-----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, IhahGTDDp0o4hQDSRSQv+ehYg04j1LKLpCCO7cq9AVXU41O/nmlz8wEKt0sOnRfe duELE7v5fT+QD5EJGM9dcw== 0000921768-01-500003.txt : 20010516 0000921768-01-500003.hdr.sgml : 20010516 ACCESSION NUMBER: 0000921768-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 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: 1634487 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 mar10q01.txt MARCH 31, 2001 FORM 10-Q ================================================================================ 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, 2001 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 65-507804 (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 (Zip Code) offices) (954) 760-5000 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of preferred and common stock as of the latest practicable date. Outstanding at Title of Each Class May 7, 2001 ----------------------------------------------- -------------- Class A Common Stock, par value $0.01 per share 31,746,763 Class B Common Stock, par value $0.01 per share 4,876,124 ================================================================================ TABLE OF CONTENTS FINANCIAL INFORMATION Page Reference Financial Statements 1-15 Consolidated Statements of Financial Condition - March 31, 2001 and 2000 and December 31, 2000 - Unaudited 4 Consolidated Statements of Operations - For the Three Months Ended March 31, 2001 and 2000 - Unaudited 5-6 Consolidated Statements of Stockholders' Equity and Comprehensive Income - For the Three Months Ended March 31, 2001 and 2000 - Unaudited 7 Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2001 and 2000 - Unaudited 8-9 Notes to Consolidated Financial Statements - Unaudited 10-15 Management's Discussion and Analysis of Financial Condition and Results of Operations 16-27 OTHER INFORMATION Exhibits and Reports on Form 8K 28 Signatures 29 [THIS PAGE INTENTIONALLY LEFT BLANK]
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED March 31, December 31, March 31, (In thousands, except share data) 2001 2000 2000 ----------- ----------- ----------- ASSETS Cash and due from depository institutions .. $ 98,226 $ 85,109 $ 93,989 Federal Funds sold and securities purchased under resell agreements ................... 1,242 1,584 9,318 Investment securities and tax certificates (approximate fair value:$369,309, $387,971 and $129,223) ............................. 363,782 383,619 129,223 Loans receivable, net ...................... 2,915,119 2,853,804 2,745,911 Securities available for sale, at fair value 986,055 839,010 847,407 Trading securities, at fair value .......... 36,126 43,557 8,177 Accrued interest receivable ................ 43,178 44,046 33,960 Real estate held for development and sale and joint ventures ........................ 157,732 147,755 147,919 Office properties and equipment, net ....... 60,362 59,850 56,301 Federal Home Loan Bank stock, at cost which approximates fair value ................... 52,690 51,940 57,160 Deferred tax asset, net .................... 18,373 25,973 40,049 Cost over fair value of net assets acquired, net ....................................... 48,857 49,882 52,541 Other assets ............................... 30,071 31,171 37,695 ----------- ----------- ----------- Total assets ............................... $ 4,811,813 $ 4,617,300 $ 4,259,650 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits ................................... $ 2,380,721 $ 2,234,485 $ 2,179,709 Advances from FHLB ......................... 1,028,803 1,038,801 1,143,188 Federal Funds purchased .................... 8,500 9,700 4,000 Securities sold under agreements to repurchase ................................ 714,121 659,502 328,588 Subordinated debentures, notes and bonds payable ............................. 221,006 224,358 217,394 Guaranteed preferred beneficial interests in the Company's Junior Subordinated Debentures ................... 74,750 74,750 74,750 Other liabilities .......................... 119,673 126,883 71,390 ----------- ----------- ----------- Total liabilities .......................... 4,547,574 4,368,479 4,019,019 ----------- ----------- ----------- 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, 31,742,882, 31,704,365 and 31,633,138 shares ..................... 317 317 316 Class B Common Stock, $0.01 par value, authorized 45,000,000 shares; issued and outstanding, 4,876,124, 4,876,124 and 9,830,146 shares ...................... 49 49 98 Additional paid-in capital ................. 103,910 103,745 134,727 Unearned compensation - restricted stock grants .............................. (341) (391) (542) Retained earnings .......................... 150,521 143,471 129,786 ----------- ----------- ----------- Total stockholders' equity before accumulated other comprehensive income (loss) .................................... 254,456 247,191 264,385 Accumulated other comprehensive income (loss) .................................... 9,783 1,630 (23,754) ----------- ----------- ----------- Total stockholders' equity ................. 264,239 248,821 240,631 ----------- ----------- ----------- Total liabilities and stockholders' equity . $ 4,811,813 $ 4,617,300 $ 4,259,650 =========== =========== ===========
See Notes to Consolidated Financial Statements - Unaudited 4
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months (In thousands, except share data) Ended March 31, -------------------- INTEREST INCOME: 2001 2000 -------- -------- Interest and fees on loans and leases .......... $ 63,851 $ 59,124 Interest and dividends on securities available for sale ...................................... 13,365 13,639 Interest and dividends on other investments and trading securities ............................ 9,036 4,461 -------- -------- TOTAL INTEREST INCOME .......................... 86,252 77,224 -------- -------- INTEREST EXPENSE: Interest on deposits ........................... 24,444 19,838 Interest on advances from FHLB ................. 14,701 15,848 Interest on securities sold under agreements to repurchase and federal funds purchased ........ 9,632 6,582 Interest on subordinated debentures, guaranteed preferred interest in the Company's Junior Subordinated Debentures and notes and bonds payable ....................................... 7,375 6,589 Capitalized interest on real estate developments and joint ventures ............................ (1,571) (1,685) -------- -------- TOTAL INTEREST EXPENSE ......................... 54,581 47,172 -------- -------- Net interest income ............................ 31,671 30,052 Provision for loan losses ...................... 2,761 10,787 -------- -------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ............................... 28,910 19,265 NON-INTEREST INCOME: Investment banking income ...................... 8,853 13,200 Transaction fees ............................... 3,880 3,251 Gains on sales of real estate held for sale and joint venture activities ...................... 6,570 3,111 ATM fees ....................................... 2,652 2,515 Loan late fees and other loan income ........... 909 1,038 Gains on loans held for sale, net .............. 13 78 Gains on trading securities and securities available for sale, net ....................... 135 50 Other .......................................... 2,302 5,506 -------- -------- TOTAL NON-INTEREST INCOME ...................... 25,314 28,749 -------- -------- NON-INTEREST EXPENSE: Employee compensation and benefits ............. 23,599 22,054 Occupancy and equipment ........................ 6,883 6,500 Advertising and promotion ...................... 1,512 1,466 Amortization of cost over fair value of net assets acquired ............................... 1,025 1,016 Other .......................................... 10,174 10,865 -------- -------- TOTAL NON-INTEREST EXPENSE ..................... 43,193 41,901 ------ ------ Income before income taxes, extraordinary item and cumulative effect of a change in accounting principle ..................................... 11,031 6,113 Provision for income taxes ..................... 4,206 2,432 -------- -------- Income before extraordinary item and cumulative effect of a change in accounting principle .... 6,825 3,681 Extraordinary item, net of taxes ............... -- 3,466 Cumulative effect of a change in accounting principle, net of tax ......................... 1,138 -- -------- -------- NET INCOME ..................................... $ 7,963 $ 7,147 ======== ======== See Notes to Consolidated Financial Statements - Unaudited (Continued)
