-----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, RfY1pq8JxAEcotsPCwHYvmc/fKYqhsMNSjY2+cI0y51GFI/WTs1zyPGvkXRypxuZ YhJY7yjIEjhHTuBfNIl4ww== 0000921768-01-500011.txt : 20010815 0000921768-01-500011.hdr.sgml : 20010815 ACCESSION NUMBER: 0000921768-01-500011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 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: 1934 Act SEC FILE NUMBER: 001-13133 FILM NUMBER: 1709427 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 june_10q.txt BANKATLANTIC BANCORP, INC. 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 June 30, 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 65-0507804 ------------------------------- ----------------- (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 1750 East Sunrise Boulevard Ft. Lauderdale, Florida 33304 -------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (954) 760-5000 -------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE -------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of preferred and common stock as of the latest practicable date. Outstanding at Title of Each Class August 2, 2001 ----------------------------------------------- -------------- Class A Common Stock, par value $0.01 per share 37,393,873 Class B Common Stock, par value $0.01 per share 4,876,124 ================================================================================ TABLE OF CONTENTS FINANCIAL INFORMATION Page Reference -------------- FINANCIAL STATEMENTS 1-19 Consolidated Statements of Financial Condition - June 30, 2001 and 2000 and December 31, 2000 - Unaudited 4 Consolidated Statements of Operations - For the Three and Six Months Ended June 30, 2001 and 2000 - Unaudited .................................... 5-7 Consolidated Statements of Stockholders' Equity and Comprehensive Income - For the Three and Six Months Ended June 30, 2001 and 2000 - Unaudited ................ 8 Consolidated Statements of Cash Flows - For the Three and Six Months Ended June 30, 2001 and 2000 - Unaudited . 9-10 Notes to Consolidated Financial Statements - Unaudited .... 11-19 Management's Discussion and Analysis of Financial Condition and Results of Operations ..................... 20-33 OTHER INFORMATION Exhibits and Reports on Form 8K ........................ 34 Signatures ............................................. 35 [THIS PAGE INTENTIONALLY LEFT BLANK] BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED June 30, December 31, June 30, (In thousands, except share data) 2001 2000 2000 ----------- ----------- ---------- ASSETS Cash and due from depository institutions ......... $ 98,254 $ 85,109 $ 80,430 Federal Funds sold and securities purchased under resell agreements ......................... 1,018 1,584 1,122 Investment securities and tax certificates (approximate fair value: $362,616,$387,971 and $361,302) ................................... 356,179 383,619 361,186 Loans receivable, net ............................. 2,972,548 2,853,804 2,780,536 Securities available for sale, at fair value ...... 866,097 839,010 773,076 Trading securities, at fair value ................. 31,113 43,557 16,796 Accrued interest receivable ....................... 37,087 44,046 38,539 Real estate held for development and sale and joint ventures .................................. 154,546 147,755 156,974 Office properties and equipment, net .............. 61,649 59,850 56,155 Federal Home Loan Bank stock, at cost which approximates fair value ......................... 56,428 51,940 50,958 Deferred tax asset, net ........................... 17,495 25,973 38,469 Cost over fair value of net assets acquired, net .. 48,463 49,882 51,913 Other assets ...................................... 55,220 31,171 32,437 ---------- ---------- ---------- Total assets ...................................... $ 4,756,097 $ 4,617,300 $ 4,438,591 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits .......................................... $ 2,370,505 $ 2,234,485 $ 2,138,319 Advances from FHLB ................................ 1,128,555 1,038,801 989,140 Federal Funds purchased ........................... 107,000 9,700 - Securities sold under agreements to repurchase .... 438,714 659,502 676,502 Subordinated debentures, notes and bonds payable .. 220,508 224,358 225,519 Guaranteed preferred beneficial interests in the Company's Junior Subordinated Debentures .... 74,750 74,750 74,750 Other liabilities ................................. 141,652 126,883 87,567 ---------- ---------- ---------- Total liabilities ................................. 4,481,684 4,368,479 4,191,797 ---------- ---------- ---------- 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, 31,794,761, 31,704,365 and 31,681,764 shares .... 318 317 317 Class B Common Stock, $0.01 par value, authorized 45,000,000 shares; issued and outstanding, 4,876,124, 4,876,124 and 9,799,596 shares ...... 49 49 98 Additional paid-in capital ........................ 104,237 103,745 134,606 Unearned compensation - restricted stock grants ... (290) (391) (492) Retained earnings ................................. 157,910 143,471 132,994 ---------- ---------- ---------- Total stockholders' equity before accumulated other comprehensive income (loss) ..................... 262,224 247,191 267,523 Accumulated other comprehensive income (loss) ..... 12,189 1,630 (20,729) ---------- ---------- ---------- Total stockholders' equity ........................ 274,413 248,821 246,794 ---------- ---------- ---------- Total liabilities and stockholders' equity ........ $ 4,756,097 $ 4,617,300 $ 4,438,591 ========== ========== ==========
See Notes to Consolidated Financial Statements - Unaudited 4 BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months For the Six Months (In thousands, except share data) Ended June 30, Ended June 30, --------------------- --------------------- 2001 2000 2001 2000 -------- -------- -------- -------- Interest income: Interest and fees on loans and leases ............. $ 61,580 $ 61,211 $ 125,431 $ 120,335 Interest and dividends on securities available for sale ........................................ 13,284 12,934 26,649 26,574 Interest and dividends on other investments and trading securities .............................. 8,792 6,001 17,828 10,461 -------- -------- -------- -------- Total interest income ............................. 83,656 80,146 169,908 157,370 -------- -------- -------- -------- Interest expense: Interest on deposits .............................. 23,089 22,267 47,533 42,105 Interest on advances from FHLB .................... 14,660 15,692 29,361 31,540 Interest on securities sold under agreements to repurchase and federal funds purchased .......... 7,142 7,407 16,774 13,989 Interest on subordinated debentures, guaranteed preferred interest in the Company's Junior Subordinated Debentures and notes and bonds payable ......................................... 7,130 6,932 14,505 13,521 Capitalized interest on real estate developments and joint ventures .............................. (1,447) (1,841) (3,018) (3,526) -------- -------- -------- -------- Total interest expense ............................ 50,574 50,457 105,155 97,629 -------- -------- -------- -------- Net interest income ............................... 33,082 29,689 64,753 59,741 Provision for loan losses ......................... 4,040 4,533 6,801 15,320 -------- -------- -------- -------- Net interest income after provision for loan losses 29,042 25,156 57,952 44,421 Non-interest income: Investment banking income ......................... 10,202 12,504 19,055 25,704 Transaction fees .................................. 3,890 3,221 7,770 6,472 Net revenues from sales of real estate ............ 7,949 2,646 14,519 5,757 ATM fees .......................................... 2,654 2,718 5,306 5,233 Loan late fees and other loan income .............. 1,157 1,069 2,066 2,107 Gains (loss) on loans held for sale, net .......... 9 (367) 22 (289) Gains on trading securities and securities available for sale, net ......................... 1,221 202 1,356 252 Other ............................................. 1,938 1,808 4,240 7,314 -------- -------- -------- -------- Total non-interest income ......................... 29,020 23,801 54,334 52,550 -------- -------- -------- -------- Non-interest expense: Employee compensation and benefits ................ 23,152 21,168 46,751 43,222 Occupancy and equipment ........................... 6,953 6,447 13,836 12,947 Advertising and promotion ......................... 2,407 2,670 3,919 4,136 Amortization of cost over fair value of net assets acquired ................................. 1,049 1,024 2,074 2,040 Other ............................................. 11,264 10,184 21,438 21,049 -------- -------- -------- -------- Total non-interest expense ........................ 44,825 41,493 88,018 83,394 Income before income taxes, discontinued operations, extraordinary item and cumulative effect of a change in accounting principle ...... 13,237 7,464 24,268 13,577 Provision for income taxes ........................ 4,632 2,461 8,838 4,893 -------- -------- -------- -------- Income before discontinued operations, extraordinary item and cumulative effect of a change in accounting principle ................ 8,605 5,003 15,430 8,684 Discontinued operations, net of taxes ............. - 259 - 259 Extraordinary item, net of taxes .................. - - - 3,466 Cumulative effect of a change in accounting principle, net of tax ........................... - - 1,138 - -------- -------- -------- -------- Net income ........................................ $ 8,605 $ 5,262 $ 16,568 $ 12,409 ======== ======== ======== ======== See Notes to Consolidated Financial Statements - Unaudited (Continued)
5 BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months For the Six Months Ended June 30, Ended June 30, ---------------------- --------------------- 2001 2000 2001 2000 ------- ---------- ------- --------- Class A common shares (1) Basic earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... $ N/A $ 0.12 $ N/A $ 0.21 Basic earnings per share from discontinued operations ..................................... N/A 0.01 N/A 0.01 Basic earnings per share from extraordinary item . N/A - N/A 0.09 Basic earnings per share from cumulative effect of a change in accounting principle ............ N/A - N/A - ------- --------- ------- --------- Basic earnings per share ......................... $ N/A $ 0.13 $ N/A $ 0.31 ======= ========== ======= ========= Diluted earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... $ N/A $ 0.11 $ N/A $ 0.20 Diluted earnings per share from discontinued operations ..................................... N/A - N/A - Diluted earnings per share from extraordinary item N/A - N/A 0.06 Diluted earnings per share from cumulative effect of a change in accounting principle ............ N/A - N/A - ------- --------- ------- --------- Diluted earnings per share ....................... $ N/A $ 0.11 $ N/A $ 0.26 ======= ========== ======= ========= Basic weighted average number of common shares outstanding .................................... N/A 31,546,061 N/A 31,522,835 ======= ========== ======= ========== Diluted weighted average number of common and common equivalent shares outstanding ........... N/A 47,194,152 N/A 47,894,114 ======= ========== ======= ========== Class B common shares (1) Basic earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... $ N/A $ 0.11 $ N/A $ 0.19 Basic earnings per share from discontinued operations ..................................... N/A 0.01 N/A 0.01 Basic earnings per share from extraordinary item . N/A - N/A 0.08 Basic earnings per share from cumulative effect of a change in accounting principle ............ N/A - N/A - ------- ---------- ------- ---------- Basic earnings per share ......................... $ N/A $ 0.12 $ N/A $ 0.28 ======= ========== ======= ========== Diluted earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... $ N/A $ 0.11 $ N/A $ 0.19 Diluted earnings per share from discontinued operations ..................................... N/A 0.01 N/A - Diluted earnings per share from extraordinary item N/A - N/A 0.06 Diluted earnings per share from cumulative effect of a change in accounting principle ............ N/A - N/A - ------- ---------- ------- ---------- Diluted earnings per share ....................... $ N/A $ 0.12 $ N/A $ 0.25 ======= ========== ======= ========== Basic weighted average number of common shares outstanding .................................... N/A 9,774,193 N/A 9,916,211 ======= ========== ======= ========== Diluted weighted average number of common and common equivalent shares outstanding ........... N/A 10,270,725 N/A 10,412,743 ======= ========== ======= ==========
