##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Year Ended December 31, 2006
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number
333-72213
 BFC Financial Corporation
  Florida
    
    59-2022148(State of Organization)
    
    (IRS Employer Identification Number)2100 West Cypress Creek RoadFt. Lauderdale, Florida
    
    33309(Address of Principal Executive Office)
    
    (Zip Code)
 Registrants telephone number, including area code
 Securities registered pursuant to Section 12(b) of the Act:   Securities registered pursuant to Section 12(g) of the Act:
 Class A Common Stock $.01 par Value 
Class B Common Stock $.01 par Value
    
    NYSE Arca
OTC BB(Title of Class)
    
    (Name of Exchange on Which Registered)
 o þ
 o þ
 þ o
 þ
  o þ o
 o þ
   
 Documents Incorporated by Reference




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET PRICE FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED CONSOLIDATED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESSIGNATURESINDEX TO EXHIBITSEX-12.1 Ratio of Earnings to Fixed ChargesEX-21.1 Subsidiaries of the RegistrantEX-23.1 Consent of PricewaterhouseCoopersEX-23.2 Consent of Ernst & YoungEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO    Table of Contents  
 PART I
   
    
    the impact of economic, competitive and other factors affecting the Company and its
subsidiaries, and their operations, markets, products and services;
    
    that BFC shareholders interests may be diluted in transactions utilizing BFC stock for
consideration;
    
    that the announced merger with Levitt Corporation (Levitt) may not be completed as
contemplated, or at all, or that it may not be successful;
    
    that the performance of those entities in which investments are made may not be as
anticipated;
    
    that BFC will be subject to the unique business and industry risks and characteristics
of each entity in which an investment is made;
    
    that BFC may not have sufficient available cash to make desired investments; and
    
    that appropriate investment opportunities on reasonable terms and at reasonable prices may not be available.
  
    
    the impact of economic, competitive and other factors affecting BankAtlantic Bancorp and
its operations, markets, products and services;
    
    credit risks and loan losses, and the related sufficiency of the allowance for loan
losses, including the impact on the credit quality of BankAtlantic loans of changes in the
real estate markets in their trade area and where their collateral is located;
    
    BankAtlantics seven-day banking initiatives and other growth, marketing or advertising
initiatives not resulting in continued growth of core deposits or producing results which
do not justify their costs;
    
    the success of expenses discipline initiatives;
    
    BankAtlantics new store expansion program, successfully opening the anticipated number
of new stores in 2007 and achieving growth and profitability at the stores;
    
    changes in interest rates and the effects of, and changes in, trade, monetary and fiscal
policies and laws including their impact on the banks net interest margin;
    
    adverse conditions in the stock market, the public debt market and other capital markets
and the impact of such conditions on activities and the value of assets;
    
    the impact of periodic testing of goodwill and other intangible assets for impairment;
    
    past performance, actual or estimated new account openings and growth rate may not be
indicative of future results; and
    
    BankAtlantic Bancorp success at managing the risk involved in the foregoing.
  
    
    the impact of economic, competitive and other factors affecting Levitt and its operations;
 2




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
    
    the market for real estate in the areas where Levitt has developments, including the
impact of market conditions on Levitts margins and the fair value of Levitts real estate
inventory;
    
    the accuracy of the estimated fair value of Levitts real estate inventory and the
potential for further impairment charges;
    
    cancellations of existing sales contracts and the ability to consummate sales contracts
included in Levitts backlog;
    
    the realization of cost savings associated with reductions of workforce and the ability
to limit overhead and costs commensurate with sales;
    
    the need to offer additional incentives to buyers to generate sales;
    
    the effects of increases in interest rates;
    
    Levitts ability to realize the expected benefits of its expanded platform, technology
investments, growth initiatives and strategic objectives;
    
    Levitts ability to timely deliver homes from backlog, shorten delivery cycles and
improve operational and construction efficiency;
    
    Levitts ability to maintain sufficient liquidity in the event of a prolonged downturn in the housing market; and
    
    Levitts success at managing the risks involved in the foregoing.
  3




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ITEM 1. BUSINESS
 The Company
  www.bfcfinancial.com
   PercentShares
    
    Percent of
    
    ofOwned
    
    Ownership
    
    VoteBankAtlantic BancorpClass A Common Stock
    
    
    8,329,236
    
    
    
    14.83
    %
    
    
    7.86
    %Class B Common Stock
    
    
    4,876,124
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    13,205,360
    
    
    
    21.64
    %
    
    
    54.86
    %LevittClass A Common Stock
    
    
    2,074,243
    
    
    
    11.15
    %
    
    
    5.91
    %Class B Common Stock
    
    
    1,219,031
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    3,293,274
    
    
    
    16.61
    %
    
    
    52.91
    %
  Recent Developments
  4




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##### Table of Contents



Business Segments
  BFC Activities Segment
   Benihana
   5




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##### Table of Contents



Employees
   December 31, 2006
    
    December 31, 2005Full-time
    
    Part-time
    
    Full-time
    
    Part-timeBFC
    
    
    41
    
    
    
    1
    
    
    
    20
    
    
    
    1BankAtlantic Bancorp
    
    
    2,433
    
    
    
    386
    
    
    
    1,900
    
    
    
    390Levitt
    
    
    666
    
    
    
    32
    
    
    
    639
    
    
    
    28Total
    
    
    3,140
    
    
    
    419
    
    
    
    2,559
    
    
    
    419
  6




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##### Table of Contents



Financial Services Segment
 Our Financial Services segment consists of BankAtlantic Bancorp, which is consolidated with
BFC Financial Corporation. The only assets available to BFC Financial Corporation from BankAtlantic
Bancorp are dividends when and if declared and paid by BankAtlantic Bancorp. BankAtlantic Bancorp
is a separate public company and its management prepared the following Item 1. Business regarding
BankAtlantic Bancorp which was included in BankAtlantic Bancorps Annual Report on Form 10-K for
the year ended December 31, 2006 filed with the Securities and Exchange Commission. Accordingly,
references to the Company, we, us , our or Parent Company in the following discussion
under the caption Financial Services are references to BankAtlantic Bancorp and its subsidiaries,
and are not references to BFC Financial Corporation.
 The Company
   www.bankatlanticbancorp.com
  BankAtlantic
   
    
    attracting checking and savings deposits (core deposits) from individuals and business customers,
    
    originating commercial real estate, business, consumer and small business loans,
    
    purchasing wholesale residential loans,
    
    investing in mortgage-backed securities, tax certificates and other securities.
  
    
    Continuing the Floridas Most Convenient Bank Initiative.BankAtlantic began its
Floridas Most Convenient Bank initiative in 2002. This initiative includes offering
free checking, seven-day banking, extended lobby hours, including some stores open from
7:30am until midnight, a 24-hour customer service center and other new products and
services that are an integral part of BankAtlantics strategy to position itself as a
customer-oriented bank and
 7




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increase its core deposit accounts. BankAtlantic defines its core deposits as its demand
deposit accounts, NOW checking accounts and savings accounts.
    
    Increasing Core Deposits.From April, 2002, when the Floridas Most Convenient Bank
initiative was launched, to December 31, 2006, BankAtlantics core deposits increased 272%
from approximately $600 million to approximately $2.2 billion. These core deposits
represented 58% of BankAtlantics total deposits at December 31, 2006, compared to 26% of
total deposits at December 31, 2001. BankAtlantic intends to continue to seek to increase
its core deposits through sales and marketing efforts, new product offerings, commitment to
customer service and the Floridas Most Convenient Bank initiative. The growth of core
deposits has slowed since the first quarter of 2006 due primarily to higher short term
interest rates, the slow down in the residential real estate market in Florida and
increased competition.
    
    Growing the Loan Portfolio by Concentrating on Areas of Lending Expertise. BankAtlantic
is focused on growth of its commercial and retail banking business with an emphasis on
generating commercial real estate, small business, and consumer loans. BankAtlantic has
historically been successful in these lending areas as a result of several key factors,
including disciplined underwriting and knowledge in its markets. Loan balances and total
earning assets are down from mid -2005 levels primarily as a consequence of a decision to
limit earning asset growth and the slow-down in the commercial real estate construction
market. BankAtlantic plans to continue to limit its earning asset growth based on the
current flat to inverted yield curve environment and to maintain disciplined underwriting
standards in the increasingly challenging market. BankAtlantic intends to continue to
limit activities in credit card, international, non-mortgage syndication and indirect
lending.
    
    Expanding the Retail Network.BankAtlantic has plans to grow its retail network
internally, through a branding initiative and de novo expansion, and may also seek to grow
externally through acquisitions which are consistent with BankAtlantics growth strategy.
BankAtlantic generally seeks to expand into relatively fast growing and high deposit level
markets within Florida. BankAtlantic has opened 17 new stores from January 1, 2005 to
December 31, 2006 and we currently anticipate continuing our aggressive store opening
initiatives in 2007.
    
    Maintaining its Strong Credit Culture.BankAtlantic believes it has put in place strong
underwriting standards and has instituted credit training programs for its banking officers
which emphasize underwriting and credit analysis. It has also developed systems and
programs which it believes will enable it to offer sophisticated products and services
without exposing BankAtlantic to unnecessary credit risk. However, the real estate market
in Florida is currently experiencing a slow down and there is no assurance that the credit
quality of our assets will not be adversely impacted.
  Commercial Real Estate:
  Consumer:
 8




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Small Business:
 Commercial Business:
 Residential:
  Standby Letters of Credit and Commitments:
 9




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As of December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Amount
    
    Pct
    
    Amount
    
    Pct
    
    Amount
    
    Pct
    
    Amount
    
    Pct
    
    Amount
    
    PctLoans receivable:Real estate loans:Residential
    
    $
    2,159
    
    
    
    46.99
    
    
    
    2,043
    
    
    
    44.20
    
    
    
    2,066
    
    
    
    45.35
    
    
    
    1,344
    
    
    
    37.00
    
    
    
    1,378
    
    
    
    40.30
    %Home Equity
    
    
    562
    
    
    
    12.23
    
    
    
    514
    
    
    
    11.12
    
    
    
    457
    
    
    
    10.03
    
    
    
    334
    
    
    
    9.19
    
    
    
    262
    
    
    
    7.65Construction and development
    
    
    860
    
    
    
    18.72
    
    
    
    1,340
    
    
    
    28.99
    
    
    
    1,454
    
    
    
    31.92
    
    
    
    1,345
    
    
    
    37.05
    
    
    
    1,266
    
    
    
    37.00Commercial
    
    
    1,063
    
    
    
    23.13
    
    
    
    1,060
    
    
    
    22.93
    
    
    
    1,075
    
    
    
    23.61
    
    
    
    1,064
    
    
    
    29.30
    
    
    
    755
    
    
    
    22.09Small business
    
    
    187
    
    
    
    4.07
    
    
    
    152
    
    
    
    3.29
    
    
    
    124
    
    
    
    2.72
    
    
    
    108
    
    
    
    2.97
    
    
    
    94
    
    
    
    2.76Loans to Levitt Corporation
    
    
    
    
    
    
    0.00
    
    
    
    
    
    
    
    0.00
    
    
    
    9
    
    
    
    0.19
    
    
    
    18
    
    
    
    0.50
    
    
    
    
    
    
    
    Other loans:Commercial business
    
    
    157
    
    
    
    3.41
    
    
    
    88
    
    
    
    1.90
    
    
    
    93
    
    
    
    2.06
    
    
    
    116
    
    
    
    3.20
    
    
    
    153
    
    
    
    4.48Small business  non-mortgage
    
    
    98
    
    
    
    2.13
    
    
    
    83
    
    
    
    1.80
    
    
    
    67
    
    
    
    1.46
    
    
    
    52
    
    
    
    1.43
    
    
    
    49
    
    
    
    1.45Consumer
    
    
    26
    
    
    
    0.57
    
    
    
    27
    
    
    
    0.59
    
    
    
    18
    
    
    
    0.41
    
    
    
    22
    
    
    
    0.60
    
    
    
    25
    
    
    
    0.73Residential loans held for sale
    
    
    9
    
    
    
    0.20
    
    
    
    3
    
    
    
    0.07
    
    
    
    5
    
    
    
    0.10
    
    
    
    2
    
    
    
    0.06
    
    
    
    
    
    
    
    Total
    
    
    5,121
    
    
    
    111.43
    
    
    
    5,310
    
    
    
    114.89
    
    
    
    5,367
    
    
    
    117.85
    
    
    
    4,405
    
    
    
    121.30
    
    
    
    3,982
    
    
    
    116.46Adjustments:Undisbursed portion of loans
in process
    
    
    483
    
    
    
    10.51
    
    
    
    649
    
    
    
    14.04
    
    
    
    768
    
    
    
    16.86
    
    
    
    728
    
    
    
    20.05
    
    
    
    512
    
    
    
    14.97Unearned discounts (premiums)
    
    
    (1
    )
    
    
    -0.02
    
    
    
    (2
    )
    
    
    -0.04
    
    
    
    (1
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.01
    )
    
    
    3
    
    
    
    0.09Allowance for loan losses
    
    
    44
    
    
    
    0.96
    
    
    
    41
    
    
    
    0.89
    
    
    
    46
    
    
    
    1.01
    
    
    
    46
    
    
    
    1.26
    
    
    
    48
    
    
    
    1.40Total loans receivable,
net
    
    $
    4,595
    
    
    
    100.00
    
    
    
    4,622
    
    
    
    100.00
    
    
    
    4,554
    
    
    
    100.00
    
    
    
    3,631
    
    
    
    100.00
    
    
    
    3,419
    
    
    
    100.00
    %
  Securities Available for Sale:
 Investment Securities and Tax Certificates:
 Derivative Investments:
 10




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##### Table of Contents



U.S.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CorporateTreasury
    
    
    
    
    
    
    
    
    
    
    Mortgage-
    
    
    Bond
    
    
    
    
    
    
    Weightedand
    
    
    Tax
    
    
    Tax-Exempt
    
    
    Backed
    
    
    and
    
    
    
    
    
    
    AverageAgencies
    
    
    Certificates
    
    
    Securities
    
    
    Securities
    
    
    Other
    
    
    Total
    
    
    YieldDecember 31, 2006Maturity: (1)One year or less
    
    $
    
    
    
    $
    195,391
    
    
    $
    
    
    
    $
    996
    
    
    $
    
    
    
    $
    196,387
    
    
    
    8.76
    %After one through
five years
    
    
    
    
    
    
    
    
    
    
    12,638
    
    
    
    106
    
    
    
    675
    
    
    
    13,419
    
    
    
    5.68After five through
ten years
    
    
    
    
    
    
    
    
    
    
    184,463
    
    
    
    1,982
    
    
    
    
    
    
    
    186,445
    
    
    
    5.64After ten years
    
    
    
    
    
    
    
    
    
    
    200,143
    
    
    
    358,666
    
    
    
    
    
    
    
    558,809
    
    
    
    5.46Fair values (2)
    
    $
    
    
    
    $
    195,391
    
    
    $
    397,244
    
    
    $
    361,750
    
    
    $
    675
    
    
    $
    955,060
    
    
    
    6.17
    %Amortized cost (2)
    
    $
    
    
    
    $
    195,391
    
    
    $
    397,469
    
    
    $
    365,565
    
    
    $
    685
    
    
    $
    959,110
    
    
    
    6.05
    %Weighted average
yield based
on fair values
    
    
    
    %
    
    
    8.78
    %
    
    
    6.00
    %
    
    
    4.96
    %
    
    
    5.18
    %
    
    
    6.17
    %Weighted average
maturity (yrs)
    
    
    
    
    
    
    1.0
    
    
    
    14.84
    
    
    
    25.59
    
    
    
    2.22
    
    
    
    16.11December 31, 2005Fair values (2)
    
    $
    1,000
    
    
    $
    163,726
    
    
    $
    388,566
    
    
    $
    381,540
    
    
    $
    585
    
    
    $
    935,417
    
    
    
    5.45
    %Amortized cost (2)
    
    $
    998
    
    
    $
    163,726
    
    
    $
    392,130
    
    
    $
    387,178
    
    
    $
    585
    
    
    $
    944,617
    
    
    
    5.20
    %December 31, 2004Fair values (2)
    
    $
    
    
    
    $
    166,731
    
    
    $
    332,605
    
    
    $
    500,517
    
    
    $
    585
    
    
    $
    1,000,438
    
    
    
    5.37
    %Amortized cost (2)
    
    $
    
    
    
    $
    166,731
    
    
    $
    332,024
    
    
    $
    498,504
    
    
    $
    585
    
    
    $
    997,844
    
    
    
    5.50
    %
 
 (1)
    
    Except for tax certificates, maturities are based upon contractual maturities. Tax
certificates do not have stated maturities, and estimates in the above table are based upon
historical repayment experience (generally 1 to 2 years).(2)
    
    Equity and tax exempt securities held by the parent company with a cost of $88.6, $95.1
million, and $50.7 million and a fair value of $99.9 million, $103.2 million, and $53.7
million, at December 31, 2006, 2005 and 2004, respectively, were excluded from the above
table. At December 31, 2006, equities held by BankAtlantic with a cost of $750,000 and a
fair value of $765,000 was excluded from the above table.  December 31, 2006 (1)Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValueTax certificates and investment securities:Tax certificates:Cost equals market
    
    $
    195,391
    
    
    $
    
    
    
    $
    
    
    
    $
    195,391Investment securities:Cost equals market
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market over cost
    
    
    139,887
    
    
    
    962
    
    
    
    
    
    
    
    140,849Cost over market
    
    
    60,295
    
    
    
    
    
    
    
    338
    
    
    
    59,957Securities available for sale:Investment securities:Cost equals market
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    235Market over cost
    
    
    87,481
    
    
    
    837
    
    
    
    
    
    
    
    88,318Cost over market
    
    
    111,006
    
    
    
    
    
    
    
    1,681
    
    
    
    109,325Mortgage-backed securities :Market over cost
    
    
    147,646
    
    
    
    1,366
    
    
    
    
    
    
    
    149,012Cost over market
    
    
    217,919
    
    
    
    
    
    
    
    5,181
    
    
    
    212,738Total
    
    $
    959,860
    
    
    $
    3,165
    
    
    $
    7,200
    
    
    $
    955,825
 
 1)
    
    The above table excludes Parent Company equity securities with a cost of $88.6 million
and a fair value of $99.9 million at December 31, 2006. 11




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Income-Producing Real Estate Joint Venture Investments:
 Lending Joint Venture:
  Deposits:
 Federal Home Loan Bank (FHLB) Advances:
 Other Short-Term Borrowings:
 
    
    Securities sold under agreements to repurchase include a sale of a portion of its
current investment portfolio (usually mortgage-backed securities and REMICs) at a
negotiated rate and an agreement to repurchase the same assets on a specified future date.
BankAtlantic issues repurchase agreements to institutions and to its customers. These
transactions are collateralized by securities in its investment portfolio but are not
insured by the FDIC. See note 14 to the Notes to Consolidated Financial Statements for
more information regarding BankAtlantics Securities sold under agreements to repurchase
borrowings.
    
    Treasury tax and loan borrowings represent BankAtlantics participation in the Federal
Reserve Treasury Investment Program whereby the Federal Reserve places funds with
BankAtlantic obtained from treasury tax and loan payments received by financial
institutions. See note 13 to the Notes to Consolidated Financial Statements for more
information regarding BankAtlantics Treasury tax and loan borrowings.
    
    Federal funds borrowings occur under established facilities with various
federally-insured banking institutions to purchase federal funds. We also have a borrowing
facility with various federal agencies which may place funds with us at overnight rates.
BankAtlantic uses these facilities on an overnight basis to assist in managing its cash
flow requirements. These lines are subject to periodic review, may be terminated at any
time by the issuer institution and are unsecured. BankAtlantic also has a facility with
the Federal Reserve Bank of Atlanta for secured advances. These advances are
collateralized by a security lien against its consumer loans. See note 13 to the Notes to
Consolidated Financial Statements for more information regarding BankAtlantics federal
funds borrowings.
 12




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##### Table of Contents




    
    BankAtlantics other borrowings have floating interest rates and consist of
mortgage-backed bond and subordinated debentures. See note 19 to the Notes to
Consolidated Financial Statements for more information regarding BankAtlantics other
borrowings.
 Parent Company
   December 31, 2006Gross
    
    
    GrossCarrying
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValueSecurities available
for sale:Equity securities (2)
    
    $
    82,134
    
    
    $
    9,554
    
    
    $
    
    
    
    $
    91,688Investment securities:Investment
securities (1)
    
    
    6,500
    
    
    
    1,714
    
    
    
    
    
    
    
    8,214Total
    
    $
    88,634
    
    
    $
    11,268
    
    
    $
    
    
    
    $
    99,902
 December 31, 2005Gross
    
    
    GrossCarrying
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValueSecurities available
for sale:Tax exempt securities
    
    $
    6,229
    
    
    $
    
    
    
    $
    21
    
    
    $
    6,208Equity securities
    
    
    82,113
    
    
    
    7,307
    
    
    
    
    
    
    
    89,420Investment securities:Investment
securities (1)
    
    
    6,800
    
    
    
    793
    
    
    
    
    
    
    
    7,593Total
    
    $
    95,142
    
    
    $
    8,100
    
    
    $
    21
    
    
    $
    103,221
 
 (1)
    
    Investment securities consist of equity instruments purchased through private
placements and are accounted for at historical cost adjusted for other-than-temporary
declines in value.(2)
    
    The table excludes the equity securities of Stifel received as a result of the merger
of Ryan Beck into Stifel because the transaction closed in February 2007. Employees
   December 31, 2006
    
    December 31, 2005Full-
    
    Part-
    
    Full-
    
    Part-Time
    
    time
    
    time
    
    timeBankAtlantic Bancorp
    
    
    8
    
    
    
    
    
    
    
    18
    
    
    
    BankAtlantic
    
    
    2,425
    
    
    
    386
    
    
    
    1,882
    
    
    
    390Total
    
    
    2,433
    
    
    
    386
    
    
    
    1,900
    
    
    
    390
 13




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##### Table of Contents



Competition
    Regulation and Supervision
 Holding Company
   
    
    acquiring another savings institution or its holding company without prior written
approval of the OTS;
    
    acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary
savings institution, a non-subsidiary holding company, or a non-subsidiary company engaged
in activities other than those permitted by HOLA; or
    
    acquiring or retaining control of a depository institution that is not insured by the
FDIC.
    14




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##### Table of Contents



BankAtlantic
   Regulation of Federal Savings Banks
 Business Activities
 
    
    mortgage loans secured by residential and commercial real estate;
    
    commercial and consumer loans;
    
    certain types of debt securities; and
    
    certain other assets.
  Loans to One Borrower
 QTL Test
 Capital Requirements
 
    
    a tangible capital requirement for savings banks to have tangible capital in an amount
equal to at least 1.5% of adjusted total assets;
 15




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##### Table of Contents




    
    a leverage ratio requirement: o
    
    for savings banks assigned the highest composite rating of 1, to have
core capital in an amount equal to at least 3% of adjusted total assets; oro
    
    for savings banks assigned any other composite rating, to have core
capital in an amount equal to at least 4% of adjusted total assets, or a higher
percentage if warranted by the particular circumstances or risk profile of the
savings bank; and
 
    
    a risk-based capital requirement for savings banks to have capital in an amount equal to
at least 8% of risk-weighted assets.
    Limitation on Capital Distributions
   Liquidity
 Assessments
 
    
    the size of the savings bank, on which the basic assessment is based;
    
    the savings banks supervisory condition, which results in an additional assessment
based on a percentage of the basic assessment for any savings bank with a composite rating
of 3, 4 or 5 in its most recent safety and soundness examination; and
    
    the complexity of the savings banks operations, which results in an additional
assessment based on a percentage of the basic assessment for any savings bank that has more
than $1 billion in trust assets that it administers, loans that it services for others or
assets covered by its recourse obligations or direct credit substitutes.
  Branching
 16




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##### Table of Contents



Community Reinvestment
 
    
    a lending test, to evaluate the institutions record of making loans in its designated
assessment areas;
    
    an investment test, to evaluate the institutions record of investing in community
development projects, affordable housing, and programs benefiting low or moderate income
individuals and businesses; and
    
    a service test, to evaluate the institutions delivery of banking services throughout
its designated assessment area.
  Transactions with Related Parties
  
    
    making or renewing a loan or other extension of credit to an affiliate;
    
    purchasing, or investing in, a security issued by an affiliate;
    
    purchasing an asset from an affiliate;
    
    accepting a security issued by an affiliate as collateral for a loan or other extension
of credit to any person or entity; and
    
    issuing a guarantee, acceptance or letter of credit on behalf of an affiliate.
  
    
    making a loan or other extension of credit to an affiliate that is engaged in any
non-bank holding company activity; and
    
    purchasing, or investing in, securities issued by an affiliate that is not a subsidiary.
  Enforcement
 17




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##### Table of Contents



Examination
 Standards for Safety and Soundness
 Real Estate Lending Standards
 Prompt Corrective Regulatory Action
 
    
    its total capital is at least 10% of its risk-weighted assets;
    
    its core capital is at least 6% of its risk-weighted assets;
    
    its core capital is at least 5% of its adjusted total assets; and
    
    it is not subject to any written agreement, order, capital directive or prompt
corrective action directive issued by the OTS, or certain regulations, to meet or maintain
a specific capital level for any capital measure.
  Insurance of Deposit Accounts
   18




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##### Table of Contents



Privacy and Security Protection
 Insurance Activities
 Federal Home Loan Bank System
 Federal Reserve System
 Anti-Terrorism and Anti-Money Laundering Regulations
 19




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##### Table of Contents




    
    internal policies, procedures and controls designed to implement and maintain the
savings banks compliance with all of the requirements of the USA PATRIOT Act, the BSA and
related laws and regulations;
    
    systems and procedures for monitoring and reporting of suspicious transactions and activities;
    
    a designated compliance officer;
    
    employee training;
    
    an independent audit function to test the anti-money laundering program;
    
    procedures to verify the identity of each customer upon the opening of accounts; and
    
    heightened due diligence policies, procedures and controls applicable to certain foreign
accounts and relationships.
  Consumer Protection
 
    
    require lenders to disclose credit terms in meaningful and consistent ways;
    
    require financial institutions to establish policies and procedures regarding identity
theft and notify customers of certain information concerning their credit reporting;
    
    prohibit discrimination against an applicant in any consumer or business credit transaction;
    
    prohibit discrimination in housing-related lending activities;
    
    require certain lender banks to collect and report applicant and borrower data regarding
loans for home purchase or improvement projects;
    
    require lenders to provide borrowers with information regarding the nature and cost of real estate settlements;
    
    prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; and
    
    prescribe penalties for violations of the requirements of consumer protection statutes and regulations.
 20




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##### Table of Contents



Homebuilding & Real Estate Development Segment
 Our Homebuilding & Real Estate Development segment consists of Levitt Corporation, which is
consolidated with BFC Financial Corporation. The only assets available to BFC Financial Corporation
are dividends when and if declared and paid by Levitt. Levitt is a separate public company and its
management prepared the following Item 1. Business regarding Levitt which was included in Levitts
Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and
Exchange Commission. Accordingly, references to the Company, we, us, our or Parent
Company in the following discussion under the caption Homebuilding & Real Estate Development are
references to Levitt and its subsidiaries, and are not references to BFC Financial Corporation.
 General Description of Business
     Recent Developments
 Merger Agreement with BFC
  21




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##### Table of Contents



Impairment charges
  Reduction in Force
  Business Strategy
  Implement initiatives to increase sales and focus on improving customer service and quality
control.
 22




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##### Table of Contents



Operate more efficiently and effectively
 Continue to develop master-planned communities in desirable markets for sale and leasing
 Improve our financial strength.
 Maintain a conservative risk profile.
 Utilize community development districts to fund development costs
 23




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##### Table of Contents



Business Segments
  Homebuilding Division
  Number of
    
    Planned
    
    Closed
    
    
    
    
    
    Sold
    
    Net UnitsCommunities
    
    Units (a)
    
    Units
    
    Inventory
    
    Backlog
    
    AvailableActive Adult CommunitiesCurrent Developments
(includes optioned
lots)
    
    
    15
    
    
    
    10,629
    
    
    
    3,262
    
    
    
    7,367
    
    
    
    767
    
    
    
    6,600Properties Under
Contract to be Acquired
(b)
    
    
    1
    
    
    
    690
    
    
    
    0
    
    
    
    690
    
    
    
    0
    
    
    
    690Total Active Adult
    
    
    16
    
    
    
    11,319
    
    
    
    3,262
    
    
    
    8,057
    
    
    
    767
    
    
    
    7,290Family CommunitiesCurrent Developments
(includes optioned
lots)
    
    
    33
    
    
    
    7,271
    
    
    
    3,200
    
    
    
    4,071
    
    
    
    481
    
    
    
    3,590Properties Under
Contract to be Acquired
(b)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total Family
    
    
    33
    
    
    
    7,271
    
    
    
    3,200
    
    
    
    4,071
    
    
    
    481
    
    
    
    3,590TOTAL HOMEBUILDINGCurrent Developments
(includes optioned
lots)
    
    
    48
    
    
    
    17,900
    
    
    
    6,462
    
    
    
    11,438
    
    
    
    1,248
    
    
    
    10,190Properties Under
Contract to be Acquired
(b)
    
    
    1
    
    
    
    690
    
    
    
    0
    
    
    
    690
    
    
    
    0
    
    
    
    690TOTAL HOMEBUILDING
    
    
    49
    
    
    
    18,590
    
    
    
    6,462
    
    
    
    12,128
    
    
    
    1,248
    
    
    
    10,880
 
 (a)
    
    Actual number of units may vary from original project plan due to engineering and architectural changes.(b)
    
    There can be no assurance that the current property under contract will be acquired.  24




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##### Table of Contents



Land Division
  ®
    25




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##### Table of Contents



ThirdNon-
    
    
    
    
    
    partyDate
    
    Acres
    
    Closed
    
    Current
    
    Saleable
    
    Saleable
    
    Backlog
    
    AcresAcquired
    
    Acquired
    
    Acres
    
    Inventory
    
    Acres (a)
    
    Acres (a)
    
    (b)
    
    AvailableCurrently in DevelopmentTradition, Florida
    
    
    1998  2004
    
    
    
    8,246
    
    
    
    1,757
    
    
    
    6,489
    
    
    
    2,431
    
    
    
    4,058
    
    
    
    37
    
    
    
    4,021Tradition, South Carolina
    
    
    2005
    
    
    
    5,390
    
    
    
    160
    
    
    
    5,230
    
    
    
    2,417
    
    
    
    2,813
    
    
    
    37
    
    
    
    2,776Total Currently in Development
    
    
    
    
    
    
    13,636
    
    
    
    1,917
    
    
    
    11,719
    
    
    
    4,848
    
    
    
    6,871
    
    
    
    74
    
    
    
    6,797
 
 (a)
    
    Actual saleable and non-saleable acres may vary over time due to changes in zoning, project design, or other factors.
Non-saleable acres include, but are not limited to, areas set aside for roads, parks, schools, utilities and other public
purposes.(b)
    
    Acres under contract to Third Parties Other Operations
  Levitt Commercial
  Investment in Bluegreen Corporation
    Other Investments and Joint Ventures
    26




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##### Table of Contents



Information Technologies
  Seasonality
  Competition
   27




---



##### Table of Contents



Employees
  Full
    
    PartTime
    
    TimeHomebuilding
    
    
    544
    
    
    
    25Land
    
    
    59
    
    
    
    7Other Operations
    
    
    63
    
    
    
    Total
    
    
    666
    
    
    
    32
  Additional Information
 www.levittcorporation.com
  28




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##### Table of Contents



ITEM 1A. RISK FACTORS
 We depend on dividends from BankAtlantic Bancorp for a significant portion of our cash flow.
Regulatory restrictions and the terms of indebtedness limit the ability for BankAtlantic Bancorp to
pay dividends.
       We also depend on dividends from Levitt for a portion of our cash flow. Regulatory restrictions and
the terms of indebtedness limit the ability for Levitt to pay dividends.
   29




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##### Table of Contents



We have in the past incurred operating cash flow deficits that we expect will continue in the
future.
  Events in Florida, where our investments are currently concentrated, could adversely impact our
results and future growth.
  Our future acquisitions may reduce our earnings, require us to obtain additional financing and
expose us to additional risks.
  
    
    fail to accomplish our strategic objectives;
    
    not perform as expected; and/or
    
    expose us to the risks of the business that we acquire.
  Our activities and our subsidiaries activities are subject to a wide range of bank regulatory
requirements that could have a material adverse effect on our business.
  30




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##### Table of Contents




    
    limit the payment of dividends by BankAtlantic to BankAtlantic Bancorp;
    
    limit transactions between us, BankAtlantic, BankAtlantic Bancorp and the subsidiaries or affiliates
of either;
    
    limit the activities of BankAtlantic, BankAtlantic Bancorp or us; or
    
    impose capital requirements on us or BankAtlantic Bancorp.
  We have many competitors who may have greater financial resources or operate under fewer regulatory
constraints.
  Our success depends on key management, the loss of which could disrupt our business operations.
  Certain members of our Board of Directors and certain of our executive officers are also directors
and executive officers of our affiliates.
  Recent changes in accounting standards regarding the treatment of stock options could harm our
ability to attract and retain employees and negatively impacts our results of operations.
  Failure to achieve and maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.
  31




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##### Table of Contents



Risks Associated with Our Investment in Benihana, Inc. and the Restaurant Industry
  
    
    Changes in consumer preferences and discretionary spending;
    
    Ability to compete with many food service businesses;
    
    The availability and quality of ingredients and changes in food and supply costs could
adversely affect results of operations;
    
    Food service industry is affected by litigation and publicity concerning food quality,
health and other issues, which could cause customers to avoid a particular restaurant,
result in significant liabilities or litigation costs or damage reputation or brand
recognition;
    
    Health concerns relating to the consumption of food products could affect consumer
preferences and could negatively impact results of operation;
    
    Increased labor costs or labor shortages could adversely affect results of operations;
    
    The ability to obtain and maintain licenses and permits necessary to operate restaurants
and compliance with laws could adversely affect operating results;
    
    Seasonal fluctuations in business could adversely impact stock price;
    
    Need for additional capital in the future which might not be available; and
    
    The loss of key management personnel.
 Issuance of Additional Securities In The Future.
   Our portfolio of equity securities subjects us to equity pricing risks
  32




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##### Table of Contents



Our control position may adversely affect the market price of BankAtlantic Bancorps and Levitts
Class A Common Stock.
  Alan B. Levan And John E. Abdos Control Position May Adversely Affect The Market Price Of Our
Common Stock.
  The terms of our articles of incorporation, which establish fixed relative voting percentages
between our Class A Common Stock and Class B Common Stock, may not be well accepted by the market.
  33




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##### Table of Contents



Financial Services Segment Risk Factors
 Our Financial Services segment consists of BankAtlantic Bancorp, which is consolidated with
BFC Financial Corporation. The only assets available to BFC Financial Corporation from BankAtlantic
Bancorp are dividends when and if declared and paid by BankAtlantic Bancorp. BankAtlantic Bancorp
is a separate public company and its management prepared the following Item 1A. Risk Factors
regarding BankAtlantic Bancorp which was included in BankAtlantic Bancorps Annual Report on Form
10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission.
Accordingly, references to the Company, we, us , our or Parent Company in the following
discussion under the caption Financial Services are references to BankAtlantic Bancorp and its
subsidiaries, and are not references to BFC Financial Corporation.
 BankAtlantic
 Changes in interest rates could adversely affect our net interest income and profitability.
   
    
    interest income on interest-earning assets, such as loans; and
    
    interest expense on interest-bearing liabilities, such as deposits.
   
    
    it amortizes premiums on acquired loans, and if loans are prepaid, the
unamortized premium will be charged off; and
    
    the yields it earns on the investment of funds that it receives from
prepaid loans are generally less than the yields that it earned on the
prepaid loans.
    34




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##### Table of Contents



BankAtlantics Floridas Most Convenient Bank initiative has resulted in higher operating
expenses, which has had an adverse impact on our earnings.
    BankAtlantics loan portfolio is concentrated in real estate lending.
  BankAtlantic obtains a significant portion of its non-interest income through service charges on
core deposit accounts.
  35




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##### Table of Contents



BankAtlantics loan portfolio subjects it to high levels of credit risk.
     BankAtlantics interest-only residential loans exposes it to greater credit risks.
  An inadequate allowance for loan losses would result in reduced earnings.
  
    
    the risk characteristics of various classifications of loans;
    
    previous loan loss experience;
    
    specific loans that have loss potential;
    
    delinquency trends;
    
    estimated fair value of the collateral;
    
    current economic conditions;
    
    the views of its regulators; and
    
    geographic and industry loan concentrations.
 36




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##### Table of Contents



Adverse events in Florida, where our business is currently concentrated, could adversely impact our
results and future growth.
  Regulatory Compliance.
  BankAtlantic has entered into a deferred prosecution agreement with the Department of Justice and a
Cease and Desist Order with the OTS regarding its compliance with the USA PATRIOT Act, anti-money
laundering laws and the Bank Secrecy Act.
  Parent Company
 We are controlled by BFC Financial Corporation and its control position may adversely affect the
market price of our Class A common stock.
  37




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##### Table of Contents



BankAtlantic Bancorps ability to service its debt and pay dividends depends on dividends from
BankAtlantic, which are subject to regulatory limits.
      Our activities and our subsidiarys activities are subject to regulatory requirements that could
have a material adverse effect on our business.
  
