##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 
 FORM 10Q
 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2004 OR [  ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 34-027228 BankAtlantic Bancorp, Inc.  Florida
(State or other jurisdiction of
incorporation or organization)
    
    65-0507804
(I.R.S. Employer
Identification No.)1750 East Sunrise Boulevard
Ft. Lauderdale, Florida
(Address of principal executive offices)
    
    33304
(Zip Code)
 (954) 760-5000
(Registrants telephone number, including area code) Not Applicable
(Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. YES [X]  NO [  ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act) YES [X]  NO [  ] Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date. Outstanding atTitle of Each Class
    
    August 2, 2004Class A Common Stock, par value $0.01 per share
    
    
    54,944,661Class B Common Stock, par value $0.01 per share
    
    
    4,876,124




---



TABLE OF CONTENTS  
 PagePart I.
    
    FINANCIAL INFORMATIONReferenceItem 1.
    
    Financial Statements
    
    
    1-27Consolidated Statements of Financial Condition  June 30, 2004 and 2003 and December 31, 2003 - Unaudited
    
    
    4Consolidated Statements of Operations - For the Three and Six Months Ended June 30, 2004 and 2003 - Unaudited
    
    
    5-6Consolidated Statements of Stockholders Equity and Comprehensive Income  For the Six Months Ended June 30, 2004 and 2003 - Unaudited
    
    
    7Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 2004 and 2003 - Unaudited
    
    
    8-9Notes to Consolidated Financial Statements - Unaudited
    
    
    10-27Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28-43Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    44-46Item 4.
    
    Controls and Procedures
    
    
    47Part II.
    
    OTHER INFORMATIONItem 2.
    
    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
    
    
    48Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    48Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    48-49Signatures
    
    
    50Sec 302 Chief Executive Officer CertificationSec 302 Chief Financial Officer CertificationSec 906 Chief Executive Officer CertificationSec 906 Chief Financial Officer Certification




---



##### Table of Contents



[THIS PAGE INTENTIONALLY LEFT BLANK]




---



##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
 June 30,
    
    December 31,
    
    June 30,(In thousands, except share data)
    
    2004
    
    2003
    
    2003ASSETSCash and due from depository institutions
    
    $
    132,927
    
    
    $
    119,882
    
    
    $
    127,150Federal funds sold and securities purchased under resell agreements
    
    
    399
    
    
    
    
    
    
    
    Securities owned (at fair value)
    
    
    120,953
    
    
    
    124,565
    
    
    
    224,405Securities available for sale (at fair value)
    
    
    694,554
    
    
    
    358,511
    
    
    
    509,572Investment securities and tax certificates (approximate fair value: $194,046,
$192,706 and $208,622)
    
    
    194,046
    
    
    
    192,706
    
    
    
    208,621Federal Home Loan Bank stock, at cost which approximates fair value
    
    
    44,154
    
    
    
    40,325
    
    
    
    69,131Loans receivable, net of allowance for loan losses of $46,737, $45,595 and $49,576
    
    
    3,899,099
    
    
    
    3,686,153
    
    
    
    4,024,344Accrued interest receivable
    
    
    27,864
    
    
    
    27,866
    
    
    
    34,162Real estate held for development and sale
    
    
    25,077
    
    
    
    21,803
    
    
    
    241,346Investments and advances to unconsolidated subsidiaries
    
    
    7,910
    
    
    
    7,910
    
    
    
    99,094Office properties and equipment, net
    
    
    106,105
    
    
    
    93,577
    
    
    
    92,599Deferred tax asset, net
    
    
    22,288
    
    
    
    22,999
    
    
    
    34,527Goodwill
    
    
    76,674
    
    
    
    76,674
    
    
    
    76,674Core deposit intangible asset
    
    
    11,121
    
    
    
    11,985
    
    
    
    12,864Due from clearing agent
    
    
    16,048
    
    
    
    
    
    
    
    Other assets
    
    
    49,159
    
    
    
    46,593
    
    
    
    64,364Total assets
    
    $
    5,428,378
    
    
    $
    4,831,549
    
    
    $
    5,818,853LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:DepositsInterest free checking
    
    $
    787,819
    
    
    $
    645,036
    
    
    $
    546,805NOW accounts
    
    
    584,658
    
    
    
    533,888
    
    
    
    455,514Savings accounts
    
    
    251,218
    
    
    
    208,966
    
    
    
    191,586Insured money fund savings
    
    
    906,865
    
    
    
    865,590
    
    
    
    850,579Certificate accounts
    
    
    719,545
    
    
    
    804,662
    
    
    
    859,896Total deposits
    
    
    3,250,105
    
    
    
    3,058,142
    
    
    
    2,904,380Advances from FHLB
    
    
    883,727
    
    
    
    782,205
    
    
    
    1,332,300Securities sold under agreements to repurchase
    
    
    374,824
    
    
    
    138,809
    
    
    
    217,950Federal funds purchased
    
    
    20,000
    
    
    
    
    
    
    
    155,000Subordinated debentures, notes and bonds payable
    
    
    36,395
    
    
    
    36,595
    
    
    
    142,461Junior subordinated debentures
    
    
    263,266
    
    
    
    263,266
    
    
    
    263,218Securities sold but not yet purchased
    
    
    51,321
    
    
    
    37,813
    
    
    
    34,968Due to clearing agent
    
    
    
    
    
    
    8,583
    
    
    
    112,410Other liabilities
    
    
    108,406
    
    
    
    92,684
    
    
    
    160,335Total liabilities
    
    
    4,988,044
    
    
    
    4,418,097
    
    
    
    5,323,022Stockholders equity:Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued and outstanding
    
    
    
    
    
    
    
    
    
    
    Class A common stock, $.01 par value, authorized 80,000,000 shares;
issued and outstanding 54,903,283, 54,396,824 and 53,753,721 shares
    
    
    549
    
    
    
    544
    
    
    
    538Class B common stock, $.01 par value, authorized 45,000,000 shares;
issued and outstanding 4,876,124, 4,876,124 and 4,876,124 shares
    
    
    49
    
    
    
    49
    
    
    
    49Additional paid-in capital
    
    
    258,258
    
    
    
    259,770
    
    
    
    254,532Unearned compensation - restricted stock grants
    
    
    (1,090
    )
    
    
    (1,178
    )
    
    
    (1,133
    )Retained earnings
    
    
    183,170
    
    
    
    148,311
    
    
    
    241,632Total stockholders equity before accumulated other comprehensive income (loss)
    
    
    440,936
    
    
    
    407,496
    
    
    
    495,618Accumulated other comprehensive income (loss)
    
    
    (602
    )
    
    
    5,956
    
    
    
    213Total stockholders equity
    
    
    440,334
    
    
    
    413,452
    
    
    
    495,831Total liabilities and stockholders equity
    
    $
    5,428,378
    
    
    $
    4,831,549
    
    
    $
    5,818,853
 See Notes to Consolidated Financial Statements - Unaudited 4




---



##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,(In thousands, except share and per share data)
    
    2004
    
    2003
    
    2004
    
    2003Interest income:Interest and fees on loans and leases
    
    $
    48,034
    
    
    $
    54,191
    
    
    $
    96,970
    
    
    $
    107,131Interest and dividends on securities available for sale
    
    
    5,194
    
    
    
    7,686
    
    
    
    8,847
    
    
    
    16,343Interest and dividends on other investment securities
    
    
    4,013
    
    
    
    5,163
    
    
    
    8,257
    
    
    
    10,214Broker dealer interest
    
    
    2,866
    
    
    
    2,181
    
    
    
    5,662
    
    
    
    4,498Total interest income
    
    
    60,107
    
    
    
    69,221
    
    
    
    119,736
    
    
    
    138,186Interest expense:Interest on deposits
    
    
    6,788
    
    
    
    9,758
    
    
    
    13,761
    
    
    
    20,927Interest on advances from FHLB
    
    
    7,769
    
    
    
    15,291
    
    
    
    16,867
    
    
    
    30,607Interest on securities sold under agreements to
repurchase and federal funds purchased
    
    
    632
    
    
    
    1,248
    
    
    
    882
    
    
    
    2,067Interest on subordinated debentures, notes and
bonds payable and junior subordinated debentures
    
    
    4,912
    
    
    
    4,531
    
    
    
    9,739
    
    
    
    8,352Capitalized interest on real estate development
    
    
    (346
    )
    
    
    (256
    )
    
    
    (653
    )
    
    
    (595
    )Total interest expense
    
    
    19,755
    
    
    
    30,572
    
    
    
    40,596
    
    
    
    61,358Net interest income
    
    
    40,352
    
    
    
    38,649
    
    
    
    79,140
    
    
    
    76,828Provision for (recovery from) loan losses
    
    
    (1,963
    )
    
    
    1,490
    
    
    
    (2,822
    )
    
    
    2,340Net interest income after provision for
(recovery from) loan losses
    
    
    42,315
    
    
    
    37,159
    
    
    
    81,962
    
    
    
    74,488Non-interest income:Investment banking income
    
    
    61,925
    
    
    
    50,565
    
    
    
    124,370
    
    
    
    102,230Service charges on deposits
    
    
    13,028
    
    
    
    9,605
    
    
    
    24,305
    
    
    
    18,163Other service charges and fees
    
    
    6,431
    
    
    
    6,071
    
    
    
    11,068
    
    
    
    9,989Income from real estate operations
    
    
    683
    
    
    
    4,136
    
    
    
    988
    
    
    
    5,222Income from unconsolidated subsidiaries
    
    
    118
    
    
    
    118
    
    
    
    236
    
    
    
    200Securities activities, net
    
    
    3
    
    
    
    (19
    )
    
    
    75
    
    
    
    365Litigation settlement
    
    
    
    
    
    
    
    
    
    
    22,840
    
    
    
    Other
    
    
    3,157
    
    
    
    2,126
    
    
    
    5,828
    
    
    
    4,510Total non-interest income
    
    
    85,345
    
    
    
    72,602
    
    
    
    189,710
    
    
    
    140,679Non-interest expense:Employee compensation and benefits
    
    
    63,538
    
    
    
    57,415
    
    
    
    130,718
    
    
    
    114,827Occupancy and equipment
    
    
    11,046
    
    
    
    9,615
    
    
    
    21,296
    
    
    
    19,353Advertising and promotion
    
    
    5,630
    
    
    
    3,819
    
    
    
    10,324
    
    
    
    6,626Amortization of intangible assets
    
    
    425
    
    
    

    439
    
    
    
    864
    
    
    
    893Cost associated with debt redemption
    
    
    
    
    
    
    1,648
    
    
    
    11,741
    
    
    
    1,648Professional fees
    
    
    2,610
    
    
    
    3,715
    
    
    
    5,347
    
    
    
    6,830Communications
    
    
    3,106
    
    
    
    4,216
    
    
    
    6,359
    
    
    
    8,045Floor broker and clearing fees
    
    
    2,438
    
    
    
    2,236
    
    
    
    5,240
    
    
    
    4,394Other
    
    
    9,109
    
    
    
    11,387
    
    
    
    18,027
    
    
    
    20,434Total non-interest expense
    
    
    97,902
    
    
    
    94,490
    
    
    
    209,916
    
    
    
    183,050Income from continuing operations before income taxes
    
    
    29,758
    
    
    
    15,271
    
    
    
    61,756
    
    
    
    32,117Provision for income taxes
    
    
    11,498
    
    
    
    5,462
    
    
    
    22,972
    
    
    
    11,490Income from continuing operations
    
    
    18,260
    
    
    
    9,809
    
    
    
    38,784
    
    
    
    20,627Discontinued operations, net of tax of $4.1 million
and $5.9 million
    
    
    
    
    
    
    7,400
    
    
    
    
    
    
    
    10,940Net income
    
    $
    18,260
    
    
    $
    17,209
    
    
    $
    38,784
    
    
    $
    31,567
 See Notes to Consolidated Financial Statements - Unaudited (Continued) 5




---



##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2004
    
    2003
    
    2004
    
    2003Earnings per shareBasic earnings per share from continuing operations
    
    $
    0.31
    
    
    $
    0.17
    
    
    $
    0.65
    
    
    $
    0.35Basic earnings per share from discontinued operations
    
    
    
    
    
    
    0.13
    
    
    
    
    
    
    
    0.19Basic earnings per share
    
    $
    0.31
    
    
    $
    0.30
    
    
    $
    0.65
    
    
    $
    0.54Diluted earnings per share from continuing operations
    
    $
    0.29
    
    
    $
    0.16
    
    
    $
    0.61
    
    
    $
    0.33Diluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.12
    
    
    
    
    
    
    
    0.18Diluted earnings per share
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.61
    
    
    $
    0.51Basic weighted average number of common shares outstanding
    
    
    59,343,940
    
    
    
    58,321,020
    
    
    
    59,300,605
    
    
    
    58,246,733Diluted weighted average number of common and common
equivalent shares outstanding
    
    
    62,807,683
    
    
    
    61,898,924
    
    
    
    62,979,163
    
    
    
    63,047,682Cash dividends per Class A share
    
    $
    0.033
    
    
    $
    0.031
    
    
    $
    0.066
    
    

    $
    0.062Cash dividends per Class B share
    
    $
    0.033
    
    
    $
    0.031
    
    
    $
    0.066
    
    
    $
    0.062
 See Notes to Consolidated Financial Statements - Unaudited 6




---



##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2004 - UNAUDITED
 Unearned
    
    Accumul-Compen-
    
    atedAddi-
    
    
    
    
    
    sation
    
    OtherCompre-
    
    
    
    
    
    tional
    
    
    
    
    
    Restricted
    
    Compre-hensive
    
    Common
    
    Paid-in
    
    Retained
    
    Stock
    
    hensive(In thousands)
    
    Income
    
    Stock
    
    Capital
    
    Earnings
    
    Grants
    
    Income
    
    TotalBALANCE, DECEMBER 31, 2002
    
    
    
    
    
    $
    583
    
    
    $
    252,699
    
    
    $
    213,692
    
    
    $
    (1,209
    )
    
    $
    3,569
    
    
    $
    469,334Net income
    
    $
    31,567
    
    
    
    
    
    
    
    
    
    
    
    31,567
    
    
    
    
    
    
    
    
    
    
    
    31,567Other comprehensive income, net of tax:Unrealized loss on securities available for sale
(less income tax benefit of $3,437)
    
    
    (5,876
    )Minimum pension liability (less income tax
benefit of $930)
    
    
    1,652Unrealized loss associated with investment in
Bluegreen Corporation
(less income tax provision of $638)
    
    
    742Accumulated gain associated with cash flow hedges
(less income tax benefit of $349)
    
    
    100Reclassification adjustment for cash flow hedges
    
    
    260Reclassification adjustment for net gain
included in net income
    
    
    (234
    )Other comprehensive loss
    
    
    (3,356
    )Comprehensive income
    
    $
    28,211Dividends on Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,325
    )
    
    
    
    
    
    
    
    
    
    
    (3,325
    )Dividends on Class B Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (302
    )
    
    
    
    
    
    
    
    
    
    
    (302
    )Issuance of Class A common stock
upon conversion of subordinated debentures
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Issuance of Class A common stock
    
    
    
    
    
    
    4
    
    
    
    988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    992Tax effect relating to the exercise of
stock options
    
    
    
    
    
    
    
    
    

    
    634
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    76Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,356
    )
    
    
    (3,356
    )BALANCE, June 30, 2003
    
    
    
    
    
    $
    587
    
    
    $
    254,532
    
    
    $
    241,632
    
    
    $
    (1,133
    )
    
    $
    213
    
    
    $
    495,831BALANCE, DECEMBER 31, 2003
    
    
    
    
    
    $
    593
    
    
    $
    259,770
    
    
    $
    148,311
    
    
    $
    (1,178
    )
    
    $
    5,956
    
    
    $
    413,452Net income
    
    $
    38,784
    
    
    
    
    
    
    
    
    
    
    
    38,784
    

    
    
    
    
    
    
    
    
    
    
    38,784Other comprehensive income (loss), net of tax:Unrealized losses on securities available for sale
(less income tax benefit of $3.7 million)
    
    
    (6,510
    )Reclassification adjustment for net gain
included in net income
    
    
    (48
    )Other comprehensive income (loss)
    
    
    (6,558
    )Comprehensive income
    
    $
    32,226Dividends on Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,603
    )
    
    
    
    
    
    
    
    
    
    
    (3,603
    )Dividends on Class B Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (322
    )
    
    
    
    
    
    
    
    
    
    
    (322
    )Issuance of Class A common stock
    
    
    
    
    
    
    11
    
    
    
    2,592
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,603Tax effect relating to the exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    4,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,585Retirement of Class A Common Stock relating
to exercise of stock options
    
    
    
    
    
    
    (2
    )
    
    
    (2,635
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,637
    )Retirement of Class A Common Stock
    
    
    
    
    
    
    (4
    )
    
    
    (6,054
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,058
    )Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    88Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,558
    )
    
    
    (6,558
    )BALANCE, June 30, 2004
    
    
    
    
    
    $
    598
    
    
    $
    258,258
    
    
    $
    183,170
    
    
    $
    (1,090
    )
    
    $
    (602
    )
    
    $
    440,334
 See Notes to Consolidated Financial Statements - Unaudited 7




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Six MonthsEnded June 30,(In thousands)
    
    2004
    
    2003Income from continuing operations
    
    $
    38,784
    
    
    $
    20,627Income from discontinued operations
    
    
    
    
    
    
    10,940Adjustments to reconcile net income to net cash provided
in operating activities:Provision (recovery) for credit losses *
    
    
    (2,222
    )
    
    
    3,695Depreciation, amortization and accretion, net
    
    
    8,071
    
    
    
    8,550Amortization of intangible assets
    
    
    864
    
    
    
    893Change in real estate inventory
    
    
    (3,274
    )
    
    
    (20,347
    )Securities owned activities, net
    
    
    3,612
    
    
    
    (37,951
    )Cost associated with debt redemption
    
    
    11,741
    
    
    
    1,648Increase (decrease) in securities sold but not yet purchased
    
    
    13,508
    
    
    
    (3,035
    )Equity in earnings of unconsolidated subsidiaries
    
    
    (236
    )
    
    
    (4,673
    )Repayments from unconsolidated subsidiaries, net
    
    
    5,236
    
    
    
    7,005Originations and repayments of loans held for sale, net
    
    
    (62,475
    )
    
