##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2004 OR o
    
    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   þ   No   
o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act) Yes   þ   No   
o Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date. Title of Each Class
    
    Outstanding at
May 3, 2004Class A Common Stock, par value $0.01 per share
Class B Common Stock, par value $0.01 per share
    
    54,460,900
4,876,124




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##### Table of Contents



TABLE OF CONTENTS Part I. FINANCIAL INFORMATION PageReferenceItem 1.   Financial Statements
    
    
    1-24Consolidated Statements of Financial Condition  March 31, 2004 and 2003 and December 31, 2003   Unaudited
    
    
    4Consolidated Statements of Operations  For the Three Months Ended March 31, 2004 and 2003  Unaudited
    
    
    5-6Consolidated
Statements of Stockholders Equity and Comprehensive Income

    For the Three Months Ended March 31, 2004 and 2003  Unaudited
    
    
    7Consolidated Statements of Cash Flows  For the Three Months Ended March 31, 2004 and 2003  Unaudited
    
    
    8-9Notes to Consolidated Financial Statements  Unaudited
    
    
    10-24Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25-39Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    40-41Item 4.
    
    Controls and Procedures
    
    
    42Part II.   OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    43Item 2.
    
    Changes in Securities and Use of Proceeds
    
    
    43Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    43Signatures
    
    
    44Section 302 CFO CertificationSection 302 CEO CertificationSection 906 CEO CertificationSection 906 CFO Certification




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Part I. FINANCIAL
INFORMATION BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  UNAUDITED
 March 31,
    
    December 31,
    
    March 31,(In thousands, except share data)
    
    2004
    
    2003
    
    2003ASSETSCash and due from depository institutions
    
    $
    114,849
    
    
    $
    119,882
    
    
    $
    139,940Federal funds sold and securities purchased under resell agreements
    
    
    1,953
    
    
    
    
    
    
    
    Securities owned (at fair value)
    
    
    122,114
    
    
    
    124,565
    
    
    
    154,319Securities available for sale (at fair value)
    
    
    358,665
    
    
    
    358,511
    
    
    
    740,003Investment securities and tax certificates (approximate fair value:$139,075, $192,706 and $175,876)
    
    
    139,075
    
    
    
    192,706
    
    
    
    175,436Federal Home Loan Bank stock, at cost which approximates fair value
    
    
    30,340
    
    
    
    40,325
    
    
    
    65,443Loans receivable, net of allowance for loan losses of $45,383,
$45,595 and $48,695
    
    
    3,674,173
    
    
    
    3,686,153
    
    
    
    3,881,143Accrued interest receivable
    
    
    26,781
    
    
    
    27,866
    
    
    
    35,587Real estate held for development and sale
    
    
    24,239
    
    
    
    21,803
    
    
    
    238,356Investments and advances to unconsolidated subsidiaries
    
    
    7,910
    
    
    
    7,910
    
    
    
    96,755Office properties and equipment, net
    
    
    96,628
    
    
    
    93,577
    
    
    
    93,136Deferred tax asset, net
    
    
    17,751
    
    
    
    22,999
    
    
    
    37,523Goodwill, net
    
    
    76,674
    
    
    
    76,674
    
    
    
    77,878Core deposit intangible asset
    
    
    11,546
    
    
    
    11,985
    
    
    
    13,303Other assets
    
    
    47,785
    
    
    
    46,593
    
    
    
    64,517Total assets
    
    $
    4,750,483
    
    
    $
    4,831,549
    
    
    $
    5,813,339LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:DepositsInterest free checking
    
    $
    748,402
    
    
    $
    645,036
    
    
    $
    516,404NOW accounts
    
    
    567,498
    
    
    
    533,888
    
    
    
    446,076Savings accounts
    
    
    233,832
    
    
    
    208,966
    
    
    
    180,362Insured money fund savings
    
    
    870,447
    
    
    
    865,590
    
    
    
    820,181Certificate accounts
    
    
    723,256
    
    
    
    804,662
    
    
    
    920,350Total deposits
    
    
    3,143,435
    
    
    
    3,058,142
    
    
    
    2,883,373Advances from FHLB
    
    
    591,466
    
    
    
    782,205
    
    
    
    1,308,246Securities sold under agreements to repurchase
    
    
    118,465
    
    
    
    138,809
    
    
    
    340,983Federal funds purchased
    
    
    25,000
    
    
    
    
    
    
    
    115,000Subordinated debentures, notes and bonds payable
    
    
    37,109
    
    
    
    36,595
    
    
    
    195,073Junior subordinated debentures
    
    
    263,266
    
    
    
    263,266
    
    
    
    252,918Securities sold but not yet purchased
    
    
    34,250
    
    
    
    37,813
    
    
    
    49,760Due to clearing agent
    
    
    18,328
    
    
    
    8,583
    
    
    
    36,982Other liabilities
    
    
    89,587
    
    
    
    92,684
    
    
    
    151,388Total liabilities
    
    
    4,320,906
    
    
    
    4,418,097
    
    
    
    5,333,723Stockholders 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 54,331,830, 54,396,824 and 53,516,846 shares
    
    
    543
    
    
    
    544
    
    
    
    535Class 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
    
    
    259,792
    
    
    
    259,770
    
    
    
    253,032Unearned compensation  restricted stock grants
    
    
    (1,134
    )
    
    
    (1,178
    )
    
    
    (1,171
    )Retained earnings
    
    
    163,005
    
    
    
    148,311
    
    
    
    226,241Total stockholders equity before accumulated other comprehensive income
    
    
    422,255
    
    
    
    407,496
    
    
    
    478,686Accumulated other comprehensive income
    
    
    7,322
    
    
    
    5,956
    
    
    
    930Total stockholders equity
    
    
    429,577
    
    
    
    413,452
    
    
    
    479,616Total liabilities and stockholders equity
    
    $
    4,750,483
    
    
    $
    4,831,549
    
    
    $
    5,813,339
 See Notes to Consolidated Financial Statements  Unaudited 4




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED For the Three Months(In thousands, except share and per share data)
    
    Ended March 31,2004
    
    2003Interest income:Interest and fees on loans and leases
    
    $
    48,936
    
    
    $
    52,940Interest and dividends on securities available for sale
    
    
    3,620
    
    
    
    8,657Interest and dividends on other investment securities
    
    
    4,277
    
    
    
    5,051Broker dealer interest
    
    
    2,796
    
    
    
    2,317Total interest income
    
    
    59,629
    
    
    
    68,965Interest expense:Interest on deposits
    
    
    6,973
    
    
    
    11,169Interest on advances from FHLB
    
    
    9,098
    
    
    
    15,316Interest on securities sold under agreements to repurchase and federal
funds purchased
    
    
    250
    
    
    
    819Interest on subordinated debentures, notes and bonds payable,
and junior subordinated debentures
    
    
    4,827
    
    
    
    3,821Capitalized interest on real estate development
    
    
    (307
    )
    
    
    (339
    )Total interest expense
    
    
    20,841
    
    
    
    30,786Net interest income
    
    
    38,788
    
    
    
    38,179Provision for (recovery from) loan losses
    
    
    (859
    )
    
    
    850Net interest income after provision for (recovery from) loan losses
    
    
    39,647
    
    
    
    37,329Non-interest income:Investment banking income
    
    
    62,445
    
    
    
    51,665Service charges on deposits
    
    
    11,277
    
    
    
    8,558Other service charges and fees
    
    
    4,637
    
    
    
    3,918Income from real estate operations
    
    
    305
    
    
    
    1,086Income from unconsolidated subsidiaries
    
    
    118
    
    
    
    82Securities activities, net
    
    
    72
    
    
    
    384Equity security litigation settlement gain
    
    
    16,782
    
    
    
    Other
    
    
    2,671
    
    
    
    2,384Total non-interest income
    
    
    98,307
    
    
    
    68,077Non-interest expense:Employee compensation and benefits
    
    
    67,180
    
    
    
    57,412Occupancy and equipment
    
    
    10,250
    
    
    
    9,738Advertising and promotion
    
    
    4,694
    
    
    
    2,807Amortization of intangible assets
    
    
    439
    
    
    
    454Cost associated with debt redemption
    
    
    11,741
    
    
    
    Professional fees
    
    
    2,737
    
    
    
    3,115Communications
    
    
    3,253
    
    
    
    3,829Floor broker and clearing fees
    
    
    2,802
    
    
    
    2,158Other
    
    
    8,918
    
    
    
    9,047Total non-interest expense
    
    
    112,014
    
    
    
    88,560Income from continuing operations before income taxes
    
    
    25,940
    
    
    
    16,846Provision for income taxes
    
    
    9,293
    
    
    
    6,028Income from continuing operations
    
    
    16,647
    
    
    
    10,818Discontinued operations, net of tax of $1,713
    
    
    
    
    
    
    3,540Net income
    
    $
    16,647
    
    
    $
    14,358
 See Notes to Consolidated
Financial Statements  Unaudited (Continued) 5




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED
 For the Three MonthsEnded March 31,2004
    
    2003Earnings per shareBasic earnings per share from continuing operations
    
    $
    0.28
    
    
    $
    0.19Basic earnings per share from discontinued operations
    
    
    
    
    
    
    0.06Basic earnings per share
    
    $
    0.28
    
    
    $
    0.25Diluted earnings per share from continuing operations
    
    $
    0.26
    
    
    $
    0.17Diluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.06Diluted earnings per share
    
    $
    0.26
    
    
    $
    0.23Basic weighted average number of common shares outstanding
    
    
    59,257,270
    
    
    
    58,171,621Diluted weighted average number of common and common
equivalent shares outstanding
    
    
    63,193,034
    
    
    
    64,250,488Cash dividends per Class A share
    
    $
    0.033
    
    
    $
    0.031Cash dividends per Class B share
    
    $
    0.033
    
    
    $
    0.031
 See Notes to Consolidated Financial Statements  Unaudited 6




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 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
    
    $
    14,358
    
    
    
    
    
    
    
    
    
    
    
    14,358
    
    
    
    
    
    
    
    
    
    
    
    14,358Other comprehensive income, net of tax:Unrealized loss on securities available for sale
(less income tax benefit of $1,596)
    
    
    (2,149
    )Minimum pension liability (less income tax
benefit of $251)
    
    
    (446
    )Unrealized loss associated with investment in
unconsolidated real estate subsidiary
(less income tax provision of $454)
    
    
    448Accumulated gain associated with cash flow hedges
(less income tax benefit of $185)
    
    
    (376
    )Reclassification adjustment for cash flow hedge
    
    
    130Reclassification adjustment for net gain
included in net income
    
    
    (246
    )Other comprehensive loss
    
    
    (2,639
    )Comprehensive income
    
    $
    11,719Dividends on Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,658
    )
    
    
    
    
    
    
    
    
    
    
    (1,658
    )Dividends on Class B Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    
    
    
    
    
    
    
    
    (151
    )Issuance of Class A common stock
    
    
    
    
    
    
    1
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165Tax effect relating to the exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    38Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,639
    )
    
    
    (2,639
    )BALANCE, MARCH 31, 2003
    
    
    
    
    
    $
    584
    
    
    $
    253,032
    
    
    $
    226,241
    
    
    $
    (1,171
    )
    
    $
    930
    
    
    $
    479,616BALANCE, DECEMBER 31, 2003
    
    
    
    
    
    $
    593
    
    
    $
    259,770
    
    
    $
    148,311
    
    
    $
    (1,178
    )
    
    $
    5,956
    
    
    $
    413,452Net income
    
    $
    16,647
    
    
    
    
    
    
    
    
    
    
    
    16,647
    
    
    
    
    
    
    
    
    
    
    
    16,647Other comprehensive income, net of tax:Unrealized gains on securities available for sale
(less income tax provision of $757)
    
    
    1,412Reclassification adjustment for net gain
included in net income
    
    
    (46
    )Other comprehensive income
    
    
    1,366Comprehensive income
    
    $
    18,013Dividends on Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,792
    )
    
    
    
    
    
    
    
    
    
    
    (1,792
    )Dividends on Class B Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (161
    )
    
    
    
    
    
    
    
    
    
    
    (161
    )Issuance of Class A common stock
    
    
    
    
    
    
    3
    
    
    
    677
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680Tax effect relating to the exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    1,522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,522Tax effect of fair value of Class A Common Stock
obtained from litigation settlement
    
    
    
    
    
    
    
    
    
    
    (2,181
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,181
    )Retirement of Class A Common Stock
    