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CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months Ended March 31, ------------------------- 2001 2000 ---------- ---------- CLASS A COMMON SHARES Basic earnings per share before extraordinary item and cumulative effect of a change in accounting principle ...................................... $ 0.19 $ 0.09 Basic earnings per share from extraordinary item . -- 0.09 Basic earnings per share from cumulative effect of a change in accounting principle ............... 0.03 -- ---------- ---------- Basic earnings per share ......................... $ 0.22 $ 0.18 ========== ========== Diluted earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... $ 0.16 $ 0.09 Diluted earnings per share from extraordinary item -- 0.06 Diluted earnings per share from cumulative effect of a change in accounting principle ............ 0.02 -- ---------- ---------- Diluted earnings per share ....................... $ 0.18 $ 0.15 ========== ========== Basic weighted average number of common shares outstanding .................................... 31,626,248 31,499,608 Diluted weighted average number of common and common equivalent shares outstanding ........... 45,695,619 48,586,052 CLASS B COMMON SHARES Basic earnings per share before extraordinary item and cumulative effect of a change in accounting principle ...................................... $ 0.17 $ 0.08 Basic earnings per share from extraordinary item . -- 0.08 Basic earnings per share from cumulative effect of a change in accounting principle ............ 0.03 -- ---------- ---------- Basic earnings per share ......................... $ 0.20 $ 0.16 ========== ========== Diluted earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... $ 0.15 $ 0.08 Diluted earnings per share from extraordinary item -- 0.05 Diluted earnings per share from cumulative effect of a change in accounting principle ............ 0.02 -- ---------- ---------- Diluted earnings per share ....................... $ 0.17 $ 0.13 ========== ========== Basic weighted average number of common shares outstanding .................................... 4,876,124 10,058,228 Diluted weighted average number of common and common equivalent shares outstanding ........... 4,876,124 10,551,290 See Notes to Consolidated Financial Statements - Unaudited
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 2001 Unearned Unrealized Compen- Appreci- Addi- sation ation on Compre- tional Restricted Securities hensive Common Paid-in Retained Stock Available (In thousands) Income Stock Capital Earnings Grants For Sale Total ------------ ------------ ----------- ------------- ------------- ---------- ------- 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, net of tax: Unrealized gain on securities available for sale ............................ 3,718 Reclassification adjustment for net gains 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 ========= ========= ========= ========= ========= ========= BALANCE, DECEMBER 31, 2000 ........... $ 366 $ 103,745 $ 143,471 $ (391) $ 1,630 $ 248,821 Net income $ 7,963 7,963 7,963 --------- Other comprehensive income, net of tax: Unrealized gain on securities available for sale ...................... 8,212 Reclassification adjustment for net gain included in net income ...... (59) --------- Other comprehensive income 8,153 --------- Comprehensive income $ 16,116 ========= Dividends on Class A Common Stock..... (801) (801) Dividends on Class B Common Stock .... (112) (112) Exercise of Class A common stock options -- 135 -- -- -- 135 Tax effect relating to the exercise of stock options ..................... 30 30 Amortization of unearned compensation - restricted stock grants ........... 50 50 Net change in unrealized appreciation on securities available for sale-net of deferred income taxes ................ 8,153 8,153 --------- --------- --------- --------- --------- --------- BALANCE, MARCH 31, 2001 $ 366 $ 103,910 $ 150,521 $ (341) $ 9,783 $ 264,239 ========= ========= ========= ========= ========= =========
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Three Months (In thousands) Ended March 31, ---------------------- 2001 2000 ---------- --------- OPERATING ACTIVITIES: Income before extraordinary item and cumulative effect of a change in accounting principle ...... $ 6,825 $ 3,681 Extraordinary item, net of tax ................... -- 3,466 Cumulative effect of a change in accounting principle, net of tax ........................... 1,138 -- Adjustments to reconcile net income to net cash provided (used) in operating activities: Provision for credit losses * .................... 3,197 11,012 Change in real estate inventory .................. (3,650) 4,367 Equity in joint venture losses (earnings) ........ (740) 284 Loans held for sale activity, net ................ (3,591) (87,431) Proceeds from sales of loans classified as held for sale ........................................ 6,182 14,590 Gains on securities activities, net .............. (135) (50) Gains on sales of property and equipment ......... (386) (182) Depreciation, amortization and accretion, net .... 1,893 2,756 Amortization of cost over fair value of net assets acquired ................................. 1,025 1,016 Decrease (increase) in deferred tax asset, net ... 3,121 (597) Trading activities, net .......................... 7,431 15,172 Decrease (increase) in accrued interest receivable 868 (3,366) Decrease in other assets ......................... (285) (913) Increase (decrease) in other liabilities ......... (7,180) 3,937 --------- --------- Net cash provided (used) in operating activities . 15,713 (32,258) --------- --------- INVESTING ACTIVITIES: Proceeds from redemption and maturities of investment securities and tax certificates ...... 52,659 13,723 Purchase of investment securities and tax certificates .................................... (33,060) (30,171) Purchases of securities available for sale ....... (163,459) (75,073) Proceeds from sales and maturities of securities available for sale .............................. 29,909 51,546 Proceeds from sales of FHLB stock ................ -- 5,700 FHLB stock acquired .............................. (750) (6,450) Purchases and net (originations) collections of loans and leases ................................ (68,509) 4,037 Proceeds from sales of real estate owned ......... 2,188 1,382 Net additions to office property and equipment ... (1,856) (1,989) Investment in and advances to joint ventures, net (5,587) (2,607) --------- --------- Net cash used in investing activities ............ (188,465) (39,902) --------- --------- FINANCING ACTIVITIES: Net increase in deposits ......................... 146,236 151,817 Repayments of FHLB advances ...................... (239,998) (290,000) Proceeds from FHLB advances ...................... 230,000 335,002 Net increase (decrease) in securities sold under agreements to repurchase .................. 54,619 (94,635) Net decrease in federal funds purchased .......... (1,200) (1,900) Repayment of notes and bonds payable ............. (14,500) (8,825) Proceeds from notes and bonds payable ............ 11,148 22,446 Issuance of common stock upon exercise of stock options ................................... 135 401 Retirement of subordinated debentures ............ -- (25,000) Payments to acquire and retire common stock ...... -- (3,264) Common stock dividends paid ...................... (913) (958) --------- --------- Net cash provided in financing activities ........ 185,527 85,084 --------- --------- Increase in cash and cash equivalents ............ 12,775 12,924 Cash and cash equivalents at beginning of period . 86,693 90,383 --------- --------- Cash and cash equivalents at end of period ....... $ 99,468 $ 103,307 ========= ========= See Notes to Consolidated Financial Statements - Unaudited (Continued) 8
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Three Months (In thousands) Ended March 31, -------------------- 2001 2000 -------- -------- Interest paid $ 54,496 $ 47,435 Income taxes paid ............................... 75 2,000 Loans transferred to real estate owned .......... 1,216 1,627 Loan charge-offs ................................ 2,633 7,587 Tax certificate net chargeoffs .................. 61 56 Increase in equity for the tax effect related to the exercise of employee stock options ...... 30 88 Change in net unrealized appreciation on securities available for sale ................. 12,632 5,226 Change in deferred taxes on net unrealized appreciation on securities available for sale . 4,479 2,035 Change in stockholders' equity from net unrealized appreciation on securities available for sale, less related deferred income taxes .. 8,153 3,191 Reduction in stockholders' equity from the retirement of restricted stock ................ -- (3,187) Increase in other liabilities from the retirement of restricted stock ........................... -- 3,187 * Provision for credit losses represents provision for loan losses, REO and tax certificates.