    
    Limit the payment of dividends by BankAtlantic to us;
    
    Limit transactions between us, BankAtlantic and the subsidiaries or affiliates of either;
    
    Limit our activities and the activities of BankAtlantic; or
    
    impose capital requirements on us.
  38




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##### Table of Contents



Our portfolio of equity securities subjects us to equity pricing risks.
   39




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##### Table of Contents



Homebuilding & Real Estate Development Segment Risk Factors
 Our Homebuilding & Real Estate Development segment consists of Levitt Corporation, which is
consolidated with BFC Financial Corporation. The only assets available to BFC Financial Corporation
are dividends when and if declared and paid by Levitt. Levitt is a separate public company and its
management prepared the following Item 1A. Risk Factors regarding Levitt which was included in
Levitts Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities
and Exchange Commission. Accordingly, references to the Company, we, us, our or Parent
Company in the following discussion under the caption Homebuilding & Real Estate Development are
references to Levitt and its subsidiaries, and are not references to BFC Financial Corporation.
 RISKS RELATING TO OUR BUSINESS AND THE REAL ESTATE BUSINESS GENERALLY
 We engage in real estate activities which are speculative and involve a high degree of risk
  
    
    overbuilding or decreases in demand;
    
    inventory build-up due to buyers contract cancellations;
    
    the availability and cost of financing;
    
    unfavorable interest rates and increases in inflation;
    
    changes in the general availability of land and competition for available land;
    
    construction defects and warranty claims arising in the ordinary course of
business or otherwise, including mold related property damage and bodily injury
claims and homeowner and homeowners association lawsuits;
    
    changes in national, regional and local economic conditions;
    
    cost overruns, inclement weather, and labor and material shortages;
    
    the impact of present or future environmental legislation, zoning laws and other regulations;
    
    availability, delays and costs associated with obtaining permits, approvals or
licenses necessary to develop property, and
    
    increase in real estate taxes, insurance and other local government fees.
 We have experienced a decline in our homebuilding operations over the past year which has adversely
affected our sales volume and pricing.
  Our industry is highly competitive
   40




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##### Table of Contents



Continued decline in land values could result in further impairment write-offs.
  Because real estate investments are illiquid, a decline in the real estate market or in the economy
in general could adversely impact our business and our cash flow.
  Shortages of supplies and labor could increase costs and delay deliveries, which may adversely
affect our operating results
  
    
    shortages or increases in prices of construction materials;
    
    natural disasters in the areas in which we operate;
    
    work stoppages, labor disputes and shortages of qualified trades people, such as
carpenters, roofers, electricians and plumbers;
    
    lack of availability of adequate utility infrastructure and services; and
    
    our need to rely on local subcontractors who may not be adequately capitalized or insured.
   Natural disasters could have an adverse effect on our real estate operations
  41




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##### Table of Contents



Our ability to sell lots and homes, and, accordingly, our operating results, will be affected by
the availability of financing to potential purchasers
  
    
    increases in interest rates,
    
    decreases in the availability of mortgage financing,
    
    increasing housing costs,
    
    unemployment, and
    
    changes in federally sponsored financing programs.
  Our ability to successfully develop communities could affect our financial condition
  A portion of our revenues from land sales in our master planned communities are recognized for
accounting purposes under the percentage of completion method, therefore if our actual results
differ from our assumptions our profitability may be reduced.
  Product liability litigation and claims that arise in the ordinary course of business may be costly
which could adversely affect our business
  42




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##### Table of Contents



We are subject to governmental regulations that may limit our operations, increase our expenses or
subject us to liability
  
    
    environmental matters, including the presence of hazardous or toxic substances,
    
    wetland preservation,
    
    health and safety,
    
    zoning, land use and other entitlements,
    
    building design, and
    
    density levels.
  
    
    installation of utility services such as gas, electric, water and waste disposal,
    
    the dedication of acreage for open space, parks and schools,
    
    permitted land uses, and
    
    the construction design, methods and materials used.
  
    
    establish building moratoriums,
    
    limit the number of homes or commercial properties that may be built,
    
    change building codes and construction requirements affecting property under construction,
    
    increase the cost of development and construction, and
    
    delay development and construction.
   43




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##### Table of Contents



Building moratoriums and changes in governmental regulations may subject us to delays or increased
costs of construction or prohibit development of our properties
  We are subject to environmental laws and the cost of compliance could adversely affect our
business
  Increased insurance risk could negatively affect our business
  We utilize community development districts to fund development costs
  RISKS RELATING TO OUR COMPANY
 Our indebtedness and leverage could adversely affect our financial condition, restrict our ability
to operate and prevent us from fulfilling our obligations
  
    
    require us to dedicate a substantial portion of our cash flow from operations to
payment of or on our debt and reduce our ability to use our cash flow for other
purposes,
    
    be accelerated if we do not meet required covenants or the collateral securing
the indebtedness decreases in value,
    
    make us more vulnerable in the event of a downturn in our business or in general economic conditions.
    
    impact our flexibility in planning for, or reacting to, the changes in our business,
    
    limit our ability to obtain future financing for working capital, capital
expenditures, acquisitions, debt service requirements or other requirements, and
    
    place us at a competitive disadvantage if we have more debt than our competitors.
  44




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##### Table of Contents



Our current land development plans may require additional capital, which may not be available
  Our results may vary
  
    
    the cyclical nature of the real estate and construction industries,
    
    prevailing interest rates and the availability of mortgage financing,
    
    the uncertain timing of closings,
    
    weather and the cost and availability of materials and labor,
    
    competitive conditions, and
    
    the timing of receipt of regulatory and other governmental approvals for construction of projects.
  45




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##### Table of Contents



We may not successfully integrate acquired businesses into ours
  
    
    difficulties in assimilating acquired management and operations,
    
    risks associated with achieving profitability,
    
    the incurrence of significant due diligence expenses relating to
acquisitions that are not completed,
    
    unforeseen expenses,
    
    integrating information technologies,
    
    risks associated with entering new markets in which we have no or limited prior experience,
    
    the potential loss of key employees of acquired organizations, and
    
    risks associated with transferred assets and liabilities.
  Our controlling shareholders have the voting power to control the outcome of any shareholder vote,
except in limited circumstances
  RISKS ASSOCIATED WITH OUR OWNERSHIP STAKE IN BLUEGREEN CORPORATION
   46




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##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 th
  Miami -
    
    
    
    
    
    Palm
    
    Tampa
    
    Orlando /Dade
    
    Broward
    
    Beach
    
    Bay
    
    JacksonvilleOwned full-service stores
    
    
    7
    
    
    
    10
    
    
    
    24
    
    
    
    4
    
    
    
    Leased full-service stores
    
    
    13
    
    
    
    12
    
    
    
    5
    
    
    
    9
    
    
    
    Ground leased full-service
stores (1)
    
    
    1
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    Total full-service stores
    
    
    21
    
    
    
    24
    
    
    
    30
    
    
    
    13
    
    
    
    Lease expiration dates
    
    
    2007-2026
    
    
    
    2007-2015
    
    
    
    2008-2012
    
    
    
    2007-2027
    
    
    
    Ground lease expiration dates
    
    
    2026
    
    
    
    2020-2072
    
    
    
    2026
    
    
    
    
    
    
    
    
 
 (1)
    
    Stores in which BankAtlantic owns the building and leases the land.  Miami -
    
    
    
    
    
    Palm
    
    Tampa
    
    Orlando /Dade
    
    Broward
    
    Beach
    
    Bay
    
    JacksonvilleLeased drive-through facilities
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Drive through lease expiration dates
    
    
    2026
    
    
    
    2011-2014
    
    
    
    
    
    
    
    
    
    
    
    Executed ground leases (2)
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    3
    
    
    
    3Executed ground lease expiration
dates
    
    
    2027
    
    
    
    2017
    
    
    
    
    
    
    
    2027
    
    
    
    2027-2028Leased back-office facilities
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    1Back-office lease expiration dates
    
    
    
    
    
    
    2009-2011
    
    
    
    2007
    
    
    
    2011
    
    
    
    2013Leased loan production offices
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    2Loan production lease expiration dates
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    2009-2011
 
 (2)
    
    Stores in which BankAtlantic has executed the lease and has not yet opened the
store.   47




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ITEM 3. LEGAL PROCEEDINGS
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  48




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##### Table of Contents



PART II
 
 ITEM 5. MARKET PRICE FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  
    
    Each share of Class A Common Stock is entitled to one vote for each share held, with
all holders of Class A Common Stock possessing in the aggregate 22% of the total voting
power. Holders of Class B Common Stock have the remaining 78% of the total voting
power. If the number of shares of Class B Common Stock outstanding decreases to
1,800,000 shares, the Class A Common Stock aggregate voting power will change to 40%
and the Class B Common Stock will have the remaining 60%. If the number of shares of
Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common
Stock aggregate voting power will change to 53% and the Class B Common Stock will have
the remaining 47%. If the number of shares of Class B Common Stock outstanding
decreases to 500,000, the fixed voting percentages will be eliminated; and
    
    Each share of Class B Common Stock is convertible at the option of the holder
thereof into one share of Class A Common Stock.
    High
    
    LowClass A Common Stock:2005First Quarter
    
    $
    11.34
    
    
    $
    9.04Second Quarter
    
    
    10.29
    
    
    
    7.81Third Quarter
    
    
    9.00
    
    
    
    6.81Fourth Quarter
    
    
    7.05
    
    
    
    4.902006First Quarter
    
    $
    6.64
    
    
    $
    5.35Second Quarter
    
    
    8.16
    
    
    
    5.69Third Quarter
    
    
    7.10
    
    
    
    4.35Fourth Quarter
    
    
    7.06
    
    
    
    4.80
 High
    
    LowClass B Common Stock:2005First Quarter
    
    $
    11.12
    
    
    $
    9.20Second Quarter
    
    
    10.70
    
    
    
    7.80Third Quarter
    
    
    8.70
    
    
    
    7.00Fourth Quarter
    
    
    6.75
    
    
    
    4.852006First Quarter
    
    $
    6.50
    
    
    $
    5.25Second Quarter
    
    
    7.70
    
    
    
    5.70Third Quarter
    
    
    8.25
    
    
    
    5.00Fourth Quarter
    
    
    6.80
    
    
    
    4.85
 49




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##### Table of Contents



Number of securitiesRemaining available forfuture issuance underNumber of securities to
    
    
    Weighted-average
    
    
    equity compensation plansbe issued upon exercise
    
    
    exercise price of
    
    
    (excluding outstandingPlan category
    
    of outstanding options
    
    
    outstanding options
    
    
    options)Equity compensation plans
approved by security holders
    
    
    1,607,087
    
    
    $
    4.88
    
    
    
    2,479,448Equity compensation plans
not approved by security
Holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,607,087
    
    
    $
    4.88
    
    
    
    2,479,448
  50




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##### Table of Contents



Shareholder Return Performance Graph
  12/31/2001
    
    
    12/31/2002
    
    
    12/31/2003
    
    
    12/31/2004
    
    
    12/31/2005
    
    
    12/31/2006BFC Financial Corporation
    
    
    
    100
    
    
    
    
    100
    
    
    
    
    343
    
    
    
    
    499
    
    
    
    
    263
    
    
    
    
    321DJ Wilshire 5000 Index
    
    
    
    100
    
    
    
    
    78
    
    
    
    
    101
    
    
    
    
    112
    
    
    
    
    117
    
    
    
    
    133Nasdaq Bank Index
    
    
    
    100
    
    
    
    
    105
    
    
    
    
    136
    
    
    
    
    151
    
    
    
    
    144
    
    
    
    
    160
 
 51




---



##### Table of Contents



ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
  (Dollars in thousands, except per share data, ratios, percentages, units and acres)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Income StatementRevenuesBFC Activities
    
    $
    3,682
    
    
    $
    3,129
    
    
    $
    5,683
    
    
    $
    1,073
    
    
    $
    607Financial Services
    
    
    507,746
    
    
    
    445,537
    
    
    
    358,703
    
    
    
    320,534
    
    
    
    350,987Homebuilding & Real Estate Development
    
    
    583,152
    
    
    
    574,824
    
    
    
    558,838
    
    
    
    288,686
    
    
    
    212,0811,094,580
    
    
    
    1,023,490
    
    
    
    923,224
    
    
    
    610,293
    
    
    
    563,675Costs and ExpensesBFC Activities
    
    
    12,370
    
    
    
    9,665
    
    
    
    7,452
    
    
    
    7,019
    
    
    
    5,141Financial Services
    
    
    474,311
    
    
    
    381,916
    
    
    
    280,431
    
    
    
    275,507
    
    
    
    321,243Homebuilding & Real Estate Development
    
    
    606,655
    
    
    
    498,760
    
    
    
    481,618
    
    
    
    253,169
    
    
    
    191,6621,093,336
    
    
    
    890,341
    
    
    
    769,501
    
    
    
    535,695
    
    
    
    518,046Equity in earnings from unconsolidated
affiliates
    
    
    10,935
    
    
    
    13,404
    
    
    
    19,603
    
    
    
    10,126
    
    
    
    9,327Income from continuing operations
    
    
    12,179
    
    
    
    146,553
    
    
    
    173,326
    
    
    
    84,724
    
    
    
    54,956(Benefit) provision for income taxes
    
    
    (528
    )
    
    
    59,566
    
    
    
    70,920
    
    
    
    36,466
    
    
    
    19,615Noncontrolling interest
    
    
    13,404
    
    
    
    79,267
    
    
    
    90,388
    
    
    
    43,616
    
    
    
    33,501(Loss) income from continuing operations
    
    
    (697
    )
    
    
    7,720
    
    
    
    12,018
    
    
    
    4,642
    
    
    
    1,840(Loss) income from discontinued operations,
net of noncontrolling interest and income taxes
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212
    
    
    
    2,380
    
    
    
    2,151Income from extraordinary items,
net of noncontrolling interest and income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,298Cumulative effect of a change in accounting
principle, net of noncontrolling interest
and income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,097
    )Net (loss) income
    
    
    (2,221
    )
    
    
    12,774
    
    
    
    14,230
    
    
    
    7,022
    
    
    
    5,1925% Preferred Stock dividends
    
    
    750
    
    
    
    750
    
    
    
    392
    
    
    
    
    
    
    
    Net (loss) income allocable to
common stock
    
    $
    (2,971
    )
    
    $
    12,024
    
    
    $
    13,838
    
    
    $
    7,022
    
    
    $
    5,192
 (CONTINUED)
 52




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##### Table of Contents



(Dollars in thousands, except per share data, ratios, percentages, units and acres)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Common Share Data (a), (c), (d)Basic (loss) earnings per share:Basic (loss) earnings per share
from continuing operations
    
    $
    (0.04
    )
    
    $
    0.24
    
    
    $
    0.48
    
    
    $
    0.21
    
    
    $
    0.08Discontinued operations
    
    
    (0.05
    )
    
    
    0.18
    
    
    
    0.09
    
    
    
    0.10
    
    
    
    0.10Extraordinary items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.15Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Basic (loss) earnings per share of common stock
    
    $
    (0.09
    )
    
    $
    0.42
    
    
    $
    0.57
    
    
    $
    0.31
    
    
    $
    0.23Diluted (loss) earnings per share:Diluted earnings (loss) per share
from continuing operations
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    0.40
    
    
    $
    0.16
    
    
    $
    0.07Discontinued operations
    
    
    (0.05
    )
    
    
    0.15
    
    
    
    0.07
    
    
    
    0.09
    
    
    
    0.09Extraordinary items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.14Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Diluted (loss) earnings per share of common
stock
    
    $
    (0.10
    )
    
    $
    0.37
    
    
    $
    0.47
    
    
    $
    0.25
    
    
    $
    0.21Basic weighted average number of
common shares outstanding
    
    
    33,249
    
    
    
    28,952
    
    
    
    24,183
    
    
    
    22,818
    
    
    
    22,454Diluted weighted average number of
common shares outstanding
    
    
    33,249
    
    
    
    31,219
    
    
    
    27,806
    
    
    
    26,031
    
    
    
    22,454Ratio of earnings to fixed charges (e)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.28
    
    
    
    Dollar deficiency of earnings to
fixed charges (e)
    
    $
    5,197
    
    
    $
    7,245
    
    
    $
    4,145
    
    
    $
    
    
    
    $
    1,347
 (CONTINUED)
 53




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##### Table of Contents



(Dollars in thousands, except per share data, ratios, percentages, units and acres)
 December 31,Balance Sheet (at period end)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Loans and leases, net
    
    $
    4,603,505
    
    
    $
    4,628,744
    
    
    $
    4,561,073
    
    
    $
    3,611,612
    
    
    $
    3,377,870Securities
    
    $
    1,081,980
    
    
    $
    1,064,857
    
    
    $
    1,066,892
    
    
    $
    553,148
    
    
    $
    925,371Total assets
    
    $
    7,605,766
    
    
    $
    7,395,755
    
    
    $
    6,954,847
    
    
    $
    5,136,235
    
    
    $
    5,415,933Deposits
    
    $
    3,867,036
    
    
    $
    3,752,676
    
    
    $
    3,457,202
    
    
    $
    3,058,142
    
    
    $
    2,920,555Securities sold under agreements to
repurchase and federal
funds purchased
    
    $
    128,411
    
    
    $
    249,263
    
    
    $
    257,002
    
    
    $
    120,874
    
    
    $
    116,279Other borrowings (f)
    
    $
    2,426,000
    
    
    $
    2,131,976
    
    
    $
    2,086,368
    
    
    $
    1,209,571
    
    
    $
    1,686,613Shareholders equity
    
    $
    177,585
    
    
    $
    183,080
    
    
    $
    125,251
    
    
    $
    85,675
    
    
    $
    77,411Book value per share (d), (g)
    
    
    4.84
    
    
    
    5.25
    
    
    
    4.25
    
    
    
    3.68
    
    
    
    3.45Return on average equity (b)(h)
    
    
    (1.24
    )%
    
    
    8.08
    %
    
    
    13.16
    %
    
    
    8.63
    %
    
    
    6.85BankAtlantic Asset quality ratiosNon-performing assets, net of reserves as a
percent of total loans, tax
certificates and
real estate owned
    
    
    0.55
    %
    
    
    0.17
    %
    
    
    0.19
    %
    
    
    0.36
    %
    
    
    0.86Loan loss allowance as a
percent of
non-performing loans
    
    
    982.89
    %
    
    
    605.68
    %
    
    
    582.18
    %
    
    
    422.06
    %
    
    
    235.61Loan loss allowance as a
percentage of total loans
    
    
    0.94
    %
    
    
    0.88
    %
    
    
    1.00
    %
    
    
    1.24
    %
    
    
    1.38Capital Ratios for
BankAtlanticTotal risk based capital
    
    
    12.08
    %
    
    
    11.50
    %
    
    
    10.80
    %
    
    
    12.06
    %
    
    
    11.89Tier I risk based capital
    
    
    10.50
    %
    
    
    10.02
    %
    
    
    9.19
    %
    
    
    10.22
    %
    
    
    10.01Leverage
    
    
    7.55
    %
    
    
    7.42
    %
    
    
    6.83
    %
    
    
    8.52
    %
    
    
    7.26Levitt CorporationConsolidated margin on sales of real estate (i)
    
    $
    83,125
    
    
    $
    150,030
    
    
    $
    143,378
    
    
    $
    73,627
    
    
    $
    48,133Consolidated Margin
    
    
    14.70
    %
    
    
    26.90
    %
    
    
    26.1
    %
    
    
    26.0
    %
    
    
    23.2Homes delivered (units)
    
    
    1,660
    
    
    
    1,789
    
    
    
    2,126
    
    
    
    1,011
    
    
    
    740Backlog of homes (units)
    
    
    1,248
    
    
    
    1,792
    
    
    
    1,814
    
    
    
    2,053
    
    
    
    824Backlog of homes (sales value)
    
    $
    438,240
    
    
    $
    557,325
    
    
    $
    448,647
    
    
    $
    458,771
    
    
    $
    167,526Land division acres sold
    
    
    371
    
    
    
    1,647
    
    
    
    1,212
    
    
    
    1,337
    
    
    
    1,715
 
 (a)
    
    Since its inception, BFC has not paid any cash dividends on its common stock.(b)
    
    Ratios were computed using quarterly averages.(c)
    
    While the Company has two classes of common stock outstanding, the two-class method is not presented because the companys
capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes(d)
    
    I.R.E. Realty Advisory Group, Inc. (RAG) owns 4,764,282 shares of BFCs Class A Common Stock and 500,000 shares of BFC Class B Common Stock. Because the Company owns 45.5% of the outstanding common stock of RAG, 2,165,367 shares of Class A Common Stock and 227,500 shares of Class B Common Stock are eliminated from the number of shares outstanding for purposes of computing earnings per share and book value per share.(e)
    
    The operations, fixed charges and dividend of BankAtlantic Bancorp and Levitt are not included in the calculation because each of those subsidiaries are separate, publicly traded companies whose Board of Directors are composed of individuals, a majority of whom are independent. Accordingly, decisions made by those Boards, including with respect to the payment of dividend, are not within our control.(f)
    
    Other borrowings consist of FHLB advances, subordinated debentures, notes, mortgage notes payable, bonds payable, secured borrowings, and junior subordinated debentures. Secured borrowings were recognized on loan participation agreements that constituted a legal sale of a portion of the loan but that were not qualified to be accounted for as a loan sale.(g)
    
    Preferred stock redemption price is eliminated from shareholders equity for purposes of computing book value per share.(h)
    
    The return on average equity is equal to net income (loss) (numerator) divided by average consolidated shareholders equity (denominator) during the respective year.(i)
    
    Margin is calculated as sales of real estate minus cost of sales of real estate. Included in cost of sales of real estate for the year ended December 31, 2006 are homebuilding inventory impairment charges and write-offs of deposits and pre-acquisition costs of $36.8 million. 54




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December 31,2006
    
    
    2005
    
    
    2004Balance Sheet Data:AssetsCash and cash equivalents
    
    $
    17,815
    
    
    $
    26,683
    
    
    $
    1,520Investment securities
    
    
    2,262
    
    
    
    2,034
    
    
    
    1,800Investment in Benihana
    
    
    20,000
    
    
    
    20,000
    
    
    
    10,000Investment in venture partnerships
    
    
    908
    
    
    
    950
    
    
    
    971Investment in BankAtlantic Bancorp, Inc.
    
    
    113,586
    
    
    
    112,218
    
    
    
    103,125Investment in Levitt Corporation
    
    
    57,009
    
    
    
    58,111
    
    
    
    48,983Investment in other subsidiaries
    
    
    1,525
    
    
    
    1,631
    
    
    
    31,867Loans receivable
    
    
    2,157
    
    
    
    2,071
    
    
    
    3,364Other assets
    
    
    2,261
    
    
    
    960
    
    
    
    2,596Total assets
    
    $
    217,523
    
    
    $
    224,658
    
    
    $
    204,226Liabilities and Shareholders EquityNotes payable
    
    $
    
    
    
    $
    
    
    
    $
    10,483Advances from and negative basis in wholly
owned subsidiaries
    
    
    1,290
    
    
    
    462
    
    
    
    34,636Other liabilities
    
    
    7,351
    
    
    
    7,417
    
    
    
    6,828Deferred income taxes
    
    
    31,297
    
    
    
    33,699
    
    
    
    27,028Total liabilities
    
    
    39,938
    
    
    
    41,578
    
    
    
    78,975Total shareholders equity
    
    
    177,585
    
    
    
    183,080
    
    
    
    125,251Total liabilities and shareholders equity
    
    $
    217,523
    
    
    $
    224,658
    
    
    $
    204,226
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Statements of Operations Data:Revenues
    
    $
    2,232
    
    
    $
    1,775
    
    
    $
    3,514Expenses (a)
    
    
    8,413
    
    
    
    14,904
    
    
    
    6,717(Loss) before earnings (loss) from subsidiaries
    
    
    (6,181
    )
    
    
    (13,129
    )
    
    
    (3,203
    )Equity from earnings in BankAtlantic Bancorp
    
    
    5,807
    
    
    
    9,053
    
    
    
    11,817Equity from (loss) earnings in Levitt
    
    
    (1,522
    )
    
    
    9,125
    
    
    
    10,265Equity from (loss) earnings in other subsidiaries
    
    
    (658
    )
    
    
    6,671
    
    
    
    (35
    )(Loss) income before income taxes
    
    
    (2,554
    )
    
    
    11,720
    
    
    
    18,844(Benefit) provision for income taxes
    
    
    (1,857
    )
    
    
    4,000
    
    
    
    6,826(Loss) income from continuing operations
    
    
    (697
    )
    
    
    7,720
    
    
    
    12,018(Loss) income from discontinued operations, net of
tax
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Net (loss) income
    
    
    (2,221
    )
    
    
    12,774
    
    
    
    14,2305% Preferred Stock dividends
    
    
    750
    
    
    
    750
    
    
    
    392Net (loss) income
    
    $
    (2,971
    )
    
    $
    12,024
    
    
    $
    13,838Statements of Cash Flow Data:Operating Activities:Income (loss) from continuing operations
    
    $
    (697
    )
    
    $
    7,720
    
    
    $
    12,018Income (loss) from discontinued operations, net of
tax
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Other operating activities
    
    
    (820
    )
    
    
    (12,709
    )
    
    
    (18,243
    )Net cash (used in) provided by operating activities
    
    
    (3,041
    )
    
    
    65
    
    
    
    (4,013
    )Net cash used in by investing activities
    
    
    (923
    )
    
    
    (10,029
    )
    
    
    (9,577
    )Net cash (used in) provided by financing activities
    
    
    (4,904
    )
    
    
    35,127
    
    
    
    13,574(Decrease) increase in cash and cash equivalents
    
    
    (8,868
    )
    
    
    25,163
    
    
    
    (16
    )Cash at beginning of period
    
    
    26,683
    
    
    
    1,520
    
    
    
    1,536Cash at end of period
    
    $
    17,815
    
    
    $
    26,683
    
    
    $
    1,520
 
 (a)
    
    During the year ended December 31, 2005, expenses includes the write-off of wholly-owned
subsidiaries inter-company advances of approximately $6.6 million, and the equity from
earnings in other subsidiaries includes the earnings recognized by BFCs wholly-owned
subsidiaries in connection with this write-off. These inter-company advances were
eliminated in consolidation. 56




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
 Introduction
      PercentShares
    
    Percent of
    
    ofOwned
    
    Ownership
    
    VoteBankAtlantic BancorpClass A Common Stock
    
    
    8,329,236
    
    
    
    14.83
    %
    
    
    7.86
    %Class B Common Stock
    
    
    4,876,124
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    13,205,360
    
    
    
    21.64
    %
    
    
    54.86
    %LevittClass A Common Stock
    
    
    2,074,243
    
    
    
    11.15
    %
    
    
    5.91
    %Class B Common Stock
    
    
    1,219,031
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    3,293,274
    
    
    
    16.61
    %
    
    
    52.91
    %
 Recent Developments
  57




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BFC Financial Corporation Summary of Consolidated Results of Operations
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004BFC Activities
    
    $
    (5,009
    )
    
    $
    (10,450
    )
    
    $
    (8,241
    )Financial Services
    
    
    26,879
    
    
    
    42,526
    
    
    
    53,285Homebuilding & Real Estate Development
    
    
    (9,163
    )
    
    
    54,911
    
    
    
    57,36212,707
    
    
    
    86,987
    
    
    
    102,406Noncontrolling interest
    
    
    13,404
    
    
    
    79,267
    
    
    
    90,388(Loss) income from continuing operations
    
    
    (697
    )
    
    
    7,720
    
    
    
    12,018Discontinued operations, less
controlling interest and income tax
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Net (loss) income
    
    $
    (2,221
    )
    
    $
    12,774
    
    
    $
    14,230
  58




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##### Table of Contents



Consolidated Financial Condition
 Consolidated Assets and Liabilities
  
    
    A decline in cash and due from depository institutions balances of approximately
$101.4 million which resulted from: i) Approximately $28.4 million at BankAtlantic
Bancorp primarily due to a decline in cash letter receivables from electronic clearing;
ii) lower cash balances at BFC of approximately $8.6 million primarily due to cash used
in operations of approximately $4.4 million and financing activities of $4.9 million; and
iii) lower cash balances at Levitt of approximately $65.2 million primarily due to cash
used in operations and investing activities of $240.1 million and $28.2 million,
respectively, partially offset by an increase in cash provided by financing activities of
$203.1 million;
    
    A decline in securities available for sale, reflecting BankAtlantics investment
strategy to limit asset growth in response to the flat to inverted yield curve
environment that existed during 2006;
    
    Higher investment securities balances, due to BankAtlantics additional investments in tax exempt securities;
    
    An increase in tax certificate balances, associated with BankAtlantics expanding purchases outside of Florida:
    
    Higher investment in FHLB stock, related to BankAtlantics additional FHLB advance borrowings;
    
    Decline in BankAtlantics loan receivable balances, associated with lower commercial
real estate loan balances primarily resulting from a slow-down in the real estate
construction market;
    
    Higher BankAtlantic residential loans held for sale balances, resulting from an
increase in originated loans;
    
    An increase in BankAtlantics accrued interest receivable, resulting from higher
earning asset yields during 2006 compared to 2005;
    
    A net increase in Levitts inventory of real estate of approximately $210.8 million,
which includes approximately $64.8 million in land acquisitions by Levitts homebuilding
division and an increase in BankAtlantic Bancorps real estate inventory related to a
decision to build homes at the River Club real estate development;
    
    Higher real estate owned balances, as BankAtlantic took possession of the real estate
securing a $27.2 million land development loan;
    
    Investments in unconsolidated affiliates increased primarily due to a net increase in
Levitts investment in Bluegreen Corporation of $11.2 million primarily associated with
$9.7 million of earnings from Bluegreen and $1.3 million from unrealized gains associated
with Bluegreens other comprehensive income, and an increase in BankAtlantic Bancorps
investment in unconsolidated affiliates due to additional investments in income producing
real estate joint ventures during 2006;
    
    An increase in property and equipment of approximately $107.7 million associated with
BankAtlantics store expansion and growth initiatives and Levitts increase of
approximately $34.4 million associated with increased investment in commercial
properties under construction at Core Communities, Levitts support for infrastructure in
Levitts master planned communities, and hardware and software in connection with
Levitts systems upgrade; and
    
    The write off of Levitts goodwill of approximately $1.3 million associated with
Levitts Tennessee operations.
  
    
    Higher BankAtlantic interest bearing deposit balances resulting from growth in savings
and NOW checking deposit accounts associated with the Floridas Most Convenient Bank
marketing initiatives;
    
    Lower BankAtlantic non-interest bearing deposit balances primarily resulting from a
decline in the average customer account balances during 2006;
 59




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
    
    A decrease of $9.0 million in customer deposits at Levitt due to lower backlog at December 31, 2006;
    
    An increase in FHLB advance borrowings at BankAtlantic to fund the decline in short-term borrowings;
    
    An increase in subordinated debentures, notes and bonds payable of approximately
$167.8 million, primarily related to project debt associated with 2006 land acquisitions
and land development activities at Levitt, partially offset with declines in notes
payable resulting from the repayment of construction loans to an unrelated financial
institution at BankAtlantic Bancorps real estate joint venture, which is consolidated in
the Companys financial statements;
    
    An increase in junior subordinated debentures of approximately $30.9 million
associated with Levitt;
    
    Declines in other liabilities of approximately $14.5 million were primarily associated
with the payment in April 2006 of a $10 million reserve by BankAtlantic established in
2005 for possible AML-BSA fines and penalties and lower current income taxes payable at
BankAtlantic Bancorp. These declines in other liabilities were partially offset with an
increase in Levitts accounts payable and accrued liabilities relating to accruals for
certain construction accruals, and professional services primarily related to Levitts
implementation of its new systems; and
    
    A decrease in the deferred tax liability primarily associated with decreases in
earnings from BankAtlantic Bancorp and Levitt.
 Noncontrolling Interest
  December 31,
    
    
    December 31,2006
    
    
    2005BankAtlantic Bancorp
    
    $
    411,396
    
    
    $
    404,118Levitt
    
    
    286,230
    
    
    
    291,675Joint Venture Partnerships
    
    
    697
    
    
    
    729$
    698,323
    
    
    $
    696,522
   Shareholders Equity
  60




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BFC Impact of Inflation
    Critical Accounting Policies
   61




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BFC Activities
    Change
    
    
    ChangeFor the Years Ended December 31,
    
    
    2006 vs.
    
