##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 
 FORM 10-Q
 þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2005 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 BoulevardFt. 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. Outstanding atTitle of Each Class
    
    May 3, 2005Class A Common Stock, par value $0.01 per share
    
    
    55,695,489Class B Common Stock, par value $0.01 per share
    
    
    4,876,124




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TABLE OF CONTENTS PagePart I. FINANCIAL INFORMATIONReferenceItem 1. Financial Statements
    
    
    1-18Consolidated Statements of Financial Condition  March 31, 2005
and 2004 and December 31, 2004   Unaudited
    
    
    4Consolidated Statements of Operations  For the Three Months
Ended March 31, 2005 and 2004 - Unaudited
    
    
    5-6Consolidated Statements of Stockholders Equity and Comprehensive Income 
For the Three Months Ended March 31, 2005 and 2004 - Unaudited
    
    
    7Consolidated Statements of Cash Flows  For the Three Months Ended
March 31, 2005 and 2004 - Unaudited
    
    
    8-9Notes to Consolidated Financial Statements  Unaudited
    
    
    10-18Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19-33Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    33-36Item 4. Controls and Procedures
    
    
    37Part II. OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 6. Exhibits
    
    
    38Signatures
    
    
    39Section 302 Chief Executive Officer CertificationSection 302 Chief Financial Officer CertificationSection 906 Chief Executive Officer CertificationSection 906 Chief Financial Officer Certification




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION   UNAUDITED
 March 31,
    
    
    December 31,
    
    
    March 31,(In thousands, except share data)
    
    2005
    
    
    2004
    
    
    2004ASSETSCash and due from depository institutions
    
    $
    119,915
    
    
    $
    118,967
    
    
    $
    114,849Federal funds sold and other short-term investments
    
    
    16,832
    
    
    
    16,093
    
    
    
    1,953Securities owned (at fair value)
    
    
    142,294
    
    
    
    125,443
    
    
    
    122,114Securities available for sale (at fair value)
    
    
    762,573
    
    
    
    747,160
    
    
    
    358,665Investment
securities and tax certificates (approximate fair value: $298,950, $306,963 and $139,075)
    
    
    302,498
    
    
    
    307,438
    
    
    
    139,075Federal Home Loan Bank stock, at cost which approximates
fair value
    
    
    80,600
    
    
    
    78,619
    
    
    
    30,340Loans receivable, net of allowance for loan losses of
$43,042, $46,010 and $45,383
    
    
    4,637,232
    
    
    
    4,599,048
    
    
    
    3,674,173Accrued interest receivable
    
    
    38,864
    
    
    
    35,982
    
    
    
    26,781Real estate held for development and sale
    
    
    24,799
    
    
    
    27,692
    
    
    
    24,239Investments in unconsolidated subsidiaries
    
    
    7,910
    
    
    
    7,910
    
    
    
    7,910Office properties and equipment, net
    
    
    132,438
    
    
    
    129,790
    
    
    
    96,628Deferred tax asset, net
    
    
    22,971
    
    
    
    20,269
    
    
    
    17,751Goodwill
    
    
    76,674
    
    
    
    76,674
    
    
    
    76,674Core deposit intangible asset
    
    
    9,597
    
    
    
    10,270
    
    
    
    11,546Due from clearing agent
    
    
    1,120
    
    
    
    16,619
    
    
    
    Other assets
    
    
    42,034
    
    
    
    38,803
    
    
    
    47,785Total assets
    
    $
    6,418,351
    
    
    $
    6,356,777
    
    
    $
    4,750,483LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:DepositsDemand
    
    $
    960,063
    
    
    $
    890,398
    
    
    $
    748,402NOW
    
    
    676,945
    
    
    
    658,137
    
    
    
    567,498Savings
    
    
    296,485
    
    
    
    270,001
    
    
    
    233,832Money market
    
    
    913,434
    
    
    
    875,422
    
    
    
    870,447Certificates of deposits
    
    
    796,928
    
    
    
    763,244
    
    
    
    723,256Total deposits
    
    
    3,643,855
    
    
    
    3,457,202
    
    
    
    3,143,435Advances from FHLB
    
    
    1,524,881
    
    
    
    1,544,497
    
    
    
    591,466Securities sold under agreements to repurchase
    
    
    217,463
    
    
    
    296,643
    
    
    
    118,465Federal funds purchased
    
    
    75,000
    
    
    
    105,000
    
    
    
    25,000Subordinated debentures, notes and bonds payable
    
    
    35,878
    
    
    
    37,741
    
    
    
    37,109Junior subordinated debentures
    
    
    263,266
    
    
    
    263,266
    
    
    
    263,266Securities sold but not yet purchased
    
    
    60,276
    
    
    
    39,462
    
    
    
    34,250Due to clearing agent
    
    
    
    
    
    
    
    
    
    
    18,328Other liabilities
    
    
    116,751
    
    
    
    143,701
    
    
    
    89,587Total liabilities
    
    
    5,937,370
    
    
    
    5,887,512
    
    
    
    4,320,906Stockholders 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 55,665,968,
55,214,225 and 54,331,830 shares
    
    
    556
    
    
    
    552
    
    
    
    543Class 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
    
    
    260,207
    
    
    
    259,702
    
    
    
    255,915Unearned compensation  restricted stock grants
    
    
    (957
    )
    
    
    (1,001
    )
    
    
    (1,134
    )Retained earnings
    
    
    228,714
    
    
    
    210,955
    
    
    
    166,882Total stockholders equity before accumulated
other comprehensive income (loss)
    
    
    488,569
    
    
    
    470,257
    
    
    
    422,255Accumulated other comprehensive income (loss)
    
    
    (7,588
    )
    
    
    (992
    )
    
    
    7,322Total stockholders equity
    
    
    480,981
    
    
    
    469,265
    
    
    
    429,577Total liabilities and stockholders equity
    
    $
    6,418,351
    
    
    $
    6,356,777
    
    
    $
    4,750,483
 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 MonthsEnded March 31,(In thousands, except share and per share data)
    
    2005
    
    
    2004Interest income:Interest and fees on loans
    
    $
    66,355
    
    
    $
    48,936Interest and dividends on securities available for sale
    
    
    5,295
    
    
    
    3,620Interest on tax exempt securities
    
    
    3,225
    
    
    
    33Interest on other investment securities
    
    
    4,364
    
    
    
    4,244Broker dealer interest
    
    
    2,947
    
    
    
    2,796Total interest income
    
    
    82,186
    
    
    
    59,629Interest expense:Interest on deposits
    
    
    8,295
    
    
    
    6,973Interest on advances from FHLB
    
    
    13,674
    
    
    
    9,098Interest on securities sold under agreements to
repurchase and federal funds purchased
    
    
    2,099
    
    
    
    250Interest on subordinated debentures, notes and
bonds payable, and junior subordinated debentures
    
    
    5,672
    
    
    
    4,827Capitalized interest on real estate development
    
    
    (452
    )
    
    
    (307
    )Total interest expense
    
    
    29,288
    
    
    
    20,841Net interest income
    
    
    52,898
    
    
    
    38,788Recovery from loan losses
    
    
    (3,916
    )
    
    
    (859
    )Net interest income after recovery from
loan losses
    
    
    56,814
    
    
    

    39,647Non-interest income:Broker/dealer revenue
    
    
    54,686
    
    
    
    63,065Service charges on deposits
    
    
    12,989
    
    
    
    11,277Other service charges and fees
    
    
    5,238
    
    
    
    4,637Income from real estate operations
    
    
    2,241
    
    
    
    305Income from unconsolidated subsidiaries
    
    
    131
    
    
    
    118Securities activities, net
    
    
    102
    
    
    
    72Litigation settlement
    
    
    
    
    
    
    22,840Other
    
    
    3,283
    
    
    
    2,051Total non-interest income
    
    
    78,670
    
    
    
    104,365Non-interest expense:Employee compensation and benefits
    
    
    65,795
    
    
    
    67,180Occupancy and equipment
    
    
    13,237
    
    
    
    10,375Advertising and promotion
    
    
    6,298
    
    
    
    4,694Cost associated with debt redemption
    
    
    
    
    
    
    11,741Professional fees
    
    
    4,081
    
    
    
    3,229Communications
    
    
    3,205
    
    
    
    3,128Floor broker and clearing fees
    
    
    2,368
    
    
    
    2,802Other
    
    
    9,801
    
    
    
    8,865Total non-interest expense
    
    
    104,785
    
    
    
    112,014Income before income taxes
    
    
    30,699
    
    
    
    31,998Provision for income taxes
    
    
    10,821
    
    
    
    11,474Net income
    
    $
    19,878
    
    
    $
    20,524
 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 31,2005
    
    
    2004Earnings per shareBasic earnings per share
    
    $
    0.33
    
    
    $
    0.35Diluted earnings per share
    
    $
    0.31
    
    
    $
    0.32Basic weighted average number
of common shares outstanding
    
    
    60,071,605
    
    
    
    59,257,270Diluted weighted average number
of common and common
equivalent shares outstanding
    
    
    63,206,870
    
    
    
    63,193,034Cash dividends per shareCash dividends per Class A share
    
    $
    0.035
    
    
    $
    0.033Cash dividends per Class B share
    
    $
    0.035
    
    
    $
    0.033
 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, 2004 AND 2005  UNAUDITED
 Accumul-Unearned
    
    
    atedCompen-
    
    
    OtherCompre-
    
    
    
    
    
    
    Addi-
    
    
    
    
    
    
    sation
    
    
    Compre-hensive
    
    
    
    
    
    
    tional
    
    
    
    
    
    
    Restricted
    
    
    hensiveIncome
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Stock
    
    
    Income(In thousands)
    
    (Loss)
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Grants
    
    
    (Loss)
    
    
    TotalBALANCE, DECEMBER 31, 2003
    
    
    
    
    
    $
    593
    
    
    $
    259,770
    
    
    $
    148,311
    
    
    $
    (1,178

    )
    
    $
    5,956
    
    
    $
    413,452Net income
    
    $
    20,524
    
    
    
    
    
    
    
    
    
    
    
    20,524
    
    
    
    
    
    
    
    
    
    
    
    20,524Other 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 (less income tax
expense of $37)
    
    
    (46
    )Other comprehensive income
    
    
    1,366Comprehensive income
    
    $
    21,890Dividends 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,522Retirement of Class A Common Stock
    
    
    
    
    
    
    (4
    )
    
    
    (6,054
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,058
    )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
    
    
    $
    255,915
    
    
    $
    166,882
    
    
    $
    (1,134
    )
    
    $
    7,322
    
    
    $
    429,577BALANCE, DECEMBER 31, 2004
    
    
    
    
    
    $
    601
    
    
    $
    259,702
    
    
    $
    210,955
    
    
    $
    (1,001
    )
    
    $
    (992
    )
    
    $
    469,265Net income
    
    $
    19,878
    
    
    
    
    
    
    
    
    
    
    
    19,878
    
    
    
    
    
    
    
    
    
    
    
    19,878Other comprehensive income (loss), net of tax:Unrealized losses on securities available for sale
(less income tax benefit of $3,686)
    
    
    (6,531
    )Reclassification adjustment for net gain
included in net income (less income tax
expense of $37)
    
    
    (65
    )Other comprehensive income (loss)
    
    
    (6,596
    )Comprehensive income
    
    $
    13,282Dividends on Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,948
    )
    
    
    
    
    
    
    
    
    
    
    (1,948
    )Dividends on Class B Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (171
    )
    
    
    
    
    
    
    
    
    
