##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION  Washington, DC 20549
 FORM 10-K þ
Annual Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Actof 1934
 For the Year Ended December 31, 2004 OR o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OFTHE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number34-027228 BankAtlantic Bancorp, Inc.  Florida
(State or other jurisdiction of
incorporation or organization)
    
    65-0507804
(I.R.S. Employer
Identification No.)
 1750 East Sunrise Boulevard
Ft. Lauderdale, Florida
(Address of principal executive offices)
    
    33304
(Zip Code)
 (954) 760-5000
(Registrants telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: Name of Each Exchange on Which RegisteredNew York Stock Exchange
 Title of Each ClassClass A Common Stock, Par Value $0.01 Per Share
 Indicate, by check mark, if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. þ 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 (or
for such shorter period that the Registrant was required to file such reports), 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 Act). YES þ NO o The aggregate market value of the voting common equity held by non-affiliates was $833
million computed by reference to the closing price of the Registrants Class A Common Stock on
June 30, 2004. The number of shares of Registrants Class A Common Stock outstanding on March 3, 2005 was
55,294,160. The number of shares of Registrants Class B Common Stock outstanding on March 3,
2005 was 4,876,124. Portions of the 2004 Annual Report to Stockholders of the Registrant are incorporated in
Parts I, II and IV of this report. Portions of the Proxy Statement of the Registrant relating to
the Annual Meeting of shareholders are incorporated in Part III of this report.




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TABLE OF CONTENTS  PART IITEM I. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED CONSOLIDATED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTSReport of Independent Registered Certified Public Accounting FirmReport of Independent Registered Public Accounting FirmITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESItem 9B. Other informationPART IIIPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESRatio of Earnings to Fixed ChargesSubsidiariesConsent of PricewaterhouseCoopers LLPConsent of KPMG LLPSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO    Table of Contents  
 PART I 
 ITEM I. BUSINESS 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. (the Company) and are subject to a number of risks and uncertainties that are subject to
change based on factors which are, in many instances, beyond the Companys control. These include,
but are not limited to, risks and uncertainties associated with: the impact of economic,
competitive and other factors affecting the Company and its operations, markets, products and
services; credit risks and loan losses, and the related sufficiency of the allowance for loan
losses; changes in interest rates and the effects of, and changes in, trade, monetary and fiscal
policies and laws 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, extended midnight branch banking hours initiatives, branch expansion and branch
renovation initiatives, and other growth initiatives not being successful or producing results
which do not justify their costs; the impact of periodic testing of goodwill and other intangible
assets for impairment; achieving the benefits of the prepayment of the Federal Home Loan Bank
advances; and 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 or other penalties relating to these compliance deficiencies will be imposed on the
Company by regulators or other federal agencies. Further, this document contains forward-looking
statements with respect to RB Holdings, Inc., 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, 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. The Company We are a Florida-based financial services holding company and own BankAtlantic and RB
Holdings, Inc. (Ryan Beck), the parent company of Ryan Beck & Co., Inc. Through these
subsidiaries, we provide a full line of products and services encompassing consumer and commercial
banking, brokerage services and investment banking. We report our operations through three
business segments consisting of BankAtlantic, Ryan Beck and BankAtlantic Bancorp, the parent
company. Our
Internet website address is www.bankatlanticbancorp.com. Our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports
are available free of charge through our website, as soon as reasonably practicable after such
material is electronically filed with, or furnished to, the SEC. Our Internet website and the
information contained in or connected to our website are not incorporated into this Annual Report
on Form 10-K. As of December 31, 2004, we had total consolidated assets of approximately $6.4 billion and
stockholders equity of approximately $469 million. On December 31, 2003, we completed the
spin-off of our wholly owned real estate development subsidiary, Levitt Corporation. At the date
of the spin-off, Levitt Corporation had approximately $393 million in assets and $126 million in
consolidated stockholders equity. 1




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BankAtlantic BankAtlantic is a federally-chartered, federally-insured savings bank organized in 1952. It is
one of the largest financial institutions headquartered in Florida and provides traditional retail
banking services and a wide range of commercial banking products and related financial services
through 74 branches or stores in southeast Florida and the Tampa Bay area, primarily in the
metropolitan areas surrounding the cities of Miami, Ft. Lauderdale, West Palm Beach and Tampa Bay
area, which are located in the heavily-populated Florida counties of Miami-Dade, Broward, Palm
Beach, Hillsborough and Pinellas. These counties had a combined population of more than 6.4
million in 2004, representing 37% of Floridas total population. BankAtlantics primary business activities include:  
    attracting checking and savings deposits from individuals and business customers,
    originating commercial real estate, business, consumer and small business loans,
    purchasing wholesale residential loans from third parties,
    making investments in mortgage-backed securities, tax certificates and other securities. BankAtlantics business strategy focuses on the following key areas:  
    Continuing the Floridas Most Convenient Bank Initiative.BankAtlantic began its
Floridas Most Convenient Bank initiative in 2002. This initiative, which includes
offering free checking, seven-day banking, extended lobby hours, including some stores
open 9:00 am until midnight, a 24-hour customer service center and other new products and
services is an integral part of BankAtlantics strategy to position itself as a
customer-oriented bank and increase its low cost deposit accounts. BankAtlantic continues
to institute marketing programs in its stores that include sales training programs,
outbound telemarketing requirements and incentive compensation programs that enable its
banking personnel to earn additional income for producing profitable business.
    Increasing Low Cost Deposits.BankAtlantics low cost deposits are comprised of demand
deposit, NOW checking accounts and savings accounts. From December 31, 2001 to December
31, 2004, the balances of its low cost deposits increased 200% from approximately $600
million to approximately $1.8 billion. These low cost deposits represented 53% of
BankAtlantics total deposits at December 31, 2004, compared to 26% of total deposits at
December 31, 2001. BankAtlantic intends to continue to seek to increase its low cost
deposits through strong sales and marketing efforts, new products offerings, commitment to
customer service and the Floridas Most Convenient Bank initiative.
    Growing the Loan Portfolio while Concentrating On Core Lending Competencies.
BankAtlantic intends to grow its core commercial and retail banking business with an
emphasis on commercial real estate loans, one to four family residential loans, and small
business and consumer loans. BankAtlantic attributes its success in these lending areas to
several key factors, including disciplined underwriting and expertise in its markets.
Further, BankAtlantic intends to limit activities in non-core lending areas, such as
credit card, international, non-mortgage syndication and indirect lending.
    Expanding the Retail Network.BankAtlantic intends to grow its retail network both
internally through a branding initiative and de novo expansion and externally through
acquisitions if attractive opportunities are presented which are consistent with
BankAtlantics growth strategy. BankAtlantic generally seeks to expand into relatively
faster growing and higher deposit level markets within Florida. We currently intend to
open at least 6 new stores in 2005 while, over the next 18 
24 months, renovating the
interior of all existing stores during 2005 and 2006 with a consistent design. 2




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
    Maintaining its Strong Credit Culture.BankAtlantic
believes it has put in place stringent
underwriting standards and has developed and instituted credit training programs for its
banking officers which emphasize underwriting and credit analysis. It has also developed
systems and programs which it believes will enable it to offer sophisticated products and
services without exposing the Bank to unnecessary credit risks. BankAtlantic offers a number of lending products to its customers. Its primary lending
products include commercial real estate loans, commercial business loans, standby letters of credit
and commitments, consumer loans, small business loans and residential loans. Commercial Real Estate:BankAtlantic provides commercial real estate loans for the
acquisition, development and construction of various property types, as well as the refinancing
and acquisition of existing income-producing properties. These loans are primarily secured by
property located in Florida. Commercial real estate loans typically are based on a maximum of 80%
of the collaterals appraised value, and generally require that one or more of the principals of
the borrowing entity guarantee these loans. Most of these loans have variable interest rates and
are indexed to either prime or LIBOR rates. Additionally, BankAtlantic purchases participations in commercial real estate loans that are
originated by other financial institutions, typically known as lead banks. These transactions
are underwritten as if we were originating the loan, applying all normal underwriting standards.
The lead bank administers the loan and provides periodic reports on the progress of the project
for which the loan was made. Major decisions regarding the loan are made by the participants on
either a majority or unanimous basis. As a result, the lead bank
generally can not significantly modify the
loan without either majority or unanimous consent of the participants. BankAtlantic sometimes
acts as a lead bank and sells participations in its loans to other lenders. This reduces its
exposure on projects and may be required in order to stay within the regulatory loans to one
borrower limitations. Commercial Business:BankAtlantic makes commercial business loans generally to medium size
companies located throughout Florida, but primarily in the South Florida and the Tampa Bay areas.
It lends on both a secured and unsecured basis, although the majority of its loans are secured.
Commercial business loans are typically secured by the accounts receivable, inventory, equipment,
real estate, and/or general corporate assets of the borrowers. Commercial business loans
generally have variable interest rates that are prime or LIBOR-based. These loans typically are
originated for terms ranging from one to five years. Standby Letters of Credit and Commitments:Standby letters of credit are conditional
commitments issued by BankAtlantic to guarantee the performance of a customer to a third party.
The credit risk involved in issuing letters of credit is the same as extending loans to customers.
BankAtlantic may hold certificates of deposit, liens on corporate assets and liens on residential
and commercial property as collateral for letters of credit. BankAtlantic issues commitments for
commercial real estate and commercial business loans. Consumer:Consumer loans are primarily loans to individuals originated through
BankAtlantics retail network and sales force. The majority of its originations are home equity
lines of credit secured by a second mortgage on the primary residence of the borrower. Home
equity lines of credit have prime-based interest rates and generally mature in 15 years. All
other consumer loans generally have fixed interest rates with terms ranging from one to five
years. Small Business:BankAtlantic makes small business loans to companies located primarily in
South Florida, along the Treasure Coast of East Florida and in the Tampa Bay area. Small business
loans are primarily originated on a secured basis and do not exceed $1.0 million for non-real
estate secured loans and $1.5 million for real estate secured loans. These loans are originated
with maturities primarily ranging from one to three years or upon demand; however, loans
collateralized by real estate could have terms of up to fifteen years. Lines of credit extended
to small businesses are due upon demand. Small business loans typically have either fixed or
variable prime-based interest rates. Residential:BankAtlantic purchases residential loans in the secondary markets that have been
originated by other institutions. These loans, which are serviced by independent servicers, are
secured by 3




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properties located throughout the United States. When BankAtlantic purchases residential
loans, it evaluates the originators underwriting of the loans and, for certain individual loans,
performs confirming credit analysis. Residential loans are typically purchased in bulk and are
generally non-conforming loans due to the size and characteristics of the individual loans.
BankAtlantic sets guidelines for loan purchases relating to loan amount, type of property, state
of residence, loan-to-value ratios, the borrowers sources of funds, appraised amounts, and loan
documentation. In 2003, BankAtlantic began a program in which it originates residential loans to
customers that are then sold on a servicing released basis to a correspondent. It also originates
certain residential loans, which are primarily made to low to moderate income borrowers in order
to comply with standards under the Community Reinvestment Act. The underwriting of these loans
generally follows government agency guidelines with independent appraisers typically performing
on-site inspections and valuations of the collateral. The composition of the loan portfolio was (in millions): As of December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Amount
    
    
    Pct%
    
    
    Amount
    
    
    Pct%
    
    
    Amount
    
    
    Pct%
    
    
    Amount
    
    
    Pct%
    
    
    Amount
    
    
    Pct%Loans receivable:Real estate loans:Residential
    
    $
    2,066
    
    
    
    45.35
    
    
    
    1,344
    
    
    
    37.00
    
    
    
    1,378
    
    
    
    40.30
    
    
    
    1,112
    
    
    
    39.76
    
    
    
    1,316
    
    
    
    46.17
    %Home Equity
    
    
    457
    
    
    
    10.03
    
    
    
    334
    
    
    
    9.19
    
    
    
    262
    
    
    
    7.65
    
    
    
    167
    
    
    
    5.96
    
    
    
    125
    
    
    
    4.38Construction and development
    
    
    1,454
    
    
    
    31.92
    
    
    
    1,345
    
    
    
    37.05
    
    
    
    1,266
    
    
    
    37.00
    
    
    
    1,144
    
    
    
    40.93
    
    
    
    938
    
    
    
    32.90Commercial
    
    
    1,075
    
    
    
    23.61
    
    
    
    1,064
    
    
    
    29.30
    
    
    
    755
    
    
    
    22.09
    
    
    
    522
    
    
    
    18.67
    
    
    
    369
    
    
    
    12.95Small business
    
    
    124
    
    
    
    2.72
    
    
    
    108
    
    
    
    2.97
    
    
    
    94
    
    
    
    2.76
    
    
    
    36
    
    
    
    1.28
    
    
    
    10
    
    
    
    0.35Loans to Levitt Corporation
    
    
    9
    
    
    
    0.19
    
    
    
    18
    
    
    
    0.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other loans:Commercial business
    
    
    85
    
    
    
    1.88
    
    
    
    81
    
    
    
    2.22
    
    
    
    82
    
    
    
    2.40
    
    
    
    76
    
    
    
    2.72
    
    
    
    85
    
    
    
    2.97Small
business - non-mortgage
    
    
    67
    
    
    
    1.46
    
    
    
    52
    
    
    
    1.43
    
    
    
    49
    
    
    
    1.45
    
    
    
    34
    
    
    
    1.23
    
    
    
    21
    
    
    
    0.72Due from foreign banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    0.05
    
    
    
    64
    
    
    
    2.25Consumer
    
    
    18
    
    
    
    0.41
    
    
    
    22
    
    
    
    0.60
    
    
    
    25
    
    
    
    0.73
    
    
    
    26
    
    
    
    0.92
    
    
    
    33
    
    
    
    1.16Residential loans held for sale
    
    
    5
    
    
    
    0.10
    
    
    
    2
    
    
    
    0.06
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    0.17
    
    
    
    
    
    
    
    Discontinued loan products (1)
    
    
    8
    
    
    
    0.18
    
    
    
    35
    
    
    
    0.98
    
    
    
    71
    
    
    
    2.08
    
    
    
    153
    
    
    
    5.48
    
    
    
    285
    
    
    
    10.01Total
    
    
    5,368
    
    
    
    117.85
    
    
    
    4,405
    
    
    
    121.30
    
    
    
    3,982
    
    
    
    116.46
    
    
    
    3,276
    
    
    
    117.17
    
    
    
    3,246
    
    
    
    113.86Adjustments:Undisbursed portion of loans
in process
    
    
    768
    
    
    
    16.86
    
    
    
    728
    
    
    
    20.05
    
    
    
    512
    
    
    
    14.97
    
    
    
    434
    
    
    
    15.53
    
    
    
    344
    
    
    
    12.08Unearned discounts (premiums)
    
    
    (1
    )
    
    
    (0.02
    )
    
    
    (0
    )

    
    
    (0.01
    )
    
    
    3
    
    
    
    0.09
    
    
    
    1
    
    
    
    0.05
    
    
    
    4
    
    
    
    0.13Allowance for loan losses
    
    
    46
    
    
    
    1.01
    
    
    
    46
    
    
    
    1.26
    
    
    
    48
    
    
    
    1.40
    
    
    
    45
    
    
    
    1.59
    
    
    
    47
    
    
    
    1.65Total loans receivable,
net
    
    $
    4,555
    
    
    
    100.00
    
    
    
    3,631
    
    
    
    100.00
    
    
    
    3,419
    
    
    
    100.00
    
    
    
    2,796
    
    
    
    100.00
    
    
    
    2,851
    
    
    
    100.00
    %Bankers acceptances
    
    $
    
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00
    
    
    
    
    
    
    
    100.00
    
    
    
    1
    
    
    
    100.00
    %
   1)
    
    In prior periods BankAtlantic discontinued the origination of syndication, lease financings
and indirect consumer loans and made major modifications to the underwriting process for
small business loans. In addition to its lending activities, BankAtlantic also invests in securities as
described below: Securities Available for Sale:BankAtlantic invests in securities available for sale,
consisting principally of investments in obligations of the U.S. government or its agencies, such
as mortgage-backed securities and real estate mortgage investment conduits (REMICs). Also
included in securities available for sale are tax exempt municipal bonds. These are debt
obligations issued by states, cities, counties and other governmental entities to raise money to
build schools, highways, hospitals, sewer systems and other projects for the public good. The
available for sale securities portfolio serves as a source of liquidity while at the same 4




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time providing a means to moderate the effects of interest rate changes. The decision to
purchase and sell securities is based upon a current assessment of the economy, the interest rate
environment and our liquidity requirements. Investment Securities and Tax Certificates:BankAtlantics portfolio of investment securities
held to maturity at December 31, 2004 consisted of tax exempt municipal bonds and tax
certificates. Tax certificates are evidences of tax obligations that are sold through auctions or
bulk sales by various state and local taxing authorities on an annual basis. The tax obligation
arises when the property owner fails to timely pay the real estate taxes on the property. Tax
certificates represent a priority lien against the real property for the delinquent real estate
taxes. The minimum repayment, in order to satisfy the lien, is the certificate amount plus the
interest accrued through the redemption date and applicable penalties, fees and costs. Tax
certificates have no payment schedule or stated maturity. If the certificate holder does not file
for the deed within established time frames, the certificate may become null and void.
BankAtlantics experience with this type of investment has been favorable because the rates earned
are generally higher than many alternative investments and substantial repayments typically occur
over a two-year period. The composition, yields and maturities of BankAtlantics securities available for sale and
investment securities and tax certificates were as follows (dollars in thousands): CorporateMortgage-
    
    
    Bond
    
    
    
    
    
    
    WeightedTax
    
    
    Tax-Exempt
    
    
    Backed
    
    
    and
    
    
    
    
    
    
    AverageCertificates
    
    
    Securities
    
    
    Securities
    
    
    Other
    
    
    Total
    
    
    YieldDecember 31, 2004Maturity: (1)One year or less
    
    $
    118,725
    
    
    $
    
    
    
    $
    
    
    
    $
    250
    
    
    $
    118,975
    
    
    
    8.69
    %After one through five years
    
    
    48,006
    
    
    
    3,071
    
    
    
    61
    
    
    
    335
    
    
    
    51,473
    
    
    
    8.38After five through ten years
    
    
    
    
    
    
    84,800
    
    
    
    763
    
    
    
    
    
    
    
    85,563
    
    
    
    5.29After ten years
    
    
    
    
    
    
    244,734
    
    
    
    499,693
    
    
    
    
    
    
    
    744,427
    
    
    
    4.63Fair values (2)
    
    $
    166,731
    
    
    $
    332,605
    
    
    $
    500,517
    
    
    $
    585
    
    
    $
    1,000,438
    
    
    
    5.37
    %Amortized cost (2)
    
    $
    166,731
    
    
    $
    332,024
    
    
    $
    498,504
    
    
    $
    585
    
    
    $
    997,844
    
    
    
    5.50
    %Weighted average yield based
On fair values
    
    
    8.69
    %
    
    
    5.75
    %
    
    
    4.01
    %
    
    
    4.99
    %
    
    
    5.37
    %Weighted average maturity
(yrs)
    
    
    2.0
    
    
    
    12.15
    
    
    
    25.55
    
    
    
    1.91
    
    
    
    17.14December 31, 2003Fair values (2)
    
    $
    190,906
    
    
    $
    
    
    
    $
    338,751
    
    
    $
    585
    
    
    $
    530,242
    
    
    
    5.90
    %Amortized cost (2)
    
    $
    190,906
    
    
    $
    
    
    
    $
    332,898
    
    
    $
    585
    
    
    $
    524,389
    
    
    
    6.40
    %December 31, 2002Fair values (2) (3)
    
    $
    194,074
    
    
    $
    
    
    
    $
    706,050
    
    
    $
    15,262
    
    
    $
    915,386
    
    
    
    6.26
    %Amortized cost (2) (3)
    
    $
    194,074
    
    
    $
    
    
    
    $
    684,085
    
    
    $
    14,794
    
    
    $
    892,953
    
    
    
    6.34
    %
   (1)
    
    Except for tax certificates, maturities are based upon contractual maturities. Tax
certificates do not have stated maturities, and estimates in the above table are based upon
historical repayment experience (generally 1 to 2 years).(2)
    
    Equity and tax exempt securities held by the parent company with a cost of $50.7 million,
$17.6 million and $4.8 million and a fair value of $53.7 million, $20.9 million, $5.2
million, at December 31, 2004, 2003 and 2002, respectively, were excluded from the above
table.(3)
    
    Includes $14.8 million of private collateralized mortgage obligations secured by
non-residential real estate at December 31, 2002. A summary of the amortized cost and gross unrealized appreciation or depreciation of
estimated fair value of tax certificates and investment securities and available for sale
securities follows (in thousands): 5




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##### Table of Contents



December 31, 2004 (1)Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValueTax certificates and
investment securities:Tax certificates:Cost equals market
    
    $
    166,731
    
    
    $
    
    
    
    $
    
    
    
    $
    166,731Investment securities :Market over cost
    
    
    54,199
    
    
    
    302
    
    
    
    
    
    
    
    54,501Cost over market
    
    
    79,363
    
    
    
    
    
    
    
    777
    
    
    
    78,586Securities available for sale:Investment securities :Cost equals market
    
    
    585
    
    
    
    
    
    
    
    
    
    
    
    585Market over cost
    
    
    131,947
    
    
    
    2,062
    
    
    
    
    
    
    
    134,009Cost over market
    
    
    66,515
    
    
    
    
    
    
    
    1,006
    
    
    
    65,509Mortgage-backed securities:Market over cost
    
    
    281,431
    
    
    
    4,036
    
    
    
    
    
    
    
    285,467Cost over market
    
    
    217,073
    
    
    
    
    
    
    
    2,023
    
    
    
    215,050Total
    
    $
    997,844
    
    
    $
    6,400
    
    
    $
    3,806
    
    
    $
    1,000,438
   1)
    
    The above table excludes Parent Company investment securities and securities available
for sale with a book value of $6.8 million and $43.9 million, respectively, and a fair
value of $7.1 million and $46.6 million, respectively, at December 31, 2004. In part to fund its lending and other activities, BankAtlantic utilizes deposits,
secured advances and other borrowed funds. Deposits:BankAtlantic offers checking and savings accounts to individuals and business
customers. These include commercial demand deposit accounts, retail demand deposit accounts,
savings accounts, money market accounts, certificates of deposit, various NOW accounts, IRA and
Keogh retirement accounts, brokered certificates of deposit and public funds. BankAtlantic
solicits deposits from customers in its geographic market through advertising and relationship
banking activities primarily conducted through its sales force and store network. Products such as
Totally Free Checking, Totally Free Savings and Totally Free Online Banking and Billpay are the
lead programs of its marketing strategy to obtain new customers. See note #7 to the Notes to
Consolidated Financial Statements for more information regarding BankAtlantics deposit accounts. Federal Home Loan Bank (FHLB) Advances:BankAtlantic is a member of the FHLB and can obtain
secured advances from the FHLB of Atlanta. These advances can be collateralized by a security lien
against its residential loans, certain commercial loans and its securities. In addition,
BankAtlantic must maintain certain levels of FHLB stock for outstanding advances. See note #8 to
the Notes to Consolidated Financial Statements for more information regarding BankAtlantics FHLB
Advances. Other Short-Term Borrowings:BankAtlantics short-term borrowings consist of securities sold
under agreements to repurchase and federal funds borrowings. Securities sold under agreements to
repurchase include a sale of a portion of its current investment portfolio (usually mortgage-backed
securities and REMICs) at a negotiated rate and an agreement to repurchase the same assets on a
specified future date. BankAtlantic issues repurchase agreements to institutions and to its
customers. These transactions are collateralized by securities in its investment portfolio but are
not insured by the FDIC. Federal funds borrowings occur under established facilities with various
federally-insured banking institutions to purchase federal funds. BankAtlantic uses these
facilities on an overnight basis to assist in managing its cash flow requirements. These federal
fund lines are subject to periodic review, may be terminated at any time by the issuer institution
and are unsecured. BankAtlantic also has a facility with the Federal Reserve Bank of Atlanta 6




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##### Table of Contents



for secured advances. These advances are collateralized by a security lien against its
consumer loans. See note #9 to the Notes to Consolidated Financial Statements for more
information regarding BankAtlantics short term borrowings. Other
borrowings:At December 31, 2004, BankAtlantics other
borrowings consisted of a $22.0 million floating rate
subordinated debenture, a floating rate mortgage-backed bond with an outstanding balance of $10.0
million and $5.6 million of floating rate development notes associated with a
joint venture acquired in connection with the Community acquisition. Banking Industry Risk Banking is a business that depends on interest rate differentials. In general, a banks net
interest income, which is the difference between the interest paid on its deposits and its other
borrowings and the interest received on its loan and securities holdings, constitutes a major
portion of its earnings. Changes in interest rates can significantly impact BankAtlantics net interest income, the
cost of purchasing residential mortgage loans in the secondary market and the valuation of its
assets and liabilities. In particular, changes in market interest rates, changes in the
relationships between short-term and long-term market interest rates or changes in the
relationships between different interest rate indices can affect the interest rates received on
interest-earning assets differently than the interest rates paid on interest-bearing liabilities.
This difference could result in an increase in interest expense relative to interest income and
therefore reduce BankAtlantics net interest income. Loan prepayments are also affected by interest rates. Loan prepayments generally accelerate
as interest rates fall. Prepayments in a declining interest rate environment reduce BankAtlantics
net interest income and adversely affect its earnings because:  
    BankAtlantic often pays premiums to acquire loans and mortgage-backed
securities, which it amortizes over the life of the asset. If loans or securities
are prepaid, the unamortized premium is charged off; and
    The yield BankAtlantic earns on the reinvestment of funds that it receives on
the prepayment of loans and securities is generally less than the yield that it
earned on the prepaid assets. Thus, the earnings and growth of BankAtlantic are significantly affected by interest rates,
which are subject to the influence of economic conditions generally, both domestic and foreign, and
also to the monetary and fiscal policies of the United States and its agencies, particularly the
Federal Reserve Board. The nature and timing of any changes in such policies or general economic
conditions and their effect on BankAtlantic cannot be controlled and are extremely difficult to
predict. Additionally, BankAtlantic is exposed to the risk that borrowers or counter-parties may
default on their obligations to it. Credit risk arises through the extension of loans and leases,
certain securities, letters of credit, financial guarantees and through counter-party exposure on
trading and wholesale loan transactions. In an attempt to manage this risk, BankAtlantic
establishes policies and procedures to manage both on and off-balance sheet (primarily loan
commitments) credit risk, and it monitors the application of these policies and procedures
throughout the Company. BankAtlantics loan portfolio includes $2.5 billion of loans secured by
residential real estate and $2.5 billion of commercial real estate and construction and development
loans, which are subject to declines in real estate values. Further, the real estate
collateralizing its commercial real estate and construction and development loans is concentrated
in Broward, Miami-Dade, Palm Beach and Hillsborough Counties in Florida and, as such, the credit
quality of these loans could be impacted by declines in the economy generally or in the real estate
markets in these areas or by local natural disasters, such as hurricanes, causing a decline in the
value of property collateralizing the loans. BankAtlantic attempts to manage credit exposure to individual borrowers and counter-parties on
an aggregate basis including loans, securities, letters of credit, and unfunded commitments.
Credit 7




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##### Table of Contents



personnel analyze the creditworthiness of individual borrowers or counter-parties, and limits
are established for the total credit exposure to any one borrower or counter-party. Credit limits
are subject to varying levels of approval by senior line and credit risk management. Depending upon the condition of the local and national economy, BankAtlantic could experience
a decline in credit quality that may result in loan losses and a material adverse effect on the
Companys earnings. The banking industry is an industry subject to multiple layers of regulation. A risk of doing
business in the banking industry is that any failure to comply with any of these regulations can
result in substantial penalties, significant restrictions on business activities and growth plans
or limitations on dividend payments, depending upon the type of violation and various other
factors. A description of the primary regulations applicable to BankAtlantic is set forth below
under Regulations and Supervision  BankAtlantic. We are taking steps to correct identified
deficiencies in BankAtlantics compliance with the USA Patriot Act, various anti-money laundering
laws and the Bank Secrecy Act, and are cooperating with regulators and incurring costs in
connection with correcting such deficiencies (See Managements Discussion and Analysis of Results
of Operations and Financial Condition  BankAtlantic Liquidity and Capital Resources.) Ryan Beck Ryan Beck is a full service broker-dealer headquartered in Florham Park, New Jersey. Ryan Beck
operates on a nationwide basis through a network of 39 offices in 14 states. In addition to
offering traditional brokerage products to individual investors, Ryan Beck is engaged in
sector-oriented investment banking and capital markets activities. Ryan Beck intends to focus on the following key areas:  
    Investment Banking. Ryan Beck has a well established investment banking group proactively focused
on financial institutions. Recently Ryan Becks strategy has been to diversify its operations
through the addition of investment bankers and capital markets expertise focused on other
sectors, such as consumer products and services, and business services. Ryan Becks investment
banking activities include managing underwritten public offerings, serving as placement agent on
institutional private financings and acting as an advisor on merger and acquisitions.  
    Private Client Group. In April 2002, Ryan Beck acquired certain of the assets and
assumed certain of the liabilities of Gruntal & Co., LLC. This transaction enabled Ryan
Beck to significantly increase its private client group revenues. The table below shows
Ryan Becks private client group statistics before the Gruntal transaction and at December
31, 2004. December 31, 2004
    
    December 31, 2001Financial Consultants
    
    450
    
    80Customer Accounts
    
    136,000
    
    27,000Customer Assets
    
    $18 billion
    
    $4 billion
  
    Capital Markets.Ryan Beck operates both equity and fixed income capital markets
groups. Both groups incorporate trading, institutional sales and syndicate activities.
Ryan Beck makes a market in over 700 equity securities, principally financial
institution stocks. Equity capital markets also incorporate a research department with
over 134 companies under coverage in four industry sectors. As a registered broker-dealer with the SEC, Ryan Beck operates on a fully-disclosed basis
through its clearing firm, Pershing LLC. Clients consist primarily of:  
    high net worth individuals,
    financial institutions, institutional clients (including mutual funds, pension funds,
trust companies, 8




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##### Table of Contents



insurance companies, LBO funds, private equity sponsors, merchant banks and other long-term
investors), and
    other corporate clients. Ryan Becks investment banking activities primarily focus on financial institutions, middle
market and emerging growth companies and municipal finance, including managing underwritten public
offerings, serving as placement agent on institutional private financings and acting as an advisor
on merger and acquisitions. Ryan Becks operations also include trading, research and
institutional sales. Its trading activities include making markets in approximately 700 securities,
and it continues to gain industry diversification. Ryan Becks research area employs 10 publishing
analysts that cover approximately 35 closed end funds and 134 companies in four industry sectors.
Additionally, it employs a Chief Market Strategist who provides economic and global market
commentary. Its Institutional Equity Sales staff provides investment ideas and proprietary
investment banking products to nearly 1,000 accounts across the United States. Brokerage Industry Risk The securities business is, by its nature, subject to various risks, particularly in volatile
or illiquid markets, including the risk of losses resulting from the underwriting or ownership of
securities, customer fraud, employee errors and misconduct, failures in connection with the
processing of securities transactions and litigation. Ryan Becks business and its profitability
are affected by many factors including:  
    The volatility and price levels of the securities markets,
    The volume, size and timing of securities transactions,
    The demand for investment banking services,
    The level and volatility of interest rates,
    The availability of credit,
    Legislation affecting the business and financial communities,
    The economy in general and
    The volatility of equity and debt securities held in inventory. Markets characterized by low trading volumes and depressed prices generally result in reduced
commissions and investment banking revenues as well as losses from declines in the market value of
securities positions. Moreover, Ryan Beck is likely to be adversely affected by negative economic
developments in the mid-Atlantic region or the financial services industry in general. A major portion of Ryan Becks assets and liabilities are securities owned or securities sold
but not yet purchased. Securities owned and securities sold but not yet purchased are associated
with trading activities conducted both as principal and as agent on behalf of individual and
institutional investor clients of Ryan Beck and are accounted for at fair value in our financial
statements. The fair value of these trading positions is generally based on listed market prices.
If listed market prices are not available or if liquidating the positions would reasonably be
expected to impact market prices, fair value is determined based on other relevant factors,
including dealer price quotations, price quotations for similar instruments traded in different
markets or managements estimates of amounts to be realized on settlement. As a consequence,
volatility in either the stock or fixed-income markets could result in adverse changes in our
financial results. Trading transactions as principal involve making markets in securities, which
are held in inventory to facilitate sales to and purchases from customers. As a result of this
activity, Ryan Beck may be required to hold securities during declining markets. Parent Company The Parent Company is a holding company. Our operations are limited and primarily include the
financing of the capital needs of our subsidiaries. We obtain our funds from dividends from our
subsidiaries, issuances of equity and debt securities, and returns on our portfolio investments, as
well as borrowings from unrelated financial institutions. We provide funds to our subsidiaries for
capital, the 9




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##### Table of Contents



financing of acquisitions and other general corporate purposes. Our largest expense is
interest expense on debt, and depending on interest rates, this expense could increase or decrease
significantly as much of our debt is indexed to floating rates. The Parent Company also maintains a portfolio of publicly traded securities and privately
held equity securities that subject it to equity pricing risks arising in connection with changes
in the relative values due to changing market and economic conditions. Volatility or a decline in
the financial markets can negatively impact our net income as a result of devaluation of these
investments. A summary of the carrying value and gross unrealized appreciation or depreciation of
estimated fair value of publicly traded securities and privately held equity securities follows
(in thousands): December 31, 2004Gross
    
    
    GrossCarrying
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValuePublicly traded securities:Publicly traded tax exempt
securities
    
    $
    20,860
    
    
    $
    
    
    
    $
    (24
    )
    
    $
    20,836Publicly traded equity securities
    
    
    23,025
    
    
    
    2,679
    
    
    
    
    
    
    
    25,704Privately held equity securities
    
    
    
    
    
    
    Limited partnership (1)
    
    
    5,000
    
    
    
    345
    
    
    
    
    
    
    
    5,345Investment securities (2)
    
    
    1,800

    
    
    
    
    
    
    
    
    
    
    
    1,800Total
    
    $
    50,685
    
    
    $
    3,024
    
    
    $
    (24
    )
    
    $
    53,685
 December 31, 2003Gross
    
    
    GrossCarrying
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValuePublicly traded securities:Publicly traded equity securities
    
    $
    15,775
    
    
    $
    3,400
    
    
    $
    
    
    
    $
    19,175Privately held equity securities
    
    
    

    
    
    
    Investment securities (2)
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    1,800Total
    
    $
    17,575
    
    
    $
    3,400
    
    
    $
    
    
    
    $
    20,975
   (1)
    
    The limited partnership invests in companies in the financial services industry.(2)
    
    Investment securities consist of equity instruments purchased through private
placements and are accounted for at historical cost adjusted for other-than-temporary
declines in value. As of December 31, 2004, we had approximately $263.4 million of indebtedness outstanding at
the holding company level, including $263.3 million of junior subordinated debentures with
maturities ranging from 2032 to 2033. The degree to which we are leveraged poses risks to our
operations, including the risk that our cash flow will not be sufficient to service our outstanding
debt and that we may not be able to obtain additional financing or refinancing. If we are forced to
utilize all or most of our cash flow for the purpose of servicing debt, we will not be able to use
those funds for other purposes. Our ability to meet these obligations is largely dependent on
BankAtlantics and Ryan Becks ability to pay dividends to us, which will depend on the results of
operations, financial condition and capital requirements of each subsidiary. See Regulations and
Supervision and Managements Discussion and Analysis
 Liquidity and Capital Resources. Employees Management believes that its relations with its employees are satisfactory. The Company
currently maintains comprehensive employee benefit programs that are considered by management to
be generally competitive with programs provided by other major employers in its markets. 10




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##### Table of Contents



The Companys number of employees at the indicated dates was: December 31, 2004
    
    
    December 31, 2003Full-
    
    
    Part-
    
    
    Full-
    
    
    Part-Time
    
    
    Time
    
    
    Time
    
    
    timeBankAtlantic
    
    
    1,507
    
    
    
    286
    
    
    
    1,301
    
    
    
    204Ryan Beck
    
    
    985
    
    
    
    39
    
    
    
    1,011
    
    
    
    31Total
    
    
    2,492
    
    
    
    325
    
    
    
    2,312
    
    
    
    235
 Competition The banking and financial services industry is very competitive. Legal and regulatory
developments have made it easier for new and sometimes unregulated entities to compete with us.
Consolidation among financial service providers has resulted in fewer very large national and
regional banking and financial institutions holding a large accumulation of assets. These
institutions may have significantly greater resources, a wider geographic presence or greater
accessibility than we have. As consolidation continues among large banks, we expect additional
smaller institutions to try to exploit our market. Our primary method of competition is emphasis
on customer service and convenience, including our Floridas Most Convenient Bank initiatives. We face substantial competition for both loans and deposits. Competition for loans comes
principally from other banks, savings institutions and other lenders. This competition could
decrease the number and size of loans that we make and the interest rates and fees that we receive
on these loans. We compete for deposits with banks, savings institutions and credit unions, as well as
institutions offering uninsured investment alternatives, including money market funds and mutual
funds. These competitors may offer higher interest rates than we do, which could decrease the
deposits that we attract or require us to increase our rates to attract new deposits. Increased
competition for deposits could increase our cost of funds and adversely affect our ability to
generate the funds necessary for our lending operations. Ryan Beck is engaged in investment banking, securities brokerage and asset management
activities, all of which are extremely competitive businesses. Competitors include all of the
member organizations of the New York Stock Exchange and NASD, banks, insurance companies,
investment companies and financial consultants. Like other firms, Ryan Becks business has been
affected by consolidation within the financial services industry and the entry of non-traditional
competitors, including banks and online financial services providers. The firm competes with other
trading, investment banking, brokerage and financial advisory firms for clients, market share and
personnel. Ryan Beck competes for individual and institutional clients on the strength of the range of
products it offers, the quality of its services, its financial resources and fair pricing. The
firms competitive position depends, to some extent, on existing economic conditions and government
policies. The ability to attract, retain and motivate qualified employees for all areas of the firms
business, including financial consultants, investment bankers, trading professionals and other
personnel, affects Ryan Becks ability to compete effectively. Another critical element influencing
Ryan Becks ability to compete is a strong infrastructure, including financial control, accounting
and other data processing systems. Regulation and Supervision Holding Company We are a unitary savings and loan holding company within the meaning of the Home Owners Loan
Act, as amended (HOLA). As such, we are registered with the Office of Thrift Supervision 11




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##### Table of Contents



(OTS) and are subject to OTS regulations, examinations, supervision and reporting
requirements. In addition, the OTS has enforcement authority over us. Among other things, this
authority permits the OTS to restrict or prohibit activities that are determined to be a serious
risk to the financial safety, soundness or stability of a subsidiary savings bank. HOLA prohibits a savings bank holding company, directly or indirectly, or through one or more
subsidiaries, from acquiring another savings institution or holding company thereof without prior
written approval of the OTS; acquiring or retaining, with certain exceptions, more than 5% of a
non-subsidiary savings institution, a non-subsidiary holding company, or a non-subsidiary company
engaged in activities other than those permitted by HOLA; or acquiring or retaining control of a
depository institution that is not insured by the FDIC. In evaluating an application by a holding
company to acquire a savings institution, the OTS must consider the financial and managerial
resources and future prospects of the company and savings institution involved, the effect of the
acquisition on the risk to the insurance funds, the convenience and needs of the community and
competitive factors. As a unitary savings and loan holding company, we generally are not restricted under existing
laws as to the types of business activities in which we may engage, provided that the Bank
continues to satisfy the Qualified Thrift Lending (QTL) test. See Regulation of Federal Savings
Banks  QTL Test for a discussion of the QTL requirements. If we were to make a non-supervisory
acquisition of another savings institution or of a savings institution that meets the QTL test and
is deemed to be a savings institution by the OTS and that will be held as a separate subsidiary,
we would become a multiple savings and loan holding company and would be subject to limitations on
the types of business activities in which we can engage. HOLA limits the activities of a multiple
savings institution holding company and its non-insured institution subsidiaries primarily to
activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding
Company (BHC) Act, subject to the prior approval of the OTS, and to other activities authorized
by OTS regulation. Transactions between the Bank, including any of the Banks subsidiaries, and us or any of the
Banks affiliates, are subject to various conditions and
limitations. See Regulation of Federal
Savings Banks  Transactions with Related Parties. The Bank must file a notice with the OTS
prior to any declaration of the payment of any dividends or other capital distributions to us. See
Regulation of Federal Savings Banks  Limitation on Capital Distributions. BankAtlantic The Bank is a federal savings association and is subject to extensive regulation, examination,
and supervision by the OTS, as its chartering agency and primary regulator, and the FDIC, as its
deposit insurer. The Banks deposit accounts are insured up to applicable limits by the Bank
Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF), which are administered
by the FDIC. The Bank must file reports with the OTS and the FDIC concerning its activities and
financial condition, and it must obtain regulatory approvals prior to entering into certain
transactions, such as mergers with, or acquisitions of, other depository institutions or forming
certain types of subsidiaries. The OTS and the FDIC conduct periodic examinations to assess the
Banks safety and soundness and compliance with various regulatory requirements. This regulation
and supervision establishes a comprehensive framework of activities in which a savings bank can
engage and is intended primarily for the protection of the insurance fund and depositors. The OTS
and the FDIC have significant discretion in connection with their supervisory and enforcement
activities and examination policies. Any change in such applicable policies, whether by the OTS,
the FDIC or the Congress, could have a material adverse impact on us, the Bank, and our operations. The following discussion is intended to be a summary of the material banking statutes and
regulations applicable to the Bank, and it does not purport to be a comprehensive description of
such statutes and regulations, nor does it include every federal and state statute and regulation
applicable to the Bank. 12




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##### Table of Contents



Regulation of Federal Savings Banks Business Activities.The Bank derives its lending and investment powers from the HOLA and the
regulations of the OTS thereunder. Under these laws and regulations, the Bank may invest in
mortgage loans secured by residential and commercial real estate, commercial and consumer loans,
certain types of debt securities, and limited other assets. The Bank may also establish service
corporations to engage in activities not otherwise permissible for the Bank, including certain real
estate equity investments and securities and insurance brokerage. These investment powers are
subject to limitations, including, among others, limitations that require debt securities acquired
by the Bank to meet certain rating criteria and that limit the Banks aggregate investment in
various types of loans to certain percentages of capital and/or assets. Loans to One Borrower.Under HOLA, savings banks are generally subject to the same limits on
loans to one borrower as are imposed on national banks. Generally, under these limits, a savings
bank may not make a loan or extend credit to a single or related group of borrowers in excess of
15% of the banks unimpaired capital and surplus. Additional loans or extensions of credit are
permitted of up to 10% of unimpaired capital and surplus if they are fully secured by readily-
marketable collateral. Such collateral includes certain debt and equity securities and bullion, but
generally does not include real estate. At December 31, 2004, the Banks limit on loans to one
borrower was $76 million. At December 31, 2004, the Banks largest aggregate amount of loans to one
borrower was $56 million and the second largest borrower had an aggregate balance of $55.75
million. QTL Test.HOLA requires a savings bank to meet a Qualified Thrift Lending (QTL) test by
maintaining at least 65% of its portfolio assets in certain qualified thrift investments in at
least nine months of the most recent twelve-month period. A savings bank that fails the QTL test
must either operate under certain restrictions on its activities or convert to a bank charter. At
December 31, 2004, the Bank maintained 74.9% of its portfolio assets in qualified thrift
investments. The Bank had also satisfied the QTL test in each of the prior 12 months and,
therefore, was a qualified thrift lender. Capital Requirements.The OTS regulations require savings banks to meet three minimum capital
standards: (a) a tangible capital ratio requirement of 1.5% of total assets as adjusted under the
OTS regulations; (b) a risk-based capital ratio requirement of 8% of core and supplementary capital
to total risk-based assets; and (c) a core capital ratio (as defined under OTS regulations). For a
depository institution that has been assigned the highest composite rating of 1 under the Uniform
Financial Institutions Rating, the minimum core capital ratio is 3%. For any other depository
institution, the minimum core capital ratio is 4%, unless a higher capital ratio is warranted by
the particular circumstances or risk profile of the depository institution. In determining the
amount of risk-weighted assets for purposes of the risk-based capital requirement, a savings bank
must compute its risk-based assets by multiplying its assets and certain off-balance sheet items by
risk-weights assigned by the OTS capital regulations. The OTS monitors the interest rate risk
management of individual institutions. The OTS may impose an individual minimum capital requirement
on institutions that exhibit a high degree of interest rate risk. At December 31, 2004, the Bank exceeded all applicable regulatory capital requirements. See
note #15 to the Notes to the Consolidated Financial Statements for actual capital amounts and
ratios. There currently are no regulatory capital requirements directly applicable to BankAtlantic
Bancorp as a unitary savings and loan holding company apart from those applicable to BankAtlantic. Limitation on Capital Distributions.OTS regulations currently impose limitations upon capital
distributions by savings institutions, such as cash dividends, payments to repurchase or otherwise
acquire the savings institutions shares, payments to shareholders of another institution in a
cash-out merger, and other distributions charged against capital if the institution would not be
well capitalized after the distribution. A savings institution must provide the OTS with at least
30 days written notice prior to declaring any capital distribution; however, in some
circumstances, a savings institution is required to 13




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##### Table of Contents



apply for prior approval of a distribution instead of providing notice. The OTS may prohibit a
distribution on safety and soundness grounds or if minimal capital requirements would not be met
after the distribution. Liquidity. The Bank is required to maintain sufficient liquidity to ensure its safe and sound
operation. The Banks liquidity ratio, which was 6.91% at December 31, 2004, was adequate. Assessments.Savings institutions are required by OTS regulation to pay semi-annual
assessments to the OTS to fund OTS operations. The regulations base the assessment for individual
savings institutions on three components: (a) the size of the institution on which the basic
assessment is based; (b) the institutions supervisory condition; and (c) the complexity of the
institutions operations. The Banks assessment expense during the year ended December 31, 2004 was
approximately $713,000. Branching.Subject to certain limitations, HOLA and the OTS regulations permit federally
chartered savings banks to establish branches in any state or territory of the United States,
provided they have, among other things, adequate capital, meet Community Reinvestment Act
requirements (as described below), or do not present any basis for supervisory objection. Also,
limitations on branching may be imposed in connection with failure to comply fully with applicable
regulations regarding its operations, including anti-terrorism and anti-money laundering
regulations. Community Reinvestment.Under the Community Reinvestment Act (CRA), a savings institution
has a continuing and affirmative obligation consistent with its safe and sound operation to help
meet the credit needs of its entire community, including low and moderate income neighborhoods. The
CRA requires the OTS to assess the institutions record of meeting the credit needs of its
community and to take such record into account in its evaluation of certain applications by the
institution. The OTS assigns institution a rating of outstanding, satisfactory, needs to
improve, or substantial non-compliance. The CRA requires all institutions to disclose their CRA
ratings to the public. The Bank received a satisfactory CRA rating in its most recent evaluation. Transactions with Related Parties.The Banks authority to engage in transactions with its
affiliates is limited by OTS regulations, by Sections 23A and 23B of the Federal Reserve Act
(FRA), and by Regulation W of the Federal Reserve Board (FRB) implementing Sections 23A and 23B
of the FRA. In general, an affiliate of the Bank is any company that controls the Bank or any other
company that is controlled by a company that controls the Bank, excluding the Banks subsidiaries
other than non-bank insured depository institutions and financial subsidiaries. Under these
regulations, covered transactions and certain other transactions with affiliates must be on terms
and conditions that are consistent with safe and sound banking practices and substantially the
same, or at least as favorable to the institution or its subsidiary, as those for comparable
transactions with non-affiliated parties. These regulations limit the amount of covered
transactions in which a savings institution may engage and set collateralization requirements.
Covered transactions generally include loans or extensions of credit to an affiliate, purchases
of securities issued by an affiliate, purchases of assets from an affiliate, and certain other
transactions. Additionally, a savings institution may not extend credit to an affiliate other than
its subsidiary, unless the affiliate engages only in activities permissible for bank holding
companies. A savings institution also is prohibited from acquiring securities issued by an
affiliate other than shares of the affiliate. Sections 22(g) and 22(h) of the FRA, Regulation O of the FRB, and Section 402 of the
Sarbanes-Oxley Act (Sarbanes-Oxley), impose limitations on loans and extensions of credit from
BankAtlantic and the Company to its executive officers, directors and principal shareholders and
their related interests. Enforcement.Under the Federal Deposit Insurance Act (FDI Act), the OTS has primary
enforcement responsibility over savings banks and has the authority to bring enforcement action
against all institution-affiliated parties, including any controlling stockholder or any
shareholder, attorney, appraiser and accountant who knowingly or recklessly participates in any
violation of applicable law or regulation, breach of fiduciary duty, or certain other wrongful
actions that have, or are likely to have, a significant 14




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adverse effect on an insured savings bank or cause it more than minimal loss. In addition, the FDIC
has back-up authority to take enforcement action for unsafe and unsound practices. Formal
enforcement action includes the issuance of a capital directive, cease and desist order, removal of
officers and/or directors, institution of proceedings for receivership or conservatorship and
termination of deposit insurance. Examination.Effective November 30, 2004, the OTS adopted new procedures for examination of
savings institutions. A savings institution must demonstrate to the OTS its ability to manage its
compliance responsibilities by establishing an effective and comprehensive oversight and monitoring
program. The degree of compliance oversight and monitoring by the institutions management will
determine the scope and intensity of the OTS examinations of the institution. Institutions with
significant management oversight and monitoring of compliance will receive a Level I examination,
which is the least intrusive examination. The OTS will conduct a Level II or III examination of
institutions with less oversight. Standards for Safety and Soundness.Pursuant to the requirements of the FDI Act, the OTS,
together with the other federal bank regulatory agencies, has adopted the Interagency Guidelines
Prescribing Standards for Safety and Soundness (Guidelines). The Guidelines prescribe safety and
soundness standards relating to internal controls and information systems, internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality,
earnings and compensation, fees and benefits. In general, the Guidelines require, among other
things, appropriate systems and practices to identify and manage the risks and exposures specified
in the Guidelines. If the OTS determines that a savings institution fails to meet any standard
prescribed by the Guidelines, the OTS may require the institution to submit to the OTS an
acceptable plan to achieve compliance. Real Estate Lending Standards.The OTS and the other federal banking agencies adopted
regulations to prescribe standards for extensions of credit that are secured by real estate or are
made for the purpose of financing the construction of improvements on real estate. The OTS
regulations require each savings bank to establish and maintain written internal real estate
lending standards that are consistent with OTS guidelines and with safe and sound banking practices
and which are appropriate to the size of the bank and the nature and scope of its real estate
lending activities. Prompt Corrective Regulatory Action.Under the OTS Prompt Corrective Action Regulations, the
OTS is required to take certain, and is authorized to take other, supervisory actions against
undercapitalized savings institutions, such as: requiring compliance with a capital restoration
plan; restricting asset growth, acquisitions, branching and new lines of business; and, in extreme
cases, appointment of a receiver or conservator. The severity of the action required or authorized
to be taken increases as a savings institutions capital deteriorates. For these purposes, a
savings institution is placed in one of five categories based on its capital. Generally, a savings
institution is treated as well capitalized (the strongest capital category) if its ratio of total
capital to risk-weighted assets is at least 10%, its ratio of core capital to risk-weighted assets
is at least 6%, its ratio of core capital to total assets is at least 5%, and it is not subject to
any order or directive by the OTS to meet a specific capital level. The most recent examination
from the OTS categorized the Bank as well capitalized. Insurance of Deposit Accounts.Savings banks are subject to a risk-based assessment system for
determining the deposit insurance assessments to be paid by each bank. The FDIC assigns an
institution to one of three capital categories based on the institutions financial information as
of the reporting period. The institution is also assigned to a supervisory subgroup based upon a
supervisory evaluation provided to the FDIC by the institutions primary federal regulator and
information that the FDIC determines to be relevant to the institutions financial condition and
the risk posed to the deposit insurance funds. An institutions assessment rate depends on the
capital category and supervisory category to which it is assigned. Insurance assessment rates
currently range from 0.0% of deposits for an institution in the highest category (i.e.,
well-capitalized and financially sound, with no more than a few minor weaknesses) to 0.27% of
deposits for an institution in the lowest category (i.e., undercapitalized and substantial
supervisory concern). The FDIC is authorized to raise the assessment rates in certain
circumstances, which would affect institutions in all risk categories. The FDIC has exercised this
authority several times in the past and 15