    
    
    
    
    
    (4
    )
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,366
    
    
    
    1,366BALANCE, MARCH 31, 2004
    
    
    
    
    
    $
    592
    
    
    $
    259,792
    
    
    $
    163,005
    
    
    $
    (1,134
    )
    
    $
    7,322
    
    
    $
    429,577
 See Notes to Consolidated Financial Statements  Unaudited 7




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BankAtlantic Bancorp, Inc. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 For the Three Months(In thousands)
    
    Ended March 31,2004
    
    2003Operating activities:Income from continuing operations
    
    $
    16,647
    
    
    $
    10,818Income from discontinued operations
    
    
    
    
    
    
    3,540Adjustments to reconcile net income to net cash provided
in operating activities:Provision (recovery) for credit losses *
    
    
    (555
    )
    
    
    1,905Depreciation, amortization and accretion, net
    
    
    3,602
    
    
    
    3,540Amortization of intangible assets
    
    
    439
    
    
    
    454Change in real estate inventory
    
    
    (2,436
    )
    
    
    (16,143
    )Securities owned activities, net
    
    
    2,451
    
    
    
    32,135Cost associated with debt redemption
    
    
    11,741
    
    
    
    Increase (decrease) in securities sold but not yet purchased
    
    
    (3,563
    )
    
    
    11,757Equity in earnings of unconsolidated subsidiaries
    
    
    (118
    )
    
    
    (136
    )(Investments in) repayments from unconsolidated subsidiaries, net
    
    
    118
    
    
    
    (993
    )Originations and repayments of loans held for sale, net
    
    
    (7,518
    )
    
    
    153Proceeds from sales of loans held for sale
    
    
    11,204
    
    
    
    695Gains on securities activities
    
    
    (72
    )
    
    
    (384
    )Equity securities litigation settlement gain
    
    
    (16,782
    )
    
    
    Decrease (increase) in deferred tax asset, net
    
    
    4,491
    
    
    
    (999
    )Decrease (increase) in accrued interest receivable
    
    
    1,085
    
    
    
    (1,731
    )Increase in other assets
    
    
    (3,518
    )
    
    
    (6,736
    )Increase (decrease) in due to clearing agent
    
    
    9,745
    
    
    
    (41,809
    )Increase (decrease) in other liabilities
    
    
    (3,756
    )
    
    
    26,643Net cash provided in operating activities
    
    
    23,205
    
    
    
    22,709Investing activities:Proceeds from redemption and maturities of investment
securities and tax certificates
    
    
    60,353
    
    
    
    51,096Purchase of investment securities and tax certificates
    
    
    (7,022
    )
    
    
    (14,930
    )Purchases of securities available for sale
    
    
    (32,313
    )
    
    
    (178,200
    )Proceeds from sales and maturities of securities available for sale
    
    
    50,942
    
    
    
    142,171(Purchases) redemptions of FHLB stock, net
    
    
    9,985
    
    
    
    (500
    )Net repayments (purchases and originations) of loans and leases
    
    
    9,407
    
    
    
    (510,235
    )Proceeds from sales of real estate owned
    
    
    1,125
    
    
    
    451Net additions to office property and equipment
    
    
    (5,503
    )
    
    
    (2,537
    )Net cash provided (used) in investing activities
    
    
    86,974
    
    
    
    (512,684
    )Financing activities:Net (decrease) increase in deposits
    
    
    85,293
    
    
    
    (37,182
    )Repayments of FHLB advances
    
    
    (202,449
    )
    
    
    (63,660
    )Proceeds from FHLB advances
    
    
    
    
    
    
    75,000Net increase (decrease) in securities sold under agreements
to repurchase
    
    
    (20,344
    )
    
    
    224,854Net increase in federal funds purchased
    
    
    25,000
    
    
    
    115,000Repayment of notes and bonds payable
    
    
    (630
    )
    
    
    (43,839
    )Proceeds from notes and bonds payable
    
    
    1,144
    
    
    
    43,631Issuance of common stock
    
    
    680
    
    
    
    165Issuance of junior subordinated debentures
    
    
    
    
    
    
    67,010Common stock dividends paid
    
    
    (1,953
    )
    
    
    (1,809
    )Net cash (used) provided in financing activities
    
    
    (113,259
    )
    
    
    379,170Decrease in cash and cash equivalents
    
    
    (3,080
    )
    
    
    (110,805
    )Cash and cash equivalents at beginning of period
    
    
    119,882
    
    
    
    250,745Cash and cash equivalents at end of period
    
    $
    116,802
    
    
    $
    139,940
 See Notes to Consolidated Financial Statements  Unaudited (Continued) 8




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##### Table of Contents



BankAtlantic Bancorp, Inc. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 For the Three Months(In thousands)
    
    Ended March 31,2004
    
    2003Interest paid
    
    $
    22,068
    
    
    $
    34,731Income taxes paid
    
    
    1,109
    
    
    
    822Loans transferred to real estate owned
    
    
    374
    
    
    
    522Net loan recoveries
    
    
    647
    
    
    
    557Tax certificate net recoveries
    
    
    31
    
    
    
    31Reduction in stockholders equity from the tax effect of fair value
of Class A Common Stock obtained from litigation settlement
    
    
    2,181
    
    
    
    Increase in current income taxes payable from the tax effect of fair value
employee stock options
    
    
    1,522
    
    
    
    169Acquisition goodwill adjustments
    
    
    
    
    
    
    (734
    )Change in accumulated other comprehensive income
    
    
    1,366
    
    
    
    (3,847
    )Change in deferred taxes on other comprehensive income
    
    
    757
    
    
    
    (1,208
    )
 * Provision for credit losses represents provision for loan losses, REO and tax certificates. See Notes to Consolidated Financial Statements  Unaudited 9




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##### 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 wholly-owned 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 Livingston, New Jersey. Ryan Beck
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 any financial statements presented in this report
for the first quarter of 2004, nor in the Consolidated Statements of Financial
Condition at December 31, 2003. For the comparable quarter ended March 31,
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 Statement 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 March 31, 2004, December 31, 2003
and March 31, 2003, the consolidated results of operations for the three months
ended March 31, 2004 and 2003, the consolidated stockholders equity and
comprehensive income for the three months ended March 31, 2004 and 2003 and the
consolidated cash flows for the three months ended March 31, 2004 and 2003.
Such adjustments consisted only of normal recurring items. The results of
operations for the three months ended March 31, 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. 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




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##### 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 MonthsEnded March 31,(in thousands, except share data)
    
    2004
    
    2003Pro forma net incomeNet income, as reported
    
    $
    16,647
    
    
    $
    14,358Add: Stock-based employee compensation
expense included in reported net income,
net of related income tax effects
    
    
    44
    
    
    
    52Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related income tax effects
    
    
    (398
    )
    
    
    (396
    )Pro forma net income
    
    $
    16,293
    
    
    $
    14,014Earnings per share:Basic as reported
    
    $
    0.28
    
    
    $
    0.25Basic pro forma
    
    
    0.27
    
    
    
    0.24Diluted as reported
    
    $
    0.26
    
    
    $
    0.23Diluted pro forma
    
    
    0.26
    
    
    
    0.23
 3. Equity Security Litigation Settlement Gain In October, 1999 the Company made a $15 million investment in 3,033,386
shares of a privately held technology companys common stock for cash and
748,000 shares of the Companys Class A common stock. Both Alan B. Levan and
John E. Abdo also acquired direct and indirect interests in 286,709 and 368,408
shares, respectively, of the technology companys common stock. Subsequently,
investors including the Company, Mr. Levan, Mr. Abdo and other affiliates of
the Company, initiated litigation against the technology companys founder,
seeking his ouster from the technology company. During 2002, the Company
recorded an impairment charge for its entire investment in the technology
company based on the Companys analysis of the technology companys operations.
In March 2004, the technology company settled the litigation with the Company
and its affiliates. Pursuant to 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 litigation between the parties
was dismissed in connection with the settlement, and the Company retains no
equity interest in the technology company. Alan B. Levan, John E. Abdo, and
certain affiliates of the Companys parent, BFC Financial Corporation, elected
to retain part or all of their investments in the technology company, but
recovered, in connection with the settlement, legal expenses and damages
totaling $442,590 in cash and 79,835 shares of the Companys Class A Common
Stock that had been owned by the technology company. The legal fees associated
with the lawsuit and the damages received by the Company and its affiliates
were shared pro rata based on the amount of each partys original investment in
the technology company. The Company recorded the $16.7 million cash received pursuant to the
settlement as equity security litigation settlement gain in its statement of
operations for the three months ended March 31, 2004. The Company accounted
for its receipt in the settlement of 378,160 shares of its Class A common stock
and the subsequent retirement of those shares as an equity transaction with no
gain or loss recognized in the statement of operations. For tax purposes, the
fair value of the Companys Class A common stock received is considered taxable
income which resulted in a current income tax liability of $2.2 million and a
corresponding reduction to additional paid in capital in the Companys
statement of stockholders equity and comprehensive income for the three months
ended March 31, 2004. 4. Advances from the Federal Home Loan Bank During March 2004, BankAtlantic prepaid $108 million of fixed rate Federal
Home Loan Bank (FHLB) advances. Of this amount, $25 million had an average
interest rate of 5.68% and was scheduled to mature in 2007, and the remaining
$83 million had an average interest rate of 5.51% and was scheduled to mature
in 2008. In conjunction with the 11




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BankAtlantic Bancorp, Inc. prepayments, BankAtlantic incurred 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 months ended March 31, 2004, $33 million of FHLB
advances matured. These advances had a weighted average interest rate of
1.53%. Of the $591 million of FHLB advances outstanding at March 31, 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 MonthsEnded March 31,2004
    
    2003Service cost benefits earned during the period
    
    $
    
    
    
    $
    Interest cost on projected benefit obligation
    
    
    383
    
    
    
    369Expected return on plan assets
    
    
    (500
    )
    
    
    (371
    )Amortization of unrecognized net gains and losses
    
    
    110
    
    
    
    295Net periodic pension (benefit) expense
    
    $
    (7
    )
    
    $
    293
 BankAtlantic did not contribute to the Plan during the three months ended
March 31, 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): March 31,
    
    December 31,
    
    March 31,2004
    
    2003
    
    2003 (1)States and municipalities
    
    $
    13,556
    
    
    $
    9,903
    
    
    $
    84,745Corporations
    
    
    8,082
    
    
    
    5,159
    
    
    
    4,958U.S. Government and
agencies
    
    
    61,564
    
    
    
    62,229
    
    
    
    35,355Corporate equities
    
    
    11,202
    
    
    
    15,072
    
    
    
    10,029Mutual funds
    
    
    26,815
    
    
    
    24,639
    
    
    
    17,022Certificates of deposit
    
    
    895
    
    
    
    7,563
    
    
    
    2,210$
    122,114
    
    
    $
    124,565
    
    
    $
    154,319
   (1)
    
    At March 31, 2003, securities owned balances included $83 million of
securities owned by GMS, of which approximately $8.0 million were not
accruing interest. Ryan Beck sold GMS in August 2003. 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 inventories. As of March 31, 2004, December 31, 2003 and March 31,
2003, the balances due to the clearing broker were $18.3 million, $8.6 million
and $37.0 million, respectively. 12




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##### Table of Contents



BankAtlantic Bancorp, Inc. Ryan Becks securities sold but not yet purchased consisted of the
following (in thousands): March 31,
    
    December 31,
    
    March 31,2004
    
    2003
    
    2003 (1)States and municipalities
    
    $
    119
    
    
    $
    67
    
    
    $
    3,277Corporations
    
    
    6,298
    
    
    
    1,963
    
    
    
    4,903U.S. Government and
agencies
    
    
    21,847
    
    
    
    32,231
    
    
    
    16,172Corporate equities
    
    
    5,968
    
    
    
    3,544
    
    
    
    3,981Certificates of deposit
    
    
    18
    
    
    
    8
    
    
    
    21,427$
    34,250
    
    
    $
    37,813
    
    
    $
    49,760
   (1)
    
    At March 31, 2003 the amounts include $8 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): March 31
    
    December 31,
    
    March 31,2004
    
    2003
    
    2003Real estate loans:Residential
    
    $
    1,273,105
    
    
    $
    1,343,657
    
    
    $
    1,824,329Construction and development
    
    
    1,516,103
    
    
    
    1,345,449
    
    
    