    
    3,866Proceeds from sales of loans held for sale
    
    
    70,057
    
    
    
    3,658Gains on securities activities
    
    
    (75
    )
    
    
    (365
    )Litigation settlement
    
    
    (22,840
    )
    
    
    Decrease in deferred tax asset, net
    
    
    4,402
    
    
    
    2,309Decrease (increase) in accrued interest receivable
    
    
    2
    
    
    
    (178
    )Increase in other assets
    
    
    (11,808
    )
    
    
    (11,461
    )Increase (decrease) in due to clearing agent
    
    
    (24,631
    )
    
    
    33,619Increase in other liabilities
    
    
    3,703
    
    
    
    40,657Net cash provided in operating activities
    
    
    32,419
    
    
    
    59,457Investing activities:Proceeds from redemption and maturities of investment
securities and tax certificates
    
    
    105,809
    
    
    
    101,999Purchase of investment securities and tax certificates
    
    
    (107,749
    )
    
    
    (99,272
    )Purchases of securities available for sale
    
    
    (424,523
    )
    
    
    (183,215
    )Proceeds from sales and maturities of securities available for sale
    
    
    111,344
    
    
    
    372,034Purchases of FHLB stock, net
    
    
    (3,829
    )
    
    
    (4,188
    )Net purchases and originations of loans and leases
    
    
    (217,796
    )
    
    
    (662,210
    )Net proceeds from sales of real estate owned
    
    
    1,939
    
    
    
    1,444Net additions to office property and equipment
    
    
    (17,832
    )
    
    
    (5,778
    )Net cash proceeds from the sale of Cumberland
    
    
    
    
    
    
    1,235Net cash used in investing activities
    
    
    (552,637
    )
    
    
    (477,951
    )Financing activities:Net (decrease) increase in deposits
    
    
    191,963
    
    
    
    (16,175
    )Repayments of FHLB advances
    
    
    (210,157
    )
    
    
    (239,368
    )Proceeds from FHLB advances
    
    
    300,000
    
    
    
    275,000Net increase in securities sold under agreements
to repurchase
    
    
    236,015
    
    
    
    101,843Net increase in federal funds purchased
    
    
    20,000
    
    
    
    155,000Repayment of notes and bonds payable
    
    
    (1,283
    )
    
    
    (126,868
    )Proceeds from notes and bonds payable
    
    
    1,083
    
    
    
    73,102Issuance of common stock
    
    
    1,777
    
    
    
    992Retirement of Class A common stock
    
    
    (1,811
    )
    
    
    Issuance of junior subordinated debentures
    
    
    
    
    
    
    75,000Common stock dividends paid
    
    
    (3,925
    )
    
    
    (3,627
    )Net cash provided in financing activities
    
    
    533,662
    
    
    
    294,899Increase (decrease) in cash and cash equivalents
    
    
    13,444
    
    
    
    (123,595
    )Cash and cash equivalents at beginning of period
    
    
    119,882
    
    
    
    250,745Cash and cash equivalents at end of period
    
    $
    133,326
    
    
    $
    127,150
 See Notes to Consolidated Financial Statements - Unaudited (Continued) 8




---



##### Table of Contents



BankAtlantic Bancorp, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED For the Six MonthsEnded June 30,(In thousands)
    
    2004
    
    2003Interest paid
    
    $
    41,975
    
    
    $
    68,961Income taxes paid
    
    
    24,483
    
    
    
    10,822Loans transferred to real estate owned
    
    
    838
    
    
    
    749Net loan recoveries (charge-offs)
    
    
    3,964
    
    
    
    (52
    )Tax certificate net recoveries (charge-offs)
    
    
    (100
    )
    
    
    (256
    )Reduction in stockholders equity from the retirement of Class A
Common Stock obtained from litigation settlement
    
    
    6,058
    
    
    
    Decreases in current income taxes payable from the tax effect of
fair value
of employee stock options
    
    
    4,585
    
    
    
    634Acquisition goodwill adjustments
    
    
    
    
    
    
    (734
    )Transfer of relocated branch to real estate held for sale
    
    
    
    
    
    
    1,000Issuance and retirement of Class A common stock accepted as
consideration for the exercise price of stock options
    
    
    826
    
    
    
    Change in accumulated other comprehensive income
    
    
    (6,558
    )
    
    
    (3,356
    )Change in deferred taxes on other comprehensive income
    
    
    (3,690
    )
    
    
    (1,520
    )July settlement of securities available for sale purchased in June
    
    
    16,604
    
    
    
    Issuance of Class A Common Stock upon conversion of
subordinated debentures
    
    
    
    
    
    
    211
  *
    
    Provision for credit losses represents provision for loan losses, REO and tax certificates. See Notes to Consolidated Financial Statements - Unaudited 9




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. Presentation of Interim Financial Statements BankAtlantic Bancorp, Inc. (the Company) is a Florida-based financial
services holding company that offers a wide range of banking and investment
products and services through its subsidiaries. The Companys principal assets
include the capital stock of its subsidiaries: BankAtlantic, its banking
subsidiary; and RB Holdings, Inc., a holding company that wholly owns Ryan Beck
& Co., Inc. (Ryan Beck), a federally registered broker-dealer. BankAtlantic
is a federal savings bank headquartered in Fort Lauderdale, Florida, which
provides traditional retail banking services and a wide range of commercial
banking products and related financial services. Ryan Beck is a full service
broker-dealer headquartered in Florham Park, New Jersey which offers a wide
range of investment and insurance products for retail and institutional
clients. On December 31, 2003, the Company completed the spin-off of its wholly
owned real estate development subsidiary, Levitt Corporation (Levitt), and
during the year ended December 31, 2003, Ryan Beck sold two of its
subsidiaries, The GMS Group, LLC (GMS) and Cumberland Advisors
(Cumberland). Accordingly, the financial information of Levitt, GMS and
Cumberland is not included in the Consolidated Statements of Operations for the
three and six months ended June 30, 2004 nor in the Consolidated Statements of
Financial Condition at June 30, 2004 and December 31, 2003. For the comparable
periods ended June 30, 2003, the financial information of the above companies
is included in the Consolidated Statement of Financial Condition, Consolidated
Statement of Stockholders Equity and Comprehensive Income and Consolidated
Statement of Cash Flows; but the information is excluded from the revenues and
expenses in the Consolidated Statements of Operations and is instead included
as discontinued operations. All significant inter-company balances and transactions have been
eliminated in consolidation. In managements opinion, the accompanying consolidated financial
statements contain such adjustments as are necessary to present fairly the
Companys consolidated financial condition at June 30, 2004, December 31, 2003
and June 30, 2003, the consolidated results of operations for the three and six
months ended June 30, 2004 and 2003, the consolidated stockholders equity and
comprehensive income for the six months ended June 30, 2004 and 2003 and the
consolidated cash flows for the six months ended June 30, 2004 and 2003. Such
adjustments consisted only of normal recurring items except for the litigation
settlement gain during the six months ended June 30, 2004. The results of
operations for the three and six months ended June 30, 2004 are not necessarily
indicative of results of operations that may be expected for the year ended
December 31, 2004. The consolidated financial statements and related notes are
presented as permitted by Form 10-Q and should be read in conjunction with the
notes to the consolidated financial statements appearing in the Companys
Annual Report on Form 10-K for the year ended December 31, 2003 and in the
Companys Form 10-Q/A for the three months ended March 31, 2004. Certain amounts for prior periods have been reclassified to conform to the
statement presentation for 2004. 2. Stock Based Compensation Under the provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, there are two methods of accounting for stock options, the
intrinsic value method and the fair value method. The Company elects to value
its options under the intrinsic value method. As a consequence, the Company
accounts for its stock based compensation plans under the recognition and
measurement principles of Accounting Principles Board (APB) Opinion No. 25
and related interpretations. 10




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123 to stock-based employee compensation. For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,(in thousands, except share data)
    
    2004
    
    2003
    
    2004
    
    2003Pro forma net incomeNet income, as reported
    
    $
    18,260
    
    
    $
    17,209
    
    
    $
    38,784
    
    
    $
    31,567Add: Stock-based employee compensation
expense included in reported net
income,
net of related income tax effects
    
    
    44
    
    
    
    90
    
    
    
    88
    
    
    
    142Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related income tax effects
    
    
    (284
    )
    
    
    (566
    )
    
    
    (682
    )
    
    
    (962
    )Pro forma net income
    
    $
    18,020
    
    
    $
    16,733
    
    
    $
    38,190
    
    
    $
    30,747Earnings per share:Basic as reported
    
    $
    0.31
    
    
    $
    0.30
    
    
    $
    0.65
    
    
    $
    0.54Basic pro forma
    
    
    0.30
    
    
    
    0.29
    
    
    
    0.64
    
    
    
    0.53Diluted as reported
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.61
    
    
    $
    0.51Diluted pro forma
    
    
    0.28
    
    
    
    0.27
    
    
    
    0.60
    
    
    
    0.50
 In July 2004 the Board of Directors granted incentive and non-qualifying
stock options to acquire an aggregate of 783,100 shares of Class A Common Stock
under the Amended and Restated BankAtlantic Bancorp 2001 Stock Option Plan.
The options vest in five years and expire ten years after the grant date except
for stock options granted to non-employee Directors which vest immediately.
The stock options were granted with an exercise price ($18.20) equal to the
fair market value of the common stock at the date of grant No compensation
expense was recognized in connection with the option grants since the exercise
price equaled the market value of the underlying common stock on the date of
grant. In April 2004 the RB Holdings, Inc. Option Plan (the Plan) was amended
to increase the number of shares of RB Holdings, Inc. common stock authorized
for issuance under the Plan from 1,530,000 to 2,437,500. In April 2004, RB Holdings Board of Directors granted to certain
executives, pursuant to the Plan, options to acquire an aggregate of 798,500
shares of RB Holdings common stock at an exercise price equal to fair value at
the date of grant, all of which vest in four years and expire ten years after
the grant date. Upon exercise of the options, the Company or RB Holdings has
the right under certain defined circumstances, starting six months plus one day
after the exercise date, to repurchase the common stock at fair value as
determined by an independent appraiser. The Company and RB Holdings also have
the right of first refusal on any sale of RB Holdings common stock issued as a
result of the exercise of an option, and the Company has the right to require
any common stockholder to sell the shares in the event that the Company chooses
to sell its interest in RB Holdings. In June 2004, options to acquire 90,000
shares of RB Holdings were exercised at a price of $1.60 per share. As of June
30, 2004, 24,465,000 shares of RB Holdings common stock were outstanding, of
which 24,375,000 shares were owned by the Company. 3. Litigation Settlement In March 2004, the Company recorded a $22.8 million litigation gain
pursuant to a settlement between the Company, its affiliates and a technology
company. In accordance with the terms of the settlement, the Company sold its
stock in the technology company to a third party investor group for its
original cost of $15 million and received from the investor group and the
technology company additional compensation for legal expenses and damages
consisting of $1.7 million in cash and 378,160 shares of the Companys Class A
common stock that had been owned by the technology company. The Company
retired the Class A common stock on the settlement date. 11




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 4. Advances from the Federal Home Loan Bank During March 2004, BankAtlantic prepaid $108 million of fixed rate Federal
Home Loan Bank (FHLB) advances with a weighted average interest rate of
5.55%, incurring prepayment penalties of $11.7 million. Also during the first
quarter of 2004, BankAtlantic prepaid a $50 million variable rate FHLB advance
scheduled to mature in 2004 with an interest rate of 1.17%. During the three
and six months ended June 30, 2004, $7.7 million and $40.7 million of FHLB
advances matured. These advances had a weighted average interest rate of 2.25%
and 1.67%, respectively. During the three months ended June 30, 2004,
BankAtlantic borrowed $300 million from the FHLB in the form of variable rate
advances having a current weighted average interest rate of 1.27% and maturity
dates ranging from August 2004 to May 2005. Of the $883.7 million of FHLB advances outstanding at June 30, 2004, $531
million mature between 2008 and 2011 and have a weighted average interest rate
of 5.41%, and $60 million mature between 2004 and 2006 and have a weighted
average interest rate 1.63%. 5. Defined Benefit Pension Plan Under BankAtlantics Retirement Plan for the Employees of BankAtlantic
(the Plan), net periodic pension expense (benefit) incurred includes the
following components (in thousands): For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2004
    
    2003
    
    2004
    
    2003Service cost benefits earned during the period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost on projected benefit obligation
    
    
    383
    
    
    
    369
    
    
    
    766
    
    
    
    738Expected return on plan assets
    
    
    (500
    )
    
    
    (371
    )
    
    
    (1,000
    )
    
    
    (742
    )Amortization of unrecognized net gains and
losses
    
    
    111
    
    
    
    294
    
    
    
    221
    
    
    
    589Net periodic pension expense (benefit)
    
    $
    (6
    )
    
    $
    292
    
    
    $
    (13
    )
    
    $
    585
 BankAtlantic did not contribute to the Plan during the six months ended
June 30, 2004 and 2003. BankAtlantic is not required to contribute to the Plan
for the year ending December 31, 2004. 6. Securities Owned Ryan Becks securities owned activities were associated with sales and
trading activities conducted both as principal and as agent on behalf of
individual and institutional investor clients of Ryan Beck. Transactions as
principal involve making markets in securities which are held in inventory to
facilitate sales to and purchases from customers. Ryan Beck also realizes
gains and losses from proprietary trading activities. Ryan Becks securities owned (at fair value) consisted of the following
(in thousands): June 30,
    
    December 31,
    
    June 30,2004
    
    2003
    
    2003States and municipalities
    
    $
    16,697
    
    
    $
    9,903
    
    
    $
    111,254Corporations
    
    
    10,757
    
    
    
    5,159
    
    
    
    43,950U.S. Government and
agencies
    
    
    48,852
    
    
    
    62,229
    
    
    
    33,107Corporate equities
    
    
    16,670
    
    
    
    15,072
    
    
    
    11,744Mutual funds
    
    
    27,055
    
    
    
    24,639
    
    
    
    22,013Certificates of deposit
    
    
    922
    
    
    
    7,563
    
    
    
    2,337$
    120,953
    
    
    $
    124,565
    
    
    $
    224,405
 At June 30, 2003, securities owned balances included $133.7 million of
securities owned by GMS, of which approximately $9.2 million were not accruing
interest. Ryan Beck sold GMS in August 2003. 12




---



##### Table of Contents



BankAtlantic Bancorp, Inc. In the ordinary course of business, Ryan Beck borrows or carries excess
funds under an agreement with its clearing broker. Securities owned are pledged
as collateral for clearing broker borrowings. As of June 30, 2004, balances
due from the clearing broker were $16.0 million. As of December 31, 2003 and
June 30, 2003, balances due to the clearing broker were $8.6 million and $112.4
million, respectively. Ryan Becks securities sold but not yet purchased consisted of the
following (in thousands): June 30,
    
    December 31,
    
    June 30,2004
    
    2003
    
    2003States and municipalities
    
    $
    87
    
    
    $
    67
    
    
    $
    2,221Corporations
    
    
    5,049
    
    
    
    1,963
    
    
    
    3,706U.S. Government and
agencies
    
    
    39,967
    
    
    
    32,231
    
    
    
    14,599Corporate equities
    
    
    6,171
    
    
    
    3,544
    
    
    
    12,712Certificates of deposit
    
    
    47
    
    
    
    8
    
    
    
    1,730$
    51,321
    
    
    $
    37,813
    
    

    $
    34,968
 At June 30, 2003 the amounts included $8.4 million of
securities sold but not yet purchased by GMS. Securities sold, but not yet purchased, are a part of Ryan Becks normal
activities as a broker and dealer in securities and are subject to off-balance
sheet risk should Ryan Beck be unable to acquire the securities for delivery to
the purchaser at prices equal to or less than the current recorded amounts. 7. Loans Receivable The loan and lease portfolio consisted of the following components (in
thousands): June 30,
    
    December 31,
    
    June 30,2004
    
    2003
    
    2003Real estate loans:Residential
    
    $
    1,506,875
    
    
    $
    1,343,657
    
    
    $
    1,869,668Construction and development
    
    
    1,550,715
    
    
    
    1,345,449
    
    
    
    1,024,844Commercial real estate
    
    
    861,472
    
    
    
    1,064,043
    
    
    
    1,145,663Small business - mortgage
    
    
    117,647
    
    
    
    107,835
    
    
    
    96,109Loans to Levitt Corporation
    
    
    14,939
    
    
    
    18,118
    
    
    
    Other loans:Loans to Levitt Corporation
    
    
    38,000
    
    
    
    43,500
    
    
    
    Second mortgages
    
    
    395,260
    
    
    
    333,655
    
    
    
    287,761Commercial business
    
    
    104,649
    
    
    
    91,724
    
    
    
    87,374Small business - non-mortgage
    
    
    60,822
    
    
    
    51,898
    
    
    
    45,646Deposit overdrafts
    
    
    5,464
    
    
    
    4,036
    
    
    
    3,278Consumer loans
    
    
    15,790
    
    
    
    17,892
    
    
    
    19,694Residential loans held for sale
    
    
    3,786
    
    
    
    2,254
    
    
    
    Discontinued loan products
    
    
    19,563
    
    
    
    35,544
    
    
    
    51,417Total gross loans
    
    
    4,694,982
    
    
    
    4,459,605
    
    
    
    4,631,454Adjustments:Undisbursed portion of loans in
process
    
    
    (747,850
    )
    
    
    (728,100
    )
    
    
    (563,132
    )Premiums related to purchased loans
    
    
    4,603
    
    
    
    6,899
    
    
    
    11,173Deferred fees
    
    
    (5,899
    )
    
    
    (6,656
    )
    
    
    (5,575
    )Allowance for loan and lease losses
    
    
    (46,737
    )
    
    
    (45,595
    )
    
    
    (49,576
    )Loans receivable  net
    
    $
    3,899,099
    
    
    $
    3,686,153
    
    
    $
    4,024,344
 The Companys loans to Levitt had an outstanding balance of $52.9 million
and $61.6 million at June 30, 2004 and December 31, 2003, respectively. The
Company also had loans to Levitt joint ventures that had an outstanding balance
of 13




