-----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, HVUHlbyVhDzvAPZXnvFVdQ/5ap03eg0UKvPZIQGByzFaJXacmXXnymGsXXvybOil GQfMoxvibJ89MtEd3sWmqg== 0000921768-99-000007.txt : 19990513 0000921768-99-000007.hdr.sgml : 19990513 ACCESSION NUMBER: 0000921768-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKATLANTIC BANCORP INC CENTRAL INDEX KEY: 0000921768 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 650507804 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13133 FILM NUMBER: 99618005 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 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, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 34-027228 BANKATLANTIC BANCORP, INC. -------------------------- (Exact name of registrant as specified in its Charter) Florida 65-0507804 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1750 East Sunrise Boulevard Ft. Lauderdale, Florida 33304 (Address of principal executive offices) (Zip Code) (954) 760-5000 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of preferred and common stock as of the latest practicable date. Outstanding at Title of Each Class May 7. 1999 Class A Common Stock, par value $0.01 per share Class B Common Stock, par value $0.01 per share BankAtlantic Bancorp, Inc. TABLE OF CONTENTS FINANCIAL INFORMATION Page Reference Financial Statements...................................................... 1-12 Consolidated Statements of Financial Condition - March 31, 1999 and 1998 and December 31, 1998 - Unaudited..................1 Consolidated Statements of Operations - For the Three Months Ended March 31, 1999 and 1998 - Unaudited................................2-3 Consolidated Statements of Stockholders' Equity and Comprehensive Income for the Three Months Ended March 31, 1999 and 1998 - Unaudited.......................................................4 Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 1999 and 1998 - Unaudited................................5-7 Notes to Consolidated Financial Statements - Unaudited.....................8-12 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................13-27 OTHER INFORMATION Exhibits and Reports on Form 8K............................................. 28 Signatures.................................................................. 29 [THIS PAGE INTENTIONALLY LEFT BLANK] BankAtlantic Bancorp, Inc. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
March 31, December 31, March 31, (In thousands, except share data) 1999 1998 1998 ---- ---- ---- ASSETS Cash and due from depository institutions ......................................... $ 96,430 $ 100,823 $ 72,102 Interest bearing deposits in other banks........................................... 5,167 0 0 Federal Funds sold and securities purchased under resell agreements................ 5,914 0 21,000 Loans receivable, net ............................................................. 2,375,633 2,466,488 2,496,510 Loans held for sale ............................................................... 257,628 168,881 139,903 Investment securities-net, held to maturity, at cost which approximates market value ..................................................................... 49,681 51,811 48,499 Securities available for sale, at market value .................................... 1,003,057 597,520 458,123 Trading securities, at market value................................................ 17,254 30,005 7,804 Accrued interest receivable ....................................................... 28,750 27,771 26,601 Real estate held for development and sale and joint ventures ...................... 60,966 67,845 17,736 Real estate owned, net ............................................................ 6,884 5,503 5,660 Office properties and equipment, net .............................................. 57,157 58,090 51,342 Federal Home Loan Bank stock, at cost which approximates market value ............. 49,155 52,230 48,587 Mortgage servicing rights, net .................................................... 42,804 44,315 45,159 Deferred tax asset, net ........................................................... 21,462 20,148 3,322 Cost over fair value of net assets acquired, net .................................. 54,530 55,493 35,063 Other assets ...................................................................... 101,134 42,052 49,097 ------- ------ ------ Total assets ...................................................................... $ 4,233,606 $ 3,788,975 $ 3,526,508 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits .......................................................................... $ 2,115,559 $ 1,925,772 $ 1,830,083 Advances from FHLB ................................................................ 983,074 1,044,572 971,709 Federal Funds purchased ........................................................... 0 18,500 0 Securities sold under agreements to repurchase .................................... 409,232 162,093 117,389 Subordinated debentures, notes and bonds payable .................................. 176,966 177,114 179,596 Guaranteed preferred beneficial interests in the Company's Junior Subordinated Debentures............................................................ 74,750 74,750 74,750 Advances by borrowers for taxes and insurance ..................................... 52,208 62,346 72,762 Other liabilities ................................................................. 185,022 83,388 63,176 ------- ------ ------ Total liabilities ................................................................. 3,996,811 3,548,535 3,309,465 --------- --------- --------- Stockholders' equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized: none issued and outstanding .................................................... 0 0 0 Class A Common Stock, $0.01 par value, authorized 80,000,000 shares; issued and outstanding, 25,826,417, 26,799,368 and 22,383,185 shares ......... 258 268 224 Class B Common Stock, $0.01 par value, authorized 45,000,000 shares; issued and outstanding, 10,359,994, 10,356,431 and 10,612,664 shares ......... 104 104 106 Additional paid-in capital ........................................................ 139,532 147,686 104,373 Unearned compensation - restricted stock grants................................... (6,720) (7,062) 0 Retained earnings ................................................................. 103,019 95,818 112,052 Total stockholders' equity before accumulated other comprehensive income .......... 236,193 236,814 216,755 Accumulated other comprehensive income - net unrealized appreciation on securities available for sale - net of deferred income taxes ................ 602 3,626 288 --- ----- --- Total stockholders' equity ........................................................ 236,795 240,440 217,043 ------- ------- ------- Total liabilities and stockholders' equity ........................................ $ 4,233,606 $ 3,788,975 $ 3,526,508 =========== =========== =========== See Notes to Consolidated Financial Statements - Unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months (In thousands, except share data) Ended March 31, Interest income: 1999 1998 ---- ---- Interest and fees on loans and leases .................................................$ 53,566 $ 47,139 Interest on banker's acceptances ...................................................... 187 460 Interest and dividends on securities available for sale ............................... 10,053 9,987 Interest and dividends on investment securities held to maturity and trading securities 2,606 2,224 ----- ----- Total interest income ................................................................. 66,412 59,810 ------ ------ Interest expense: Interest on deposits .................................................................. 16,591 16,367 Interest on advances from FHLB ........................................................ 13,497 10,712 Interest on securities sold under agreements to repurchase and federal funds purchased 4,044 3,318 Interest on subordinated debentures, guaranteed preferred interest in the Company's Junior Subordinated Debentures and notes and bonds payable ......... 4,787 4,939 Capitalized interest on investments in and advances to real estate joint ventures ..... (175) 0 ---- - Total interest expense ................................................................ 38,744 35,336 ------ ------ Net interest income ................................................................... 27,668 24,474 Provision for loan losses ............................................................. 5,164 3,407 ----- ----- Net interest income after provision for loan losses ................................... 22,504 21,067 ------ ------ Non-interest income: Loan late fees and other loan income .................................................. 1,130 899 Gains on sales of loans held for sale ................................................. 633 1,747 Gains on sales of securities available for sale ....................................... 579 1,720 Trading securities gains (losses) ..................................................... (69) 171 Gains on sales of real estate held for sale ........................................... 3,666 100 Equity in earnings of unconsolidated real estate joint ventures ....................... 1,729 0 Principal transactions - RBCO ......................................................... 3,000 0 Investment banking - RBCO ............................................................. 3,117 0 Commissions - RBCO .................................................................... 2,676 0 Transaction fees ...................................................................... 3,591 2,600 ATM fees .............................................................................. 2,199 1,297 Other ................................................................................. 1,218 1,030 ----- ----- Total non-interest income ............................................................. 23,469 9,564 ------ ----- Non-interest expense: Employee compensation/benefits excluding RBCO and real estate operations .............. 9,641 10,827 Employee compensation/benefits for RBCO ............................................... 6,450 0 Employee compensation/benefits for real estate operations ............................. 152 165 Occupancy and equipment ............................................................... 5,674 4,847 Federal insurance premium ............................................................. 273 262 Advertising and promotion ............................................................. 756 634 Amortization of cost over fair value of net assets acquired ........................... 983 659 Other excluding RBCO and real estate operations ....................................... 5,572 4,705 Other for RBCO ........................................................................ 1,976 0 Other for real estate operations ...................................................... 818 880 --- --- Total non-interest expense ............................................................ 32,295 22,979 ------ ------ Income before income taxes and discontinued operations ................................ 13,678 7,652 Provision for income taxes ........................................................... 5,507 2,806 ----- ----- Income from continuing operations ..................................................... 8,171 4,846 Income from discontinued operations, net of taxes .................................... 0 410 - --- Net Income ............................................................................