    1,247,747Commercial
    
    
    943,305
    
    
    
    1,064,043
    
    
    
    800,911Small business
    
    
    117,054
    
    
    
    110,745
    
    
    
    98,455Loans to Levitt
    
    
    18,505
    
    
    
    18,118
    
    
    
    Other loans:Loans to Levitt
    
    
    42,125
    
    
    
    43,500
    
    
    
    Second mortgages  direct
    
    
    362,237
    
    
    
    333,655
    
    
    
    275,385Second mortgages  indirect
    
    
    971
    
    
    
    1,105
    
    
    
    1,565Commercial business
    
    
    98,692
    
    
    
    91,724
    
    
    
    86,293Lease financing
    
    
    11,984
    
    
    
    14,442
    
    
    
    24,876Small business  non-mortgage
    
    
    59,163
    
    
    
    58,574
    
    
    
    60,516Deposit overdrafts
    
    
    3,477
    
    
    
    4,036
    
    
    
    2,557Consumer loans  other direct
    
    
    16,374
    
    
    
    17,892
    
    
    
    21,778Consumer loans  other indirect
    
    
    633
    
    
    
    1,297
    
    
    
    3,729Loans held for sale:Residential
    
    
    3,307
    
    
    
    2,254
    
    
    
    Commercial syndication
    
    
    4,375
    
    
    
    9,114
    
    
    
    13,953Total gross loans
    
    
    4,471,410
    
    
    
    4,459,605
    
    
    
    4,462,094Adjustments:Undisbursed portion of loans in process
    
    
    (751,126
    )
    
    
    (728,100
    )
    
    
    (536,406
    )Premiums related to purchased loans
    
    
    5,694
    
    
    
    6,898
    
    
    
    10,399Deferred fees
    
    
    (6,422
    )
    
    
    (6,655
    )
    
    
    (6,249
    )Allowance for loan and lease losses
    
    
    (45,383
    )
    
    
    (45,595
    )
    
    
    (48,695
    )Loans receivable  net
    
    $
    3,674,173
    
    
    $
    3,686,153
    
    
    $
    3,881,143
 BankAtlantic began originating residential loans held for sale with an
independent mortgage company in August 2003. The mortgage company provides
processing and closing assistance to BankAtlantic. Pursuant to an agreement,
this mortgage company purchases the loans from BankAtlantic 14 days after the
date of funding. BankAtlantic owns the loans 13




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BankAtlantic Bancorp, Inc. during the 14 day period and accordingly earns the interest income during
the period. The sales price is negotiated quarterly for all loans sold during
the quarter. Loans held for sale gains or losses are recognized upon loan sale. The
loan origination fees and related direct loan origination costs on loans held
for sale are deferred and recognized upon loan sale as a component of the
realized gain. The loans held for sale are valued at the lower of aggregate
cost or market. There was no valuation allowance established on these loans at
or during the three months ended March 31, 2004. The derivatives relating to
the commitments to originate and sell loans were not significant. The Companys loans to Levitt had an outstanding balance of $60.6 million
and $61.6 million at March 31, 2004 and December 31, 2003, respectively. The
Company also has loans to Levitt joint ventures that had an outstanding balance
of $184,000 and $23.2 million at March 31, 2004 and December 31, 2003,
respectively. Included in interest income in the Companys statement of
operations for the three months ended March 31, 2004 was $851,000 of interest
income related to loans to Levitt and its joint ventures. At March 31, 2004,
the Company had $13.4 million of undisbursed loans in process to Levitt and its
joint ventures. 8. Real Estate Held for Development and Sale Real estate held for development and sale consisted of the following (in
thousands): March 31,
    
    December 31,
    
    March 31,2004
    
    2003
    
    2003Land and land
development costs
    
    $
    9,703
    
    
    $
    9,705
    
    
    $
    174,829Construction costs
    
    
    9,464
    
    
    
    7,192
    
    
    
    47,254Other costs
    
    
    2,025
    
    
    
    1,859
    
    
    
    14,216Other
    
    
    3,047
    
    
    
    3,047
    
    
    
    2,057Total
    
    $
    24,239
    
    
    $
    21,803
    
    
    $
    238,356
 Income from real estate operations were as follows (in thousands): For the Three MonthsEnded March 31,2004
    
    2003Sales of real estate
    
    $
    757
    
    
    $
    4,164Cost of sales on real estate
    
    
    452
    
    
    
    3,078Gains on sales of real
estate
    
    $
    305
    
    
    $
    1,086
 In 2002, BankAtlantic acquired Community Savings Bankshares, Inc.
(Community). Real estate held for development and sale at March 31, 2004 and
December 31, 2003 consisted of real estate held by a joint venture that was
acquired in connection with the Community acquisition and $3.1 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 March 31, 2003 consisted of
$22.0 million of real estate inventory of the joint venture acquired in the
Community acquisition, $2.1 million of real estate held for sale associated
with BankAtlantic branch banking facilities, and $214.3 million of real estate
inventory of Levitt. 14




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##### 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): March 31,
    
    December 31,
    
    March 31,2004
    
    2003
    
    2003Investment in Bluegreen Corporation
    
    $
    
    
    
    $
    
    
    
    $
    61,584Investments and advances to real estate
joint ventures
    
    
    
    
    
    
    
    
    
    
    27,613Investments in statutory business trusts
    
    
    7,910
    
    
    
    7,910
    
    
    
    7,558Total
    
    $
    7,910
    
    
    $
    7,910
    
    
    $
    96,755
 As of March 31, 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 March 31, 2003, investments and advances to unconsolidated subsidiaries
consisted of the Companys and Levitts investment in Bluegreen Corporation,
(which consisted in 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 months ended March
31, 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
branches 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, institutional salesBankAtlantic BancorpParent Company
    
    BankAtlantic Bancorps operations, costs of
acquisitions and financing of acquisitions
 15




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##### Table of Contents



BankAtlantic Bancorp, Inc. Description of BankAtlantics Reportable Segments The Company evaluates BankAtlantics segment performance based on segment
profits after tax. BankAtlantic has three reportable segments. The table
below is segment information for the three months ended March 31, 2004 and 2003
associated with the three BankAtlantic reportable segments (in
thousands): BankAtlanticBankAtlantic Reportable SegmentsBank
    
    Commercial
    
    Community
    
    
    
    
    
    
    
    
    
    BankAtlanticInvestments
    
    Banking
    
    Banking
    
    Treasury
    
    Other
    
    Total2004Interest income
    
    $
    23,427
    
    
    
    26,634
    
    
    
    23,056
    
    
    
    (17,583
    )
    
    
    808
    
    
    
    56,342Interest expense
    
    
    13,887
    
    
    
    9,657
    
    
    
    7,627
    
    
    
    (14,893
    )
    
    
    194
    
    
    
    16,472Net interest income
    
    
    9,540
    
    
    
    16,977
    
    
    
    15,429
    
    
    
    (2,690
    )
    
    
    614
    
    
    
    39,870Net
charge-offs/(recoveries)
    
    
    209
    
    
    
    (23
    )
    
    
    (4
    )
    
    
    
    
    
    
    (829
    )
    
    
    (647
    )Net interest income after
net charge-offs
(recoveries)
    
    
    9,331
    
    
    
    17,000
    
    
    
    15,433
    
    
    
    (2,690
    )
    
    
    1,443
    
    
    
    40,517Non-interest income
    
    
    139
    
    
    
    606
    
    
    
    16,594
    
    
    
    
    
    
    
    105
    
    
    
    17,444Non-interest expense
    
    
    1,515
    
    
    
    2,961
    
    
    
    26,406
    
    
    
    
    
    
    
    10,326
    
    
    
    41,208Segments profits and
losses before tax
    
    
    7,955
    
    
    
    14,645
    
    
    
    5,621
    
    
    
    (2,690
    )
    
    
    (8,778
    )
    
    
    16,753Taxes
    
    
    2,847
    
    
    
    5,272
    
    
    
    2,024
    
    
    
    (969
    )
    
    
    (3,160
    )
    
    
    6,014Segment net income
    
    $
    5,108
    
    
    
    9,373
    
    
    
    3,597
    
    
    
    (1,721
    )
    
    
    (5,618
    )
    
    
    10,739Segment assets
    
    $
    1,789,951
    
    
    
    1,805,187
    
    
    
    554,277
    
    
    
    
    
    
    
    344,950
    
    
    
    4,494,3652003Interest income
    
    $
    34,476
    
    
    
    25,546
    
    
    
    21,751
    
    
    
    (16,405
    )
    
    
    1,561
    
    
    
    66,929Interest expense
    
    
    22,248
    
    
    
    11,396
    
    
    
    11,010
    
    
    
    (17,750
    )
    
    
    468
    
    
    
    27,372Net interest income
    
    
    12,228
    
    
    
    14,150
    
    
    
    10,741
    
    
    
    1,345
    
    
    
    1,093
    
    
    
    39,557Net
charge-offs/(recoveries)
    
    
    26
    
    
    
    (29
    )
    
    
    (76
    )
    
    
    
    
    
    
    (478
    )
    
    
    (557
    )Net interest income after
net charge-offs
(recoveries)
    
    
    12,202
    
    
    
    14,179
    
    
    
    10,817
    
    
    
    1,345
    
    
    
    1,571
    
    
    
    40,114Non-interest income
    
    
    74
    
    
    
    734
    
    
    
    12,840
    
    
    
    
    
    
    
    28
    
    
    
    13,676Non-interest expense
    
    
    1,174
    
    
    
    3,401
    
    
    
    21,848
    
    
    
    
    
    
    
    8,353
    
    
    
    34,776Segments profits and
losses before tax
    
    
    11,102
    
    
    
    11,512
    
    
    
    1,809
    
    
    
    1,345
    
    
    
    (6,754
    )
    
    
    19,014Taxes
    
    
    3,996
    
    
    
    4,144
    
    
    
    651
    
    
    
    485
    
    
    
    (2,464
    )
    
    
    6,812Segment net income
    
    $
    7,106
    
    
    
    7,368
    
    
    
    1,158
    
    
    
    860
    
    
    
    (4,290
    )
    
    
    12,202Segment assets
    
    $
    2,810,762
    
    
    
    1,634,132
    
    
    
    448,105
    
    
    
    
    
    
    
    403,171
    
    
    
    5,296,170
 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 isolates 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 the Treasury.
The duration on savings and transaction account deposit products that do not
have maturities were estimated based on a deposit duration 16




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##### Table of Contents



BankAtlantic Bancorp, Inc. 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. 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 (consumer indirect, syndication,
lease financing and small business loans originated before January 1, 2001).
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. 17




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##### Table of Contents



BankAtlantic Bancorp, Inc. Description 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 March 31, 2004 and 2003 associated with the three Ryan Beck reportable
segments (in thousands): Ryan BeckInvestment
    
    CapitalPCG
    
    Banking
    
    Markets
    
    Total2004Net interest income:Broker dealer interest
    
    $
    2,291
    
    
    $
    56
    
    
    $
    449
    
    
    $
    2,796Interest Expense
    
    
    (36
    )
    
    
    (8
    )
    
    
    (166
    )
    
    
    (210
    )Net interest income
    
    
    2,255
    
    
    
    48
    
    
    
    283
    
    
    
    2,586Non-interest income:Principal transactions
    
    
    19,470
    
    
    
    535
    
    
    
    4,438
    
    
    
    24,443Investment banking
    
    
    88
    
    
    
    11,713
    
    
    
    830
    
    
    
    12,631Commissions
    
    
    23,714
    
    
    
    
    
    
    
    1,657
    
    
    
    25,371Other
    
    
    597
    
    
    
    
    
    
    
    23
    
    
    
    620Non-interest income
    
    
    43,869
    
    
    
    12,248
    
    
    
    6,948
    
    
    
    63,065Non-interest expense
    
    
    (43,944
    )
    
    
    (6,857
    )
    
    
    (6,288
    )
    
    
    (57,089
    )Pre-tax contribution
    
    $
    2,180
    
    
    $
    5,439
    
    
    $
    943
    
    
    $
    8,5622003Net interest income:Broker dealer interest
    
    $
    2,088
    
    
    $
    49
    
    
    $
    180
    
    
    $
    2,317Interest Expense
    
    
    (274
    )
    
    
    (4
    )
    
    
    (85
    )
    
    
    (363
    )Net interest income
    
    
    1,814
    
    
    
    45
    
    
    
    95
    
    
    