    
    (171
    )Issuance of Class A common stock upon exercise
of stock options
    
    
    
    
    
    
    7
    
    
    
    1,544
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,551Tax effect relating to the exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    3,953
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,953Retirement of Class A Common Stock relating to
exercise of stock options
    
    
    
    
    
    
    (3
    )
    
    
    (4,645
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,648
    )Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44Retirement of Ryan Beck common stock
    
    
    
    
    
    
    
    
    
    
    (347
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (347
    )Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,596
    )
    
    
    (6,596
    )BALANCE, MARCH 31, 2005
    
    
    
    
    
    $
    605
    
    
    $
    260,207
    
    
    $
    228,714
    
    
    $
    (957
    )
    
    $
    (7,588
    )
    
    $
    480,981
 See Notes to Consolidated Financial Statements  Unaudited 7




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BankAtlantic Bancorp, Inc. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED For the Three MonthsEnded March 31,(In thousands)
    
    2005
    
    
    2004Operating activities:Net income
    
    $
    19,878
    
    
    $
    20,524Adjustments to reconcile net income to net cash (used) provided
in operating activities:Recovery from credit losses, net *
    
    
    (4,016
    )
    
    
    (555
    )Depreciation, amortization and accretion, net
    
    
    4,421
    
    
    
    3,602Amortization of intangible assets
    
    
    425
    
    
    
    439Securities activities, net
    
    
    (102
    )
    
    
    (72
    )(Gains) losses on sale of real estate owned
    
    
    (137
    )
    
    
    60Gains on sales of loans
    
    
    (110
    )
    
    
    (129
    )Gain on sale of branch
    
    
    (935
    )
    
    
    Equity in earnings of unconsolidated subsidiaries
    
    
    (131
    )
    
    
    (118
    )Litigation settlement
    
    
    
    
    
    
    (22,840
    )Cost associated with debt redemption
    
    
    
    
    
    
    11,741Issuance of forgivable notes receivable
    
    
    (1,806
    )
    
    
    (4,816
    )Originations and repayments of loans held for sale, net

    
    
    (28,185
    )
    
    
    (7,518
    )Proceeds from sales of loans held for sale
    
    
    29,412
    
    
    
    11,333Decrease (increase) in real estate inventory
    
    
    2,893
    
    
    
    (2,436
    )(Increase) decrease in securities owned activities, net
    
    
    (16,851
    )
    
    
    2,451Increase (decrease) in securities sold but not yet purchased
    
    
    20,814
    
    
    
    (3,563
    )Decrease in deferred tax asset, net
    
    
    983
    
    
    
    4,491(Increase) decrease in accrued interest receivable
    
    
    (2,882
    )
    
    
    1,085(Increase) decrease in other assets
    
    
    (9,108
    )
    
    
    1,298Decrease in due from clearing agent
    
    
    15,499
    
    
    
    9,745Decrease in other liabilities
    
    
    (38,699
    )
    
    
    (1,575
    )Net cash (used) provided in operating activities
    
    
    (8,637
    )
    
    
    23,147Investing activities:Proceeds from redemption and maturities of investment
securities and tax certificates
    
    
    55,989
    
    
    
    60,353Purchase of investment securities and tax certificates
    
    
    (35,446
    )
    
    
    (7,022
    )Purchases of securities available for sale
    
    
    (97,669
    )
    
    
    (32,313
    )Proceeds from sales and maturities of securities available for sale
    
    
    72,404
    
    
    
    50,942(Purchases) redemptions of FHLB stock, net
    
    
    (1,981
    )
    
    
    9,985Repayments from unconsolidated subsidiaries
    
    
    131
    
    
    
    118Net (purchases and originations) repayments of loans
    
    
    (31,225
    )
    
    
    9,407Proceeds from sales of real estate owned
    
    
    500
    
    
    
    1,065Additions to office property and equipment
    
    
    (6,823
    )
    
    
    (5,503
    )Purchase of subsidiary common stock
    
    
    (491
    )
    
    
    Net cash outflows from the sale of branch
    
    
    (13,592
    )
    
    
    Net cash (used) provided in investing activities
    
    
    (58,203
    )
    
    
    87,032Financing activities:Net increase in deposits
    
    
    204,369
    
    
    
    85,293Repayments of FHLB advances
    
    
    (259,583
    )
    
    
    (202,449
    )Proceeds from FHLB advances
    
    
    240,000
    
    
    
    Net decrease in securities sold under agreements to repurchase
    
    
    (79,180
    )
    
    
    (20,344
    )Net (decrease) increase in federal funds purchased
    
    
    (30,000
    )
    
    
    25,000Repayment of notes and bonds payable
    
    
    (1,863
    )
    
    
    (630
    )Proceeds from notes and bonds payable
    
    
    
    
    
    
    1,144Proceeds from issuance of Class A common stock
    
    
    422
    
    
    
    680Payment of the minimum withholding tax upon exercise of stock options
    
    
    (3,519
    )
    
    
    Common stock dividends paid
    
    
    (2,119
    )
    
    
    (1,953
    )Net cash provided (used) in financing activities
    
    
    68,527
    
    
    
    (113,259
    )Increase (decrease) in cash and cash equivalents
    
    
    1,687
    
    
    
    (3,080
    )Cash and cash equivalents at beginning of period
    
    
    135,060
    
    
    
    119,882Cash and cash equivalents at end of period
    
    $
    136,747
    
    
    $
    116,802
 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 MonthsEnded March 31,(In thousands)
    
    2005
    
    
    2004Cash paid forInterest on borrowings and deposits
    
    $
    28,760
    
    
    $
    22,068Income taxes
    
    
    334
    
    
    
    1,109Supplementary disclosure of non-cash investing and financing activities:Loans transferred to real estate owned
    
    
    1,109
    
    
    
    374Net loan recoveries
    
    
    948
    
    
    
    647Tax certificate net recoveries
    
    
    255
    
    
    
    31Decrease in current income taxes payable from the tax effect
associated with the exercise of employee stock options
    
    
    3,953
    
    
    
    1,522Change in accumulated other comprehensive income
    
    
    (6,596
    )
    
    
    1,366Change in deferred taxes on other comprehensive income
    
    
    3,686
    
    
    
    757Securities purchased pending settlement
    
    
    15,873
    
    
    
    Issuance and retirement of Class A common stock accepted as
consideration for the exercise price of stock options
    
    
    1,129
    
    
    
    Reduction in stockholders equity from the retirement of Class A
common stock obtained from litigation settlement
    
    
    
    
    
    
    6,058
   *
    
    Recovery from 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), an investment banking firm which is a federally
registered broker-dealer. BankAtlantic is a federal savings bank headquartered in Fort Lauderdale,
Florida. BankAtlantic is a community-oriented bank which provides traditional retail banking
services and a wide range of commercial banking products and related financial services through a
network of 75 branches located in Florida. Ryan Beck is a full service broker-dealer headquartered
in Florham Park, New Jersey. Ryan Beck provides financial advice to individuals, institutions and
corporate clients through 39 offices in 14 states. Ryan Beck also engages in the underwriting,
distribution and trading of tax-exempt, equity and debt securities. 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 for a fair statement of the Companys consolidated financial condition
at March 31, 2005, December 31, 2004 and March 31, 2004, the consolidated results of operations for
the three months ended March 31, 2005 and 2004, the consolidated stockholders equity and
comprehensive income for the three months ended March 31, 2005 and 2004 and the consolidated cash
flows for the three months ended March 31, 2005 and 2004. Such adjustments consisted only of
normal recurring items except for the litigation settlement gain during the three months ended
March 31, 2004. The results of operations for the three months ended March 31, 2005 are not
necessarily indicative of results of operations that may be expected for the year ended December
31, 2005. 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, 2004. Certain amounts for prior periods have been reclassified to conform to the statement
presentation for 2005. 10




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##### Table of Contents



BankAtlantic Bancorp, Inc. 2. Stock Based Compensation Under the provisions of SFAS No. 123, Accounting for Stock-Based Compensation, there were 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. The following table illustrates the effect on net income and earnings per share as if the
Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee
compensation. For the Three MonthsMarch 31,(in thousands, except share data)
    
    2005
    
    
    2004Pro forma net incomeNet income, as reported
    
    $
    19,878
    
    
    $
    20,524Add: Stock-based employee compensation
expense included in reported net
income,
net of related income tax effects
    
    
    44
    
    
    
    44Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related income tax effects
    
    
    (517
    )
    
    
    (435
    )Pro forma net income
    
    $
    19,405
    
    
    $
    20,133Earnings per share:Basic as reported
    
    $
    0.33
    
    
    $
    0.35Basic pro forma
    
    $
    0.32
    
    
    $
    0.34Diluted as reported
    
    $
    0.31
    
    
    $
    0.32Diluted pro forma
    
    $
    0.31
    
    
    $
    0.32
 During the three months ended March 31, 2005 and 2004 the Company received net proceeds of
$422,000 and $680,000, respectively, from the exercise of stock options. During the quarter ended
March 31, 2005 the Company accepted 62,253 shares of Class A common stock with a fair value of $1.1
million as consideration for the exercise price of stock options and accepted 196,962 shares of
Class A common stock in payment of $3.5 million for optionees minimum statutory withholding taxes
related to option exercises. 3. Litigation Settlement In March 2004, the Company recorded a $22.8 million litigation gain pursuant to a settlement
between the Company and its affiliates and a technology company. In accordance with the terms of
the settlement, the Company sold its stock in the technology company, to a third party investor
group for its original cost of $15 million and received from the investor group and the technology
company additional compensation for legal expenses and damages consisting of $1.7 million in cash
and 378,160 shares of the Companys Class A common stock with a $6.1 million fair value that had
been owned by the technology company. The Company had recorded an impairment charge for the entire
investment during 2002. The Company retired the Class A common stock on the settlement date. 11




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##### Table of Contents



BankAtlantic Bancorp, Inc. 4. Advances from the Federal Home Loan Bank During the three months ended March 31, 2004 BankAtlantic prepaid $108 million of Federal Home
Loan Bank (FHLB) advances incurring prepayment penalties of $11.7 million. Of the $1.5 billion of FHLB advances outstanding at March 31, 2005, $531 million mature
between 2008 and 2011 and have a weighted average interest rate of 5.41%, and $994 million are
LIBOR-based floating rate advances that mature between 2005 and 2006 and have a weighted average
interest rate of 2.89%. 5. Defined Benefit Pension Plan At December 31, 1998, the Company froze its defined benefit pension plan (Plan). All
participants in the Plan ceased accruing service benefits beyond that date. The Company is subject
to future pension expense or income based on future actual plan returns and actuarial values of the
Plan obligations to employees. Under the Plan, net periodic pension expense (benefit) incurred
includes the following components (in thousands): For the Three MonthsEnded March 31,2005
    
    
    2004Service cost benefits earned during the period
    
    $
    
    
    
    $
    Interest cost on projected benefit obligation
    
    
    376
    
    
    
    383Expected return on plan assets
    
    
    (500
    )
    
    
    (500
    )Amortization of unrecognized net gains and
losses
    
    
    181
    
    
    
    110Net periodic pension expense (benefit)
    
    $
    57
    
    
    $
    (7
    )
 BankAtlantic did not contribute to the Plan during the three months ended March 31, 2005 and
2004. BankAtlantic is not required to contribute to the Plan for the year ending December 31,
2005. 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 31,2005
    
    
    2004
    
    
    2004States and municipalities
    
    $
    18,181
    
    
    $
    10,824
    
    
    $
    13,556Corporations
    
    
    8,201
    
    
    