$ 8,171 $ 5,256 ========== ========== See Notes to Consolidated Financial Statements - Unaudited (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months Ended March 31, ------------------------------------ 1999 1998 ---- ---- Class A common shares Basic earnings per share from continuing operations ...... $ 0.24 $ 0.15 Basic earnings per share from discontinued operations .... 0.00 0.02 ---- ---- Basic earnings per share ................................. $ 0.24 $ 0.17 ================== ============== Diluted earnings per share from continuing operations .... $ 0.19 $ 0.13 Diluted earnings per share from discontinued operations .. 0.00 0.01 ---- ---- Diluted earnings per share ............................... $ 0.19 $ 0.14 ================== ============== Basic weighted average number of common shares outstanding 25,342,390 21,809,903 ========== ========== Diluted weighted average number of common and common equivalent shares outstanding ............................ 41,203,707 38,764,353 ============= ========== Class B common shares Basic earnings per share from continuing operations ...... $ 0.21 $ 0.14 Basic earnings per share from discontinued operations .... 0.00 0.01 ---- ---- Basic earnings per share ................................. $ 0.21 $ 0.15 ================== ============== Diluted earnings per share from continuing operations .... $ 0.18 $ 0.12 Diluted earnings per share from discontinued operations .. 0.00 0.01 ---- ---- Diluted earnings per share ............................... $ 0.18 $ 0.13 ================== ============== Basic weighted average number of common shares outstanding 10,359,717 10,768,956 ========== ========== Diluted weighted average number of common and common equivalent shares outstanding ............................ 10,997,899 11,879,110 ========== ==========
See Notes to Consolidated Financial Statements - Unaudited CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Net Unearned Unrealized Compen- Appreci- Addi- sation - ation on Compre- tional Restricted Securities hensive Common Paid-in Retained Stock Available (In thousands) Income Stock Capital Earnings Grants For Sale Total - -------------- ------ ----- ------- -------- ------ -------- ----- BALANCE, DECEMBER 31, 1997 .............. $ 32 $ 98,475 $ 107,650 $ 0 $ 724 $ 207,171 Net income .................................... $ 5,256 0 0 5,256 0 0 5,256 -------- Oher comprehensive income, net of tax: Unrealized gains on securities available for sale 51 Reclassification adjustment for gains and (losses) included in net income ......................... (487) ---- Other comprehensive loss ........................ (436) ---- Comprehensive income .............................$ 4,820 ======= Dividends on Class A common stock ................ 0 0 (599) 0 0 (599) Dividends on Class B common stock ................ 0 0 (255) 0 0 (255) Exercise of Class A common stock options ......... 0 93 0 0 0 93 Exercise of Class B common stock options ......... 2 760 0 0 0 762 Tax effect relating to the exercise of stock options 0 286 0 0 0 286 Purchase and retirement of Class B common stock .. (2) (4,439) 0 0 0 (4,441) upon acquisition of Leasing Technology, Inc. ... 7 8,358 0 0 0 8,365 Issuance of Class A common stock upon conversion of subordinated debentures, net .... 1 840 0 0 0 841 Net change in unrealized depreciation on securities available for sale-net of deferred income taxes 0 0 0 0 (436) (436) - - - - ---- ---- BALANCE, MARCH 31, 1998 ............................. $ 330 $ 104,373 $ 112,052 $ 0 $ 288 $ 217,043 =========== ========== ========== ========== ============= ========== BALANCE, DECEMBER 31, 1998 ........................ $ 372$ 147,686 $ 95,818 $ (7,062)$ 3,626 $ 240,440 Net income .......................................$ 8,171 0 0 8,171 0 0 8,171 ------- Other comprehensive income, net of tax: Unrealized losses on securities availablefor sale (3,300) Reclassification adjustment for gains and (losses) included in net income .......................... 276 --- Other comprehensive loss ........................(3,024) ------ Comprehensive income ............................$ 5,147 ======= Dividends on Class A common stock ........................ 0 0 (711) 0 0 (711) Dividends on Class B common stock ........................ 0 0 (259) 0 0 (259) Exercise of Class A common stock options ................. 0 42 0 0 0 42 Exercise of Class B common stock options ................. 0 14 0 0 0 14 Tax effect relating to the exercise of stock options ..... 0 12 0 0 0 12 Purchase and retirement of Class A common stock .......... (10) (8,384) 0 0 0 (8,394) Forfeited Class A restricted common stock ................ 0 (89) 0 89 0 0 Unearned compensation - restricted stock grants .......... 0 251 0 (251) 0 0 Amortization of unearned compensation - restricted stock grants .......................................... 0 0 0 504 0 504 Net change in unrealized depreciation on securities Available for sale-net of deferred income taxes ........ 0 0 0 0 (3,024) (3,024) - - - - ------ ------ BALANCE, MARCH 31, 1999 ..................................$ 362 $ 139,532 $ 103,019 $ (6,720)$ 602 $ 236,795 ========= ========= ========== ========== ============= ============== See Notes to Consolidated Financial Statements - Unaudited
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
For the Three Months (In thousands, except share data) Ended March 31, --------------------------------- --------------- Operating activities: 1999 1998 ---- ---- Income from continuing operations ............................................ 8,171 4,846 Income from discontinued operations .......................................... 0 410 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses .................................................... 5,164 3,407 Provision for losses on real estate owned .................................... 70 432 Depreciation, amortization and accretion, net ................................ 6,308 7,657 Gains on sales of mortgage servicing rights .................................. 0 (2,038) Decrease (increase) in deferred tax asset, net ............................... 599 (447) Trading account (gains) losses ............................................... 69 (171) Purchases of trading securities .............................................. (99) (1,441) Decrease in trading securities owned at market - RBCO ........................ 12,781 0 Gains on sales of real estate owned .......................................... (71) (724) Gains on sales of real estate held for development and sale .................. (3,666) (100) Gains on sales of securities available for sale .............................. (579) (1,720) Proceeds from sales of loans held for sale ................................... 60,619 95,619 Fundings of loans held for sale .............................................. (22,702) (17,056) Loans purchased, classified as held for sale ................................. (122,624) 0 Gains on sales of loans held for sale ........................................ (633) (1,728) Provision for (recovery from) tax certificate losses ......................... 180 (35) Increase in accrued interest receivable ...................................... (979) (3,977) Decrease (increase) in other assets .......................................... 5,681 (1,546) Equity in earnings of unconsolidated real estate joint ventures .............. (1,729) 0 Increase (decrease) in other liabilities ..................................... (13,026) 5,526 Decrease in RBCO securities sold not yet purchased ........................... (1,313) 0 ------ - Net cash provided (used) by operating activities ............................. (67,779) 86,914 ------- ------
See Notes to Consolidated Financial Statements - Unaudited (Continued) CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Continued)
For the Three Months (In thousands, except share data) Ended March 31, 1999 1998 ---- ---- Investing activities: Proceeds from redemption and maturities of investment securities ...... 8,463 11,787 Purchase of investment securities ..................................... (8,428) (5,038) Proceeds from sales of securities available for sale .................. 0 334,836 Principal collected on securities available for sale .................. 48,174 30,159 Purchases of securities available for sale ............................ (405,474) (215,648) Proceeds from sales of FHLB stock ..................................... 7,550 0 FHLB stock acquired ................................................... (4,475) (13,700) Principal reduction on loans .......................................... 397,386 309,861 Loan fundings for portfolio ........................................... (289,656) (233,916) Loans purchased for portfolio ......................................... 0 (778,401) Proceeds from maturities of banker's acceptances ...................... 3,672 135,985 Purchases of banker's acceptances ..................................... (2,643) (91,381) Proceeds from sales of banker's acceptances ........................... 0 24,593 Additions to dealer reserve ........................................... 0 (2,086) Proceeds from sales of real estate owned .............................. 1,072 3,192 Purchases of real estate owned ....................................... (784) 0 Mortgage servicing rights acquired .................................... (643) (17,027) Proceeds from sales of mortgage servicing rights ...................... 0 15,394 Cost of equipment acquired for lease .................................. (7,462) (1,657) Additions to office property and equipment ............................ (1,108) (1,596) Repayments of joint venture investments ............................... 3,005 0 Investment in and advances to joint ventures .......................... (16,296) (1,345) Proceeds from sales of real estate held for development and sale ...... 7,195 840 Additional investment in real estate held for development and sale .... (2,388) (847) Acquisition, net of cash acquired ..................................... 0 (300) - ---- Net cash used in investing activities ................................. (262,840) (496,295) -------- -------- Financing activities: Net increase in deposits ............................................. 176,944 52,987 Interest credited to deposits ......................................... 12,843 13,363 Repayments of FHLB advances ........................................... (330,498) (150,998) Proceeds from FHLB advances ........................................... 269,000 425,000 Net increase in securities sold under agreements to repurchase ........ 247,139 58,673 Net decrease in federal funds purchased ............................... (18,500) (2,500) Repayment of notes payable ............................................ (1,480) (6,396) Increase in notes payable ............................................. 1,332 605 Issuance of common stock relating to exercise of employee stock options 56 855 Payments to acquire and retire common stock ........................... (8,394) (4,441) Receipts (repayments) of advances by borrowers for taxes and insurance (10,138) 33,365 Common stock dividends paid ........................................... (997) (817) ---- ---- Net cash provided by financing activities ............................ 337,307 419,696 ------- ------- Increase in cash and cash equivalents ................................. 6,688 10,315 Cash and cash equivalents at beginning of period ...................... 100,823 82,787 ------- ------ Cash and cash equivalents at end of period ............................ $ 107,511 $ 93,102 ========= ========= See Notes to Consolidated Financial Statements - Unaudited (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (CONTINUED)