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could raise rates in the future. Increases in deposit insurance premiums could have an adverse
effect on the Companys earnings. At December 31, 2004 BankAtlantic was assigned to the
well-capitalized category. The Deposit Insurance Funds Act of 1996 recapitalized the SAIF and expanded the assessment
base for the payments of Financing Corporation (FICO) bonds. FICO bonds were sold by the federal
government in order to finance the recapitalization of SAIF and BIF insurance funds. The quarterly
adjusted rate of assessment for FICO bonds is 0.0152% for both BIF-and SAIF-insured institutions. Privacy and Security ProtectionThe Gramm-Leach-Bliley Act (GLBA) imposes requirements on
financial institutions to protect customer privacy. GLBA generally prohibits disclosure of
customers non-public personal information to persons not affiliated with the financial
institution, unless the customer has been given the opportunity to object and has not objected to
such disclosure. Financial institutions must disclose their privacy policies to customers annually.
Financial institutions are further required to maintain policies and procedures to safeguard their
customers non-public personal information. The Bank has policies and procedures designed to
comply with GLBA and applicable customer privacy regulations. Insurance Activities.As a federal savings bank, the Bank is generally permitted to engage in
certain insurance activities through subsidiaries. OTS regulations promulgated pursuant to GLBA
prohibit depository institutions from conditioning the extension of credit to individuals upon
either (a) the purchase of an insurance product or annuity or (b) an agreement by the consumer not
to purchase an insurance product or annuity from an entity that is not affiliated with the
depository institution. The regulations also require prior disclosure of this prohibition to
potential insurance product or annuity customers. Federal Home Loan Bank System.The Bank is a member of the Federal Home Loan Bank (FHLB) of
Atlanta, which is one of the regional FHLBs composing the FHLB System. Each FHLB provides a
central credit facility primarily for its member institutions. The Bank, as a member of the FHLB of
Atlanta, is required to acquire and hold shares of capital stock in the FHLB. The Bank was in
compliance with this requirement with an investment in FHLB stock at December 31, 2004 of $78.6
million. Any advances from a FHLB must be secured by specified types of collateral, and all
long-term advances may be obtained only for the purpose of providing funds for residential housing
finance. The FHLB of Atlanta paid dividends on the capital stock of $1.7 million during the year
ended December 31, 2004. If dividends were reduced or interest on future FHLB advances increased,
the Banks net interest income would likely also be reduced. Federal Reserve System.The Bank is subject to provisions of the FRA and the FRBs
regulations, pursuant to which depository institutions may be required to maintain
non-interest-earning reserves against their deposit accounts and certain other liabilities.
Currently, reserves must be maintained against transaction accounts (primarily NOW and regular
interest and non-interest bearing checking accounts). The FRB regulations establish the specific
rates of reserves that must be maintained, and the Bank is in compliance with those reserve
requirements. Required reserves must be maintained in the form of vault cash, a
non-interest-bearing account at a Federal Reserve Bank, or a pass-through account as defined by the
FRB. The effect of this reserve requirement is to reduce interest-earning assets. The balances
maintained to meet the reserve requirements imposed by the FRB may be used to satisfy liquidity
requirements imposed by the OTS. FHLB System members are also authorized to borrow from the Federal
Reserve ''discount window, but FRB regulations require such institutions to exhaust all FHLB
sources before borrowing from a Federal Reserve Bank. As of December 31, 2004, the Bank was in
compliance with the FRB reserve requirement. Anti-Terrorism and Anti-Money Laundering Regulations.The Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot
Act) provides the federal government with additional powers to address terrorist threats. By way
of amendments to the Bank Secrecy Act, Title III of the USA Patriot Act puts in place measures
intended to encourage information-sharing among bank regulatory and law enforcement agencies. In
addition, certain provisions of Title III impose affirmative obligations, including the obligation
to establish anti-money 16




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laundering programs that include, at a minimum: (a) internal policies, procedures and controls
designed to implement and maintain the institutions compliance with all of the requirements of the
USA Patriot Act, Bank Secrecy Act and related laws and regulations; (b) systems and procedures for
monitoring and reporting of suspicious transactions and activities; (c) a designated compliance
officer; (d) employee training; (e) an independent audit function to test the anti-money laundering
program; (f) procedures to verify the identity of each customer upon the opening of accounts; and
(g) heightened due diligence procedures applicable to certain foreign accounts and relationships.
The final rules on the USA Patriot Act, including the Section 326 requirements for Customer
Identification Programs, were effective October 1, 2003. Under Section 326, each institution must
develop a Customer Identification Program (CIP) as part of its anti-money laundering program. The
purpose of the CIP is to enable the institution to determine the true identity and anticipated
account activity of each customer. To make this determination, among other things, the institution
must collect certain information from customers at the time they enter into the customer
relationship with the institution. This information must be verified within a reasonable time
through documentary and non-documentary methods. Furthermore, all customers must be screened
against any Section 326 government lists of known or suspected terrorists. In 2004, deficiencies
were identified in the Banks compliance with anti-terrorism and anti-money laundering laws and
regulations (see Management Discussion and Analysis of Results of Operation and Financial
Condition  BankAtlantic Liquidity and Capital Resources.) Consumer Protection.The Bank is subject to federal and state consumer protection statutes
and regulations, including the Fair Credit Reporting Act (FCRA), the Equal Credit Opportunity
Act, the Fair Housing Act, the Truth in Lending Act, the Truth in Savings Act, the Real Estate
Settlement Procedures Act and the Home Mortgage Disclosure Act. Among other things, these acts:
(a) require lenders to disclose credit terms in meaningful and consistent ways; (b) prohibit
discrimination against an applicant in any consumer or business credit transaction; (c) prohibit
discrimination in housing-related lending activities; (d) require certain lender banks to collect
and report applicant and borrower data regarding loans for home purchase or improvement projects;
(e) require lenders to provide borrowers with information regarding the nature and cost of real
estate settlements; (f) prohibit certain lending practices and limit escrow account amounts with
respect to real estate transactions; and (g) prescribe penalties for violations of the requirements
of consumer protection statutes and regulations. The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) amended FCRA, and certain
of its provisions that require changes to financial institution procedures. Financial institutions
must implement policies and procedures that track identity theft incidents, provide identity-theft
victims with evidence of fraudulent transactions upon request, block from reporting to consumer
reporting agencies credit information resulting from identity theft, notify customers of adverse
information concerning the customer in consumer reporting agency reports, and notify customers when
reporting negative information concerning the customer to a consumer reporting agency. The Bank is
in the process of revising its policies and procedures to implement FACT Act requirements. Ryan Beck The securities industry in the United States is subject to extensive regulation under both
federal and state laws. The SEC is the federal agency charged with administration of the federal
securities laws. Much of the regulation of broker-dealers has been delegated to self-regulatory
authorities, principally the NASD and, in the case of broker-dealers that are members of a
securities exchange, the particular securities exchange. These self-regulatory organizations
conduct periodic examinations of member broker-dealers in accordance with rules they have adopted
and amended from time to time, subject to approval by the SEC. Securities firms are also subject to regulation by state securities commissions in those
states in which they do business. As of December 31, 2004, Ryan Beck was registered as a
broker-dealer in 50 states and the District of Columbia. The principal purpose of regulation and
discipline of broker-dealers is the protection of clients and the securities markets, rather than
protection of creditors and stockholders of broker-dealers. The regulations to which
broker-dealers are subject cover all aspects of the securities business, including sales methods,
trading practices among broker-dealers, uses and safekeeping of clients 17




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funds and securities, capital structure of securities firms, record-keeping and reporting,
fee arrangements, disclosure to clients and the conduct of directors, officers and employees. Additionally, legislation, changes in rules promulgated by the SEC and self-regulatory
authorities or changes in the interpretation or enforcement of existing laws and rules may
directly affect the operations and profitability of broker-dealers. The SEC, self-regulatory
authorities and state securities commissions may conduct administrative proceedings which can
result in censure, fine, suspension or expulsion of a broker-dealer, its officers or employees.
Such administrative proceedings, whether or not resulting in adverse findings, can require
substantial expenditures. The profitability of broker-dealers could also be affected by rules and
regulations that impact the business and financial communities in general, including changes to
the laws governing taxation, antitrust regulation and electronic commerce. Securities held in custody by Pershing for Ryan Becks customer accounts are protected to an
unlimited amount. The Securities Investors Protection Corporation (SIPC) provides $500,000 of
coverage, including $100,000 for claims for cash. Pershing provides the remaining coverage through
a commercial insurer. The account protection applies when a SIPC member firm fails financially and
is unable to meet obligations to securities customers, but it does not protect against losses from
the rise and fall in the market value of investments. Ryan Beck is also subject to anti-terrorism and anti-money laundering regulations, including
those under the USA Patriot Act, similar to those applicable to BankAtlantic. Ryan Beck is subject to the net capital provision of Rule 15c3-1 under the Securities
Exchange Act of 1934. The Net Capital Rule specifies minimum net capital requirements that are
intended to ensure the general financial soundness and liquidity of broker-dealers. Failure to
maintain the required net capital may subject a firm to suspension or expulsion by the NASD,
certain punitive actions by the SEC and other regulatory bodies, and ultimately may require a
firms liquidation. At December 31, 2004, Ryan Beck was in compliance with all applicable
capital requirements. Ryan Beck operates under the provisions of paragraph (k)(2)(ii) of Rule 15c3-3 of the SEC as
a fully disclosed broker and, accordingly, customer accounts are carried on the books of the
clearing broker. However, Ryan Beck safe keeps and redeems municipal bond coupons for the benefit
of its customers. Accordingly, Ryan Beck is subject to the provisions of SEC Rule 15c3-3 relating
to possession or control and customer reserve requirements and was in compliance with such
provisions at December 31, 2004. 18




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ITEM 2. PROPERTIES The Companys and BankAtlantics principal and executive offices are located at 1750 East
Sunrise Boulevard, Fort Lauderdale, Florida, 33304. In addition to its branches, BankAtlantic
owns three buildings and leases four locations, which house its back office operations. The lease
expiration dates for the four back office locations range from 2006-2009. The following table
sets forth owned and leased branch offices at December 31, 2004: Miami-Dade
    
    
    Broward
    
    
    Palm Beach
    
    
    Tampa BayOwned full-service branches
    
    
    4
    
    
    
    11
    
    
    
    26
    
    
    
    3Leased full-service branches
    
    
    8
    
    
    
    12
    
    
    
    5
    
    
    
    5Total full-service branches
    
    
    12
    
    
    
    23
    
    
    
    31
    
    
    
    8Lease expiration dates
    
    
    2005-2012
    
    
    
    2005-2012
    
    
    
    2005-2011
    
    
    
    2006-2008
 BankAtlantic also maintains two ground leases in Broward County, with one expiring
in 2006 and the other expiring in 2072. During 2002, BankAtlantic purchased a $14.3 million office facility in Broward County to
consolidate its headquarters and back office operations into a centralized facility. As of
December 31, 2004 BankAtlantic had incurred approximately $24.5 million in renovation costs. The
total estimated cost to renovate the facility is approximately $29.4 million, and the facility is
expected to be completed during the second quarter of 2005. At December 31, 2004 Ryan Becks office space includes leased facilities in the following
states with year of lease expiration: Lease
    
    
    Number ofLocations
    
    Expiration
    
    
    OfficesCalifornia
    
    
    2006
    
    
    
    1Connecticut
    
    
    2005  2009
    
    
    
    3Florida
    
    
    2005  2010
    
    
    
    2Georgia
    
    
    2005
    
    
    
    1Illinois
    
    
    2008
    
    
    
    1Maryland
    
    
    2009
    
    
    
    1Massachusetts
    
    
    2006  2008
    
    
    
    4Nevada
    
    
    2005
    
    
    
    1New Jersey
    
    
    2006  2019
    
    
    
    7New York
    
    
    2005  2011
    
    
    
    7Ohio
    
    
    2008
    
    
    
    1Pennsylvania
    
    
    2006  2011
    
    
    
    5Virginia
    
    
    2007
    
    
    
    135
 19




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ITEM 3. LEGAL PROCEEDINGS In the ordinary course of business, the Company and its subsidiaries are parties to lawsuits
as plaintiff or defendant involving its bank operations, lending, tax certificates, securities
sales, brokerage and underwriting and acquisitions. Although the Company believes it has
meritorious defenses in all current legal actions, the outcome of the various legal actions is
uncertain. Management, based on discussions with legal counsel, believes results of operations or
financial condition will not be significantly impacted by the resolution of these matters. 20




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 21




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PART II 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Companys Class A common stock is traded on the New York Stock Exchange under the symbol
BBX. BFC Financial Corporation (BFC) is the sole holder of the Companys Class B common stock
and there is no trading market for the Companys Class B common stock. The Class B common stock
may only be owned by BFC or its affiliates and is convertible into Class A common stock on a share
for share basis. On March 3, 2005, there were approximately 909 record holders and 55,294,160 shares of the
Class A common stock issued and outstanding. In addition, there were 4,876,124 shares of Class B
common stock outstanding at March 3, 2005. The following table sets forth, for the periods indicated, the high and low sale prices of
the Class A common stock as reported by the New York Stock Exchange: Class A CommonStock PriceHigh
    
    
    LowFor the year ended December 31, 2004
    
    $
    20.08
    
    
    $
    13.70Fourth quarter
    
    
    20.08
    
    
    
    16.06Third quarter
    
    
    19.25
    
    
    
    17.40Second quarter
    
    
    18.53
    
    
    
    14.37First quarter
    
    
    19.00
    
    
    
    13.70For the year ended December 31, 2003
    
    $
    14.40
    
    
    $
    6.48Fourth quarter
    
    
    14.40
    
    
    
    10.60Third quarter
    
    
    11.55
    
    
    
    8.89Second quarter
    
    
    9.10
    
    
    
    7.15First quarter
    
    
    7.42
    
    
    
    6.48
 Because our Class A Common Stock is listed on the New York Stock Exchange, our chief executive
officer is required to make, and he has made, an annual certification to the New York Stock
Exchange stating that he was not aware of any violation by us of the corporate governance listing
standards of the New York Stock Exchange. Our chief executive officer made his annual
certification to that effect to the New York Stock Exchange on May 19, 2004. In addition, we have
filed, as exhibits to this Annual Report on Form 10-K, the certifications of our principal
executive officer and principal financial officer required under Sections 906 and 302 of the
Sarbanes-Oxley Act of 2002 regarding the quality of our public disclosure. On December 31, 2003, the Company completed the spin-off of its wholly owned real estate
development subsidiary, Levitt Corporation (Levitt), by means of a distribution to its
stockholders of all of the outstanding capital stock of Levitt. As a result of the spin-off, the
Company no longer owns any shares of capital stock of Levitt. On December 31, 2003, the last
trading day before consummation of the Levitt spin-off, the closing price of the Class A common
stock was $19.00. On January 2, 2004, the first trading day after consummation of the Levitt
spin-off, the closing price of the Class A common stock was $14.81. The high and low sale prices
in the above table for the year ended December 31, 2003 were adjusted to reflect the Levitt
spin-off. The adjusted market sales prices were obtained from a nationally recognized quotation
service. 22




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##### Table of Contents



See
Regulation and Supervision - Limitation on Capital Distributions and Managements
Discussion and Analysis  Liquidity and Capital Resources for a description of certain limitations
on the payment of dividends by our subsidiaries. Subject to the results of operations and
regulatory capital requirements, the Company has indicated that it will seek to declare regular
quarterly cash dividends on its common stock. The declaration and payment of dividends will depend
upon, among other things, indenture restrictions, loan covenants, the results of operations,
financial condition and cash requirements of the Company and on the ability of BankAtlantic to pay
dividends or otherwise advance funds to the Company, which payments and distributions are subject
to OTS approval and regulations and based upon BankAtlantics regulatory capital levels and net
income. BankAtlantic and Ryan Beck paid $15.0 million and $5.0 million, respectively, of dividends
to the Company during the year ended December 31, 2004. This was the first dividend payment from
Ryan Beck to the Company since we acquired Ryan Beck in June 1998. Future dividend payments by
Ryan Beck will depend upon the results of operations, financial condition and capital requirements
of Ryan Beck. The cash dividends paid by the Company were as follows: Cash Dividends Per
    
    
    Cash Dividends PerShare of Class B
    
    
    Share of Class ACommon Stock
    
    
    Common StockFiscal year ended December 31, 2004
    
    $
    0.136
    
    
    $
    0.136Fourth quarter
    
    
    0.035
    
    
    
    0.035Third quarter
    
    
    0.035
    
    
    
    0.035Second quarter
    
    
    0.033
    
    
    
    0.033First quarter
    
    
    0.033
    
    
    
    0.033Fiscal year ended December 31, 2003
    
    $
    0.128
    
    
    $
    0.128Fourth quarter
    
    
    0.033
    
    
    
    0.033Third quarter
    
    
    0.033
    
    
    
    0.033Second quarter
    
    
    0.031
    
    
    
    0.031First quarter
    
    
    0.031
    
    
    
    0.031
 The following table lists all securities authorized for issuance and outstanding under the
Companys equity compensation plans at December 31, 2004: Number of securitiesremaining available forfuture issuance underNumber of securities to
    
    
    Weighted-average
    
    
    equity compensation plansbe issued upon exercise
    
    
    exercise price of
    
    
    excluding outstandingPlan category
    
    of outstanding options
    
    
    outstanding options
    
    
    optionsEquity compensation plans
approved by security holders
    
    
    6,092,480
    
    
    $
    6.81
    
    
    
    596,393Equity compensation plans
not approved by security
holders
    
    
    82,365
    (1)
    
    
    4.89
    
    
    
    Total
    
    
    6,174,845
    
    
    $
    6.79
    
    
    
    596,393
   (1)
    
    During 1999, non-qualifying options for 751 shares of Class A common stock were
granted to each employee of BankAtlantic except certain executive officers under the
BankAtlantic Bancorp 23




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##### Table of Contents



1999 non-qualifying stock option plan. The options were granted with exercise prices
equal to the fair value on the grant date with a ten year term. All outstanding options
under the BankAtlantic Bancorp 1999 non-qualifying stock option plan were vested as of
December 31, 2004. In January 2004, the Compensation Committee adjusted all outstanding options to acquire Class
A common stock that were outstanding prior to the Levitt spin-off to reflect the change in
intrinsic value of the options that resulted from the spin-off. Purchases of equity securities by the issuer and affiliated purchasers during the 2004 fourth
quarter were: Total Number ofShares Purchased as
    
    
    Maximum Number of Shares ThatPart of Publicly
    
    
    May Yet Be PurchasedTotal Number of
    
    
    Average Price
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Shares Purchased
    
    
    per Share
    
    
    or Programs (2)
    
    
    ProgramsOctober 1, 2004 through
October 31, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    November 1, 2004 through
November 30, 2004
    
    
    86,487
    (1)
    
    
    18.41
    
    
    
    
    
    
    
    December 1, 2004 through
December 31, 2004
    
    
    2,127
    (1)
    
    
    19.99
    
    
    
    
    
    
    
    Total
    
    
    88,614
    
    
    $
    18.45
    
    
    
    
    
    
    
    
    (2) The Company currently
has no plan or program to repurchase its equity securities. 24




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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA For the Years Ended December 31,(In thousands except share and per share data)
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Income StatementTotal interest income
    
    $
    260,555
    
    
    $
    261,849
    
    
    $
    303,387
    
    
    $
    324,026
    
    
    $
    326,574Total interest expense
    
    
    87,722
    
    
    
    113,217
    
    
    
    148,891
    
    
    
    186,912
    
    
    
    206,082Net interest income
    
    
    172,833
    
    
    
    148,632
    
    
    
    154,496
    
    
    
    137,114
    
    
    
    120,492Provision for (recovery from) loan
losses
    
    
    (5,109
    )
    
    
    (547
    )
    
    
    14,077
    
    
    
    16,905
    
    
    
    29,132Securities activity, net
    
    
    3,730
    
    
    
    (1,553
    )
    
    
    (10,223
    )
    
    
    3,597
    
    
    
    2,226Litigation settlement
    
    
    22,840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other non-interest income
    
    
    318,219
    
    
    
    283,267
    
    
    
    181,972
    
    
    
    81,338
    
    
    
    84,827Impairment of goodwill (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,624
    
    
    
    Other non-interest expense
    
    
    412,053
    
    
    
    368,872
    
    
    
    283,967
    
    
    
    158,030
    
    
    
    146,253Income from continuing operations
before income taxes
    
    
    110,678
    
    
    
    62,021
    
    
    
    28,201
    
    
    
    40,490
    
    
    
    32,160Provision for income taxes
    
    
    39,910
    
    
    
    23,424
    
    
    
    9,051
    
    
    
    17,960
    
    
    
    13,516Income from continuing operations
    
    
    70,768
    
    
    
    38,597
    
    
    
    19,150
    
    
    
    22,530
    
    
    
    18,644Discontinued operations, net of tax
    
    
    
    
    
    
    29,120
    
    
    
    22,543
    
    
    
    8,492
    
    
    
    6,070Income before extraordinary items andcumulative effect of a change in
accounting principle
    
    
    70,768
    
    
    
    67,717
    
    
    
    41,693
    
    
    
    31,022
    
    
    
    24,714Extraordinary item, net of tax
    
    
    
    
    
    
    
    
    
    
    23,749
    
    
    
    
    
    
    
    Cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    (15,107
    )
    
    
    1,138
    
    
    
    Net income
    
    
    70,768
    
    
    
    67,717
    
    
    
    50,335
    
    
    
    32,160
    
    
    
    24,714Amortization of goodwill, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,903
    
    
    
    3,887Net income adjusted to exclude goodwill
amortization
    
    $
    70,768
    
    
    $
    67,717
    
    
    $
    50,335
    
    
    $
    36,063
    
    
    $
    28,601Performance ratiosReturn on average assets (2)
    
    
    1.34
    %
    
    
    0.70
    %
    
    
    0.35
    %
    
    
    0.48
    %
    
    
    0.42
    %Return on average equity (2)
    
    
    15.91
    
    
    
    7.84
    
    
    
    4.41
    
    
    
    7.40
    
    
    
    7.31Average equity to average assets
    
    
    8.40
    
    
    
    8.92
    
    
    
    8.03
    
    
    
    6.48
    
    
    
    5.81Dividend payout ratio (3)
    
    
    11.48
    
    
    
    19.50
    
    
    
    36.51
    
    
    
    23.44
    
    
    
    20.82
 25




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##### Table of Contents



For the Years Ended December 31,(In thousands except share and per share data)
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Diluted earnings per share (4)Diluted earnings from continuing operations
    
    $
    1.11
    
    
    $
    0.62
    
    
    $
    0.32
    
    
    $
    0.47
    
    
    $
    N/ADiluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.46
    
    
    
    0.35
    
    
    
    0.16
    
    
    
    N/ADiluted earnings per share from extraordinary items
    
    
    
    
    
    
    
    
    
    
    0.37
    
    
    
    
    
    
    
    N/ADiluted earnings (loss) per share from cumulative
effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.23
    )
    
    
    0.02
    
    
    
    N/ADiluted earnings per share
    
    
    1.11
    
    
    
    1.08
    
    
    
    0.81
    
    
    
    0.65
    
    
    
    N/ADiluted earnings per share from amortization of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.08
    
    
    
    N/ADiluted earnings per share adjusted for
goodwill amortization
    
    $
    1.11
    
    
    $
    1.08
    
    
    $
    0.81
    
    
    $
    0.73
    
    
    $
    N/APer Class A common share data (4)Diluted earnings from continuing operations
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    0.43Diluted earnings from discontinued operations
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.11Diluted earnings from extraordinary items
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    Diluted earnings per share
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.54Diluted earnings per share from amortization of goodwill
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.07Diluted earnings per share adjusted for amortization
of goodwill
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    0.61Per Class B common share data (4)Diluted earnings from continuing operations
    
    
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    0.41Diluted earnings from discontinued operations
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.10Diluted earnings from extraordinary items
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    Diluted earnings per share
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.51Diluted earnings per share from amortization of goodwill
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.06Diluted earnings per share adjusted for amortization
of goodwill
    
    
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    0.57Per common share dataCash dividends declared per common share Class A
    
    $
    0.136
    
    
    $
    0.128
    
    
    $
    0.120
    
    
    $
    0.112
    
    
    $
    0.101Cash dividends declared per common share Class B
    
    
    0.136
    
    
    
    0.128
    
    
    
    0.120
    
    
    
    0.110
    
    
    
    0.092Book value per share (5)
    
    
    7.81
    
    
    
    6.98
    
    
    
    8.05
    
    
    
    7.50
    
    
    
    6.80Tangible book value per share (5)
    
    
    6.36
    
    
    
    5.48
    
    
    
    6.46
    
    
    
    6.82
    
    
    
    5.44
 26




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##### Table of Contents



For the Years Ended December 31,(In thousands except share and per share data)
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Balance Sheet (at year end)Loans receivable, net (6)
    
    $
    4,599,048
    
    
    $
    3,686,153
    
    
    $
    3,372,630
    
    
    $
    2,774,238
    
    
    $
    2,853,804Securities
    
    
    1,196,134
    
    
    
    675,782
    
    
    
    1,106,552
    
    
    
    1,340,881
    
    
    
    1,266,186Total assets
    
    
    6,356,777
    
    
    
    4,831,549
    
    
    
    5,421,011
    
    
    
    4,654,486
    
    
    
    4,617,300Deposits
    
    
    3,457,202
    
    
    
    3,058,142
    
    
    
    2,920,555
    
    
    
    2,276,567
    
    
    
    2,234,485Securities sold under agreements to repurchase and
other short term borrowings
    
    
    401,643
    
    
    
    138,809
    
    
    
    116,279
    
    
    
    467,070
    
    
    
    669,202Other borrowings (7)
    
    
    1,845,504
    
    
    
    1,082,066
    
    
    
    1,671,361
    
    
    
    1,312,208
    
    
    
    1,337,909Stockholders equity
    
    
    469,265
    
    
    
    413,452
    
    
    
    469,334
    
    
    
    435,673
    
    
    
    248,821Asset quality ratios for BankAtlanticNon-performing assets, net of reserves, as a percent
of total loans, tax certificates and repossessed assets
    
    
    0.19
    %
    
    
    0.36
    %
    
    
    0.86
    %
    
    
    1.49
    %
    
    
    1.09
    %Loan loss allowance as a percent of non-performing loans
    
    
    582.18
    
    
    
    422.06
    
    
    
    235.61
    
    
    
    114.44
    
    
    
    193.30Loan loss allowance as a percent of total loans
    
    
    1.00
    
    
    
    1.24
    
    
    
    1.38
    
    
    
    1.57
    
    
    
    1.62Capital ratios for BankAtlantic:Total risk based capital
    
    
    10.80
    %
    
    
    12.06
    %
    
    
    11.89
    %
    
    
    12.90
    %
    
    
    11.00
    %Tier I risk based capital
    
    
    9.19
    
    
    
    10.22
    
    
    
    10.01
    
    
    
    11.65
    
    
    
    9.74Leverage
    
    
    6.83
    
    
    
    8.52
    
    
    
    7.26
    
    
    
    8.02
    
    
    
    6.66
   1.
    The impairment of goodwill during the year ended December 31, 2001 resulted from the
termination of the operations of Leasing Technology Inc. (LTI). We acquired LTI, a
company engaged in the equipment leasing and finance business, in March 1998. During
2001, after an extensive review of its operations, we concluded that LTI would not be able
to meet performance expectations and we terminated its operations. We determined that the
goodwill associated with the LTI acquisition was impaired, resulting in a $6.6 million
goodwill impairment charge.2.
    The return on average assets is equal to income from continuing operations
(numerator) divided by average consolidated assets (denominator) during the respective
year. The return on average equity is equal to income from continuing operations
(numerator) divided by average consolidated equity (denominator) during the respective
year. Income from continuing operations excludes the income from (i) Levitt Corporation
for the years ended December 31, 2000 through 2003, (ii) Cumberland Advisors, Inc. for the
years ended December 31, 2000 through 2003, (iii) The GMS Group LLC for the years ended
December 31, 2003 and 2002 and (iv) BankAtlantics mortgage servicing business for the
year ended December 31, 2000. While income from continuing operations (numerator)
excludes income from these discontinued operations, average consolidated assets includes
the assets of the discontinued operations. Average consolidated equity (denominator) was
not adjusted for the $126 million reduction in retained earnings related to the December
31, 2003 spin-off of Levitt Corporation.3.
    Cash dividends declared on common shares divided by income from continuing
operations.4.
    In periods prior to December 31, 2001, our capital structure included a dividend
premium for our Class A common shareholders. As a consequence of the dividend structure,
we used the two-class method to calculate our earnings per share. During the 2001 second
quarter, our shareholders voted to equalize the dividend payable on the Class A Common
Stock and Class B Common Stock. As a result, effective as of January 1, 2001 we no longer
use the two-class method to calculate our earnings per share. Subsequent to the
elimination of the two-class method of computing earnings per share effective January 1,
2001, the Company computed earnings per share by aggregating both Class A and Class B
common stock. As a consequence the earnings (numerator) were not allocated between Class
A and Class B common stock as in the two-class method and the weighted average shares and
common stock equivalent shares outstanding component (denominator)of earnings per share
were combined into one aggregate amount of weighted average diluted common shares
outstanding.5.
    The denominator of book value and tangible book value per share was computed by
combining the number of Class A and Class B shares outstanding at year end for all
periods.6.
    Includes $0, $233,000, $0, $5,000, and $1.3 million of bankers acceptances in 2004,
2003, 2002, 2001, and 2000, respectively.7.
    Other borrowings consist of FHLB advances, subordinated debentures, notes, bonds
payable, guaranteed preferred beneficial interests in Companys junior subordinated
debentures and junior subordinated debentures. 27




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION Introduction BankAtlantic Bancorp, Inc. is a Florida-based financial services holding company
offering a full range of products and services through BankAtlantic, our wholly-owned banking
subsidiary, and RB Holdings, Inc., our wholly-owned parent company of our broker-dealer
subsidiary, Ryan Beck. As of December 31, 2004, we had total consolidated assets of
approximately $6.4 billion, deposits of approximately $3.5 billion and shareholders equity of
approximately $469 million. The following events have occurred during the past three years that have had a significant
impact on the Companys results of operations:  
    In March 2002, BankAtlantic acquired Community Savings Bancshares, Inc., the parent
company of Community Savings, F.A. (Community), and immediately merged Community into
BankAtlantic. Community had its headquarters and branches in our South Florida market
and had approximately $909 million in assets and $637 million in deposits on the date of
acquisition.
    Also, in April 2002, Ryan Beck acquired certain of the assets and assumed certain
liabilities of the former broker-dealer known as Gruntal & Co., LLC. Before this
acquisition, Ryan Beck had 130 account executives located in 9 offices, principally in
the New Jersey/New York metropolitan area and southeast Florida. This transaction added
over 400 additional consultants and 25 new offices to Ryan Becks operations. Ryan Beck
currently has over 450 financial consultants in 39 offices and now has a substantial
east coast presence, along with offices in the mid-west and west coast.
    Effective December 31, 2003, we spun-off our wholly-owned real estate development
subsidiary, Levitt Corporation (Levitt), which is now traded on the New York Stock
Exchange under the symbol LEV. Levitt had approximately $393 million in total
assets and $126 million in shareholders equity at December 31, 2003. This transaction
was effected by means of a distribution to our stockholders of all of the outstanding
capital stock of Levitt.
    In April 2002, BankAtlantic embarked upon its Floridas Most Convenient Bank
initiative to attract retail customers. This campaign includes seven-day branch banking
and extended weekday hours, along with a 24/7 live customer service center, Totally Free
Checking, free online banking, Totally Free Change Exchange coin counters, and dozens of
additional product and service initiatives. During 2004 BankAtlantic began an initiative
to extend branch operating hours to midnight and began offering free internet
bill-paying services. BankAtlantic also announced a plan to grow its retail network
through de novo expansion while renovating its existing branches to further its branding
as Floridas Most Convenient Bank. While the initiatives have resulted in increased
expenses, we believe this marketing campaign has contributed to significant new deposit
account openings and growth in low cost deposits at BankAtlantic. BankAtlantic Bancorp, Inc. Consolidated Results of Operations Net income increased to $70.8 million in 2004 from $67.7 million in 2003 and $50.3
million in 2002. Included in these totals is income from discontinued operations (primarily
relating to Levitt) of $29.1 million in 2003 and $22.5 million in 2002. Additionally, in 2002,
the Company realized an extraordinary gain of $23.7 million associated with the Gruntal
transaction because the fair value of the assets acquired exceeded the purchase price. Also in
2002, the Company realized a loss of $15.1 million due to the initial implementation of FAS 142
concerning goodwill impairment. The Company performed the required goodwill impairment test and
determined that the goodwill assigned to the Ryan Beck 28




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##### Table of Contents



subsidiary was impaired. The Company performed its annual goodwill impairment test again in
2004 and 2003 and concluded that no further goodwill impairment existed. Income from continuing operations increased to $70.8 million in 2004 from $38.6 million in
2003 and $19.1 million in 2002. A reconciliation of income from continuing operations from each
of the Companys primary business segments follows (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002BankAtlantic
    
    $
    48,540
    
    
    $
    42,129
    
    
    $
    45,109Ryan Beck
    
    
    17,483
    
    
    
    9,645
    
    
    
    (2,448
    )Parent Co.
    
    
    4,745
    
    
    
    (13,177
    )
    
    
    (23,511
    )Total
    
    $
    70,768
    
    
    $
    38,597
    
    
    $
    19,150
 A detailed discussion of the result of operations of each of these business segments follows. BankAtlantic Results of Operations Summary In April 2002, BankAtlantic launched its Floridas Most Convenient Bankmarketing campaign,
and this initiative continues to drive growth in new customer generation. Since the beginning of
2002, BankAtlantic has opened nearly 410,000 new checking and savings accounts, and the fourth
quarter of 2004 marked the twelfth consecutive quarter of double-digit growth in new low cost
checking and savings account openings. Since January 1, 2002, total low cost deposits have
increased from approximately $600 million to approximately $1.8 billion, an increase of 200%.
Non-interest bearing demand deposits now constitute 26% of deposit funding, up from 21% last year
and 13% before initiation of the campaign. We expect these trends to continue as we increase our
advertising expenditures, create other marketing programs and maintain our commitment to superior
customer service. Subject to changes in the interest rate environment, we expect our net interest income to
improve in 2005. During 2004, the net interest margin was positively impacted by managements
decision to prepay certain of our high rate FHLB Advances in 2003 and 2004. Although we incurred
penalties that decreased earnings in those periods, we prepaid these fixed rate advances with the
expectation that it would lower our funding costs and improve our net interest margin in future
periods. We believe the impact of this decision will be realized to an increasing extent
beginning in 2005. We also believe that our Floridas Most Convenient Bankcampaign will
contribute to decreasing the average cost of our deposit funding as balances of non-interest
bearing and other low cost deposits continue to grow and increasingly constitute a larger
percentage of our total deposit funding. Our credit quality continued to improve. The ratio of non-performing loans to total loans
declined to 0.17% at year-end. In 2004, we had net recoveries of $5.5 million vs. net charge offs
of $1.1 million for 2003 and $19.8 million for 2002, and the associated ratio of net charge-offs
(recoveries) to average outstanding loans declined during each of these respective years to
(0.14%), 0.03% and 0.57%. In addition to lower loan charge-offs, in 2004 we were successful in
recovering and collecting loans in our commercial real estate loan and leasing portfolios which
had been charged off. We cannot assure that we will have similar success in future periods and
expect to experience higher net charge-off ratios. Also, because of our continued emphasis on the origination and purchase of loans
collateralized by real estate, which have lower historical loss experiences than our discontinued
loan products and our non-real estate loans, the trend in our ratio of the allowance for loan
losses to total loans outstanding has declined to 1.00% at December 31, 2004 from 1.62% at the
2000 year-end. This trend, combined with net recoveries from loans charged off during prior
periods, necessitated a negative provision for loan losses of $5.1 million in 2004. We believe
that our credit ratios reflect the improving credit quality of our loans. 29




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##### Table of Contents



Although we do not foresee significant changes in the quality of our loan portfolio, we
caution that changes in the local or national economy, or changes within certain industries, could
have a dramatic impact on the performance of our loans. Our non-interest income continued to improve during 2004, due primarily to increased fees
associated with the additional new deposit accounts opened during the year. We believe that we
will continue to experience an increase in non-interest income during 2005 as we continue our
Floridas Most Convenient Bankinitiatives and expand and renovate our branch network. Our non-interest expenses increased significantly during 2004 due primarily to the costs
linked to our marketing initiatives, including the hiring of new employees to service customers
and advertising expenditures to promote our Floridas Most Convenient Bankcampaign. We also
incurred higher expenses associated with regulatory compliance and internal audit costs relating
to compliance with the Sarbanes-Oxley Act. We believe that expenses related to compliance will
be less in 2005 than 2004, but that expenses related to our marketing initiatives will continue to
increase during 2005 as we continue to implement the Floridas Most Convenient Bankinitiatives.
Additionally, our branch expansion and renovation plans will also result in increased non-interest
expense. The following table is a condensed income statement summarizing BankAtlantics results of
operations (in thousands): For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2004 vs.
    
    
    2003 vs.2004
    
    
    2003
    
    
    2002
    
    
    2003
    
    
    2002Net interest income
    
    $
    176,858
    
    
    $
    154,100
    
    
    $
    164,122
    
    
    $
    22,758
    
    
    $
    (10,022
    )(Provision for) recovery from
loan losses
    
    
    5,109
    
    
    
    547
    
    
    
    (14,077
    )
    
    
    4,562
    
    
    
    14,624Net income after provision for
loan losses
    
    
    181,967
    
    
    
    154,647
    
    
    
    150,045
    
    
    
    27,320
    
    
    
    4,602Non-interest income
    
    
    85,724
    
    
    
    70,686
    
    
    
    53,317
    
    
    
    15,038
    
    
    
    17,369Non-interest expense
    
    
    (193,621
    )
    
    
    (161,615
    )
    
    
    (134,408
    )
    
    
    (32,006
    )
    
    
    (27,207
    )Income from continuing operations
before income taxes
    
    
    74,070
    
    
    
    63,718
    
    
    
    68,954
    
    
    
    10,352
    
    
    
    (5,236
    )Income taxes
    
    
    (25,530
    )
    
    
    (21,589
    )
    
    
    (23,845
    )
    
    
    (3,941
    )
    
    
    2,256Income from continuing operations
    
    $
    48,540
    
    
    $
    42,129
    
    
    $
    45,109
    
    
    $
    6,411
    
    
    $
    (2,980
    )
 A discussion of each component of income and expense follows: 30




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##### Table of Contents



BankAtlantics
Net Interest Income The following table summarizes net interest income: For the Years EndedDecember 31, 2004
    
    
    December 31, 2003
    
    
    December 31, 2002(Dollars in thousands)
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateInterest earning assetsLoans: (a)Residential real estate
    
    $
    1,527,911
    
    
    $
    72,758
    
    
    
    4.76
    %
    
    $
    1,639,504
    
    
    $
    78,535
    
    
    
    4.79
    %
    
    $
    1,429,022
    
    
    $
    88,808
    
    
    
    6.21
    %Commercial real estate
    
    
    1,683,068
    
    
    
    96,585
    
    
    
    5.74
    
    
    
    1,610,707
    
    
    
    94,193
    
    
    
    5.85
    
    
    
    1,500,744
    
    
    
    96,836
    
    
    
    6.45Consumer
    
    
    421,167
    
    
    
    17,959
    
    
    
    4.26
    
    
    
    316,113
    
    
    
    14,177
    
    
    
    4.48
    
    
    
    253,044
    
    
    
    14,165
    
    
    
    5.60Lease financing
    
    
    10,771
    
    
    
    1,125
    
    
    
    10.44
    
    
    
    21,930
    
    
    
    2,490
    
    
    
    11.35
    
    
    
    43,496
    
    
    
    5,307
    
    
    
    12.20Commercial business
    
    
    101,288
    
    
    
    6,423
    
    
    
    6.34
    
    
    
    107,371
    
    
    
    6,126
    
    
    
    5.71
    
    
    
    99,852
    
    
    
    5,935
    
    
    
    5.94Small business
    
    
    183,642
    
    
    
    13,118
    
    
    
    7.14
    
    
    
    161,245
    
    
    
    11,973
    
    
    
    7.43
    
    
    
    146,468
    
    
    
    11,565
    
    
    
    7.90Total loans
    
    
    3,927,847
    
    
    
    207,968
    
    
    
    5.29
    
    
    
    3,856,870
    
    
    
    207,494
    
    
    
    5.38
    
    
    
    3,472,626
    
    
    
    222,616
    
    
    
    6.41Tax exempt securities (c)
    
    
    110,748
    
    
    
    5,988
    
    
    
    5.41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Taxable investment securities (b)
    
    
    635,129
    
    
    
    34,948
    
    
    
    5.50
    
    
    
    789,451
    
    
    
    43,741
    
    
    
    5.54
    
    
    
    1,180,100
    
    
    
    74,419
    
    
    
    6.31Federal funds sold
    
    
    6,282
    
    
    
    47
    
    
    
    0.75
    
    
    
    16,499
    
    
    
    166
    
    
    
    1.01
    
    
    
    3,929
    
    
    
    57
    
    
    
    1.45Total investment securities
    
    
    752,159
    
    
    
    40,983
    
    
    
    5.45
    
    
    
    805,950
    
    
    
    43,907
    
    
    
    5.45
    
    
    
    1,184,029
    
    
    
    74,476
    
    
    
    6.29Total interest earning assets
    
    
    4,680,006
    
    
    $
    248,951
    
    
    
    5.32
    %
    
    
    4,662,820
    
    
    $
    251,401
    
    
    
    5.39
    %
    
    
    4,656,655
    
    
    $
    297,092
    
    
    
    6.38
    %Non-interest earning assetsTotal non-interest earning assets
    
    
    333,253
    
    
    
    
    
    
    
    
    
    
    
    324,598
    
    
    
    
    
    
    
    
    
    
    
    316,085Total assets
    
    $
    5,013,259
    
    
    
    
    
    
    
    
    
    
    $
    4,987,418
    
    
    
    
    
    
    
    
    
    
    $
    4,972,740Interest bearing liabilitiesDeposits:Savings
    
    $
    243,906
    
    
    $
    652
    
    
    
    0.27
    %
    
    $
    190,506
    
    
    $
    856
    
    
    
    0.45
    %
    
    $
    140,961
    
    
    $
    1,362
    
    
    
    0.97
    %NOW, money funds and checking
    
    
    1,489,442
    
    
    
    10,861
    
    
    
    0.73
    
    
    
    1,315,747
    
    
    
    11,142
    
    
    
    0.85
    
    
    
    1,078,298
    
    
    
    15,338
    
    
    
    1.42Certificate accounts
    
    
    733,717
    
    
    
    16,842
    
    
    
    2.30
    
    
    
    882,736
    
    
    
    24,191
    
    
    
    2.74
    
    
    
    1,230,013
    
    
    
    46,077
    
    
    
    3.75Total interest bearing deposits
    
    
    2,467,065
    
    
    
    28,355
    
    
    
    1.15
    
    
    
    2,388,989
    
    
    
    36,189
    
    
    
    1.51
    
    
    
    2,449,272
    
    
    
    62,777
    
    
    
    2.56Securities sold under agreements
to repurchase and federal funds
purchased
    
    
    252,718
    
    
    
    3,349
    
    
    
    1.33
    
    
    
    285,284
    
    
    
    3,089
    
    
    
    1.08
    
    
    
    400,376
    
    
    
    6,845
    
    
    
    1.71Advances from FHLB
    
    
    959,588
    
    
    
    37,689
    
    
    
    3.93
    
    
    
    1,195,653
    
    
    
    57,299
    
    
    
    4.79
    
    
    
    1,198,463
    
    
    
    62,412
    
    
    
    5.21Subordinated debentures and notes
payable
    
    
    36,220
    
    
    
    2,002
    
    
    
    5.53
    
    
    
    35,457
    
    
    
    1,917
    
    
    
    5.41
    
    
    
    14,805
    
    
    
    936
    
    
    
    6.32Total interest bearing liabilities
    
    
    3,715,591
    
    
    
    71,395
    
    
    
    1.92
    
    
    
    3,905,383
    
    
    
    98,494
    
    
    
    2.52
    
    
    
    4,062,916
    
    
    
    132,970
    
    
    
    3.27Non-interest bearing liabilitiesDemand deposit and escrow accounts
    
    
    765,084
    
    
    
    
    
    
    
    
    
    
    
    551,866
    
    
    
    
    
    
    
    
    
    
    
    405,599Other liabilities
    
    
    29,111
    
    
    
    
    
    
    
    
    
    
    
    55,261
    
    
    
    
    
    
    
    
    
    
    
    70,187Total non-interest bearing
liabilities
    
    
    794,195
    
    
    
    
    
    
    
    
    
    
    
    607,127
    
    
    
    
    
    
    
    
    
    
    
    475,786Stockholders equity
    
    
    503,473
    
    
    
    
    
    
    
    
    
    
    
    474,908
    
    
    
    
    
    
    
    
    
    
    
    434,038Total liabilities and stockholders
Equity
    
    $
    5,013,259
    
    
    
    
    
    
    
    
    
    
    $
    4,987,418
    
    
    
    
    
    
    
    
    
    
    $
    4,972,740Tax equivalent net interest
income/net
interest spread
    
    
    
    
    
    
    177,556
    
    
    
    3.40
    %
    
    
    
    
    
    
    152,907
    
    
    
    2.87
    %
    
    
    
    
    
    
    164,122
    
    
    
    3.11
    %Tax equivalent adjustment
    
    
    
    
    
    
    (2,096
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 31




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##### Table of Contents



For the Years EndedDecember 31, 2004
    
    
    December 31, 2003
    
    
    December 31, 2002(Dollars in thousands)
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateCapitalized interest from real
estate operations
    
    
    
    
    
    
    1,398
    
    
    
    
    
    
    
    
    
    
    
    1,193
    
    
    
    
    
    
    
    
    
    
    
    Net interest income
    
    
    
    
    
    $
    176,858
    
    
    
    
    
    
    
    
    
    
    $
    154,100
    
    
    
    
    
    
    
    
    
    
    $
    164,122MarginInterest income/interest earning
assets
    
    
    
    
    
    
    
    
    
    
    5.32
    %
    
    
    
    
    
    
    
    
    
    
    5.39
    %
    
    
    
    
    
    
    
    
    
    
    6.38
    %Interest expense/interest earning
assets
    
    
    
    
    
    
    
    
    
    
    1.53
    
    
    
    
    
    
    
    
    
    
    
    2.11
    
    
    
    
    
    
    
    
    
    
    
    2.86Tax
equivalent net interest margin
    
    
    
    
    
    
    
    
    
    
    3.79
    %
    
    
    
    
    
    
    
    
    
    
    3.28
    %
    
    
    
    
    
    
    
    
    
    
    3.52
    %
   a)
    
    Includes non-accruing loansb)
    
    Average balances were based on amortized cost.c)
    
    The tax equivalent basis is computed using a 35% tax rate. The following table summarizes the changes in tax equivalent net interest income (in
thousands): Year Ended
    
    
    Year EndedDecember 31, 2004
    
    
    December 31, 2003Compared to Year Ended
    
    
    Compared to Year EndedDecember 31, 2003
    
    
    December 31, 2002Volume (a)
    
    
    Rate
    
    
    Total
    
    
    Volume (a)
    
    
    Rate
    
    
    TotalIncrease (decrease) due to:Loans
    
    $
    3,758
    
    
    $
    (3,284
    )
    
    $
    474
    
    
    $
    20,672
    
    
    $
    (35,794
    )
    
    $
    (15,122
    )Tax exempt securities
    
    
    5,988
    
    
    
    
    
    
    
    5,988
    
    
    
    
    
    
    
    
    
    
    
    Taxable investment securities (b)
    
    
    (8,492
    )
    
    
    (301
    )
    
    
    (8,793
    )
    
    
    (21,645
    )
    
    
    (9,033
    )
    
    
    (30,678
    )Federal funds sold
    
    
    (76
    )
    
    
    (43
    )
    
    
    (119
    )
    
    
    126
    
    
    
    (17
    )
    
    
    109Total earning assets
    
    
    1,178
    
    
    
    (3,628
    )
    
    
    (2,450
    )
    
    
    (847
    )
    
    
    (44,844
    )
    
    
    (45,691
    )Deposits:Savings
    
    
    143
    
    
    
    (347
    )
    
    
    (204
    )
    
    
    223
    
    
    
    (729
    )
    
    
    (506
    )NOW, money funds, and checking
    
    
    1,267
    
    
    
    (1,548
    )
    
    
    (281
    )
    
    
    2,011
    
    
    
    (6,207
    )
    
    
    (4,196
    )Certificate accounts
    
    
    (3,421
    )
    
    
    (3,928
    )
    
    
    (7,349
    )
    
    
    (9,517
    )
    
    
    (12,369
    )
    
    
    (21,886
    )Total deposits
    
    
    (2,011
    )
    
    
    (5,823
    )
    
    
    (7,834
    )
    
    
    (7,283
    )
    
    
    (19,305
    )
    
    
    (26,588
    )Securities sold under agreements
to repurchase
    
    
    (432
    )
    
    
    692
    
    
    
    260
    
    
    
    (1,246
    )
    
    
    (2,510
    )
    
    
    (3,756
    )Advances from FHLB
    
    
    (9,272
    )
    
    
    (10,338
    )
    
    
    (19,610
    )
    
    
    (135
    )
    
    
    (4,978
    )
    
    
    (5,113
    )Subordinated debentures
    
    
    42
    
    
    
    43
    
    
    
    85
    
    
    
    1,117
    
    
    
    (136
    )
    
    
    981(9,662
    )
    
    
    (9,603
    )
    
    
    (19,265
    )
    
    
    (264
    )
    
    
    (7,624
    )
    
    
    (7,888
    )Total interest bearing liabilities
    
    
    (11,673
    )
    
    
    (15,426
    )
    
    
    (27,099
    )
    
    
    (7,547
    )
    
    
    (26,929
    )
    