    
    2005 vs.2006
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004RevenuesInterest and dividend income
    
    $
    2,292
    
    
    $
    1,623
    
    
    $
    677
    
    
    $
    669
    
    
    $
    946Other income
    
    
    3,679
    
    
    
    1,750
    
    
    
    5,338
    
    
    
    1,929
    
    
    
    (3,588
    )5,971
    
    
    
    3,373
    
    
    
    6,015
    
    
    
    2,598
    
    
    
    (2,642
    )Cost and ExpensesInterest expense
    
    
    30
    
    
    
    346
    
    
    
    393
    
    
    
    (316
    )
    
    
    (47
    )Employee compensation and benefits
    
    
    9,407
    
    
    
    6,245
    
    
    
    3,865
    
    
    
    3,162
    
    
    
    2,380Impairment of securities
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    
    
    
    
    (363
    )Other expenses, net
    
    
    3,398
    
    
    
    3,505
    
    
    
    2,959
    
    
    
    (107
    )
    
    
    54612,835
    
    
    
    10,096
    
    
    
    7,580
    
    
    
    2,739
    
    
    
    2,516Loss before income taxes
    
    
    (6,864
    )
    
    
    (6,723
    )
    
    
    (1,565
    )
    
    
    (141
    )
    
    
    (5,158
    )(Benefit) provision for income taxes
    
    
    (1,855
    )
    
    
    3,727
    
    
    
    6,676
    
    
    
    (5,582
    )
    
    
    (2,949
    )Noncontrolling interest
    
    
    (25
    )
    
    
    6
    
    
    
    1,822
    
    
    
    (31
    )
    
    
    (1,816
    )Loss from continuing operations
    
    $
    (4,984
    )
    
    $
    (10,456
    )
    
    $
    (10,063
    )
    
    
    5,472
    
    
    
    (393
    )
   62




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For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Other operating income (loss) less
permanent difference
    
    $
    (9,094
    )
    
    $
    (8,516
    )
    
    $
    (4,775
    )Equity from earnings in BankAtlantic Bancorp
    
    
    5,807
    
    
    
    9,053
    
    
    
    11,817Equity from (loss) earnings in Levitt
    
    
    (1,522
    )
    
    
    9,125
    
    
    
    10,265(4,809
    )
    
    
    9,662
    
    
    
    17,30738.58
    %
    
    
    38.58
    %
    
    
    38.58
    %(Benefit) provision for income tax
    
    $
    (1,855
    )
    
    $
    3,727
    
    
    $
    6,676
 63




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Liquidity and Capital Resources of BFC
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Net cash provided by (used in):Operating activities
    
    $
    (4,378
    )
    
    $
    (2,164
    )
    
    $
    (6,012
    )Investing activities
    
    
    670
    
    
    
    (7,847
    )
    
    
    (8,120
    )Financing activities
    
    
    (4,922
    )
    
    
    34,590
    
    
    
    14,757(Decrease) increase in cash and cash
equivalents
    
    
    (8,630
    )
    
    
    24,579
    
    
    
    625Cash and cash equivalents at beginning of
period
    
    
    26,806
    
    
    
    2,227
    
    
    
    1,602Cash and cash equivalents at end of period
    
    $
    18,176
    
    
    $
    26,806
    
    
    $
    2,227
  
    
    Dividends from BankAtlantic Bancorp and Levitt;
    
    Dividends from Benihana;
    
    Revenues from CCC advisory fees;
    
    Revenues from shared services activities in 2006;
    
    Revenues from BMOC operations in 2005 and 2004
    
    Net proceeds of approximately $46.4 million, after underwriting discounts, commissions
and offering expenses, from the sale of 5,957,555 shares of Class A Common Stock during
2005,
    
    Net proceeds of $15.0 million in 2004 received upon the sale by the Company of its 5%
Cumulative Convertible Preferred Stock; and
    
    Principal and interest payments on loans receivable.
  
    
    Fund minimum withholding tax liability of approximately $4.2 million upon exercise of
options in 2006. The Company retired shares of the Companys common stock delivered by the
option holders as consideration for the option holders minimum tax withholding;
    
    Repayment of $10.5 million outstanding under the Companys revolving line of credit
during 2005 and payment of mortgage payables;
    
    Fund $1.8 million investment in CCC real estate partnerships during 2006;
    
    In 2005 and 2004, purchased an aggregate of 800,000 shares of Benihana Convertible
Preferred Stock for a purchase price of $20 million;
    
    Fund the payment of dividends on the Companys 5% Cumulative Convertible Preferred Stock
of $750,000; and
    
    Fund BFCs operating and general and administrative expenses.
    64




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65




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66




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Financial Services
 Our Financial Services segment consists of BankAtlantic Bancorp, which is consolidated
with BFC Financial Corporation. The only assets available to BFC Financial Corporation from
BankAtlantic Bancorp are dividends when and if paid by BankAtlantic Bancorp. BankAtlantic Bancorp
is a separate public company and its management prepared the following discussion regarding
BankAtlantic Bancorp which was included in BankAtlantic Bancorps Annual Report on Form 10-K for
the year ended December 31, 2006 filed with the Securities and Exchange Commission. Accordingly,
references to the Company, we, us or our in the following discussion under the caption
Financial Services are references to BankAtlantic Bancorp and its subsidiaries, and are not
references to BFC Financial Corporation.
 Introduction
   Consolidated Results of Operations
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004BankAtlantic
    
    $
    36,322
    
    
    $
    55,820
    
    
    $
    48,540Parent Co.
    
    
    (9,443
    )
    
    
    (13,294
    )
    
    
    4,745Total
    
    $
    26,879
    
    
    $
    42,526
    
    
    $
    53,285
  Floridas Most Convenient Bank
   67




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BankAtlantic Results of Operations
 Summary
 Floridas Most Convenient Bank
     68




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For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2006 vs
    
    
    2005 vs2006
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net interest income
    
    $
    219,605
    
    
    $
    221,075
    
    
    $
    176,858
    
    
    $
    (1,470
    )
    
    $
    44,217(Provision for) recovery from loan losses
    
    
    (8,574
    )
    
    
    6,615
    
    
    
    5,109
    
    
    
    (15,189
    )
    
    
    1,506Net interest income after
provision for loan losses
    
    
    211,031
    
    
    
    227,690
    
    
    
    181,967
    
    
    
    (16,659
    )
    
    
    45,723Non-interest income
    
    
    131,844
    
    
    
    100,060
    
    
    
    85,724
    
    
    
    31,784
    
    
    
    14,336Non-interest expense
    
    
    (293,448
    )
    
    
    (241,092
    )
    
    
    (193,621
    )
    
    
    (52,356
    )
    
    
    (47,471
    )BankAtlantic income before
income taxes
    
    
    49,427
    
    
    
    86,658
    
    
    
    74,070
    
    
    
    (37,231
    )
    
    
    12,588Provision for income taxes
    
    
    (13,105
    )
    
    
    (30,838
    )
    
    
    (25,530
    )
    
    
    17,733
    
    
    
    (5,308
    )BankAtlantic net contribution
    
    $
    36,322
    
    
    $
    55,820
    
    
    $
    48,540
    
    
    $
    (19,498
    )
    
    $
    7,280
 69




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##### Table of Contents



BankAtlantics Net Interest Income
 For the Years EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/(Dollars are in thousands)
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateInterest earning assetsLoans: (a)Residential real estate
    
    $
    2,099,664
    
    
    
    109,103
    
    
    
    5.20
    %
    
    $
    2,177,432
    
    
    
    106,992
    
    
    
    4.91
    %
    
    $
    1,527,911
    
    
    
    72,758
    
    
    
    4.76
    %Commercial real estate
    
    
    1,530,282
    
    
    
    128,420
    
    
    
    8.39
    
    
    
    1,828,557
    
    
    
    130,379
    
    
    
    7.13
    
    
    
    1,683,068
    
    
    
    96,585
    
    
    
    5.74Consumer
    
    
    558,769
    
    
    
    41,997
    
    
    
    7.52
    
    
    
    514,822
    
    
    
    31,348
    
    
    
    6.09
    
    
    
    421,167
    
    
    
    17,959
    
    
    
    4.26Commercial business
    
    
    140,465
    
    
    
    12,452
    
    
    
    8.86
    
    
    
    94,420
    
    
    
    7,455
    
    
    
    7.90
    
    
    
    112,059
    
    
    
    7,548
    
    
    
    6.74Small business
    
    
    259,816
    
    
    
    20,988
    
    
    
    8.08
    
    
    
    211,371
    
    
    
    16,520
    
    
    
    7.82
    
    
    
    183,642
    
    
    
    13,118
    
    
    
    7.14Total loans
    
    
    4,588,996
    
    
    
    312,960
    
    
    
    6.82
    
    
    
    4,826,602
    
    
    
    292,694
    
    
    
    6.06
    
    
    
    3,927,847
    
    
    
    207,968
    
    
    
    5.29Tax exempt securities (c)
    
    
    396,539
    
    
    
    23,162
    
    
    
    5.84
    
    
    
    368,807
    
    
    
    21,391
    
    
    
    5.80
    
    
    
    110,748
    
    
    
    5,988
    
    
    
    5.41Taxable investment securities (b)
    
    
    618,913
    
    
    
    36,912
    
    
    
    5.96
    
    
    
    698,279
    
    
    
    37,184
    
    
    
    5.33
    
    
    
    635,129
    
    
    
    34,948
    
    
    
    5.50Federal funds sold
    
    
    1,824
    
    
    
    22
    
    
    
    1.21
    
    
    
    4,275
    
    
    
    17
    
    
    
    0.40
    
    
    
    6,282
    
    
    
    47
    
    
    
    0.75Total investment securities
    
    
    1,017,276
    
    
    
    60,096
    
    
    
    5.91
    
    
    
    1,071,361
    
    
    
    58,592
    
    
    
    5.47
    
    
    
    752,159
    
    
    
    40,983
    
    
    
    5.45Total interest earning assets
    
    
    5,606,272
    
    
    
    373,056
    
    
    
    6.65
    %
    
    
    5,897,963
    
    
    
    351,286
    
    
    
    5.96
    %
    
    
    4,680,006
    
    
    
    248,951
    
    
    
    5.32
    %Total non-interest earning assets
    
    
    448,296
    
    
    
    
    
    
    
    
    
    
    
    389,186
    
    
    
    
    
    
    
    
    
    
    
    333,253Total assets
    
    $
    6,054,568
    
    
    
    
    
    
    
    
    
    
    $
    6,287,149
    
    
    
    
    
    
    
    
    
    
    $
    5,013,259Interest bearing liabilitiesDeposits:Savings
    
    $
    369,504
    
    
    
    2,936
    
    
    
    0.79
    %
    
    $
    298,867
    
    
    
    909
    
    
    
    0.30
    %
    
    $
    243,906
    
    
    
    652
    
    
    
    0.27
    %NOW, money funds and checking
    
    
    1,502,058
    
    
    
    20,413
    
    
    
    1.36
    
    
    
    1,582,182
    
    
    
    16,593
    
    
    
    1.05
    
    
    
    1,489,442
    
    
    
    10,861
    
    
    
    0.73Certificate accounts
    
    
    868,777
    
    
    
    35,610
    
    
    
    4.10
    
    
    
    784,525
    
    
    
    22,582
    
    
    
    2.88
    
    
    
    733,717
    
    
    
    16,842
    
    
    
    2.30Total interest bearing deposits
    
    
    2,740,339
    
    
    
    58,959
    
    
    
    2.15
    
    
    
    2,665,574
    
    
    
    40,084
    
    
    
    1.50
    
    
    
    2,467,065
    
    
    
    28,355
    
    
    
    1.15Securities sold under agreements
to repurchase and federal funds
purchased
    
    
    304,635
    
    
    
    15,309
    
    
    
    5.03
    
    
    
    314,782
    
    
    
    9,760
    
    
    
    3.10
    
    
    
    252,718
    
    
    
    3,349
    
    
    
    1.33Advances from FHLB
    
    
    1,265,772
    
    
    
    66,492
    
    
    
    5.25
    
    
    
    1,538,852
    
    
    
    62,175
    
    
    
    4.04
    
    
    
    959,588
    
    
    
    37,689
    
    
    
    3.93Subordinated debentures and
notes payable
    
    
    66,287
    
    
    
    5,513
    
    
    
    8.32
    
    
    
    191,050
    
    
    
    12,584
    
    
    
    6.59
    
    
    
    36,220
    
    
    
    2,002
    
    
    
    5.53Total interest bearing liabilities
    
    
    4,377,033
    
    
    
    146,273
    
    
    
    3.34
    
    
    
    4,710,258
    
    
    
    124,603
    
    
    
    2.65
    
    
    
    3,715,591
    
    
    
    71,395
    
    
    
    1.92Non-interest bearing liabilitiesDemand deposit and escrow accounts
    
    
    1,056,254
    
    
    
    
    
    
    
    
    
    
    
    979,075
    
    
    
    
    
    
    
    
    
    
    
    765,084Other liabilities
    
    
    61,392
    
    
    
    
    
    
    
    
    
    
    
    53,150
    
    
    
    
    
    
    
    
    
    
    
    29,111Total non-interest bearing liabilities
    
    
    1,117,646
    
    
    
    
    
    
    
    
    
    
    
    1,032,225
    
    
    
    
    
    
    
    
    
    
    
    794,195Stockholders equity
    
    
    559,889
    
    
    
    
    
    
    
    
    
    
    
    544,666
    
    
    
    
    
    
    
    
    
    
    
    503,473Total liabilities and stockholders
equity
    
    $
    6,054,568
    
    
    
    
    
    
    
    
    
    
    $
    6,287,149
    
    
    
    
    
    
    
    
    
    
    $
    5,013,259Net interest income/net
interest spread
    
    
    
    
    
    
    226,783
    
    
    
    3.31
    %
    
    
    
    
    
    
    226,683
    
    
    
    3.31
    %
    
    
    
    
    
    
    177,556
    
    
    
    3.40
    %Tax equivalent adjustment
    
    
    
    
    
    
    (8,107
    )
    
    
    
    
    
    
    
    
    
    
    (7,487
    )
    
    
    
    
    
    
    
    
    
    
    (2,096
    )Capitalized interest from real estate
operations
    
    
    
    
    
    
    929
    
    
    
    
    
    
    
    
    
    
    
    1,879
    
    
    
    
    
    
    
    
    
    
    
    1,398Net interest income
    
    
    
    
    
    
    219,605
    
    
    
    
    
    
    
    
    
    
    
    221,075
    
    
    
    
    
    
    
    
    
    
    
    176,858MarginInterest income/interest earning
assets
    
    
    
    
    
    
    
    
    
    
    6.65
    %
    
    
    
    
    
    
    
    
    
    
    5.96
    %
    
    
    
    
    
    
    
    
    
    
    5.32
    %Interest expense/interest earning
assets
    
    
    
    
    
    
    
    
    
    
    2.61
    
    
    
    
    
    
    
    
    
    
    
    2.11
    
    
    
    
    
    
    
    
    
    
    
    1.53Tax equivalent net interest margin
    
    
    
    
    
    
    
    
    
    
    4.04
    %
    
    
    
    
    
    
    
    
    
    
    3.85
    %
    
    
    
    
    
    
    
    
    
    
    3.79
    %
 
 a)
    
    Includes non-accruing loansb)
    
    Average balances were based on amortized cost.c)
    
    The tax equivalent basis is computed using a 35% tax rate. 70




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##### Table of Contents



Year Ended
    
    
    Year EndedDecember 31, 2006
    
    
    December 31, 2005Compared to Year Ended
    
    
    Compared to Year EndedDecember 31, 2005
    
    
    December 31, 2004Volume (a)
    
    
    Rate
    
    
    Total
    
    
    Volume (a)
    
    
    Rate
    
    
    TotalIncrease (decrease) due to:Loans
    
    $
    (16,204
    )
    
    $
    36,470
    
    
    $
    20,266
    
    
    $
    54,502
    
    
    $
    30,224
    
    
    $
    84,726Tax exempt securities
    
    
    1,620
    
    
    
    151
    
    
    
    1,771
    
    
    
    14,968
    
    
    
    435
    
    
    
    15,403Taxable investment securities (b)
    
    
    (4,733
    )
    
    
    4,461
    
    
    
    (272
    )
    
    
    3,363
    
    
    
    (1,127
    )
    
    
    2,236Federal funds sold
    
    
    (30
    )
    
    
    35
    
    
    
    5
    
    
    
    (8
    )
    
    
    (22
    )
    
    
    (30
    )Total earning assets
    
    
    (19,347
    )
    
    
    41,117
    
    
    
    21,770
    
    
    
    72,825
    
    
    
    29,510
    
    
    
    102,335Deposits:Savings
    
    
    561
    
    
    
    1,466
    
    
    
    2,027
    
    
    
    167
    
    
    
    90
    
    
    
    257NOW, money funds,
and checking
    
    
    (1,089
    )
    
    
    4,909
    
    
    
    3,820
    
    
    
    973
    
    
    
    4,759
    
    
    
    5,732Certificate accounts
    
    
    3,453
    
    
    
    9,575
    
    
    
    13,028
    
    
    
    1,462
    
    
    
    4,278
    
    
    
    5,740Total deposits
    
    
    2,925
    
    
    
    15,950
    
    
    
    18,875
    
    
    
    2,602
    
    
    
    9,127
    
    
    
    11,729Securities sold under
Agreements to repurchase
    
    
    (510
    )
    
    
    6,059
    
    
    
    5,549
    
    
    
    1,924
    
    
    
    4,487
    
    
    
    6,411Advances from FHLB
    
    
    (14,345
    )
    
    
    18,662
    
    
    
    4,317
    
    
    
    23,404
    
    
    
    1,082
    
    
    
    24,486Subordinated debentures
    
    
    (10,376
    )
    
    
    3,305
    
    
    
    (7,071
    )
    
    
    10,198
    
    
    
    384
    
    
    
    10,582(25,231
    )
    
    
    28,026
    
    
    
    2,795
    
    
    
    35,526
    
    
    
    5,953
    
    
    
    41,479Total interest bearing liabilities
    
    
    (22,306
    )
    
    
    43,976
    
    
    
    21,670
    
    
    
    38,128
    
    
    
    15,080
    
    
    
    53,208Change in tax equivalent
interest income
    
    $
    2,959
    
    
    $
    (2,859
    )
    
    $
    100
    
    
    $
    34,697
    
    
    $
    14,430
    
    
    $
    49,127
 
 (a)
    
    Changes attributable to rate/volume have been allocated to volume.(b)
    
    Average balances were based on amortized cost. For the Year Ended December 31, 2006 Compared to the Same 2005 Period
    71




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##### Table of Contents



For the Year Ended December 31, 2005 Compared to the Same 2004 Period
     72




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##### Table of Contents



BankAtlantics Allowance for Loan Losses
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Balance, beginning of period
    
    $
    41,192
    
    
    $
    46,010
    
    
    $
    45,595
    
    
    $
    48,022
    
    
    $
    44,585Charge-offs:Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,394
    )
    
    
    Commercial real estate loans
    
    
    (7,000
    )
    
    
    
    
    
    
    (645
    )
    
    
    
    
    
    
    (6,998
    )Small business
    
    
    (951
    )
    
    
    (764
    )
    
    
    (238
    )
    
    
    (771
    )
    
    
    (953
    )Consumer loans
    
    
    (681
    )
    
    
    (259
    )
    
    
    (585
    )
    
    
    (1,563
    )
    
    
    (1,006
    )Residential real estate loans
    
    
    (239
    )
    
    
    (453
    )
    
    
    (582
    )
    
    
    (681
    )
    
    
    (827
    )Continuing loan products
    
    
    (8,871
    )
    
    
    (1,476
    )
    
    
    (2,050
    )
    
    
    (5,409
    )
    
    
    (9,784
    )Discontinued loan products
    
    
    (34
    )
    
    
    (1,218
    )
    
    
    (2,026
    )
    
    
    (6,314
    )
    
    
    (18,879
    )Total charge-offs
    
    
    (8,905
    )
    
    
    (2,694
    )
    
    
    (4,076
    )
    
    
    (11,723
    )
    
    
    (28,663
    )Recoveries:Commercial business loans
    
    
    291
    
    
    
    18
    
    
    
    536
    
    
    
    95
    
    
    
    76Commercial real estate loans
    
    
    419
    
    
    
    1,471
    
    
    
    4,052
    
    
    
    3
    
    
    
    20Small business
    
    
    566
    
    
    
    899
    
    
    
    418
    
    
    
    559
    
    
    
    7Consumer loans
    
    
    536
    
    
    
    401
    
    
    
    370
    
    
    
    622
    
    
    
    477Residential real estate loans
    
    
    348
    
    
    
    65
    
    
    
    486
    
    
    
    726
    
    
    
    331Continuing loan products
    
    
    2,160
    
    
    
    2,854
    
    
    
    5,862
    
    
    
    2,005
    
    
    
    911Discontinued loan products
    
    
    581
    
    
    
    1,637
    
    
    
    3,738
    
    
    
    8,572
    
    
    
    7,968Total recoveries
    
    
    2,741
    
    
    
    4,491
    
    
    
    9,600
    
    
    
    10,577
    
    
    
    8,879Net (charge-offs) recoveries
    
    
    (6,164
    )
    
    
    1,797
    
    
    
    5,524
    
    
    
    (1,146
    )
    
    
    (19,784
    )Provision for (recovery from)
loan losses
    
    
    8,574
    
    
    
    (6,615
    )
    
    
    (5,109
    )
    
    
    (547
    )
    
    
    14,077Adjustments to acquired loan
losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (734
    )
    
    
    9,144Balance, end of period
    
    $
    43,602
    
    
    $
    41,192
    
    
    $
    46,010
    
    
    $
    45,595
    
    
    $
    48,022
  As of December 31,2006
    
    
    2005
    
    
    2004Allocation
    
    
    
    
    
    
    Allocation
    
    
    
    
    
    
    AllocationAmount
    
    
    of ALL
    
    
    Amount
    
    
    of ALL
    
    
    Amount
    
    
    of ALLLease finance
    
    $
    
    
    
    $
    
    
    
    $
    664
    
    
    $
    156
    
    
    $
    6,551
    
    
    $
    1,429Syndication loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Small business (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer  indirect
    
    
    
    
    
    
    
    
    
    
    543
    
    
    
    
    
    
    
    1,734
    
    
    
    2$
    
    
    
    $
    
    
    
    $
    1,207
    
    
    $
    156
    
    
    $
    8,285
    
    
    $
    1,431
 73




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##### Table of Contents



As of December 31,2003
    
    
    2002Allocation
    
    
    
    
    
    
    AllocationAmount
    
    
    Of ALL
    
    
    Amount
    
    
    of ALLLease finance
    
    $
    14,442
    
    
    $
    3,425
    
    
    $
    31,279
    
    
    $
    7,396Syndication loans
    
    
    9,114
    
    
    
    185
    
    
    
    14,499
    
    
    
    294Small business (1)
    
    
    9,569
    
    
    
    873
    
    
    
    17,297
    
    
    
    2,143Consumer  indirect
    
    
    2,402
    
    
    
    70
    
    
    
    8,105
    
    
    
    457$
    35,527
    
    
    $
    4,553
    
    
    $
    71,180
    
    
    $
    10,290
 
 (1)
    
    Small business loans originated before January 1, 2000.      74




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##### Table of Contents



December 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004ALL
    
    
    Loans
    
    
    
    
    
    
    ALL
    
    
    Loans
    
    
    
    
    
    
    ALL
    
    
    Loansto gross
    
    
    by
    
    
    
    
    
    
    to gross
    
    
    by
    
    
    
    
    
    
    to gross
    
    
    byALL
    
    
    loans
    
    
    category
    
    
    ALL
    
    
    loans
    
    
    category
    
    
    ALL
    
    
    loans
    
    
    categoryby
    
    
    in each
    
    
    to gross
    
    
    By
    
    
    in each
    
    
    to gross
    
    
    by
    
    
    in each
    
    
    to grosscategory
    
    
    category
    
    
    loans
    
    
    category
    
    
    category
    
    
    loans
    
    
    category
    
    
    category
    
    
    loansCommercial business
    
    $
    2,359
    
    
    
    1.50
    %
    
    
    3.07
    %
    
    $
    1,988
    
    
    
    2.30
    %
    
    
    1.63
    %
    
    $
    2,507
    
    
    
    2.94
    %
    
    
    1.59
    %Commercial real estate
    
    
    24,632
    
    
    
    1.28
    
    
    
    37.54
    
    
    
    17,984
    
    
    
    0.75
    
    
    
    45.20
    
    
    
    23,345
    
    
    
    0.92
    
    
    
    47.28Small business
    
    
    4,495
    
    
    
    1.58
    
    
    
    5.57
    
    
    
    2,640
    
    
    
    1.12
    
    
    
    4.43
    
    
    
    2,403
    
    
    
    1.26
    
    
    
    3.55Residential real estate
    
    
    4,242
    
    
    
    0.20
    
    
    
    42.34
    
    
    
    2,592
    
    
    
    0.13
    
    
    
    38.53
    
    
    
    2,565
    
    
    
    0.12
    
    
    
    38.57Consumer  direct
    
    
    7,874
    
    
    
    1.34
    
    
    
    11.49
    
    
    
    6,354
    
    
    
    1.17
    
    
    
    10.19
    
    
    
    4,281
    
    
    
    0.90
    
    
    
    8.86Discontinued loan
products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156
    
    
    
    12.92
    
    
    
    0.02
    
    
    
    1,431
    
    
    
    17.27
    
    
    
    0.15Total assigned
    
    
    43,602
    
    
    
    
    
    
    
    
    
    
    
    31,714
    
    
    
    
    
    
    
    
    
    
    
    36,532Unassigned
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    9,478
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    9,478
    
    
    
    N/A
    
    
    
    N/A$
    43,602
    
    
    
    0.85
    
    
    
    100.00
    
    
    $
    41,192
    
    
    
    0.78
    
    
    
    100.00
    
    
    $
    46,010
    
    
    
    0.86
    
    
    
    100.00
 December 31, 2003
    
    
    December 31, 2002ALL
    
    
    Loans
    
    
    
    
    
    
    ALL
    
    
    Loansto gross
    
    
    by
    
    
    
    
    
    
    to gross
    
    
    byALL
    
    
    loans
    
    
    category
    
    
    ALL
    
    
    loans
    
    
    categoryBy
    
    
    in each
    
    
    to gross
    
    
    by
    
    
    in each
    
    
    to grosscategory
    
    
    category
    
    
    loans
    
    
    category
    
    
    category
    
    
    loansCommercial business
    
    $
    1,715
    
    
    
    2.15
    
    
    
    1.81
    
    
    $
    1,437
    
    
    
    1.75
    
    
    
    2.06Commercial real estate
    
    
    24,005
    
    
    
    0.99
    
    
    
    55.12
    
    
    
    21,124
    
    
    
    1.05
    
    
    
    50.75Small business
    
    
    2,300
    
    
    
    1.44
    
    
    
    3.63
    
    
    
    2,863
    
    
    
    1.99
    
    
    
    3.61Residential real estate
    
    
    2,111
    
    
    
    0.16
    
    
    
    30.56
    
    
    
    2,512
    
    
    
    0.18
    
    
    
    34.60Consumer  direct
    
    
    3,900
    
    
    
    1.10
    
    
    
    8.07
    
    
    
    3,239
    
    
    
    1.13
    
    
    
    7.19Discontinued loan products
    
    
    4,553
    
    
    
    12.81
    
    
    
    0.81
    
    
    
    10,290
    
    
    
    14.46
    
    
    
    1.79Total assigned
    
    
    38,584
    
    
    
    
    
    
    
    
    
    
    
    41,465Unassigned
    
    
    7,011
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    6,557
    
    
    
    N/A
    
    
    
    N/A$
    45,595
    
    
    
    1.04
    
    
    
    100.00
    
    
    $
    48,022
    
    
    
    1.21
    
    
    
    100.00
  75




---



##### Table of Contents



AmountCommercial business
    
    $
    264Commercial real estate
    
    
    5,285Small business
    
    
    1,566Residential real estate
    
    
    1,262Consumer  direct
    
    
    1,101$
    9,478
        76




---



##### Table of Contents



BankAtlantics Non-performing Assets and Potential Problem Loans (dollars in thousands):
 December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002NONPERFORMING ASSETSTax certificates
    
    $
    632
    
    
    $
    388
    
    
    $
    381
    
    
    $
    894
    
    
    $
    1,419Residential
    
    
    2,629
    
    
    
    5,981
    
    
    
    5,538
    
    
    
    9,777
    
    
    
    14,237Commercial real estate and business
    
    
    
    
    
    
    340
    
    
    
    340
    
    
    
    52
    
    
    
    1,474Small business  real estate
    
    
    244
    
    
    
    9
    
    
    
    88
    
    
    
    155
    
    
    
    239Lease financing
    
    
    
    
    
    
    
    
    
    
    727
    
    
    
    25
    
    
    
    3,900Consumer
    
    
    1,563
    
    
    
    471
    
    
    
    1,210
    
    
    
    794
    
    
    
    532Total non-accrual assets
    
    
    5,068
    
    
    
    7,189
    
    
    
    8,284
    
    
    
    11,697
    
    
    
    21,801Residential real estate owned
    
    
    617
    
    
    
    86
    
    
    
    309
    
    
    
    1,474
    
    
    
    1,304Commercial real estate owned
    
    
    21,130
    
    
    
    881
    
    
    
    383
    
    
    
    948
    
    
    
    8,303Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Total repossessed assets
    
    
    21,747
    
    
    
    967
    
    
    
    692
    
    
    
    2,422
    
    
    
    9,611Total nonperforming assets
    
    
    26,815
    
    
    
    8,156
    
    
    
    8,976
    
    
    
    14,119
    
    
    
    31,412Specific valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,386
    )Total nonperforming assets, net
    
    $
    26,815
    
    
    $
    8,156
    
    
    $
    8,976
    
    
    $
    14,119
    
    
    $
    30,026Total nonperforming assets as
a percentage of:Total assets
    
    
    0.43
    
    
    
    0.13
    
    
    
    0.15
    
    
    
    0.31
    
    
    
    0.64Loans, tax certificates and
net real estate owned
    
    
    0.55
    
    
    
    0.17
    
    
    
    0.19
    
    
    
    0.36
    
    
    
    0.86TOTAL ASSETS
    
    $
    6,187,122
    
    
    $
    6,109,330
    
    
    $
    6,044,988
    
    
    $
    4,566,850
    
    
    $
    4,903,886TOTAL LOANS, TAX CERTIFICATES
AND NET REAL ESTATE OWNED
    
    $
    4,903,961
    
    
    $
    4,830,268
    
    
    $
    4,771,682
    
    
    $
    3,872,473
    
    
    $
    3,673,110Allowance for loan losses
    
    $
    43,602
    
    
    $
    41,192
    
    
    $
    46,010
    
    
    $
    45,595
    
    
    $
    48,022Total tax certificates
    
    $
    199,090
    
    
    $
    166,697
    
    
    $
    170,028
    
    
    $
    193,776
    
    
    $
    195,947Allowance for tax certificate losses
    
    $
    3,699
    
    
    $
    3,271
    
    
    $
    3,297
    
    
    $
    2,870
    
    
    $
    1,873OTHER POTENTIAL PROBLEM LOANSCONTRACTUALLY PAST DUE 90
DAYS OR MORECommercial real estate and business (1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    135
    
    
    $
    100PERFORMING IMPAIRED LOANS, NET
OF SPECIFIC ALLOWANCESPerforming impaired loans
    
    
    163
    
    
    
    193
    
    
    
    320
    
    
    
    180
    
    
    
    RESTRUCTURED LOANSCommercial real estate and business
    
    
    
    
    
    
    77
    
    
    
    24
    
    
    
    1,387
    
    
    
    1,882TOTAL POTENTIAL PROBLEM LOANS
    
    $
    163
    
    
    $
    270
    
    
    $
    344
    
    
    $
    1,702
    
    
    $
    1,982
 
 (1)
    
    The majority of these loans have matured and the borrower continues to make payments under
the matured loan agreement.   77




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BankAtlantics Non- Interest Income
  For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2006 vs
    
    
    2005 vs2006
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Other service charges and fees
    
    $
    27,542
    
    
    $
    23,347
    
    
    $
    23,620
    
    
    $
    4,195
    
    
    $
    (273
    )Service charges on deposits
    
    
    90,472
    
    
    
    61,956
    
    
    
    51,435
    
    
    
    28,516
    
    
    
    10,521(Loss) income from real estate
operations
    
    
    (982
    )
    
    
    4,480
    
    
    
    2,405
    
    
    
    (5,462
    )
    
    
    2,075Gains on sales of loans
    
    
    680
    
    
    
    742
    
    
    
    483
    
    
    
    (62
    )
    
    
    259Securities activities, net
    
    
    657
    
    
    
    117
    
    
    
    37
    
    
    
    540
    
    
    
    80Gains associated with debt redemption
    
    
    1,528
    
    
    
    
    
    
    
    
    
    
    
    1,528
    
    
    
    Gain (loss) on sales of bank facilities
    
    
    1,627
    
    
    
    1,200
    
    
    
    (16
    )
    
    
    427
    
    
    
    1,216Other
    
    
    10,320
    
    
    
    8,218
    
    
    
    7,760
    
    
    
    2,102
    
    
    
    458Non-interest income
    
    $
    131,844
    
    
    $
    100,060
    
    
    $
    85,724
    
    
    $
    31,784
    
    
    $
    14,336
     78




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79




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BankAtlantics Non- Interest Expense
  For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2006 vs
    
    
    2005 vs2006
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Employee compensation and benefits
    
    $
    146,099
    
    
    $
    113,526
    
    
    $
    93,154
    
    
    $
    32,573
    
    
    $
    20,372Occupancy and equipment
    
    
    57,291
    
    
    
    41,611
    
    
    
    32,713
    
    
    
    15,680
    
    
    
    8,898Advertising and promotion
    
    
    34,659
    
    
    
    26,895
    
    
    
    16,012
    
    
    
    7,764
    
    
    
    10,883Check losses
    
    
    8,615
    
    
    
    5,176
    
    
    
    2,878
    
    
    
    3,439
    
    
    
    2,298Professional fees
    
    
    7,653
    
    
    
    9,695
    
    
    
    11,285
    
    
    
    (2,042
    )
    
    
    (1,590
    )Supplies and postage
    
    
    6,833
    
    
    
    5,638
    
    
    
    4,467
    
    
    
    1,195
    
    
    
    1,171Telecommunication
    
    
    4,774
    
    
    
    3,944
    
    
    
    3,045
    
    
    
    830
    
    
    
    899Amortization of intangible assets
    
    
    1,561
    
    
    
    1,627
    
    
    
    1,715
    
    
    
    (66
    )
    
    
    (88
    )Costs associated with debt redemption
    
    
    1,457
    
    
    
    
    
    
    
    11,741
    
    
    
    1,457
    
    
    
    (11,741
    )Fines and penalties, compliance matters
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    (10,000
    )
    
    
    10,000Impairment of office properties and equipment
    
    
    
    
    
    
    3,706
    
    
    
    
    
    
    
    (3,706
    )
    
    
    3,706Other
    
    
    24,506
    
    
    
    19,274
    
    
    
    16,611
    
    
    
    5,232
    
    
    
    2,663Non-interest expense
    
    $
    293,448
    
    
    $
    241,092
    
    
    $
    193,621
    
    
    $
    52,356
    
    
    $
    47,471
    Floridas Most Convenient Bank
 80




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BankAtlantics Provision for Income Taxes
 For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2006 vs
    
    
    2005 vs2006
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Income before income taxes
    
    $
    49,427
    
    
    $
    86,658
    
    
    $
    74,070
    
    
    $
    (37,231
    )
    
    $
    12,588Provision for income taxes
    
    
    (13,105
    )
    
    
    (30,838
    )
    
    
    (25,530
    )
    
    
    17,733
    
    
    
    (5,308
    )BankAtlantic net income
    
    $
    36,322
    
    
    $
    55,820
    
    
    $
    48,540
    
    
    $
    (19,498
    )
    
    $
    7,280Effective tax rate
    
    
    26.51
    %
    
    
    35.59
    %
    
    
    34.47
    %
  81




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Parent Company Results of Operations
  For the Years
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2006 vs
    
    
    2005 vs2006
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net interest income (expense):Interest on loans
    
    $
    
    
    
    $
    556
    
    
    $
    1,751
    
    
    $
    (556
    )
    
    $
    (1,195
    )Interest and dividends on investments
    
    
    2,448
    
    
    
    1,701
    
    
    
    756
    
    
    
    747
    
    
    
    945Interest on Junior Subordinated
Debentures
    
    
    (21,933
    )
    
    
    (19,347
    )
    
    
    (16,958
    )
    
    
    (2,586
    )
    
    
    (2,389
    )Net interest (expense)
    
    
    (19,485
    )
    
    
    (17,090
    )
    
    
    (14,451
    )
    
    
    (2,395
    )
    
    
    (2,639
    )Non-interest income:Income from unconsolidated subsidiaries
    
    
    1,634
    
    
    
    621
    
    
    
    485
    
    
    
    1,013
    
    
    
    136Securities activities, net
    
    
    9,156
    
    
    
    731
    
    
    
    3,693
    
    
    
    8,425
    
    
    
    (2,962
    )Litigation settlement
    
    
    
    
    
    
    
    
    
    
    22,840
    
    
    
    
    
    
    
    (22,840
    )Other
    
    
    
    
    
    
    1,172
    
    
    
    512
    
    
    
    (1,172
    )
    
    
    660Non-interest income
    
    
    10,790
    
    
    
    2,524
    
    
    
    27,530
    
    
    
    8,266
    
    
    
    (25,006
    )Non-interest expense:Employee compensation and benefits
    
    
    4,705
    
    
    
    4,047
    
    
    
    3,042
    
    
    
    658
    
    
    
    1,005Advertising and promotion
    
    
    408
    
    
    
    422
    
    
    
    289
    
    
    
    (14
    )
    
    
    133Professional fees
    
    
    638
    
    
    
    1,179
    
    
    
    1,708
    
    
    
    (541
    )
    
    
    (529
    )Other
    
    
    1,005
    
    
    
    515
    
    
    
    603
    
    
    
    490
    
    
    
    (88
    )Non-interest expense
    
    
    6,756
    
    
    
    6,163
    
    
    
    5,642
    
    
    
    593
    
    
    
    521(Loss) income before income taxes
    
    
    (15,451
    )
    
    
    (20,729
    )
    
    
    7,437
    
    
    
    5,278
    
    
    
    (28,166
    )Income tax (expense) benefit
    
    
    6,008
    
    
    
    7,435
    
    
    
    (2,692
    )
    
    
    (1,427
    )
    
    
    10,127Parent Company (loss) income
    
    $
    (9,443
    )
    
    $
    (13,294
    )
    
    $
    4,745
    
    
    $
    3,851
    
    
    $
    (18,039
    )
     82




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83




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##### Table of Contents



BankAtlantic Bancorp Consolidated Financial Condition
  
    
    Lower cash and due from depository institution balances resulting from a decline in
cash letter receivables resulting from electronic clearing;
    
    Decline in securities available for sale reflecting an investment strategy to limit
asset growth in response to the flat to inverted yield curve environment that existed
during 2006;
    
    Higher investment securities balances due to additional investments in tax exempt securities;
    
    Increase in tax certificate balances associated with expanding purchases outside of Florida:
    
    Higher investment in FHLB stock related to additional FHLB advance borrowings;
    
    Decline in loan receivable balances associated with lower commercial real estate loan
balances primarily resulting from a slow-down in the real estate construction market;
    
    Higher residential loans held for sale balances resulting from an increase in
originated loans;
    
    Increase in accrued interest receivable resulting from higher earning asset yields
during 2006 compared to 2005;
    
    Increase in real estate inventory related to a decision to build homes at the River
Club real estate development;
    
    Higher real estate owned balances as BankAtlantic took possession of the real estate
securing a $27.2 million land development loan;
    
    Increase in investment in unconsolidated subsidiaries due to additional investments in
income producing real estate joint ventures during 2006;
    
    Increase in office properties and equipment associated with BankAtlantics store
expansion and growth initiatives.
  