For the Three Months Ended March 31, 1999 1998 ---- ---- Supplementary disclosure and non-cash investing and financing activities: Interest paid on borrowings and deposits .............................................. $ 38,305 $ 31,744 Income taxes paid ..................................................................... 5,000 1,361 Loans transferred to real estate owned ................................................ 1,668 1,032 Purchased residential loans held for investment transferred to held for sale .......... 0 50,377 Issuance of Class A common stock upon acquisition ..................................... 0 8,365 Issuance of Class A common stock upon conversion of subordinated debentures .......... 0 841 Decrease in deferred offering costs upon conversion of subordinated debentures ........ 0 (42) Decrease in subordinated debentures upon conversion to Class A common stock ........... 0 883 Loan charge-offs ...................................................................... 6,614 3,040 Tax certificate recoveries, net ....................................................... (78) (220) Class A common stock dividends; not paid until April .................................. 711 599 Class B common stock dividends; not paid until April .................................. 259 255 Accrual for the purchase of mortgage servicing rights not yet paid for ................ 0 13,000 Sales of securities available for sale not yet settled ................................ 64,114 0 Purchase of securities available for sale not yet settled ............................. 116,503 0 Joint venture investments transferred to loans ........................................ 20,758 0 Increase in equity for the tax effect related to the exercise of employee stock options 12 286 Change in net unrealized depreciation on securities available for sale ................ (4,937) (718) Change in deferred taxes on net unrealized depreciation on securities available for sale ................................................................... (1,913) (282) Change in stockholders' equity from net unrealized depreciation on securities available for sale, less related deferred income taxes ................ (3,024) (436) Increase in real estate held for development and sale resulting from St. Lucie West Holding Company ("SLWHC") purchase accounting adjustments ......................... 0 1,009 Decrease in other assets resulting from SLWHC purchase accounting adjustments ......... 0 1,009 = ===== See Notes to Consolidated Financial statements - Unaudited
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. Presentation of Interim Financial Statements BankAtlantic Bancorp, Inc. (the "Company") is a unitary savings bank holding company. The Company's principal assets include the capital stock of: BankAtlantic, a Federal Savings Bank ("BankAtlantic") and its subsidiaries and Ryan Beck & Co., Inc. ("RBCO"), an investment banking firm and its subsidiaries. Under applicable law, the Company generally has broad authority with few restrictions to engage in various types of business activities. The Company's primary activities have related to the operations of BankAtlantic, RBCO and their subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In management's opinion, the accompanying consolidated financial statements contain such adjustments necessary to present fairly the Company's consolidated financial condition at March 31, 1999 and 1998, the consolidated results of operations for the three months ended March 31, 1999 and 1998, the consolidated stockholders' equity and comprehensive income for the three months ended March 31, 1999 and 1998 and the consolidated cash flows for the three months ended March 31, 1999 and 1998. 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 the Company's Annual Report on Form 10K for the year ended December 31, 1998. 2. Equity Capital Pursuant to previously announced plans to purchase shares of its common stock, the Company paid $8.4 million to repurchase and retire 999,700 shares of Class A common stock during the three months ended March 31, 1999, During the three months ended March 31, 1998, the Company paid $4.4 million to repurchase and retire 303,500 shares of Class B common stock. During the three months ended March 31, 1999, 7,490 and 3,563 of Class A and Class B incentive stock options, respectively, were exercised resulting in a $68,000 increase in stockholders' equity. The tax effect included in the preceding amount was $12,000. During the three months ended March 31, 1998, 10,989 and 232,247 of Class A and Class B stock options, respectively, were exercised resulting in a $1.1 million increase in stockholders' equity. The tax effect included in the preceding amount was $286,000. During the three months ended March 31, 1999, the Company issued 29,356 shares of restricted Class A common stock to new employees of RBCO, vested 3,974 shares of retention pool restricted stock granted in June 1998 to an employee who left RBCO in March 1999, and canceled 10,098 shares of restricted Class A common stock for terminated employees. The restricted Class A common stock issued to new employees vests on the fourth anniversary of the grant date and had a fair value at the grant date of $251,000. Furthermore in March 1999, the Board of Directors granted non-qualifying stock options to purchase 500 shares of Class A common stock with an exercise price equal to the market price at the date of the grant ($7.375) to all employees except executive officers of BankAtlantic and its subsidiaries resulting in the issuance of 509,500 non-qualifying stock options. During the three months ended March 31, 1998, the Company issued 134,804 shares of Class A common stock upon the conversion of $883,000 in principal amount of the Company's 6 3/4% Convertible Subordinated Debentures at a conversion price of $6.55. There were no conversions during the three months ended March 31, 1999. 3. Sales of Financial Assets On March 26, 1999, the Company sold $63.5 million of securities available for sale for a $579,000 gain. Included in other assets was a $64.1 million receivable from the above sale. During the three months ended March 31, 1998, the Company sold $333.1 million of securities available for sale for a $1.7 million gain. During the three months ended March 31, 1999 the Company sold $38.5 million, $20.4 million and $1.1 million of loans originated for resale, loans purchased and classified as held for sale and leases for gains of $492,000, $64,000 and $77,000, respectively. During the three months ended March 31, 1998, the Company sold $43.5 million of loans originated for resale and $50.4 million of purchased loans transferred from held for investment to held for sale for an aggregate gain of $1.7 million. As part of its normal operations from 1996 through the latter part of 1998, the Company purchased bulk residential loans to be held for investment. These bulk purchased loans are continually evaluated and such evaluations may result in transfers from the held for investment category to the held for sale category. Such transfers, if any, have not and are not normally expected to exceed 10% of the average annual balance of the portfolio. 4. Trading Securities During the three months ended March 31, 1999, the Company realized a $69,000 loss from government securities trading. The Company did not trade government securities during the three months ended March 31, 1998. During the three months ended March 31, 1998, the Company transferred $1.8 million of equity securities available for sale to trading securities resulting in a $562,000 unrealized gain on the date of transfer. The unrealized and realized gains on the trading securities for the three months ended March 31, 1998 were $171,000. Included in trading securities at March 31, 1999 were $17.2 million of securities owned by RBCO and a $30,000 premium related to a futures contract to purchase $1.5 million of Treasury notes. The government securities future contract was settled in April at book value. The RBCO gains on trading securities were associated with sales and trading activities conducted both as principal and as agent on behalf of individual and institutional investor clients of RBCO. Transactions as principal involve making markets in securities which are held in inventory to facilitate sales to and purchases from customers. During the three months ended March 31, 1999, RBCO realized net gains from principal transactions of $3.0 million. Furthermore, included in other liabilities was $1.7 million of securities sold not yet purchased relating to RBCO trading activity. The Company's trading securities consist of the following (in thousands): March 31, December 31, 1999 1998 ---- ---- Debt obligations: States and municipalities .. $ 5,925 $18,476 Corporations ............... 738 615 U.S. Government and agencies 181 172 Corporate equities ........... 10,380 10,448 Other ........................ 30 294 -- --- $17,254 $30,005 ======= ======= 5. Real Estate Held for Development and Sale and Joint Venture Activities In October 1997, the Company acquired St. Lucie West Holding Corp. ("SLWHC"), the developer of the master planned community of St. Lucie West in St. Lucie County Florida. During the three months ended March 31, 1999 and 1998, SLWHC land sales resulted in gains of $3.7 million and $100,000, respectively. Since the third quarter of 1997 the Company has entered into six joint venture partnerships with developers to develop residential, multi-family and commercial non-residential properties. During the three months ended March 31, 1999 one of the Company's real estate joint ventures closed on a land sale to a developer resulting in the Company recognizing a $1.7 million gain. Additionally, during the three months ended March 31, 1999, the Company relinquished its equity participation rights in a loan accounted for as a joint venture in exchange for substantial principal repayments on the loan and a guarantee from a real estate investment trust resulting in the Company transferring $20.8 million in investments in joint ventures to loans receivable. Included in investment in real estate held for development and sale and joint venture activities at March 31, 1999 was $26.7 million of SLWHC land, $6.7 million of equity investments in real estate joint ventures, $25.6 million of advances to real estate joint ventures and $1.9 million of investments and advances to a broker/dealer joint venture partner. During the three months ended March 31, 1999, the Company capitalized $175,000 of interest expense in connection with investments and advances to real estate joint ventures and deferred $224,000 of interest income associated with loans to joint ventures. Included in investment in real estate held for development and sale and joint venture activities at March 31, 1998 was $17.7 million associated with the SLWHC acquisition. 6. Comprehensive Income The income tax benefit relating to the comprehensive income reclassification adjustment in the statement of stockholders' equity for the three months ended March 31, 1999 and 1998 was $168,000 and $306,000, respectively. 7. Discontinued Operations, Restructuring Charges and Other Write-downs During December 1998, the Company commenced a restructuring of its operations and established a restructuring liability. The table below summarizes amounts paid associated with the restructuring liability during the three months ended March 31, 1999.