    
    (34,476
    )Change in tax equivalent net
interest
income
    
    $
    12,851
    
    
    $
    11,798
    
    
    $
    24,649
    
    
    $
    6,700
    
    
    $
    (17,915
    )
    
    $
    (11,215
    )
   (a)
    
    Changes attributable to rate/volume have been allocated to volume.(b)
    
    Average balances were based on amortized cost. For the Year Ended December 31, 2004 Compared to the Same 2003 Period The improvement in our tax equivalent net interest margin primarily resulted from a
significant decrease in interest expense caused by managements decision to prepay certain of our
high rate FHLB advances and the increased percentage of low cost deposits in our deposit mix. In
late 2003, we repaid $325 million of advances with an average rate of 5.57%. We recognized
expenses of $10.9 million in connection with these prepayments and recognized a $1.9 million loss
on the termination of interest rate swap contracts. In early 2004, we repaid $108 million of
fixed rate advances with an average interest rate of 5.55% and incurred penalties of $11.7
million. During the year ended December 31, 2004, 32




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##### Table of Contents



approximately $960 million, or 26% of average interest bearing liabilities, consists of
advances from the FHLB with an average rate of 3.93% versus an average rate of 4.79% during 2003. Our deposit mix changed with decreased higher rate certificate of deposit accounts and
increased low cost deposits. We believe this is primarily the result of our Floridas Most
Convenient Bank initiatives. Low cost deposits are comprised of checking and savings accounts.
Balances in low cost deposits increased 31% at December 31, 2004, to $1.8 billion, or 53% of total
deposits, versus $1.4 billion, or 45% of total deposits, at December 31, 2003. In 2004, new
checking (DDA/NOW) and savings account openings were approximately 166,000, compared to 145,000 in
2003 and 99,000 in 2002. Non-interest bearing account balances increased approximately $245
million and now constitute 26% of total deposits, up from 21% last year and 16% at December 2002. Partially offsetting the decreases in interest expense on advances and deposits were
increases in interest expense on short-term borrowings. Although average balances were slightly
lower, the average rate on these borrowings was higher, reflecting the short-term interest rate
environment. Interest expense on subordinated debentures and notes payable represents interest expense
associated with mortgage-backed bonds acquired in connection with our acquisition of Community
Savings in 2002, $22 million of subordinated debentures issued in October 2002 and joint venture
construction loans. These borrowings all have variable interest rates. Interest income on average loans increased slightly as the small decline in average loan
yields was offset by an increase in average loan balances. The growth in balances primarily
resulted from the origination of commercial real estate and home equity consumer loans. During
2004, the Bank originated over $1.3 billion of corporate and commercial loans and over $400
million of home equity loans. Beginning in July 2004 the prime rate of interest increased from
4.00% to 5.25% at December 31, 2004, while long term loan rates declined slightly from the
December 2003 levels. The increase in short term interest rates contributed to average loan
yields only declining slightly from the prior period. Tax-equivalent interest income on investment securities declined $2.9 million, primarily due
to a decline in the average balance of the investment portfolio. Maturities and prepayments on
U.S. agency obligations, primarily mortgage-backed securities, were only partially replaced by
purchases of new agency securities and purchases of tax exempt securities. During 2004, BankAtlantic began investing in tax exempt securities as the after tax yields on
these securities were more attractive than alternative investments. Capitalized interest represents interest capitalized on qualifying assets associated with the
Riverclub real estate joint venture acquired as part of the Community acquisition. For the Year Ended December 31, 2003 Compared to the Same 2002 Period Net interest income decreased by $11.2 million, or 6%, from 2002. The decline reflects a
substantial decrease in yields on earning assets partially offset by lower rates on interest
bearing liabilities resulting in a 24 basis point decline in our net interest margin. The net
interest margin was negatively impacted by the historically low interest rates during 2003 and
high rates associated with our advances from the FHLB. The yield on the 10-year Treasury bond
declined from approximately 5.5% in early 2002 to almost 3.0% in mid-2003. For most of 2002, the
prime rate stood at 4.75%. The prime rate declined to 4.25% in November, 2002 and declined again
to 4.00% in June, 2003. Short-term Libor and Treasury based indices also declined during this
period, leading to less interest income earned on adjustable rate loans and investments.
Additionally, this low interest rate environment resulted in accelerated prepayments of mortgage
loans and mortgage-backed securities as homeowners took advantage of the refinancing
opportunities. We experienced accelerated amortization of premiums associated with some of these
assets, and we were faced with investing the proceeds from these repayments primarily in
residential and commercial loans at lower yields. 33




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##### Table of Contents



Interest income on average loans declined as the significant decline in average loan yields
was partially offset by an increase in average loan balances. The growth in balances resulted
from the purchase and origination of commercial real estate, residential and home equity loans.
During 2003, the Bank purchased $1.1 billion of residential loans and originated over $1.0 billion
of commercial loans and $317 million of home equity loans. The net loan growth was funded
primarily by the reduction in the average balances of our securities portfolios. Interest income on investment securities declined primarily due to the accelerated repayment
of high yielding securities resulting from the historically low interest rate environment. As a consequence of lower average yields on earning assets and a slight increase in average
earning asset balances, interest income decreased by $45.7 million. Rates on interest bearing liabilities did not decline as rapidly as rates on interest earning
assets as 30% of average interest bearing liabilities consisted of long term advances from the
FHLB that, either directly or indirectly via interest rate swaps, had fixed interest rates. These
advances were primarily originated in order to fund the purchase of fixed rate residential loans.
In September 2003 we repaid $185 million of high rate advances and in December 2003 we repaid $140
million of high rate advances. The advances repaid had an average rate of 5.57%. The lower deposit rates reflect the historically low interest rate environment during 2003
plus a change in our deposit mix from higher rate certificate of deposit accounts to low cost
deposits and insured money fund accounts, as discussed above. Interest expense on short-term borrowings was substantially lower during 2003 due to lower
average balances and average rates. Interest expense on FHLB advances declined resulting from maturities and repayments of
advances at higher rates than the advances outstanding. In total, BankAtlantics interest expense declined by $34.5 million primarily due to
declining average rates and, secondarily, due to lower average balances on interest bearing
liabilities. 34




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##### Table of Contents



BankAtlantics Allowance for Loan Losses Changes in the allowance for loan losses were as follows (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Balance, beginning of period
    
    $
    45,595
    
    
    $
    48,022
    
    
    $
    44,585
    
    
    $
    47,000
    
    
    $
    44,450Charge-offs:Commercial business loans
    
    
    
    
    
    
    (2,394
    )
    
    
    
    
    
    
    
    
    
    
    (24
    )Commercial real estate loans
    
    
    (645
    )
    
    
    
    
    
    
    (6,998
    )
    
    
    Small business
    
    
    (238
    )
    
    
    (771
    )
    
    
    (953
    )
    
    
    (88
    )
    
    
    Consumer loans
    
    
    (585
    )
    
    
    (1,563
    )
    
    
    (1,006
    )
    
    
    (2,629
    )
    
    
    (2,233
    )Residential real estate loans
    
    
    (582
    )
    
    
    (681
    )
    
    
    (827
    )
    
    
    (244
    )
    
    
    (715
    )Continuing loan products
    
    
    (2,050
    )
    
    
    (5,409
    )
    
    
    (9,784
    )
    
    
    (2,961
    )
    
    
    (2,972
    )Discontinued loan products
    
    
    (2,026
    )
    
    
    (6,314
    )
    
    
    (18,879
    )
    
    
    (24,955
    )
    
    
    (29,249
    )Total charge-offs
    
    
    (4,076
    )
    
    
    (11,723
    )
    
    
    (28,663
    )
    
    
    (27,916
    )
    
    
    (32,221
    )Recoveries:Commercial business loans
    
    
    536
    
    
    
    95
    
    
    
    76
    
    
    
    331
    
    
    
    94Commercial real estate loans
    
    
    4,052
    
    
    
    3
    
    
    
    20
    
    
    
    10
    
    
    
    8Small business
    
    
    418
    
    
    
    559
    
    
    
    7
    
    
    
    4
    
    
    
    Consumer loans
    
    
    370
    
    
    
    622
    
    
    
    477
    
    
    
    769
    
    
    
    645Residential real estate loans
    
    
    486
    
    
    
    726
    
    
    
    331
    
    
    
    223
    
    
    
    106Continuing loan products
    
    
    5,862
    
    
    
    2,005
    
    
    
    911
    
    
    
    1,337
    
    
    
    853Discontinued loan products
    
    
    3,738
    
    
    
    8,572
    
    
    
    7,968
    
    
    
    7,259
    
    
    
    4,786Total recoveries
    
    
    9,600
    
    
    
    10,577
    
    
    
    8,879
    
    
    
    8,596
    
    
    
    5,639Net (charge-offs) recoveries
    
    
    5,524
    
    
    
    (1,146
    )
    
    
    (19,784
    )
    
    
    (19,320
    )
    
    
    (26,582
    )Provision for (recovery from) loan
losses
    
    
    (5,109
    )
    
    
    (547
    )
    
    
    14,077
    
    
    
    16,905
    
    
    
    29,132Allowance
for loan losses, acquired
    
    
    
    
    
    
    (734
    )
    
    
    9,144
    
    
    
    
    
    
    
    Balance, end of period
    
    $
    46,010
    
    
    $
    45,595
    
    
    $
    48,022
    
    
    $
    44,585
    
    
    $
    47,000
 The outstanding loan balances related to our discontinued loan products and the amount of
allowance for loan losses (ALL) assigned to each discontinued loan product was as follows (in
thousands): As of December 31,2004
    
    
    2003
    
    
    2002Allocation
    
    
    
    
    
    
    Allocation
    
    
    
    
    
    
    AllocationAmount
    
    
    of ALL
    
    
    Amount
    
    
    of ALL
    
    
    Amount
    
    
    of ALLLease finance
    
    $
    6,551
    
    
    $
    1,429
    
    
    $
    14,442
    
    
    $
    3,425
    
    
    $
    31,279
    
    
    $
    7,396Syndication loans
    
    
    
    
    
    
    
    
    
    
    9,114
    
    
    
    185
    
    
    
    14,499
    
    
    
    294Small business (1)
    
    
    
    
    
    
    
    
    
    
    9,569
    
    
    
    873
    
    
    
    17,297
    
    
    
    2,143Consumer  indirect
    
    
    1,734
    
    
    
    2
    
    
    
    2,402
    
    
    
    70
    
    
    
    8,105
    
    
    
    457$
    8,285
    
    
    $
    1,431
    
    
    $
    35,527
    
    
    $
    4,553
    
    
    $
    71,180
    
    
    $
    10,290
 35




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##### Table of Contents



As of December 31,2001
    
    
    2000Allocation
    
    
    
    
    
    
    AllocationAmount
    
    
    of ALL
    
    
    Amount
    
    
    of ALLLease finance
    
    $
    54,969
    
    
    $
    8,639
    
    
    $
    75,918
    
    
    $
    2,879Syndication loans
    
    
    40,774
    
    
    
    8,602
    
    
    
    80,016
    
    
    
    8,480Small business (1)
    
    
    32,123
    
    
    
    4,105
    
    
    
    66,989
    
    
    
    9,965Consumer - indirect
    
    
    25,400
    
    
    
    1,247
    
    
    
    62,475
    
    
    
    5,388$
    153,266
    
    
    $
    22,593
    
    
    $
    285,398
    
    
    $
    26,712
   (1)
    
    Small business loans originated before January 1, 2000. During prior periods we discontinued the origination of syndication, lease financings and
indirect consumer loans and made major modifications to the underwriting process for small business
loans (collectively, discontinued loan products.) The loans associated with the discontinued
loan products gave rise to a significant portion of our net charge-offs during each of the years in
the three year period ended December 31, 2002. The decline in those portfolios during the past
three years has contributed to the reduction of our allowance for loan losses. Additionally, we
were able to realize net recoveries associated with previously charged-off loans during the years
ended December 31, 2004 and 2003 which favorably impacted our provision for loan losses. The provision for (recovery from) loan losses improved in each of the years in the three year
period ended December 31, 2004. This improvement resulted from several factors including the
discontinuation of the loan products mentioned above and changes in our credit policies which
focused our loan production on collateral based loans with lower loss experiences than our other
loan products. The discontinued loan products accounted for approximately 80.1% of our net
charge-offs in the past five years. In 2003 and 2004, we saw noticeable benefits from our change
in policy, as the balances and the associated losses in discontinued loan products declined, while
we experienced substantially lower losses from our loans originated under our new credit policy.
Additionally, during 2003, our loan provision was a recovery due to significant recoveries from our
discontinued loan products. The majority of these recoveries were from bankruptcy settlements
associated with syndication loans charged-off in prior periods. In 2004, our provision for loan
losses was a recovery primarily resulting from a $4.1 million recovery of a commercial real estate
loan that was charged off in 2002, as well as continued net recoveries from our discontinued loan
products. BankAtlantics total charge-offs from continuing loan products during 2004 consisted of a
$645,000 charge-down of one commercial real estate loan and various smaller charges-offs associated
with small business, residential and consumer loans. BankAtlantics total recoveries from
continuing products during 2004 related primarily from its $4.1 million recovery of the commercial
real estate loan mentioned above. BankAtlantics improvement in net charge-offs during 2003
compared to 2002 resulted from commercial real estate loan charge-offs during 2002 and lower
discontinued loan product net charge-offs during 2003. The commercial real estate loan charge-offs
during 2002 were associated with two loans. The amount charged off on one of the loans was
partially recovered from the loan guarantor during 2004. The other loan was sold without recourse
at book value (less the amount charged-down) to an unrelated third party. BankAtlantic acquired Community Savings $9.1 million allowance for loan losses in connection
with the Community Savings acquisition in March 2002. In 2003, the acquired allowance for loan
losses was reduced by $734,000 with a corresponding reduction in goodwill for loans acquired in
connection with the Community acquisition that had either matured or were prepaid and which had
been assigned a valuation allowance. 36




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##### Table of Contents



The table below presents the allocation of the allowance for loan losses by various loan
classifications (Allowance for Loan Losses), the percent of allowance to each loan category (ALL
to gross loans percent) and sets forth the percentage of loans in each category to gross loans
excluding bankers acceptances (Loans to gross loans percent). The allowance shown in the table
should not be interpreted as an indication that charge-offs in future periods will occur in these
amounts or percentages or that the allowance indicates future charge-off amounts or trends (dollars
in thousands): December 31, 2004
    
    
    December 31, 2003
    
    
    December 31, 2002ALL
    
    
    Loans
    
    
    
    
    
    
    ALL
    
    
    Loans
    
    
    
    
    
    
    ALL
    
    
    LoansAllowance
    
    
    to gross
    
    
    to gross
    
    
    Allowance
    
    
    to gross
    
    
    to gross
    
    
    Allowance
    
    
    to gross
    
    
    to grossfor
    
    
    loans
    
    
    loans
    
    
    for
    
    
    loans
    
    
    loans
    
    
    for
    
    
    loans
    
    
    loansLoan Losses
    
    
    Percent
    
    
    Percent
    
    
    Loan Losses
    
    
    Percent
    
    
    Percent
    
    
    Loan Losses
    
    
    Percent
    
    
    PercentCommercial business
    
    $
    2,507
    
    
    
    2.94
    
    
    
    1.59
    
    
    $
    1,715
    
    
    
    2.15
    
    
    
    1.81
    
    
    $
    1,437
    
    
    
    1.75
    
    
    
    2.06Commercial real estate
    
    
    23,345
    
    
    
    0.92
    
    
    
    47.28
    
    
    
    24,005
    
    
    
    0.99
    
    
    
    55.12
    
    
    
    21,124
    
    
    
    1.05
    
    
    
    50.75Small business
    
    
    2,403
    
    
    
    1.26
    
    
    
    3.55
    
    
    
    2,300
    
    
    
    1.44
    
    
    
    3.63
    
    
    
    2,863
    
    
    
    1.99
    
    
    
    3.61Residential real estate
    
    
    2,565
    
    
    
    0.12
    
    
    
    38.57
    
    
    
    2,111
    
    
    
    0.16
    
    
    
    30.56
    
    
    
    2,512
    
    
    
    0.18
    
    
    
    34.60Consumer
    
    
    4,281
    
    
    
    0.90
    
    
    
    8.86
    
    
    
    3,900
    
    
    
    1.10
    
    
    
    8.07
    
    
    
    3,239
    
    
    
    1.13
    
    
    
    7.19Discontinued loan
products
    
    
    1,431
    
    
    
    17.26
    
    
    
    0.15
    
    
    
    4,553
    
    
    
    12.81
    
    
    
    0.81
    
    
    
    10,290
    
    
    
    14.46
    
    
    
    1.79Total assigned
    
    
    36,532
    
    
    
    
    
    
    
    
    
    
    
    38,584
    
    
    
    
    
    
    
    
    
    
    
    41,465Unassigned
    
    
    9,478
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    7,011
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    6,557
    
    
    
    N/A
    
    
    
    N/A$
    46,010
    
    
    
    0.86
    
    
    
    100.00
    
    
    $
    45,595
    
    
    
    1.04
    
    
    
    100.00
    
    
    $
    48,022
    
    
    
    1.21
    
    
    
    100.00
 December 31, 2001
    
    
    December 31, 2000ALL
    
    
    Loans
    
    
    
    
    
    
    ALL
    
    
    LoansAllowance
    
    
    to gross
    
    
    to gross
    
    
    Allowance
    
    
    to gross
    
    
    to grossfor
    
    
    loans
    
    
    loans
    
    
    for
    
    
    loans
    
    
    loansLoan Losses
    
    
    Percent
    
    
    Percent
    
    
    Loan Losses
    
    
    Percent
    
    
    PercentCommercial business
    
    $
    1,563
    
    
    
    2.02
    
    
    
    2.37
    
    
    $
    1,502
    
    
    
    1.00
    
    
    
    4.64Commercial real estate
    
    
    13,682
    
    
    
    0.82
    
    
    
    50.87
    
    
    
    10,072
    
    
    
    0.77
    
    
    
    40.25Small business
    
    
    1,073
    
    
    
    1.53
    
    
    
    2.14
    
    
    
    785
    
    
    
    2.56
    
    
    
    0.94Residential real estate
    
    
    1,304
    
    
    
    0.12
    
    
    
    34.08
    
    
    
    1,540
    
    
    
    0.12
    
    
    
    40.52Consumer - direct
    
    
    2,064
    
    
    
    1.07
    
    
    
    5.86
    
    
    
    2,989
    
    
    
    1.89
    
    
    
    4.86Discontinued loan
products
    
    
    22,593
    
    
    
    14.74
    
    
    
    4.68
    
    
    
    26,712
    
    
    
    9.36
    
    
    
    8.79Total assigned
    
    
    42,279
    
    
    
    
    
    
    
    
    
    
    
    43,600Unassigned
    
    
    2,306
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    3,400
    
    
    
    N/A
    
    
    
    N/A$
    44,585
    
    
    
    1.36
    
    
    
    100.00
    
    
    $
    47,000
    
    
    
    1.45
    
    
    
    100.00
 The assigned portion of the allowance for loan losses primarily related to commercial
real estate loans at December 31, 2004, 2003 and 2002 and to discontinued loan products in prior
periods. The allowance for commercial real estate loans increased from $10.1 million at December
31, 2000 to $23.3 million at December 31, 2004. This increase primarily reflects portfolio growth
associated with high balance loans and additional reserves associated with loans to borrowers in
the hospitality industry. This industry was designated to have higher credit risk than the other
industries in our portfolio. The allowance for loan losses to total gross loan percent has
declined for each loan category during the three year period ended December 31, 2004, except for
commercial business and discontinued loan products. The decline reflects improving credit quality
of the loan portfolio due, in part, to changes in our credit policies and procedures which began in
2000. The increase in the ratio for discontinued loan products reflects a high percentage of
aviation leases due to lease repayments and charge-offs in this portfolio. Aviation leases have a
higher loss experience than other discontinued loan products. Commercial business allowance to 37




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##### Table of Contents



gross loans percent increased due to an increase in the allowance for loans collateralized by
time-sharing properties during 2004. At December 31, 2004, our commercial real estate portfolio included several large lending
relationships, including 24 relationships with unaffiliated borrowers involving individual lending
commitments in excess of $30 million with an aggregate outstanding balance of $1.0 billion. The unassigned portion of the allowance for loan losses addresses certain individual industry
conditions, general economic conditions and geographic concentration. The major factors
contributing to the increase in our unassigned allowance for loan losses during the past three
years were the expanded geographical area in which we originate commercial real estate loans, the
growth in our consumer and purchased residential loan portfolios and adverse economic trends
associated with small business loans. During 2003 we opened commercial loan offices in Orlando and
Jacksonville, Florida. The loans originated outside our primary markets may have substantially
different loss experiences than our loans secured by collateral in South Florida. Loans
originated in commercial lending branch offices outside of South Florida amounted to $564 million
at December 31, 2004. Also contributing to our increase in the unassigned portion of the allowance
during 2004 was the growth in our purchased residential and home equity loan products. We
purchased $1.3 billion of residential loans during 2004 of which 34% were secured by properties
located in California, many of which were hybrid loans with interest only payments for a period of
three to ten years, followed by conversion to a fully amortizing loan at the then prevailing
interest rates for the remaining term of the loan. These types of delayed amortizing loans may
have a greater default or recovery risk than existing traditional amortizing loans in our
portfolio. During 2004, we modified our underwriting policies to allow for higher loan-to-value
ratios based on Beacon scores for home equity loans, and we originated approximately $400 million
of home equity loans during 2004 primarily in our South Florida market. The charge-offs for home
equity loans in the Southeastern United States during the four quarters ended September 30, 2004
exceeded all other regions in the country. Additionally, the Southeastern United States losses on
non-real estate secured small business loans were more than double any other region in the country
during the last six months of 2004. These types of loans generally have a higher degree of credit
risk than other loans in our portfolio as repayment is dependent on the success of the business,
many of which are relatively newer businesses without an established operating history or are
family-owned firms. 38




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##### Table of Contents



BankAtlantics Non-performing Assets and Potential Problem Loans(dollars in thousands): December 31,NONPERFORMING ASSETS
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Tax certificates
    
    $
    381
    
    
    $
    894
    
    
    $
    1,419
    
    
    $
    1,727
    
    
    $
    2,491Residential
    
    
    5,538
    
    
    
    9,777
    
    
    
    14,237
    
    
    
    10,908
    
    
    
    16,618Syndication
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,700
    
    
    
    Commercial real estate and
business
    
    
    340
    
    
    
    52
    
    
    
    1,474
    
    
    
    13,066
    
    
    
    1,705Small
business - real estate
    
    
    88
    
    
    
    155
    
    
    
    239
    
    
    
    905
    
    
    
    2,532Lease financing
    
    
    727
    
    
    
    25
    
    
    
    3,900
    
    
    
    2,585
    
    
    
    1,515Consumer
    
    
    1,210
    
    
    
    794
    
    
    
    532
    
    
    
    796
    
    
    
    1,944Total non-accrual assets
    
    
    8,284
    
    
    
    11,697
    
    
    
    21,801
    
    
    
    40,687
    
    
    
    26,805Residential real estate owned
    
    
    309
    
    
    
    1,474
    
    
    
    1,304
    
    
    
    2,033
    
    
    
    2,562Commercial real estate owned
    
    
    383
    
    
    
    948
    
    
    
    8,303
    
    
    
    1,871
    
    
    
    1,937Consumer
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    17
    
    
    
    95Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,647Total repossessed assets
    
    
    692
    
    
    
    2,422
    
    
    
    9,611
    
    
    
    3,921
    
    
    
    6,241Total nonperforming assets
    
    
    8,976
    
    
    
    14,119
    
    
    
    31,412
    
    
    
    44,608
    
    
    
    33,046Specific valuation allowances
    
    
    
    
    
    
    
    
    
    
    (1,386
    )
    
    
    (9,936
    )
    
    
    (819
    )Total nonperforming assets, net
    
    $
    8,976
    
    
    $
    14,119
    
    
    $
    30,026
    
    
    $
    34,672
    
    
    $
    32,227Total nonperforming assets
as a percentage of:Total assets
    
    
    0.15
    
    
    
    0.31
    
    
    
    0.64
    
    
    
    1.03
    
    
    
    0.76Loans, tax certificates and
repossessed assets
    
    
    0.19
    
    
    
    0.36
    
    
    
    0.86
    
    
    
    1.49
    
    
    
    1.09TOTAL ASSETS
    
    $
    6,044,988
    
    
    $
    4,566,850
    
    
    $
    4,903,886
    
    
    $
    4,330,690
    
    
    $
    4,361,043Total loans, tax certificates and
repossessed assets
    
    $
    4,771,682
    
    
    $
    3,872,473
    
    
    $
    3,673,110
    
    
    $
    2,989,979
    
    
    $
    3,029,833Allowance for loan losses
    
    $
    46,010
    
    
    $
    45,595
    
    
    $
    48,022
    
    
    $
    44,585
    
    
    $
    47,000Total tax certificates
    
    $
    170,028
    
    
    $
    193,776
    
    
    $
    195,947
    
    
    $
    145,598
    
    
    $
    124,289Allowance for tax certificate
losses
    
    $
    3,297
    
    
    $
    2,870
    
    
    $
    1,873
    
    
    $
    1,521
    
    
    $
    1,937POTENTIAL PROBLEM LOANSLoans contractually past due
90 days or more (1)
    
    $
    
    
    
    $
    135
    
    
    $
    100
    
    
    $
    
    
    
    $
    7,086Performing impaired loans,
net of specific allowance
    
    
    320
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    15,001Restructured loans
    
    
    24
    
    
    
    1,387
    
    
    
    1,882
    
    
    
    743
    
    
    
    Total potential problem loans
    
    $
    344
    
    
    $
    1,702
    
    
    $
    1,982
    
    
    $
    743
    
    
    $
    22,087
   (1)

    The majority of these loans have matured and the borrower continues to make payments under
the matured loan agreement. The 2000 amount represents one loan that was repaid during
February 2001. Non-performing assets significantly declined at December 31, 2004 and 2003 compared to
the prior years. We attribute this reduction in non-performing assets to the strengthening of
BankAtlantics underwriting policies by focusing our loan production on collateral based loans as
well as discontinuing the origination of loan products with high historical loss experiences. In
2004, non-accrual assets improved due primarily to lower residential non-performing loans,
delinquent tax certificates and real estate owned 39




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##### Table of Contents



balances in our portfolio, resulting from favorable economic conditions in the real estate
industry. The improvement in non-performing assets was partially offset by higher non-accrual
lease financing lending arrangements in the aviation industry and higher non-accruing home equity
loans. The specific valuation allowances on non-performing assets at December 31, 2002, 2001 and
2000 consisted of specific valuation allowances on non-performing loans. At each period end,
BankAtlantic individually evaluates the non-homogenous loans in its portfolio to identify those
which it deems probable that the borrower will be unable to meet the contractual terms of the loan
agreements. A specific valuation allowance is established for these loans, primarily based on
cash flow valuation models. At year-end 2004 and 2003, there were no specific valuation
allowances assigned to non-performing loans, as the present values of the expected cash flows was
in excess of the carrying amount of the non-homogenous, non-performing loans. The decline in potential problem assets at December 31, 2004 compared to the prior year was
due to a lease in the aviation industry transferring to a non-accrual status and subsequently
charged down by $600,000. BankAtlantics Non- Interest Income The following table summarizes the changes in non-interest income (in thousands): For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2004 vs.
    
    
    2003 vs.2004
    
    
    2003
    
    
    2002
    
    
    2003
    
    
    2002Other service charges and fees
    
    $
    23,620
    
    
    $
    19,318
    
    
    $
    14,087
    
    
    $
    4,302
    
    
    $
    5,231Service charges on deposits
    
    
    51,435
    
    
    
    40,569
    
    
    
    26,479
    
    
    
    10,866
    
    
    
    14,090Income from real estate
operations
    
    
    2,405
    
    
    
    5,642
    
    
    
    1,293
    
    
    
    (3,237
    )
    
    
    4,349Gains on sales of loans
    
    
    483
    
    
    
    122
    
    
    
    1,840
    
    
    
    361
    
    
    
    (1,718
    )Securities activities, net
    
    
    37
    
    
    
    (1,957
    )
    
    
    4,741
    
    
    
    1,994
    
    
    
    (6,698
    )Other
    
    
    7,744
    
    
    
    6,992
    
    
    
    4,877
    
    
    
    752
    
    
    
    2,115Non-interest income
    
    $
    85,724
    
    
    $
    70,686
    
    
    $
    53,317
    
    
    $
    15,038
    
    
    $
    17,369
 Other service charges and fees increased 22% during 2004 compared to 2003. The
additional fee income reflects the opening of 410,000 new deposit accounts since January 2002 that
are associated with our Floridas Most Convenient Bank campaign. New ATM and check 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 foreign transaction fees. Other service charges
and fees increased 37% during 2003 compared to 2002, reflecting the opening of 244,000 new deposit
accounts from January 2002 though December 2003. New deposit accounts increased by 31% and 35%
during the years ended December 31, 2004 and 2003, respectively. Revenues from service charges on deposits increased 27% in 2004 and 53% in 2003. This is
primarily the result of increased overdraft fee income associated with the increased number of
checking accounts attributed to our high performance checking products and Floridas Most
Convenient Bank initiatives and to higher fees assessed on overdrafts. Income from real estate operations represents revenues from the Riverclub joint venture. This
is a 50% owned real estate joint venture acquired in connection with the Community acquisition in
March 2002. This venture consists of a development of single family homes, condominium units and
duplexes located on 117 acres of land in Florida. During 2004 and 2003, the Riverclub joint
venture closed on the sale of 14 and 26 units, respectively. Prior to 2003, this joint venture
was accounted for as an unconsolidated subsidiary, and the income from real estate operations
represented the Banks equity in the undistributed earnings of Riverclub. During 2002, there were
11 closings on the sale of units. 40




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##### Table of Contents



During 2002, BankAtlantic had a gain on the sale of a commercial loan of $2.1 million. The
gain was partially offset by losses on the sale of CRA loans. In 2004 and 2003, BankAtlantic had
gains on sales of residential loans of $483,000 and $122,000, respectively. Securities activity, net in 2004 was the result of the fair value adjustment on a forward
contract held for trading purposes. Losses on securities in 2003 were primarily due to the
termination of interest rate swaps. The swaps had a total notional amount of $75 million and were
settled at a loss of $1.9 million in connection with prepayments of FHLB advances discussed above.
In 2002, gains on securities activities resulted from the sale of $152 million of mortgage-backed
securities and $9.4 million of corporate bonds for gains. The securities were sold to reposition
the portfolio in response to the significant decline in interest rates. Other income in 2004 was favorably impacted by higher miscellaneous customer fees such as
wire fees, research charges and cash management services associated with the substantial increase
in the number of customer accounts. In 2003, other income was also favorably impacted by the
expansion of our branch brokerage business unit which earned $1.4 million in commissions versus
$342,000 in commissions in 2002. BankAtlantics Non- Interest Expense The following table summarizes the changes in non-interest expense (in thousands): For the Years Ended
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2004 vs.
    
    
    2003 vs.2004
    
    
    2003
    
    
    2002
    
    
    2003
    
    
    2002Employee compensation and benefits
    
    $
    93,154
    
    
    $
    79,492
    
    
    $
    65,130
    
    
    $
    13,662
    
    
    $
    14,362Occupancy and equipment
    
    
    32,713
    
    
    
    27,329
    
    
    
    29,852
    
    
    
    5,384
    
    
    
    (2,523
    )Advertising and promotion
    
    
    16,012
    
    
    
    9,434
    
    
    
    7,470
    
    
    
    6,578
    
    
    
    1,964Restructuring charges and
impairment write-downs
    
    
    
    
    
    
    257
    
    
    
    1,007
    
    
    
    (257
    )
    
    
    (750
    )Amortization of intangible assets
    
    
    1,715
    
    
    
    1,772
    
    
    
    1,360
    
    
    
    (57
    )
    
    
    412Acquisition related charges
    
    
    
    
    
    
    
    
    
    
    864
    
    
    
    
    
    
    
    (864
    )Professional Fees
    
    
    9,743
    
    
    
    4,390
    
    
    
    2,723
    
    
    
    5,353
    
    
    
    1,667Cost associated with debt redemption
    
    
    11,741
    
    
    
    10,895
    
    
    
    
    
    
    
    846
    
    
    
    10,895Other
    
    
    28,543
    
    
    
    28,046
    
    
    
    26,002
    
    
    
    497
    
    
    
    2,044Non-interest expense
    
    $
    193,621
    
    
    $
    161,615
    
    
    $
    134,408
    
    
    $
    32,006
    
    
    $
    27,207
 Compensation and benefit expenses increased 17% in 2004. In addition to standard
annual employee salary increases, the growth in this expense category primarily resulted from:  
    An increase in the number of employees resulting from Floridas Most Convenient
Bank initiatives. The number of full time equivalent BankAtlantic employees
increased to 1,650 at year-end 2004 versus 1,403 at year-end 2003 and 1,244 at year-end
2002. In 2002, 172 employees were added as a result of the Community acquisition. The
remainder of personnel growth during the past three years primarily related to the
additional personnel required to implement BankAtlantics commitment to provide extended
banking hours and high service levels to the increased number of BankAtlantic customers
resulting from the Floridas Most Convenient Bankcampaign.
    The higher cost of employee benefits. In addition to the increase in the
number of employees, the cost of our regular benefit programs also increased, primarily
due to rising health insurance costs. 41




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##### Table of Contents




    The higher expense associated with our employee profit sharing plan.
Approximately $5.7 million in bonuses were paid in 2004 to employees of BankAtlantic for
exceeding targeted performance goals, versus $3.6 million in 2003 and zero in 2002. In 2004, occupancy and equipment expenses increased 20% from 2003. During the year, we
adopted a plan to renovate all of our existing stores with a goal to have a consistent look or
brand. Management anticipates that the renovation plan will be complete in 2006. This resulted
in the accelerated depreciation on $2.8 million of fixed assets and leasehold improvements that
are scheduled to be replaced. These items are being depreciated over their remaining useful life.
Also in 2004, Florida experienced unprecedented hurricane activity, and repair and maintenance
expenses increased approximately 29% primarily as a result of damage to facilities and equipment.
Additionally, as a result of extended weekend and weekday store hours associated with the
Floridas Most Convenient Bankinitiative, guard service expense increased over 120% as we
provided added security for the protection of both our customers and our employees. In 2003, occupancy and equipment expenses decreased 8% from 2002. This decline primarily
resulted from lower data processing costs and depreciation expense. Lower data processing
expenses resulted from the renewal of a vendor contract at significantly lower rates than
experienced during the prior period. The decrease in depreciation expense reflects $1.9 million
of accelerated depreciation expense during 2002, most of which was associated with a reduction in
the estimated life of our on-line banking platform as we upgraded the technology. Advertising expenses during 2004 and 2003 reflect marketing initiatives to promote our high
performance account products and our Floridas Most Convenient Bankinitiatives. These
promotions included print, radio and billboard advertising periodic customer gifts and events
associated with seven-day banking. Restructuring charges and impairment write-downs during 2002 were the result of a plan to
discontinue certain ATM relationships. As a consequence, an $801,000 restructuring charge and a
$206,000 impairment write-down were recognized. These relationships were primarily with
convenience stores and gas stations which did not meet our performance expectations and were
unlikely to meet our future profitability goals. The remaining ATM machines are primarily located
in our branch network, cruise ships, Native American reservation gaming facilities and other
retail outlets. Amortization of intangible assets consisted of the amortization of core deposit intangible
assets acquired in connection with the Community acquisition. The core deposit intangible assets
are being amortized over an estimated life of ten years. Acquisition related charges and impairments during 2002 include various data conversion and
system integration expenses as well as facilities impairment write-downs associated with the
Community acquisition. As a consequence of the acquisition, BankAtlantic closed two of its
branches that competed directly with two of the former Community offices. The higher expenses for professional fees in 2004, compared to 2003, resulted from
deficiencies that were identified in the Banks compliance with anti-terrorism and anti-money
laundering laws and regulations. BankAtlantic is taking steps to correct identified deficiencies in
its compliance with the USA Patriot Act, anti-money laundering laws and the Bank Secrecy Act, and
is cooperating with regulators and other federal agencies concerning those deficiencies.
BankAtlantic has incurred substantial costs to improve its compliance systems and procedures,
including costs associated with engaging attorneys and compliance consultants, acquiring new
software and hiring additional compliance staff. Compliance costs in 2004 were approximately $5.0
million. These compliance-related costs were primarily one-time and are not expected to recur at
these levels in 2005. However, 2005 on-going costs will be higher than our previous general
compliance costs by an estimated $2.5 million annually. The higher expenses for professional fees in 2003, compared to 2002, were primarily associated
with legal fees incurred in connection with a lawsuit filed against BankAtlantic in October 2002
relating to 42




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##### Table of Contents



our Floridas Most Convenient Bankinitiative which was settled without payments to either
party. Costs associated with debt redemption resulted from the prepayment penalties associated with
the repayment of $108 million of FHLB advances in 2004 and $325 million of advances in 2003. We
prepaid these high rate advances with the expectation that it would improve our net interest
margin in future periods. Overall, other non-interest expense was generally flat in 2004 versus 2003. Increases in
branch operating expenses related to an increased number of customer accounts and general
operating expenses were offset by a decrease in our provision for tax certificate losses as actual
loss history on these investments improved from prior periods. The increase in other expenses in 2003 versus 2002 primarily resulted from higher ATM
interchange expenses, check loss charges, and higher general operating expenses. These increases
in other expenses relate to a substantial increase in the number of deposit accounts and the
related increase in transaction volume associated with Floridas Most Convenient Bank
initiative. Expenses of the Riverclub joint venture as well as costs related to converting check
cards from Visa to MasterCard are also reflected in 2003 results and contributed to higher other
expenses. Ryan Beck Results of Operations Summary The integration of the assets that were acquired from Gruntal has enabled Ryan Beck to
significantly increase its distribution capabilities and revenues since the latter half of 2003.
The increase to approximately 450 financial consultants enables the investment banking and trading
lines of business to distribute their products to an increased client base of over 136,000
clients. Principal transaction revenue is primarily generated from the purchase and sale of fixed
income and equity securities which are closely related to Ryan Becks customer activities.
Investment banking revenue is principally derived from transactions with financial institution and
emerging growth and middle market company clients. Commission revenue is primarily derived from
the purchase and sale of securities on behalf of individual and institutional investors. 43




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##### Table of Contents



The following table is a condensed income statement summarizing Ryan Becks results of
operations (in thousands): For the Years
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2004 vs.
    
    
    2004 vs.2004
    
    
    2003
    
    
    2002
    
    
    2003
    
    
    2003Net interest income:Interest on trading securities
    
    $
    11,351
    
    
    $
    10,437
    
    
    $
    7,512
    
    
    $
    914
    
    
    $
    2,925Interest expense
    
    
    (924
    )
    
    
    (1,283
    )
    
    
    (1,444
    )
    
    
    359
    
    
    
    161Net interest income
    
    
    10,427
    
    
    
    9,154
    
    
    
    6,068
    
    
    
    1,273
    
    
    
    3,086Non-interest income:Principal transactions
    
    
    90,415
    
    
    
    95,519
    
    
    
    49,106
    
    
    
    (5,104
    )
    
    
    46,413Investment banking
    
    
    48,245
    
    
    
    27,728
    
    
    
    19,119
    
    
    
    20,517
    
    
    
    8,609Commissions
    
    
    89,289
    
    
    
    85,176
    
    
    
    62,924
    
    
    
    4,113
    
    
    
    22,252Other
    
    
    3,855
    
    
    
    2,516
    
    
    
    2,696
    
    
    
    1,339
    
    
    
    (180
    )Non-interest income
    
    
    231,804
    
    
    
    210,939
    
    
    
    133,845
    
    
    
    20,865
    
    
    
    77,094Non-interest expense:Employee compensation and benefits
    
    
    158,868
    
    
    
    147,358
    
    
    
    100,909
    
    
    
    11,510
    
    
    
    46,449Occupancy and equipment
    
    
    15,429
    
    
    
    12,707
    
    
    
    9,344
    
    
    
    2,722
    
    
    
    3,363Advertising and promotion
    
    
    4,735
    
    
    
    3,291
    
    
    
    2,977
    
    
    
    1,444
    
    
    
    314Professional Fees
    
    
    5,482
    
    
    
    10,467
    
    
    
    3,994
    
    
    
    (4,985
    )
    
    
    6,473Communications
    
    
    12,527
    
    
    
    13,783
    
    
    
    10,152
    
    
    
    (1,256
    )
    
    
    3,631Floor broker and clearing fees
    
    
    9,835
    
    
    
    9,227
    
    
    
    8,192
    
    
    
    608
    
    
    
    1,035Acquisition related charges and
impairments
    
    
    
    
    
    
    
    
    
    
    4,061
    
    
    
    
    
    
    
    (4,061
    )Other
    
    
    6,184
    
    
    
    6,691
    
    
    
    4,865
    
    
    
    (507
    )
    
    
    1,826Non-interest expense
    
    
    213,060
    
    
    
    203,524
    
    
    
    144,494
    
    
    
    9,536
    
    
    
    59,030Income (loss) from continuing
operations before income taxes
    
    
    29,171
    
    
    
    16,569
    
    
    
    (4,581
    )
    
    
    12,602
    
    
    
    21,150Income taxes
    
    
    (11,688
    )
    
    
    (6,924
    )
    
    
    2,133
    
    
    
    (4,764
    )
    
    
    (9,057
    )Income from continuing operations
    
    $
    17,483
    
    
    $
    9,645
    
    
    $
    (2,448
    )
    
    $
    7,838
    
    
    $
    12,093
 For the Year Ended December 31, 2004 Compared to the Same 2003 Period: The improvement in income from continuing operations was primarily the result of higher
investment banking revenues as well as increased revenue from the activities of Ryan Becks
financial consultants. Investment banking revenue increased 74% from 2003. The improvement was largely attributable
to the increase in merger and acquisition and advisory business in 2004 in both the financial
institutions group and the middle market investment banking group. Ryan Becks Financial
Institutions Group completed 22 transactions during 2004, versus 17 during 2003. The decrease in principal transaction revenue was primarily the result of reductions in
trading revenue associated with the firms fixed income proprietary trading activity. Net interest income increased 14% from 2003. The improvement in net interest income
primarily resulted from Ryan Becks participation in interest income associated with approximately
$237 million of customer margin debit balances and fees earned in connection with approximately
$1.2 billion in customer money market account balances. Commission revenue increased 5% in 2004. The improvement is largely due to the increased
activity on the part of the firms retail client base as well as the increase in average
production per financial 44




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##### Table of Contents



consultant from $335,000 of gross revenues per financial consultant during 2003 to $373,000
during 2004. The increase in employee compensation and benefits of 8% from 2003 is primarily due to the
increase in the firms bonuses which is correlated to the increased investment banking revenues
from 2003. Occupancy and rent expenses have increased 21% from 2003. This increase is primarily due to
the additional offices opened in 2004 and the leasing of back-office space associated with the
relocation of Ryan Becks corporate headquarters. The increase in advertising and promotion expense was mainly attributable to expenses
associated with the launch of Ryan Becks first formal advertising campaign designed to expand Ryan
Becks exposure through print and television media. Professional fees decreased by 48% in 2004. The decrease is primarily due to legal
settlements reached in 2004, including the settlement of the former Gruntals bankruptcy case,
which has resulted in a decrease in Ryan Becks legal reserve for 2004. Offsetting this decrease
is the increase in professional fees associated with higher internal audit costs related to Ryan
Becks compliance with the Sarbanes-Oxley Act of 2002. The decrease in communications and other expenses from 2003 related primarily to decreased
communication costs due to the elimination of duplicate vendors and services carried as a result
of the Gruntal transaction. For the Year Ended December 31, 2003 Compared to the Same 2002 Period: The improvement in income from continuing operations was primarily the result of the full
year impact of increased revenue from Ryan Becks additional financial consultants, as well as the
improvement in investment banking revenue. Investment banking revenue increased 45% from 2002. The improvement was largely attributable
to the increased distribution capabilities discussed above along with an increase in merger and
acquisition and advisory business in 2003. Net interest income increased 51% from 2002. The improvement in net interest income
primarily resulted from the expansion of municipal bond trading and the associated spread between
the interest on the municipal bonds and the financing costs incurred. Also included in interest
income was Ryan Becks participation in interest income associated with approximately $259 million
of customer margin debit balances and fees earned in connection with approximately $1.3 billion in
customer money market account balances. This improvement in interest income was partially offset
by the interest expense associated with a $5.0 million subordinated borrowing from the Company,
which was repaid in full on September 3, 2003, as well as an increased level of borrowings from
Ryan Becks clearing agent as a result of a higher volume of trading activity. Principal transactions revenue increased 95% from 2002. The improvement in principal
transaction revenue was primarily the result of additional financial consultants and trading
personnel hired in connection with the Gruntal transaction on April 26, 2002. This increase was
aided by the improved operating environment of the U.S. securities industry in the second half of
fiscal 2003. Commission revenue increased 35% in 2003. The improvement is largely due to the additional
financial consultants, as well as the improvement in equity and fixed income markets. The increase in employee compensation and benefits of 46% from 2002 is primarily due to the
additional personnel. Also, the increase in Ryan Becks revenue resulted in an increase in
compensation in the form of commission expense and discretionary bonuses. 45




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##### Table of Contents



Occupancy and rent expenses have increased 36% from 2002. This increase is primarily due to
the additional offices operated as a result of the Gruntal transaction. Professional fees increased by 162% in 2003. The increase was primarily due to additional
legal expense associated with the successor liability issues related to the Gruntal transaction,
as well as an NASD ruling against Ryan Beck in the amount of $2.7 million which resulted in a $1.7
million increase in professional fees. Additionally, broker registration fees were higher
associated with the additional financial consultants added as a result of the Gruntal transaction. Acquisition-related charges during 2002 included branch closures, professional fees, and
regulatory costs incurred in connection with the Gruntal transaction. The increase in communications, floor broker and clearing fees and other expenses from 2002
related primarily to increased commission revenue and principal transactions revenue associated
with the additional financial consultants. Parent Company Results of Operations The following table is a condensed income statement summarizing the parent companys
results of operations (in thousands): For the Years
    
    
    Change
    
    
    ChangeEnded December 31,
    
    
    2004 vs.
    
