other ............... 585 1,031 Bank loan operations - retail products ........... (4,653) (600) Bank loan operations - commercial products ....... 4,657 3,860 Real estate operations ........................... 1,417 2,258 Investment banking operations .................... (505) (304) ------ ------ Net contribution ................................. $ 3,681 $ 8,171 ====== ====== Bank Investment Operations Segment net contribution from bank investment operations - other declined due to lower gains on the sale of loans and securities available for sale as well as a writedown of a marketable equity security. The additional noninterest income resulted from increased earning assets relating primarily to the purchase of securities during the period. The higher interest expense and overhead resulted from an increase in allocated overhead reflecting a decline in deposit related noninterest income and an increase in noninterest expenses. Segment net contribution from bank investment operations - wholesale residential increased primarily from an increase in earning assets and higher average yields. The additional earning assets represent loans purchased during the period and the improvement in yield reflects rate adjustments on adjustable rate loans. The additional overhead allocation reflects the increase in segment assets and higher bankwide allocated overhead. Bank Loan Operations Segment net contribution from bank loan operations - commercial increased due to a significant increase in loan balances due to loan origination and loan syndications. Also, contributing to the improved net contributions was 23 a decline in the provision for loan losses attributed to a recovery on a nonaccrual loan and higher syndication loan growth during 1999 compared to 2000. Segment net contribution from bank loan operations - retail declined due to a significant increase in the provision for loan losses and declining portfolio balances. The additional provision for loan losses during 2000 was the result of increased small business and consumer loan charge-offs and delinquency trends. The decline in portfolio balances reflects lower fundings of small business loans and the Company ceasing the origination of indirect consumer loans during 1998. Real Estate Operations Segment net contribution from real estate operations decreased due to a decline in earnings from joint venture operations, a decline in land sales at SLWHC, and a loss from Levitt and Sons operations. The above net contribution declines were partially offset by the sale of SLWHC utility expansion receivable. The additional overhead allocation reflects a significant increase in intercompany borrowings during 2000 compared to 1999. Investment Banking Operations Segment net contribution from investment banking operations declined resulting from increased operating expenses associated with RBCO expanded business activities. RBCO experienced a significant increase in commission and trading revenues, offset by lower investment banking revenues and higher compensation, communication and occupancy expenses. The increased compensation expense reflects higher commission expense associated with the commission revenue. The higher communication and occupancy expenses resulted from the expansion of RBCO operations and the acquisition of the Southeast Research Group. Financial Condition The Company's total assets at March 31, 2000 were $4.3 billion compared to $4.2 billion at December 31, 1999. The increase in total assets primarily resulted from increased: 1) loans held for sale balances due to bulk purchases of residential loans categorized as held for sale, 2) securities available for sale resulting from the purchase of adjustable rate mortgage backed securities, 3) tax certificate purchases, and 4) securities purchased under resell agreements associated with RBCO activities. The above increases in total assets were partially offset by decreased: 1) loans receivable resulting from the repayment of consumer indirect automobile loans and purchased residential loans held to maturity, 2) trading securities related to RBCO operations, and 3) real estate held for development and sale and joint ventures due to sales. The Company's total liabilities at March 31, 2000 were $4.0 billion compared to $3.9 billion at December 31, 1999. The increase in total liabilities primarily resulted from increased: 1) deposit balances reflecting the introduction of new deposit products, and 2) advances from the FHLB used to fund growth in securities available for sale. The above increases in total liabilities were partially offset by decreased: 1) short term borrowings due to deposit growth, and 2) subordinated debentures due to the repurchase of $25 million of 5 5/8% convertible subordinated debentures, partially offset by the issuance of $15 million of investment notes. Market Risk Market risk is defined as the risk of loss arising from adverse changes in market valuation which arise from interest rate risk, foreign currency exchange rate risk, commodity price risk, and equity price risk. The Company's primary market risk is interest rate risk and its secondary market risk is equity price risk. 24 Equity Price Risk The Company maintains a portfolio of trading and available for sale securities