-----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, F9XPVx+w7xC26PPlLFmarbj7AdiSu2ZF5ixfTk4uRbS1Z8wULBcQbFjtRLyfBV+W iy51Ds7zo+UvMjCXq88iwg== 0000921768-97-000009.txt : 19970520 0000921768-97-000009.hdr.sgml : 19970520 ACCESSION NUMBER: 0000921768-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD 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: 000-27228 FILM NUMBER: 97607928 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 FOR THE THREE MONTHS ENDED MARCH 31, 1997 FORM 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 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 (State or other jurisdiction of incorporation or organization) 1750 East Sunrise Boulevard Ft. Lauderdale, Florida (Address of principal executive offices) 65-0507804 (I.R.S. Employer Identification No.) 33304 (Zip Code) (954) 760-5000 (Registrant's telephone number, including area code) Not Applicable (Former name,former address and former fiscal year,if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of preferred and common stock as of the latest practicable date. Outstanding at Title of Each Class May 9, 1997 Class A Common Stock, par value $0.01 per share 7,646,468 Class B Common Stock, par value $0.01 per share 10,743,256 BankAtlantic Bancorp, Inc. TABLE OF CONTENTS ----------------- FINANCIAL INFORMATION Page Reference - --------------------- -------------- Financial Statements.................................................... 1-6 Consolidated Statements of Financial Condition - March 31, 1997 and December 31, 1996 - Unaudited..................................... 1 Consolidated Statements of Operations - For the Three Months Ended March 31, 1997 and 1996 - Unaudited................................... 2 Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 1997 and 1996 - Unaudited................................... 3-4 Notes to Consolidated Financial Statements - Unaudited................. 5-6 Management's Discussion and Analysis of Results of Operations and Financial Condition............................................... 7-13 OTHER INFORMATION - ----------------- Exhibits............................................................... 13 Signatures............................................................. 14 [THIS PAGE INTENTIONALLY LEFT BLANK] BankAtlantic Bancorp, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED March 31, December 31, 1997 1996 ASSETS --------- ----------- (In thousands, except share data) Cash and due from depository institutions ................................................... $ 81,099 $ 102,995 Federal Funds sold .......................................................................... 0 6,148 Other interest bearing deposits with depository institutions ................................ 22,998 0 Loans receivable, net ....................................................................... 1,851,441 1,824,856 Investment securities-net, held to maturity, at cost which approximates market value ........ 46,715 54,511 Debt securities available for sale, at market value ......................................... 572,783 439,345 Investment in trading account securities, at market value ................................... 6,349 0 Accrued interest receivable ................................................................. 21,333 20,755 Real estate owned, net ...................................................................... 4,713 4,918 Office properties and equipment, net ........................................................ 47,884 48,274 Federal Home Loan Bank stock, at cost which approximates market value ....................... 19,137 14,787 Mortgage servicing rights ................................................................... 27,408 25,002 Deferred tax asset, net ..................................................................... 5,481 3,355 Cost over fair value of net assets acquired ................................................. 28,050 28,591 Other assets ................................................................................ 37,694 31,990 --------- --------- Total assets ................................................................................ $ 2,773,085 $ 2,605,527 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits .................................................................................... $ 1,824,189 $ 1,832,780 Advances from FHLB .......................................................................... 382,702 295,700 Securities sold under agreements to repurchase .............................................. 255,967 190,588 Subordinated debentures ..................................................................... 78,500 78,500 Drafts payable .............................................................................. 385 386 Advances by borrowers for taxes and insurance ............................................... 43,612 29,659 Other liabilities ........................................................................... 35,125 30,210 --------- --------- Total liabilities ........................................................................... 2,620,480 2,457,823 --------- --------- Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized: none issued and outstanding 0 0 Class A Common Stock, $0.01 par value, authorized 30,000,000 shares; issued and outstanding, 7,817,090 and 7,807,258 shares ............................................................ 78 78 Class B Common Stock, $0.01 par value, authorized 15,000,000 shares; issued and outstanding, 10,735,440 and 10,542,116 shares .......................................................... 107 105 Additional paid-in capital .................................................................. 65,612 64,171 Retained earnings ........................................................................... 88,377 82,602 --------- --------- Total stockholders' equity before net unrealized appreciation (depreciation) on debt securities available for sale - net of deferred income taxes ....................................... 154,174 146,956 Net unrealized appreciation (depreciation) on debt securities available for sale - net of deferred income taxes ................................................................... (1,569) 748 --------- --------- Total stockholders' equity .................................................................. 152,605 147,704 --------- --------- Total liabilities and stockholders' equity ................................................. $ 2,773,085 $ 2,605,527 ========= ========= See Notes to Consolidated Financial Statements - Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months Ended March 31, (In thousands, except share data) --------------- 1997 1996 Interest income: ----------- ---------- Interest and fees on loans ................................ $ 41,123 $ 20,333 Interest on debt securities available for sale ............ 7,542 10,500 Interest and dividends on investment securities ........... 1,779 1,259 ----------- ---------- Total interest income ..................................... 50,444 32,092 ----------- ---------- Interest expense: Interest on deposits ...................................... 17,275 12,379 Interest on advances from FHLB ............................ 4,801 2,027 Interest on securities sold under agreements to repurchase 2,549 718 Interest on subordinated debentures ....................... 1,539 496 ----------- ---------- Total interest expense .................................... 26,164 15,620 ----------- ---------- Net interest income ....................................... 24,280 16,472 Provision for loan losses ................................. 2,476 940 ----------- ---------- Net interest income after provision for loan losses ....... 