Amount paid Type of Restructuring Charge Initial amount during period Ending Balance - ---------------------------- -------------- ------------- -------------- Employee severance and benefits ................ $ 1,000 $ (689) $ 311 Impairment of assets due to facility closures .. 1,085 (482) 603 Provision for lease contracts on closed branches 247 (9) 238 Other .......................................... 233 (33) 200 --- --- --- Total restructuring charges ............... $ 2,565 $ (1,213) $ 1,352 ======== ================= ==============
During the three months ended March 31, 1999 there were no adjustments to the restructuring liability. Discontinued Operations At December 31, 1998, the Board of Directors adopted a formal plan to dispose of the Company's mortgage servicing business ("MSB"). It is anticipated that the exit plan will be substantially completed by the second or third quarter of 1999. The Company intends to exit the MSB by: (1) selling the mortgage servicing rights ("MSR") along with the related MSB facilities to unrelated third parties; (2) terminating 70 full-time employees and (3) terminating contracts associated with the MSB operations. The MSB had total assets of $44.2 million and total liabilities of $70.4 million at March 31, 1999. The assets primarily consist of MSR and receivables from previous sales of MSR. The liabilities are primarily advances by borrowers for taxes and insurance and collections of principal and interest payments due to investors. Activity in the allowance established for exiting the MSB and the operating activity from the measurement date (December 31, 1998) through March 31, 1999 is as follows (in thousands):
Balance at Amounts Balance at December 31, Paid/ March 31, 1998 Write downs 1999 ---- ----------- ---- Employee severance and benefits ...................... $ 925 $ 0 $ 925 Provision for servicing contract cancellation ........ 900 0 900 Fixed asset write-downs .............................. 430 (40) 390 Estimated cost to sell MSR ........................... 3,600 0 3,600 Anticipated loss from operations through disposal date 4,145 (257) 3,888 ----- ---- ----- Total ................................................ $10,000 $ 297 $ 9,703 ======= ======= =======
The costs of exiting the MSB are estimates and are subject to change based on market conditions, actual prepayment rates, completeness of underlying loan documents, transferability issues and the amount of time necessary to complete the exit plan. Changes in estimates will be accounted for prospectively. During the three months ended March 31, 1999 there were no changes in the disposal cost estimates. The Company had a servicing valuation allowance relating to purchased mortgage servicing rights of $10.7 million at March 31, 1999 and December 31, 1998. On April 30, 1999, the Company entered into a contract to sell the majority of its mortgage servicing rights portfolio to an unrelated third party. Based on the terms of the contract it is not anticipated that the portfolio sale will result t in any significant gain or loss. 8. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system and regulatory environment. The information provided for Segment Reporting is based on internal reports utilized by management. Interest expense and certain revenue and expense items are allocated to the various segments as interest expense and overhead. The presentation and allocation of interest expense and overhead and the net contribution calculated under the management approach may not reflect the actual economic costs, contribution or results of operations of the unit as a stand alone business. If a different basis of allocation was utilized, the relative contributions of the segments might differ but the relative trends in segments would, in management's view, likely not be impacted. The following summarizes the aggregation of the Company's operating segments into reportable segments: Reportable Segment Operating Segments Aggregated - ------------------ ----------------------------- Bank Investment Operations - Other Investment Division, Tax Certificate Department, Government Trading, Equity Portfolio Bank Investment Operations - - Wholesale Residential Real Estate Capital Services, Capital Markets Bank Loan Operations - Commercial Commercial Lending, Syndications, BA Factors, Inc. Bank Loan Operations - Retail Residential Lending, CRA Lending, BankAtlantic Mortgage, Indirect and Direct Consumer Lending, Small Business Lending, International and Trade Finance, Lease financing Real Estate Operations BankAtlantic Development Corp. (includes SLW and real estate joint ventures) Investment Banking Operations Ryan, Beck & Co. The accounting policies of the segments are generally the same as those described in the summary of significant accounting policies. Intersegment transactions consist of borrowings by real estate operations and investment banking operations which are recorded based upon the terms of the underlying loan agreements and are effectively eliminated in the interest expense and overhead allocations. The Company evaluates segment performance based on net contribution after tax. The table below is segment information for continuing operations for the three months ended March 31, 1999 and 1998:
Bank Investment Bank Loan Operations Operations ---------- ---------- Investment Wholesale Com- Real Estate Banking Segment (in thousands) Other Residential mercial Retail Operations Operations Total - -------------- ----- ----------- ------- ------ ---------- ---------- ----- March 31, 1999 Interest income ............$ 12,008 $ 22,438 $ 18,185 $ 13,648 $ (224) $ 357 $ 66,412 Interest expense and overhead ............. (10,025) (18,284) (10,213) (7,812) (390) (227) (46,951) Recovery from (provision for) loan losses .............. 0 32 (887) (4,309) 0 0 (5,164) Non-interest income ........ 526 64 390 1,379 3,140 8,940 14,439 Segment profits before taxes ................... 1,714 3,202 6,419 (939) 3,643 (361) 13,678 Provision for income taxes . 683 1,276 2,559 (339) 1,385 (57) 5,507 --- ----- ----- ---- ----- --- ----- Segment net income$ ........ 1,031 $ 1,926 $ 3,860 $ (600) $ 2,258 $ (304) $ 8,171 ===== ============= ============= ============= ============ ============= ============= Segment total assets ......$ 1,065,860 $ 1,387,800 $ 793,924 $ 535,059 $ 39,839 $ 55,094 $ 3,877,576 =========== ============= ============= ============= ============= ============= ============== March 31, 1998 Interest income ............$ 12,741 $ 19,929 $ 14,101 $ 13,039 $ 0 $ 0 $ 59,810 Interest expense and overhead ............ (12,039) (15,609) (9,276) (8,735) 381 0 (45,278) Provision for loan losses .. 0 (679) (454) (2,274) 0 0 (3,407) Non-interest income ........ 1,791 1,015 283 1,314 125 0 4,528 Segment profits before taxes 1,118 4,150 3,689 1 (1,306) 0 7,652 Provision for income taxes . 410 1,522 1,353 0 (479) 0 2,806 --- ----- ----- - ---- - ----- Segment net income ........$ 708 $ 2,628 $ 2,336 $ 1 $ (827) $ 0 $ 4,846 =========== ============= ============= ============= ============= ============ ============== Segment total assets ......$ 677,919 $ 1,446,143 $ 589,279 $ 513,386 $ 26,579 $ 0 $ 3,253,306 =========== ============= ============= ============= ============= ============= ==============
The difference between total segment assets and segment non-interest income and consolidated assets, and noninterest income are as follows: (in thousands) For the Three Months Ended March 31, --------- Total Assets Total assets for reportable segments ............$ 3,877,576 $ 3,253,306 Assets in discontinued operations ............... 44,169 58,628 Assets in overhead .............................. 311,861 214,574 ------- ------- Total consolidated assets .....................$ 4,233,606 $ 3,526,508 ============= =========== Noninterest Income Total non-interest income for reportable segments$ 14,439 $ 4,528 Items included in interest expense and overhead: Transaction fee income .......................... 3,591 2,600 ATM fees ........................................ 2,199 1,297 Other deposit related fees ...................... 3,240 1,139 ----- ----- Total consolidated non-interest income ..........$ 23,469 $ 9,564 ============= =========== 9. Reclassifications Certain amounts for prior periods have been reclassified to conform with statement presentation for 1999. 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 Company's expectations and are subject to a number of risks and uncertainties, including but not limited to, the risks and uncertainties associated with the implementation of and the realization of benefits from its restructuring initiatives and expense reductions, economic, competitive and other factors affecting the Company and its operations, markets, products and services, changes in interest rates and economic policies, the success of new lines of business, significant growth in banking as well as non-banking initiatives, and other factors discussed elsewhere in this report filed by the Company with the Securities and Exchange Commission ("SEC"). Many of these factors are beyond the Company's control. Results of Operations (In Thousands, except per share data) For the Three Months Ended March 31, --------- 1999 1998 ---- ---- Income from continuing operations ......................$ 8,171 $ 4,846 Income from discontinued operations net of taxes ....... 0 410 - --- Net income .............................................$ 8,171 $ 5,256 ========= ========= Class A common shares Basic earnings per share from continuing operations ... $ 0.24 $ 0.15 Basic earnings per share from discontinued operations .. 0.00 0.02 ---- ---- Basic earnings per share .............................$ 0.24 $ 0.17 ========= ========= Diluted earnings per share from continuing operations $ 0.19 $ 0.13 Diluted earnings per share from discontinued operations 0.00 0.01 ---- ---- Diluted earnings per share ..........................$ 0.19 $ 0.14 ==== ========= Class B common shares Basic earnings per share from continuing operations .. 0.21 $ 0.14 Basic earnings per share from discontinued operations . 0.00 0.01 ---- ---- Basic earnings per share ............................$ 0.21 $ 0.15 ==== ========= Diluted earnings per share from continuing operations $ 0.18 $ 0.12 Diluted earnings per share from discontinued operations 0.00 0.01 ---- ---- Diluted earnings per share ...........................$ 0.18 $ 0.13 ========= ========= Continuing Operations - Income from continuing operations increased by 69% during the three months ended March 31, 1999 compared to the same period during 1998. The primary reasons for the increase in continuing operations were: 1) an improvement in net interest income resulting from an increase in interest earning assets and recognition of interest income on a nonaccrual loan which was completely repaid in 1999, 2) additional earnings from the Company's real estate operations, 3) higher transaction fee income resulting from changes made to the pricing of the Company's deposit products and 4) a decline in employee compensation from bank operations due to a reduction of the Company's full time employees by approximately 148. The above improvements in income from continuing operations were partially offset by: 1) an increase in the provision for loan losses resulting from small business and indirect consumer loan charge-offs, 2) lower trading account gains and gains on the sale of securities available for sale and loans held for sale, and 3) higher occupancy costs due to an expanded branch and ATM network. Discontinued operations - Income from discontinued operations for the three months ended March 31, 1999 was zero compared to $410,000, net of income taxes for the same 1998 period. During the three months ended March 31, 1999 there were no changes in the disposal cost estimates to exit the MSB. Income from discontinued operations during 1998 resulted from gains on sales of mortgage servicing rights offset by expenses from servicing operations. Net Interest Income