See Notes to Consolidated Financial Statements - Unaudited (Continued) 6 BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months For the Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 2001 2000 2001 2000 ---------- ------- ---------- ------- Earnings per share (1) Basic earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... 0.24 N/A 0.42 N/A Basic earnings per share from discontinued operations ..................................... - N/A - N/A Basic earnings per share from extraordinary item . - N/A - N/A Basic earnings per share from cumulative effect of a change in accounting principle ............ - N/A 0.03 N/A ---------- ------- ---------- ------- Basic earnings per share ......................... 0.24 N/A 0.45 N/A ========== ======= ========== ======= Diluted earnings per share before extraordinary item and cumulative effect of a change in accounting principle ........................... 0.19 N/A 0.34 N/A Diluted earnings per share from discontinued operations ..................................... - N/A - N/A Diluted earnings per share from extraordinary item - N/A - N/A Diluted earnings per share from cumulative effect of a change in accounting principle ............ - N/A 0.03 N/A ---------- ------- ---------- ------- Diluted earnings per share ....................... 0.19 N/A 0.37 N/A ========== ======= ========== ======= Basic weighted average number of common shares outstanding .................................... 36,535,810 N/A 36,519,091 N/A ========== ======= ========== ======= Diluted weighted average number of common and common equivalent shares outstanding ........... 51,275,621 N/A 50,909,002 N/A ========== ======= ========== ======= (1) In prior periods our capital structure included a dividend preference for our Class A shareholders. As a consequence of the dividend preference we used the two-class method to calculate our earnings per share. During the 2001 second quarter our shareholders voted to eliminate the dividend preference. As a result we will no longer use the two-class method to calculate our earnings per share as of January 1, 2001. If the two-class method for calculating earnings per share was utilized through March 31, 2001, the diluted earnings per share for the six months ended June 30, 2001 would remain unchanged. See Notes to Consolidated Financial Statements - Unaudited (Continued)
7 BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 2001 Unearned Compen- Addi- sation Other Compre- tional Restricted Compre- hensive Common Paid-in Retained Stock hensive (In thousands) Income Stock Capital Earnings Grants Income Total ------- ------ -------- -------- ---------- -------- -------- BALANCE, DECEMBER 31, 1999 .................. $ 426 $145,399 $122,639 $ (5,633) $(26,945) $235,886 Net income ................................ $12,409 - - 12,409 - - 12,409 -------- Other comprehensive income, net of tax: Unrealized gain on securities available for sale ............................. 6,884 Reclassification adjustment for net gains included in net income ............... (668) ------- Other comprehensive income ................ 6,216 ------- Comprehensive income ........................ $18,625 ======= Dividends on Class A common stock ........... - - (1,601) - - (1,601) Dividends on Class B common stock ........... - - (453) - - (453) Exchange of Class A restricted stock for participation in deferred compensation plan (7) (7,779) - 4,599 - (3,187) Exercise of Class B common stock options .... 2 634 - - - 636 Tax effect relating to the exercise of stock options ............................ - 152 - - - 152 Purchase and retirement of Class A common stock ............................. (6) (3,855) - - - (3,861) Issuance of Class A restricted common stock for acquisitions .......................... - 178 - - - 178 Forfeited Class A restricted common stock ... - (123) - 103 - (20) Amortization of unearned compensation restricted stock grants .................. - - - 439 - 439 Net change in unrealized appreciation on securities available for sale-net of deferred income taxes ..................... - - - - 6,216 6,216 ------ -------- -------- ---------- -------- -------- BALANCE, JUNE 30, 2000 ...................... $ 415 $134,606 $132,994 $ (492) $(20,729) $246,794 ====== ======== ======== ========== ======== ======== BALANCE, DECEMBER 31, 2000 .................. $ 366 $103,745 $143,471 $ (391) $ 1,630 $248,821 Net income ................................ $16,568 16,568 - - 16,568 ------- Other comprehensive income, net of tax: Unrealized gain on securities available for sale ............................. 10,515 Accumulated gains associated with cash flow hedge ........................... 301 Reclassification adjustment for net gains included in net income ............... (257) ------- Other comprehensive income ................ 10,559 ------- Comprehensive income ........................ $27,127 ======= Dividends on Class A Common Stock ........... - - (1,876) - - (1,876) Dividends on Class B Common Stock ........... - - (253) - - (253) Exercise of Class A common stock options .... 1 404 - - - 405 Tax effect relating to the exercise of stock options ............................ - 63 - - - 63 Issuance of Class A common stock upon conversion of subordinated debentures ..... - 25 - - - 25 Amortization of unearned compensation ...... - restricted stock grants .................. - - - 101 - 101 Net change in other comprehensive income, net of income taxes ........................... - - - - 10,559 10,559 ------ -------- -------- --------- -------- -------- BALANCE, JUNE 30, 2001 ...................... $ 367 $104,237 $157,910 $ (290) $ 12,189 $274,413 ====== ======== ======== ========= ======== ======== See Notes to Consolidated Financial Statements - Unaudited
8 BankAtlantic Bancorp, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Six Months (In thousands) Ended June 30, --------------------- 2001 2000 -------- -------- OPERATING ACTIVITIES: Income before discontinued operations extraordinary item and cumulative effect of a change in accounting principle ................................ $ 15,430 $ 8,684 Income from discontinued operations ................... -- 259 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 * ......................... 7,573 15,826 Change in real estate inventory ....................... (1,131) (97) Equity in joint venture losses (earnings) ............. (1,196) 411 Loans held for sale activity, net ..................... (17,813) (98,792) Proceeds from sales of loans classified as held for sale ............................................ 13,002 23,824 Gains on securities activities, net ................... (934) (318) Gains on sales of property and equipment .............. (367) (240) Depreciation, amortization and accretion, net ......... 3,298 4,418 Amortization of cost over fair value of net assets acquired ..................................... 2,074 2,040 Decrease (increase) in deferred tax asset, net ........ 2,667 (916) Trading activities, net ............................... 12,444 6,515 Decrease (increase) in accrued interest receivable .... 6,959 (7,945) Decrease (increase) in other assets ................... (25,335) 3,943 Increase in other liabilities ......................... 14,832 9,083 -------- -------- Net cash provided (used) in operating activities ...... 32,641 (29,839) -------- -------- Investing activities: Proceeds from redemption and maturities of investment securities and tax certificates ..................... 129,813 56,487 Purchase of investment securities and tax certificates (102,085) (290,801) Purchases of securities available for sale ............ (237,894) (79,874) Proceeds from sales and maturities of securities available for sale .................................. 228,969 166,534 Proceeds from sales of FHLB stock ..................... 512 13,657 FHLB stock acquired ................................... (5,000) (8,205) Purchases and net originations of loans and leases .... (123,899) (68,309) Proceeds from sales of real estate owned .............. 3,490 2,089 Net additions to office property and equipment ........ (5,586) (3,234) Acquisition, net of cash acquired ..................... (655) (210) Investment in and advances to joint ventures, net ..... (4,464) (7,324) -------- -------- Net cash used in investing activities ................. (116,799) (219,190) -------- -------- FINANCING ACTIVITIES: Net increase in deposits .............................. 136,020 110,427 Repayments of FHLB advances ........................... (275,246) (805,050) Proceeds from FHLB advances ........................... 365,000 696,004 Net increase (decrease) in securities sold under agreements to repurchase ............................ (220,788) 253,279 Net increase (decrease) in federal funds purchased .... 97,300 (5,900) Repayment of notes and bonds payable .................. (27,333) (12,849) Proceeds from notes and bonds payable ................. 23,508 34,678 Issuance of common stock upon exercise of stock options 405 636 Retirement of subordinated debentures ................. -- (25,083) Payments to acquire and retire common stock ........... -- (3,861) Common stock dividends paid ........................... (2,129) (2,083) -------- -------- Net cash provided in financing activities ............. 96,737 240,198 -------- -------- Increase in cash and cash equivalents ................. 12,579 (8,831) Cash and cash equivalents at beginning of period ...... 86,693 90,383 -------- -------- Cash and cash equivalents at end of period ............ $ 99,272 $ 81,552 ======== ======== * Provision for credit losses represents provision for loan losses, REO and tax certificates. See Notes to Consolidated Financial Statements - Unaudited (Continued) 9 BankAtlantic Bancorp, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Six Months Ended June 30, --------------------- (In thousands) 2001 2000 -------- -------- SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Interest paid ................................. $ 108,908 $ 103,294 Income taxes paid ............................. 10,875 2,000 Loans transferred to real estate owned ........ 2,375 3,766 Loan charge-offs .............................. 10,113 13,638 Tax certificate net charge-offs ............... 1,327 549 Increase in equity for the tax effect related to the exercise of employee stock options ... 63 152 Change in other comprehensive income .......... 16,370 10,151 Change in deferred taxes on other comprehensive income ...................................... (5,811) (3,935) Change in stockholders' equity from other comprehensive income ........................ 10,559 6,216 Reduction in stockholders' equity from the retirement of restricted stock .............. - (3,187) Increase in other liabilities from the retirement of restricted stock .............. - 3,187 Issuance of common stock upon acquisition ..... - 178 Accrual for the purchase of tax certificates, paid in July ................................ - 10,167 Loan securitizations .......................... - 33,577 See Notes to Consolidated Financial Statements - Unaudited 10 BankAtlantic Bancorp, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. PRESENTATION OF INTERIM FINANCIAL STATEMENTS We are a Florida-based financial services holding company with $4.8 billion in assets and we own, directly or indirectly, BankAtlantic, Levitt Corporation, and Ryan, Beck & Co., LLC. BankAtlantic, a federal savings bank headquartered in Fort Lauderdale, Florida, provides traditional retail and commercial banking products and services and engages in a wide range of related activities. Through Levitt Corporation, a subsidiary of BankAtlantic, we engage in real estate development and real estate investment activities primarily in Florida. Our wholly-owned subsidiary, Ryan, Beck, is an investment banking firm which provides a wide range of investment banking, brokerage and investment management services. All significant inter-company balances and transactions have been eliminated in consolidation, including $29.5 million of loans from BankAtlantic to Levitt Corporation. In management's opinion, the accompanying consolidated financial statements contain such adjustments necessary to present fairly our consolidated financial condition at June 30, 2001, December 31, 2000 and June 30, 2000, the consolidated results of operations for the three and six months ended June 30, 2001 and 2000, the consolidated stockholders' equity and comprehensive income for the six months ended June 30, 2001 and 2000 and the consolidated cash flows for the six months ended June 30, 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 our Annual Report on Form 10-K for the year ended December 31, 2000 and our Form 10-Q for the three months ended March 31, 2001. 2. COMMON STOCK On May 24, 2001 we amended our articles of incorporation to grant voting rights to holders of our Class A Common Stock, make the Class B Common Stock convertible into Class A Common Stock on a share for share basis, and equalize the cash dividends payable on our Class A Common Stock and Class B Common Stock. As a consequence of the amendment, our Class A shareholders are entitled to one vote per share, which in the aggregate represent 53% of the combined voting power of the Class A Common Stock and the Class B Common Stock. Our Class B Common Stock represents the remaining 47% of the combined vote. The fixed voting percentages will be eliminated, and shares of Class B Common Stock will be entitled to only one vote per share, from and after the date that BFC or its affiliates no longer own in the aggregate at least 2,438,062 shares of Class B Common Stock (which amount is 50% of the number of shares it now holds). 3. EXTRAORDINARY ITEM In February 2000, the Company repurchased $25 million in aggregate principal amount of the Company's 5-5/8% Convertible Subordinated Debentures at a purchase price of $18.75 million and recognized a $3.5 million (net of income tax) extraordinary gain upon the retirement of these Debentures. 