21,804 15,532 ----------- ---------- Non-interest income: Loan servicing and other loan fees ........................ 1,571 838 Gains on sales of loans originated for resale ............. 451 164 Unrealized loss on trading account securities ............. (68) 0 Gains on sales of mortgage servicing rights ............... 2,433 0 Gains on sales of debt securities available for sale ...... 253 2,292 Other ..................................................... 4,384 3,540 ----------- ---------- Total non-interest income ................................. 9,024 6,834 ----------- ---------- Non-interest expense: Employee compensation and benefits ........................ 9,547 7,368 Occupancy and equipment ................................... 4,792 2,785 Federal insurance premium ................................. 208 591 Advertising and promotion ................................. 369 507 Foreclosed asset activity, net ............................ 13 (162) Amortization of cost over fair value of net assets acquired 627 306 Other ..................................................... 4,844 3,120 ----------- ---------- Total non-interest expense ................................ 20,400 14,515 ----------- ---------- Income before income taxes ................................ 10,428 7,851 Provision for income taxes ................................ 4,087 3,141 ----------- ---------- Net income ................................................ $ 6,341 $ 4,710 ========== ========== Net income per common and common equivalent share ......... $ 0.33 $ 0.27 ========== ========== Net income per common and common equivalent share, assuming full dilution .................................. $ 0.28 $ 0.27 ========== ========== Weighted average number of common and common equivalent shares outstanding ........................... 19,448,159 17,644,250 ========== ========== Weighted average number of common and common equivalent shares outstanding, assuming full dilution .. 25,117,894 17,699,328 ========== ========== See Notes to Consolidated Financial Statements - Unaudited
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
For the Three Months Ended March 31, --------------- 1997 1996 Operating activities: --------- --------- Net income ................................................................................. $ 6,341 $ 4,710 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses .................................................................. 2,476 940 Depreciation ............................................................................... 1,290 858 Amortization of mortgage servicing rights ................................................. 1,833 1,500 Increase in deferred income tax asset, net ................................................. (671) (297) Net (accretion) amortization of securities ................................................. (131) 5 Unrealized loss on trading account securities .............................................. 68 0 Net amortization of deferred loan origination fees ......................................... (290) (285) Gains on sales of real estate owned ........................................................ (79) (149) Net losses on sales of property and equipment .............................................. 18 71 Gains on sales of mortgage servicing rights ................................................ 0 (2,433) Gains on sales of debt securities available for sale ....................................... (253) (2,292) Purchases of trading account securities .................................................... (6,417) 0 Proceeds from loans originated for resale .................................................. 25,005 15,345 Fundings of loans originated for resale (13,074) (12,449) Gains on sales of loans originated for resale .............................................. (451) (164) Provision for tax certificate losses ....................................................... 78 125 Amortization of dealer reserve ............................................................. 2,061 593 Amortization of cost over fair value of net assets acquired ................................ 627 306 Net accretion of purchase accounting adjustments ........................................... (221) (68) Amortization of deferred borrowing costs .................................................. 85 26 Decrease (increase) in accrued interest receivable ......................................... (578) 603 Decrease (increase) in other assets ........................................................ 769 (2,344) Increase in other liabilities .............................................................. 5,156 2,585 Decrease in drafts payable ................................................................. (1) (250) --------- --------- Net cash provided by operating activities .................................................. 21,208 9,369 --------- --------- Investing activities: Proceeds from redemption and maturities of investment securities ........................... 12,311 9,414 Purchase of investment securities .......................................................... (4,593) (220) Proceeds from sales of debt securities available for sale .................................. 91,519 75,394 Principal collected on debt securities available for sale .................................. 43,147 52,942 Purchases of debt securities available for sale ............................................ (271,434) 0 Proceeds from sales of FHLB stock .......................................................... 1,550 1,249 FHLB stock acquired ........................................................................ (5,900) 0 Principal reduction on loans................................................................ 164,309 132,570 Loan fundings for portfolio................................................................. (135,702) (169,172) Loans purchased............................................................................. (68,957) (2,237) Proceeds from maturities of bankers'acceptances............................................. 208 0 Fundings of bankers' acceptances............................................................ (77) 0 Net increase in other interest bearing deposits with depository institutions................ (22,998) 0 Additions to dealer reserve ................................................................ (2,630) (356) Proceeds from sales of real estate owned ................................................... 429 548 Mortgage servicing rights acquired.......................................................... (9,155) (5,212) Proceeds from sales of mortgage servicing rights ........................................... 1,291 0 Additions to office property and equipment ................................................. (918) (2,577) --------- --------- Net cash provided (used) by investing activities ........................................... (207,600) 92,343 --------- --------- See Notes to Consolidated Financial Statements - Unaudited (Continued)
CONSOLIDATED STATEMENTS FOR CASH FLOWS - UNAUDITED (CONTINUED)