See Notes to Consolidated Financial Statements - Unaudited 9 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., LLC. ("Ryan Beck"), an investment banking firm and its subsidiaries. Levitt Corporation ("Levitt"), a real estate development company is a subsidiary of BankAtlantic. The Company's primary activities have related to the operations of BankAtlantic and Ryan Beck and their subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation including $30.1 million of loans from BankAtlantic to Levitt Corporation. 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, 2001, December 31, 2000 and March 31, 2000, the consolidated results of operations for the three months ended March 31, 2001 and 2000, the consolidated stockholders' equity and comprehensive income for the three months ended March 31, 2001 and 2000 and the consolidated cash flows for the three months ended March 31, 2001 and 2000. Such adjustments consisted only of normal recurring items except for the cumulative effect of a change in accounting principle and an extraordinary item discussed in Note 9 and Note 3, respectively. The consolidated financial statements and related notes are presented as permitted by Form 10-Q and should be read in conjunction with the notes to the consolidated financial statements appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. 2. Common Stock Options In April 2001, the Class B shareholder approved the BankAtlantic Bancorp 2001 Stock Option Plan, which provides for the grant of incentive and non-qualifying stock options for up to an aggregate of 1,500,000 shares of Class A Common Stock. The Board of Directors approved the stock option plan effective January 2, 2001. In January 2001 the Board of Directors granted, pursuant to the BankAtlantic Bancorp 2001 Stock Option Plan, 548,875 incentive and non-qualifying stock options to acquire Class A Common Stock. The options vest in five years and expire ten years after the grant date except for Director stock options which vest immediately. All stock options were issued with an exercise price equal to the fair market value of the common stock at the date of grant ($3.875) except for incentive options issued to certain control persons, which were issued at 110% of fair market value ($4.26). The following table sets forth the activity of all outstanding options issued under our stock option plans: Class A ------------- Outstanding at December 31, 2000 ... 5,490,386 Exercised .......................... (38,517) Granted ............................ 548,875 Canceled ........................... (83,585) -------------- Outstanding at March 31, 2001 ...... 5,917,159 ============== Exercisable at March 31, 2001 ...... 2,175,020 ============== Exercise price per share outstanding $2.26 - $12.23 ============== 10 3. Extraordinary Item In February 2000, the Company repurchased $25 million in aggregate principal amount of the Company's 5-5/8% Debentures and recognized a $3.5 million (net of income tax) extraordinary gain upon the retirement of the Debentures. 4. Trading Securities The Ryan Beck 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 Ryan Beck. 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, 2001, Ryan Beck realized net revenues from principal transactions of $4.5 million included in investment banking income compared to net revenues of $5.0 million during the same 2000 period. Furthermore, included in other liabilities at March 31, 2001 and December 31, 2000 was $14.2 million and $12.0 million, respectively, of securities sold, not yet purchased, relating to Ryan Beck trading activities. The Company's trading securities consisted of the following (in thousands): March 31, December 31, March 31, 2001 2000 2000 -------- ----------- ---------- States and municipalities .. $ 3,497 $ 11,731 $ 3,324 Corporations ............... 544 227 898 U.S. Government and agencies 25,161 24,476 153 Corporate equities ......... 4,082 3,401 3,802 Certificates of deposit .... 2,842 3,722 0 -------- -------- --------- $ 36,126 $ 43,557 $ 8,177 ======== ======== ========= 5. Loans Held for Sale In the past, we originated and purchased residential loans for portfolio and for sale. Currently, the majority of residential loans originated are CRA loans held for sale and the majority of residential loans purchased are retained in our portfolio. During June 2000, we discontinued our commercial non-mortgage syndication lending activities and transferred the entire portfolio to loans held for sale. At March 31, 2000, commercial syndication loans of $120 million were accounted for as loans held to maturity. Loans held for sale consisted of the following (in thousands): March 31, December 31, March 31, 2001 2000 2000 -------- ----------- --------- Residential................ $ 1,607 $ 0 $ 287,399 Commercial syndication..... 75,805 80,016 0 ------- -------- --------- Total loans held for sale $ 77,412 $ 80,016 $ 287,399 ======= ========= ========= 6. Real Estate Held for Development and Sale and Joint Venture Activities Real estate held for development and sale and joint venture activities consisted of the combined activities of St. Lucie West Holding Corporation ("SLWHC") and Levitt and Sons as well as Levitt Corporation's joint venture activities. SLWHC is the developer of the master planned community of St. Lucie West in St. Lucie County Florida. Levitt and Sons 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, (in thousands) 2001 2000 2000 --------- ----------- -------- Land and land development costs ..... $ 88,789 $ 87,989 $ 85,853 Construction costs .................. 18,305 15,254 14,644 Other costs ......................... 6,953 4,775 1,953 Equity investments in joint ventures 5,683 7,559 7,436 Loans to joint ventures ............. 34,943 29,125 34,947 Other ............................... 3,059 3,053 3,086 -------- --------- -------- $ 157,732 $ 147,755 $ 147,919 ======== ========== ======== The components of gains on sales of real estate developed for resale were as follows: For the Three Months Ended March 31, -------------------- (In thousands) 2001 2000 -------- -------- Sales of real estate ............ $ 24,778 $ 23,211 Cost of sales ................... 18,948 19,816 -------- ------- Gains on sales of real estate ... 5,830 3,395 Gains (losses) on joint venture activities .................... 740 (284) -------- -------- Gains on sales of real estate held for sale and joint venture activities .................... $ 6,570 $ 3,111 ======= ======== 7. Comprehensive Income The income tax provision relating to the comprehensive income reclassification adjustment in the Consolidated Statements of Stockholders' Equity and Comprehensive Income for the three months ended March 31, 2001 and 2000 was $33,000 and $271,000, respectively. 8. Restructuring Charge During December 2000, we adopted a plan to terminate our ATM relationships with Wal*Mart and K-Mart. The above relationships did not meet our strategic goals. The table below summarizes amounts paid associated with the restructuring liability included in other liabilities during the three months ended March 31, 2001. (in thousands) Initial Amount paid Ending Type of restructuring charge Amount During period Balance - -------------------------------- -------- -------------- -------- Lease contract termination costs $ 1,768 $ (856) $ 912 De-installation costs .......... 305 (12) 293 Other .......................... 74 -- 74 -------- --------- -------- Total restructuring charge ... $ 2,147 $ (868) $ 1,279 ======== ========= ======== During the three months ended March 31, 2001 there was no adjustment to the restructuring liability. The restructuring of our ATM network is anticipated to be completed during the fourth quarter of 2001. 9. Derivatives We adopted Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133") on January 1, 2001. At the adoption date we recognized all derivative instruments as defined by FAS 133 in the statement of financial position as either assets or liabilities and measured them at fair value resulting in a $1.1 million gain associated with the cumulative effect of a change in accounting principle, net of tax. The derivatives utilized by us during the three months ended March 31, 2001 were interest rate swaps and forward contracts. We used interest rate swap contracts to manage our interest rate risk. We entered into interest rate swaps to reduce our interest rate risk associated with our deposits accounts. The forward contracts were held for trading purposes. The following table outlines the notional amount and fair value of our derivatives outstanding at March 31, 2001: (in thousands)
Paying Receiving Notional Index/Fixed Index/Fixed Termination Amount Fair Value Amount Amount Date --------- ---------- ----------- ----------- ----------- Five year callable receive fixed swaps $ 30,000 $ 0 3 mo. LIBOR 7.13% 1/16/2006 One year receive fixed swaps.......... $ 75,000 $ 81 1 mo. LIBOR 6.83% 4/28/2001 One year callable receive fixed swaps. $ 30,000 $ 165 1 mo. LIBOR 7.10% 7/8/2001 Two year callable receive fixed swaps. $ 150,000 $ 3,163 1 mo. LIBOR 7.05% 3/9/2002 Three year pay fixed swaps $ 75,000 $ (1,505) 5.82% 3 mo. LIBOR 8/30/2004 ========= ========= =========== =========== =========== Forward contract to purchase Adjustable rate mortgages .......... $ 210,200 $ 513 ======== ==========
10. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system and regulatory environment. The information provided for Segment 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 income 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 the 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 - ------------------ ----------------------------- Capital Markets Investments, tax certificates, residential loans purchased, CRA lending and real estate capital services Commercial Banking Commercial lending, syndications, international, lease finance and trade finance Community Banking Indirect and direct consumer lending, small business lending and ATM operations Levitt Corporation Real estate and joint venture operations Ryan Beck Investment banking and brokerage operations Parent Company Costs of acquisitions, financing of acquisitions, contributions of capital to subsidiaries and equity investments 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. The Company evaluates segment performance based on net income after tax. The table below is segment information for income before extraordinary item and the cumulative effect of a change in accounting principle for the three months ended March 31, 2001 and 2000:
Bank Operations --------------------------------------- Capital Commercial Community Levitt Parent Segment (in thousands) Markets Banking Banking Corporation Ryan Beck Company Total ------------------------- ------------- ------------- ------------ ------------ ---------- 2001 Interest income $ 46,619 $ 31,975 $ 7,597 $ 451 $ 576 $ 43 $ 87,261 Interest expense and overhead (35,645) (19,193) (4,702) (90) (103) (5,616) (65,349) Provision for loan losses (163) (4,246) 1,648 0 0 0 (2,761) Non-interest income 122 727 2,757 7,296 9,133 322 20,357 Segment profits and losses before taxes 8,780 7,967 1,440 1,551 (1,838) (6,869) 11,031 Provision for income taxes 3,302 2,996 542 423 (653) (2,404) 4,206 ------------------------- ------------- ------------- ------------ ------------ ---------- Segment net income (loss) $ 5,478 $ 4,971 $ 898 $ 1,128 $ (1,185) $ (4,465) $ 6,825 =========== ============= ============= ============= ============ ============ ========== Segment average assets $ 2,593,231 $1,257,364 $ 405,159 $ 165,759 $ 59,822 $ 79,526 $4,560,861 =========== ============ ============= ============= ============ ============ ========== 2000 Interest income $ 43,363 $ 24,795 $ 8,769 $ 521 $ 481 $ 540 $ 78,469 Interest expense and overhead (34,311) (13,831) (4,887) (240) (208) (5,422) (58,899) Provision for loan losses (143) (661) (9,983) 0 0 0 (10,787) Non-interest income 57 622 2,875 7,415 13,455 12 24,436 Segment profits and losses before taxes 7,884 9,454 (8,188) 3,385 (77) (6,345) 6,113 Provision for income taxes 2,953 3,541 (3,066) 1,259 (33) (2,222) 2,432 ------------- ---------- ------------- ------------- ------------ ------------ --------- Segment net income (loss) $ 4,931 $ 5,913 $ (5,122) $ 2,126 $ (44) $ (4,123) $ 3,681 ============== ========= ============= ============= ============ ============ ========== Segment average assets $ 2,474,134 $ 996,617 $ 414,052 $ 153,664 $ 38,151 $ 73,375 $4,149,993 ============= ========== ============= ============= ============ ========== ==========
The difference between total segment average assets and consolidated average assets, segment non-interest income and total consolidated non-interest income, segment interest income and total consolidated interest income is as follows: For the Three Months Ended (in thousands) March 31, -------------------------- AVERAGE ASSETS 2001 2000 ----------- ----------- Average assets for reportable segments ........... $ 4,560,861 $ 4,149,993 Average assets in overhead ....................... 138,067 123,337 ----------- ----------- Total average consolidated assets ................ $ 4,698,928 $ 4,273,330 =========== =========== Non-interest income Total non-interest income for reportable segments $ 20,357 $ 24,436 Items included in interest expense and overhead: Transaction fee income ......................... 3,880 3,251 Gains on sales of property and equipment ....... 386 182 Other deposit related fees ..................... 691 880 ----------- ----------- Total consolidated interest income ............... $ 25,314 $ 28,749 =========== =========== Interest income Total interest income for reportable segments .... $ 87,261 $ 78,469 Deferred interest income on real estate activities (834) (1,036) Elimination entries .............................. (175) (209) ----------- ----------- Total consolidated non-interest income ........... $ 86,252 $ 77,224 =========== =========== 11. Common Stock Split As a result of the corporate transaction effected in August 2000 which resulted in the redemption and cancellation of all publicly held shares of the Company's Class B Common Stock, the 4,876,124 shares of Class B Common Stock owned by BFC Financial Corporation ("BFC") were converted into one share of Class B Common Stock. As provided in the Company's Articles of Incorporation, the one share of Class B Common Stock owned by BFC after the transaction continued to have the economic equivalence of 4,876,124 shares of Class A Common Stock. In order to more clearly reflect the equity interest of the one share of Class B Common Stock as compared to the outstanding Class A Common Stock, the Board on April 16, 2001 approved a four million eight hundred seventy-six thousand one hundred twenty-four to one (4,876,124:1) forward stock split of the Class B Common Stock. This stock split was implemented on April 18, 2001. As a result of the stock split, BFC holds 4,876,124 shares of Class B Common Stock, with each share of Class B Common Stock having an identical economic interest as one share of Class A Common Stock. The stock split had no impact on the equity interest in the Company of any shareholder. Stockholders' equity and all per share data have been retroactively restated to reflect the stock split. 12. Reclassifications Certain amounts for prior periods have been reclassified to conform with the statement presentation for 2001. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for historical information contained herein, the matters discussed in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. When used in this report, or in the documents incorporated by reference herein, the words "anticipate", "believe", "estimate", "may", "intend", "expect" and similar expressions identify certain of such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of BankAtlantic Bancorp, Inc. ("the Company") and are subject to a number of risks and uncertainties, including but not limited to, the risks and uncertainties associated with: the impact and effects of increased leverage; economic, competitive and other factors affecting the Company and its operations, markets, products and services; credit risks and the related sufficiency of its allowance for loan losses, changes in interest rates and economic policies; the success of technological, strategic and business initiatives, the profitability of its banking and non-banking initiatives; risks associated with the value of the Company's equity investments; and other factors discussed elsewhere in this report filed by the Company with the Securities and Exchange Commission ("SEC"). Many of these factors are beyond the Company's control. Results of Operations For the Three Months Ended March 31, ------------------ (in thousands) 2001 2000 ------- ------- Income Statement Total interest income ................................... $ 86,252 $ 77,224 Total interest expense .................................. 54,581 47,172 ------- ------ Net interest income 31,671 30,052 Provision for loan losses ............................... 2,761 10,787 Gains on sales of securities, net ....................... 135 50 Other non-interest income ............................... 25,179 28,699 Non-interest expense .................................... 43,193 41,901 Income before income taxes, extraordinary item and cumulative effect of a change in accounting principle ... 11,031 6,113 Provision for income taxes .............................. 4,206 2,432 Income before extraordinary item and cumulative effect of change in accounting principle ------- ------- 6,825 3,681 Extraordinary item, net of tax .......................... -- 3,466 Cumulative effect of a change in accounting principle ... 1,138 -- ------- ------- Net income .............................................. $ 7,963 $ 7,147 ======= ======= FOR THE THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE SAME 2000 PERIOD: OVERVIEW Income before extraordinary item and cumulative effect of a change in accounting principle increased 85% from 2000. This improvement resulted primarily from a substantial reduction in our provision for loan losses and secondarily from an increase in our net interest income. We also recognized a $1.1 million gain, net of tax during the 2001 period from the cumulative effect of a change in accounting principle related to the implementation of Financial Accounting Standard Number 133, "Accounting for Derivative Instruments and Hedging Activities". During the 2000 period we recognized a $3.5 million extraordinary gain, net of tax resulting from the repurchase of our 5-5/8% Debentures at a discount. Net interest income increased by 5.4% from 2000. The improvement resulted from an increase in average earning assets partially offset by a narrowing of the net interest margin. The earning asset growth was primarily related to growth in the commercial real estate loan portfolio and secondarily in higher securities average balances. The provision for loan loss decreased $8.0 million. The large provision for loan losses during the March 2000 quarter reflected losses experienced in our small business and indirect consumer lending portfolios. During the first quarter of 2001, the losses in these portfolios significantly declined resulting in a corresponding reduction in the provision for loan losses. Non-interest income declined by 11.9% from the 2000 quarter. The decline in non-interest income primarily resulted from lower investment banking revenues along with a one-time $3.9 million gain from the sale of a utility expansion receivable during 2000. The above declines in non-interest income were partially offset by higher transaction account fee income and a gain on the sale of a branch facility. Non-interest expense increased by 3.1% from 2000. The increase primarily resulted from higher compensation expense associated with additions to our senior management team as well as increased salaries and employee benefits due to a highly competitive local labor market. RESULTS OF OPERATIONS Net interest income For the Three Months Ended March 31, --------------------------------- (in thousands) 2001 2000 Change -------- -------- -------- Interest and fees on loans and banker's acceptances ............................... $ 63,851 $ 59,124 $ 4,727 Interest on securities available for sale .. 