---



##### Table of Contents



BankAtlantic Bancorp, Inc. $0 and $23.2 million at June 30, 2004 and December 31, 2003, respectively.
Included in interest income in the Companys statement of operations for the
three and six months ended June 30, 2004 was $390,000 and $1.0 million,
respectively, of interest income related to loans to Levitt and its joint
ventures. During the three and six months ended June 30, 2003, $600,000 and
$1.2 million, respectively, of interest income related to loans to Levitt were
not included in the Companys statements of operations as those amounts were
eliminated in consolidation. At June 30, 2004, the Company had $12.4 million
of undisbursed loans in process to Levitt. 8. Real Estate Held for Development and Sale Real estate held for development and sale consisted of the following (in
thousands): June 30,
    
    December 31,
    
    June 30,2004
    
    2003
    
    2003Land and land
development costs
    
    $
    9,673
    
    
    $
    9,705
    
    
    $
    179,321Construction costs
    
    
    10,008
    
    
    
    7,192
    
    
    
    44,683Other costs
    
    
    2,377
    
    
    
    1,859
    
    
    
    14,285Other
    
    
    3,019
    
    
    
    3,047
    
    
    
    3,057Total
    
    $
    25,077
    
    
    $
    21,803
    
    
    $
    241,346
 Income from real estate operations was as follows (in thousands): For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2004
    
    2003
    
    2004
    
    2003Sales of real estate
    

    $
    3,668
    
    
    $
    9,248
    
    
    $
    4,425
    
    
    $
    13,412Cost of sales on real estate
    
    
    2,985
    
    
    
    5,112
    
    
    
    3,437
    
    
    
    8,190Gains on sales of real
estate
    
    $
    683
    
    
    $
    4,136
    
    
    $
    988
    
    
    $
    5,222
 In 2002, BankAtlantic acquired Community Savings Bankshares, Inc.
(Community). Real estate held for development and sale at June 30, 2004 and
December 31, 2003 consisted of real estate held by a joint venture that was
acquired in connection with the Community acquisition and $3.0 million of real
estate held for sale associated with BankAtlantic branch banking facilities.
The joint venture was consolidated in the Companys financial statements as of
January 1, 2003. Real estate held for development and sale at June 30, 2003 consisted of
$19.8 million of real estate inventory of the joint venture acquired in the
Community acquisition, $3.1 million of real estate held for sale associated
with BankAtlantic branch banking facilities, and $218.5 million of real estate
inventory of Levitt. 14




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 9. Investments and advances to unconsolidated subsidiaries The consolidated statements of financial condition and consolidated
statements of operations include the following amounts for investments and
advances to unconsolidated subsidiaries (in thousands): June 30,
    
    December 31,
    
    June 30,2004
    
    2003
    
    2003Statement of Financial Condition
    
    $
    
    
    
    $
    
    
    
    $Investment in Bluegreen corporation
    
    
    
    
    
    
    
    
    
    
    64,381Investments and advances to real
estate joint ventures
    
    
    
    
    
    
    
    
    
    
    26,803Investment in statutory business trusts
    
    
    7,910
    
    
    
    7,910
    
    
    
    7,910Total
    
    $
    7,910
    
    
    $
    7,910
    
    
    $
    99,094
 As of June 30, 2004 and December 31, 2003, investments and advances to
unconsolidated subsidiaries consisted of the Companys investments in eleven
statutory business trusts that were formed to issue trust preferred securities.
Prior to January 1, 2003, these trusts were consolidated in the Companys
financial statements. At June 30, 2003, investments and advances to unconsolidated subsidiaries
consisted of the Companys and Levitts investment in Bluegreen Corporation,
(which consisted of aggregate holdings of approximately 38% of Bluegreens
outstanding common stock) Levitts investments in real estate joint ventures
and the Companys investments in eleven statutory business trusts. 10. Segment Reporting Operating segments are defined as components of an enterprise about which
separate financial information is available that is regularly reviewed by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. Reportable segments consist of one or more operating
segments with similar economic characteristics, products and services,
production processes, type of customer, distribution system and regulatory
environment. The activities of reportable segments exclude discontinued
operations, extraordinary gains (losses) and income (loss) from changes in
accounting principles. The accounting policies of these reportable segments
are the same as those of the Company. As of January 1, 2004, the Company implemented a new internal reporting
methodology for evaluating operating segment performance for BankAtlantics
reportable segments. Additionally, Ryan Beck changed the composition of its
reportable segments, creating three reportable segments. As a result of Ryan
Becks change, the Companys results of operations are now reported through
seven reportable segments instead of five reportable segments reported by the
Company in prior periods. Segment reporting for the three and six months ended
June 30, 2003 was restated to conform to the new methodology. The following summarizes the aggregation of the Companys operating
segments into reportable segments: Reportable Segment
    
    Operating Segments AggregatedBankAtlanticBank Investments
    
    Investments, tax certificates, residential loans purchased, CRA lending and real estate capital servicesCommercial Banking
    
    Commercial lending and commercial depositsCommunity Banking
    
    Consumer lending, small business lending, ATM operations, branch banking and trade finance lendingRyan BeckPrivate Client Group (PCG)
    
    Retail branch offices, retail branch administration, product marketing and supportInvestment Banking
    
    Financial institutions group, middle markets group, public finance, and underwriting activitiesCapital Markets
    
    Equity and fixed income trading departments, unit trust and institutional sales
 15




---



##### Table of Contents



BankAtlantic Bancorp, Inc. BankAtlantic BancorpParent Company
    
    BankAtlantic Bancorps operations, costs ofacquisitions and financing of acquisitions
 Results of BankAtlantics Reportable Segments The Company evaluates BankAtlantics segment performance based on segment
profits after tax. BankAtlantic has three reportable segments. Information
regarding Treasury and Other is provided following the tables. The table
below is segment information for the three months ended June 2004 and 2003
associated with the three BankAtlantic reportable segments (in thousands): BankAtlantic Reportable SegmentsBank
    
    Commercial
    
    Community
    
    
    
    
    
    
    
    
    
    BankAtlanticInvestments
    
    Banking
    
    Banking
    
    Treasury
    
    Other
    
    Total2004Interest income
    
    
    24,882
    
    
    
    26,281
    
    
    
    28,334
    
    
    
    (23,393
    )
    
    
    659
    
    
    
    56,763Interest expense
    
    
    (15,795
    )
    
    
    (9,517
    )
    
    
    (8,023
    )
    
    
    18,149
    
    
    
    (180
    )
    
    
    (15,366
    )Net interest income
    
    
    9,087
    
    
    
    16,764
    
    
    
    20,311
    
    
    
    (5,244
    )
    
    
    479
    
    
    
    41,397Charge-offs/(recoveries)
    
    
    41
    
    
    
    (2,278
    )
    
    
    (76
    )
    
    
    
    
    
    
    (873
    )
    
    
    (3,186
    )Net interest income after
net charge-offs
(recoveries)
    
    
    9,046
    
    
    
    19,042
    
    
    
    20,387
    
    
    
    (5,244
    )
    
    
    1,352
    
    
    
    44,583Non-interest income
    
    
    64
    
    
    
    1,252
    
    
    
    19,727
    
    
    
    
    
    
    
    442
    
    
    
    21,485Non-interest expense
    
    
    (1,319
    )
    
    
    (2,892
    )
    
    
    (27,815
    )
    
    
    
    
    
    
    (10,495
    )
    
    
    (42,521
    )Segments profits and
losses before tax
    
    
    7,791
    
    
    
    17,402
    
    
    
    12,299
    
    
    
    (5,244
    )
    
    
    (8,701
    )
    
    
    23,547Taxes
    
    
    (2,805
    )
    
    
    (6,265
    )
    
    
    (4,428
    )
    
    
    1,888
    
    
    
    3,133
    
    
    
    (8,477
    )Segment net income
    
    $
    4,986
    
    
    
    11,137
    
    
    
    7,871
    
    
    
    (3,356
    )
    
    
    (5,568
    )
    
    
    15,070Segment assets
    
    
    2,389,534
    
    
    
    1,767,555
    
    
    
    599,865
    
    
    
    
    
    
    
    364,941
    
    
    
    5,121,8952003Interest income
    
    $
    34,654
    
    
    
    26,050
    
    
    
    19,859
    
    
    
    (14,532
    )
    
    
    1,306
    
    
    
    67,337Interest expense
    
    
    (21,452
    )
    
    
    (10,921
    )
    
    
    (9,584
    )
    
    
    15,685
    
    
    
    (350
    )
    
    
    (26,622
    )Net interest income
    
    
    13,202
    
    
    
    15,129
    
    
    
    10,275
    
    
    
    1,153
    
    
    
    956
    
    
    
    40,715Charge-offs/(recoveries)
    
    
    325
    
    
    
    (22
    )
    
    
    1,088
    
    
    
    
    
    
    
    (494
    )
    
    
    897Net interest income after
net charge-offs
(recoveries)
    
    
    12,877
    
    
    
    15,151
    
    
    
    9,187
    
    
    
    1,153
    
    
    
    1,450
    
    
    
    39,818Non-interest income
    
    
    76
    
    
    
    1,573
    
    
    
    15,120
    
    
    
    
    
    
    
    514
    
    
    
    17,283Non-interest expense
    
    
    (1,286
    )
    
    
    (2,872
    )
    
    
    (23,498
    )
    
    
    
    
    
    
    (10,295
    )
    
    
    (37,951
    )Segments profits and
losses before tax
    
    
    11,667
    
    
    
    13,852
    
    
    
    809
    
    
    
    1,153
    
    
    
    (8,331
    )
    
    
    19,150Taxes
    
    
    (4,200
    )
    
    
    (4,987
    )
    
    
    (291
    )
    
    
    (415
    )
    
    
    3,004
    
    
    
    (6,889
    )Segment net income
    
    $
    7,467
    
    
    
    8,865
    
    
    
    518
    
    
    
    738
    
    
    
    (5,327
    )
    
    
    12,261Segment assets
    
    
    2,658,804
    
    
    
    1,731,635
    
    
    
    456,532
    
    
    
    
    
    
    
    374,344
    
    
    
    5,221,315
 16




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The table below is segment information for the six months ended June 2004
and 2003 associated with the three BankAtlantic reportable segments (in
thousands): BankAtlantic Reportable SegmentsBank
    
    Commercial
    
    Community
    
    
    
    
    
    
    
    
    
    BankAtlanticInvestments
    
    Banking
    
    Banking
    
    Treasury
    
    Other
    
    Total2004Interest income
    
    $
    48,309
    
    
    
    52,915
    
    
    
    51,390
    
    
    
    (40,976
    )
    
    
    1,467
    
    
    
    113,105Interest expense
    
    
    (29,682
    )
    
    
    (19,174
    )
    
    
    (15,650
    )
    
    
    33,042
    
    
    
    (374
    )
    

    
    (31,838
    )Net interest income
    
    
    18,627
    
    
    
    33,741
    
    
    
    35,740
    
    
    
    (7,934
    )
    
    
    1,093
    
    
    
    81,267Charge-offs/(recoveries)
    
    
    250
    
    
    
    (2,301
    )
    
    
    (80
    )
    
    
    
    
    
    
    (1,702
    )
    
    
    (3,833
    )Net interest income after net charge-offs
(recoveries)
    
    
    18,377
    
    
    
    36,042
    
    
    
    35,820
    
    
    
    (7,934
    )
    
    
    2,795
    
    
    
    85,100Non-interest income
    
    
    203
    
    
    
    1,858
    
    
    
    36,321
    
    
    
    
    
    
    
    547
    
    
    
    38,929Non-interest expense
    
    
    (2,834
    )
    
    
    (5,853
    )
    
    
    (54,221
    )
    
    
    
    
    
    
    (20,821
    )
    
    
    (83,729
    )Segments profits and losses before tax
    
    
    15,746
    
    
    
    32,047
    
    
    
    17,920
    
    
    
    (7,934
    )
    
    
    (17,479
    )
    
    
    40,300Taxes
    
    
    (5,652
    )
    
    
    (11,537
    )
    
    
    (6,452
    )
    
    
    2,857
    
    
    
    6,293
    
    
    
    (14,491
    )Segment net income
    
    $
    10,094
    
    
    
    20,510
    
    
    
    11,468
    
    
    
    (5,077
    )
    
    
    (11,186
    )
    
    
    25,8092003Interest income
    
    $
    69,130
    
    
    
    51,596
    
    
    
    41,610
    
    
    
    (30,937
    )
    
    
    2,867
    
    
    
    134,266Interest expense
    
    
    (43,700
    )
    
    
    (22,317
    )
    
    
    (20,594
    )
    
    
    33,435
    
    
    
    (818
    )
    
    
    (53,994
    )Net interest income
    
    
    25,430
    
    
    
    29,279
    
    
    
    21,016
    
    
    
    2,498
    
    
    
    2,049
    
    
    
    80,272Charge-offs/(recoveries)
    
    
    351
    
    
    
    (51
    )
    
    
    1,012
    
    
    
    
    
    
    
    (972
    )
    
    
    340Net interest income after
net charge-offs
(recoveries)
    
    
    25,079
    
    
    
    29,330
    
    
    
    20,004
    
    
    
    2,498
    
    
    
    3,021
    
    
    
    79,932Non-interest income
    
    
    150
    
    
    
    2,307
    
    
    
    27,960
    
    
    
    
    
    
    
    542
    
    
    
    30,959Non-interest expense
    
    
    (2,460
    )
    
    
    (6,273
    )
    
    
    (45,346
    )
    
    
    
    
    
    
    (18,648
    )
    
    
    (72,727
    )Segments profits and
losses before tax
    
    
    22,769
    
    
    
    25,364
    
    
    
    2,618
    
    
    
    2,498
    
    
    
    (15,085
    )
    
    
    38,164Taxes
    
    
    (8,196
    )
    
    
    (9,131
    )
    
    
    (942
    )
    
    
    (900
    )
    
    
    5,468
    
    
    
    (13,701
    )Segment net income
    
    $
    14,573
    
    
    
    16,233
    
    
    
    1,676
    
    
    
    1,598
    
    
    
    (9,617
    )
    
    
    24,463
 The amounts included in the three BankAtlantic reportable segments are
derived using a management reporting model that includes the methodologies of
funds transfer pricing and activity based costing. Exposure to interest rate
risk is managed centrally and reflected in BankAtlantics segment reporting
under the heading entitled Treasury. In each segment the funds transfer
pricing model charges each interest earning asset with a duration-matched cost
of funds at the date of origination for the life of the asset or until a
variable rate asset reprices. This matching of durations between interest
earning assets and rate-bearing liabilities attempts to isolate the net
interest income of each banking operating segment from interest rate risk and
places the gains and losses from BankAtlantics management of interest rate
risk in Treasury. The duration on savings and transaction account deposit
products that do not have maturities were estimated based on a deposit duration
analysis performed by a third party consultant. The activity based costing
model allocates costs to the activities and processes that create the expenses
and transfers costs for services provided by one segment to another. Net charge-offs or recoveries are allocated to the BankAtlantic reportable
segment that generated the loss or recovery. Non-interest income and expenses are credited to the reportable segment
that generated the revenues or costs. Intersegment costs are allocated to the
operating segments based on an activity based costing model. 17




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Income tax expense is allocated based on a standard tax rate of 36% for
BankAtlantics reportable segments. The Treasury net contribution represents the difference between the actual
net interest income earned by BankAtlantic and the aggregate net interest
income allocated to the reportable segments calculated using funds transfer
pricing methodologies. Other includes discontinued loan products and unallocated corporate
overhead. Discontinued loan products represent the net interest income and net
recoveries from our discontinued loan products (small business loans originated
before January 1, 2001, consumer indirect, syndication and lease financing.)
Unallocated corporate overhead represents expenses that were not assigned to
bank reportable segments through the activity based costing model. These
overhead costs cannot be broken down and attributed directly to the activities
of specific reportable segments, and therefore allocation of costs would have
to be based on subjective measures that could distort the performance of the
reportable segments. As a consequence, management has decided not to allocate
these overhead costs. These overhead costs are primarily back office costs,
such as human resources, accounting, finance, auditing, and data processing. 18




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Results of Ryan Becks Reportable Segments The Company evaluates Ryan Becks segment performance based on pre-tax
contribution. The table below is segment information for the three months
ended June 30, 2004 and 2003 associated with the three Ryan Beck reportable
segments (in thousands): Investment
    
    CapitalPCG
    
    Banking
    
    Markets
    
    Total2004Net interest income:Broker dealer interest
    
    $
    2,516
    
    
    $
    17
    
    
    $
    333
    
    
    $
    2,866Interest expense
    
    
    (59
    )
    
    
    (2
    )
    
    
    (213
    )
    
    
    (274
    )Net interest income
    
    
    2,457
    
    
    
    15
    
    
    
    120
    
    
    
    2,592Non-interest income:Principal transactions
    
    
    17,473
    
    
    
    154
    
    
    
    4,027
    
    
    
    21,654Investment banking
    
    
    
    
    
    
    17,334
    
    
    
    692
    
    
    
    18,026Commissions
    
    
    20,493
    
    
    
    
    
    
    
    1,752
    
    
    
    22,245Other
    
    
    999
    
    
    
    
    
    
    
    84
    
    
    
    1,083Non-interest income
    
    
    38,965
    
    
    
    17,488
    
    
    
    6,555
    
    
    
    63,008Non-interest expense
    
    
    (40,172
    )
    
    
    (7,015
    )
    
    
    (6,238
    )
    
    
    (53,425
    )Pre-tax contribution
    
    $
    1,250
    
    
    $
    10,488
    
    
    $
    437
    
    
    $
    12,1752003Net interest income:Broker dealer interest
    
    $
    1,931
    
    
    $
    32
    
    
    $
    218
    
    
    $
    2,181Interest expense
    
    
    (241
    )
    
    
    (4
    )
    
    
    (133
    )
    
    
    (378
    )Net interest income
    
    
    1,690
    
    
    
    28
    
    
    
    85
    
    
    
    1,803Non-interest income:Principal transactions
    
    
    16,256
    
    
    
    1,156
    
    
    
    6,645
    
    
    
    24,057Investment banking
    
    
    
    
    
    
    4,671
    
    
    
    408
    
    
    
    5,079Commissions
    
    
    19,487
    
    
    
    16
    
    
    
    2,100
    
    
    
    21,603Other
    
    
    449
    
    
    
    
    
    
    
    31
    
    
    
    480Non-interest income
    
    
    36,192
    
    
    
    5,843
    
    
    
    9,184
    
    
    
    51,219Non-interest expense
    
    
    (40,783
    )
    