For the Three Months Ended March 31, --------------- 1997 1996 ---- ---- FINANCING ACTIVITIES: Net increase (decrease) in deposits ........................................... $ (21,847) $ 12,345 Interest credited to deposits ................................................. 13,311 10,507 Repayments of FHLB advances ................................................... (160,000) (325,270) Proceeds from FHLB advances ................................................... 247,002 186,970 Net increase (decrease) in securities sold under agreements to repurchase .... 65,379 (22,356) Net decrease in federal funds purchased ....................................... 0 (1,200) Repayment of note payable ..................................................... 0 (1) Issuance of common stock relating to exercise of employee stock options ....... 1,101 0 Issuance of common stock, net ................................................. 0 15,791 Receipts of advances by borrowers for taxes and insurance ..................... 13,953 13,234 Common stock dividends paid ................................................... (551) (466) ------- -------- Net cash provided by financing activities .................................... 158,348 (110,446) ------- -------- Decrease in cash and cash equivalents ........................................ (28,044) (8,734) Cash and cash equivalents at beginning of period .............................. 109,143 69,867 ------- -------- Cash and cash equivalents at end of period .................................... $ 81,099 $ 61,133 ======= ======= Supplementary disclosure and non-cash investing and financing activities: Interest paid on borrowings ................................................... $ 26,599 $ 15,176 Income taxes paid ............................................................. 910 0 Loans transferred to real estate owned ........................................ 145 856 Proceeds receivable from sales of mortgage servicing rights ................... 6,058 0 Loan charge-offs .............................................................. 2,423 1,854 Tax certificate charge-offs, net of (recoveries) .............................. (226) 142 Common stock dividend declared and not paid until April ....................... 566 524 Increase in equity for the tax effect related to the exercise of employee stock options ..................................................................... 342 0 Change in net unrealized depreciation on debt securities available for sale ... (3,772) (6,055) Change in deferred taxes on net unrealized depreciation on debt securities available for sale ............................................... (1,455) (2,336) Change in stockholders' equity from net unrealized depreciation on debt securities available for sale, less related deferred income taxes ... (2,317) (3,719) ====== ====== See Notes to Consolidated Financial Statements - Unaudited
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. Presentation of Interim Financial Statements BankAtlantic Bancorp, Inc. ("BBC") is a unitary savings bank holding company. BBC's primary asset is the capital stock of BankAtlantic, a Federal Savings Bank ("BankAtlantic"), its wholly owned subsidiary. Under applicable law, BBC generally has broad authority to engage in various types of business activities with few restrictions. BBC's activities currently relate to the operations of BankAtlantic and BankAtlantic's subsidiaries. BankAtlantic's subsidiaries are primarily utilized to dispose of real estate acquired through foreclosure. All significant inter-company balances and transactions have been eliminated in consolidation. In management's opinion, the accompanying consolidated financial statements contain such adjustments necessary to present fairly BBC's consolidated financial condition at March 31, 1997, the consolidated results of operations and the consolidated cash flows for the three months ended March 31, 1997 and 1996. Such adjustments consisted only of normal recurring items. The consolidated financial statements and related notes are presented as permitted by Form 10Q and should be read in conjunction with the notes to consolidated financial statements appearing in BBC's Annual Report on Form 10K for the year ended December 31, 1996. 2. Equity Capital The follow table sets forth the changes in common stockholders' equity for the three months ended March 31, 1997 before net unrealized depreciation of debt securities available for sale:
Additional (in thousands) Common Paid in Retained Stock Capital Earnings -------- ---------- -------- Balance at December 31, 1996 ................................ $ 183 $ 64,171 $ 82,602 Exercise of stock options .................................. 2 1,099 0 Tax effect relating to the exercise of employee stock options 0 342 0 Net income .................................................. 0 0 6,341 Dividends on common stock ................................... 0 0 (566) -------- ---------- -------- Balance at March 31, 1997 ................................... $ 185 $ 65,612 $ 88,377 ======== ========== ========
3. Sales of Financial Assets During the three months ended March 31, 1997, BankAtlantic sold $5.3 million of mortgage servicing rights realizing a gain of $2.4 million. These mortgage servicing rights related to approximately $518.2 million of loans. Included in other assets at March 31, 1997 were $6.1 million and $9.5 million of receivables from the sales of mortgage servicing rights during the months of March 1997 and December 1996, respectively. During the quarter ended March 31, 1997, BBC sold $91.3 million of treasury notes for a $253,000 gain. 4. Trading Account Securities During the three months ended March 31, 1997, BBC purchased $6.3 million of marketable equity securities and classified them as trading account securities. Trading account securities are recorded at fair value with unrealized gains or losses reflected in operations. At March 31, 1997 the unrealized loss on trading account securities was $68,000. 5. Guaranteed Preferred Beneficial Interests in BBC's Junior Subordinated Debentures In March 1997, BBC formed BBC Capital Trust I ("BBC Capital"). BBC Capital is a statutory business trust which was formed for the purpose of issuing Cumulative Trust Preferred Securities ("Preferred Securities") and investing the proceeds thereof in Junior Subordinated Debentures of BBC. In a public offering in April 1997, BBC Capital issued 2.99 million shares of Preferred Securities at a price of $25 per share. The gross proceeds from the offering of $74.75 million were invested in an identical principal amount of BBC's 9.50% Junior Subordinated Debentures (the "Junior Subordinated Debentures") which bear interest at the same rate as the Preferred Securities and have a stated maturity of 30 years. In addition, BBC contributed $2.3 million to BBC Capital in exchange for BBC Capital's Common Securities (the "Common Securities") and such proceeds were also invested in an identical principal amount of Junior Subordinated Debentures. Offering costs of $2.9 million were paid by BBC. BBC intends to use the net proceeds from the sale of the Junior Subordinated Debentures for general corporate purposes, including repurchases of its common stock, for acquisitions by either BBC or BankAtlantic and contribution to BankAtlantic to support growth and for working capital. Such possible future acquisitions may be in businesses not engaged in banking activities and in such event such acquisitions could result in material changes to the scope of BBC's business and would subject BBC to the risks inherent in any businesses acquired. BBC Capital's sole asset is $77.1 million aggregate principal amount of the Junior Subordinated Debentures. Holders of the Preferred Securities and the Common Securities will be entitled to receive a cumulative cash distribution at a fixed 9.50% rate of the $25 liquidation amount of each Security and the Preferred Securities will have a preference under certain circumstances with respect to cash distributions and amounts payable on liquidation, redemption or otherwise over the Common Securities. The Preferred Securities are considered debt for financial accounting and tax purposes. BBC has the right, at any time, so long as no event of default has occurred and is