    1,954Non-interest income:Principal transactions
    
    
    13,592
    
    
    
    4,253
    
    
    
    7,239
    
    
    
    25,084Investment banking
    
    
    
    
    
    
    6,977
    
    
    
    712
    
    
    
    7,689Commissions
    
    
    17,448
    
    
    
    105
    
    
    
    1,799
    
    
    
    19,352Other
    
    
    815
    
    
    
    
    
    
    
    25
    
    
    
    840Non-interest income
    
    
    31,855
    
    
    
    11,335
    
    
    
    9,775
    
    
    
    52,965Non-interest expense
    
    
    (37,730
    )
    
    
    (6,521
    )
    
    
    (7,553
    )
    
    
    (51,804
    )Pre-tax contribution
    
    $
    (4,061
    )
    
    $
    4,859
    
    
    $
    2,317
    
    
    $
    3,115
 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 a 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. 18




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##### Table of Contents



BankAtlantic Bancorp, Inc. Segment Reporting Worksheet 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 March 31, 2004 and 2003 (in
thousands): Adjusting and
    
    BankAtlanticParent
    
    Elimination
    
    BancorpBankAtlantic
    
    Ryan Beck
    
    Company
    
    Entries
    
    Consolidated2004Interest income
    
    $
    56,342
    
    
    $
    2,796
    
    
    $
    542
    
    
    $
    (51
    )
    
    $
    59,629Interest expense
    
    
    (16,547
    )
    
    
    (210
    )
    
    
    (4,135
    )
    
    
    51
    
    
    
    (20,841
    )Recovery from loan losses
    
    
    859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    859Non-interest income
    
    
    18,220
    
    
    
    63,065
    
    
    
    17,079
    
    
    
    (57
    )
    
    
    98,307Non-interest expense
    
    
    (54,132
    )
    
    
    (57,089
    )
    
    
    (850
    )
    
    
    57
    
    
    
    (112,014
    )Income before taxes
    
    
    4,742
    
    
    
    8,562
    
    
    
    12,636
    
    
    
    
    
    
    
    25,940Provision for income taxes
    
    
    (1,436
    )
    
    
    (3,434
    )
    
    
    (4,423
    )
    
    
    
    
    
    
    (9,293
    )Net income
    
    $
    3,306
    
    
    $
    5,128
    
    
    $
    8,213
    
    
    $
    
    
    
    $
    16,647Total assets
    
    $
    4,494,365
    
    
    $
    176,247
    
    
    $
    695,662
    
    
    $
    (615,791
    )
    
    $
    4,750,4832003Interest income
    
    $
    66,929
    
    
    $
    2,317
    
    
    $
    454
    
    
    $
    (735
    )
    
    $
    68,965Interest expense
    
    
    (27,431
    )
    
    
    (363
    )
    
    
    (3,727
    )
    
    
    735
    
    
    
    (30,786
    )Provision for loan losses
    
    
    (850
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (850
    )Non-interest income
    
    
    15,114
    
    
    
    52,965
    
    
    
    27
    
    
    
    (29
    )
    
    
    68,077Non-interest expense
    
    
    (36,329
    )
    
    
    (51,804
    )
    
    
    (456
    )
    
    
    29
    
    
    
    (88,560
    )Income before taxes
    
    
    17,433
    
    
    
    3,115
    
    
    
    (3,702
    )
    
    
    
    
    
    
    16,846Provision for income taxes
    
    
    (6,031
    )
    
    
    (1,292
    )
    
    
    1,295
    
    
    
    
    
    
    
    (6,028
    )Net income
    
    $
    11,402
    
    
    $
    1,823
    
    
    $
    (2,407
    )
    
    $
    
    
    
    $
    10,818Total assets (1)
    
    $
    5,296,170
    
    
    $
    207,383
    
    
    $
    785,693
    
    
    $
    (475,907
    )
    
    $
    5,813,339
   (1)
    
    The adjusting and elimination entries include the total assets of Levitt. The elimination entries consist of the intercompany loan interest income
and interest expense, management fees, consulting fees and brokerage
commissions. 19




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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 months ended March 31, 2004 and 2003 consists of (in thousands): For the Three Months EndedMarch 31,2004
    
    2003Interest expenseSegment interest expense
    
    $
    16,472
    
    
    $
    27,372Joint venture interest expense
    
    
    75
    
    
    
    59BankAtlantic interest expense
    
    
    16,547
    
    
    
    27,431Non-interest incomeSegment non-interest income
    
    
    17,444
    
    
    
    13,676Income from real estate operations
    
    
    305
    
    
    
    1,086Other
    
    
    471
    
    
    
    352BankAtlantic non-interest income
    
    
    18,220
    
    
    
    15,114Non-interest expenseSegment non-interest expense
    
    
    41,208
    
    
    
    34,776Joint venture expenses
    
    
    520
    
    
    
    1,096Provision for tax certificates
    
    
    300
    
    
    
    300Cost associated with debt redemption
    
    
    11,741
    
    
    
    Other
    
    
    363
    
    
    
    157BankAtlantic non-interest expense
    
    
    54,132
    
    
    
    36,329TaxesSegment taxes
    
    
    6,014
    
    
    
    6,812Actual tax rate different than segment
assumed tax rate
    
    
    (254
    )
    
    
    (212
    )Segment earnings greater than
BankAtlantic earnings
    
    
    (4,324
    )
    
    
    (569
    )BankAtlantic taxes
    
    
    1,436
    
    
    
    6,031Net incomeSegment net income
    
    
    10,739
    
    
    
    12,202Provision for loan losses different
than net recoveries
    
    
    136
    
    
    
    (901
    )Provision for tax certificates
    
    
    (192
    )
    
    
    (192
    )Joint venture operation excluded from
segment reporting
    
    
    (116
    )
    
    
    81Cost associated with debt redemption
    
    
    (7,515
    )
    
    
    Tax rate difference
    
    
    254
    
    
    
    212BankAtlantic net income
    
    $
    3,306
    
    
    $
    11,402
 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. 20




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##### Table of Contents



BankAtlantic Bancorp, Inc. 11. Financial instruments with off-balance sheet risk Financial instruments with off-balance sheet risk were (in thousands): March 31,
    
    December 31,
    
    March 31,2004
    
    2003
    
    2003Commitment to sell fixed rate residential loans
    
    $
    20,508
    
    
    $
    12,962
    
    
    $
    135Commitment to sell variable rate residential loans
    
    
    7,445
    
    
    
    3,740
    
    
    
    Commitments to purchase mortgage-backed securities
    
    
    100,000
    
    
    
    
    
    
    
    Forward contracts to purchase mortgage-backed securities
    
    
    6,391
    
    
    
    8,611
    
    
    
    27,813Commitments to purchase other investment securities
    
    
    18,710
    
    
    
    
    
    
    
    Commitments to purchase fixed rate residential loans
    
    
    
    
    
    
    40,242
    
    
    
    Commitments to purchase variable rate residential loans
    
    
    103,600
    
    
    
    3,500
    
    
    
    124,547Commitments to originate loans held for sale
    
    
    24,537
    
    
    
    14,271
    
    
    
    Commitments to extend credit, including the undisbursed
portion of loans in process
    
    
    1,412,453
    
    
    
    1,404,538
    
    
    
    1,141,639Standby letters of credit
    
    
    35,973
    
    
    
    31,722
    
    
    
    29,517Commercial lines of credit
    
    
    131,047
    
    
    
    162,623
    
    
    
    160,149
 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 $29.9 million at March 31,
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 $6.1 million at March 31,
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 March 31, 2004 and December
31, 2003 was $70,000 and $110,000, respectively, of unearned guarantee fees. 21




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##### 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 months
ended March 31, 2003. The components of earnings from discontinued operations for the three
months ended March 31, 2003 were as follows (in thousands): For the ThreeMonths EndedMarch 31, 2003Net interest income
    
    $
    1,323Non-Interest Income:Investment banking income
    
    
    6,319Income from real estate operations
    
    
    13,771Loss from unconsolidated subsidiaries
    
    
    (194
    )Other
    
    
    868Total non-interest income
    
    
    20,764Non Interest Expenses:Employee compensation and benefits
    
    
    10,049Other
    
    
    6,785Total non-interest expenses
    
    
    16,834Income before income taxes
    
    
    5,253Provision for income taxes
    
    
    1,713Income from discontinued operations, net of tax
    
    $
    3,540
 The assets and liabilities associated with discontinued operations
included in the Companys statement of financial condition as of March 31, 2003
consisted of the following: (in thousands) March 31,2003ASSETSCash
    
    $
    13,867Securities owned
    
    
    82,955Loans receivable
    
    
    6,205Real estate inventory
    
    
    214,269Investment in unconsolidated subsidiaries
    
    
    61,949Goodwill
    
    
    1,204Other assets
    
    
    17,357Total assets
    
    $
    397,806Liabilities:Notes payable
    
    $
    105,747Securities sold but not yet purchased
    
    
    8,363Due to clearing agent
    
    
    56,084Other liabilities
    
    
    51,878Total liabilities
    
    $
    222,072
 22




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##### 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 ended March 31,
2004 and 2003 (in thousands, except share data): For the Three Months EndedMarch 31,2004
    
    2003Basic earnings per share:Income from continuing operations
    
    $
    16,647
    
    
    $
    10,818Basic weighted average number of common shares outstanding
    
    
    59,257,270
    
    
    
    58,171,621Basic earnings per share from continuing operations
    
    $
    0.28
    
    
    $
    0.19Discontinued operations, net of taxes
    
    
    
    
    
    
    3,540Basic weighted average number of common shares outstanding
    
    
    59,257,270
    
    
    
    58,171,621Basic earnings per share from discontinued operations
    
    
    
    
    
    
    0.06Net income
    
    $
    16,647
    
    
    $
    14,358Basic weighted average number of common shares outstanding
    
    
    59,257,270
    
    
    
    58,171,621Basic earnings per share
    
    $
    0.28
    
    
    $
    0.25Diluted earnings per share:Income from continuing operations
    
    $
    16,647
    
    
    $
    10,818Interest expense on convertible debentures
    
    
    
    
    
    
    440Subsidiary stock options
    
    
    (192
    )
    
    
    (47
    )Income available after assumed conversion
    
    $
    16,455
    
    
    $
    11,211Basic weighted average shares outstanding
    
    
    59,257,270
    
    
    
    58,171,621Common stock equivalents resulting from convertible debentures
    
    
    
    
    
    
    4,092,622Common stock equivalents resulting from stock-based compensation
    
    
    3,935,764
    
    
    
    1,986,245Diluted weighted average shares outstanding
    
    
    63,193,034
    
    
    
    64,250,488Diluted earnings per share from continuing operations
    
    $
    0.26
    
    
    $
    0.17Discontinued operations, net of taxes
    
    
    
    
    
    
    3,540Diluted weighted average number of common shares outstanding
    
    
    63,193,034
    
    
    
    64,250,488Diluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.06Income available after assumed conversion
    
    $
    16,455
    
    
    $
    14,751Diluted weighted average shares outstanding
    
    
    63,193,034
    
    
    
    64,250,488Diluted earnings per share
    
    $
    0.26
    
    
    $
    0.23
 14. New Accounting Pronouncements In March 2004, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 105, Application of Accounting Principles to
Loan Commitments. This SAB provided guidance that should be considered when
calculating the fair value of certain loan commitments accounted for as
derivatives. Additionally, the SAB provided disclosure requirements with
respect to loan commitments accounted for as derivatives. Although this SAB is
applicable to the Company, the implementation of this SAB on April 1, 2004 did
not have a material impact on the Companys financial condition or results of
operations. In March 2004, the Emerging Issues Task Force (EITF) reached a consensus
on EITF 03-1 The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments. The EITF provides guidance on the meaning
of other-than-temporary impairment and its application to investments
classified as either available for sale or held to maturity under FASB
Statement No. 115 and investments accounted for under the cost method of
accounting. The Company has reviewed this guidance and management believes
that it will not have a significant impact on the Companys existing accounting
policies or on its financial statements. In December 2003, the American Institute of Certified Public Accountants
Accounting Standards Executive Committee issued Statement of Position 03-3
(SOP), Accounting for Certain Loans or Debt Securities Acquired in a 23