    
    Higher interest bearing deposit balances resulting from growth in Savings and NOW
checking deposit accounts associated with the Floridas Most Convenient Bank marketing
initiatives;
    
    Lower non-interest bearing deposit balances primarily resulting from a decline in the
average customer account balances during 2006;
    
    Increase in FHLB advance borrowings to fund the decline in short-term borrowings;
    
    Decrease in development notes payable associated with the repayment of River Club real
estate development borrowings from third party lenders;
    
    Decrease in other liabilities associated with the payment of a $10 million reserve
established for possible AML-BSA fines and penalties in April 2006 and lower current
income taxes payable associated with the payment of 2005 income taxes in February 2006.
  84




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##### Table of Contents



Liquidity and Capital Resources
 BankAtlantic Bancorp, Inc.
      BankAtlantic
  85




---



##### Table of Contents



OutstandingonDecember 31,
    
    
    For the Period Ending December 31, (1)2008-
    
    
    
    
    
    
    
    
    
    
    2020-2006
    
    
    2007
    
    
    2009
    
    
    2010-2014
    
    
    2015-2019
    
    
    2024
    
    
    >2025Commercial real
estate
    
    $
    2,109,741
    
    
    $
    942,068
    
    
    $
    688,677
    
    
    $
    230,436
    
    
    $
    184,308
    
    
    $
    60,380
    
    
    $
    3,872Residential real
estate
    
    
    2,167,819
    
    
    
    55,641
    
    
    
    26,893
    
    
    
    42,059
    
    
    
    334,732
    
    
    
    15,316
    
    
    
    1,693,178Consumer (2)
    
    
    588,164
    
    
    
    1,477
    
    
    
    2,257
    
    
    
    69,892
    
    
    
    389,972
    
    
    
    124,566
    
    
    
    Commercial business
    
    
    255,334
    
    
    
    122,103
    
    
    
    42,937
    
    
    
    88,569
    
    
    
    1,725
    
    
    
    
    
    
    
    Total loans
    
    $
    5,121,058
    
    
    $
    1,121,289
    
    
    $
    760,764
    
    
    $
    430,956
    
    
    $
    910,737
    
    
    $
    200,262
    
    
    $
    1,697,050Total securities
Available for sale
(3)
    
    $
    558,863
    
    
    $
    996
    
    
    $
    3,410
    
    
    $
    83,905
    
    
    $
    150,424
    
    
    $
    1,771
    
    
    $
    318,357
 
 (1)
    
    Does not include deductions for the undisbursed portion of loans in process.(2)
    
    Includes second mortgage loans.(3)
    
    Does not include $92.5 million of equity securities. 86




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##### Table of Contents



Commercial
    
    
    Real EstateBusiness
    
    
    Construction
    
    
    TotalOne year or less
    
    $
    243,118
    
    
    $
    846,216
    
    
    $
    1,089,334Over one year, but less than five
years
    
    
    11,959
    
    
    
    11,683
    
    
    
    23,642Over five years
    
    
    257
    
    
    
    1,657
    
    
    
    1,914$
    255,334
    
    
    $
    859,556
    
    
    $
    1,114,890Due After One Year:Pre-determined interest rate
    
    $
    12,216
    
    
    $
    13,340
    
    
    $
    25,556Floating or adjustable interest rate
    
    
    
    
    
    
    
    
    
    
    $
    12,216
    
    
    $
    13,340
    
    
    $
    25,556
  Florida
    
    
    56
    %Eastern U.S.A.
    
    
    23
    %Western U.S.A.
    
    
    16
    %Central U.S.A
    
    
    5
    %100
    %
   Minimum RatiosAdequately
    
    WellActual
    
    Capitalized
    
    CapitalizedAmount
    
    Ratio
    
    Ratio
    
    RatioAt December 31, 2006:Total risk-based capital
    
    $
    529,497
    
    
    
    12.08
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based
capital
    
    $
    460,359
    
    
    
    10.50
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    460,359
    
    
    
    7.55
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    460,359
    
    
    
    7.55
    %
    
    
    4.00
    %
    
    
    5.00
    %At December 31, 2005:Total risk-based capital
    
    $
    512,664
    
    
    
    11.50
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based
capital
    
    $
    446,419
    
    
    
    10.02
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    446,419
    
    
    
    7.42
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    446,419
    
    
    
    7.42
    %
    
    
    4.00
    %
    
    
    5.00
    %
  87




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##### Table of Contents



Consolidated Cash Flows
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Net cash provided (used) by:Operating activities
    
    $
    3,359
    
    
    $
    57,339
    
    
    $
    67,295Investing activities
    
    
    (205,891
    )
    
    
    132,220
    
    
    
    (1,457,098
    )Financing activities
    
    
    174,460
    
    
    
    (154,358
    )
    
    
    1,404,981(Decrease) increase in cash
and cash equivalents
    
    $
    (28,072
    )
    
    $
    35,201
    
    
    $
    15,178
    Off Balance Sheet Arrangements, Contractual Obligations and Loan Commitments
  Amount of Commitment Expiration Per PeriodTotalAmounts
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    After 5Loan Commitments
    
    Committed
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsLines of credit
    
    $
    709,655
    
    
    $
    90,243
    
    
    $
    
    
    
    $
    
    
    
    $
    619,412Standby letters of credit
    
    
    67,831
    
    
    
    67,831
    
    
    
    
    
    
    
    
    
    
    
    Other commercial commitments
    
    
    318,931
    
    
    
    318,931
    
    
    
    
    
    
    
    
    
    
    
    Total loan commitments
    
    $
    1,096,417
    
    
    $
    477,005
    
    
    $
    
    
    
    $
    
    
    
    $
    619,412
   88




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##### Table of Contents



Payments Due by Period (2)Less than
    
    
    
    
    
    
    
    
    
    
    After 5Contractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsTime deposits
    
    $
    943,184
    
    
    $
    854,103
    
    
    $
    77,298
    
    
    $
    11,698
    
    
    $
    85Long-term debt
    
    
    293,189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293,189Advances from FHLB (1)
    
    
    1,517,058
    
    
    
    1,445,058
    
    
    
    40,000
    
    
    
    32,000
    
    
    
    Operating lease obligations
    
    
    88,316
    
    
    
    8,667
    
    
    
    16,491
    
    
    
    12,080
    
    
    
    51,078Pension obligation
    
    
    14,336
    
    
    
    938
    
    
    
    2,220
    
    
    
    2,848
    
    
    
    8,330Other obligations
    
    
    37,956
    
    
    
    15,456
    
    
    
    8,250
    
    
    
    6,250
    
    
    
    8,000Securities sold but not yet
purchased
    
    
    31,407
    
    
    
    31,407
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    2,925,446
    
    
    $
    2,355,629
    
    
    $
    144,259
    
    
    $
    64,876
    
    
    $
    360,682
 
 (1)
    
    Payments due by period are based on contractual maturities(2)
    
    The above table excludes interest payments on interest bearing liabilities      Critical Accounting Policies
  89




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Allowance for loan losses
      90




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##### Table of Contents



Valuation of securities and trading activities
   QuotedQuoted Market
    
    
    Broker
    
    
    Matrix
    
    
    ValuationPrices
    
    
    Prices
    
    
    Pricing
    
    
    Model
    
    
    TotalSecurities:Mortgage-backed securities
    
    $
    
    
    
    $
    
    
    
    $
    361,750
    
    
    $
    
    
    
    $
    361,750Tax exempt securities
    
    
    
    
    
    
    20,099
    
    
    
    377,145
    
    
    
    
    
    
    
    397,244Other securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    675
    
    
    
    675Total debt securities
    
    
    
    
    
    
    20,099
    
    
    
    738,895
    
    
    
    675
    
    
    
    759,669Total derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total equity securities
    
    
    92,453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,453Total
    
    $
    92,453
    
    
    $
    20,099
    
    
    $
    738,895
    
    
    $
    675
    
    
    $
    852,122
      91




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##### Table of Contents



Impairment of Goodwill and Other Intangible Assets
  Impairment of Long-Lived Assets
      92




---



##### Table of Contents



Accounting for Business Combinations
  Accounting for Contingencies
  Share-based Compensation
   Dividends
   93




---



##### Table of Contents



Impact of Inflation
   94




---



##### Table of Contents



Homebuilding & Real Estate Development
 Our Homebuilding & Real Estate Development segment consists of Levitt, which is
consolidated with BFC Financial Corporation. The only assets available to BFC Financial Corporation
are dividends when and if paid by Levitt. Levitt is a separate public company and its management
prepared the following discussion regarding Levitt which was included in Levitts Annual Report on
Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission.
Accordingly, references to the Company, we, us or our in the following discussion under the
caption Homebuilding & Real Estate Development are references to Levitt and its subsidiaries, and
are not references to BFC Financial Corporation.
 Executive Overview
  Outlook
    95




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##### Table of Contents



Financial and Non-Financial Metrics
  Critical Accounting Policies and Estimates
   Inventory of Real Estate
    96




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##### Table of Contents



Investments in Unconsolidated Subsidiaries
  Homesite Contracts and Consolidation of Variable Interest Entities
  97




---



##### Table of Contents



Revenue Recognition
    Capitalized Interest
  Income Taxes
  Stock-based Compensation
   98




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##### Table of Contents



Goodwill
 $
 Consolidated Results of Operations
 2006
    
    
    2005Year Ended December 31,
    
    
    vs. 2005
    
    
    vs. 20042006
    
    
    2005
    
    
    2004
    
    
    Change
    
    
    Change(In thousands, except per share data)RevenuesSales of real estate
    
    $
    566,086
    
    
    
    558,112
    
    
    
    549,652
    
    
    
    7,974
    
    
    
    8,460Other Revenues (b)
    
    
    9,241
    
    
    
    6,772
    
    
    
    6,184
    
    
    
    2,469
    
    
    
    589Total revenues
    
    
    575,327
    
    
    
    564,884
    
    
    
    555,836
    
    
    
    10,443
    
    
    
    9,049Costs and expensesCost of sales of real estate
    
    
    482,961
    
    
    
    408,082
    
    
    
    406,274
    
    
    
    74,879
    
    
    
    1,808Selling, general and administrative expenses
    
    
    121,151
    
    
    
    87,639
    
    
    
    71,001
    
    
    
    33,512
    
    
    
    16,638Other expenses
    
    
    3,677
    
    
    
    4,855
    
    
    
    7,600
    
    
    
    (1,178
    )
    
    
    (2,745
    )Total costs and expenses
    
    
    607,789
    
    
    
    500,576
    
    
    
    484,875
    
    
    
    107,213
    
    
    
    15,701Earnings from Bluegreen Corporation
    
    
    9,684
    
    
    
    12,714
    
    
    
    13,068
    
    
    
    (3,030
    )
    
    
    (354
    )(Loss) earnings from joint ventures
    
    
    (416
    )
    
    
    69
    
    
    
    6,050
    
    
    
    (485
    )
    
    
    (5,981
    )Interest and other income (b)
    
    
    8,260
    
    
    
    10,256
    
    
    
    3,233
    
    
    
    (1,996
    )
    
    
    7,023(Loss) income before income taxes
    
    
    (14,934
    )
    
    
    87,347
    
    
    
    93,312
    
    
    
    (102,281
    )
    
    
    (5,965
    )Benefit (provision) for income taxes
    
    
    5,770
    
    
    
    (32,436
    )
    
    
    (35,897
    )
    
    
    38,206
    
    
    
    3,461Net (loss) income
    
    $
    (9,164
    )
    
    
    54,911
    
    
    
    57,415
    
    
    
    (64,075
    )
    
    
    (2,504
    )Basic (loss) earnings per share
    
    $
    (0.46
    )
    
    $
    2.77
    
    
    $
    3.10
    
    
    $
    (3.23
    )
    
    $
    (0.33
    )Diluted (loss) earnings per share (a)
    
    $
    (0.47
    )
    
    $
    2.74
    
    
    $
    3.04
    
    
    $
    (3.21
    )
    
    $
    (0.30
    )Basic weighted average shares outstanding
    
    
    19,823
    
    
    
    19,817
    
    
    
    18,518
    
    
    
    6
    
    
    
    1,299Diluted weighted average shares outstanding
    
    
    19,823
    
    
    
    19,929
    
    
    
    18,600
    
    
    
    (106
    )
    
    
    1,329
 
 (a)
    
    Diluted (loss) earnings per share takes into account (i) the dilution in earnings we recognize from Bluegreen as a result of
outstanding
securities issued by Bluegreen that enable the holders thereof to acquire shares of Bluegreens common stock and (ii) the dilutive
effect of our stock options and restricted stock using the treasury stock method.(b)
    
    The years ended December 31, 2005 and 2004 reflect the reclassification of irrigation, leasing and marketing revenue to Other revenues
from Interest and other income. See Note 1  Consolidation Policy. For the Year Ended December 31, 2006 Compared to the Same 2005 Period
  99




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100




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For the Year Ended December 31, 2005 Compared to the Same 2004 Period
   101




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102




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Homebuilding Division Results of Operations
 2006
    
    
    2005Year Ended December 31,
    
    
    vs. 2005
    
    
    vs. 20042006
    
    
    2005
    
    
    2004
    
    
    Change
    
    
    Change(Dollars in thousands, except unit data)RevenuesSales of real estate
    
    $
    500,719
    
    
    
    438,367
    
    
    
    472,296
    
    
    
    62,352
    
    
    
    (33,929
    )Other Revenues
    
    
    4,070
    
    
    
    3,750
    
    
    
    4,798
    
    
    
    320
    
    
    
    (1,048
    )Total revenues
    
    
    504,789
    
    
    
    442,117
    
    
    
    477,094
    
    
    
    62,672
    
    
    
    (34,977
    )Costs and expensesCost of sales of real estate
    
    
    440,059
    
    
    
    347,008
    
    
    
    371,097
    
    
    
    93,051
    
    
    
    (24,089
    )Selling, general and administrative expenses
    
    
    77,858
    
    
    
    57,403
    
    
    
    50,806
    
    
    
    20,455
    
    
    
    6,597Other expenses
    
    
    3,669
    
    
    
    3,606
    
    
    
    7,015
    
    
    
    63
    
    
    
    (3,409
    )Total costs and expenses
    
    
    521,586
    
    
    
    408,017
    
    
    
    428,918
    
    
    
    113,569
    
    
    
    (20,901
    )(Loss) earnings from joint ventures
    
    
    (279
    )
    
    
    104
    
    
    
    3,518
    
    
    
    (383
    )
    
    
    (3,414
    )Interest and other income
    
    
    3,388
    
    
    
    723
    
    
    
    1,944
    
    
    
    2,665
    
    
    
    (1,221
    )(Loss) income before income taxes
    
    
    (13,688
    )
    
    
    34,927
    
    
    
    53,638
    
    
    
    (48,615
    )
    
    
    (18,711
    )Benefit (provision) for income taxes
    
    
    4,749
    
    
    
    (12,691
    )
    
    
    (20,658
    )
    
    
    17,440
    
    
    
    7,967Net (loss) income
    
    $
    (8,939
    )
    
    
    22,236
    
    
    
    32,980
    
    
    
    (31,175
    )
    
    
    (10,744
    )Operational data:Homes delivered
    
    
    1,660
    
    
    
    1,789
    
    
    
    2,126
    
    
    
    (129
    )
    
    
    (337
    )Construction starts
    
    
    1,682
    
    
    
    1,662
    
    
    
    2,294
    
    
    
    20
    
    
    
    (632
    )Average selling price of homes delivered
    
    $
    302,000
    
    
    
    245,000
    
    
    
    222,000
    
    
    
    57,000
    
    
    
    23,000Margin percentage on homes delivered (a)
    
    
    12.1
    %
    
    
    20.8
    %
    
    
    21.4
    %
    
    
    (8.7
    )%
    
    
    (0.6
    )%Gross sales contracts (units)
    
    
    1,520
    
    
    
    2,039
    
    
    
    1,982
    
    
    
    (519
    )
    
    
    57Sales contracts cancellations (units)
    
    
    404
    
    
    
    272
    
    
    
    303
    
    
    
    132
    
    
    
    (31
    )Net orders (units)
    
    
    1,116
    
    
    
    1,767
    
    
    
    1,679
    
    
    
    (651
    )
    
    
    88Net orders (value  in thousands)
    
    $
    381,993
    
    
    
    547,045
    
    
    
    427,916
    
    
    
    (165,052
    )
    
    
    119,129Backlog of homes (units)
    
    
    1,248
    
    
    
    1,792
    
    
    
    1,814
    
    
    
    (544
    )
    
    
    (22
    )Backlog of homes (value  in thousands)
    
    $
    438,240
    
    
    
    557,325
    
    
    
    448,647
    
    
    
    (119,085
    )
    
    
    108,678Joint Ventures (excluded from above):Homes delivered
    
    
    
    
    
    
    
    
    
    
    146
    
    
    
    
    
    
    
    (146
    )Construction starts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net orders (units)
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    (42
    )Net orders (value)
    
    $
    
    
    
    
    
    
    
    
    13,967
    
    
    
    
    
    
    
    (13,967
    )Backlog of homes (units)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Backlog of homes (value)
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (a)
    
    Margin percentage is calculated by dividing margin (sales of real
estate minus cost of sales of real estate) by sales of real estate. 103




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For the Year Ended December 31, 2006 Compared to the Same 2005 Period
    104




---



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For the Year Ended December 31, 2005 Compared to the Same 2004 Period
    105




---



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106




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##### Table of Contents



Land Division Results of Operations
 2006
    
    
    2005Year Ended December 31,
    
    
    Vs. 2005
    
    
    vs. 20042006
    
    
    2005
    
    
    2004
    
    
    Change
    
    
    Change(Dollars in thousands)RevenuesSales of real estate
    
    $
    69,778
    
    
    
    105,658
    
    
    
    96,200
    
    
    
    (35,880
    )
    
    
    9,458Other Revenues (b)
    
    
    3,816
    
    
    
    1,111
    
    
    
    927
    
    
    
    2,705
    
    
    
    184Total revenues
    
    
    73,594
    
    
    
    106,769
    
    
    
    97,127
    
    
    
    (33,175
    )
    
    
    9,642Costs and expensesCost of sales of real estate
    
    
    42,662
    
    
    
    50,706
    
    
    
    42,838
    
    
    
    (8,044
    )
    
    
    7,868Selling, general and administrative expenses
    
    
    15,119
    
    
    
    12,395
    
    
    
    10,373
    
    
    
    2,724
    
    
    
    2,022Other expenses
    
    
    
    
    
    
    1,177
    
    
    
    561
    
    
    
    (1,177
    )
    
    
    616Total costs and expenses
    
    
    57,781
    
    
    
    64,278
    
    
    
    53,772
    
    
    
    (6,497
    )
    
    
    10,506Interest and other income (b)
    
    
    2,650
    
    
    
    7,897
    
    
    
    744
    
    
    
    (5,247
    )
    
    
    7,153Income before income taxes
    
    
    18,463
    
    
    
    50,388
    
    
    
    44,099
    
    
    
    (31,925
    )
    
    
    6,289Provision for income taxes
    
    
    (6,936
    )
    
    
    (18,992
    )
    
    
    (17,031
    )
    
    
    12,056
    
    
    
    (1,961
    )Net income
    
    $
    11,527
    
    
    
    31,396
    
    
    
    27,068
    
    
    
    (19,869
    )
    
    
    4,328Operational data:Acres sold
    
    
    371
    
    
    
    1,647
    
    
    
    1,212
    
    
    
    (1,276
    )
    
    
    435Margin percentage (a)
    
    
    38.9
    %
    
    
    52.0
    %
    
    
    55.5
    %
    
    
    (13.1
    )%
    
    
    (3.5
    )%Unsold saleable acres
    
    
    6,871
    
    
    
    7,287
    
    
    
    5,965
    
    
    
    (416
    )
    
    
    1,322Acres subject to sales contracts 
Third parties
    
    
    74
    
    
    
    246
    
    
    
    1,833
    
    
    
    (172
    )
    
    
    (1,587
    )Aggregate sales price of acres subject to
sales contracts to third parties
    
    
    21,124
    
    
    
    39,283
    
    
    
    121,095
    
    
    
    (18,159
    )
    
    
    (81,812
    )
 
 (a)
    
    Margin percentage is calculated by dividing margin (sales of real
estate minus cost of sales of real estate) by sales of real estate.(b)
    
    The years ended December 31, 2005 and 2004 reflect the
reclassification of irrigation, leasing and marketing revenue to Other
revenues from Interest and other income. See Note 1  Consolidation
Policy.   107




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For the Year Ended December 31, 2006 Compared to the Same 2005 Period
       For the Year Ended December 31, 2005 Compared to the Same 2004 Period
  108




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109




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Other Operations Results of Operations
 2006
    
    
    2005Year Ended December 31,
    
    
    Vs. 2005
    
    
    Vs. 20042006
    
    
    2005
    
    
    2004
    
    
    Change
    
    
    Change(Dollars in thousands)RevenuesSales of real estate
    
    $
    11,041
    
    
    
    14,709
    
    
    
    5,555
    
    
    
    (3,668
    )
    
    
    9,154Other Revenues (a)
    
    
    1,435
    
    
    
    1,963
    
    
    
    459
    
    
    
    (528
    )
    
    
    1,504Total revenues
    
    
    12,476
    
    
    
    16,672
    
    
    
    6,014
    
    
    
    (4,196
    )
    
    
    10,658Costs and expensesCost of sales of real estate
    
    
    11,649
    
    
    
    12,520
    
    
    
    6,255
    
    
    
    (871
    )
    
    
    6,265Selling, general and administrative expenses
    
    
    28,174
    
    
    
    17,841
    
    
    
    9,822
    
    
    
    10,333
    
    
    
    8,019Other expenses
    
    
    8
    
    
    
    72
    
    
    
    24
    
    
    
    (64
    )
    
    
    48Total costs and expenses
    
    
    39,831
    
    
    
    30,433
    
    
    
    16,101
    
    
    
    9,398
    
    
    
    14,332Earnings from Bluegreen Corporation
    
    
    9,684
    
    
    
    12,714
    
    
    
    13,068
    
    
    
    (3,030
    )
    
    
    (354
    )(Loss) earnings from joint ventures
    
    
    (137
    )
    
    
    (35
    )
    
    
    2,532
    
    
    
    (102
    )
    
    
    (2,567
    )Interest and other income (a)
    
    
    4,196
    
    
    
    2,143
    
    
    
    545
    
    
    
    2,053
    
    
    
    1,598(Loss) income before income taxes
    
    
    (13,612
    )
    
    
    1,061
    
    
    
    6,058
    
    
    
    (14,673
    )
    
    
    (4,997
    )Benefit (provision) for income taxes
    
    
    5,639
    
    
    
    (378
    )
    
    
    (2,198
    )
    
    
    6,017
    
    
    
    1,820Net (loss) income
    
    $
    (7,973
    )
    
    
    683
    
    
    
    3,860
    
    
    
    (8,656
    )
    
    
    (3,177
    )
 (a)
    
    The years ended December 31, 2005 and 2004 reflect the reclassification of leasing revenue to Other revenues from
Interest and other income. See Note 1  Consolidation Policy.
  For the Year Ended December 31, 2006 Compared to the Same 2005 Period
   110




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111




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##### Table of Contents



For the Year Ended December 31, 2005 Compared to the Same 2004 Period
       FINANCIAL CONDITION
   
    
    a net increase in inventory of real estate of approximately $210.8 million, which
includes approximately $64.8 million in land acquisitions by our Homebuilding Division;
 112




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##### Table of Contents




    
    an increase of $34.4 million in property and equipment associated with increased
investment in commercial properties under construction by our Land Division, support
for infrastructure in our master planned communities, and $3.5 million in hardware and
software acquired for our implementation of our new financial and operating system ;
    
    a net increase of approximately $11.2 million in our investment in Bluegreen
Corporation associated primarily with $9.7 million of earnings from Bluegreen (net of
purchase accounting adjustments), $1.3 million from our pro rata share of unrealized
gains associated with Bluegreens other comprehensive income and $287,000 associated
with Bluegreens capital transactions; and
    
    the above increases in assets were partially offset by a net decrease in cash and
cash equivalents of $65.2 million, which resulted from cash used in operations and
investing activities of $268.3 million, partially offset by an increase in cash
provided by financing activities of $203.1 million.
  
    
    a net increase in notes and mortgage notes payable of $176.8 million, primarily
related to project debt associated with 2006 land acquisitions and land development
activities;
    
    an increase of $30.9 million in junior subordinated debentures ;
    
    a decrease of $9.0 million in customer deposits due to a smaller backlog at December 31, 2006;
    
    an increase of $18.5 million in accruals as a result of increased construction costs,
accrued professional services related to our systems implementation and legal and
valuation services accruals related to the proposed merger with BFC; and
    
    a decrease in tax liability of approximately $7.0 million relating primarily to
our pre-tax loss and the timing of estimated tax
payments.
 LIQUIDITY AND CAPITAL RESOURCES
    113




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##### Table of Contents



December 31,2006
    
    
    2005Mortgage notes payable
    
    $
    67,504
    
    
    
    127,061Mortgage notes payable to BankAtlantic
    
    
    
    
    
    
    223Borrowing base facilities
    
    
    348,600
    
    
    
    143,100Land acquisition and construction
mortgage
notes payable
    
    
    1,641
    
    
    
    3,875Land acquisition mortgage notes payable
    
    
    66,932
    
    
    
    48,936Construction mortgage notes payable
    
    
    28,884
    
    
    
    13,012Lines of credit
    
    
    14,000
    
    
    
    14,500Subordinated investment notes
    
    
    2,489
    
    
    
    3,132Unsecured junior subordinated debentures
    
    
    85,052
    
    
    
    54,124Other borrowings
    
    
    601
    
    
    
    7Total Outstanding Debt
    
    $
    615,703
    
    
    $
    407,970
 Additional detail on the above borrowings is provided in Item 8 Note 11.
 Operating Activities
   114




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Investing Activities
 Financing Activities
     115




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##### Table of Contents



Off Balance Sheet Arrangements and Contractual Obligations
    Payments due by periodLess than
    
    
    13 - 36
    
    
    37 - 60
    
    
    More thanCategory (1)
    
    Total
    
    
    12 Months
    
    
    Months
    
    
    Months
    
    
    60 MonthsLong-term debt obligations
    
    $
    615,703
    
    
    
    46,016
    
    
    
    304,341
    
    
    
    146,706
    
    
    
    118,640Interest payable on long-term debt
    
    
    268,250
    
    
    
    46,487
    
    
    
    78,738
    
    
    
    25,791
    
    
    
    117,234Operating lease obligations
    
    
    8,531
    
    
    
    2,287
    
    
    
    3,466
    
    
    
    1,323
    
    
    
    1,455Purchase obligations
    
    
    14,220
    
    
    
    14,220
    
    
    
    
    
    
    
    
    
    
    
    Total obligations
    
    $
    906,704
    
    
    
    109,010
    
    
    
    386,545
    
    
    
    173,820
    
    
    
    237,329
 
 (1)
    
    Long-term debt obligations consist of notes, mortgage notes and bonds payable.
Interest payable on these long-term debt obligations is the interest that will be incurred
related to the outstanding debt. Operating lease obligations consist of lease
commitments. Purchase obligations consist of contracts to acquire real estate properties
for development and sale for which due diligence has been completed and our deposit is
committed; however our liability for not completing the purchase of any such property is
generally limited to the deposit made under the relevant contract. At December 31, 2006,
we had $400,000 in deposits securing such purchase obligations and we currently intend to
acquire the land associated with these purchase obligations, subject to market conditions
and the Companys financial condition.(2)
    
    In addition to the above scheduled payments, certain of our borrowings require
repayments of specified amounts upon a sale of portions of the property securing the debt.  116




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Fair MarketValue atPayments due by year
    
    
    December 31,2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total
    
    
    2006Fixed rate debt:Notes and mortgage
payable (a)
    
    
    2,303
    
    
    
    980
    
    
    
    328
    
    
    
    256
    
    
    
    264
    
    
    
    101,208
    
    
    
    105,339
    
    
    
    105,885Average interest rate
    
    
    8.03
    %
    
    
    8.03
    %
    
    
    8.09
    %
    
    
    8.10
    %
    
    
    8.11
    %
    
    
    5.27
    %
    
    
    7.61
    %Variable rate debt:Notes and mortgage payable
    
    
    43,713
    
    
    
    24,951
    
    
    
    278,082
    
    
    
    100,312
    
    
    
    45,874
    
    
    
    17,432
    
    
    
    510,364
    
    
    
    510,364Average interest rate
    
    
    7.73
    %
    
    
    7.69
    %
    
    
    7.68
    %
    
    
    7.73
    %
    
    
    7.90
    %
    
    
    7.28
    %
    
    
    7.71
    %Total debt obligations
    
    
    46,016
    
    
    
    25,931
    
    
    
    278,410
    
    
    
    100,568
    
    
    
    46,138
    
    
    
    118,640
    
    
    
    615,703
    
    
    
    616,249
 
 (a)
    
    Fair value calculated based upon recent borrowings in same category of this debt.  Impact of Inflation
    New Accounting Pronouncements
    117




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Applicability of
the Assessment of a Buyers Continuing Investment under FASB Statement No. 66, Accounting for Sales
of Real Estate, for Sales of Condominiums,
 118




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Consolidated Market Risk
   BFC Interest Rate Risk
  BankAtlantic Bancorp Consolidated Interest Rate Risk
  BankAtlantic Repricing Gap TableAs of December 31, 20061 Year
    
    3 Years
    
    5 Years
    
    More Thanor Less
    
    or Less
    
    or Less
    
    5 Years
    
    TotalInterest earning assets:Loans:Residential loans (1)Fixed rate
    
    $
    144,931
    
    
    $
    161,943
    
    
    $
    138,788
    
    
    $
    218,431
    
    
    $
    664,093Hybrid ARMs less than 5 years
    
    
    148,908
    
    
    
    104,424
    
    
    
    30,489
    
    
    
    
    
    
    
    283,821Hybrid ARMs more than 5 years
    
    
    282,048
    
    
    
    331,526
    
    
    
    323,296
    
    
    
    277,881
    
    
    
    1,214,751Commercial loans
    
    
    1,409,577
    
    
    
    92,388
    
    
    
    80,767
    
    
    
    19,232
    
    
    
    1,601,964Small business loans
    
    
    184,842
    
    
    
    74,731
    
    
    
    23,412
    
    
    
    10,059
    
    
    
    293,044Consumer
    
    
    554,754
    
    
    
    5,459
    
    
    
    4,459
    
    
    
    17,177
    
    
    
    581,849Total loans
    
    
    2,725,060
    
    
    
    770,471
    
    
    
    601,211
    
    
    
    542,780
    
    
    
    4,639,522Investment securitiesTax exempt securities
    
    
    3
    
    
    
    9,914
    
    
    
    30,113
    
    
    
    357,439
    
    
    
    397,469Taxable investment securities
    
    
    256,085
    
    
    
    64,715
    
    
    
    72,123
    
    
    
    53,544
    
    
    
    446,467Tax certificates
    
    
    195,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,391Total investment securities
    
    
    451,479
    
    
    
    74,629
    
    
    
    102,236
    
    
    
    410,983
    
    
    
    1,039,327Total interest earning assets
    
    $
    3,176,539
    
    
    $
    845,100
    
    
    $
    703,447
    
    
    $
    953,763
    
    
    $
    5,678,849Total interest bearing liabilities
    
    $
    3,422,526
    
    
    $
    356,883
    
    
    $
    267,788
    
    
    $
    1,573,975
    
    
    $
    5,621,172GAP (repricing difference)
    
    $
    (245,987
    )
    
    $
    488,217
    
    
    $
    435,659
    
    
    $
    (620,212
    )Cumulative GAP
    
    $
    (245,987
    )
    
    $
    242,230
    
    
    $
    677,889
    
    
    $
    57,677Repricing Percentage
    
    
    -3.98
    %
    
    
    7.89
    %
    
    
    7.04
    %
    
    
    -10.02
    %Cumulative Percentage
    
    
    -3.98
    %
    
    
    3.92
    %
    
    
    10.96
    %
    
    
    0.93
    %Total assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,187,122
 
 (1)
    
    Hybrid adjustable rate mortgages (ARM) earn fixed rates for designated periods and
adjust annually thereafter based on the one year U.S. Treasury note rate.  119




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i.
    