    
    (3,395
    )
    
    
    (7,368
    )
    
    
    (51,546
    )Pre-tax contribution
    
    $
    (2,901
    )
    
    $
    2,476
    
    
    $
    1,901
    
    
    $
    1,476
 19




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The table below is segment information for the six months ended June 30,
2004 and 2003 associated with the three Ryan Beck reportable segments (in
thousands): Investment
    
    CapitalPCG
    
    Banking
    
    Markets
    
    Total2004Net interest income:Broker dealer interest
    
    $
    4,807
    
    
    $
    73
    
    
    $
    782
    
    
    $
    5,662Interest expense
    
    
    (95
    )
    
    
    (10
    )
    
    
    (379
    )
    
    
    (484
    )Net interest income
    
    
    4,712
    
    
    
    63
    
    
    
    403
    
    
    
    5,178Non-interest income:Principal transactions
    
    
    36,943
    
    
    
    689
    
    
    
    8,465
    
    
    
    46,097Investment banking
    
    
    88
    
    
    
    29,047
    
    
    
    1,522
    
    
    
    30,657Commissions
    
    
    44,207
    
    
    
    
    
    
    
    3,409
    
    
    
    47,616Other
    
    
    1,596
    
    
    
    
    
    
    
    107
    
    
    
    1,703Non-interest income
    
    
    82,834
    
    
    
    29,736
    
    
    
    13,503
    
    
    
    126,073Non-interest expense
    
    
    (84,116
    )
    
    
    (13,872
    )
    
    
    (12,526
    )
    
    
    (110,514
    )Pre-tax contribution
    
    $
    3,430
    
    
    $
    15,927
    
    
    $
    1,380
    
    
    $
    20,7372003Net interest income:Broker dealer interest
    
    $
    4,019
    
    
    $
    81
    
    
    $
    398
    
    
    $
    4,498Interest expense
    
    
    (515
    )
    
    
    (8
    )
    
    
    (218
    )
    
    
    (741
    )Net interest income
    
    
    3,504
    
    
    
    73
    
    
    
    180
    
    
    
    3,757Non-interest income:Principal transactions
    
    
    29,848
    
    
    
    5,409
    
    
    
    13,884
    
    
    
    49,141Investment banking
    
    
    
    
    
    
    11,648
    
    
    
    1,120
    
    
    
    12,768Commissions
    
    
    36,935
    
    
    
    121
    
    
    
    3,899
    
    
    
    40,955Other
    
    
    1,264
    
    
    
    
    
    
    
    56
    
    
    
    1,320Non-interest income
    
    
    68,047
    
    
    
    17,178
    
    
    
    18,959
    
    
    
    104,184Non-interest expense
    
    
    (78,513
    )
    
    
    (9,916
    )
    
    
    (14,921
    )
    
    
    (103,350
    )Pre-tax contribution
    
    $
    (6,962
    )
    
    $
    7,335
    
    
    $
    4,218
    
    
    $
    4,591
 The Private Client Group is Ryan Becks retail investment brokerage and
consulting group, which offers a full range of investment planning and related
services to its clients. The Investment Banking reportable segment provides consulting services
primarily in the financial services industry in connection with capital
raising, mergers and acquisitions, and similar transactions. Its investment
banking activities include financial institutions, middle market and municipal
finance groups. The Capital Markets reportable segment underwrites and trades in trust
preferred securities, U.S. government securities, agency bonds and zero coupon
bonds as well as equities and tax-exempt securities. Additionally, the Capital
Markets group distributes brokered deposits and other taxable fixed income
securities through other broker dealers. All revenue and expense items, with the exception of certain department
allocations, such as general and administrative, operations and research, are
identified and reported at each segment. Ryan Beck allocates certain common
income and expense items among business segments based upon various
methodologies and factors, including a percentage of income methodology for
certain revenue products, and a headcount factor for certain expense items. 20




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Segment Reporting Worksheets The table below is a consolidating worksheet for income from continuing
operations that reconciles the Companys segment reporting to the consolidated
financial statements for the three months ended June 2004 and 2003 (in
thousands): Adjusting andParent
    
    Elimination
    
    SegmentBankAtlantic
    
    Ryan Beck
    
    Company
    
    Entries
    
    Total2004Interest income
    
    $
    56,763
    
    
    $
    2,866
    
    
    $
    548
    
    
    $
    (70
    )
    
    $
    60,107Interest expense
    
    
    (15,419
    )
    
    
    (274
    )
    
    
    (4,132
    )
    
    
    70
    
    
    
    (19,755
    )Recovery from loan losses
    
    
    1,963
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,963Non-interest income
    
    
    22,169
    
    
    
    63,008
    
    
    
    241
    
    
    
    (73
    )
    
    
    85,345Non-interest expense
    
    
    (43,570
    )
    
    
    (53,425
    )
    
    
    (980
    )
    
    
    73
    
    
    
    (97,902
    )Income (loss) before
taxes
    
    
    21,906
    
    
    
    12,175
    
    
    
    (4,323
    )
    
    
    
    
    
    
    29,758Provision for income
taxes
    
    
    (7,911
    )
    
    
    (5,161
    )
    
    
    1,574
    
    
    
    
    
    
    
    (11,498
    )Net income (loss)
    
    $
    13,995
    
    
    $
    7,014
    
    
    $
    (2,749
    )
    
    $
    
    
    
    $
    18,260Total assets
    
    $
    5,121,895
    
    
    
    188,307
    
    
    
    706,560
    
    
    
    (588,384
    )
    
    $
    5,428,3782003Interest income
    
    $
    67,337
    
    
    $
    2,181
    
    
    $
    509
    
    
    $
    (806
    )
    
    $
    69,221Interest expense
    
    
    (26,622
    )
    
    
    (378
    )
    
    
    (4,378
    )
    
    
    806
    
    
    
    (30,572
    )Provision for loan losses
    
    
    (1,490
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,490
    )Non-interest income
    
    
    21,493
    
    
    
    51,219
    
    
    
    (57
    )
    
    
    (54
    )
    
    
    72,602Non-interest expense
    
    
    (40,657
    )
    
    
    (51,546
    )
    
    
    (2,341
    )
    
    
    54
    
    
    
    (94,490
    )Income (loss) before
taxes
    
    
    20,061
    
    
    
    1,476
    
    
    
    (6,267
    )
    
    
    
    
    
    
    15,271Provision for income
taxes
    
    
    (7,103
    )
    
    
    (551
    )
    
    
    2,192
    
    
    
    
    
    
    
    (5,462
    )Net income (loss)
    
    $
    12,958
    
    
    $
    925
    
    
    $
    (4,075
    )
    
    $
    
    
    
    $
    9,809Total assets (1)
    
    $
    5,221,315
    
    
    
    274,418
    
    
    
    761,915
    
    
    
    (438,795
    )
    
    $
    5,818,853
  (1)
    
    The adjusting and elimination entries at June 30, 2003 include the
total assets of Levitt, GMS and Cumberland. The adjusting and elimination entries consist of intercompany
transactions relating to loan interest income and interest expense, management
fees, consulting fees and brokerage commissions. 21




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The table below is a consolidating worksheet for income from continuing
operations that reconciles the Companys segment reporting to the consolidated
financial statements for the six months ended June 2004 and 2003 (in
thousands): Adjusting andParent
    
    Elimination
    
    SegmentBankAtlantic
    
    Ryan Beck
    
    Company
    
    Entries
    
    Total2004Interest income
    
    $
    113,105
    
    
    $
    5,662
    
    
    $
    1,090
    
    
    $
    (121
    )
    
    $
    119,736Interest expense
    
    
    (31,966
    )
    
    
    (484
    )
    
    
    (8,267
    )
    
    
    121
    
    
    
    (40,596
    )Recovery from loan losses
    
    
    2,822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,822Non-interest income
    
    
    40,389
    
    
    
    126,073
    
    
    
    23,378
    
    
    
    (130
    )
    
    
    189,710Non-interest expense
    
    
    (97,702
    )
    
    
    (110,514
    )
    
    
    (1,830
    )
    
    
    130
    
    
    
    (209,916
    )Income before taxes
    
    
    26,648
    
    
    
    20,737
    
    
    
    14,371
    
    
    
    
    
    
    
    61,756Provision for income
taxes
    
    
    (9,347
    )
    
    
    (8,595
    )
    
    
    (5,030
    )
    
    
    
    
    
    
    (22,972
    )Net income
    
    $
    17,301
    
    
    $
    12,142
    
    
    $
    9,341
    
    
    $
    
    
    
    $
    38,7842003Interest income
    
    $
    134,266
    
    
    $
    4,498
    
    
    $
    963
    
    
    $
    (1,541
    )
    
    $
    138,186Interest expense
    
    
    (54,053
    )
    
    
    (741
    )
    
    
    (8,105
    )
    
    
    1,541
    
    
    
    (61,358
    )Provision for loan losses
    
    
    (2,340
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,340
    )Non-interest income
    
    
    36,607
    
    
    
    104,185
    
    
    
    (30
    )
    
    
    (83
    )
    
    
    140,679Non-interest expense
    
    
    (76,986
    )
    
    
    (103,350
    )
    
    
    (2,797
    )
    
    
    83
    

    
    
    (183,050
    )Income (loss) before
taxes
    
    
    37,494
    
    
    
    4,592
    
    
    
    (9,969
    )
    
    
    
    
    
    
    32,117Provision for income
taxes
    
    
    (13,134
    )
    
    
    (1,843
    )
    
    
    3,487
    
    
    
    
    
    
    
    (11,490
    )Net income (loss)
    
    $
    24,360
    
    
    $
    2,749
    
    
    $
    (6,482
    )
    
    $
    
    
    
    $
    20,627
 22




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The differences between BankAtlantics statement of operations components
and the reportable segment information for income from continuing operations
for the three and six months ended June 30, 2004 and 2003 consists of (in
thousands): For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Interest expenseSegment interest expense
    
    $
    15,366
    
    
    
    26,622
    
    
    $
    31,838
    
    
    
    53,994Joint venture interest expense
    
    
    53
    
    
    
    
    
    
    
    128
    
    
    
    59BankAtlantic interest expense
    
    
    15,419
    
    
    
    26,622
    
    
    
    31,966
    
    
    
    54,053Non-interest incomeSegment non-interest income
    
    
    21,485
    
    
    
    17,283
    
    
    
    38,929
    
    
    
    30,959Income from real estate operations
    
    
    684
    
    
    
    4,210
    
    
    
    989
    
    
    
    5,296Other
    
    
    
    
    
    
    
    
    
    
    471
    
    
    
    352BankAtlantic non-interest income
    
    
    22,169
    
    
    
    21,493
    
    
    
    40,389
    
    
    
    36,607Non-interest expenseSegment non-interest expense
    
    
    42,521
    
    
    
    37,951
    
    
    
    83,729
    
    
    
    72,727Joint venture expenses
    
    
    749
    
    
    
    2,406
    
    
    
    1,269
    
    
    
    3,502Provision for tax certificates
    
    
    300
    
    
    
    300
    
    
    
    600
    
    
    
    600Cost associated with debt redemption
    
    
    
    
    
    
    
    
    
    
    11,741
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    157BankAtlantic non-interest expense
    
    
    43,570
    
    
    
    40,657
    
    
    
    97,702
    
    
    
    76,986TaxesSegment taxes
    
    
    8,477
    
    
    
    6,889
    
    
    
    14,491
    
    
    
    13,701Actual tax rate different than segment
assumed tax rate
    
    
    24
    
    
    
    (114
    )
    
    
    (230
    )
    
    
    (326
    )Segment earnings greater than
BankAtlantic earnings
    
    
    (590
    )
    
    
    328
    
    
    
    (4,914
    )
    
    
    (241
    )BankAtlantic taxes
    
    
    7,911
    
    
    
    7,103
    
    
    
    9,347
    
    
    
    13,134Net incomeSegment net income
    
    
    15,070
    
    
    
    12,261
    
    
    
    25,809
    
    
    
    24,463Provision for loan losses different
than net recoveries
    
    
    (782
    )
    
    
    (380
    )
    
    
    (646
    )
    
    
    (1,281
    )Provision for tax certificates
    
    
    (192
    )
    
    
    (192
    )
    
    
    (384
    )
    
    
    (384
    )Joint venture operation excluded from
segment reporting
    
    
    (77
    )
    
    
    1,155
    
    
    
    (193
    )
    
    
    1,235Cost associated with debt redemption
    
    
    
    
    
    
    
    
    
    
    (7,515
    )
    
    
    Tax rate difference
    
    
    (24
    )
    
    
    114
    
    
    
    230
    
    
    
    327BankAtlantic net income
    
    $
    13,995
    
    
    
    12,958
    
    
    $
    17,301
    
    
    
    24,360
 Segment charge-offs/ (recoveries) consists of loan and tax certificate net charge-offs. The above segment reporting information is based on internal reports
utilized by management. The presentation and allocation of segment income and
the components of segment income calculated under the management approach may
not reflect the actual economic costs, contribution or results of operations of
the units as stand alone businesses. If a different basis of allocation were
utilized, the relative contributions of the segments might differ but the
relative trends in the segments likely would not, in managements view, be
impacted. 23




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 11. Financial instruments with off-balance sheet risk Financial instruments with off-balance sheet risk were (in thousands): June 30,
    
    December 31,
    
    June 30,2004
    
    2003
    
    2003Commitment to sell fixed rate residential loans
    
    $
    18,646
    
    
    $
    12,962
    
    
    $
    339Commitment to sell variable rate residential loans
    
    
    8,000
    
    
    
    3,740
    
    
    
    Forward contracts to purchase mortgage-backed
securities
    
    
    5,396
    
    
    
    8,611
    
    
    
    17,745Commitments to purchase other investment securities
    
    
    1,655
    
    
    
    
    
    
    
    Commitments to purchase fixed rate residential loans
    
    
    80,000
    
    
    
    40,242
    
    
    
    Commitments to purchase variable rate residential loans
    
    
    9,877
    
    
    
    3,500
    
    
    
    29,000Commitments to originate loans held for sale
    
    
    22,644
    
    
    
    14,271
    
    
    
    Commitments to originate loans held to maturity
    
    
    411,362
    
    
    
    370,071
    
    
    
    329,786Commitments to extend credit, including the undisbursed
portion of loans in process
    
    
    1,112,791
    
    
    
    1,048,738
    
    
    
    818,032Standby letters of credit
    

    
    38,846
    
    
    
    31,722
    
    
    
    23,012Commercial lines of credit
    
    
    103,510
    
    
    
    162,623
    
    
    
    148,931
 Standby letters of credit are conditional commitments issued by
BankAtlantic to guarantee the performance of a customer to a third party.
BankAtlantics standby letters of credit are generally issued to customers in
the construction industry guaranteeing project performance. These types of
standby letters of credit had a maximum exposure of $33.8 million at June 30,
2004. BankAtlantic also issues standby letters of credit to commercial lending
customers guaranteeing the payment of goods and services. These types of
standby letters of credit had a maximum exposure of $5.0 million at June 30,
2004. These guarantees are primarily issued to support public and private
borrowing arrangements and have maturities of one year or less. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. BankAtlantic may hold
certificates of deposit and residential and commercial liens as collateral for
such commitments. Included in other liabilities at June 30, 2004 and December
31, 2003 was $31,000 and $110,000, respectively, of unearned guarantee fees. 24




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 12. Discontinued operations In December 2003, the Company completed the spin-off of its wholly-owned
subsidiary, Levitt, and transferred its investment in Bluegreen Corporation to
Levitt. During the year ended December 31, 2003, Ryan Beck sold two of its
subsidiaries, GMS and Cumberland. The above transactions were presented as
discontinued operations in our statement of operations for the three and six
months ended June 30, 2003. The components of earnings from discontinued operations for the three and
six months ended June 30, 2003 were as follows (in thousands): For the Three
    
    For the SixMonths Ended
    
    Months EndedJune 30, 2003
    
    June 30, 2003Net interest income
    
    $
    2,034
    
    
    $
    3,357Non-Interest Income:Investment banking income
    
    
    7,526
    
    
    
    13,845Income from real estate operations
    
    
    18,278
    
    
    
    32,049Income from unconsolidated subsidiaries
    
    
    2,550
    
    
    
    2,356Other
    
    
    1,341
    
    
    
    2,209Total non-interest income
    
    
    29,695
    
    
    
    50,459Non Interest Expenses:Employee compensation and benefits
    
    
    11,802
    
    
    
    21,851Other
    
    
    8,386
    
    
    
    15,171Total non-interest expenses
    
    
    20,188
    
    
    
    37,022Income from discontinued operations before
income taxes
    
    
    11,541
    
    
    
    16,794Provision for income taxes
    
    
    4,141
    
    
    
    5,854Income from discontinued operations, net
of tax
    
    $
    7,400
    
    
    $
    10,940
 The assets and liabilities associated with discontinued operations
included in the Companys statement of financial condition as of June 30, 2003
consisted of the following: (in thousands) June 30,2003Assets:Cash
    
    $
    19,430Securities owned
    
    
    133,683Loans receivable
    
    
    4,809Real estate inventory
    
    
    218,473Investment in unconsolidated subsidiaries
    
    
    68,320Goodwill
    
    
    1,204Other assets
    
    
    17,674Total assets
    
    $
    463,593Liabilities:Notes payable
    
    $
    105,699Securities sold but not yet purchased
    
    
    8,398Due to clearing agent
    
    
    104,270Other liabilities
    
    
    55,477Total liabilities
    
    $
    273,844
 25




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 13. Earnings per Share The following reconciles the numerators and denominators of the basic and
diluted earnings per share computation for the three months and six months
ended June 30, 2004 and 2003: For the Three Months EndedJune 30,(In thousands, except share data)
    
    2004
    
    2003Basic earnings per shareIncome from continuing operations
    
    $
    18,260
    
    
    $
    9,809Basic weighted average number of common shares outstanding
    
    
    59,343,940
    
    
    
    58,321,020Basic earnings per share from continuing operations
    
    $
    0.31
    
    
    $
    0.17Discontinued operations, net of taxes
    
    
    
    
    
    
    7,400Basic weighted average number of common shares outstanding
    
    
    59,343,940
    
    
    
    58,321,020Basic earnings per share from discontinued operations
    
    
    
    
    
    
    0.13Net income
    
    $
    18,260
    
    
    $
    17,209Basic weighted average number of common shares outstanding
    
    
    59,343,940
    
    
    