    10,093
    
    
    
    8,082U.S. Government and agencies
    
    
    59,430
    
    
    
    57,659
    
    
    
    61,564Corporate equity
    
    
    17,645
    
    
    
    18,042
    
    
    
    11,202Deferred compensation assets
    
    
    28,535
    
    
    
    27,898
    
    
    
    26,815Certificates of deposits
    
    
    10,302
    
    
    
    927
    
    
    
    895$
    142,294
    
    
    $
    125,443
    
    
    $
    122,114
 In the ordinary course of business, Ryan Beck borrows or carries excess funds under an
agreement with its clearing broker. Securities owned are pledged as collateral for clearing broker
borrowings. As of March 31, 2005 and December 31, 2004, balances due from the clearing broker were
$1.1 million and $16.6 million, respectively. As of March 31, 2004, balances due to the clearing
broker were $18.3 million. 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 31,2005
    
    
    2004
    
    
    2004Corporate equity
    
    $
    7,586
    
    
    $
    3,498
    
    
    $
    5,968Corporate bonds
    
    
    4,383
    
    
    
    9,958
    
    
    
    6,298States and municipalities
    
    
    67
    
    
    
    269
    
    
    
    119U.S. Government agencies
    
    
    48,232
    
    
    
    25,384
    
    
    
    21,847Certificates of deposits
    
    
    8
    
    
    
    353
    
    
    
    18$
    60,276
    
    
    $
    39,462
    
    
    $
    34,250
 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 portfolio consisted of the following components (in thousands): March 31,
    
    
    December 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2004Real estate loans:Residential
    
    $
    2,140,431
    
    
    $
    2,065,658
    
    
    $
    1,273,105Construction and development
    
    
    1,423,892
    
    
    
    1,454,048
    
    
    
    1,516,103Commercial
    
    
    1,064,022
    
    
    
    1,075,391
    
    
    
    943,305Small business
    
    
    129,921
    
    
    
    123,740
    
    
    
    114,445Loans to Levitt Corporation
    
    
    7,605
    
    
    
    8,621
    
    
    
    18,505Other loans:Home equity
    
    
    469,804
    
    
    
    457,058
    
    
    
    362,237Commercial business
    
    
    91,332
    
    
    
    91,505
    
    
    
    98,692Small business  non-mortgage
    
    
    72,861
    
    
    
    66,679
    
    
    
    53,530Loans to Levitt Corporation
    
    
    16,000
    
    
    
    38,000
    
    
    
    42,125Consumer loans
    
    
    12,804
    
    
    
    14,540
    
    
    
    16,374Deposit overdrafts
    
    
    6,959
    
    
    
    3,894
    
    
    
    3,477Residential loans held for sale
    
    
    3,824
    
    
    
    4,646
    
    
    
    3,307Discontinued loans products (1)
    
    
    6,718
    
    
    
    8,285
    
    
    
    26,205Total gross loans
    
    
    5,446,173
    
    
    
    5,412,065
    
    
    
    4,471,410Adjustments:Undisbursed portion of loans in
process
    
    
    (767,380
    )
    
    
    (767,804
    )
    
    
    (751,126
    )Premiums related to purchased loans
    
    
    6,532
    
    
    
    6,609
    
    
    
    5,694Deferred fees
    
    
    (5,051
    )
    
    
    (5,812
    )
    
    
    (6,422
    )Allowance for loan losses
    
    
    (43,042
    )
    
    
    (46,010
    )
    
    
    (45,383
    )Loans receivable  net
    
    $
    4,637,232
    
    
    $
    4,599,048
    
    
    $
    3,674,173
   (1)
    
    Discontinued loan products consist of non-mortgage syndication loans, lease
financings, indirect consumer loans and certain small business loans originated
before 2002. These loan products were discontinued during prior periods. The Companys loans to Levitt Corporation had an outstanding balance of $23.6 million,
$46.6 million and $60.6 million at March 31, 2005, December 31, 2004 and March 31, 2004,
respectively. Included in interest income in the Companys statement of operations for the three
months ended March 31, 2005 and 2004 was $613,000 and $634,000, respectively, of interest income
related to loans to Levitt. At March 31, 2005, the Company had $3.8 million of undisbursed loans
in process to Levitt.   13




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##### Table of Contents



BankAtlantic Bancorp, Inc. 8. Real Estate Held for Development and Sale Real estate held for development and sale consists of real estate held by a joint venture that
was acquired in connection with the Community Savings Bankshares (Community) acquisition during
March 2002 and real estate held for sale associated with BankAtlantic branch banking facilities. Real estate held for development and sale consisted of the following (in thousands): March 31,
    
    
    December 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2004Land and land
development costs
    
    $
    10,831
    
    
    $
    10,662
    
    
    $
    9,703Construction costs
    
    
    9,190
    
    
    
    12,163
    
    
    
    9,464Other costs
    
    
    2,310
    
    
    
    2,399
    
    
    
    2,025Branch banking facilities
    
    
    2,468
    
    
    
    2,468
    
    
    
    3,047Total
    
    $
    24,799
    
    
    $
    27,692
    
    
    $
    24,239
 Income from real estate operations were as follows (in thousands): For the Three MonthsEnded March 31,2005
    
    
    2004Sales of real estate
    
    $
    9,028
    
    
    $
    757Cost of sales on real estate
    
    
    6,787
    
    
    
    452Income from real estate
operations
    
    $
    2,241
    
    
    $
    305
 9. Related Parties The Company and Levitt Corporation (Levitt) are under common control. The controlling
shareholder of the Company and Levitt is BFC Financial Corporation (BFC), and Levitt owns 31% of
the outstanding common stock of Bluegreen Corporation (Bluegreen). The majority of BFCs capital
stock is owned or controlled by the Companys Chairman, Chief Executive Officer and President, and
by the Companys Vice Chairman, both of whom are also directors of the Company, executive officers
and directors of BFC and Levitt, and directors of Bluegreen. The Company, BFC, Levitt and Bluegreen
share various office premises and employee services, pursuant to the arrangements described below. The Company maintains service arrangements with BFC and Levitt, pursuant to which the Company
provided the following back-office support functions to Levitt and BFC: human resources, risk
management, project planning, system support and investor and public relation services. For such
services the Company is compensated for its costs plus 5%. Additionally, the Company rents office
space to Levitt and BFC on a month-to-month basis and receives rental payments at agreed upon rates
that may not be equivalent to market rates. These amounts were included in non-interest income in
the Companys statement of operations for the three months ended March 31, 2005 and 2004. The table below shows the service fees and rent payments from Levitt and BFC to the Company
for office space rent and back-office support functions for the three months ended March 31, 2005
(in thousands): BFC
    
    
    Levitt
    
    
    TotalService fees
    
    $
    58
    
    
    $
    113
    
    
    $
    171Rent
    
    
    22
    
    
    
    6
    
    
    
    28Total
    
    $
    80
    
    
    $
    119
    
    
    $
    199
 14




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##### Table of Contents



BankAtlantic Bancorp, Inc. The table below shows the service fees and rent payments from Levitt and BFC to the Company
for office space rent and back-office support functions for the three months ended March 31, 2004
(in thousands): BFC
    
    
    Levitt
    
    
    TotalService fees
    
    $
    10
    
    
    $
    75
    
    
    $
    85Rent
    
    
    11
    
    
    
    20
    
    
    
    31Total
    
    $
    21
    
    
    $
    95
    
    
    $
    116
 Additionally, during the three months ended March 31, 2005 and 2004 Levitt paid BankAtlantic
$29,000 and $15,000, respectively, for project management services and the Company recognized
expenses of $148,000 and $54,000, respectively, for risk management services provided by Bluegreen.
For these services the Company pays or is compensated, as applicable, on a cost plus 5% basis. The Company has entered into securities sold under agreements to repurchase with Levitt and BFC in an aggregate of $49.3
million and $39.6 million at March 31, 2005 and December 31, 2004, respectively. 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
information provided for Segment Reporting is based on internal reports utilized by management.
Results of operations are reported through three reportable segments: BankAtlantic, Ryan Beck and
Parent Company. The Parent Company includes the operations of BankAtlantic Bancorp as well as
acquisition related expenses. The following summarizes the aggregation of the Companys operating segments into reportable
segments: Reportable Segment
    
    Operating Segments AggregatedBankAtlantic
    
    Community Banking, Commercial Lending, and Bank Investments.Ryan Beck
    
    Private Client Group, Investment Banking and Capital Markets.Parent Company
    
    BankAtlantic Bancorps operations, costs of acquisitions and financing
activities.
 The accounting policies of the segments are generally the same as those described in the
summary of significant accounting policies in the Companys Annual Report on Form 10-K for the year
ended December 31, 2004. Intersegment transactions consist of shared services such as risk
management consulting and investment banking placement and advisory fees which are eliminated in
consolidation. 15




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##### Table of Contents



BankAtlantic Bancorp, Inc. The company evaluates segment performance based on segment net income after tax. The table
below is segment information for segment net income for the three months ended March 31, 2005 and
2004 (in thousands): Adjusting andParent
    
    
    Elimination
    
    
    SegmentBankAtlantic
    
    
    Ryan Beck
    
    
    Company
    
    
    Entries
    
    
    Total2005Interest income
    
    $
    78,584
    
    
    $
    2,947
    
    
    $
    678
    
    
    $
    (23
    )
    
    $
    82,186Interest expense
    
    
    (24,239
    )
    
    
    (502
    )
    
    
    (4,570
    )
    
    
    23
    
    
    
    (29,288
    )Recovery from loan losses
    
    
    3,916
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,916Non-interest income
    
    
    23,541
    
    
    
    54,686
    
    
    
    532
    
    
    
    (89
    )
    
    
    78,670Non-interest expense
    
    
    (50,264
    )
    
    
    (52,565
    )
    
    
    (2,045
    )
    
    
    89
    
    
    
    (104,785
    )Segment profit before
taxes
    
    
    31,538
    
    
    
    4,566
    
    
    
    (5,405
    )
    
    
    
    
    
    
    30,699Provision for income
taxes
    
    
    (10,677
    )
    
    
    (2,036
    )
    
    
    1,892
    
    
    
    
    
    
    
    (10,821
    )Segment net income (loss)
    
    $
    20,861
    
    
    $
    2,530
    
    
    $
    (3,513
    )
    
    $
    
    
    
    $
    19,878Total assets
    
    $
    6,103,599
    
    
    $
    191,012
    
    
    $
    752,752
    
    
    $
    (629,012
    )
    
    $
    6,418,3512004Interest 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
    
    
    
    23,137
    
    
    
    (57
    )
    
    
    104,365Non-interest expense
    
    
    (53,495
    )
    
    
    (57,089
    )
    
    
    (1,487
    )
    
    
    57
    
    
    
    (112,014
    )Segment profit before
taxes
    
    
    5,379
    
    
    
    8,562
    
    
    
    18,057
    
    
    
    
    
    
    
    31,998Provision for income
taxes
    
    
    (1,659
    )
    
    
    (3,434
    )
    
    
    (6,381
    )
    
    
    
    
    
    
    (11,474
    )Segment net income
    
    $
    3,720
    
    
    $
    5,128
    
    
    $
    11,676
    
    
    $
    
    
    
    $
    20,524Total assets
    
    $
    4,494,779
    
    
    $
    170,517
    
    
    $
    695,662
    
    
    $
    (610,475
    )
    
    $
    4,750,483
 16




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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 31,2005
    