4. EARNINGS PER SHARE We were required to use the two-class method to report our earnings per share in prior periods. This method was required as a result of the Class A shareholders' having a right to receive a per share cash dividend equal to at least 110% of any cash dividend paid per share on our Class B Common Stock. Our articles of incorporation were amended on May 24, 2001 to equalize the cash dividend payable on our Class A and Class B Common Stock. As a result we will no longer use the two-class method to calculate our earnings per share as of January 1, 2001. See our Annual Report on Form 10-K for a detailed explanation on the calculation of earnings per share using the two-class method. Subsequent to January 1, 2001, basic earnings per share were computed based upon the weighted-average number of common shares outstanding during the periods. Diluted earnings per share were computed based upon the weighted- 11 average number of common shares outstanding plus the assumed issuance of common shares for all potentially dilutive securities. 5. 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 and six months ended June 30, 2001, Ryan Beck realized net revenues from principal transactions of $3.9 million and $8.4 million, respectively, compared to $4.0 million and $9.0 million during the same 2000 periods. Furthermore, included in other liabilities at June 30, 2001 and December 31, 2000 was $40.2 million and $12.0 million, respectively, of securities sold, not yet purchased, relating to Ryan Beck trading activities. Ryan Beck's trading securities consisted of the following (in thousands): June 30, December 31, June 30, 2001 2000 2000 ------- ----------- ------- Debt obligations: States and municipalities .. $ 9,791 $ 11,731 $ 8,532 Corporations ............... 290 227 376 U.S. Government and agencies 16,640 24,476 3,734 Corporate equities ......... 4,094 3,401 4,154 Certificates of deposit .... 298 3,722 0 ------- ---------- -------- $31,113 $ 43,557 $ 16,796 ======= ========== ======== 6. 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. During the second quarter of 2001, a syndicated commercial real estate loan that had been classified held to maturity was transferred to held for sale. The change in classification reflects management's intent to sell the loan in the foreseeable future. Loans held for sale consisted of the following (in thousands): June 30, December 31, June 30, 2001 2000 2000 --------- ----------- --------- Residential ............... $ 4,904 $ 0 $ 244,141 Commercial real estate .... 22,713 0 0 Commercial syndication .... 79,901 80,016 123,868 --------- ----------- --------- Total loans held for sale $ 107,518 $ 80,016 $ 368,009 ========= =========== ========= 7. 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 Core Communities, Inc. ("Core Communities" f/k/a St. Lucie West Holding Corporation) and Levitt and Sons as well as Levitt Corporation's joint venture activities. Core Communities 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. 12 Real estate held for development and sale and joint ventures consisted of the following: June 30, December 31, June 30, 2001 2000 2000 -------- ----------- -------- Land and land development costs ... $ 86,907 $ 87,989 $ 90,180 Construction costs ................ 19,657 15,254 14,994 Other costs ....................... 8,022 4,775 1,747 Equity investments in joint venture 6,151 7,559 7,214 Loans to joint ventures ........... 33,809 29,125 39,757 Other ............................. - 3,053 3,082 -------- ----------- -------- $ 154,546 $ 147,755 $ 156,974 ======== =========== ======== The components of net revenues from sales of real estate were as follows: For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------- ------------------- (In thousands) 2001 2000 2001 2000 -------- -------- -------- -------- Sales of real estate ............. $ 33,176 $ 16,775 $ 57,954 $ 39,986 Cost of sales .................... 25,683 14,001 44,631 33,817 -------- -------- -------- -------- Gains on sales of real estate .. 7,493 2,774 13,323 6,169 Gains (losses) on joint venture activities ..................... 456 (128) 1,196 (412) -------- -------- -------- -------- Net revenues from sales of real estate ......................... $ 7,949 $ 2,646 $ 14,519 $ 5,757 ======== ======== ======== ======== 8. COMPREHENSIVE INCOME The income tax provision relating to the comprehensive income reclassification adjustment in the Consolidated Statements of Stockholders' Equity and Comprehensive Income for the six months ended June 30, 2001 and 2000 was $145,000 and $359,000, respectively. 9. RESTRUCTURING CHARGE During December 2000, we adopted a plan to terminate our ATM relationships with Wal*Mart and K-Mart. The restructuring of the ATM network is part of a company-wide program to review all lines of business. These reviews, which will continue in future quarters, are designed to identify underperforming units with a view towards improving performance. The table below summarizes amounts paid associated with the restructuring liability included in other liabilities during the six months ended June 30, 2001: (in thousands) Amount Paid Initial During Ending Type of Restructuring Charge Amount Period Adjustments Balance - -------------------------------- ------- ------- ----------- ------- Lease contract termination costs $ 1,768 $ (856) $ (219) $ 693 De-installation costs .......... 305 (15) - 290 Other .......................... 74 - - 74 ------- ------- ---------- ------ Total restructuring charge $ 2,147 $ (871) $ (219) $ 1,057 ======= ======= =========== ====== 13 During the 2001 second quarter, the restructuring charge liability established during the fourth quarter 2000 was adjusted downward to reflect lower ATM lease termination costs than had been projected when the restructuring charge was first determined. The restructuring of our ATM network is anticipated to be completed during the fourth quarter of 2001. 10. 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 six months ended June 30, 2001 were interest rate swaps and forward contracts. We used interest rate swap contracts to manage our interest rate risk. The callable receive fixed swaps were issued in an effort to reduce our interest rate risk associated with our callable 7% certificate accounts. During the 2001, second quarter, we exercised the call option and retired the 7% certificate accounts. We expect the swaps to be called in the foreseeable future. The forward contracts were held for trading purposes. The three and five year pay fixed swaps were originally purchased to reduce exposure to interest rate risk associated with our Business Money Market Deposit product. We did not elect hedge accounting treatment for the swaps. Due to changes in the interest rate environment, we shifted our interest rate risk strategy and designated the swaps from hedging our Business Money Market Deposit product to hedging the variable cash flows associated with the forecasted interest payments on certain variable rate FHLB Advances, and elected cash flow hedge accounting treatment. The swaps were designated as a cash flow hedge on June 15, 2001. Our risk management objective and strategy is to fix the cash outflow on forecasted interest payments associated with the LIBOR based advances at an approximate rate of 5.09%. The risk being hedged is the interest rate risk associated with the variability of cash outflows relating to the advances. The net gain recognized from the inception of the hedge through June 30, 2001 representing the amount of hedge ineffectiveness was $15,000. The net gain included in other comprehensive income from this hedging relationship was $301,000. These net gains will be recognized in earnings as interest expense is accrued on the FHLB advances. The net amount of existing losses on the swaps included in other liabilities expected to be reclassified into earnings within the next 12 months is $533,000. The hedging relationship is expected to last over the term of the swaps. The following table outlines the notional amount and fair value of our derivatives outstanding at June 30, 2001: (in thousands)
Paying Receiving Notional Fair Index/Fixed Index/Fixed Termination Amount Value Amount Amount Date -------- -------- ----------- ----------- ----------- Five year callable receive fixed swaps $ 30,000 $ 0 3 mo. LIBOR 7.13% 1/16/2006 One year callable receive fixed swaps. $ 15,000 $ 0 1 mo. LIBOR 7.06% 7/23/2001 Five year pay fixed swaps ............ $ 25,000 $ (39) 5.73% 3 mo. LIBOR 1/05/2006 Three year pay fixed swaps ........... $ 50,000 $ (934) 5.81% 3 mo. LIBOR 12/28/2003 ======== ======== =========== =========== =========== Forward contract to purchase adjustable rate mortgage-backed Securities ........................ $176,823 $ 489 ======== ========
11. 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 14 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. 15 The Company evaluates segment performance based on net income after tax. The table below is segment information for income before discontinued operations, extraordinary item and the cumulative effect of a change in accounting principle for the three months ended June 30, 2001 and 2000:
Bank Operations --------------------------------------- Capital Commercial Community Levitt Parent Segment (in thousands) Markets Banking Banking Corporation Ryan Beck Company Total ---------- ----------- ----------- ----------- ----------- --------- ---------- 2001 - ---- Interest income ............. $ 46,487 $ 30,178 $ 7,016 $ 344 $ 580 $ (34) $ 84,571 Interest expense and overhead (35,687) (17,761) (4,225) (60) (206) (5,118) (63,057) Provision for loan losses ... 43 (5,404) 1,321 0 0 0 (4,040) Non-interest income ......... 589 868 2,868 8,657 10,338 758 24,078 Segment profits and losses before taxes................ 9,856 6,234 1,837 2,078 (915) (5,853) 13,237 Provision for income taxes .. 3,621 2,291 675 421 (327) (2,049) 4,632 ---------- ----------- ----------- ----------- ----------- --------- ---------- Segment net income (loss) ... $ 6,235 $ 3,943 $ 1,162 $ 1,657 $ (588) $ (3,804) $ 8,605 ========== =========== =========== =========== =========== ========= ========== Segment average assets ...... $ 2,654,965 $ 1,360,428 $ 323,421 $ 166,661 $ 76,306 $ 108,570 $ 4,690,351 ========== =========== =========== =========== =========== ========= ========== 2000 - ---- Interest income ............. $ 43,973 $ 27,964 $ 8,241 $ 492 $ 460 $ 311 $ 81,441 Interest expense and overhead (35,599) (16,201) (5,028) (425) (70) (5,513) (62,836) Provision for loan losses ... (74) (2,986) (1,473) 0 0 0 (4,533) Non-interest income ......... 635 84 2,909 3,211 12,718 (113) 19,444 Segment profits and losses before taxes ............... 7,742 7,212 (650) (863) 820 (6,797) 7,464 Provision for income taxes .. 2,962 2,759 (249) (947) 315 (2,379) 2,461 ---------- ----------- ---------- ----------- ------------ --------- ---------- Segment net income (loss) ... $ 4,780 $ 4,453 $ (401) $ 84 $ 505 $ (4,418) $ 5,003 ========== =========== ========== =========== =========== ========= ========== Segment average assets ...... $ 2,483,892 $ 1,150,649 $ 357,271 $ 153,644 $ 33,998 $ 91,458 $ 4,270,912 ========== =========== ========== =========== =========== ========= ==========
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16 The table below is segment information for income before discontinued operations, extraordinary item and the cumulative effect of a change in accounting principle for the six months ended June 30, 2001 and 2000:
Bank Operations ------------------------------------- Capital Commercial Community Levitt Parent Segment (in thousands) Markets Banking Banking Corporation Ryan Beck Company Total ---------- ---------- ---------- ----------- ----------- --------- ---------- 2001 Interest income ............. $ 93,106 $ 62,153 $ 14,613 $ 795 $ 1,156 $ 9 $ 171,832 Interest expense and overhead (71,332) (36,954) (8,927) (150) (309) (10,734) (128,406) Provision for loan losses ... (120) (9,650) 2,969 0 0 0 (6,801) Non-interest income ......... 711 1,595 5,625 15,953 19,471 1,080 44,435 Segment profits and losses before taxes ............... 18,636 14,201 3,277 3,629 (2,753) (12,722) 24,268 Provision for income taxes .. 6,923 5,287 1,217 844 (980) (4,453) 8,838 ---------- ---------- ---------- ---------- ---------- --------- ---------- Segment net income (loss) ... $ 11,713 $ 8,914 $ 2,060 $ 2,785 $ (1,773) $ (8,269) $ 15,430 ========== ========== ========== ========== ========== ========= ========== Segment average assets ...... $ 2,624,098 $ 1,308,896 $ 364,290 $ 166,210 $ 68,064 $ 97,882 $ 4,629,440 ========== ========== ========== ========== ========== ========= ========== 2000 Interest income ............. $ 87,336 $ 52,759 $ 17,010 $ 1,013 $ 941 $ 851 $ 159,910 Interest expense and overhead (69,910) (30,032) (9,915) (665) (278) (10,935) (121,735) Provision for loan losses ... (217) (3,647) (11,456) 0 0 0 (15,320) Non-interest income ......... 692 706 5,784 10,626 26,173 (101) 43,880 Segment profits and losses before taxes ............... 15,626 16,666 (8,838) 2,522 743 (13,142) 13,577 Provision for income taxes .. 5,915 6,300 (3,315) 312 282 (4,601) 4,893 ---------- ---------- ---------- ---------- ---------- --------- ---------- Segment net income (loss) ... $ 9,711 $ 10,366 $ (5,523) $ 2,210 $ 461 $ (8,541) $ 8,684 ========== ========== ========== ========== ========== ========= ========== Segment average assets ...... $ 2,479,013 $ 1,073,633 $ 385,662 $ 153,654 $ 36,075 $ 94,917 $ 4,222,954 ========== ========== ========== ========== ========== ========= ==========