continuing, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters; provided, that no extended interest payment period may extend beyond the stated maturity of the Junior Subordinated Debentures. During the extended interest payment period, distributions or the Preferred Securities will also be deferred and BBC will be prohibited from declaring or paying any cash distributions with respect to its debt securities that rank pari passu with or junior to the Junior Subordinated Debentures or with respect to its capital stock. The Preferred Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Junior Subordinated Debentures at maturity or their earlier redemption. Subject to regulatory approval, if then required, the Junior Subordinated Debentures are redeemable prior to maturity at the option of BBC (i) on or after June 30, 2002, in whole at any time or in part from time to time, or (ii) at any time, in whole ( but not in part), within 180 days following the occurrence of certain events including certain changes in the tax laws, in each case at a redemption price equal to 100% of the principal amount of the Junior Subordinated Debentures so redeemed, together with any accrued but unpaid interest to the date fixed for redemption. Subject to receipt of any regulatory approvals, BBC has the right at any time to terminate BBC Capital and cause the Junior Subordinated Debentures to be distributed to holders of Preferred Securities in liquidation of BBC Capital. BBC has guaranteed the payment of distributions and payments on liquidation or redemption of the Preferred Securities, but only in each case to the extent of funds held by BBC Capital. The obligations of BBC under the guarantee and the Junior Subordinated Debentures are subordinate and junior in right of payment to all Senior Debt and the Company's 6 3/4% Convertible Subordinated Debentures (as defined in the Indenture relating to the Junior Subordinated Debentures) and the 9% Subordinated Debentures. 6. New Accounting Standard Financial Accounting Standards Board Statement No. 128, Earnings per Share ("FAS 128") was issued in February 1997. This statement simplifies the standards for computing earnings per share ("EPS") and is effective for financial statements issued for periods ending after December 15, 1997. FAS 128 requires restatement of all prior-period EPS data presented. FAS 128 requires dual presentation of basic and diluted EPS on the face of the income statement with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if options or warrants to issue common stock were exercised. Diluted EPS is computed similarly to fully diluted EPS pursuant to Accounting Principles Board Opinion 15. Implementation of FAS 128 will impact disclosure of EPS and will not have a material impact on BBC's Statement of Operations or Statement of Financial Condition. 7. Subsequent Events On April 4, 1997, BBC registered the issuance from time to time of its shares of Class A Common Stock issuable upon conversion of BBC's 6 3/4% Convertible Subordinated Debentures. Subsequently, $200,000 of BBC's 6 3/4% Convertible Subordinated Debentures were converted into 19,531 shares of Class A Common Stock based on the $10.24 conversion price. 8. Certain amounts for prior periods have been reclassified to conform with statement presentation for 1997. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Except for historical information contained herein, the matters discussed in this report are forward-looking statements made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These forward-looking statements are based largely on BBC's expectations and are subject to a number of risks and uncertainties, including but not limited to, economic, competitive and other factors affecting BBC's operations, markets, products and services, expansion strategies and other factors discussed in BBC's Annual Report on Form 10K for the year ended December 31, 1996. Many of these factors are beyond BBC's control. Actual results could differ materially from these forward-looking statements. In light of these risks and uncertainties, there is no assurance that the forward-looking information contained in this report will, in fact, occur. BBC's net income for the quarter ended March 31, 1997 was $6.3 million or $0.33 and $0.28 primary and fully diluted earnings per common and common equivalent share, respectively, compared to net income of $4.7 million or $0.27 primary and fully diluted earnings per common and common equivalent share for the quarter ended March 31, 1996. Net interest income after provision for loan losses was $21.8 million for the March 31, 1997 quarter compared to $15.5 million for the quarter ended March 31, 1996. During the three months ended March 31, 1997, total interest income increased by $18.4 million primarily due to higher interest income earned on loans and investment securities, partially offset by lower interest income on debt securities available for sale. This increase in loan interest income reflects higher average balances resulting from the purchase of residential mortgage loans, loan fundings and the October 1996 Bank of North America ("BNA") acquisition. The increase in interest and dividends on investment securities was primarily due to a $500,000 reversal of tax certificate interest income reserve compared to a $98,000 reversal during the same 1996 period . The interest reserve reversal reflects higher than anticipated tax certificate repayments. Tax certificate and FHLB stock average balances were higher during the 1997 quarter than the 1996 quarter. The increase in the level of tax certificates reflects the fact that BankAtlantic began purchasing tax certificates outside of Florida during the first quarter of 1997 . Increases in FHLB stock were required based on increased FHLB advances. The decline in interest income on debt securities available for sale resulted from lower average balances primarily due to securities sales and principal repayments. During the three months ended March 31, 1997 total interest expense was $26.2 million compared to $15.6 million during the comparable 1996 period. The higher interest expense primarily resulted from the BNA acquisition, increased borrowings and a generally higher interest rate environment during 1997 than experienced in 1996. Included in 1997 borrowings was $57.5 million of 6 3/4% Convertible Subordinated Debentures issued in July 1996. The increased borrowings funded loan growth and the BNA acquisition. The provision for loan losses was $2.5 million for the three months ended March 31, 1997 compared to $940,000 during the comparable 1996 period. The increased provision for loan losses resulted from higher consumer loan net charge-offs and a $150,000 specific allowance relating to BNA construction loans to a builder . Non-interest income was $9.0 million for the three months ended March 31, 1997 compared to $6.8 million for the comparable 1996 period. The $2.2 million net increase was primarily comprised of $903,000 of increased ATM and transaction account fee income, $733,000 of increased loan servicing and other loan fee income, a $2.4 million gains on the sales of mortgage servicing rights offset by a $2.0 million decline in gains on sales of debt securities available for sale. Non-interest expense for the quarter ended March 31, 1997 was $20.4 million compared to $14.5 million for the same 1996 period. The net increase of $5.9 million primarily resulted from additional expenses associated with operating a larger organization due to the BNA acquisition, higher legal expenses, increased consumer repossession costs and data processing fees and expenses associated with the conversion of data processing function to a service bureau during the fourth quarter of 1996.