    58,321,020Basic earnings per share
    
    $
    0.31
    
    
    $
    0.30Diluted earnings per shareIncome from continuing operations
    
    $
    18,260
    
    
    $
    9,809Interest expense on convertible debentures
    
    
    
    
    
    
    129Subsidiary stock options
    
    
    (273
    )
    
    
    (27
    )Income available after assumed conversion
    
    $
    17,987
    
    
    $
    9,911Basic weighted average shares outstanding
    
    
    59,343,940
    
    
    
    58,321,020Common stock equivalents resulting from convertible debentures
    
    
    
    
    
    
    1,213,470Common stock equivalents resulting from stock-based compensation
    
    
    3,463,743
    
    
    
    2,364,434Diluted weighted average shares outstanding
    
    
    62,807,683
    
    
    
    61,898,924Diluted earnings per share from continuing operations
    
    $
    0.29
    
    
    $
    0.16Discontinued operations, net of taxes
    
    
    
    
    
    
    7,400Diluted weighted average number of common shares outstanding
    
    
    62,807,683
    
    
    
    61,898,924Diluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.12Diluted earnings per share
    
    $
    0.29
    
    
    $
    0.28
 26




---



##### Table of Contents



BankAtlantic Bancorp, Inc. For the Six Months EndedJune 30,(In thousands, except share data)
    
    2004
    
    2003Basic earnings per shareIncome from continuing operations
    
    $
    38,784
    
    
    $
    20,627Basic weighted average number of common shares outstanding
    
    
    59,300,605
    
    
    
    58,246,733Basic earnings per share from continuing operations
    
    $
    0.65
    
    
    $
    0.35Discontinued operations, net of taxes
    
    
    
    
    
    
    10,940Basic weighted average number of common shares outstanding
    
    
    59,300,605
    
    
    
    58,246,733Basic earnings per share from discontinued operations
    
    
    
    
    
    
    0.19Net income
    
    $
    38,784
    
    
    $
    31,567Basic weighted average number of common shares outstanding
    
    
    59,300,605
    
    
    
    58,246,733Basic earnings per share
    
    $
    0.65
    
    
    $
    0.54Diluted earnings per shareIncome from continuing operations
    
    $
    38,784
    
    
    $
    20,627Interest expense on convertible debentures
    
    
    
    
    
    
    569Subsidiary stock options
    
    
    (472
    )
    
    
    (74
    )Income available after assumed conversion
    
    $
    38,312
    
    
    $
    21,122Basic weighted average shares outstanding
    
    
    59,300,605
    
    
    
    58,246,733Common stock equivalents resulting from convertible debentures
    
    
    
    
    
    
    2,645,093Common stock equivalents resulting from stock-based compensation
    
    
    3,678,558
    
    
    
    2,155,856Diluted weighted average shares outstanding
    
    
    62,979,163
    
    
    
    63,047,682Diluted earnings per share from continuing operations
    
    $
    0.61
    
    
    $
    0.33Discontinued operations, net of taxes
    
    
    
    
    
    
    10,940Diluted weighted average number of common shares outstanding
    
    

    62,979,163
    
    
    
    63,047,682Diluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.18Diluted earnings per share
    
    $
    0.61
    
    
    $
    0.51
 27




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS The objective of the following discussion is to provide an understanding
of the financial condition and results of operations of BankAtlantic Bancorp,
Inc. (the Company, which may also be referred to as we, us, or our) and
its subsidiaries for the three and six months ended June 30, 2004 and 2003.
The principal assets of the Company consist of its ownership of these
subsidiaries, which include BankAtlantic, a federal savings bank headquartered
in Fort Lauderdale, Florida and its subsidiaries (BankAtlantic or Bank) and
RB Holdings, Inc., the holding company for Ryan Beck & Co., Inc., a brokerage
and investment banking firm, and its subsidiaries (Ryan Beck). Except for historical information contained herein, the matters discussed
in this document contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the Securities Act),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act), that involve substantial risks and uncertainties. When used
in this document and in any documents incorporated by reference herein, the
words anticipate, believe, estimate, may, intend, expect and
similar expressions identify certain of such forward-looking statements.
Actual results, performance, or achievements could differ materially from
those contemplated, expressed, or implied by the forward-looking statements
contained herein. These forward-looking statements are based largely on the
expectations of the Company and are subject to a number of risks and
uncertainties that are subject to change based on factors which are, in many
instances, beyond the Companys control. These include, but are not limited
to, risks and uncertainties associated with: the impact of economic,
competitive and other factors affecting the Company and its operations,
markets, products and services; credit risks and loan losses, and the related
sufficiency of the allowance for loan losses; changes in interest rates and
the effects of, and changes in, trade, monetary and fiscal policies and laws;
increases in costs associated with regulatory compliance; adverse conditions
in the stock market, the public debt market and other capital markets and the
impact of such conditions on our activities and the value of our assets;
BankAtlantics seven-day banking initiative and other growth initiatives not
being successful or producing results which do not justify their costs; as
well as the impact of periodic testing of goodwill and other intangible assets
for impairment; and BankAtlantics achieving the benefits of its prepayment of
certain Federal Home Loan Bank (FHLB) advances. Further, this document
contains forward-looking statements relating to BankAtlantics de novo branch
expansion strategy, existing branch renovation plans and branch branding
initiative which are subject to a number of risks and uncertainties, including
that the number of new branches may be less than anticipated, that required
capital expenditures or operating costs will be higher than anticipated and
that the de novo branch expansion strategy, existing branch renovation plans
and branch branding initiative will not be successful or will not produce
results which justify their costs. Further this document contains
forward-looking statements with respect to Ryan Beck, which are subject to a
number of risks and uncertainties, including, but not limited to: the risks
and uncertainties associated with its operations, products and services;
changes in economic or regulatory policies; the volatility of the stock market
and fixed income markets, including the markets impact on Ryan Becks trading
activities; the success of any new lines of business in which it may engage;
and uncertainties associated with litigation brought against Gruntal & Co.,
LLC (Gruntal), a company in which certain assets were acquired and certain
liabilities were assumed by Ryan Beck in 2002. In addition to the risks and
factors identified above, reference is also made to other risks and factors
detailed in reports filed by the Company with the Securities and Exchange
Commission. The Company cautions that the foregoing factors are not
exclusive. Critical Accounting Policies Management views critical accounting policies as accounting policies that
are important to the understanding of our financial statements and also involve
estimates and judgments about inherently uncertain matters. In preparing the
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the consolidated statements
of financial condition and assumptions that affect the recognition of income
and expenses on the statement of operations for the periods presented. Actual
results could differ significantly from those estimates. Material estimates
that are particularly susceptible to significant change in subsequent periods
relate to the determination of the allowance for loan losses, evaluation of
goodwill and other intangible assets for impairment, the valuation of real
estate acquired in connection with foreclosure or in satisfaction of loans, the
valuation of the fair value of assets and liabilities in the application of the
purchase method of accounting, the valuation of securities, the amount of the
deferred tax asset valuation allowance, and accounting for contingencies. The
six accounting policies that we have identified as critical accounting policies
are: (i) allowance for loan losses; (ii) valuation of securities; (iii)
impairment of goodwill and other intangible assets; (iv) impairment of
long-lived assets; (v) accounting for business combinations; and (vi)
accounting for contingencies. For a 28




---



##### Table of Contents



BankAtlantic Bancorp, Inc. more detailed discussion of these critical accounting policies see Critical
Accounting Policies appearing in the Companys Annual Report on Form 10-K for
the year ended December 31, 2003. Summary Consolidated Results of Operations For Three Months Ended June 30,
    
    For Six Months Ended June 30,(in thousands)
    
    2004
    
    2003
    
    Change
    
    2004
    
    2003
    
    ChangeBankAtlantic
    
    $
    13,995
    
    
    $
    12,958
    
    
    $
    1,037
    
    
    $
    17,301
    
    
    $
    24,360
    
    
    $
    (7,059
    )Ryan Beck
    
    
    7,014
    
    
    
    925
    
    
    
    6,089
    
    
    
    12,142
    
    
    
    2,749
    
    
    
    9,393Parent Company
    
    
    (2,749
    )
    
    
    (4,074
    )
    
    
    1,325
    
    
    
    9,341
    
    
    
    (6,482
    )
    
    
    15,823Income from
continuing
operations
    
    
    18,260
    
    
    
    9,809
    
    
    
    8,451
    
    
    
    38,784
    
    
    
    20,627
    
    
    
    18,157Discontinued
operations,
net of tax
    
    
    
    
    
    
    7,400
    
    
    
    (7,400
    )
    
    
    
    
    
    
    10,940
    
    
    
    (10,940
    )Net income
    
    $
    18,260
    
    
    $
    17,209
    
    
    $
    1,051
    
    
    $
    38,784
    
    
    $
    31,567
    
    
    $
    7,217
 For the Three Months Ended June 30, 2004 Compared to the Same 2003 Period: Income from continuing operations increased 86% from the same 2003 period.
This increase was primarily related to a 658% increase in earnings at Ryan Beck
and an 8% increase in earnings at BankAtlantic. The significant increase in Ryan Beck earnings was attributable to
increased merger and acquisition-related business during the quarter that
resulted in higher fee income for its investment banking segment. The higher
investment banking revenues were partially offset by lower revenues from
commissions and principal transactions reflecting decreased activity by
individual customers based on market conditions during the period. The increased earnings at BankAtlantic was primarily the result of
additional fee income related to increased deposit accounts at the Bank, an
improvement in the provision for loan losses and an increase in the net
interest margin. The additional fee income earned on deposit accounts is primarily
attributable to BankAtlantics Floridas Most Convenient Bank initiatives.
Since inception of these initiatives in January 2002, BankAtlantic has opened
over 331,000 new checking and savings accounts, including approximately 42,000
during the second quarter of 2004. The credit quality of BankAtlantics loan portfolio continued to improve
during the second quarter of 2004 as BankAtlantic continued to emphasize
collateral based lending and the balances of discontinued loan products
continued to decline. During the quarter, BankAtlantic recovered $2.1 million
from the guarantor on a residential construction loan that was charged-off in
July 2002. Primarily as a result of this recovery and recoveries associated
with discontinued loan products, BankAtlantic had net recoveries for the
quarter of $3.3 million. The improvement in BankAtlantics net interest margin reflects the growth
in low cost deposits plus prepayments of high cost FHLB advances that occurred
in each of the three preceding quarters. The above favorable effects on earnings were partially offset by higher
compensation, occupancy and advertising expenses primarily associated with the
Floridas Most Convenient Bank initiatives and lower real estate revenues
associated with a real estate joint venture. In December 2003, the Company completed the spin-off of its wholly-owned
subsidiary, Levitt Corporation (Levitt), and transferred its investment in
Bluegreen Corporation to Levitt. During the year ended December 31, 2003, Ryan
Beck sold two of its subsidiaries, GMS and Cumberland. The above transactions
were presented as discontinued operations in our statement of operations for
the three months and six months ended June 30, 2003. In July 2004, BankAtlantic announced a branch expansion and renovation
strategic plan. The goals of the plan are to renovate all 73 existing
branches by December 2005 and to open between eight to ten new branches during
2005. The plan was adopted in response to the early success of the Floridas
Most Convenient Bank initiatives, including the 29




---



##### Table of Contents



BankAtlantic Bancorp, Inc.

growth in BankAtlantics low cost deposits, since January 2002 and the
desire to expand its operations in its current markets and to other markets. For the Six Months Ended June 30, 2004 Compared to the Same 2003 Period: Income from continuing operations increased 88% from the same 2003 period,
primarily as a result of the items discussed above. Additionally, income from
continuing operations in the first quarter of 2004 was enhanced by recognition
of a $22.8 million gain in connection with a March 2004 settlement of
litigation with a technology company in which the Company was an investor.
Income from continuing operations for the 2004 period was partially offset by
prepayment penalties of $11.7 million that BankAtlantic incurred by prepaying
high fixed interest rate FHLB advances totaling $108 million. Excluding the
impact of the litigation settlement gain and the cost associated with FHLB
advance prepayment penalties and other debt redemptions, income from continuing
operations would have been $31.6 million for the first six months of 2004,
representing a 45% increase over $21.7 million earned for the corresponding
period in 2003. 30




---



##### Table of Contents



Bank Atlantic Bancorp. Inc. Bank Results of Operations Net interest income Average Balance Sheet - Yield / Rate AnalysisFor the Three Months EndedJune 30, 2004
    
    June 30, 2003Average
    
    Revenue/
    
    
    
    
    
    Yield/
    
    Average
    
    Revenue/
    
    Yield/(Dollars in thousands)
    
    Balance
    
    Expense
    
    
    
    
    
    Rate
    
    Balance
    
    Expense
    
    RateInterest earning assetsLoans:Residential real estate
    
    $
    1,386,482
    
    
    
    15,781
    
    
    
    
    
    
    
    4.55
    %
    
    $
    1,880,890
    
    
    $
    22,556
    
    
    
    4.80
    %Commercial real estate
    
    
    1,641,438
    
    
    
    22,670
    
    
    
    
    
    
    
    5.52
    
    
    
    1,554,965
    
    
    
    23,374
    
    
    
    6.01Consumer
    
    
    403,824
    
    
    
    4,067
    
    
    
    
    
    
    
    4.03
    
    
    
    306,740
    
    
    
    3,520
    
    
    
    4.59Lease financing
    
    
    11,526
    
    
    
    317
    
    
    
    
    
    
    
    11.00
    
    
    
    22,713
    
    
    
    648
    
    
    
    11.41Commercial business
    
    
    103,780
    
    
    
    1,589
    
    
    
    
    
    
    
    6.12
    
    
    
    106,323
    
    
    
    1,496
    
    
    
    5.63Small business
    
    
    182,171
    
    
    
    3,223
    
    
    
    
    
    
    
    7.08
    
    
    
    158,798
    
    
    
    2,895
    
    
    
    7.29Total loans
    
    
    3,729,221
    
    
    
    47,647
    
    
    
    
    
    
    
    5.11
    
    
    
    4,030,429
    
    
    
    54,489
    
    
    
    5.41Investments - tax exempt
    
    
    72,675
    
    
    
    938
    
    
    
    (1
    )
    
    
    5.16
    
    
    
    
    
    
    
    
    
    
    
    Investments - taxable
    
    
    620,285
    
    
    
    8,505
    
    
    
    
    
    
    
    5.48
    
    
    
    900,224
    
    
    
    12,848
    
    
    
    5.71Total interest earning assets
    
    
    4,422,181
    
    
    
    57,090
    
    
    
    
    
    
    
    5.16
    %
    
    
    4,930,653
    
    
    
    67,337
    
    
    
    5.46
    %Goodwill and core deposit intangibles
    
    
    81,849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,591Other non-interest earning assets
    
    
    251,755
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237,074Total Assets
    
    $
    4,755,785
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,251,318Interest bearing liabilitiesDeposits:Savings
    
    $
    242,506
    
    
    
    161
    
    
    
    
    
    
    
    0.27
    %
    
    $
    185,685
    
    
    $
    268
    
    
    
    0.58
    %NOW
    
    
    586,259
    
    
    
    534
    
    
    
    
    
    
    
    0.37
    
    
    
    454,108
    
    
    
    561
    
    
    
    0.50Money funds
    
    
    912,065
    
    
    
    2,116
    
    
    
    
    
    
    
    0.93
    
    
    
    836,246
    
    
    
    2,625
    
    
    
    1.26Certificate accounts
    
    
    709,523
    
    
    
    3,977
    
    
    
    
    
    
    
    2.25
    
    
    
    913,564
    
    
    
    6,304
    
    
    
    2.77Total deposits
    
    
    2,450,353
    
    
    
    6,788
    
    
    
    
    
    
    
    1.11
    
    
    
    2,389,603
    
    
    
    9,758
    
    
    
    1.64Short-term borrowed funds
    
    
    300,460
    
    
    
    702
    
    
    
    
    
    
    
    0.94
    
    
    
    436,975
    
    
    
    1,337
    
    
    
    1.23Advances from FHLB
    
    
    696,661
    
    
    
    7,769
    
    
    
    
    
    
    
    4.49
    
    
    
    1,313,896
    
    
    
    15,291
    
    
    
    4.67Long-term debt
    
    
    36,429
    
    
    
    505
    
    
    
    
    
    
    
    5.58
    
    
    
    33,684
    
    
    
    491
    
    
    
    5.85Total interest bearing liabilities
    
    
    3,483,903
    
    
    
    15,764
    
    
    
    
    
    
    
    1.82
    
    
    
    4,174,158
    
    
    
    26,877
    
    
    
    2.58Non-interest bearing deposits
    
    
    755,593
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    535,567Non-interest bearing other liabilities
    
    
    24,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,454Total Liabilities
    
    
    4,264,081
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,781,179Stockholders equity
    
    
    491,704
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470,139Total liabilities and stockholders equity
    
    $
    4,755,785
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,251,318Net interest income/ net interest spread
    
    
    
    
    
    $
    41,326
    
    
    
    
    
    
    
    3.34
    %
    
    
    
    
    
    $
    40,460
    
    
    
    2.88
    %Tax equivalent adjustment
    
    
    
    
    
    
    (328
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capitalized interest from real estate operations
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256Net interest income
    
    
    
    
    
    
    41,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,716MarginInterest income/interest earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.16
    %
    
    
    
    
    
    
    
    
    
    
    5.46
    %Interest expense/interest earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.43
    
    
    
    
    
    
    
    
    
    
    
    2.19Net interest margin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    3.27
    %
  (1)
    