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 17 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 For the Six Months Ended (in thousands) June 30, June 30, -------------------------- -------------------------- Total average assets 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Total assets for reportable segments ............. $ 4,690,351 $ 4,270,912 $ 4,629,440 $ 4,222,954 Assets in overhead ............................... 110,451 118,048 120,707 108,191 ----------- ----------- ----------- ----------- Total consolidated assets ........................ $ 4,800,802 $ 4,388,960 $ 4,750,147 $ 4,331,145 =========== =========== =========== =========== Non-interest income Total non-interest income for reportable segments $ 24,078 $ 19,444 $ 44,435 $ 43,880 Items included in interest expense and overhead: Transaction fee income ......................... 3,890 3,221 7,770 6,472 Gains on sales of property and equipment ....... 20 57 367 240 Other fees ..................................... 1,032 1,079 1,762 1,958 ----------- ----------- ----------- ----------- Total consolidated non-interest income ........... $ 29,020 $ 23,801 $ 54,334 $ 52,550 =========== =========== =========== =========== Interest income Total interest income for reportable segments .... $ 84,571 $ 81,441 $ 171,832 $ 159,910 Deferred interest income on real estate activities (107) 371 (282) (665) Elimination entries .............................. (808) (1,666) (1,642) (1,875) ----------- ----------- ----------- ----------- Total consolidated interest income ............... $ 83,656 $ 80,146 $ 169,908 $ 157,370 =========== =========== =========== ===========
12. SUBSEQUENT EVENTS During July 2001, we sold 5.1 million shares of our Class A Common Stock in an underwritten public offering at a price of $8.50 per share. The net proceeds after underwriting discounts and expenses were $40.3 million. The net proceeds of the offering will be used to reduce debt at the holding company level and for general corporate purposes. On July 13, 2001, we exercised our right to redeem our subordinated investment notes. We had outstanding $34.8 million of subordinated investment notes with an 11% weighted average interest rate at June 30, 2001. The notes will be redeemed on August 15, 2001 at 100% of the principal amount plus accrued interest. 13. NEW ACCOUNTING PRONOUNCEMENTS In July 2001, the FASB issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies criteria in which intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. Statement 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lives Assets to Be Disposed Of. We are required to adopt the provisions of Statement 141 immediately. The goodwill on our Statement of Financial Condition will continue to be amortized prior to the adoption of Statement 142. We will adopt Statement 142 on January 1, 2002. 18 In connection with the transitional goodwill impairment evaluation, Statement 142 will require us to perform an assessment of whether there is an indication that goodwill is impaired as of the date of adoption. To accomplish this we must identify our reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. We will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and we must perform the second step of the transitional impairment test. In the second step, we must compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in our statement of earnings. As of the date of adoption, the Company expects to have unamortized goodwill in the amount of $47.4 million that will be subject to the transition provisions of Statements 141 and 142. Amortization expense related to goodwill was $4.1 million and $2.1 million for the year ended December 31, 2000 and the six months ended June 30, 2001, respectively. Because of the extensive effort needed to comply with adopting Statements 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on our financial statements at the date of this report, including whether any transitional impairment losses would be required to be recognized as the cumulative effect of a change in accounting principle. On July 5, 2001, the FASB board voted to issue Statement No. 143, "Accounting for Asset Retirement Obligations", That standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The standard is effective for fiscal years beginning after June 15, 2002, with earlier application encouraged. The potential impact of Statement 143 on our Statement of Operations and Statement of Financial Condition is currently under review by management. 14. RECLASSIFICATIONS Certain amounts for prior periods have been reclassified to conform with the statement presentation for 2001. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 19 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 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; expectations of performance improvements at our investment banking and leasing subsidiaries; the impact of the implementation of FASB Statement 141 and 142 and other factors discussed elsewhere in 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 For the Six Months Ended June 30, Ended June 30, -------------------- ------------------- (In thousands) 2001 2000 2001 2000 -------- -------- -------- -------- Income Statement Total interest income .................. $ 83,656 $ 80,146 $169,908 $157,370 Total interest expense ................. 50,574 50,457 105,155 97,629 ------- ------- ------- ------- Net interest income .................... 33,082 29,689 64,753 59,741 Provision for loan losses .............. 4,040 4,533 6,801 15,320 Gains on sales of securities, net ...... 1,221 202 1,356 252 Other non-interest income .............. 27,799 23,599 52,978 52,298 Non-interest expense ................... 44,825 41,493 88,018 83,394 Income before income taxes, discontinued operations, extraordinary item and cumulative effect of a change in ..... ------- ------- ------- ------- accounting principle ................. 13,237 7,464 24,268 13,577 Provision for income taxes ............. 4,632 2,461 8,838 4,893 Income before discontinued operations, extraordinary item and cumulative ..... ------- ------- ------- ------- effect of a change in accounting principle ............................. 8,605 5,003 15,430 8,684 Discontinued operations, net of taxes .. - 259 - 259 Extraordinary item, net of tax ......... - - - 3,466 Cumulative effect of a change in accounting principle, net of tax ...... - - 1,138 - ------- ------- ------- ------- Net income ............................. $ 8,605 $ 5,262 $ 16,568 $ 12,409 ======= ======= ======= =======
OVERVIEW FOR THE THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SAME 2000 PERIOD: Income before discontinued operations, extraordinary item and cumulative effect of a change in accounting principle increased 72% from 2000. This improvement resulted primarily from increased net interest income, a reduction in our provision for loan losses, higher gains on the sales of securities and a substantial increase in income from real estate 20 operations. The above improvements in income were partially offset by higher compensation expense, a decline in income from investment banking operations and an increase in other operating expenses. Net interest income increased by 11.4% from 2000. The improvement resulted from higher average earning assets and an improvement in the net interest margin. The earning asset growth was primarily related to growth in the commercial real estate loan portfolio and, secondarily, higher securities average balances. The improvement in the net interest margin reflects the rapid decline in interest rates during the first six months of 2001. The provision for loan losses decreased $493,000. The decline in the provision for loan losses primarily resulted from a continuing decline in charge-offs and required reserves associated with our small business and indirect loan portfolios partially offset by additional reserves allocated to our syndication and lease financing portfolios. Non-interest income increased by 21.9% from the 2000 quarter. The improvement in non-interest income primarily resulted from a substantial increase in income from our real estate operations as well as higher transaction account fees and gains on the sales of assets. The above increases in non-interest income were partially offset by lower revenues from our investment banking operations. Non-interest expense increased by 8.0% from 2000. The increase primarily resulted from higher compensation, occupancy and operating expenses. FOR THE SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SAME 2000 PERIOD: Income before discontinued operations, extraordinary item and cumulative effect of a change in accounting principle increased 77.7% from 2000. The improvement primarily resulted from the items discussed above. 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 and we recognized $259,000 of income from discontinued operations, net of tax. Income from discontinued operations resulted from the sale of a building used in the mortgage servicing operations. NET INTEREST INCOME
For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------------- --------------------------- (In thousands) 2001 2000 Change 2001 2000 Change ------- ------- ------ -------- ------- ------ Interest and fees on loans and leases .... $ 61,580 $ 61,211 $ 369 $125,431 $120,335 $ 5,096 Interest on securities available for sale 13,284 12,934 350 26,649 26,574 75 Interest and dividends on other investments and trading securities ..... 8,792 6,001 2,791 17,828 10,461 7,367 Interest on deposits ..................... (23,089) (22,267) (822) (47,533) (42,105) (5,428) Interest on advances from FHLB ........... (14,660) (15,692) 1,032 (29,361) (31,540) 2,179 Interest on securities sold under agreements to repurchase ............... (7,142) (7,407) 265 (16,774) (13,989) (2,785) Interest on subordinated debentures, notes and bonds payable and guaranteed preferred interests in the Company's junior Subordinated Debentures ......... (7,130) (6,932) (198) (14,505) (13,521) (984) Capitalized interest on real estate developments and joint ventures ........ 1,447 1,841 (394) 3,018 3,526 (508) ------- ------- ------ ------- ------- ------ Net interest income ...................... $ 33,082 $ 29,689 $ 3,393 $ 64,753 $ 59,741 $ 5,012 ======= ======= ====== ======= ======= ====== Net interest margin ...................... 3.03% 2.95% .08% 2.97% 3.01% (.04)% ======== ======= ====== ======= ======= ======
21 FOR THE THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SAME 2000 PERIOD: Net interest income increased by 11.4% from 2000. The increase was due to higher average loan, securities available for sale and securities held to maturity balances as well as a slight improvement in our net interest margin. The growth in our loan portfolio was primarily attributable to commercial real estate fundings and the origination of home equity loans. This growth resulted from our strategy to emphasize commercial real estate loans and to grow our core commercial and retail banking business. This growth was partially offset by declines in our small business, indirect consumer, syndication and international loan portfolios. The decline in the above portfolio balances reflects our strategic decision to exit non-mortgage syndication, indirect consumer and correspondent financial institution lending as well as reduce our small business loan production. The growth in our securities portfolio primarily resulted from our purchases of adjustable rate mortgage-backed securities. The securities were purchased to reposition our portfolio in reaction to the significant decline in interest rates during the first six months of 2001. The net interest margin improved by 8 basis points from 2000. The increased margin primarily resulted from rates on interest bearing liabilities declining faster than yields on interest earning assets. Rate declines on interest-bearing liabilities were due to lower rates paid on deposit products, FHLB advances and short-term borrowings due to the rapid decline in interest rates during 2001. These rate declines were partially offset by 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. Lower yields on interest earning assets reflected the re-pricing of our floating rate loans and securities downward due to the declining interest rate environment during 2001. FOR THE SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SAME 2000 PERIOD: Net interest income increased by 8.4% from 2000. Total interest income increased by $12.5 million and total interest expense increased by $7.5 million. The increase in net interest income primarily resulted from the items discussed above for the three months ended June 30, 2001 except that the net interest margin during the 2001 period declined 4 basis points from the 2000 period. The decline in the net interest margin resulted from higher rates on deposit products and additional subordinated investment note borrowings. The higher deposit rates were primarily from money market accounts and callable certificates of deposits. During the second quarter of 2001, the rates on money market accounts were significantly lowered and we exercised our right to redeem all callable certificate accounts. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 22 PROVISION FOR LOAN LOSSES For the For the Three Months Six Months Ended June 30, Ended June 30, ------------------- --------------------- (in thousands) 2001 2000 2001 2000 ------- -------- ------- -------- Balance, beginning of period .. $ 47,128 $ 47,650 $ 47,000 $ 44,450 Charge-offs: Syndication loans ........... 0 0 0 0 Commercial business loans ... 0 0 0 (24) Commercial real estate loans 0 0 0 0 Small business - real estate 0 (67) (12) (85) Small business - nonmortgage (840) (2,964) (2,184) (6,095) Lease financing ............. (3,397) (402) (5,382) (922) Consumer loan - indirect .... (669) (1,025) (1,692) (4,394) Consumer loans - direct ..... (314) (283) (691) (1,777) Residential real estate loans 0 (241) (152) (341) ------- -------- ------- -------- (5,220) (4,982) (10,113) (13,638) ------- -------- ------- -------- Recoveries: Small business - real estate 0 0 0 42 Small business - nonmortgage 637 174 1,478 287 Lease financing ............. 705 108 989 162 Commercial business loans ... 18 28 229 0 Commercial real estate loans 7 0 7 2 Residential real estate loans 91 96 156 97 Consumer loans - indirect ... 480 847 1,248 1,545 Consumer loans - direct ..... 132 196 223 383 ------- -------- ------- -------- 2,070 1,449 4,330 2,518 ------- -------- ------- -------- Net charge-offs ............... (3,150) (3,533) (5,783) (11,120) Provision for loan losses ..... 4,040 4,533 6,801 15,320 ------- -------- ------- -------- Balance, end of period ........ $ 48,018 $ 48,650 $ 48,018 $ 48,650 ======= ======== ======= ======== The provision for loan losses declined by $493,000 during the three months ended June 30, 2001 compared to the same 2000 period. The decline in the provision for loan losses primarily resulted from a continuing decline in charge-offs and required reserves associated with our small business and indirect loan portfolios. These portfolios were responsible for the majority of our provisions for loan losses in prior periods. The above improvements in the provision for loan losses were partially offset by additional reserves allocated to our syndication and lease financing portfolios. We increased specific reserves on one syndication loan due to a decline in the financial condition of the borrower. The leasing portfolio experienced a significant increase in charge-offs during the current period with a corresponding increase in delinquencies. As a consequence of these adverse trends we increased our reserves on the leasing portfolio and made several management and strategic decisions. These decisions include reducing lease financing originations, modifying our underwriting process, reducing staff and engaging a consulting firm to review all aspects of our leasing operations. We believe that these strategic initiatives will improve the operating results of our leasing subsidiary. The decreased provision for loan losses during the 2001 six month period reflected improvements from the significant losses experienced in our small business and indirect consumer lending portfolios during the comparable 2000 period. 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 and non-mortgage syndication loans in June 2000. The improved loan loss experiences in the portfolios were partially offset by the additional reserves required for our syndication and lease financing portfolios discussed above. 23 At the indicated dates, our non-performing assets and potential problem loans were (in thousands): June 30, December 31, 2001 2000 -------- ----------- NONPERFORMING ASSETS Non-accrual: Tax certificates .................................. $ 2,506 $ 2,491 Loans and leases .................................. 18,282 18,106 ------ ------ Total non-accrual ............................... 20,788 20,597 ------ ------ Repossessed assets: Real estate owned, net of allowance ............... 4,321 4,499 Vehicles and equipment ............................ 325 1,742 ------ ------ Total repossessed assets ........................ 4,646 6,241 ------ ------ Total non-performing assets ....................... $25,434 $26,838 ====== ====== POTENTIAL PROBLEM LOANS Contractually past due 90 days or more ............ $ 46 $ 7,086 Performing impaired loans net of specific allowance 25,737 15,001 Restructured loans ................................ 629 0 Delinquent residential loans purchased ............ 4,291 5,389 ------ ------ Total potential problem loans ..................... $30,703 $27,476 ====== ====== Non-performing assets were slightly lower at June 30, 2001 compared to December 31, 2000. Nonaccrual assets remained at December 2000 levels while repossessed assets improved. We experienced declines in nonaccrual commercial, small business and consumer loans partially offset by increases in non-accrual leases and syndication loans. One $7.5 million syndication loan, which was included in performing impaired loans at December 31, 2000, was moved to non-accrual loans at June 30, 2001 due to the deteriorating financial condition of the borrower. The $2.6 million specific reserve on this loan at December 31, 2000 was increased to $4.8 million at June 30, 2001. The improvement in repossessed assets resulted from fewer repossessed equipment and vehicles obtained from lease financing activities. We began repossessing and selling leased equipment earlier in the collection process during 2001. The increase in potential problem loan balances primarily resulted from the impairment of syndication and commercial non-mortgage loans with an aggregate loan balance of $19.4 million and the restructuring of various non-mortgage small business loans. 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] 24 NON-INTEREST INCOME
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------ ------------------------ 2001 2000 Change 2001 2000 Change (in thousands) ------ ------ ------ ------ ------ ------ BANKING OPERATIONS Loan late fees and other loan income ........... $ 1,157 $ 1,069 $ 88 $ 2,066 $ 2,107 $ (41) Gains on sales of loans held for sale, net of write-down .................................... 9 (367) 376 22 (289) 311 Gains on trading securities and available for sale, net .................................... 1,221 202 1,019 1,356 252 1,104 Transaction fees ............................... 3,890 3,221 669 7,770 6,472 1,298 ATM fees ....................................... 2,654 2,718 (64) 5,306 5,233 73 Other .......................................... 1,119 1,019 100 2,415 1,966 449 ------ ------ ------ ------ ------ ------- Non-interest income from banking operations 10,050 7,862 2,188 18,935 15,741 3,194 ------ ------ ------ ------ ------ ------- LEVITT OPERATIONS Net revenues from sales of real estate ......... 7,949 2,646 5,303 14,519 5,757 8,762 Other .......................................... 681 575 106 1,407 4,879 (3,472) ------ ------ ------ ------ ------ ------- Non-interest income from Levitt operations . 8,630 3,221 5,409 15,926 10,636 5,290 ------ ------ ------ ------ ------ ------- RYAN BECK OPERATIONS Principal transactions ......................... 3,935 4,043 (108) 8,405 9,001 (596) Investment banking ............................. 3,078 3,032 46 4,038 5,039 (1,001) Commissions .................................... 3,189 5,429 (2,240) 6,612 11,664 (5,052) Other .......................................... 138 214 (76) 418 469 (51) ------ ------ ------- ------ ------ ------- Non-interest income from Ryan Beck operations 10,340 12,718 (2,378) 19,473 26,173 (6,700) ------ ------ ------ ------ ------ ------- Total non-interest income ...................... $29,020 $23,801 $ 5,219 $54,334 $52,550 $ 1,784 ====== ====== ====== ====== ====== =======
NON-INTEREST INCOME - BANKING OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SAME 2000 PERIOD: Loan late fees and other loan income increased slightly from 2000. The increase primarily resulted from higher late fees collected on our leasing portfolio and an increase in trade finance loan fees. During the three months ended June 30, 2001 we sold $6.8 million of loans held for sale for a $9,000 gain. The loans sold were qualifying loans under the Community Reinvestment Act ("CRA"). During the three months ended June 30, 2000 we sold loans held for sale for a gain of $247,000, recognized a $86,000 decrease in the valuation allowance on residential loans held for sale and recorded a $700,000 unrealized loss on a syndication loan. Gains on trading and available for sale securities, net during the three months ended June 30, 2001 consisted of the sale of equity securities for a gain of $1.2 million, the sale of fixed rate mortgage backed securities for a $497,000 gain, a $21,000 gain on a derivative instrument and write-downs of a limited partnership investment and an equity security of $54,000 and $418,000, respectively. The partnership and the equity security write-downs were due to other-than-temporary declines in value of the equity investments. During the three months ended June 30, 2000 we securitized $33.6 million of loans held for sale and sold the resulting mortgage-backed securities for a gain of $312,000. In addition, we sold treasury notes for an $18,000 gain and corporate bonds for a $112,000 loss. During the 2001 period transaction fee income increased by 21% from the comparable 2000 period. The improvement in fee income primarily resulted from an increase in fees earned on transaction account overdrafts. 25 During the 2001 period, ATM fee income declined by 2% compared to the same 2000 period. The decline resulted primarily from the termination of our ATM relationship with K-Mart. The decline was substantially offset by a renegotiated profit sharing agreement at certain ATM locations and from Wal*Mart ATM's associated with the restructuring of our ATM network. Wal*Mart agreed to forego all profit sharing in exchange for our leaving the ATM's in its stores until August 31, 2001. Other income remained at 2000 levels. Included in other income during the three months ended June 30, 2001 was a $12,000 gain associated with the sale of a Wal*Mart in-store branch to an unrelated financial institution. FOR THE SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SAME 2000 PERIOD: Loan late fees and other loan income declined slightly 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. The above declines were partially offset by the items discussed above for the three months ended June 30, 2001. During the six months ended June 30, 2001 we sold $13.0 million of CRA loans held for sale for a $22,000 gain. During the six months ended June 30, 2000 we sold $23.4 million of loans held for sale and recorded a $532,000 gain, recognized a $121,000 increase in the valuation allowance on residential loans held for sale and recorded the unrealized loss on a syndication loan discussed above. Gains on trading and available for sale securities, net during the six months ended June 30, 2001 consisted of items discussed above as well as the sale of a $1.0 million mutual fund investment for a $322,000 gain, a $221,000 write-down associated with a limited partnership investment and a $34,000 unrealized gain on derivative instruments. Gains on trading and available for sale securities, net during the six months ended June 30, 2000 consisted of gains on the sale of mortgage-backed securities of $1.0 million, a $781,000 write-down of an equity security and $22,000 gains from government securities trading. The increases in ATM fees and transaction fees were due to the items discussed above during the three months ended June 30, 2001. Other income increased by 23% from 2000. Included in other revenues during the 2001 period was the sale of a branch facility for a $386,000 gain. During the 2000 period other income included a $182,000 gain from the sale of a parcel of land. NON-INTEREST INCOME - LEVITT OPERATIONS Net revenues from sales of real estate represented the net profits on sales of real estate by Levitt and Sons and Core Communities as well as our equity in earnings from real estate joint venture activities. During the second quarter of 2001, Levitt and Sons sold real estate inventory for a net gain of $6.1 million, Core Communities sold developed land for a net gain of $1.3 million and we realized $500,000 of earnings from joint venture activities. During the second quarter of 2000, Levitt and Sons sold real estate inventory for a net gain of $2.1 million, Core Communities sold developed land for a net gain of $701,000 and we incurred a $128,000 loss from joint venture activities. During the six months ended June 30, 2001, Levitt and Sons sold real estate inventory for a net gain of $10.5 million, Core Communities sold developed land for a net gain of $2.8 million and we realized $1.2 million of earnings from joint venture activities. During the six months ended June 30, 2000, Levitt and Sons sold real estate inventory for a net gain of $4.3 million, Core Communities sold developed land for a net gain of $1.9 million and we incurred a $412,000 loss from joint venture activities. During the first six months of 2001 other income declined significantly from the comparable 2000 period. Included in other income during the 2000 period was a $3.9 million gain associated with a sale of a utility expansion receivable to a public municipality. 