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##### Table of Contents



BankAtlantic Bancorp, Inc. Transfer. The SOP addresses accounting for loans and debt securities
acquired in purchase business combinations or purchased subsequent to
origination. The SOP prohibits the creation of valuation allowances in the
initial accounting of all loans acquired. The SOP does not apply to originated
loans. The SOP limits the yield that may be accreted to the excess of the
purchasers estimate of undiscounted expected principal, interest and other
cash flows over the purchasers initial investment. The SOP requires excess
contractual cash flows over cash flows expected to be collected to not be
recognized as an adjustment of yield, loss accrual or valuation allowance.
Subsequent increases in cash flows expected to be collected generally should be
recognized prospectively through adjustment of the loans yield over its
remaining life. Decreases in cash flows expected to be collected should be
recognized as impairments. The SOP is effective for loans and securities
acquired in fiscal years beginning after December 15, 2004 with early adoption
encouraged. Management intends to adopt the provisions of the SOP on January
1, 2005. The SOP will have an effect on future loan acquisitions that are
within the scope of the SOP but will not have an effect on the Companys
historical financial statements. 15. Subsequent Event In April 2004, the Company withdrew the registration statement previously
filed with the Securities and Exchange Commission relating to the offering of
4,000,000 shares of its Class A Common Stock. 24




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##### 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. and its wholly owned subsidiaries (the Company, which may also be
referred to as we, us, or our) for the three months ended March 31, 2004
and 2003, respectively. 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) and RB Holdings, Inc., the holding company for Ryan Beck &
Co., Inc., a brokerage and investment banking firm located in Livingston, New
Jersey, 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;
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; 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 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 applicable
to it; the volatility of the stock market and fixed income markets; the mix of
revenue-producing financial products in which it invests or which it offers
its customers; the success of any new lines of business in which it may
engage; 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; and additional risks
and uncertainties that are subject to change and may be outside of Ryan Becks
control. 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 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. 25




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BankAtlantic Bancorp, Inc. Consolidated Results of Operations For the Three Months Ended March 31,(In thousands)
    
    2004
    
    2003
    
    ChangeNet interest income
    
    $
    38,788
    
    
    $
    38,179
    
    
    $
    609Provision for (recovery from) loan loss
    
    
    (859
    )
    
    
    850
    
    
    
    1,709Securities activities, net
    
    
    72
    
    
    
    384
    
    
    
    (312
    )Equity security litigation settlement gain
    
    
    16,782
    
    
    
    
    
    
    
    16,782Other non-interest income
    
    
    81,453
    
    
    
    67,693
    
    
    
    13,760Non-interest expense
    
    
    112,014
    
    
    
    88,560
    
    
    
    (23,454
    )Income from continuing operations
before income taxes
    
    
    25,940
    
    
    
    16,846
    
    
    
    9,094Provision for income taxes
    
    
    9,293
    
    
    
    6,028
    
    
    
    3,265Income from continuing operations
    
    
    16,647
    
    
    
    10,818
    
    
    
    5,829Discontinued operations, net of tax
    
    
    
    
    
    
    3,540
    
    
    
    (3,540
    )Net income
    
    $
    16,647
    
    
    $
    14,358
    
    
    $
    2,289
 For the Three Months Ended March 31, 2004 Compared to the Same 2003 Period: Income from continuing operations increased 54% from the same 2003 period,
to $16.6 million for the first quarter of 2004, up from $10.8 million in the
corresponding period in 2003. The increase in income from continuing
operations consisted primarily of two components, a $16.8 million equity
security litigation settlement gain recognized in connection with the Companys
settlement in March 2004 of litigation with a technology company in which the
Company was an investor, and an improvement in earnings at Ryan Beck. Ryan
Beck experienced growth in merger and acquisition-related business that
resulted in higher fee income for its investment banking segment, and growth in
the business of its private client group that resulted in increased retail
commission revenues. The improvement in Ryan Beck earnings and the equity
security litigation settlement gain were partially offset by BankAtlantic
earnings that were less than those for the comparable 2003 period, primarily
because of the prepayment penalties incurred when BankAtlantic prepaid high
fixed interest rate FHLB advances. The prepaid FHLB advances totaled $108
million, resulting in prepayment penalties of $11.7 million. Excluding the
impact of the equity security litigation settlement gain and the FHLB advance
prepayment penalties, income from continuing operations would have been $13.4
million for the first quarter of 2004, an increase of 24% over that for the
same 2003 period. Net interest income increased slightly from the 2003 quarter. The
improvement was primarily the result of rates on interest bearing liabilities
decreasing faster than yields earned on interest earning assets, a by-product
of falling interest rates. Interest bearing liability rates also decreased
because of a change in the mix of BankAtlantics deposit accounts, with fewer
high rate certificate of deposit accounts and more low cost deposit and insured
money fund accounts in the first quarter of 2004 as compared to the first
quarter of 2003. This change was due primarily to BankAtlantics initiatives
associated with its Floridas Most Convenient Bank campaign. Those initiatives
include seven-day banking, extended weekday hours, 24/7 call center service,
Totally Free Checking, free online banking, Totally Free Change Exchange coin
counters, and various other products and services. Since the implementation of
those initiatives during 2002, BankAtlantic has opened nearly 290,000 new
checking and savings accounts, including more than 45,000 in the first quarter
of 2004 compared to approximately 37,000 during the first quarter of 2003. The improvement in the provision for loan losses reflects net recoveries
of previously charged off loans associated with BankAtlantics discontinued
loan products and implementation of a loan underwriting policy that emphasizes
collateral based lending relationships. These collateral based loans have
lower credit risk than BankAtlantics discontinued loan products, which allowed
BankAtlantic to reduce its allowance for loan losses as a percentage of
outstanding loans. Gains on securities activities during the 2004 quarter resulted from the
repositioning of mutual fund investments. Gains on securities activities
during the 2003 quarter resulted from a liquidating dividend associated with
equity securities owned by BankAtlantic Bancorp. 26




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##### Table of Contents



BankAtlantic Bancorp, Inc. Other non-interest income increased 20% from the 2003 quarter. The
increase primarily resulted from substantial increases in Ryan Becks
non-interest income and in service charges received by BankAtlantic. Ryan Becks non-interest income was $63.1 million in the first quarter
2004, representing an increase of 19% over the comparable 2003 period. The
Private Client Group revenues for the first quarter 2004 rose 38% to $43.9
million, compared to $31.9 million in the comparable 2003 period. Investment
Banking revenues for the quarter grew to $12.2 million, compared to $11.3
million in the comparable 2003 period. BankAtlantics non-interest income, which primarily consisted of service
charges and other bank related fees, increased 21% in the first quarter of 2004
compared to the same quarter a year earlier. The increase is primarily
attributable to growth in the number of deposit accounts at the bank. The
growth in the number of deposit accounts were primarily the result of
initiatives adopted in connection with BankAtlantics Floridas Most Convenient
Bank campaign. Non-interest expense in the first quarter of 2004 increased 26% from the
comparable 2003 quarter. Included in the 2004 quarter is an $11.7 million
expense consisting of prepayment penalties incurred by BankAtlantic when it
prepaid certain high rate FHLB advances. Excluding this expense item,
non-interest expense increased 13%. Ryan Becks non-interest expense increased 10%, from $51.8 million in the
first quarter of 2003 to $57.1 million in the first quarter of 2004, primarily
as a result of increased commissions and other compensation expenses related to
the generation of increased revenues. BankAtlantics non-interest expense, excluding the $11.7 million
prepayment penalty, increased 17%, from $36.3 million in the first quarter of
2003 to $42.4 million in the first quarter of 2004. BankAtlantics marketing
initiatives, including 7-day banking and the newly introduced
Yeah, Were
Open slogan, resulted in increased advertising expenditures, and the extended
banking hours implemented at its branches and the growth in customer accounts
required additional employees which resulted in increased employee compensation
and benefits expenses. 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 months
ended March 31, 2003. 27




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##### Table of Contents



BankAtlantic Bancorp, Inc. BankAtlantic Results of Operations Net interest income For the Three Months EndedMarch 31, 2004
    
    March 31, 2003Average
    
    Revenue/
    
    Yield/
    
    Average
    
    Revenue/
    
    Yield/(in thousands)
    
    Balance
    
    Expense
    
    Rate
    
    Balance
    
    Expense
    
    RateLoans:Residential real estate
    
    $
    1,326,061
    
    
    $
    15,941
    
    
    
    4.81
    %
    
    $
    1,559,553
    
    
    $
    21,586
    
    
    
    5.54
    %Commercial real estate
    
    
    1,689,962
    
    
    
    23,694
    
    
    
    5.61
    
    
    
    1,530,402
    
    
    
    22,866
    
    
    
    5.98Consumer
    
    
    374,222
    
    
    
    3,900
    
    
    
    4.17
    
    
    
    296,675
    
    
    
    3,467
    
    
    
    4.67Lease financing
    
    
    13,642
    
    
    
    382
    
    
    
    11.20
    
    
    
    29,962
    
    
    
    834
    
    
    
    11.13Commercial business
    
    
    98,959
    
    
    
    1,500
    
    
    
    6.06
    
    
    
    100,753
    
    
    
    1,450
    
    
    
    5.76Small business
    
    
    173,891
    
    
    
    3,085
    
    
    
    7.10
    
    
    
    164,151
    
    
    
    3,037
    
    
    
    7.40Total loans
    
    
    3,676,737
    
    
    
    48,502
    
    
    
    5.28
    
    
    
    3,681,496
    
    
    
    53,240
    
    
    
    5.78Investments  tax exempt
    
    
    3,362
    
    
    
    51
    (1)
    
    
    6.04
    
    
    
    
    
    
    
    
    
    
    
    Investments  taxable
    
    
    540,460
    
    
    
    7,808
    
    
    
    5.78
    
    
    
    953,326
    
    
    
    13,688
    
    
    
    5.74Total interest earning assets
    
    
    4,220,559
    
    
    
    56,361
    
    
    
    5.34
    %
    
    
    4,634,822
    
    
    
    66,928
    
    
    
    5.78
    %Goodwill and core deposit intangibles
    
    
    82,263
    
    
    
    
    
    
    
    
    
    
    
    84,754Other non-interest earning assets
    
    
    240,068
    
    
    
    
    
    
    
    
    
    
    
    261,961Total Assets
    
    $
    4,542,890
    
    
    
    
    
    
    
    
    
    
    $
    4,981,537Deposits:Savings
    
    $
    220,005
    
    
    
    144
    
    
    
    0.26
    %
    
    $
    171,298
    
    
    
    316
    
    
    
    0.75
    %NOW
    
    
    543,619
    
    
    
    491
    
    
    
    0.36
    
    
    
    425,622
    
    
    
    542
    
    
    
    0.52Money funds
    
    
    866,767
    
    
    
    1,876
    
    
    
    0.87
    
    
    
    809,482
    
    
    
    2,652
    
    
    
    1.33Certificate accounts
    
    
    769,949
    
    
    
    4,462
    
    
    
    2.33
    
    
    
    966,869
    
    
    
    7,659
    
    
    
    3.21Total deposits
    
    
    2,400,340
    
    
    
    6,973
    
    
    
    1.17
    
    
    
    2,373,271
    
    
    
    11,169
    
    
    
    1.91Short-term borrowed funds
    
    
    150,735
    
    
    
    302
    
    
    
    0.81
    
    
    
    285,716
    
    
    
    837
    
    
    
    1.19Advances from FHLB
    
    
    760,973
    
    
    
    9,098
    
    
    
    4.81
    
    
    
    1,284,983
    
    
    
    15,315
    
    
    
    4.83Long-term debt
    
    
    35,842
    
    
    
    482
    
    
    
    5.41
    
    
    
    35,411
    
    
    
    447
    
    
    
    5.12Total interest bearing liabilities
    
    
    3,347,890
    
    
    
    16,855
    
    
    
    2.02
    
    
    
    3,979,381
    
    
    
    27,768
    
    
    
    2.83Non-interest bearing deposits
    
    
    664,796
    
    
    
    
    
    
    
    
    
    
    
    478,355Non-interest bearing other liabilities
    
    
    34,025
    
    
    
    
    
    
    
    
    
    
    
    63,538Total Liabilities
    
    
    4,046,711
    
    
    
    
    
    
    
    
    
    
    
    4,521,274Stockholders equity
    
    
    496,179
    
    
    
    
    
    
    
    
    
    
    
    460,263Total liabilities and stockholders equity
    
    $
    4,542,890
    
    
    
    
    
    
    
    
    
    
    $
    4,981,537Net interest income/ net interest spread
    
    
    
