-----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, AS9VKF0Mma1nkKG1hOE95Y606NomeEPKpmB0tKtGXcuUr9ghsVc41sDGpC+27aso AwVJhgFGBVVA2+LHrE5RVg== 0000950170-97-001291.txt : 19971030 0000950170-97-001291.hdr.sgml : 19971030 ACCESSION NUMBER: 0000950170-97-001291 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971029 SROS: NASD SROS: NYSE 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: 97702927 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 September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 34-027228 BANKATLANTIC BANCORP, INC. (Exact name of registrant as specified in its Charter) FLORIDA 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 OCTOBER 23, 1997 ------------------- ---------------- Class A Common Stock, par value $0.01 per share 11,597,914 Class B Common Stock, par value $0.01 per share 10,677,778 =============================================================================== BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- TABLE OF CONTENTS
FINANCIAL INFORMATION PAGE REFERENCE Financial Statements....................................................................... 1-7 Consolidated Statements of Financial Condition - September 30, 1997, December 31, 1996 and September 30, 1996 - Unaudited................................ 1 Consolidated Statements of Operations - For the Three and Nine Months Ended September 30, 1997 and 1996 - Unaudited............................................... 2 Consolidated Statements of Cash Flows - For the Nine Months Ended September 30, 1997 and 1996 - Unaudited............................................... 3-4 Notes to Consolidated Financial Statements - Unaudited................................... 5-7 Management's Discussion and Analysis of Financial Condition and Results of Operations.... 8-14 OTHER INFORMATION Exhibits and Reports on Form 8K.......................................................... 15 Signatures............................................................................... 16
- ------------------------------------------------------------------------------- BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- [THIS PAGE INTENTIONALLY LEFT BLANK] - ------------------------------------------------------------------------------- BANKATLANTIC BANCORP, INC. - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED SEPTEMBER DECEMBER SEPTEMBER 30, 31, 30, --------- --------- --------- 1997 1996 1996 --------- --------- --------- ASSETS Cash and due from depository institutions $ 113,734 $ 102,995 $ 78,901 Federal Funds sold 1,534 6,148 0 Loans receivable, net 1,963,227 1,824,856 1,264,616 Investment securities-net, held to maturity, at cost which approximates market value 59,953 54,511 65,818 Securities available for sale, at market value 495,093 439,345 615,726 Trading securities 4,237 0 0 Accrued interest receivable 21,432 20,755 16,897 Real estate owned, net 5,909 4,918 5,451 Office properties and equipment, net 50,283 48,274 47,132 Federal Home Loan Bank stock, at cost which approximates market value 27,437 14,787 10,849 Mortgage servicing rights 31,952 25,002 23,421 Deferred tax asset, net 3,718 3,355 2,537 Cost over fair value of net assets acquired 26,815 28,591 9,905 Other assets 39,672 31,990 29,227 --------- --------- --------- Total assets $2,844,996 $2,605,527 $2,170,480 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $1,763,373 $1,832,780 $1,352,169 Advances from FHLB 548,706 295,700 216,985 Securities sold under agreements to repurchase 128,369 190,588 290,423 Subordinated debentures 78,300 78,500 78,500 Guaranteed preferred beneficial interests in the Company's Junior Subordinated Debentures 74,750 0 0 Advances by borrowers for taxes and insurance 57,467 29,659 56,647 Other liabilities 37,473 30,596 36,029 --------- --------- --------- Total liabilities 2,688,438 2,457,823 2,030,753 --------- --------- --------- Commitments and contingencies 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 30,000,000 shares; issued and outstanding, 11,597,914, 12,394,602 and 12,417,540 shares 116 78 41 Class B Common Stock, $0.01 par value, authorized 15,000,000 shares; issued and outstanding, 10,677,778, 10,542,116 and 10,582,980 shares 107 105 106 Additional paid-in capital 54,857 64,171 64,031 Retained earnings 100,352 82,602 75,559 --------- --------- --------- Total stockholders' equity before net unrealized appreciation (depreciation) on securities available for sale - net of deferred income taxes 155,432 146,956 139,737 Net unrealized appreciation (depreciation) on securities available for sale - net of deferred income taxes 1,126 748 (10) --------- --------- --------- Total stockholders' equity 156,558 147,704 139,727 --------- --------- --------- Total liabilities and stockholders' equity $2,844,996 $2,605,527 $2,170,480 ========= ========= =========
See Notes to Consolidated Financial Statements - Unaudited - ------------------------------------------------------------------------------- 1 BANKATLANTIC BANCORP, INC. - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED FOR THE THREE MONTHS FOR THE NINE MONTHS (IN THOUSANDS, EXCEPT SHARE DATA) ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------------- -------------------------- INTEREST INCOME: 1997 1996 1997 1996 ----------- ----------- ------------ ----------- Interest and fees on loans $ 44,333 $ 27,277 $ 127,404 $ 69,487 Interest and dividends on securities available for sale 7,139 9,313 22,927 29,039 Interest and dividends on investment securities held to maturity 2,048 1,931 5,679 4,845 ----------- ----------- ------------ ----------- Total interest income 53,520 38,521 156,010 103,371 ----------- ----------- ------------ ----------- INTEREST EXPENSE: Interest on deposits 17,193 12,644 51,510 37,356 Interest on advances from FHLB 7,685 2,625 18,752 5,448 Interest on securities sold under agreements to repurchase 1,496 2,846 6,354 5,033 Interest on subordinated debentures and guaranteed preferred interest in the Company's Junior Subordinated Debentures 3,320 1,495 7,634 2,489 ----------- ----------- ------------ ----------- Total interest expense 29,694 19,610 84,250 50,326 ----------- ----------- ------------ ----------- NET INTEREST INCOME 23,826 18,911 71,760 53,045 Provision for loan losses 3,671 1,869 8,833 4,264 ----------- ----------- ------------ ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 20,155 17,042 62,927 48,781 ----------- ----------- ------------ ----------- NON-INTEREST INCOME: Loan servicing and other loan fees 797 956 3,773 2,900 Gains on sales of loans available for sale 1,488 1 2,653 287 Gains on sales of mortgage servicing rights 1,914 2,554 6,548 2,554 Gains on sales of securities available for sale 194 0 1,136 3,946 Trading account gains and losses, net 1,508 0 1,495 0 Gains (losses) on sales of property and equipment, net 868 0 852 (329) Transaction fees 3,710 3,093 10,787 8,776 Other 794 703 2,687 2,721 ----------- ----------- ------------ ----------- Total non-interest income 11,273 7,307 29,931 20,855 ----------- ----------- ------------ ----------- NON-INTEREST EXPENSE: Employee compensation and benefits 10,033 7,422 28,866 21,841 Occupancy and equipment 4,773 2,980 13,810 8,671 Federal insurance premium 269 689 822 1,949 Advertising and promotion 667 394 1,561 1,631 SAIF special assessment 0 7,160 0 7,160 Amortization of cost over fair value of net assets acquired 627 306 1,881 918 Other 4,532 3,421 13,804 8,402 ----------- ----------- ------------ ----------- Total non-interest expense 20,901 22,372 60,744 50,572 ----------- ----------- ------------ ----------- INCOME BEFORE INCOME TAXES 10,527 1,977 32,114 19,064 Provision for income taxes 4,098 886 12,523 7,714 ----------- ----------- ------------ ----------- NET INCOME $ 6,429 $ 1,091 $ 19,591 $ 11,350 =========== =========== ============ =========== Net income per common and common equivalent share $ 0.27 $ 0.05 $ 0.81 $ 0.48 =========== =========== ============ =========== Net income per common and common equivalent share, assuming full dilution $ 0.23 $ 0.04 $ 0.68 $ 0.46 =========== =========== ============ =========== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 23,838,836 24,077,950 24,134,372 23,453,913 =========== =========== ============ =========== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING, ASSUMING FULL DILUTION 31,106,198 24,253,705 31,606,424 25,901,719 =========== =========== ============ ===========
