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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarter Ended September 30, 2006
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number 001-09071
 BFC Financial Corporation
  Florida
    
    59-2022148(State of Organization)
    
    (IRS Employer Identification Number)2100 West Cypress Creek RoadFort Lauderdale, Florida
    
    33309(Address of Principal Executive Office)
    
    (Zip Code)
 Registrants telephone number, including area code
 Not Applicable
  þ o
  o þ o
  o þ




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PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Consolidated Statements of Financial Condition as of September 30, 2006 and December 31, 2005  UnauditedConsolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 2006 and 2005  UnauditedConsolidated Statements of Comprehensive Income (Loss) for the Three and Nine Month Periods Ended September 30, 2006 and 2005  UnauditedConsolidated Statements of Shareholders Equity as of September 30, 2006 and December 31, 2005  UnauditedConsolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2006 and 2005  UnauditedNotes to Unaudited Consolidated Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1.A
    
    Risk FactorsItem 6.
    
    ExhibitsSIGNATURESEX-31.1 Section 302 Chief Executive Officer CertificationEX-31.2 Section 302 Chief Financial Officer CertificationEX-32.1 Section 906 Chief Executive Officer CertificationEX-32.2 Section 906 Chief Financial Officer Certification
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BFC Financial Corporation
 
 Consolidated Statements of Financial Condition   Unaudited
 (In thousands, except share data)
 September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCash and due from depository institutions
    
    $
    213,216
    
    
    $
    302,208Federal funds sold and other short-term investments
    
    
    1,481
    
    
    
    3,229Securities owned (at fair value)
    
    
    186,588
    
    
    
    180,292Securities available for sale (at fair value)
    
    
    665,950
    
    
    
    676,660Investment securities and tax certificates (approximate fair value:$422,239 in 2006 and $384,646 in 2005)
    
    
    419,024
    
    
    
    384,968Federal Home Loan Bank stock, at cost which approximates fair value
    
    
    87,867
    
    
    
    69,931Loans receivable, net of allowance for loan losses
of $43,106 in 2006 and $41,830 in 2005
    
    
    4,628,263
    
    
    
    4,629,566Residential loans held for sale
    
    
    15,251
    
    
    
    2,538Real estate held for development and sale
    
    
    870,104
    
    
    
    632,597Investments in unconsolidated affiliates
    
    
    122,320
    
    
    
    110,124Property and equipment, net
    
    
    271,838
    
    
    
    198,433Accrued interest receivable
    
    
    46,177
    
    
    
    41,496Goodwill
    
    
    76,674
    
    
    
    77,981Core deposit intangible asset
    
    
    7,221
    
    
    
    8,395Due from clearing agent
    
    
    13,579
    
    
    
    Other assets
    
    
    68,706
    
    
    
    65,608Total assets
    
    $
    7,694,259
    
    
    $
    7,384,026LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Deposits:Demand
    
    $
    1,011,531
    
    
    $
    1,019,949NOW
    
    
    723,211
    
    
    
    755,708Savings
    
    
    370,169
    
    
    
    313,889Money market
    
    
    695,591
    
    
    
    846,441Certificates of deposits
    
    
    874,956
    
    
    
    816,689Total deposits
    
    
    3,675,458
    
    
    
    3,752,676Customer deposits on real estate held for sale
    
    
    54,017
    
    
    
    51,686Advances from FHLB
    
    
    1,687,062
    
    
    
    1,283,532Securities sold under agreements to repurchase
    
    
    84,851
    
    
    
    109,788Federal funds purchased and other short term borrowings
    
    
    51,435
    
    
    
    139,475Secured borrowings
    
    
    
    
    
    
    138,270Subordinated debentures, notes and bonds payable
    
    
    548,416
    
    
    
    392,784Junior subordinated debentures
    
    
    348,318
    
    
    
    317,390Securities sold not yet purchased
    
    
    68,820
    
    
    
    35,177Due to clearing agent
    
    
    40,842
    
    
    
    24,486Deferred tax liabilities, net
    
    
    8,786
    
    
    
    10,692Other liabilities
    
    
    242,511
    
    
    
    248,468Total liabilities
    
    
    6,810,516
    
    
    
    6,504,424Noncontrolling interest
    
    
    706,336
    
    
    
    696,522Commitments and contingenciesShareholders equity:Preferred stock of $.01 par value; authorized 10,000,000 shares;
5% Cumulative Convertible Preferred Stock (5% Preferred Stock)
issued and outstanding 15,000 shares in 2006 and 2005
    
    
    
    
    
    
    Class A Common Stock of $.01 par value, authorized 70,000,000 shares;
issued and outstanding 28,714,446 in 2006 and 29,949,612 in 2005
    
    
    265
    
    
    
    278Class B Common Stock of $.01 par value, authorized 20,000,000 shares;
issued and outstanding 7,132,088 in 2006 and 4,285,413 in 2005
    
    
    69
    
    
    
    41Additional paid-in capital
    
    
    93,397
    
    
    
    97,223Unearned compensation  restricted stock grants
    
    
    
    
    
    
    (100
    )Retained earnings
    
    
    83,045
    
    
    
    85,113Total shareholders equity before
accumulated other comprehensive income
    
    
    176,776
    
    
    
    182,555Accumulated other comprehensive income
    
    
    631
    
    
    
    525Total shareholders equity
    
    
    177,407
    
    
    
    183,080Total liabilities and shareholders equity
    
    $
    7,694,259
    
    
    $
    7,384,026
 See accompanying notes to unaudited consolidated financial statements.
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BFC Financial Corporation
 
 Consolidated Statements of Operations  Unaudited
 (In thousands, except per share data)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005RevenuesBFC ActivitiesInterest and dividend income
    
    $
    623
    
    
    $
    530
    
    
    $
    1,718
    
    
    $
    1,004Other income
    
    
    162
    
    
    
    230
    
    
    
    1,064
    
    
    
    556785
    
    
    
    760
    
    
    
    2,782
    
    
    
    1,560Financial ServicesInterest and dividend income
    
    
    98,972
    
    
    
    92,869
    
    
    
    283,411
    
    
    
    266,938Broker/dealer revenue
    
    
    45,205
    
    
    
    50,201
    
    
    
    151,148
    
    
    
    187,608Other income
    
    
    35,822
    
    
    
    25,723
    
    
    
    102,511
    
    
    
    74,262179,999
    
    
    
    168,793
    
    
    
    537,070
    
    
    
    528,808Homebuilding & Real Estate DevelopmentSales of real estate
    
    
    130,939
    
    
    
    128,520
    
    
    
    387,140
    
    
    
    434,480Interest and dividend income
    
    
    669
    
    
    
    588
    
    
    
    1,903
    
    
    
    1,554Other income
    
    
    3,693
    
    
    
    2,277
    
    
    
    9,237
    
    
    
    5,741135,301
    
    
    
    131,385
    
    
    
    398,280
    
    
    
    441,775Total revenues
    
    
    316,085
    
    
    
    300,938
    
    
    
    938,132
    
    
    