    The tax equivalent basis is computed using a 35% tax rate. 31




---



##### Table of Contents



BankAtlantic Bancorp, Inc.   For the Three Months Ended June 30, 2004 Compared to the Same 2003 Period: The increase in net interest income primarily resulted from an improvement
in the net interest margin and a significant increase in low cost deposits.
While further margin improvement will largely depend on the future pattern of
interest rates, we believe our level of low cost deposits, coupled with the
positioning of our balance sheet for rising interest rates should enable
BankAtlantic to benefit from a higher interest rate environment. The significant factors resulting in the improvement in the net interest
margin were a substantial reduction in our deposit interest expense associated
with a change in our deposit mix, the repayment of high rate FHLB advances and
a historically low interest rate environment during the current quarter. These
factors were partially offset by a decline in average asset yields primarily
due to the downward re-pricing of floating rate loans and new loans being
originated or purchased at rates lower than maturing or prepaid loans. A major factor resulting in the reduction in deposit interest expense was
low cost deposit growth. Low cost deposits comprised approximately 50% of all
deposits at June 30, 2004 versus 41% at June 30, 2003. Higher rate certificate
of deposit accounts declined from 30% of total deposits at June 30, 2003 to 22%
at June 30, 2004. Growth in BankAtlantics low cost deposit accounts is
primarily attributable to its Floridas Most Convenient Bank initiatives. BankAtlantics average interest earning asset balances declined primarily
due to falling interest rates resulting in increased refinancing and prepayment
of many residential loans originated or purchased by BankAtlantic. This
reduced the balances in both its residential mortgage loan portfolio and its
taxable investment securities portfolio. At the same time, BankAtlantic
experienced growth in its commercial real estate loans and in consumer equity
lines of credit and invested in tax exempt securities, which slightly mitigated
the negative impact of the residential loan refinancings and prepayments. BankAtlantic chose to use some of the proceeds from maturing loans and
investments to decrease borrowings. BankAtlantic prepaid some of its FHLB
advances in each of the three preceding quarters with a view towards favorably
impacting its net interest margin in future periods. Despite these prepayments,
BankAtlantics average FHLB advance rates only declined slightly from the
comparable 2003 period because a portion of the remaining FHLB advance
borrowings have higher rates than the prepaid FHLB advances. Also, interest
expense on BankAtlantics short-term borrowings was substantially lower during
the current quarter due to the lower rates and lower balances on its debt. 32




---



##### Table of Contents



BankAtlantic Bancorp, Inc. For the Six Months EndedJune 30, 2004
    
    June 30, 2003Average
    
    Revenue/
    
    
    
    
    
    Yield/
    
    Average
    
    Revenue/
    
    Yield/(in thousands)
    
    Balance
    
    Expense
    
    
    
    
    
    Rate
    
    Balance
    
    Expense
    
    RateLoans:Residential real estate
    
    $
    1,356,271
    
    
    
    31,722
    
    
    
    
    
    
    
    4.68
    %
    
    $
    1,721,109
    
    
    
    44,142
    
    
    
    5.13
    %Commercial real estate
    
    
    1,665,700
    
    
    
    46,364
    
    
    
    
    
    
    
    5.57
    
    
    
    1,542,751
    
    
    
    46,241
    
    
    
    5.99Consumer
    
    
    389,023
    
    
    
    7,967
    
    
    
    
    
    
    
    4.10
    
    
    
    301,735
    
    
    
    6,988
    
    
    
    4.63Lease financing
    
    
    12,584
    
    
    
    698
    
    
    
    
    
    
    
    11.09
    
    
    
    26,318
    
    
    
    1,482
    
    
    
    11.26Commercial business
    
    
    101,369
    
    
    
    3,089
    
    
    
    
    
    
    
    6.09
    
    
    
    103,553
    
    
    
    2,945
    
    
    
    5.69Small business
    
    
    178,031
    
    
    
    6,308
    
    
    
    
    
    
    
    7.09
    
    
    
    161,460
    
    
    
    5,932
    
    
    
    7.35Total loans
    
    
    3,702,978
    
    
    
    96,148
    
    
    
    
    
    
    
    5.19
    
    
    
    3,856,926
    
    
    
    107,730
    
    
    
    5.59Investments  tax exempt
    
    
    38,019
    
    
    
    989
    
    
    
    (1
    )
    
    
    5.20
    
    
    
    
    
    
    
    
    
    
    
    0.00Investments  taxable
    
    
    580,382
    
    
    
    16,314
    
    
    
    
    
    
    
    5.62
    
    
    
    926,628
    
    
    
    26,536
    
    
    
    5.73Total interest earning assets
    
    
    4,321,379
    
    
    
    113,451
    
    
    
    
    
    
    
    5.25
    %
    
    
    4,783,554
    
    
    
    134,266
    
    
    
    5.61
    %Goodwill and core deposit intangibles
    
    
    82,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,170Other non-interest earning assets
    
    
    245,915
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249,449Total Assets
    
    $
    4,649,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,117,173Deposits:Savings
    
    $
    231,256
    
    
    
    304
    
    
    
    
    
    
    
    0.26
    %
    
    $
    178,531
    
    
    
    584
    
    
    
    0.66
    %NOW
    
    
    564,939
    
    
    
    1,026
    
    
    
    
    
    
    
    0.37
    
    
    
    439,944
    
    
    
    1,103
    
    
    
    0.51Money funds
    
    
    889,416
    
    
    
    3,992
    
    
    
    
    
    
    
    0.90
    
    
    
    822,938
    
    
    
    5,278
    
    
    
    1.29Certificate accounts
    
    
    739,736
    
    
    
    8,439
    
    
    
    
    
    
    
    2.29
    
    
    
    940,069
    
    
    
    13,962
    
    
    
    3.00Total deposits
    
    
    2,425,347
    
    
    
    13,761
    
    
    
    
    
    
    
    1.14
    
    
    
    2,381,482
    
    
    
    20,927
    
    
    
    1.77Short-term borrowed funds
    
    
    225,597
    
    
    
    1,004
    
    
    
    
    
    
    
    0.89
    
    
    
    361,763
    
    
    
    2,174
    
    
    
    1.21Advances from FHLB
    
    
    728,817
    
    
    
    16,867
    
    
    
    
    
    
    
    4.65
    
    
    
    1,299,519
    
    
    
    30,607
    
    
    
    4.75Long-term debt
    
    
    36,136
    
    
    
    987
    
    
    
    
    
    
    
    5.49
    
    
    
    34,543
    
    
    
    938
    
    
    
    5.48Total interest bearing liabilities
    
    
    3,415,897
    
    
    
    32,619
    
    
    
    
    
    
    
    1.92
    
    
    
    4,077,307
    
    
    
    54,646
    
    
    
    2.70Non-interest bearing deposits
    
    
    710,194
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    507,119Non-interest bearing other liabilities
    
    
    29,305
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,518Total Liabilities
    
    
    4,155,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,651,944Stockholders equity
    
    
    493,954
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465,229Total liabilities and stockholders equity
    
    $
    4,649,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,117,173Net interest income/net
interest spread
    
    
    
    
    
    $
    80,832
    
    
    
    
    
    
    
    3.33
    %
    
    
    
    
    
    $
    79,620
    
    
    
    2.91
    %Tax equivalent adjustment
    
    
    
    
    
    
    (346
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capitalized interest from real estate
operations
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    595Net interest income
    
    
    
    
    
    
    81,139
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,215MarginInterest income/interest earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.25
    %
    
    
    
    
    
    
    
    
    
    
    5.61
    %Interest expense/interest earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.52
    
    
    
    
    
    
    
    
    
    
    
    2.30Net interest margin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    3.31
    %
  (1)
    
    The tax equivalent basis is computed using a 35% tax rate. For the Six Months Ended June 30, 2004 Compared to the Same 2003 Period: Net interest income for the six month period increased slightly from 2003
levels. The increase resulted primarily from the items discussed above for the
three months ended June 30, 2004. 33




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Provision for Loan Losses For Three Months Ended
    
    For Six Months EndedJune 30,
    
    June 30,(in thousands)
    
    2004
    
    2003
    
    2004
    
    2003Balance, beginning of period
    
    $
    45,383
    
    
    $
    48,695
    
    
    $
    45,595
    
    
    $
    48,022Charge-offs:Small business
    
    
    
    
    
    
    (171
    )
    
    
    
    
    
    
    (417
    )Consumer loans
    
    
    (241
    )
    
    
    (310
    )
    
    
    (390
    )
    
    
    (545
    )Residential real estate loans
    
    
    (124
    )
    
    
    (98
    )
    
    
    (355
    )
    
    
    (212
    )Discontinued loan products
    
    
    (159
    )
    
    
    (1,978
    )
    
    
    (646
    )
    
    
    (4,975
    )Total charge-offs
    
    
    (524
    )
    
    
    (2,557
    )
    
    
    (1,391
    )
    
    
    (6,149
    )Recoveries:Commercial business loans
    
    
    256
    
    
    
    21
    
    
    
    324
    
    
    
    49Commercial real estate loans
    
    
    2,050
    
    
    
    
    
    
    
    2,051
    
    
    
    1Small business
    
    
    233
    
    
    
    18
    
    
    
    242
    
    
    
    373Consumer loans
    
    
    106
    
    
    
    130
    
    
    
    154
    
    
    
    306Residential real estate loans
    
    
    217
    
    
    
    61
    
    
    
    243
    
    
    
    118Discontinued loan products
    
    
    979
    
    
    
    1,718
    
    
    
    2,341
    
    
    
    5,250Total recoveries
    
    
    3,841
    
    
    
    1,948
    
    
    
    5,355
    
    
    
    6,097Net (charge-offs) recoveries
    
    
    3,317
    
    
    
    (609
    )
    
    
    3,964
    
    
    
    (52
    )Provision for (recovery from) loan losses
    
    
    (1,963
    )
    
    
    1,490
    
    
    
    (2,822
    )
    
    
    2,340Adjustments to provision for
acquired loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (734
    )Balance, end of period
    
    $
    46,737
    
    
    $
    49,576
    
    
    $
    46,737
    
    
    $
    49,576
 For the Three and Six Months Ended June 30, 2004 Compared to the Same 2003
Periods: The substantial improvement in net charge-offs primarily resulted from a
$2.1 million recovery in the 2004 second quarter of a residential construction
loan that was charged off in 2002 and lower net charge-offs associated with
discontinued loan products. The remaining balance of these discontinued loan
products declined to $19.6 million from $51.4 million a year earlier.
Discontinued loan products are lease financing, indirect consumer lending,
non-real estate syndication lending, and certain types of small business
lending. The negative provisions for loan losses during the 2004 periods were due
to a $2.1 million residential construction loan recovery and recoveries on
other loans, partially offset by $2.1 million of specific reserves relating to
two commercial business loans and one aviation lease having an aggregate
outstanding balance of $4.6 million. The reserves were established due to the
weakened financial conditions of the borrowers. BankAtlantics allowance for loan losses was 1.18% and 1.22% of total
loans at June 30, 2004 and 2003, respectively. The historically low
charge-off experience and the resulting decrease in the allowance for loan
losses as a percent of total loans reflect the continued improvement in credit
quality largely associated with an increased emphasis on collateral based
lending, coupled with the run-off of discontinued loan products in the
portfolio. Adjustments in the 2003 first quarter to the allowance for loan losses
were associated with loans acquired in connection with the 2002 purchase of
Community Savings Bancshares, Inc. (Community or Community Savings).
BankAtlantic reduced its allowance for loan losses and reduced goodwill by
$734,000 during the 2003 first quarter for those acquired loans which had been
assigned a valuation allowance at the acquisition date and which had either
matured or were prepaid. 34




---



##### Table of Contents



BankAtlantic Bancorp, Inc. At the indicated dates, the Companys non-performing assets and potential
problem loans were (in thousands): June 30,
    
    December 31,2004
    
    2003NONPERFORMING ASSETSNonaccrual:Tax certificates
    
    $
    586
    
    
    $
    894Loans and leases
    
    
    12,711
    
    
    
    10,803Total nonaccrual
    
    
    13,297
    
    
    
    11,697Repossessed assets:Real estate owned
    
    
    1,321
    
    
    
    2,422Total nonperforming assets
    
    
    14,618
    
    
    
    14,119Specific valuation allowances
    
    
    (2,095
    )
    
    
    Total nonperforming assets, net
    
    $
    12,523
    
    
    $
    14,119AllowancesAllowance for loan losses
    
    $
    46,737
    
    
    $
    45,595Allowance for tax certificate losses
    
    
    3,369
    
    
    
    2,870Total Allowances
    
    $
    50,106
    
    
    $
    48,465POTENTIAL PROBLEM LOANSContractually past due 90 days or more
    
    $
    1
    
    
    $
    135Performing impaired loans
    
    
    199
    
    
    
    180Restructured loans
    
    
    31
    
    
    
    1,387TOTAL POTENTIAL PROBLEM LOANS
    
    $
    231
    
    
    $
    1,702
 Non-performing assets increased slightly from December 2003. The ratio of
non-performing assets to total loans, tax certificates and repossessed assets
declined from 0.36% at December 31, 2003 to 0.35% at June 30, 2004. During the
2004 period, non-performing assets were unfavorably impacted by two loans and
one aviation lease transferring to non-accrual status as a result of the
weakened financial conditions of the borrowers. The aviation lease was
included in restructured loans at December 31, 2003. Non-performing assets
were favorably impacted by fewer residential non-performing loans partly due to
increased efforts on the collection of residential loans serviced by others.
The decline in repossessed assets was primarily due to the runoff of
discontinued loan products, sale of real estate owned and strengthened credit
standards. Non-Interest Income For Three Months Ended June 30,
    
    For Six Months Ended June 30,Banking Operations(In thousands)
    
    2004
    
    2003
    
    Change
    
    2004
    
    2003
    
    ChangeOther service charges and fees
    
    $
    6,431
    
    
    $
    6,071
    
    
    $
    360
    
    
    $
    11,068
    
    
    $
    9,989
    
    
    $
    1,079Service charges on deposits
    
    
    13,028
    
    
    
    9,605
    
    
    
    3,423
    
    
    
    24,305
    
    
    
    18,163
    
    
    
    6,142Income from real estate joint
venture
    
    
    683
    
    
    
    4,136
    
    
    
    (3,453
    )
    
    
    988
    
    
    
    5,222
    
    
    
    (4,234
    )Securities activities, net
    
    
    
    
    
    
    (19
    )
    
    
    19
    
    
    
    (3
    )
    
    
    (40
    )
    
    
    37Other
    
    
    2,027
    
    
    
    1,700
    
    
    
    327
    
    
    
    4,031
    
    
    
    3,273
    
    
    
    758Non-interest income
    
    $
    22,169
    
    
    $
    21,493
    
    
    $
    676
    
    
    $
    40,389
    
    
    $
    36,607
    
    
    $
    3,782
 For the Three and Six Months Ended June 30, 2004 Compared to the Same 2003
Periods: The higher non-interest income was primarily due to service charges and
fees associated with a substantial increase in deposit customers. This
increase was partially offset by a decline in real estate income associated
with real estate activities of a joint venture that was acquired in connection
with the Community acquisition. 35




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The increase in deposit accounts was primarily the result of
BankAtlantics Floridas Most Convenient Bank initiatives. Since launching
these initiatives in January 2002, BankAtlantic has opened over 331,000 new
checking and savings accounts, including approximately 42,000 and 87,000 in the
three and six months ended June 30, 2004, respectively. The Floridas Most
Convenient Bank initiatives include seven-day branch banking, extended weekday
branch hours, 24/7 live customer service, Totally Free Checking, free online
banking, and dozens of other products and services not offered by BankAtlantic
prior to January 2002. The increase in other service charges and fees resulted from an 18% and
20% increase, respectively, in fees received from check card and ATM usage.
This increase was chiefly due to the increased number of deposit accounts
which resulted in increased usage of check cards and ATMs, and an increase in
debit card interchange fees during 2004. The additional ATM and debit card
income was partially offset by lower late payment fees and prepayment penalties
on loans. Revenues from deposit service charges were up 36% and 34% over the
comparable 2003 periods. The increase was primarily the result of overdraft
fees from transaction accounts. Overdraft fee income increased from $8.7
million and $16.3 million during the three and six months ended June 30, 2003,
respectively, to $11.8 million and $21.9 million during the same 2004 periods.
The higher overdraft fees were due to both an increase in the number of
accounts and additional fees assessed on overdrafts. Real estate income reflects income of a joint venture acquired as part of
the Community acquisition. The decrease in real estate income reflects a
decline in the number of units closed by the joint venture, compared to the
same 2003 periods. During the three and six months ended June 30, 2004, the
joint venture had closings of 5 units and 7 units, respectively. During the
same 2003 periods, the joint venture closed on 12 units and 17 units,
respectively. Other income reported for the three and six months ended June 30, 2004 was
favorably impacted by an $115,000 and a $245,000 increase, respectively, in
gains on loans held for sale. The additional loan sale income was associated
with the origination of residential loans held for sale with an independent
mortgage company, a program which the Bank initiated in August 2003. Other
income also included an increase in fee income received for banking services
provided to our deposit customers. Non-Interest Expense For Three Months
    
    For Six MonthsEnded June 30,
    
    Ended June 30,Banking Operations(In thousands)
    
    2004
    
    2003
    
    Change
    
    2004
    
    2003
    
    ChangeEmployee compensation and benefits
    
    $
    23,135
    
    
    $
    20,466
    
    
    $
    2,669
    
    
    $
    46,164
    
    
    $
    39,934
    
    
    $
    6,230Occupancy and equipment
    
    
    7,809
    
    
    
    6,715
    
    
    
    1,094
    
    
    
    14,955
    
    
    
    13,363
    
    
    
    1,592Advertising and promotion
    
    
    4,161
    
    
    
    2,874
    
    
    
    1,287
    
    
    
    7,624
    
    
    
    4,473
    
    
    
    3,151Amortization of intangible assets
    
    
    425
    
    
    
    439
    
    
    
    (14
    )
    
    
    864
    
    
    
    893
    
    
    
    (29
    )Cost associated with debt redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,741
    
    
    
    
    
    
    
    11,741Professional fees
    
    
    807
    
    
    
    1,025
    
    
    
    (218
    )
    
    
    2,065
    
    
    
    2,121
    
    
    
    (56
    )Other
    
    
    7,233
    
    
    
    9,138
    
    
    
    (1,905
    )
    
    
    14,289
    
    
    
    16,202
    
    
    
    (1,913
    )Non-interest expense
    
    $
    43,570
    
    
    $
    40,657
    
    
    $
    2,913
    
    
    $
    97,702
    
    
    $
    76,986
    
    
    $
    20,716
 For the Three and Six Months Ended June 30, 2004 Compared to the Same 2003
Periods: Compensation and benefit expenses increased 13% and 16% in the second
quarter and first half of 2004, respectively, compared to the same 2003
periods. In addition to annual employee salary increases, the growth in this
expense category resulted in large part from an increase in the number of
BankAtlantic employees and higher employee benefit costs. The Floridas
Most Convenient Bank initiatives, which include extended branch business
hours and services, and the resulting substantial increase in deposit
customers, required BankAtlantic to hire additional employees to staff its
branches and operations. The number of full time equivalent BankAtlantic
employees increased to 1,453 at June 30, 2004, versus 1,244 at December 31,
2002. Occupancy and equipment expenses during the second quarter of 2004
increased 16% over those in the second quarter of 2003. The higher expenses
resulted from additional depreciation expense associated with branch fixed
assets and leasehold improvements. In June 2004, BankAtlantic initiated a
program to renovate its existing 73 branches. 36