See Notes to Consolidated Financial Statements - Unaudited - ------------------------------------------------------------------------------- 2 BANKATLANTIC BANCORP, INC. - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED FOR THE NINE MONTHS ENDED SEPTEMBER 30, ------------------------ OPERATING ACTIVITIES: 1997 1996 ----------- ---------- Net income ...................................................................... $ 19,591 $ 11,350 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ....................................................... 8,833 4,264 Reversal of allowance for losses on real estate owned ........................... 0 (200) Depreciation .................................................................... 3,577 2,608 Amortization of mortgage servicing rights ....................................... 5,767 5,041 Gains on sales of mortgage servicing rights ..................................... (6,548) (2,554) Increase (decrease) in deferred income tax asset, net ........................... (600) 171 Net (accretion) amortization of securities ...................................... (302) 35 Unrealized gains on trading account securities, net ............................. (823) 0 Gains on sales of trading securities ........................................... (672) 0 Purchases of trading account securities ......................................... (6,243) 0 Proceeds from sales of trading securities ....................................... 3,501 0 Net amortization of deferred loan origination fees .............................. (801) (1,013) Gains on sales of real estate owned ............................................. (328) (346) Gains on sales of securities available for sale ................................ (1,136) (3,946) Proceeds from sales of loans available for sale ................................. 137,549 45,085 Fundings of loans available for sale ............................................ (67,715) (46,609) Gains on sales of loans available for resale .................................... (2,653) (287) Recovery from tax certificate losses ............................................ (164) (259) Amortization of dealer reserve .................................................. 6,054 1,579 Amortization of cost over fair value of net assets acquired ..................... 1,881 918 Net accretion of purchase accounting adjustments ................................ (335) (244) Amortization of deferred borrowing costs ....................................... 303 137 Increase in accrued interest receivable ......................................... (677) (2,344) Decrease (increase) in other assets ............................................. 6,793 (3,675) Net losses (gains) on sales of property and equipment ........................... (852) 329 Increase in other liabilities ................................................... 7,580 12,925 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES ....................................... 111,580 22,965 --------- --------- INVESTING ACTIVITIES: Proceeds from redemption and maturities of investment securities ................ 34,232 40,307 Purchase of investment securities ............................................... (39,510) (56,010) Proceeds from sales of securities available for sale ............................ 273,770 166,985 Principal collected on securities available for sale ............................ 106,138 135,642 Purchases of securities available for sale ..................................... (433,495) (231,765) Proceeds from sales of FHLB stock ............................................... 1,550 1,249 FHLB stock acquired ............................................................. (14,200) (2,009) Principal reduction on loans .................................................... 493,109 432,526 Loan fundings for portfolio ..................................................... (331,578) (555,573) Loans purchased ................................................................. (376,502) (315,247) Proceeds from maturities of bankers' acceptances ................................ 287 0 Fundings of bankers' acceptances ................................................ (77) 0 Additions to dealer reserve ..................................................... (7,522) (2,196) Proceeds from sales of real estate owned ........................................ 2,558 2,611 Mortgage servicing rights acquired .............................................. (43,199) (19,042) Proceeds from sales of mortgage servicing rights ................................ 26,554 3,051 Proceeds from sales of property and equipment ................................... 1,144 0 Additions to office property and equipment ...................................... (5,878) (9,115) Investment and advances to Florida Atlantic Securities, Inc. .................... (1,738) 0 Escrow deposit from the purchase of Bank of North America Bancorp ............... 0 (5,000) -------- --------- NET CASH (USED) BY INVESTING ACTIVITIES ........................................ (314,357) (413,586) -------- ---------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (CONTINUED) - ------------------------------------------------------------------------------- 3 BANKATLANTIC BANCORP, INC. - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS FOR CASH FLOWS - UNAUDITED (CONTINUED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, ------------------------ 1997 1996 ----------- --------- FINANCING ACTIVITIES: Net increase (decrease) in deposits (110,525) 19,119 Interest credited to deposits 41,008 32,688 Repayments of FHLB advances (320,000) (438,755) Proceeds from FHLB advances 573,006 453,955 Net increase (decrease) in securities sold under agreements to repurchase (62,219) 224,186 Net decrease in federal funds purchased 0 (1,200) Repayment of note payable 0 (1) Issuance of common stock relating to exercise of employee stock options 1,805 333 Net proceeds from issuance of subordinated debentures 0 55,137 Proceeds from issuance of guaranteed preferred interests in the Company's junior subordinated debentures 74,750 0 Deferred offering costs from issuance of guaranteed preferred interests in the Company's junior subordinated debentures (2,908) 0 Issuance of common stock, net 0 18,004 Payments to acquire and retire common stock (12,188) (3,259) Receipts of advances by borrowers for taxes and insurance 27,808 40,963 Common stock dividends paid (1,635) (1,515) ----------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 208,902 399,655 ----------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 6,125 9,034 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 109,143 69,867 ----------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 115,268 $ 78,901 ----------- --------- SUPPLEMENTARY DISCLOSURE AND NON-CASH INVESTING AND FINANCING ACTIVITIES: Interest paid on borrowings $ 83,087 $ 47,372 Income taxes paid 10,825 8,000 Loans transferred to real estate owned 3,221 1,237 Proceeds receivable from sales of mortgage servicing rights 10,476 10,821 Residential loans held to maturity transferred to available for sale 245,703 0 Issuance of Class A Common Stock upon conversion of subordinated debentures 200 0 Loan charge-offs 8,322 5,518 Tax certificate charge-offs, net of (recoveries) (755) 142 Common stock dividend; not paid until October 703 550 Increase in equity for the tax effect related to the exercise of employee stock options 861 89 Change in net unrealized appreciation (depreciation) on securities available