    Calculating interest income and interest expense from existing assets and liabilities
using current repricing, prepayment and volume assumptions,ii.
    
    Estimating the change in expected net interest income based on instantaneous and
parallel shifts in the yield curve to determine the effect on net interest income; andiii.
    
    Calculating the percentage change in net interest income calculated in (i) and (ii).
   
    
    Interest rates,
    
    Loan prepayment rates,
    
    Deposit decay rates,
    
    Re-pricing of certain borrowings
    
    Reinvestment in earning assets.
 The prepayment assumptions used in the model are:
 
    
    Fixed rate mortgages
    
    20 %
    
    Fixed rate securities
    
    14 %
    
    Tax certificates
    
    10 %
    
    Adjustable rate mortgages
    
    15 %
    
    Adjustable rate securities
    
    17 %
 Deposit runoff assumptions used in the model are as follows:
 Within
    
    1-3
    
    3-5
    
    Over 51 Year
    
    Years
    
    Years
    
    YearsMoney fund savings accounts decay rates
    
    
    17
    %
    
    
    17
    %
    
    
    16
    %
    
    
    14
    %NOW and savings accounts decay rates
    
    
    37
    %
    
    
    32
    %
    
    
    17
    %
    
    
    17
    %
  As of December 31, 2006NetChanges
    
    Interest
    
    Percentin Rate
    
    Income
    
    Change+200 bp
    
    $
    241,341
    
    
    
    (5.94
    )%+100 bp
    
    $
    252,047
    
    
    
    (1.74
    )%0
    
    $
    256,482
    
    
    
    -100 bp
    
    $
    256,485
    
    
    
    0.00
    %-200 bp
    
    $
    252,346
    
    
    
    (1.62
    )%
 120




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##### Table of Contents



As of December 31, 2005NetChanges
    
    Interest
    
    Percentin Rate
    
    Income
    
    Change+200 bp
    
    $
    258,020
    
    
    
    1.47
    %+100 bp
    
    $
    259,549
    
    
    
    2.15
    %0
    
    $
    254,715
    
    
    
    -100 bp
    
    $
    247,130
    
    
    
    (3.37
    )%-200 bp
    
    $
    232,813
    
    
    
    (9.72
    )%
  Consolidated Equity Price Risk
  AvailablePercent
    
    for SaleChange in
    
    Securities
    
    DollarFair Value
    
    Fair Value
    
    Change20%
    
    $
    113,720
    
    
    $
    18,95310%
    
    $
    104,244
    
    
    $
    9,4770%
    
    $
    94,767
    
    
    $
    -10%
    
    $
    85,290
    
    
    $
    (9,477
    )-20%
    
    $
    75,814
    
    
    $
    (18,953
    )
   Levitt
  121




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 123




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ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 124




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[This Page Intentionally Left Blank]
 125




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BFC FINANCIAL CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Certified Public Accounting Firm of PricewaterhouseCoopers
LLPReport of Independent Registered Public Accounting Firm of Ernst & Young LLP
On the Consolidated Financial Statements of Bluegreen Corporation for the year ended December 31,
2006Financial Statements:Consolidated Statements of Financial Condition as of December 31, 2006 and 2005Consolidated Statements of Operations for each of the years in the three year period ended
December 31, 2006Consolidated Statements of Comprehensive (Loss) Income for each of the years in the three year
period ended December 31, 2006Consolidated Statements of Shareholders Equity for each of the years in the three year period
ended December 31, 2006Consolidated Statements of Cash Flows for each of the years in the three year period ended
December 31, 2006Notes to Consolidated Financial Statements
 126




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Report of Independent Registered Certified Public Accounting Firm
   Consolidated financial statements
   Internal control over financial reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
 127




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128




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Report of Independent Registered Public Accounting Firm
 
    Share-Based Payment Accounting for Real Estate
Time-Sharing Transactions
  
 
 129




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BFC Financial Corporation
Consolidated Statements of Financial Condition
(In thousands, except share data)
 December 31,2006
    
    
    2005ASSETSCash and due from depository institutions
    
    $
    195,401
    
    
    $
    296,842Federal funds sold and other short-term investments
    
    
    5,722
    
    
    
    3,229Securities available for sale (at fair value)
    
    
    653,659
    
    
    
    676,660Investment securities (approximate fair value: $229,546 and $220,920)
    
    
    227,208
    
    
    
    221,242Tax certificates net of allowance of $3,699 and $3,271
    
    
    195,391
    
    
    
    163,726Federal Home Loan Bank stock, at cost which approximates fair value
    
    
    80,217
    
    
    
    69,931Discontinued operations assets held for sale
    
    
    190,763
    
    
    
    240,109Loans receivable, net of allowance for loan losses of $44,173 and $41,830
    
    
    4,594,192
    
    
    
    4,626,206Residential loans held for sale
    
    
    9,313
    
    
    
    2,538Accrued interest receivable
    
    
    47,676
    
    
    
    41,496Real estate held for development and sale
    
    
    847,492
    
    
    
    632,597Real estate owned
    
    
    21,747
    
    
    
    967Investments in unconsolidated affiliates
    
    
    124,521
    
    
    
    110,124Properties and equipment, net
    
    
    298,513
    
    
    
    190,860Goodwill
    
    
    70,490
    
    
    
    71,797Core deposit intangible asset
    
    
    6,834
    
    
    
    8,395Other assets
    
    
    36,627
    
    
    
    39,036Total assets
    
    $
    7,605,766
    
    
    $
    7,395,755LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:DepositsInterest bearing deposits
    
    $
    2,871,116
    
    
    $
    2,732,727Non-interest bearing deposits
    
    
    995,920
    
    
    
    1,019,949Total deposits
    
    
    3,867,036
    
    
    
    3,752,676Customer deposits on real estate held for sale
    
    
    42,696
    
    
    
    51,686Advances from FHLB
    
    
    1,517,058
    
    
    
    1,283,532Securities sold under agreements to repurchase
    
    
    96,385
    
    
    
    109,788Federal funds purchased and other short term borrowings
    
    
    32,026
    
    
    
    139,475Secured borrowings
    
    
    
    
    
    
    138,270Subordinated debentures, notes and bonds payable
    
    
    560,624
    
    
    
    392,784Junior subordinated debentures
    
    
    348,318
    
    
    
    317,390Deferred tax liabilities, net
    
    
    10,646
    
    
    
    22,421Discontinued operations liabilities held for sale
    
    
    95,246
    
    
    
    133,763Other liabilities
    
    
    159,823
    
    
    
    174,368Total liabilities
    
    
    6,729,858
    
    
    
    6,516,153Noncontrolling interest
    
    
    698,323
    
    
    
    696,522Commitments and contingenciesShareholders equity:Preferred stock of $.01 par value; authorized 10,000,000 shares;
5% Cumulative Convertible Preferred Stock (5% Preferred Stock)
issued and outstanding 15,000 shares in 2006 and 2005
    
    
    
    
    
    
    Class A common stock of $.01 par value, authorized 70,000,000 shares;
issued and outstanding 28,755,882 in 2006 and 29,949,612 in 2005
    
    
    266
    
    
    
    278Class B common stock of $.01 par value, authorized 20,000,000 shares;
issued and outstanding 7,090,652 in 2006 and 4,285,413 in 2005
    
    
    69
    
    
    
    41Additional paid-in capital
    
    
    93,910
    
    
    
    97,223Unearned compensation  restricted stock grants
    
    
    
    
    
    
    (100
    )Retained earnings
    
    
    81,889
    
    
    
    85,113Total shareholders equity before
accumulated other comprehensive income
    
    
    176,134
    
    
    
    182,555Accumulated other comprehensive income
    
    
    1,451
    
    
    
    525Total shareholders equity
    
    
    177,585
    
    
    
    183,080Total liabilities and shareholders equity
    
    $
    7,605,766
    
    
    $
    7,395,755
 See accompanying notes to consolidated financial statements.
 130




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BFC Financial Corporation
Consolidated Statements of Operations
(In thousands, except per share data)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004RevenuesBFC Activities:Interest and dividend income
    
    $
    2,249
    
    
    $
    1,591
    
    
    $
    659Other income
    
    
    1,433
    
    
    
    1,538
    
    
    
    5,0243,682
    
    
    
    3,129
    
    
    
    5,683Financial Services:Interest and dividend income
    
    
    367,177
    
    
    
    345,002
    
    
    
    246,830Service charges on deposits
    
    
    90,472
    
    
    
    61,956
    
    
    
    51,435Other service charges and fees
    
    
    27,542
    
    
    
    23,347
    
    
    
    23,620Other income
    
    
    22,555
    
    
    
    15,232
    
    
    
    36,818507,746
    
    
    
    445,537
    
    
    
    358,703Homebuilding & Real Estate Development:Sales of real estate
    
    
    566,086
    
    
    
    558,112
    
    
    
    549,652Interest and dividend income
    
    
    2,474
    
    
    
    2,240
    
    
    
    1,108Other income
    
    
    14,592
    
    
    
    14,472
    
    
    
    8,078583,152
    
    
    
    574,824
    
    
    
    558,838Total revenues
    
    
    1,094,580
    
    
    
    1,023,490
    
    
    
    923,224Costs and ExpensesBFC Activities:Interest expense
    
    
    30
    
    
    
    346
    
    
    
    393Employee compensation and benefits
    
    
    9,407
    
    
    
    6,245
    
    
    
    3,865Impairment of securities
    
    
    
    
    
    
    
    
    
    
    363Other expenses
    
    
    2,933
    
    
    
    3,074
    
    
    
    2,83112,370
    
    
    
    9,665
    
    
    
    7,452Financial Services:Interest expense, net of interest capitalized
    
    
    166,578
    
    
    
    141,561
    
    
    
    86,547Provision (recovery) of loan losses
    
    
    8,574
    
    
    
    (6,615
    )
    
    
    (5,109
    )Employee compensation and benefits
    
    
    150,804
    
    
    
    117,573
    
    
    
    96,196Occupancy and equipment
    
    
    57,308
    
    
    
    41,621
    
    
    
    32,717Advertising and promotion
    
    
    35,067
    
    
    
    27,317
    
    
    
    16,301Impairment of office properties and equipment
    
    
    
    
    
    
    3,706
    
    
    
    Amortization of intangible assets
    
    
    1,561
    
    
    
    1,627
    
    
    
    1,715Cost associated with debt redemption
    
    
    1,457
    
    
    
    
    
    
    
    11,741Fines and penalties, compliance matters
    
    
    
    
    
    
    10,000
    
    
    
    Other expenses
    
    
    52,962
    
    
    
    45,126
    
    
    
    40,323474,311
    
    
    
    381,916
    
    
    
    280,431Homebuilding & Real Estate Development:Cost of sales of real estate
    
    
    482,961
    
    
    
    407,190
    
    
    
    403,900Interest expense, net of interest capitalized
    
    
    
    
    
    
    
    
    
    
    259Selling, general and administrative expenses
    
    
    120,017
    
    
    
    86,715
    
    
    
    70,118Other expenses
    
    
    3,677
    
    
    
    4,855
    
    
    
    7,341606,655
    
    
    
    498,760
    
    
    
    481,618Total costs and expenses
    
    
    1,093,336
    
    
    
    890,341
    
    
    
    769,501Equity in earnings from unconsolidated affiliates
    
    
    10,935
    
    
    
    13,404
    
    
    
    19,603Income from continuing operations before income taxes
and noncontrolling interest
    
    
    12,179
    
    
    
    146,553
    
    
    
    173,326Provision (benefit) for income taxes
    
    
    (528
    )
    
    
    59,566
    
    
    
    70,920Noncontrolling interest
    
    
    13,404
    
    
    
    79,267
    
    
    
    90,388(Loss) income from continuing operations
    
    
    (697
    )
    
    
    7,720
    
    
    
    12,018Discontinued operations, less noncontrolling interest and income tax
provision (benefit) of $(8,958) in 2006, 13,205 in 2005 and $13,078 in 2004
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Net (loss) income
    
    
    (2,221
    )
    
    
    12,774
    
    
    
    14,2305% Preferred Stock dividends
    
    
    750
    
    
    
    750
    
    
    
    392Net (loss) income allocable to common stock
    
    $
    (2,971
    )
    
    $
    12,024
    
    
    $
    13,838
 See accompanying notes to consolidated financial statements.
 131




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BFC Financial Corporation
Consolidated Statements of Operations
(In thousands, except per share data)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004(Loss) earnings per common share:Basic (loss) earnings per share from continuing operations
    
    $
    (0.04
    )
    
    $
    0.24
    
    
    $
    0.48Basic (loss) earnings per share from discontinued operations
    
    
    (0.05
    )
    
    
    0.18
    
    
    
    0.09Basic (loss) earnings per share
    
    
    (0.09
    )
    
    
    0.42
    
    
    
    0.57Diluted (loss) earnings per share from continuing operations
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    0.40Diluted (loss) earnings per share from discontinued operations
    
    
    (0.05
    )
    
    
    0.15
    
    
    
    0.07Diluted (loss) earnings per share
    
    
    (0.10
    )
    
    
    0.37
    
    
    
    0.47Basic weighted average number of common shares outstanding
    
    
    33,249
    
    
    
    28,952
    
    
    
    24,183Diluted weighted average number of common and common
equivalent shares outstanding
    
    
    33,249
    
    
    
    31,219
    
    
    
    27,806
 See accompanying notes to consolidated financial statements.
 132




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BFC Financial Corporation
Consolidated Statements of Comprehensive (Loss) Income
(In thousands)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Net (loss) income
    
    $
    (2,221
    )
    
    $
    12,774
    
    
    
    14,230Other comprehensive income (loss), net of tax:Unrealized gains (losses) on securities available for sale,
    
    
    1,518
    
    
    
    (365
    )
    
    
    448Unfunded pension liability
    
    
    212
    
    
    
    
    
    
    
    Minimum pension liability
    
    
    
    
    
    
    (132
    )
    
    
    (662
    )Unrealized gains (losses) associated with investment
in unconsolidated affiliates
    
    
    79
    
    
    
    152
    
    
    
    (42
    )Reclassification adjustments:Realized net periodic pension costs
    
    
    (26
    )
    
    
    
    
    
    
    Realized gains on securities available for sale
    
    
    (857
    )
    
    
    (72
    )
    
    
    (332
    )926
    
    
    
    (417
    )
    
    
    (588
    )Comprehensive (loss) income
    
    $
    (1,295
    )
    
    $
    12,357
    
    
    
    13,642
  133




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BFC Financial Corporation
Consolidated Statements of Shareholders Equity
For each of the years in the three year period ended December 31, 2006
(In thousands)
 Unearned
    
    
    
    
    
    
    AccumulatedCompen-
    
    
    
    
    
    
    Othersation
    
    
    
    
    
    
    Compre-Class A
    
    
    Class B
    
    
    Additional
    
    
    Restricted
    
    
    
    
    
    
    hensiveCommon
    
    
    Common
    
    
    Paid-in
    
    
    Stock
    
    
    Retained
    
    
    IncomeStock
    
    
    Stock
    
    
    Capital
    
    
    Grants
    
    
    Earnings
    
    
    (Loss)
    
    
    TotalBalance, December 31, 2003
    
    $
    163
    
    
    $
    23
    
    
    $
    24,654
    
    
    $
    
    
    
    $
    59,305
    
    
    $
    1,530
    
    
    $
    85,675Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,230
    
    
    
    
    
    
    
    14,230Other comprehensive loss, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (588
    )
    
    
    (588
    )Net effect of subsidiaries capital
transactions, net of taxes
    
    
    
    
    
    
    
    
    
    
    5,812
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,812Retirement of Common Stock
    
    
    
    
    
    
    (6
    )
    
    
    (7,276
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,282
    )Issuance of Common Stock
    
    
    
    
    
    
    24
    
    
    
    1,767
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,791Issuance of 5% Preferred Stock
    
    
    
    
    
    
    
    
    
    
    14,988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,988Cash dividends on 5% Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (392
    )
    
    
    
    
    
    
    (392
    )Common stock split
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    Tax effect relating to the exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    11,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,017Balance, December 31, 2004
    
    $
    217
    
    
    $
    41
    
    
    $
    50,962
    
    
    $
    
    
    
    $
    73,089
    
    
    $
    942
    
    
    $
    125,251Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,774
    
    
    
    
    
    
    
    12,774Other comprehensive loss, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    (417
    )Issuance of Class A Common Stock,
net of stock issuance costs
    
    
    61
    
    
    
    
    
    
    
    46,547
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,608Issuance of Class A restricted stock
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    (200
    )
    
    
    
    
    
    
    
    
    
    
    Net effect of subsidiaries capital
transactions, net of taxes
    
    
    
    
    
    
    
    
    
    
    (474
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (474
    )Cash dividends on 5% Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750
    )
    
    
    
    
    
    
    (750
    )Amortization
of unearned compensation on restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    100Tax effect relating to share-based
compensation
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Balance, December 31, 2005
    
    $
    278
    
    
    $
    41
    
    
    $
    97,223
    
    
    $
    (100
    )
    
    $
    85,113
    
    
    $
    525
    
    
    $
    183,080Cumulative effect adjustment
upon adoption of Staff Accounting
Bulletin No. 108 (SAB No. 108)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (253
    )
    
    
    
    
    
    
    (253
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,221
    )
    
    
    
    
    
    
    (2,221
    )Other comprehensive income, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    926
    
    
    
    926Issuance of Common Stock,
upon exercise of stock options
    
    
    1
    
    
    
    39
    
    
    
    9,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,116Retirement of Common Stock relating to
exercise of stock options
    
    
    (13
    )
    
    
    (11
    )
    
    
    (13,246
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,270
    )Net effect of subsidiaries capital
transactions, net of taxes
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )Cash dividends on 5% Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750
    )
    
    
    
    
    
    
    (750
    )Share-based compensation related
to stock options and restricted stock
    
    
    
    
    
    
    
    
    
    
    973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    973Reversal of unamortized stock
compensation related to restricted stock
upon adoption of FAS 123 ( R)
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2006
    
    $
    266
    
    
    $
    69
    
    
    $
    93,910
    
    
    $
    
    
    
    $
    81,889
    
    
    $
    1,451
    
    
    $
    177,585
 See accompanying notes to consolidated financial statements.
 134




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##### Table of Contents



BFC Financial Corporation
Consolidated Statements of Cash Flows
(In thousands)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Operating activities:Net (loss) income from continuing operations
    
    $
    (697
    )
    
    $
    7,720
    
    
    $
    12,018(Loss) Income from discontinued operations
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Adjustment to reconcile net income to net cash
provided by operating activities:Noncontrolling interest
    
    
    4,393
    
    
    
    91,144
    
    
    
    103,994Provision (recovery) and valuation allowances, net
    
    
    8,883
    
    
    
    (6,265
    )
    
    
    (5,105
    )Cumulative effect adjustment before noncontrolling interest
    
    
    (1,899
    )
    
    
    
    
    
    
    Depreciation, amortization and accretion, net
    
    
    26,430
    
    
    
    18,508
    
    
    
    17,577Amortization of deferred revenue
    
    
    3,854
    
    
    
    2,368
    
    
    
    1,425Amortization of intangible assets
    
    
    1,561
    
    
    
    1,627
    
    
    
    1,715Share-based compensation expense related to stock options
and restricted stock
    
    
    9,291
    
    
    
    
    
    
    
    Tax benefits from share-based compensation
    
    
    (3,719
    )
    
    
    
    
    
    
    Securities activities, net
    
    
    (9,795
    )
    
    
    (847
    )
    
    
    (7,198
    )Impairment of securities
    
    
    
    
    
    
    
    
    
    
    362Net gain on transfer of net assets for settlement of note
    
    
    
    
    
    
    (3,439
    )
    
    
    Net gains on sale of real estate owned
    
    
    (1,443
    )
    
    
    (1,840
    )
    
    
    (694
    )Net gains on sales of loans held for sale
    
    
    (680
    )
    
    
    (742
    )
    
    
    (483
    )Net (gains) losses on sales of property and equipment
    
    
    (2,711
    )
    
    
    (277
    )
    
    
    17Gain on sale of branch
    
    
    
    
    
    
    (922
    )
    
    
    Equity in earnings from unconsolidated affiliates
    
    
    (9,267
    )
    
    
    (12,783
    )
    
    
    (19,118
    )(Decrease) increase in deferred tax liability, net
    
    
    (20,628
    )
    
    
    3,511
    
    
    
    17,894Litigation settlement
    
    
    
    
    
    
    
    
    
    
    (23,987
    )Net (gains) losses associated with debt redemption
    
    
    (71
    )
    
    
    
    
    
    
    11,741Impairment of office properties and equipment
    
    
    
    
    
    
    3,706
    
    
    
    Impairment of long lived assets
    
    
    38,083
    
    
    
    
    
    
    
    Reserve for fines and penalties, compliance matters
    
    
    
    
    
    
    10,000
    
    
    
    Increase of forgivable notes receivable, net
    
    
    (6,111
    )
    
    
    (6,999
    )
    
    
    (8,079
    )Originations and repayments of loans held for sale, net
    
    
    (93,887
    )
    
    
    (125,487
    )
    
    
    (163,988
    )Proceeds from sales of loans held for sale
    
    
    87,793
    
    
    
    128,337
    
    
    
    171,192Increase in real estate held for development and sale
    
    
    (259,629
    )
    
    
    (191,610
    )
    
    
    (142,511
    )Decrease (increase) in securities owned, net
    
    
    67,910
    
    
    
    (54,849
    )
    
    
    (878
    )(Decrease) increase in securities sold but not yet purchased
    
    
    (3,770
    )
    
    
    (4,285
    )
    
    
    1,649Increase in accrued interest receivable
    
    
    (6,183
    )
    
    
    (5,501
    )
    
    
    (8,093
    )(Increase) decrease in other assets
    
    
    3,024
    
    
    
    2,556
    
    
    
    (507
    )(Decrease) increase in due to clearing agent
    
    
    (40,115
    )
    
    
    41,105
    
    
    
    (25,202
    )(Decrease) increase in other liabilities
    
    
    (30,048
    )
    
    
    21,344
    
    
    
    46,100Net cash used in operating activities
    
    
    (240,955
    )
    
    
    (78,866
    )
    
    
    (17,947
    )Investing activities:Proceeds from redemption and maturities of investment
securities and tax certificates
    
    
    199,482
    
    
    
    210,493
    
    
    
    212,983Purchase of investment securities and tax certificates
    
    
    (236,962
    )
    
    
    (278,509
    )
    
    
    (311,825
    )Purchase of securities available for sale
    
    
    (143,272
    )
    
    
    (227,179
    )
    
    
    (677,050
    )Proceeds from sales and maturities of securities
available for sale
    
    
    181,444
    
    
    
    300,469
    
    
    
    308,529Purchases of FHLB stock
    
    
    (49,950
    )
    
    
    (29,870
    )
    
    
    (49,923
    )Redemption of FHLB stock
    
    
    39,664
    
    
    
    38,558
    
    
    
    11,629Repayments from unconsolidated subsidiaries
and real estate joint venture
    
    
    5,303
    
    
    
    447
    
    
    
    10,084Investments in unconsolidated affiliates and
and real estate joint venture
    
    
    (10,323
    )
    
    
    (6,228
    )
    
    
    (127
    )Net repayments (purchases and originations) of loans
    
    
    (106,123
    )
    
    
    105,186
    
    
    
    (928,493
    )Proceeds from sales of real estate owned
    
    
    4,382
    
    
    
    3,872
    
    
    
    3,821Proceeds from sales of property and equipment
    
    
    2,055
    
    
    
    651
    
    
    
    Additions to property and equipment
    
    
    (121,680
    )
    
    
    (56,335
    )
    
    
    (81,033
    )Net cash (used in) provided by investing activities
    
    
    (235,980
    )
    
    
    61,555
    
    
    
    (1,501,405
    )
  See accompanying notes to consolidated financial statements.
 135




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##### Table of Contents



BFC Financial Corporation
Consolidated Statements of Cash Flows
(In thousands)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Financing activities:Net increase in deposits
    
    $
    114,360
    
    
    $
    313,190
    
    
    
    399,060Net cash outflows from sale of branch
    
    
    
    
    
    
    (13,605
    )
    
    
    Repayments of FHLB advances
    
    
    (2,551,344
    )
    
    
    (1,506,832
    )
    
    
    (469,323
    )Proceeds from FHLB advances
    
    
    2,785,000
    
    
    
    1,246,000
    
    
    
    1,220,000Net increase (decrease) in securities sold under agreements
to repurchase
    
    
    (13,403
    )
    
    
    (147,214
    )
    
    
    133,119Net increase (decrease) in federal funds purchased
    
    
    (107,449
    )
    
    
    34,475
    
    
    
    105,000Repayments of secured borrowings
    
    
    (26,516
    )
    
    
    (101,924
    )
    
    
    Proceeds from secured borrowings
    
    
    
    
    
    
    65,293
    
    
    
    Repayment of notes and bonds payable
    
    
    (216,891
    )
    
    
    (266,432
    )
    
    
    (227,621
    )Proceeds from notes and bonds payable
    
    
    384,732
    
    
    
    388,781
    
    
    
    325,401Issuance of junior subordinated debentures
    
    
    30,928
    
    
    
    54,124
    
    
    
    Capital contributions in managed fund by investors
    
    
    2,905
    
    
    
    
    
    
    
    Capital withdrawals in managed fund by investors
    
    
    (4,203
    )
    
    
    
    
    
    
    BankAtlantic Bancorp excess tax benefits from
share-based compensation
    
    
    3,719
    
    
    
    
    
    
    
    Change in noncontrolling interest
    
    
    
    
    
    
    895
    
    
    
    Payments for debt issuance costs
    
    
    (3,043
    )
    
    
    (3,498
    )
    
    
    Proceeds from the issuance of BFC Class A Common Stock,
net of issuance costs
    
    
    
    
    
    
    46,436
    
    
    
    Proceeds from the issuance of BFC common stock upon
exercise of stock options
    
    
    
    
    
    
    172
    
    
    
    1,791Payment by BFC of the minimum witholding tax
upon exercise of stock option
    
    
    (4,154
    )
    
    
    
    
    
    
    (7,282
    )5% Preferred Stock dividends paid
    
    
    (750
    )
    
    
    (750
    )
    
    
    (392
    )Proceeds from the issuance of 5% Preferred Stock, net of issuance cost
    
    
    
    
    
    
    
    
    
    
    14,988Issuance of Levitt Corporation common stock, net of issuance cost
    
    
    
    
    
    
    
    
    
    
    114,769Payment by BankAtlantic Bancorp of
the minimum withholding tax upon exercise of stock options
    
    
    (2,717
    )
    
    
    (3,519
    )
    
    
    (2,946
    )Proceeds from issuance of BankAtlantic Bancorp
Class A common stock
    
    
    1,479
    
    
    
    1,179
    
    
    
    2,334Purchase and retirement of BankAtlantic Bancorp
subsidiary common stock
    
    
    (7,833
    )
    
    
    (491
    )
    
    
    BankAtlantic Bancorp common stock dividends
paid to non-BFC shareholders
    
    
    (7,592
    )
    
    
    (6,930
    )
    
    
    (6,331
    )Levitt common stock dividends paid to non-BFC shareholders
    
    
    (1,322
    )
    
    
    (1,322
    )
    
    
    (661
    )Venture partnerships distribution paid to non-BFC partners
    
    
    
    
    
    
    
    
    
    
    (1,376
    )Net cash provided by financing activities
    
    
    375,906
    
    
    
    98,028
    
    
    
    1,600,530Increase (decrease) in cash and cash equivalents
    
    
    (101,029
    )
    
    
    80,717
    
    
    
    81,178Cash and cash equivalents at beginning of period
    
    
    305,437
    
    
    
    224,720
    
    
    
    143,542Cash and cash equivalents of discontinued assets held for sale
    
    
    (3,285
    )
    
    
    (5,366
    )
    
    
    (3,674
    )Cash and cash equivalents at end of period
    
    $
    201,123
    
    
    $
    300,071
    
    
    $
    221,046
  See accompanying notes to consolidated financial statements.
 136




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##### Table of Contents



BFC Financial Corporation
Consolidated Statements of Cash Flows
(In thousands)
 For the Years Ended December 31,2006
    
    2005
    
    2004Supplemental cash flow information:Interest on borrowings and deposits, net of amounts capitalized
    
    $
    167,430
    
    
    $
    143,499
    
    
    $
    89,193Income taxes paid
    
    
    39,770
    
    
    
    30,002
    
    
    
    56,044Supplementary disclosure of non-cash investing and financing activities:Loans transferred to real estate owned
    
    
    23,728
    
    
    
    2,307
    
    
    
    1,401Decreases in current income taxes payable from the tax
effect of fair value of employee stock options
    
    
    
    
    
    
    4,538
    
    
    
    6,610Securities purchased pending settlement
    
    
    
    
    
    
    6,183
    
    
    
    25,546Reduction in loan participations sold accounted for
as secured borrowings
    
    
    111,754
    
    
    
    
    
    
    
    Exchange branch facilities
    
    
    2,350
    
    
    
    
    
    
    
    Decrease in minority interest resulting from the retirement of
BankAtlantic Bancorp Class A common stock obtained
from litigation settlement
    
    
    
    
    
    
    
    
    
    
    6,058Increase in joint venture investment resulting from unrealized gain
on non-monetary exchange
    
    
    
    
    
    
    
    
    
    
    409Fair value of assets acquired from acquisition of
Bowden Building Corporation
    
    
    
    
    
    
    
    
    
    
    26,463Fair value of liabilities assumed from acquisition of
Bowden Building Corporation
    
    
    
    
    
    
    
    
    
    
    20,354Decrease in real estate inventory to property and equipment
    
    
    8,412
    
    
    
    1,809
    
    
    
    (Decrease) increase in accumulated other comprehensive income,
net of taxes
    
    
    926
    
    
    
    (417
    )
    
    
    (588
    )Net increase (decrease) in shareholders equity from
the effect of subsidiaries capital transactions, net of income taxes
    
    
    (16
    )
    
    
    (474
    )
    
    
    5,812(Decrease) increase in shareholders equity for the tax effect relating
to share-based compensation
    
    
    
    
    
    
    (12
    )
    
    
    11,017Issuance and retirement of BFC Common Stock accepted
as consideration for the exercise price of stock options
    
    
    4,154
    
    
    
    
    
    
    
    
 See accompanying notes to consolidated financial statements.
 137




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 1. Organization and Summary of Significant Accounting Policies
 Basis of Financial Statement Presentation
     138




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  PercentShares
    
    Percent of
    
    ofOwned
    
    Ownership
    
    VoteBankAtlantic BancorpClass A Common Stock
    
    
    8,329,236
    
    
    
    14.83
    %
    
    
    7.86
    %Class B Common Stock
    
    
    4,876,124
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    13,205,360
    
    
    
    21.64
    %
    
    
    54.86
    %LevittClass A Common Stock
    
    
    2,074,243
    
    
    
    11.15
    %
    
    
    5.91
    %Class B Common Stock
    
    
    1,219,031
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    3,293,274
    
    
    
    16.61
    %
    
    
    52.91
    %
    Consolidation Policy 
 Cash Equivalents 
 Restricted Cash 
 Securities Owned and Securities Sold, But Not Yet Purchased
 139




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Investment Securities 
       Derivative Instruments 
 Tax Certificates
 Allowance for Tax Certificate Losses 
 Loans 
 140




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Loans Held for Sale
 Transfer of Loan Participations 
 Impaired Loans 
 Allowance for Loan Losses 
   Non-performing Loans 
  Real Estate Owned (REO)
 141




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Real Estate Held for Development and Sale 
    Capitalized Interest 
 142




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Interest expense
    
    $
    209,539
    
    
    $
    163,050
    
    
    $
    99,437Interest capitalized
    
    
    (42,931
    )
    
    
    (21,143
    )
    
    
    (12,238
    )Interest expense, net
    
    $
    166,608
    
    
    $
    141,907
    
    
    $
    87,199
 Homebuilding and Land Sales Revenue Recognition 
   Homesite Contracts and Consolidation of Variable Interest Entities 
  Investments in Unconsolidated Affiliates 
 143




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Goodwill and Other Intangible Assets
  Properties and Equipment 
  Impairment of Long Lived Assets
  Advertising 
 Income Taxes 
 144




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
   Noncontrolling Interest-
 Accounting for Contingencies 
 (Loss) Earnings Per Share 
 Brokered Deposits 
 Stock-Based Compensation  
 Discontinued Operations
  145




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  New Accounting Pronouncements:
      2. Cumulative-Effect Adjustment for Quantifying Financial Statement Misstatements
  146




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
    Cumulative EffectAdjustmentAs of January 1, 2006Other liabilities:Recurring operating expenses(1)
    
    
    
    
    
    $
    1,618Deferred data processing expenses(2)
    
    
    
    
    
    
    1,474Current taxes payable
    
    
    
    
    
    
    (696
    )Increase in other liabilities
    
    
    
    
    
    
    2,396Decrease in deferred tax liability
    
    
    
    
    
    
    (657
    )Decrease in noncontrolling interest(3)
    
    
    
    
    
    
    (1,486
    )Decrease in retained earnings
    
    
    
    
    
    $
    253
 
 (1)
    
    BankAtlantic has historically expensed certain recurring invoices
when paid. The effect of this accounting policy was not material to BankAtlantics
financial statements in any given year as the rollover impact of expenses in the
following year approximated the expenses that rolled over from the prior year.(2)
    
    BankAtlantic pays a fixed fee for certain data processing transaction
services and at the end of each contract year, the actual number of transactions is
determined and the fees related to any greater or lesser transactions are invoiced
or repaid to BankAtlantic over a twelve month period. BankAtlantic accounted for
these charges when paid. The effect of this accounting policy was not material to
BankAtlantics financial statements in any given year and the amount of the error
had accumulated over a four year period as follows (in thousands): For the Years
    
    Occupancy andEnded December 31,
    
    Equipment Expense2002
    
    $
    2212003
    
    
    2762004
    
    
    5332005
    
    
    444$
    1,474
 
 (3)
    
    Noncontrolling interest amount represents third parties interest of
approximately 78% in BankAtlantic Bancorp.  147




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 3. Segment Reporting
     BFC Activities
  Financial Services
  Homebuilding & Real Estate Development
   148




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2006
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    566,086
    
    
    $
    
    
    
    $
    566,086Interest and dividend income
    
    
    2,292
    
    
    
    367,177
    
    
    
    2,910
    
    
    
    (479
    )
    
    
    371,900Other income
    
    
    3,679
    
    
    
    140,949
    
    
    
    14,592
    
    
    
    (2,626
    )
    
    
    156,5945,971
    
    
    
    508,126
    
    
    
    583,588
    
    
    
    (3,105
    )
    
    
    1,094,580Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    482,961
    
    
    
    
    
    
    
    482,961Interest expense, net
    
    
    30
    
    
    
    167,057
    
    
    
    
    
    
    
    (479
    )
    
    
    166,608Provision for loan losses
    
    
    
    
    
    
    8,574
    
    
    
    
    
    
    
    
    
    
    
    8,574Other expenses
    
    
    12,805
    
    
    
    300,186
    
    
    
    124,828
    
    
    
    (2,626
    )
    
    
    435,19312,835
    
    
    
    475,817
    
    
    
    607,789
    
    
    
    (3,105
    )
    
    
    1,093,336(6,864
    )
    
    
    32,309
    
    
    
    (24,201
    )
    
    
    
    
    
    

    1,244Equity in earnings from
unconsolidated affiliates
    
    
    
    
    
    
    1,667
    
    
    
    9,268
    
    
    
    
    