For the Three Months Ended March 31, --------- (In thousands) 1999 1998 Change - -------------- ---- ---- ------ Interest and fees on loans ........................................$ 53,566 $ 47,139 $6,427 Interest on banker's acceptances .................................. 187 460 (273) Interest and dividends on securities available for sale .......... 10,053 9,987 66 Interest and dividends on investment securities held to maturity and trading securities .......................................... 2,606 2,224 382 Interest on deposits .............................................. (16,591) (16,367) (224) Interest on advances from FHLB .................................... (13,497) (10,712) (2,785) Interest on securities sold under agreements to repurchase ........ (4,044) (3,318) (726) Interest on subordinated debentures, notes payable and guaranteed preferred interest in the Company's Junior Subordinated Debentures (4,787) (4,939) 152 Capitalized interest .............................................. 175 0 175 --- - --- Net interest income ...............................................$ 27,668 $ 24,474 $3,194 =========== ========== ======
Net interest income increased by 13% during the three months ended March 31, 1999 compared to the same period in 1998. Total interest income increased by $6.6 million while total interest expense increased by $3.4 million. The increase in interest income resulted from higher average interest earning assets, primarily higher average loan portfolio balances and the recognition of $1.1 million of interest income resulting from the repayment of a $5.9 million commercial loan which had been classified as nonaccrual. The higher average interest earning assets during the period were partially offset by lower yields. The increased loan average balances resulted from: 1) increases in corporate loans through the participation in loan syndications, 2) higher small business loan average balances due to loan originations, 3) purchases of wholesale residential loans during 1998, 4) higher commercial real estate loan average balances reflecting loan originations, and 5) increases in lease financing resulting from the acquisition of LTI in March 1998. The above loan portfolio improvement in average balances was partially offset by lower residential and consumer loan average balances. The decline in consumer loan average balances resulted from the Company eliminating the origination of indirect consumer loans as part of its December 1998 restructuring plan. The decline in residential loan average balances reflects the sale of the majority of originated residential loans and loan sales from the held for sale portfolio. Interest income from banker's acceptances was lower during the three months ended March 31, 1999 compared to the same 1998 period due to a decline in average balances. The lower loan yields resulted from: 1) a decline in the prime interest rate during the third and fourth quarter of 1998, 2) lower yields on purchased residential loans reflecting the repayment of higher yielding loans and increased premium amortization during the 1999 quarter compared to 1998 due to increased prepayments and 3) increased average balances of syndication loans which had lower yields than the existing portfolio. The slight increase in securities available for sale interest income resulted from higher average balances, partially offset by lower yields. The higher average balances were the result of purchases of REMIC's. The lower yields reflect the purchase of securities at lower yields than the existing portfolio. The increase in interest and dividends on investment securities held to maturity and trading securities primarily resulted from interest income associated with the RBCO trading portfolio and higher FHLB stock average balances. Increases in FHLB stock were required based on higher average balances of FHLB advance. The increase in deposit expense during the three months ended March 31, 1999 compared to the same 1998 period resulted from higher average balances, partially offset by lower rates. The increased deposit average balances resulted from the acquisition of brokered deposits primarily through RBCO and public funds. The average balance of brokered deposits and public funds increased from $29.4 million during the three months ended March 31, 1998 to $203.9 million during the same 1999 period. The lower rates paid on deposits were due to a lower interest rate environment throughout the 1999 period compared to the same period during 1998. The increase in interest expense on advances from FHLB was primarily due to higher average balances. The additional FHLB borrowings were primarily intermediate term advances used to fund purchases of residential loans. The higher interest expense on securities sold under agreements to repurchase resulted from higher average balances during 1999, partially offset by lower rates. The higher average balances funded loan growth and the decline in rates reflect the lower interest rate environment during 1999. The decrease in interest on subordinated debentures, guaranteed preferred interest in the Company's Junior Subordinated Debentures and notes and bonds payable resulted from lower average balances of notes payable during the three months ended March 31, 1998 compared to the same period during 1999. Interest expense of $175,000 was capitalized in connection with investments and advances to real estate joint venture partnerships. Provision for Loan Losses For the Three Months Ended March 31, 1999 1998 ---- ---- Balance, beginning of period ...........$ 37,950 $ 28,450 Charge-offs: Commercial real estate loans ........... (158) (101) Lease financing ........................ (303) (85) Small business - real estate ........... (10) 0 Small business - non-mortgage .......... (2,093) (18) Consumer loans - indirect .............. (3,297) (2,247) Consumer loans - direct ................ (694) (458) Residential real estate loans .......... (59) (61) Purchased residential real estate loans 0 (70) - --- (6,614) (3,040) ------ ------ Recoveries: Commercial real estate loans ........... 0 1 Lease financing ........................ 66 37 Small business - non-mortgage .......... 37 0 Consumer loans - indirect .............. 378 346 Consumer loans - direct ................ 228 306 Commercial business loans .............. 141 159 --- --- 850 849 --- --- Net charge-offs ........................ (5,764) (2,191) Additions charged to operations ........ 5,164 3,407 Allowance for loan losses acquired ..... 0 284 - --- Balance, end of period ................. $ 37,350 $ 29,950 ======== ======== The provision for loan losses increased during the three months ended March 31, 1999 compared to the same 1998 period due to: 1) charge-offs in the indirect consumer loan portfolio, 2) charge-offs in the small business non-mortgage loan portfolio, and 3) higher aggregate loan balances, The Company ceased the origination of indirect consumer loans as part of its December 1998 restructuring. The charge-offs in small business non-mortgage loans were higher than anticipated and modifications to the program have been and will continue to be implemented in an attempt to address the charge-offs. At the indicated dates the Company's risk elements and non-performing assets were (in thousands): March 31, December 31, 1999 1998 ---- ---- Nonaccrual : Tax certificates .................... $ 690 $ 765 Loans and leases .................... 24,750 23,364 ------ ------ Total nonaccrual .................... 25,440 24,129 ------ ------ Repossessed Assets: Real estate owned, net of allowance . 6,100 5,503 Purchased real estate owned ......... 784 0 Vehicles and equipment .............. 2,330 1,896 ----- ----- Total repossessed assets ............ 9,214 7,399 ----- ----- Contractually past due 90 days or more (1) 64 3,182 -- ----- Total non-performing assets ......... 34,718 34,710 Restructured loans ....................... 5 7 - - Total risk elements .................. $34,723 $34,717 ======= ======= (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. The increase in nonaccrual loans resulted from: 1) a $1.9 million increase in small business nonaccrual loans, and 2) the purchase of $4.6 million of nonaccrual residential loans held for sale as part of a bulk purchase of residential loans. The $4.6 million of nonaccrual loans and the $784,000 of REO were acquired in connection with a $114 million bulk residential loan purchase from the Resolution Trust Corporation. The Company intends to segregate the portfolio and sell these loans to unrelated financial service companies. Such loans and REO are valued individually at the lower of cost or market. The increase in nonaccrual loans was partially offset by declines in: 1) consumer nonaccrual loans, due primarily to a change in the Company's collection policy to aggressively repossess automobiles, 2) improvement in delinquency trends for lease financing, and 3) nonaccrual commercial real estate loans resulting from the repayment of a $5.9 million nonaccrual loan. The increase in repossessed assets resulted from higher consumer repossessed automobiles and an increase in repossessed residential real estate owned. Non-Interest Income
For the Three Months Ended March 31, --------- (In thousands) 1999 1998 Change - -------------- ---- ---- ------ Noninterest Income Excluding RBCO and Real Estate Operation Loan late fees and other loan income .........................$ 1,130 $ 899 $ 231 Gains on sales of loans held for sale ......................... 633 1,747 (1,114) Trading account gains (losses) ................................ (69) 171 (240) Gains on sales of securities available for sale ............... 579 1,720 (1,141) Transaction accounts .......................................... 3,591 2,600 991 ATM fees ...................................................... 2,199 1,297 902 Other ......................................................... 1,049 1,005 44 ----- ----- -- Non-interest income excluding RBCO and real estate operations 9,112 9,439 (327) ----- ----- ---- RBCO Operations Principal transactions ........................................ 3,000 0 3,000 Investment banking ............................................ 3,117 0 3,117 Commissions ................................................... 2,676 0 2,676 Other ......................................................... 147 0 147 --- - --- Non-interest income - RBCO .................................... 8,940 0 8,940 ----- - ----- Real Estate Operations Gains on sales of real estate held for development and sale ... 3,666 100 3,566 Equity in earnings of unconsolidated real estate joint ventures 1,729 0 1,729 Other ......................................................... 22 25 (3) Non-interest income - real estate operations .................. 5,417 125 5,292 ----- --- ----- Total non-interest income ...................................$ 23,469 $ 9,564 $ 13,905 ========== ========== =========
Non-Interest Income Excluding RBCO and Real Estate Operations Loan late fees and other fee income increased during the three months ended March 31, 1999 compared to the same 1998 period. The increase resulted from higher late fees, commitment fees and loan prepayment penalties. The additional fees earned reflect a larger loan portfolio in 1999 compared to 1998. During the three months ended March 31, 1999 the Company sold $38.5 million, $20.4 million and $1.1 million of loans originated for sale, loans purchased and classified as held for sale and leases for gains shown on the above table. During the three months ended March 31, 1998, the Company sold $43.5 million of loans originated for sale and $50.4 million of purchased loans transferred from held for investment to held for sale for gains shown in the above table. As part of its normal operations from 1996 through the latter part of 1998, the Company purchased bulk residential loans to be held for investment. These bulk purchased loans are continually evaluated and such evaluations may result in transfers from the held for investment category to the held for sale category. Such transfers, if any, have not and are not normally expected to exceed 10% of the average annual balance of the portfolio. On March 26, 1999, the Company sold $63.5 million of securities available for sale for a gain shown in the above table. Included in other assets on the Statement of Financial Condition was a $64.4 million receivable from the above sale. During the three months ended March 31, 1998, the Company sold $333.1 million of securities available for sale for a gain shown in the above table. During the three months ended March 31, 1999, the Company realized a $69,000 loss from government securities trading. The Company did not trade government securities during the three months ended March 31, 1998. During the three months ended March 31, 1998, the Company transferred $1.8 million of equity securities available for sale to trading securities resulting in a $562,000 unrealized gain on the date of transfer. The unrealized and