which subjects the Company to equity pricing risks. The change in fair values of equity securities represents instantaneous changes in all equity prices segregated by trading securities, securities sold not yet purchased and available for sale securities. The following are hypothetical changes in the fair value of the Company's securities sold not yet purchased, trading and available for sale securities at March 31, 2000 based on percentage changes in fair value. Actual future price appreciation or depreciation may be different from the changes identified in the table below. Available Securities Total Percent Trading for Sale Sold Not Dollar Change in Securities Securities Yet Change from Fair Value Fair Value Fair Value Purchased 0% - -------------- ------------ ------------ ----------- ------------ 20 % $ 9,812 $ 26,719 $(900) $ 5,938 10 % $ 8,995 $ 24,493 $(825) $ 2,970 - % $ 8,177 $ 22,266 $(750) $ - (10)% $ 7,359 $ 20,039 $(675) $ (2,970) (20)% $ 6,542 $ 17,813 $(600) $ (5,938) RBCO is a market maker in equity securities which could from time to time require them to hold securities during declining markets. The Company attempts to manage its equity price risk by maintaining a relatively small portfolio of securities and evaluating equity securities as part of the Company's overall asset and liability management process. Interest Rate Risk The majority of the Company's assets and liabilities are monetary in nature subjecting the Company to significant interest rate risk. During 1998, the Company began trading government securities which are generally bought and sold on the same day. During the second quarter of 1999 the Company's trading activities were expanded beyond trading in government securities to trading in options and futures on Eurodollar time deposits which expire in three months or less. Eurodollar time deposits are indexed to the LIBOR. The Company has developed a model using vendor software to quantify its interest rate risk. A sensitivity analysis was performed measuring the Company's potential gains and losses in net portfolio fair values of interest rate sensitive instruments at March 31, 2000 resulting from a change in interest rates. Interest rate sensitive instruments included in the model were the Company's: loan portfolio, debt securities available for sale, investment securities, FHLB stock, Federal Funds sold, government securities, Eurodollar time deposit options and futures deposits, including brokered deposits and public funds, advances from FHLB, securities sold under agreements to repurchase, Federal Funds purchased, Notes and Bonds payable Subordinated Debentures, Trust Preferred Securities, Interest rate swaps, and Off-balance sheet loan commitments. 25 The Company has fixed rate loan commitments aggregating $6.4 million at March 31, 2000. The model calculates the net potential gains and losses in net portfolio fair value by: (i) discounting anticipated cash flows from existing assets, liabilities and off-balance sheet contracts at market rates to determine fair values at March 31, 2000, (ii) discounting the above expected cash flows based on instantaneous and parallel shifts in the yield curve to determine fair values, and (iii) the difference between the fair value calculated in (i) and (ii) is the potential gain or loss in net portfolio fair values. Management has made estimates of fair value discount rates that it believes to be reasonable. However, because there is no quoted market for many of these financial instruments, management has no basis to determine whether the fair value presented would be indicative of the value negotiated in an actual sale. BankAtlantic's fair value estimates do not consider the tax effect that would be associated with the disposition of the assets or liabilities at their fair value estimates. Presented below is an analysis of the Company's interest rate risk at March 31, 2000 as calculated utilizing the Company's model. The table measures changes in net portfolio value for instantaneous and parallel shifts in the yield curve in 100 basis point increments up or down. Net Portfolio Changes Value Dollar in Rate Amount Change -------- ------------- -------- In thousands +200 bp $ 258,485 $ (86,554) +100 bp $ 307,559 $ (37,480) 0 bp $ 345,039 $ - (100) bp $ 368,358 $ 23,319 (200) bp $ 347,867 $ 2,828 In preparing the above table, the Company makes various assumptions to determine the net portfolio value at the assumed changes in interest rate. These assumptions include: loan prepayment rates, deposit decay rates, market values of certain assets under the representative interest rate scenarios, and repricing of certain deposits and borrowings It was also assumed that delinquency rates would not change as a result of changes in interest rates although there can be no assurance that this would be the case. Even if interest rates change in the designated increments, there can be no assurance that the Company's assets and liabilities would be impacted as indicated in the table above. In addition, a change in U.S. Treasury rates in the designated amounts, accompanied by a change in the shape of the yield curve could cause significantly different changes to the fair values than indicated above. Furthermore, the result of the calculations in the preceding table are subject to significant deviations based upon actual future events, including anticipatory and reactive measures which the Company may take in the future. Liquidity and Capital Resources The Company's principal source of cash flow is dividends from BankAtlantic, sales of securities available for sale and proceeds from the issuance of debt and equity securities. Such funds were utilized by the Company to pay dividends on its outstanding common stock, interest payments on its Debentures, acquire its common stock and to fund the repurchase of Debentures under the tender offer. Dividends from BankAtlantic to the Company are currently subject to regulatory approval. 