26 NON-INTEREST INCOME - RYAN BECK OPERATIONS During the second quarter of 2001 compared to the same 2000 period revenues declined by 19%. The decline was primarily the result of reduced agency commissions. The reduced commissions were due to lower investor transaction volume due to a decline in overall financial market transactions. During the six months ended June 30, 2001 compared to the same 2000 period revenues declined by 26%. Revenues in the three major categories of fee income declined during the first six months of 2001 compared to the same 2000 period. Principal transactions, investment banking and commission revenues declined by 7%, 20% and 43%, 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 24% 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 For the Six Months Ended June 30, Ended June 30, ----------------------------- ---------------------------- 2001 2000 Change 2001 2000 Change (In thousands) -------- ------- -------- ------- ------- ------- BANKING OPERATIONS Employee compensation and benefits ............. $ 12,562 $ 11,120 $ 1,442 $ 25,749 $ 22,005 $ 3,744 Occupancy and equipment ........................ 6,172 5,638 534 12,191 11,239 952 Advertising and promotion ...................... 970 1,452 (482) 1,557 2,033 (476) Amortization of cost over fair value of net assets acquired ............................... 711 709 2 1,419 1,417 2 Other .......................................... 6,228 5,334 894 11,483 10,536 947 ------- ------- ------- ------- ------- ------- Non-interest expense from banking operations . 26,643 24,253 2,390 52,399 47,230 5,169 ------- ------- ------- ------- ------- ------- LEVITT OPERATIONS Employee compensation and benefits ............. 2,133 1,316 817 4,269 2,641 1,628 Advertising and promotion ...................... 779 835 (56) 1,579 1,448 131 Other .......................................... 2,951 2,097 854 5,325 4,575 750 ------- ------- ------- ------- ------- ------- Non-interest expense from Levitt operations .. 5,863 4,248 1,615 11,173 8,664 2,509 ------- ------- ------- ------- ------- ------- RYAN BECK OPERATIONS Employee compensation and benefits ............. 8,457 8,732 (275) 16,733 18,576 (1,843) Occupancy and equipment ........................ 781 809 (28) 1,645 1,708 (63) Advertising and promotion ...................... 658 383 275 783 655 128 Amortization of cost over fair value of net assets acquired ............................... 338 315 23 655 623 32 Other .......................................... 2,085 2,753 (668) 4,630 5,938 (1,308) ------- ------- ------- ------- ------- ------- Non-interest expense from Ryan Beck operations 12,319 12,992 (673) 24,446 27,500 (3,054) ------- ------- ------- ------- ------- ------- Total non-interest expenses .................... $ 44,825 $ 41,493 $ 3,332 $ 88,018 $ 83,394 $ 4,624 ======= ======= ======= ======= ======= =======
NON-INTEREST EXPENSES - BANKING OPERATIONS The increase in compensation expenses during the three and six months ended June 30, 2001 compared to the same 2000 periods primarily resulted from increases in 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 strategy. The increase in occupancy and equipment expenses during the three and six months ended June 30, 2001 compared to the same 2000 period 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. 27 The decline in advertising and promotion expense during the three and six months ended June 30, 2001 compared to the same 2000 periods related to promotions associated with BankAtlantic's new deposit and loan products that were introduced during 2000 along with BankAtlantic's promotion of internet banking. The increase in other expenses during the three and six months ended June 30, 2001 compared to the same 2000 periods resulted from substantially higher legal expenses as well as additional telecommunication expenses associated with internet and technology upgrades. Also included in other expenses during the three and six months ended June 30, 2001 was income of $219,000 from a restructuring charge adjustment. During the 2001 second quarter, the restructuring charge liability established during the 2000 fourth quarter was adjusted downward to reflect lower ATM lease termination costs than had been projected when the restructuring charge was first determined. NON-INTEREST EXPENSES - LEVITT OPERATIONS The increase in compensation and benefits primarily resulted from the expansion of Levitt and Sons activities. The number of Levitt Corporation employees increased from 116 at January 1, 2000 to 196 at June 30, 2001. Levitt and Sons began several new development projects during 2000 and the first six months of 2001. This expansion also resulted in an increase in selling, general and administrative expenses. NON-INTEREST EXPENSES - RYAN BECK OPERATIONS The decline in employee compensation and benefits during the three months ended June 30, 2001 compared to the same 2000 period was primarily due to lower commission expenses associated with a significant decline in Ryan Beck commission revenues discussed above. The significant decline in compensation expense during the six months ended June 30, 2001 compared to the same 2000 period resulted from substantial declines in Ryan Beck's revenues in all major revenue producing categories discussed above. The decline in other expenses during the three and six months ended June 30, 2001 compared to the same 2000 period 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 2001. The above expense reductions were partially offset by $262,000 of compensation severance charges associated with staff reductions in market related units. During the second quarter of 2001, in response to adverse market conditions, the management of Ryan Beck initiated measures to reduce staff in operational departments most affected by the market downturn. Additionally, management is currently reviewing underperforming lines of business with a view towards improving Ryan Beck's performance in subsequent periods. SEGMENT REPORTING The table below provides segment information for income before discontinued operations, extraordinary item and the cumulative effect of a change in accounting principle for the three and six months ended June 30, 2001 and 2000: For the Three Months For the Six Months (in thousands) Ended June 30, Ended June 30, -------------------- -------------------- Segment net income 2001 2000 2001 2000 -------- -------- -------- -------- Capital markets .... $ 6,235 $ 4,780 $ 11,713 $ 9,711 Commercial banking . 3,943 4,453 8,914 10,366 Community banking .. 1,162 (401) 2,060 (5,523) Levitt Corporation . 1,657 84 2,785 2,210 Ryan Beck .......... (588) 505 (1,773) 461 Parent Company ..... (3,804) (4,418) (8,269) (8,541) -------- -------- -------- -------- Segment net income $ 8,605 $ 5,003 $ 15,430 $ 8,684 ======== ======== ======== ======== 28 CAPITAL MARKETS The increase in segment net income for the three and six months ended June 30, 2001 compared to the same 2000 period reflected additional interest income resulting from growth in average earning assets. The increase in average earning assets resulted from the purchase of adjustable rate mortgage-backed securities and tax certificate acquisitions. The higher interest expense and overhead during the three and six months period resulted from an increase in allocated overhead due to higher average segment assets partially offset by a decline in the overhead allocation rate due to lower cost of funds during 2001 compared to the same 2000 period. COMMERCIAL BANKING The decline in segment net income for the three and six months ended June 30, 2001 compared to the same 2000 period resulted from a substantial increase in the provision for loan losses associated with the lease finance and syndication portfolios. This reduction in segment net income was partially offset by additional interest income from higher commercial real estate average balances and the decline in the overhead allocation rate discussed above. In addition, non-interest income increased during 2001 compared to the 2000 period attributable to a $700,000 unrealized loss recorded in June 2000 associated with a syndication loan. COMMUNITY BANKING The increase in segment net income for the three and six months ended June 30, 2001 compared to the same 2000 period 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 with the origination of home equity loans and a significant reduction in the originations of non-mortgage small business loans. LEVITT CORPORATION The increase in segment net income for the three and six months ended June 30, 2001 compared to the same 2000 period primarily resulted from an increase in Levitt and Sons net gains from residential real estate sales. During the second quarter of 2001 Levitt and Sons closed on 194 homes compared to 73 homes during the same 2000 period. During the six months ended June 30, 2001 Levitt and Sons closed on 361 homes compared to 188 homes during the same 2000 period. Income during the 2000 six month period included $3.9 million of income associated with a sale of a utility expansion receivable to a public municipality as part of the master plan for that community. In addition, income from joint venture operations was $500,000 and $1.2 million during the three and six months ended June 30, 2001, respectively, compared to net losses of $128,000 and $412,000 during the same 2000 periods. RYAN BECK Segment net income declined from $505,000 during the 2000 second quarter to a segment net loss of $588,000 during the same 2001 period. The reduced segment net income contribution resulted from a decline in commission income attributable to lower investor transaction volume due to a decline in overall financial market transactions. Segment net income declined from $461,000 during the first six months of 2000 to a segment net loss of $1.8 million during the same 2001 period. The decline resulted from the impact of adverse market conditions on each of Ryan Beck's three major revenue sources: investment banking, trading (principal transactions) and commissions. Investment banking, trading and commission revenue declined by 20%, 7% and 43%, respectively, from the 2000 six month period. PARENT COMPANY The parent company net loss declined during the three and six months ended June 30, 2001 compared to the same 2000 period. The decline primarily resulted from gains on the sales of equity securities and lower interest expense on floating rate debt. The decline in interest expense for the quarter reflects the recognition of deferred income associated with inter-company loans to Levitt Corporation. The deferred income was recognized when the real estate associated with the inter-company loans was sold. These reductions in the net segment loss were partially offset by lower interest income from the repayment of an inter-company $10 million note receivable along with higher interest expense associated with the issuance of investment notes during 2000. 29 FINANCIAL CONDITION Our total assets at June 30, 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 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, 4) other assets resulting from a substantial increase in the amounts due from Ryan Beck's clearing agent, and 5) 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, 3) accrued interest associated with the settlement of interest receivables on derivative securities, and 4) deferred tax asset, net primarily due to appreciation of securities available for sale. The Company's total liabilities at June 30, 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, money market accounts and savings accounts, 2) FHLB advances due to additional three to five year variable rate advance borrowings, 3) other liabilities associated with Levitt and Sons' construction accounts payable, and 4) Federal Funds purchased used to pay down securities sold under agreements to repurchase. 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 the net portfolio fair values of interest rate sensitive instruments at June 30, 2001 resulting from a change in interest rates. The model calculates the net potential gains and losses in net portfolio fair value by: (i) discounting anticipated cash flows from existing assets, liabilities and off-balance sheet contracts at market rates to determine fair values at June 30, 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. 