    
    2004
    
    
    2004Commitments to sell fixed rate residential loans
    
    $
    16,985
    
    
    $
    19,537
    
    
    $
    20,508Commitments to sell variable rate residential loans
    
    
    5,399
    
    
    
    6,588
    
    
    
    7,445Commitments to purchase mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    100,000Forward contract to purchase mortgage-backed
securities
    
    
    3,826
    
    
    
    3,947
    
    
    
    6,391Commitments to purchase other investment securities
    
    
    
    
    
    
    
    
    
    
    18,710Commitments to purchase variable rate residential
loans
    
    
    291,143
    
    
    
    40,015
    
    
    
    103,600Commitments to originate loans held for sale
    
    
    18,753
    
    
    
    21,367
    
    
    
    24,537Commitments to originate loans held to maturity
    
    
    312,628
    
    
    
    238,429
    
    
    
    329,240Commitments to extend credit, including the
undisbursed
portion of loans in process
    
    
    1,197,861
    
    
    
    1,170,191
    
    
    
    1,083,213Standby letters of credit
    
    
    55,590
    
    
    
    55,605
    
    
    
    35,973Commercial lines of credit
    
    
    135,603
    
    
    
    121,688
    
    
    
    132,023
 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 $36.9 million at March 31, 2005. 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 $18.7
million at March 31, 2005. 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, 2005, December 31,
2004 and March 31, 2004 was $87,000, $114,000 and $70,000, respectively, of unearned guarantee
fees. There were no obligations associated with these guarantees recorded in the financial
statements. 12. Branch Sale In January 2005, BankAtlantic sold a branch that was acquired in March 2002 in connection with
the Community acquisition. The following table summarizes the assets sold, liabilities transferred and cash outflows
associated with the branch sale (in thousands). AmountAssets sold:Loans
    
    $
    2,235Property and equipment
    
    
    733Liabilities transferred:Deposits
    
    
    (17,716
    )Accrued interest payable
    
    
    (27
    )Net assets sold
    
    
    (14,775
    )Write-off of core deposit intangible assets
    
    
    248Gain on sale of branch
    
    
    935Net cash outflows from sale of branch
    
    $
    (13,592
    )
 17




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##### Table of Contents



BankAtlantic Bancorp, Inc. 13. Earnings per Share The following table reconciles the numerators and denominators of the basic and diluted
earnings per share computation for the three months ended March 31, 2005 and 2004 (in thousands,
except share data): For the Three Months EndedMarch 31,2005
    
    
    2004Basic earnings per share:Net income
    
    $
    19,878
    
    
    $
    20,524Basic weighted average number of common shares outstanding
    
    
    60,071,605
    
    
    
    59,257,270Basic earnings per share
    
    $
    0.33
    
    
    $
    0.35Diluted earnings per share:Net income
    
    $
    19,878
    
    
    $
    20,524Effect of stock options issued by Ryan Beck
    
    
    (120
    )
    
    
    (192
    )Income available after assumed conversion
    
    $
    19,758
    
    
    $
    20,332Basic weighted average shares outstanding
    
    
    60,071,605
    
    
    
    59,257,270Common stock equivalents resulting from stock-based
compensation
    
    
    3,135,265
    
    
    
    3,935,764Diluted weighted average shares outstanding
    
    
    63,206,870
    
    
    
    63,193,034Diluted earnings per share
    
    $
    0.31
    
    
    $
    0.32
 14. New Accounting Pronouncements In December 2004, FASB issued Statement No. 123 (revision) Share-based payments. This
Statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensationand
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,and its related
implementation guidance. This Statement focuses primarily on accounting for transactions in which
an entity obtains employee services in share-based payment transactions. The Statement eliminated
the accounting for share-based transactions under APB No. 25 and its related interpretations,
instead requiring all share-based payments to be accounted for using a fair value method. The
Statement can be adopted using the Modified Prospective Application or the Modified
Retrospective Application. Under the modified prospective application, this Statement applies to
new awards granted after the effective date and to unvested awards at the effective date. Under
the modified retrospective application, the Company would apply the modified prospective method,
but also restate the prior financial statements to include the amounts that were previously
recognized in the pro forma disclosures under Statement No. 123. The Statement was originally to
be effective for public companies as of the beginning of the first interim or annual reporting
period that begins after June 15, 2005. In April 2005 the Securities and Exchange Commission
(SEC) issued a final rule to amend the effective date of the Statement for public companies to
the first interim or annual reporting period of the registrants first fiscal year beginning after
June 15, 2005. Also, on March 29, 2005 the SEC issued Staff Accounting Bulletin (SAB) No. 107.
SAB No. 107 expresses the staffs views of the interaction between FASB Statement No. 123R,
Share-Based Payment, and certain SEC rules and regulations. SAB No. 107 also addresses the
valuation of share-based payment arrangements for public companies. Management is currently
evaluating the Statement, the SECs guidance and the two transitional applications, and anticipates
adopting the Statement as of January 1, 2006. Management estimates that compensation expense
resulting from currently unvested options at the adoption date would be approximately $7.0 million
to be recorded over the remaining vesting period of approximately three years. 15. Contingencies BankAtlantic previously disclosed that it had identified deficiencies in its compliance with
the USA PATRIOT Act, anti-money laundering laws and the Bank Secrecy Act and that it has been
cooperating with regulators and other federal agencies concerning these deficiencies. BankAtlantic
has provided and is continuing to provide information to the government pursuant to a number of
subpoenas relating to, among other things, numerous customers and transactions and the Banks
policies and procedures. BankAtlantic Bancorp cannot predict whether or to what extent civil or
criminal regulatory action or monetary or other penalties will be pursued against BankAtlantic or
the Company by regulators or other federal agencies. No amounts have been recorded at March 31,
2005 in the financial statements relating to possible penalties from federal agencies. 18




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##### Table of Contents



BankAtlantic Bancorp, Inc. 
 Item 2. 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, 2005 and 2004, 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
Florham Park, 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 BankAtlantic Bancorp,
Inc. 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 including
their impact on BankAtlantics net interest margin; adverse conditions in the stock market, the
public debt market and other capital markets and the impact of such conditions on 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 justify their costs; the impact of
periodic testing of goodwill and other intangible assets for impairment; achieving the benefits of
the prepayment of the Federal Home Loan Bank advances; as well as the costs related to the
correction of compliance deficiencies associated with the USA Patriot Act, anti-money laundering
laws and the Bank Secrecy Act, and whether or to what extent monetary fines, restrictions on
operations or other penalties relating to these compliance deficiencies will be imposed on the
Company or the Bank by regulators or other federal agencies. 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; its ability to
recruit and retain financial consultants, the volatility of the stock market and fixed income
markets and its effects on the volume of its business and the value of its securities portfolio and positions, including its securities sold but not yet purchased; as well as its revenue mix, the success of new lines of business 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 held for
development and 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 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 as well as the
determination of other-than-temporary declines in value; (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, 2004. 19




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##### Table of Contents



BankAtlantic Bancorp, Inc. Consolidated Results of Operations For the Three Months Ended March 31,(in thousands)
    
    2005
    
    
    2004
    
    
    ChangeBankAtlantic
    
    $
    20,861
    
    
    $
    3,720
    
    
    $
    17,141Ryan Beck
    
    
    2,530
    
    
    
    5,128
    
    
    
    (2,598
    )Parent Company
    
    
    (3,513
    )
    
    
    11,676
    
    
    
    (15,189
    )Net income
    
    $
    19,878
    
    
    $
    20,524
    
    
    $
    (646
    )
 For the Three Months Ended March 31, 2005 Compared to the Same 2004 Period: The change in BankAtlantics segment net income was primarily due to a substantial improvement
in its net interest income, net recoveries in its provision for loan losses, higher revenues from a
real estate joint venture and growth in non-interest income. Also contributing to the change in
BankAtlantics earnings between quarters was $7.6 million of after-tax costs associated with
prepayment penalties incurred by BankAtlantic in connection with its prepayment of high fixed
interest rate FHLB advances during the first quarter of 2004. The significant increase in
BankAtlantics net interest income was due to earning asset growth and continued increases in
BankAtlantics low cost deposits. The primary contributor to the net recovery in BankAtlantics
provision for loan losses was a $1.1 million recovery of a loan partially charged off during 2003
and the continued improvement in loan portfolio credit quality. The higher real estate joint
venture revenues were due to an increase in units sold during 2005. The additional non-interest
income was primarily associated with higher service charges on deposit accounts directly related to
growth in the number of deposit accounts from initiatives adopted in connection with BankAtlantics
Floridas Most Convenient Bank marketing campaign. The above improvements in BankAtlantics
earnings were partially offset by higher operating expenses relating to several new initiatives
associated with the Floridas Most Convenient Bank campaign which were designed to enhance
customer service and convenience. The decline in Ryan Becks segment net income primarily resulted from lower retail brokerage
revenues as investors were less active in the securities markets during the 2005 period. Ryan
Becks 2005 earnings were also unfavorably impacted by additional occupancy cost and recruitment
expenses associated with Ryan Becks relocation and expansion of offices as well as the hiring of
additional institutional professionals. Parent Company segment net income in 2005 was significantly less than segment net income in
2004 primarily as a result of a $14.8 million after-tax litigation settlement gain during 2004. 20




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##### Table of Contents



BankAtlantic Bancorp, Inc. BankAtlantic Results of Operations Net interest income BankAtlanticAverage Balance Sheet - Yield / Rate AnalysisFor the Three Months EndedMarch 31, 2005
    
    
    March 31, 2004Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/(dollars in thousands)
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateLoans:Residential real estate
    
    $
    2,085,473
    
    
    $
    25,509
    
    
    
    4.89
    %
    
    $
    1,326,061
    
    
    $
    15,941
    
    
    
    4.81
    %Commercial real estate
    
    
    1,759,747
    
    
    
    28,323
    
    
    
    6.44
    
    
    
    1,689,962
    
    
    
    23,694
    
    
    
    5.61Consumer
    
    
    487,746
    
    
    
    6,776
    
    
    
    5.56
    
    
    
    374,222
    
    
    
    3,900
    
    
    
    4.17Lease financing
    
    
    6,242
    
    
    
    151
    
    
    
    9.68
    
    
    
    13,642
    
    
    
    382
    
    
    
    11.20Commercial business
    
    
    94,283
    
    
    
    1,640
    
    
    
    6.96
    
    
    
    98,959
    
    
    
    1,500
    
    
    
    6.06Small business
    
    
    195,733
    
    
    
    3,491
    
    
    
    7.13
    
    
    
    173,891
    
    
    
    3,085
    
    
    
    7.10Total loans
    
    
    4,629,224
    
    
    
    65,890
    
    
    
    5.69
    
    
    
    3,676,737
    
    
    
    48,502
    
    
    
    5.28Investments  tax exempt (1)
    
    
    334,029
    
    
    
    4,829
    
    
    
    5.78
    
    
    
    3,362
    
    
    
    51
    
    
    
    6.04Investments  taxable
    
    
    732,939
    
    
    
    9,555
    
    
    
    5.21
    
    
    
    540,460
    
    
    
    7,808
    
    
    
    5.78Total interest earning assets
    
    
    5,696,192
    
    
    
    80,274
    
    
    
    5.64
    %
    
    
    4,220,559
    
    
    
    56,361
    
    
    
    5.34
    %Goodwill and core deposit intangibles
    
    
    80,375
    
    
    
    
    
    
    
    
    
    
    
    82,263Other non-interest earning assets
    
    
    283,019
    
    
    
    
    
    
    
    
    
    
    
    240,068Total assets
    
    $
    6,059,586
    
    
    
    
    
    
    