    
    
    
    39,506
    
    
    
    3.32
    %
    
    
    
    
    
    
    39,160
    
    
    
    2.95
    %Capitalized interest
    
    
    
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    339Net interest income (tax equivalent)
    
    
    
    
    
    $
    39,813
    
    
    
    
    
    
    
    
    
    
    $
    39,499MarginInterest income/interest earning assets
    
    
    
    
    
    
    
    
    
    
    5.34
    %
    
    
    
    
    
    
    
    
    
    
    5.78
    %Interest expense/interest earning assets
    
    
    
    
    
    
    
    
    
    
    1.61
    
    
    
    
    
    
    
    
    
    
    
    2.43Net interest margin (tax equivalent)
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    3.35
    %
   (1)
    
    The tax equivalent basis is computed using a 35% tax rate. For the Three Months Ended March 31, 2004 Compared to the Same 2003 Period: The slight improvement in net interest income in the first quarter of 2004
as compared to the first quarter of 2003 primarily resulted from an improvement
in the net interest margin, partially offset by a decline in average earning
assets. BankAtlantics average interest earning asset balances declined, as
compared to the first quarter of 2003, primarily because the falling interest
rates over the past year resulted in increased refinancings and prepayments of
many residential loans originated or purchased by BankAtlantic. This reduced
the balances in both its residential mortgage loan portfolio and 28




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BankAtlantic Bancorp, Inc. 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, which mitigated the negative impact of
residential loan prepayments. As a by-product of the residential loan prepayment activity,
BankAtlantics average interest earning asset balances declined. As interest
rates continued to fall, BankAtlantic found that few attractive alternatives
existed for re-investment of the proceeds from the residential loan and taxable
securities prepayments and from payments of loans and securities that matured
during the same period. Therefore, instead of re-investing these proceeds in
this rate environment, it chose to decrease the amount of its existing debt.
The fixed interest rates on BankAtlantics FHLB advances were higher than the
interest rates that BankAtlantic determined it is presently able to obtain on
its borrowings, and therefore it prepaid the FHLB advances with the expectation
that their elimination will favorably impact its net interest margin in future
periods. As a consequence, BankAtlantics average FHLB advance balances
declined by approximately $524 million, thereby reducing its interest expense
on advances. During 2003, BankAtlantic repaid fixed rate FHLB advances that
would have matured within 24 months, and during the 2004 quarter BankAtlantic
repaid FHLB advances that would have matured during 2007 and 2008. The FHLB
advances repaid had higher interest rates than alternative borrowings with the
same maturity dates; however, they did not have higher rates than certain
remaining BankAtlantic FHLB advance borrowings. As a consequence, average
FHLB advance rates during the three months ended March 31, 2004 only declined
slightly from the FHLB advance rates during the comparable 2003 period. Also,
interest expense on BankAtlantics short-term borrowings was substantially
lower during 2004 due to the lower rates and lower balances on its debt.
Average debt balances decreased as a direct result of having lower average
interest earning assets. Although the foregoing factors all had an impact on BankAtlantics net
interest margin, a significant factor resulting in the improvement of its net
interest margin was a substantial reduction in its deposit interest expense,
attributed to a 74 basis point reduction in average deposit interest rates.
The reduction in average deposit interest rates resulted chiefly from a
combination of the low interest rate environment and a change in the banks
deposit mix, with fewer higher rate certificate of deposit accounts and more
low cost deposits and insured money fund accounts in the first quarter of 2004
as compared to the first quarter of 2003. Low cost deposits are checking and
savings accounts. Average low cost deposits increased from $1,075 million
during the first quarter of 2003 to $1,428 million during the comparable 2004
quarter, while certificate of deposit average balances declined from $967
million during the 2003 quarter to $770 million during the comparable 2004
quarter. Additionally, average non-interest bearing checking accounts included
in low cost deposits grew from $478 million during the first quarter of 2003,
to $665 million during the comparable 2004 quarter. Average insured money fund
balances increased from $809 million during the first quarter of 2003, to $867
million during the comparable 2004 quarter. Growth in BankAtlantics checking
and saving accounts is primarily attributable to its Floridas Most Convenient
Bank initiatives. Since the implementation of those initiatives in 2002,
BankAtlantic has opened nearly 290,000 new checking and savings accounts,
including more than 45,000 in the first quarter of 2004. In total, the rate on BankAtlantics interest bearing liabilities
decreased 81 basis points as a result of the change in deposit mix, the
historically low interest rate environment, and the decrease in its balances of
high rate FHLB advances, whereas the rate on BankAtlantics interest earning
assets decreased only 44 basis points. The decline in average asset yields
was due to the downward re-pricing of floating rate loans and the purchase of
loans at rates lower than the rates earned on the loans that prepaid or remain
in BankAtlantics existing portfolio. 29




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BankAtlantic Bancorp, Inc. Provision for Loan Losses For Three Months EndedMarch 31,(in thousands)
    
    2004
    
    2003Balance, beginning of period
    
    $
    45,595
    
    
    $
    48,022Charge-offs:Consumer loans
    
    
    (149
    )
    
    
    (235
    )Residential real estate loans
    
    
    (231
    )
    
    
    (114
    )Discontinued loan products
    
    
    (487
    )
    
    
    (3,243
    )Total charge-offs
    
    
    (867
    )
    
    
    (3,592
    )Recoveries:Commercial business loans
    
    
    68
    
    
    
    28Commercial real estate loans
    
    
    1
    
    
    
    1Small business
    
    
    9
    
    
    
    Consumer loans
    
    
    48
    
    
    
    176Residential real estate loans
    
    
    26
    
    
    
    57Discontinued loan products
    
    
    1,362
    
    
    
    3,887Total recoveries
    
    
    1,514
    
    
    
    4,149Net recoveries
    
    
    647
    
    
    
    557Provision (recovery) for loan losses
    
    
    (859
    )
    
    
    850Adjustments to acquired loan losses
    
    
    
    
    
    
    (734
    )Balance, end of period
    
    $
    45,383
    
    
    $
    48,695
 During the first quarter of 2004, recoveries on previously charged off
loans exceeded gross loan charge-offs by $647,000. The net recoveries
primarily related to BankAtlantics discontinued loan products, which include
lease financing, indirect consumer lending, syndication lending, and certain
types of small business lending. The remaining balance of these discontinued
products declined to $26.1 million from $58.6 million a year earlier. Although
BankAtlantic discontinued these loan products, it did not sell any portion of
these portfolios. The unamortized principal balances remain in BankAtlantics
loan portfolio. BankAtlantic continues to monitor the net charge off history
of the remaining balances of these products, and continues to maintain an
allowance for loan losses for these products that it believes reflects the
historic performance of this portfolio. During the first quarter of 2003, recoveries on previously charged off
loans exceeded gross loan charge-offs by $557,000. The net recoveries in 2003
also related to discontinued loan products, including a $2.1 million recovery
from settlement of a syndication loan that BankAtlantic had charged down by
$8.0 million during the first quarter of 2002. BankAtlantics allowance for loan losses was 1.22% and 1.24% of total
loans at March 31, 2004 and 2003, respectively. At March 31, 2004, loans
receivable had declined to $3.720 billion from $3.930 billion at March 31,
2003. Management believes that the $859,000 loan loss recovery during the
first quarter of 2004 was the result of a decline in the loan balances in the
banks loan portfolio and an improvement in the credit quality of the loans in
the portfolio. The improvement in credit quality was associated with changes
in BankAtlantics loan underwriting standards placing an emphasis on collateral
based lending, coupled with the run-off of the discontinued loan products. The
$850,000 provision for loan losses during the comparable 2003 quarter resulted
from loan growth resulting principally from the purchase of $675 million of
residential loans. In 2000, BankAtlantic significantly restructured its credit analysis
procedures, shifting to a formal written credit analysis framework from its
former approach based on credit scoring. In addition, lending policies were
revised and a centralized underwriting department was established which reports
to credit administration personnel, rather than loan origination personnel
under the prior policy. Adjustments to the allowance for loan losses acquired in 2003 were
associated with loans acquired in connection with the 2002 purchase of
Community. BankAtlantic reduced its allowance for loan losses and reduced
goodwill by 30




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##### Table of Contents



BankAtlantic Bancorp, Inc. $734,000 during the 2003 first quarter for acquired loans which had been
assigned a valuation allowance at the acquisition date that had either matured
or were prepaid. At the indicated dates, the Companys non-performing assets and potential
problem loans were (in thousands): March 31,
    
    December 31,2004
    
    2003NONPERFORMING ASSETSNonaccrual:Tax certificates
    
    $
    565
    
    
    $
    894Loans and leases
    
    
    11,724
    
    
    
    10,803Total nonaccrual
    
    
    12,289
    
    
    
    11,697Repossessed assets:Real estate owned, net of allowance
    
    
    1,667
    
    
    
    2,422Vehicles and equipment
    
    
    
    
    
    
    Total repossessed assets
    
    
    1,667
    
    
    
    2,422Total nonperforming assets
    
    
    13,956
    
    
    
    14,119Specific valuation allowances
    
    
    (956
    )
    
    
    Total nonperforming assets, net
    
    $
    13,000
    
    
    $
    14,119AllowancesAllowance for loan losses
    
    $
    45,383
    
    
    $
    45,595Allowance for tax certificate loses
    
    
    3,202
    
    
    
    2,870Total Allowances
    
    $
    48,585
    
    
    $
    48,465POTENTIAL PROBLEM LOANSContractually past due 90 days or more
    
    $
    1
    
    
    $
    135Performing impaired loans with
specific valuation allowances
    
    
    188
    
    
    
    180Restructured loans
    
    
    1,368
    
    
    
    1,387TOTAL POTENTIAL PROBLEM LOANS
    
    $
    1,557
    
    
    $
    1,702
 Non-performing assets continued to remain at historically low levels.
Non-performing assets remained unchanged from December 31, 2003 at 0.36% of
total loans, tax certificates and repossessed assets. During the first quarter of 2004, non-accrual loans increased because
BankAtlantic placed a $1.4 million loan to a borrower in the
telecommunications industry on non-accrual status. This loan was placed on
non-accrual status because of business adversity within the telecommunications
industry and the borrowers failure to receive revenues from a significant
contract which had a material adverse effect on the borrowers cash flow. As
a consequence, the loan was individually evaluated for impairment by
estimating the present value of the expected cash flows and comparing the
amount to the outstanding balance of the loan. As a result of this analysis a
$956,000 specific valuation allowance was established on this loan as shown in
the above table. The decline in repossessed assets was primarily due to sales of 1-4 family
residential properties during the 2004 quarter. 31




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BankAtlantic Bancorp, Inc. Non-Interest Income For Three MonthsBankAtlantic
    
    Ended March 31,(In thousands)
    
    2004
    
    2003
    
    ChangeOther service charges and fees
    
    $
    4,637
    
    
    $
    3,918
    
    
    $
    719Service charges on deposits
    
    
    11,277
    
    
    
    8,558
    
    
    
    2,719Income from real estate
operations
    
    
    305
    
    
    
    1,086
    
    
    
    (781
    )Securities activities, net
    
    
    (3
    )
    
    
    (21
    )
    
    
    18Other
    
    
    2,004
    
    
    
    1,573
    
    
    
    431Non-interest income
    
    $
    18,220
    
    
    $
    15,114
    
    
    $
    3,106
 Service charges and fees increased during the 2004 first quarter, as
compared to the same 2003 quarter, primarily because of a 25% increase in check
card and ATM fees. Service charges on deposits also increased by 32% over
those charged during the comparable 2003 quarter. The increase in service
charges primarily resulted from a 39% increase in overdraft fees from
transaction accounts. The higher overdraft fees were due to both an increase in
the number of accounts and additional fees assessed on overdrafts.
Additionally, growth in the number of checking accounts resulted in additional
income from check printing charges and checking account related services. The
increase in revenues from service charges, check card, ATM and other checking
account related fees is linked to the significant increase in the number of
transaction accounts opened at BankAtlantic. Income from real estate operations represents revenues from a real estate
joint venture that was acquired as part of the Community acquisition in 2002.
The decrease in real estate income in the first quarter of 2004 reflects a
decline in the number of units closed by the joint venture during the first
quarter of 2004, as compared to the same 2003 period. During the current
quarter, the joint venture closed on two lots, whereas during the first
quarter of 2003, the joint venture closed on four condominiums and one single
family home. Other income reported for the 2004 quarter was favorably impacted by
$129,000 of gains on loans held for sale, compared to $3,000 for the 2003
quarter, and an increase in wire fee income during the current quarter,
compared to the same 2003 quarter. Non-Interest Expense BankAtlantic
    