realized gains on the trading securities for the three months ended March 31, 1998 were $171,000. The increase in transaction fee income during the three months ended March 31, 1999 compared to the same 1998 period resulted from: 1) an increase in the Company's non-interest bearing transaction accounts reflecting in part, an increase in small business loans, and 2) changes made to the pricing of the Company's deposit products. The significant increase in ATM fee income during 1999 was primarily the result of an expanded ATM network. The Company's ATM network increased from 261 machines at March 31, 1998 to 783 machines at March 31, 1999. BankAtlantic established its ATM network to enhance fee income and to expand banking services throughout Florida. Noninterest Income RBCO Operations RBCO revenues are generated from principal transactions, investment banking and commissions. Principal transactions are sales and trading activities of tax exempt debt securities, taxable debt securities and equity securities. Investment banking revenues include management fees and underwriting fees earned in connection with all underwriting participations and selling concessions earned in connection with RBCO's participation in tax-exempt debt, corporate debt and equity underwriting. Commission revenues reflect fees earned from retail customers upon the execution of equity security and mutual fund trades. During the three months ended March 31, 1999 RBCO earned revenues on principal transactions, investment banking and commissions as shown in the preceding table. As previously noted, RBCO was acquired by the Company on June 30, 1998 in a transaction recorded under the purchase method of accounting. RBCO has recently announced a significant expansion of its business activities including the hiring of additional key personnel, the diversification into the healthcare, consumer and technology industries, and the expansion of its investment banking operations. Noninterest Income Real Estate Operations Real estate held for development and sale represents the net profits on sales of real estate by SLWHC and equity earnings from the Company's six real estate joint ventures. During the three months ended March 31, 1999 and 1998 SLWHC sold developed land for gains as reported above. Other income represents accretion of SLWHC impact fee receivables established at the acquisition date. The equity earnings from real estate joint ventures primarily resulted from the sale of property in one joint venture. Non-Interest Expenses For the Three Months Ended March 31, --------- (In thousands) 1999 1998 Change - -------------- ---- ---- ------ Noninterest Expense Excluding RBCO and Real Estate Operations Employee compensation and benefits ....$ 9,641 $ 10,827 $ (1,186) Occupancy and equipment ............... 5,188 4,847 341 Federal insurance premium ............. 273 262 11 Advertising and promotion ............. 326 489 (163) Amortization of cost over fair value of net assets acquired ................ 711 659 52 Other ................................. 5,572 4,705 867 ----- ----- --- Non-interest expenses ............. 21,711 21,789 (78) ------ ------ --- RBCO Operations Employee compensation and benefits .... 6,450 0 6,450 Occupancy and equipment ............... 486 0 486 Advertising and promotion ............. 248 0 248 Amortization of cost over fair value of 0 net assets acquired ................ 272 0 272 Other ................................. 1,976 0 1,976 ----- - ----- Non-interest expenses ................. 9,432 0 9,432 ----- - ----- Real Estate Operations Employee compensation and benefits .... 152 165 (13) Advertising and promotion ............. 182 145 37 Selling, general and administrative ... 818 880 (62) Non-interest expenses ............... 1,152 1,190 (38) ----- ----- --- Total non-interest expenses .........$ 32,295 $ 22,979 $ 9,316 ========== ========== ======== The decrease in employee compensation and benefits during the three months ended March 31, 1999 compared to the 1998 period resulted from the Company's December 1998 restructuring which reduced the Company's number of full time employees by approximately 115 and froze the accrual of benefits under the defined benefit pension plan. As of March 31, 1999 compared to March 31, 1998, the Company's number of full time employees declined by 148. Occupancy and equipment expenses increased during the three months ended March 31, 1999 due to the expanded ATM and branch network resulting in higher rental and repair and maintenance expenses. The decrease in advertising and promotion expenses during the three months ended March 31, 1999 compared to the same 1998 period resulted from the fact that the level of advertising and promotions during 1998 associated with the branch expansion in Miami-Dade County, Florida and BankAtlantic's small business banking unit was significantly reduced during the 1999 period. The increase in amortization of cost over fair value of net assets acquired reflects the acquisition of LTI effective March 1, 1998 and the acquisition of RBCO on June 30, 1998. The increase in other expenses reflects higher operating expenses associated with an expanded branch and ATM network, partially offset by lower legal, consulting, stationery, printing and supplies expenses. RBCO Non-Interest Expenses The RBCO acquisition agreement provided for the establishment of an incentive retention pool, under which shares of the Company's Class A common stock were allocated to key employees of RBCO. Included in employee compensation and benefits was $504,000 of retention pool compensation amortization. The retention pool was valued at $8.1 million at the acquisition date and the shares vest four years after the acquisition date. As a result, the Company is amortizing the $8.1 million value of the retention pool into compensation expense over the vesting period. Occupancy and equipment expense primarily consisted of $294,000 of rent and maintenance expense, $135,000 of depreciation expense and a $57,000 charge for data processing. Other expenses were primarily floor brokerage and clearing fees of $660,000, professional fees of $212,000 and $328,000 for third party quotation services. The remaining expenses were general and administrative costs. Real Estate Operations Non-Interest Expenses Real estate operations non-interest expenses primarily related to SLWHC expenses. Selling, general and administrative expenses were mainly real estate taxes on developed land. SEGMENT REPORTING The table below is segment information for continuing operations for the three months ended March 31, 1999 and 1998: (in thousands) For the Three Months Ended March 31, --------- 1999 1998 ---- ---- Net contribution after income taxes .............. Bank investment operations - wholesale residential $ 1,926 $ 2,628 Bank investment operations - other ............... 1,031 708 Bank loan operations - retail products ........... (600) 1 Bank loan operations - commercial products ....... 3,860 2,336 Real estate operations ........................... 2,258 (827) Investment banking operations .................... (304) 0 ---- - Net contribution ............................... $ 8,171 $ 4,846 ========== ========== Bank Investment Operations Segment net contribution from bank investment operations - other improved due to higher net interest margin resulting from lower interest expense and overhead allocations. The lower allocated overhead resulted from the declining interest rate environment during 1999 and lower operating expenses. The above improvement in segment net income was partially offset by lower noninterest income during 1999 compared to 1998. The lower noninterest income resulted from a decline in gains on the sales of securities available for sale and trading securities. Segment net contribution from bank investment operations - wholesale residential declined primarily from: lower gains from the sale of loans, a decline in purchased residential loan yields due to accelerated premium amortization resulting from repayments and a higher interest expense and overhead allocation resulting from increased average interest earning assets, partially offset by a lower provision for loan losses. Bank Loan Operations Segment net contribution from bank loan operations - commercial increased due to an improvement in the net margin, recognition of $1.1 million of interest income upon the repayment of a $5.9 million nonaccrual loan and higher loan fees during the three months ended March 31, 1999 compared to the same 1998 period. The above increases were partially offset by a higher provision for loan losses caused by loan growth. Segment net contribution from bank loan operations - retail increased primarily from an increase in the provision for loan losses. The increase in the loan loss provision was partially offset by higher yields earned on the retail portfolio reflecting an increase in average interest earning loan balances. The additional provision for loan losses during 1999 resulted from increased small business and indirect charge-offs and delinquency trends. Real Estate Operations Segment net contribution from real estate operations during the three months ended March 31, 1999 consisted of land sales less operating costs from the Company's wholly owned subsidiary St. Lucie West Holding Corporation and equity earnings from the Company's six real estate joint ventures. Real estate operations segment net contribution during the three months ended March 31, 1998 consisted of a land sale and operating costs from St. Lucie West Holding Corporation. Investment Banking Operations Investment banking operations were primarily the operations of RBCO. RBCO was acquired on June 30, 1998. Financial Condition The Company's total assets at March 31, 1999 were $4.2 billion compared to $3.8 billion at December 31, 1998. The increase in total assets primarily resulted from increased: 1) loans held for sale balances due to the purchase of $123 million of residential loans, 2) securities available for sale resulting from the purchase of REMIC's, 3) other assets reflecting the receivable generated upon the sale of $63.5 million of mortgage-backed securities that settled in April 1999, 4) federal funds sold, 5) securities purchased under agreements to resell, and 6) interest bearing deposits in other banks. The above increases in total assets were partially offset by decreased: 1) loans receivable resulting from the repayment of consumer indirect automobile loans and purchased residential loans held to maturity, and 2) trading securities due to lower RBCO state and municipality inventories. The Company's total liabilities at March 31, 1999 were $4.0 billion compared to $3.5 billion at December 31, 1998. The increase in total liabilities primarily resulted from increased: 1) deposit balances reflecting the acquisition of brokered deposits and public funds and an increase in noninterest bearing deposit balances. 2) securities sold under agreements to repurchase used to fund securities available for sale growth, and 3) other liabilities resulting from the purchase of $117 million of REMIC securities that settled in April 1999. The above increases in total liabilities were partially offset by decreased: 1) advances from FHLB due to maturities, 2) federal funds purchased resulting from a shift in short term borrowings to securities sold under agreements to repurchase, 3) advances by borrowers for taxes and insurance reflecting a decline in loans serviced for others balances. Market Risk Market risk is defined as the risk of loss arising from adverse changes in market valuation which arise from interest rate risk, foreign currency exchange rate risk, commodity price risk, and equity price risk. The Company's primary market risk is interest rate risk and its secondary market risk is equity price risk. Equity Price Risk The Company (including RBCO) maintains a portfolio of trading and available for sale securities which subjects the Company to equity pricing risks. The change in fair values of equity securities represents instantaneous changes in all equity prices segregated by trading securities, securities sold not yet purchased and available for sale securities. The following are hypothetical changes in the fair value of the Company's securities sold not yet purchased, trading and available for sale securities at March 31, 1999 based on percentage changes in fair value. Actual future price appreciation or depreciation may be different from the changes identified in the table below.