    
    
    10,935Income (loss) before income taxes
and noncontrolling interest
    
    
    (6,864
    )
    
    
    33,976
    
    
    
    (14,933
    )
    
    
    
    
    
    
    12,179Provision (benefit) for income taxes
    
    
    (1,855
    )
    
    
    7,097
    
    
    
    (5,770
    )
    
    
    
    
    
    
    (528
    )Income (loss)
before noncontrolling interest
    
    
    (5,009
    )
    
    
    26,879
    
    
    
    (9,163
    )
    
    
    
    
    
    
    12,707Noncontrolling interest
    
    
    (25
    )
    
    
    21,072
    
    
    
    (7,643
    )
    
    
    
    
    
    
    13,404Income (loss) from continuing
operations
    
    
    (4,984
    )
    
    
    5,807
    
    
    
    (1,520
    )
    
    
    
    
    
    
    (697
    )At December 31, 2006Total assets
    
    $
    45,756
    
    
    $
    6,495,662
    
    
    $
    1,090,666
    
    
    $
    (26,318
    )
    
    $
    7,605,766
 Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2005
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    558,112
    
    
    $
    
    
    
    $
    558,112Interest and dividend income
    
    
    1,623
    
    
    
    345,894
    
    
    
    2,556
    
    
    
    (1,240
    )
    
    
    348,833Other income
    
    
    1,750
    
    
    
    101,678
    
    
    
    14,472
    
    
    
    (1,355
    )
    
    
    116,5453,373
    
    
    
    447,572
    
    
    
    575,140
    
    
    
    (2,595
    )
    
    
    1,023,490Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    408,082
    
    
    
    (892
    )
    
    
    407,190Interest expense, net
    
    
    346
    
    
    
    141,909
    
    
    
    
    
    
    
    (348
    )
    
    
    141,907Recovery for loan losses
    
    
    
    
    
    
    (6,615
    )
    
    
    
    
    
    
    
    
    
    
    (6,615
    )Other expenses
    
    
    9,750
    
    
    
    246,970
    
    
    
    92,494
    
    
    
    (1,355
    )
    
    
    347,85910,096
    
    
    
    382,264
    
    
    
    500,576
    
    
    
    (2,595
    )
    
    
    890,341Equity in earnings from
unconsolidated affiliates
    
    
    
    
    
    
    621
    
    
    
    12,783
    
    
    
    
    
    
    
    13,404Income (loss) before income taxes and
noncontrolling interest
    
    
    (6,723
    )
    
    
    65,929
    
    
    
    87,347
    
    
    
    
    
    
    
    146,553Provision for income taxes
    
    
    3,727
    
    
    
    23,403
    
    
    
    32,436
    
    
    
    
    
    
    
    59,566Income (loss) before
noncontrolling interest
    
    
    (10,450
    )
    
    
    42,526
    
    
    
    54,911
    
    
    
    
    
    
    
    86,987Noncontrolling interest
    
    
    6
    
    
    
    46,246
    
    
    
    45,786
    
    
    
    (12,771
    )
    
    
    79,267Income (loss) from continuing operation
    
    $
    (10,456
    )
    
    $
    (3,720
    )
    
    $
    9,125
    
    
    $
    12,771
    
    
    $
    7,720At December 31, 2005Total assets
    
    $
    54,118
    
    
    $
    6,471,411
    
    
    $
    895,673
    
    
    $
    (25,447
    )
    
    $
    7,395,755
 149




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2004
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    549,652
    
    
    $
    
    
    
    $
    549,652Interest and dividend income
    
    
    680
    
    
    
    249,204
    
    
    
    1,338
    
    
    
    (2,625
    )
    
    
    248,597Other income
    
    
    5,335
    
    
    
    112,500
    
    
    
    8,078
    
    
    
    (938
    )
    
    
    124,9756,015
    
    
    
    361,704
    
    
    
    559,068
    
    
    
    (3,563
    )
    
    
    923,224Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    406,274
    
    
    
    (2,374
    )
    
    
    403,900Interest expense, net
    
    
    393
    
    
    
    86,798
    
    
    
    259
    
    
    
    (251
    )
    
    
    87,199Recovery for loan losses
    
    
    
    
    
    
    (5,109
    )
    
    
    
    
    
    
    
    
    
    
    (5,109
    )Other expenses
    
    
    7,187
    
    
    
    198,993
    
    
    
    78,269
    
    
    
    (938
    )
    
    
    283,5117,580
    
    
    
    280,682
    
    
    
    484,802
    
    
    
    (3,563
    )
    
    
    769,501(1,565
    )
    
    
    81,022
    
    
    
    74,266
    
    
    
    
    
    
    
    153,723Equity in earnings from unconsolidated
affiliates
    
    
    
    
    
    
    485
    
    
    
    19,118
    
    
    
    
    
    
    
    19,603Income (loss) before income taxes
and noncontrolling interest
    
    
    (1,565
    )
    
    
    81,507
    
    
    
    93,384
    
    
    
    
    
    
    
    173,326Provision for income taxes
    
    
    6,676
    
    
    
    28,222
    
    
    
    36,022
    
    
    
    
    
    
    
    70,920Income (loss) before noncontrolling
Interest
    
    
    (8,241
    )
    
    
    53,285
    
    
    
    57,362
    
    
    
    
    
    
    
    102,406Noncontrolling interest
    
    
    1,822
    
    
    
    55,074
    
    
    
    47,098
    
    
    
    (13,606
    )
    
    
    90,388Income (loss) from continuing
operations
    
    $
    (10,063
    )
    
    $
    (1,789
    )
    
    $
    10,264
    
    
    $
    13,606
    
    
    $
    12,018At December 31, 2004Total assets
    
    $
    26,596
    
    
    $
    6,356,777
    
    
    $
    678,467
    
    
    $
    (106,993
    )
    
    $
    6,954,847
  HomebuildingFinancial
    
    & Real EstateServices
    
    Development
    
    TotalBalance as of December
31, 2005
    
    $
    76,674
    
    
    $
    1,307
    
    
    $
    77,981Impairment of goodwill (a)
    
    
    
    
    
    
    (1,307
    )
    
    
    (1,307
    )Balance as of December
31, 2006
    
    $
    76,674
    
    
    $
    
    
    
    $
    76,674
 
 (a)
    
    During the year ended December 31, 2006, the Companys Homebuilding & Real Estate
Development segment wrote off the $1.3 million in goodwill recorded in connection with the
acquisition of Levitts Tennessee operations. The $1.3 million is included in Homebuilding
& Real Estate Development other expenses in the consolidated statements of operations. 4. Discontinued Operations
 Financial Services
  150




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
   BankAtlantic
    
    
    Option
    
    
    TotalBancorp
    
    
    Holders
    
    
    ConsiderationAllocation Percentage (1)
    
    
    96.34
    %
    
    
    3.66
    %
    
    
    100.00
    %Initial Share Consideration
    
    
    2,377,354
    
    
    
    90,246
    
    
    
    2,467,600Cash Consideration
    
    $
    2,555,582
    
    
    $
    97,007
    
    
    $
    2,652,589Warrants to acquire Stifel
stock at $36.00 per share
    
    
    481,715
    
    
    
    18,285
    
    
    
    500,000
 
 (1)
    
    The contingent earn-out payments, if any, will change the allocation percentages as the
initial merger consideration for the option holders was reduced by the options exercise
price.   151




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Investment banking revenues
    
    $
    218,461
    
    
    $
    251,361
    
    
    $
    243,155Expenses:Employee compensation and benefits
    
    
    170,605
    
    
    
    165,325
    
    
    
    158,868Occupancy and equipment
    
    
    16,588
    
    
    
    15,816
    
    
    
    15,429Advertising and promotion
    
    
    5,788
    
    
    
    5,418
    
    
    
    4,735Interest expense
    
    
    5,995
    
    
    
    3,419
    
    
    
    924Other expenses:Professional fees
    
    
    8,790
    
    
    
    6,706
    
    
    
    5,482Communications
    
    
    15,187
    
    
    
    13,554
    
    
    
    12,527Floor broker and clearing fees
    
    
    8,612
    
    
    
    9,118
    
    
    
    9,835Other
    
    
    6,389
    
    
    
    7,204
    
    
    
    6,184Total Expenses
    
    
    237,954
    
    
    
    226,560
    
    
    
    213,984(Loss) income from discontinued operations
before income taxes and noncontrolling
interest
    
    
    (19,493
    )
    
    
    24,801
    
    
    
    29,171Income tax (benefit) provision
    
    
    (8,958
    )
    
    
    10,690
    
    
    
    13,184Noncontrolling interest (loss) income
    
    
    (9,011
    )
    
    
    11,877
    
    
    
    13,605(Loss) income from discontinued operations,
net of tax and noncontrolling interest
    
    $
    (1,524
    )
    
    $
    2,234
    
    
    $
    2,382
  As of December 31,2006
    
    
    2005ASSETSCash
    
    $
    3,285
    
    
    $
    5,366Securities owned
    
    
    112,382
    
    
    
    180,292Loans receivable
    
    
    
    
    
    
    3,360Office properties and equipment, net
    
    
    9,644
    
    
    
    7,573Deferred tax asset, net
    
    
    16,411
    
    
    
    11,729Goodwill
    
    
    6,184
    
    
    
    6,184Due from clearing agent
    
    
    15,629
    
    
    
    Other assets
    
    
    27,228
    
    
    
    25,605Total assets
    
    $
    190,763
    
    
    $
    240,109LIABILITIES:Securities sold but not yet purchased
    
    $
    31,407
    
    
    $
    35,177Due to clearing agent
    
    
    
    
    
    
    24,486Other liabilities
    
    
    63,839
    
    
    
    74,100Total liabilities
    
    $
    95,246
    
    
    $
    133,763
 152




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  For the Years Ended December 31,2006
    
    2005
    
    2004Net cash provided by operating activities
    
    $
    516
    
    
    $
    1,467
    
    
    $
    8,977Net cash (used in) provided by investing
activities
    
    $
    (1,298
    )
    
    $
    225
    
    
    $
    (5,861
    )Net cash (used in) provided by financing
activities
    
    $
    (1,299
    )
    
    $
    
    
    
    $
    4,856
 BFC Activities
   For the Years Ended December 31,2005
    
    
    2004BFC Activities  Revenues
Other income
    
    $
    117
    
    
    $
    502BFC Activities  Expenses
Interest expense
    
    
    736
    
    
    
    778Gain on disposition
    
    
    5,146
    
    
    
    Income (loss) from discontinued operations
    
    
    4,527
    
    
    
    (276
    )Provision (benefit) for income taxes
    
    
    1,707
    
    
    
    (106
    )Income (loss) from discontinued operations, net of tax
    
    $
    2,820
    
    
    $
    (170
    )
  5. Federal Funds Sold and Other Short Term Investments
  For the Years Ended December 31,2006
    
    2005
    
    2004Ending Balance
    
    $
    691
    
    
    $
    1,057
    
    
    $
    5,100Maximum outstanding at any month end within period
    
    $
    16,276
    
    
    $
    8,648
    
    
    $
    54,530Average amount invested during period
    
    $
    1,824
    
    
    $
    4,275
    
    
    $
    6,282Average yield during period
    
    
    3.00
    %
    
    
    1.87
    %
    
    
    0.75
    %
  153




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 6. Securities Available for Sale
  December 31, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMortgage-Backed Securities:Mortgage-backed securities
    
    $
    324,646
    
    
    $
    1,366
    
    
    $
    3,113
    
    
    $
    322,899Real estate mortgage investment conduits (1)
    
    
    40,919
    
    
    
    
    
    
    
    2,068
    
    
    
    38,851Total mortgage-backed securities
    
    
    365,565
    
    
    
    1,366
    
    
    
    5,181
    
    
    
    361,750Investment Securities:Tax-exempt securities
    
    
    197,287
    
    
    
    822
    
    
    
    1,671
    
    
    
    196,438Other bonds
    
    
    685
    
    
    
    
    
    
    
    10
    
    
    
    675Equity securities
    
    
    83,013
    
    
    
    11,783
    
    
    
    
    
    
    
    94,796Total investment securities
    
    
    280,985
    
    
    
    12,605
    
    
    
    1,681
    
    
    
    291,909Total
    
    $
    646,550
    
    
    $
    13,971
    
    
    $
    6,862
    
    
    $
    653,659
 
 (1)
    
    Real estate mortgage investment conduits are pass-through entities that hold
residential loans and investors are issued ownership interests in the entities in the form
of a bond. December 31, 2005Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMortgage- Backed Securities:Mortgage-backed securities
    
    $
    337,381
    
    
    $
    1,547
    
    
    $
    4,749
    
    
    $
    334,179Real estate mortgage investment conduits
    
    
    49,797
    
    
    
    
    
    
    
    2,436
    
    
    
    47,361Total mortgage-backed securities
    
    
    387,178
    
    
    
    1,547
    
    
    
    7,185
    
    
    
    381,540Investment Securities:Tax-exempt securities
    
    
    204,441
    
    
    
    325
    
    
    
    2,795
    
    
    
    201,971Other bonds
    
    
    588
    
    
    
    
    
    
    
    
    
    
    
    588U.S. Treasury notes
    
    
    998
    
    
    
    2
    
    
    
    
    
    
    
    1,000Equity securities
    
    
    82,296
    
    
    
    9,265
    
    
    
    
    
    
    
    91,561Total investment securities
    
    
    288,323
    
    
    
    9,592
    
    
    
    2,795
    
    
    
    295,120Total
    
    $
    675,501
    
    
    $
    11,139
    
    
    $
    9,980
    
    
    $
    676,660
  Less Than 12 Months
    
    
    12 Months or Greater
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesAvailable for sale
securities:Mortgage-backed securities
    
    $
    30,868
    
    
    $
    (88
    )
    
    $
    142,632
    
    
    $
    (3,025
    )
    
    $
    173,500
    
    
    $
    (3,113
    )Real estate mortgage
investment conduits
    
    
    
    
    
    
    
    
    
    
    38,851
    
    
    
    (2,068
    )
    
    
    38,851
    
    
    
    (2,068
    )Tax-exempt securities
    
    
    29,715
    
    
    
    (65
    )
    
    
    79,169
    
    
    
    (1,606
    )
    
    
    108,884
    
    
    
    (1,671
    )Other bonds
    
    
    242
    
    
    
    (8
    )
    
    
    198
    
    
    
    (2
    )
    
    
    440
    
    
    
    (10
    )Total available for sale
securities:
    
    $
    60,825
    
    
    $
    (161
    )
    
    $
    260,850
    
    
    $
    (6,701
    )
    
    $
    321,675
    
    
    $
    (6,862
    )
  154




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
    Less Than 12 Months
    
    
    12 Months or Greater
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesAvailable for sale securities:Mortgage-backed securities
    
    $
    156,852
    
    
    $
    (2,110
    )
    
    $
    101,168
    
    
    $
    (2,639
    )
    
    $
    258,020
    
    
    $
    (4,749
    )Real estate mortgage investment
conduits
    
    
    12,210
    
    
    
    (346
    )
    
    
    35,151
    
    
    
    (2,090
    )
    
    
    47,361
    
    
    
    (2,436
    )Tax exempt securities
    
    
    107,089
    
    
    
    (1,209
    )
    
    
    49,657
    
    
    
    (1,586
    )
    
    
    156,746
    
    
    
    (2,795
    )Total available for sale securities
    
    $
    276,151
    
    
    $
    (3,665
    )
    
    $
    185,976
    
    
    $
    (6,315
    )
    
    $
    462,127
    
    
    $
    (9,980
    )
  Debt SecuritiesAvailable for SaleEstimatedAmortized
    
    
    FairDecember 31, 2006 (1) (2) (3)
    
    Cost
    
    
    ValueDue within one year
    
    $
    997
    
    
    $
    996Due after one year, but
within five years
    
    
    13,918
    
    
    
    13,419Due after five years, but
within ten years
    
    
    177,737
    
    
    
    177,379Due after ten years
    
    
    370.885
    
    
    
    367,069Total
    
    $
    563,537
    
    
    $
    558,863
 
 (1)
    
    Scheduled maturities in the above table may vary significantly
from actual maturities due to prepayments.(2)
    
    Scheduled maturities are based upon contractual
maturities.(3)
    
    Amounts include $163 million of callable tax exempt
securities with call dates ranging from 2008 to 2014.  For the Years Ended December 312006
    
    
    2005
    
    
    2004Gross gains on securities activities
    
    $
    10,137
    
    
    $
    917
    
    
    $
    7,162Realized gross losses on securities activities
    
    
    (168
    )
    
    
    (18
    )
    
    
    Unrealized gains on derivative transactions
    
    
    
    
    
    
    12
    
    
    
    36Realized losses on derivative transactions
    
    
    (156
    )
    
    
    (6
    )
    
    
    Securities activities, net
    
    $
    9,813
    
    
    $
    905
    
    
    $
    7,198
   155




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BFC Financial Corporation
Notes to Consolidated Financial Statements
   For The Years Ended December 31,2006
    
    
    2005
    
    
    2004Change in other comprehensive income (loss) on
securities available for sale
    
    $
    1,076
    
    
    $
    (711
    )
    
    $
    195Income tax provision (benefit)
    
    
    415
    
    
    
    (274
    )
    
    
    79Change in shareholders equity from net
unrealized gains (losses)
on securities available for sale, net of tax
    
    $
    661
    
    
    $
    (437
    )
    
    $
    116
  December 31,2006
    
    
    2005Unrealized gains on securities
    
    $
    1,802
    
    
    $
    1,144Unrecognized losses from defined benefit pension plan
    
    
    (597
    )
    
    
    Unrealized gain associated with investment in
unconsolidated affiliates
    
    
    247
    
    
    
    168Minimum pension liability
    
    
    
    
    
    
    (786
    )Accumulated other comprehensive income
    
    $
    1,451
    
    
    $
    525
 7. Investment Securities Held-to-Maturity and Certain Equity Securities
  December 31, 2006Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueTax-exempt securities (2), (3)
    
    $
    200,182
    
    
    $
    962
    
    
    $
    338
    
    
    $
    200,806Equity securities (1)
    
    
    27,026
    
    
    
    1,714
    
    
    
    
    
    
    
    28,740$
    227,208
    
    
    $
    2,676
    
    
    $
    338
    
    
    $
    229,546
 December 31, 2005Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueTax-exempt securities (2)
    
    $
    193,918
    
    
    $
    313
    
    
    $
    1,428
    
    
    $
    192,803Equity securities (1)
    
    
    27,324
    
    
    
    793
    
    
    
    
    
    
    
    28,117$
    221,242
    
    
    $
    1,106
    
    
    $
    1,428
    
    
    $
    220,920
 
 (1)
    
    Equity securities consist of equity instruments purchased through private
placements which do not have readily determinable fair values and are accounted for
at historical cost adjusted for other-than-temporary declines in value, as well as
BFCs Benihana convertible preferred stock investment of approximately $20.0 million
at December 31, 2006 and 2005 (see Note 9).(2)
    
    Tax exempt securities consist of municipal bonds.(3)
    
    Amounts include $196.6 million of callable tax exempt securities with call
dates ranging from 2007 to 2016. 156




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Less Than 12 Months
    
    
    12 Months or Greater
    
    

    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    

Value
    
    

LossesAs of December 31,2006Tax exempt securities
    
    $
    47,603
    
    
    $
    (202
    )
    
    $
    12,354
    
    
    $
    (136
    )
    
    $
    59,957
    
    
    $
    (338
    )As of December 31,
2005Tax exempt securities
    
    $
    116,393
    
    
    $
    (1,132
    )
    
    $
    11,982
    
    
    $
    (296
    )
    
    $
    128,375
    
    
    $
    (1,428
    )
    EstimatedAmortized
    
    
    FairCost
    
    
    ValueDue after five years,
but within ten years
    
    $
    9,057
    
    
    $
    9,066Due after ten years
    
    
    191,125
    
    
    
    191,740Total
    
    $
    200,182
    
    
    $
    200,806
 8. Tax Certificates
  December 31, 2006
    
    
    December 31, 2005Estimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueTax certificates (1)(2) 
Net of allowance of
$3,699
in 2006 and $3,271
in 2005
    
    $
    195,391
    
    
    $
    195,391
    
    
    $
    163,726
    
    
    $
    163,726
 
 (1)
    
    Management considers the estimated fair value equivalent to book value for tax
certificates since these securities have no readily traded market value.(2)
    
    Based on historical repayment experience, the majority of tax certificates are
redeemed in two years or less. 157




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Balance, beginning of period
    
    $
    3,271
    
    
    $
    3,297
    
    
    $
    2,870Charge-offs
    
    
    (295
    )
    
    
    (979
    )
    
    
    (491
    )Recoveries
    
    
    423
    
    
    
    603
    
    
    
    918Net recoveries (charge-offs)
    
    
    128
    
    
    
    (376
    )
    
    
    427Provision charged to operations
    
    
    300
    
    
    
    350
    
    
    
    Balance, end of period
    
    $
    3,699
    
    
    $
    3,271
    
    
    $
    3,297
 9. Benihana Convertible Preferred Stock Investment
    158




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##### Table of Contents



BSF Financial Corporation
 Notes to Consolldated Financial Statements
 10. Loans Receivable and Loans Held for Sale
  December 31,
    
    
    December 31,2006
    
    
    2005Real estate loans:Residential
    
    $
    2,158,506
    
    
    $
    2,043,055Construction and development
    
    
    859,556
    
    
    
    1,339,576Commercial
    
    
    1,071,287
    
    
    
    1,066,598Small business
    
    
    186,833
    
    
    
    151,924Other loans:Home equity
    
    
    562,318
    
    
    
    513,813Commercial business
    
    
    157,109
    
    
    
    87,599Small business  non-mortgage
    
    
    98,225
    
    
    
    83,429Consumer loans
    
    
    17,406
    
    
    
    21,469Deposit overdrafts
    
    
    8,440
    
    
    
    5,694Other loans
    
    
    425
    
    
    
    2,071Total gross loans
    
    
    5,120,105
    
    
    
    5,315,228Adjustments:Undisbursed portion of loans in process
    
    
    (482,842
    )
    
    
    (649,296
    )Premiums related to purchased loans
    
    
    2,180
    
    
    
    5,566Deferred fees, net
    
    
    (874
    )
    
    
    (3,231
    )Deferred profit on commercial real estate loans
    
    
    (204
    )
    
    
    (231
    )Allowance for loan and lease losses
    
    
    (44,173
    )
    
    
    (41,830
    )Loans receivable  net
    
    $
    4,594,192
    
    
    $
    4,626,206Loans held for sale
    
    $
    9,313
    
    
    $
    2,538
  Florida
    
    
    56
    %Eastern U.S.A.
    
    
    23
    %Western U.S.A.
    
    
    16
    %Central U.S.A
    
    
    5
    %100
    %
  159




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##### Table of Contents



BSF Financial Corporation
 Notes to Consolldated Financial Statements
 Allowance for Loan Losses (in thousands)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Balance, beginning of period
    
    $
    41,830
    
    
    $
    47,082
    
    
    $
    46,667Loans charged-off
    
    
    (8,905
    )
    
    
    (2,694
    )
    
    
    (4,076
    )Recoveries of loans previously charged-off
    
    
    2,674
    
    
    
    4,057
    
    
    
    9,600Net recoveries (charge-offs)
    
    
    (6,231
    )
    
    
    1,363
    
    
    
    5,524Net provision (recovery) of loan losses
    
    
    8,574
    
    
    
    (6,615
    )
    
    
    (5,109
    )Balance, end of period
    
    $
    44,173
    
    
    $
    41,830
    
    
    $
    47,082
  December 31, 2006
    
    
    December 31, 2005Gross
    
    
    
    
    
    
    GrossRecorded
    
    
    Specific
    
    
    Recorded
    
    
    SpecificInvestment
    
    
    Allowances
    
    
    Investment
    
    
    AllowancesImpaired loans with specific valuation allowances
    
    $
    325
    
    
    $
    162
    
    
    $
    386
    
    
    $
    193Impaired loans without specific valuation allowances
    
    
    10,319
    
    
    
    
    
    
    
    6,878
    
    
    
    Total
    
    $
    10,644
    
    
    $
    162
    
    
    $
    7,264
    
    
    $
    193
   For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Contracted
interest income
    
    $
    2,715
    
    
    $
    343
    
    
    $
    464Interest
income recognized
    
    
    (2,203
    )
    
    
    (192
    )
    
    
    (192
    )Foregone interest income
    
    $
    512
    
    
    $
    151
    
    
    $
    272
  160




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Non-performing assets (in thousands):
 December 31,2006
    
    
    2005
    
    
    2004Non-accrual  tax certificates
    
    $
    632
    
    
    $
    388
    
    
    $
    381Non-accrual  loansResidential
    
    
    2,629
    
    
    
    5,981
    
    
    
    5,538Commercial real estate and business
    
    
    
    
    
    
    340
    
    
    
    340Small business
    
    
    244
    
    
    
    9
    
    
    
    88Lease financing
    
    
    
    
    
    
    
    
    
    
    727Consumer
    
    
    1,563
    
    
    
    471
    
    
    
    1,210Total non-accrual loans
    
    
    4,436
    
    
    
    6,801
    
    
    
    7,903Real estate owned
    
    
    21,747
    
    
    
    967
    
    
    
    692Total non-performing assets
    
    $
    26,815
    
    
    $
    8,156
    
    
    $
    8,976
 Other potential problem loans (in thousands):
 December 31,2006
    
    
    2005
    
    
    2004Performing impaired loans,
net of specific allowances
    
    $
    162
    
    
    $
    193
    
    
    $
    320Restructured loans
    
    
    
    
    
    
    77
    
    
    
    24Total potential problem loans
    
    $
    162
    
    
    $
    270
    
    
    $
    344
   For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Real estate acquired in settlement of loans and
tax certificates:Operating expenses, net
    
    $
    (215
    )
    
    $
    (75
    )
    
    $
    (137
    )Provisions for losses on REO
    
    
    (9
    )
    
    
    
    
    
    
    (5
    )Net gains on sales
    
    
    1,443
    
    
    
    1,840
    
    
    
    694Total income from real estate acquired
    
    $
    1,219
    
    
    $
    1,765
    
    
    $
    552
 11. Accrued Interest Receivable
  December 31,2006
    
    
    2005Loans receivable
    
    $
    29,604
    
    
    $
    26,113Investment securities and tax certificates
    
    
    13,128
    
    
    
    10,929Securities available for sale
    
    
    4,944
    
    
    
    4,454Accrued interest receivable
    
    $
    47,676
    
    
    $
    41,496
 161




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 12.
    
    Properties and Equipment
  December 31,2006
    
    
    2005Land, buildings and improvements
    
    $
    250,504
    
    
    $
    150,188Furniture and equipment
    
    
    113,110
    
    
    
    91,146Water irrigation facilities
    
    
    6,588
    
    
    
    7,150Total
    
    
    370,202
    
    
    
    248,484Less accumulated depreciation
    
    
    71,689
    
    
    
    57,624Properties and equipment, net
    
    $
    298,513
    
    
    $
    190,860
    13.
    
    Real Estate Held for Development and Sale
  December 31,2006
    
    
    2005Land and land development costs
    
    $
    579,256
    
    
    $
    467,747Construction costs
    
    
    180,005
    
    
    
    120,830Capitalized interest and other costs
    
    
    88,231
    
    
    
    44,020Total
    
    $
    847,492
    
    
    $
    632,597
  162
    Table of Contents   BFC Financial Corporation
Notes to Consolidated Financial Statements
  14.
    
    Investments in Unconsolidated Affiliates
  December 31,2006
    
    
    2005Investment in Bluegreen Corporation
    
    $
    107,063
    
    
    $
    95,828Investments in joint ventures
    
    
    6,983
    
    
    
    4,749BankAtlantic Bancorp investment in statutory business trusts
    
    
    7,910
    
    
    
    7,910Levitt investment in statutory business trusts
    
    
    2,565
    
    
    
    1,637$
    124,521
    
    
    $
    110,124
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Equity in Bluegreen earnings
    
    $
    9,684
    
    
    $
    12,714
    
    
    $
    13,068Equity in joint ventures (loss) earnings
    
    
    (416
    )
    
    
    69
    
    
    
    6,050Earnings from statutory trusts
    
    
    1,667
    
    
    
    621
    
    
    
    485$
    10,935
    
    
    $
    13,404
    
    
    $
    19,603
   Investment in Bluegreen
 163
    Table of Contents   BFC Financial Corporation
Notes to Consolidated Financial Statements
     
 December 31,2006
    
    
    2005Total assets
    
    $
    854,212
    
    
    $
    694,243Total liabilities
    
    
    486,487
    
    
    
    371,069Minority interest
    
    
    14,702
    
    
    
    9,508Total shareholders equity
    
    
    353,023
    
    
    
    313,666Total liabilities and shareholders equity
    
    $
    854,212
    
    
    $
    694,243
 
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Revenues and other income
    
    $
    673,373
    
    
    $
    684,156
    
    
    $
    630,728Cost and other expenses
    
    
    610,882
    
    
    
    603,624
    
    
    
    557,462Income before minority interest and provision for income taxes
    
    
    62,491
    
    
    
    80,532
    
    
    
    73,266Minority interest
    
    
    7,319
    
    
    
    4,839
    
    
    
    4,065Income before provision for income taxes
    
    
    55,172
    
    
    
    75,693
    
    
    
    69,201Provision for income taxes
    
    
    (20,861
    )
    
    
    (29,142
    )
    
    
    (26,642
    )Income before cumulative effect of change in accounting principle
    
    
    34,311
    
    
    
    46,551
    
    
    
    42,559Cumulative effect of change in accounting principle, net of tax
    
    
    (5,678
    )
    
    
    
    
    
    
    Minority interest in cumulative effect of change in accounting
principle
    
    
    1,184
    
    
    
    
    
    
    
    Net income
    
    $
    29,817
    
    
    $
    46,551
    
    
    $
    42,559
 164




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 BankAtlantic Bancorp Investment in Statutory Business Trusts
  December 31,Statement of Financial Condition
    
    2006
    
    
    2005Junior subordinated debentures
    
    $
    263,266
    
    
    $
    263,266Other assets
    
    
    918
    
    
    
    820Total Assets
    
    $
    264,184
    
    
    $
    264,086Trust preferred securities
    
    $
    255,375
    
    
    $
    255,375Other liabilities
    
    
    899
    
    
    
    801Total Liabilities
    
    
    256,274
    
    
    
    256,176Common securities
    
    
    7,910
    
    
    
    7,910Total Liabilities and Equity
    
    $
    264,184
    
    
    $
    264,086
 For the Years EndedDecember 31,Statement of Operations
    
    2006
    
    
    2005
    
    
    2004Interest income from
subordinated
debentures
    
    $
    20,913
    
    
    $
    18,538
    
    
    $
    16,161Interest expense
    
    
    (20,286
    )
    
    
    (17,982
    )
    
    
    (15,676
    )Net income
    
    $
    627
    
    
    $
    556
    
    
    $
    485
  165




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 15.
    
    Deposits
  December 31,2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentInterest free checking
    
    $
    995,920
    
    
    
    25.75
    %
    
    $
    1,019,949
    
    
    
    27.18
    %Insured money fund savings2.30% at December 31, 2006,1.76% at December 31, 2005,
    
    
    677,642
    
    
    
    17.52
    
    
    
    846,441
    
    
    
    22.56NOW accounts1.10% at December 31, 2006,0.50% at December 31, 2005,
    
    
    779,383
    
    
    
    20.16
    
    
    
    755,708
    
    
    
    20.14Savings accounts1.10% at December 31, 2006,0.46% at December 31, 2005,
    
    
    465,172
    
    
    
    12.03
    
    
    
    313,889
    
    
    
    8.36Total non-certificate accounts
    
    
    2,918,117
    
    
    
    75.46
    
    
    
    2,935,987
    
    
    
    78.24Certificate accounts:Less than 2.00%
    
    
    11,923
    
    
    
    0.31
    
    
    
    20,546
    
    
    
    0.552.01% to 3.00%
    
    
    16,425
    
    
    
    0.43
    
    
    
    181,589
    
    
    
    4.843.01% to 4.00%
    
    
    174,165
    
    
    
    4.50
    
    
    
    475,750
    
    
    
    12.674.01% to 5.00%
    
    
    278,934
    
    
    
    7.21
    
    
    
    130,288
    
    
    
    3.475.01% to 6.00%
    
    
    459,046
    
    
    
    11.87
    
    
    
    4,767
    
    
    
    0.136.01% to 7.00%
    
    
    2,691
    
    
    
    0.07
    
    
    
    
    
    
    
    Total certificate accounts
    
    
    943,184
    
    
    
    24.39
    
    
    
    812,940
    
    
    
    21.66Total deposit accounts
    
    
    3,861,301
    
    
    
    99.85
    
    
    
    3,748,927
    
    
    
    99.90Premium on brokered deposits
    
    
    (7
    )
    
    
    
    
    
    
    (35
    )
    
    
    Interest earned not credited to deposit accounts
    
    
    5,742
    
    
    
    0.15
    
    
    
    3,784
    
    
    
    0.10Total
    
    $
    3,867,036
    
    
    
    100.00
    %
    
    $
    3,752,676
    
    
    
    100.00
    %
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Money fund savings and NOW accounts
    
    $
    20,413
    
    
    $
    16,592
    
    
    $
    10,860Savings accounts
    
    
    2,936
    
    
    
    909
    
    
    
    652Certificate accounts  below $100,000
    
    
    23,136
    
    
    
    12,676
    
    
    
    8,126Certificate accounts, $100,000 and above
    
    
    13,048
    
    
    
    10,225
    
    
    
    8,873Less early withdrawal penalty
    
    
    (574
    )
    
    
    (318
    )
    
    
    (156
    )Total
    
    $
    58,959
    
    
    $
    40,084
    
    
    $
    28,355
 166




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  For the Years Ending December 31,2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter0.00% to 2.00%
    
    $
    10,901
    
    
    $
    715
    
    
    $
    174
    
    
    $
    21
    
    
    $
    113
    
    
    $
    2.01% to 3.00%
    
    
    12,538
    
    
    
    2,834
    
    
    
    963
    
    
    
    89
    
    
    
    
    
    
    
    3.01% to 4.00%
    
    
    137,081
    
    
    
    22,636
    
    
    
    7,846
    
    
    
    4,425
    
    
    
    2,142
    
    
    
    354.01% to 5.00%
    
    
    246,796
    
    
    
    18,823
    
    
    
    9,118
    
    
    
    1,969
    
    
    
    2,177
    
    
    
    505.01% to 6.00%
    
    
    444,129
    
    
    
    13,017
    
    
    
    1,172
    
    
    
    
    
    
    
    729
    
    
    
    6.01% and greater
    
    
    2,658
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33Total
    
    $
    854,103
    
    
    $
    58,025
    
    
    $
    19,273
    
    
    $
    6,504
    
    
    $
    5,194
    
    
    $
    85
  December 31,20063 months or less
    
    $
    101,6004 to 6 months
    
    
    100,1797 to 12 months
    
    
    101,689More than 12 months
    
    
    36,654Total
    
    $
    340,122
  2006
    
    
    2005Brokered deposits
    
    $
    60,956
    
    
    $
    78,296Public deposits
    
    
    62,940
    
    
    
    63,767Total institutional
deposits
    
    $
    123,896
    
    
    $
    142,063
  167




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 16.
    