for sale 615 (9,349) Change in deferred taxes on net unrealized appreciation (depreciation) on securities available for sale 237 (3,606) Change in stockholders' equity from net unrealized appreciation (depreciation) on securities available for sale, less related deferred income taxes 378 (5,743) =========== =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED - ------------------------------------------------------------------------------- 4 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- 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 primary asset is the capital stock of BankAtlantic, a Federal Savings Bank ("BankAtlantic"), its wholly owned subsidiary. Under applicable law, the Company generally has broad authority with few restrictions to engage in various types of business activities, including investments in real estate, real estate development and real estate related businesses. In June 1997 the Company entered into an agreement to acquire the controlling interest in a builder of residential communities in South Florida. While the Company elected in August 1997 not to proceed with this acquisition, the Company has indicated that it may in the future pursue an acquisition for initiating its real estate activities as a means to diversify the Company's sources of non-interest income and to increase non-interest revenues. At present the Company's primary activities currently relate to the operations of BankAtlantic and BankAtlantic's subsidiaries. BankAtlantic's subsidiaries are primarily utilized to dispose of real estate acquired through foreclosure. The Company's recent activities include formation of BBC Capital Trust I, a wholly owned subsidiary (See Note 5) and purchasing 50% of the voting common stock of Florida Atlantic Securities Inc., ("FASI") a full-service investment banking and securities brokerage firm (See Note 6). 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 September 30, 1997, the consolidated results of operations for the three and nine months ended September 30, 1997 and 1996 and the consolidated cash flows for the nine months ended September 30, 1997 and 1996. Such adjustments consisted only of normal recurring items. The consolidated financial statements and related notes are presented as permitted by Form 10Q and should be read in conjunction with the notes to consolidated financial statements appearing in the Company's Annual Report on Form 10K for the year ended December 31, 1996 and the Form 10Q for each of the periods ended March 31, 1997 and June 30, 1997. 2. EQUITY CAPITAL The follow table sets forth the changes in common stockholders' equity for the nine months ended September 30, 1997 before net unrealized appreciation of securities available for sale:
COMMON ADDITIONAL RETAINED (IN THOUSANDS) STOCK PAID IN CAPITAL EARNINGS - ----------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 $ 183 $ 64,171 $82,602 Exercise of stock options 3 1,802 0 Tax effect relating to the exercise of employee stock options 0 861 0 Payments to acquire and retire treasury stock (11) (12,177) 0 Issuance of common stock upon conversion of subordinated debentures 0 200 0 Net income 0 0 19,591 Dividends on common stock 0 0 (1,793) 5 for 4 stock split, August 1997 48 0 (48) --------- --------- --------- Balance at September 30, 1997 $ 223 $ 54,857 $ 10,0352 ========= ========= =========
In August 1996, the Company announced a plan to purchase up to 1.56 million shares of common stock. During the nine months ended September 30, 1997, the Company paid $8.9 million and $3.3 million to repurchase 832,500 shares and 292,500 shares of Class A and Class B common shares, respectively. As of September 30, 1997, under the August 1996 repurchase plan, the Company has paid $10.7 million and $4.7 million to repurchase in the secondary market 1,082,500 shares and 468,281 shares of Class A and Class B common shares, respectively. These shares were retired at the time of purchase. During the nine months ended September 30, 1997, the Company issued 24,414 shares of Class A Common Stock upon the conversion of $200,000 principal amount of the Company's 6 3/4% Convertible Subordinated Debentures due 2006 (the "6 3/4% Convertible Debentures") at a conversion price of $8.19. - ------------------------------------------------------------------------------- 5 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- 3. SALES OF FINANCIAL ASSETS During the three and nine months ended September 30, 1997, BankAtlantic sold $8.9 million and $20.0 million of mortgage servicing rights realizing gains of $1.9 million and $6.5 million, respectively. These mortgage servicing rights related to approximately $562.1 million and $1.6 billion of loans, respectively. Included in other assets at September 30, 1997 and December 31, 1996 were $10.5 million and $9.5 million of receivables from the sales of mortgage servicing rights, respectively. During the three and nine months ended September 30, 1997, BankAtlantic sold $39.7 million and $230.4 million of treasury notes, for gains of $190,000 and $476,000, respectively, and $7.6 million and $5.9 million of federal agency obligations and REMIC securities during the nine months ended September 30, 1997 for gains of $220,000 and $436,000, respectively. During the three months ended, September 30, 1997, $28.7 million of 5 year balloon mortgage-backed securities were sold for a $4,000 gain. During the nine months ended September 30, 1996, BankAtlantic sold $136.6 million of adjustable rate mortgage-backed securities, $20.5 million of 15 year mortgage-backed securities and $5.9 million of seven year balloon mortgage-backed securities for gains totaling $3.9 million. All debt securities sold were classified as securities available for sale. Proceeds from the sales of these assets were used to fund purchases of mortgage servicing rights and support loan growth. 4. TRADING ACCOUNT SECURITIES During the three months ended September 30, 1997, the Company sold $2.8 million of marketable equity securities for a $672,000 gain. The unrealized holding gain on marketable equity securities for the three and nine months ended September 30, 1997 was $836,000 and $823,000, respectively. 5. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE COMPANY'S JUNIOR SUBORDINATED DEBENTURES In March 1997, the Company formed BBC Capital Trust I ("BBC Capital"). BBC Capital is a statutory business trust which was formed for the purpose of issuing 9 1/2% Cumulative Trust Preferred Securities ("Preferred Securities") and investing the proceeds thereof in Junior Subordinated Debentures of the Company. In a public offering in April 1997, BBC Capital issued for $74.75 million, 2.99 million shares of Preferred Securities at a price of $25 per share. BBC Capital used the gross proceeds received from the sale of the Preferred Securities to purchase $74.75 million of 9 1/2% Junior Subordinated Debentures from the Company which mature on June 30, 2027 (the "9 1/2% Junior Subordinated Debentures"). The net proceeds to the Company from the sale of the Junior Subordinated Debentures were $71.8 million after deduction of the underwriting discount and expenses. 6. INVESTMENT IN FLORIDA ATLANTIC SECURITIES INC. In September 1997, the Company entered into a joint ownership agreement with a newly formed company, FASI. FASI is a full-service investment banking and securities brokerage firm. Included in other assets is the Company's investment of $237,500 to acquire 50% of FASI's voting stock and a $1.5 million five year loan to FASI. The investment is accounted for under the equity method. Included in the Company's statement of operations in other non-interest expenses during the three and nine months ended September 30, 1997 is a $24,000 loss from FASI's operations. - ------------------------------------------------------------------------------- 6 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- 7. LOANS RECEIVABLE, NET ARE SUMMARIZED BELOW:
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 1997 1996 1996 ------------- ------------- ------------- (IN THOUSANDS) Real estate loans: Residential ........................................................... $ 838,616 $ 869,843 $ 514,891 Residential available for sale ........................................ 205,400 16,207 21,491 Construction and development .......................................... 330,579 301,813 217,292 FHA and VA insured .................................................... 1,143 4,013 4,255 Commercial ............................................................ 403,371 427,235 346,789 Other loans: Second mortgages ...................................................... 83,432 96,128 93,590 Commercial business ................................................... 51,219 78,384 57,141 Consumer .............................................................. 255,635 248,562 149,263 ------------- ------------- ------------- Total gross loans ............................................. 2,169,395 2,042,185 1,404,712 ------------- ------------- ------------- Adjustments: Undisbursed portion of loans in process ............................... 177,910 190,874 119,841 Unearned discounts on commercial real estate loans .................... (92) 705 730 Allowance for loan losses ............................................. 28,350 25,750 19,525 ------------- ------------- ------------- Loan receivable -- net ........................................ $ 1,963,227 $ 1,824,856 $ 1,264,616 ============= ============= =============
BankAtlantic, in an effort to reduce its interest sensitivity and react to recent changes in interest rates transferred during September 1997 $245.7 million of originated residential loans from loans held to maturity to loans available for sale. It is anticipated that the remaining transferred loans may be sold in the foreseeable future. 8. SUBSEQUENT EVENTS On October 27, 1997 the Company filed a registration statement with the Securities and Exchange Commission relating to proposed public offerings of 3.0 million shares of the Class A Common Stock, and $100.0 million of Convertible Subordinated Debentures. The offering price of Class A Common Stock and the terms of the Convertible Subordinated Debentures will be determined at the time the offerings become effective and will be subject to, among other things, market conditions. There is no assurance that the proposed offerings will be completed. 9. RECLASSIFICATIONS Certain amounts for prior periods have been reclassified to conform with statement presentation for 1997. - ------------------------------------------------------------------------------- 7 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Except for historical information contained herein, the matters discussed in this report are forward-looking statements made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, including but not limited to, economic, competitive and other factors affecting the Company's operations, markets, products and services, expansion strategies, potential impact of changes in interest rates, regulatory oversight and other factors discussed in the Company's Annual Report on Form 10K for the year ended December 31, 1996. Many of these factors are beyond the Company's control. Actual results could differ materially from these forward-looking statements. In light of these risks and uncertainties, there is no assurance that the results discussed in such forward-looking statements contained in this report will, in fact, occur. The Company does not undertake any obligation to publicly release the results of any revisions to these forward looking statements to reflect future events or circumstances. The Company's net income for the quarter ended September 30, 1997 was $6.4 million or $0.27 and $0.23 primary and fully diluted earnings per common and common equivalent share, respectively, compared to net income of $1.1 million or $0.05 and $0.04 primary and fully diluted earnings per common and common equivalent share for the same period in 1996. The Company's net income for the nine months ended September 30, 1997 was $19.6 million or $0.81 and $0.68 primary and fully diluted earnings per common and common equivalent share, respectively, compared to net income of $11.4 million or $0.48 and $0.46 primary and fully diluted earnings per common and common equivalent share for the same nine month period during 1996. Included in the Company's net income for the three and nine months ended September 30, 1996 was a one-time SAIF special assessment which reduced net income by $4.4 million or $0.19 and $0.18 primary and fully diluted earnings per common and common equivalent share for the three months ended September 30, 1996, respectively, and $0.19 and $0.17 primary and fully diluted earnings per common and common equivalent share for the nine months ended September 30, 1996, respectively. Net interest income after provision for loan losses was $20.2 million for the September 30, 1997 quarter compared to $17.0 million for the quarter ended September 30, 1996. During the three months ended September 30, 1997 compared to the same period in 1996, total interest income was $53.5 million compared to $38.5 million and total interest expense was $29.7 million compared to $19.6 million, respectively. The provision for loan losses was $3.7 million for the three months ended September 30, 1997 compared to $1.9 million during the comparable 1996 period. Non-interest income was $11.3 million for the three months ended September 30, 1997 compared to $7.3 million for the comparable 1996 period and non-interest expenses for the quarter ended September 30, 1997 were $20.9 million compared to $22.4 million for the same 1996 period. Net interest income after provision for loan losses was $62.9 million for the nine months ended September 30, 1997 compared to $48.8 million for the comparable 1996 period. Non-interest income was $29.9 million for the 1997 nine month period compared to $20.9 million during the comparable 1996 period and non-interest expense was $60.7 million for the nine months ended September 30, 1997 compared to $50.6 million during the comparable 1996 period. NET INTEREST INCOME
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------- ------------------------------- (In thousands) 1997 1996 Change 1997 1996 Change -------- -------- -------- -------- -------- -------- Interest and fees on loans ............................... $ 44,333 $ 27,277 $ 17,056 $127,404 $ 69,487 $ 57,917 Interest and dividends on securities available for sale . 7,139 9,313 (2,174) 22,927 29,039 (6,112) Interest and dividends on investment securities .......... 2,048 1,931 117 5,679 4,845 834 Interest on deposits ..................................... (17,193) (12,644) (4,549) (51,510) (37,356) (14,154) Interest on advances from FHLB ........................... (7,685) (2,625) (5,060) (18,752) (5,448) (13,304) Interest on securities sold under agreements to repurchase (1,496) (2,846) 1,350 (6,354) (5,033) (1,321) Interest on subordinated debentures and guaranteed preferred interest in the Company's Junior Subordinated Debentures ............................... (3,320) (1,495) (1,825) (7,634) (2,489) (5,145) -------- -------- -------- -------- -------- -------- Net interest income ................................. $ 23,826 $ 18,911 $ 4,915 $ 71,760 $ 53,045 $ 18,715 ======== ======== ======== ======== ======== ========