26 BankAtlantic's primary sources of funds during the first three months of 2000 were from principal collected on loans, securities available for sale and investment securities held to maturity, sales of securities available for sale, FHLB stock, REO, and real estate held for development, borrowings from FHLB advances, securities sold under agreements to repurchase, sales of property and equipment, and deposit inflows. These funds were primarily utilized to fund operating expenses, deposit outflows, loan purchases and fundings, repay advances from borrowers for taxes and insurance and to purchase FHLB stock, tax certificates, trading securities, real estate inventory, joint venture investments and securities available for sale. At March 31, 2000, BankAtlantic met all applicable liquidity and regulatory capital requirements. The Company's commitments to originate and purchase loans at March 31, 2000 were $245.1 million and $55.8 million compared to $212.7 million and zero at March 31, 1999. Additionally, the Company had commitments to purchase $30.1 million of mortgage-backed securities at March 31, 2000 compared to zero during the same 1999 period. At March 31, 2000, loan commitments were 10.96% of net loans receivable. At March 31, 2000, commitments to sell mortgage backed securities were $49.5 million. Leasing Technology Inc. ("LTI") is obligated on leases sold with full recourse by LTI to investors prior to the Company's acquisition. Under the terms of such agreements, LTI is subject to recourse for 100% of the remaining balance of the lease receivable sold upon a default by the lessees. At March 31, 2000, the amount of lease payments subject to such recourse provisions was approximately $2.1 million and a $84,000 estimated liability on leases sold with recourse is included in other liabilities in the Company's Statement of Financial Condition. In January 2000, the Board of Directors of the Company approved a corporate transaction which would result in the redemption and retirement of all publicly held outstanding shares of Class B common stock at a price of $6.00 per share payable in cash. Based on the number of Class B common shares outstanding at March 31, 2000 and assuming 25% of outstanding Class B stock options are exercised prior to the effective date of the corporate transaction, approximately $32 million in cash will be required to consummate the corporate transaction. The Class B common stock represents 100% of the voting rights of the Company. BFC Financial Corporation and its affiliates currently beneficially own in excess of 50% of BankAtlantic Bancorp's Class B common stock. As a result of the transaction which is structured as a merger, BFC Financial Corporation would be the sole holder of the Class B common stock. The Company's Class A common stock will be unaffected by the transaction and will remain outstanding. Outstanding options to purchase Class A common stock will remain exercisable for the same number of shares of Class A common stock of the Company as the surviving corporation for the same exercise price and upon the same terms as in effect before the merger. Likewise, the Company's 6-3/4% Convertible Subordinated Debentures due 2006 and 5- 5/8% Convertible Subordinated Debentures due 2007 will remain convertible into the same number of shares of Class A common stock of the Company as the surviving corporation at the same conversion price and upon the same terms as in effect before the merger. All outstanding options to acquire Class B common stock will automatically be exchanged for options to acquire Class A common stock on a basis which preserves the intrinsic value of the option on the effective date of the corporate transaction. The options will otherwise be on substantially the same terms and conditions as the former options to purchase shares of Class B common stock, including vesting and term. The proposed transaction is subject to approval of the Company's Class A and Class B shareholders, receipt of all required regulatory approvals, and obtaining financing for the transaction. In January 2000, the Company announced a tender offer for up to $25 million in principal amount of the Company's outstanding 5 5/8% Convertible Subordinated Debentures due 2007 for a cash price of $750 per $1,000 principal amount of Debentures. On February 29, 2000 the Company accepted for purchase the maximum $25 million aggregate principal amount of Debentures for an aggregate purchase price of $18.75 million under the terms of the tender offer. Upon expiration of the tender