    
    2003 vs.2004
    
    
    2003
    
    
    2002
    
    
    2003
    
    
    2002Net interest income:Interest on loans
    
    $
    1,751
    
    
    $
    1,488
    
    
    $
    1,716
    
    
    $
    263
    
    
    $
    (228
    )Interest on investments
    
    
    756
    
    
    
    234
    
    
    
    29
    
    
    
    522
    
    
    
    205Interest on Junior Subordinated Debentures
    
    
    (16,958
    )
    
    
    (16,344
    )
    
    
    (17,439
    )
    
    
    (614
    )
    
    
    1,095Net interest income (expense)
    
    
    (14,451
    )
    
    
    (14,622
    )
    
    
    (15,694
    )
    
    
    171
    
    
    
    1,072Non-interest income:Income from unconsolidated
subsidiaries
    
    
    485
    
    
    
    425
    
    
    
    
    
    
    
    60
    
    
    
    425Securities activities, net
    
    
    3,693
    
    
    
    404
    
    
    
    3,837
    
    
    
    3,289
    
    
    
    (3,433
    )Impairment of securities
    
    
    
    
    
    
    
    
    
    
    (18,801
    )
    
    
    
    
    
    
    18,801Litigation settlement
    
    
    22,840
    
    
    
    
    
    
    
    
    
    
    
    22,840
    
    
    
    Investment banking expense
    
    
    
    
    
    
    (635
    )
    
    
    
    
    
    
    635
    
    
    
    (635
    )Other
    
    
    512
    
    
    
    
    
    
    
    (359
    )
    
    
    512
    
    
    
    359Non-interest income (expense)
    
    
    27,530
    
    
    
    194
    
    
    
    (15,323
    )
    
    
    27,336
    
    
    
    15,517Non-interest expense:Employee compensation and benefits
    
    
    3,042
    
    
    
    90
    
    
    
    940
    
    
    
    2,952
    
    
    
    (850
    )Professional fees
    
    
    1,146
    
    
    
    1,500
    
    
    
    810
    
    
    
    (354
    )
    
    
    690Cost associated with debt redemption
    
    
    
    
    
    
    1,648
    
    
    
    3,125
    
    
    
    (1,648
    )
    
    
    (1,477
    )Other
    
    
    1,454
    
    
    
    600
    
    
    
    280
    
    
    
    854
    
    
    
    320Non-interest expense
    
    
    5,642
    
    
    
    3,838
    
    
    
    5,155
    
    
    
    1,804
    
    
    
    (1,317
    )Income (loss) before income taxes
    
    
    7,437
    
    
    
    (18,266
    )
    
    
    (36,172
    )
    
    
    25,703
    
    
    
    17,906Income taxes
    
    
    (2,692
    )
    
    
    5,089
    
    
    
    12,661
    
    
    
    (7,781
    )
    
    
    (7,572
    )Income (loss) from continuing operations
    
    $
    4,745
    
    
    $
    (13,177
    )
    
    $
    (23,511
    )
    
    $
    17,922
    
    
    $
    10,334
 Interest income on loans during the 2004 period represents interest income on loans to
Levitt. In April 2004, Levitt repaid one of those loans in the amount of $5.5 million. Interest
on loans for each of the years in the two year period ended December 31, 2003 represent interest
income associated with a $5 million loan to Ryan Beck and a $30 million loan to Levitt. The $30
million loan to Levitt was originated 46




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in April 2002. The $5 million Ryan Beck loan was fully repaid in September 2003. Interest on investments during 2004 was primarily interest and dividends associated with a
debt and equity portfolio managed by a money manager as well as earnings from a reverse repurchase
account with BankAtlantic. Interest income on investments during the comparable 2003 and 2002
periods were primarily interest income recognized by the Company on the BankAtlantic reverse
repurchase account. Interest expense for the years ended December 31, 2004 and 2003 consisted primarily of debt
service on the Companys junior subordinated debentures. The average balance associated with the
Companys junior subordinated debentures was $263.3 million during the years ended December 31,
2004 and 2003. The higher interest expense during 2004 compared to 2003 was primarily due to
higher rates on variable rate junior subordinated debentures during 2004. The decrease in interest expense during 2003 compared to 2002 resulted from lower rates on
borrowings partially offset by higher average balances. During 2002 and 2003, we redeemed higher
rate trust preferred securities and subordinated debentures with the proceeds from the issuance of
lower rate junior subordinated debentures. During the years ended December 31, 2003 and 2002, we
issued $77.3 million and $186.0 million, respectively, of junior subordinated debentures, all of
which were issued in connection with the issuance of trust preferred securities. The average rate
of these debentures was 5.94%. A portion of the proceeds from the issuance of those debentures
were used to retire $74.8 million of 9.50% fixed rate trust preferred securities and $21.0 million
of 9.00% subordinated debentures. Income from unconsolidated subsidiaries represents the equity earnings from trusts formed to
issue trust preferred securities. Prior to January 1, 2003, the trusts were consolidated for
financial reporting. This change in accounting methodology was required due to a change in
applicable accounting rules. The securities activities during 2004 primarily represent gains from sales of exchanged
traded mutual funds. The Company sold these mutual funds in order to invest the proceeds with a
money manager. Securities activities during 2003 represent a gain realized on a liquidating
dividend from an equity security. Securities activities during 2002 reflect gains from the sales
of equity securities. During 2002, the Company recognized a $15 million impairment charge associated with its
investment in a privately held technology company. The Company charged off the carrying value of
this investment as the ability of the technology company to continue as a going concern was in
doubt. Additionally, during 2002, the Company recognized impairment charges of $3.8 million on
publicly traded equity securities resulting from significant declines in value that were other
than temporary. The determinations were based on the length of time that the carrying amount of an
investment was significantly above its market value and on the near term prospects of the issuers.
The Company did not recognize impairments on securities during 2003 or 2004. The litigation settlement reflects proceeds from the settlement of litigation related to the
Companys prior investment of $15 million in the technology company discussed above. Pursuant to
that settlement, the Company sold its stock in the technology company to a third party investor
group for $15 million in cash, the Companys original cost, and the Company received consideration
from the technology company for legal expenses and damages, which consisted of $1.7 million in cash
and 378,160 shares of the Companys Class A Common Stock returned by the technology company to the
Company. The Companys investment banking expense during the year ended December 31, 2003 resulted from
fees paid by it to Ryan Beck in connection with Ryan Becks underwriting of offerings of trust
preferred securities by the Company in 2003. These fees are included in Ryan Becks investment
banking income in Ryan Becks business segment results of operations but were eliminated in the
Companys consolidated financial statements. The Company recorded compensation expense during 2004 as a result of the allocation of
investor relations, corporate and risk management compensation cost to the Company from
BankAtlantic effective January 1, 2004. This expense was partially offset by fees received by the
Company for investor relations 47




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and risk management services provided by the Company to Levitt and BFC Financial Corporation,
which are included in other income during 2004. Compensation expense during the 2003 periods
primarily resulted from the issuance of Class A restricted stock to BankAtlantic employees and the
amortization of a forgivable loan related to executive recruiting. The compensation expense during
2002 was primarily related to the Ryan Beck retention pool established upon the acquisition of Ryan
Beck in June 1998. Cost associated with debt redemption during 2003 resulted from the Company redeeming its
5.625% convertible debentures at a redemption price of 102% of the principal amount. The loss on
the redemption reflects a $732,000 write-off of deferred offering costs and a $916,000 call
premium. During 2002, we recognized a $3.1 million loss associated with the redemption of
debentures. The decreased professional fees during 2004 primarily resulted from lower legal fees incurred
in connection with the technology company litigation, which was settled in the first quarter of
2004. This decline in professional fees was partially offset by expenses associated with
compliance with the Sarbanes-Oxley Act of 2002. The increase in professional fees during 2003
consisted of higher fees associated with the technology company litigation and legal, accounting
and tax advice associated with the Levitt spin-off. The increase in other expenses during 2004 relates to administrative expense associated with
the departments transferred to the Company as well as higher regulatory compliance costs. BankAtlantic Bancorp Consolidated Financial Condition Our total assets at December 31, 2004 were $6.4 billion compared to $4.8 billion at
December 31, 2003. The increase in total assets primarily resulted from:  
    Purchase of approximately $1.3 billion of residential real estate loans;
    Origination of and participation in $1.6 billion of commercial real estate loans;
    Origination of approximately $400 million of home equity loans;
    Purchase of approximately $800 million of securities available for sale and
investment securities;
    Additions of $49 million of fixed assets associated with the Companys new corporate
headquarter building and BankAtlantics branch renovation and expansion initiatives;
    Receivable from Ryan Becks clearing agent associated with Ryan Becks trading
activities;
    Higher real estate inventory related to increased construction activity by the
Riverclub real estate joint venture acquired by BankAtlantic in connection with the
Community acquisition;
    Increases in accrued interest receivable due to higher loan receivable and securities
balances; and
    Higher Federal Home Loan Bank stock balances associated with a substantial increase in
FHLB advance borrowings. The above increases in total assets were partially offset by declines in other assets
primarily due to the reduction in BankAtlantics prepaid pension asset, due to a minimum pension
liability at December 31, 2004. The Companys total liabilities at December 31, 2004 were $5.9 billion compared to $4.4
billion at December 31, 2003. The increases in total liabilities primarily resulted from:  
    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.
    Increases in short-term borrowings and FHLB advances to fund loan and securities
growth; and
    Increases in other liabilities primarily due to securities purchased pending
settlement in January 2005. Stockholders equity at December 31, 2004 was $469.3 million compared to $413.5 million at
December 31, 2003. The increase was primarily attributable to earnings of $70.8 million and $10.0
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 offset by declaration of $8.1
million of common 48




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##### Table of Contents



stock dividends, a $6.1 million reduction in additional paid in capital resulting from the
retirement of 378,160 shares of the Companys Class A Common Stock received as part of the private
technology company litigation settlement, $6.9 million change in accumulated other comprehensive
income, net of income tax benefits, and a $4.4 million reduction in additional paid in capital
related to the acceptance of Class A common stock as consideration for the payment of withholding
taxes and the exercise price which were due upon the exercise of Class A stock options. Liquidity and Capital Resources BankAtlantic Bancorp, Inc. 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, repay borrowings, and purchase
equity securities and to fund operations. The Companys annual debt service associated with its
junior subordinated debentures and financial institution borrowings is approximately $16.7 million.
The Companys estimated current annual dividends to common shareholders are approximately $8.4
million. During the year ended December 31, 2004, the Company received $15.0 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 loan covenants 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, we also transferred our 4.9% ownership interest in
Bluegreen Corporation to Levitt in exchange for a $5.5 million note and additional shares of
Levitts stock (which additional shares were included in the spin-off). This $5.5 million note
was repaid by Levitt during 2004. Additionally, 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. The
Company maintained a revolving credit facility of $30 million with an independent
financial institution. The credit facility contained customary covenants, including financial
covenants relating to BankAtlantics regulatory capital and maintenance of certain loan loss
reserves and is secured by the common stock of BankAtlantic. The Company has used this credit
facility to temporarily fund acquisitions and asset purchases as well as for general corporate
purposes. The credit facility had an outstanding balance of $100,000 at December 31, 2004, and we
were in compliance with all loan covenants. Amounts outstanding accrue interest at the prime rate
minus 50 basis points, and the facility was repaid in March 2005. BankAtlantic 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; 49




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##### Table of Contents



proceeds from securities sold under agreements to repurchase and federal funds purchased;
advances from FHLB; 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, payments of
maturing certificates of deposit, payments of operating expenses and payments of dividends to the
Company. The FHLB has granted BankAtlantic a $1.8 billion line of credit subject to available
collateral, with a maximum term of ten years. BankAtlantic has utilized its FHLB line of credit to
borrow $1.5 billion at December 31, 2004. 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 $270 million at
December 31, 2004. BankAtlantic has established lines of credit for up to $235 million with other
banks to purchase federal funds and has established a $7.5 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 December 31, 2004 were $259.8
million and $40.0 million, respectively, compared to $384.3 million and $43.7 million,
respectively, at December 31, 2003. Additionally, BankAtlantic had commitments to purchase
mortgage-backed securities of $4.0 million and $8.6 million at December 31, 2004 and 2003,
respectively. At December 31, 2004, total loan commitments represented approximately 6.5% of net
loans receivable. At year-end 2004, BankAtlantic had approximately $312.2 million in investments and
mortgage-backed securities pledged against securities sold under agreements to repurchase and
$55.6 million pledged against public deposits and treasury tax and loan accounts. During 2002, BankAtlantic purchased a $14.3 million facility to consolidate its headquarters
and back office operations into a centralized location. As of December 31, 2004, the Company had
incurred approximately $24.5 million in renovation costs. The total additional estimated cost to
renovate is approximately $4.9 million, and the facility is expected to be completed during 2005. As disclosed previously, we are taking steps to correct identified deficiencies in
BankAtlantics compliance with the USA Patriot Act, anti-money laundering laws and the Bank
Secrecy Act and have been cooperating with regulators and other federal agencies concerning those
deficiencies. We cannot predict whether or to what extent monetary or other penalties will be
imposed upon BankAtlantic by regulators or other federal agencies in connection with these
compliance deficiencies. 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 the necessary approvals. It is anticipated that delays, if any occur, would not alter
the course or scope of BankAtlantics branching strategy. The estimated cost of constructing
these branches is approximately $18 million. 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 $4.1
million in renovation costs on branch facilities as of December 31, 2004. 50




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##### Table of Contents



A significant source of our liquidity is repayments and maturities of loans and securities.
The table below presents the contractual principal repayments and maturity dates of our loan
portfolio and securities available for sale at December 31, 2004. The total amount of principal
repayments on loans and securities contractually due after December 31, 2005 was $4.8 billion, of
which $1.7 billion have fixed interest rates and $3.1 billion have floating or adjustable interest
rates. Actual principal repayments may differ from information shown below (in thousands): OutstandingonDecember 31,
    
    
    For the Period Ending December 31, (1)2006-
    
    
    2008-
    
    
    2013-2004
    
    
    2005
    
    
    2007
    
    
    2012
    
    
    2017
    
    
    2018-2022
    
    
    >2023Commercial real estate
    
    $
    2,661,801
    
    
    $
    1,187,534
    
    
    $
    902,651
    
    
    $
    363,797
    
    
    $
    115,126
    
    
    $
    86,892
    
    
    $
    5,801Residential real estate
    
    
    2,070,304
    
    
    
    39,665
    
    
    
    19,403
    
    
    
    20,262
    
    
    
    128,830
    
    
    
    414,040
    
    
    
    1,448,104Consumer (2)
    
    
    477,226
    
    
    
    2,559
    
    
    
    3,329
    
    
    
    16,329
    
    
    
    235,589
    
    
    
    219,420
    
    
    
    Commercial business
    
    
    158,638
    
    
    
    86,939
    
    
    
    35,354
    
    
    
    29,277
    
    
    
    7,068
    
    
    
    
    
    
    
    Total loans
    
    $
    5,367,969
    
    
    $
    1,316,697
    
    
    $
    960,737
    
    
    $
    429,665
    
    
    $
    486,613
    
    
    $
    720,352
    
    
    $
    1,453,905Total securities
available for
sale (3)
    
    $
    721,456
    
    
    $
    4,398
    
    
    $
    2,917
    
    
    $
    39,435
    
    
    $
    157,691
    
    
    $
    104,515
    
    
    $
    412,500
   (1)
    
    Does not include deductions for the undisbursed portion of loans in process,
deferred loan fees, unearned discounts and allowances for loan losses.(2)
    
    Includes second mortgage loans.(3)
    
    Does not include $25.7 million of equity securities available for sale. Loan maturities and sensitivity of loans to changes in interest rates for commercial
business and real estate construction loans at December 31, 2004 were (in thousands): Commercial
    
    
    Real EstateBusiness
    
    
    Construction
    
    
    TotalOne year or less
    
    $
    156,756
    
    
    $
    821,063
    
    
    $
    977,819Over one year, but less than five years
    
    
    1,248
    
    
    
    636,034
    
    
    
    637,282Over five years
    
    
    634
    
    
    
    5,572
    
    
    
    6,206$
    158,638
    
    
    $
    1,462,669
    
    
    $
    1,621,307Due After One Year:Pre-determined interest rate
    
    $
    1,882
    
    
    $
    19,751
    
    
    $
    21,633Floating or adjustable interest rate
    
    
    
    
    
    
    621,855
    
    
    
    621,855$
    1,882
    
    
    $
    641,606
    
    
    $
    643,488
 BankAtlantics geographic loan concentration at December 31, 2004 was: Florida
    
    
    56

    %California
    
    
    12
    %Northeast
    
    
    8
    %Other
    
    
    24
    %Total
    
    
    100
    %
 The loan concentration for BankAtlantics originated portfolio is primarily in Florida. The
concentration in California, the Northeast, and other locations primarily relates to purchased
wholesale residential real estate loans. 51




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##### Table of Contents



At December 31, 2004, BankAtlantic met all applicable liquidity and regulatory capital
requirements. At the indicated dates, BankAtlantics capital amounts and ratios were (dollars in
thousands): Minimum RatiosAdequately
    
    
    WellActual
    
    
    Capitalized
    
    
    CapitalizedAmount
    
    
    Ratio
    
    
    Ratio
    
    
    RatioAt 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
    %At December 31, 2003:Total risk-based capital
    
    $
    447,967
    
    
    
    12.06
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based
capital
    
    $
    379,505
    
    
    
    10.22
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    379,505
    
    
    
    8.52
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    379,505
    
    
    
    8.52
    %
    
    
    4.00
    %
    
    
    5.00
    %
 Savings institutions are also subject to the provisions of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA). Regulations implementing the prompt corrective
action provisions of FDICIA define specific capital categories based on FDICIAs defined capital
ratios, as discussed more fully in Part I under Regulation of Federal Savings Banks. Ryan Beck Ryan Becks primary sources of funds during the year ended December 31, 2004 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, pay dividends 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 2004 and 2003, the
buyer made $5.9 million and $1.6 million, respectively, of principal repayments of the promissory
note which reduced the balance to $6.1 million at December 31, 2004. In the ordinary course of business, Ryan Beck borrows, under an agreement with its Clearing
Broker, by pledging securities owned as collateral primarily to finance its trading inventories.
The amount and terms of the borrowings are subject to the lending policies of the Clearing Broker
and can be changed at the Clearing Brokers discretion. Additionally, the amount financed is also
impacted by the market value of the securities owned. Ryan Beck is subject to the net capital provision of Rule 15c3-1 under the Securities
Exchange Act of 1934, which requires the maintenance of minimum net capital and requires the ratio
of aggregate indebtedness to net capital, both as defined, not to exceed 15 to 1. Additionally,
Ryan Beck, as a market maker, is subject to supplemental requirements of Rule 15c3-1(a) 4, which
provides for the computation of net capital to be based on the number of and price of issues in
which markets are made by Ryan Beck, not to exceed $1.0 million. Ryan Becks regulatory net
capital was $35.3 million, which was $34.3 million in excess of its required net capital of $1.0
million at December 31, 2004. 52




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Ryan Beck operates under the provisions of paragraph (k)(2)(ii) of Rule 15c3-3 of the
Securities and Exchange Commission as a fully disclosed introducing broker and, accordingly,
customer accounts are carried on the books of the clearing broker. However, Ryan Beck safekeeps
and redeems municipal bond coupons for the benefit of its customers. Accordingly, Ryan Beck is
subject to the provisions of SEC Rule 15c3-3 relating to possession or control and customer
reserve requirements and was in compliance with such provisions at December 31, 2004. Consolidated Cash Flows A summary of our consolidated cash flows follows (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Net cash provided (used) by:Operating activities
    
    $
    66,793
    
    
    $
    100,282
    
    
    $
    1,485Investing activities
    
    
    (1,456,596
    )
    
    
    147,818
    
    
    
    279,746Financing activities
    
    
    1,404,981
    
    
    
    (378,963
    )
    
    
    (150,691
    )Increase (decrease) in cash and cash
equivalents
    
    $
    15,178
    
    
    $
    (130,863
    )
    
    $
    130,540
 Cash flows from operating activities declined during 2004 compared to 2003 due primarily to a
decrease in Ryan Becks clearing agent liability and the reduction in cash flows associated with
Levitt due to the December 31, 2003 spin-off. The above declines in cash flows were partially
offset by a substantial decrease in real estate inventory as a result of the Levitt spin-off. Cash flows from investing activities decreased during 2004 compared to 2003 due to a
substantial increase in loan purchases and originations and securities purchases. Cash flows from financing activities increased during 2004 compared to 2003 resulting
primarily from additional FHLB advance and short-term borrowings used to fund loan and securities
purchases. Also contributing to the increase in cash flows from financing activities was a
substantial increase in low-cost deposits. Cash flows from operating activities increased during 2003 compared to 2002 due primarily to
increases in other liabilities and amounts due to clearing agent. The above increases in cash
flows were partially offset by a substantial decrease in securities owned activities. Cash flows from investing activities decreased during 2003 compared to 2002 resulting
primarily from greater purchases and originations of loans, net of repayments, and lower proceeds
from the sale and maturity of securities. These decreases in cash flows from investing activities
were partially offset by lower investments in unconsolidated subsidiaries and reduced purchases of
investments. Cash flows from financing activities declined during 2003 compared to 2002 primarily as a
result of increases in FHLB maturities and repayments. The decreases were partially offset by a
net increase in deposits and a net increase in securities sold under agreements to repurchase. 53




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##### Table of Contents



Off Balance Sheet Arrangements, Contractual Obligations and Loan Commitments The table below summarizes the Companys loan commitments at December 31, 2004 (in thousands): Amount of Commitment Expiration Per PeriodTotalAmounts
    
    
    Less than
    
    
    
    
    
    
    4-5
    
    
    After 5Loan Commitments
    
    Committed
    
    
    1 year
    
    
    1-3 years
    
    
    years
    
    
    yearsLines of credit
    
    $
    524,074
    
    
    $
    121,688
    
    
    $
    
    
    
    $
    
    
    
    $
    402,386Standby letters of credit
    
    
    55,605
    
    
    
    55,605
    
    
    
    
    
    
    
    
    
    
    
    Loan commitments
    
    
    299,811
    
    
    
    299,811
    
    
    
    
    
    
    
    
    
    
    
    Other commitments
    
    
    3,947
    
    
    
    3,947
    
    
    
    
    
    
    
    
    
    
    
    Total commercial commitments
    
    $
    883,437
    
    
    $
    481,051
    
    
    $
    
    
    
    $
    
    
    
    $
    402,386
 Lines of credit are primarily revolving lines to home equity loan and business loan
customers. The business loans to customers usually expire in less than one year and the home
equity lines generally expire in 15 years. Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the
performance of a customer to a third party. BankAtlantic 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 $36.7 million at December 31, 2004.
BankAtlantic also issues standby letters of credit to commercial lending customers guaranteeing the
payment of goods and services. These types of standby letters of credit had a maximum exposure of
$18.9 million at December 31, 2004. Those 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 loans to
customers. BankAtlantic may hold certificates of deposit and residential and commercial liens as
collateral for such commitments, similar to other types of borrowings. Loan commitments are agreements to lend funds to a customer as long as there is no violation
of any condition established in the commitment. Commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. BankAtlantic evaluates each customers creditworthiness on a
case-by-case basis. The amount of collateral required by BankAtlantic in connection with an
extension of credit is based on managements credit evaluation of the counter-party. The other commitments consist of a 5-year forward commitment to purchase the underlying
collateral from a government agency pool in March 2005. Ryan Beck, in its capacity as a market-maker and dealer in corporate and municipal
fixed-income and equity securities, may enter into transactions in a variety of cash and derivative
financial instruments in order to facilitate customer order flow and to hedge market risk
exposures. Accordingly, these transactions result in off-balance-sheet risk as Ryan Becks
ultimate obligation may exceed the amount recorded in the Consolidated Statement of Financial
Condition. As a securities broker and dealer, Ryan Beck is engaged in various securities trading and
brokerage activities servicing a diverse group of domestic corporations, governments,
institutional, and individual investors. Ryan Beck has exposure to risk associated with the
nonperformance of these counter parties in fulfilling their contractual obligations. At December 31, 2004, the Company did not have off balance sheet arrangements that would have
a material effect on the Companys consolidated financial statements. 54




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##### Table of Contents



The table below summarizes the Companys contractual obligations at December 31, 2004 (in
thousands). Payments Due by PeriodLess than
    
    
    
    
    
    
    4-5
    
    
    After 5Contractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    years
    
    
    yearsTime deposits
    
    $
    761,061
    
    
    $
    556,104
    
    
    $
    164,336
    
    
    $
    40,188
    
    
    $
    433Long-term debt
    
    
    301,007
    
    
    
    100
    
    
    
    5,683
    
    
    
    
    
    
    
    295,224Advances from FHLB (1)
    
    
    1,544,497
    
    
    
    877,500
    
    
    
    135,417
    
    
    
    419,000
    
    
    
    112,580Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    72,391
    
    
    
    13,263
    
    
    
    21,677
    
    
    
    14,715
    
    
    
    22,736Pension obligation
    
    
    12,102
    
    
    
    821
    
    
    
    1,815
    
    
    
    2,169
    
    
    
    7,297Other obligations
    
    
    6,233
    
    
    
    6,233
    
    
    
    
    
    
    
    
    
    
    
    Securities sold but not yet purchased
    
    
    39,462
    
    
    
    39,462
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    2,736,753
    
    
    $
    1,493,483
    
    
    $
    328,928
    
    
    $
    476,072
    
    
    $
    438,270
   (1)
    
    Payments due by period are based on contractual maturities (2)
    
    The above table excludes interest payments on
interest bearing liabilities. Long-term debt primarily consists of the junior subordinated debentures issued by the
Company as well as BankAtlantics subordinated debentures and mortgage backed bonds. Operating
lease obligations represent minimum future lease payments in which the Company is the lessee for
real estate and equipment leases. Securities sold but not yet purchased represent obligations of Ryan Beck to deliver specified
financial instruments at contracted prices, thereby creating a liability to purchase the financial
instrument in the market at prevailing prices. The pension obligation represents the accumulated benefit obligation of the Companys defined
benefit plan at December 31, 2004. The payments represent the estimated benefit payments through
2014, of which the majority of the payments will be funded through plan assets. The table does not
include estimated benefit payments after 2014. The actuarial present value of projected
accumulated benefit obligation was $26.2 million at December 31, 2004. The other obligations are legally binding agreements with vendors for the purchase of
services and materials associated with the construction of BankAtlantics new corporate
headquarters and BankAtlantics branch renovations. The headquarters is expected to be completed
during the second quarter of 2005. Critical Accounting Policies Management views critical accounting policies as accounting policies that are important to
the understanding of our financial statements and also involve estimates and judgments about
inherently uncertain matters. In preparing the financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the consolidated statements of
financial condition and assumptions that affect the recognition of income and expenses on the
statement of operations for the periods presented. Actual results could differ significantly from
those estimates. Material estimates that are particularly susceptible to significant change in
subsequent periods relate to the determination of the allowance for loan losses, evaluation of
goodwill and other intangible assets for impairment, the valuation of real estate acquired in
connection with foreclosure or in satisfaction of loans, the valuation of the fair value of assets
and liabilities in the application of the purchase method of accounting, the 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 55




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##### Table of Contents



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. We have discussed the critical accounting estimates outlined below with our audit
committee of our board of directors, and the audit committee has reviewed our disclosure. See
note 1, Summary of Significant Accounting Policies to the Notes to Consolidated Financial
Statements, for a detailed discussion of our significant accounting policies. Allowance for loan losses The allowance for loan losses is maintained at an amount we consider adequate to absorb
probable losses inherent in our loan portfolio. We have developed policies and procedures for
evaluating our allowance for loan losses which consider all information available to us. However,
we must rely on estimates and judgments regarding issues where the outcome is unknown. As a
consequence, if circumstances change the allowance for loan losses may decrease or increase
significantly. The calculation of our allowance for loan losses consists of three components. The first
component requires us to identify impaired loans based on management classification and, if
necessary, assign a valuation allowance to the impaired loans. A loan is deemed impaired when
collection of principal and interest based on the contractual terms of the loan is not likely to
occur. Valuation allowances are established on loans that are collateral-dependent and
foreclosure is probable based on managements estimated fair value of the collateral less the cost
to dispose of the collateral. Valuation allowances are established on other loans based on the
present value of expected future cash flows. These valuations are based on available information
and require estimates and subjective judgments about fair values of the collateral or expected
future cash flows. Most of our loans do not have an observable market price and an estimate of
the collection of contractual cash flows is based on the judgment of management. It is likely that
we would obtain materially different results if different assumptions or conditions were to
prevail. This would include updated information that came to managements attention about the
loans or a change in the current economic environment. As a consequence of the estimates and
assumptions required to calculate the first component of our allowance for loan losses, a change
in these highly uncertain estimates could have a materially favorable or unfavorable impact on our
financial condition and results of operations. The second component of the allowance requires us to group loans that have similar credit
risk characteristics so as to form a basis for predicting losses based on loss percentages and
delinquency trends as it relates to the group. Management assigns an allowance to these groups of
loans by utilizing data such as historical loss experiences, trends in the industry, static pool
analysis, delinquency trends and credit scores. A subsequent change in data trends may result in
material changes in this component of the allowance from period to period. The third component of the allowance is the unassigned portion of the allowance. This
component addresses certain industry and geographic concentrations, the view of regulators, model
imprecision, change in underwriting standards and changes in the composition of the loan
portfolio. This component requires substantial management judgment in adjusting the allowance for
the changes in the current economic climate compared to the economic environment that existed
historically. Due to the subjectivity involved in the determination of the unassigned portion of
the allowance, the relationship of the unassigned component to the total allowance may fluctuate
substantially from period to period. Management believes that the allowance for loan losses reflects managements best estimate of
incurred credit losses as of the statement of financial condition date. As of December 31, 2004,
our allowance for loan losses was $46 million. See Provision for Loan Losses for a discussion of
the amounts of our allowance assigned to each loan product and the amount of our unassigned
allowance. The estimated allowance derived from the above methodology may be significantly
different from actual realized losses. Actual losses incurred in the future are highly dependent
upon future events, including the economies of geographic areas in which we hold loans. These
uncertainties are beyond managements control. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review 56




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our allowance for loan losses. Such agencies may require us to recognize additions to the
allowance based on their judgments and information available to them at the time of their
examination. On an on-going basis, we analyze our loan portfolio by monitoring the loan mix, credit
quality, historical trends and economic conditions. As a consequence, our allowance for loan
losses estimates will change from period to period. A measure of this change is our ratio of the
allowance for loan losses to total loans. This ratio has declined from 1.62% at December 31, 2000
to 1.00% at December 31, 2004. If we were to increase or decrease our historical loss experience
in the assigned portion of the allowance for loan losses by 25 basis points at December 31, 2004,
we estimate that our pre-tax earnings would increase or decrease by approximately $11 million. Valuation of securities and trading activities We record our securities available for sale, investment securities, trading securities and
derivative instruments in our statement of financial condition at fair value. We use the
following three methods for valuation: obtaining market price quotes, using a price matrix, and
applying a management valuation model. The following table provides the sources of fair value for our investment securities, trading
securities and derivative instruments at December 31, 2004 (in thousands): NationalMarket Price
    
    
    Price
    
    
    ValuationQuotes
    
    
    Matrix
    
    
    Model
    
    
    TotalInvestment securitiesMortgage-backed securities
    
    $
    
    
    
    $
    500,517
    
    
    $
    
    
    
    $
    500,517Tax exempt securities
    
    
    
    
    
    
    353,441
    
    
    
    
    
    
    
    353,441Other securities
    
    
    
    
    
    
    
    
    
    
    585
    
    
    
    585Equity securities
    
    
    25,704
    
    
    
    
    
    
    
    
    
    
    
    25,704Total investment securities
    
    
    25,704
    
    
    
    853,958
    
    
    
    585
    
    
    
    880,247Trading securitiesSecurities owned
    
    
    125,443
    
    
    
    
    
    
    
    
    
    
    
    125,443Securities sold not yet purchased
    
    
    (39,462
    )
    
    
    
    
    
    
    
    
    
    
    (39,462
    )Total trading securities
    
    
    85,981
    
    
    
    
    
    
    
    
    
    
    
    85,981Derivatives
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    49Total
    
    $
    111,685
    
    
    $
    853,958
    
    
    $
    634
    
    
    $
    966,277
 Equity securities trade daily on various stock exchanges. The fair value of these securities
in our statement of financial condition was based on the closing price quotations at period end.
The closing quotation represents inter-dealer quotations without retail markups, markdowns or
commissions and do not necessarily represent actual transactions. We adjust our equity securities
available for sale to fair value monthly with a corresponding increase or decrease, net of income
taxes, to other comprehensive income. Declines in the fair value of individual securities below
their cost that are other than temporary result in write-downs through charges to earnings of the
individual securities to their fair value. We subscribe to a third-party service to obtain a pricing matrix to determine the fair value
of our debt securities available for sale. The pricing matrix computes a fair value of debt
securities based on the securities coupon rate, maturity date and estimates of future prepayment
rates. The valuations obtained from the pricing matrix are not actual transactions and will not
be the actual amount realized upon sale. It is likely that we would obtain materially different
results if different interest rate and prepayment assumptions were used in the valuation. We
adjust our debt securities available for sale to fair value monthly with a corresponding increase
or decrease, net of income taxes, to other comprehensive income. 57




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Debt securities held to maturity are recorded at historical cost with the fair value
disclosed on our statement of financial condition. Declines in the fair value of individual
securities below their cost that are other than temporary result in write-downs through charges to
earnings of the individual securities to their fair value. Future contracts or commitments to purchase residential loans that are not listed on an
exchange for which we cannot obtain broker quotes are valued based on a valuation model.
Management estimates the valuation of these contracts based on available market information. This
valuation requires a significant amount of judgment in assessing the estimated fair value. These
estimates would be significantly different if the assumptions concerning credit quality were
changed. At December 31, 2004, the fair value and unrealized gain associated with our securities was
$880.2 million and $5.2 million, respectively. If interest rates were to decline by 200 basis
points, we estimate that the fair value of our debt securities portfolio would increase by $100.4
million. In contrast, if interest rates were to increase by 200 basis points, we estimate that
the fair value of our securities would decline by $88.8 million. The above changes in value are
based on various assumptions concerning prepayment rates and shifts in the interest rate yield
curve and do not take into account any mitigating steps that management might take in response to
changes in interest rates. We are likely to obtain significantly different results if these
assumptions were changed. At December 31, 2003 and 2002, our securities had a fair value of
$358.5 million and $707.9 million, respectively, and unrealized gains were $9.3 million and $22.3
million, respectively. Securities owned and securities sold but not yet purchased are accounted for at fair value
with changes in fair value included in earnings. The fair value of these securities is determined
by obtaining security values from various sources, including dealer price quotations and price
quotations for similar instruments traded and management estimates. The majority of our
securities owned are listed on national markets or market quotes can be obtained from brokers.
The fair values of securities owned and securities sold but not yet purchased are highly volatile
and are largely driven by general market conditions and changes in the market environment. The
most significant factors affecting the valuation of securities owned and securities sold but not
yet purchased is the lack of liquidity and credit quality of the issuer. Lack of liquidity
results when trading in a position or a market sector has slowed significantly or ceased and
quotes may not be available. Impairment of Goodwill We test goodwill for impairment annually. The test requires us to determine the fair value
of our reporting units and compare the reporting units fair value to its carrying value. The
fair values of the reporting units are estimated using discounted cash flow present value
techniques and management valuation models. While management believes the sources utilized to
arrive at the fair value estimates are reliable, different sources or methods could have yielded
different fair value estimates. These fair value estimates require a significant amount of
judgment. Changes in managements valuation of its reporting units may affect future earnings
through the recognition of a goodwill impairment charge. At September 30, 2004 (our goodwill
impairment testing date) the fair value of our reporting units was greater than their carrying
value; therefore, goodwill was not impaired. If the fair value of our reporting units declines
below the carrying amount we would have to perform the second step of the impairment test. This
step requires us to fair value all assets (recognized and unrecognized) and liabilities in a
manner similar to a purchase price allocation. This allocation will include core deposit
intangible assets that are currently not recognized on our financial statements. These
unrecognized assets may result in a significant impairment of goodwill. At December 31, 2004,
total goodwill was $76.7 million. The fair value of our bank operations and Ryan Beck reportable
segments assigned goodwill exceeds the carrying value by $565 million and $43 million,
respectively. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. When testing a long-lived
asset for recoverability, it may be necessary to review estimated lives and adjust the
depreciation period. Changes 58




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in circumstances and the estimates of future cash flows as well as evaluating estimated lives of
long-lived assets are subjective and involve a significant amount of judgment. A change in the
estimated life of a long-lived asset may substantially increase depreciation and amortization
expense in subsequent periods. For purposes of recognition and measurement of an impairment loss,
we are required to group long-lived assets at the lowest level for which identifiable cash flows
are independent of other assets. These cash flows are based on projections from management
reports which are based on subjective interdepartmental allocations. Fair values are not
available for many of our long-lived assets, and estimates must be based on available information,
including prices of similar assets and present value valuation techniques. At December 31, 2004,
total property and equipment was $129.8 million. Our core deposit intangible assets are periodically reviewed for impairment at the branch
level by reviewing the undiscounted cash flows by branch in order to assess recoverability. At
December 31, 2004 our core deposit intangible asset was $10.2 million. The undiscounted cash
flows of the branches assigned to the core deposit intangible asset exceeded its carry amount at
December 31, 2004. During 2005, we expect to relocate to our new corporate headquarters. At December 31, 2004
the facility was considered held and used, as defined by FASB Statement No. 144, with a book
value of $3.5 million. Based on a November 2004 appraisal, management believes the carrying value
of the facility to be recoverable. During 2004, we finalized a plan to renovate the interior of BankAtlantics branches. As a
result of the renovation plan, BankAtlantic shortened the estimated lives of $2.8 million of
branch fixed assets resulting in $1.5 million of accelerated depreciation and amortization during
2004. Accounting for Business Combinations The Company accounts for its business combinations, such as the Community acquisition and the
Gruntal transaction, based on the purchase method of accounting. The purchase method of
accounting requires us to fair value the tangible net assets and identifiable intangible assets
acquired. The fair values are based on available information and current economic conditions at
the date of acquisition. The fair values may be obtained from independent appraisers, discounted
cash flow present value techniques, management valuation models, quoted prices on national markets
or quoted market prices from brokers. These fair values estimates will affect future earnings
through the disposition or amortization of the underlying assets and liabilities. While
management believes the sources utilized to arrive at the fair value estimates are reliable,
different sources or methods could have yielded different fair value estimates. Such different
fair value estimates could affect future earnings through different values being utilized for the
disposition or amortization of the underlying assets and liabilities acquired. Contingent Liabilities Contingent liabilities consist of liabilities that we may incur in connection with Ryan Beck
arbitration proceedings, litigation and regulatory and tax uncertainties arising from the conduct
of our business activities. We have established reserves for legal and other claims when it
becomes probable that we will incur a loss and the loss is reasonably estimated. We have
attorneys, consultants and other professionals assessing the probability of the estimated amounts.
Changes in these assessments can lead to changes in the recorded reserves and the actual costs of
resolving the claims may be substantially higher or lower than the amounts reserved for the claim.
The reserving for contingencies is based on managements judgment on uncertain events in which
changes in circumstances could significantly affect the amounts recorded in the Companys financial
statements. At December 31, 2004, total reserves for contingent liabilities included in other
liabilities were $2.1 million. 59




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Dividends The availability of funds for dividend payments depends upon BankAtlantics and Ryan Becks
ability to pay dividends to the Company. Current regulations applicable to the payment of cash
dividends by savings institutions impose limits on capital distributions based on an institutions
regulatory capital levels, retained net income and net income. See Regulation and Supervision 
Limitation on Capital Distributions. Subject to the results of operations and regulatory capital requirements for BankAtlantic and
indenture restrictions, we will seek to declare regular quarterly cash dividends on our common
stock. Impact of Inflation The financial statements and related financial data and notes presented herein have been
prepared in accordance with generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all of our assets and liabilities are monetary in
nature. As a result, interest rates have a more significant impact on our performance than the
effects of general price levels. Although interest rates generally move in the same direction as
inflation, the magnitude of such changes varies. The possible effect of fluctuating interest rates
is discussed more fully under the section entitled Consolidated Interest Rate Risk In Item 7A
below. 60




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Consolidated Market Risk Market risk is defined as the risk of loss arising from adverse changes in market valuations
which 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. Consolidated Interest Rate Risk The majority of our assets and liabilities are monetary in nature subjecting us to
significant interest rate risk which would arise if the relative values of each of our assets and
liabilities change in conjunction with a general rise or decline in interest rates. We have
developed a model using standard industry software to quantify our interest rate risk. A
sensitivity analysis was performed measuring our potential gains and losses in net portfolio fair
values of interest rate sensitive instruments at December 31, 2004 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,
    Forward contracts,
    Junior subordinated debentures, and
    Off-balance sheet loan commitments. The model calculates the net potential gains and losses in net portfolio fair value by:  i.
    discounting anticipated cash flows from existing assets, liabilities and off-balance
sheet contracts and derivatives at market rates to determine fair values at December 31,
2004,  ii.
    discounting the above expected cash flows based on instantaneous and parallel shifts
in the yield curve to determine fair values; and  iii.
    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
negotiated 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, notes and bonds payable and junior subordinated debentures were
valued for this purpose based on their contractual maturities or redemption dates. 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 tolerances. 61




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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 decay rates,
    Market values of certain assets under various interest rate
scenarios, and
    Re-pricing of certain borrowings. The prepayment assumptions used in the model are:  
    Fixed rate mortgages
    25%
    Fixed rate securities
    22%
    Tax certificates
    10%
    Adjustable rate mortgages
    59%
    Adjustable rate securities
    39% Deposit runoff assumptions used in the model are as follows: Within
    
    1-3
    
    3-5
    
    Over 51 Year
    
    Years
    
    Years
    
    YearsMoney fund savings accounts decay rates
    
    
    17
    %
    
    
    17
    %
    
    
    16
    %
    
    
    14
    %NOW and savings accounts decay rates
    
    
    37
    %
    
    
    32
    %
    
    
    17
    %
    
    
    17
    %
 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 was also assumed 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 table above. 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 above. Furthermore, the results of the calculations in
the 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 impact of changes in interest rates on the Companys
net portfolio value at December 31, 2004 (dollars in thousands): Net PortfolioChanges
    
    Value
    
    
    Dollarin Rate
    
    Amount
    
    
    Change+200
    bp
    
    $
    452,314
    
    
    $
    (128,817
    )+100
    bp
    
    $
    534,255
    
    
    $
    (46,876
    )0
    
    
    $
    581,131
    
    
    $
    -100
    bp
    
    $
    595,287
    
    
    $
    14,156-200
    bp
    
    $
    593,271
    
    
    $
    12,140
 62




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Presented below is an analysis of the impact of changes in interest rates on the Companys
net portfolio value at December 31, 2003 (dollars in thousands): Net PortfolioChanges
    
    Value
    
    
    Dollarin Rate
    
    Amount
    
    
    Change+200
    bp
    
    $
    470,869
    
    
    $
    17,666+100
    bp
    
    $
    482,543
    
    
    $
    29,3400
    
    
    $
    453,203
    
    
    $
    -100
    bp
    
    $
    408,921
    
    
    $
    (44,282
    )-200
    bp
    
    $
    391,156
    
    
    $
    (62,047
    )
 Interest Rate Sensitivity Changes in interest rates can impact our net interest income as well as the valuation of our
assets and liabilities, as the relative spreads between our assets and our liabilities can widen
or narrow due to changes in the overall levels of and changes in market interest rates. Our profitability is dependent to a large extent on net interest income. Net interest income
is the difference between interest income on interest-earning assets, such as loans and investment
securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings.
Changes in market interest rates, changes in the relationships between short-term and long-term
market interest rates, or changes in the relationships between different interest rate indices can
affect the interest rates charged on interest-earning assets differently than the interest rates
paid on interest-bearing liabilities. This difference could result in an increase in interest
expense relative to interest income. While we have attempted to structure our asset and liability
management strategies to mitigate the impact on net interest income of changes in market interest
rates, we cannot assure you that we will be successful. Generally, as interest rates fall, loan prepayments accelerate. Prepayments in a declining
interest rate environment reduce our net interest income and adversely impact our earnings due to
accelerated amortization of loan premiums and the reinvestment of proceeds from these loan payoffs
at lower rates. Significant loan prepayments in our purchased residential loan portfolio in the
future could have an adverse effect on future earnings. Equity Price Risk We also maintain a portfolio of equity securities that subject us to equity pricing risks
which would arise as the relative values of our equity investments change in conjunction with
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 securities at December 31, 2004 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
    %
    
    $
    30,845
    
    
    $
    5,14110
    %
    
    $
    28,274
    
    
    $
    2,5700
    %
    
    $
    25,704
    
    
    $
    -10
    %
    
    $
    23,134
    
    
    $
    (2,570
    )-20
    %
    
    $
    20,563
    
    
    $
    (5,141
    )
 63




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Excluded from the above table is $1.8 million of investments in private companies and a $5.3
million investment in a limited partnership for which no current market exists. The limited
partnership invests in companies in the financial service industry. The ability to realize on or
liquidate these investments will depend on future market conditions and is subject to significant
uncertainty. Ryan Beck Market Risk Ryan Becks market risk is the potential change in value of financial instruments caused by
fluctuations in interest rates, equity prices, credit spreads or other market forces. The Company,
through its broker/dealer subsidiary Ryan Beck, is exposed to market risk arising from trading and
market making activities. Ryan Becks management monitors risk in its trading activities by establishing limits and
reviewing daily trading results, inventory aging, pricing, concentration and securities ratings.
Ryan Beck uses a variety of tools, including aggregate and statistical methods. Value at Risk,
(VaR) is the principal statistical method and measures the potential loss in the fair value of a
portfolio due to adverse movements in underlying risk factors. Ryan Beck began using VaR on
January 31, 2003. 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. The following table sets forth the high, low and average VaR for Ryan Beck for the year ended
December 31, 2004: (dollars 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
 The following table sets forth the high, low and average VaR for Ryan Beck during the period
January 31, 2003 to December 31, 2003, and adjusted for discontinued operations: (dollars in thousands)High
    
    
    Low
    
    
    AverageVaR
    
    
    1,285
    
    
    
    16
    
    
    
    531Aggregate Long Value
    
    
    68,995
    
    
    
    42,364
    
    
    
    66,809Aggregate Short Value
    
    
    19,570
    
    
    
    60,602
    
    
    
    36,495
 64




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




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BANKATLANTIC BANCORP,
INC. AND SUBSIDIARIES 
 INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
 PageReport of
Independent Registered Certified Public Accounting Firm - PricewaterhouseCoopers LLP
    
    
    F-2Report of
Independent Registered Public Accounting Firm - KPMG LLP
    
    
    F-4Consolidated Statements of Financial Condition as of December 31, 2004 and 2003
    
    
    F-5Consolidated Statements of Operations for each of the years in the three year period ended
December 31, 2004
    
    
    F-6Consolidated Statements of Stockholders Equity and Comprehensive Income for each of the
years in the three year period ended December 31, 2004
    
    
    F-8Consolidated Statements of Cash Flows for each of the years in the three year period ended
December 31, 2004
    
    
    F-11Notes to Consolidated Financial Statements
    
    
    F-14




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Report of Independent
Registered Certified Public Accounting Firm To the Board of Directors and Stockholders of  BankAtlantic
Bancorp, Inc.: We have completed an integrated audit of BankAtlantic Bancorp, Inc.s 2004 consolidated
financial statements and of its internal control over financial reporting as of December 31, 2004
and an audit of its 2003 consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are
presented below. Consolidated financial statements In our opinion, the accompanying consolidated statements of financial condition and the
related consolidated statements of operations, stockholders equity and comprehensive income, and
cash flows present fairly, in all material respects, the financial position of BankAtlantic
Bancorp, Inc. and its subsidiaries at December 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the two years in the period ended December 31, 2004 in
conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits of
these statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit of
financial statements includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion. Internal control over financial reporting Also,
in our opinion, managements assessment, included in Managements
Report on Internal Control over Financial Reporting, appearing under Item 9A, that the Company
maintained effective internal control over financial reporting as of December 31, 2004 based on
criteria established in Internal Control - Integrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material
respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2004,
based on criteria established in Internal Control - Integrated Frameworkissued by the COSO. The
Companys management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express opinions on managements assessment and on the effectiveness of
the Companys internal control over financial reporting based on our audit. We conducted our audit
of internal control over financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. An audit of internal control over financial
reporting includes obtaining an understanding of internal control over financial reporting,
evaluating managements assessment, testing and evaluating the design and operating effectiveness
of internal control, and performing such other procedures as we consider necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinions. A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of




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records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the companys assets that could have a material effect on the financial
statements. Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers LLP Fort Lauderdale, Florida
March 15, 2005




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Report of Independent Registered Public Accounting Firm The Board of Directors
BankAtlantic Bancorp, Inc.: We have audited the accompanying consolidated statements of operations, stockholders equity
and comprehensive income and cash flows of BankAtlantic Bancorp, Inc. and subsidiaries for the year
ended December 31, 2002. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the results of operations and cash flows of BankAtlantic Bancorp, Inc. and
subsidiaries for the year ended December 31, 2002, in conformity with U.S. generally accepted
accounting principles. As discussed in Note 1 to the consolidated financial statements, the Company changed its
method of accounting for goodwill and intangible assets in 2002. KPMG LLP Fort Lauderdale, Florida
February 3, 2003




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31,(In thousands, except share data)
    
    2004
    
    
    2003ASSETSCash and due from depository institutions (See Note 14)
    
    $
    118,967
    
    
    $
    119,882Federal funds sold and other short-term investments (See Note 3)
    
    
    16,093
    
    
    
    Securities owned (at fair value) (See Note 3)
    
    
    125,443
    
    
    
    124,565Securities available for sale (at fair value) (See Note 3)
    
    
    747,160
    
    
    
    358,511Investment securities and tax certificates (approximate fair value: $306,963
and $192,706) (See Note 3)
    
    
    307,438
    
    
    
    192,706Federal Home Loan Bank stock, at cost which approximates
fair value (See Note 8,14)
    
    
    78,619
    
    
    
    40,325Loans receivable, net of allowance for loan losses of
$46,010 and $45,595 (See Note 4)
    
    
    4,599,048
    
    
    
    3,686,153Accrued interest receivable (See Note 5)
    
    
    35,982
    
    
    
    27,866Real estate held for development and sale (See Note 21)
    
    
    27,692
    
    
    
    21,803Investments and advances to unconsolidated subsidiaries (See Notes 2, 22)
    
    
    7,910
    
    
    
    7,910Office properties and equipment, net (See Note 6)
    
    
    129,790
    
    
    
    93,577Deferred tax asset, net (See Note 12)
    
    
    20,269
    
    
    
    22,999Goodwill (See Notes 1,2)
    
    
    76,674
    
    
    
    76,674Core deposit intangible asset (See Note 2)
    
    
    10,270
    
    
    
    11,985Due from clearing agent (See Note 3)
    
    
    16,619
    
    
    
    Other assets (See Notes 4, 10, 13)
    
    
    38,803
    
    
    
    46,593Total assets
    
    $
    6,356,777
    
    
    $
    4,831,549LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:DepositsInterest bearing deposits
    
    $
    2,566,804
    
    
    $
    2,413,106Non-interest bearing deposits
    
    
    890,398
    
    
    
    645,036Total deposits (See Note 7)
    
    
    3,457,202
    
    
    
    3,058,142Advances from FHLB (See Note 8)
    
    
    1,544,497
    
    
    
    782,205Securities sold under agreements to repurchase (See Note 9)
    
    
    296,643
    
    
    
    138,809Federal funds purchased (See Note 8)
    
    
    105,000
    
    
    
    Subordinated debentures, notes and bonds payable (See Note 10)
    
    
    37,741
    
    
    
    36,595Junior subordinated debentures (See Note 10)
    
    
    263,266
    
    
    
    263,266Securities sold but not yet purchased (See Note 3)
    
    
    39,462
    
    
    
    37,813Due to clearing agent (See Note 3)
    
    
    
    
    
    
    8,583Other liabilities (See Note 13)
    
    
    143,701
    
    
    
    92,684Total liabilities
    
    
    5,887,512
    
    
    
    4,418,097Commitments and contingencies (See Note 14)Stockholders equity:(See Notes 11, 12)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 55,214,225 and 54,396,824 shares
    
    
    552
    
    
    
    544Class B common stock, $.01 par value, authorized 45,000,000 shares;
issued and outstanding 4,876,124, and 4,876,124 shares
    
    
    49
    
    
    
    49Additional paid-in capital
    
    
    259,702
    
    
    
    259,770Unearned
compensation - restricted stock grants
    
    
    (1,001
    )
    
    
    (1,178
    )Retained earnings
    
    
    210,955
    
    
    
    148,311Total stockholders equity before accumulated
other comprehensive income (loss)
    
    
    470,257
    
    
    
    407,496Accumulated other comprehensive income (loss)
    
    
    (992
    )
    
    
    5,956Total stockholders equity
    
    
    469,265
    
    
    
    413,452Total liabilities and stockholders equity
    
    $
    6,356,777
    
    
    $
    4,831,549
 See Notes to Consolidated Financial Statements F-5




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31,(In thousands, except share and per share data)
    
    2004
    
    
    2003
    
    
    2002Interest income:Interest and fees on loans and leases (See Note 4)
    
    $
    209,719
    
    
    $
    207,446
    
    
    $
    221,370Interest and dividends on securities available for sale
    
    
    18,083
    
    
    
    24,313
    
    
    
    42,406Interest on tax exempt securities
    
    
    4,048
    
    
    
    
    
    
    
    Interest and dividends on other investment securities
    
    
    17,354
    
    
    
    19,653
    
    
    
    32,100Broker dealer interest
    
    
    11,351
    
    
    
    10,437
    
    
    
    7,511Total interest income
    
    
    260,555
    
    
    
    261,849
    
    
    
    303,387Interest expense:Interest on deposits (See Note 7)
    
    
    28,355
    
    
    
    36,189
    
    
    
    62,777Interest on advances from FHLB
    
    
    37,689
    
    
    
    57,299
    
    
    
    62,412Interest on securities sold under agreements to
repurchase and federal funds purchased
    
    
    3,191
    
    
    
    2,914
    
    
    
    6,546Interest on subordinated debentures, notes and
bonds payable, and junior subordinated debentures
    
    
    19,885
    
    
    
    18,008
    
    
    
    17,156Capitalized interest on real estate development
    
    
    (1,398
    )
    
    
    (1,193
    )
    
    
    Total interest expense
    
    
    87,722
    
    
    
    113,217
    
    
    
    148,891Net interest income
    
    
    172,833
    
    
    
    148,632
    
    
    
    154,496Provision for (recovery from) loan losses (See Note 4)
    
    
    (5,109
    )
    
    
    (547
    )
    
    
    14,077Net interest income after provision for
(recovery from) loan losses
    
    
    177,942
    
    
    
    149,179
    
    
    
    140,419Non-interest income:Investment banking income (See Note 3)
    
    
    227,949
    
    
    
    207,788
    
    
    
    130,738Service charges on deposits
    
    
    51,435
    
    
    
    40,569
    
    
    
    26,479Other service charges and fees
    
    
    23,620
    
    
    
    19,318
    
    
    
    14,087Income from real estate operations (Note 21)
    
    
    2,405
    
    
    
    5,642
    
    
    
    Income from unconsolidated subsidiaries (See Note 22)
    
    
    485
    
    
    
    425
    
    
    
    1,293Securities activities, net (See Note 3)
    
    
    3,730
    
    
    
    (1,553
    )
    
    
    8,578Impairment of securities (See Note 3,23)
    
    
    
    
    
    
    
    
    
    
    (18,801
    )Litigation settlement (See Note 3,23)
    
    
    22,840
    
    
    
    
    
    
    
    Gains on sales of loans, net
    
    
    483
    
    

    
    122
    
    
    
    1,840Other
    
    
    11,842
    
    
    
    9,403
    
    
    
    7,535Total non-interest income
    
    
    344,789
    
    
    
    281,714
    
    
    
    171,749Non-interest expense:Employee compensation and benefits (See Notes 11,13)
    
    
    255,064
    
    
    
    226,940
    
    
    