    972,143Costs and ExpensesBFC ActivitiesInterest expense
    
    
    1
    
    
    
    23
    
    
    
    17
    
    
    
    335Employee compensation and benefits
    
    
    2,339
    
    
    
    1,864
    
    
    
    7,075
    
    
    
    4,684Other expenses
    
    
    716
    
    
    
    886
    
    
    
    2,236
    
    
    
    2,3423,056
    
    
    
    2,773
    
    
    
    9,328
    
    
    
    7,361Financial ServicesInterest expense, net of interest capitalized
    
    
    46,410
    
    
    
    38,484
    
    
    
    124,476
    
    
    
    105,824Provision for (recovery from) loan losses
    
    
    271
    
    
    
    (3,410
    )
    
    
    414
    
    
    
    (6,506
    )Employee compensation and benefits
    
    
    79,573
    
    
    
    68,455
    
    
    
    239,784
    
    
    
    212,641Occupancy and equipment
    
    
    19,181
    
    
    
    14,853
    
    
    
    52,944
    
    
    
    42,043Advertising and promotion
    
    
    10,383
    
    
    
    6,667
    
    
    
    28,984
    
    
    
    21,034Impairment of property and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,706Cost associated with debt redemption
    
    
    
    
    
    
    
    
    
    
    1,457
    
    
    
    Other expenses
    
    
    23,034
    
    
    
    21,209
    
    
    
    69,956
    
    
    
    60,688178,852
    
    
    
    146,258
    
    
    
    518,015
    
    
    
    439,430Homebuilding & Real Estate DevelopmentCost of sales of real estate
    
    
    104,520
    
    
    
    98,395
    
    
    
    307,485
    
    
    
    312,711Employee compensation and benefits
    
    
    13,136
    
    
    
    9,830
    
    
    
    38,426
    
    
    
    30,790Selling, general and administrative expenses
    
    
    19,288
    
    
    
    10,054
    
    
    
    50,609
    
    
    
    31,419Other expenses
    
    
    615
    
    
    
    1,448
    
    
    
    7,906
    
    
    
    3,390137,559
    
    
    
    119,727
    
    
    
    404,426
    
    
    
    378,310Total costs and expenses
    
    
    319,467
    
    
    
    268,758
    
    
    
    931,769
    
    
    
    825,101Equity earnings from unconsolidated affiliates
    
    
    7,061
    
    
    
    5,886
    
    
    
    10,185
    
    
    
    13,153Income before income taxes and noncontrolling interest
    
    
    3,679
    
    
    
    38,066
    
    
    
    16,548
    
    
    
    160,195Provision for income taxes
    
    
    539
    
    
    
    14,328
    
    
    
    3,290
    
    
    
    65,054Noncontrolling interest
    
    
    4,308
    
    
    
    21,589
    
    
    
    14,764
    
    
    
    85,663(Loss) income from continuing operations
    
    
    (1,168
    )
    
    
    2,149
    
    
    
    (1,506
    )
    
    
    9,478Loss from discontinued operations less income tax benefit of $57 and
$182 for the three and nine months ended September 30, 2005
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (290
    )Net (loss) income
    
    
    (1,168
    )
    
    
    2,057
    
    
    
    (1,506
    )
    
    
    9,1885% Preferred Stock dividends
    
    
    187
    
    
    
    187
    
    
    
    562
    
    
    
    562Net (loss) income allocable to common stock
    
    $
    (1,355
    )
    
    $
    1,870
    
    
    $
    (2,068
    )
    
    $
    8,626
 (Continued)
 See accompanying notes to unaudited consolidated financial statements.
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BFC Financial Corporation
Consolidated Statements of Operations  Unaudited
(In thousands, except per share data)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(Loss) earnings per share of common stock:Basic (loss) earnings per share from continuing operations
    
    $
    (0.04
    )
    
    $
    0.06
    
    
    $
    (0.06
    )
    
    $
    0.32Basic loss per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Basic (loss) earnings per share
    
    $
    (0.04
    )
    
    $
    0.06
    
    
    $
    (0.06
    )
    
    $
    0.31Diluted (loss) earnings per share from continuing operations
    
    $
    (0.04
    )
    
    $
    0.05
    
    
    $
    (0.06
    )
    
    $
    0.28Diluted loss per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Diluted (loss) earnings per share
    
    $
    (0.04
    )
    
    $
    0.05
    
    
    $
    (0.06
    )
    
    $
    0.27Basic weighted average number of common shares outstanding
    
    
    33,427
    
    
    
    31,751
    
    
    
    33,181
    
    
    
    27,983Diluted weighted average number of common and common
equivalent shares outstanding
    
    
    33,427
    
    
    
    34,121
    
    
    
    33,181
    
    
    
    30,471
 See accompanying notes to unaudited consolidated financial statements.
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BFC Financial Corporation
 
 Consolidated Statements of Comprehensive Income (Loss)  Unaudited
 (In thousands)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net (loss) income
    
    $
    (1,168
    )
    
    $
    2,057
    
    
    $
    (1,506
    )
    
    $
    9,188Other comprehensive (loss) income, net of tax:Unrealized (loss) gain on securities available for sale, net of income tax
    
    
    1,012
    
    
    
    (56
    )
    
    
    662
    
    
    
    (51
    )Unrealized gain associated with investment in unconsolidated
real estate affiliates, net of income tax
    
    
    86
    
    
    
    11
    
    
    
    63
    
    
    
    27Reclassification adjustment for net gain included in net income
    
    
    (188
    )
    
    
    (14
    )
    
    
    (619
    )
    
    
    (31
    )910
    
    
    
    (59
    )
    
    
    106
    
    
    
    (55
    )Comprehensive (loss) income
    
    $
    (258
    )
    
    $
    1,998
    
    
    $
    (1,400
    )
    
    $
    9,133
  See accompanying notes to unaudited consolidated financial statements.
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BFC Financial Corporation
 
 Consolidated Statements of Shareholders Equity  Unaudited

(In thousands)
 Unearned
    
    
    
    
    
    
    AccumulatedCompen-
    
    
    
    
    
    
    Othersation
    
    
    
    
    
    
    Compre-Class A
    
    
    Class B
    
    
    Additional
    
    
    Restricted
    
    
    
    
    
    
    hensiveCommon
    
    
    Common
    
    
    Paid-in
    
    
    Stock
    
    
    Retained
    
    
    IncomeStock
    
    
    Stock
    
    
    Capital
    
    
    Grants
    
    
    Earnings
    
    
    (Loss)
    
    
    TotalBalance, December 31, 2005
    
    $
    278
    
    
    $
    41
    
    
    $
    97,223
    
    
    $
    (100
    )
    
    $
    85,113
    
    
    $
    525
    
    
    $
    183,080Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,506
    )
    
    
    
    
    
    
    (1,506
    )Other
comprehensive income, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    106Issuance of Class B Common Stock,
upon exercise of stock options
    
    
    
    
    
    
    39
    
    
    
    9,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,115Retirement of Common Stock relating to
exercise of stock options (1)
    
    
    (13
    )
    
    
    (11
    )
    