    
    
    
    $
    4,542,890Deposits:Savings
    
    $
    281,512
    
    
    
    189
    
    
    
    0.27
    %
    
    $
    220,005
    
    
    
    144
    
    
    
    0.26
    %NOW
    
    
    664,313
    
    
    
    602
    
    
    
    0.37
    
    
    
    543,619
    
    
    
    491
    
    
    
    0.36Money market
    
    
    921,382
    
    
    
    2,704
    
    
    
    1.19
    
    
    
    866,767
    
    
    
    1,876
    
    
    
    0.87Certificate of deposit
    
    
    777,353
    
    
    
    4,800
    
    
    
    2.50
    
    
    
    769,949
    
    
    
    4,462
    
    
    
    2.33Total interest bearing deposits
    
    
    2,644,560
    
    
    
    8,295
    
    
    
    1.27
    
    
    
    2,400,340
    
    
    
    6,973
    
    
    
    1.17Short-term borrowed funds
    
    
    357,047
    
    
    
    2,122
    
    
    
    2.41
    
    
    
    150,735
    
    
    
    302
    
    
    
    0.81Advances from FHLB
    
    
    1,536,434
    
    
    
    13,674
    
    
    
    3.61
    
    
    
    760,973
    
    
    
    9,098
    
    
    
    4.81Long-term debt
    
    
    37,206
    
    
    
    600
    
    
    
    6.54
    
    
    
    35,842
    
    
    
    482
    
    
    
    5.41Total interest bearing liabilities
    
    
    4,575,247
    
    
    
    24,691
    
    
    
    2.19
    
    
    
    3,347,890
    
    
    
    16,855
    
    
    
    2.02Demand deposits
    
    
    913,717
    
    
    
    
    
    
    
    
    
    
    
    664,796Non-interest bearing other liabilities
    
    
    44,216
    
    
    
    
    
    
    
    
    
    
    
    34,025Total liabilities
    
    
    5,533,180
    
    
    
    
    
    
    
    
    
    
    
    4,046,711Stockholders equity
    
    
    526,406
    
    
    
    
    
    
    
    
    
    
    
    496,179Total liabilities and stockholders
equity
    
    $
    6,059,586
    
    
    
    
    
    
    
    
    
    
    $
    4,542,890Net tax equivalent interest income/
net interest spread
    
    
    
    
    
    
    55,583
    
    
    
    3.45
    %
    
    
    
    
    
    
    39,506
    
    
    
    3.32
    %Tax equivalent adjustment
    
    
    
    
    
    
    (1,690
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )Capitalized interest from real
estate operations
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    307Net interest income
    
    
    
    
    
    $
    54,345
    
    
    
    
    
    
    
    
    
    
    $
    39,795MarginInterest income/interest earning assets
    
    
    
    
    
    
    
    
    
    
    5.64
    %
    
    
    
    
    
    
    
    
    
    
    5.34
    %Interest expense/interest earning assets
    
    
    
    
    
    
    
    
    
    
    1.76
    
    
    
    
    
    
    
    
    
    
    
    1.61Net interest margin (tax equivalent)
    
    
    
    
    
    
    
    
    
    
    3.88
    %
    
    
    
    
    
    
    
    
    
    
    3.73
    %
   (1)
    
    The tax equivalent basis is computed using a 35% tax rate. 21




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##### Table of Contents



BankAtlantic Bancorp, Inc. For the Three Months Ended March 31, 2005 Compared to the Same 2004 Period: The substantial improvement in tax equivalent net interest income primarily resulted from a
35% increase in interest earning assets and a 15 basis point improvement in the net interest
margin. BankAtlantics average interest earning asset balances increased primarily due to the purchase
of residential loans and investments during 2004 and the first quarter of 2005. During the year
ended December 31, 2004 and the first quarter of 2005, we purchased $1.3 billion and $190 million
of residential loans, respectively. Our investment purchases were $563 million during the year
ended December 31, 2004 and $70 million during the first quarter of 2005. We also experienced
growth in our home equity and commercial real estate loan portfolios. The growth in our interest
earning assets was funded through deposit growth, short term borrowings and Libor-based FHLB
advances. The improvement in our tax equivalent net interest margin primarily resulted from changes in
our deposit mix to a higher percentage of low cost deposits to total deposits as well as increased
yields earned on variable rate commercial and home equity loans. Low cost deposits are savings,
NOW and demand deposits. Since August 2004 the prime interest rate has increased from 4.25% to
5.50%. This increase has favorably impacted the yields on consumer and commercial loans, which
were partially offset by higher rates on our short term borrowings, certificate accounts, money
market deposits, Libor-based FHLB advances and long term debt. The margin was also favorably
impacted by the March 2004 prepayment of $108 million of FHLB advances which had an average
interest rate of 5.55%. BankAtlantic believes that its tax equivalent net interest margin will
continue to improve; although, a shift in the slope of the yield curve could moderate or even
prevent further margin improvement. 22




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##### Table of Contents



BankAtlantic Bancorp, Inc. Provision for Loan Losses For Three Months EndedMarch 31,(in thousands)
    
    2005
    
    
    2004Balance, beginning of period
    
    $
    46,010
    
    
    $
    45,595Charge-offs:Consumer loans
    
    
    (68
    )
    
    
    (149
    )Residential real estate loans
    
    
    (198
    )
    
    
    (231
    )Small business
    
    
    (128
    )
    
    
    Continuing loan products
    
    
    (394
    )
    
    
    (380
    )Discontinued loan products
    
    
    (324
    )
    
    
    (487
    )Total charge-offs
    
    
    (718
    )
    
    
    (867
    )Recoveries:Commercial business loans
    
    
    1,110
    
    
    
    68Commercial real estate loans
    
    
    
    
    
    
    1Small business
    
    
    185
    
    
    
    9Consumer loans
    
    
    44
    
    
    
    48Residential real estate loans
    
    
    1
    
    
    
    26Continuing loan products
    
    
    1,340
    
    
    
    152Discontinued loan products
    
    
    326
    
    
    
    1,362Total recoveries
    
    
    1,666
    
    
    
    1,514Net recoveries
    
    
    948
    
    
    
    647Recovery from loan losses
    
    
    (3,916
    )
    
    
    (859
    )Balance, end of period
    
    $
    43,042
    
    
    $
    45,383
 Charge-offs from continuing loan products were nominal for the three months ended March 31,
2005 and 2004. The majority of the continuing loan product recoveries during the 2005 quarter
resulted from a $1.1 million partial recovery of a commercial business loan that had been charged
off during the third quarter of 2003. The lower charge-offs and recoveries from discontinued loan
products resulted from declining portfolio balances. The remaining balance of these discontinued
loan products declined to $6.7 million from $26.2 million a year earlier. Discontinued loan
products are lease financing, indirect consumer lending, non-real estate syndication lending, and
certain types of small business lending. The provision for loan losses was a net recovery during the current quarter due to the
commercial business loan recovery, declining reserves for discontinued loan products and the
repayment of a large classified loan during 2005. The provision for loan losses was a net recovery
during the 2004 quarter resulting from declining reserves and net recoveries from discontinued loan
products. BankAtlantics allowance for loan losses to total loans declined from 1.22% at March 31, 2004
to 0.92% at March 31, 2005. The lower allowance for loan losses resulted from improved credit
quality, and was partially offset by an increase in loans receivable from $3.7 billion at March 31,
2004 to $4.6 billion at March 31, 2005. 23




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BankAtlantic Bancorp, Inc. At the indicated dates, BankAtlantics non-performing assets and potential problem loans were
(in thousands): March 31,
    
    
    December 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2004NONPERFORMING ASSETSNonaccrual:Tax certificates
    
    $
    418
    
    
    $
    381
    
    
    $
    565Loans and leases
    
    
    6,504
    
    
    
    7,903
    
    
    
    11,724Total nonaccrual
    
    
    6,922
    
    
    
    8,284
    
    
    
    12,289Repossessed assets:Real estate owned
    
    
    1,438
    
    
    
    692
    
    
    
    1,667Total nonperforming assets
    
    
    8,360
    
    
    
    8,976
    
    
    
    13,956Specific valuation allowance
    
    
    
    
    
    
    
    
    
    
    (956
    )Total nonperforming assets, net
    
    $
    8,360
    
    
    $
    8,976
    
    
    $
    13,000AllowancesAllowance for loan losses
    
    $
    43,042
    
    
    $
    46,010
    
    
    $
    45,383Allowance for tax certificate loses
    
    
    3,453
    
    
    
    3,297
    
    
    
    3,202Total allowances
    
    
    46,495
    
    
    
    49,307
    
    
    
    48,585POTENTIAL PROBLEM LOANSContractually past due 90 days or more
    
    
    7,032
    
    
    
    
    
    
    
    1Performing impaired loans
    
    
    216
    
    
    
    320
    
    
    
    188Restructured loans
    
    
    20
    
    
    
    24
    
    
    
    1,368TOTAL POTENTIAL PROBLEM LOANS
    
    $
    7,268
    
    
    $
    344
    
    
    $
    1,557
 Non-performing assets remain at historically low levels. Non-performing assets to total
loans, tax certificates and repossessed assets declined from 0.37% at March 31, 2004 to 0.19% and
0.17% at December 31, 2004 and March 31, 2005, respectively. The improvement in nonaccrual loans
at March 31, 2005 compared to December 31, 2004 resulted from declines in non-performing
residential loans and the repossession of residential real estate associated with a home equity
loan that was moved to real estate owned. Performing impaired loans at March 31, 2005 primarily consists of a $7.0 million hotel loan
that is past due based on its maturity date. BankAtlantic is accruing interest on this loan and is
in final negotiations with third parties for the sale of the loan. The potential buyers proposed
purchase prices for the loan are for an amount that exceeds the outstanding loan balance and
accrued interest. Management believes that the fair value of the real estate collateral
substantially exceeds the outstanding loan balance. BankAtlantics Non-Interest Income For Three MonthsEnded March 31,(in thousands)
    
    2005
    
    
    2004
    
    
    ChangeOther service charges and fees
    
    $
    5,238
    
    
    $
    4,637
    
    
    $
    601Service charges on deposits
    
    
    12,989
    
    
    
    11,277
    
    
    
    1,712Income from real estate
operations
    
    
    2,241
    
    
    
    305
    
    
    
    1,936Securities activities, net
    
    
    7
    
    
    
    (3
    )
    
    
    10Other
    
    
    3,066
    
    
    
    2,004
    
    
    
    1,062Non-interest income
    
    $
    23,541
    
    
    $
    18,220
    
    
    $
    5,321
 The higher other service charges and fees during 2005 reflect the opening of over 220,000 new
deposit accounts since January 2004, including approximately 55,000 new accounts during the first
quarter of 2005. New ATM and check 24




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##### Table of Contents



BankAtlantic Bancorp, Inc. cards are linked to the new checking and savings accounts and
therefore the increase in accounts results in increases in
interchange fees, annual fees and transaction fees on our customers use of other banks
ATMs. The higher revenues from service charges on deposits during 2005 primarily resulted from an
increase in fees assessed on overdrafts and secondarily from the increased number of checking
accounts discussed above. Income from real estate operations represents revenues from a real estate joint venture that
was acquired in March 2002 as part of the Community acquisition. The venture is a 175 unit
development consisting of single family homes, condominium units and duplexes located in Florida.
Since inception of the project through March 31, 2005, sales of sixty-six units have closed. The
increase in real estate income in the first quarter of 2005 reflects closings on twelve units,
whereas during the first quarter of 2004, the joint venture closed on two units. Other income reported for the 2005 quarter was favorably impacted by a $935,000 gain on the
sale of a branch. The branch was acquired in March 2002 in connection with the Community
acquisition. The branch was not close to any other branches, and was not meeting performance
expectations. Additionally, the remote location of the branch resulted in higher than average
operating expenses. BankAtlantics Non-Interest Expense For Three MonthsEnded March 31,(in thousands)
    