    166,979Occupancy and equipment (See Note 6)
    
    
    48,146
    
    
    
    40,036
    
    
    
    39,196Advertising and promotion
    
    
    21,036
    
    
    
    12,724
    
    
    
    10,447Amortization of intangible assets
    
    
    1,715
    
    
    
    1,772
    
    
    
    1,360Restructuring charge and impairment write-downs (See Note 6)
    
    
    
    
    
    
    257
    
    
    
    1,007Cost associated with debt redemption (See Note 8,10)
    
    
    11,741
    
    
    
    12,543
    
    
    
    3,125Acquisition-related charges and impairments
    
    
    
    
    
    
    
    
    
    
    4,925Professional fees
    
    
    16,101
    
    
    
    16,311
    
    
    
    7,527Communications
    
    
    12,527
    
    
    
    13,783
    
    
    
    10,152Floor broker and clearing fees
    
    
    9,835
    
    
    
    9,227
    
    
    
    8,192Other
    
    
    35,888
    
    
    
    35,279
    
    
    
    31,057Total non-interest expense
    
    
    412,053
    
    
    
    368,872
    
    
    
    283,967Income from continuing operations before income taxes
    
    
    110,678
    
    
    
    62,021
    
    
    
    28,201Provision for income taxes (See Note 12)
    
    
    39,910
    
    
    
    23,424
    
    
    
    9,051Income from continuing operations
    
    
    70,768
    
    
    
    38,597
    
    
    
    19,150Discontinued operations, (less applicable income taxes
of $16,512 and $6,825) (See Note 12)
    
    
    
    
    
    
    29,120
    
    
    
    22,543Extraordinary items (less applicable provision for
income taxes of $2,771) (See Note 2,12)
    
    
    
    
    
    
    
    
    
    
    23,749Cumulative effect of a change in accounting principle
(less applicable income taxes of $1,246 ) (See Note 1,12)
    
    
    
    
    
    
    
    
    
    
    (15,107
    )Net income
    
    $
    70,768
    
    
    $
    67,717
    
    
    $
    50,335
 (CONTINUED) See Notes to Consolidated Financial Statements F-6




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Earnings per share (See Note 20)Basic earnings per share from continuing operations
    
    $
    1.19
    
    
    $
    0.66
    
    
    $
    0.33Basic earnings per share from discontinued operations
    
    
    
    
    
    
    0.50
    
    
    
    0.39Basic earnings per share from extraordinary items
    
    
    
    
    
    
    
    
    
    
    0.41Basic loss per share from cumulative effect of a
change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.26
    )Basic earnings per share
    
    $
    1.19
    
    
    $
    1.16
    
    
    $
    0.87Diluted earnings per share from continuing operations
    
    $
    1.11
    
    
    $
    0.62
    
    
    $
    0.32Diluted earnings per share from discontinued operations
    
    
    
    
    
    
    0.46
    
    
    
    0.35Diluted earnings per share from extraordinary items
    
    
    
    
    
    
    
    
    
    
    0.37Diluted loss per share from cumulative effect of a
change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.23
    )Diluted earnings per share
    
    $
    1.11
    
    
    $
    1.08
    
    
    $
    0.81Cash dividends per Class A share
    
    $
    0.136
    
    
    $
    0.128
    
    
    $
    0.120Cash dividends per Class B share
    
    $
    0.136
    
    
    $
    0.128
    
    
    $
    0.120Basic weighted average number of common shares outstanding
    
    
    59,525,532
    
    
    
    58,509,894
    
    
    
    57,997,556Diluted weighted average number of common and common
equivalent shares outstanding
    
    
    63,056,435
    
    
    
    62,354,430
    
    
    
    64,400,725
 See Notes to Consolidated Financial Statements F-7




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
For Each of the Years in the Three Year Period Ended December 31, 2004 Unearned
    
    
    Accumul-Compen-
    
    
    atedAddi-
    
    
    
    
    
    
    sation
    
    
    OtherCompre-
    
    
    
    
    
    
    tional
    
    
    
    
    
    
    Restricted
    
    
    Compre-hensive
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Stock
    
    
    hensive(In thousands)
    
    Income
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Grants
    
    
    Income
    
    
    TotalBALANCE, DECEMBER 31, 2001
    
    
    
    
    
    $
    581
    
    
    $
    251,202
    
    
    $
    170,349
    
    
    $
    (1,359
    )
    
    $
    14,900
    
    
    $
    435,673Net income
    
    $
    50,335
    
    
    
    
    
    
    
    
    
    
    
    50,335
    
    
    
    
    
    
    
    
    
    
    
    50,335Other comprehensive income, net of tax:Unrealized gains on securities available for sale
(less income tax provision of $2,142)
    
    
    3,514Minimum pension liability (less income tax
benefit of $4,194)
    
    
    (7,456
    )Unrealized losses associated with investment in
unconsolidated subsidiaries (less income
tax benefit of $454)
    
    
    (448
    )Accumulated losses associated with cash flow
hedges (less income tax benefit of $517)
    
    
    (917
    )Reclassification adjustment for cash flow hedges
    
    
    (534
    )Reclassification adjustment for net gain
included in net income (less income tax benefit
of $3,254)
    
    
    (5,490
    )Other comprehensive loss
    
    
    (11,331
    )Comprehensive income
    
    $
    39,004Dividends on Class A common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,408
    )
    
    
    
    
    
    
    
    
    
    
    (6,408
    )Dividends on Class B common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (584
    )
    
    
    
    
    
    
    
    
    
    
    (584
    )Issuance of Class A common stock
    
    
    
    
    
    
    2
    
    
    
    1,202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,204Tax effect relating to the exercise of stock options
    
    
    
    
    
    
    
    
    
    
    440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    440Issuance of Class A common stock upon
conversion of subordinated debentures
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Issuance of subsidiary stock options
    
    
    
    
    
    
    
    
    
    
    (170
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170
    )Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    150Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,331
    )
    
    
    (11,331
    )BALANCE, DECEMBER 31, 2002
    
    
    
    
    
    $
    583
    
    
    $
    252,699
    
    
    $
    213,692
    
    
    $
    (1,209
    )
    
    $
    3,569
    
    
    $
    469,334
 (CONTINUED) See Notes to Consolidated Financial Statements F-8




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
For Each of the Years in the Three Year Period Ended December 31, 2004 Unearned
    
    
    Accumul-Compen-
    
    
    atedAddi-
    
    
    
    
    
    
    sation
    
    
    OtherCompre-
    
    
    
    
    
    
    tional
    
    
    
    
    
    
    Restricted
    
    
    Compre-hensive
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Stock
    
    
    hensive(In thousands)
    
    Income
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Grants
    
    
    Income
    
    
    TotalBALANCE, DECEMBER 31, 2002
    
    
    
    
    
    $
    583
    
    
    $
    252,699
    
    
    $
    213,692
    
    
    $
    (1,209
    )
    
    $
    3,569
    
    
    $
    469,334Net income
    
    $
    67,717
    
    
    
    
    
    
    
    
    
    
    
    67,717
    
    
    
    
    
    
    
    
    
    
    
    67,717Other comprehensive income, net of tax:Unrealized losses on securities available for sale
(less income tax benefit of $5,296)
    
    
    (9,330
    )Minimum pension liability (less income tax
provision of $4,194)
    
    
    7,456Unrealized gains associated with investment in
unconsolidated real estate subsidiary (less income
tax provision of $454)
    
    
    448Accumulated gains associated with cash flow
hedges (less income tax provision of $1,108)
    
    
    2,306Reclassification adjustment for cash flow hedges
    
    
    513Reclassification adjustment for net losses
included in net income (less income tax provision
of $559)
    
    
    994Other comprehensive income
    
    
    2,387Comprehensive income
    
    $
    70,104Levitt Corporation spin-off transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125,573
    )
    
    
    
    
    
    
    
    
    
    
    (125,573
    )Dividends on Class A common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,903
    )
    
    
    
    
    
    
    
    
    
    
    (6,903
    )Dividends on Class B common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (622
    )
    
    
    
    
    
    
    
    
    
    
    (622
    )Issuance of Class A common stock
    
    
    
    
    
    
    10
    
    
    
    4,672
    
    
    
    
    
    
    
    (134
    )
    
    
    
    
    
    
    4,548Tax effect relating to the exercise of stock options
    
    
    
    
    
    
    
    
    
    
    2,264
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,264Purchase and retirement of Class A common stock
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )Issuance of Class A common stock upon
conversion of subordinated debentures
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Issuance of subsidiary stock options
    
    
    
    
    
    
    
    
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165
    
    
    
    
    
    
    
    165Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,387
    
    
    
    2,387BALANCE, DECEMBER 31, 2003
    
    
    
    
    
    $
    593
    
    
    $
    259,770
    
    
    $
    148,311
    
    
    $
    (1,178
    )
    
    $
    5,956
    
    
    $
    413,452
 (CONTINUED) See Notes to Consolidated Financial Statements F-9




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
For Each of the Years in the Three Year Period Ended December 31, 2004 Unearned
    
    
    Accumul-Compen-
    
    
    atedAddi-
    
    
    
    
    
    
    sation
    
    
    OtherCompre-
    
    
    
    
    
    
    tional
    
    
    
    
    
    
    Restricted
    
    
    Compre-hensive
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Stock
    
    
    hensive(In thousands)
    
    Income
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Grants
    
    
    Income (loss)
    
    
    TotalBALANCE, DECEMBER 31, 2003
    
    
    
    
    
    $
    593
    
    
    $
    259,770
    
    
    $
    148,311
    
    
    $
    (1,178
    )
    
    $
    5,956
    
    
    $
    413,452Net income
    
    $
    70,768
    
    
    
    
    
    
    
    
    
    
    
    70,768
    
    
    
    
    
    
    
    
    
    
    
    70,768Other comprehensive income (loss), net of tax:Unrealized gains on securities available for sale
(less income tax provision of $188)
    
    
    342Minimum pension liability (less income tax
benefit of $2,758)
    
    
    (4,903
    )Reclassification adjustment for net gain
included in net income (less income tax
benefit of $1,333)
    
    
    (2,387
    )Other comprehensive income (loss)
    
    
    (6,948
    )Comprehensive income
    
    $
    63,820Dividends on Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,460
    )
    
    
    

    
    
    
    
    
    
    
    (7,460
    )Dividends on Class B Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (664
    )
    
    
    
    
    
    
    
    
    
    
    (664
    )Issuance of Class A common stock
    
    
    
    
    
    
    15
    
    
    
    3,724
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,739Tax effect relating to the exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    6,610
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,610Retirement of Class A Common Stock relating
to exercise of stock options
    
    
    
    
    
    
    (3
    )
    
    
    (4,348
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,351
    )Retirement of Class A Common Stock (See Note 3)
    
    
    
    
    
    
    (4
    )
    
    
    (6,054
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,058
    )Amortization of unearned compensation -
restricted stock grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    177Net change in accumulated other comprehensive
income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,948
    )
    
    
    (6,948
    )BALANCE, DECEMBER 31, 2004
    
    
    
    
    
    $
    601
    
    
    $
    259,702
    
    
    $
    210,955
    
    
    $
    (1,001
    )
    
    $
    (992
    )
    
    $
    469,265
 See Notes to Consolidated Financial Statements F-10




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31,(In thousands)
    
    2004
    
    
    2003
    
    
    2002Operating
activities:Income from continuing operations
    
    $
    70,768
    
    
    $
    38,597
    
    
    $
    19,150Income from discontinued operations, net of tax
    
    
    
    
    
    
    29,120
    
    
    
    22,543Income from extraordinary item, net of tax
    
    
    
    
    
    
    
    
    
    
    23,749Cumulative effect of a change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (15,107
    )Adjustment to reconcile net income to net cash provided by operating activities:(Recovery) provision for credit losses (1)
    
    
    (5,105
    )
    
    
    1,465
    
    
    
    17,019Depreciation, amortization and accretion, net
    
    
    16,299
    
    
    
    18,685
    
    
    
    10,638Amortization of intangible assets
    
    
    1,715
    
    
    
    1,772
    
    
    
    1,360Securities activities, net
    
    
    (3,730
    )
    
    
    1,553
    
    
    
    (8,578
    )Gains on sale of REO
    
    
    (694
    )
    
    
    (1,984
    )
    
    
    (117
    )Gain on Gruntal transaction
    
    
    
    
    
    
    
    
    
    
    (26,520
    )Restructuring charges and impairment write-downs, net
    
    
    
    
    
    
    257
    
    
    
    4,852Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    16,353Impairment of securities
    
    
    
    
    
    
    
    
    
    
    18,801Equity in earnings from unconsolidated subsidiaries
    
    
    (485
    )
    
    
    (8,341
    )
    
    
    (8,866
    )Litigation settlement
    
    
    (22,840
    )
    
    
    
    
    
    
    Costs associated with debt redemption
    
    
    11,741
    
    
    
    12,543
    
    
    
    3,125Issuance of forgivable notes receivable to Ryan Beck employees
    
    
    (8,079
    )
    
    
    (6,260
    )
    
    
    (10,463
    )Originations and repayments of loans held for sale, net
    
    
    (163,988
    )
    
    
    (32,494
    )
    
    
    (21,279
    )Proceeds from sales of loans held for sale
    
    
    170,709
    
    
    
    44,617
    
    
    
    41,602(Increase) decrease in securities owned activities, net
    
    
    (878
    )
    
    
    (43,194
    )
    
    
    33,751(Increase) decrease in accrued interest receivable
    
    
    (8,116
    )
    
    
    6,118
    
    
    
    2,542Increase in real estate inventory
    
    
    (5,889
    )
    
    
    (55,090
    )
    
    
    (57,653
    )Decrease (increase) in deferred tax asset, net
    
    
    6,633
    
    
    
    9,427
    
    
    
    (4,510
    )Increase (decrease) in other assets
    
    
    1,342
    
    
    
    (8,044
    )
    
    
    (893
    )Increase (decrease) in other liabilities
    
    
    30,943
    
    
    
    77,591
    
    
    
    (25,509
    )Increase (decrease) in due to clearing agent
    
    
    (25,202
    )
    
    
    10,353
    
    
    
    (32,876
    )Increase (decrease) in securities sold but not yet purchased
    
    
    1,649
    
    
    
    3,591
    
    
    
    (1,629
    )Net cash provided by operating activities
    
    
    66,793
    
    
    
    100,282
    
    
    
    1,485
 (CONTINUED) See Notes to Consolidated Financial Statements F-11




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31,(In thousands)
    
    2004
    
    
    2003
    
    
    2002Investing activities:Purchase of investment securities and tax certificates
    
    
    (301,825
    )
    
    
    (205,209
    )
    
    
    (238,700
    )Proceeds from redemption and maturity of investment securities
and tax certificates
    
    
    212,983
    
    
    
    205,677
    
    
    
    239,176Purchase of securities available for sale
    
    
    (676,900
    )
    
    
    (278,977
    )
    
    
    (356,493
    )Proceeds from sales and maturities of securities available for sale
    
    
    304,703
    
    
    
    630,222
    
    
    
    772,339Net purchases and originations of loans and leases
    
    
    (913,496
    )
    
    
    (235,735
    )
    
    
    (23,776
    )Proceeds from sales of real estate owned
    
    
    3,821
    
    
    
    10,807
    
    
    
    6,015Additions to office properties and equipment
    
    
    (48,925
    )
    
    
    (12,599
    )
    
    
    (23,676
    )Proceeds from sales of properties and equipment
    
    
    
    
    
    
    
    
    
    
    1,986Proceeds from sales of bank facilities real estate held for sale
    
    
    852
    
    
    
    
    
    
    
    6,012(Investments) and repayments from unconsolidated subsidiaries, net (Note 2)
    
    
    485
    
    
    
    (941
    )
    
    
    (49,902
    )(Purchases) redemptions of FHLB stock, net
    
    
    (38,294
    )
    
    
    24,618
    
    
    
    (452
    )Net cash proceeds from the sale of Ryan Becks subsidiaries (Note 2)
    
    
    
    
    
    
    9,955
    
    
    
    Acquisitions, net of cash acquired (Note 2)
    
    
    
    
    
    
    
    
    
    
    (52,783
    )Net cash provided (used) by investing activities
    
    
    (1,456,596
    )
    
    
    147,818
    
    
    
    279,746Financing activities:Net increase in deposits
    
    
    399,060
    
    
    
    137,587
    
    
    
    47,858Reduction in deposits from sale of in-store branches, net
    
    
    
    
    
    
    
    
    
    
    (42,597
    )Proceeds from FHLB advances
    
    
    1,220,000
    
    
    
    275,000
    
    
    
    227,499Repayments of FHLB advances
    
    
    (469,323
    )
    
    
    (799,991
    )
    
    
    (172,736
    )Net increase (decrease) in federal funds purchased
    
    
    105,000
    
    
    
    
    
    
    
    (61,000
    )Proceeds from notes and bonds payable
    
    
    2,944
    
    
    
    134,016
    
    
    
    157,331Issuance of trust preferred securities
    
    
    
    
    
    
    
    
    
    
    180,375Issuance of junior subordinated debentures
    
    
    
    
    
    
    77,320
    
    
    
    Repayment of notes and bonds payable
    
    
    (1,798
    )
    
    
    (112,341
    )
    
    
    (95,468
    )Retirement of subordinated notes and debentures
    
    
    
    
    
    
    (70,855
    )
    
    
    (21,716
    )Retirement of trust preferred securities
    
    
    
    
    
    
    
    
    
    
    (74,750
    )Net increase (decrease) in securities sold under agreements to repurchase
    
    
    157,834
    
    
    
    4,767
    
    
    
    (289,791
    )Net cash reduction on Levitt Corporation spin-off (Note 2)
    
    
    
    
    
    
    (21,413
    )
    
    
    Issuance of common stock
    
    
    2,334
    
    
    
    4,472
    
    
    
    1,296Retirement of Class A common stock accepted as consideration for the payment of the
minimum withholding tax upon the exercise of stock options
    
    
    (2,946
    )
    
    
    
    
    
    
    Common stock dividends paid
    
    
    (8,124
    )
    
    
    (7,525
    )
    
    
    (6,992
    )Net cash provided (used) by financing activities
    
    
    1,404,981
    
    
    
    (378,963
    )
    
    
    (150,691
    )(Decrease) Increase in cash and cash equivalents
    
    
    15,178
    
    
    
    (130,863
    )
    
    
    130,540Cash and cash equivalents at the beginning of period
    
    
    119,882
    
    
    
    250,745
    
    
    
    120,205Cash and cash equivalents at end of period
    
    $
    135,060
    
    
    $
    119,882
    
    
    $
    250,745
 (CONTINUED) See Notes to Consolidated Financial Statements F-12




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31,(In thousands)
    
    2004
    
    
    2003
    
    
    2002Cash paid forInterest on borrowings and deposits
    
    $
    87,869
    
    
    $
    120,221
    
    
    $
    158,914Income taxes
    
    
    26,565
    
    
    
    31,115
    
    
    
    36,790Supplementary disclosure of non-cash investing and financing activities:Loans transferred to REO
    
    
    1,401
    
    
    
    2,450
    
    
    
    13,067Net loan recoveries (charge-offs)
    
    
    5,524
    
    
    
    (1,146
    )
    
    
    (19,784
    )Tax certificate net recoveries (charge-offs)
    
    
    427
    
    
    
    (203
    )
    
    
    (1,123
    )Reduction in stockholders equity from the retirement of Class A
Common Stock obtained from litigation settlement
    
    
    6,058
    
    
    
    
    
    
    
    Decreases in current income taxes payable from the tax effect of fair value
of employee stock options
    
    
    6,610
    
    
    
    2,264
    
    
    
    440Change in accumulated other comprehensive income
    
    
    (6,948
    )
    
    
    2,387
    
    
    
    (11,331
    )Change in deferred taxes on other comprehensive income
    
    
    (3,903
    )
    
    
    1,019
    
    
    
    (6,277
    )Securities purchased pending settlement
    
    
    25,546
    
    
    
    
    
    
    
    Issuance and retirement of Class A common stock accepted as
consideration for the exercise price of stock options
    
    
    1,405
    
    
    
    
    
    
    
    Levitt dividend received in the form of a note receivable
    
    
    
    
    
    
    8,000
    
    
    
    Note receivable issued in connection with the GMS sale
    
    
    
    
    
    
    13,681
    
    
    
    Levitt notes receivable outstanding at date of spin-off
    
    
    
    
    
    
    48,118
    
    
    
    Note receivable issued in connection with Bluegreen stock transfer
    
    
    
    
    
    
    5,500
    
    
    
    Acquisition goodwill adjustments
    
    
    
    
    
    
    734
    
    
    
    9,144Transfer of relocated branch to real estate held for sale
    
    
    
    
    
    
    1,000
    
    
    
    Increase in investments in unconsolidated subsidiaries related to
deconsolidation of trusts formed to issue trust preferred securities
    
    
    
    
    
    
    7,910
    
    
    
    Increase in junior subordinated debentures related to trust deconsolidation
    
    
    
    
    
    
    7,910
    
    
    
    Transfer of guaranteed preferred beneficial interest in Companys Junior
Subordinated Debentures to junior subordinated debentures
    
    
    
    
    
    
    180,375
    
    
    
    Issuance of Class A common stock upon conversion of subordinated
debentures
    
    
    
    
    
    
    211
    
    
    
    25Issuance of notes payable under the Ryan Beck deferred compensation plan
    
    
    
    
    
    
    
    
    
    
    3,675Securities held to maturity transferred to available for sale
    
    
    
    
    
    
    14,505
    
    
    
    
   (1)
    
    Provision for credit losses represents provision for loan losses, REO and tax certificates. See Notes to Consolidated Financial Statements F-13




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Financial Statement Presentation BankAtlantic Bancorp, Inc. (the Company, BBC)
is a unitary savings bank holding company organized under the laws of the State of Florida in 1994.
The Companys principal assets include BankAtlantic and its subsidiaries and RB Holdings, Inc.
(Ryan Beck) and its subsidiaries. On December 31, 2003, the Company completed the spin-off of
its wholly owned real estate development subsidiary, Levitt Corporation (Levitt), and during the
year ended December 31, 2003, Ryan Beck sold two of its subsidiaries, The GMS Group, LLC (GMS)
and Cumberland Advisors (Cumberland). Accordingly, the financial information of Levitt, GMS and
Cumberland is not included in the Consolidated Statement of Financial Condition at December 31,
2004 and 2003 and is included in the Consolidated Statements of Operations for each of the years in
the two year period ended December 31, 2003 as discontinued operations. The financial information
of the above companies is included in the Consolidated Statement of Stockholders Equity and
Comprehensive Income and Consolidated Statement of Cash Flows for the years ended December 31, 2003
and 2002. The accounting policies applied by the Company conform with accounting principles generally
accepted in the United States of America. BankAtlantic was founded in 1952 and is a federally-chartered, federally-insured savings bank
headquartered in Fort Lauderdale, Florida. BankAtlantic currently operates through a network of 74
branches located in 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. Ryan Beck, founded in 1946 and acquired by the Company in 1998, 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 is an
investment banking firm engaged in the underwriting, distribution and trading of tax-exempt, equity
and debt securities. Ryan Beck also offers a full service, general securities brokerage business
with investment and insurance products for retail and institutional clients and provides investment
and wealth management advisory services for its customers. As an investment banking firm, Ryan
Beck provides capital-raising and advisory services, in addition to mergers and acquisitions
transaction management. Ryan Beck operates the majority of its business on a fully-disclosed basis
through a clearing broker, Pershing, a Bank of New York Securities Company. RB Holdings, Inc. was
formed in July, 2003 as a holding company for Ryan Beck & Co., Inc. The Company has two classes of common stock. Class A shareholders are entitled to one vote
per share, which in the aggregate represents 53% of the combined voting power of the Class A common
stock and the Class B common stock. Class B common stock represents the remaining 47% of the
combined vote. BFC Financial Corporation (BFC) currently owns 100% of the Companys Class B
common stock and 15% of the Companys outstanding Class A common stock resulting in BFC owning 22%
of the Companys aggregate outstanding common stock. The percent of total common equity
represented by Class A and Class B common stock was 92% and 8% at December 31, 2004, respectively.
The fixed voting percentages will be eliminated, and shares of Class B common stock will be
entitled to only one vote per share from and after the date that BFC or its affiliates no longer
own in the aggregate at least 2,438,062 shares of Class B common stock (which is one-half of the
number of shares it now owns). Class B common stock is convertible into Class A common stock on a
share for share basis. 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 statements of financial condition and operations for
the periods presented. Actual results could differ significantly from those estimates. Material
estimates that are particularly susceptible to significant change in the near term relate to the
determination of the allowance for loan losses, evaluation of intangible and long-lived assets for
impairment, evaluation of securities for impairment, the valuation of real estate acquired in
connection with foreclosure or in satisfaction of loans, the valuation of the fair value of assets
and liabilities in the application of the purchase method of accounting, the amount of the deferred
tax asset valuation allowance, and accounting for contingencies. In connection with the
determination of the allowances for loan losses, real estate owned, and real estate held for
development, management obtains independent appraisals for significant properties when it is deemed
prudent. Certain amounts for prior years have been reclassified to conform to revised statement
presentation for 2004. F-14




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Consolidation Policy The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, majority-owned joint ventures and variable interest
entities in which the Company is the primary beneficiary as defined by Financial Accounting
Standards Board Interpretation No. 46R (FIN No. 46). On July 1, 2003, all of the companys
subsidiaries, except for Levitt and its subsidiaries, implemented the interpretation effective
January 1, 2003. As a consequence of the implementation of FIN No. 46, the Company consolidated a
50% owned joint venture and deconsolidated its wholly owned statutory business trusts formed to
issue trust preferred securities. The joint venture was acquired in connection with the Community
acquisition and recorded at fair value on the acquisition date, resulting in no impact to our
financial statements upon adoption of FIN No. 46. In periods ending prior to January 1, 2003, the
statutory business trusts were included in the Companys consolidated financial statements and the
50% owned joint venture was accounted for under the equity method of accounting. Prior to the
implementation of FIN No. 46, the Company consolidated all entities in which it owned a majority of
the voting securities. Less than majority-owned joint ventures in which the Company did not have a
controlling interest were accounted for under the equity method of accounting. All inter-company
transactions and balances have been eliminated. Cash Equivalents Cash and due from depository institutions include demand deposits at other
financial institutions and money market funds. Federal funds sold are generally sold for one-day
periods, and securities purchased under resell agreements are settled in less than 30 days. Debt and Equity Securities Debt securities are classified based on managements intention
on the date of purchase. Debt securities that management has both the positive intent and ability
to hold to maturity are classified as securities held-to-maturity and are carried at amortized
cost. Trading account securities consist of securities that are bought and held principally for
the purpose of selling them in the near term and are carried at fair value with changes in the fair
value included in earnings. All other debt securities are classified as available for sale and
carried at fair value with the net unrealized gains and losses included in stockholders equity on
an after-tax basis as other comprehensive income. The fair value of securities available for sale
was estimated by obtaining prices actively quoted on national markets, using a price matrix or
applying management valuation models. Declines in the fair value of individual held to maturity
and available for sale securities below their amortized cost that are other than temporary result
in write-downs through charges to earnings of the individual securities to their fair value. Marketable equity securities and mutual funds which are included in securities available for
sale are carried at fair value with the net unrealized gains and losses included in stockholders
equity on an after-tax basis as other comprehensive income. Declines in the fair value of
individual equity securities and mutual funds below their cost that are other than temporary result
in write-downs through charges to earnings of the individual securities to their fair value. The
fair value of marketable equity securities and mutual funds was estimated by obtaining prices
actively quoted on national markets. Equity securities that do not have readily determinable fair
values are classified as investment securities and carried at historical cost. These securities
are evaluated for other than temporary declines in value, and, if impaired, the historical cost of
the securities is written down through charges to earnings to estimated fair value. Interest and dividends on securities, including the amortization of premiums and the accretion
of discounts, are reported in interest and dividends on securities using the interest method over
the lives of the securities, adjusted for actual prepayments. Gains and losses on the sale of
securities are recorded on the trade date. The specific identification method was used in determining cost in computing realized gains
and losses in connection with sales of debt and equity securities. Tax Certificates Tax certificates represent a priority lien against real property for which
assessed real estate taxes are delinquent. Tax certificates are classified as investment
securities and are carried at cost, net of an allowance for probable losses, which approximates
fair value. Allowance for Tax Certificate Losses The allowance represents managements estimate of
incurred losses in the portfolio that are probable and subject to reasonable estimation. In
establishing its allowance for tax certificate losses, management considers past loss experience,
present indicators, such as the length of time the certificate has been outstanding, economic
conditions and collateral values. Tax certificates and resulting deeds are classified as
non-accrual when a tax certificate is 24 to 60 months delinquent, depending on the municipality,
from the acquisition date. At that time, interest ceases to be accrued. The provision to record
the allowance is included in other expenses. F-15




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Loans- Loans that management has the intent and ability to hold for the foreseeable future
or until maturity or payoff are reported at their outstanding principal balances net of any
unearned income, unamortized deferred fees or costs, premiums or discounts and an allowance for
loan losses. Loan origination fees and direct loan origination costs are deferred and recognized
in interest income over the estimated life of the loans using the interest method, adjusted for
actual prepayments. Loans Held for Sale Such loans are reported at the lower of aggregate cost or estimated
fair value based on current market prices for similar loans. Loan origination fees and related
direct loan origination costs on originated loans held for sale and premiums and discounts on
purchased loans held for sale are deferred until the related loan is sold and included in gains and
losses upon sale. Allowance for Loan Losses- The allowance for loan losses reflects managements estimate of
probable incurred credit losses in the loan portfolios. Loans are charged off against the
allowance when management believes the uncollectibility of the loan balance is confirmed.
Recoveries are credited to the allowance. The allowance consists of three components. The first component of the allowance is for
high-balance non-homogenous loans that are individually evaluated for impairment. A loan is
impaired when collection of principal and interest based on the contractual terms of the loan is
not likely to occur. The process for identifying loans to be evaluated individually for impairment
is based on managements identification of classified loans. Once an individual loan is found to be
impaired, a valuation allowance is assigned to the loan based on one of the following three
methods: (1) present value of expected future cash flows, (2) fair value of collateral less costs
to sell, or (3) observable market price. Non-homogenous loans that are not impaired are assigned
an allowance based on historical data by product. The second component of the allowance is for
homogenous loans in which groups of loans with common characteristics are evaluated to estimate
the inherent losses in the portfolio. Homogenous loans have certain characteristics that are
common to the entire portfolio so as to form a basis for predicting losses on historical data and
delinquency trends as it relates to the group. Management segregates homogenous loans into groups
such as residential real estate, small business mortgage, small business non-mortgage, lease
financing, and various types of consumer loans. The methodology utilized in establishing the
allowance for homogenous loans includes consideration of trends in industries, analysis of
historical losses, static pool analysis, delinquency trends, and credit scores. The third
component of the allowance is determined separately from the procedures outlined above. This
component addresses certain industry and geographic concentrations, the view of regulators and
changes in composition of the loan portfolio. Management believes the allowance for loan losses is
adequate and that it has a sound basis for estimating the adequacy of the allowance for loan
losses. Actual losses incurred in the future are highly dependent upon future events, including the
economies of the geographic areas in which BankAtlantic holds loans. Non-performing Loans A loan is generally placed on non-accrual status at the earlier of
(i) the loan becoming past due 90 days as to either principal or interest or (ii) when the borrower
has entered bankruptcy proceedings and the loan is delinquent. Exceptions to placing 90-day past
due loans on non-accrual may be made if there exists an abundance of collateral and the loan is in
the process of collection. Loans are placed on non-accrual or charged-off at an earlier date if
collection of principal or interest is considered doubtful. When a loan is placed on non-accrual
status, interest accrued but not received is reversed against interest income. A non-accrual loan
may be restored to accrual status when delinquent loan payments are collected and the loan is
expected to perform in the future according to its contractual terms.
Interest income on performing impaired loans is recognized on an accrual basis. Consumer non-mortgage loans and lease financing contracts that are 120 days past due are
charged off. Real estate secured consumer and residential loans that are 120 days past due are
charged down to fair value less cost to sell. Real Estate Owned (REO) REO is recorded at the lower of cost or estimated fair value,
less estimated selling costs when acquired, establishing a new cost basis. Write-downs required at
the time of acquisition are charged to the allowance for loan losses. Expenditures for capital
improvements made thereafter are generally capitalized. Real estate acquired in settlement of loans
is anticipated to be sold and valuation allowance adjustments are made to reflect any subsequent
changes in fair values from the initially recorded amount. The costs of holding REO are charged to
operations as incurred. Provisions and reversals in the REO valuation allowance are reflected in
operations. Management obtains independent appraisals for significant properties. Investment Banking Activities Investment banking revenues include gains, losses, and fees,
net of syndicate expenses, arising from securities offerings in which Ryan Beck acts as an
underwriter or agent. Investment banking revenues also include fees earned from providing merger
and acquisition and financial advisory services. Investment banking F-16




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) management fees are recorded as earned, provided no contingency of payment exists. Sales
concessions are recorded on trade date, and underwriting fees are recorded at the time the
underwriting is completed. Securities Transactions Proprietary securities transactions in regular-way trades are
recorded on a trade date basis. Profit and loss arising from all securities transactions entered
into for the account and risk of Ryan Beck are recorded on a trade date basis. Customers
securities transactions are reported on a settlement date basis with related commission income and
expenses reported on a trade date basis. Amounts receivable and payable for securities
transactions that have not reached their contractual settlement date are recorded net on the
statement of financial condition. Securities Owned and Securities Sold, But Not Yet Purchased Securities owned and securities
sold, but not yet purchased are associated with proprietary securities transactions entered into by
Ryan Beck and are accounted for at fair value with changes in the fair value included in earnings.
The fair value of these trading positions is generally based on listed market prices. If listed
market prices are not available or if liquidating the positions would reasonably be expected to
impact market prices, fair value is determined based on other relevant factors, including dealer
price quotations, price quotations for similar instruments traded in different markets,
managements estimates of amounts to be realized on settlement or management valuation model
associated with securities that are not readily marketable. Real Estate Held for Development and Sale This includes land, land development costs, and
other construction costs associated with the Companys investment in a real estate variable
interest entity. The real estate inventory is stated at the lower of accumulated cost or
estimated fair value. The estimated fair value of real estate is evaluated based on an independent
appraisal. The appraisal takes into consideration the current status of property, various
restrictions, carrying costs, debt service requirements, costs of disposition and any other
circumstances which may affect fair value, including managements plans for the property. Inventory costs include direct acquisition, development and construction costs, interest and
other indirect construction costs. Land and indirect land development costs are accumulated by
specific area and allocated proportionately to various housing units within the respective area
based upon the most practicable methods, including specific identification and allocation based
upon the relative sales value method or unit methods. Direct construction costs are assigned to
housing units based on specific identification. All other capitalized costs are accumulated and
are allocated to those housing units based upon the most practicable methods. Other capitalized
costs consist of capitalized interest, real estate taxes, tangible selling costs, local government
fees and field overhead incurred during the development and construction period. Start-up costs
and selling expenses are expensed as incurred. Interest is capitalized at the effective rates paid on borrowings incurred for real estate
inventory during the preconstruction and planning stage and the periods that projects are under
development. Capitalization of interest is discontinued if development ceases at a project. Revenue and all related costs and expenses from real estate sales are recognized at the time
that closing has occurred. This is when title to and possession of the property and risks and
rewards of ownership transfer to the buyer and other sale and profit recognition criteria are
satisfied as required under generally accepted accounting principles in the United States of
America for real estate transactions. Investments in Unconsolidated Subsidiaries The Company follows the equity method of
accounting to record its interests in subsidiaries in which it does not own the majority of the
voting stock. Effective January 1, 2003, the Company implemented FIN No. 46, which required the
Company to use the equity method to account for its investments in variable interest entities in
which it is not the primary beneficiary. As a result of the adoption of this standard in 2003, the
Company began accounting for its interest in statutory business trusts (utilized in the issuance of
trust preferred securities) under the equity method. Under this method, the Companys initial
investment is recorded at cost and is subsequently adjusted to recognize its share of earnings or
losses. Distributions received reduce the carrying amount of the investment. Goodwill and Other Intangible Assets The Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002. As of the adoption date, the Company no longer amortizes
goodwill over its useful life. Instead, goodwill is tested for impairment annually at the
reporting unit level, by comparing the fair value of the reporting unit to its carrying amount. The
Company will recognize a goodwill impairment charge if the carrying amount of the goodwill assigned
to the reporting unit is greater than the implied fair value of the goodwill. At the date of adoption the fair values of all reporting units, except for the Ryan Beck
reportable segment, exceeded F-17




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) their respective carrying amounts at the adoption date. Based on an independent valuation, a $15.1
million impairment loss (net of a $1.2 million tax benefit) related to Ryan Beck was recorded
effective as of January 1, 2002 as the cumulative effect of a change in accounting principle. Other intangible assets consist of core deposit intangible assets which were initially
measured at fair value and are amortized over their useful life of ten years. Office Properties and EquipmentLand is carried at cost. Office properties, equipment and
computer software are carried at cost less accumulated depreciation. Depreciation is primarily
computed on the straight-line method over the estimated useful lives of the assets which generally
range up to 40 years for buildings and 3-10 years for equipment. The cost of leasehold
improvements is being amortized using the straight-line method over the terms of the related
leases. Expenditures for new properties and equipment and major renewals and betterments are
capitalized. Expenditures for maintenance and repairs are charged to expense as incurred, and gains
or losses on disposal of assets are reflected in current operations. Impairment of long lived assetsLong-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. In performing the review for impairment, the Company compares the expected future cash
flows (undiscounted and without interest charges) to the carrying amount of the asset and records
an impairment loss if the carrying amount exceeds the expected future cash flows. Long-lived assets to be abandoned or distributed to
owners in a spin-off are considered held and used until disposed. The depreciable life of a
long-lived asset to be abandoned is revised and the asset is depreciated over its shortened
depreciable life when an entity commits to a plan to abandon the asset before the end of its
previously estimated useful life. An impairment loss is recognized at the date a long-lived asset
is exchanged for a similar productive asset or distributed to owners in a spin-off if the carrying
amount of the asset exceeds its fair value. Long-lived assets classified as held for sale are
reported at the lower of its carrying amount or fair value less cost to sell and depreciation
(amortization) is ceased. AdvertisingAdvertising expenditures are expensed as incurred. Income TaxesThe Company and its subsidiaries, other than Heartwood Holdings, Inc., a real
estate investment trust, file a consolidated federal income tax return. The Company and its
subsidiaries file separate state income tax returns for each state jurisdiction. The provision for
income taxes is based on income before taxes reported for financial statement purposes after
adjustment for permanent differences. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured using the enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The
effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period
that includes the statutory enactment date. A deferred tax asset valuation allowance is recorded
when it is more likely than not that deferred tax assets will not be realized. Derivative InstrumentsAll derivatives are recognized on the statement of financial
condition at their fair value. On the date the derivative contract is entered, the Company
evaluates the derivative in order to determine if it qualifies for hedge accounting. The hedging
instrument must be highly effective in achieving offsetting changes in the hedge instrument and
hedged item attributable to the risk being hedged. Any ineffectiveness which arises during the
hedging relationship is recognized in earnings in the Companys statements of operations. When it
is determined that a derivative is not highly effective as a hedge or that it has ceased to be a
highly effective hedge, the Company discontinues hedge accounting prospectively. Changes in the fair value of a derivative that is highly effective and that is designated and
qualifies as a fair-value hedge, along with the loss or gain on the hedged asset or liability or
unrecognized firm commitment of the hedged item that is attributable to the hedged risk are
recorded in earnings. Changes in the fair value of a derivative that is highly effective and that
is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income until
earnings are affected by the variability in cash flows of the designated hedged item. Changes in
the fair value of undesignated derivative F-18




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) instruments are reported in current-period earnings. At December 31, 2004 and 2003 the Companys derivatives consisted of commitments to sell
residential mortgage loans which were accounted for at fair value. Earnings Per Common Share Basic earnings per share excludes dilution and is computed by
dividing net income by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflect the potential dilution that could occur if convertible
securities or options to issue common shares of the Company or its subsidiaries were exercised. In
calculating diluted earnings per share, interest expense net of taxes on convertible securities is
added back to net income and equity in earnings of subsidiaries is adjusted for the effect of
subsidiary stock options outstanding, if dilutive. The resulting net income amount is divided by
the weighted average number of common shares outstanding, when dilutive. The options and restricted
stock are included in the weighted average number of common shares outstanding based on the
treasury stock method, if dilutive. Brokered Deposits brokered deposits are accounted for at historical cost and discounts or
premiums, if any, are amortized or accreted using the interest method over the term of the brokered
deposit. Stock-Based Compensation Plans During the year ended December 31, 2004, the Company
maintained both qualifying and non-qualifying stock-based compensation plans for its employees and
directors. These are described more fully in Note 11. The Company accounts for these plans under
the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25
and related interpretations. No compensation is recognized in connection with option grants that
had an exercise price equal to the market value of the underlying common stock on the date of
grant. The tax benefit recognized upon the exercise of certain options is recorded as a component
of additional paid-in-capital. The following table illustrates the effect on net income and earnings per share if the Company
had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation. For the Years Ended December 31,(in thousands, except share data)
    
    2004
    
    
    2003
    
    
    2002Pro forma net incomeNet income, as reported
    
    $
    70,768
    
    
    $
    67,717
    
    
    $
    50,335Add: Stock-based employee compensation
expense included in reported net
income,
net of related income tax effects
    
    
    177
    
    
    
    231
    
    
    
    242Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related income tax effects
    
    
    (1,973
    )
    
    
    (1,897
    )
    
    
    (1,948
    )Pro forma net income
    
    $
    68,972
    
    
    $
    66,051
    
    
    $
    48,629Earnings per share:Basic as reported
    
    $
    1.19
    
    
    $
    1.16
    
    
    $
    0.87Basic pro forma
    
    $
    1.16
    
    
    $
    1.14
    
    
    $
    0.84Diluted as reported
    
    $
    1.11
    
    
    $
    1.08
    
    
    $
    0.81Diluted pro forma
    
    $
    1.09
    
    
    $
    1.07
    
    
    $
    0.79
 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 also
establishes standards for the accounting for transactions in which an entity exchanges its equity
instruments for goods or services and addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the F-19




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) fair value of the entitys equity instruments or that may be settled by the issuance of those
equity instruments. 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. For public companies the Statement will be effective as of the
beginning of the first interim or annual reporting period that begins after June 15, 2005. 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. Additionally, under the modified
retrospective application the Company can choose to only restate the prior interim periods in the
year of adoption as the effective date of the Statement does not coincide with the beginning of the
Companys fiscal year. Management will adopt the Statement on July 1, 2005 and is currently
evaluating the two transitional applications. Management estimates that compensation expense
resulting from currently unvested options would be approximately $9.9 million to be recorded over
the remaining vesting period of approximately four years. The estimated compensation expense from
unvested options during the year ended December 31, 2005 is $3.0 million. The Emerging Issues Task Force (EITF) reached a consensus on EITF 03-1 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments.The EITF provides
guidance on the meaning of other-than-temporary impairment and its application to investments
classified as either available for sale or held to maturity under FASB Statement No. 115 and
investments accounted for under the cost method of accounting. The guidance of EITF 03-01 requires
that the Company make evidence-based judgments about the recovery of the unrealized loss
(impairment), if any, on each security considering the severity and duration of the impairment and
the Companys ability and intent to hold the securities until the forecasted recovery. In
September 2004 the FASB issued a FSP that delayed the effective date for the measurement and
recognition guidance for the meaning of other-than-temporary impairment. The disclosure
requirements were not deferred. At December 31, 2004, the securities portfolios were evaluated for
other-than-temporary declines in value based on existing guidance contained in FASB No. 115, SAB
Topic 5-M and FASB Staff Implementation Guide to FASB No. 115 resulting in no other-than-temporary
impairment of the securities portfolios. In December 2003, the American Institute of Certified Public Accountants (AICPA) Accounting
Standards Executive Committee (AcSEC) issued Statement of Position 03-3 (SOP). The SOP
addresses accounting for loans and debt securities acquired in purchase business combinations or
purchased subsequent to origination with evidence of deterioration in credit quality since
origination. The SOP prohibits the creation of valuation allowances in the initial accounting of
all loans acquired that meet the criteria of the SOP. The SOP does not apply to originated loans.
The SOP limits the yield that may be accreted to the excess of the purchasers estimate of
undiscounted expected principal, interest and other cash flows over the purchasers initial
investment. The SOP requires excess contractual cash flows over cash flows expected to be
collected to not be recognized as an adjustment of yield, loss accrual or valuation allowance.
Subsequent increases in cash flows expected to be collected generally should be recognized
prospectively through adjustment of the loans yield over its remaining life. Decreases in cash
flows expected to be collected should be recognized as impairments. The SOP is effective for
loans and securities acquired in fiscal years beginning after December 15, 2004 with early adoption
encouraged. Upon adoption as of January 1, 2005, the SOP did not have an impact on the Companys
financial statements. 2. Discontinued Operations and Acquisitions Discontinued Operations During the year ended December 31, 2003, the Company completed the spin-off of its
wholly-owned subsidiary, Levitt, and transferred its investment in Bluegreen to Levitt. During the
year ended December 31, 2003, Ryan Beck sold two of its subsidiaries, The GMS Group, LLC (GMS)
and Cumberland Advisors. The above transactions were presented as discontinued operations in our
statements of operations for the years ended December 31, 2003 and 2002. On December 31, 2003, the Company completed the spin-off of Levitt, by means of a distribution
to its shareholders of all of the outstanding capital stock of Levitt. As a result of the
spin-off, the Company no longer owns any shares of capital stock of Levitt. In connection with the
spin-off, the Company converted a $30.0 million demand note owed to the Company by Levitt to a five
year term note 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, the
Company transferred its 4.9% ownership interest in Bluegreen Corporation to Levitt in exchange for
a $5.5 million note and additional shares of Levitts stock (which additional shares were included
in the spin-off). The transfer of the Bluegreen shares was accounted for at historical cost with
no gain or loss recognized because at the date of the transfer, Levitt was a wholly owned
subsidiary of the Company. F-20




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) This $5.5 million note was repaid in April 2004. Additionally, prior to the spin-off, Levitt
declared an $8.0 million dividend to the Company in the form of a note due in five years bearing
interest on the same basis as the $30.0 million note described above. Levitt operated
independently from the Company and its other subsidiaries. As a consequence, common costs incurred
by the Company on behalf of Levitt were inconsequential. As part of Ryan Becks acquisition of certain of the assets and assumption of certain of the
liabilities of Gruntal & Co, LLC, in April 2002, Ryan Beck acquired all of the membership interests
in The GMS Group, L.L.C. (GMS). Since its acquisition, GMS was operated as an independent
business unit. After a receipt of an offer by GMSs management to purchase GMS from Ryan Beck,
Ryan Beck sold its entire membership interest in GMS to GMS Group Holdings Corp. (Buyer) in
August 2003 for $22.6 million. The Buyer was formed by the management of GMS along with other
investors. Ryan Beck received cash proceeds from the sale of $9.0 million and a $13.6 million
secured promissory note issued by the Buyer with recourse to the management of GMS. The note is
secured by the membership interest in GMS and contains covenants that require GMS to maintain
certain capital and financial ratios. If these covenants are not maintained, Ryan Beck can
exercise its rights of default under the note, including pursing the sale of the collateral. Ryan
Beck did not recognize any gain or loss associated with the
transaction. The promissory note is at a federal funds rate plus an
applicable margin and is
payable in 27 equal quarterly installments continuing until
June 2010 with a final payment of $4.4
million in September 2010. At December 31, 2004 and 2003, the outstanding balance of the
promissory note was $6.1 million and $12.0 million, respectively. During the second quarter of 2003, Ryan Beck sold its entire interest in Cumberland Advisors,
Inc. for $1.5 million and recognized a $228,000 loss. The components of earnings from discontinued operations are as follows (in thousands): For the Years EndedDecember 31,2003
    
    
    2002Net interest income
    
    $
    5,870
    
    
    $
    3,312Non-interest income:Investment banking income
    
    
    17,782
    
    
    
    20,418Income from real estate operations
    
    
    73,547
    
    
    
    49,498Income from unconsolidated subsidiaries
    
    
    9,564
    
    
    
    6,208Other
    
    
    4,535
    
    
    
    4,050Total non-interest income
    
    
    105,428
    
    
    
    80,174Non-interest expense:Employee compensation and benefits
    
    
    37,222
    
    
    
    31,969Occupancy and equipment
    
    
    744
    
    
    
    763Advertising and promotion
    
    
    4,546
    
    
    
    3,386Selling, general and administrative
    
    
    16,504
    
    
    
    12,190Professional fees
    
    
    3,063
    
    
    
    2,282Communications
    
    
    1,148
    
    
    
    1,162Floor broker and clearing fees
    
    
    683
    
    
    
    668Other
    
    
    1,756
    
    
    
    1,698Total non-interest expenses
    
    
    65,666
    
    
    
    54,118Income from discontinued operations before
income taxes
    
    
    45,632
    
    
    
    29,368Provision for income taxes
    
    
    16,512
    
    
    
    6,825Income from discontinued operations, net of tax
    
    $
    29,120
    
    
    $
    22,543
 F-21




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the assets and liabilities sold or transferred associated with
discontinued operations and the cash proceeds received or transferred (in thousands): GMS &
    
    
    LevittCumberland
    
    
    Spin-off
    
    
    TotalCash
    
    $
    815
    
    
    $
    21,413
    
    
    $
    22,228Securities owned
    
    
    105,083
    
    
    
    
    
    
    
    105,083Loans receivable (1)
    
    
    
    
    
    
    (12,955
    )
    
    
    (12,955
    )Real estate held for development
    
    
    
    
    
    
    257,556
    
    
    
    257,556Investment in unconsolidated subsidiaries
    
    
    
    
    
    
    73,662
    
    
    
    73,662Property and equipment
    
    
    559
    
    
    
    
    
    
    
    559Goodwill
    
    
    1,204
    
    
    
    
    
    
    
    1,204Other assets
    
    
    5,479
    
    
    
    16,256
    
    
    
    21,735Securities sold under agreements to
repurchase
    
    
    
    
    
    
    17,935
    
    
    
    17,935Subordinated debentures
    
    
    
    
    
    
    (111,615
    )
    
    
    (111,615
    )Securities sold but not yet purchased
    
    
    (3,781
    )
    
    
    
    
    
    
    (3,781
    )Due to clearing agent
    
    
    (80,561
    )
    
    
    
    
    
    
    (80,561
    )Other liabilities
    
    
    (4,347
    )
    
    
    (93,179
    )
    
    
    (97,526
    )Stockholders equity
    
    
    
    
    
    
    (125,573
    )
    
    
    (125,573
    )Net assets sold or transferred
    
    
    24,451
    
    
    
    43,500
    
    
    
    67,951Notes
receivable - GMS Holdings, Inc.
    