    For the Three Months Ended March 31,(In thousands)
    
    2004
    
    2003
    
    ChangeEmployee compensation and
benefits
    
    $
    23,029
    
    
    $
    19,468
    
    
    $
    3,561Occupancy and equipment
    
    
    7,146
    
    
    
    6,648
    
    
    
    498Advertising and promotion
    
    
    3,463
    
    
    
    1,599
    
    
    
    1,864Amortization of intangible assets
    
    
    439
    
    
    
    454
    
    
    
    (15
    )Cost associated with debt
redemption
    
    
    11,741
    
    
    
    
    
    
    
    11,741Professional fees
    
    
    1,258
    
    
    
    1,096
    
    
    
    162Other
    
    
    7,056
    
    
    
    7,064
    
    
    
    (8
    )Non-interest expense
    
    $
    54,132
    
    
    $
    36,329
    
    
    $
    17,803
 Compensation and benefit expenses increased in the first quarter of 2004
by 18% over the comparable 2003 quarter. In addition to annual employee
salary increases, the growth in this expense category primarily resulted from
an increase in the number of BankAtlantic employees. BankAtlantic hired
additional employees to staff its branches and operations during the extended
business hours implemented in connection with its Floridas Most Convenient
Bank initiative. The number of full time equivalent BankAtlantic employees
increased to 1,428 at March 31, 2004 versus 1,244 at December 31, 2002. In
addition, the cost of BankAtlantics regular benefit programs and health
insurance increased significantly. Occupancy and equipment expenses increased 7.5% over those in the first
quarter of 2003, chiefly because BankAtlantic engaged additional guard services
to increase security at its branches. This increase in occupancy and 32




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BankAtlantic Bancorp, Inc. equipment expenses was partially offset by a reduction in data processing
costs that resulted from a renegotiated contract with one of the banks service
providers. Advertising expenses during the first quarter of 2004 increased
significantly from those incurred during the comparable 2003 quarter, as a
direct result of an aggressive BankAtlantic marketing campaign during the
current quarter that included television and radio advertising to promote the
Floridas Most Convenient Bank initiatives and the newly
introduced Yeah,
Were Open slogan. Management is aggressively marketing these initiatives and
slogan, based on its determination to build upon the substantial increase in
new BankAtlantic accounts since the introduction of the Floridas Most
Convenient Bank campaign in 2002. Management ramped up the marketing campaign
in early 2004, thereby increasing marketing expenditures, in an effort to
attract additional low cost deposit accounts. 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. Amortization of intangible assets during the three months ended March 31,
2004 and 2003 reflects the amortization of core deposit intangible assets
acquired in connection with the Community acquisition. These core deposit
intangible assets are being amortized over an estimated life of seven years. The cost associated with debt redemption resulted from a prepayment
penalty of $11.7 million incurred when BankAtlantic prepaid $108 million of
FHLB advances that had an average interest rate of 5.55% and were scheduled to
mature in 2007-2008. The interest rates on these FHLB advances exceeded the
rates that BankAtlantic is currently able to obtain on FHLB advances, and
therefore BankAtlantic expects to recover this expense in future periods
through the savings realized from lower borrowing costs. Other expenses, in total, remained stable for the three months ended March
31, 2004 compared to the same 2003 period. However, the 2003 period included a
$750,000 write-down of a real estate owned (REO) property. This write-down
resulted from a reassessment of a residential construction property that was
transferred to REO during the second quarter of 2002. In the 2004 period, we
incurred higher operating expenses linked to the substantial increase in new
deposit accounts. These higher expenses include postage, correspondent bank
clearing charges and insurance expenses. 33




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BankAtlantic Bancorp, Inc. Ryan Beck & Co. and Subsidiaries Results of Operations For the Three Months Ended March 31,(In thousands)
    
    2004
    
    2003
    
    ChangeNet interest income:Broker dealer interest
    
    $
    2,796
    
    
    $
    2,317
    
    
    $
    479Interest expense
    
    
    (210
    )
    
    
    (363
    )
    
    
    153Net interest income
    
    
    2,586
    
    
    
    1,954
    
    
    
    632Non-interest income:Principal transactions
    
    
    24,443
    
    
    
    25,084
    
    
    
    (641
    )Investment banking
    
    
    12,631
    
    
    
    7,689
    
    
    
    4,942Commissions
    
    
    25,371
    
    
    
    19,352
    
    
    
    6,019Other
    
    
    620
    
    
    
    840
    
    
    
    (220
    )Non-interest income
    
    
    63,065
    
    
    
    52,965
    
    
    
    10,100Non-interest expense:Employee compensation and
benefits
    
    
    44,042
    
    
    
    37,923
    
    
    
    6,119Occupancy and equipment
    
    
    3,103
    
    
    
    3,090
    
    
    
    13Advertising and promotion
    
    
    1,161
    
    
    
    1,208
    
    
    
    (47
    )Professional fees
    
    
    1,045
    
    
    
    1,722
    
    
    
    (677
    )Communications
    
    
    3,253
    
    
    
    3,829
    
    
    
    (576
    )Floor broker and clearing fees
    
    
    2,802
    
    
    
    2,158
    
    
    
    644Other
    
    
    1,683
    
    
    
    1,874
    
    
    
    (191
    )Non-interest expense
    
    
    57,089
    
    
    
    51,804
    
    
    
    5,285Income before income taxes
    
    
    8,562
    
    
    
    3,115
    
    
    
    5,447Income taxes
    
    
    3,434
    
    
    
    1,292
    
    
    
    2,142Income from continuing operations
    
    $
    5,128
    
    
    $
    1,823
    
    
    $
    3,305
 Income from continuing operations increased primarily as a result of
higher transactional business and investment banking activity associated with
three large financial institution offerings during the first quarter of 2004. Net interest income increased 32% in the first quarter of 2004, as
compared to the same 2003 quarter. The increase in net interest income
primarily resulted from expansion of municipal, corporate and government bond
trading activities and the associated spread between the interest on the bonds
and the financing costs incurred. Also included in interest income was Ryan
Becks participation in interest income associated with approximately $231
million of customer margin debit balances and fees earned in connection with
approximately $1.2 billion in customer money market balances. Further
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 the interest expense on that loan. Ryan Becks increase in
interest income was partially offset by an increase in interest expense due to
increased borrowings by Ryan Beck from its clearing agent in connection with a
higher volume of trading activity. Principal transaction revenue decreased by 3% as compared to the same
quarter of 2003, primarily because in the 2003 quarter Ryan Beck recorded $7.7
million of principal gross sales credits in connection with a second step
mutual to stock conversion and best efforts offering which it conducted for one
of its financial institutions group clients. In the first quarter of 2004,
Ryan Beck received principal gross sales credits of $2.3 million related to
Unit Investment Trusts offerings. Ryan Becks transactional business was higher
in the 2004 first quarter as compared to 2003, and it expects a high level of
transactional business to continue based upon the current economic climate. Investment banking revenue increased by 64% from the same quarter of 2003,
attributable mainly to increased merger and acquisition fees and consulting
fees received by the Financial Institution and Middle Market Investment Banking
Groups. During the first quarter, the Financial Institutions Group completed
five mergers and the Middle Market Group completed one of the best performing
IPOs for the quarter among domestic transactions. Additionally, in early
April 2004, Ryan Beck completed certain major investment banking transactions
which resulted in revenue in excess of all investment banking revenue realized by Ryan Beck in the 2004 first quarter. The
impact of those transactions will be reflected in the second quarter of 2004. 34




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BankAtlantic Bancorp, Inc. Commission revenue increased by 31% from the same quarter of 2003,
attributable mainly to increased agency transactions conducted in 2004. During
the first quarter of 2004, Ryan Becks ticket volume was 297,688, an increase
of 44% compared to first quarter 2003. The increase in employee compensation and benefits of 16% from 2003 is
primarily due to the increase in bonus accruals necessitated by the additional
investment banking revenue in 2004 versus 2003. Also contributing to the
increase is commission expense associated with the increase in Ryan Becks
commissionable revenue. Professional fees in the first quarter of 2004 were less than those in
2003 primarily because of reduced legal costs associated with the Gruntal
transaction (see Part II, Item 1 Legal Proceedings herein for a further
discussion.) During the first quarter of 2004, the bankruptcy court presiding
over the Gruntal 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 it is expected that the majority of the claims
against Ryan Beck associated with the Gruntal transaction will be permanently
stayed or dismissed by the arbitration panels and courts hearing such claims. The decrease in communications costs is primarily due to the elimination,
as part of the integration of Gruntal operations into those of Ryan Beck, of
duplicate services that were in place in the first quarter of 2003. The increase in floor broker and clearing fees is due to the increase in
transactional business in 2004, as compared to 2003. Parent Company Results of Operations For the Three Months Ended March 31,(in thousands)
    
    2004
    
    2003
    
    ChangeNet interest income:Interest on loans
    
    $
    542
    
    
    $
    454
    
    
    $
    88Interest expense
    
    
    (4,135
    )
    
    
    (3,727
    )
    
    
    (408
    )Net interest income
    
    
    (3,593
    )
    
    
    (3,273
    )
    
    
    (320
    )Non-interest income:Income from unconsolidated subsidiaries
    
    
    118
    
    
    
    82
    
    
    
    36Gains on securities activities
    
    
    75
    
    
    
    405
    
    
    
    (330
    )Equity security litigation settlement gain
    
    
    16,782
    
    
    
    
    
    
    
    16,782Other
    
    
    104
    
    
    
    
    
    
    
    104Non-interest income
    
    
    17,079
    
    
    
    487
    
    
    
    16,592Non-interest expense:Investment banking expense
    
    
    
    
    
    
    460
    
    
    
    (460
    )Employee compensation and benefits
    
    
    109
    
    
    
    24
    
    
    
    85Professional fees
    
    
    491
    
    
    
    317
    
    
    
    174Other
    
    
    250
    
    
    
    115
    
    
    
    135Non-interest expense
    
    
    850
    
    
    
    916
    
    
    
    (66
    )Income (loss) before income taxes
    
    
    12,636
    
    
    
    (3,702
    )
    
    
    16,338Income taxes
    
    
    4,423
    
    
    
    (1,295
    )
    
    
    5,718Income (loss) from continuing operations
    
    $
    8,213
    
    
    $
    (2,407
    )
    
    $
    10,620
 Interest on loans during the 2004 quarter is interest income recognized by
the Company on loans to Levitt having an aggregate principal balance of $42.1
million. Interest on loans during the 2003 quarter is interest income
recognized by the Company on a $30 million loan to Levitt and a $5 million loan
to Ryan Beck. Interest expense increased during the first quarter of 2004, as compared
to the same 2003 period, as a result of the Companys accrual of interest
expense on $77.3 million of junior subordinated debentures issued during March
and April of 2003 as part of the trust preferred securities offerings. The
proceeds of these offerings were used to repay $46.0 million of 35




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BankAtlantic Bancorp, Inc. convertible debentures and pay down by $16 million a bank line of credit.
The junior subordinated debentures issued had higher rates than the convertible
debentures and the bank line of credit. Income from unconsolidated subsidiaries represents the equity earnings
from trusts formed to issue trust preferred securities as part of trust
preferred securities offerings. The increase in the first quarter of 2004 was
primarily because of earnings from three new trusts established in March and
April 2003. The income from securities activities during the three months ended March
31, 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 three months
ended March 31, 2003 represented a gain realized from a liquidating dividend on
an equity security. The equity security litigation settlement gain reflects proceeds from a
litigation settlement related to the Companys prior investment of $15 million
in a technology company which it sold in connection with the settlement to a
third party investor group. During 2002, the Company recorded an impairment
charge for its entire $15 million investment in the technology company, based
on the Companys analysis of the technology companys operations. During the
first quarter of 2004, the Company and certain of its affiliates settled
litigation related to its investment in this technology company. Pursuant to
the 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, consisting of cash of $1.7 million and 378,160 shares of
the Companys Class A Common Stock that the technology company returned to the
Company. The litigation between the parties was dismissed in connection with
the settlement, and the Company has no further interest in the technology
company. The Companys investment banking expense during the first quarter of 2003
resulted from fees paid by it to Ryan Beck in connection with Ryan Becks
underwriting of the Companys offering of trust preferred securities in 2003.
These fees are included in Ryan Becks investment banking income in Ryan Becks
business segment results of operations and were eliminated in the Companys
consolidated financial statements. Other income during the first quarter of 2004 includes fees received by
the Company for investor relations and risk management services provided by the
Company to Levitt and BFC Financial Corporation. The Company incurred compensation expense as a result of hiring investor
relations and risk management personnel as of January 1, 2004, who were
formerly employed by BankAtlantic. Compensation expense during the three
months ended March 31, 2003 primarily resulted from the issuance of Class A
restricted stock to BankAtlantic employees and the amortization of a forgivable
loan. The increase in professional fees during the 2004 first quarter compared
to the same 2003 period consisted of higher professional fees associated with
the technology company litigation that was settled in 2004 and an accrual for
risk management consulting services provided to the Company by Bluegreen
Corporation. Financial Condition Our total assets at March 31, 2004 and December 31, 2003 were
approximately $4.8 billion. Changes in the components of total assets included
reductions in the following assets:  
    
    Decreases in real estate held for development and investments
and advances to unconsolidated subsidiaries due to the spin-off of
Levitt;  
    
    Decreases in our loan portfolio due to residential loan
refinancing activity and declining discontinued loan product
balances;  
    
    Reduction in tax certificate balances primarily related to certificate repayments;  
    
    Lower securities owned associated with Ryan Becks trading activities;  
    
    Decline in deferred tax assets related to the technology company litigation settlement and  
    
    Redemptions of FHLB stock linked to the prepayment of FHLB advances. The above decreases were partially offset by:  
    
    The origination of and participation in commercial real estate loans;  
    
    The origination of home equity loans; 36




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BankAtlantic Bancorp, Inc.  
    