    2005
    
    
    2004
    
    
    ChangeEmployee compensation and
benefits
    
    $
    26,398
    
    
    $
    22,392
    
    
    $
    4,006Occupancy and equipment
    
    
    9,117
    
    
    
    7,146
    
    
    
    1,971Advertising and promotion
    
    
    5,168
    
    
    
    3,463
    
    
    
    1,705Amortization of intangible assets
    
    
    425
    
    
    
    439
    
    
    
    (14
    )Cost associated with debt
redemption
    
    
    
    
    
    
    11,741
    
    
    
    (11,741
    )Professional fees
    
    
    1,895
    
    
    
    1,725
    
    
    
    170Other
    
    
    7,261
    
    
    
    6,589
    
    
    
    672Non-interest expense
    
    $
    50,264
    
    
    $
    53,495
    
    
    $
    (3,231
    )
 The substantial increase in employee compensation and benefits resulted primarily from
Floridas Most Convenient Bank initiatives.These initiatives include: midnight hours at
selected branches, extended hours at all locations, free online banking and bill pay, 24/7
customer service center and the opening of all locations seven days a week. The initiatives and
the growth in low cost deposit accounts was the primary cause for the increase in the number of
full time equivalent employees to 1,745 at March 31, 2005 from 1,428 at March 31, 2004. The
increased number of employees and higher salaries are believed necessary to maintain satisfactory
customer service standards. In addition to the increase in employees, the costs incurred under
BankAtlantics profit sharing plan were $960,000 higher during 2005. The additional amounts
accrued for the employee profit sharing plan were based on BankAtlantic exceeding targeted
performance goals. During the year ended December 31, 2004, BankAtlantic adopted a plan to renovate all of its
existing branches with a goal of having a consistent look or brand. Management anticipates that
the renovation plan will be complete in 2006. This resulted in the accelerated depreciation on
fixed assets and leasehold improvements that are scheduled to be replaced as well as higher repair
and maintenance costs to maintain branch appearances. Additionally, as a result of extended
weekend and weekday hours associated with the Floridas Most Convenient Bank initiative, guard
service expense increased by approximately 53%. Advertising expenses during the first quarter of 2005 increased significantly from those
incurred during the comparable 2004 quarter, as a direct result of an aggressive BankAtlantic
marketing campaign during the 2005 quarter that included television and radio advertising to
promote the Floridas Most Convenient Bank initiative. The marketing campaign is ongoing and
BankAtlantic anticipates continued higher advertising and promotion expenditures during the 2005
fiscal year compared to those incurred during the 2004 fiscal year. The cost associated with debt redemption was the result of a prepayment penalty of $11.7
million incurred when BankAtlantic prepaid $108 million of FHLB advances scheduled to mature in
2007-2008 that had an average interest rate of 25




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##### Table of Contents



BankAtlantic Bancorp, Inc. 5.55%. The interest rates on these FHLB advances
exceeded the rates that BankAtlantic was able to obtain on other available FHLB advances, and
therefore BankAtlantic expects to recover this expense in future periods through the savings
realized from lower borrowing costs. The higher expenses for professional fees in 2005, compared to 2004, resulted from consulting
costs associated with the Banks compliance with anti-terrorism and anti-money laundering laws and
regulations. The increase in other non-interest expense relates to higher general operating expenses
related to a significant increase in the number of customer accounts and the extended hours of the
branch network. 26




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##### Table of Contents



BankAtlantic Bancorp, Inc. Ryan Beck & Co. and Subsidiaries Results of Operations For the Three MonthsEnded March 31,(in thousands)
    
    2005
    
    
    2004
    
    
    ChangeNet interest income:Interest on trading securities
    
    $
    2,947
    
    
    $
    2,796
    
    
    $
    151Interest expense
    
    
    (502
    )
    
    
    (210
    )
    
    
    (292
    )Net interest income
    
    
    2,445
    
    
    
    2,586
    
    
    
    (141
    )Non-interest income:Principal transactions
    
    
    18,632
    
    
    
    24,443
    
    
    
    (5,811
    )Investment banking
    
    
    11,882
    
    
    
    12,631
    
    
    
    (749
    )Commissions
    
    
    21,485
    
    
    
    25,371
    
    
    
    (3,886
    )Other
    
    
    2,687
    
    
    
    620
    
    
    
    2,067Non-interest income
    
    
    54,686
    
    
    
    63,065
    
    
    
    (8,379
    )Non-interest expense:Employee compensation and
benefits
    
    
    38,437
    
    
    
    44,042
    
    
    
    (5,605
    )Occupancy and equipment
    
    
    4,118
    
    
    
    3,228
    
    
    
    890Advertising and promotion
    
    
    1,073
    
    
    
    1,161
    
    
    
    (88
    )Professional fees
    
    
    1,417
    
    
    
    1,045
    
    
    
    372Communications
    
    
    3,205
    
    
    
    3,128
    
    
    
    77Floor broker and clearing fees
    
    
    2,368
    
    
    
    2,802
    
    
    
    (434
    )Other
    
    
    1,947
    
    
    
    1,683
    
    
    
    264Non-interest expense
    
    
    52,565
    
    
    
    57,089
    
    
    
    (4,524
    )Income before income taxes
    
    
    4,566
    
    
    
    8,562
    
    
    
    (3,996
    )Income taxes
    
    
    2,036
    
    
    
    3,434
    
    
    
    (1,398
    )Income from continuing
operations
    
    $
    2,530
    
    
    $
    5,128
    
    
    $
    (2,598
    )
 Segment net income decreased primarily as a result of lower transactional business, as
investors were generally less active in the securities markets during the quarter. Historically,
transactional business volume increases or decreases based on market performance. During the first
quarter of 2005 both the DOW and NASDAQ declined. Net interest income was slightly less in the first quarter of 2005, compared to the same 2004
quarter. Included in interest income is Ryan Becks participation in interest income associated
with approximately $238 million of customer margin debit balances and fees earned in connection
with approximately $1.2 billion in customer money market balances. Principal transaction revenue decreased by 24% compared to the same quarter of 2004, primarily
due to a decrease in customer and proprietary trading activity evidenced by a 16% decrease in the
number of trade tickets processed in the first quarter of 2005 compared to the same 2004 quarter.
Ryan Becks proprietary equity and fixed income trading revenue decreased 54% in the first quarter
of 2005 compared to the same 2004 quarter. In the first quarter of 2005, Ryan Beck received
principal gross sales credits of $2.9 million related to Unit Investment Trust offerings compared
to $2.3 million for the same 2004 quarter. Investment banking revenue decreased by 6% from the same quarter of 2004, attributable mainly
to decreased consulting, merger and acquisition fees, due to lower deal activity. During the first
quarter of 2005, the Financial Institutions Group completed three mergers as compared to five
mergers for the same 2004 quarter. Additionally, in the first quarter of 2004 the Middle Market
Group completed an IPO, with no corresponding 2005 transaction. Commission revenue decreased by 15% from the same quarter of 2004, attributable mainly to
decreased agency transactions conducted in 2005. Other income is primarily comprised of rebates received on customer money market balances and
inactive fees received on customer accounts. 27




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##### Table of Contents



BankAtlantic Bancorp, Inc. The decrease in employee compensation and benefits of 13% from 2004 is primarily due to the
decrease in bonus accruals as a result of the decreased revenue in 2005 versus 2004. Also
contributing to the decrease was less commission expense arising from the decrease in Ryan Becks
commissionable revenue. Occupancy and equipment increased by 28% from the same quarter of 2004, attributable mainly to
the firms continued expansion throughout 2004. During 2004, Ryan Beck opened three new offices,
including the relocation of its corporate headquarters, and had significant expenses associated
with the expansion of other offices. The decrease in floor broker and clearing fees is due to the decrease in transactional
business in 2005, as compared to 2004. Other expenses increased by 16% from the same quarter of 2004, attributable mainly to
recruiting fees associated with Ryan Becks first quarter 2005 expansion of its capital markets
business. Parent Company Results of Operations For the Three MonthsEnded March 31,(in thousands)
    
    2005
    
    
    2004
    
    
    ChangeNet interest income:Interest income
    
    $
    678
    
    
    $
    542
    
    
    $
    136Interest expense
    
    
    (4,570
    )
    
    
    (4,135
    )
    
    
    (435
    )Net interest income (expense)
    
    
    (3,892
    )
    
    
    (3,593
    )
    
    
    (299
    )Non-interest income:Income from unconsolidated
subsidiaries
    
    
    131
    
    
    
    118
    
    
    
    13Securities activities, net
    
    
    95
    
    
    
    75
    
    
    
    20Litigation settlement
    
    
    
    
    
    
    22,840
    
    
    
    (22,840
    )Other
    
    
    306
    
    
    
    104
    
    
    
    202Non-interest income
    
    
    532
    
    
    
    23,137
    
    
    
    (22,605
    )Non-interest expense:Employee compensation and benefits
    
    
    960
    
    
    
    746
    
    
    
    214Professional fees
    
    
    859
    
    
    
    516
    
    
    
    343Other
    
    
    226
    
    
    
    225
    
    
    
    1Non-interest expense
    
    
    2,045
    
    
    
    1,487
    
    
    
    558(Loss) income before income taxes
    
    
    (5,405
    )
    
    
    18,057
    
    
    
    (23,462
    )Income taxes
    
    
    (1,892
    )
    
    
    6,381
    
    
    
    (8,273
    )Net income (loss)
    
    $
    (3,513
    )
    
    $
    11,676
    
    
    $
    (15,189
    )
 Interest income consists of interest on loans to Levitt, interest and dividends from
investments and interest from a BankAtlantic repo account. Interest income on loans to Levitt was
$465,000 during the 2005 quarter compared to $435,000 during the same 2004 period. Interest income
on the BankAtlantic repo account was $23,000 during 2005 compared to $51,000 during the same 2004
period. Interest expense increased during the first quarter of 2005, compared to the same 2004 period,
as a result of higher interest rates during 2005 compared to 2004. The Companys junior
subordinated debentures and other borrowings average balances were $263.3 million during the three
months ended March 31, 2005 and 2004, of which $128.9 million accrue at floating rates. Income from unconsolidated subsidiaries represents the equity earnings from trusts formed to
issue trust preferred securities as part of trust preferred securities offerings. Securities activities during the three months ended March 31, 2005 and 2004 represents gains
from managed funds. The Companys money manager sold these securities in order to rebalance its
investment portfolio to benchmark allocation percentages. 28