- ------------------------------------------------------------------------------- 8 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- The increase in interest and fees on loans during the three months ended September 30, 1997 compared to the same period in 1996 reflects higher average balances resulting from loans acquired in connection with the BNA acquisition, residential loan purchases, and commercial real estate loan growth. The higher loan average balances were partially offset by lower rates earned on consumer loans. Loan average balances increased from $1.2 billion during the three months ended September 30, 1996 to $2.0 billion during the comparable period during 1997. The BNA acquisition originally increased loan balances by $395.0 million. Average balances of purchased residential loans increased from $228.4 million during the three months ended September 30, 1996 to $659.1 million during the comparable 1997 period. Average commercial real estate loans for the 1997 quarter increased to $542.7 million from $425.1 million during the comparable 1996 period. The commercial real estate loan growth primarily resulted from loan fundings and the BNA acquisition. The above increases in loan interest income were partially offset by lower yields earned on consumer loans resulting from the funding of new loans bearing lower interest rates than portfolio loan rates and the acquisition of BNA's consumer loan portfolio. The decline in interest and dividends on securities available for sale resulted from lower average balances and yields reflecting the sale of $272.6 million of securities available for sale and $2.8 million of trading securities. The above security sales were partially offset by the purchase of $148.8 million of treasury notes, $217.2 million of 7 year balloon mortgage-backed securities, $55.1 million of 5 year balloon mortgage-backed securities, $10.0 million of adjustable rate mortgage-backed securities and $2.4 million of corporate bonds during the nine months ended September 30, 1997. The 1997 increases in interest and dividends on investment securities was primarily due to a $287,000 increase in dividends from FHLB stock partially offset by a $228,000 decrease in tax certificate interest income. FHLB stock average balances increased from $8.8 million during the three months ended September 30, 1996 to $25.0 million during the comparable 1997 period. Increases in FHLB stock were required based on higher FHLB advance levels. The decrease in tax certificate interest income reflects higher recoveries and a $100,000 interest reserve reversal during the 1996 three month period compared to $0 the same period during 1997. The increase in interest on deposits for the quarter ended September 30, 1997 compared to the comparable 1996 quarter resulted from higher average deposit balances and rates during 1997. Average interest bearing deposit balances increased from $1.2 billion for the three months ended September 30, 1996 to $1.6 billion for the comparable period ended September 30, 1997, and average rates on deposits increased from 4.05 % during the 1996 quarter to 4.20 % during the 1997 quarter. The increase in the rates on deposits reflects a new savings product which pays higher rates based on account balances as well as the generally higher interest rate environment experienced during 1997 than during 1996. Saving account average balances and rates increased from $102.9 million and 1.44 % during the three months ended September 30, 1996 to $249.3 million and 3.31 % during the comparable 1997 period. The remaining increase in deposit average balances primarily resulted from the deposits acquired in connection with the BNA acquisition. The increase in interest expense on advances from FHLB was primarily due to higher average balances and secondarily to higher average rates. Advances from FHLB average balances and rates increased from $170.3 million and 6.13%, respectively, during the third quarter of 1996 to $491.4 million and 6.22%, respectively, during the comparable 1997 quarter. The additional FHLB borrowings were primarily intermediate term advances. Intermediate term advances generally carry higher rates than short term advances and were partially used to fund purchases of residential loans. The lower interest expense on securities sold under agreements to repurchase resulted from lower average balances. Securities sold under agreements to repurchase average balances decreased from $217.7 million during the three months ended September 30, 1996 to $114.9 million during the comparable 1997 three month period. Substantially all of the 9 1/2% Junior Subordinated Debenture proceeds were placed by the Company in a depository account at BankAtlantic where these proceeds were utilized by BankAtlantic to reduce securities sold under agreements to repurchase. During the 1996 quarter interest on subordinated debentures consisted of interest expense on $21.0 million of the Company's 9% Subordinated Debentures and $57.5 million of 6 3/4% Convertible Subordinated Debentures. The interest expense during the 1997 quarter includes interest expense on the above Subordinated Debentures and Convertible Subordinated Debentures plus $1.8 million of interest expense on $74.75 million on the 9 1/2% Junior Subordinated Debentures issued in April 1997. During the nine months ended September 30, 1997, net interest income increased by $20.5 million primarily due to the reasons discussed above for the September 30, 1997 quarter. The increase in total interest income was impacted by higher loan average balances, and higher yields on earning assets, partially offset by lower securities available for sale average balances. The yields on interest earning assets increased from 8.21 % for the 1996 nine month period to 8.32 % during the same period in 1997. The higher yields reflect a change in the mix of interest earning assets from lower yielding investments and securities available for sale to higher yielding loans. Average total loans receivable as a percentage of average earning assets increased from 59.1% during the 1996 nine month period to 76.8% for the comparable 1997 period. Securities available for sale average balances declined from $616.7 million during the nine months ended September 30, 1996 to $498.4 million during the comparable 1997 period. The increase in total interest expense was impacted by higher average balances and yields for all categories of interest bearing liabilities. Total average interest bearing liabilities and yields increased from $1.5 billion and 4.39% during the nine months ended September 30, 1997 to $2.3 billion and 4.84% during the comparable 1997 period. Included in the interest expense increase was $3.0 million of interest on 9 1/2% Junior Subordinated Debentures and the effect of the 6 3/4% Convertible Subordinated Debentures being outstanding for all of 1997 compared to approximately six months during the 1996 comparable period. - ------------------------------------------------------------------------------- 9 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- Provision for Loan Losses The provision for loan losses for the third quarter 1997 was $3.7 million compared to $1.9 million during the comparable 1996 period. The higher 1997 provision for loan losses reflects a $1.5 million increase in consumer loan net charge-offs, and a $1.1 million increase in specific reserves, partially offset by $300,000 of higher commercial loan recoveries and $285,000 of lower commercial loan charge-offs. During the 1997 quarter $750,000 and $350,000 of specific reserves were established for a commercial real estate loan and a commercial business loan specifically associated with the BNA acquisition. The decline in commercial loan charge-offs resulted primarily from a $450,000 charge-off of one commercial business loan during 1996. The provision for loan losses for the nine months ended September 30, 1997 increased $4.6 million from the comparable 1996 period. The increase primarily related to $3.0 million of additional consumer loan net charge-offs during 1997 compared to 1996. The increase for the period in the allowance for loan losses was related to the acquisition of BNA, loan growth, increased consumer loan portfolio delinquencies, and increased consumer loan charge-off trends as well as the items discussed above for the quarter. The change in specific reserves during the nine months ended September 30, 1997 included a $325,000 reduction relating to the payoff of a commercial business loan.