    
    (13,246
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,270
    )Net effect of subsidiaries capital
transactions, net of taxes
    
    
    
    
    
    
    
    
    
    
    (267
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (267
    )Cash dividends on 5% Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (562
    )
    
    
    
    
    
    
    (562
    )Share-based compensation related
to stock options and restricted stock
    
    
    
    
    
    
    
    
    
    
    711
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    711Adoption of FAS 123R
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Balance, September 30, 2006
    
    $
    265
    
    
    $
    69
    
    
    $
    93,397
    
    
    $
    
    
    
    $
    83,045
    
    
    $
    631
    
    
    $
    177,407
 
 (1)
    
    Retirement of shares delivered to the Company as consdieration for the exercise price and
minimum withholding tax amounts upon the exercise of options. See accompanying notes to unaudited consolidated financial statements.
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BFC Financial Corporation
 
 Consolidated Statements of Cash Flows  Unaudited
 (In thousands)
 For the Nine MonthsEnded September 30,2006
    
    
    2005Operating activities:(Loss) income from continuing operations
    
    $
    (1,506
    )
    
    $
    9,478Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (290
    )Adjustment to reconcile net (loss) income to net cash
used in operating activities:Noncontrolling interest in income of consolidated subsidiaries
    
    
    14,764
    
    
    
    85,663Provision for (recovery from) loan losses, REO and
and tax certificates and valuation allowances, net
    
    
    639
    
    
    
    (6,306
    )Depreciation, amortization and accretion, net
    
    
    17,997
    
    
    
    15,579Amortization of deferred revenue
    
    
    3,619
    
    
    
    2,221Amortization of intangible assets
    
    
    1,174
    
    
    
    1,226BFC share based compensation expense related
to stock option and restricted stock
    
    
    711
    
    
    
    Controlling subsidiaries share based compensation expense
related to stock options and restricted stock
    
    
    6,096
    
    
    
    BankAtlantic Bancorp excess tax benefits from share-based compensation
    
    
    (3,664
    )
    
    
    Securities activities, net
    
    
    (7,586
    )
    
    
    (373
    )Net gains on sale of real estate owned
    
    
    (1,055
    )
    
    
    (1,264
    )Net gains on sales of loans held for sale
    
    
    (469
    )
    
    
    (521
    )Gains on sales of property and equipment
    
    
    (3,104
    )
    
    
    (293
    )Gain on sale of branch
    
    
    
    
    
    
    (922
    )(Increase) decrease in deferred tax liabilities
    
    
    (2,163
    )
    
    
    4,398Equity earnings of unconsolidated affiliates
    
    
    (8,944
    )
    
    
    (12,743
    )Net gains associated with debt redemptions
    
    
    (71
    )
    
    
    Impairment of inventory and long lived assets
    
    
    6,049
    
    
    
    Impairment of office properties and equipment
    
    
    
    
    
    
    3,706Increase of forgivable notes receivable
    
    
    (4,792
    )
    
    
    (3,366
    )Originations of loans held for sale, net
    
    
    (79,935
    )
    
    
    (113,021
    )Proceeds from sales of loans held for sale
    
    
    67,692
    
    
    
    109,509Increase in real estate held for development and sale
    
    
    (250,838
    )
    
    
    (108,641
    )(Increase) decrease in securities owned, net
    
    
    (6,296
    )
    
    
    5,145Increase (decrease) in securities sold but not yet purchased
    
    
    33,643
    
    
    
    (18,774
    )Increase in accrued interest receivable
    
    
    (4,667
    )
    
    
    (3,771
    )Decrease (increase) in other assets
    
    
    2,615
    
    
    
    (5,078
    )Decrease in other notes receivable
    
    
    1,084
    
    
    
    952Increase in due to clearing agent, net
    
    
    2,777
    
    
    
    969Increase in customer deposits on real estate held for sale
    
    
    2,331
    
    
    
    1,917(Decrease) increase in other liabilities
    
    
    (8,774
    )
    
    
    18,478Net cash used in operating activities
    
    $
    (222,673
    )
    
    $
    (16,122
    )
 (continued)
 See accompanying notes to unaudited consolidated financial statements.
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BFC Financial Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 For the Nine MonthsEnded September 30,2006
    
    
    2005Investing activities:Proceeds from redemption and maturities of investment
securities and tax certificates
    
    $
    149,232
    
    
    $
    163,227Purchase of investment securities and tax certificates
    
    
    (182,994
    )
    
    
    (233,538
    )Purchase of securities available for sale
    
    
    (121,619
    )
    
    
    (222,425
    )Proceeds from sales and maturities of securities available for sale
    
    
    140,011
    
    
    
    265,290Purchases of FHLB stock
    
    
    (41,850
    )
    
    
    (23,974
    )Redemption of FHLB stock
    
    
    23,914
    
    
    
    23,662Investments in unconsolidated affiliates and real estate joint ventures
    
    
    (7,872
    )
    
    
    (6,249
    )Distributions from unconsolidated affiliates
    
    
    4,775
    
    
    
    446Net repayments (purchases and originations) of loans
    
    
    (114,084
    )
    
    
    (29,591
    )Proceeds from sales of real estate owned
    
    
    3,338
    
    
    
    3,103Proceeds from the sale of property and equipment
    
    
    1,978
    
    
    
    664Purchases of office property and equipment
    
    
    (79,231
    )
    
    
    (36,348
    )Net cash used in investing activities
    
    
    (224,402
    )
    
    
    (95,733
    )Financing activities:Net (decrease) increase in deposits
    
    
    (77,218
    )
    
    
    254,064Repayments of FHLB advances
    
    
    (1,826,344
    )
    
    
    (1,073,749
    )Proceeds from FHLB advances
    
    
    2,230,000
    
    
    
    1,015,000Decrease in securities sold under agreements to repurchase
    
    
    (24,937
    )
    
    
    (130,192
    )Decrease in federal funds purchased
    
    
    (88,040
    )
    
    
    (76,958
    )Proceeds from secured borrowings
    
    
    
    
    
    
    48,016Repayments of secured borrowings
    
    
    (26,516
    )
    
    
    Repayment of notes and bonds payable
    
    
    (162,222
    )
    
    
    (179,583
    )Proceeds from notes payable
    
    
    317,855
    
    
    
    210,730Proceeds from junior subordinated debentures
    
    
    30,928
    
    
    
    54,124Payment of debt issuance costs
    
    
    (2,475
    )
    
    
    (2,146
    )Net cash outflows from the sale of branch
    
    
    
    
    
    
    (13,605
    )Payment by BFC of minimum withholding tax upon
the exercise of stock options
    
    
    (4,155
    )
    
    
    Proceeds from the issuance of BFC common stock
    
    
    
    
    
    
    50,640BFC issuance costs
    
    
    
    
    
    
    (4,204
    )BFC issuance of common stock upon exercise of stock options
    
    
    
    
    
    
    1725% Preferred Stock dividends paid
    
    
    (562
    )
    
    
    (562
    )Capital contributions in a managed fund by BankAtlantic investors
    
    
    2,200
    
    
    