    
    (13,681
    )
    
    
    
    
    
    
    (13,681
    )Notes
receivable - Levitt Corporation
    
    
    
    
    
    
    (43,500
    )
    
    
    (43,500
    )Net cash declines due to Levitt spin-off
    
    
    
    
    
    
    (21,413
    )
    
    
    (21,413
    )Cash sold
    
    
    (815
    )
    
    
    
    
    
    
    (815
    )Net cash increase (decrease)
    
    $
    9,955
    
    
    $
    (21,413
    )
    
    $
    (11,458
    )
   (1)
    
    Includes $18.1 million of construction loans from BankAtlantic to Levitt that
were eliminated in the Companys consolidated financial statements prior to the Levitt
spin-off transaction. Acquisitions On April 26, 2002 Ryan Beck acquired certain of the assets and assumed certain of the
liabilities of Gruntal & Co., LLC (Gruntal) and acquired all of the membership interests in GMS
(the Gruntal transaction). The assets acquired from Gruntal include all of Gruntals customer
accounts, furniture, leasehold improvements and equipment owned by Gruntal at the offices where
Gruntals financial consultants are located, assets related to Gruntals deferred compensation plan
and forgivable notes. The consideration provided by Ryan Beck for this transaction was the
assumption of a note payable related to furniture and equipment in the Gruntal offices, assumption
of non-cancelable leases associated with the Gruntal offices acquired, obligations owed to
financial consultants participating in Gruntals deferred compensation plan that accepted
employment with Ryan Beck, and the payment of $6.0 million in cash. The Gruntal transaction was accounted for by the purchase method of accounting. Under this
method the acquired assets and assumed liabilities of Gruntal were recorded at their estimated fair
value, and the amount of estimated fair value of net assets in excess of the purchase price was
used to write down non-financial assets. The remaining balance was recorded as an extraordinary
income item. The Companys financial statements reflect the Gruntal transaction as of April 26,
2002. On March 22, 2002, BankAtlantic acquired Community Savings Bankshares Inc., the parent company
of Community Savings, F.A. (Community), for $170.3 million in cash and immediately merged
Community into BankAtlantic. At the acquisition date, BankAtlantic Bancorp made a $78.5 million
capital contribution to BankAtlantic. BankAtlantic funded the acquisition of Community using such
capital contribution received from BankAtlantic Bancorp and funds obtained from the liquidation of
investments. Communitys results of operations have been included in the Companys consolidated
financial statements since March 22, 2002. Community was a federally chartered savings and loan
association founded in 1955 and headquartered in North Palm Beach, Florida. At March 22, 2002,
Community had assets of $909 million and deposits of $637 million and 21 branches. The Community
acquisition was accounted for based on the purchase F-22




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) method of accounting. In the purchase method of accounting, the assets acquired and liabilities
assumed are fair valued and goodwill is recorded for the excess of the purchase price over the fair
value of the net assets acquired. The following table summarizes the fair value of assets acquired and liabilities assumed in
connection with the acquisition of Community and the Gruntal transaction effective March 22, 2002
and April 26, 2002, respectively (in thousands): Community
    
    
    Gruntal
    
    
    TotalCash and interest-earning deposits
    
    $
    124,977
    
    
    $
    886
    
    
    $
    125,863Securities available for sale
    
    
    79,768
    
    
    
    
    
    
    
    79,768Securities owned
    
    
    
    
    
    
    151,909
    
    
    
    151,909Loans receivable, net
    
    
    623,469
    
    
    
    
    
    
    
    623,469FHLB stock
    
    
    8,063
    
    
    
    
    
    
    
    8,063Investments and advances in unconsolidated subsidiaries
    
    
    16,122
    
    
    
    
    
    
    
    16,122Goodwill
    
    
    55,068
    
    
    
    
    
    
    
    55,068Core deposit intangible asset
    
    
    15,117
    
    
    
    
    
    
    
    15,117Other assets
    
    
    46,620
    
    
    
    12,597
    
    
    
    59,217Fair value of assets acquired
    
    
    969,204
    
    
    
    165,392
    
    
    
    1,134,596Deposits
    
    
    639,111
    
    
    
    
    
    
    
    639,111FHLB advances
    
    
    138,981
    
    
    
    
    
    
    
    138,981Other borrowings
    
    
    14,291
    
    
    
    3,427
    
    
    
    17,718Securities sold, but not yet purchased
    
    
    
    
    
    
    1,201
    
    
    
    1,201Due to clearing agent
    
    
    
    
    
    
    101,705
    
    
    
    101,705Other liabilities
    
    
    6,022
    
    
    
    27,463
    (1)
    
    
    33,485Fair value of liabilities assumed
    
    
    798,405
    
    
    
    133,796
    
    
    
    932,201Fair value of net assets acquired over cost
    
    
    
    
    
    
    (23,749
    ) (2)
    
    
    (23,749
    )Purchase price
    
    
    170,799
    
    
    
    7,847
    
    
    
    178,646Cash acquired
    
    
    (124,977
    )
    
    
    (886
    )
    
    
    (125,863
    )Purchase price net of cash acquired
    
    $
    45,822
    
    
    $
    6,961
    
    
    $
    52,783
   1.
    
    Included in Gruntals other liabilities were a $21 million deferred compensation plan
obligation, of which $18.3 million was vested. Also included in other liabilities was
$675,000 of termination costs for contract obligations related to leased equipment and
$654,000 of contract termination obligations associated with closing certain Gruntal
branches.2.
    
    The Company recognized an extraordinary gain of $23.7 million, net of income taxes of
$2.8 million, and reduced the carrying amount of non-financial assets by $11.2 million as a
result of the fair value of the assets acquired exceeding the cost of the Gruntal
transaction. The Company did not establish a deferred tax liability for the extraordinary
gain associated with the GMS membership interest acquired because the Company acquired the
GMS membership interest rather than the net assets. The purchase price of Community consisted of $170.3 million in cash and $500,000 of
acquisition professional fees. The cost of the Gruntal transaction consisted of a $6.0 million
cash payment, $750,000 of acquisition professional fees and an estimated $1.05 million of
contingent consideration payable to Gruntal. The $1.05 million contingent consideration to Gruntal
relates to possible deferred compensation plan participant forfeitures and represents the maximum
amount of additional consideration. Ryan Beck paid Gruntal $350,000 and $350,000 of contingent
consideration during the year ended December 31, 2004 and 2003, respectively. F-23




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following pro forma information for the year ended December 31, 2002 is presented as if
the Gruntal and Community transactions had been consummated on January 1, 2002. The pro forma
information is not necessarily indicative of the combined financial position or results of
operations which would have been realized had the transactions been consummated during the period
or as of the date for which the pro forma financial information is presented. For the Year EndedDecember 31, 2002(in thousands, except per share data)
    
    Historical
    
    
    Pro FormaInterest income
    
    $
    303,387
    
    
    $
    319,341Interest expense
    
    
    148,891
    
    
    
    155,611Provision for loan losses
    
    
    14,077
    
    
    
    16,121Net interest income after provision for loan losses
    
    $
    140,419
    
    
    $
    147,609Income from continuing operations
    
    
    19,150
    
    
    
    15,461Basic earnings per share from continuing operations
    
    $
    0.33
    
    
    $
    0.27Diluted earnings per share from continuing
operations
    
    $
    0.32
    
    
    $
    0.26
 During April 2002, the Companys and Levitts ownership in Bluegreen Corporation
(Bluegreen), a New York Stock Exchange-listed company engaged in the acquisition, development,
marketing and sale of primarily drive-to vacation interval resorts, golf communities and
residential land, increased from approximately 5% to 40%. This interest in Bluegreen was acquired
for an aggregate purchase price of approximately $56 million. The Company acquired approximately
5% of Bluegreen common stock during the first quarter of 2001, and Levitt acquired approximately
35% of Bluegreen common stock in April 2002. As a consequence the Companys investment in
Bluegreen was accounted for as an investment in an unconsolidated subsidiary under the equity
method of accounting. The equity in earnings from Bluegreen is included in discontinued operations
in the Companys Statement of Operations for the years ended December 31, 2003 and 2002. F-24




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. Available for Sale Securities, Investment Securities, Tax Certificates and Short-Term
Investments The following tables summarize available-for-sale securities, investment securities and
tax certificates (in thousands): Available for SaleDecember 31, 2004
    
    
    December 31, 2003Gross
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair Value
    
    
    Cost
    
    
    Appreciation
    
    
    Depreciation
    
    
    Fair ValueMortgage-Backed Securities:Mortgage-backed securities
    
    $
    401,566
    
    
    $
    3,848
    
    
    $
    1,587
    
    
    $
    403,827
    
    
    
    315,520
    
    
    $
    6,262
    
    
    $
    529
    
    
    $
    321,253Real estate mortgage investment
conduits
    
    
    96,938
    
    
    
    188
    
    
    
    436
    
    
    
    96,690
    
    
    
    17,378
    
    
    
    120
    
    
    
    
    
    
    
    17,498Total mortgage-backed securities
    
    
    498,504
    
    
    
    4,036
    
    
    
    2,023
    
    
    
    500,517
    
    
    
    332,898
    
    
    
    6,382
    
    
    
    529
    
    
    
    338,751Investment Securities:Tax-exempt securities
    
    
    219,322
    
    
    
    2,062
    
    
    
    1,030
    
    
    
    220,354
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other bonds
    
    
    585
    
    
    
    
    
    
    
    
    
    
    
    585
    
    
    
    585
    
    
    
    
    
    
    
    
    
    
    
    585Equity securities
    
    
    23,025
    
    
    
    2,679
    
    
    
    
    
    
    
    25,704
    
    
    
    15,775
    
    
    
    3,400
    
    
    
    
    
    
    
    19,175Total investment securities
    
    
    242,932
    
    
    
    4,741
    
    
    
    1,030
    
    
    
    246,643
    
    
    
    16,360
    
    
    
    3,400
    
    
    
    
    
    
    
    19,760Total
    
    $
    741,436
    
    
    $
    8,777
    
    
    $
    3,053
    
    
    $
    747,160
    
    
    
    349,258
    
    
    $
    9,782
    
    
    $
    529
    
    
    $
    358,511
 Investment Securities and Tax CertificatesDecember 31, 2004
    
    
    December 31, 2003Gross
    
    
    Gross
    
    
    Estimated
    
    
    
    
    
    
    Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Appreciation
    
    
    Depreciation
    
    
    Value
    
    
    Cost
    
    
    Appreciation
    
    
    Depreciation
    
    
    ValueTax certificates (1) Net of allowance of $3,297
    
    $
    166,731
    
    
    $
    
    
    
    $
    
    
    
    $
    166,731
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net of allowance of $2,870
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,906
    
    
    
    
    
    
    

    
    
    
    
    190,906Tax-exempt securities
    
    
    133,562
    
    
    
    302
    
    
    
    777
    
    
    
    133,087
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Limited partnership (2)
    
    
    5,000
    
    
    
    345
    
    
    
    
    
    
    
    5,345
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment securities (3)
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    1,800
    
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    1,800$
    307,093
    
    
    $
    647
    
    
    $
    777
    
    
    $
    306,963
    
    
    $
    192,706
    
    
    $
    
    
    
    $
    
    
    
    $
    192,706
   (1)
    
    Management considers estimated fair value equivalent to book value for tax certificates
since these securities have no readily traded market and are deemed to approximate fair value.(2)
    
    The limited partnership invests in companies in the financial service industry and is
recorded at fair value.(3)
    
    Investment securities consist of equity instruments purchased through private placements
and are accounted for at historical cost adjusted for other-than-temporary declines in value. F-25




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table shows the gross unrealized losses and fair value of the Companys
available for sale securities and investment securities with unrealized losses that are deemed
temporary, aggregated by investment category and length of time that individual securities have
been in a continuous unrealized loss position, at December 31, 2004 (in thousands): Less Than 12 Months
    
    
    12 Months or Greater
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesAvailable for sale securities:Mortgage-backed securities
    
    $
    91,091
    
    
    $
    (1,256
    )
    
    $
    52,253
    
    
    $
    (331
    )
    
    $
    143,344
    
    
    $
    (1,587
    )Real estate mortgage investment
conduits
    
    
    71,705
    
    
    
    (436
    )
    
    
    
    
    
    
    
    
    
    
    71,705
    
    
    
    (436
    )Tax exempt securities
    
    
    71,523
    
    
    
    (1,030
    )
    
    
    
    
    
    
    
    
    
    
    71,523
    
    
    
    (1,030
    )Total available for sale securities:
    
    
    234,319
    
    
    
    (2,722
    )
    
    
    52,253
    
    
    
    (331
    )
    
    
    286,572
    
    
    
    (3,053
    )Investment securitiesTax exempt securities
    
    
    78,585
    
    
    
    (777
    )
    
    
    
    
    
    
    
    
    
    
    78,585
    
    
    
    (777
    )Total
    
    $
    312,904
    
    
    $
    (3,499
    )
    
    $
    52,253
    
    
    $
    (331
    )
    
    $
    365,157
    
    
    $
    (3,830
    )
 Unrealized losses on mortgage-backed securities outstanding greater than twelve months at
December 31, 2004 were caused by interest rate increases. The cash flows of these securities are
guaranteed by government agencies. Management expects that the mortgage-backed securities would
not be settled at a price less than the carrying amount. Accordingly, the Company does not
consider these investments other-than-temporarily impaired at December 31, 2004. Unrealized losses on securities outstanding less than twelve months at December 31, 2004 were
also caused by interest rate increases. These securities are guaranteed by government agencies and
are of high credit quality. Since these securities are of high credit quality and the decline in
value has existed for a short period of time, management believes that these securities may recover
their losses in the foreseeable future. Accordingly, the Company does not consider these
investments other-than-temporarily impaired at December 31, 2004. F-26




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The scheduled maturities of debt securities and tax certificates were (in thousands): Debt Securities
    
    
    Tax Certificates andAvailable for Sale
    
    
    Investment SecuritiesEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairDecember 31, 2004 (1) (2)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueDue within one year
    
    $
    4,419
    
    
    $
    4,398
    
    
    $
    118,725
    
    
    $
    118,725Due after one year, but
within five years
    
    
    6,285
    
    
    
    6,226
    
    
    
    48,006
    
    
    
    48,006Due after five years, but
within ten years
    
    
    86,136
    
    
    
    86,051
    
    
    
    
    
    
    
    Due after ten years (3)
    
    
    621,571
    
    
    
    624,781
    
    
    
    133,562
    
    
    
    133,087Total
    
    $
    718,411
    
    
    $
    721,456
    
    
    $
    300,293
    
    
    $
    299,818
   (1)
    
    Scheduled maturities in the above table may vary significantly from
actual maturities due to prepayments.(2)
    
    Except for tax certificates, maturities are based upon
contractual maturities. Tax certificates do not have stated maturities,
and estimates in the above table are based upon historical repayment
experience (generally 1 to 2 years).(3)
    
    Amounts include $294 million of callable tax exempt securities
with call dates ranging from 2008 to 2015. Activity in the allowance for tax certificate losses was (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Balance, beginning of period
    
    $
    2,870
    
    
    $
    1,873
    
    
    $
    1,521Charge-offs
    
    
    (491
    )
    
    
    (869
    )
    
    
    (1,783
    )Recoveries
    
    
    918
    
    
    
    666
    
    
    
    660Net recoveries (charge-offs)
    
    
    427
    
    
    
    (203
    )
    
    
    (1,123
    )Provision charged to
operations
    
    
    
    
    
    
    1,200
    
    
    
    1,475Balance, end of period
    
    $
    3,297
    
    
    $
    2,870
    
    
    $
    1,873
 F-27




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of gains and losses on sales of securities were (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Gross gains on securities
activities
    
    $
    3,694
    
    
    $
    457
    
    
    $
    8,711Gross losses on securities
activities
    
    
    
    
    
    
    (1,961
    )
    
    
    (67
    )Realized gain on future contract
    
    
    36
    
    
    
    
    
    
    
    Realized loss on future contract
    
    
    
    
    
    
    (49
    )
    
    
    (66
    )Net
(losses) gains on the sales of securities available for sale
    
    $
    3,730
    
    
    $
    (1,553
    )
    
    $
    8,578
 Proceeds from sales of securities available for sale were $95.6 million, $40.1 million,
and $197.6 million during the years ended December 31, 2004, 2003 and 2002, respectively. Included
in gross losses on securities activities, net during the year ended December 31, 2003 was $1.9
million of realized losses related to the settlement of interest rate swap contracts. The interest
rate swaps were accounted for as a cash flow hedge and the unrealized losses were recorded in other
comprehensive income during the year ended December 31, 2002. During 1999, the Company entered into a strategic relationship and paid $10 million in cash
and issued 848,364 shares of Class A common stock to acquire an interest in a privately held
technology company. During 2002, the Company performed an evaluation of its investment in the
technology company determining that there was an other-than-temporary decline in value resulting in
the Company writing off its entire $15 million investment in the technology company. The Company
also recognized an impairment charge of $3.8 million during the year ended December 31, 2002 on
other equity securities resulting from significant declines in their value that were considered
other than temporary due to the financial condition and near term prospects of the issuers of the
equity securities. In March 2004, the Company recorded a $22.8 million litigation gain pursuant to a settlement
between the Company and its affiliates and the technology company. In accordance with the terms
of the settlement, the Company sold its stock in the technology company to a third party investor
group for its original cost of $15 million and received from the investor group and the technology
company additional compensation for legal expenses and damages consisting of $1.7 million in cash
and 378,160 shares of the Companys Class A common stock that had been owned by the technology
company with a $6.1 million fair value. The Company retired the Class A common stock on the
settlement date. The Companys securities owned consisted of the following (in thousands): December 31,2004
    
    
    2003Debt obligations:States and municipalities
    
    $
    10,824
    
    
    $
    9,903Corporations
    
    
    10,093
    
    
    
    5,159U.S. Government and
agencies
    
    
    57,659
    
    
    
    62,229Corporate equity
    
    
    18,042
    
    
    
    15,072Mutual funds
    
    
    27,898
    
    
    
    24,639Certificates of deposits
    
    
    927
    
    
    
    7,563Total
    
    $
    125,443
    
    
    $
    124,565
 All the securities owned at December 31, 2004 and 2003 were associated with Ryan Becks
trading activities conducted both as principal and as agent on behalf of the firm and individual
and institutional investor clients. Transactions as principal involve making markets in
securities which are held in inventory to facilitate sales to and purchases from customers. Ryan
Beck realized income from principal transactions of $90.4 million, $95.5 million and $49.1 million
for the years ended December 31, 2004, 2003 and 2002, respectively. 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 December 31, 2004, balances due from the clearing broker were $16.6 million. As
of December 31, 2003, balances due to the clearing broker were $8.6 million. F-28




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Securities sold, but not yet purchased consists of the following (in thousands): December 31,2004
    
    
    2003Corporate equity
    
    $
    3,498
    
    
    $
    3,544Corporate bonds
    
    
    9,958
    
    
    
    1,963State and municipalities
    
    
    269
    
    
    
    67U.S. Government agencies
    
    
    25,384
    
    
    
    32,231Certificates of deposits
    
    
    353
    
    
    
    8$
    39,462
    
    
    $
    37,813
 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. The following table provides information on securities purchased under resell agreements (in
thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Ending Balance
    
    $
    
    
    
    $
    
    
    
    $
    30,145Maximum outstanding at any month end
within period
    
    $
    
    
    
    $
    160,000
    
    
    $
    30,145Average amount invested during period
    
    $
    
    
    
    $
    31,589
    
    
    $
    4,558Average yield during period
    
    
    
    
    
    
    0.60
    %
    
    
    0.73
    %
 The underlying securities associated with the securities purchased under resell
agreements during the years ended December 31, 2003 and 2002 were held by the Company. The following table provides information on Federal Funds sold (in thousands): For the Years Ended2004
    
    
    2003
    
    
    2002Ending Balance
    
    $
    5,100
    
    
    $
    
    
    
    $
    20,000Maximum outstanding at any month end
within period
    
    $
    54,530
    
    
    $
    83,000
    
    
    $
    20,000Average amount invested during period
    
    $
    6,282
    
    
    $
    16,499
    
    
    $
    3,928Average yield during period
    
    
    0.75
    %
    
    
    1.01
    %
    
    
    1.45
    %
 The estimated fair value of securities and short term investments pledged for the following
obligations were (in thousands): December 31,2004
    
    
    2003Treasury tax and loan
    
    $
    1,784
    
    
    $
    1,724Repurchase agreements
    
    
    312,171
    
    
    
    144,984Public deposits
    
    
    53,838
    
    
    
    Interest rate swap and
forward contracts
    
    
    
    
    
    
    174$
    367,793
    
    
    $
    146,882
 The counter party to the repurchase agreements has the right to engage in other
repurchase transactions with the pledged securities but must deliver the pledged securities to
BankAtlantic at the termination of the agreement. F-29




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The change in net unrealized holding gains or losses on available for sale securities,
included as a separate component of stockholders equity, was as follows (in thousands): For The Years Ended December 31,2004
    
    
    2003
    
    
    2002Net change in other comprehensive income
on securities
    
    $
    (3,190
    )
    
    $
    (13,073
    )
    
    $
    (3,085
    )Change in deferred taxes (benefits) on net unrealized
appreciation
(depreciation) on securities
    
    
    (1,145
    )
    
    
    (4,737
    )
    
    
    (1,109
    )Change in stockholders equity from net unrealized appreciation
(depreciation) on securities
    
    $
    (2,045
    )
    
    $
    (8,336
    )
    
    $
    (1,976
    )
 The components of accumulated other comprehensive income included in stockholders equity was
as follows (in thousands): December 31,2004
    
    
    2003Unrealized gains on securities
    
    $
    3,911
    
    
    $
    5,956Minimum pension liability
    
    
    (4,903
    )
    
    
    Accumulated other
comprehensive income
    
    $
    (992
    )
    
    $
    5,956
 F-30




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. Loans Receivable The loan portfolio consisted of the following components (in thousands): December 31,2004
    
    
    2003Real estate loans:Residential
    
    $
    2,065,658
    
    
    $
    1,343,657Construction and development
    
    
    1,454,048
    
    
    
    1,345,449Commercial
    
    
    1,075,391
    
    
    
    1,064,043Small business
    
    
    123,740
    
    
    
    107,852Loans to Levitt Corporation
    
    
    8,621
    
    
    
    18,118Other loans:Home equity
    
    
    457,058
    
    
    
    333,655Commercial business
    
    
    91,505
    
    
    
    91,724Small
business  non-mortgage
    
    
    66,679
    
    
    
    51,898Loans to Levitt Corporation
    
    
    38,000
    
    
    
    43,500Consumer loans
    
    
    14,540
    
    
    
    17,892Deposit overdrafts
    
    
    3,894
    
    
    
    4,036Residential loans held for sale
    
    
    4,646
    
    
    
    2,254Discontinued loans products (1)
    
    
    8,285
    
    
    
    35,527Total gross loans
    
    
    5,412,065
    
    
    
    4,459,605Adjustments:Undisbursed portion of loans in
process
    
    
    (767,804
    )
    
    
    (728,100
    )Premiums related to purchased loans
    
    
    6,609
    
    
    
    6,898Deferred fees
    
    
    (5,812
    )
    
    
    (6,655
    )Allowance for loan and lease losses
    
    
    (46,010
    )
    
    
    (45,595
    )Loans
receivable  net
    
    $
    4,599,048
    
    
    $
    3,686,153
   (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. BankAtlantics loan portfolio had the following geographic concentration at December 31,
2004: Florida
    
    
    56
    %California
    
    
    12
    %Northeast
    
    
    8
    %Other
    
    
    24
    %100
    %
 Loans to Levitt amounting to $38.0 million are unsecured and $8.6 million of loans to Levitt
are construction loans secured by land and improvements at December 31, 2004. BankAtlantic began originating residential loans held for sale with an independent mortgage
company in August 2003. The mortgage company provides processing and closing assistance to
BankAtlantic. Pursuant to an agreement, this mortgage company purchases the loans from
BankAtlantic 14 days after the date of funding. BankAtlantic owns the loans during the 14 day
period and accordingly earns the interest income during the period. The sales price is negotiated
quarterly for all loans sold during the quarter. F-31




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Allowance for Loan Losses (in thousands): For Years Ended December 31,2004
    
    
    2003
    
    
    2002Balance, beginning of period
    
    $
    45,595
    
    
    $
    48,022
    
    
    $
    44,585Loans charged-off
    
    
    (4,076
    )
    
    
    (11,723
    )
    
    
    (28,663
    )Recoveries of loans previously charged-off
    
    
    9,600
    
    
    
    10,577
    
    
    
    8,879Net recoveries (charge-offs)
    
    
    5,524
    
    
    
    (1,146
    )
    
    
    (19,784
    )Allowance for loan losses, acquired
    
    
    
    
    
    
    (734
    )
    
    
    9,144Net provision charged (credited) to
operations
    
    
    (5,109
    )
    
    
    (547
    )
    
    
    14,077Balance, end of period
    
    $
    46,010
    
    
    $
    45,595
    
    
    $
    48,022
 The following summarizes impaired loans (in thousands): December 31, 2004
    
    
    December 31, 2003Gross
    
    
    
    
    
    
    GrossRecorded
    
    
    Specific
    
    
    Recorded
    
    
    SpecificInvestment
    
    
    Allowances
    
    
    Investment
    
    
    AllowancesImpaired loans
with specific
valuation
allowances
    
    $
    247
    
    
    $
    123
    
    
    $
    361
    
    
    $
    181Impaired loans
without specific
valuation
allowances
    
    
    8,123
    
    
    
    
    
    
    
    12,325
    
    
    
    Total
    
    $
    8,370
    
    
    $
    123
    
    
    $
    12,686
    
    
    $
    181
 The average gross recorded investment in impaired loans was $10.3 million, $16.3 million and
$39.3 million during the years ended December 31, 2004, 2003 and 2002, respectively. Interest income which would have been recorded under the contractual terms of impaired loans
and the interest income actually recognized was (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Contracted interest
income
    
    $
    464
    
    
    $
    666
    
    
    $
    1,575Interest income
recognized
    
    
    (192
    )
    
    
    (396
    )
    
    
    (768
    )Foregone interest income
    
    $
    272
    
    
    $
    270
    
    
    $
    807
 Non-performing assets consist of non-accrual loans, non-accrual tax certificates, REO and
repossessed assets. Non-accrual loans are loans on which interest recognition has been suspended
because of doubts as to the borrowers ability to repay principal or interest. Non-accrual tax
certificates are tax deeds or certificates in which interest recognition has been suspended due to
the aging of the certificate or deed. F-32




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Non-performing assets (in thousands): December 31,2004
    
    
    2003
    
    
    2002Non-accrual
- tax certificates
    
    $
    381
    
    
    $
    894
    
    
    $
    1,419Non-accrual - loansResidential
    
    
    5,538
    
    
    
    9,777
    
    
    
    14,237Commercial real estate and business
    
    
    340
    
    
    
    52
    
    
    
    1,474Small business
    
    
    88
    
    
    
    155
    
    
    
    239Lease financing
    
    
    727
    
    
    
    25
    
    
    
    3,900Consumer
    
    
    1,210
    
    
    
    794
    
    
    
    532Real estate owned
    
    
    692
    
    
    
    2,422
    
    
    
    9,607Other repossessed assets
    
    
    
    
    
    
    
    
    
    
    4Total non-performing assets
    
    
    8,976
    
    
    
    14,119
    
    
    
    31,412Specific valuation allowance
    
    
    
    
    
    
    
    
    
    
    (1,386
    )Total non-performing
assets, net
    
    $
    8,976
    
    
    $
    14,119
    
    
    $
    30,026
 Other potential problem loans (in thousands): December 31,2004
    
    
    2003
    
    
    2002Loans contractually past due 90 days or more
and still accruing
    
    $
    
    
    
    $
    135
    
    
    $
    100Performing impaired loans, net of specific
allowances
    
    
    320
    
    
    
    180
    
    
    
    Restructured loans
    
    
    24
    
    
    
    1,387
    
    
    
    1,882Total potential problem loans
    
    $
    344
    
    
    $
    1,702
    
    
    $
    1,982
 Loans contractually past due 90 days or more represent loans that have matured and the
borrower continues to make the payments under the matured loan agreement. BankAtlantic is in the
process of renewing or extending these matured loans. Restructured loans are loans in which the
original terms were modified granting the borrower loan concessions due to financial difficulties.
Performing impaired loans are impaired loans which are still accruing interest. There were no
commitments to lend additional funds on non-performing loans and BankAtlantic has $200,000 of
commitments to lend additionally funds to potential problem loans at December 31, 2004. Foreclosed asset activity in non-interest expense includes the following (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Real estate acquired in
settlement of loans and
tax certificates:Operating expenses, net
    
    $
    137
    
    
    $
    1,122
    
    
    $
    872Provisions for losses on REO
    
    
    5
    
    
    
    812
    
    
    
    1,467Net (gains) losses on sales
    
    
    (694
    )
    
    
    (1,984
    )
    
    
    (117
    )Total (income) loss
    
    $
    (552
    )
    
    $
    (50
    )
    
    $
    2,222
 F-33




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Activity in the allowance for real estate owned consisted of (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Balance, beginning of period
    
    $
    
    
    
    $
    
    
    
    $
    Net charge-offs:Commercial real estate
    
    
    
    
    
    
    (750
    )
    
    
    (1,500
    )Residential real estate
    
    
    (5
    )
    
    
    (62
    )
    
    
    33Total net charge-offs
    
    
    (5
    )
    
    
    (812
    )
    
    
    (1,467
    )Provision for losses on
REO
    
    
    5
    
    
    
    812
    
    
    
    1,467Balance, end of period
    
    $
    
    
    
    $
    
    
    
    $
    
 5. Accrued Interest Receivable Accrued interest receivable consists of (in thousands): December 31,2004
    
    
    2003Loans receivable
    
    $
    22,128
    
    
    $
    15,700Investment securities and
tax certificates
    
    
    9,527
    
    
    
    10,269Securities available for sale
    
    
    4,327
    
    
    
    1,897Accrued interest receivable
    
    $
    35,982
    
    
    $
    27,866
 6. Office Properties and Equipment Office properties and equipment was comprised of (in thousands): December 31,2004
    
    
    2003Land
    
    $
    28,958
    
    
    $
    28,749Buildings and improvements
    
    
    81,650
    
    
    
    64,119Furniture and equipment
    
    
    73,702
    
    
    
    49,923Total
    
    
    184,310
    
    
    
    142,791Less accumulated depreciation
    
    
    54,520
    
    
    
    49,214Office properties and
equipment - net
    
    $
    129,790
    
    
    $
    93,577
 During 2004, BankAtlantic finalized a plan to renovate the interior of its existing branches.
BankAtlantic has incurred approximately $4.1 million of renovation costs as of December 31, 2004.
As a consequence of the branch renovation plan, BankAtlantic shortened the estimated lives of
$2.8 million of branch fixed assets resulting in $1.5 million of additional depreciation expense
during the year ended December 31, 2004. During 2002, BankAtlantic purchased a $14.3 million facility to consolidate BankAtlantics
headquarters and back office operations into a centralized location. BankAtlantic has incurred
approximately $24.5 million in renovation costs on this building as of December 31, 2004. During 2002, the Company discontinued certain ATM relationships, resulting in an $801,000
restructuring charge and a $206,000 impairment write-down. Depreciation expense was $11.9 million, $10.0 million and $10.7 million for the years ended
December 31, 2004, 2003 and 2002, respectively. Included in furniture and equipment at December
31, 2004 and 2003 was $5.4 million and $4.7 million, respectively, of unamortized software costs. F-34




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 7. Deposits The weighted average nominal interest rate payable on deposit accounts at December 31, 2004
and 2003 was 0.87% and 0.94%, respectively. The stated rates and balances on deposits were (dollars
in thousands): December 31,2004
    
    
    2003Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentInterest free checking
    
    $
    890,398
    
    
    
    25.75
    %
    
    $
    645,036
    
    
    
    21.09
    %Insured money fund savings1.05% at December 31, 2004,0.83% at December 31, 2003
    
    
    875,422
    
    
    
    25.32
    
    
    
    865,590
    
    
    
    28.31NOW accounts0.30% at December 31, 2004,0.30% at December 31, 2003
    
    
    658,137
    
    
    
    19.04
    
    
    
    533,888
    
    
    
    17.46Savings accounts0.28% at December 31, 2004,0.28% at December 31, 2003
    
    
    270,001
    
    
    
    7.81
    
    
    
    208,966
    
    
    
    6.83Total non-certificate accounts
    
    
    2,693,958
    
    
    
    77.92
    
    
    
    2,253,480
    
    
    
    73.69Certificate accounts:Less than 2.00%
    
    
    302,319
    
    
    
    8.74
    
    
    
    455,709
    
    
    
    14.902.01% to 3.00%
    
    
    327,958
    
    
    
    9.49
    
    
    
    147,446
    
    
    
    4.823.01% to 4.00%
    
    
    74,439
    
    
    
    2.15
    
    
    
    45,546
    
    
    
    1.494.01% to 5.00%
    
    
    21,357
    
    
    
    0.62
    
    
    
    51,379
    
    
    
    1.685.01% and greater
    
    
    34,988
    
    
    
    1.01
    
    
    
    102,382
    
    
    
    3.35Total certificate accounts
    
    
    761,061
    
    
    
    22.01
    
    
    
    802,462
    
    
    
    26.24Total deposit accounts
    
    
    3,455,019
    
    
    
    99.93
    
    
    
    3,055,942
    
    
    
    99.93Premium on brokered deposits
    
    
    (308
    )
    
    
    (0.01
    )
    
    
    (798
    )
    
    
    (0.03
    )Fair value adjustment related to acquisitions
    
    
    16
    
    
    
    0.00
    
    
    
    472
    
    
    
    0.02Interest earned not credited to deposit
accounts
    
    
    2,475
    
    
    
    0.08
    
    
    
    2,526
    
    
    
    0.08Total
    
    $
    3,457,202
    
    
    
    100.00
    %
    
    $
    3,058,142
    
    
    
    100.00
    %
 Interest expense by deposit category was (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Money fund savings and NOW accounts
    
    $
    10,860
    
    
    $
    11,142
    
    
    $
    15,338Savings accounts
    
    
    652
    
    
    
    856
    
    
    
    1,362Certificate
accounts - below $100,000
    
    
    8,126
    
    
    
    10,914
    
    
    
    24,177Certificate accounts, $100,000 and above
    
    
    8,873
    
    
    
    13,457
    
    
    
    22,140Less early withdrawal penalty
    
    
    (156
    )
    
    
    (180
    )
    
    
    (240
    )Total
    
    $
    28,355
    
    
    $
    36,189
    
    
    $
    62,777
 F-35




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) At December 31, 2004, the amounts of scheduled maturities of certificate accounts were (in
thousands): For the Years Ending December 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter0.00% to 2.00%
    
    $
    288,852
    
    
    $
    10,462
    
    
    $
    2,348
    
    
    $
    276
    
    
    $
    369
    
    
    $
    132.01% to 3.00%
    
    
    215,061
    
    
    
    90,250
    
    
    
    18,025
    
    
    
    3,444
    
    
    
    1,179
    
    
    
    3.01% to 4.00%
    
    
    19,589
    
    
    
    3,192
    
    
    
    23,442
    
    
    
    18,982
    
    
    
    8,819
    
    
    
    4154.01% to 5.00%
    
    
    2,977
    
    
    
    7,655
    
    
    
    3,901
    
    
    
    638
    
    
    
    6,183
    
    
    
    25.01% and greater
    
    
    29,625
    
    
    
    3,073
    
    
    
    1,988
    
    
    
    298
    
    
    
    
    
    
    
    3Total
    
    $
    556,104
    
    
    $
    114,632
    
    
    $
    49,704
    
    
    $
    23,638
    
    
    $
    16,550
    
    
    $
    433
 Time deposits of $100,000 and over had the following maturities (in thousands): December 31,20043 months or less
    
    $
    71,2774 to 6 months
    
    
    90,0517 to 12 months
    
    
    138,019More than 12 months
    
    
    97,872Total
    
    $
    397,219
 Included in certificate accounts at December 31 was (in thousands): 2004
    
    
    2003Brokered deposits
    
    $
    140,116
    
    
    $
    145,559Public deposits
    
    
    114,052
    
    
    
    180,241Total institutional deposits
    
    $
    254,168
    
    
    $
    325,800
 Ryan Beck acted as principal dealer in obtaining $20.6 million and $20.7 million of the
brokered deposits outstanding as of December 31, 2004 and 2003, respectively. BankAtlantic has
various relationships for obtaining brokered deposits. These relationships are considered as an
alternative source of borrowings, when and if needed. F-36




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 8. Advances from Federal Home Loan Bank and Federal Funds Purchased Advances from Federal Home Loan Bank (FHLB) (dollars in thousands): Payable During Year
    
    Year
    
    
    
    December 31Ending December 31,
    
    Callable
    
    Interest Rate
    
    2004
    
    
    20032004
    
    
    
    2.80% to 5.68%
    
    $
    
    
    
    $
    6,2502005
    
    
    
    1.86%
    
    
    7,500
    
    
    
    17,5002006
    
    
    

    1.89%
    
    
    10,417
    
    
    
    18,7502007
    
    
    
    5.68%
    
    
    
    
    
    
    25,0002008
    
    
    
    5.14% to 5.67%
    
    
    409,000
    
    
    
    492,0002010
    
    
    
    5.84% to 6.34%
    
    
    32,000
    
    
    
    32,0002011
    
    
    
    4.50% to 4.90%
    
    
    50,000
    
    
    
    Total fixed rate advances
    
    
    
    
    
    
    508,917
    
    
    
    591,5002008
    
    2004
    
    1.31%
    
    
    
    
    
    
    25,0002011
    
    2004
    
    4.50% to 4.90%
    
    
    
    
    
    
    50,0002011
    
    2005
    
    5.05%
    
    
    30,000
    
    
    
    30,000Total callable fixed rate advances -
European
    
    
    
    
    
    
    30,000
    
    
    
    105,0002009
    
    2004
    
    5.06%
    
    
    
    
    
    
    10,0002009
    
    2005
    
    4.46%
    
    
    10,000
    
    
    
    Total callable fixed rate advances -
Bermuda
    
    
    
    
    
    
    10,000
    
    
    
    10,000Adjustable rate advances2004
    
    
    
    1.17% to 1.40%
    
    
    
    
    
    
    50,0002005
    
    
    
    2.13% to 2.57%
    
    
    870,000
    
    
    
    2006
    
    
    
    1.18% to 2.39%
    
    
    125,000
    
    
    
    25,000Total adjustable rate advances
    
    
    
    
    
    
    995,000
    
    
    
    75,000Purchase accounting fair value adjustments
    
    
    
    
    
    
    580
    
    
    
    705Total FHLB advances
    
    
    
    
    
    $
    1,544,497
    
    
    $
    782,205Average cost during period
    
    
    
    
    
    
    3.93
    %
    
    
    4.79
    %Average cost end of period
    
    
    
    
    
    
    3.41
    %
    
    
    4.67
    %
 European callable advances give the FHLB the option to reprice the advance at a specific
future date. Bermuda callable advances give the FHLB the option to reprice the advance anytime
from the call date until the payable date. Once the FHLB exercises its call option, the Company
has the option to convert to a three month LIBOR-based floating rate advance, pay off the advance
or convert to another fixed rate advance. At December 31, 2004, $2.1 billion of 1-4 family residential loans, $285.9 million of
commercial real estate loans and $450.3 million of consumer loans were pledged against FHLB
advances. In addition, FHLB stock is pledged as collateral for outstanding FHLB advances. BankAtlantics line of credit with the FHLB is limited to 30% of assets, subject to available
collateral, with a maximum term of 10 years. On December 31, 2004, BankAtlantic pledged $9.7 million of consumer loans to the Federal
Reserve Bank of Atlanta (FRB) as collateral for potential advances of $8.0 million. The FRB line
of credit has not yet been utilized by the Company. During the year ended December 31, 2004, BankAtlantic prepaid $108 million of fixed rate FHLB
advances. Of this amount, $25 million had an average interest rate of 5.68% and was scheduled to
mature in 2007, and the remaining $83 million had an average interest rate of 5.51% and was
scheduled to mature in 2008. As a result of the prepayments, BankAtlantic incurred prepayment
penalties of $11.7 million. During the year ended December 31, 2003, the Company repaid $325 million of fixed rate FHLB
advances that F-37




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) would have matured within 24 months and incurred a prepayment penalty of $10.9
million. The weighted average rate of FHLB advances repaid was 5.57%. Federal Funds Purchased: BankAtlantic established $235.0 million of lines of credit with other banking institutions for
the purchase of federal funds. The following table provides information on federal funds purchased
at December 31, (dollars in thousands): 2004
    
    
    2003
    
    
    2002Ending balance
    
    $
    105,000
    
    
    $
    
    
    
    $
    Maximum outstanding at any month end
within period
    
    $
    105,000
    
    
    $
    180,000
    
    
    $
    85,000Average amount outstanding during period
    
    $
    47,661
    
    
    $
    60,179
    
    
    $
    47,704Average cost during period
    
    
    2.47
    %
    
    
    1.29
    %
    
    
    1.85
    %
 9. Securities Sold Under Agreements to Repurchase Securities sold under agreements to repurchase represent transactions whereby the Company
sells a portion of its current investment portfolio (usually MBSs and REMICs) at a negotiated
rate and agrees to repurchase the same assets on a specified future date. The Company issues
repurchase agreements to institutions and to its customers. These transactions are collateralized
by investment securities. Customer repurchase agreements are not insured by the FDIC. At December
31, 2004 and 2003, the outstanding balances of customer repurchase agreements were $99.6 million
and $138.8 million, respectively. Repurchase agreements outstanding to institutions at December
31, 2004 and 2003 were $197.0 million and $0, respectively. The following table provides information on the agreements to repurchase (dollars in
thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Maximum borrowing at any month-end within
the period
    
    $
    374,824
    
    
    $
    365,042
    
    
    $
    540,880Average borrowing during the period
    
    $
    189,398
    
    
    $
    193,068
    
    
    $
    327,001Average interest cost during the period
    
    
    1.26
    %
    
    
    1.11
    %
    
    
    1.73
    %Average interest cost at end of the period
    
    
    2.16
    %
    
    
    0.73
    %
    
    
    1.08
    %
 The following table lists the amortized cost and estimated fair value of securities sold under
repurchase agreements, and the repurchase liability associated with such transactions (dollars in
thousands): WeightedEstimated
    
    
    
    
    
    
    AverageAmortized
    
    
    Fair
    
    
    Repurchase
    
    
    InterestCost
    
    
    Value
    
    
    Balance
    
    
    RateDecember 31, 2004 (1)Mortgage-backed securities
    
    $
    213,824
    
    
    $
    215,904
    
    
    $
    202,358
    
    
    
    2.09
    %REMIC
    
    
    96,644
    
    
    
    96,267
    
    
    
    94,285
    
    
    
    2.30Total
    
    $
    310,468
    
    
    $
    312,171
    
    
    $
    296,643
    
    
    
    2.16
    %December 31, 2003 (1)Mortgage-backed securities
    
    $
    124,759
    
    
    $
    128,118
    
    
    $
    122,661
    
    
    
    0.73
    %REMIC
    
    
    16,846
    
    
    
    16,866
    
    
    
    16,148
    
    
    
    0.73Total
    
    $
    141,605
    
    
    $
    144,984
    
    
    $
    138,809
    
    
    
    0.73
    %
   (1)
    At December 31, 2004 and 2003, all securities were classified as available
for sale and were recorded at fair value in the consolidated statements of
financial condition. F-38




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) All repurchase agreements existing at December 31, 2004 matured and were repaid in
January 2005. These securities were held by unrelated broker dealers. 10. Notes, Bonds and Junior Subordinated Debentures The Company had the following subordinated debentures, notes and bonds payable outstanding at
December 31, 2004 and 2003 (in thousands): Issue
    
    
    December 31,
    
    
    Interest
    
    
    MaturityDate
    
    
    2004
    
    
    2003
    
    
    Rate
    
    
    DateBBC BorrowingsBank line of credit
    
    
    8/24/00
    
    
    $
    100
    
    
    $
    100
    
    
    Prime -0.50%
    
    
    3/1/2005Total BBC borrowings
    
    
    
    
    
    
    100
    
    
    
    100BankAtlantic BorrowingsSubordinated debentures (1)
    
    
    10/29/02
    
    
    
    22,000
    
    
    
    22,000
    
    
    LIBOR + 3.45 %
    
    
    11/7/2012Development notes
    
    
    3/22/02
    
    
    
    1,036
    
    
    
    856
    
    
    Prime + 1.00 %
    
    
    8/28/06Development notes
    
    
    3/22/02
    
    
    
    4,647
    
    
    
    1,883
    
    
    Prime + 0.75 %
    
    
    5/1/06Mortgage-backed bond
    
    
    3/22/02
    
    
    
    9,958
    
    
    
    10,954
    
    
    
    (2
    )
    
    
    9/30/2013Total BankAtlantic borrowings
    
    
    
    
    
    
    37,641
    
    
    
    35,693RB Holdings, Inc. BorrowingsNotes Payable
    
    
    4/26/02
    
    
    
    
    
    
    
    802
    
    
    LIBOR + 2.65 %
    
    
    5/1/2004Total notes and bonds
    
    
    
    
    
    $
    37,741
    
    
    $
    36,595
   (1)
    LIBOR interested rates are indexed to 3-month LIBOR and adjust quarterly.(2)
    The bonds adjust semi-annually to the ten year treasury constant maturity rate minus 23 basis points. The Company had the following junior subordinated debentures outstanding at December 31,
2004 and 2003 (in thousands): BeginningOptionalIssue
    
    Outstanding
    
    
    Interest
    
    Maturity
    
    RedemptionJunior Subordinated Debentures
    
    Date
    
    Amount
    
    
    Rate
    
    Date
    
    DateSubordinated Debentures Trust II
    
    3/5/2002
    
    $
    57,088
    
    
    8.50%
    
    3/31/2032
    
    3/31/2007Subordinated Debentures Trust III
    
    6/26/2002
    
    
    25,774
    
    
    LIBOR + 3.45%
    
    6/26/2032
    
    6/26/2007Subordinated Debentures Trust IV
    
    9/26/2002
    
    
    25,774
    
    
    LIBOR + 3.40%
    
    9/26/2032
    
    9/26/2007Subordinated Debentures Trust V
    
    9/27/2002
    
    
    10,310
    
    
    LIBOR + 3.40%
    
    9/30/2032
    
    9/27/2007Subordinated Debentures Trust VI
    
    12/10/2002
    
    
    15,450
    
    
    LIBOR + 3.35%
    
    12/10/2032
    
    12/10/2007Subordinated Debentures Trust VII
    
    12/19/2002
    
    
    25,774
    
    
    LIBOR + 3.25%
    
    12/19/2032
    
    12/19/2007Subordinated Debentures Trust VIII
    
    12/19/2002
    
    
    15,464
    
    
    LIBOR + 3.35%
    
    01/07/2033
    
    12/19/2007Subordinated Debentures Trust IX
    
    12/19/2002
    
    
    10,310
    
    
    LIBOR + 3.35%
    
    01/07/2033
    
    12/19/2007Subordinated Debentures Trust X
    
    3/26/2003
    
    
    51,548
    
    
    6.40 (2)%
    
    3/26/2033
    
    3/26/2008Subordinated Debentures Trust XI
    
    4/10/2003
    
    
    10,310
    
    
    6.45 (2)%
    
    4/24/2033
    
    4/24/2008Subordinated Debentures Trust XII
    
    3/27/2003
    
    
    15,464
    
    
    6.65 (2)%
    
    4/07/2033
    
    4/07/2008Total Subordinated Debentures (1)
    
    
    
    $
    263,266
   (1)
    LIBOR interest rates are indexed to 3-month LIBOR and adjust quarterly.(2)
    Adjusts to floating LIBOR rate five years from the issue date. F-39




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Annual maturities of Junior Subordinated Debentures and other debt outstanding at
December 31, 2004 are as follows (in thousands): Year EndingDecember 31,
    
    Amount2005
    
    $
    1002006
    
    
    5,6832007
    
    
    2008
    
    
    2009
    
    
    Thereafter
    
    
    295,224$
    301,007
 At December 31, 2004 and 2003, $6.7 million and $7.6 million, respectively, of unamortized
underwriting discounts and costs associated with the issuance of subordinated debentures and junior
subordinated debentures were included in other assets in the Companys statements of financial
condition. Junior Subordinated Debentures: The Company has formed eleven statutory business trusts (Trusts) for the purpose of issuing
Trust Preferred Securities (trust preferred securities) and investing the proceeds thereof in
junior subordinated debentures of the Company. The trust preferred securities are fully and
unconditionally guaranteed by the Company. The Trusts used the proceeds from issuing trust
preferred securities and the issuance of its common securities to the Company to purchase junior
subordinated debentures from the Company. Interest on the junior subordinated debentures and
distributions on the trust preferred securities are payable quarterly in arrears. Distributions on
the trust preferred securities are cumulative and are based upon the liquidation value of the trust
preferred security. The Company has the right, at any time, as long as there are no continuing
events of default, to defer payments of interest on the junior subordinated debentures for a period
not exceeding 20 consecutive quarters; but not beyond the stated maturity of the junior
subordinated debentures. To date no interest has been deferred. The trust preferred securities are
subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated
debentures at maturity or their earlier redemption. The Company has the right to redeem the junior
subordinated debentures five years from the issue date and also has the right to redeem the junior
subordinated debentures in whole (but not in part) within 180 days following certain events, as
defined, whether occurring before or after the redemption date and therefore cause a mandatory
redemption of the trust preferred securities. The exercise of such right is subject to the Company
having received regulatory approval, if required under applicable capital guidelines or regulatory
policies. In addition, the Company has the right, at any time, to shorten the maturity of the
junior subordinated debentures to a date not earlier than the redemption date. Exercise of this
right is also subject to the Company having received regulatory approval, if required under
applicable capital guidelines or regulatory policies. A portion of the net proceeds from issuance of junior subordinated debenture during the years
ended December 31, 2003 and 2002 were used to redeem the Companys $45.8 million of 5.625%
Convertible Subordinated Debentures, retire $74.8 million of 9.5% trust preferred securities, $21
million of 9% subordinated debentures and pay down $16 million of borrowings under the Companys
credit facility with an unrelated financial institution. The Company incurred costs associated
with the above debt redemptions of $1.6 million and $3.1 million during the years ended December
31, 2003 and 2002, respectively. BBC: Revolving Credit Facility: The
Company maintained a revolving credit facility of $30 million from an independent financial
institution. The credit facility contained customary financial covenants relating to regulatory
capital and maintenance of certain loan loss reserves and is secured by the common stock of
BankAtlantic. The Company was in compliance with all loan covenants at December 31, 2004. The
facility was repaid in March 2005. F-40