FOR THE THREE ENDED FOR THE NINE ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------------- -------------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Balance, beginning of period ....................... $ 27,200 $ 19,200 $ 25,750 $ 19,000 Charge-offs: Commercial business loans ........................ (118) (451) (177) (566) Commercial real estate loans ..................... (48) 0 (49) (238) Consumer loans ................................... (3,196) (1,625) (7,916) (4,684) Residential real estate loans .................... (104) (27) (180) (30) -------- -------- -------- -------- Total charge-offs .................................. (3,466) (2,103) (8,322) (5,518) -------- -------- -------- -------- Recoveries: Commercial business loans ........................ 148 31 234 304 Commercial real estate loans ..................... 180 0 206 41 Consumer loans ................................... 617 528 1,649 1,434 Residential real estate loans .................... 0 0 0 0 -------- -------- -------- -------- Total recoveries ................................... 945 559 2,089 1,779 -------- -------- -------- -------- Net charge-offs .................................... (2,521) (1,544) (6,233) (3,739) Provision for loan losses .......................... 3,671 1,869 8,833 4,264 -------- -------- -------- -------- Balance, end of period ............................. $ 28,350 $ 19,525 $ 28,350 $ 19,525 ======== ======== ======== ======== On the indicated dates the Company's risk elements and non-performing assets were (in thousands): SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 1997 1996 1996 ------------- ------------ ------------- Nonaccrual : Tax certificates ............................................... $ 986 $ 1,835 $ 2,698 Loans .......................................................... 12,487 12,424 6,585 ------- ------- ------- Total nonaccrual ............................................... 13,473 14,259 9,283 ------- ------- ------- Repossessed Assets: Real estate owned ............................................... 5,909 4,918 5,451 Repossessed assets .............................................. 2,419 1,992 359 ------- ------- ------- Total repossessed assets ........................................ 8,328 6,910 5,810 ------- ------- ------- Contractually past due 90 days or more (1) .......................... 580 2,961 812 ------- ------- ------- Total non-performing assets ..................................... 22,381 24,130 15,905 Restructured loans .................................................. 3,855 3,718 3,672 ------- ------- ------- Total risk elements ............................................. 26,236 27,848 19,577 ======= ======= =======
(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. - ------------------------------------------------------------------------------- 10 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- BankAtlantic's "risk elements" consist of restructured loans and "non-performing" assets. The classification of loans as "non-performing" is generally based upon non-compliance with loan performance and collateral coverage standards, as well as management's assessment of problems relating to the borrower's or guarantor's financial condition. BankAtlantic generally designates any loan that is 90 days or more delinquent as non-performing. BankAtlantic may designate loans as non-performing prior to the loan becoming 90 days delinquent, if the borrower's ability to repay is questionable. A "non-performing" classification alone does not indicate an inherent principal loss; however, it generally indicates that management does not expect the asset to earn a market rate of return in the current period. Restructured loans are loans for which BankAtlantic has modified the loan terms due to the financial difficulties of the borrower. Total risk elements at September 30, 1997 compared to December 31, 1996 decreased by $1.6 million. The reduction in risk elements primarily relates to decreases in nonaccrual tax certificates and loans contractually past due 90 days or more, partially offset by increases in real estate owned ("REO") and repossessed assets. The $849,000 decrease in nonaccrual tax certificates primarily relates to redemptions. The $2.3 million decline in loans contractually past due 90 days or more resulted from loan payoffs or loan renewals. The $427,000 increase in repossessed assets primarily relates to automobiles associated with the indirect consumer loan portfolio. The $991,000 increase in real estate owned was due to higher residential REO associated with the wholesale residential loan portfolio partially offset by the sales of $900,000 and $1.3 million of commercial and residential REO properties, respectively.
NON-INTEREST INCOME FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------- ------------------------------ (In thousands) 1997 1996 Change 1997 1996 Change ------- ------- ------- ------- -------- ------- Loan servicing and other loan fees ........................ $ 797 $ 956 $ (159) 3,773 $ 2,900 $ 873 Gains on sales of loans available for resale .............. 1,488 1 1,487 2,653 287 2,366 Trading account gains and losses, net ..................... 1,508 0 1,508 1,495 0 1,495 Gains on sales of mortgage servicing rights ............... 1,914 2,554 (640) 6,548 2,554 3,994 Gains on sales of securities available for sale .......... 194 0 194 1,136 3,946 (2,810) Gain (losses) on sales of property and equipment, net ..... 868 0 868 852 (329) 1,181 Transaction accounts ...................................... 3,710 3,093 617 10,787 8,776 2,011 Other ..................................................... 794 703 91 2,687 2,721 (34) ------- ------- ------- ------- -------- ------- Total non-interest income .............................. $11,273 $ 7,307 $ 3,966 $29,931 $ 20,855 $ 9,076 ======= ======= ======= ======= ======== =======
The decrease in loan servicing and other loan fees during the three month period in 1997 compared to the corresponding 1996 period resulted from a decline in loan servicing income due to higher amortization of mortgage servicing rights, partially offset by an increase in late fee income and loan fees. Loan servicing income declined by $350,000 due to higher amortization of mortgage servicing rights caused by decreased interest rates during the period resulting in loan prepayments. Late fee income increased from $340,000 during the three months ended September 30, 1996 to $463,000 during the comparable 1997 period primarily due to larger loan portfolios. Loan fee income increased by $62,000 due to increased investor loan set-up fees on serviced loans. The increase in loan servicing and other loan fees for the nine month period in 1997 compared to the corresponding 1996 period resulted from higher late fee income and loan fees. The increase in late fee income and other loan fees primarily related to the items discussed above. During the three and nine months ended September 30, 1997 and 1996, BankAtlantic sold $80.2 million and $134.9 million, and $11.4 million and $44.8 million, respectively, of residential loans available for sale for gains reported in the preceding table. BankAtlantic, in an effort to reduce its interest sensitivity and react to the recent changes in interest rates, transferred during September 1997 $245.7 million of originated residential loans from loans held to maturity to loans available for sale. It is anticipated that the transferred loans may be sold in the foreseeable future. During the three and nine months ended September 30, 1997, BankAtlantic sold $ 8.9 million and $20.0 million of mortgage servicing rights for the gains reported in the above table. These rights related to approximately $562.1 million and $1.6 billion of loans serviced for others during the respective three and nine month periods ended September 30, 1997. During the three and nine months ended September 30, 1996, BankAtlantic sold $11.3 million of mortgage servicing rights for gains reported in the above table. These rights related to approximately $736.9 million of loans serviced for others. During the three and nine months ended September 30, 1997, BankAtlantic sold $39.7 million and $230.4 million of treasury notes for gains of $190,000 and $476,000, respectively, and $7.6 million and $5.9 million of federal agency obligations and REMIC securities during the nine months ended September 30, 1997 for gains of $220,000 and $436,000, respectively. During the three months - ------------------------------------------------------------------------------- 11 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- ended, September 30, 1997, $28.7 million of 5 year balloon mortgage-backed securities were sold for a $4,000 gain. During the nine months ended September 30, 1996, BankAtlantic sold $136.6 million of adjustable rate mortgage-backed securities, $20.5 million of 15 year mortgage-backed securities and $5.9 million of seven year balloon mortgage-backed securities for total gains of $3.9 million, respectively. Proceeds from the sales of these assets were used to fund purchases of mortgage servicing rights and support loan growth. During the three months ended September 30, 1997, the Company sold $2.8 million of marketable equity securities for a $672,000 gain. The unrealized holding gain on marketable equity securities for the three and nine months ended September 30, 1997 was $836,000 and $823,000, respectively. During the three months ended September 30, 1997, BankAtlantic sold vacant land which had been acquired in 1989 realizing a $882,000 gain. The remaining gains and losses on sales of property and equipment for the three and nine months ended September 30, 1997 and 1996 relate to sales or disposals of furniture and equipment. The increase in transaction account fees during the three and nine months ended September 30, 1997 compared to the corresponding 1996 period resulted from higher checking account and ATM fee income. ATM fee income increased from $1.1 million and $2.8 million during the three and nine months ended September 30, 1996 to $1.3 million and $4.0 million for the comparable three and nine month periods during 1997, respectively. Checking account fees increased from $ 2.0 million and $6.0 million during the three and nine months ended September 30, 1996 to $2.4 million and $6.8 million during the comparable 1997 periods, respectively. The additional fee income resulted from higher average deposit balances and the implementation of an ATM surcharge fee ( a fee received by an ATM owner).