    Advances from Federal Home Loan Bank
 Advances from Federal Home Loan Bank (FHLB) (dollars in thousands
 Maturity Date
    
    
    
    
    
    December 31Ending December 31,
    
    Interest Rate
    
    
    20062007
    
    5.32% to 5.34%
    
    $
    75,0002008
    
    5.14% to 5.67%
    
    
    15,0002010
    
    5.84% to 6.34%
    
    
    32,000Total fixed rate advances
    
    
    
    
    
    
    122,0002007
    
    5.34% to 5.40%
    
    
    1,370,0002008
    
    
    5.33%
    
    
    
    25,000Total adjustable rate advances
    
    
    
    
    
    
    1,395,000Purchase accounting fair value adjustments
    
    
    
    
    
    
    58Total FHLB advances
    
    
    
    
    
    $
    1,517,058Average cost during period
    
    
    
    
    
    
    5.25
    %Average cost end of period
    
    
    
    
    
    
    5.36
    %
    17.
    
    Federal Funds Purchased and Treasury Borrowings
   168




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  2006
    
    2005
    
    2004Ending balance
    
    $
    32,026
    
    
    $
    139,475
    
    
    $
    105,000Maximum outstanding at any month-end
within period
    
    $
    266,237
    
    
    $
    181,065
    
    
    $
    105,000Average amount outstanding during
period
    
    $
    176,237
    
    
    $
    124,605
    
    
    $
    47,661Average cost during period
    
    
    5.17
    %
    
    
    3.42
    %
    
    
    2.47
    %
 18. Securities Sold Under Agreements to Repurchase
    For the Years Ended December 31,2006
    
    2005
    
    2004Maximum borrowing at any month-end within
the period
    
    $
    202,607
    
    
    $
    287,088
    
    
    $
    374,824Average borrowing during the period
    
    $
    123,944
    
    
    $
    185,111
    
    
    $
    189,398Average interest cost during the period
    
    
    4.83
    %
    
    
    2.88
    %
    
    
    1.26
    %Average interest cost at end of the period
    
    
    5.17
    %
    
    
    4.10
    %
    
    
    2.16
    %
  WeightedEstimated
    
    
    
    
    
    
    AverageAmortized
    
    
    Fair
    
    
    Repurchase
    
    
    InterestCost
    
    
    Value
    
    
    Balance
    
    
    RateDecember 31, 2006 (1)Mortgage-backed securities
    
    $
    65,313
    
    
    $
    64,856
    
    
    $
    60,277
    
    
    
    5.17
    %REMIC
    
    
    40,919
    
    
    
    38,851
    
    
    
    36,108
    
    
    
    5.17Total
    
    $
    106,232
    
    
    $
    103,707
    
    
    $
    96,385
    
    
    
    5.17
    %December 31, 2005 (1)Mortgage-backed securities
    
    $
    84,023
    
    
    $
    83,376
    
    
    $
    77,229
    
    
    
    4.10
    %REMIC
    
    
    37,241
    
    
    
    35,151
    
    
    
    32,559
    
    
    
    4.10Total
    
    $
    121,264
    
    
    $
    118,527
    
    
    $
    109,788
    
    
    
    4.10
    %
 
 (1)
    
    At December 31, 2006 and 2005, all securities were classified as
available for sale and were recorded at fair value in the consolidated
statements of financial condition. 169




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  19.
    
    Subordinated Debentures, Notes and Bonds Payable, Secured Borrowings, Junior Subordinated
Debentures and Other Liabilities
  Issue
    
    December 31,
    
    
    Interest
    
    MaturityDate
    
    2006
    
    
    2005
    
    
    Rate
    
    DateBFC borrowingsRevolving Line of Credit
    
    Various
    
    $
    
    
    
    $
    
    
    
    LIBOR +2.80
    
    June 15, 2007Mortgage payable
    
    Various
    
    
    50
    
    
    
    69
    
    
    6.00%
    
    June 2009Total BFC borrowings
    
    
    
    $
    50
    
    
    $
    69BankAtlantic borrowingsSubordinated debentures (1)
    
    10/29/2002
    
    $
    22,000
    
    
    $
    22,000
    
    
    LIBOR + 3.45%
    
    November 7, 2012Mortgage-backed bond
    
    3/22/2002
    
    
    7,923
    
    
    
    8,973
    
    
    (2)
    
    September 30, 2013Development notes
    
    3/22/2002
    
    
    
    
    
    
    7,651
    
    
    Prime + 1.00%
    
    August 26, 2006Development notes
    
    3/22/2002
    
    
    
    
    
    
    468
    
    
    Prime + .75%
    
    May 1, 2006$
    29,923
    
    
    $
    39,092BankAtlantic secured borrowings
    
    Various
    
    
    
    
    
    
    138,270
    
    
    Floating
    
    VariousTotal BankAtlantic borrowings
    
    
    
    $
    29,923
    
    
    $
    177,362Levitt BorrowingsHomebuilding- mortgage notes payable
    
    Various
    
    $
    55,307
    
    
    $
    114,687
    
    
    From Prime - 0.50% to Prime + 0.50%
    
    Range from March 2007 to September 2009Homebuilding mortgage notes payable
due to BankAtlantic
    
    Various
    
    
    
    
    
    
    223
    
    
    Prime
    
    March 2006Borrowing base facilities
    
    
    
    
    348,600
    
    
    
    143,100
    
    
    From LIBOR + 2.00% to LIBOR + 2.40%
    
    Range from August 2009   to January 2010Land acquisition mortgage notes payable
    
    
    
    
    66,932
    
    
    
    48,936
    
    
    From Fixed 6.88% to LIBOR + 2.80%
    
    Range from June 2011 to October 2019Construction mortgage notes payable
    
    
    
    
    28,884
    
    
    
    13,012
    
    
    From LIBOR + 1.70% to LIBOR + 2.00%
    
    Range from May 2007 to June 2009Land acquisition and construction
mortgage notes payable
    
    
    
    
    1,641
    
    
    
    3,875
    
    
    LIBOR + 2.75%
    
    September 2007Mortgage notes payable
    
    
    
    
    12,197
    
    
    
    12,374
    
    
    Fixed 5.47%
    
    April 2015Subordinated investment notes
    
    
    
    
    2,489
    
    
    
    3,132
    
    
    Fixed from 8.00% to 8.75%
    
    Range from December 2006     to February 2008Promissory note payable
    
    
    
    
    437
    
    
    
    
    
    
    Fixed 2.44%
    
    July 2009Other borrowings
    
    
    
    
    164
    
    
    
    7
    
    
    Fixed from 5.99% to 7.48%
    
    Range from April 2007 to August 2011Line of credit
    
    
    
    
    14,000
    
    
    
    14,500
    
    
    Prime
    
    September 2007Total Levitt borrowings
    
    
    
    $
    530,651
    
    
    $
    353,846Inter-Company borrowings eliminated (3)
    
    
    
    
    
    
    
    
    (223
    )Total
    
    
    
    $
    560,624
    
    
    $
    531,054
 
 (1)
    
    LIBOR interest rates are indexed to 3-month LIBOR and adjust quarterly.(2)
    
    The bonds adjust semi-annually to the ten year treasury constant maturity rate minus 23 basis points.(3)
    
    Loans between Levitt and BankAtlantic were eliminated in consolidation. 170




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  December 31,
    
    
    
    
    
    
    Beginning2006
    
    
    2005
    
    
    
    
    
    
    OptionalIssue
    
    Outstanding
    
    
    Outstanding
    
    
    Interest
    
    Maturity
    
    RedemptionJunior Subordinated Debentures
    
    Date
    
    Amount
    
    
    Amount
    
    
    Rate
    
    Date
    
    DateSubordinated Debentures Trust II
    
    03/05/2002
    
    $
    57,088
    
    
    $
    57,088
    
    
    8.50%
    
    03/31/2032
    
    03/31/2007Subordinated Debentures Trust III
    
    06/26/2002
    
    
    25,774
    
    
    
    25,774
    
    
    LIBOR + 3.45%
    
    06/26/2032
    
    06/26/2007Subordinated Debentures Trust IV
    
    09/26/2002
    
    
    25,774
    
    
    
    25,774
    
    
    LIBOR + 3.40%
    
    09/26/2032
    
    09/26/2007Subordinated Debentures Trust V
    
    09/27/2002
    
    
    10,310
    
    
    
    10,310
    
    
    LIBOR + 3.40%
    
    09/30/2032
    
    09/27/2007Subordinated Debentures Trust VI
    
    12/10/2002
    
    
    15,450
    
    
    
    15,450
    
    
    LIBOR + 3.35%
    
    12/10/2032
    
    12/10/2007Subordinated Debentures Trust VII
    
    12/19/2002
    
    
    25,774
    
    
    
    25,774
    
    
    LIBOR + 3.25%
    
    12/19/2032
    
    12/19/2007Subordinated Debentures Trust VIII
    
    12/19/2002
    
    
    15,464
    
    
    
    15,464
    
    
    LIBOR + 3.35%
    
    01/07/2033
    
    12/19/2007Subordinated Debentures Trust IX
    
    12/19/2002
    
    
    10,310
    
    
    
    10,310
    
    
    LIBOR + 3.35%
    
    01/07/2033
    
    12/19/2007Subordinated Debentures Trust X
    
    03/26/2003
    
    
    51,548
    
    
    
    51,548
    
    
    6.40% (2)
    
    03/26/2033
    
    03/26/2008Subordinated Debentures Trust XI
    
    04/10/2003
    
    
    10,310
    
    
    
    10,310
    
    
    6.45% (2)
    
    04/24/2033
    
    04/24/2008Subordinated Debentures Trust XII
    
    03/27/2003
    
    
    15,464
    
    
    
    15,464
    
    
    6.65% (2)
    
    04/07/2033
    
    04/07/2008Total BankAtlantic Bancorp (1)
    
    
    
    
    263,266
    
    
    
    263,266Unsecured junior subordinated
debentures  Levitt Capital Trust
I (LCT I) (2)
    
    03/15/2005
    
    
    23,196
    
    
    
    23,196
    
    
    From fixed 8.11% to LIBOR + 3.85%
    
    03/01/2035
    
    3/15/2010Unsecured junior subordinated
debentures  Levitt Capital Trust
II (LCT II) (2) and
    
    05/04/2005
    
    
    30,928
    
    
    
    30,928
    
    
    From fixed 8.09% to LIBOR + 3.80%
    
    06/30/2035
    
    05/04/2010Unsecured junior subordinated
debentures  Levitt Capital Trust
III (LCT III) (2)
    
    06/01/2006
    
    
    15,464
    
    
    
    
    
    
    From fixed 9.25% to LIBOR + 3.80%
    
    06/30/2036
    
    06/30/2011Unsecured junior subordinated
debentures  Levitt Capital Trust
IV (LCTIV) (2)
    
    07/18/2006
    
    
    15,464
    
    
    
    
    
    
    From fixed 9.35% to LIBOR + 3.80%
    
    09/30/2036
    
    09/30/2011Total Levitt
    
    
    
    
    85,052
    
    
    
    54,124Total Junior Subordinated
Debentures
    
    
    
    $
    348,318
    
    
    $
    317,390
 
 (1)
    
    LIBOR interest rates are indexed to 3-month LIBOR and adjust quarterly.(2)
    
    Adjusts to floating LIBOR rate five years from the issue date.  Year ended December 31,
    
    Amount2007
    
    $
    46,0362008
    
    
    25,9532009
    
    
    278,4192010
    
    
    100,5682011
    
    
    46,138Thereafter
    
    
    411,828$
    908,942
 171




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 BankAtlantic Bancorp Junior Subordinated Debentures
  BankAtlantic Bancorp Revolving Credit Facilities
  BankAtlantic
     172




---



##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 BankAtlantic Bancorp Indentures
  Levitt Borrowings
   th
   173




---



##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
     Levitt Junior Subordinated Debentures
     174




---



##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Levitt Development Bonds
     BFC Borrowings
  Other Liabilities
  175




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 20. Income Taxes
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Continuing operations
    
    $
    (528
    )
    
    $
    59,566
    
    
    $
    70,920Discontinued operations
    
    
    (8,958
    )
    
    
    13,205
    
    
    
    13,078Total (benefit) provision for
income taxes
    
    $
    (9,486
    )
    
    $
    72,771
    
    
    $
    83,998Continuing operations:Current:Federal
    
    $
    13,511
    
    
    $
    45,117
    
    
    $
    46,707State
    
    
    946
    
    
    
    6,198
    
    
    
    6,40514,457
    
    
    
    51,315
    
    
    
    53,112Deferred:Federal
    
    
    (13,977
    )
    
    
    7,132
    
    
    
    16,356State
    
    
    (1,008
    )
    
    
    1,119
    
    
    
    1,452(14,985
    )
    
    
    8,251
    
    
    
    17,808(Benefit) provision for income taxes
    
    $
    (528
    )
    
    $
    59,566
    
    
    $
    70,920
  For the Years Ended December 31,2006 (1)
    
    
    2005 (1)
    
    
    2004 (1)Income tax provision at expected
federal income tax rate of 35%
    
    $
    4,263
    
    
    
    35.00
    %
    
    $
    51,294
    
    
    
    35.00
    %
    
    $
    60,664
    
    
    
    35.00
    %Increase (decrease) resulting from:Taxes related to subsidiaries not
consolidated for income tax purposes
    
    
    1,509
    
    
    
    12.39
    
    
    
    6,359
    
    
    
    4.34
    
    
    
    7,066
    
    
    
    4.08Tax-exempt interest income
    
    
    (5,110
    )
    
    
    (41.96
    )
    
    
    (5,032
    )
    
    
    (3.43
    )
    
    
    (1,729
    )
    
    
    (1.00
    )Provision (benefit) for state taxes,
net of federal effect
    
    
    (938
    )
    
    
    (7.70
    )
    
    
    4,877
    
    
    
    3.33
    
    
    
    5,150
    
    
    
    2.97Change in State tax valuation
allowance
    
    
    1,694
    
    
    
    13.91
    
    
    
    777
    
    
    
    0.53
    
    
    
    94
    
    
    
    0.05Low income housing tax credits
    
    
    (721
    )
    
    
    (5.92
    )
    
    
    (549
    )
    
    
    (0.37
    )
    
    
    (468
    )
    
    
    (0.27
    )Goodwill impairment adjustment
    
    
    458
    
    
    
    3.76
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-deductible fines and penalties
    
    
    
    
    
    
    
    
    
    
    3,500
    
    
    
    2.39
    
    
    
    
    
    
    
    Other  net
    
    
    (1,683
    )
    
    
    (13.82
    )
    
    
    (1,660
    )
    
    
    (1.13
    )
    
    
    143
    
    
    
    0.08(Benefit) provision for income taxes
    
    $
    (528
    )
    
    
    (4.34
    )%
    
    $
    59,566
    
    
    
    40.66
    %
    
    $
    70,920
    
    
    
    40.91
    %
 
 (1)
    
    Expected tax is computed based upon income (loss) from continuing operations before
noncontrolling interest. 176




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Years Ended December 31,2006
    
    
    2005
    
    
    2004Deferred tax assets:Allowance for loans, REO, tax certificate losses and other reserves, for
financial statement purposes
    
    $
    20,546
    
    
    $
    20,234
    
    
    $
    21,166Federal and State net operating loss carryforward
    
    
    30,191
    
    
    
    25,612
    
    
    
    22,735Compensation expensed for books and deferred for tax purposes
    
    
    13,099
    
    
    
    10,225
    
    
    
    4,746Real estate held for development and sale capitalized costs for tax purposes
in excess of amounts capitalized for financial statement purposes
    
    
    6,579
    
    
    
    5,762
    
    
    
    5,948Write-down of real estate inventory
    
    
    12,889
    
    
    
    
    
    
    
    Accumulated other comprehensive income
    
    
    43
    
    
    
    3,466
    
    
    
    243Share based compensation
    
    
    1,922
    
    
    
    
    
    
    
    Purchase accounting adjustments from real estate acquisitions
    
    
    274
    
    
    
    399
    
    
    
    1,152Income recognized for tax purposes and deferred for financial statement purposes
    
    
    6,949
    
    
    
    4,426
    
    
    
    1,692Other
    
    
    4,727
    
    
    
    3,240
    
    
    
    3,982Total gross deferred tax assets
    
    
    97,219
    
    
    
    73,364
    
    
    
    61,664Less valuation allowance
    
    
    5,035
    
    
    
    3,341
    
    
    
    2,564Total deferred tax assets
    
    
    92,184
    
    
    
    70,023
    
    
    
    59,100Deferred tax liabilities:Subsidiaries not consolidated for income tax purposes
    
    
    55,404
    
    
    
    55,302
    
    
    
    48,273Investment in Bluegreen
    
    
    19,501
    
    
    
    15,167
    
    
    
    9,282Deferred loan income
    
    
    1,956
    
    
    
    1,452
    
    
    
    1,190Purchase accounting adjustments for bank acquisitions
    
    
    1,929
    
    
    
    2,219
    
    
    
    1,920Prepaid pension expense
    
    
    2,438
    
    
    
    2,454
    
    
    
    2,517Depreciation for tax greater than book
    
    
    2,685
    
    
    
    665
    
    
    
    1,146Property and equipment
    
    
    985
    
    
    
    1,397
    
    
    
    1,132Securities owned recorded at fair value for books and historical cost for tax purposes
    
    
    188
    
    
    
    931
    
    
    
    1,216Other
    
    
    1,333
    
    
    
    1,128
    
    
    
    879Total gross deferred tax liabilities
    
    
    86,419
    
    
    
    80,715
    
    
    
    67,555Net deferred tax (liability) asset
    
    
    5,765
    
    
    
    (10,692
    )
    
    
    (8,455
    )Less net deferred tax liability at beginning of period
    
    
    10,692
    
    
    
    8,455
    
    
    
    2,895Acquired net deferred tax asset, net of valuation allowance
    
    
    
    
    
    
    
    
    
    
    595Increase (decrease) in deferred tax liability from
BFCs tax effect relating to exercise stock option
    
    
    
    
    
    
    12
    
    
    
    (11,016
    )(Decrease) increase in deferred tax liability from subsidiaries other capital transactions
    
    
    (173
    )
    
    
    (189
    )
    
    
    3,650Increase (decrease) in BFCs accumulated other comprehensive income
    
    
    580
    
    
    
    (262
    )
    
    
    (370
    )Increase (decrease) in Levitts accumulated other comprehensive income
    
    
    600
    
    
    
    981
    
    
    
    (1,291
    )Increase (decrease) in BankAtlantic Bancorp accumulated other comprehensive income
    
    
    3,161
    
    
    
    (3,451
    )
    
    
    (3,903
    )Benefit (provision) for deferred income taxes
    
    
    20,625
    
    
    
    (5,145
    )
    
    
    (17,895
    )Provision (benefit) for deferred income taxes  discontinued operations
    
    
    (5,640
    )
    
    
    (3,106
    )
    
    
    87Benefit (provision) for deferred income taxes  continuing operations
    
    $
    14,985
    
    
    $
    (8,251
    )
    
    $
    (17,808
    )
 177




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Balance, beginning of period
    
    $
    3,341
    
    
    $
    2,564
    
    
    $
    2,470Increase (reduction) in
state deferred tax
valuation allowance
    
    
    1,694
    
    
    
    777
    
    
    
    94Balance, end of period
    
    $
    5,035
    
    
    $
    3,341
    
    
    $
    2,564
  Expiration Year
    
    State
    
    
    Federal2007
    
    $
    4,235
    
    
    $
    4,5582008
    
    
    2,332
    
    
    
    3,3222011
    
    
    1,662
    
    
    
    1,8312012
    
    
    669
    
    
    
    9842021
    
    
    806
    
    
    
    1,4222022
    
    
    824
    
    
    
    1,5152023
    
    
    2,008
    
    
    
    3,7922024
    
    
    28,059
    
    
    
    34,7142025
    
    
    4,964
    
    
    
    5,7972026
    
    
    16,387
    
    
    
    18,224$
    61,946
    
    
    $
    76,159
     178




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  21. Stock Based Compensation
  Pre-tax income before noncontrolling interest
    
    $
    (7,805
    )Benefit from income tax
    
    
    2,320Noncontrolling interest
    
    
    4,315Decrease to income from continuing operations
    
    
    (1,170
    )Discontinued operations, net of noncontrolling interest and income tax
    
    
    (52
    )Increase to net loss
    
    $
    (1,222
    )Basic loss per share from
continuing operations
    
    $
    (0.04
    )Diluted loss per share from
continuing operations
    
    $
    (0.04
    )
  For the Years Ended December 31,(In thousands, except per share data)
    
    2005
    
    
    2004Pro forma net incomeNet income available to common shareholders, as reported
    
    $
    12,024
    
    
    $
    13,838Add: Stock-based employee compensation
expense included in reported net income, net of
related tax effects and noncontrolling interest
    
    
    51
    
    
    
    38Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related income tax
effects and noncontrolling interest
    
    
    (1,168
    )
    
    
    (897
    )Pro forma net income
    
    $
    10,907
    
    
    $
    12,979Earnings per share:Basic as reported
    
    $
    0.42
    
    
    $
    0.57Basic pro forma
    
    $
    0.38
    
    
    $
    0.54Diluted as reported
    
    $
    0.38
    
    
    $
    0.47Diluted pro forma
    
    $
    0.34
    
    
    $
    0.44
  179




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 BFCs Stock Option Plans and Restricted Stock
      Weighted Average2006
    
    2005
    
    2004Volatility
    
    
    44.22
    %
    
    
    41.38
    %
    
    
    57.14
    %Expected dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected term (in years)
    
    
    7.5
    
    
    
    7.5
    
    
    
    9.5Risk-free rate
    
    
    5.01
    %
    
    
    4.61
    %
    
    
    4.53
    %
 180




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining
    
    
    AggregateOutstanding
    
    
    Exercise
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Price
    
    
    (in years)
    
    
    Value ($000)Outstanding at December 31, 2003
    
    
    8,454,112
    
    
    $
    1.54
    
    
    
    
    
    
    $
    Exercised
    
    
    (3,521,419
    )
    
    
    0.51
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    307,427
    
    
    
    8.33
    
    
    
    
    
    
    
    Outstanding at December 31, 2004
    
    
    5,240,120
    
    
    $
    2.63
    
    
    
    3.80
    
    
    $
    Exercised
    
    
    (113,153
    )
    
    
    1.53
    
    
    
    
    
    
    
    Forfeited
    
    
    (58,898
    )
    
    
    3.74
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    231,500
    
    
    
    8.92
    
    
    
    
    
    
    
    Outstanding at December 31, 2005
    
    
    5,299,569
    
    
    $
    2.92
    
    
    
    3.12
    
    
    $
    Exercised
    
    
    (3,928,982
    )
    
    
    2.32
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    236,500
    
    
    
    6.36
    
    
    
    
    
    
    
    Outstanding at December 31, 2006
    
    
    1,607,087
    
    
    $
    4.88
    
    
    
    6.25
    
    
    $
    3,875Exercisable at December 31, 2006
    
    
    364,527
    
    
    $
    2.91
    
    
    
    1.95
    
    
    $
    1,406Available for grant at December
31, 2006
    
    
    2,479,448
     181




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  WeightedRestricted
    
    
    AverageStock
    
    
    Fair ValueOutstanding at December 31, 2004
    
    $
    
    
    
    $
    Granted
    
    
    22,524
    
    
    
    8.88Vested
    
    
    (11,262
    )
    
    
    6.68Forfeited
    
    
    
    
    
    
    Outstanding at December 31, 2005
    
    $
    11,262
    
    
    $
    5.52Granted
    
    
    30,028
    
    
    
    6.66Vested
    
    
    (26,276
    )
    
    
    6.29Forfeited
    
    
    
    
    
    
    Outstanding at December 31, 2006
    
    $
    15,014
    
    
    $
    6.65
  BankAtlantic Bancorp Restricted Stock and Stock Option Plans:
 Stock Option PlansMaximum
    
    Shares
    
    Class of
    
    Vesting
    
    Type ofTerm
    
    Authorized (3)
    
    Stock
    
    Requirements
    
    Options (2)1996 Stock Option Plan
    
    10 years
    
    
    2,246,094
    
    
    A
    
    5 Years (1)
    
    ISO, NQ1999 Non-qualifying Stock Option Plan
    
    10 years
    
    
    862,500
    
    
    A
    
    (1)
    
    NQ1999 Stock Option Plan
    
    10 years
    
    
    862,500
    
    
    A
    
    (1)
    
    ISO, NQ2000 Non-qualifying Stock Option Plan
    
    10 years
    
    
    1,704,148
    
    
    A
    
    Immediately
    
    NQ2001 Amended and Restated Stock
Option Plan
    
    10 years
    
    
    3,918,891
    
    
    A
    
    5 Years (1)
    
    ISO, NQ2005 Restricted Stock and Option
Plan (4)
    
    10 years
    
    
    6,000,000
    
    
    A
    
    5 Years (1)
    
    ISO, NQ
 
 (1)
    
    Vesting is established by the Compensation Committee in connection with
each grant of options or restricted stock. All directors stock options vest immediately.(2)
    
    ISO  Incentive Stock OptionNQ  Non-qualifying Stock Option(3)
    
    During 2001 shares underlying options available for grant under all stock options
plans except the 2001 stock option plan were canceled. During 2005 restricted stock and
options available for grant under the 2001 stock option plan were canceled.(4)
    
    The Plan provides that up to 6,000,000 shares of BankAtlantic Bancorp Class A common
stock may be issued for restricted stock awards and upon the exercise of options granted
under the Plan. 182




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
    Weighted Average2006
    
    2005
    
    2004Expected volatility
    
    
    31.00-32.00
    %
    
    
    31.00
    %
    
    
    41.00
    %Volatility
    
    
    31.44
    %
    
    
    31.00
    %
    
    
    41.00
    %Expected dividends
    
    
    1.03
    %
    
    
    0.76
    %
    
    
    0.73
    %Expected term (in
years)
    
    
    7.45
    
    
    
    7.00
    
    
    
    7.00Risk-free rate
    
    
    5.19
    %
    
    
    4.10
    %
    
    
    4.32
    %
 183




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Weighted
    
    
    Weighted AverageClass A
    
    
    Average
    
    
    Remaining
    
    
    AggregateOutstanding
    
    
    Exercise
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Price
    
    
    (in years)
    
    
    Value ($000)Outstanding at December 31, 2003
    
    
    6,938,220
    
    
    $
    4.62
    
    
    
    
    
    
    $
    Exercised
    
    
    (1,461,678
    )
    
    
    2.56
    
    
    
    
    
    
    
    Forfeited
    
    
    (77,797
    )
    
    
    8.15
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    776,100
    
    
    
    18.20
    
    
    
    
    
    
    
    Outstanding at December 31, 2004
    
    
    6,174,845
    
    
    
    6.79
    
    
    
    5.4
    
    
    $
    Exercised
    
    
    (923,140
    )
    
    
    2.52
    
    
    
    
    
    
    
    Forfeited
    
    
    (71,023
    )
    
    
    11.13
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    858,571
    
    
    
    18.74
    
    
    
    
    
    
    
    Outstanding at December 31, 2005
    
    
    6,039,253
    
    
    
    9.08
    
    
    
    5.7
    
    
    $
    Exercised
    
    
    (1,459,740
    )
    
    
    4.13
    
    
    
    
    
    
    
    Forfeited
    
    
    (259,776
    )
    
    
    13.58
    
    
    
    
    
    
    
    Expired
    
    
    (32,100
    )
    
    
    9.30
    
    
    
    
    
    
    
    Granted
    
    
    951,268
    
    
    
    14.75
    
    
    
    
    
    
    
    Outstanding at December 31, 2006
    
    
    5,238,905
    
    
    $
    11.29
    
    
    
    6.4
    
    
    $
    13,222Exercisable at December 31, 2006
    
    
    1,248,778
    
    
    $
    4.94
    
    
    
    3.05
    
    
    $
    11,083Available for grant at December
31, 2006
    
    
    4,254,717
    184




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  BankAtlantic Bancorp
    
    
    WeightedClass A
    
    
    AverageRestricted
    
    
    Grant dateStock
    
    
    Fair ValueOutstanding at December 31,
2003
    
    
    183,287
    
    
    $
    7.38Vested
    
    
    (19,500
    )
    
    
    7.17Forfeited
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    Outstanding at December 31,
2004
    
    
    163,787
    
    
    $
    7.40Vested
    
    
    (40,421
    )
    
    
    8.10Forfeited
    
    
    
    
    
    
    Granted
    
    
    9,268
    
    
    
    18.88Outstanding at December 31,
2005
    
    
    132,634
    
    
    $
    8.75Vested
    
    
    (34,826
    )
    
    
    11.12Forfeited
    
    
    
    
    
    
    Granted
    
    
    31,389
    
    
    
    14.74Outstanding at December 31,
2006
    
    
    129,197
    
    
    $
    8.79
  Levitt Restricted Stock and Stock Option Plan
   185




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
   Year ended
    
    Years endedDecember 31,
    
    December 31, 2005 and2006
    
    2004Expected volatility
    
    
    37.37%-39.80%
    
    
    
    37.99%-50.35%Expected dividend yield
    
    
    0.39%-0.61%
    
    
    
    0.00%-0.33%Risk-free interest rate
    
    
    4.57%-5.06%
    
    
    
    4.02%-4.40%Expected life
    
    5-7.5 years
    
    7.5 yearsForfeiture rate  executives
    
    
    5%
    
    
    
    Forfeiture rate 
non-executives
    
    
    10%
    
    
    
    
    Weighted
    
    
    Weighted Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    ValueOptions
    
    
    Price
    
    
    Term
    
    
    (thousands)Options outstanding at December 31, 2005
    
    
    1,305,176
    
    
    $
    25.59
    
    
    
    
    
    
    $
    Granted
    
    
    759,655
    
    
    
    13.53
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    172,650
    
    
    
    25.79
    
    
    
    
    
    
    
    Options outstanding at December 31, 2006
    
    
    1,892,181
    
    
    $
    20.73
    
    
    8.33 years
    
    
    $
    Vested and expected to vest
in the future at December 31, 2006
    
    
    1,558,860
    
    
    $
    20.73
    
    
    8.34 years
    
    
    $
    Options exercisable at December 31, 2006
    
    
    99,281
    
    
    $
    19.56
    
    
    8.28 years
    
    
    $
    Stock available for equity compensation grants at
December 31, 2006
    
    
    1,107,819
 186




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Weighted Average
    
    
    Weighted Average
    
    
    Aggregate IntrinsicGrant Date
    
    
    Remaining
    
    
    ValueShares
    
    
    Fair Value
    
    
    Contractual Term
    
    
    (in thousands)Non-vested at
December 31, 2005
    
    
    1,250,000
    
    
    $
    13.44
    
    
    
    
    
    
    
    Grants
    
    
    759,655
    
    
    
    6.44Vested
    
    
    44,105
    
    
    
    6.33Forfeited
    
    
    172,650
    
    
    
    12.98
    
    
    
    
    
    
    
    Non-vested at
December 31, 2006
    
    
    1,792,900
    
    
    $
    10.70
    
    
    8.28 years
    
    
    $
    
  Options Outstanding
    
    
    Options ExercisableRemainingRange of
    
    Number of
    
    
    Contractual LifeExercise Price
    
    Stock Options
    
    
    (in years)
    
    
    Options
    
    
    Exercise Price$9.64-$12.85
    
    
    15,000
    
    
    
    9.85
    
    
    
    
    
    
    
    $12.86-$16.07
    
    
    658,300
    
    
    
    9.46
    
    
    
    
    
    
    
    $16.08-$19.28
    
    
    51,605
    
    
    
    9.50
    
    
    
    44,105
    
    
    $
    16.09$19.29-$22.49
    
    
    612,100
    
    
    
    7.11
    
    
    
    45,000
    
    
    $
    20.15$22.50-$25.70
    
    
    70,750
    
    
    
    6.89
    
    
    
    
    
    
    
    $25.71-$32.13
    
    
    484,426
    
    
    
    8.39
    
    
    
    10,176
    
    
    $
    31.951,892,181
    
    
    
    8.33
    
    
    
    99,281
    
    
    $
    9.56
   22. Pension, Profit Sharing Plan, 401(k) Plans and Deferred Retirement Agreement
 BFC
 BFC Defined Contribution 401(k) Plan
  187




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 BFC Profit Sharing Plan
  BFC Deferred Retirement Agreement
  BankAtlantic Bancorp
 Defined Benefit Pension Plan :
   December 31,2006
    
    
    2005Projected benefit obligation at the
beginning of the year
    
    $
    29,381
    
    
    $
    26,234Interest cost
    
    
    1,624
    
    
    
    1,565Actuarial loss (gain)
    
    
    (557
    )
    
    
    2,361Benefits paid
    
    
    (828
    )
    
    
    (779
    )Projected benefit obligation at end of year
    
    $
    29,620
    
    
    $
    29,381
 December 31,2006
    
    
    2005Fair value of Plan assets at the beginning of year
    
    $
    26,151
    
    
    $
    25,097Actual return on Plan assets
    
    
    3,303
    
    
    
    1,833Employer contribution
    
    
    
    
    
    
    Benefits paid
    
    
    (828
    )
    
    
    (779
    )Fair value of Plan assets as of actuarial date
    
    $
    28,626
    
    
    $
    26,151
 188




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 December 31,2006
    
    
    2005Actuarial present value of projected benefit
obligation for service rendered to date
    
    $
    (29,620
    )
    
    $
    (29,381
    )Plan assets at fair value as of the actuarial date
    
    
    28,626
    
    
    
    26,151Unfunded accumulated benefit obligation (1)
    
    
    (994
    )
    
    
    (3,230
    )Unrecognized net loss from past experience
different from
that assumed and effects of changes in assumptions
    
    
    7,315
    
    
    
    9,917Prepaid pension cost (2)
    
    $
    6,321
    
    
    $
    6,687
 
 (1)
    
    The measurement date for the projected benefit obligation was December 31, 2006
and 2005. The unfunded accumulated benefit obligation was recorded in other
liabilities in the Companys consolidated statement of financial condition.(2)
    
    The prepaid pension cost was reversed into other comprehensive income and a
minimum pension liability was recorded for the unfunded accumulated benefit obligation
at December 31, 2005.  December 31,2006
    
    
    2005Net periodic pension expense
    
    $
    367
    
    
    $
    163Change in minimum pension liability
    
    
    2,236
    
    
    
    (2,094
    )Change in deferred tax assets
    
    
    (1,204
    )
    
    
    942Increase (decrease) in
BankAtlantic Bancorp
other comprehensive income
    
    $
    1,399
    
    
    $
    (989
    )
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Interest cost on projected benefit obligation
    
    $
    1,624
    
    
    $
    1,565
    
    
    $
    1,508Expected return on plan assets
    
    
    (2,190
    )
    
    
    (2,100
    )
    
    
    (1,998
    )Amortization of unrecognized net gains and
losses
    
    
    933
    
    
    
    698
    
    
    
    723Net periodic pension expense (1)
    
    $
    367
    
    
    $
    163
    
    
    $
    233
 
 (1)
    
    Periodic pension expense is included as an increase in compensation expense.  For the Years EndedDecember 31,2006
    
    2005
    
    2004Weighted average discount rate
    
    
    5.75
    %
    
    
    5.50
    %
    
    
    6.00
    %Rate of increase in future
compensation levels
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AExpected long-term rate of return
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %
  189




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
   Plan AssetsAt December 31,2006
    
    2005Equity securities
    
    
    74.66
    %
    
    
    76.19
    %Debt securities
    
    
    20.87
    
    
    
    20.54Cash
    
    
    4.47
    
    
    
    3.27Total
    
    
    100.00
    %
    
    
    100.00
    %
    PensionExpected Future Service
    
    Benefits2007
    
    
    $
    9382008
    
    
    
    1,0082009
    
    
    
    1,2122010
    
    
    
    1,4152011
    
    
    
    1,433Years 2012-2016
    
    
    
    8,330
 Defined Contribution 401(k) Plan :
  For the Years Ended December 31,2006
    
    2005
    
    2004Employee salary contribution
limit (1)
    
    $
    15
    
    
    $
    14
    
    
    $
    13Percentage of salary limitation
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %Total match contribution (2)
    
    $
    2,461
    
    
    $
    2,037
    
    
    $
    1,790Vesting of employer match
    
    Immediate
    
    Immediate
    
    Immediate
 190




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 
 (1)
    
    For the 2006, 2005 and 2004 plan year, employees over the age of 50 were entitled to
contribute $20,000, $18,000 and $16,000, respectively.(2)
    
    The employer matched 100% of the first 3% of employee contributions and 50% of the next
2% of employee contributions. Profit Sharing Plan
  Levitt 401 (K) Plan
  23. Commitments and Contingencies
  Year Ending December 31,
    
    Amount2007
    
    $
    10,9532008
    
    
    10,8712009
    
    
    9,0862010
    
    
    7,3652011
    
    
    6,038Thereafter
    
    
    52,534Total
    
    $
    96,847
 For the Years Ended December 31,(In thousands)
    
    2006
    
    
    2005
    
    
    2004Rental expense for
premises and
equipment
    
    $
    13,037
    
    
    $
    8,211
    
    
    $
    6,992
  191




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  December 31,
    
    December 31,2006
    
    2005BFC ActivitiesGuaranty agreements
    
    $
    34,396
    
    
    $
    21,660Financial ServicesCommitments to sell fixed rate residential loans
    
    
    30,696
    
    
    
    13,634Commitments to sell variable rate residential loans
    
    
    2,921
    
    
    
    4,438Commitments to purchase variable rate residential loans
    
    
    69,525
    
    
    
    6,689Commitments to originate loans held for sale
    
    
    26,346
    
    
    
    16,220Commitments to originate loans held to maturity
    
    
    223,060
    
    
    
    311,081Commitments to extend credit, including the undisbursed
portion of loans in process
    
    
    890,036
    
    
    
    1,151,054Commitments to purchase branch facilities land
    
    
    11,180
    
    
    
    5,334Standby letters of credit
    
    
    67,831
    
    
    
    67,868Commercial lines of credit
    
    
    86,992
    
    
    
    119,639Homebuilding & Real Estate DevelopmentLevitts commitments to purchase properties for development
    
    
    14,200
    
    
    
    186,200
 BFC Activities
     192




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Financial Services
       Homebuilding & Real Estate Development
   193




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
   Purchase
    
    Units/
    
    ExpectedPrice
    
    Acres
    
    Closing(unaudited)
    
    (unaudited)Homebuilding Division
    
    $14.2 million
    
    690 Units
    
    
    2007
    24. Regulatory Matters
    194




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
   For Capital
    
    To Be ConsideredActual
    
    Adequacy Purposes
    
    Well CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2006:Total risk-based capital
    
    $
    529,497
    
    
    
    12.08
    %
    
    $
    350,714
    
    
    
    8.00
    %
    
    $
    438,392
    
    
    
    10.00
    %Tier I risk-based capital
    
    $
    460,359
    
    
    
    10.50
    %
    
    $
    175,357
    
    
    
    4.00
    %
    
    $
    263,035
    
    
    
    6.00
    %Tangible capital
    
    $
    460,359
    
    
    
    7.55
    %
    
    $
    91,425
    
    
    
    1.50
    %
    
    $
    91,425
    
    
    
    1.50
    %Core capital
    
    $
    460,359
    
    
    
    7.55
    %
    
    $
    243,799
    
    
    
    4.00
    %
    
    $
    304,749
    
    
    
    5.00
    %As of December 31, 2005:Total risk-based capital
    
    $
    512,664
    
    
    
    11.50
    %
    
    $
    356,526
    
    
    
    8.00
    %
    
    $
    445,657
    
    
    
    10.00
    %Tier I risk-based capital
    
    $
    446,419
    
    
    
    10.02
    %
    
    $
    178,263
    
    
    
    4.00
    %
    
    $
    267,394
    
    
    
    6.00
    %Tangible capital
    
    $
    446,419
    
    
    
    7.42
    %
    
    $
    90,235
    
    
    
    1.50
    %
    
    $
    90,235
    
    
    
    1.50
    %Core capital
    
    $
    446,419
    
    
    
    7.42
    %
    
    $
    240,627
    
    
    
    4.00
    %
    
    $
    300,784
    
    
    
    5.00
    %
 25. Legal Proceedings
     195




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 26. Parent Company Financial Information
  Parent Company Condensed Statements of Financial Condition
(In thousands)
 December 31,2006
    
    
    2005AssetsCash and cash equivalents
    
    $
    17,815
    
    
    $
    26,683Investment securities
    
    
    2,262
    
    
    
    2,034Investment in Benihana, Inc.
    