Net Interest Income For the Three Months Ended March 31, --------------------------------- (In thousands) 1997 1996 Change --------- --------- --------- Interest and fees on loans ............................... $ 41,123 $ 20,333 $ 20,790 Interest on debt securities available for sale ........... 7,542 10,500 (2,958) Interest and dividends on investment securities .......... 1,779 1,259 520 Interest on deposits ..................................... (17,275) (12,379) (4,896) Interest on advances from FHLB ........................... (4,801) (2,027) (2,774) Interest on securities sold under agreements to repurchase (2,549) (718) (1,831) Interest on subordinated debentures ...................... (1,539) (496) (1,043) --------- --------- --------- Net interest income ................................. $ 24,280 $ 16,472 $ 7,808 ========= ========= =========
The increase in interest and fees on loans during the three months ended March 31, 1997 compared to the same period in 1996 reflects higher average balances resulting from loans acquired in connection with the BNA acquisition, residential loan purchases, and loan fundings. The higher loan average balances were partially offset by lower rates earned on consumer loans. Loan average balances increased from $860.2 million during the three months ended March 31, 1996 to $1.9 billion during the comparable period during 1997. The BNA acquisition increased loan balances by $395.0 million. During the three months ended March 31, 1997 and the year ended December 31, 1996, BankAtlantic purchased for portfolio $69.0 million and $465.9 million of residential first mortgage loans from mortgage bankers and financial institutions located in various states. Loan fundings for portfolio were $135.7 million, $169.2 million and $692.5 million for the three months ended March 31, 1997 and 1996, and the year ended December 31, 1996, respectively. The lower fundings during the 1997 quarter compared to the same period during 1996 resulted from the discontinuation of mass and direct marketing of consumer loans during the fourth quarter of 1996 and lower residential loan fundings. The decrease in yields earned on consumer loans reflects the funding of new loans bearing lower interest rates than portfolio loan rates and the acquisition of BNA's consumer loan portfolio. The decline in interest on debt securities available for sale resulted from lower average balances and yields whichdeclined from $647.1 million and 6.49% for the three months ended March 31, 1996 to $492.3 million and 6.13% for the comparable 1997 period. The decline in debt securities available for sale average balances and yields resulted from principal repayments and sales of debt securities. Sales of debt securities were $91.3 million and $368.5 million during the three months ended March 31, 1997 and the year ended December 31, 1996, respectively. The lower debt securities available for sale average balances for the three months ended March 31, 1997 were partially offset by purchases of $148.8 million of treasury notes, $121.3 million of 7 year balloon mortgage-backed securities, and $1.3 million of 5 year balloon mortgage-backed securities. The 1997 increase in interest and dividends on investment securities was primarily due to a $500,000 reversal of tax certificate interest income reserve compared to a $98,000 reversal during the same 1996 period. The interest reserve reversal reflects higher than anticipated tax certificate repayments. Tax certificate and FHLB stock average balances were higher during the 1997 quarter compared to the 1996 quarter. The increase in the level of tax certificates reflects the fact that BankAtlantic began purchasing tax certificates outside of Florida during the first quarter of 1997. Increases in FHLB stock were required because of increased FHLB advances. The increase in interest on deposits for the quarter ended March 31, 1997 compared to the comparable 1996 quarter resulted from higher average deposit balances and rates during 1997. Average interest bearing deposit balances increased from $1.2 billion for the three months ended March 31, 1996 to $1.7 billion for the comparable period ended March 31, 1997, and average rates on deposits increased from 4.11% during the 1996 quarter to 4.19% during the 1997 quarter. The increase in the rates on deposits reflected higher rates on money market funds partially offset by lower certificate of deposit rates. The higher deposit average balances primarily resulted from $469.1 million of interest bearing deposits acquired with the BNA acquisition. The increase in interest expense on advances from FHLB was primarily due to higher average balances and secondarily to higher average rates. Advances from FHLB average balances increased from $145.1 million during the first quarter of 1996 to $314.5 million during the comparable 1997 quarter, and average rates paid on advances from FHLB increased from 5.60% during the 1996 three month period to 6.19% during the same period in 1997. The additional FHLB borrowings were primarily intermediate term advances. Intermediate term advances generally have higher rates than short term advances and were used to partially fund the purchase of residential loans. The additional interest expense on securities sold under agreements to repurchase resulted from higher average balances and rates. Securities sold under agreements to repurchase average balances increased from $64.0 million during the three months ended March 31, 1996 to $194.5 million during the comparable 1997 three month period and average rates increased from 4.39% during the 1996 period to 5.26% during the comparable 1997 period. The increased average rates on securities sold under agreements to repurchase resulted from a higher interest rate environment during 1997 than experienced during 1996. The higher interest on subordinated debentures relates to the issuance of $57.5 million of 6 3/4% Convertible Subordinated Debentures in July 1996. PROVISION FOR LOAN LOSSES The provision for loan losses for first quarter 1997 was $2.5 million compared to $940,000 during the comparable 1996 period. The higher 1997 provision for loan losses reflects an $865,000 increase in consumer loan net charge-offs, and a $450,000 increase in the March 1997 allowance for loan losses compared to a $300,000 reduction in the loan loss allowance during the March 1996 period. The increased consumer loan net charge-offs primarily resulted from the indirect consumer loan portfolio acquired with the BNA acquisition. The 1997 allowance for loan losses increase reflects a $150,000 specific allowance for BNA construction loans to a builder . The remaining increase in the allowance for loan losses was due to loan growth and recent consumer loan delinquency trends. On the indicated dates BBC's risk elements and non-performing assets were (in thousands): March 31, December 31, 1997 1996 -------- ----------- Nonaccrual : Tax certificates .................... $ 1,658 $ 1,835 Loans ............................... 