13,365 13,639 (274) Interest and dividends on investments, tax certificates and trading securities ....... 9,036 4,461 4,575 Interest on deposits ....................... (24,444) (19,838) (4,606) Interest on advances from FHLB ............. (14,701) (15,848) 1,147 Interest on securities sold under agreements to repurchase ............................. (9,632) (6,582) (3,050) Interest on subordinated debentures, notes and bonds payable and guaranteed preferred interests in the Company's Junior Subordinated Debentures ................... (7,375) (6,589) (786) Capitalized interest on real estate developments and joint ventures ........... 1,571 1,685 (114) -------- -------- ------- Net interest income ........................ $ 31,671 $ 30,052 $ 1,619 -------- -------- -------- Net interest margin ........................ 2.91% 3.07% (0.16)% ======== ======== ======== FIRST QUARTER THIS YEAR VERSUS THE SAME QUARTER LAST YEAR: Net interest income increased by 5.4% from 2000. The increase was due to higher interest income in our loan portfolio and our investments held to maturity portfolio. The additional interest income in our loan portfolio primarily resulted from growth in our commercial real estate loans. The additional interest income in our securities held to maturity portfolio primarily resulted from the purchase of adjustable rate mortgage-backed securities. The growth in our loan and securities portfolio average balances was partially offset by the narrowing of the net interest margin resulting primarily from the rising interest rate environment during 2000. The net interest margin declined by 16 basis points from 2000. The reduced margin primarily resulted from rates on interest bearing liabilities increasing faster than yields on interest earning assets. Rate increases on interest-bearing liabilities were due to higher rates paid on deposit products, notes payable and short term borrowings as well as additional subordinated investment note borrowings at higher rates than traditional borrowings. Proceeds from subordinated investment notes were used to fund the retirement of all publicly held Class B Common Stock and to retire a portion of our 5-5/8% convertible debentures. Provision for Loan Losses For the Three Months (in thousands) Ended March 31, -------------------- 2001 2000 -------- -------- Balance, beginning of period .. $ 47,000 $ 44,450 Charge-offs: Commercial business loans ... 0 (24) Small business - real estate (68) (18) Small business - nonmortgage (1,344) (3,131) Lease financing ............. (1,985) (520) Consumer loan - indirect .... (1,023) (3,369) Consumer loans - direct ..... (377) (1,494) Residential real estate loans (152) (100) -------- -------- (4,949) (8,656) -------- -------- Recoveries: Small business - real estate 21 0 Small business - nonmortgage 876 113 Lease financing ............. 284 54 Commercial business loans ... 211 14 Commercial real estate loans 0 2 Residential real estate loans 65 1 Consumer loans - indirect ... 768 698 Consumer loans - direct ..... 91 187 -------- -------- 2,316 1,069 -------- -------- Net charge-offs ............... (2,633) (7,587) Provision for loan losses ..... 2,761 10,787 -------- -------- Balance, end of period ........ $ 47,128 $ 47,650 ======== ======== The provision for loan losses declined significantly during the three months ended March 31, 2001 compared to the same 2000 period. The large 2000 provision for loan losses reflected losses experienced in our small business and indirect consumer loan portfolio. During 2000, we significantly reduced the origination of small business loans and modified the underwriting process. We discontinued the origination of indirect consumer loans in December 1998. During 2000, the majority of our charge-offs were from small business and indirect consumer loans. During 2001, charge-offs from these portfolios were significantly reduced due to declining portfolio balances and a modified underwriting process on new originations. The improved loan loss experiences in the portfolios were partially offset by additional reserves required for our syndication and lease financing portfolios. The increased provision for loan losses associated with syndication loans related to an increase in our general reserves for syndication loans based on evaluation of the aggregate portfolio. The additional reserves allocated to lease financing resulted from higher than anticipated loss experiences as well as adverse delinquency and industry trends associated with the portfolio. At the indicated dates, the Company's non-performing assets and potential problem loans were (in thousands): March 31, December 31, 2001 2000 -------- ----------- NONPERFORMING ASSETS Nonaccrual: Tax certificates .................................. $ 2,481 $ 2,491 Loans and leases .................................. 18,287 18,106 ------- ------- Total nonaccrual ................................ 20,768 20,597 ------- ------- Repossesssed assets: Real estate owned, net of allowance ............... 2,827 2,562 Vehicles and equipment ............................ 2,892 3,679 ------- ------- Total repossessed assets ........................ 5,719 6,241 ------- ------- Total nonperforming assets ........................ $26,487 $26,838 ======= ======= POTENTIAL PROBLEM LOANS Contractually past due 90 days or more ............ $ 46 $ 7,086 Performing impaired loans net of specific allowance 37,287 15,001 Restructured loans ................................ 0 0 Delinquent residential loans purchased ............ 4,902 5,389 ------- ------- Total potential problem loans ..................... $42,235 $27,476 ======= ======= Nonperforming assets were slightly lower at March 31, 2001 compared to December 31, 2000. Nonaccrual and repossessed assets remained at December 2000 levels. We experienced declines in nonaccrual residential and consumer loans which were offset by increases in nonaccrual leases. The improvement in vehicle and equipment repossessed assets reflects declines in repossessed equipment and vehicles obtained from lease financing activities. The significant increase in potential problem loan balances primarily resulted from the impairment of three syndication loans during the March 2001 quarter with an aggregate loan balance of $22.5 million. The decline in loans contractually past due 90 days or more from the December 31, 2000 balance reflects one loan that was repaid in February 2001. The decline in delinquent residential loans purchased reflected either a negotiated payoff or foreclosure and sale of the collateral. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] NON-INTEREST INCOME For the Three Months Ended March 31, ------------------------- 2001 2000 Change ------ ------ ------ (in thousands) Banking Operations Loan late fees and other loan income ........................ $ 909 $1,038 $ (129) Gains on sales of loans held for sale, net ..................... 13 78 (65) Gains on trading and available for sale securities, net ...... 135 50 85 Transaction fees ............... 3,880 3,251 629 ATM fees ....................... 2,652 2,515 137 Other .......................... 1,296 947 349 ------ ------ ------ Non-interest income ......... 8,885 7,879 1,006 ------ ------ ------ Levitt Operations Gains on sales of real estate held for development and sale . 6,570 3,111 3,459 Other .......................... 726 4,304 (3,578) ------ ------ ------ Non-interest income ......... 7,296 7,415 (119) ------ ------ ------ Ryan Beck Operations Principal transactions ......... 4,470 4,958 (488) Investment banking ............. 960 2,007 (1,047) Commissions .................... 3,423 6,235 (2,812) Other .......................... 280 255 25 ------ ------ ------ Non-interest income ......... 9,133 13,455 (4,322) ------ ------ ------ Total non-interest income ...... $25,314 $28,749 $(3,435) ====== ====== ====== NON-INTEREST INCOME - BANKING OPERATIONS Loan late fees and other loan income declined by 12% from 2000. The decline primarily resulted from lower prepayment penalties on commercial real estate loans and lower late fees earned on consumer and residential loans. During the three months ended March 31, 2001 we sold $6.2 million of loans held for sale for a $13,000 gain. During the three months ended March 31, 2000 we sold $14.3 million of loans held for sale for a $242,000 gain. Included in gains on sales of loans held for sale during the 2000 quarter was a $164,000 writedown associated with loans held for sale. Gains on trading and available for sale securities, net during the three months ended March 31, 2001 consisted of the sale of a $1.0 million mutual fund investment for a $322,000 gain, a $221,000 writedown associated with a limited partnership investment and a $34,000 unrealized gain on derivative instruments. The partnership writedown was due to an other-than-temporary decline in one equity investment held by the limited partnership. During the three months ended March 31, 2000 the Company sold $317,000 of securities available for sale for a gain of $793,000, recognized a writedown on marketable equity securities available for sale of $781,000 and realized $38,000 of gains on trading activities. BankAtlantic's trading activities were discontinued during 2000. During the 2001 period transaction