offer, approximately $60 million aggregate principal amount of the Debentures had been validly tendered, and since this amount exceeded the $25 million principal amount tendered by the Company, the Debentures tendered were purchased on a pro-rata basis (at a ratio of approximately 41%) in accordance with the terms of the tender offer. The Company recognized a $3.5 million (net of income tax) extraordinary gain upon the retirement of the Debentures. In January 2000, the Company began an offering of up to $150 million of subordinated investment notes. The Company currently anticipates that only $50 million of investment notes will be outstanding at any time. No minimum amount of investment notes must be sold and the Company may terminate the offering at any time. The interest rate and maturity date are fixed upon issuance. At March 31, 2000 the Company had issued an aggregate of $15.4 million of investment notes with interest rates between 10% and 11% and maturity dates between February 2002 and April 2002. The Company used a portion of the proceeds to pay a portion of the purchase price for the debentures tendered 27 pursuant to the tender offer described above and also intends to use the proceeds to fund the proposed merger and for general corporate purposes. The Company may elect at any time prior to maturity to automatically extend the maturity date of the investment notes for an additional one year. The investment notes are subordinated to all existing and future senior indebtedness. On March 1, 2000, 749,533 restricted shares of Class A common stock issued to key employees of RBCO in connection with the acquisition of RBCO were retired in exchange for the establishment of interests in the BankAtlantic Bancorp-Ryan Beck Deferred Compensation Plan ("Plan") in the aggregate amount of $7.8 million. In January 2000, each participant in the RBCO retention pool was provided the opportunity to exchange those restricted shares that were allocated to such participant for a cash-based deferred compensation award in an amount equal to the aggregate value of the restricted shares at the date of the RBCO acquisition. The Company may at its option terminate the Plan at anytime without the consent of the participants or stockholders and distribute to the participants the amount credited to their deferred account (in whole or in part). Subject to the terms of the Plan, the participant's account will be settled by the Company in cash on the vesting date (June 28, 2002) except the Company can elect to defer payment of up to 50% of a participant's interest in the plan for up to one year following the vesting date. If the Company elects to exercise it rights to defer 50% of the cash payment, the Company will issue a note bearing interest at prime plus 1%. As a result of the exchange, stockholders' equity declined by $3.2 million with a corresponding increase in other liabilities. On July 14, 1999, the Company's Board of Directors approved the repurchase on the open market of up to 3.5 million shares of the Company's common stock. The Board authorized the repurchase of common stock on a "time-to- time" basis, depending upon market conditions and subject to compliance with applicable securities laws. Pursuant to the above repurchase plan the Company paid $3.3 million to repurchase and retire 551,000 shares of Class B common stock during the three months ended March 31, 2000. During the three months ended March 31, 2000 the Company entered into interest rate swap contracts with an aggregate notional amount of $125 million. The interest rate swaps terminate during the first quarter of 2002. The interest rate swap contracts obligate the Company to pay the one month LIBOR index and the Company receives an average fixed rate of interest of 7.08%. The interest rate swap contracts were executed to convert the Company's 7% fixed rate callable time deposits to a one-month LIBOR interest rate. The Company has elected hedge accounting treatment for the interest rate swaps; therefore, any adjustment to the carrying amount of the interest rate swaps shall be recognized in the carrying amount of the callable time deposits. At the indicated date BankAtlantic's capital amounts and ratios were: Minimum Ratios ------------------------ Adequately Well Actual Capitalized Capitalized Amount Ratio Ratio Ratio -------- ------ ----------- ----------- (In thousands) AT MARCH 31, 2000: Total risk-based capital $ 349,133 12.99% 8.00% 10.00% Tier I risk-based capital $ 315,372 11.74% 4.00% 6.00% Tangible capital $ 315,372 7.71% 1.50% 1.50% Core capital $ 315,372 7.71% 4.00% 5.00% AT DECEMBER 31, 1999: Total risk-based capital $ 339,322 13.30% 8.00% 10.00% Tier I risk-based capital $ 307,270 12.04% 4.00% 6.00% Tangible capital $ 307,270 7.71% 1.50% 1.50% Core capital $ 307,270 7.71% 4.00% 5.00% Savings institutions are also subject to the provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). Regulations implementing the prompt corrective action provisions of FDICIA define specific capital categories based on FDICIA's defined capital ratios, as discussed more fully in the Company's Annual Report on Form 10K for the year ended December 31, 1999. 