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##### Table of Contents



BankAtlantic Bancorp, Inc. The litigation settlement in 2004 reflects proceeds from the settlement of litigation related
to the Companys prior investment of $15 million in a technology company. Pursuant to that
settlement, the Company sold its stock in the technology company to a third party investor group
for $15 million in cash, the Companys original cost, and the Company received consideration from
the technology company for legal expenses and damages, which consisted of $1.7 million in cash and
378,160 shares of the Companys Class A Common Stock returned by the technology company to the
Company. Other income during the first quarter of 2005 and 2004 includes fees received by the Company
for investor relations and risk management services provided by the Company to Levitt and BFC. The Companys compensation expense represents salaries for investor relations, risk management
and executive management personnel. The Company receives income from Levitt and BFC for services
performed by these employees. The increase in compensation expense during the 2005 period was due
to payroll taxes associated with the exercise of stock options. The increase in professional fees during the 2005 first quarter compared to the same 2004
period consisted of higher regulatory costs incurred to comply with the Sarbanes-Oxley Act,
primarily consisting of costs related to internal control and compliance with Section 404 of that
Act. BankAtlantic Bancorp Consolidated Financial Condition We had total assets of $6.4 billion at March 31, 2005 and December 31, 2004. The change
in components of total assets from December 31, 2004 to March 31, 2005 is summarized below:  
    Purchase of approximately $190 million of residential real estate loans;
    Origination of and participation in $320 million of commercial and small business loans;
    Origination of approximately $105 million of home equity loans;
    Purchase of approximately $40 million of mortgage-backed securities;
    Purchase of approximately $25 million of tax-exempt securities;
    Purchase of approximately $55 million of managed-fund securities;
    Principal reductions of $23 million associated with loans to Levitt;
    Loan, investment securities and tax certificate repayments and maturities of approximately $700 million;
    Additions of $7 million of fixed assets associated with the Companys new corporate
headquarter building and BankAtlantics branch renovation and expansion initiatives;
    A decline in receivable from Ryan Becks clearing agent and a corresponding increase in
securities owned associated with Ryan Becks trading activities;
    Lower real estate held for development and sale associated with units closed at the
Riverclub real estate joint venture acquired by BankAtlantic in connection with the
Community acquisition;
    Higher other assets balances related to increased fee-based deposit overdraft accounts
as well as higher REO balances;
    Increases in accrued interest receivable due to higher loan receivable and securities
balances; and
    Higher Federal Home Loan Bank stock balances associated with increased stock ownership
membership requirements that went into effect during the first quarter of 2005. We had total liabilities of $5.9 billion at March 31, 2005 and December 31, 2004. The
change in components of total liabilities from December 31, 2004 to March 31, 2005 is summarized
below:  
    Higher deposit account balances resulting from the growth in low-cost deposits
associated with Floridas Most Convenient Bank and totally free checking account
initiatives;
    An increase in securities sold but not yet purchased associated with Ryan Becks trading activities;
    Repayments of borrowings and FHLB advances caused by deposit growth; and
    Decrease in other liabilities primarily due to securities purchased pending settlement
and a reduction in Ryan Becks accrued employee compensation and benefits reflecting the
payout of 2004 annual bonuses during the first quarter of 2005. Stockholders equity at March 31, 2005 was $481.0 million compared to $469.3 million at
December 31, 2004. The increase was primarily attributable to earnings of $19.9 million and $5.5
million from the issuance of common stock and associated tax benefits upon the exercise of stock
options. The above increases in stockholders equity were partially 29




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##### Table of Contents



BankAtlantic Bancorp, Inc. offset by declaration of $2.1
million of common stock dividends, a $347,000 reduction in additional paid in capital resulting
from the retirement of 90,000 shares of Ryan Becks common stock issued upon the exercise of
employee stock options in
June 2004, $6.6 million other comprehensive loss, net of income tax benefits, and a $4.6
million reduction in additional paid in capital related to the acceptance of Class A common stock
as consideration for the payment of withholding taxes and the exercise price which were due upon
the exercise of Class A common stock options by various executive officers of the Company. 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, repayment of subsidiary loans and loans to
Levitt, and liquidation of equity securities and other investments it holds, management fees from
subsidiaries and affiliates and interest payments from loans to Levitt. The Company uses these
funds to contribute capital to its subsidiaries, pay debt service, and repay borrowings, purchase
equity securities and fund operations. The Companys annual debt service associated with its junior
subordinated debentures is approximately $17.5 million. The Companys estimated current annual
dividends to common shareholders are approximately $8.5 million. During the three months ended
March 31, 2005, the Company received $5.0 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 as
well as indenture restrictions and on the ability of BankAtlantic to pay dividends to the Company.
These payments are subject to regulations and OTS approval and are based upon BankAtlantics
regulatory capital levels and net income. In addition, Ryan Beck paid $5.0 million in dividends to
the Company during the year ended December 31, 2004. Future dividend payments by Ryan Beck will
depend upon the results of operations, financial condition and capital requirements of Ryan Beck. In connection with the Levitt spin-off, a $30.0 million demand note owed by Levitt to us was
converted to a five year term note due in December 2008 with interest only payable monthly
initially at the prime rate and thereafter at the prime rate plus increments of an additional
0.25% every six months. Prior to the spin-off, Levitt declared an $8.0 million dividend to us
payable in the form of a note due in December 2008, bearing interest on the same basis as the
$30.0 million note described above. In March 2005, the $8.0 million note was paid in full and the
$30.0 million note was paid down to $16.0 million. The proceeds from the loan payments were
invested in managed funds with a third party money manager. It is anticipated that these funds
will be invested in this manner until needed to fund the operations of the Company and its
subsidiaries, which may include acquisitions, BankAtlantics branch expansion and renovation
strategy, or other business purposes. In March 2005, the Company repaid the remaining $100,000 balance under a revolving credit
facility with an independent financial institution. In May 2005, the Company entered into a
modification agreement to the revolving credit facility reducing the commitment amount from $30
million to $20 million and extending the maturity date from March 1, 2005 to March 1, 2007. 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 Company is in compliance with all loan
covenants. Amounts outstanding accrue interest at the prime rate minus 50 basis points. There
were no amounts outstanding under this credit facility as of March 31, 2005. 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 investment securities; proceeds from the sale of loans and securities available
for sale; proceeds from securities sold under agreements to repurchase and federal funds
purchased; advances from FHLB; interest payments on loans and securities; and funds generated by
operations. These funds were primarily utilized to fund loan disbursements and purchases, deposit
outflows, repayments of securities sold under agreements to repurchase, repayments of advances
from FHLB, purchases of tax certificates and investment securities, payments of maturing
certificates of deposit, payments of operating expenses and payments of dividends to the Company.
The FHLB has granted BankAtlantic a line of credit capped at 30% of assets subject to available
collateral, with a maximum term of ten years. BankAtlantic has utilized its FHLB line of credit to 30




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##### Table of Contents



BankAtlantic Bancorp, Inc. borrow $1.5 billion at March 31, 2005. The line of credit is secured by a blanket lien on
BankAtlantics residential mortgage loans and certain commercial real estate and consumer loans.
BankAtlantics available borrowings under this line of credit were approximately $307 million at
March 31, 2005. BankAtlantic has established lines of credit for up to $235 million
with other banks to purchase federal funds and has established a $7 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, 2005 were
approximately $331.3 million and $291.1 million, respectively, compared to $353.8 million and
$103.6 million, respectively, at March 31, 2004. Additionally, BankAtlantic had commitments to
purchase securities of $3.8 million and $125.1 million, respectively, at March 31, 2005 and 2004.
At March 31, 2005, loan commitments represented approximately 13.4% of loans receivable, net. In 2004, BankAtlantic announced its de novo branch expansion strategy under which it plans to
open between six to eight branches, subject to required regulatory approvals. In view of recently
identified issues concerning BankAtlantics compliance with the USA PATRIOT Act, Bank Secrecy Act
and anti-money laundering laws, there is no assurance that BankAtlantic will not face delays in
obtaining regulatory approvals. It is anticipated that delays, if any occur, would not materially
alter the course or scope of BankAtlantics branching strategy. The estimated cost of
constructing these branches is approximately $18 million. During the three months ended March
31, 2005 BankAtlantic opened two de novo branches. The capital expenditures for these two branches
amounted to approximately $2.1 million. BankAtlantic has also entered into purchase commitments
to acquire land for de novo branch expansion with an aggregate purchase price of $2.0 million,
subject to due diligence. In June 2004, BankAtlantics management finalized a plan to renovate the majority of
BankAtlantics existing branches. The renovation of these branches is projected to be completed
during 2006 at an estimated cost of $13 million. BankAtlantic has incurred approximately $5.8
million in renovation costs on branch facilities as of March 31, 2005. At March 31, 2005, BankAtlantic met all applicable liquidity and regulatory capital
requirements. At the indicated date, BankAtlantics capital amounts and ratios were (dollars in
thousands): Minimum RatiosAdequately
    
    
    WellActual
    
    
    Capitalized
    
    
    CapitalizedAmount
    
    
    Ratio
    
    
    Ratio
    
    
    RatioAt March 31, 2005:Total risk-based capital
    
    $
    490,045
    
    
    
    11.06
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based
capital
    
    $
    421,831
    
    
    
    9.52
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    421,831
    
    
    
    7.03
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    421,831
    
    
    
    7.03
    %
    
    
    4.00
    %
    
    
    5.00
    %At December 31, 2004:Total risk-based capital
    
    $
    476,600
    
    
    
    10.80
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based
capital
    
    $
    405,482
    
    
    
    9.19
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    405,482
    
    
    
    6.83
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    405,482
    
    
    
    6.83
    %
    
    
    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,
2004. Compliance Matter BankAtlantic
previously disclosed that it had identified deficiencies in its compliance with
the USA PATRIOT Act, anti-money laundering laws and the Bank Secrecy Act and that it has been
cooperating with regulators and other federal agencies concerning these deficiencies. BankAtlantic
has provided and is continuing to provide information to the 31




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BankAtlantic Bancorp, Inc. government pursuant to a number of
subpoenas relating to, among other things, numerous customers and transactions and the Banks
policies and procedures. BankAtlantic Bancorp cannot predict whether or to what extent civil or
criminal regulatory action or monetary or other penalties will be pursued against BankAtlantic or
the Company by regulators or other federal agencies. Recently, Riggs Bank, N.A. announced that it had consented to a $25 million civil money
penalty paid to the Department of the Treasury, assessed concurrently by the Financial Crimes
Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency, for willful,
systemic violation of the anti-money laundering program and suspicious activity and currency
transaction requirements of the Bank Secrecy Act. Riggs Bank, N.A. also announced that it has
resolved an investigation into its Bank Secrecy Act compliance by pleading guilty to a count of
failing to file timely and/or accurate Suspicious Activity Reports, paid a $16 million fine and
agreed to a five-year period of corporate probation. Riggs National Corporation, the holding
company for Riggs Bank, N.A., also consented to the issuance of a Cease and Desist Order relating
to future compliance and board oversight, which, among other things, prohibits the declaration or
payment of dividends on its stock or distributions of interest, principal or other sums with
respect to debentures issued in connection with its trust preferred securities, or the redemption
or repurchase any of its stock without regulatory approval. Further, AmSouth Corporation (AmSouth) and AmSouth Bank disclosed that they have entered
into a deferred prosecution agreement with the U.S. Attorney relating to deficiencies in the banks
reporting of suspicious activities under the Bank Secrecy Act. AmSouth also announced that it
entered into a Cease and Desist Order with the Federal Reserve and the Alabama Department of
Banking and an order with FinCEN relating to deficiencies in AmSouths compliance with the Bank
Secrecy Act. AmSouth announced that under the deferred prosecution agreement, it agreed to make a
payment of $40 million to the United States and, in connection with the Federal Reserve and FinCEN
orders, was assessed a $10 million civil money penalty. AmSouth also disclosed that in connection
with the Cease and Desist Order, the Federal Reserve indicated it would restrict AmSouths
expansion activities until such time as the Federal Reserve believes the company is in substantial
compliance with the requirements of the order. AmSouth further disclosed that the Cease and Desist
Order requires specific actions, including steps to comply with the Bank Secrecy Act. Other financial institutions have also been required to enter into regulatory agreements and
to pay fines and assessments with respect to their activities. BankAtlantic Bancorp and
BankAtlantic may be the subject of similar civil and criminal regulatory proceedings and actions
and may be required to pay fines or penalties which may be similar to, greater than or less than
those imposed on other institutions. Ryan Beck & Co., Inc. Liquidity and Capital Resources Ryan Becks primary sources of funds during the quarter ended March 31, 2005 were clearing
broker borrowings, proceeds from the sale of securities owned, proceeds from securities sold but
not yet purchased, loan repayments and fees from customers. These funds were primarily utilized
to pay operating expenses and fund capital expenditures. As part of the Gruntal transaction in
2002, Ryan Beck acquired all of the membership interests in The GMS Group, LLC (GMS). During
2003, Ryan Beck sold GMS for $22.6 million, receiving cash proceeds of $9.0 million and a $13.6
million promissory note. The note is secured by the membership interests in GMS and requires GMS
to maintain certain capital and financial ratios. During the three months ended March 31, 2005,
the buyer made $1.7 million of principal repayments on the promissory note which reduced the
balance to $4.4 million at March 31, 2005. In the ordinary course of business, Ryan Beck borrows funds under an agreement with its
Clearing Broker and pledges 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 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 $29.7 million, which was $28.7 million in excess of its required net capital of $1.0
million at March 31, 2005. 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. 32