fee income increased by 19% from the comparable 2000 period. The improvement in fee income primarily resulted from an increase in fees earned on transaction account overdrafts. During the 2001 period, ATM fee income increased by 5% compared to the same 2000 period. The increase resulted from a renegotiated profit sharing agreement at certain ATM locations. Other income increased by 37% from 2000. The increase primarily resulted from the sale of a branch facility for a $386,000 gain and higher other revenues from tax certificates and leasing operations. During the three months ended March 31, 2000, we sold a parcel of land for a $182,000 gain. NON-INTEREST INCOME - LEVITT OPERATIONS Gains on sales of real estate held for sale represented the net profits on sales of real estate by Levitt and Sons and SLWHC as well as our equity in earnings from real estate joint venture activities. During the first quarter of 2001, Levitt and Sons sold real estate inventory for a net gain of $4.0 million, SLWHC sold developed land for a net gain of $1.5 million and we realized $740,000 of earnings from joint venture activities. During the three months ended March 31, 2000 Levitt and Sons sold real estate inventory for a net gain of $2.4 million, SLWHC sold developed land for a net gain of $1.2 million and we incurred a $284,000 loss from joint venture activities. During the first quarter of 2001 other income declined significantly from the comparable 2000 period. Included in other income during the March 2000 period was a one-time $3.9 million gain associated with a sale of a utility expansion receivable to a public municipality. NON-INTEREST INCOME - RYAN BECK OPERATIONS Ryan Beck's revenues in the three major categories of fee income declined during the 2001 quarter compared to the same 2000 period. Principal transactions, investment banking and commission revenues declined by 10%, 52% and 45%, respectively, from the corresponding 2000 period. The substantial reduction in revenues was attributed to the overall erosion of the stock market from its highs set during the first quarter of 2000. The principal transaction revenue decline reflected a 43% reduction in equity trading revenues partially offset by an increase in fixed income transaction revenues. This increase was related to revenues from a newly developed certificate of deposit and government agency department. NON-INTEREST EXPENSES For the Three Months Ended March 31, --------------------------- 2001 2000 Change ------- ------- ------- (in thousands) Banking Operations Employee compensation and benefits $13,187 $10,885 $ 2,302 Occupancy and equipment ........... 6,019 5,601 418 Advertising and promotion ......... 587 581 6 Amortization of cost over fair value of net assets .............. 708 708 0 acquired Other ............................. 5,255 5,314 (59) ------- ------- ------- Non-interest expense ............ 25,756 23,089 2,667 ------- ------- ------- Levitt Operations Employee compensation and benefits 2,136 1,325 811 Advertising and promotion ......... 800 613 187 Selling, general and administrative 2,374 2,366 8 ------- ------- ------- Non-interest expense ............ 5,310 4,304 1,006 ------- ------- ------- Ryan Beck Operations Employee compensation and benefits 8,276 9,844 (1,568) Occupancy and equipment ........... 864 899 (35) Advertising and promotion ......... 125 272 (147) Amortization of cost over fair value of net assets .............. 317 308 9 acquired Other ............................. 2,545 3,185 (640) ------- ------- ------- Non-interest expense ............ 12,127 14,508 (2,381) ------- ------- ------- Total non-interest expenses ...... $43,193 $41,901 $ 1,292 ======= ======= ======= Non-Interest Expenses - Banking Operations Compensation expenses increased 21% from the comparable 2000 period. Due to competitive local labor market conditions, we substantially increased compensation of existing employees and related health insurance benefits. We also strengthened our senior management team and hired information system personnel to upgrade our technology infrastructure and to implement our internet banking activities. Occupancy and equipment expenses increased 7% from the comparable 2000 period. The increase was primarily due to additional data processing fees and higher depreciation expense. The increase in data processing fees was associated with additional charges from our service bureau due to loan and deposit growth. The increase in depreciation expense related to upgrades in our technology infrastructure. NON-INTEREST EXPENSES - LEVITT OPERATIONS The increase in compensation and benefits resulted from the expansion of Levitt and Sons activities. The number of Levitt Corporation employees increased from 145 at March 31, 2000 to 200 at March 31, 2001. Levitt and Sons began several new development projects during 2000 and the first quarter of 2001. This expansion also resulted in an increase in advertising and promotion expense. NON-INTEREST EXPENSES - RYAN BECK OPERATIONS The decline in employee compensation and benefits was primarily due to lower commission expenses associated with the significant declines in Ryan Beck revenues discussed above. The decline in other expenses related to lower floor brokerage and clearing fees attributed to a significant reduction in commission revenues as well as the effects of lower clearing costs in the second quarter of 2000. SEGMENT REPORTING The table below provides segment information for income before extraordinary item and the cumulative effect of a change in accounting principle for the three months ended March 31, 2001 and 2000: For the Three Months (in thousands) Ended March 31, -------------------- Segment net income 2001 2000 ------- ------- Capital markets .... $ 5,478 $ 4,931 Commercial banking . 4,971 5,913 Community banking .. 898 (5,122) Levitt Corporation . 1,128 2,126 Ryan Beck .......... (1,185) (44) Parent Company ..... (4,465) (4,123) ------- ------- Segment net income $ 6,825 $ 3,681 ======= ======= CAPITAL MARKETS Segment net income increased by 11% from the comparable 2000 quarter. The improvement reflected additional interest income resulting from growth in average earning assets. The increase in average earning assets reflected the purchase of mortgage-backed securities and tax certificate acquisitions. The higher interest expense and overhead resulted from an increase in allocated overhead due to higher average segment assets. COMMERCIAL BANKING Segment net income declined by 16% from the comparable 2000 quarter. The decline primarily resulted from an increase in the provision for loan losses associated with the lease finance portfolio and secondarily higher interest expense and overhead. The higher interest expense and overhead resulted from an increase in allocated overhead due to higher average segment assets balances. The reductions in segment net income were partially offset by additional interest income from higher commercial real estate average balances due to loan originations and purchases. COMMUNITY BANKING Segment net income increased by $6.0 million from the comparable 2000 quarter. The improvement primarily resulted from a significantly lower provision for loan losses. This improvement reflects declining small business and consumer indirect loan average balances and management's belief that substantial progress has been made in improving the credit quality of the loan portfolio in this segment. Also contributing to the improvement in segment net income was additional interest income earned from higher average loan balances primarily relating to the origination of home equity loans. LEVITT CORPORATION Segment net income from the operations of Levitt Corporation declined by 47% from the comparable 2000 quarter. The lower segment net income resulted from a one-time $3.9 million gain in 2000 associated with a sale of a utility expansion receivable to a public municipality. Revenues from Levitt Corporation's sales of real estate and joint venture activities increased from $3.1 million for the three months ended March 31, 2000 to $6.6 million during the comparable 2001 period. RYAN BECK During the three months ended March 31, 2001 the Ryan Beck segment posted a $1.2 million loss compared to a slight loss during the same 2000 period. The segment loss was attributed to lower revenues from Ryan Beck's three major revenues sources: investment banking, principal transactions and commissions. The substantial decline in revenues resulted from the overall erosion of the stock market from its highs set in the first quarter of 2000. The decline in this segment's net income was partially offset by lower compensation and clearing expenses. PARENT COMPANY The parent company loss increased by $341,000 during the first quarter of 2001 compared to the same 2000 period. The increase primarily resulted from lower interest income due to the repayment of an inter-company $10 million note receivable along with higher interest expense associated with the issuance of investment notes during 2000. FINANCIAL CONDITION Our total assets at March 31, 2001 were $4.8 billion compared to $4.6 billion at December 31, 2000. The increase in total assets primarily resulted from increased: 1) loans receivable, net primarily from the origination and purchase of commercial real estate loans, 2) Securities available for sale resulting from the purchase of US government securities and adjustable rate mortgage backed securities, 3) real estate held for development and sale and joint venture activities due to an increase in Levitt and Sons real estate inventory, and 4) cash and due from depository institutions due to higher in-transit cash letter balances. The above increases in total assets were partially offset by decreased: 1) investment securities and tax certificates resulting from redemptions and maturities, 2) trading securities