Available Securities Total Percent Trading for Sale Sold Not Dollar Change in Securities Securities Yet Change from Fair Value Fair Value Fair Value Purchased 0% ---------- ---------- ---------- --------- -- (dollars in thousands) 20 % $ 20,705 $ 24,943 $ 1,991 $ 7,940 10 % $ 18,979 $ 22,865 $ 1,825 $ 3,970 0 % $ 17,254 $ 20,786 $ 1,659 $ 0 -10 % $ 15,529 $ 18,707 $ 1,493 $ (3,970) -20 % $ 13,803 $ 16,629 $ 1,327 $ (7,940)
During 1998, the Company began trading government securities which are generally bought and sold on the same day. In addition, RBCO is a market maker in equity securities which could from time to time require them to hold securities during declining markets. The Company attempts to manage its equity price risk by maintaining a relatively small portfolio of securities and evaluating equity securities as part of the Company's overall asset and liability management process. Interest Rate Risk The majority of the Company's assets and liabilities are monetary in nature subjecting the Company to significant interest rate risk. The Company has developed a model using vendor software to quantify its interest rate risk. A sensitivity analysis was performed measuring the Company's potential gains and losses in net portfolio fair values of interest rate sensitive instruments at March 31, 1999 resulting from a change in interest rates. Interest rate sensitive instruments included in the model were the Company's: /bullet/ loan portfolio, /bullet/ debt securities available for sale, /bullet/ investment securities, /bullet/ FHLB stock, /bullet/ Federal Funds sold, /bullet/ deposits, /bullet/ advances from FHLB, /bullet/ securities sold under agreements to repurchase, /bullet/ Federal Funds purchased, /bullet/ Subordinated Debentures, /bullet/ Trust Preferred Securities, /bullet/ off-balance sheet loan commitments, and /bullet/ mortgage servicing rights. The Company has no off-balance sheet derivatives other than fixed rate loan commitments aggregating $18.9 million at March 31, 1999. The model calculates the net potential gains and losses in net portfolio fair value by: (i) discounting anticipated cash flows from existing assets, liabilities and off-balance sheet contracts at market rates to determine fair values at March 31, 1999, (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 gains and losses in net portfolio fair values. Management has made estimates of fair value discount rates that it believes to be reasonable. However, because there is no quoted market for many of these financial instruments, management has no basis to determine whether the fair value presented would be indicative of the value negotiated in an actual sale. BankAtlantic's fair value estimates do not consider the tax effect that would be associated with the disposition of the assets or liabilities at their fair value estimates. Presented below is an analysis of the Company's interest rate risk at March 31, 1999 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 $ 267,588 $ (123,023) +100 bp $ 342,592 $ (48,019) 0 bp $ 390,611 $ 0 (100) bp $ 364,857 $ (25,754) (200) bp $ 319,095 $ (71,516) In preparing the above table, the Company makes various assumptions to determine the net portfolio value at the assumed changes in interest rate. These assumptions include: /bullet/ loan prepayment rates, /bullet/ deposit decay rates, /bullet/ market values of certain assets under the representative interest rate scenarios, and /bullet/ repricing of certain borrowings It was also assumed that delinquency rates would not change as a result of changes in interest rates although there can be no assurance that this would be the case. Even if interest rates change in the designated increments, there can be no assurance that the Company's assets and liabilities would be impacted as indicated in the table above. In addition, a change in U.S. Treasury rates in the designated amounts, accompanied by a change in the shape of the yield curve could cause significantly different changes to the fair values than indicated above. Furthermore, the result of the calculations in the preceding table are subject to significant deviations based upon actual future events, including anticipatory and reactive measures which the Company may take in the future. Liquidity and Capital Resources BankAtlantic's primary sources of funds during the first three months of 1999 were from principal collected on loans, securities available for sale and investment securities held to maturity, and sales of securities available for sale, FHLB stock, REO, and real estate held for development, borrowings from FHLB advances, securities sold under agreements to repurchase, and deposit inflows . These funds were primarily utilized to fund operating expenses, deposit outflows, loan purchases and fundings, pay dividends, repay advances from borrowers for taxes and insurance and to purchase FHLB stock, tax certificates, trading securities and securities available for sale and acquire common stock. At March 31, 1999, BankAtlantic met all applicable liquidity and regulatory capital requirements. During the three months ended March 31, 1999 the Company opened a $5.0 million money market account with an unrelated financial institution which was pledged to the financial institution upon issuance of an irrevocable standby letter of credit. The letter of credit secures a loan to one of the Company's joint ventures. The money market account is included in interest bearing deposits in other banks in the Company's Consolidated Statement of Financial Condition. The Company is currently considering various corporate alternatives concerning its real estate operations conducted through its wholly owned subsidiary BankAtlantic Development Corporation ("BDC"). The Company was originally considering a spin off of BDC to shareholders; however, as a result of potential adverse tax consequences, the Company is now exploring other alternatives, including the possibility of selling a portion of BDC's common stock. Any transaction would be subject to Board of Directors' and regulatory approval. The Company's commitments to originate loans at March 31, 1999 were $212.7 million compared to $144.1 million at March 31, 1998. Additionally at March 31, 1998, the Company had commitments to purchase loans and securities available for sale of $26.5 million, and $30.1 million, respectively. The Company did not have commitments to purchase loans and securities available for sale at March 31, 1999. At March 31, 1999, loan commitments were 7.96% of net loans receivable. LTI is obligated on leases sold with full recourse by LTI to investors prior to the Company's acquisition. Under the terms of such agreements, LTI is subject to recourse for 100% of the remaining balance of the lease receivable sold upon a default by the lessees. At March 31, 1999, the amount of lease payments subject to such recourse provisions was approximately $5.6 million and a $223,000 estimated liability on leases sold with recourse is included in other liabilities in the Company's Statement of Financial Condition. At the indicated date BankAtlantic's capital amounts and ratios were:
To be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes Action Provisions ------ -------- ----------------- Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- (In thousands) At March 31, 1999: Total risk-based capital $ 338,759 13.36 % > $ 202,833 > 8.00 % > $ 253,542 > 10.00 % = = = = Tier I risk-based capital $ 306,989 12.11 % > $ 101,417 > 4.00 % > $ 152,125 > 6.00 % = = = = Tangible capital $ 306,989 7.56 % > $ 60,942 > 1.50 % > $ 60,942 > 1.50 % = = = = Core capital $ 306,989 7.56 % > $ 162,510 > 4.00 % > $ 203,138 > 5.00 % = = = = At December 31, 1998: Total risk-based capital $ 336,131 13.92 % > $ 193,150 > 8.00 % > $ 241,438 > 10.00 % = = = = Tier I risk-based capital $ 305,860 12.67 % > $ 96,575 > 4.00 % > $ 144,863 > 6.00 % = = = = Tangible capital $ 305,860 8.48 % > $ 54,111 > 1.50 % > $ 54,111 > 1.50 % = = = = Core capital $ 305,860 8.48 % > $ 144,297 > 4.00 % > $ 180,371 > 5.00 % = = = =
Savings institutions are also subject to the provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). Regulations implementing the prompt corrective action provisions of FDICIA define specific capital categories based on FDICIA's defined capital ratios, as discussed more fully in the Company's Annual Report on Form 10K for the year ended December 31, 1998. The Company's wholly owned subsidiary, RBCO, is subject to the net capital provision of Rule 15c3-1 under the Securities Exchange Act of 1934 which requires that RBCO's aggregate indebtedness shall not exceed 15 times net capital as defined under such provision. Additionally, RBCO, as a market marker, is subject to supplemental requirements of Rule 15c3-1(a)4, which provides for the computation of net capital to be based on the number and price of issues in which markets are made by RBCO, not to exceed $1,000,000. At March 31, 1999, RBCO's regulatory net capital was approximately $13.5 million, which exceeded minimum net capital rule requirements by $12.5 million. RBCO operates under the provisions of paragraph (K)(2)(ii) of Rule 15c3-3 of the Securities and Exchange commission as a fully-disclosed broker and, accordingly, customer accounts are carried on the books of the clearing broker. However, RBCO safekeeps and redeems municipal bond coupons for the benefit of its customers. Accordingly, RBCO is subject to the provisions of SEC Rule 15c3-3 relating to possession or control and customer reserve requirements and was in compliance with such provisions at March 31, 1999. Year 2000 Issues Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the year 2000. The consequences of incomplete or untimely resolution of year 2000 issues represent an uncertainty that could affect future financial results. The year 2000 issue affects virtually all companies and organizations. The Company has undertaken various initiatives intended to ensure that computer applications will function properly with respect to dates in the year 2000 and thereafter. The Company has established a year 2000 action plan which was presented to the Board of Directors on December 2, 1997. The action plan was developed using the guidelines outlined in the Federal Financial Institutions Examination Council's "The Effect of 2000 on Computer