30 Presented below is an analysis of the Company's interest rate risk at June 30, 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 $ 286,531 $ (63,802) +100 bp $ 330,816 $ (19,517) 0 $ 350,333 $ 0 (100)bp $ 363,447 $ 13,114 (200)bp $ 345,004 $ (5.329) 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: [X] loan prepayment rates, [X] deposit decay rates, [X] market values of certain assets under the representative interest rate scenarios, and [X] 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 June 30, 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. Available Securities Percent Trading for Sale Sold Not Change in Securities Securities Yet Dollar Fair Value Fair Value Fair Value Purchased Change ------------ ----------- ----------- ---------- ----------- (dollars in thousands) 20 % $ 37,336 $ 39,550 $ 48,300 $ 20,865 10 % $ 34,224 $ 36,254 $ 44,275 $ 10,432 0 % $ 31,113 $ 32,958 $ 40,250 $ 0 (10)% $ 28,002 $ 29,662 $ 36,225 $ (10,432) (20)% $ 24,890 $ 26,366 $ 32,200 $ (20,865) 31 Excluded from the above table are $21 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 During July 2001, we sold 5.1 million shares of our Class A Common Stock in an underwritten public offering at a price of $8.50 per share. The net proceeds after underwriting discounts and expenses were $40.3 million. The net proceeds of the offering will be used to reduce debt at the holding company level and for general corporate purposes. On July 13, 2001, we exercised our right to redeem our subordinated investment notes. We had outstanding $34.8 million of subordinated investment notes with an 11% weighted average interest rate at June 30, 2001. The notes will be redeemed on August 15, 2001. In August 2001, the Board of Directors passed a resolution to redeem our 6.75% Convertible Subordinated Debentures. These Debentures currently trade at a premium to the call price, and are convertible at $5.70 per share. The amount of Debentures redeemed and the timing of the redemptions are subject to market conditions. In August 2001, the Office of Thrift Supervision ("OTS") approved our request to transfer direct ownership of Levitt Corporation from BankAtlantic to BankAtlantic Bancorp. As a consequence of the transfer, loans from BankAtlantic to Levitt-related entities will be subject to regulatory restrictions on loans to affiliates. Loans currently outstanding to Levitt will be grandfathered and therefore would not be subject to the restrictions. The transfer is pending Board approval and is anticipated to occur during the 2001 third quarter. Management believes that the transfer on Levitt Corporation to BankAtlantic Bancorp would not have a material effect on the operations of Levitt Corporation or BankAtlantic Bancorp. Our 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. These funds are utilized primarily to service our debt, to pay dividends to our shareholders and to make investments in equity securities. The Company's annual debt service at June 30, 2001 associated with its subordinated debentures, Trust Preferred Securities, and financial institution borrowings was $16.7 million. The Company's estimated current annual dividends to common shareholders are $4.8 million. The declaration and payment of dividends by the Company 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. Payments and distributions by BankAtlantic to the Company are subject to OTS approval and regulations and based upon BankAtlantic's regulatory capital levels and net income. BankAtlantic's primary sources of funds during the first six 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 June 30, 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"). At June 30, 2001 BankAtlantic had fifteen in-store branches with aggregate deposit balances of approximately $126.9 million. One in-store branch was sold in June 2001. We are actively seeking buyers for the fifteen remaining branches. As of June 30, 2001 we had contracts to sell eleven of those branches by December 31, 2001 to unrelated financial institutions. The Company's commitments to originate and purchase loans at June 30, 2001 were $174.5 million and $20.4 million compared to $155.9 million and $0 million at June 30, 2000, respectively. Additionally, the Company had 32 commitments to purchase $931,000 of mortgage-backed securities at June 30, 2000 compared to $138 million at June 30, 2001. At June 30, 2001, loan commitments represented approximately 6.6% of 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 JUNE 30, 2001: Total risk-based capital $342,571 10.96% 8.00% 10.00% Tier 1 risk-based capital $304,709 9.75% 4.00% 6.00% Tangible capital ......... $304,709 6.79% 1.50% 1.50% Core capital ............. $304,709 6.79% 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 maker, 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 June 30, 2001, Ryan Beck's regulatory net capital was approximately $4.6 million, which exceeded minimum net capital rule requirements by $3.6 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 June 30, 2001. 33 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Shareholders on May 23, 2001. At the meeting the following four Directors were elected by the Class B shareholder, each of which received 4,876,124 votes for, with no votes against and no abstentions: Steven M. Coldren Mary E. Ginestra Jarett S. Levan Dale Renner The following Directors' terms of office continued after the meeting: John E. Abdo Alan B. Levan Charlie C. Winningham Ben A. Plotkin Bruno Di Giulian Holders of Class A Common Stock and Class B Common Stock adopted the Amended and Restated Articles of Incorporation, dated May 24, 2001 by the following votes: Broker For Against Abstained Non-votes ------------------------------------------------- Class A Common Shareholders 21,687,568 316,595 60,477 8,272,239 Class B Common Shareholders 4,876,124 0 0 0 EXHIBITS AND REPORTS ON FORM 8K (a) EXHIBITS Exhibit 3 Restated Articles of Incorporation of BankAtlantic Bancorp, Inc. Exhibit 11 Statement re: Computation of Per Share Earnings (b) REPORTS ON FORM 8K A report on Form 8K dated May 23, 2001 was filed with the Securities and Exchange Commission announcing the amendment to the Company's articles of incorporation. 34 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. August 14, 2001 By: /s/Alan B. Levan - --------------- --------------------------- Date Alan B. Levan Chief Executive Officer/ Chairman/President August 14 , 2001 By: /s/James A. White - ---------------- -------------------------- Date James A. White Executive Vice President, Chief Financial Officer 35 EX-3 3 exhibit3.txt RESTATED ARTICLES OF INCORPORATION RESTATED ARTICLES OF INCORPORATION OF BANKATLANTIC BANCORP, INC. Pursuant to Section 607.1007 of the Florida Business Corporation Act, the undersigned, Chairman of the Board of BANKATLANTIC BANCORP, INC., a Florida corporation (the "Corporation"), hereby executes and submits for filing with the Department of State, State of Florida, these Restated Articles of Incorporation, to read as follows: ARTICLE I - NAME AND ADDRESS The name of this Corporation is BankAtlantic Bancorp, Inc. The address of the principal office and the mailing address of this Corporation is 1750 East Sunrise Boulevard, Fort Lauderdale, Florida 33304. ARTICLE II - PURPOSE This Corporation is organized for the purpose of transacting any and all lawful business. 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 to 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. A. CLASS A COMMON STOCK AND CLASS B COMMON STOCK. The relative rights, preferences, privileges and restrictions of the Class A Common Stock and the Class B Common Stock are as follows: -1- 1. VOTING. Except as provided in this Article III (or in any supplementary sections thereto), all rights to vote and all voting power (including, without limitation, the right to elect directors) shall be vested exclusively in the holders of Class A Common Stock and the holders of Class B Common Stock, voting together without regard to class. (i) CLASS A COMMON STOCK. On all matters presented for a vote ofshareholders, holders of Class A Common Stock shall be entitled to one vote foreach share held. Until the total number of outstanding shares of Class B Common Stock shall first fall below 2,438,062 shares (a "Trigger Event"), the Class A Common Stock shall possess in the aggregate 53% of the total voting power of the Common Stock. (ii) CLASS B COMMON STOCK. (a) On all matters presented for a vote of shareholders, holders of Class B Common Stock shall until the occurrence of a Trigger Event be entitled to such number of votes (which may be or include a fraction of a vote) for each share held which, based on the number of shares of Class A Common Stock and Class B Common Stock outstanding on the record date relating to the matter to be voted upon, will fix the aggregate voting power of the Class B Common Stock at 47% of the total voting power of the Common Stock. Until the occurrence of a Trigger Event, the number of votes per share of Class B Common Stock shall equal the quotient derived by dividing (1) the number equal to (x) the total number of shares of Class A Common Stock outstanding on the relevant record date divided by .53 less (y) the total number of shares of Class A Common Stock outstanding on such record date by (2) the total number of shares of Class B Common Stock outstanding on such record date. (b) From and after the occurrence of a Trigger Event, holders of Class A Common Stock and Class B Common Stock shall each be entitled to one vote for each share held. (iii) CUMULATIVE VOTING. There shall be no cumulation of votes for the election of directors. (iv) CLASS VOTE BY CLASS B COMMON STOCK. Notwithstanding any other provision of this Article III, until the occurrence of a Trigger Event the Corporation shall not take any of the following actions without the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, given separately as a class, which vote shall be in addition to any right to vote required by the laws of the State of Florida: (1) issue any additional shares of Class B Common Stock except pursuant to a stock dividend issued exclusively to the holders of Class B Common Stock; (2) effect any reduction in the number of outstanding shares of Class B Common Stock (other than by holders of Class B Common Stock converting Class B Common Stock into Class A Common Stock or through voluntary disposition thereof to the Corporation); or (3) effect any change or alteration in any provision of this Article III. 2. CONVERSION AND RESERVATION OF SHARES. Each share of Class B Common Stock shall be convertible, at any time, and from time to time at the option of the holder thereof, into one fully paid and nonassessable share of Class A Common Stock. In order to exercise the conversion right, a holder of shares of Class B Common Stock shall surrender the certificate or certificates representing such shares, duly endorsed or assigned to the Corporation, at the office of the Corporation together with written notice to the Corporation of the number of shares which the holder elects to convert and written instructions regarding the registration and delivery of certificates for shares of Class A Common Stock acquired thereby. As promptly as practicable thereafter, the Corporation shall issue and deliver to the holder to the place designated by such holder, a certificate or certificates for the number of shares of Class A Common Stock to which such holder is entitled. The person entitled to receive shares of Class A Common Stock issuable upon conversion shall be deemed to have become the holder of record of such shares of Class A -2- Common Stock at the close of business on the date upon which the conversion right is so exercised. If any certificate representing shares of Class B Common Stock shall have been converted in part, the holder shall be entitled to a new certificate representing the unconverted shares of Class B Common Stock. There shall be no charge to holders of Class B Common Stock for any costs associated with the conversion of Class B Common Stock, including any stamp or other tax resulting from the issuance; provided, however, that the Corporation shall not be responsible for any taxes which may be payable in respect of any conversion in which any share or shares of Class A Common Stock are to be issued in the name of a holder other than the record holder of the Class B Common Stock being converted. The Corporation shall at all times reserve and keep available, out of its authorized but unissued Class A Common Stock, such number of shares as would become issuable upon the conversion of all shares of Class B Common Stock then outstanding. 3. OWNERSHIP OF CLASS B COMMON STOCK. Until the occurrence of a Trigger Event, shares of Class B Common Stock may only be held by or transferred to BFC Financial Corporation, a Florida corporation ("BFC"), or to successors or affiliates of BFC. For purposes of this Article III, the term "affiliate" shall mean a person who, directly or indirectly, controls or is controlled by, or is under common control with, BFC or the specified person; provided, however, that the following persons shall also be deemed to be affiliates of BFC: (i) a natural person who is a descendant (including any descendant by adoption and any descendant of an adopted descendant) of an affiliate of BFC or who is or was at any time the spouse or surviving spouse of an affiliate of BFC; or (ii) a trust established primarily for the benefit of an affiliate of BFC or any natural person described in clause (i) above; or (iii)a partnership, limited liability company, corporation or other entity in which an affiliate of BFC or any natural person described in clause (i) above or any trust described in clause (ii) above beneficially own at least 50% of the equity interests in such entity. From and after the occurrence of a Trigger Event, holders of shares of Class B Common Stock may transfer or otherwise dispose of such shares to any person, and any person may have the status of an owner or holder of shares of Class B Common Stock. 4. TRANSFERS OF CLASS B COMMON STOCK ON CORPORATE BOOKS. Shares of Class B Common Stock shall be transferred on the books of the Corporation and a new certificate issued, upon due presentation at the office of the Secretary of the Corporation (or at such additional place or places as may from time to time be designated by the Corporation, including the transfer agent of the Corporation) of the certificate for such shares, in proper form for transfer; provided, however, that if at the time such certificate is presented for transfer there has not occurred a Trigger Event, then such transfer will not be effected unless such certificate is accompanied by an affidavit of the record holder certifying that the transfer of such shares is to a person permitted by the provisions of subsection A.3. of this Article III. 5. 