related to Ryan Beck's operations, and 3) deferred tax asset, net primarily due to appreciation of securities available for sale. The Company's total liabilities at March 31, 2001 were $4.5 billion compared to $4.4 billion at December 31, 2000. The increase in total liabilities primarily resulted from increased: 1) deposit balances reflecting an increase in time deposits and savings accounts and 2) securities sold under agreements to repurchase which were used to fund growth in loans receivable and securities available for sale. The above increases in total liabilities were partially offset by decreased: 1) advances from FHLB due to maturities, and 2) other liabilities resulting from lower due from clearing agent balances. MARKET RISK Market risk is defined as the risk of loss arising from adverse changes in market valuations which arise from interest rate risk, foreign currency exchange rate risk, commodity price risk, and equity price risk. Our primary market risk is interest rate risk and our secondary market risk is equity price risk. INTEREST RATE RISK The majority of our assets and liabilities are monetary in nature subjecting us to significant interest rate risk which would arise if the relative values of each of our assets and liabilities changed in conjunction with a general rise or decline in interest rates. We have developed a model using standard industry software to quantify our interest rate risk. A sensitivity analysis was performed measuring our potential gains and losses in net portfolio fair values of interest rate sensitive instruments at March 31, 2001 resulting from a change in interest rates. Interest rate sensitive instruments included in the model were our: /bullet/ Loan portfolio, /bullet/ Debt securities available for sale, /bullet/ Investment securities, /bullet/ FHLB stock, /bullet/ Federal Funds sold, /bullet/ Government securities, /bullet/ Deposits /bullet/ Advances from FHLB, /bullet/ Securities sold under agreements to repurchase, /bullet/ Federal Funds purchased, /bullet/ Notes and Bonds payable /bullet/ Subordinated Debentures, /bullet/ Trust Preferred Securities, ss. /bullet/ Forward, contracts, /bullet/ Interest rate swaps, and /bullet/ Off-balance sheet loan commitments. 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, 2001, (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, 2001 as calculated utilizing the Company's model. The table measures changes in net portfolio value for instantaneous and parallel shifts in the yield curve in 100 basis point increments up or down. Net Portfolio Changes Value Dollar in Rate Amount Change ------------- ------------ ------------- (dollars in thousands) +200 bp $ 315,688 $ (49,616) +100 bp $ 349,900 $ (15,404) 0 $ 365,304 $ 0 -100 bp $ 363,466 $ (1,838) -200 bp $ 339,192 $ (26,112) In preparing the above table, the Company makes various assumptions to determine the net portfolio value at the assumed changes in interest rate. These assumptions include: /bullet/ loan prepayment rates, /bullet/ deposit decay rates, /bullet/ market values of certain assets under the representative interest rate scenarios, and /bullet/ repricing of certain deposits and borrowings It was also assumed that delinquency rates would not change as a result of changes in interest rates although there can be no assurance that this would be the case. Even if interest rates change in the designated increments, there can be no assurance that our 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 or reactive measures which we may take in the future. 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 our securities sold, not yet purchased, trading and available for sale securities at March 31, 2001 based on percentage changes in fair value. Actual future price appreciation or depreciation may be different from the changes identified in the table below. Securities Available Sold Not Percent Trading for Sale Yet Change in Securities Securities Purchased Dollar Fair Value Fair Value Fair Value Fair Value Change - ------------- ------------ ------------- ------------- ----------- (dollars in thousands) 20 % $ 43,351 $ 28,817 $ 17,000 $ 14,861 10 % $ 39,739 $ 26,415 $ 15,584 $ 7,431 0 % $ 36,126 $ 24,014 $ 14,167 $ 0 (10) % $ 32,513 $ 21,613 $ 12,750 $ (7,431) (20) % $ 28,901 $ 19,211 $ 11,334 $ (14,861) Excluded from the above table are $20 million of investments in private companies for which no current market exists. The ability to realize on or liquidate our investments will depend on future market conditions and is subject to significant risk. Ryan Beck is a market maker in equity securities, which could result, from time to time, in Ryan Beck holding securities during declining markets. LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of liquidity is dividends from BankAtlantic. During 2000, the Company received $23.2 million of dividends from BankAtlantic. The Company also obtains funds through the issuance of equity securities, sales of securities available for sale, borrowings from financial institutions and issuance of debt securities. The Company's annual debt service at March 31, 2001 associated with its subordinated debentures, Trust Preferred Securities, investment notes and financial institution borrowings was $20.3 million. The Company's estimated current annual dividends to common shareholders are $3.7 million. The declaration and payment of dividends will depend upon, among other things, the results of operations, financial condition and cash requirements of the Company as well as indenture restrictions and loan covenants and on the ability of BankAtlantic to pay dividends or otherwise advance funds to the Company, which payments and distributions are subject to OTS approval and regulations and based upon BankAtlantic's regulatory capital levels and net income. During the years ending December 31, 2002 and 2003 the Company has $54.8 million of investment notes and bank debt maturing along with a $7.7 million payment associated with its cash-based deferred compensation plan. Management has no current plans with respect to the payment of such obligations and there is no assurance that the Company will be in a position to fund or refinance the obligations on terms satisfactory to the Company. BankAtlantic's primary sources of funds during the first three months of 2001 were from principal collected on loans, securities available for sale and investment securities held to maturity, sales of securities available for sale, 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, and to fund or purchase loans, FHLB stock, tax certificates, trading securities, real estate inventory, joint venture investments and securities available for sale. At March 31, 2001, BankAtlantic met all applicable liquidity and regulatory capital requirements. BankAtlantic has entered into discussions with other banks concerning the possible sale of selected branches located in Wal*Mart Super Stores ("in-store branches"). BankAtlantic has sixteen in-store branches with aggregate deposit balances of approximately $133 million. The Company's commitments to originate and purchase loans at March 31, 2001 were $174.4 million and $74.8 million compared to $245.1 million and $55.8 million at March 31, 2000. Additionally, the Company had commitments to purchase $30.1 million of mortgage-backed securities at March 31, 2000 compared to zero during the same 2001 period. At March 31, 2001, loan commitments represented approximately 9% of net loans receivable, net. At the indicated date BankAtlantic's capital amounts and ratios were (dollars in thousands): Minimum Ratios -------------------------- Actual Adequately Well --------------------- Capitalized Capitalized Amount Ratio Ratio Ratio ---------- -------- ----------- ----------- At March 31, 2001: Total risk-based capital $ 336,847 11.03% 8.00% 10.00% Tier 1 risk-based capital $ 298,658 9.78% 4.00% 6.00% Tangible capital......... $ 298,658 6.54% 1.50% 1.50% Core capital............. $ 298,658 6.54% 4.00% 5.00% At December 31, 2000: Total risk-based capital. $ 328,973 11.00% 8.00% 10.00% Tier 1 risk-based capital $ 291,544 9.74% 4.00% 6.00% Tangible capital......... $ 291,544 6.66% 1.50% 1.50% Core capital............. $ 291,544 6.66% 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 our Annual Report on Form 10-K for the year ended December 31, 2000. Our wholly owned subsidiary, Ryan Beck, is subject to the net capital provision of Rule 15c3-1 under the Securities Exchange Act of 1934 which requires that Ryan Beck's aggregate indebtedness shall not exceed 15 times net capital as defined under such provision. Additionally, Ryan Beck, 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 Ryan Beck, not to exceed $1,000,000. At March 31, 2001, Ryan Beck's regulatory net capital was approximately $8.1 million, which exceeded minimum net capital rule requirements by $7.1 million. Ryan Beck 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, Ryan Beck safekeeps and redeems municipal bond coupons for the benefit of its customers. Accordingly, Ryan Beck 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, 2001. PART II - OTHER INFORMATION EXHIBITS AND REPORTS ON FORM 8K (a) Exhibits -------- Exhibit 3 Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company Exhibit 11 Statement re: Computation of Per Share Earnings (b) Reports on Form 8K ------------------ None 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, 2001 By: /s/Alan B. Levan - -------------- --------------------------- Date Alan B. Levan Chief Executive Officer/ Chairman/President May 15, 2001 By: /s/James A. White - -------------- -------------------------- Date James A. White Executive Vice President, Chief Financial Officer EX-11 2 exhibit11.txt EXHIBIT 11 Earnings Per Share The following reconciles the numerators and denominators of the basic and diluted earnings per share.