    BankAtlantic Bancorp excess tax benefits from share-based compensation
    
    
    3,664
    
    
    
    Proceeds from the issuance of BankAtlantic Bancorp Class A common stock
    
    
    1,324
    
    
    
    1,084Payment by BankAtlantic Bancorp of minimum withholding tax
upon the exercise of stock options
    
    
    (2,717
    )
    
    
    (3,519
    )BankAtlantic Bancorp purchase and retirement of its Class A common stock
    
    
    (7,833
    )
    
    
    Purchase by BankAtlantic Bancorp of its subsidiary common stock
    
    
    
    
    
    
    (491
    )BankAtlantic Bancorp common stock dividends paid to non-BFC shareholders
    
    
    (5,625
    )
    
    
    (5,123
    )Change in noncontrolling interest
    
    
    
    
    
    
    625Levitt common stock dividends paid to non-BFC shareholders
    
    
    (992
    )
    
    
    (990
    )Net cash provided by financing activities
    
    
    356,335
    
    
    
    143,333(Decrease) increase in cash and cash equivalents
    
    
    (90,740
    )
    
    
    31,478Cash and cash equivalents at the beginning of period
    
    
    305,437
    
    
    
    224,720Cash and cash equivalents at end of period
    
    $
    214,697
    
    
    $
    256,198
 (continued)
 See accompanying notes to unaudited consolidated financial statements.
 11




---



##### Table of Contents



BFC Financial Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 For the Nine MonthsEnded September 30,2006
    
    2005Cash paid forInterest on borrowings and deposits, net of amounts capitalized
    
    $
    126,218
    
    
    $
    97,130Income taxes paid
    
    
    38,973
    
    
    
    29,846Supplemental disclosure of non-cash operating, investing and
financing activities:Loans transferred to REO
    
    
    2,755
    
    
    
    2,059Net loan recoveries
    
    
    
    
    
    
    1,191Tax certificate net recoveries
    
    
    
    
    
    
    165Increase in joint venture investment resulting from unrealized gain
on non-monetary exchange
    
    
    
    
    
    
    (201
    )Reduction in loans participations sold accounted for as secured borrowings
    
    
    111,754
    
    
    
    Exchange of branch facilities
    
    
    2,350
    
    
    
    Increase (decrease) in accumulated other comprehensive income, net of taxes
    
    
    106
    
    
    
    (55
    )Net (decrease) increase in shareholders equity from
the effect of subsidiaries capital transactions, net of income taxes
    
    
    (267
    )
    
    
    (542
    )Securities purchased pending settlement
    
    
    680
    
    
    
    Issuance and retirement of BFC Common Stock accepted
as consideration for the exercise price of stock options
    
    
    4,155
    
    
    
    Decreases in shareholders equity for the tax effect relating
to share-based compensation
    
    
    
    
    
    
    (12
    )Increase in property and equipment reclassified from inventory
    
    
    7,978
    
    
    
    
 See accompanying notes to unaudited consolidated financial statements.
 12




---



##### Table of Contents



1. Presentation of Interim Financial Statements and Significant Accounting Policies
      Accounting for the Impairment of Disposal of
Long-Lived Assets
 13




---



##### Table of Contents



PercentShares
    
    Percent of
    
    ofOwned
    
    Ownership
    
    VoteBankAtlantic BancorpClass A Common Stock
    
    
    8,329,236
    
    
    
    14.84
    %
    
    
    7.87
    %Class B Common Stock
    
    
    4,876,124
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    13,205,360
    
    
    
    21.65
    %
    
    
    54.87
    %LevittClass A Common Stock
    
    
    2,074,243
    
    
    
    11.15
    %
    
    
    5.91
    %Class B Common Stock
    
    
    1,219,031
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    3,293,274
    
    
    
    16.61
    %
    
    
    52.91
    %
    14




---



##### Table of Contents



Allowance for Loan Losses
   
    
    Delinquency and charge-off levels and trends;
    
    Problem loans and non-accrual levels and trends;
    
    Lending policy and underwriting procedures;
    
    Lending management and staff;
    
    Nature and volume of portfolio;
    
    Economic and business conditions;
    
    Concentration of credit;
    
    Quality of loan review system; and
    
    External factors
   2. Segment Reporting
  15




---



##### Table of Contents



BFC Activities
  Financial Services
  Homebuilding & Real Estate Development
   16




---



##### Table of Contents



Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2006
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    130,939
    
    
    $
    
    
    
    $
    130,939Interest and dividend income
    
    
    634
    
    
    
    98,972
    
    
    
    812
    
    
    
    (154
    )
    
    
    100,264Broker/dealer revenue
    
    
    
    
    
    
    45,205
    
    
    
    
    
    
    
    
    
    
    
    45,205Other income
    
    
    709
    
    
    
    35,942
    
    
    
    3,692
    
    
    
    (666
    )
    
    
    39,6771,343
    
    
    
    180,119
    
    
    
    135,443
    
    
    
    (820
    )
    
    
    316,085Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    104,520
    
    
    
    
    
    
    
    104,520Interest expense, net
    
    
    1
    
    
    
    46,564
    
    
    
    
    
    
    
    (154
    )
    
    
    46,411Provision for loan losses
    
    
    
    
    
    
    271
    
    
    
    
    
    
    
    
    
    
    
    271Other expenses
    
    
    3,197
    
    
    
    132,383
    
    
    
    33,351
    
    
    
    (666
    )
    
    
    168,2653,198
    
    
    
    179,218
    
    
    
    137,871
    
    
    
    (820
    )
    
    
    319,467Equity in earnings from
unconsolidated affiliates
    
    
    
    
    
    
    266
    
    
    
    6,795
    
    
    
    
    
    
    
    7,061Income (loss) before income taxes
    
    
    (1,855
    )
    
    
    1,167
    
    
    
    4,367
    
    
    
    
    
    
    
    3,679Provision (benefit) for income taxes
    
    
    315
    
    
    
    (1,171
    )
    
    
    1,395
    
    
    
    
    
    
    
    539Income (loss)
before noncontrolling interest
    
    
    (2,170
    )
    
    
    2,338
    
    
    
    2,972
    
    
    
    
    
    
    
    3,140Noncontrolling interest
    
    
    (4
    )
    
    
    1,834
    
    
    
    2,478
    
    
    
    
    
    
    
    4,308Net (loss) income
    
    $
    (2,166
    )
    
    $
    504
    
    
    $
    494
    
    
    $
    
    
    
    $
    (1,168
    )At September 30, 2006Total assets
    
    $
    46,049
    
    
    $
    6,570,440
    
    
    $
    1,115,979
    
    
    $
    (38,209
    )
    
    $
    7,694,259
 Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2005
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    128,520
    
    
    $
    
    
    
    $
    128,520Interest and dividend income
    
    
    539
    
    
    
    92,929
    
    
    
    607
    
    
    
    (88
    )
    
    
    93,987Broker/dealer revenue
    
    
    
    
    
    
    50,368
    
    
    
    
    
    
    
    (167
    )
    
    
    50,201Other income
    
    
    228
    
    
    