28 The Company's wholly owned subsidiary, RBCO, is subject to the net capital provision of Rule 15c3-1 under the Securities Exchange Act of 1934 which requires that RBCO's aggregate indebtedness shall not exceed 15 times net capital as defined under such provision. Additionally, RBCO, as a market marker, is subject to supplemental requirements of Rule 15c3-1(a)4, which provides for the computation of net capital to be based on the number and price of issues in which markets are made by RBCO, not to exceed $1,000,000. At March 31, 2000, RBCO's regulatory net capital was approximately $14.1 million, which exceeded minimum net capital rule requirements by $13.1 million. RBCO operates under the provisions of paragraph (K)(2)(ii) of Rule 15c3-3 of the Securities and Exchange Commission as a fully-disclosed broker and, accordingly, customer accounts are carried on the books of the clearing broker. However, RBCO safekeeps and redeems municipal bond coupons for the benefit of its customers. Accordingly, RBCO is subject to the provisions of SEC Rule 15c3-3 relating to possession or control and customer reserve requirements and was in compliance with such provisions at March 31, 2000. 29 PART II - OTHER INFORMATION Exhibits and Reports on Form 8K (a) Exhibits Exhibit 2 Amended and Restated Agreement and Plan of Merger, dated March 29, 2000 by and among the Company and BBC Sub, Inc. (incorporated by reference to Appendix A to the Company's Preliminary Proxy Statement filed on April 10, 2000) Exhibit 10 BankAtlantic Bancorp-Ryan Beck Deferred Compensation Plan Exhibit 11 Statement re: Computation of Per Share Earnings (b) Reports on Form 8K A report on Form 8K dated January 13, 2000 was filed with the Securities and Exchange Commission announcing a corporate merger which would result in the redemption and retirement of all publicly held Class B common stock. 30 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANKATLANTIC BANCORP, INC. May 15, 2000 By: /s/Alan B. Levan - ------------ ---------------- Date Alan B. Levan Chief Executive Officer/ Chairman/President May 15, 2000 By: /s/James A. White - ------------ ----------------- Date James A. White Executive Vice President, Chief Financial Officer EX-10 2 DEFERRED COMPENSATION PLAN ------------------------------------------------- BankAtlantic Bancorp-Ryan, Beck Deferred Compensation Plan --------------------------------------------------- -------------------------------------------------- BankAtlantic Bancorp-Ryan, Beck Deferred Compensation Plan --------------------------------------------------- Page 1. Purpose.................................................. 1 2. Definitions.............................................. 1 3. Administration........................................... 2 4. Participation............................................ 3 5. Deferrals................................................ 3 6. Settlement of Deferral Accounts.......................... 4 7. General Provisions....................................... 4 8. Effective Date........................................... 6 - 6 - --------------------------------------------------------------------- BankAtlantic Bancorp-Ryan, Beck Deferred Compensation Plan ___________________________________ 1. Purpose. The purpose of this BankAtlantic Bancorp-Ryan, Beck Deferred Compensation Plan (the "Plan") is to provide certain employees of Ryan, Beck & Co., Inc. (the "Company") with a short-term deferred compensation plan award in exchange for relinquishment of certain restricted stock rights. The Plan is not intended to be covered by the terms of the Employee Retirement Income Security Act of 1974, as amended. The Plan is sponsored by BankAtlantic Bancorp, Inc. ("BankAtlantic"). 2. Definitions. In addition to the terms defined in Section 1 above, the following terms used in the Plan shall have the meanings set forth below: "Administrator" shall mean the Company or any person or entity to whom or to which it has delegated some or all of its administrative responsibilities hereunder. "Beneficiary" shall mean the beneficiary designated by the Participant under the Company's group term life insurance plan, unless the Participant has designated any other person or persons (who may be designated contingently or successively and which may be an entity other than a natural person) on a form supplied by the Administrator to receive benefits payable in the event of the death of the Participant. In the event of the Participant's death without an effective Beneficiary designation, any Plan benefits payable shall be paid in equal parts to the Participant's surviving spouse or, if the Participant has no surviving spouse, to the Participant's surviving children or, if the Participant has no surviving children, to the Participant's surviving parents, or if the Participant has no surviving parents, to the Participant's surviving siblings or, if the Participant has no surviving siblings, to the Participant's estate. "Board" shall mean the Board of Directors of BankAtlantic. "Cause" shall mean (i) continued failure to perform substantially the Participant's duties with the Employer (other than such failure as a result of death or disability), or (ii) engaging in illegal conduct or gross misconduct which is materially injurious to the Employer, as determined by the Committee in its sole