12,339 12,424 ------ ------ Total nonaccrual .................... 13,997 14,259 ====== ====== Repossessed Assets: Real estate owned .................... 4,713 4,918 Repossessed assets ................... 3,739 1,992 ------ ------- Total repossessed assets ............. 8,452 6,910 ====== ======= Contractually past due 90 days or more (1) 935 2,961 Total non-performing assets .......... 23,384 24,130 Restructured loans ....................... 3,762 3,718 ------- ------- Total risk elements .................. $27,146 $27,848 ======= ======= (1) The majority of these loans have matured and the borrower continues to make payments under the matured loan agreement. BankAtlantic is in the process of renewing or extending these matured loans. BankAtlantic's "risk elements" consist of restructured loans and "non-performing" assets. The classification of loans as "non-performing" is generally based upon non-compliance with loan performance and collateral coverage standards, as well as management's assessment of problems relating to the borrower's or guarantor's financial condition. BankAtlantic generally designates any loan that is 90 days or more delinquent as non-performing. BankAtlantic may designate loans as non-performing prior to the loan becoming 90 days delinquent, if the borrower's ability to repay is questionable. A "non-performing" classification alone does not indicate an inherent principal loss; however, it generally indicates that management does not expect the asset to earn a market rate of return in the current period. Restructured loans are loans for which BankAtlantic has modified the loan terms due to the financial difficulties of the borrower. Total risk elements at March 31, 1997 compared to December 31, 1996 decreased by $702,000. The lower amount of risk elements primarily related to decreases in loans contractually past due 90 days or more, partially offset by higher repossessed assets balances. The $2.0 million decrease in loans contractually past due 90 days or more resulted from the renewal of three commercial loans amounting to $1.4 million and the payoff of a $600,000 commercial loan. The $1.7 million increase in repossessed assets primarily relates to automobiles associated with the indirect consumer loan portfolio acquired with the BNA acquisition. Furthermore, real estate owned declined by $205,000 due to sales, and nonaccrual tax certificates decreased by $177,000 resulting from redemptions of certificates. Non-Interest Income
For the Three Months Ended March 31, ----------------------------- (In thousands) 1997 1996 Change ------- ------- ------- Loan servicing and other loan fees ................. $ 1,571 $ 838 $ 733 Gains on sales of loans originated for resale ...... 451 164 287 Unrealized loss on trading account securities ...... (68) 0 (68) Gains on sales of mortgage servicing rights ........ 2,433 0 2,433 Gains on sales of debt securities available for sale 253 2,292 (2,039) Other .............................................. 4,384 3,540 844 ------- ------- ------- Total non-interest income ....................... $ 9,024 $ 6,834 $ 2,190 ======= ======= =======
The increase in loan servicing and other loan fees during the three month period in 1997 compared to the corresponding 1996 period resulted from higher loan servicing fees, late fee income and loan fees. Loan servicing income increased from $126,000 during the three months ended March 31, 1997 to $482,000 during the same 1997 period. The increased servicing income reflects the increase of mortgage servicing rights average balances from $22.4 million during the quarter ended March 31, 1996 to $28.3 million during the 1997 quarter, as well as a lower amortization rate on mortgage servicing rights caused by reduced loan prepayments during the comparable periods. In addition, investor loan set-up fee income increased by $143,000 resulting from increases in mortgage loans serviced for others. Late fee income increased from $311,000 during the three months ended March 31, 1996 to $491,000 during the comparable 1997 period. The increased late fee income resulted from higher loan average balances. Other loan fees increased by $111,000 during the 1997 period compared to the same 1996 period. The other loan fee income increase primary resulted from higher prepayment penalties on commercial loans. During the three months ended March 31, 1997 and 1996, BankAtlantic sold $24.6 million and $15.2 million, respectively, of recently originated residential loans for gains as reported in the prior table. During the three months ended March 31, 1997, BBC purchased $6.3 million of marketable equity securities which are classified as trading securities. The unrealized losses on these securities is shown in the prior table. During the three months ended March 31, 1997, BankAtlantic sold $5.3 million of mortgage servicing rights for the gain reported in the above table. These rights related to approximately $518.2 million of loans serviced for others. During the three months ended March 31, 1997, BankAtlantic sold from its available for sale portfolio $91.3 million of treasury notes, and during the three months ended March 31, 1996, BankAtlantic sold $52.6 million of adjustable rate mortgage-backed securities and $20.5 million of 15 year mortgage-backed securities for the gains reported in the prior table. The increase in other non-interest income during the three months ended March 31, 1997 compared to the 1996 period was due to higher fees earned on checking accounts and ATM fees, partially offset by lower lease income. Checking account income and ATM fees were $2.1 million and $1.3 million for the first quarter 1997, respectively, compared to $1.9 million and $668,000, respectively, during the comparable 1996 period. The $144,000 decline in lease income resulted from sales of leased properties during December 1996. Non-Interest Expenses
For the Three Months Ended March 31, ----------------------------- (In thousands) 1997 1996 Change - -------------- ---- ---- ------ Employee compensation and benefits ................... $ 9,547 $ 7,368 $ 2,179 Occupancy and equipment .............................. 4,792 2,785 2,007 Federal insurance premium ............................ 208 591 (383) Advertising and promotion ............................ 369 507 (138) Foreclosed asset activity, net ....................... 13 (162) 175 Amortization of cost over fair value of net assets acquired ........................................... 627 306 321 Other ................................................ 4,844 3,120 1,724 ----- ----- ----- Total non-interest expenses ...................... $20,400 $14,515 $ 5,885 ======= ======= =======