    25,994
    
    
    
    2,279
    
    
    
    (271
    )
    
    
    28,230767
    
    
    
    169,291
    
    
    
    131,406
    
    
    
    (526
    )
    
    
    300,938Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    98,455
    
    
    
    (60
    )
    
    
    98,395Interest expense, net
    
    
    23
    
    
    
    38,511
    
    
    
    
    
    
    
    (27
    )
    
    
    38,507Recovery for loan losses
    
    
    
    
    
    
    (3,410
    )
    
    
    
    
    
    
    
    
    
    
    (3,410
    )Other expenses
    
    
    2,836
    
    
    
    111,184
    
    
    
    21,518
    
    
    
    (272
    )
    
    
    135,2662,859
    
    
    
    146,285
    
    
    
    119,973
    
    
    
    (359
    )
    
    
    268,758Equity in earnings from
unconsolidated affiliates
    
    
    
    
    
    
    142
    
    
    
    5,744
    
    
    
    
    
    
    
    5,886Income (loss) before income taxes
    
    
    (2,092
    )
    
    
    23,148
    
    
    
    17,177
    
    
    
    (167
    )
    
    
    38,066Provision (benefit) for income
taxes
    
    
    1,041
    
    
    
    6,888
    
    
    
    6,469
    
    
    
    (70
    )
    
    
    14,328Income (loss)
before noncontrolling interest
    
    
    (3,133
    )
    
    
    16,260
    
    
    
    10,708
    
    
    
    (97
    )
    
    
    23,738Noncontrolling interest
    
    
    17
    
    
    
    12,720
    
    
    
    8,928
    
    
    
    (76
    )
    
    
    21,589Net (loss) income
    
    $
    (3,150
    )
    
    $
    3,540
    
    
    $
    1,780
    
    
    $
    (21
    )
    
    $
    2,149At September 30, 2005Total assets
    
    $
    57,613
    
    
    $
    6,482,713
    
    
    $
    786,934
    
    
    $
    (48,362
    )
    
    $
    7,278,898
 17




---



##### Table of Contents



Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2006
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    387,140
    
    
    $
    
    
    
    $
    387,140Interest and dividend income
    
    
    1,750
    
    
    
    283,411
    
    
    
    2,324
    
    
    
    (453
    )
    
    
    287,032Broker/dealer revenue
    
    
    
    
    
    
    151,148
    
    
    
    
    
    
    
    
    
    
    
    151,148Other income
    
    
    2,740
    
    
    
    102,827
    
    
    
    9,236
    
    
    
    (1,991
    )
    
    
    112,8124,490
    
    
    
    537,386
    
    
    
    398,700
    
    
    
    (2,444
    )
    
    
    938,132Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    307,485
    
    
    
    
    
    
    
    307,485Interest expense, net
    
    
    17
    
    
    
    124,929
    
    
    
    
    
    
    
    (453
    )
    
    
    124,493Provision for loan losses
    
    
    
    
    
    
    414
    
    
    
    
    
    
    
    
    
    
    
    414Other expenses
    
    
    9,691
    
    
    
    393,814
    
    
    
    97,863
    
    
    
    (1,991
    )
    
    
    499,3779,708
    
    
    
    519,157
    
    
    
    405,348
    
    
    
    (2,444
    )
    
    
    931,769Equity in earnings from
unconsolidated affiliates
    
    
    
    
    
    
    1,364
    
    
    
    8,821
    
    
    
    
    
    
    
    10,185Income (loss) before income taxes
    
    
    (5,218
    )
    
    
    19,593
    
    
    
    2,173
    
    
    
    
    
    
    
    16,548Provision for income taxes
    
    
    271
    
    
    
    2,421
    
    
    
    598
    
    
    
    
    
    
    
    3,290Income (loss)
before noncontrolling interest
    
    
    (5,489
    )
    
    
    17,172
    
    
    
    1,575
    
    
    
    
    
    
    
    13,258Noncontrolling interest
    
    
    (8
    )
    
    
    13,459
    
    
    
    1,313
    
    
    
    
    
    
    
    14,764Net (loss) income
    
    $
    (5,481
    )
    
    $
    3,713
    
    
    $
    262
    
    
    $
    
    
    
    $
    (1,506
    )At September 30, 2006Total assets
    
    $
    46,049
    
    
    $
    6,570,440
    
    
    $
    1,115,979
    
    
    $
    (38,209
    )
    
    $
    7,694,259
 Homebuilding
    
    
    AdjustingBFC
    
    
    Financial
    
    
    & Real Estate
    
    
    and2005
    
    Activities
    
    
    Services
    
    
    Development
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    
    
    
    $
    
    
    
    $
    434,480
    
    
    $
    
    
    
    $
    434,480Interest and dividend income
    
    
    1,028
    
    
    
    267,817
    
    
    
    1,814
    
    
    
    (1,163
    )
    
    
    269,496Broker/dealer revenue
    
    
    
    
    
    
    188,969
    
    
    
    
    
    
    
    (1,361
    )
    
    
    187,608Other income
    
    
    598
    
    
    
    74,998
    
    
    
    5,742
    
    
    
    (779
    )
    
    
    80,5591,626
    
    
    
    531,784
    
    
    
    442,036
    
    
    
    (3,303
    )
    
    
    972,143Costs and Expenses:Cost of sale of real estate
    
    
    
    
    
    
    
    
    
    
    313,591
    
    
    
    (880
    )
    
    
    312,711Interest expense, net
    
    
    336
    
    
    
    106,106
    
    
    
    
    
    
    
    (283
    )
    
    
    106,159Recovery for loan losses
    
    
    
    
    
    
    (6,506
    )
    
    
    
    
    
    
    
    
    
    
    (6,506
    )Other expenses
    
    
    7,340
    
    
    
    340,112
    
    
    
    66,065
    
    
    
    (780
    )
    
    
    412,7377,676
    
    
    
    439,712
    
    
    
    379,656
    
    
    
    (1,943
    )
    
    
    825,101Equity in earnings from
unconsolidated affiliates
    
    
    
    
    
    
    410
    
    
    
    12,743
    
    
    
    
    
    
    
    13,153Income (loss) before income taxes
    
    
    (6,050
    )
    
    
    92,482
    
    
    
    75,123
    
    
    
    (1,360
    )
    
    
    160,195Provision (benefit) for income taxes
    
    
    5,266
    
    
    
    31,807
    
    
    
    28,545
    
    
    
    (564
    )
    
    
    65,054Income (loss)
before noncontrolling interest
    
    
    (11,316
    )
    
    
    60,675
    
    
    
    46,578
    
    
    
    (796
    )
    
    
    95,141Noncontrolling interest
    
    
    35
    
    
    
    47,414
    
    
    
    38,837
    
    
    
    (623
    )
    
    
    85,663Net (loss) income
    
    $
    (11,351
    )
    
    
    13,261
    
    
    $
    7,741
    
    
    $
    (173
    )
    
    $
    9,478At September 30, 2005Total assets
    
    $
    57,613
    
    
    $
    6,482,713
    
    
    $
    786,934
    
    
    $
    (48,362
    )
    