NON-INTEREST EXPENSES FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------------- ------------------------------- (IN THOUSANDS) 1997 1996 Change 1997 1996 Change -------- -------- -------- -------- -------- -------- Employee compensation and benefits .... $ 10,033 $ 7,422 $ 2,611 $ 28,866 $ 21,841 $ 7,025 Occupancy and equipment ............... 4,773 2,980 1,793 13,810 8,671 5,139 Federal insurance premium ............. 269 689 (420) 822 1,949 (1,127) Advertising and promotion ............. 667 394 273 1,561 1,631 (70) SAIF special assessment ............... 0 7,160 (7,160) 0 7,160 (7,160) Amortization of cost over fair value of net assets acquired ................ 627 306 321 1,881 918 963 Other ................................. 4,532 3,421 1,111 13,804 8,402 5,402 -------- -------- -------- -------- -------- -------- Total non-interest expenses ....... $ 20,901 $ 22,372 $ (1,471) $ 60,744 $ 50,572 $ 10,172 ======== ======== ======== ======== ======== ========
The increase in employee compensation and benefits during the three and nine months ended September 30, 1997 compared to the 1996 period resulted from the expansion of BankAtlantic's branch network, the acquisition of eight branches as a result of the BNA acquisition and annual salary increases. During the three months ended September 30, 1997, BankAtlantic opened two full service branches, one in-store branch and began two new business units (International Lending and Small Business Lending). These business units are expected to be fully operational by the end of 1997. Occupancy and equipment expenses increased due to the expanded branch network and the BNA acquisition mentioned above, and the fourth quarter 1996 conversion of a substantial portion of its data processing functions to an outside service bureau. As a result of the conversion, processing fees increased from $281,000 and $498,000 during the three and nine months ended September 30, 1996 to $1.1 million and $3.0 million during the comparable periods in 1997, respectively. Depreciation expense increased by $262,000 and $969,000 during the three and nine months ended September 30 1997 compared to the same periods during 1996. The increase in depreciation expense resulted from the purchase of item processing equipment, the implementation of a wide area network throughout the organization, and upgrading consumer and residential loan origination software. Management believes these expenditures will enhance BankAtlantic's customer delivery systems. The reduction in federal insurance premium during the three and nine months ended September 30, 1997 resulted from reduced FDIC premium rates based on the SAIF recapitalization effected in September 1996. At that time BankAtlantic incurred a $7.2 million special one-time SAIF assessment. The decline was partially offset by increased insured deposits in connection with the BNA acquisition. - ------------------------------------------------------------------------------- 12 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- The increase in advertising and promotion expenses during the September 1997 quarter resulted primarily from branch expansion in Dade County, Florida. The decline in advertising and promotions for the nine months ended September 30, 1997 reflects direct consumer lending promotions during 1996 that were not conducted in 1997. The increase in the amortization of cost over fair value of net assets acquired for the three and nine months ended September 30, 1997 related to the BNA acquisition. The increase in other expenses during the three months ended September 30, 1997 compared to the 1996 periods reflects expenses associated with the BNA acquisition, an expanded branch network, higher consumer repossession expenses and a $305,000 write-off of due diligence costs incurred in connection with an abandoned acquisition. In the 1997 quarter, telephone, postage, stationery, printing and supplies expenses increased by a total of $505,000 compared to the same 1996 quarter due to the expanded branch network and the BNA acquisition. Repossession expenses increased $234,000 relating to costs associated with indirect consumer automobile loans. The increase in other expenses during the nine months ended September 30, 1997 reflects the items discussed above, charitable contributions, settlement of a sales tax audit and higher check losses and teller outages. During the nine months ended September 30, 1997 telephone, postage, stationery, printing and supplies expenses increased by a total of $1.3 millionand check losses and teller outages, charitable contributions and consumer repossession expenses increased by $642,000, $171,000 and $1.1 million, respectively. A state of Florida sales tax audit resulted in a $166,000 payment. The remaining increase in other expenses reflects higher operating expenses generally associated with a larger organization. FINANCIAL CONDITION The Company's total assets at September 30, 1997 were $2.8 billion compared to $2.6 billion at December 31, 1996. Loans receivable, net, securities available for sale, investment securities held to maturity, FHLB stock, mortgage servicing rights and cash and due from depository institutions increased by $138.4 million, $55.7 million, $5.4 million, $12.7 million, $7.0 million and $10.7 million, respectively. The increase in loans receivable, net reflects $376.5 million of residential loan purchases and $399.3 million of loan fundings, partially offset by $493.1 million of loan principal repayments and $134.9 million of loan sales. The higher securities available for sale balances reflect the purchase of $433.5 million of securities, partially offset by the sale of $272.6 million of securities and $106.1 million of principal repayments. The higher investment securities held to maturity balances primarily resulted from the purchase of $39.5 million of tax certificates, partially offset by $34.2 million of security redemptions and maturities. During 1997, the Company purchased additional FHLB stock to satisfy FHLB advance requirements. The increased mortgage servicing rights balances reflect $43.2 million of servicing acquired partially offset by $20.0 million of mortgage servicing rights sold and $5.8 million of mortgage servicing rights amortization. The Company's total liabilities at September 30, 1997 were $ 2.7 billion compared to $2.5 billion at December 31, 1996. FHLB advances, guaranteed preferred beneficial interest in the Company's Junior Subordinated Debentures and advances by borrowers for taxes and insurance increased by $253.0 million, $74.8 million, and $27.8 million, respectively. The above increases were partially offset by $69.4 million of net deposit outflows and a $62.2 million decline in securities sold under agreements to repurchase. Proceeds from the additional FHLB advances, issuance of the Company's 9 1/2% Junior Subordinated Debentures, loan repayments, sales of financial assets and properties and principal collected on securities available for