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Management anticipates that the renovation plan will be completed by
December 2005. In connection with this program and in conjunction with this
decision, BankAtlantic shortened the estimated useful lives of branch fixed
assets and leasehold improvements affected by the renovation plans, causing an
acceleration in depreciation expense on $2.8 million of fixed assets and
leasehold improvements. The shortened asset lives increased depreciation
expense by approximately $400,000 during the second quarter of 2004, and will
increase depreciation expense in subsequent quarters through December 2005. The
remaining increase in occupancy and equipment expenses for the three and six
months ended June 30, 2004 was due to the engagement of additional guard
services to increase security at BankAtlantics branches during extended
business hours. Advertising expenses during the three and six months ended June 30, 2004
increased significantly as a direct result of an aggressive BankAtlantic
marketing campaign that commenced in early 2004 and included television and
radio advertising to promote the Banks Floridas Most Convenient Bank
initiatives. The marketing campaign is ongoing, and BankAtlantic
anticipates continued higher advertising and promotion expenditures during the
2004 fiscal year compared to those incurred during the 2003 fiscal year. The cost associated with debt redemption related to a prepayment penalty
of $11.7 million incurred when BankAtlantic prepaid $108 million of FHLB
advances with an average interest rate of 5.55% and originally maturing in
2007-2008. BankAtlantic expects to recover this expense in future periods
through the savings realized from lower borrowing costs. Professional fees for the three and six months ended June 30, 2004
declined primarily because the Bank had incurred significant legal fees during
the comparable 2003 periods in connection with a lawsuit filed against it
relating to the Floridas Most Convenient Bank initiatives. The decline in
fees was partially offset by increased professional fees incurred during the
2004 periods in connection with regulatory compliance. The decrease in other expenses for the three months ended June 30, 2004,
compared to the same 2003 period, primarily resulted from a $257,000 branch
impairment writedown during 2003 and lower expenses associated with the real
estate joint venture acquired in the Community transaction. The decrease in
other expenses during the six months ended June 30, 2004, as compared to the
same 2003 period, primarily resulted from the items noted in the preceding
sentence, and from a $750,000 write-down of an REO property during 2003. 37




---



##### Table of Contents



BankAtlantic Bancorp, Inc. RB Holdings, Inc. and Subsidiaries Results of Operations For the Three Months Ended June 30,
    
    For the Six Months Ended June 30,(In thousands)
    
    2004
    
    2003
    
    Change
    
    2004
    
    2003
    
    ChangeNet interest income:Interest on trading securities
    
    $
    2,866
    
    
    $
    2,181
    
    
    $
    685
    
    
    $
    5,662
    
    
    $
    4,498
    
    
    $
    1,164Interest expense
    
    
    (274
    )
    
    
    (378
    )
    
    
    104
    
    
    
    (484
    )
    
    
    (741
    )
    
    
    257Net interest income
    
    
    2,592
    
    
    
    1,803
    
    
    
    789
    
    
    
    5,178
    
    
    
    3,757
    
    
    
    1,421Non-interest income:Principal transactions
    
    
    21,654
    
    
    
    24,057
    
    
    
    (2,403
    )
    
    
    46,097
    
    
    
    49,141
    
    
    
    (3,044
    )Investment banking
    
    
    18,026
    
    
    
    5,079
    
    
    
    12,947
    
    
    
    30,657
    
    
    
    12,768
    
    
    
    17,889Commissions
    
    
    22,245
    
    
    
    21,603
    
    
    
    642
    
    
    
    47,616
    
    
    
    40,955
    
    
    
    6,661Other
    
    
    1,083
    
    
    
    480
    
    
    
    603
    
    
    
    1,703
    
    
    
    1,320
    
    
    
    383Non-interest income
    
    
    63,008
    
    
    
    51,219
    
    
    
    11,789
    
    
    
    126,073
    
    
    
    104,184
    
    
    
    21,889Non-interest expense:Employee compensation and
benefits
    
    
    40,297
    
    
    
    36,892
    
    
    
    3,405
    
    
    
    84,339
    
    
    
    74,815
    
    
    
    9,524Occupancy and equipment
    
    
    3,236
    
    
    
    2,900
    
    
    
    336
    
    
    
    6,339
    
    
    
    5,990
    
    
    
    349Advertising and promotion
    
    
    1,421
    
    
    
    945
    
    
    
    476
    
    
    
    2,582
    
    
    
    2,153
    
    
    
    429Professional Fees
    
    
    1,330
    
    
    
    2,332
    
    
    
    (1,002
    )
    
    
    2,375
    
    
    
    4,054
    
    
    
    (1,679
    )Communications
    
    
    3,106
    
    
    
    4,216
    
    
    
    (1,110
    )
    
    
    6,359
    
    
    
    8,045
    
    
    
    (1,686
    )Floor broker and clearing fees
    
    
    2,438
    
    
    
    2,236
    
    
    
    202
    
    
    
    5,240
    
    
    
    4,394
    
    
    
    846Other
    
    
    1,597
    
    
    
    2,025
    
    
    
    (428
    )
    
    
    3,280
    
    
    
    3,899
    
    
    
    (619
    )Non-interest expense
    
    
    53,425
    
    
    
    51,546
    
    
    
    1,879
    
    
    
    110,514
    
    
    
    103,350
    
    
    
    7,164Income before income taxes
    
    
    12,175
    
    
    
    1,476
    
    
    
    10,699
    
    
    
    20,737
    
    
    
    4,591
    
    
    
    16,146Income taxes
    
    
    5,161
    
    
    
    551
    
    
    
    4,610
    
    
    
    8,595
    
    
    
    1,843
    
    
    
    6,752Income from continuing
operations
    
    $
    7,014
    
    
    $
    925
    
    
    $
    6,089
    
    
    $
    12,142
    
    
    $
    2,748
    
    
    $
    9,394
 For the Three and Six Months Ended June 30, 2004 Compared to the Same 2003
Periods: Income from continuing operations increased significantly as a result of
higher investment banking activity from Ryan Becks Financial Institutions
Group. Net interest income increased 44% and 38%, respectively. This increase
primarily resulted from interest earned by Ryan Beck on approximately $255
million of customer margin debit balances and fees earned in connection with
approximately $1.1 billion in customer money market balances. Also
contributing to the increase in net interest income was Ryan Becks repayment
of a subordinated loan from the Company in the third quarter of 2003,
eliminating current interest expense on that loan. Principal transaction revenue decreased 10% and 6%, respectively. The
primary reason for the decrease was decreased Private Client Group customer
activity as a result of current market conditions. Additionally, income from
Ryan Becks deferred compensation plan assets was down 35% and 59%,
respectively, and related compensation expense associated with the plan was
down by similar amounts. Investment banking revenue increased 255% and 140%, respectively. Through
the second quarter of 2004, Ryan Becks Financial Institutions Group completed
nine merger and acquisition transactions, versus five through June 30, 2003.
Additionally, this group helped raise over $1.2 billion in capital financing
transactions through the second quarter of 2004, versus $0.5 billion through
June 30, 2003. Commission revenue increased 3% and 16%, respectively. While the three
month quarterly comparison was relatively flat, the increase in the six months
ended June 30, 2004 was attributable mainly to the increase in Ryan Becks
sales transaction volume in the first quarter 2004. 38




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Employee compensation and benefits increased 9% and 13%, respectively. The
increase is mainly attributable to the increase in bonus accruals resulting
from the additional investment banking revenue. Advertising and promotion expense increased 50% and 20%, respectively. The
increase is mainly attributable to expenses associated with Ryan Becks most
recent advertising campaign designed to expand Ryan Becks exposure through
print and television media. Professional fees decreased 43% and 41%, respectively. The decrease is
primarily due to a reduction in the legal costs associated with litigation in
which Ryan Beck has been involved as a result of having acquired certain assets
and liabilities of Gruntal in 2002. During the first quarter of 2004, the
bankruptcy court presiding over Gruntals bankruptcy proceedings entered an
order confirming a plan of liquidation for Gruntal that included a third party
release in favor of Ryan Beck and the Company, and as a result Ryan Beck
expects that many of the claims against it associated with the Gruntal
transaction will be permanently stayed or dismissed by the arbitration panels
and courts hearing such claims. Communications cost decreased 26% and 21%, respectively. The decrease is
primarily due to the elimination of duplicate services as the Gruntal
operations were integrated into those of Ryan Beck. Parent Company Results of Operations For the Three Months Ended June 30,
    
    For the Six Months Ended June 30,2004
    
    2003
    
    Change
    
    2004
    
    2003
    
    ChangeNet interest income:Interest on loans and investments
    
    $
    548
    
    
    $
    509
    
    
    $
    39
    
    
    $
    1,090
    
    
    $
    963
    
    
    $
    127Subordinated Debentures and notes
payable
interest expense
    
    
    (4,132
    )
    
    
    (4,378
    )
    
    
    246
    
    
    
    (8,267
    )
    
    
    (8,105
    )
    
    
    (162
    )Net interest income
    
    
    (3,584
    )
    
    
    (3,869
    )
    
    
    285
    
    
    
    (7,177
    )
    
    
    (7,142
    )
    
    
    (35
    )Non-interest income:Income from unconsolidated subsidiaries
    
    
    118
    
    
    
    118
    
    
    
    
    
    
    
    236
    
    
    
    200
    
    
    
    36Gains on securities activities
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    78
    
    
    
    405
    
    
    
    (327
    )Litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,840
    
    
    
    
    
    
    
    22,840Other
    
    
    120
    
    
    
    
    
    
    
    120
    
    
    
    224
    
    
    
    
    
    
    
    224Non-interest income
    
    
    241
    
    
    
    118
    
    
    
    123
    
    
    
    23,378
    
    
    
    605
    
    
    
    22,773Non-interest expense:Investment banking expense
    
    
    
    
    
    
    175
    
    
    
    (175
    )
    
    
    
    
    
    
    635
    
    
    
    (635
    )Employee compensation and benefits
    
    
    106
    
    
    
    57
    
    
    
    49
    
    
    
    215
    
    
    
    81
    
    
    
    134Professional fees
    
    
    546
    
    
    
    383
    
    
    
    163
    
    
    
    1,037
    
    
    
    700
    
    
    
    337Cost associated with debt redemption
    
    
    
    
    
    
    1,648
    
    
    
    (1,648
    )
    
    
    
    
    
    
    1,648
    
    
    
    (1,648
    )Other
    
    
    328
    
    
    
    253
    
    
    
    75
    
    
    
    578
    
    
    
    368
    
    
    
    210Non-interest expense
    
    
    980
    
    
    
    2,516
    
    
    
    (1,536
    )
    
    
    1,830
    
    
    
    3,432
    
    
    
    (1,602
    )(Loss) income before income taxes
    
    
    (4,323
    )
    
    
    (6,267
    )
    
    
    1,944
    
    
    
    14,371
    
    
    
    (9,969
    )
    
    
    24,340Income taxes
    
    
    (1,574
    )
    
    
    (2,192
    )
    
    
    618
    
    
    
    5,030
    
    
    
    (3,487
    )
    
    
    8,517(Loss) income from continuing operations
    
    $
    (2,749
    )
    
    $
    (4,075
    )
    
    $
    1,326
    
    
    $
    9,341
    
    
    $
    (6,482
    )
    
    $
    15,823
 For the Three and Six Months Ended June 30, 2004 Compared to the Same 2003
Periods: Interest on loans and investments during the 2004 quarter and six month
period represents interest income recognized by the Company on loans to Levitt
and interest income earned on a BankAtlantic reverse repurchase account.
Interest on loans and investments during the comparable 2003 periods is
interest income recognized by the Company on loans to Levitt and Ryan Beck as
well as interest income earned on the BankAtlantic reverse repurchase account. Interest expense declined during the second quarter of 2004 as a result of
lower average debenture and notes payable balances. Average balances declined
from $278 million during the 2003 second quarter to $263 million during the
same 2004 period. The increase in interest expense during the 2004 six month
period, resulted from the issuance of $77.3 million of junior subordinated
debentures during March and April of 2003 in trust preferred securities
offerings conducted by the Company. The proceeds of these 2003 offerings were
used to repay $46.0 million of convertible 39




---



##### Table of Contents



BankAtlantic Bancorp, Inc. debentures and pay down by $16 million a bank line of credit. The junior
subordinated debentures issued in these offerings had higher interest rates
than the convertible debentures and the bank line of credit that their proceeds
were used to pay. Income from unconsolidated subsidiaries represents the equity earnings
from trusts formed to issue trust preferred securities. The increase in
earnings during the six months ended June 30, 2004, was primarily due to
earnings from three new trusts established in March and April 2003. The income from securities activities during the six months ended June 30,
2004 represents gains from mutual fund sales. The Company sold mutual funds to
rebalance its investment portfolio to benchmark allocation percentages. The
income from securities activities during the six months ended June 30, 2003
represented a gain realized from a liquidating dividend on an equity security. The litigation settlement reflects proceeds from the settlement of
litigation related to the Companys prior investment of $15 million in a
technology company. Pursuant to that settlement, the Company sold its stock in
the technology company to a third party investor group for $15 million in cash,
the Companys original cost, and the Company received consideration from the
technology company for legal expenses and damages, which consisted of $1.7
million in cash and 378,160 shares of the Companys Class A Common Stock
returned by the technology company to the Company. The Companys investment banking expense during the three and six months
ended June 30, 2003 resulted from fees paid by it to Ryan Beck in connection
with Ryan Becks underwriting of the Companys 2003 offerings of trust
preferred securities. These fees are included in Ryan Becks investment
banking income in Ryan Becks business segment results of operations but were
eliminated in the Companys consolidated financial statements. The Company incurred compensation expense as a result of the transfer of
investor relations and risk management staff to the Company, who were formerly
employed by BankAtlantic as of January 1, 2004, This expense was partially
offset by fees received by the Company for investor relations and risk
management services provided by the Company to Levitt and BFC Financial
Corporation, which are included in other income during 2004. Compensation
expense during the 2003 periods primarily resulted from the issuance of Class A
restricted stock to BankAtlantic employees and the amortization of a forgivable
loan related to executive recruiting. Costs associated with debt redemption during the three and six months
ended June 30, 2003 resulted from the Company redeeming its 5.625% convertible
debentures at a redemption price of 102% of the principal amount. The loss on
the redemption reflects a $732,000 write-off of deferred offering costs and a
$917,000 call premium. The increased professional fees for the three and six months ended June
30, 2004 primarily consisted of fees incurred in connection with the
technology company litigation settled in 2004, regulatory compliance, and risk
management consulting services provided to the Company by Bluegreen
Corporation. Financial Condition Our total assets at June 30, 2004 were $5.4 billion, compared to $4.8
billion at December 31, 2003. The increase in total assets primarily resulted
from:  
    
    Higher loan balances related to the purchase of residential and
commercial loans as well as the origination of home equity loans;
    
    Increases in securities available for sale balances associated
with the purchase of mortgage-backed securities and municipal
securities;
    
    Additions to property and equipment for the construction of BankAtlantics new corporate headquarters;
    
    A receivable from Ryan Becks clearing agent associated with Ryan Becks trading activities;
    
    Higher real estate inventory related to increased construction
activity by a real estate joint venture acquired in connection with
the Community acquisition; and
    
    Higher FHLB stock investment due to increased FHLB advance
borrowings. The Companys total liabilities at June 30, 2004 were $5.0 billion,
compared to $4.4 billion at December 31, 2003. 40




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The increase in total liabilities primarily resulted from:  
    
    Higher low cost deposit balances and insured money fund savings
account balances;
    
    Increases in short-term borrowings and FHLB advances during the
second quarter to fund loan and securities available for sale growth;
    
    Additional securities sold but not yet purchased, associated
with Ryan Beck trading activities; and
    
    Increases in other liabilities associated with the purchases of
securities available for sale awaiting settlement. Stockholders equity at June 30, 2004 was $440.3 million compared to
$413.5 million at December 31, 2003. The increase was primarily attributable
to earnings of $38.8 million and $7.2 million of proceeds and tax benefits from
the issuance of common stock upon the exercise of stock options. The above
increases in stockholders equity were partially offset by the payment of $3.9
million of common stock dividends, a $6.1 million reduction in additional paid
in capital resulting from the retirement of 378,160 shares of the Companys
Class A Common Stock received as part of the private technology company
litigation settlement, $6.6 million of unrealized losses on securities
available for sale, net of income tax benefits and $2.6 million reduction in
additional paid in capital related to the acceptance of Class A common stock as
consideration for the payment of withholding taxes and the exercise price which
were due upon the exercise of Class A stock options. Liquidity and Capital Resources BankAtlantic Bancorp, Inc. Liquidity and Capital Resources The Companys principal source of liquidity is dividends from BankAtlantic
and, to a lesser extent, Ryan Beck. The Company also obtains funds through the
issuance of equity and debt securities, borrowings from financial institutions,
liquidation of equity securities and other investments it holds, management
fees from subsidiaries and affiliates and principal and interest payments from
loans to Levitt Corporation. The Company also received $16.8 million in the
first quarter of 2004 as part of the private technology company litigation
settlement. The Company uses these funds to purchase debt and equity
investments, provide capital to its subsidiaries, pay dividends to its
shareholders and to fund operations. The Companys annual debt service
associated with its junior subordinated debentures and other borrowings is
approximately $15.6 million. The Companys estimated current annual dividends
to common shareholders are approximately $7.8 million. During 2003, and during
the first six months of 2004, the Company received $20.0 million and $5
million, respectively, of dividends from BankAtlantic. The declaration and
payment of dividends and the ability of the Company to meet its debt service
obligations will depend upon the results of operations, financial condition and
cash requirements of the Company, indenture restrictions and loan covenants,
and the ability of BankAtlantic to pay dividends to the Company.
BankAtlantics dividends are subject to regulations and OTS approval and are
based upon BankAtlantics regulatory capital levels and net income. In
addition, Ryan Beck paid $5 million in dividends to the Company during the
first quarter of 2004. Future dividend payments by Ryan Beck will depend upon
the results of operations, financial condition and capital requirements of Ryan
Beck. During the second quarter of 2004, the Company transferred $18 million of
exchange traded mutual funds and placed an additional $35 million of funds with
a third party money manager subject to certain liquidity and concentration
restrictions. It is anticipated that these funds will be invested in this
manner until capital is needed to fund the operations of the Company and its
subsidiaries, including acquisitions, BankAtlantics branch expansion and
renovation strategy, or for other business purposes. Additionally, during the
second quarter of 2004, the Company invested $5 million in a hedge fund limited
partnership which primarily invests in financial services companies. The Company maintains a revolving credit facility of $30 million with an
independent financial institution. The credit facility contains customary
covenants, including financial covenants relating to regulatory capital and
maintenance of certain loan loss reserves, and is secured by the common stock
of BankAtlantic. The Company has used this credit facility to temporarily fund
acquisitions and asset purchases as well as for general corporate purposes.
The credit facility had an outstanding balance of $100,000 at June 30, 2004,
and the Company was in compliance with all loan covenants. Amounts outstanding
accrue interest at the prime rate minus 50 basis points, and the facility
matures on March 1, 2005. BankAtlantic Liquidity and Capital Resources BankAtlantics liquidity depends on its ability to generate sufficient
cash to support loan demand, to meet deposit withdrawals, and to pay operating
expenses. BankAtlantics securities portfolio provides an internal source of
liquidity through its short-term investments as well as scheduled maturities
and interest payments. Loan repayments and sales also provide an internal
source of liquidity. 41