discretion. "Code" shall mean the Internal Revenue Code of 1986, as amended. References to any provision of the Code or regulation (including a proposed regulation) thereunder shall include any successor provisions or regulations. "Committee" shall mean the Compensation Committee of the Board. Any function of the Committee may be delegated to the Administrator. "Deferral Account" shall mean the account established and maintained by BankAtlantic attributable to a Participant, as described in Section 5. Deferral Accounts will be maintained solely as bookkeeping entries by BankAtlantic to evidence unfunded obligations of BankAtlantic. "Employer" shall mean the Company and all entities that are members of the controlled group of which the Company is a member, as determined under Section 414(b) or (c) of the Code. "Participant" shall mean any employee of the Company who is a participant in the Restricted Stock Award Plan and who elects to participate in the Plan pursuant to Section 4. "Plan Year" shall mean the calendar year. "Restricted Stock Award Plan" shall mean the BankAtlantic Bancorp, Inc. Restricted Stock Award Plan for Key Employees of Ryan, Beck & Co., Inc. 3. Administration. Authority. Both the Committee and the Administrator (subject to the ability of the Committee to restrict the Administrator) shall administer the Plan in accordance with its terms, and shall have all powers necessary to accomplish such purpose, including the power and authority to construe and interpret the Plan, to define the terms used herein, to prescribe, amend and rescind rules and regulations, agreements, forms, and notices relating to the administration of the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. Any actions of the Committee or the Administrator with respect to the Plan shall be conclusive and binding upon all persons interested in the Plan, except that any action of the Administrator will not be binding on the Committee. The Committee and Administrator may each appoint agents and delegate thereto powers and duties under the Plan, except as otherwise limited by the Plan. The Board may, with prospective or retroactive effect, amend, alter, suspend, discontinue, or terminate the Plan at any time without the consent of Participants, stockholders, or any other person; provided, however, that, without the consent of a Participant, no such action shall adversely affect the rights of such Participant with respect to any rights to payment of amounts credited to such Participant's Deferral Account. Notwithstanding the foregoing, the Board may, in its sole discretion, terminate the Plan (in whole or in part) and distribute to Participants (in whole or in part) the amounts credited to their Deferral Accounts. Limitation of Liability. Each member of the Committee and the Administrator shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or BankAtlantic or any subsidiary or affiliated entity, the Company's or BankAtlantic's independent certified public accountants, or any executive compensation consultant, legal counsel, or other professional retained by the Company or BankAtlantic to assist in the administration of the Plan. To the maximum extent permitted by law, no member of the Committee or the Administrator, nor any person to whom duties have been delegated, shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan. 4. Participation. The Committee shall offer to each employee of the Company who is a participant in the Restricted Stock Award Plan the opportunity to relinquish all rights and privileges under the Restricted Stock Award Plan in exchange for the establishment of a Deferral Account hereunder, upon such terms as are set forth in the applicable Deferred Compensation Plan Election Form (the "Election Form"). Employees who elect to take advantage of such offer will become Participants in this Plan, and will cease to be participants in the Restricted Stock Award Plan. 5. Deferrals. Each employee of the Company who elects, at such time and in such manner as the Committee designates, to become a Participant hereunder, will have a Deferral Account established hereunder. A Participant's Deferral Account, which will be in the form of a bookkeeping entry only, will be credited with an amount set forth in the Election Form, which amount shall be equal to the fair market value of the restricted stock awarded to him or her under the Restricted Stock Award Plan, such value to be determined as of the date of the original award under the Restricted Stock Award Plan. No interest, gains, losses or dividends will be credited to a Participant's Deferral Account, except as otherwise set forth in Section 6(c) hereof. Vesting. A Participant will become vested in his or her Deferral Account as of the date that is the fourth anniversary of the date as of which he or she was granted restricted stock under the Restricted Stock Award Plan (the "Vesting Date"), if the Participant is then employed by the Employer and has been during such four year period continually employed by the Employer on a full-time basis. Death or Disability. If a Participant's employment with the Employer terminates as a result of his death or disability (as determined by the Committee), then the date of such termination shall be considered a Vesting