    $
    7,278,898
 18




---



##### Table of Contents



HomebuildingFinancial
    
    
    & Real EstateServices
    
    
    Development
    
    
    TotalBalance as of December 31, 2005
    
    $
    76,674
    
    
    $
    1,307
    
    
    $
    77,981Impairment of goodwill (a)
    
    
    
    
    
    
    (1,307
    )
    
    
    (1,307
    )Balance as of September 30, 2006
    
    $
    76,674
    
    
    $
    
    
    
    $
    76,674
 
 (a)
    
    In the nine months ended September 30, 2006 the Companys Homebuilding & Real Estate
Development segment recognized an impairment charge of $1.3 million in goodwill associated
with Levitts Tennessee operations (see note 10). 3. Stock Based Compensation
    19




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2005
    
    
    September 30, 2005Net income allocable to common shareholders, as
reported
    
    $
    1,870
    
    
    $
    8,626Add: Stock-based employee compensation
expense included in reported net income, net of
Related tax effects and minority interest
    
    
    14
    
    
    
    33Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related income tax
effects and minority interest
    
    
    (414
    )
    
    
    (825
    )Pro forma net income
    
    $
    1,470
    
    
    $
    7,834Earnings per share:Basic as reported
    
    $
    0.06
    
    
    $
    0.31Basic pro forma
    
    $
    0.05
    
    
    $
    0.28Diluted as reported
    
    $
    0.05
    
    
    $
    0.27Diluted pro forma
    
    $
    0.04
    
    
    $
    0.24
 BFC Activities Segment
     20




---



##### Table of Contents



Stock Price
    
    $
    6.36Exercise Price
    
    $
    6.36Interest Rate
    
    
    5.01
    %Dividend Rate
    
    
    0.00
    %Volatility
    
    
    44.22
    %Option Life (years)
    
    
    7.5Option Value
    
    $
    3.54Annual Forfeiture Rate
    
    
    0.00
    %
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2006Outstanding Options at Beginning of Period
    
    
    1,607,087
    
    
    
    5,299,569Granted
    
    
    
    
    
    
    236,500Exercised
    
    
    
    
    
    
    (3,928,982
    )Forfeited
    
    
    
    
    
    
    Outstanding Options at September 30, 2006
    
    
    1,607,087
    
    
    
    1,607,087Exercisable at September 30, 2006
    
    
    
    
    
    
    364,527Available for grant at September 30, 2006
    
    
    
    
    
    
    2,479,448
  As of and for the NineFor the Three Months
    
    MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    2006
    
    2005Weighted average exercise price of options
outstanding
    
    $
    4.88
    
    
    $
    2.92
    
    
    $
    4.88
    
    
    $
    2.92Weighted average exercise price of options granted
    
    $
    
    
    
    $
    8.92
    
    
    $
    6.36
    
    
    $
    8.92Weighted average exercise price of options exercised
    
    $
    
    
    
    $
    
    
    
    $
    2.32
    
    
    $
    1.53Weighted average price of options forfeited
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3.74Weighted average remaining contractual life in years
    
    
    
    
    
    
    
    
    
    
    6.5
    
    
    
    3.4
  21




---



##### Table of Contents



Class A
    
    
    WeightedNonvested
    
    
    AverageRestricted
    
    
    Grant dateStock
    
    
    Fair ValueOutstanding at December 31, 2005
    
    
    11,262
    
    
    $
    100,007Vested
    
    
    (11,262
    )
    
    $
    (100,007
    )Forfeited
    
    
    
    
    
    
    Issued
    
    
    30,028
    
    
    $
    199,986Outstanding at September 30, 2006
    
    
    30,028
    
    
    $
    199,986
  Financial Services Segment  BankAtlantic Bancorp
  Class A
    
    
    WeightedNonvested
    
    
    AverageRestricted
    
    
    Grant DateStock
    
    
    Fair ValueOutstanding at
December 31, 2004
    
    
    147,500
    
    
    $
    7.54Vested
    
    
    (21,817
    )
    
    
    8.41Forfeited
    
    
    
    
    
    
    Issued
    
    
    9,268
    
    
    
    18.88Outstanding at
September 30, 2005
    
    
    134,951
    
    
    $
    8.18Outstanding at
December 31, 2005
    
    
    132,634
    
    
    $
    8.00Vested
    
    
    (29,481
    )
    
    
    10.42Forfeited
    
    
    
    
    
    
    Issued
    
    
    31,389
    
    
    
    14.74Outstanding at
September 30, 2006
    
    
    134,542
    
    
    $
    9.04
 22




---



##### Table of Contents



Employees
    
    DirectorsStock Price
    
    $
    14.76
    
    
    $
    14.53Exercise Price
    
    $
    14.76
    
    
    $
    14.53Interest Rate
    
    
    5.19
    %
    
    
    4.94
    %Dividend Rate
    
    
    1.03
    %
    
    
    1.05
    %Volatility
    
    
    31.43
    %
    
    
    31.83
    %Option Life (years)
    
    
    7.50
    
    
    
    5.00Option Value
    
    $
    6.02
    
    
    $
    4.84Annual Forfeiture Rate
    
    
    3.00
    %
    
    
    0
    %
 23




---



##### Table of Contents



Employees
    
    DirectorsStock Price
    
    $
    19.02
    
    
    $
    18.88Exercise Price
    
    $
    19.02
    
    
    $
    18.88Interest Rate
    
    
    4.10
    %
    
    
    4.10
    %Dividend Rate
    
    
    .74
    %
    
    
    .74
    %Volatility
    
    
    31.00
    %
    
    
    31.00
    %Option Life (years)
    
    
    7.00
    
    
    
    7.00Option Value
    
    $
    7.24
    
    
    $
    7.36Annual Forfeiture Rate
    
    
    2.00
    %
    
    
    0
    %
  BankAtlantic BancorpClass AOutstandingOptionsOutstanding at December 31, 2004
    
    
    6,174,845Exercised
    
    
    (901,537
    )Forfeited
    
    
    (63,452
    )Issued
    
    
    811,071Outstanding at September 30, 2005
    
    
    6,020,927Outstanding at December 31, 2005
    
    
    6,039,253Exercised
    
    
    (1,422,261
    )Forfeited
    
    
    (201,839
    )Issued
    
    
    951,268Outstanding at September 30, 2006
    
    
    5,366,421Available for grant at September 30, 2006
    
    
    4,221,754
  As of or for the NineMonths Ended September 30,2006
    
    2005Weighted average exercise price of options
outstanding
    
    $
    11.22
    
    
    $
    9.04Weighted average exercise price of options exercised
    
    $
    4.13
    
    
    $
    2.48Weighted average price of options forfeited
    
    $
    14.14
    
    
    $
    11.53Weighted average remaining contractual life in years
    
    
    6.5
    
    
    
    5.7
  24




---



##### Table of Contents



Ryan Beck Stock Option Plan:
   Ryan BeckOutstandingOptionsOutstanding at December 31, 2004
    