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) BankAtlantic: In connection with the acquisition of Community, BankAtlantic assumed a $15.9 million
mortgage-backed bond, valued at $14.3 million at the acquisition date. The bond had a $10.0
million outstanding balance at December 31, 2004. BankAtlantic pledged $15.2 million of
residential loans as collateral for this bond at December 31, 2004. In October 2002, BankAtlantic issued $22 million of floating rate subordinated debentures due
2012. The Subordinated Debentures pay interest quarterly at a floating rate equal to 3-month LIBOR
plus 345 basis points and are redeemable after October 2007 at a price based upon then prevailing
market interest rates. The net proceeds have been used by BankAtlantic for general corporate
purposes. The subordinated debentures were issued by BankAtlantic in a private
transaction as part of a larger pooled securities offering. The subordinated debentures currently
qualify for inclusion in BankAtlantics total risk based capital. The development notes are the obligation of a real estate joint venture that was acquired in
connection with the acquisition of Community. The notes are secured by construction of specific
homes. The notes are with unrelated financial institutions with interest rates ranging from prime
plus 0.75% to prime plus 1% with interest rate floors ranging from 5.00% to 5.75%. These notes
mature in 2006. BankAtlantics wholly-owned subsidiary has a 50% interest in the real estate joint
venture and effective January 1, 2003, the joint venture was included in the Companys consolidated
financial statements upon the implementation of FIN No. 46. Ryan Beck: As part of the Gruntal transaction, Ryan Beck assumed a $3.4 million note payable secured by
leasehold improvements and equipment in nine branch locations. The note was repaid in May 2004. Indentures The Indentures relating to all of the Debentures (including those related to the junior
subordinated debentures) contain certain customary covenants found in Indentures under the Trust
Indenture Act, including covenants with respect to the payment of principal and interest,
maintenance of an office or agency for administering the Debentures, holding of funds for payments
on the Debentures in trust, payment by the Company of taxes and other claims, maintenance by the
Company of its properties and its corporate existence and delivery of annual certifications to the
Trustee. 11. Restricted Stock, Common Stock and Common Stock Option Plans Issuance and Redemption of Class A Common Stock In April 2003, the Company called for redemption approximately $45.8 million of its 5.625%
Convertible Subordinated Debentures due 2007. The Convertible Subordinated Debentures were
redeemed at a redemption price of 102% of the principal amount plus accrued and unpaid interest
through the redemption date. During the period between the mailing of the notice of redemption and
the redemption, approximately $211,000 of Convertible Subordinated Debentures were converted by
holders into an aggregate of 18,754 shares of Class A Common Stock. During the years ended December 31, 2004, 2003 and 2002, the Company received net proceeds of
$3.7 million, $4.5 million and $1.2 million, respectively, from the exercise of stock options.
During the year ended December 31, 2004, the Company redeemed 268,644 shares of Class A common
stock as consideration for the payment of the exercise price of stock options and for the payment
of the optionees minimum statutory withholding taxes. Restricted Stock: In December 1998, the Company adopted a Restricted Stock Incentive Plan (BankAtlantic
Bancorp-Ryan Beck Restricted Stock Incentive Plan) to provide additional incentives to officers
and key employees of its subsidiary, Ryan Beck. The Plan provided up to 862,500 shares of
restricted Class A common stock, of which not more than 287,500 shares may be granted to any one
person. The Plan allows the Board of Directors of the Company to impose an annual cap on awards. During the years ended December 31, 2004, 2003 and 2002, the Company issued 0, 12,500 and
1,500 shares, respectively, of restricted Class A common stock to certain key employees of
BankAtlantic. The restricted stock vests over F-41




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) designated periods and had a fair market value of
$0, $148,000 and $17,000 on the issue dates, respectively. During the years ended December 31,
2004, 2003 and 2002, 19,500, 54,760 and 21,000 shares, respectively, of restricted stock vested and
163,787 shares of restricted stock remain outstanding. In May 2004, BankAtlantic Bancorps stockholders approved the Companys 2004 restricted stock
incentive plan for the purpose of attracting and retaining the best available personnel for
positions of substantial responsibility and to provide additional incentive to the employees of the
Company or its subsidiaries. The maximum aggregate number of shares which may be issued for
restricted stock awards under the Plan is 250,000 shares. No shares have been granted under the
Plan at December 31, 2004. Retention Pool: In connection with the acquisition of Ryan Beck in June 1998, the Company established a
retention pool covering certain key officers of Ryan Beck. All participants in the retention pool
vested on June 28, 2002, and received, in the aggregate, 5,941 shares of the Companys Class A
common stock, and $3.8 million in cash and notes payable for an aggregate principal amount of $3.7
million. The notes payable had a 5.75% interest rate and were paid in full in May 2003. Included
in the Companys statement of operations during 2002 was $1.0 million of compensation expense
associated with the retention pool. BankAtlantic Bancorp Stock Option Plans: Stock Option PlansMaximum
    
    Shares
    
    
    Class of
    
    Vesting
    
    Type ofTerm (3)
    
    Authorized (6)
    
    
    Stock
    
    Requirements
    
    Options (5)1996 Stock Option Plan
    
    10 years
    
    
    2,246,094
    
    
    A
    
    5 Years (1)
    
    ISO, NQ1998 Ryan Beck Option Plan
    
    10 years
    
    
    362,417
    
    
    A
    
    (4)
    
    ISO, NQ1998 Stock Option Plan
    
    10 years
    
    
    920,000
    
    
    A
    
    5 Years (1)
    
    ISO, NQ1999 Non-qualifying Stock Option Plan
    
    10 years
    
    
    862,500
    
    
    A
    
    (2)
    
    NQ1999 Stock Option Plan
    
    10 years
    
    
    862,500
    
    
    A
    
    (2)
    
    ISO, NQ2000 Non-qualifying Stock Option Plan
    
    10 years
    
    
    1,704,148
    
    
    A
    
    Immediately
    
    NQ2001 Amended and Restated Stock
Option Plan
    
    10 years
    
    
    3,918,891
    
    
    A
    
    5 Years (1)
    
    ISO, NQ
   (1)
    Vesting is established by the Compensation Committee in connection with each
grant of options. All directors stock options vest immediately.(2)
    Vesting is established by the Compensation Committee.(3)
    All outstanding options must be exercised no later than 10 years after their
grant date.(4)
    Upon acquisition of Ryan Beck the Company assumed all options outstanding under
Ryan Becks existing stock option plans at various exercise prices based upon the
exercise prices of the assumed option. No new options will be issued under the 1998
Ryan Beck option plan and the plan will terminate when the outstanding options are
exercised or expire.(5)
    ISO - Incentive Stock OptionNQ - Non-qualifying Stock Option(6)
    During 2001 shares underlying options available for grant under all stock options
plans except the 2001 stock option plan were canceled. The Companys shareholders
increased the number of shares authorized under the 2001 stock option plan to 3,000,000
at the 2002 Annual Meeting and in January 2004, in connection with the Levitt spin-off
the Company adjusted the shares authorized under the 2001 Amended and Restated Stock
Option Plan to 3,918,891. In January 2004, the Compensation Committee adjusted all outstanding options to acquire
Class A common stock that were outstanding prior to the Levitt spin-off to reflect the change in
intrinsic value of the Companys Class A common stock that resulted from the spin-off. The options
were adjusted in accordance with FASB Interpretation No. 44 whereby the aggregate intrinsic value
of the options immediately after the Levitt spin-off was adjusted to equal the aggregate intrinsic
value of the options immediately before the Levitt spin-off and options were also adjusted so that
the ratio of the exercise price per share to the market value per share remained unchanged. The
option adjustment was accounted for as if the outstanding options prior to the Levitt spin-off were
cancelled and new options were issued at the adjusted exercise price
and number of shares. As a consequence of the above adjustments the
outstanding options increased from 5,311,365 to 6,938,220 and the
weighted average exercise price was reduced from $6.04 to $4.62. Prior
period shares and exercise prices have been retroactively adjusted in the tables below to reflect
the Levitt spin-off adjustment. F-42




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The following is a summary of the Companys Class A common stock option activity: Class AOutstandingOptionsOutstanding at December 31, 2001
    
    
    7,127,260Exercised
    
    
    (351,953
    )Forfeited
    
    
    (318,222
    )Issued
    
    
    992,263Outstanding at December 31, 2002
    
    
    7,449,348Exercised
    
    
    (1,301,470
    )Forfeited
    
    
    (224,781
    )Issued
    
    
    1,015,123Outstanding at December 31, 2003
    
    
    6,938,220Exercised
    
    
    (1,461,678
    )Forfeited
    
    
    (77,797
    )Issued
    
    
    776,100Outstanding at December 31, 2004
    
    
    6,174,845Available for grant at December 31, 2004
    
    
    596,393
 For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Weighted average exercise price of options outstanding
    
    $
    6.79
    
    
    $
    4.62
    
    
    $
    4.17Weighted average exercise price of options exercised
    
    $
    2.56
    
    
    $
    4.10
    
    
    $
    3.81Weighted average price of options forfeited
    
    $
    8.15
    
    
    $
    5.14
    
    
    $
    6.76
 The method used to calculate the fair value of the options granted was the Black-Scholes model
with the following grant date fair values and assumptions: Weighted AverageNumber of
    
    
    
    
    
    
    
    
    
    
    Risk Free
    
    
    
    
    
    
    ExpectedYear of
    
    Options
    
    
    Grant Date
    
    
    Exercise
    
    
    Interest
    
    
    Expected
    
    
    DividendGrant
    
    Granted
    
    
    Fair Value
    
    
    Price
    
    
    Rate
    
    
    Volatility
    
    
    Yield2002
    
    
    992,263
    
    
    $
    4.25
    
    
    $
    8.56
    
    
    
    4.65
    %
    
    
    47.00
    %
    
    
    1.04
    %2003
    
    
    1,015,123
    
    
    $
    3.66
    
    
    $
    7.45
    
    
    
    3.34
    %
    
    
    50.00
    %
    
    
    1.27
    %2004
    
    
    776,100
    
    
    $
    8.42
    
    
    $
    18.20
    
    
    
    4.32
    %
    
    
    41.00
    %
    
    
    0.73
    %
 The employee turnover factor was 1.00% for officer incentive and non-qualifying stock options
during the year ended December 31, 2004 and 2002, respectively. The employee turnover factor was
6.00% for incentive and non-qualifying stock options during the year ended December 31, 2003. The
expected life for options issued during 2004, 2003 and 2002 was 7.0 years. F-43




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The following table summarizes information about fixed stock options outstanding at December
31, 2004: Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Class
of
    
    Range of
    
    
    Number
    
    
    Average
    
    
    Average
    
    
    Number
    
    
    AverageCommon
    
    Exercise
    
    
    Outstanding
    
    
    Remaining
    
    
    Exercise
    
    
    Exercisable
    
    
    ExerciseStock
    
    Prices
    
    
    at 12/31/04
    
    
    Contractual Life
    
    
    Price
    
    
    at 12/31/04
    
    
    PriceA
    
    $
    1.73 to $  1.91
    
    
    
    620,358
    
    
    0.3 years
    
    $
    1.77
    
    
    
    620,358
    
    
    $
    1.77A
    
    $
    1.92 to $  3.83
    
    
    
    1,533,561
    
    
    4.3 years
    
    
    3.19
    
    
    
    469,150
    
    
    
    3.71A
    
    $
    3.84 to $  6.70
    
    
    
    1,347,449
    
    
    3.4 years
    
    
    4.94
    
    
    
    1,345,947
    
    
    
    4.94A
    
    $
    6.71 to $  9.36
    
    
    
    1,897,377
    
    
    7.6 years
    
    
    8.00
    
    
    
    108,416
    
    
    
    8.03A
    
    $
    9.37 to $18.20
    
    
    
    776,100
    
    
    9.5 years
    
    
    18.20
    
    
    
    35,000
    
    
    
    18.206,174,845
    
    
    5.4 years
    
    $
    6.79
    
    
    
    2,578,871
    
    
    $
    4.28
 The following table summarizes information about fixed stock options outstanding at December
31, 2003: Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Class of
    
    Range of
    
    
    Number
    
    
    Average
    
    
    Average
    
    
    Number
    
    
    AverageCommon
    
    Exercise
    
    
    Outstanding
    
    
    Remaining
    
    
    Exercise
    
    
    Exercisable
    
    
    ExerciseStock
    
    Prices
    
    
    at 12/31/03
    
    
    Contractual Life
    
    
    Price
    
    
    at 12/31/03
    
    
    PriceA
    
    $
    1.73 to 1.91
    
    
    
    1,673,384
    
    
    0.9 years
    
    $
    1.77
    
    
    
    1,281,013
    
    
    $
    1.77A
    
    $
    1.92 to 3.83
    
    
    
    1,563,844
    
    
    5.3 years
    
    
    3.19
    
    
    
    368,829
    
    
    
    3.71A
    
    $
    3.84 to 6.70
    
    
    
    1,752,835
    
    
    4.5 years
    
    
    4.89
    
    
    
    725,370
    
    
    
    5.00A
    
    $
    6.71 to 9.36
    
    
    
    1,948,157
    
    
    8.7 years
    
    
    8.00
    
    
    
    82,995
    
    
    
    8.386,938,220
    
    
    5.0 years
    
    $
    4.62
    
    
    
    2,458,207
    
    
    $
    3.23
 The following table summarizes information about fixed stock options outstanding at December
31, 2002: Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Class of
    
    Range of
    
    
    Number
    
    
    Average
    
    
    Average
    
    
    Number
    
    
    AverageCommon
    
    Exercise
    
    
    Outstanding
    
    
    Remaining
    
    
    Exercise
    
    
    Exercisable
    
    
    ExerciseStock
    
    Prices
    
    
    at 12/31/02
    
    
    Contractual Life
    
    
    Price
    
    
    at 12/31/02
    
    
    PriceA
    
    $
    1.73 to 1.91
    
    
    
    1,985,110
    
    
    1.8 years
    
    $
    1.77
    
    
    
    1,985,110
    
    
    $
    1.77A
    
    $
    1.92 to 3.83
    
    
    
    1,749,837
    
    
    6.1 years
    
    
    3.22
    
    
    
    618,093
    
    
    
    3.71A
    
    $
    3.84 to 6.70
    
    
    
    2,659,407
    
    
    5.5 years
    
    
    4.88
    
    
    
    985,046
    
    
    
    4.87A
    
    $
    6.71 to 9.36
    
    
    
    1,054,994
    
    
    8.5 years
    
    
    8.47
    
    
    
    120,202
    
    
    
    7.997,449,348
    
    
    5.1 years
    
    $
    4.17
    
    
    
    3,708,451
    
    
    $
    3.11
 Ryan Beck Stock Option Plan: Ryan Becks Board of Directors adopted the RB Holdings, Inc. Option Plan (the Plan)
effective March 29, 2002. In April 2004, Ryan Becks Board of Directors declared a 3 for 1 stock
split increasing Ryan Becks outstanding shares from 8,125,000 to 24,375,000, all of which is owned
by the Company. Ryan Beck adjusted the exercise price and number of options granted for all
options then outstanding in order to restore the option holders intrinsic value. Additionally,
shares authorized under the Plan were adjusted from 510,000 shares to 1,530,000 shares. In April
2004, the Plan was amended to increase the number of shares of Ryan Beck stock authorized for
issuance under the Plan from 1,530,000 to 2,437,500. All shares and exercise prices below have
been adjusted for the stock split. F-44




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The following is a summary of Ryan Becks common stock option activity: Ryan BeckOutstandingOptionsOutstanding at December 31, 2001
    
    
    Issued
    
    
    1,477,500Outstanding at December 31, 2002
    
    
    1,477,500Exercised
    
    
    Forfeited
    
    
    (22,500
    )Issued
    
    
    75,000Outstanding at December 31, 2003
    
    
    1,530,000Exercised
    
    
    (90,000
    )Forfeited
    
    
    (15,000
    )Issued
    
    
    820,500Outstanding at December 31, 2004
    
    
    2,245,500Available for grant at December 31, 2004
    
    
    102,000
 In March 2002, and pursuant to the Plan, Ryan Becks Board of Directors granted to certain
executives, options to acquire an aggregate of 1,155,000 shares of Ryan Beck common stock at an
exercise price of $1.60. The exercise price was below the $1.68 fair value at the date of grant.
All of the options issued under this grant vested immediately. The Company recorded $92,000 of
compensation expense associated with the issuance of these options in 2002. Additionally, in June
2002, 322,500 options were granted with an exercise price equal to the fair value at the date of
grant ($1.68), all of which vest four years from the grant date. During 2003, 75,000 options were
granted with an exercise price equal to the fair value at the date of grant ($3.36), all of which
vest four years from the grant date. During 2003, 22,500 options issued during 2002 were
forfeited at an exercise price of $1.68. In March 2004, options were granted to acquire an
aggregate of 798,500 shares of Ryan Beck common stock at an exercise price equal to fair value at
the date of grant ($5.26), and in July 2004, 22,000 options were granted to acquire shares of Ryan
Beck common stock at an exercise price equal to fair value at the date of grant ($5.28), all of
which vest four years from the grant date and expire ten years from the grant date. In June 2004,
options to acquire 90,000 shares of Ryan Beck common stock were exercised at a price of $1.60 per
share. Upon exercise of the options, the Company or Ryan Beck has the right under certain defined
circumstances, starting six months plus one day after the exercise date, to repurchase the common
stock at fair value as determined by an independent appraiser. The Company and Ryan Beck also have
the right of first refusal on any sale of Ryan Beck common stock issued as a result of the exercise
of an option, and the Company has the right to require any common stockholder to sell its shares in
the event that the Company sells its interest in Ryan Beck. The 90,000 shares of Ryan Beck common
stock issued in June 2004 upon the exercise of Ryan Beck stock options were repurchased by Ryan
Beck in January 2005 at $5.46 per share, the fair value of Ryan Beck common stock at the repurchase
date. F-45




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 12. Income Taxes The provision for income taxes consisted of (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Continuing operations
    
    $
    39,910
    
    
    $
    23,424
    
    
    $
    9,051Discontinued operations
    
    
    
    
    
    
    16,512
    
    
    
    6,825Extraordinary items
    
    
    
    
    
    
    
    
    
    
    2,771Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (1,246
    )Total provision for income taxes
    
    $
    39,910
    
    
    $
    39,936
    
    
    $
    17,401Continuing operations:Current:Federal
    
    $
    28,494
    
    
    $
    15,555
    
    
    $
    15,422State
    
    
    4,783
    
    
    
    2,515
    
    
    
    42533,277
    
    
    
    18,070
    
    
    
    15,847Deferred:Federal
    
    
    6,811
    
    
    
    6,429
    
    
    
    (6,094
    )State
    
    
    (178
    )
    
    
    (1,075
    )
    
    
    (702
    )6,633
    
    
    
    5,354
    
    
    
    (6,796
    )Provision for income taxes
    
    $
    39,910
    
    
    $
    23,424
    
    
    $
    9,051
 The Companys actual provision for income taxes from continuing operations differs from the
Federal expected income tax provision as follows (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Income tax provision at expected
federal income tax rate of 35%
    
    $
    38,737
    
    
    
    35.00
    %
    
    $
    21,707
    
    
    
    35.00
    %
    
    $
    9,870
    
    
    
    35.00
    %Increase (decrease) resulting from:Tax-exempt income
    
    
    (1,817
    )
    
    
    (1.64
    )
    
    
    (267
    )
    
    
    (0.43
    )
    
    
    (275
    )
    
    
    (0.98
    )Provision (benefit) for state taxes,
net of federal benefit
    
    
    2,993
    
    
    
    2.70
    
    
    
    2,104
    
    
    
    3.39
    
    
    
    (1,299
    )
    
    
    (4.61
    )Change in State tax valuation allowance
    
    
    94
    
    
    
    0.08
    
    
    
    (1,168
    )
    
    
    (1.88
    )
    
    
    1,071
    
    
    
    3.80Low income housing tax credits
    
    
    (468
    )
    
    
    (0.42
    )
    
    
    (555
    )
    
    
    (0.89
    )
    
    
    (416
    )
    
    
    (1.48
    )Levitt spin-off nondeductible items
    
    
    90
    
    
    
    0.08
    
    
    
    1,275
    
    
    
    2.06
    
    
    
    
    
    
    
    Other - net
    
    
    281
    
    
    
    0.26
    
    
    
    328
    
    
    
    0.52
    
    
    
    100
    
    
    
    0.36Provision for income taxes
    
    $
    39,910
    
    
    
    36.06
    %
    
    $
    23,424
    
    
    
    37.77
    %
    
    $
    9,051
    
    
    
    32.09
    %
 F-46




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The tax effects of temporary differences that give rise to significant portions of the
deferred tax assets and tax liabilities were (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Deferred tax assets:Provision for discontinued operations, restructuring charges and write-downs
    
    $
    267
    
    
    $
    294
    
    
    $
    191Allowance for loans, REO, tax certificate losses and other reserves, for
financial statement purposes
    
    
    20,485
    
    
    
    27,125
    
    
    
    29,470Federal and State net operating loss carryforward
    
    
    2,608
    
    
    
    2,661
    
    
    
    5,003Compensation expensed for books and deferred for tax purposes
    
    
    3,530
    
    
    
    3,754
    
    
    
    3,915Goodwill impairment for books in excess of tax amortization
    
    
    
    
    
    
    
    
    
    
    1,086Real estate held for development and sale capitalized costs for tax purposes
in excess of amounts capitalized for financial statement purposes
    
    
    1,078
    
    
    
    1,293
    
    
    
    7,291Accumulated other comprehensive income
    
    
    606
    
    
    
    
    
    
    
    Other
    
    
    1,511
    
    
    
    1,291
    
    
    
    3,152Total gross deferred tax assets
    
    
    30,085
    
    
    
    36,418
    
    
    
    50,108Less valuation allowance
    
    
    2,564
    
    
    
    2,470
    
    
    
    4,369Total deferred tax assets
    
    
    27,521
    
    
    
    33,948
    
    
    
    45,739Deferred tax liabilities:Deferred loan income
    
    
    1,190
    
    
    
    885
    
    
    
    918Change in investment of unconsolidated real estate subsidiary
    
    
    
    
    
    
    
    
    
    
    1,762Purchase accounting adjustments for bank acquisitions
    
    
    1,920
    
    
    
    2,229
    
    
    
    1,356Accumulated other comprehensive income
    
    
    
    
    
    
    3,297
    
    
    
    2,278Prepaid pension expense
    
    
    2,517
    
    
    
    2,607
    
    
    
    2,713Depreciation for tax greater than book
    
    
    1,146
    
    
    
    
    
    
    
    Other
    
    
    479
    
    
    
    1,931
    
    
    
    1,396Total gross deferred tax liabilities
    
    
    7,252
    
    
    
    10,949
    
    
    
    10,423Net deferred tax asset
    
    
    20,269
    
    
    
    22,999
    
    
    
    35,316Less net deferred tax asset at beginning of period
    
    
    (22,999
    )
    
    
    (35,316
    )
    
    
    (17,879
    )Acquired net deferred tax asset, net of valuation allowance
    
    
    
    
    
    
    
    
    
    
    (8,175
    )Increase (decrease) in accumulated other comprehensive income
    
    
    (3,903
    )
    
    
    1,019
    
    
    
    (6,277
    )(Provision) benefit for deferred income taxes
    
    
    (6,633
    )
    
    
    (11,298
    )
    
    
    2,985Provision
benefit for deferred income taxes - discontinued operations
    
    
    
    
    
    
    4,073
    
    
    
    2,286Reduction in deferred tax asset associated with Levitt spin-off and GMS
    
    
    
    
    
    
    1,871
    
    
    
    Provision
for deferred income taxes - extraordinary item
    
    
    
    
    
    
    
    
    
    
    2,771Benefit for
deferred income taxes - cumulative effect of an accounting change
    
    
    
    
    
    
    
    
    
    
    (1,246
    )(Provision)
benefit for deferred income taxes - continuing operations
    
    $
    (6,633
    )
    
    $
    (5,354
    )
    
    $
    6,796
 Activity in the deferred tax valuation allowance was (in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Balance, beginning of period
    
    $
    2,470
    
    
    $
    4,369
    
    
    $
    7,682Discontinued operations valuation allowance activity
    
    
    
    
    
    
    (418
    )
    
    
    (3,479
    )Increase (reduction) in state deferred tax
valuation allowance
    
    
    94
    
    
    
    (1,168
    )
    
    
    1,071Other decreases and reclassifications
    
    
    
    
    
    
    (313
    )
    
    
    (905
    )Balance, end of period
    
    $
    2,564
    
    
    $
    2,470
    
    
    $
    4,369
 Except as discussed below, management believes that the Company will have sufficient taxable
income of the appropriate character in future years to realize the net deferred income tax asset.
In evaluating the expectation of sufficient F-47




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) future taxable income, management considered the future
reversal of temporary differences and available tax planning
strategies that could be implemented, if required. A valuation allowance was required at
December 31, 2004, 2003 and 2002 as it was managements assessment that, based on available
information, it is more likely than not that certain State net operating loss carryforwards (NOL)
included in the Companys deferred tax assets will not be realized. A change in the valuation
allowance occurs if there is a change in managements assessment of the amount of the net deferred
income tax asset that is expected to be realized. At
December 31, 2004, the Company had NOLs of
$73 million for state tax purposes primarily associated with
BankAtlantic Bancorp and Leasing Technology, Inc. The Company files separate State income tax
returns in each State jurisdiction. BankAtlantic Bancorp has incurred taxable losses during the
past six years resulting from its debt obligations and Leasing Technology Inc. has incurred
significant losses associated with its lease financing activities. As a consequence, management
believes that it is more likely than not that the State NOL associated with these companies will
not be realized. Prior to December 31, 1996, BankAtlantic was permitted to deduct from taxable income an
allowance for bad debts which was in excess of the provision for such losses charged to income.
Accordingly, at December 31, 2004, the Company had $21.5 million of excess allowance for bad debts
for which no provision for income tax has been provided. If, in the future, this portion of
retained earnings is distributed, or BankAtlantic no longer qualifies as a bank for tax purposes,
federal income tax of approximately $7.5 million would be owed. 13. Pension and 401(k) Plans BankAtlantic 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 and became vested. 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. The following tables set forth the Plans funded status and the minimum pension liability or
prepaid pension cost included in the consolidated statements of financial condition at (in
thousands): December 31,2004
    
    
    2003Projected benefit obligation at the beginning of
the year
    
    $
    23,094
    
    
    $
    22,276Interest cost
    
    
    1,508
    
    
    
    1,485Actuarial loss
    
    
    2,421
    
    
    
    148Benefits paid
    
    
    (789
    )
    
    
    (815
    )Projected benefit obligation at end of year
    
    $
    26,234
    
    
    $
    23,094
 December 31,2004
    
    
    2003Fair value of Plan assets at the beginning of year
    
    $
    23,927
    
    
    $
    17,860Actual return on Plan assets
    
    
    1,959
    
    
    
    6,132Employer contribution
    
    
    
    
    
    
    750Benefits paid
    
    
    (789
    )
    
    
    (815
    )Fair value of Plan assets as of actuarial date
    
    $
    25,097
    
    
    $
    23,927
 F-48




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) December 31,2004
    
    
    2003Actuarial present value of projected benefit obligation for service
rendered to date
    
    $
    (26,234
    )
    
    $
    (23,094
    )Plan assets at fair value as of the actuarial date
    
    
    25,097
    
    
    
    23,927(Unfunded) funded accumulated benefit obligation (1)
    
    
    (1,137
    )
    
    
    833Unrecognized net loss (gain) from past experience different from
that assumed and effects of changes in assumptions
    
    
    7,661
    
    
    
    5,924Prepaid pension cost (2)
    
    $
    6,524
    
    
    $
    6,757
   (1)
    The measurement date for the accumulated benefit obligation was December 31,
2004 and 2003. The December 31, 2004 unfunded accumulated benefit obligation was
recorded in other liabilities in the Companys consolidated statement of financial
condition.(2)
    The December 31, 2003 prepaid pension cost was recorded in other assets in the
Companys consolidated statement of financial condition. In 2004, the prepaid pension
cost was reversed into other comprehensive income and a minimum pension liability was
recorded for the unfunded accumulated benefit obligation. For the year ended December 31, 2004, the Company recorded a minimum pension liability in
other comprehensive income associated with the unfunded accumulated benefit obligation as follows
(in thousands): AmountChange in prepaid pension cost in other assets
    
    $
    (6,524
    )Minimum pension liability in other liabilities
    
    
    (1,137
    )Change in deferred tax assets
    
    
    2,758Decrease in other comprehensive income
    
    $
    (4,903
    )
 Net pension expense (benefit) includes the following components (in thousands): For the Years Ended2004
    
    
    2003
    
    
    2002Service cost benefits earned during the period
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost on projected benefit obligation
    
    
    1,508
    
    
    
    1,485
    
    
    
    1,424Expected return on plan assets
    
    
    (1,998
    )
    
    
    (1,470
    )
    
    
    (1,989
    )Amortization of unrecognized net gains and losses
    
    
    723
    
    
    
    1,212
    
    
    
    314Net periodic pension expense (benefit) (1)
    
    $
    233
    
    
    $
    1,227
    
    
    $
    (251
    )
   (1)
    Periodic pension expense (benefit) is included as an increase/decrease in compensation
expense. The actuarial assumptions used in accounting for the Plan were: For the Years EndedDecember 31,2004
    
    
    2003
    
    
    2002Weighted average discount rate
    
    
    6.00
    %
    
    
    6.75
    %
    
    
    6.75
    %Rate of increase in future compensation levels
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AExpected long-term rate of return
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    9.00
    %
 Actuarial estimates and assumptions are based on various market factors and are evaluated on
an annual basis, and changes in such assumptions may impact future pension costs. The discount rate
assumption is based on rates of high quality corporate bonds, and the reduction in the discount
rate at December 31, 2004 reflects historically low interest rate trends related to these bonds.
Current participant data was used for the actuarial assumptions for each of the three years ended
December 31, 2004. The Company contributed $750,000 to the Plan during the year ended December 31,
2003. The F-49




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Company did not make any contributions to the Plan during the years ended December 31,
2004 and 2002. The Company will not be required to contribute to the Plan for the year ending
December 31, 2005. The Companys pension plan weighted-average asset allocations at December 31, 2004 and 2003 by
asset category are as follows: Plan AllocationAt December 31,2004
    
    
    2003Equity securities
    
    
    76.62
    %
    
    
    57.45
    %Debt securities
    
    
    21.57
    
    
    
    38.13Cash
    
    
    1.81
    
    
    
    4.42Total
    
    
    100.00
    %
    
    
    100.00
    %
 The Plans investment policies and strategies are to invest in mutual funds that are rated
with at least a 3-star rating awarded by Morningstar at the initial purchase. If a funds
Morningstar rating falls below a 3-star rating after an initial purchase, it is closely monitored
to ensure that its under-performance can be attributed to market conditions rather than fund
management deficiencies. Fund manger changes or changes in fund objectives could be cause for
replacement of any mutual fund. The Plan also maintains an aggressive growth investment category
which includes investments in equity securities and mutual funds. Both public and private
securities are eligible for this category of investment, but no more than 5% of total Plan assets
at the time of the initial investment may be invested in any one company. Beyond the initial cost
limitation (5% at time of purchase), there will be no limitation as to the percentage that any one
investment can represent if it is achieved through growth. As a means to reduce negative market
volatility, and to invoke a sell discipline for concentrated positions, the Plan has a strategy of
selling call options against certain stock positions within the portfolio when considered timely.
At December 31, 2004, 9.6% of the Plans assets were invested in the aggressive growth category. The Plans targeted asset allocation is 68% equity securities, 30% debt securities and 2% cash
during the year ended December 31, 2005. A rebalancing of the portfolio takes place on a quarterly
basis when there has been a 5% or greater change from the prevailing benchmark allocation. The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid (in thousands): PensionExpected Future Service
    
    Benefits2005
    
    $
    8212006
    
    
    8952007
    
    
    9202008
    
    
    9892009
    
    
    1,180Years 2010-2014
    
    $
    7,297
 There are large increases in annual benefit payouts expected in 2009 and 2010 when four key
employees reach normal retirement age. F-50




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) BankAtlantic 401(k) Plan: The table below outlines the terms of the Security Plus 401(k) Plan and the associated
employer costs (dollars in thousands): For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Employee Salary Contribution Limit (1)
    
    $
    13
    
    
    $
    12
    
    
    $
    11Percentage of Salary Limitation
    
    
    75
    %
    
    
    75
    %
    
    
    75
    %Total Match Contribution (2)
    
    $
    1,790
    
    
    $
    1,558
    
    
    $
    1,800Vesting of Employer Match
    
    Immediate
    
    Immediate
    
    Immediate
   (1)
    For the 2004, 2003 and 2002 plan year, employees over the age of 50 were entitled to
contribute $16,000, $14,000 and $12,000, respectively.(2)
    The employer matched 100% of the first 3% of employee contributions and 50% of the next
2% of employee contributions. BankAtlantic Profit Sharing Plan At January 1, 2003, BankAtlantic established the BankAtlantic Profit Sharing Stretch Plan (the
Plan) for all employees of BankAtlantic and its subsidiaries. The profit sharing awards are paid
in cash quarterly and are based on achieving specific performance goals. Included in compensation
expense during the years ended December 31, 2004 and 2003 was $5.7 million and $3.6 million,
respectively, of expenses associated with the Plan. Ryan Beck Plans: Retirement Plans As of December 31, 2004 and 2003, Ryan Beck maintains one retirement plan for eligible
employees, the 401(k) Savings Plan. In 2002 Ryan Beck maintained two retirement plans for eligible
employees, the 401(k) Savings Plan and the Money Purchase Pension Plan. Ryan Beck maintained a nonvoluntary Money Purchase Pension Plan to which Ryan Beck contributed
in 2002 5% of an employees eligible earnings, subject to certain limitations. Contributions to
the Ryan Beck Money Purchase Pension Plan totaled $729,000 during the year ended December 31, 2002.
The Ryan Beck Money Purchase Pension Plan was liquidated into the Ryan Beck 401(k) Savings Plan
during 2003. Ryan Becks employees may contribute up to 25% of their eligible earnings, subject to certain
limitations, to the 401(k) Savings Plan. In 2004 and 2003, Ryan Beck began an employer match of
50% on the first 6% of contributions for salaried employees. Additionally, Ryan Beck awarded an
additional 2% and 1% of contributions for salaried employees as a discretionary match during 2004
and 2003, respectively. Included in employee compensation and benefits on the consolidated
statement of operations was $1.6 million, $332,420 and $0 of expenses and employer contributions
related to the 401(k) Savings Plan during the years ended December 31, 2004, 2003 and 2002,
respectively. Effective January 1, 2004, the RB Holdings, Inc. Supplemental Executive Retirement Plan was
established. Retirement benefits of $2.3 million under the plan are payable in equal monthly
installments over 120 months commencing at retirement. Normal retirement is at age 60. If the
participant retires early or has an involuntary termination without cause, or for good reason or
change in control the participant shall be entitled to receive an amount equal to his/her
retirement benefit multiplied by 10% for each year of participation in the Plan not to exceed 10
years. Ryan Beck & Co., Inc., Deferred Compensation Plans During the year ended December 31, 2002, Ryan Beck established the Ryan Beck & Co., Inc.
Voluntary Deferred Compensation Plan for certain employees whereby the employee may elect to defer
a portion of his or her compensation for a minimum of 3 years or until retirement. These
contributions are fully vested. The obligations under the terms of this plan are F-51




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) not required to
be funded. The obligations are unsecured general obligations to pay, in the future, the value of
the deferred compensation, adjusted to reflect the performance of selected measurement options
chosen by each participant. Ryan Beck
has elected to invest in the mutual fund options chosen by the participants to manage the
market risk of this obligation. For the years ended December 31, 2004, 2003 and 2002 the deferred
compensation obligation payable under this plan totaled $17.0 million, $13.8 million and $9.7
million, respectively. During the year ended December 31, 2004 and 2003, Ryan Beck realized
compensation expense of $3.1 million and $3.0 million, respectively, associated with the increase
in the deferred compensation plan obligations. During the year ended December 31, 2002, Ryan Beck
realized a $1.5 million reduction in compensation expense associated with the decrease in the plan
obligation. During 2002, Ryan Beck amended the Ryan Beck & Co., Inc. Supplemental Bonus Plan whereby Ryan
Beck may establish incentive deferred compensation which vests over multiple years. During the
years ended December 31, 2004, 2003, and 2002, Ryan Beck awarded deferred bonuses under this Plan
of $1.0 million, $0, and $1.5 million, respectively. The 2002 awards vest and are payable 25% per
year and the 2004 awards vest and are payable in three equal installments on the first business day
in January 2006, 2007 and 2008. Ryan Beck & Co., Inc., 2002 Retention Program In connection with the Gruntal transaction, a nonqualified deferred compensation plan was
assumed by Ryan Beck covering select employees of Gruntal. Gruntal provided an annual contribution
which would vest if the employee remained employed for ten years from the contribution date. All
unvested amounts will vest no later than 2011. The Gruntal nonqualified deferred compensation plan
was merged into the Ryan Beck & Co., Inc. Voluntary Deferred Compensation Plan during 2002. In July 2002, Ryan Beck established a retention plan for certain financial consultants, key
employees and others. During 2003 Ryan Beck expanded this plan to recruit financial consultants.
Pursuant to this plan the participants received forgivable notes of $8.0 million, $6.3 million and
$10.5 million during the years ended December 31, 2004, 2003 and 2002, respectively. Each
forgivable note will have a term of five or seven years. A pro-rata portion of the principal
amount of the note is forgiven each month over the five or seven year term. If a participant
terminates employment with Ryan Beck prior to the end of the term of the Note, the outstanding
balance becomes immediately due to Ryan Beck. Ryan Beck acquired $15.1 million of forgivable notes
in connection with the Gruntal transaction. Included in other assets at December 31, 2004 and 2003
were $16.7 million and $15.1 million, respectively, of forgivable notes. Included in compensation
expense for the year ended December 31, 2004, 2003 and 2002 was $5.4 million, $4.9 million and $3.7
million, respectively, of forgivable note amortization. 14. Commitments and Contingencies The Company is a lessee under various operating leases for real estate and equipment extending
to the year 2072. The approximate minimum future rentals under such leases, at December 31, 2004,
for the periods shown are (in thousands): Year Ending December 31,
    
    Amount2005
    
    $
    13,2632006
    
    
    11,8172007
    
    
    9,8602008
    
    
    7,9672009
    
    
    6,748Thereafter
    
    
    22,736Total
    
    $
    72,391
 For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Rental expense for premises and equipment
    
    $
    18,885
    
    
    $
    17,697
    
    
    $
    16,327
 In the normal course of its business, the Company is a party to financial instruments with
off-balance-sheet risk. These financial instruments include commitments to extend credit and to
issue standby and documentary letters of credit. Those instruments involve, to varying degrees,
elements of credit risk. BankAtlantics exposure to credit loss in the event of F-52




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) nonperformance by
the other party to the financial instrument for commitments to extend credit and standby letters of
credit written is represented by the contractual amount of those instruments. BankAtlantic uses the
same credit policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments. Financial instruments with off-balance sheet risk were (in thousands): December 31,2004
    
    
    2003Commitments to sell fixed rate residential loans
    
    $
    19,537
    
    
    $
    12,962Commitments to sell variable rate residential loans
    
    
    6,588
    
    
    
    3,740Forward contract to purchase mortgage-backed securities
    
    
    3,947
    
    
    
    8,611Commitments to purchase fixed rate residential loans
    
    
    
    
    
    
    40,242Commitments to purchase variable rate residential loans
    
    
    40,015
    
    
    
    3,500Commitments to originate loans held for sale
    
    
    21,367
    
    
    
    14,271Commitments to originate loans held to maturity
    
    
    238,429
    
    
    
    370,071Commitments to extend credit, including the undisbursed
portion of loans in process
    
    
    1,170,191
    
    
    
    1,034,467Standby letters of credit
    
    
    55,605
    
    
    
    31,722Commercial lines of credit
    
    
    121,688
    
    
    
    162,623
 Commitments to extend credit are agreements to lend funds to a customer as long as there is no
violation of any condition established in the commitment. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. BankAtlantic has $28.5 million of commitments to
extend credit at a fixed interest rate and $1.4 billion of commitments to extend credit at a
variable rate. BankAtlantic evaluates each customers creditworthiness on a case-by-case basis. The
amount of collateral required by BankAtlantic in connection with an extension of credit is based on
managements credit evaluation of the counter-party. Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the
performance of a customer to a third party. BankAtlantic 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 $36.7 million at December 31, 2004.
BankAtlantic also issues standby letters of credit to commercial lending customers guaranteeing the
payment of goods and services. These types of standby letters of credit had a maximum exposure of
$18.9 million at December 31, 2004. Those guarantees are primarily issued to support public and
private borrowing arrangements and generally 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 which are collateralized similar to other types
of borrowings. Included in other liabilities at December 31, 2004 was $114,000 of unearned
guarantee fees. There were no obligations recorded in the financial statements associated with
these guarantees. BankAtlantic is required to maintain reserve balances with the Federal Reserve Bank. Such
reserves consisted of cash and amounts due from banks of $51.3 million and $50.1 million at
December 31, 2004 and 2003, respectively. As a member of the FHLB system, BankAtlantic is required to purchase and hold stock in the
FHLB of Atlanta. As of December 31, 2004 BankAtlantic was in compliance with this requirement,
with an investment of approximately $78.6 million in stock of the FHLB of Atlanta. BankAtlantic is taking steps to correct deficiencies in its compliance with the USA Patriot
Act, anti-money laundering laws and the Bank Secrecy Act, and is cooperating with our regulators
and other federal agencies concerning those deficiencies. BankAtlantic cannot predict whether or
to what extent monetary or other penalties will be imposed by its regulators or other federal
agencies relating to these compliance deficiencies. No amounts have been recorded at December 31,
2004 in the accompanying financial statements relating to possible penalties from federal agencies. The Company, through its ownership of Ryan Beck, is subject to the risks of investment
banking. Ryan Becks customers securities transactions are introduced on a fully disclosed basis
to its clearing broker. The clearing broker carries all of the accounts of the customers of Ryan
Beck and is responsible for execution, collection and payment of funds, and F-53




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) receipt and delivery of
securities relative to customer transactions. Customers securities activities are transacted on a
cash and margin basis. These transactions may expose Ryan Beck to off-balance-sheet risk, wherein
the clearing broker may charge Ryan Beck for any losses it incurs in the event that customers may
be unable to fulfill their contractual commitments and margin requirements are not sufficient to
fully cover losses. As the right to charge Ryan Beck has no maximum amount and applies to all
trades executed through the clearing broker, Ryan Beck believes there is no maximum amount
assignable to this right. At December 31, 2004, Ryan Beck recorded liabilities of approximately
$188,000 with regard to this right. Ryan
Beck has the right to pursue collection or performance from the counter parties who do not
perform under their contractual obligations. Ryan Beck seeks to minimize this risk through
procedures designed to monitor the creditworthiness of its customers and ensure that customer
transactions are executed properly by the clearing broker. Ryan Beck, in its capacity as a market-maker and dealer in corporate and municipal
fixed-income and equity securities, may enter into transactions in a variety of cash and derivative
financial instruments in order to facilitate customer order flow and hedge market risk exposures.
These financial instruments include securities sold, but not yet purchased and future contracts.
Securities sold, but not yet purchased represent obligations of the Company to deliver specified
financial instruments at contracted prices, thereby creating a liability to purchase the financial
instrument in the market at prevailing prices. Accordingly, these transactions result in
off-balance-sheet risk as the Companys ultimate obligation may exceed the amount recognized in the
Consolidated Statement of Financial Condition. 15. Regulatory Matters The Company is a unitary savings bank holding company subject to regulatory oversight and
examination by the Office of Thrift Supervision (OTS), including normal supervision and reporting
requirements. The Company is also subject to the reporting and other requirements of the
Securities Exchange Act of 1934. In addition, BFC owns 8,296,890 shares of Class A common stock and
100% of Class B common stock which amounts to 22% of the Companys outstanding common stock. BFC
is subject to the same oversight by the OTS as discussed herein with respect to the Company. BankAtlantics deposits are insured by the FDIC for up to $100,000 for each insured account
holder, the maximum amount currently permitted by law. BankAtlantic is subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can cause regulators to initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a direct material
effect on BankAtlantics financial statements. At December 31, 2004, BankAtlantic met all capital
adequacy requirements to which it is subject and was considered a well capitalized institution. The OTS imposes limits applicable to the payment of cash dividends by BankAtlantic to the
Company which are based on an institutions regulatory capital levels and its net income.
BankAtlantic is permitted to pay capital distributions during a calendar year that do not exceed
its net income for the year plus its retained net income for the prior two years, without notice
to, or the approval of, the OTS. At December 31, 2004, this capital distribution limitation was
$78.8 million. During the years ended December 31, 2004, 2003 and 2002 BankAtlantic paid $15
million, $20 million and $22 million, respectively, of dividends to the Company. Ryan Beck paid $5 million in dividends to the Company during 2004. Future dividend payments
by Ryan Beck will depend upon the results of operations, financial condition and capital
requirements of Ryan Beck. F-54




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) BankAtlantics actual capital amounts and ratios are presented in the table (dollars in
thousands): For Capital
    
    
    To Be ConsideredActual
    
    
    Adequacy Purposes
    
    
    Well CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2004:Total risk-based capital
    
    $
    476,600
    
    
    
    10.80
    %
    
    $
    352,886
    
    
    
    8.00
    %
    
    $
    441,107
    
    
    
    10.00
    %Tier I risk-based capital
    
    $
    405,482
    
    
    
    9.19
    %
    
    $
    176,443
    
    
    
    4.00
    %
    
    $
    264,664
    
    
    
    6.00
    %Tangible capital
    
    $
    405,482
    
    
    
    6.83
    %
    
    $
    89,030
    
    
    
    1.50
    %
    
    $
    89,030
    
    
    
    1.50
    %Core capital
    
    $
    405,482
    
    
    
    6.83
    %
    
    $
    237,413
    
    
    
    4.00
    %
    
    $
    296,766
    
    
    
    5.00
    %As of December 31, 2003:Total risk-based capital
    
    $
    447,967
    
    
    
    12.06
    %
    
    $
    297,208
    
    
    
    8.00
    %
    
    $
    371,509
    
    
    
    10.00
    %Tier I risk-based capital
    
    $
    379,505
    
    
    
    10.22
    %
    
    $
    148,604
    
    
    
    4.00
    %
    
    $
    222,906
    
    
    
    6.00
    %Tangible capital
    
    $
    379,505
    
    
    
    8.52
    %
    
    $
    66,802
    
    
    
    1.50
    %
    
    $
    66,802
    
    
    
    1.50
    %Core capital
    
    $
    379,505
    
    
    
    8.52
    %
    
    $
    178,138
    
    
    
    4.00
    %
    
    $
    222,673
    
    
    
    5.00
    %
 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. 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 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 approximately
$35.3 million, which was $34.3 million in excess of its required net capital of $1.0 million at
December 31, 2004. Ryan Beck operates under the provisions of paragraph (k)(2)(ii) of Rule 15c3-3 of the
Securities and Exchange Commission as a fully disclosed introducing broker and, accordingly,
customer accounts are carried on the books of the clearing broker. However, Ryan Beck safekeeps and
redeems municipal bond coupons for the benefit of its customers. Accordingly, Ryan Beck is subject
to the provisions of SEC Rule 15c3-3 relating to possession or control and customer reserve
requirements and was in compliance with such provisions at December 31, 2004. 16. Legal Proceedings In the ordinary course of business, the Company and its subsidiaries are parties to lawsuits
as plaintiff or defendant involving its bank operations, lending, tax certificates, securities
sales, brokerage and underwriting and acquisitions. Although the Company believes it has
meritorious defenses in all current legal actions, the outcome of the various legal actions is
uncertain. Management, based on discussions with legal counsel, believes results of operations or
financial condition will not be significantly impacted by the resolution of these matters. F-55




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 17. Parent Company Financial Information Condensed statements of financial condition at December 31, 2004 and 2003 and condensed
statements of operations for each of the years in the three year period ended December 31, 2004 are
shown below (in thousands): CONDENSED STATEMENTS OF FINANCIAL CONDITION December 312004
    
    
    2003ASSETSCash deposited at BankAtlantic
    
    $
    8,975
    
    
    $
    22,717Short term investments
    
    
    11,149
    
    
    
    48Notes receivable from Levitt Corporation
    
    
    38,000
    
    
    
    43,500Investment securities
    
    
    53,663
    
    
    
    20,949Investment in BankAtlantic
    
    
    516,877
    
    
    
    489,855Investment in other subsidiaries
    
    
    90,184
    
    
    
    77,558Deferred tax asset, net
    
    
    
    
    
    
    5,510Current
income tax receivable - BankAtlantic
    
    
    3,725
    
    
    
    3,326Investment in unconsolidated subsidiaries
    
    
    7,910
    
    
    
    7,910Due from BankAtlantic
    
    
    
    
    
    
    1,156Other assets
    
    
    6,236
    
    
    
    6,962Total assets
    
    $
    736,719
    
    
    $
    679,491LIABILITIES AND STOCKHOLDERS EQUITYNote payable
    
    $
    100
    
    
    $
    100Due to BankAtlantic
    
    
    126
    
    
    
    Junior subordinated debentures
    
    
    263,266
    
    
    
    263,266Other liabilities
    
    
    3,962
    
    
    
    2,673Total liabilities
    
    
    267,454
    
    
    
    266,039Stockholders equity
    
    
    469,265
    
    
    
    413,452Total liabilities and stockholders equity
    
    $
    736,719
    
    
    $
    679,491
 F-56




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) For the Years Ended December 31,2004
    
    
    2003
    
    
    2002CONDENSED STATEMENTS OF OPERATIONSDividends from subsidiaries
    
    $
    5,000
    
    
    $
    
    
    
    $
    365Dividends from BankAtlantic
    
    
    15,000
    
    
    
    20,000
    
    
    
    22,000Interest income on notes receivable from subsidiaries and related parties
    
    
    1,751
    
    
    
    1,488
    
    
    
    1,716Interest income on investments
    
    
    756
    
    
    
    234
    
    
    
    30Total interest income and dividends
    
    
    22,507
    
    
    
    21,722
    
    
    
    24,111Interest expense on debentures and other borrowings
    
    
    16,958
    
    
    
    16,344
    
    
    
    17,801Net interest income
    
    
    5,549
    
    
    
    5,378
    
    
    
    6,310Securities activity, net
    
    
    3,693
    
    
    
    404
    
    
    
    3,836Impairment of securities
    
    
    
    
    
    
    
    
    
    
    (18,801
    )Litigation settlement
    
    
    22,840
    
    
    
    
    
    
    
    Income from unconsolidated subsidiaries
    
    
    485
    
    
    
    425
    
    
    
    Service fees from subsidiaries and related parties
    
    
    552
    
    
    
    
    
    
    
    Total non-interest income (loss)
    
    
    27,570
    
    
    
    829
    
    
    
    (14,965
    )Employee compensation and benefits
    
    
    3,042
    
    
    
    90
    
    
    
    940Advertising and promotion
    
    
    289
    
    
    
    
    
    
    
    Loss on debt redemption
    
    
    
    
    
    
    1,648
    
    
    
    3,125Professional fees
    
    
    1,145
    
    
    
    1,500
    
    
    
    810Other expenses
    
    
    1,205
    
    
    
    1,233
    
    
    
    387Total non-interest expense
    
    
    5,681
    
    
    
    4,471
    
    
    
    5,262Income (loss) from continuing operations before income tax
    
    
    27,438
    
    
    
    1,736
    
    
    
    (13,917
    )Income tax provision (benefit)
    
    
    2,693
    
    
    
    (5,087
    )
    
    
    (12,320
    )Income (loss) from continuing operations
    
    
    24,745
    
    
    
    6,823
    
    
    
    (1,597
    )Discontinued operations, net of tax
    
    
    
    
    
    
    1,157
    
    
    
    496Cumulative effect of a change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (13,339
    )Income (loss) before undistributed earnings of subsidiaries
    
    
    24,745
    
    
    
    7,980
    
    
    
    (14,440
    )Equity in undistributed net income (loss) of subsidiaries excluding
BankAtlantic
    