The increase in employee compensation and benefits during the three months ended March 31, 1997 compared to the 1996 period resulted from the expansion of BankAtlantic's branch network, the acquisition of eight BNA branches and annual salary increases. Occupancy and equipment expenses increased due to the expanded branch network and the BNA acquisition mentioned above, and the fourth quarter conversion of data processing functions to an outside service bureau. As a result of the conversion, processing fees and depreciation expense increased from $108,000 and $858,000 during 1996 to $1.0 million and $1.3 million during 1997, respectively. The increase in depreciation expense resulted from the purchase of item processing equipment, the implementation of a wide area network throughout the organization, and upgrading consumer and residential lending loan origination software. Management believes these expenditures will enhance BankAtlantic's customer delivery systems. The reduction in federal insurance premium during the 1997 quarter resulted from reduced FDIC premium rates based on the SAIF recapitalization substantially effected in September 1996. At that time BankAtlantic incurred a $7.2 million special one-time SAIF assessment. The decline was partially offset by increased deposits in connection with the BNA acquisition on which FDIC premiums are assessed. The decline in advertising and promotion expenses during 1997 resulted from direct consumer lending and branch expansion promotions during 1996 that were not conducted in 1997. The decline in foreclosed asset activity, net reflects lower levels of real estate owned and related activities during the periods. Gains on sales of real estate owned and operating expenses were $79,000 and $92,000, respectively, during 1997 compared to gains of $149,000 and operating income of $13,000 for the comparable 1996 period. The increase in the amortization of cost over fair value of net assets acquired for the three months ended March 31, 1997 related to the BNA acquisition. The increase in other expenses during the three months ended March 31, 1997 compared to the 1996 period reflects expenses associated with the BNA acquisition, an expanded branch network, service bureau conversion losses discussed below, as well as higher consumer repossession expenses primarily resulting from increased volume. In 1997, telephone, postage, stationery, printing and supplies expenses increased by a total of $368,000 compared to 1996 due to the expanded branch network and the BNA acquisition. Check losses and teller outages increased by a total of $388,000 largely associated with the October, 1996data processing conversion. Consumer repossession expenses increased by $782,000 primarily as a consequence of the indirect consumer automobile loans acquired in connection with the BNA and MegaBank acquisitions. Financial Condition BBC's total assets at March 31, 1997 were $2.8 billion compared to $2.6 billion at December 31, 1996. Loans receivable, net, debt securities available for sale, trading account securities, FHLB stock, and other assets increased by $26.6 million, $133.4 million, $6.3 million, $4.4 million, and $5.7 million, respectively. The $23.0 million increase in other interest bearing deposits with depository institutions was offset by decreases in cash and federal funds sold of $21.9 million and $6.1 million, respectively. The increase in loans receivable, net reflects $69.0 million of residential loan purchases and $135.7 million of loan fundings for portfolio, partially offset by $164.3 million of loan principal repayments and $24.6 million of loan sales. The higher debt securities available for sale balances reflect the purchase of $271.4 million of securities, partially offset by the sale of $91.3 million of treasury notes and $43.1 million of principal repayments. During 1997, BBC purchased $6.3 million of marketable equity securities and additional FHLB stock was purchased to satisfy FHLB advance requirements. The other asset increase reflects a receivable associated with the sale of mortgage servicing rights during March 1997. At March 31, 1997, FHLB advances, securities sold under agreements to repurchase and advances by borrowers for taxes and insurance increased by $87.0 million, $65.4 million and $14.0 million, respectively. The additional borrowings, loan repayments, and principal collected on debt securities available for sale and investment securities were used to fund loan growth and deposit outflows and to purchase debt securities available for sale, FHLB stock and trading account securities. Liquidity and Capital Resources BBC's primary source of funds during the first three months of 1997 were dividends from BankAtlantic. The primary use of funds during the three month period was payment of cash dividends to common stockholders, interest expense on its outstanding 9% Subordinated Debentures and 6 3/4% Convertible Subordinated Debentures, the purchase of $6.3 million of trading account securities and funding a $6.5 million commercial loan participated with BankAtlantic. It is anticipated that funds for interest and dividend payments will continue to be obtained from BankAtlantic. BBC currently anticipates that it will pay regular quarterly cash dividends on its common stock. Payment of interest and the ultimate repayment of the 6 3/4% and 9% Debentures is significantly dependent upon the operations and distributions from BankAtlantic, refinancing of the debt or raising additional equity capital. In March 1997, BBC formed BBC Capital Trust I ("BBC Capital"). BBC Capital is a statutory business trust which was formed for the purpose of issuing Cumulative Trust Preferred Securities ("Preferred Securities") and investing the proceeds thereof in Junior Subordinated Debentures of BBC. In a public offering in April 1997, BBC Capital issued 2.99 million shares of Preferred Securities at a price of $25 per share. The gross proceeds from the offering of $74.75 million were invested in an identical principal amount of BBC's 9.50% Junior Subordinated Debentures (the "Junior Subordinated Debentures") which bear interest at the same rate as the Preferred Securities and have a stated maturity of 30 years. In addition, BBC contributed $2.3 million to BBC Capital in exchange for BBC