Date, and he or she (or his or her Beneficiary) shall be entitled to the Deferral Account. Retirement. If a Participant's employment with the Employer terminates as a result of retirement (as determined by the Committee), and if the Participant is in good standing with the Employer and meets such other terms and conditions as are imposed by the Committee in its discretion, then the Participant will be considered to have attained the Vesting Date with respect to a pro rata portion of the Deferral Account (with the remainder to be irrevocably forfeited); the pro rata portion shall be determined by a fraction, equal to the number of complete months from the original date of grant under the Restricted Stock Award Plan to the date of retirement, divided by forty-eight (48), such calculation to be made by the Committee in its sole discretion. Termination Without Cause. If a Participant's employment with the Employer is terminated without Cause, then the date of such termination of employment shall be considered to be a Vesting Date. Forfeiture. Notwithstanding anything else herein, in the event that a Participant terminates employment with the Employer for any reason not otherwise set forth above prior to his or her Vesting Date, or ceases to be a full-time employee of the Employer prior to his or her Vesting Date, or if his or her employment is terminated for Cause, then such Participant's Deferral Account shall be irrevocably forfeited. 6. Settlement of Deferral Accounts. Form of Payment. Upon the occurrence of a Vesting Date with respect to a Participant, BankAtlantic shall settle such Participant's Deferral Account, and discharge all of its obligations to pay deferred compensation under the Plan with respect to such Deferral Account, by payment of cash, except as provided in Section 6(c) hereof. Timing of Payments. Payments in settlement of a Deferral Account shall be made as soon as practicable after such Vesting Date, except as provided in Section 6(c) hereof. Deferral of Payment. At the Committee's sole discretion, BankAtlantic can elect to defer payment of 50% of a Participant's Deferral Account for one year following the Vesting Date as of which he or she otherwise would have been paid 100% of his or her vested Deferral Account. If BankAtlantic elects to exercise its rights under this Section 6(c), it shall issue a note to each affected Participant and/or Beneficiary, under which it will promise to pay the remaining 50% of the vested Deferral Account no later than one year following the applicable Vesting Date, with simple interest credited for the one year period at prime rate plus 1% (with such interest rate to be determined as of the Vesting Date). 7. General Provisions. Limits on Transfer of Awards. Other than by will or the laws of descent and distribution, no right, title or interest of any kind in the Plan shall be transferable or assignable by a Participant or his or her Beneficiary or be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy, execution or other legal or equitable process, nor subject to the debts, contracts, liabilities or engagements, or torts of any Participant or his or her Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable process or encumber or dispose of any interest in the Plan shall be void. Receipt and Release. Payment to any Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims for the compensation or awards deferred and relating to the Deferral Account to which the payment relates against the Company and BankAtlantic or any subsidiary or affiliated entity thereof, the Committee, or the Administrator, and the Administrator may require such Participant or Beneficiary, as a condition to such payment, to execute a receipt and release to such effect. Unfunded Status of Awards. The Plan is intended to constitute an "unfunded" plan for deferred compensation and Participants shall rely solely on the unsecured promise of BankAtlantic for payment hereunder. With respect to any payment not yet made to a Participant under the Plan, nothing contained in the Plan shall give a Participant any rights that are greater than those of a general unsecured creditor of BankAtlantic or the applicable affiliated entity. Compliance. A Participant in the Plan shall have no right to receive payment with respect to his or her Deferral Account until legal and contractual obligations of BankAtlantic relating to establishment of the Plan and the making of such payments shall have been complied with in full. In addition, BankAtlantic shall impose such restrictions on any interest constituting a security as it may deem advisable in order to comply with the Securities Act of 1933, as amended, the requirements of any applicable stock exchange or automated quotation system, any state securities laws applicable to such interest, any provision of BankAtlantic's Articles of Incorporation or Bylaws, or any other law, regulation, or binding contract to which BankAtlantic is a party. Other Participant Rights. No provision of the Plan or transaction hereunder shall confer upon any Participant any right to be employed by the Company or a subsidiary thereof, or to interfere in any way with the right of the Company or a subsidiary to increase or decrease the amount of any compensation payable to such Participant. Subject to the limitations set forth herein, the Plan shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns. Tax Withholding. BankAtlantic and any subsidiary or affiliated entity shall have the right to deduct from amounts otherwise payable in settlement of a Deferral Account any sums that federal, state, local or foreign tax law requires to be withheld with respect to such payment. Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New Jersey, without giving effect to principles of conflicts of laws, and applicable provisions of federal law. Construction. The captions and numbers preceding the sections of the Plan are included solely as a matter of convenience of reference and are not to be taken as limiting or extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular, and male references shall include female and neuter, and vice versa. Severability. In the event that any provision of the Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein. Status. The establishment and maintenance of, or allocations and credits to, the Deferral Account of any Participant shall not vest in any Participant any right, title or interest in and to any specific assets or benefits. 8. Effective Date. The Plan shall be effective March 1, 2000. EX-11 3 EARNINGS PER SHARE EXHIBIT 11 Earnings Per Share
Earnings Per Share EXHIBIT 11 The following reconciles the numerators and denominators of the basic and diluted earnings per share computations. For the Three Months ended For the Three Months ended (In thousands, except share March 31, 2000 March 31, 1999 - --------------------------- ----------------------------------- ---------------------------------------- percentages) Class A Class B Total Class A Class B Total ------------ ---------- ---------- ------- ---------- ---------- ---------- Basic Numerator Actual dividends declared ......... $ - $ - $ - $ 711 $ 259 $ 970 Basic allocation of undistributed earnings from income before extraordinary item .............. 2,853 828 3,681 5,510 1,691 7,201 ---------- ---------- ------- ---------- ---------- --------- Income before extraordinary item... 2,853 828 3,681 6,221 1,950 8,171 Income from extraordinary item .... 2,686 780 3,466 - - - ---------- ---------- ------- ---------- ---------- --------- Net income ........................ $ 5,539 $ 1,608 $ 7,147 $ 6,221 $ 1,950 $ 8,171 ========== ========== ======= ========== ========== ========= Basic Denominator Weighted average shares outstanding 31,499,608 10,058,228 30,697,706 10,359,717 ========== ========== ========== ========== Allocation percentage ............. 77.50% 22.50% 76.52% 23.48% ========== ========== ========== ========== Basic earnings per share .......... $ 0.18 $ 0.16 $ 0.20 $ 0.19 ========== ========== ========== ========== Diluted Numerator Actual dividends declared ......... $ - $ - $ - $ 711 $ 259 $ 970 --------- ---------- ------- ---------- ---------- --------- Basic allocation of undistributed earnings from income before extraordinary item .............. 2,853 828 3,681 5,510 1,691 7,201 Reallocation of basic undistributed earnings due to change in allocation percentage ............ 221 (221) - 460 (460) - --------- --------- ------- ---------- --------- --------- Diluted allocated undistributed earnings from income before extraordinary .................... 3,074 607 3,681 5,970 1,231 7,201 --------- --------- ------- ---------- --------- --------- Interest expense on convertible debt 1,171 231 1,402 1,237 255 1,492 --------- --------- ------- ---------- --------- --------- Dilutive income before extraordinary 4,245 838 5,083 7,918 1,745 9,663 Dilutive income from extraordinary.. 2,894 572 3,466 - - - --------- --------- ------- ---------- --------- --------- Net income ......................... $ 7,139 $ 1,410 $ 8,549 $ 7,918 $ 1,745 $ 9,663 ========= ======== ======= ========== ========= ========= Diluted Denominator Basic weighted average shares outstanding ....................... 31,499,608 10,058,228 30,697,706 10,359,717 Convertible debentures ............. 17,081,483 - 17,873,324 - Options ............................ 4,961 493,062 367,190 733,909 Diluted weighted average ---------- ---------- ---------- ---------- shares outstanding ............... 48,586,052 10,551,290 48,938,221 11,093,626 ========== ========== ========== ========== Allocation percentage .............. 83.51% 16.49% 82.91% 17.09% ========== ========== ========== ========== Diluted earnings per share ......... $ 0.15 $ 0.13 $ 0.16 $ 0.16 ========== ========== ========== ==========
EX-27 4 FDS --
9 This schedule contains summary financial information extracted from the Consolidated Statement of Financial Condition at March 31, 2000 and the Consolidated Statement of Operations for three months ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 921768 BankAtlantic Bancorp, Inc. 1,000 U.S. Dollars 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 93,989 0 9,318 8,177 847,407 129,223 129,223 2,745,911 47,650 4,259,650 2,179,709 332,588 71,390 1,435,332 0 0 414 240,217 4,259,650 59,124 18,100 0 77,224 19,838 47,172 30,052 10,787 50 41,901 6,113 6,113 3,466 0 7,141 0.18 0.15 7.71 32,744 0 0 0 44,560 8,656 1,069 47,650 47,004 646 0
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