    Increases in office property and equipment renovation costs
associated with the construction of BankAtlantics new corporate
headquarters and  
    
    Higher real estate inventory related to increased construction
activity by a real estate joint venture acquired in connection with
the Community acquisition. The Companys total liabilities at March 31, 2004 were $4.3 billion
compared to $4.4 billion at December 31, 2003.
The decrease in total liabilities primarily resulted from:  
    
    The prepayment and repayment at maturity of over $191 million
of FHLB Advances;  
    
    Reduction in certificate of deposit account balances associated
with marketing initiatives focusing on the origination of low cost
deposits;  
    
    Decreases in securities sold but not yet purchased associated with Ryan Beck trading activities and  
    
    Decline in other liabilities associated with lower accrued compensation expense. The above decreases in total liabilities were partially offset by:  
    
    Higher transaction and savings account balances resulting from
BankAtlantics seven-day banking and totally free checking account
initiatives and  
    
    Increases in due to clearing agent balances associated with
Ryan Becks trading activities. Stockholders equity at March 31, 2004 was $429.5 million compared to
$413.5 million at December 31, 2003. The increase was primarily attributable
to earnings of $16.6 million, a $1.4 million increase in other comprehensive
income and $2.2 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 $1.9 million of
common stock dividends and a $2.2 million reduction in additional paid in
capital resulting from a current income tax liability related to the fair value
of the Class A Common Stock received by the Company pursuant to the litigation
settlement. 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 uses these funds to purchase 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 $16.0 million. The Companys estimated current annual dividends
to common shareholders are approximately $7.8 million. During 2003, the Company
received $20.0 million 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. This was the first time Ryan Beck has paid dividends to
the Company since being acquired in 1998. However, whether dividend payments
will be made in the future, and their timing and amount, will depend upon the
results of operations, financial condition and capital requirements of Ryan
Beck. 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 March 31, 2004,
and we were 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. The Company filed a registration statement with the Securities and
Exchange Commission relating to the offering of 4,000,000 shares of its Class A
Common Stock, with an over allotment option of 600,000 shares. In April 2004,
the Company withdrew this registration statement. The decision to withdraw the
offering was based on the Companys shareholders equity and cash position
having improved significantly since the filing of the registration statement,
but the trading price of bank equities, including the Companys stock, having
declined following announcement of the offering, related largely to 37




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BankAtlantic Bancorp, Inc. increased market expectations of higher interest rates. Additionally,
BankAtlantics regulatory capital ratios qualify BankAtlantic as well
capitalized and the Company projects sufficient earnings to support its
growth. The Company has no plans to offer these securities at this time. BankAtlantic Liquidity and Capital Resources BankAtlantics liquidity will depend 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. 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 available for sale; proceeds
from securities sold under agreements to repurchase; advances from the FHLB;
and 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; and pay dividends to
the Company. BankAtlantic has a $1.4 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 $591.5 million in
FHLB advances, and the FHLB issued a $92 million letter of credit to secure
public deposits under this line of credit at March 31, 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 $741.7 million at
March 31, 2004. BankAtlantic has also established lines of credit for up to
$250 million with other banks to purchase federal funds, and it has
established an $8.6 million potential advance with the Federal Reserve Bank of
Atlanta. 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 March 31,
2004 were $353.8 million and $103.6 million, respectively, compared to $368.8
million and $124.5 million, respectively, at March 31, 2003. Additionally,
BankAtlantic had commitments to purchase mortgage-backed securities of $106.4
million and $27.8 million, respectively, at March 31, 2004 and 2003. At March
31, 2004, loan commitments represented approximately 12.45% of loans
receivable, net. As of March 31, 2004, BankAtlantic had approximately $121.1 million in
investments and mortgage-backed securities pledged against securities sold
under agreements to repurchase. During 2002, BankAtlantic purchased a $14.3 million building to
consolidate its headquarters and back office operations into a centralized
facility. BankAtlantic had incurred approximately $5.3 million in renovation
costs. The total estimated cost to complete renovation is approximately $19.2
million, and the facility is expected to be completed in October, 2004. The
costs to complete renovation will be funded by cash flow from operations. At March 31, 2004, BankAtlantic met all applicable liquidity and
regulatory capital requirements. 38




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BankAtlantic Bancorp, Inc. At the indicated date, BankAtlantics capital amounts and ratios were
(dollars in thousands): Minimum RatiosActual
    
    AdequatelyCapitalized
    
    WellCapitalized(in thousands)
    
    Amount
    
    Ratio
    
    Ratio
    
    RatioAt March 31, 2004:Total risk-based capital
    
    $
    445,220
    
    
    
    12.20
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based capital
    
    $
    377,574
    
    
    
    10.35
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    377,574
    
    
    
    8.63
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    377,574
    
    
    
    8.63
    %
    
    
    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 three months ended March
31, 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 $21.4 million, which was $20.4 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
March 31, 2004. 39




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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 March 31,
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 utilized by us. Presented below is an analysis of the Companys interest rate risk at
March 31, 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 March 31, 2004NetPortfolioChanges
    
    Value
    
    Dollarin Rate
    
    Amount
    
    Change(dollars in thousands)+200 bp
    
    $
    496,045
    
    
    $
    36,467+100 bp
    
    $
    493,315
    
    
    $
    33,7370
    
    $
    459,578
    
    
    $
    -100 bp
    
    $
    413,276
    
    
    $
    (46,302
    )-200 bp
    
    $
    389,999
    
    
    $
    (69,579
    )
 As of March 31, 2003NetPortfolioChanges
    
    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 in the third and fourth quarter of 2003 as well as a slowing of
residential loan prepayments and 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, it was determined that the repayment
of high fixed rate FHLB advances should have a positive impact on
BankAtlantics net interest margin. During September 2003 and December 2003,
BankAtlantic repaid $185 million and $140 million, respectively, of FHLB
advances and recognized a $2.0 million and $8.9 million loss, respectively, as
a result of prepayment penalties. Additionally, BankAtlantic prepaid $108
million of FHLB advances in March 2004, incurring an $11.7 million prepayment
penalty. BankAtlantic will continue to evaluate its 40




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##### Table of Contents



BankAtlantic Bancorp, Inc. high fixed rate FHLB advances in light of market interest rate conditions
and interest rate risk strategies to determine whether additional prepayments
could reduce borrowing costs and improve its net interest margin. BankAtlantic
may prepay additional FHLB advances subject to changes in interest rates and
its interest rate risk strategies. We expect BankAtlantics net interest
margin to improve during 2004 compared to 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
March 31, 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%
    
    $
    2,450
    
    
    $
    21,581
    
    
    $
    4,00510%
    
    $
    2,246
    
    
    $
    19,782
    
    
    $
    2,0020%
    
    $
    2,042
    
    
    $
    17,984
    
    
    $
    -10%
    
    $
    1,838
    
    
    $
    16,186
    
    
    $
    (2,002
    )-20%
    
    $
    1,634
    
    
    $
    14,387
    
    
    $
    (4,005
    )
 Excluded from the above table is $1.8 million of investments in private
companies for which no current 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 three months ended
March 31, 2004. The following table sets forth the high, low and average VaR for Ryan Beck
during the period January 1, 2004 to March 31, 2004. (dollars in thousands)High
    
    Low
    
    AverageVaR
    
    $
    1,747
    
    
    $
    113
    
    
    $
    621Aggregate Long Value
    
    
    103,877
    
    
    
    45,515
    
    
    
    72,372Aggregate Short Value
    
    
    140,714
    
    
    
    27,734
    
    
    
    58,769
 41




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##### 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. 42




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##### Table of Contents



BankAtlantic Bancorp, Inc. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings Gruntal Proceedings.In April 2002, Ryan Beck acquired certain of the assets
and assumed certain of the liabilities of Gruntal. Ryan Beck was named as a
defendant in a number of arbitration claims filed by former Gruntal clients
whose claims arose prior to Ryan Becks acquisition of Gruntal. In these
actions, Ryan Beck is alleged to be the successor in interest to Gruntal,
which allegations Ryan Beck denies. In some instances, the former Gruntal
brokers against whom the claims relate are now employed by Ryan Beck, and in
other instances the brokers are not employed by Ryan Beck. Ryan Beck did not
assume any of the liabilities associated with these actions in the Gruntal
transaction. While Ryan Beck does not consider any individual action to be
material, an adverse result in a number of these actions in the aggregate could
adversely affect the Companys financial statements. In October 2002, Gruntal
filed for bankruptcy protection under Chapter 11 of the Federal Bankruptcy
Laws. In March 2004, the bankruptcy court 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 their respective officers, directors, employees,
agents, successors and assigns. Based on the foregoing, it is expected that
the majority of the pending claims will be dismissed by the arbitration panels
and the courts currently hearing such matters. 
 Item 2. Changes in Securities and Use of Proceeds (e) Purchases of equity securities by the issuer and affiliated purchasers Total Number ofShares Purchased
    
    Maximum Number thatas Part of Publicly
    
    May Yet Be PurchasedTotal Number of
    
    Average price
    
    Announced Plans
    
    Under the Plans orPeriod
    
    Shares Purchased
    
    per share
    
    or Programs
    
    ProgramsJanuary 1, 2004 through January 31, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    February 1, 2004 through February 29, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 1, 2004 through March 31, 2004
    
    
    457,995
    (1)
    
    
    
    (1)
    
    
    
    (2)
    
    
    Total
    
    
    457,995
    
    
    $
    
    
    
    
    
    
    
    
    
   (1)
    
    The amount represents the number of shares of the Companys Class A
Common Stock received by the Company and its affiliates pursuant to a
litigation settlement with a technology company that owned those shares.
The Company received 378,160 of these shares which were subsequently
retired.(2)
    
    The Company currently has no plan or program to repurchase its equity
securities. 
 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 31.1
    
    CFO Certification pursuant to Regulation S-X Section 302Exhibit 31.2
    
    CEO Certification pursuant to Regulation S-X Section 302Exhibit 32.1
    
    CEO Certification pursuant to 18 U.S.C. Section 1350, as
AdoptedPursuant to Section 906 of the Sarbanes-Oxley Act of
2002Exhibit 32.2
    
    CFO Certification pursuant to 18 U.S.C. Section 1350, as
AdoptedPursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 (b) Reports on Form 8-K Form 8-K filed on January 7, 2004, announcing the spin-off of Levitt
Corporation to the Companys shareholders. 43




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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.May 10, 2004

Date
    
    By: /s/ Alan B. Levan
Alan B. Levan
Chief Executive Officer/
Chairman/President
 May 10, 2004

Date
    
    By:  /s/ James A. White
James A. White
Executive Vice President,
Chief Financial Officer
 44