    
    2,245,500Exercised
    
    
    Forfeited
    
    
    (7,500
    )Issued
    
    
    22,000Outstanding at September 30, 2005
    
    
    2,260,000Outstanding at December 31, 2005
    
    
    2,069,000Exercised
    
    
    Forfeited
    
    
    (82,000
    )Issued
    
    
    377,500Outstanding at September 30, 2006
    
    
    2,364,500Available for grant at September 30, 2006
    
    
    73,000
 As of or for the NineMonths Ended September 30,2006
    
    
    2005Weighted average exercise price of options
outstanding
    
    $
    3.82
    
    
    $
    3.00Weighted average exercise price of options exercised
    
    $
    
    
    
    $
    Weighted average price of options forfeited
    
    $
    4.28
    
    
    $
    5.26Weighted average remaining contractual life in years
    
    
    6.7
    
    
    
    6.8
 25




---



##### Table of Contents



For the Nine MonthsEnded September 30,2006
    
    2005Stock Price
    
    $
    8.74
    
    
    $
    5.46Exercise Price
    
    $
    8.74
    
    
    $
    5.46Interest Rate
    
    
    4.55
    %
    
    
    4.39
    %Dividend Rate
    
    
    0.82
    %
    
    
    0.83
    %Volatility
    
    
    38.25
    %
    
    
    40.90
    %Option Life (years)
    
    
    7.00
    
    
    
    6.00Option Value
    
    $
    3.86
    
    
    $
    2.33Annual Forfeiture
Rate
    
    
    2.96
    %
    
    
    
    %
    Homebuilding & Real Estate Development Segment  Levitt
   Three months ended
    
    Nine months endedSeptember 30, 2006
    
    September 30, 2006Expected volatility
    
    
    37.7204
    %
    
    
    37.3701%  37.7204
    %Expected dividend yield
    
    
    .50%  .61
    %
    
    
    .39%  .61
    %Risk-free interest rate
    
    
    4.987%  5.061
    %
    
    
    4.987%  5.061
    %Expected life
    
    5.0  7.5 years
    
    5.0  7.5 yearsForfeiture rate  executives
    
    
    5
    %
    
    
    5
    %Forfeiture rate  non-executives
    
    
    10
    %
    
    
    10
    %
  26




---



##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber
    
    
    Exercise
    
    
    Contractual
    
    
    Valueof Options
    
    
    Price
    
    
    Term
    
    
    (thousands)Options outstanding at December 31,
2005
    
    
    1,305,176
    
    
    $
    25.59
    
    
    
    
    
    
    $
    Granted
    
    
    689,655
    
    
    
    13.60
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    156,250
    
    
    $
    26.19
    
    
    
    
    
    
    
    Options outstanding at September 30,
2006
    
    
    1,838,581
    
    
    $
    21.04
    
    
    8.65 years
    
    $
    Vested and expected to vest
in the future at September 30, 2006
    
    
    1,504,702
    
    
    $
    21.04
    
    
    8.65 years
    
    $
    Options exercisable at September 30,
2006
    
    
    99,281
    
    
    $
    19.56
    
    
    8.53 years
    
    $
    Stock available for equity
compensation
grants at September 30, 2006
    
    
    1,149,561
  Weighted
    
    WeightedAverage
    
    AverageGrant Date
    
    RemainingShares
    
    Fair Value
    
    Contractual TermUnvested at December 31, 2005
    
    
    1,250,000
    
    
    $
    13.44Grants
    
    
    689,655
    
    
    $
    6.46Vested
    
    
    44,105
    
    
    $
    6.33Forfeited
    
    
    156,250
    
    
    $
    13.23Unvested at September 30, 2006
    
    
    1,739,300
    
    
    $
    10.88
    
    
    8.65 years
  27




---



##### Table of Contents



4. Discontinued Operations
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2005
    
    
    September 30, 2005BFC Activities  RevenuesOther income
    
    $
    44
    
    
    $
    101BFC Activities  ExpensesInterest expense
    
    
    193
    
    
    
    573Loss from discontinued operations
    
    
    (149
    )
    
    
    (472
    )Benefit for income taxes
    
    
    (57
    )
    
    
    (182
    )Loss from discontinued operations, net
of tax
    
    $
    (92
    )
    
    $
    (290
    )
 5. Securities Owned
  28




---



##### Table of Contents



September 30,
    
    
    December 31,2006
    
    
    2005State and municipal obligations
    
    $
    46,310
    
    
    $
    76,568Corporate debt
    
    
    5,081
    
    
    
    3,410Obligations of U.S. Government
agencies
    
    
    88,925
    
    
    
    45,827Equity securities
    
    
    16,209
    
    
    
    23,645Mutual funds and other
    
    
    22,591
    
    
    
    28,359Certificates of deposits
    
    
    7,472
    
    
    
    2,483$
    186,588
    
    
    $
    180,292
   September 30,
    
    
    December 31,2006
    
    
    2005Equity securities
    
    $
    18,325
    
    
    $
    3,780Corporate debt
    
    
    928
    
    
    
    1,332State and municipal obligations
    
    
    1,101
    
    
    
    41Obligations of U.S. Government
agencies
    
    
    48,198
    
    
    
    29,653Certificates of deposits
    
    
    268
    
    
    
    371$
    68,820
    
    
    $
    35,177
   6. Benihana Convertible Preferred Stock Investment
  29




---



##### Table of Contents



7. Loans Receivable
  September 30,
    
    
    December 31,2006
    
    
    2005Real estate loans:Residential
    
    $
    2,171,795
    
    
    $
    2,043,055Construction and development
    
    
    908,198
    
    
    
    1,339,576Commercial
    
    
    1,070,159
    
    
    
    1,066,598Small business
    
    
    180,200
    
    
    
    151,924Other loans:Home equity
    
    
    542,537
    
    
    
    513,813Commercial business
    
    
    159,086
    
    
    
    89,752Small business  non-mortgage
    
    
    92,294
    
    
    
    83,429Consumer loans
    
    
    15,120
    
    
    
    21,469Deposit overdrafts
    
    
    8,337
    
    
    
    5,694Other loans
    
    
    1,000
    
    
    
    2,071Discontinued loans products (1)
    
    
    269
    
    
    
    1,207Total gross loans
    
    
    5,148,995
    
    
    
    5,318,588Adjustments:Undisbursed portion of loans in process
    
    
    (477,944
    )
    
    
    (649,296
    )Premiums related to purchased loans
    
    
    2,195
    
    
    
    5,566Deferred fees
    
    
    (1,666
    )
    
    
    (3,231
    )Deferred profit on commercial real estate loans
    
    
    (211
    )
    
    
    (231
    )Allowance for loan and lease losses
    
    
    (43,106
    )
    
    
    (41,830
    )Loans receivable  net
    
    $
    4,628,263
    
    
    $
    4,629,566
 
 (1)
    
    Discontinued loan products consist of lease financings and indirect
consumer loans. These loan products were discontinued during prior periods.  8. Real Estate Held for Development and Sale
  September 30,
    
    
    December 31,2006
    
    
    2005Land and land development costs
    
    $
    605,567
    
    
    $
    467,747Construction costs
    
    
    190,400
    
    
    