sale and investment securities held to maturity were used to repay securities sold under agreements to repurchase, fund loan growth and deposit outflows and to purchase securities available for sale, trading securities, mortgage servicing rights, FHLB stock and tax certificates and to acquire outstanding shares of common stock. LIQUIDITY AND CAPITAL RESOURCES In March 1997, the Company formed BBC Capital Trust I ("BBC Capital"). BBC Capital is a statutory business trust which was formed for the purpose of issuing 9 1/2% Cumulative Trust Preferred Securities ("Preferred Securities") and investing the proceeds thereof in Junior Subordinated Debentures of the Company. In a public offering in April 1997, BBC Capital issued for $74.75 million, 2.99 million shares of Preferred Securities at a price of $25 per share. BBC Capital used the gross proceeds received from the sale of the Preferred Securities to purchase $74.75 million of 9 1/2% Junior Subordinated Debentures from the Company which mature on June 30, 2027. The net proceeds to the Company from the sale of the 9 1/2% Junior Subordinated Debentures were $71.8 million after deduction of the underwriting discount and expenses. Substantially all of the net proceeds from the sale of the Junior Subordinated Debentures are in a depository account at BankAtlantic to provide for liquidity for potential acquisitions or longer term investment opportunities by either the Company or BankAtlantic. - ------------------------------------------------------------------------------- 13 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- On October 27, 1997 the Company filed a registration statement with the Securities and Exchange Commission relating to proposed public offerings of 3.0 million shares of Class A Common Stock, and $100.0 million of Convertible Subordinated Debentures. The offering price of Class A Common Stock and the terms of the Convertible Subordinated Debentures will be determined at the time the offerings become effective and will be subject to, among other things, market conditions. There is no assurance that the proposed offerings will be completed. In September 1997, the Company entered into a joint ownership agreement with a newly formed company, FASI. FASI is a full-service investment banking and securities brokerage firm. Included in other assets is the Company's investment of $237,500 to acquire 50% of FASI's voting stock and a $1.5 million five year loan to FASI. The investment is accounted for under the equity method. Included in the Company's statement of operations in other non-interest expenses during the three and nine months ended September 30, 1997 is a $24,000 loss from FASI's operations. BankAtlantic's primary sources of funds during the first nine months of 1997 were from operations, principal collected on loans, securities available for sale and investment securities held to maturity, and sales of securities available for sale, trading securities and property and equipment, FHLB advances, mortgage servicing rights sales, and advances from borrowers for taxes and insurance. These funds were primarily utilized to fund deposit outflows, loan purchases and fundings and the purchase of FHLB stock, tax certificates, trading securities and securities available for sale and repay to securities sold under agreements to repurchase. At September 30, 1997, BankAtlantic met all applicable liquidity and regulatory capital requirements. BankAtlantic's commitments to originate loans at September 30, 1997 were $80.0 million compared to $101.1 million at September 30, 1996. Commitments to purchase residential loans were $67.0 million and $62.5 million at September 30, 1997 and 1996, respectively, and commitments to purchase securities available for sale were $50.2 million, and $0 at September 30, 1997 and 1996, respectively. BankAtlantic expects to fund the 1997 loan commitments from loan and securities available for sale repayments. At September 30, 1997, loan commitments were 7.49% of loans receivable, net. BankAtlantic's actual capital amounts and ratios are presented in the table: To be Well
FOR CAPITAL ADEQUACY ACTUAL PURPOSES ------------------- ------------------------------- AMOUNT RATIO AMOUNT RATIO --------- ------ -------- ------ (IN THOUSANDS) As of September 30, 1997: Total risk-based capital 209,025 11.31 % /greater than/ $ 147,789 /greater than/ 8.00 % /greater than/ Tier I risk-based capital 185,881 10.06 % /greater than/ $ 73,894 /greater than/ 4.00 % /greater than/ Tangible capital 185,881 6.65 % /greater than/ $ 41,919 /greater than/ 1.50 % /greater than/ Core capital 185,881 6.65 % /greater than/ $ 83,838 /greater than/ 3.00 % /greater than/ As of December 31, 1996: Total risk-based capital 193,196 10.83 % /greater than/ $ 142,691 /greater than/ 8.00 % /greater than/ Tier I risk-based capital 170,865 9.58 % /greater than/ $ 71,363 /greater than/ 4.00 % /greater than/ Tangible capital 170,865 6.65 % /greater than/ $ 38,547 /greater than/ 1.50 % /greater than/ Core capital 170,865 6.65 % /greater than/ $ 77,094 /greater than/ 3.00 % /greater than/ CAPITALIZED UNDER PROMPT CORRECTIVE ACTION PROVISIONS ------------------------------------- AMOUNT RATIO -------- ------ As of September 30, 1997: Total risk-based capital 184,736 /greater than/ 10.00 % Tier I risk-based capital 110,841 /greater than/ 6.00 % Tangible capital 41,919 /greater than/ 1.50 % Core capital 139,730 /greater than/ 5.00 % As of December 31, 1996: Total risk-based capital 178,407 /greater than/ 10.00 % Tier I risk-based capital 107,004 /greater than/ 6.00 % Tangible capital 38,547 /greater than/ 1.50 % Core capital 128,491 /greater than/ 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, 1996. - ------------------------------------------------------------------------------- 14 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- PART II - OTHER INFORMATION EXHIBITS AND REPORTS ON FORM 8K None - ------------------------------------------------------------------------------- 15 BANKATLANTIC BANCORP, INC. - ------------------------------------------------------------------------------- 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. October 29, 1997 By: /s/ ALAN B. LEVAN ---------------- -------------------------------- Date Alan B. Levan Chief Executive Officer/ Chairman/President October 29, 1997 By: /s/ JASPER R. EANES ---------------- --------------------------------- Date Jasper R. Eanes Executive Vice President/ Chief Financial Officer EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule EX-27 2
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 (UNAUDITED) AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 113,734 0 1,534 4,237 495,093 59,953 59,953 1,963,227 28,350 2,844,996 1,763,373 128,369 94,940 701,756 0 0 223 156,335 2,844,996 127,404 28,606 0 156,010 51,510 84,250 71,760 8,833 2,631 60,744 32,114 32,114 0 0 19,591 0.81 0.68 8.32 12,487 580 3,855 0 25,750 8,322 2,089 28,350 28,350 0 4,726
-----END PRIVACY-ENHANCED MESSAGE-----