    
    12,482
    
    
    
    9,645
    
    
    
    (2,365
    )Equity in undistributed earnings from BankAtlantic
    
    
    33,541
    
    
    
    22,129
    
    
    
    23,112Equity in subsidiaries discontinued operations, net of tax
    
    
    
    
    
    
    27,963
    
    
    
    22,047Equity in income from subsidiaries extraordinary item
    
    
    
    
    
    
    
    
    
    
    23,749Equity in income (loss) from subsidiaries cumulative effect of a change
a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (1,768
    )Net income
    
    $
    70,768
    
    
    $
    67,717
    
    
    $
    50,335
 F-57




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONDENSED STATEMENTS OF CASH FLOW For the Years Ended December 31,(In thousands)
    
    2004
    
    
    2003
    
    
    2002Operating activities:Income from continuing operations
    
    $
    70,768
    
    
    $
    38,597
    
    
    $
    19,150Income from discontinued operations
    
    
    
    
    
    
    29,120
    
    
    
    22,543Income from extraordinary item
    
    
    
    
    
    
    
    
    
    
    23,749Loss from cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (15,107
    )Adjustments to reconcile net income to net cash provided by
operating activities:Equity in net undistributed earnings of BankAtlantic and other subsidiaries
    
    
    (46,023
    )
    
    
    (59,737
    )
    
    
    (64,775
    )Amortization and accretion, net
    
    
    804
    
    
    
    1,060
    
    
    
    707Loss on debt redemption
    
    
    
    
    
    
    1,648
    
    
    
    3,125Equity in earnings of unconsolidated subsidiaries
    
    
    (485
    )
    
    
    (2,077
    )
    
    
    (780
    )Impairment of securities
    
    
    
    
    
    
    
    
    
    
    18,801Gains on securities activities
    
    
    (3,693
    )
    
    
    (404
    )
    
    
    (3,836
    )Litigation settlement
    
    
    (22,840
    )
    
    
    
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    13,339Increase (decrease) in other liabilities
    
    
    6,982
    
    
    
    2,539
    
    
    
    (2,897
    )Changes in due from BankAtlantic
    
    
    1,282
    
    
    
    (1,247
    )
    
    
    7,074(Increase) decrease in deferred tax asset
    
    
    6,569
    
    
    
    (1,246
    )
    
    
    (4,803
    )Decrease (increase) in other assets
    
    
    (610
    )
    
    
    12,730
    
    
    
    (14,325
    )Net cash provided by operating activities
    
    
    12,754
    
    
    
    20,983
    
    
    
    1,965Investing activities:Repayments of loans to Levitt
    
    
    5,500
    
    
    
    
    
    
    
    Repayments of loans to Ryan Beck
    
    
    
    
    
    
    5,000
    
    
    
    Increase in loans to subsidiaries
    
    
    
    
    
    
    
    
    
    
    (35,000
    )(Investments) and repayments from unconsolidated subsidiaries, net
    
    
    485
    
    
    
    (1,077
    )
    
    
    (116,372
    )Purchase of securities
    
    
    (128,708
    )
    
    
    (16,700
    )
    
    
    (213
    )Proceeds from sales of securities
    
    
    116,064
    
    
    
    3,965
    
    
    
    10,883Net cash used by investing activities
    
    
    (6,659
    )
    
    
    (8,812
    )
    
    
    (140,702
    )Financing activities:Issuance of common stock
    
    
    2,334
    
    
    
    4,472
    
    
    
    1,296Retirement of Class A common stock accepted as consideration for the
payment
of the minimum withholding tax upon the exercise of stock options
    
    
    (2,946
    )
    
    
    
    
    
    
    Common stock dividends paid
    
    
    (8,124
    )
    
    
    (7,525
    )
    
    
    (6,992
    )Proceeds from issuance of junior subordinated debentures
    
    
    
    
    
    
    77,346
    
    
    
    185,920Redemption of junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    (77,062
    )Proceeds from notes payable
    
    
    
    
    
    
    
    
    
    
    30,000Repayments of notes payable
    
    
    
    
    
    
    (16,000
    )
    
    
    (14,000
    )Retirement of subordinated investment notes and subordinated debentures
    
    
    
    
    
    
    (50,422
    )
    
    
    (21,716
    )Net cash (used) provided by financing activities
    
    
    (8,736
    )
    
    
    7,871
    
    
    
    97,446Increase (decrease) in cash and cash equivalents
    
    
    (2,641
    )
    
    
    20,042
    
    
    
    (41,291
    )Cash and cash equivalents at beginning of period
    
    
    22,765
    
    
    
    2,723
    
    
    
    44,014Cash and cash equivalents at end of period
    
    $
    20,124
    
    
    $
    22,765
    
    
    $
    2,723(continued)
 F-58




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) For the Years Ended December 31(In thousands)
    
    2004
    
    
    2003
    
    
    2002Cash paid for:Interest
    
    $
    16,902
    
    
    $
    15,961
    
    
    $
    18,017Supplementary disclosure of non-cash investing and financing activities:Reduction in stockholders equity from the retirement of Class A
common stock obtained from litigation settlement
    
    
    6,058
    
    
    
    
    
    
    
    Issuance and retirement of Class A common stock accepted as
consideration for the exercise price of stock options
    
    
    1,405
    
    
    
    
    
    
    
    Increase in notes receivable in connection with the Levitt spin off
    
    
    
    
    
    
    43,500
    
    
    
    Reduction in stockholders equity associated with the Levitt spin off
transaction
    
    
    
    
    
    
    125,573
    
    
    
    Increase in equity for the tax effect related to the exercise of stock options
    
    
    6,610
    
    
    
    2,264
    
    
    
    440Increase (decrease) in stockholders equity from other comprehensive income
    
    
    (6,948
    )
    
    
    2,387
    
    
    
    (11,331
    )Issuance of Class A common stock upon conversion of subordinated debentures
    
    
    
    
    
    
    211
    
    
    
    25Capital contributions associated with the Ryan Beck deferred compensation plan
    
    
    
    
    
    
    
    
    
    
    (828
    )Increase in notes payable under the Ryan Beck deferred compensation plan
    
    
    
    
    
    
    
    
    
    
    3,675Increase in junior subordinated debentures and investment in unconsolidated
subsidiaries related to trust deconsolidation
    
    
    
    
    
    
    7,910
    
    
    
    
 18. Selected Quarterly Results(Unaudited) The following tables summarize the quarterly results of operations for the years ended
December 31, 2004 and 2003 (in thousands except share and per share data). First
    
    
    Second
    
    
    Third
    
    
    Fourth2004
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalInterest income
    
    $
    59,629
    
    
    $
    60,107
    
    
    $
    66,373
    
    
    $
    74,446
    
    
    $
    260,555Interest expense
    
    
    20,841
    
    
    
    19,755
    
    
    
    22,056
    
    
    
    25,070
    
    
    
    87,722Net interest income
    
    
    38,788
    
    
    
    40,352
    
    
    
    44,317
    
    
    
    49,376
    
    
    
    172,833Provision for (recovery from)
loan losses
    
    
    (859
    )
    
    
    (1,963
    )
    
    
    1,717
    
    
    
    (4,004
    )
    
    
    (5,109
    )Net interest income after
provision for loan losses
    
    
    39,647
    
    
    
    42,315
    
    
    
    42,600
    
    
    
    53,380
    
    
    
    177,942Income before taxes
    
    
    31,998
    
    
    
    29,758
    
    
    
    23,157
    
    
    
    25,765
    
    
    
    110,678Net income
    
    $
    20,524
    
    
    $
    18,260
    
    
    $
    14,691
    
    
    $
    17,293
    
    
    $
    70,768Basic earnings per share
    
    $
    0.35
    
    
    $
    0.31
    
    
    $
    0.25
    
    
    $
    0.29
    
    
    $
    1.19Diluted earnings per share
    
    $
    0.32
    
    
    $
    0.29
    
    
    $
    0.23
    
    
    $
    0.27
    
    
    $
    1.11Basic weighted average number
of common shares outstanding
    
    
    59,257,270
    
    
    
    59,343,940
    
    
    
    59,687,354
    
    
    
    59,826,903
    
    
    
    59,525,532Diluted weighted average
number
of common shares outstanding
    
    
    63,193,034
    
    
    
    62,807,683
    
    
    
    63,109,757
    
    
    
    63,155,527
    
    
    
    63,056,435
 The first quarter earnings were impacted by a $22.8 million litigation settlement gain. The
litigation gain was partially offset by the Companys prepaying $108 million of FHLB advances,
incurring prepayment penalties of $11.7 million. F-59




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The third and fourth quarter earnings were impacted by $2.0 million and $3.0 million,
respectively, of professional and consulting costs associated with steps taken to correct
deficiencies in, and improving systems and procedures involving, BankAtlantics compliance with the
USA Patriot Act, anti-money laundering laws and the Bank Secrecy Act. The Company received a $4.0 million recovery from the guarantor of a residential construction
loan that was charged-off during 2002. Of this amount, $2.0 million was recognized during the
second quarter and the remaining $2.0 million was recognized during the fourth quarter. First
    
    
    Second
    
    
    Third
    
    
    Fourth2003
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalInterest income
    
    $
    68,965
    
    
    $
    69,221
    
    
    $
    62,811
    
    
    $
    60,852
    
    
    $
    261,849Interest expense
    
    
    30,786
    
    
    
    30,572
    
    
    
    27,312
    
    
    
    24,547
    
    
    
    113,217Net interest income
    
    
    38,179
    
    
    
    38,649
    
    
    
    35,499
    
    
    
    36,305
    
    
    
    148,632Provision for (recovery from) loan losses
    
    
    850
    
    
    
    1,490
    
    
    
    (1,076
    )
    
    
    (1,811
    )
    
    
    (547
    )Net interest income after provision for loan losses
    
    
    37,329
    
    
    
    37,159
    
    
    
    36,575
    
    
    
    38,116
    
    
    
    149,179Income before income taxes
    
    
    16,846
    
    
    
    15,271
    
    
    
    15,885
    
    
    
    14,019
    
    
    
    62,021Income from continuing operations
    
    
    10,818
    
    
    
    9,809
    
    
    
    10,144
    
    
    
    7,826
    
    
    
    38,597Discontinued operations, net of taxes
    
    
    3,540
    
    
    
    7,400
    
    
    
    8,364
    
    
    
    9,816
    
    
    
    29,120Net income
    
    $
    14,358
    
    
    $
    17,209
    
    
    $
    18,508
    
    
    $
    17,642
    
    
    $
    67,717Basic earnings per share from continuing operations
    
    $
    0.19
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.66Basic earnings per share from discontinued operations
    
    
    0.06
    
    
    
    0.13
    
    
    
    0.15
    
    
    
    0.17
    
    
    
    0.50Basic earnings per share
    
    $
    0.25
    
    
    $
    0.30
    
    
    $
    0.32
    
    
    $
    0.30
    
    
    $
    1.16Diluted earnings per share from continuing operations
    
    $
    0.17
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.12
    
    
    $
    0.62Diluted earnings per share from discontinued operations
    
    
    0.06
    
    
    
    0.12
    
    
    
    0.14
    
    
    
    0.16
    
    
    
    0.46Diluted earnings per share
    
    $
    0.23
    
    
    $
    0.28
    
    
    $
    0.30
    
    
    $
    0.28
    
    
    $
    1.08Basic weighted average number of common
shares outstanding
    
    
    58,171,621
    
    
    
    58,321,020
    
    
    
    58,646,254
    
    
    
    58,891,273
    
    
    
    58,509,894Diluted weighted average number of common
shares outstanding
    
    
    64,250,488
    
    
    
    61,898,924
    
    
    
    61,343,946
    
    
    
    61,852,217
    
    
    
    62,354,430
 The third and fourth quarter earnings were impacted by the Companys prepaying $185 million of
FHLB advances in the third quarter and $140 million of FHLB advances in the fourth quarter,
incurring prepayment penalties of $2.0 million and $8.9 million, respectively. The discontinued operations primarily reflect the operations of Levitt and GMS. Levitt was
spun-off to the Companys stockholders on December 31, 2003 and the Companys membership interest
in GMS was sold in August 2003. 19. Estimated Fair Value of Financial Instruments The information set forth below provides disclosure of the estimated fair value of the
Companys financial instruments presented in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments
(FAS 107). Management has made estimates of fair value that it believes to be reasonable. However,
because there is no market for many of these financial instruments, management has no basis to
determine whether the fair value presented would be indicative of the value negotiated in an actual
sale. The Companys 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. Fair values are estimated for loan portfolios with similar financial characteristics.
Loans are segregated by category, and each loan category is further segmented into fixed and
adjustable rate interest terms and by performing and non-performing categories. F-60




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The fair value of performing loans, except residential mortgage and adjustable rate loans is
calculated by discounting scheduled cash flows through the estimated maturity using estimated
market discount rates that reflect the credit and interest rate risk inherent in the loan. The
estimate of average maturity is based on BankAtlantics historical experience with prepayments for
each loan classification, modified, as required, by an estimate of the effect of current economic
and lending conditions. For performing residential mortgage loans, fair value is estimated by
discounting contractual cash flows, which are adjusted for national historical prepayment
estimates. The discount rate is based on secondary market sources and is adjusted to reflect
differences in servicing and credit costs. Fair values of non-performing loans are based on the assumption that the loans are on a
non-accrual status, discounted at market rates during a 24 month work-out period. Assumptions
regarding credit risk are determined using available market information and specific borrower
information. The book value of tax certificates approximates market value. The fair value of
mortgage-backed and investment securities are estimated based upon a price matrix obtained from a
third party or market price quotes. Under FAS 107, the fair value of deposits with no stated maturity, such as non-interest
bearing demand deposits, savings and NOW accounts, and money market and checking accounts, is
considered the same as book value. The fair value of certificates of deposit is based on the
discounted value of contractual cash flows. The discount rate is estimated using current rates
offered by BankAtlantic for similar remaining maturities. The fair value of Federal Home Loan Bank stock is its carrying amount. The book value of securities sold under agreements to repurchase and federal funds purchased
approximates fair value. The fair value of FHLB advances is based on discounted cash flows using rates offered for debt
with comparable terms to maturity and issuer credit standing. The fair value of securities owned and securities sold but not yet purchased was based on
dealer price quotations or price quotations from similar instruments traded. The fair values of subordinated debentures, junior subordinated debentures, and notes payable
were based on discounted value of contractual cash flows at a market discount rate. The following table presents information for the Companys financial instruments at December
31, 2004 and 2003 (in thousands): December 31, 2004
    
    
    December 31, 2003Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    135,060
    
    
    $
    135,060
    
    
    $
    119,882
    
    
    $
    119,882Securities available for sale
    
    
    747,160
    
    
    
    747,160
    
    
    
    358,511
    
    
    
    358,511Securities owned
    
    
    125,443
    
    
    
    125,443
    
    
    
    124,565
    
    
    
    124,565Investment securities
    
    
    307,438
    
    
    
    306,963
    
    
    
    192,706
    
    
    
    192,706Federal Home Loan Bank stock
    
    
    78,619
    
    
    
    78,619
    
    
    
    40,325
    
    
    
    40,325Loans receivable including loans held
for sale, net
    
    
    4,599,048
    
    
    
    4,606,858
    
    
    
    3,686,153
    
    
    
    3,695,028Financial liabilities:Deposits
    
    $
    3,457,202
    
    
    $
    3,451,853
    
    
    $
    3,058,142
    
    
    $
    3,062,565Short term borrowings
    
    
    401,643
    
    
    
    401,627
    
    
    
    138,809
    
    
    
    138,809Advances from FHLB
    
    
    1,544,497
    
    
    
    1,564,188
    
    
    
    782,205
    
    
    
    830,939Securities sold but not yet purchased
    
    
    39,462
    
    
    
    39,462
    
    
    
    37,813
    
    
    
    37,813Subordinated debentures and notes payable
    
    
    37,741
    
    
    
    37,092
    
    
    
    36,595
    
    
    
    36,285Junior subordinated debentures
    
    
    263,266
    
    
    
    265,955
    
    
    
    263,266
    
    
    
    257,647
 F-61




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The carrying amount and fair values of BankAtlantics commitments to extend credit, standby
letters of credit, financial guarantees and forward commitments are not significant. (See Note 14
for the contractual amounts of BankAtlantics financial instrument commitments). Derivatives During the year ended December 31, 2000, the Company entered into a forward contract to
purchase the underlying collateral from a government agency pool of securities in May 2005. The
underlying collateral is $8.6 million of five-year hybrid adjustable rate mortgage loans that will
adjust annually after May 2005. The hybrid adjustable rate mortgage loans are loans in which the
rate at inception remains fixed for five years and then adjusts to a spread over the U.S. Treasury
note annually thereafter. The forward contract was held for trading purposes and recorded at fair
value with changes in fair value included in earnings. During the year ended December 31, 2002, the Company utilized interest rate swaps to manage
its interest rate risk. The Company entered into callable time deposits with its customers and
entered into callable interest rate swaps. The Company designated these callable interest rate
swaps as fair value hedges. During the year ended December 31, 2003, interest rate swap contracts
with a notional amount of $33 million were called by the counter-party, resulting in the Company
redeeming $33 million of fixed rate time deposits. The Companys loss on the termination of the
interest rate swaps was offset by a corresponding gain on the call of the time deposits. There
were no interest rate swaps outstanding at December 31, 2004 and 2003. The Company also created cash flow hedges by entering into interest rate swap contracts to
hedge the variable cash flows relating to forecasted interest payments on certain variable rate
FHLB advances. The changes in fair value of the interest rate swap contracts designated as cash
flow hedges were recorded in other comprehensive income and the receivables and payables from the
swap contracts were recorded as an adjustment to interest expense on FHLB advances in the Companys
statement of operations for the year ended December 31, 2002. The Company terminated the above
mentioned interest rate swap contracts with a notional amount of $75 million during the year ended
December 31, 2003 and recognized a $1.9 million loss included in securities activities, net in the
Companys statement of operations. Commitments to originate residential loans held for sale and to sell residential loans are
derivatives. The fair value of these derivatives was not included in the Companys financial
statements as the amount was not considered significant. These derivatives relate to a loan
origination program with an independent mortgage company whereby the mortgage company purchases the
originated loans from BankAtlantic 14 days after the funding date at a price negotiated quarterly
for all loans sold during the quarter. F-62




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 20. Earnings per Share The following reconciles the numerators and denominators of the basic and diluted earnings per
share computation for the years ended December 31, 2004, 2003 and 2002 (in thousands, except share
data). For The Years Ended December 31,2004
    
    
    2003
    
    
    2002Basic earnings per shareNumerator:Income from continuing
operations
    
    $
    70,768
    
    
    $
    38,597
    
    
    $
    19,150Discontinued operations
    
    
    
    
    
    
    29,120
    
    
    
    22,543Extraordinary item
    
    
    
    
    
    
    
    
    
    
    23,749Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (15,107
    )Net income
    
    $
    70,768
    
    
    $
    67,717
    
    
    $
    50,335Denominator:Basic weighted average number of
common shares outstanding
    
    
    59,525,532
    
    
    
    58,509,894
    
    
    
    57,997,556Basic earnings per share from:Continuing operations
    
    $
    1.19
    
    
    $
    0.66
    
    
    
    0.33Discontinued operations
    
    
    
    
    
    
    0.50
    
    
    
    0.39Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.41Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.26
    )Basic earnings per share
    
    $
    1.19
    
    
    $
    1.16
    
    
    $
    0.87
 F-63




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) For the Years Ended December 31,2004
    
    
    2003
    
    
    2002Diluted earnings per shareNumerator:Income from continuing operations
    
    $
    70,768
    
    
    $
    38,597
    
    
    $
    19,150Subsidiary stock options
    
    
    (668
    )
    
    
    (251
    )
    
    
    (24
    )Interest expense on convertible debentures
    
    
    
    
    
    
    569
    
    
    
    1,760Income available after assumed conversion
from continuing operations
    
    
    70,100
    
    
    
    38,915
    
    
    
    20,886Discontinued operations
    
    
    
    
    
    
    29,120
    
    
    
    22,543Extraordinary items
    
    
    
    
    
    
    
    
    
    
    23,749Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (15,107
    )Income available after assumed conversion
    
    $
    70,100
    
    
    $
    68,035
    
    
    $
    52,071Denominator:Basic weighted average number of
common shares outstanding
    
    
    59,525,532
    
    
    
    58,509,894
    
    
    
    57,997,556Common stock equivalents resulting from:Convertible debentures
    
    
    
    
    
    
    1,311,676
    
    
    
    4,092,774Stock-based compensation
    
    
    3,530,903
    
    
    
    2,532,860
    
    
    
    2,310,395Diluted weighted average shares
outstanding
    
    
    63,056,435
    
    
    
    62,354,430
    
    
    
    64,400,725Diluted earnings per share from:Continuing operations
    
    $
    1.11
    
    
    $
    0.62
    
    
    $
    0.32Discontinued operations
    
    
    
    
    
    
    0.46
    
    
    
    0.35Extraordinary items
    
    
    
    
    
    
    
    
    
    
    0.37Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.23
    )Diluted earnings per share
    
    $
    1.11
    
    
    $
    1.08
    
    
    $
    0.81
 In January 2004, the Companys compensation committee adjusted the exercise price and number
of shares of all outstanding options to acquire the Companys Class A common stock in connection
with the spin-off of Levitt to preserve the intrinsic value of the options. This adjustment
increased the number of common stock equivalents from stock based compensation by approximately
30%. Options to acquire 776,100, 0
and 983,119 shares of Class A Common Stock were anti-dilutive for the
years ended December 31, 2004, 2003 and 2002, respectively. 21. Real Estate Held for Development and Sale Real estate held for development and sale consist of the following (in thousands): December 31,2004
    
    
    2003Land and land development
costs
    
    $
    10,662
    
    
    $
    9,705Construction costs
    
    
    12,163
    
    
    
    7,192Other costs
    
    
    2,399
    
    
    
    1,859Branch banking facilities
    
    
    2,468
    
    
    
    3,047Total
    
    $
    27,692
    
    
    $
    21,803
 F-64




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Income from real estate operations were as follows (in thousands): For the Years EndedDecember 31,2004
    
    
    2003Sales of real estate
    
    $
    9,242
    
    
    
    19,850Cost of sales on real estate
    
    
    6,837
    
    
    
    14,208Gains on sales of real estate
    
    
    2,405
    
    
    
    5,642
 Real estate held for development and sale at December 31, 2004 and 2003 consisted of a joint
venture that was acquired in connection with the Community acquisition and real estate held for
sale associated with branch banking facilities. The joint venture was consolidated in the
Companys financial statements as of January 1, 2003 upon the adoption of FIN No. 46. The joint
venture was accounted for under the equity method during prior periods. 22. Investments and Advances to Unconsolidated Subsidiaries At December 31, 2004 and 2003, investments and advances to unconsolidated subsidiaries
consisted of the Companys $7.9 million investment in eleven statutory business trusts that were
formed to issue trust preferred securities. Prior to January 1, 2003, these trusts were
consolidated in the Companys financial statements. During the year ended December 31, 2002, income from unconsolidated subsidiaries consisted of
BankAtlantics 50% owned joint venture that was acquired in connection with the Community
acquisition. As mentioned above, the joint venture was consolidated in the Companys financial
statements as of January 1, 2003. The consolidated statements of operations include the following amounts for income from
unconsolidated subsidiaries (in thousands): For the Years Ended December 31,Statement of Operations
    
    2004
    
    
    2003
    
    
    2002Equity in joint venture earnings
    
    $
    
    
    
    $
    
    
    
    $
    583Interest income recognized on loan to
joint venture
    
    
    
    
    
    
    
    
    
    
    710Earnings from statutory trusts
    
    
    485
    
    
    
    425
    
    
    
    Income from unconsolidated subsidiaries
    
    $
    485
    
    
    $
    425
    
    
    $
    1,293
 F-65




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##### Table of Contents



BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The Condensed Combined Statements of Financial Condition and Condensed Combined
Statements of Operation for unconsolidated subsidiaries are as follows for 2004 and 2003 (in
thousands): December 31,Statement of Financial Condition
    
    2004
    
    
    2003Junior subordinated debentures
    
    $
    263,266
    
    
    $
    263,266Other assets
    
    
    694
    
    
    
    637Total Assets
    
    $
    263,960
    
    
    $
    263,903Trust preferred securities
    
    $
    255,375
    
    
    $
    255,375Other liabilities
    
    
    675
    
    
    
    618Total Liabilities
    
    
    256,050
    
    
    
    255,993Common securities
    
    
    7,910
    
    
    
    7,910Total Liabilities and Equity
    
    $
    263,960
    
    
    $
    263,903
 For the Years EndedDecember 31,Statement of Operations
    
    2004
    
    
    2003
    
    
    2002Interest income from junior subordinated
debentures
    
    $
    16,161
    
    
    $
    14,534
    
    
    
    Revenue from the sale of real estate
    
    
    
    
    
    
    
    
    
    
    7,942Selling, general and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (6,775
    )Interest expense
    
    
    (15,676
    )
    
    
    (14,109
    )
    
    
    Net income
    
    $
    485
    
    
    $
    425
    
    
    
    1,167
 F-66




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 23. Related Parties The Company, Levitt and Bluegreen are under common control. The controlling shareholder of
the Company and Levitt is BFC, and Levitt owns 31% of the outstanding common stock of 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. The
Company received compensation for such services on a percentage of cost basis. Additionally, the
Company rents office space to Levitt and BFC on a month-to-month basis and receives rental payments
based on market rates. These amounts were included in non-interest income in the Companys
statement of operations for the year ended December 31, 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 year ended December 31, 2004: BFC
    
    
    Levitt
    
    
    TotalService fees
    
    $
    73,633
    
    
    $
    458,806
    
    
    $
    532,439Rent
    
    
    50,237
    
    
    
    49,036
    
    
    
    99,273Total
    
    $
    123,870
    
    
    $
    507,842
    
    
    $
    631,712
 Additionally, BFC paid the Company approximately $67,000 for each of the years 2003 and 2002
for office space used by BFC in BankAtlantics headquarters and for miscellaneous administrative
and other related expenses. BFC paid Ryan Beck $280,000 during the year ended December 31, 2004 for
advisory services. Levitt paid BankAtlantic $96,000 for project management services during the
year ended December 31, 2004. BankAtlantic provided certain administrative services to Bluegreen
in 2003 without receipt of payment for such services. During the year ended December 31, 2004, Levitt provided property development consulting
services and Bluegreen provided risk management services to the Company, for which Levitt
recognized $40,000 and Bluegreen recognized $100,000 of revenues from the Company. The value of
these services received by the Company was calculated based on a percentage of cost basis. These
amounts were included in non-interest expense in the Companys statements of operations. In connection with the spin-off of Levitt as of December 31, 2003, the Company converted an
outstanding $30.0 million demand note owed by Levitt to the Company to a five year term note 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, the Company transferred
its 4.9% ownership interest in Bluegreen Corporation to Levitt in exchange for a $5.5 million note
and additional shares of Levitt common stock (which additional shares were distributed as part of
the spin-off transaction.) The note was repaid in May 2004. Additionally, prior to the spin-off,
Levitt declared an $8.0 million dividend to the Company payable in the form of a five year note
with the same payment terms as the $30.0 million note described above. The outstanding balance of
these notes at December 31, 2004 and 2003 was $38.0 million. BankAtlantic also has $8.6 million
and $18.1 million of construction loans to Levitt secured by land and improvements at December 31,
2004 and 2003, respectively. Included in interest income in the Companys statement of operations
for the year ended December 31, 2004 was $2.6 million of interest income related to loans to Levitt
and its joint ventures. Levitt maintains deposit balances at BankAtlantic amounting to $37.8
million as of December 31, 2004. The Company recognized $230,000 of interest expense in
connection with the above deposits. During the years ended December 31, 2003 and 2002 the items
above, to the extent outstanding, were not included in the Companys financial statements as those
amounts were eliminated in consolidation. During the year ended December 31, 2003, BankAtlantic paid a subsidiary of Levitt a $540,000
management fee to operate and sell a residential construction property acquired through
foreclosure. The property was sold to an unrelated developer during the fourth quarter of 2003.
This amount was eliminated in consolidation during the year ended December 31, 2003. F-67




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The Abdo Companies, a company in which John E. Abdo, Vice Chairman of the Company, is the
principal shareholder and CEO, receives monthly management fees from Levitt, which was a subsidiary
of the Company until it was spun off to the Companys shareholders on December 31, 2003. BFC
received management fees in connection with providing accounting, general and administrative
services to Levitt. The amounts paid may not be representative of the amounts that would be paid in
an arms-length transaction. Management fees paid to related parties by Levitt prior to its spin-off
from the Company were: For the Years EndedDecember 31,2003
    
    
    2002Abdo Companies
    
    $
    291,240
    
    
    $
    291,240BFC
    
    
    213,000
    
    
    
    170,000$
    504,240
    
    
    $
    461,240
 The Company was an investor in a privately held technology company located in Boca Raton,
Florida which owned 748,000 shares of the Companys Class A Stock. The Company had a $15 million
investment in 3,033,386 shares of the technology companys common stock, which shares were acquired
in October 1999 at an average price per share of $4.95. Both Alan B. Levan and John E. Abdo became
directors of the technology company in connection with the Companys investment and individually
invested in the technology company. Alan B. Levan owned or controlled direct and indirect
interests in an aggregate of 286,709 shares of the technology companys common stock purchased at
an average price of $8.14 and Mr. Abdo owned or controlled direct and indirect interests in an
aggregate of 368,408 shares of the technology companys common stock purchased at an average price
of $7.69. Jarett Levan had an indirect ownership interest in an aggregate of 350 shares of such
common stock, and director Bruno DiGiulian had an indirect ownership interest in 1,754 shares of
such common stock. The Company and its affiliates collectively owned approximately 7% of the
technology companys outstanding common stock. During 2001, Mr. Levan and Mr. Abdo resigned from
the technology companys Board of Directors and initiated a lawsuit on behalf of the Company and
others against the founder of the technology company, personally, regarding his role in the
operation of the technology company. The Company and the other owners of the shares of the
technology company who were parties to the lawsuit shared in the legal fees incurred in connection
with the litigation in proportion to their respective interests. In March 2004, the technology
company settled the lawsuit with the Company and it affiliates. Pursuant to that settlement, the
Company sold its stock in the technology company to a third party investor group for $15 million in
cash, the Companys original cost, and the Company received consideration from the technology
company for legal expenses and damages, which consisted of $1.7 million in cash and 378,160 shares
of the Companys Class A Common Stock returned by the
technology company to the Company. The Company and its subsidiaries utilized certain services of Ruden, McClosky, Smith, Schuster
& Russell, P.A. (Ruden, McClosky), a law firm to which Bruno DiGiulian, a director of the
Company, is of counsel. Fees aggregating $239,000 and $110,000 were paid by BankAtlantic and fees
aggregating $0 and $30,000 were paid by Ryan Beck to Ruden, McClosky in 2004 and 2003,
respectively. In addition, fees aggregating $845,000 were paid to Ruden, McClosky by Levitt in 2003
when Levitt was a wholly-owned subsidiary of the Company. In 2002, fees aggregating $1.0 million
were paid to the law firm by BankAtlantic and Levitt Corporation. Ruden, McClosky also represents
Alan B. Levan and John E. Abdo with respect to certain other business interests. 24. 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. F-68




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The following summarizes the aggregation of the Companys operating segments into reportable
segments: Reportable Segment
    
    Operating Segments AggregatedBankAtlantic
    
    Banking operationsRyan Beck
    
    Investment banking and brokerage operationsParent 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. Intersegment transactions consist of shared services
such as risk management consulting and investment banking placement and advisory fees which are
eliminated in consolidation. Depreciation and amortization consist of: depreciation on property and equipment, amortization
of core deposit intangible assets, deferred compensation expenses and deferred offering costs. F-69




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) The Company evaluates segment performance based on net segment income after tax. The table
below is segment information for income from continuing operations for each of the years in the
three year period ended December 31, 2004 (in thousands): Adjusting andParent
    
    
    Elimination
    
    
    SegmentBankAtlantic
    
    
    Ryan Beck
    
    
    Company
    
    
    Entries
    
    
    Total2004Interest income
    
    $
    246,856
    
    
    $
    11,351
    
    
    
    2,507
    
    
    
    (159
    )
    
    $
    260,555Interest expense
    
    
    (69,998
    )
    
    
    (924
    )
    
    
    (16,958
    )
    
    
    158
    
    
    
    (87,722
    )Recovery from loan losses
    
    
    5,109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,109Non-interest income
    
    
    85,724
    
    
    
    231,804
    
    
    
    27,530
    
    
    
    (269
    )
    
    
    344,789Non-interest expense
    
    
    (193,621
    )
    
    
    (213,060
    )
    
    
    (5,642
    )
    
    
    270
    
    
    
    (412,053
    )Segments profits
before income taxes
    
    
    74,070
    
    
    
    29,171
    
    
    
    7,437
    
    
    
    
    
    
    
    110,678Provision for income taxes
    
    
    (25,530
    )
    
    
    (11,688
    )
    
    
    (2,692
    )
    
    
    
    
    
    
    (39,910
    )Segment net income
    
    $
    48,540
    
    
    $
    17,483
    
    
    $
    4,745
    
    
    $
    
    
    
    $
    70,768Total assets
    
    $
    6,044,988
    
    
    
    187,887
    
    
    
    736,719
    
    
    
    (612,817
    )
    
    $
    6,356,777Equity method investments
included in total assets
    
    $
    
    
    
    $
    
    
    
    $
    7,910
    
    
    $
    
    
    
    $
    7,910Goodwill
    
    
    70,490
    
    
    
    454
    
    
    
    5,730
    
    
    
    
    
    
    
    76,674Expenditures for segment
assets
    
    $
    42,229
    
    
    $
    5,861
    
    
    $
    
    
    
    $
    
    
    
    $
    48,090Depreciation and amortization
    
    $
    (11,473
    )
    
    $
    (7,507
    )
    
    $
    (793
    )
    
    $
    
    
    
    $
    (19,773
    )2003Interest income
    
    $
    251,402
    
    
    $
    10,437
    
    
    $
    1,722
    
    
    $
    (1,712
    )
    
    $
    261,849Interest expense
    
    
    (97,302
    )
    
    
    (1,283
    )
    
    
    (16,344
    )
    
    
    1,712
    
    
    
    (113,217
    )Recovery from loan losses
    
    
    547
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    547Non-interest income
    
    
    70,686
    
    
    
    210,939
    
    
    
    194
    
    
    
    (105
    )
    
    
    281,714Non-interest expense
    
    
    (161,615
    )
    
    
    (203,524
    )
    
    
    (3,838
    )
    
    
    105
    
    
    
    (368,872
    )Segments profits and losses
before income taxes
    
    
    63,718
    
    
    
    16,569
    
    
    
    (18,266
    )
    
    
    
    
    
    
    62,021Provision for income taxes
    
    
    (21,589
    )
    
    
    (6,924
    )
    
    
    5,089
    
    
    
    
    
    
    
    (23,424
    )Segment net income (loss)
    
    $
    42,129
    
    
    $
    9,645
    
    
    $
    (13,177
    )
    
    $
    
    
    
    $
    38,597Total assets
    
    $
    4,566,850
    
    
    
    172,944
    
    
    
    679,491
    
    
    
    (587,736
    )
    
    $
    4,831,549Equity method investments
included in total assets
    
    $
    
    
    
    $
    
    
    
    $
    7,910
    
    
    $
    
    
    
    $
    7,910Goodwill
    
    
    70,490
    
    
    
    454
    
    
    
    5,730
    
    
    
    
    
    
    
    76,674Expenditures for segment
assets
    
    $
    10,228
    
    
    $
    1,310
    
    
    $
    
    
    
    $
    
    
    
    $
    11,538Depreciation and amortization
    
    $
    (10,094
    )
    
    $
    (6,592
    )
    
    $
    (821
    )
    
    $
    
    
    
    $
    (17,507
    )
 F-70




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BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Adjusting andParent
    
    
    Elimination
    
    
    Segment2002
    
    BankAtlantic
    
    
    Ryan Beck
    
    
    Company
    
    
    Entries
    
    
    TotalInterest income
    
    $
    297,092
    
    
    
    7,512
    
    
    
    1,745
    
    
    
    (2,962
    )
    
    $
    303,387Interest expense
    
    
    (132,970
    )
    
    
    (1,444
    )
    
    
    (17,439
    )
    
    
    2,962
    
    
    
    (148,891
    )Provision from loan losses
    
    
    (14,077
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,077
    )Non-interest income
    
    
    53,317
    
    
    
    133,845
    
    
    
    (15,323
    )
    
    
    (90
    )
    
    
    171,749Non-interest expense
    
    
    (134,408
    )
    
    
    (144,494
    )
    
    
    (5,155
    )
    
    
    90
    
    
    
    (283,967
    )Segments profits and losses
before income taxes
    
    
    68,954
    
    
    
    (4,581
    )
    
    
    (36,172
    )
    
    
    
    
    
    
    28,201Provision for income taxes
    
    
    (23,845
    )
    
    
    2,133
    
    
    
    12,661
    
    
    
    
    
    
    
    (9,051
    )Segment net income (loss)
    
    $
    45,109
    
    
    $
    (2,448
    )
    
    $
    (23,511
    )
    
    $
    
    
    
    $
    19,150Total assets (1)
    
    $
    4,903,886
    
    
    
    229,032
    
    
    
    723,561
    
    
    
    (435,468
    )
    
    $
    5,421,011Equity method investments
included in total assets
    
    $
    23,602
    
    
    $
    
    
    
    $
    1,934
    
    
    $
    
    
    
    $
    25,536Expenditures for segment
assets
    
    $
    34,351
    
    
    $
    2,285
    
    
    $
    
    
    
    $
    
    
    
    $
    36,636Depreciation and amortization
    
    $
    (10,890
    )
    
    $
    (4,889
    )
    
    $
    (690
    )
    
    $
    
    
    
    $
    (16,469
    )
   (1)
    
    The adjusting and elimination entries include the assets of Levitt. F-71




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 
 ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) to make known material
information concerning the Company, including its subsidiaries, to those officers who certify our
financial reports and to other members of senior management. As of December 31, 2004, 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 to
ensure that material information required to be included in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the SECs rules and forms. Our management, including our principal executive officer and principal financial officer,
does not expect that our disclosure controls and procedures and internal controls over financial
reporting will prevent all errors and all improper conduct. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of improper conduct, if any,
within the Company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of simple error
or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the control. Further, the design of any system of controls also is based in part upon assumptions
about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions. Managements Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control
over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. Under the supervision and with the
participation of our management, including our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control  Integrated Frameworkissued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under
the framework in Internal Control  Integrated Framework, our management concluded that our
internal control over financial reporting was effective as of December 31, 2004. Our managements
assessment of the effectiveness of our internal control over financial reporting as of December
31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered certified
public accounting firm, as stated in their Auditors report which is included herein. See
Financial Statements and Supplementary Data. /s/ Alan B. LevanAlan B. LevanChairman, President and
Chief Executive Officer /s/
James A. WhiteJames A. WhiteExecutive Vice President 
Chief Financial Officer March 15, 2005 Changes in Internal Controls In addition, we reviewed our internal control over financial reporting, and there have been no
significant changes in our internal control over financial reporting or in other factors that could
significantly affect those controls during the fourth quarter.




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##### Table of Contents



Item 9B. Other information None. 
 PART III Items 10 through 14 will be provided by incorporating the information required under such
items by reference to the registrants definitive proxy statement to be filed with the Securities
and Exchange Commission, no later than 120 days after the end of the year covered by this Form
10-K, or, alternatively, by amendment to this Form 10-K under cover of 10-K/A no later than the end
of such 120 day period. 
 PART IV 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Documents Filed as Part of this Report: (1) Financial Statements The following consolidated financial statements of BankAtlantic Bancorp, Inc. and its
subsidiaries are included herein under Part II, Item 8 of this Report. Report of Independent Registered Certified Public Accounting Firm of
PricewaterhouseCoopers LLP dated March 15, 2005. Report of Independent Registered Public Accounting Firm of KPMG LLP
dated February 3, 2003. Consolidated Statements of Financial Condition as of December 31, 2004
and 2003. Consolidated Statements of Operations for each of the years in the
three year period ended December 31, 2004. Consolidated Statements of Stockholders Equity and Comprehensive
Income for each of the years in the three year period ended December
31, 2004. Consolidated Statements of Cash Flows for each of the years in the
three year period ended December 31, 2004. Notes to
Consolidated Financial Statements. (2) Financial Statement Schedules All schedules are omitted as the required information is either not applicable or
presented in the financial statements or related notes. (3) Exhibits




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The following exhibits are either filed as a part of this Report or are incorporated
herein by reference to documents previously filed as indicated below: ExhibitNumber
    
    Description
    
    Reference3.1
    
    Restated Articles of Incorporation
    
    Exhibit 3.1 to the Registrants Quarterly Report
on
Form 10-Q for the quarter ended June 30,
2001, filed on August 14, 2001.3.3
    
    Amended and Restated Bylaws
    
    Form 10-K for the year ended December 31, 2003,
filed on March 3, 2004.10.1
    
    Amendments to Stock Option Plans*
    
    Exhibit 10.1 to the Registrants quarterly
report on
Form 10-Q for the quarter ended September 30,
2003 filed on November 14, 2003.10.4
    
    2004 Restricted Stock Incentive Plan
    
    Appendix A to the Registrants Definitive
Proxy Statement filed on April 12, 2004.10.5
    
    1998 Ryan Beck Stock Option Plan*
    
    Appendix A, Exhibit B to the Registrants
Registration statement on Form S-4 filed on
May 26, 1998 (Registration No. 333-53107.)10.6
    
    BankAtlantic Bancorp 2000 Non-qualified Stock
Option Plan
    
    Form 10-K for the year ended December 31, 2001,
filed on March 30, 2002.10.7
    
    BankAtlantic Bancorp 1996 Stock Option Plan*
    
    Appendix A to the Registrants Definitive
Proxy Statement filed on April 25, 1996.10.8
    
    BankAtlantic Bancorp 1998 Stock Option Plan*
    
    Appendix A to the Registrants Definitive
Proxy Statement filed on March 16, 1998.10.9
    
    BankAtlantic Bancorp, Inc. Restricted Stock
Award Plan for Key Employees of Ryan,
Beck & Co., Inc.*
    
    Exhibit 10.9 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 1998
filed on March 26, 1999.10.10
    
    BankAtlantic Bancorp, Inc. - Ryan Beck
Restricted Stock Incentive Plan*
    
    Exhibit 10.10 to the Registrants Annual Report
on Form 10-K for the year ended December 31, 1998
filed on March 26, 1999.10.11
    
    BankAtlantic Bancorp-Ryan Beck Executive
Incentive Plan*
    
    Appendix B to the Registrants Definitive Proxy
Statement filed on June 22, 1999.10.12
    
    BankAtlantic Bancorp 1999 Stock Option Plan*
    
    Appendix C to the Registrants Definitive Proxy
Statement filed on June 22, 1999.10.13
    
    BankAtlantic Bancorp 1999 Non-qualified Stock
Option Plan*
    
    Form 10-K for the year ended December 31, 2001,
filed on March 30, 2002.10.15
    
    Columbus Bank and Trust Company Loan
Agreement, dated as of September 17, 2001
    
    Form 10-K for the year ended
December 31, 2001, filed on March 30, 2002.10.16
    
    First Modification of Columbus Bank and Trust
Company Loan Agreement, dated January 23,
2004
    
    Form 10-K for the year ended December 31, 2003
filed on March 3, 2004.10.17
    
    Employment agreement of Ben A. Plotkin
    
    Appendix A, Exhibit D to the Registrants
Registration statement on Form S-4 filed on
May 26, 1998 (Registration No. 333-53107.)10.18
    
    Employment agreement of Lloyd B. DeVaux
    
    Form 10-K for the year ended December 31, 2001,
filed on March 30, 2002.10.19 (a)
    
    BankAtlantic Split Dollar Life Insurance Plan
    
    Form 10-K for the year ended December 31, 2001,
filed on March 30, 2002.10.19 (b)
    
    BankAtlantic Split Dollar Life Insurance Plan
Agreement with Alan B. Levan
    
    Form 10-K for the year ended December 31, 2001,
filed on March 30, 2002.10.19 (c)
    
    Corrective amendment to BankAtlantic Split
Dollar Life Insurance Plan Agreement
    
    Form 10-K for the year ended December 31, 2001,
filed on March 30, 2002.10.20
    
    Indenture for the Registrants 8.50% Junior
Subordinated Debentures due 2027 held by BBC
Capital Trust II
    
    Exhibit 4.4 to the Registrants form S-3A, filed
on October 24, 2001 (Registration 333-71594
and 333-71594-01.)




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Reference10.21
    
    Amended and Restated Trust Agreement of BBC
Capital Trust II
    
    Exhibit 4.9 to the Registrants Registration
Statement From S-3A, filed on October 27, 2001
(Registration Nos. 333-71594 and 333-71594-01).10.22
    
    Amended and Restated Declaration of Trust of
BBC Capital Statutory Trust III
    
    Exhibit 10.1 to the Registrants quarterly
report on Form 10-Q for the quarter ended June
30, 2002 filed on August 14, 2002.10.23
    
    Indenture for the Registrants Floating Rate
Junior Subordinated Deferrable Interest
Debentures held by BBC Capital Trust III
    
    Exhibit 10.2 to the Registrants quarterly
report on Form 10-Q for the quarter ended June
30, 2002 filed on August 14, 2002.10.24
    
    Amended and Restated Declaration of Trust of
BBC Capital Statutory Trust IV
    
    Exhibit 10.1 to the Registrants quarterly
report on Form 10-Q for the quarter ended
September 30, 2002 filed on November 14, 2002.10.25
    
    Indenture for the Registrants Floating Rate
Junior Subordinated Deferrable Interest
Debentures due 2032 held by BBC Capital
Statutory Trust IV
    
    Exhibit 10.2 to the Registrants quarterly
report on Form 10-Q for the quarter ended
September 30, 2002 filed on November 14, 2002.10.26
    
    Amended and Restated Trust Agreement of BBC
Capital Trust V
    
    Exhibit 10.3 to the Registrants quarterly
report on Form 10-Q for the quarter ended
September 30, 2002 filed on November 14, 2002.10.27
    
    Indenture for the Registrants Floating Rate
Junior Subordinated Notes due 2032 held by
BBC Capital Trust V
    
    Exhibit 10.3 to the Registrants quarterly
report on Form 10-Q for the quarter ended
September 30, 2002 filed on November 14, 2002.10.28
    
    Indenture for the Companys Floating Rate
Junior Subordinated Notes due 2032 held by
BBC Capital Trust VI
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.29
    
    Amended and Restated Trust Agreement of BBC
    
    Form 10-K for the year ended December 31, 2002,Capital Trust VI
    
    filed on March 31, 2003.10.30
    
    Indenture for the Companys Floating Rate
Junior Subordinated Deferrable Interest
Debentures due 2032 held by BBC Capital
Statutory Trust VII
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.31
    
    Amended and Restated Declaration of Trust of
BBC Capital Statutory Trust VII
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.32
    
    Indenture for the Companys Floating Rate
Junior Subordinated Debt Securities due 2033
held by BBC Capital Trust VIII
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.33
    
    Amended and Restated Declaration of Trust of
BBC Capital Trust VIII
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.34
    
    Indenture for the Companys Floating Rate
Junior Subordinated Debt Securities due 2033
held by BBC Capital Trust IX
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.35
    
    Amended and Restated Declaration of Trust of
BBC Capital Trust IX
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.36
    
    Indenture for BankAtlantics Floating Rate
Subordinated Debt Securities due 2012
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.37
    
    Amendment to the BankAtlantic Bancorp, Inc.
1999 Stock Option Plan
    
    Form 10-K for the year ended December 31, 2002,
filed on March 31, 2003.10.38
    
    Amended and Restated BankAtlantic Bancorp
2001 Option Plan
    
    Appendix B to the Registrants Definitive Proxy
Statement filed on April 18, 2002.10.39
    
    Amended and Restated Declaration of Trust of
BBC Capital Statutory Trust X
    
    Exhibit 10.1 to the Registrants quarterly
report on
Form 10-Q for the quarter ended March 31,
2003 filed on May 15, 2003.10.40
    
    Indenture for the Companys Floating Rate
Junior Subordinated Deferrable Interest
Debentures due 2033 held by BBC Capital
Statutory Trust X
    
    Exhibit 10.2 to the Registrants quarterly
report on
Form 10-Q for the quarter ended March 31, 2003
filed on May 15, 2003.10.41
    
    Amended and Restated Declaration of Trust of
BBC Capital Statutory Trust XI
    
    Exhibit 10.3 to the Registrants quarterly
report on
Form 10-Q for the quarter ended March 31,
2003 filed on May 15, 2003.




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Reference10.42
    
    Indenture for the Companys Floating Rate
Junior Subordinated Deferrable Interest
Debentures due 2033 held by BBC Capital
Statutory Trust XI
    
    Exhibit 10.4 to the Registrants quarterly
report on
Form 10-Q for the quarter ended March 31, 2003
filed on May 15, 2003.10.43
    
    Amended and Restated Declaration of Trust of
BBC Capital Statutory Trust XII
    
    Exhibit 10.5 to the Registrants quarterly
report on
Form 10-Q for the quarter ended March 31,
2003 filed on May 15, 2003.10.44
    
    Indenture for the Companys Floating Rate
Junior Subordinated Deferrable Interest
Debentures due 2033 held by BBC Capital
Statutory Trust XII
    
    Exhibit 10.6 to the Registrants quarterly
report on
Form 10-Q for the quarter ended March 31, 2003
filed on May 15, 2003.12.1
    
    Ratio of Earnings to Fixed Charges.
    
    Filed with this Report.21.1
    
    Subsidiaries of the Registrant.
    
    Filed with this Report.23.1
    
    Consent of PricewaterhouseCoopers LLP
    
    Filed with this Report.23.2
    
    Consent of KPMG LLP
    
    Filed with this Report.31.1
    
    Certification of Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed with this Report.31.2
    
    Certification of the Chief Executive Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed with this Report.32.1
    
    Certification pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
    
    Filed with this Report.32.2
    
    Certification pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
    
    Filed with this Report.
    Reports on Form 8-K None.




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) 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.March 16, 2005
    
    
    
    
    
    By:
    
    /s/ Alan B. LevanAlan B. Levan, Chairman of the Board,President and Chief Executive Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the capacities indicated. Signature
    
    Title/s/ Alan B. Levan
    
    Chairman of the Board, President and Chief Executive OfficerAlan B. Levan/s/ John E Abdo
    
    Vice Chairman of the BoardJohn E. Abdo/s/ James A. White
    
    Executive Vice President and Chief
Financial OfficerJames A. White/s/ Steven M. Coldren
    
    DirectorSteven M. Coldren/s/ Mary E. Ginestra
    
    DirectorMary E. Ginestra/s/ Bruno Di Giulian
    
    DirectorBruno Di Giulian/s/ Charlie C. Winningham, II
    
    DirectorCharlie C. Winningham, II/s/ Jarett S. Levan
    
    DirectorJarett S. Levan/s/ Jonathan Mariner
    
    DirectorJonathan Mariner/s/ D. Keith Cobb
    
    DirectorD. Keith Cobb/s/ Willis Holcombe
    
    DirectorWillis Holcombe