---



##### Table of Contents



BankAtlantic Bancorp, Inc. BankAtlantics primary sources of funds are deposits; principal
repayments of loans and tax certificates and securities available for sale;
proceeds from the sale of loans and securities; proceeds from securities sold
under agreements to repurchase; advances from the FHLB; and from operations.
These funds were utilized to fund loan disbursements and purchases; cover
deposit outflows; repay securities sold under agreements to repurchase; repay
advances from the FHLB; purchase tax certificates; pay maturing certificates
of deposit; pay operating expenses, including increased costs associated with
regulatory compliance; and pay dividends to the Company. BankAtlantic has a
$1.5 billion line of credit with the FHLB, subject to available collateral,
with a maximum term of ten years. BankAtlantic has utilized its FHLB line of
credit to borrow $883.7 million. The FHLB also issued a $63 million letter of
credit to secure public deposits under this arrangement at June 30, 2004. The
line of credit is secured by a blanket lien on BankAtlantics residential
mortgage loans and certain commercial real estate loans. BankAtlantics
available borrowings under this line of credit were approximately $687.2
million at June 30, 2004. BankAtlantic has also established lines of credit
for up to $205 million with other banks to purchase federal funds.
BankAtlantic has various relationships to acquire brokered deposits. These
relationships may be utilized as an alternative source of borrowings, if
needed. BankAtlantics commitments to originate and purchase loans at June 30,
2004 were $434.0 million and $89.9 million, respectively, compared to $329.8
million and $29.0 million, respectively, at June 30, 2003. Additionally,
BankAtlantic had commitments to purchase securities of $7.1 million and $17.7
million, respectively, at June 30, 2004 and 2003. At June 30, 2004, loan
commitments represented approximately 13.4% of loans receivable, net. As of June 30, 2004, BankAtlantic had approximately $384.4 million in
investments and mortgage-backed securities pledged against securities sold
under agreements to repurchase. During 2002, BankAtlantic paid $14.3 million to purchase a building to
consolidate its headquarters and back office operations into a centralized
facility. BankAtlantic has incurred approximately $10.0 million in renovation
costs on this building. The total estimated cost to complete renovation is
approximately $18.1 million, and the facility is expected to be completed in
November 2004. The costs to complete renovation will be funded by cash flow
from operations. In July 2004, BankAtlantic announced its new branch de novo expansion
strategy under which it will open between eight to ten branches in 2005. The
total estimated cost to construct these branches is approximately $18 million.
BankAtlantic estimates that each new branch will have first year losses of
$225,000 on average, and will begin to contribute to earnings in 12 to 15
months following its opening. The first branch is anticipated to open during
the first quarter of 2005. BankAtlantic expects to place these new branches
within its current geographic market. If the strategy is successful,
BankAtlantic anticipates expanding the concept to other markets. In June 2004, BankAtlantics management finalized a plan to renovate the
interior of all existing 73 BankAtlantic branches. The renovation of these
branches is projected to be completed in December 2005, with an estimated cost
of $13 million. 42




---



##### Table of Contents



BankAtlantic Bancorp, Inc. At June 30, 2004, BankAtlantic met all applicable liquidity and regulatory
capital requirements. BankAtlantics capital amounts and ratios were (dollars
in thousands): Minimum RatiosActual
    
    AdequatelyCapitalized
    
    WellCapitalized(in thousands)
    
    Amount
    
    Ratio
    
    Ratio
    
    RatioAt June 30, 2004:Total risk-based capital
    
    $
    463,021
    
    
    
    11.55
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based capital
    
    $
    390,979
    
    
    
    9.76
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    390,979
    
    
    
    7.77
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    390,979
    
    
    
    7.77
    %
    
    
    4.00
    %
    
    
    5.00
    %At December 31, 2003:Total risk-based capital
    
    $
    447,967
    
    
    
    12.06
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based capital
    
    $
    379,505
    
    
    
    10.22
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    379,505
    
    
    
    8.52
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    379,505
    
    
    
    8.52
    %
    
    
    4.00
    %
    
    
    5.00
    %
 Savings institutions are also subject to the provisions of the Federal
Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). Regulations
implementing the prompt corrective action provisions of FDICIA define specific
capital categories based on FDICIAs defined capital ratios, as discussed more
fully in our Annual Report on Form 10-K for the year ended December 31, 2003. Ryan Beck & Co., Inc. Liquidity and Capital Resources Ryan Becks primary source of funds during the six months ended June 30,
2004 were clearing broker borrowings, proceeds from the sale of securities
owned, proceeds from securities sold but not yet purchased, and fees from
customers. These funds were primarily utilized to pay operating expenses, pay
dividends to the Company, fund the purchase of securities owned and fund
capital expenditures. In the ordinary course of business, Ryan Beck borrows under an agreement
with its clearing broker by pledging securities owned as collateral primarily
to finance its trading inventories. The amount and terms of the borrowings are
subject to the lending policies of the clearing broker and can be changed at
the clearing brokers discretion. Additionally, the amount financed is also
impacted by the market value of the securities owned which are pledged as
collateral. Ryan Beck is subject to the net capital provision of Rule 15c3-1 under the
Securities Exchange Act of 1934, which requires the maintenance of minimum net
capital and requires the ratio of aggregate indebtedness to net capital, both
as defined, not to exceed 15 to 1. Additionally, Ryan Beck, as a market maker,
is subject to supplemental requirements of Rule 15c3-1(a) 4, which provides for
the computation of net capital to be based on the number of and price of issues
in which markets are made by Ryan Beck, not to exceed $1.0 million. Ryan
Becks regulatory net capital was $35.4 million, which was $34.4 million in
excess of its required net capital of $1.0 million. Ryan Beck operates under the provisions of paragraph (k)(2)(ii) of Rule
15c3-3 of the Securities and Exchange Commission as a fully disclosed
introducing broker and, accordingly, customer accounts are carried on the books
of the clearing broker. However, Ryan Beck safekeeps and redeems municipal bond
coupons for the benefit of its customers. Accordingly, Ryan Beck is subject to
the provisions of SEC Rule 15c3-3 relating to possession or control and
customer reserve requirements and was in compliance with such provisions at
June 30, 2004. 43




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk Market risk is defined as the risk of loss arising from adverse changes in
market valuations that arise from interest rate risk, foreign currency exchange
rate risk, commodity price risk and equity price risk. Our primary market risk
is interest rate risk and our secondary market risk is equity price risk. Interest Rate Risk The majority of our assets and liabilities are monetary in nature,
subjecting us to significant interest rate risk which would arise if the
relative values of each of our assets and liabilities changed in conjunction
with a general rise or decline in interest rates. We have developed a model
using standard industry software to quantify our interest rate risk. A
sensitivity analysis was performed measuring our potential gains and losses in
net portfolio fair values of interest rate sensitive instruments at June 30,
2004 resulting from a change in interest rates. See Item 7A Quantitative and
Qualitative Disclosures about Market Risk of the Companys Annual Report on
Form 10-K for the year ended December 31, 2003 for a detailed explanation of
the model methodology and the assumptions we utilize. Presented below is an analysis of the Companys interest rate risk at June
30, 2004 and December 31, 2003, calculated utilizing the Companys model. The
table measures changes in net portfolio value for instantaneous and parallel
shifts in the yield curve in 100 basis point increments up or down. As of June 30, 2004Net PortfolioChanges
    
    Value
    
    Dollarin Rate
    
    Amount
    
    Change(dollars in thousands)+200 bp
    
    $
    479,516
    
    
    $
    (34,374
    )+100 bp
    
    $
    509,978
    
    
    $
    (3,912
    )0
    
    
    $
    513,890
    
    
    $
    -100 bp
    
    $
    490,297
    
    
    $
    (23,593
    )-200 bp
    
    $
    485,883
    
    
    $
    (28,007
    )
 As of December 31, 2003Net PortfolioChanges
    
    Value
    
    Dollarin Rate
    
    Amount
    
    Change(dollars in thousands)+200 bp
    
    $
    470,869
    
    
    $
    17,666+100 bp
    
    $
    482,543
    
    
    $
    29,3400
    
    
    $
    453,203
    
    
    $
    -100 bp
    
    $
    408,921
    
    
    $
    (44,282
    )-200 bp
    
    $
    391,156
    
    
    $
    (62,047
    )
 Our net interest margin has improved since the third quarter of 2003. The
improvement primarily resulted from the repayment of high fixed rate FHLB
advances during each of the three preceding quarters as well as a significant
increase in low cost deposits. Our asset and liability committee monitors
BankAtlantics interest rate risk. Based on the committees on-going review,
we determined that the repayment of a portion of BankAtlantics high fixed rate
FHLB advances should have a positive impact on BankAtlantics net interest
margin. During September 2003, December 2003, and March 2004, BankAtlantic
prepaid $185 million, $140 million and $108 million, respectively, of FHLB
advances and recognized losses of $2.0 million, $8.9 million and $11.7 million,
respectively. BankAtlantic will continue to evaluate its high fixed rate FHLB
advances in light of market interest rate conditions to determine whether
additional prepayments 44




---



##### Table of Contents



BankAtlantic Bancorp, Inc. could reduce borrowing costs and improve its net interest margin. We
expect BankAtlantics net interest margin for the 2004 year to be greater than
in 2003 as a result of advance repayments and growth in low cost deposits. Equity Price Risk BankAtlantic Bancorp BankAtlantic Bancorp maintains a portfolio of equity securities and
exchange traded mutual funds that subject it to equity pricing risks arising
in connection with changes in the relative values of its equity investments
due to changing market and economic conditions. The following are
hypothetical changes in the fair value of our available for sale securities at
June 30, 2004, based on hypothetical percentage changes in fair value. Actual
future price appreciation or depreciation may be different from the changes
identified in the table below (dollars in thousands). Percent
    
    Available for SaleChange in
    
    Equity
    
    Mutual
    
    DollarFair Value
    
    Securities
    
    Funds
    
    Change20
    %
    
    $
    2,017
    
    
    $
    21,947
    
    
    $
    3,99410
    %
    
    $
    1,849
    
    
    $
    20,118
    
    
    $
    1,9970
    %
    
    $
    1,681
    
    
    $
    18,289
    
    
    $
    -10
    %
    
    $
    1,513
    
    
    $
    16,460
    
    
    $
    (1,997
    )-20
    %
    
    $
    1,345
    
    
    $
    14,631
    
    
    $
    (3,994
    )
 Excluded from the above table is $1.8 million of investments in private
companies and $5.0 million invested in a limited partnership hedge fund
specializing in bank equities, for which no current liquid market exists. The
ability to realize on or liquidate these investments will depend on future
market conditions and is subject to significant risk. Ryan Beck Ryan Beck is exposed to the market risk that the financial instruments in
which it trades and makes a market will fluctuate in value. These value
fluctuations can be caused by changes in interest rates, equity prices, credit
spreads or other market forces. The Company, through Ryan Beck, is therefore
indirectly exposed to these market risks arising from Ryan Becks trading and
market making activities. Ryan Becks management monitors risk in its trading activities by
establishing limits and reviewing daily trading results, inventory aging,
pricing, concentration and securities ratings. Ryan Beck uses a variety of
tools, including aggregate and statistical methods. Value at Risk (VaR) is
the principal statistical method used by Ryan Beck to monitor its risk, and
this method measures the potential loss in the fair value of a portfolio due to
adverse movements in underlying risk factors. Ryan Beck uses an historical simulation approach to measuring VaR using a
99% confidence level, a one day holding period and the most recent three months
average volatility. The 99% VaR means that, on average, one would not expect
to exceed such loss amount more than one time every one hundred trading days if
the portfolio were held constant for a one-day period. The aggregate long and
short value represents the one day market value of securities owned (long) and
securities sold but not yet purchased (short) during the six months ended June
30, 2004. 45




---



##### Table of Contents



BankAtlantic Bancorp, Inc. The following table sets forth the high, low and average VaR for Ryan Beck
during the period January 1, 2004 to June 30, 2004. (dollars in thousands)High
    
    Low
    
    AverageVaR
    
    $
    664
    
    
    $
    105
    
    
    $
    317Aggregate Long Value
    
    
    112,494
    
    
    
    47,096
    
    
    
    74,107Aggregate Short Value
    
    
    116,852
    
    
    
    23,851
    
    
    
    63,331
 The following table sets forth the high, low and average VaR for Ryan Beck
during the period January 31, 2003 to December 31, 2003, and adjusted for
discontinued operations. (dollars in thousands)High
    
    Low
    
    AverageVaR
    
    $
    1,285
    
    
    $
    16
    
    
    $
    531Aggregate Long Value
    
    
    68,995
    
    
    
    42,364
    
    
    
    66,809Aggregate Short Value
    
    
    19,570
    
    
    
    60,602
    
    
    
    36,495
 46




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in our periodic
SEC reports. Changes in Internal Controls In addition, we reviewed our internal control over financial reporting,
and there have been no significant changes in our internal control over
financial reporting or in other factors that could significantly affect those
controls during the last fiscal quarter. Limitations on the Effectiveness of Controls Our management, including our principal executive officer and principal
financial officer, does not expect that our disclosure controls and procedures
and internal controls over financial reporting will prevent all errors and all
improper conduct. A control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of improper conduct, if any, within the
Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be circumvented
by the individual acts of some persons, by collusion of two or more people, or
by management override of the control. Further, the design of any system of controls also is based in part upon
assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur
and not be detected. CEO and CFO Certifications Appearing as Exhibits 31.1 and 31.2 to this quarterly report are
Certifications of the principal executive officer and the principal financial
officer. The Certifications are required in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002. This Item of this report, which you are currently
reading, is the information concerning the evaluation referred to in the
Section 302 Certifications and this information should be read in conjunction
with the Section 302 Certifications for a more complete understanding of the
topics presented. 47




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 PART II  OTHER INFORMATION 
 Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities (e) Purchases of equity securities by the issuer and affiliated purchasers Total Number ofShares Purchased as
    
    Maximum Number thatPart of Publicly
    
    May Yet Be PurchasedTotal Number of
    
    Average price
    
    Announced Plans
    
    Under the Plans orPeriod
    
    Shares Purchased
    
    per share
    
    or Programs (2)
    
    ProgramsApril 1, 2004
through
April 30, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    May 1, 2004 through
May 31, 2004
    
    
    175,710
    (1)
    
    
    15.01
    
    
    
    
    
    
    
    June 1, 2004 through
June 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    175,710
    
    
    $
    15.01
    
    
    
    
    
    
    
    
 (1) The amount represents the number of shares of the Companys Class A Common
Stock redeemed by the Company as consideration for the payment of withholding
taxes and for the exercise price of nonqualifying stock options exercised
during the period. (2) The Company currently has no plan or program to repurchase its equity
securities. 
 Item 4. Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Shareholders on May 11, 2004. At
the meeting the holders of the Companys Class A and Class B Common Stock
voting together as a single class elected the following four Directors to a
three year term by the following votes: Director
    
    For
    
    WithheldSteven M. Coldren
    
    
    95,659,475
    
    
    
    1,802,602Mary E. Ginestra
    
    
    95,622,553
    
    
    
    1,839,524Willis N. Holcombe
    
    
    96,819,102
    
    
    
    642,975Jarret S. Levan
    
    
    95,324,860
    
    
    
    2,137,217
 Also at the annual meeting, the holders of the Companys Class A and Class
B Common Stock voting together as a single class approved the adoption of the
Companys 2004 Restricted Stock Incentive Plan by the following votes: Votes
    
    Votes
    
    VotesFor
    
    Against
    
    AbstainingRestricted stock incentive plan
    
    
    84,153,247
    
    
    
    3,567,646
    
    
    
    86,002
 
 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 10.1
    
    BankAtlantic Bancorp, Inc. 2004 Restricted Stock Incentive
Plan (Incorporated by reference to Appendix A of the
Companys definitive Proxy Statement filed with the
Securities and Exchange Commission on April 12, 2004.)Exhibit 31.1
    
    CFO Certification pursuant to Regulation S-X Section 302Exhibit 31.2
    
    CEO Certification pursuant to Regulation S-X Section 302
 48




---



##### Table of Contents



BankAtlantic Bancorp, Inc. Exhibit 32.1
    
    CEO Certification pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002Exhibit 32.2
    
    CFO Certification pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 49




---



##### Table of Contents



BankAtlantic Bancorp, Inc. 
 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. BANKATLANTIC BANCORP, INC. August  9,  2004
    By:
    /s/ Alan B. LevanAlan B. LevanDate
    
    
    Chief Executive Officer/
Chairman/President August  9,  2004
    By:
    /s/ James A. WhiteJames A. WhiteDate
    
    Executive Vice President,
Chief Financial Officer 50