    
    20,000
    
    
    
    20,000Investment in venture partnerships
    
    
    908
    
    
    
    950Investment in BankAtlantic Bancorp, Inc.
    
    
    113,586
    
    
    
    112,218Investment in Levitt Corporation
    
    
    57,009
    
    
    
    58,111Investment in and advances to wholly owned subsidiaries
    
    
    1,525
    
    
    
    1,631Loans receivable
    
    
    2,157
    
    
    
    2,071Other assets
    
    
    2,261
    
    
    
    960Total assets
    
    $
    217,523
    
    
    $
    224,658Liabilities and Shareholders EquityAdvances from and negative basis in wholly owned subsidiaries
    
    $
    1,290
    
    
    $
    462Other liabilities
    
    
    7,351
    
    
    
    7,417Deferred income taxes
    
    
    31,297
    
    
    
    33,699Total liabilities
    
    
    39,938
    
    
    
    41,578Total shareholders equity
    
    
    177,585
    
    
    
    183,080Total liabilities and shareholders equity
    
    $
    217,523
    
    
    $
    224,658
 Parent Company Condensed Statements of Operations
(In thousands)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Revenues
    
    $
    2,232
    
    
    $
    1,775
    
    
    $
    3,514Expenses
    
    
    8,413
    
    
    
    14,904
    
    
    
    6,717(Loss) before earnings (loss) from subsidiaries
    
    
    (6,181
    )
    
    
    (13,129
    )
    
    
    (3,203
    )Equity from earnings in BankAtlantic Bancorp
    
    
    5,807
    
    
    
    9,053
    
    
    
    11,817Equity from (loss) earnings in Levitt
    
    
    (1,522
    )
    
    
    9,125
    
    
    
    10,265Equity from (loss) earnings in other subsidiaries
    
    
    (658
    )
    
    
    6,671
    
    
    
    (35
    )(Loss) income before income taxes
    
    
    (2,554
    )
    
    
    11,720
    
    
    
    18,844(Benefit) provision for income taxes
    
    
    (1,857
    )
    
    
    4,000
    
    
    
    6,826(Loss) income from continuing operations
    
    
    (697
    )
    
    
    7,720
    
    
    
    12,018Equity in subsidiaries discontinued operations, net of tax
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Net (loss) income
    
    
    (2,221
    )
    
    
    12,774
    
    
    
    14,2305% Preferred Stock dividends
    
    
    750
    
    
    
    750
    
    
    
    392Net (loss) income allocable to common stock
    
    $
    (2,971
    )
    
    $
    12,024
    
    
    $
    13,838
 
 (a)
    
    During the year ended December 31, 2005, expenses includes the write-off of
wholly-owned subsidiaries inter-company advances of approximately $6.6 million, and the
equity from earnings in other subsidiaries includes the earnings recognized by BFCs
wholly-owned subsidiaries in connection with this write-off. These inter-company advances
were eliminated in consolidation. 196




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Parent Company Condensed Statements of Cash Flow
(In thousands)
 For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Operating Activities:(Loss) income from continuing operations
    
    $
    (697
    )
    
    $
    7,720
    
    
    $
    12,018Discontinued operations, net of tax
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Cash (used in) provided by in other operating activities
    
    
    (820
    )
    
    
    (12,709
    )
    
    
    (18,243
    )Net cash (used in) provided by operating activities
    
    
    (3,041
    )
    
    
    65
    
    
    
    (4,013
    )Investing Activities:Capital contribution to subsidiaries
    
    
    
    
    
    
    
    
    
    
    (1,000
    )Investment in real estate limited partnership
    
    
    (1,000
    )
    
    
    
    
    
    
    Distribution from venture partnerships
    
    
    
    
    
    
    
    
    
    
    1,423Additions to property and equipment
    
    
    77
    
    
    
    (29
    )
    
    
    Investment in Benihana convertible preferred stock
    
    
    
    
    
    
    (10,000
    )
    
    
    (10,000
    )Net cash used in investing activities
    
    
    (923
    )
    
    
    (10,029
    )
    
    
    (9,577
    )Financing Activities:Borrowing
    
    
    
    
    
    
    1,000
    
    
    
    4,468Repayments of borrowing
    
    
    
    
    
    
    (11,483
    )
    
    
    Proceeds from issuance of Class A Common Stock net of issuance costs
    
    
    
    
    
    
    46,188
    
    
    
    Proceeds from the issuance of Class B Common Stock upon exercise
of stock options
    
    
    
    
    
    
    172
    
    
    
    1,791Proceeds from issuance of 5% Preferred Stock, net of issuance cost
    
    
    
    
    
    
    
    
    
    
    14,988Payment of the minimum withholding tax upon the exercise of stock options
    
    
    (4,154
    )Retirement of common stock
    
    
    
    
    
    
    
    
    
    
    (7,281
    )5% Preferred Stock dividends paid
    
    
    (750
    )
    
    
    (750
    )
    
    
    (392
    )Net cash (used in) provided by financing activities
    
    
    (4,904
    )
    
    
    35,127
    
    
    
    13,574(Decrease) increase in cash and cash equivalents
    
    
    (8,868
    )
    
    
    25,163
    
    
    
    (16
    )Cash at beginning of period
    
    
    26,683
    
    
    
    1,520
    
    
    
    1,536Cash at end of period
    
    $
    17,815
    
    
    $
    26,683
    
    
    $
    1,520Supplementary disclosure of non-cash investing
and financing activitiesInterest paid on borrowings
    
    $
    
    
    
    $
    320
    
    
    $
    357Net increase in shareholders equity from
the effect of subsidiaries capital transactions, net of income taxes
    
    
    16
    
    
    
    474
    
    
    
    5,812Increase (decrease) in accumulated other comprehensive income, net of taxes
    
    
    926
    
    
    
    (417
    )
    
    
    (588
    )Issuance and retirement of Common Stock accepted
as consideration for the exercise price of stock options
    
    
    4,154
    
    
    
    
    
    
    
    (Decrease) increase in shareholders equity for the tax effect related to the
exercise of employee stock options
    
    
    
    
    
    
    (12
    )
    
    
    11,017Decrease in advances due from wholly-owned subsidiaries
    
    
    
    
    
    
    (23,744
    )
    
    
    Dividends from wholly-owned subsidiaries
    
    
    
    
    
    
    23,744
    
    
    
    
  197




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 27. Selected Quarterly Results (Unaudited)
  First
    
    
    First
    
    
    Second
    
    
    SecondQuarter
    
    
    Quarter (1)
    
    
    Quarter
    
    
    Quarter (1)(As-Reported)
    
    
    (As-Adjusted)
    
    
    (As-Reported)
    
    
    (As-Adjusted)2006Revenues
    
    $
    246,561
    
    
    $
    246,561
    
    
    $
    261,314
    
    
    $
    261,314Costs and expenses
    
    
    238,764
    
    
    
    239,180
    
    
    
    252,319
    
    
    
    252,3957,797
    
    
    
    7,381
    
    
    
    8,995
    
    
    
    8,919Equity in earnings from unconsolidated affiliates
    
    
    771
    
    
    
    771
    
    
    
    2,353
    
    
    
    2,353Income before income taxes and
noncontrolling interest
    
    
    8,568
    
    
    
    8,152
    
    
    
    11,348
    
    
    
    11,272Provision (benefit) for income taxes
    
    
    2,696
    
    
    
    2,514
    
    
    
    3,498
    
    
    
    3,465Noncontrolling interest
    
    
    5,928
    
    
    
    5,728
    
    
    
    7,610
    
    
    
    7,573(Loss) income from continuing operations
    
    
    (56
    )
    
    
    (90
    )
    
    
    240
    
    
    
    234Loss from discontinued operations, net of tax
    
    
    (209
    )
    
    
    (209
    )
    
    
    (313
    )
    
    
    (313
    )Net loss
    
    
    (265
    )
    
    
    (299
    )
    
    
    (73
    )
    
    
    (79
    )5% Preferred Stock dividends
    
    
    188
    
    
    
    188
    
    
    
    188
    
    
    
    188Net income (loss) allocable to common stock
    
    $
    (453
    )
    
    $
    (487
    )
    
    $
    (261
    )
    
    $
    (267
    )Basic loss per share from continuing operations
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    0.00
    
    
    $
    0.00Basic loss per share from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Basic loss per share
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )Diluted loss per share from continuing operations
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    0.00
    
    
    $
    0.00Diluted loss per share from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Diluted loss per share
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )Basic weighted average number of common
shares outstanding
    
    
    32,692
    
    
    
    32,692
    
    
    
    33,422
    
    
    
    33,422Diluted weighted average number of common
shares outstanding
    
    
    32,692
    
    
    
    32,692
    
    
    
    33,422
    
    
    
    33,422
 Third
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter (1)
    
    
    Quarter
    
    
    Total(As-Reported)
    
    
    (As-Adjusted)2006Revenues
    
    $
    267,023
    
    
    $
    267,023
    
    
    $
    323,299
    
    
    $
    1,098,197Costs and expenses
    
    
    262,458
    
    
    
    262,152
    
    
    
    343,226
    
    
    
    1,096,9534,565
    
    
    
    4,871
    
    
    
    (19,927
    )
    
    
    1,244Equity in earnings from unconsolidated affiliates
    
    
    7,061
    
    
    
    7,061
    
    
    
    750
    
    
    
    10,935Income before income taxes and
noncontrolling interest
    
    
    11,626
    
    
    
    11,932
    
    
    
    (19,177
    )
    
    
    12,179Provision (benefit) for income taxes
    
    
    4,048
    
    
    
    4,181
    
    
    
    (10,688
    )
    
    
    (528
    )Noncontrolling interest
    
    
    8,106
    
    
    
    8,253
    
    
    
    (8,150
    )
    
    
    13,404(Loss) income from continuing operations
    
    
    (528
    )
    
    
    (502
    )
    
    
    (339
    )
    
    
    (697
    )Loss from discontinued operations, net of tax
    
    
    (640
    )
    
    
    (640
    )
    
    
    (362
    )
    
    
    (1,524
    )Net loss
    
    
    (1,168
    )
    
    
    (1,142
    )
    
    
    (701
    )
    
    
    (2,221
    )5% Preferred Stock dividends
    
    
    187
    
    
    
    187
    
    
    
    187
    
    
    
    750Net income (loss) allocable to common stock
    
    $
    (1,355
    )
    
    $
    (1,329
    )
    
    $
    (888
    )
    
    $
    (2,971
    )Basic loss per share from continuing operations
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )Basic loss per share from discontinued operations
    
    
    (0.02
    )
    
    
    (0.02
    )
    
    
    (0.01
    )
    
    
    (0.05
    )Basic loss per share
    
    $
    (0.04
    )
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.09
    )Diluted loss per share from continuing operations
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.05
    )Diluted loss per share from discontinued operations
    
    
    (0.02
    )
    
    
    (0.02
    )
    
    
    (0.01
    )
    
    
    (0.05
    )Diluted loss per share
    
    $
    (0.04
    )
    
    $
    (0.05
    )
    
    $
    (0.03
    )
    
    $
    (0.10
    )Basic weighted average number of common
shares outstanding
    
    
    33,427
    
    
    
    33,427
    
    
    
    33,436
    
    
    
    33,249Diluted weighted average number of common
shares outstanding
    
    
    33,427
    
    
    
    33,427
    
    
    
    33,436
    
    
    
    33,249
 
 (1)
    
    Upon the implementation of SAB No. 108, the Company identified misstatements in its
prior financial statements that were immaterial and the amounts were adjusted to retained
earnings at January 1, 2006 as a cumulative effect adjustment. The Company adjusted the
quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 to reflect these
adjustments. See Note 2 Cumulative-Effect Adjustment for Quantifying Financial Statement
Misstatements for a discussion of the adoption of SAB No. 108 and descriptions of the
misstatements. 198




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Total2005Revenues
    
    $
    305,742
    
    
    $
    221,621
    
    
    $
    246,980
    
    
    $
    249,147
    
    
    $
    1,023,490Costs and expenses
    
    
    235,773
    
    
    
    202,106
    
    
    
    214,793
    
    
    
    237,669
    
    
    
    890,34169,969
    
    
    
    19,515
    
    
    
    32,187
    
    
    
    11,478
    
    
    
    133,149Equity in earnings from unconsolidated affiliates
    
    
    2,359
    
    
    
    4,908
    
    
    
    5,886
    
    
    
    251
    
    
    
    13,404Income before income taxes and
noncontrolling interest
    
    
    72,328
    
    
    
    24,423
    
    
    
    38,073
    
    
    
    11,729
    
    
    
    146,553Provision for income taxes
    
    
    29,769
    
    
    
    9,129
    
    
    
    14,625
    
    
    
    6,043
    
    
    
    59,566Noncontrolling interest
    
    
    38,392
    
    
    
    14,219
    
    
    
    21,356
    
    
    
    5,300
    
    
    
    79,267Income from continuing operations
    
    
    4,167
    
    
    
    1,075
    
    
    
    2,092
    
    
    
    386
    
    
    
    7,720Income (loss) from discontinued operations, net of tax
    
    
    233
    
    
    
    1,656
    
    
    
    (35
    )
    
    
    3,200
    
    
    
    5,054Net income
    
    
    4,400
    
    
    
    2,731
    
    
    
    2,057
    
    
    
    3,586
    
    
    
    12,7745% Preferred Stock dividends
    
    
    188
    
    
    
    187
    
    
    
    187
    
    
    
    188
    
    
    
    750Net income allocable to common stock
    
    $
    4,212
    
    
    $
    2,544
    
    
    $
    1,870
    
    
    $
    3,398
    
    
    $
    12,024Basic earnings per share from continuing operations
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.06
    
    
    $
    0.01
    
    
    $
    0.24Basic earnings per share from discontinued operations
    
    
    0.01
    
    
    
    0.06
    
    
    
    (0.00
    )
    
    
    0.10
    
    
    
    0.18Basic earnings per share
    
    $
    0.16
    
    
    $
    0.10
    
    
    $
    0.06
    
    
    $
    0.11
    
    
    $
    0.42Diluted earnings per share from continuing operations
    
    $
    0.13
    
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.22Diluted earnings per share from discontinued operations
    
    
    0.01
    
    
    
    0.06
    
    
    
    (0.00
    )
    
    
    0.09
    
    
    
    0.15Diluted earnings per share
    
    $
    0.14
    
    
    $
    0.08
    
    
    $
    0.05
    
    
    $
    0.10
    
    
    $
    0.37Basic weighted average number of common
shares outstanding
    
    
    25,750
    
    
    
    26,381
    
    
    
    31,751
    
    
    
    31,829
    
    
    
    28,952Diluted weighted average number of common
shares outstanding
    
    
    28,336
    
    
    
    28,902
    
    
    
    34,121
    
    
    
    33,625
    
    
    
    31,219
 28. Estimated Fair Value of Financial Instruments
      199




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
           December 31, 2006
    
    December 31, 2005Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    201,123
    
    
    $
    201,123
    
    
    $
    300,071
    
    
    $
    300,071Securities available for sale
    
    
    653,659
    
    
    
    653,659
    
    
    
    676,660
    
    
    
    676,660Investment securities
    
    
    227,208
    
    
    
    229,546
    
    
    
    221,242
    
    
    
    220,920Federal home loan bank stock
    
    
    80,217
    
    
    
    80,217
    
    
    
    69,931
    
    
    
    69,931Loans receivable including loans held for sale, net
    
    
    4,603,505
    
    
    
    4,566,158
    
    
    
    4,628,744
    
    
    
    4,602,181Financial liabilities:Deposits
    
    $
    3,867,036
    
    
    $
    3,872,703
    
    
    $
    3,752,676
    
    
    $
    3,755,089Short term borrowings
    
    
    128,411
    
    
    
    128,411
    
    
    
    249,263
    
    
    
    249,263Advances from FHLB
    
    
    1,517,058
    
    
    
    1,507,264
    
    
    
    1,283,532
    
    
    
    1,288,012Secured borrowings
    
    
    
    
    
    
    
    
    
    
    138,270
    
    
    
    138,270Subordinated debentures, notes and
and junior subordinated debentures
    
    
    908,942
    
    
    
    909,433
    
    
    
    710,174
    
    
    
    702,096
  200




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 Derivatives
  Concentration of Credit Risk
  201




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 29. Earnings (Loss) per Share
   For the Years Ended December 31,(In thousands, except per share data)
    
    2006
    
    
    2005
    
    
    2004Basic (loss) earnings per shareNumerator:(Loss) income from continuing operations allocable to
common stock
    
    $
    (1,447
    )
    
    $
    6,970
    
    
    $
    11,626Discontinued operations, net of taxes
    
    
    (1,524
    )
    
    
    5,054
    
    
    
    2,212Net (loss) income allocable to common shareholders
    
    $
    (2,971
    )
    
    $
    12,024
    
    
    $
    13,838Denominator:Weighted average number of common shares outstanding
    
    
    35,642
    
    
    
    31,345
    
    
    
    26,576Eliminate RAG weighted average number of common shares
    
    
    (2,393
    )
    
    
    (2,393
    )
    
    
    (2,393
    )Basic weighted average number of common shares outstanding
    
    
    33,249
    
    
    
    28,952
    
    
    
    24,183Basic (loss) earnings per share:(Loss) earnings per share from continuing operations
    
    $
    (0.04
    )
    
    $
    0.24
    
    
    $
    0.48(Loss) earnings per share from discontinued operations
    
    
    (0.05
    )
    
    
    0.18
    
    
    
    0.09Basic (loss) earnings per share
    
    $
    (0.09
    )
    
    $
    0.42
    
    
    $
    0.57Diluted (loss) earnings per shareNumerator(Loss) income from continuing operations allocable to
common stock
    
    $
    (1,447
    )
    
    $
    6,970
    
    
    $
    11,626Effect of securities issuable by subsidiaries
    
    
    (93
    )
    
    
    (142
    )
    
    
    (562
    )(Loss) income available after assumed dilution
    
    $
    (1,540
    )
    
    $
    6,828
    
    
    $
    11,064Discontinued operations, net of taxes
    
    $
    (1,524
    )
    
    $
    5,054
    
    
    $
    2,212Effect of securities issuable by subsidiaries
    
    
    
    
    
    
    (200
    )
    
    
    (218
    )Discontinued operations, net of taxes after assumed dilution
    
    $
    (1,524
    )
    
    $
    4,854
    
    
    $
    1,994Net (loss) income available after assumed dilution
    
    $
    (3,064
    )
    
    $
    11,682
    
    
    $
    13,058DenominatorWeighted average number of common shares outstanding
    
    
    35,642
    
    
    
    31,345
    
    
    
    26,576Eliminate RAG weighted average number of common shares
    
    
    (2,393
    )
    
    
    (2,393
    )
    
    
    (2,393
    )Common stock equivalents resulting from stock-based
compensation
    
    
    
    
    
    
    2,267
    
    
    
    3,623Diluted weighted average shares outstanding
    
    
    33,249
    
    
    
    31,219
    
    
    
    27,806Diluted (loss) earnings per share(Loss) earnings per share from continuing operations
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    0.40(Loss) earnings per share from discontinued operations
    
    
    (0.05
    )
    
    
    0.15
    
    
    
    0.07Diluted (loss) earnings per share
    
    $
    (0.10
    )
    
    $
    0.37
    
    
    $
    0.47
 202




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  30. Certain Relationships and Related Party Transactions
   At December 31, 2006 andFor the Year Ended December 31, 2006BankAtlantic(in thousands)
    
    
    
    
    
    BFC
    
    Bancorp
    
    Levitt
    
    BluegreenCash and cash equivalents and
(securities sold under agreements
to repurchase)
    
    
    (c
    )
    
    $
    996
    
    
    $
    (5,547
    )
    
    $
    4,552
    
    
    $
    Shared service receivable (payable)
    
    
    (a
    )
    
    $
    312
    
    
    $
    (142
    )
    
    $
    (107
    )
    
    $
    (63
    )Shared service income (expense)
    
    
    (a
    )
    
    $
    2,035
    
    
    $
    (647
    )
    
    $
    (1,134
    )
    
    $
    (254
    )Interest income (expense) from
cash balance/securities sold under
agreements to repurchase
    
    
    (c
    )
    
    $
    43
    
    
    $
    (479
    )
    
    $
    436
    
    
    $
    
 At December 31, 2005 andFor the Year Ended December 31, 2005BankAtlantic(in thousands)
    
    
    
    
    
    BFC
    
    Bancorp
    
    Levitt
    
    BluegreenCash and cash equivalents and (securities sold under agreements to
repurchase)
    
    
    (c
    )
    
    $
    1,115
    
    
    $
    (6,238
    )
    
    $
    5,123
    
    
    $
    Notes receivable (payable)
    
    
    
    
    
    $
    
    
    
    $
    223
    
    
    $
    (223
    )
    
    $
    Shared service income (expense)
    
    
    (b
    )
    
    $
    (368
    )
    
    $
    1,329
    
    
    $
    (883
    )
    
    $
    (78
    )Consulting service income (expense)
    
    
    (f
    )
    
    $
    127
    
    
    $
    (218
    )
    
    $
    (127
    )
    
    $
    218Property development reimbursement (cost incurred)
    
    
    (d
    )
    
    $
    
    
    
    $
    (438
    )
    
    $
    438
    
    
    $
    Interest income (expense) from notes receivable /payable
    
    
    (h
    )
    
    $
    
    
    
    $
    892
    
    
    $
    (892
    )
    
    $
    Interest income (expense) from cash balance/securities sold under
agreements to repurchase
    
    
    (c
    )
    
    $
    32
    
    
    $
    (348
    )
    
    $
    316
    
    
    $
    Fees received (paid) relating to the issuance of BFC Class A Common Stock
    
    
    (e
    )
    
    $
    (1,950
    )
    
    $
    1,950
    
    
    $
    
    
    
    $
    
 At December 31, 2004 andFor the Year Ended December 31, 2004BankAtlantic(in thousands)
    
    
    
    
    
    BFC
    
    Bancorp
    
    Levitt
    
    BluegreenCash and cash equivalents and (securities sold under
agreements to repurchase)
    
    
    (c
    )
    
    $
    1,803
    
    
    $
    (39,641
    )
    
    $
    37,838
    
    
    $
    Notes receivable (payable)
    
    
    (g
    )
    
    $
    
    
    
    $
    46,621
    
    
    $
    (46,621
    )
    
    $
    Shared service income (expense)
    
    
    (b
    )
    
    $
    (124
    )
    
    $
    728
    
    
    $
    (604
    )
    
    $Interest income (expense) from notes receivable/payable
    
    
    (h
    )
    
    $
    
    
    
    $
    2,574
    
    
    $
    (2,574
    )
    
    $
    Interest income (expense) from cash balance/securities
sold under agreements to repurchase
    
    
    (c
    )
    
    $
    21
    
    
    $
    (251
    )
    
    $
    230
    
    
    $
    Advisory services fees received (paid)
    
    
    (e
    )
    
    $
    (280
    )
    
    $
    280
    
    
    $
    
    
    
    $
    
 203




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 
 (a)
    
    Effective January 1, 2006, BFC maintained arrangements with
BankAtlantic Bancorp, Levitt and Bluegreen to provide shared service
operations in the areas of human resources, risk management, investor
relations and executive office administration. Pursuant to this
arrangement, certain employees from BankAtlantic were transferred to
BFC to staff BFCs shared service operations. The costs of shared
services are allocated based upon the usage of the respective
services. Also as part of the shared service arrangement, the Company
reimburses BankAtlantic Bancorp and Bluegreen for office facilities
costs relating to the Company and its shared service operations.(b)
    
    In 2005, BankAtlantic Bancorp maintained service arrangements with BFC
and Levitt, pursuant to which BankAtlantic Bancorp provided certain
human resources, risk management, project planning, system support and
investor and public relations services. For such services
BankAtlantic Bancorp was compensated on a cost plus 5% basis.
Additionally, in 2005 Levitt reimbursed BankAtlantic for office
facilities costs.(c)
    
    BFC and Levitt entered into securities sold under agreements to
repurchase (Repurchase Agreements) with BankAtlantic and the balance
in those accounts in the aggregate was approximately $5.5 million,
$6.2 million and $39.6 million at December 31, 2006, 2005 and 2004,
respectively. Interest in connection with the Repurchase Agreements
was approximately $479,000, $348,000 and $2.6 million for the year
ended December 31, 2006, 2005 and 2004, respectively. These
transactions have the same terms as other BankAtlantic repurchase
agreements.(d)
    
    During the years ended December 31, 2005 and 2004, actions were taken
by Levitt with respect to the development of certain property owned by
BankAtlantic. Levitts efforts included the successful rezoning of the
property and obtaining the permits necessary to develop the property
for residential and commercial use. At December 31, 2006, BankAtlantic
had reimbursed Levitt $438,000 for the costs incurred by it in
connection with the development of this project. Levitt has no further
involvement in the project.(e)
    
    During the year ended December 31, 2005, BFC sold 5,957,555 shares of
its Class A Common Stock in an underwritten public offering at a price
of $8.50 per share. The $1.95 million represents Ryan Becks
participation as lead underwriter in this offering. Additionally
during the year ended December 31, 2004, the Company paid Ryan Beck
$280,000 for advisory service.(f)
    
    In 2005, a subsidiary of BFC received $127,000 in consulting fees for
assisting a subsidiary of Levitt in obtaining financing of certain
properties. Also during 2005, BankAtlantic Bancorp paid Bluegreen
approximately $218,000 for risk management services.(g)
    
    In connection with the spin-off of Levitt as of December 31, 2003,
BankAtlantic Bancorp converted an outstanding $30.0 million demand
note owed by Levitt to BankAtlantic Bancorp to a five year term note
and prior to the spin-off, BankAtlantic Bancorp transferred its 4.9%
ownership interest in Bluegreen Corporation to Levitt in exchange for
a $5.5 million note and additional shares of Levitt common stock
(which additional shares were distributed as part of the spin-off
transaction.) Additionally, prior to the spin-off, Levitt declared an
$8.0 million dividend to BankAtlantic Bancorp payable in the form of a
five year note. The $5.5 million note was repaid during the year ended
December 31, 2004 and the remaining two notes were repaid during the
year ended December 31, 2005. Amount remaining in 2005 represents
construction loans due from Levitt to BankAtlantic. There were no such
loans as of December 31, 2006.(h)
    
    The interest income (expense) relates to the loans due from Levitt to
BankAtlantic and BankAtlantic Bancorp. In 2006 there were no such
loans and interest.   BankAtlantic BancorpClass A
    
    Weightedcommon
    
    Averagestock
    
    PriceOptions outstanding
    
    
    306,598
    
    
    $
    10.48Options unvested
    
    
    245,143
    
    
    $
    11.39
   204




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
        31. Noncontrolling Interest
  December 31,
    
    
    December 31,2006
    
    
    2005BankAtlantic Bancorp
    
    $
    411,396
    
    
    $
    404,118Levitt
    
    
    286,230
    
    
    
    291,675Joint Venture Partnerships
    
    
    697
    
    
    
    729$
    698,323
    
    
    $
    696,522
 205




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
 32. Common Stock, 5% Cumulative Convertible Preferred Stock and Dividends
 Common Stock
     5% Cumulative Convertible Preferred Stock
  206




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##### Table of Contents



BFC Financial Corporation
Notes to Consolidated Financial Statements
  Dividends
    33. Subsequent Event
   207




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
    Managements Report on Internal Control over Financial Reporting
 Internal
Control  Integrated Framework




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  /s/ Alan B. Levan

Alan B. LevanChief Executive OfficerMarch 14, 2007/s/ Glen R. Gilbert

Glen R. GilbertChief Financial OfficerMarch 14, 2007




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Documents Filed as Part of this Report:
 (1)
    
    Financial StatementsThe following consolidated financial statements of BFC Financial Corporation and its
subsidiaries are included herein under Part II, Item 8 of this Report.
         (2)
    
    Financial Statement SchedulesAll schedules are omitted as the required information is either not applicable or
presented in the financial statements or related notes.




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##### Table of Contents



(3)
    
    ExhibitsThe following exhibits are either filed as a part of this Report or are incorporated herein
by reference to documents previously filed as indicated below:
 ExhibitNumber
    
    Description
    
    Reference3.1
    
    Articles of Incorporation, as amended and restated
    
    Exhibit 3.1 of
Registrants
Registration Statement
on Form 8-A filed
October 16, 19973.2
    
    Amendment to Articles of Incorporation, as
amended and restated
    
    Exhibit 4 of
Registrants
Registration Statement
on Form 8-K filed June
18, 2002 and Appendix
A of Registrants
Schedule 14c filed
January 18, 20053.3
    
    By-laws
    
    Exhibit 3.2 of
Registrants
Registration Statement
on Form 8-A filed
October 16, 199710.1
    
    BFC Financial Corporation
2005 Stock Incentive Plan
    
    Appendix A to the
Registrants
Definitive Proxy
Statement filed on
April 18, 200510.5
    
    Agreement and Plan of Merger dated as of January
30, 2007 by and among BFC Financial Corporation,
LEV Merger Sub, Inc. and Levitt Corporation
    
    Exhibit 2.1 to the
Registrants Form 8-K
filed on January 31,
200712.1
    
    Ratio of earnings to fixed charges
    
    Filed with this Report.21.1
    
    Subsidiaries of the registrant
    
    Filed with this Report23.1
    
    Consent of PricewaterhouseCoopers LLP
    
    Filed with this Report23.2
    
    Consent of Ernst & Young LLP
    
    Filed with this Report31.1
    
    Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed with this Report31.2
    
    Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed with this Report32.1
    
    Certification pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed with this Report32.2
    
    Certification pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed with this Report




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##### Table of Contents



SIGNATURES
  BFC FINANCIAL CORPORATIONMarch 14, 2007
    
    By:
    
    /s/ Alan B. LevanAlan B. Levan, Chairman of the Board,President and Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ Alan B. Levan

Alan B. Levan
    
    Chairman
of the Board,
President and Chief Executive
Officer
    
    March 14, 2007/s/ John E. Abdo

John E. Abdo
    
    Vice
Chairman of the Board
    
    March 14, 2007/s/ Glen R. Gilbert

Glen R. Gilbert
    
    Executive
Vice President and
Chief Financial Officer
    
    March 14, 2007/s/ D. Keith Cobb

D. Keith Cobb
    
    Director
    
    March 14, 2007/s/ Earl Pertnoy

Earl Pertnoy
    
    Director
    
    March 14, 2007/s/ Oscar J. Holzmann

Oscar J. Holzmann
    
    Director
    
    March 14, 2007/s/ Neil A. Sterling

Neil A. Sterling
    
    Director
    
    March 14, 2007




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit
    
    Description12.1
    
    Ratio of earnings to fixed charges21.1
    
    Subsidiaries of the Registrant23.1
    
    Consent of PricewaterhouseCoopers LLP23.2
    
    Consent of Ernst & Young LLP31.1
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002