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##### Table of Contents



BankAtlantic Bancorp, Inc. 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, 2005. 
 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 BankAtlantics assets and liabilities are monetary in nature, subjecting us
to significant interest rate risk in that their value fluctuates with changes 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, 2005 resulting from a change in
interest rates. Interest rate sensitive instruments included in the model are:  
    Loans,
    Debt securities available for sale,
    Investment securities,
    FHLB stock,
    Federal funds sold,
    Deposits,
    Advances from FHLB,
    Securities sold under agreements to repurchase,
    Federal funds purchased,
    Subordinated debentures,
    Notes and bonds payable, and
    Junior subordinated debentures. The model calculates the net potential gains and losses in net portfolio fair value by:  i.
    Discounting anticipated cash flows from existing assets and liabilities at market
rates to determine fair values at March 31, 2005 and December 31, 2004,ii.
    Discounting the above expected cash flows based on instantaneous and parallel shifts
in the yield curve to determine fair values; andiii.
    Calculating the difference between the fair value calculated in (i) and (ii). Management has made estimates of fair value discount rates that it believes to be reasonable.
However, because there is no quoted market for many of these financial instruments, management
has no basis to determine whether the fair value presented would be indicative of the value that
could be attained in an actual sale. Our fair value estimates do not consider the tax effect that
would be associated with the disposition of the assets or liabilities at their fair value
estimates. Subordinated debentures and mortgage-backed bonds payable were valued for this purpose based
on their contractual maturities or redemption date. The Companys interest rate risk policy has
been approved by the Board of Directors and establishes guidelines for tolerance levels for net
portfolio value changes based on interest rate volatility. Management has maintained the
portfolio within these established guidelines. Certain assumptions by the Company in assessing the interest rate risk were utilized in
preparing the following table. These assumptions related to:  §
    Interest rates,§
    Loan prepayment rates,§
    Deposit runoff rates,§
    Non-maturing deposit servicing rates,§
    Market values of certain assets under various interest rate scenarios, and§
    Re-pricing of certain borrowings. 33




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##### Table of Contents



BankAtlantic Bancorp, Inc. The tables below measure changes in net portfolio value for instantaneous and parallel shifts
in the yield curve in 100 basis point increments up or down. It also assumes that delinquency
rates would not change as a result of changes in interest rates, although there can be no
assurance that this would be the case. Even if interest rates change in the designated
increments, there can be no assurance that our assets and liabilities would perform as indicated
in the tables below. In addition, a change in U.S. Treasury rates in the designated amounts
accompanied by a change in the shape of the yield curve could cause significantly different
changes to the fair values than indicated. Furthermore, the results of the calculations in
the following preceding table are subject to significant deviations based upon actual future
events, including anticipatory and reactive measures which we may take in the future. Presented below is an analysis of the Companys interest rate risk at March 31, 2005 and
December 31, 2004 calculated utilizing the Companys model (in thousands): As of March 31, 2005Net PortfolioChanges
    
    Value
    
    
    Dollarin Rate
    
    Amount
    
    
    Change+200 bp
    
    $
    896,729
    
    
    $
    81,604+100 bp
    
    $
    884,664
    
    
    $
    69,5390
    
    $
    815,125
    
    
    $
    -100 bp
    
    $
    682,632
    
    
    $
    (132,493
    )-200 bp
    
    $
    489,550
    
    
    $
    (325,575
    )
 As of December 31, 2004Net PortfolioChanges
    
    Value
    
    
    Dollarin Rate
    
    Amount
    
    
    Change+200 bp
    
    $
    813,332
    
    
    $
    77,676+100 bp
    
    $
    803,501
    
    
    $
    67,8450
    
    $
    735,656
    
    
    $
    -100 bp
    
    $
    596,126
    
    
    $
    (139,530
    )-200 bp
    
    $
    406,938
    
    
    $
    (328,718
    )
 Deposit decay assumptions used in the model are as follows: Within
    
    
    1-3
    
    
    3-5
    
    
    Over 51 Year
    
    
    Years
    
    
    Years
    
    
    YearsSavings
    
    
    16
    %
    
    
    10
    %
    
    
    10
    %
    
    
    10
    %Money market
    
    
    83
    
    
    
    15
    
    
    
    15
    
    
    
    15NOW
    
    
    7
    
    
    
    6
    
    
    
    6
    
    
    
    6Demand
    
    
    14
    
    
    
    6
    
    
    
    6
    
    
    
    6
 The Company began utilizing a new interest rate risk model in January 2005, that should enable
management to evaluate the interest rate sensitivity of our interest earnings assets and interest
bearing liabilities on a more specific asset and liability basis. As a consequence, the December
31, 2004 amounts are also provided utilizing the new model. The change in the December 31, 2004
amounts from those calculated under the prior model was primarily due to a change in deposit decay
rates. The old model decay rates were based on industry averages, whereas the deposit decay rates
utilized under the new model are based on BankAtlantics historical experience as calculated by a
third party. 34




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##### Table of Contents



BankAtlantic Bancorp, Inc. Our tax equivalent net interest margin improved to 3.88% in the first quarter of 2005 vs.
3.73% in the first quarter 2004, but down slightly from the 3.91% in the fourth quarter 2004. The
decline from the 2004 fourth quarter tax equivalent net interest margin is attributable to
acquisitions of securities and residential loans made late in the 2004 fourth quarter funded
through short term borrowings. These investments, which generally have lower yields than our
existing portfolio, coupled with the increase in short-term interest rates since August 2004 have
offset the favorable effects on our tax equivalent net interest margin from the payoff of higher
rate FHLB advances, growth in our low cost deposits and higher yields on commercial, consumer, and
small business loans. We believe that our tax equivalent net interest margin will improve during
2005. Although a shift in the slope of the yield curve could moderate further margin improvement. Equity Price Risk BankAtlantic Bancorp BankAtlantic Bancorp maintains a portfolio of equity securities that subject us to
equity pricing risks which would arise as the relative values of our equity investments change as
a consequence of market or economic conditions. The change in fair values of equity investments
represents instantaneous changes in all equity prices. The following are hypothetical changes in
the fair value of our available for sale equity securities at March 31, 2005 based on 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): AvailablePercent
    
    for SaleChange in
    
    Securities
    
    
    DollarFair Value
    
    Fair Value
    
    
    Change20%
    
    $
    43,399
    
    
    $
    7,23310%
    
    $
    39,783
    
    
    $
    3,6170%
    
    $
    36,166
    
    
    $
    -10%
    
    $
    32,549
    
    
    $
    (3,617
    )-20%
    
    $
    28,933
    
    
    $
    (7,233
    )
 Excluded from the above table are $1.8 million of investments in other financial institutions
and $5.0 million invested in a limited partnership hedge fund specializing in bank equities, for
which no current liquid market exists. The ability to realize or liquidate these investments will
depend on future market conditions and is subject to significant risk. Ryan Beck Market Risk The Company, through its broker/dealer subsidiary Ryan Beck, is exposed to market risk
arising from trading and market making activities. Ryan Becks market risk is the potential change
in value of financial instruments caused by fluctuations in interest rates, equity prices, credit
spreads and other market forces. 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 and measures the
potential loss in the fair value of a portfolio due to adverse movements in underlying risk
factors. Substantially all the trading inventory is subject to measurement using VaR. 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. Modeling and statistical methods rely on approximations and assumptions that could be
significant under certain circumstances. As such, the risk management process also employs other
methods such as sensitivity to interest rates and stress testing. 35




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##### Table of Contents



BankAtlantic Bancorp, Inc. The following table sets forth the high, low and average VaR for Ryan Beck for the three
months ended March 31, 2005 (in thousands): High
    
    
    Low
    
    
    AverageVaR
    
    $
    359
    
    
    $
    55
    
    
    $
    193Aggregate Long Value
    
    
    123,209
    
    
    
    67,388
    
    
    
    94,685Aggregate Short Value
    
    $
    187,412
    
    
    $
    36,440
    
    
    $
    69,471
 The following table sets forth the high, low and average VaR for Ryan Beck for the year ended
December 31, 2004 (in thousands): High
    
    
    Low
    
    
    AverageVaR
    
    $
    1,747
    
    
    $
    11
    
    
    $
    336Aggregate Long Value
    
    
    112,494
    
    
    
    43,431
    
    
    
    72,787Aggregate Short
Value
    
    $
    167,987
    
    
    $
    23,851
    
    
    $
    65,006
 36




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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
changes in our internal control over financial reporting that occurred during our first fiscal
quarter that have materially affected, or are reasonably likely to materially affect our internal
control over financial reporting. 37




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##### Table of Contents



BankAtlantic Bancorp, Inc. 
 PART II  OTHER INFORMATION 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds (e) Purchases of equity securities by the issuer and affiliated purchasers Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    shares thatPart of Publicly
    
    
    May Yet Be PurchasedTotal Number of
    
    
    Average price
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Shares Purchased (1)
    
    
    per share
    
    
    or Programs (2)
    
    
    ProgramsJanuary 1, 2005 through
January 31, 2005
    
    
    2,892
    
    
    $
    19.90
    
    
    
    
    
    
    
    February 1, 2005
through
February 28, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 1, 2005 through
March 31, 2005
    
    
    256,323
    
    
    
    17.91
    
    
    
    
    
    
    
    Total
    
    
    259,215
    
    
    $
    17.93
    
    
    
    
    
    
    
    
   1.
    
    The amount represents the number of shares of the Companys Class A Common Stock
redeemed by the Company as consideration for the payment of the exercise price and minimum
withholding taxes of stock options exercised during the period.2.
    
    The Company currently has no plan or program to repurchase its equity securities. 
 Item 6. Exhibits Exhibit 31.1
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Certification of the Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002Exhibit 32.2
    
    CFO Certification of the Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
 38




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##### Table of Contents



BankAtlantic Bancorp, Inc. 
 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANKATLANTIC BANCORP, INC. Date May 10, 2005
    
    By:
    
    /s/ Alan B. LevanAlan B. LevanChief Executive Officer/
Chairman/PresidentDate May 10, 2005
    
    By:
    
    /s/ James A. WhiteJames A. WhiteExecutive Vice President,
Chief Financial Officer
 39