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 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 the distribution per share of Class -3- 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. 6. 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. 7. SUBSCRIPTION AND PREEMPTIVE RIGHTS. No shares of Class A Common Stock or Class B Common Stock, and no obligations or shares convertible into shares of Class A Common Stock or Class B Common Stock, shall have any preemptive right or preferential right to subscribe to or purchase any shares of any class of stock of the Corporation or any right to subscribe to or purchase thereof. 8. VIOLATIONS OF SUBSECTIONS A.3. In the event that the Board of Directors of the Corporation shall determine, upon the basis of facts not disclosed in any affidavit or other document accompanying the certificate for shares of Class B Common Stock when presented for transfer, that such shares of Class B Common Stock have been registered in violation of the provisions of subsection A.3., then the Corporation may seek a judicial determination including an action at law or in equity as may be appropriate under the circumstances. 9. LEGEND ON CERTIFICATES FOR CLASS B COMMON STOCK. Every certificate for shares of Class B Common Stock shall bear a legend on the face thereof reading as follows: "The shares of Class B Common Stock represented by this certificate may not be transferred to any person who does not meet the qualifications set forth in subsection A.3. of Article III of the Articles of Incorporation of this Corporation and no person who does not meet the qualifications prescribed by subsection A.3. of said Article III is entitled to own or to be registered as the record holder of such shares of Class B Common Stock, until the time referred to in said subsection A.3., but the record holder of this certificate may at any time convert such shares of Class B Common Stock into the same number of shares of Class A Common Stock of the Corporation for the purpose of effecting the sale or other disposition of such shares to any person. Each holder of this certificate, by accepting the same, accepts and agrees to all of the foregoing." Any certificate for shares of Class B Common Stock which shall be issued after the occurrence of a Trigger Event shall not bear such legend. 10. ADJUSTMENTS. In the event of a reorganization, recapitalization, merger or stock split affecting the Class B Common Stock, then the threshold number of shares of Class B Common Stock referenced in the definition of Trigger Event in subsection A.1.(i) of this Article III and the number or kind of shares into which the Class B Common Stock are convertible pursuant to subsection A.2. of this Article III shall be appropriately and proportionately adjusted; and in each such case such provisions shall be applied so as to give effect to such adjustments. If any such transaction shall be effected by amendment -4- of the Articles of Incorporation, then such amendment shall itself adjust such threshold share number or conversion rate in accordance with the foregoing. B. PREFERRED STOCK. The preferred stock may be divided into one or more series or classes, with each series separately designated so as to distinguish the shares thereof from the shares of all other series and classes. The Board of Directors is authorized to divide the preferred stock into one or more series or classes, by adoption of supplementary sections or amendments to the articles of incorporation, having the relative rights, preferences and limitations as may from time to time be determined by the Board of Directors. Without limiting the generality of the foregoing, the Board of Directors is authorized to fix and determine: 1. The number of shares which shall constitute the series and the designation of such shares; 2. The rate and the time at which dividends on that series shall be paid, whether dividends shall be cumulative and the participating or other special rights, if any, with respect to dividends; 3. The voting powers, full or limited, if any, of shares of such series; 4. Whether the shares of such series shall be redeemable and, if so, the price(s) at which, and the terms and conditions on which, such shares may be redeemed and the terms and amount of any sinking fund or purchase fund, if any, for the purchase or redemption of that series; 5. The amount(s) payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution, or winding up of the Corporation. 6. The terms upon which the holder of any series may convert their shares into any class or classes; 7. The price or other consideration for which the shares of such series shall be issued; and 8. Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued as shares of the same or any other series of serial preferred stock. Each share of each series of serial preferred stock shall have the same relative rights as and be identical in respects with all the other shares of the same series. ARTICLE IV - PREEMPTIVE RIGHTS Shareholders shall not be entitled to preemptive rights with respect to any shares of the Corporation which may be issued. -5- ARTICLE V - INITIAL REGISTERED OFFICE AND AGENT The street address of the initial registered office of this Corporation is 150 West Flagler Street, Miami, Florida 33130 and the name of the initial registered agent of this Corporation is Alison W. Miller. ARTICLE VI - BYLAWS The power to alter, amend or repeal the Bylaws shall be vested in each of the Board of Directors and the shareholders of this Corporation. ARTICLE VII - INDEMNIFICATION This Corporation shall indemnify any officer or director, or any former officer or director of this Corporation, to the fullest extent permitted by law. The foregoing right of indemnification shall not be exclusive of any other rights to which any Director, officer, employee or agent may be entitled as a matter of law or which he may be lawfully granted. ARTICLE VIII - AMENDMENT This Corporation reserves to its shareholders the right to amend or repeal any provisions now or hereafter contained in these Articles of Incorporation. Any rights which these Articles of Incorporation may confer upon this Corporation may be modified or cancelled by a vote of the holders of a majority of the Corporation's stock entitled to vote thereon to amend or repeal said Articles of Incorporation. The foregoing Restated Articles of Incorporation were duly adopted and approved without shareholder action by the Board of Directors of the Corporation by unanimous written consent in lieu of a meeting as of May 23, 2001. Pursuant to Section 607.1007 of the Florida Business Corporation Act, shareholder action was not required with respect to the adoption of the foregoing Restated Articles of Incorporation. -6- IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief Executive Officer of the Corporation has executed these Restated Articles of Incorporation in his capacity as such this 11th day of June, 2001. BANKATLANTIC BANCORP, INC. By: /s/Alan B. Levan ------------------------------------ Alan B. Levan, Chairman of the Board and Chief Executive Officer -7- EX-11 4 exhibit11.txt EARNINGS PER SHARE BankAtlantic Bancorp, Inc. 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 Six Months ended (In thousands, except share June 30, 2000 June 30, 2000 data and percentages) ------------------------------------------- ------------------------------------------- Class A Class B Total Class A Class B Total ------------ ------------ ------------ ------------ ------------ ------------ BASIC NUMERATOR Actual dividends declared $ 1,599 $ 450 $ 2,049 $ 1,599 $ 450 $ 2,049 Basic allocation of undis- tributed earnings from continuing operations .. 2,305 649 2,954 5,160 1,475 6,635 ------------ ------------ ------------ ------------ ------------ ------------ Income from continuing operations ............. 3,904 1,099 5,003 6,759 1,925 8,684 Income from discontinued operations ............. 202 57 259 202 57 259 Income from extraordinary item ................... - - - 2,694 772 3,466 ------------ ------------ ------------ ------------ ------------ ------------ Net income ............... $ 4,106 $ 1,156 $ 5,262 $ 9,655 $ 2,754 $ 12,409 ============ ============ ============ ============ ============ ============ BASIC DENOMINATOR Weighted average shares outstanding ............ 31,546,061 9,774,193 31,522,835 9,916,221 ============ ============ ============ ============ Allocation percentage .... 78.02% 21.98% 77.76% 22.24% ============ ============ ============ ============ Basic earnings per share . $ 0.13 $ 0.12 $ 0.31 $ 0.28 ============ ============ ============ ============ DILUTED NUMERATOR Actual dividends declared $ 1,599 $ 450 $ 2,049 $ 1,599 $ 450 $ 2,049 ------------ ------------ ------------ ------------ ------------ ------------ Basic allocation of undis- tributed earnings from continuing operations .. 3,904 1,099 5,003 6,759 1,925 8,684 Reallocation of basic undistributed earnings due to change in alloc- ation percentage ....... 162 (162) - 395 (395) - Diluted allocated undis- tributed earnings from ------------ ------------ ------------ ------------ ------------ ----------- continuing operations .. 4,066 937 5,003 7,154 1,530 $ 8,684 ------------ ------------ ------------ ------------ ------------ ------------ Interest expense on convertible debt ....... 1,045 207 1,252 2,216 438 2,654 ------------ ------------ ------------ ------------ ------------ ------------ Dilutive income from continuing operations .. 5,111 1,144 6,255 9,370 1,968 11,338 Dilutive income from discontinued operations 216 43 259 2,894 572 3,466 Dilutive income from extraordinary item ..... - - - 217 42 259 ------------ ------------ ------------ ------------ ------------ ------------ Net income ............... $ 5,327 $ 1,187 $ 6,514 $ 12,481 $ 2,582 $ 15,063 ============ ============ ============ ============ ============ ============ DILUTED DENOMINATOR Basic weighted average shares outstanding ..... 31,546,061 9,774,193 31,522,835 9,916,221 Convertible debentures ... 15,640,702 - 16,361,092 - Options .................. 7,389 496,532 10,187 496,532 ------------ ------------ ------------ ------------ Diluted weighted average shares outstanding ..... 47,194,152 10,270,725 47,894,114 10,412,753 ============ ============ ============ ============ Allocation percentage .... 83.48% 16.52% 83.50% 16.50% ============ ============ ============ ============ Diluted earnings per share .................. $ 0.11 $ 0.12 $ 0.26 $ 0.25 ============ ============ ============ ============
BankAtlantic Bancorp, Inc. EARNINGS PER SHARE EXHIBIT 11 The following reconciles the numerators and denominators of the basic and diluted earnings per share computations. (In thousands, except share data and percentages) For the For the Three Months Six Months Ended Ended June 30, 2001 June 30, 2001 ------------- ------------- BASIC EARNINGS PER SHARE Net income before cumulative effect of a change in accounting principle ..................... 8,605 15,430 Basic weighted average number of common shares outstanding ................................. 36,535,810 36,519,091 ---------- ---------- Basic earning per share before cumulative effect of a change in accounting principle .. 0.24 0.42 ========== ========== Cumulative effect of a change in accounting principle ................................... - 1,138 Basic weighted average number of common shares outstanding ................................. 36,535,810 36,519,091 ---------- ---------- Basic earning per share from cumulative effect of a change in accounting principle ......... - 0.03 ========== ========== Net income .................................... 8,605 16,568 Basic weighted average number of common shares outstanding .................................. 36,535,810 36,519,091 ---------- ---------- Basic earnings per share ...................... 0.24 0.45 ========== ========== DILUTED EARNINGS PER SHARE Net income before cumulative effect of a change in accounting principle .............. 8,605 15,430 Interest expense on convertible debentures .... 1,027 2,052 ---------- ---------- Income available after assumed conversion ..... 9,632 17,482 ---------- ---------- Basic weighted average shares outstanding ..... 36,535,810 36,519,091 Convertible debentures ........................ 13,064,312 13,065,213 Options ....................................... 1,675,499 1,324,698 ---------- ---------- Diluted weighted average shares outstanding ... 51,275,621 50,909,002 ---------- ---------- Diluted earning per share before cumulative effect of a change in accounting principle .. 0.19 0.34 ========== ========== Cumulative effect of a change in accounting principle ................................... - 1,138 Diluted earning per share before cumulative effect of a change in accounting principle .. 51,275,621 50,909,002 ---------- ---------- Diluted earning per share from cumulative effect of a change in accounting principle .. - 0.03 ========== ========== Income available after assumed conversion ..... 9,632 18,620 Diluted weighted average shares outstanding ... 51,275,621 50,909,002 ---------- ---------- Diluted earnings per share .................... 0.19 0.37 ========== ========== -----END PRIVACY-ENHANCED MESSAGE-----