Systems". The six phases of the Company's action plan are: (1) Awareness - Define the Year 2000 issues, gain executive level support, establish a project team and develop a strategy which encompasses technology and business issues, (2) Assessment - Assess the size and complexity of the issues and detail the magnitude of the effort necessary to address them, (3) Renovation - Code enhancements, hardware and software upgrades, and system replacements, (4) Validation - Testing of software, system components and connections between systems, (5) Implementation - - Systems should be certified as year 2000 ready by the business users, and (6) Contingency planning determination of strategy to handle the most likely worst case scenarios on year 2000 issues. The Company believes that it has completed the awareness and assessment phases of its action plan. Renovation, validation and implementation phases were approximately 95% completed at March 31, 1999 and are scheduled to be 100% completed as of June 30, 1999. The contingency planning phase was 90% completed as of March 31, 1999, and is scheduled to be 100% completed as of June 30, 1999. Although the Company expects to meet its action plan schedule, there is no assurance that this timetable will be completed according to schedule. The majority of the Company's mission critical information technology system structure ("IT") has been outsourced to third party vendors. The Company's internal IT primarily consists of a minicomputer for item processing and a personal computer based wide area network. The wide area network's primary function is to communicate with third party service bureaus and secondarily to run non-critical personal computer applications such as E-mail, word processing and spreadsheet programs. The Company has various non-IT systems including but not limited to, vault security equipment, branch security equipment, telephone systems, circuit boards on building equipment, building elevators, and appliances. The above IT and non-IT systems could fail or create erroneous results by or at the year 2000. The Company relies on third party vendors to perform loan, deposit, general ledger, clearing agent functions and other application processing. The Company is monitoring the progress of these third party vendors in meeting their year 2000 obligations and is actively involved in the implementation and testing of the modified application programs. The third party vendors completed the update of the application programs during the fourth quarter of 1998 and the Company tested these applications during the first quarter of 1999. Although the Company currently has no indication that its third party vendors will not be able to operate as a result of year 2000 related problems, there is no assurance that these third party vendors will meet their obligations to the Company. Included in the Statement of Operations during the three months ended March 31, 1999 and 1998 were $48,000 and $1,000, respectively, of third party expenses related to the year 2000 action plan. The Company estimates that it will spend approximately $100,000 on year 2000 consulting services, $300,000 on software and hardware maintenance specifically related to year 2000, $100,000 on RBCO system upgrades and consulting services and $100,000 for contingency planning during the year ended December 31, 1999. The above items will be expensed as incurred and do not include employee compensation allocated for time spent on the year 2000 project. Risk factors associated with the year 2000 event include the risk that the Company's business could be disrupted due to vendors, suppliers, and customer system failures, or even the possible loss of electrical power or phone service. The Company is currently assessing the probability of these events occurring and has formulated a contingency plan. The Company could also be subjected to year 2000 litigation from customers, borrowers and suppliers as a result of both internal and third party system failures. The Company as part of its action plan has sent brochures to customers, and questionnaires to borrowers and suppliers, and as mentioned above is addressing both IT and non-IT year 2000 issues. Further, the credit quality of the Company's loans may be affected by the failure of a borrower's operating or other systems as a consequence of a year 2000 issue or the related failure of a borrower's key suppliers, customers, or service providers resulting in higher provisions for loan losses. The Company's underwriting and credit policies include consideration of a borrower's potential year 2000 issues. There is no assurance that the Company's borrowers will be able to meet their obligations to the Company if these borrowers experience year 2000 problems. Certain assets of the Company may have to be replaced, based on upgrades to equipment and software that are part of the Company's normal business needs, rapidly developing technology, and a three year capital equipment and software replacement plan. The Company does not anticipate impairment or significant replacement of assets related to the year 2000 issue. There is no assurance that the foregoing has identified all costs, risks or possible losses which the Company may experience associated with year 2000 issues. The failure to correct a material year 2000 problem could result in an interruption in, or a failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Due to the general uncertainty inherent in the year 2000 problem, resulting in part from the uncertainty of the year 2000 readiness of third-party suppliers, borrowers and customers, the Company is unable to determine at this time whether the consequences of year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition. The goal of the Year 2000 Project is to significantly reduce the Company's level of uncertainty about the year 2000 problem and, the Company believes that, with the implementation of new business systems and completion of the project as scheduled, the possibility of significant interruptions of normal operations should be reduced. PART II - OTHER INFORMATION Exhibits and Reports on Form 8K Exhibit 11 Statement re: Computation of Per Share Earnings. 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 12, 1999 By: /s/Alan B. Levan ------------------------- Date Alan B. Levan Chief Executive Officer/ Chairman/President May 12, 1999 By: /s/ Frank V. Grieco ------------- ------------------------------- Date Frank V. Grieco Senior Executive Vice President, Principal Financial and Accounting Officer EXHIBIT 11 Earnings Per Share The following reconciles the numerators and denominators of the basic and diluted earnings per share computations .
For the Three Months ended For the Three Months ended (In thousands, except per share March 31, 1999 March 31, 1998 ------------------------------- -------------- -------------- data and percentages) Class A Class B Total Class A Class B Total Basic Numerator Actual dividends declared ..............$ 711 $ 259 $ 970 $ 599 $ 255 $ 854 Basic allocation of undistributed earnings from continuing operations .. 5,250 1,951 7,201 2,755 1,237 3,992 ----- ----- ----- ----- ----- ----- Income from continuing operations ...... 5,961 2,210 8,171 3,354 1,492 4,846 Income from discontinued operations .... 0 0 0 281 129 410 - - - --- --- --- Net income .............................$ 5,961 $ 2,210 $ 8,171 $ 3,635 $ 1,621 $ 5,256 ============== ============== =========== =========== ============= ============== Basic Denominator Weighted average shares outstanding .... 25,342,390 10,359,717 21,809,903 10,768,956 ========== ========== ========== ========== Allocation percentage .................. 72.91 % 27.09 % 69.02 % 30.98 % ===== ===== ===== ===== Basic earnings per share ...............$ 0.24 $ 0.21 $ 0.17 $ 0.15 ============== ============== ======== ============== Diluted Numerator Actual dividends declared ..............$ 711 $ 259 $ 970 $ 599 $ 255 $ 854 -------------- -------------- ----------- ------------ -------------- ------------- Basic allocation of undistributed earnings from continuing operations .. 5,250 1,951 7,201 2,755 1,237 3,992 Reallocation of basic undistributed earnings due to change in allocation percentage ........................... 546 (546) 0 369 (369) 0 --- ---- - --- ---- - Diluted allocated undistributed earnings from continuing operations ........... 5,796 1,405 7,201 3,124 868 3,992 ----- ----- ----- ----- --- ----- Interest expense on convertible debt ... 1,201 291 1,492 1,202 335 1,537 ----- --- ----- ----- --- ----- Dilutive net income from continuing operations ........................... 7,708 1,955 9,663 4,925 1,458 6,383 Dilutive net income from discontinued operations ........................... 0 0 0 321 89 410 - - - --- -- --- Net income .............................$ 7,708 $ 1,955 $ 9,663 $ 5,246 $ 1,547 $ 6,793 ============== =============== ========== ============= ========= =============== Diluted Denominator Basic weighted average shares outstanding ........................... 25,342,390 10,359,717 21,809,903 10,768,956 Convertible debentures ................. 15,542,021 0 16,314,540 0 Options ................................ 319,296 638,182 639,910 1,110,754 ------- ------- ------- --------- Diluted weighted average shares outstanding ................... 41,203,707 10,997,899 38,764,353 11,879,710 ========== ========== ========== ========== Allocation percentage .................. 80.47% 19.53% 78.21% 21.79% ===== ===== ===== ===== Diluted earnings per share .............$ 0.19 $ 0.18 $ 0.14 $ 0.13 ============== =============== ========== ============
EX-27 2 FDS --
9 This schedule contains summary financial information extracted from the Consolidated Statement of Financial Condition at March 31, 1999 and the Consolidated Statement of Operations for three months ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 921768 BankAtlantic Bancorp, Inc. 1,000 U.S. Dollars 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 96,430 5,167 5,914 17,254 1,003,057 49,681 49,681 2,633,261 37,350 4,233,606 2,115,559 409,232 237,230 1,234,790 0 0 362 236,433 4,233,606 53,753 12,659 0 66,412 16,591 38,744 27,668 5,164 510 32,295 13,678 13,678 0 0 8,171 0.24 0.19 7.71 24,750 64 5 0 37,950 6,614 850 37,350 36,995 355 0
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