Capital's Common Securities (the "Common Securities") and such proceeds were also invested in an identical principal amount of Junior Subordinated Debentures. Offering costs of $2.9 million were paid by BBC. BBC intends to use the net proceeds from the sale of the Junior Subordinated Debentures for general corporate purposes, including repurchases of its common stock, for acquisitions by either BBC or BankAtlantic and contribution to BankAtlantic to support growth and for working capital. Such possible future acquisitions may be in businesses not engaged in banking activities and in such event such acquisitions could result in material changes to the scope of BBC's business and would subject BBC to the risks inherent in any businesses acquired. BBC Capital's sole asset is $77.1 million aggregate principal amount of the Junior Subordinated Debentures. Holders of the Preferred Securities and the Common Securities will be entitled to receive a cumulative cash distribution at a fixed 9.50% rate of the $25 liquidation amount of each Security and the Preferred Securities will have a preference under certain circumstances with respect to cash distributions and amounts payable on liquidation, redemption or otherwise over the Common Securities. The Preferred Securities are considered debt for financial accounting and tax purposes. BBC has the right, at any time, so long as no event of default has occurred and is continuing, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters; provided, that no extended interest payment period may extend beyond the stated maturity of the Junior Subordinated Debentures. During the extended interest payment period, distributions or the Preferred Securities will also be deferred and BBC will be prohibited from declaring or paying any cash distributions with respect to its debt securities that rank pari passu with or junior to the Junior Subordinated Debentures or with respect to its capital stock. The Preferred Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Junior Subordinated Debentures at maturity or their earlier redemption. Subject to regulatory approval, if then required, the Junior Subordinated Debentures are redeemable prior to maturity at the option of BBC (i) on or after June 30, 2002, in whole at any time or in part from time to time, or (ii) at any time, in whole ( but not in part), within 180 days following the occurrence of certain events including certain changes in the tax laws, in each case at a redemption price equal to 100% of the principal amount of the Junior Subordinated Debentures so redeemed, together with any accrued but unpaid interest to the date fixed for redemption. Subject to receipt of any regulatory approvals, BBC has the right at any time to terminate BBC Capital and cause the Junior Subordinated Debentures to be distributed to holders of Preferred Securities in liquidation of BBC Capital. BBC has guaranteed the payment of distributions and payments on liquidation or redemption of the Preferred Securities, but only in each case to the extent of funds held by BBC Capital. The obligations of BBC under the guarantee and the Junior Subordinated Debentures are subordinate and junior in right of payment to all Senior Debt and the Company's 6 3/4% Convertible Subordinated Debt (as defined in the Indenture relating to the Junior Subordinated Debentures) and the 9% Subordinated Debentures. BankAtlantic's primary sources of funds during the first three months of 1997 were from operations, principal collected on loans, mortgage-backed securities, investment securities, sales of debt securities available for sale, FHLB advances, a mortgage servicing rights sale, securities sold under agreements to repurchase and advances from borrowers for taxes and insurance. These funds were primarily utilized to fund deposit outflows and loan purchases and fundings and the purchase of FHLB stock, tax certificates, and debt securities available for sale. At March 31, 1997, BankAtlantic met all applicable liquidity and regulatory capital requirements. BankAtlantic's commitments to originate loans at March 31, 1997 were $46.9 million compared to $95.4 million at March 31, 1996. Commitments to purchase residential loans were $24.0 million and $0 at March 31, 1997 and 1996, respectively. BankAtlantic expects to fund the 1997 loan commitments from loan and debt securities available for sale repayments. At March 31, 1997, loan commitments were 2.48 % of loans receivable, net. BankAtlantic's actual capital amounts and ratios are presented in the table:
To be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes Action Provisions ------ -------- ----------------- Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- (In thousands) As of March 31, 1997: Total risk-based capital $ 199,657 11.12 % > $ 143,665 > 8.00 % > $179,582 > 10.00% = = = = Tier I risk-based capital $ 177,154 9.86 % > $ 71,833 > 4.00 % > $107,749 > 6.00% = = = = Tangible capital ........ $ 177,154 6.49 % > $ 40,939 > 1.50 % > $ 40,939 > 1.50% = = = = Core capital ............ $ 177,154 6.49 % > $ 81,878 > 3.00 % > $136,463 > 5.00% = = = = As of December 31, 1996: Total risk-based capital $ 193,196 10.83 % > $ 142,691 > 8.00 % > $178,407 > 10.00% = = = = Tier I risk-based capital $ 170,865 9.58 % > $ 71,363 > 4.00 % > $107,004 > 6.00% = = = = Tangible capital ........ $ 170,865 6.65 % > $ 38,547 > 1.50 % > $ 38,547 > 1.50% = = = = Core capital ............ $ 170,865 6.65 % > $ 77,094 > 3.00 % > $128,491 > 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 BBC's Annual Report on Form 10K for the year ended December 31, 1996. PART II - OTHER INFORMATION Exhibits - -------- None Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANKATLANTIC BANCORP, INC. May 15, 1997 By: /s/Alan B. Levan - ------------ ------------------------------- Date Alan B. Levan Chief Executive Officer/ Chairman/President May 15, 1997 By: /s/Jasper R. Eanes - ------------ ------------------------------- Date Jasper R. Eanes Executive Vice President/ Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the Consolidated Statement of Financial Condition at March 31, 1997 (Unaudited) and the Consolidated Statement of Operations for the three months ended March 31, 1997 (Unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 U.S. Dollars 3-MOS DEC-31-1997 Jan-01-1997 Mar-31-1997 1 81,099 22,998 0 6,349 572,783 46,715 46,715 1,877,641 26,200 2,773,085 1,824,189 415,967 79,122 301,202 0 0 185 152,420 2,773,085 41,123 9,321 0 50,444 17,275 26,164 24,280 2,476 253 20,400 10,428 10,428 0 0 6,341 0.33 0.28 8.33 12,339 935 3,762 0 25,750 2,423 397 26,200 26,200 0 4,565
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