For the Three Months ended For the Three Months ended (in thousands, except share data and March 31, 2001 March 31, 2000 ------------------------------------- ------------------------------------------ percentages) Class A Class B Total Class A Class B Total --------------- ----------- --------- --------------- --------------- --------- Basic Numerator Actual dividends declared $ 801 $ 112 $ 913 $ - $ - $ - Basic allocation of undistributed earnings from income before extraordinary item and cumulative effect of a change in accounting principle 5,986 839 6,825 2,853 828 3,681 Income before extraordinary item and cumulative effect of a change in --------------- ----------- --------- --------------- --------------- --------- accounting principle 6,787 951 7,738 2,853 828 3,681 Income from extraordinary item - - - 2,686 780 3,466 Cumulative effect of a change in accounting principle, net of tax 998 140 1,138 - - - --------------- ----------- --------- --------------- --------------- --------- Net income $ 7,785 $ 1,091 $ 8,876 $ 5,539 $ 1,608 $ 7,147 =============== =========== ========= =============== =============== ========= Basic Denominator Weighted average shares outstanding 31,626,248 4,876,124 31,499,608 10,058,228 =============== =========== =============== =============== Allocation percentage 87.71 % 12.29 % 77.50 % 22.50 % =============== =========== =============== ============== Basic earnings per share $ 0.22 $ 0.20 $ 0.18 $ 0.16 =============== =========== =============== =============== Diluted Numerator Actual dividends declared $ 801 $ 112 $ 913 $ - $ - $ - --------------- ----------- --------- --------------- --------------- --------- Basic allocation of undistributed earnings from income before extraordinary item and cumulative effect of a change in accounting principle 5,986 839 6,825 2,853 828 3,681 Reallocation of basic undistributed earnings due to change in allocation percentage 235 (235) 0 221 (221) - Diluted allocated undistributed earnings from income before extraordinary item and cumulative effect of a change in --------------- ----------- --------- --------------- --------------- --------- accounting principle 6,221 604 6,825 3,074 607 3,681 Interest expense on convertible debt 936 91 1,027 1,171 231 1,402 --------------- ----------- --------- --------------- --------------- --------- Dilutive income before extraordinary item and cumulative effect of a change in accounting principle 7,157 695 7,852 4,245 838 5,083 Dilutive income from extraordinary item - - - 2,894 572 3,466 Cumulative effect of a change in accounting principle, net of tax 1,037 101 1,138 - - - --------------- ----------- --------- --------------- --------------- --------- Net income $ 8,194 $ 796 $ 8,990 $ 7,139 $ 1,410 $ 8,549 =============== =========== ========= =============== =============== ========= Diluted Denominator Basic weighted average shares Outstanding 31,626,248 4,876,124 31,499,608 10,058,228 Convertible debentures 13,066,115 - 17,081,483 - Options 1,003,256 - 4,961 493,062 --------------- ----------- --------------- --------------- Diluted weighted average shares outstanding 45,695,619 4,876,124 48,586,052 10,551,290 =============== =========== =============== =============== Allocation percentage 91.16 % 8.84 % 83.51 % 16.49 % =============== =========== =============== =============== Diluted earnings per share $ 0.18 $ 0.17 $ 0.15 $ 0.13 =============== =========== =============== ===============
EX-3.(I) 3 exhibit3.txt ARTICLES OF INCORPORATION ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF BANKATLANTIC BANCORP, INC. The Articles of Incorporation of BANKATLANTIC BANCORP, INC., a Florida corporation (the "Corporation"), are hereby amended pursuant to the provisions of Section 607.1006 of the Florida Business Corporation Act as follows: 1. The introductory paragraph and Section A of Article III shall be deleted in their entirety and amended to read as follows: ARTICLE III - CAPITAL STOCK The aggregate number of shares of capital stock which this Corporation shall have authority to issue is One Hundred Thirty Five Million (135,000,000) of which Ten Million (10,000,000) shall be preferred stock, par value $.01 per share, and of which One Hundred Twenty Five Million (125,000,000) shall be common stock, par value $.01 per share, consisting of Eighty Million (80,000,000) shares of a class designated "Class A Common Stock" and Forty Five Million (45,000,000) shares of a class designated "Class B Common Stock" (the Class A Common Stock and the Class B Common Stock are sometimes hereinafter referred collectively as the "Common Stock"). The preferred stock may be divided into and issued in series by the Board of Directors as set forth below. The Board of Directors shall fix the consideration to be received for each share. Such consideration shall consist of any tangible or intangible property or benefit to this Corporation, including cash, promissory notes, services performed or securities of other corporations or entities and shall have a value, in the judgment of the Board of Directors, equivalent to or greater than the full par value of the shares. In the case of a stock dividend, that part of the surplus of the Corporation which is transferred to stated capital upon the issuance of shares as a share dividend shall be deemed to be the consideration for their issuance. Upon the filing of these Articles of Amendment with the Secretary of State of the State of Florida, each share of Class B Common Stock of the Corporation then outstanding shall, without any action on the part of the holder thereof, be changed into Four Million Eight Hundred Seventy Six Thousand One Hundred Twenty Four (4,876,124) shares of Class B Common Stock of the Corporation. A. Common Stock, Class A Common Stock and Class B Common Stock. The Class A Common Stock and the Class B Common Stock shall be identical in all respects and shall have equal rights and privileges except as set forth in this Article III A. The relative rights, preferences, privileges and restrictions of the Class A Common Stock and Class B Common Stock are as follows: 1. Voting. Except as provided in this Article III (or in any supplementary sections thereto), the holders of the Class B Common Stock shall exclusively possess all voting power. Each holder of shares of Class B Common Stock shall be entitled to one vote per share. Each holder of shares of Class A Common Stock shall have no voting rights except as required by law. There shall be no cumulation of votes for the election of directors. 2. Dividends. Whenever there shall have been paid, or declared and set aside --------- for payment, to the holders of the outstanding shares of any class of stock having preference over the Common Stock as to the payment of dividends, the full amount of -1- dividends and of a sinking fund, retirement fund, or other required payments, if any, to which such holders are respectively entitled in preference to the Common Stock, then dividends may be paid on the Common Stock and on any class or series of stock entitled to participate therewith as to dividends when and as declared by the Board of Directors out of any assets legally available for the payment of dividends. Holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors, provided that (i) with respect to dividends payable in cash, the distribution per share of Class A Common Stock must be equal to at least 110% of the amount of the distribution per share of Class B Common Stock and (ii) with respect to dividends or other distributions payable other than in cash, including distributions pursuant to stock dividends or stock splits or divisions, the distribution per share of Class A Common Stock must be identical to the distribution per share of Class B Common Stock, except that a dividend or other distribution to holders of Class A Common Stock may be declared and issued in Class A Common Stock and a dividend or other distribution to holders of Class B Common Stock may be declared and issued in either Class A Common Stock or Class B Common Stock provided that in each case the number of shares so declared and issued on a per share basis to such holders is the same. 3. Rights upon Liquidation or Dissolution. In the event of any liquidation, dissolution, or winding up of the Corporation, the holders of Common Stock (and the holders of any class or series of stock entitled to participate with such stock in the distribution of assets) shall be entitled to receive, in cash or in kind, the assets of the Corporation available for distribution remaining after: (i) payment or provision for payment of the Corporation's debts and liabilities; (ii) distributions or provision for distributions in settlement of its liquidation account; and (iii) distributions or provision for distributions to holders of any class or series of stock having preference over the Common Stock in the liquidation, dissolution, or winding up of the Corporation. Each share of Class A Common Stock and Class B Common Stock shall be entitled to share ratably, as a single class, in such remaining assets of the Corporation. The foregoing Articles of Amendment to the Articles of Incorporation were duly adopted and approved by the holders of the Corporation's voting stock and by the board of directors of the Corporation, in each case, by unanimous written consent in lieu of a meeting, pursuant to Sections 607.0704 and 607.0821 of the Florida Business Corporation Act, as of April 16, 2001. The number of votes cast was sufficient for approval. IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief Executive Officer has executed these Articles of Amendment to the Articles of Incorporation this 16th day of April, 2001. BANKATLANTIC BANCORP, INC. By: /s/ Alan B. Levan -------------------------------- Alan B. Levan, Chairman of the Board and Chief Executive Officer C:\TEMP\ART-AMD-4-2001.wpd -2- -----END PRIVACY-ENHANCED MESSAGE-----