    120,830Capitalized interest and other costs
    
    
    74,137
    
    
    
    44,020Total
    
    $
    870,104
    
    
    $
    632,597
 30




---



##### Table of Contents



9. Investments in Unconsolidated Affiliates
  September 30,
    
    
    December 31,2006
    
    
    2005Investment in Bluegreen
    
    $
    106,045
    
    
    $
    95,828Investment in real estate joint ventures
    
    
    5,766
    
    
    
    4,749Investment in statutory business trusts
    
    
    10,509
    
    
    
    9,547$
    122,320
    
    
    $
    110,124
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Equity in Bluegreen earnings
    
    $
    6,923
    
    
    $
    5,951
    
    
    $
    9,026
    
    
    $
    12,818Equity in joint ventures losses
    
    
    (128
    )
    
    
    (207
    )
    
    
    (205
    )
    
    
    (75
    )Equity in statutory trusts earnings
    
    
    266
    
    
    
    142
    
    
    
    1,364
    
    
    
    410Income from unconsolidated
affiliates
    
    $
    7,061
    
    
    $
    5,886
    
    
    $
    10,185
    
    
    $
    13,153
   31




---



##### Table of Contents



Unaudited Condensed Consolidated Balance Sheets
 September 30,
    
    
    December 31,2006
    
    
    2005Total assets
    
    $
    842,067
    
    
    $
    694,243Total liabilities
    
    $
    481,933
    
    
    $
    371,069Minority interest
    
    
    13,284
    
    
    
    9,508Total shareholders equity
    
    
    346,850
    
    
    
    313,666Total liabilities and shareholders equity
    
    $
    842,067
    
    
    $
    694,243
 32




---



##### Table of Contents



Unaudited Condensed Consolidated Statements of Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues and other income
    
    $
    207,569
    
    
    $
    204,173
    
    
    $
    519,787
    
    
    $
    529,960Cost and other expenses
    
    
    170,134
    
    
    
    172,781
    
    
    
    462,399
    
    
    
    462,197Income before minority interest and
provision for income taxes
    
    
    37,435
    
    
    
    31,392
    
    
    
    57,388
    
    
    
    67,763Minority interest
    
    
    2,241
    
    
    
    1,584
    
    
    
    4,940
    
    
    
    3,305Income before provision for income taxes
    
    
    35,194
    
    
    
    29,808
    
    
    
    52,448
    
    
    
    64,458Provision for income taxes
    
    
    13,287
    
    
    
    11,476
    
    
    
    19,930
    
    
    
    24,816Income before cumulative effect of
change in accounting principle
    
    
    21,907
    
    
    
    18,332
    
    
    
    32,518
    
    
    
    39,642Cumulative effect of
change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (5,678
    )
    
    
    Minority interest in cumulative effect of
change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1,184
    
    
    
    Net income
    
    $
    21,907
    
    
    $
    18,332
    
    
    $
    28,024
    
    
    $
    39,642
  10. Impairment of Goodwill and Property and Equipment
 Impairment of Goodwill
  33




---



##### Table of Contents



Impairment of Property and Equipment
  11. Defined Benefit Pension Plan
  For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost benefits earned during the period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost on projected benefit obligation
    
    
    407
    
    
    
    388
    
    
    
    1,221
    
    
    
    1,164Expected return on plan assets
    
    
    (547
    )
    
    
    (525
    )
    
    
    (1,641
    )
    
    
    (1,575
    )Amortization of unrecognized net gains and
losses
    
    
    237
    
    
    
    168
    
    
    
    711
    
    
    
    504Net periodic pension expense
    
    $
    97
    
    
    $
    31
    
    
    $
    291
    
    
    $
    93
  12. Advances From the Federal Home Loan Bank
   13. Other Debt
  34




---



##### Table of Contents



35




---



##### Table of Contents



14. Noncontrolling Interest
  September 30,
    
    
    December 31,2006
    
    
    2005BankAtlantic Bancorp
    
    $
    410,976
    
    
    $
    404,118Levitt
    
    
    294,647
    
    
    
    291,675Joint Venture Partnerships
    
    
    713
    
    
    
    729$
    706,336
    
    
    $
    696,522
 15. Interest Expense
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest expense
    
    $
    58,019
    
    
    $
    43,944
    
    
    $
    154,432
    
    
    $
    120,079Interest capitalized
    
    
    (11,608
    )
    
    
    (5,436
    )
    
    
    (29,939
    )
    
    
    (13,920
    )Interest expense,
net
    
    $
    46,411
    
    
    $
    38,508
    
    
    $
    124,493
    
    
    $
    106,159
 16. Commitments, Contingencies and Financial Instruments with off-Balance Sheet Risk
  September 30,
    
    December 31,2006
    
    2005BFC ActivitiesGuaranty agreements
    
    $
    29,465
    
    
    $
    21,660Financial ServicesCommitments to sell fixed rate residential loans
    
    $
    35,445
    
    
    $
    13,634Commitments to sell variable rate residential loans
    
    
    3,755
    
    
    
    4,438Commitments to purchase variable rate residential loans
    
    
    9,592
    
    
    
    6,689Commitments to purchase variable rate commercial loans
    
    
    38,850
    
    
    
    Commitments to originate loans held for sale
    
    
    29,784
    
    
    
    16,220Commitments to originate loans held to maturity
    
    
    240,472
    
    
    
    311,081Commitments to extend credit, including the undisbursed
portion of loans in process
    
    
    916,136
    
    
    
    1,151,054Commitments to purchase branch facilities land
    
    
    8,425
    
    
    
    5,334Standby letters of credit
    
    
    79,821
    
    
    
    67,868Homebuilding & Real Estate DevelopmentLevitts commitments to purchase properties for
development
    
    $
    49,600
    
    
    $
    186,200
 36




---



##### Table of Contents



BFC Activities
    Financial Services
  Homebuilding & Real Estate Development
  37




---



##### Table of Contents



Purchase
    
    
    
    
    
    ExpectedPrice
    
    Units
    
    ClosingHomebuilding Division
    
    $46.0 million
    
    2,000 units
    
    
    2007-2009Other Operations
    
    3.6 million
    
    90 units
    
    
    2006
  17. Certain Relationships and Related Party Transactions
  38




---



##### Table of Contents



BankAtlantic(In thousands)
    
    
    
    
    
    BFC
    
    Bancorp
    
    Levitt
    
    BluegreenFor the three months ended September 30, 2006Shared service income (expense)
    
    
    (a
    )
    
    $
    452
    
    
    $
    (91
    )
    
    $
    (312
    )
    
    $
    (49
    )Interest income (expense) from cash
balance/securities sold under
agreements to repurchase
    
    
    
    
    
    $
    11
    
    
    $
    (154
    )
    
    $
    143
    
    
    $
    For the three months ended September 30, 2005Shared service income (expense)
    
    
    (b
    )
    
    $
    (86
    )
    
    $
    306
    
    
    $
    (232
    )
    
    $
    12Interest income (expense) from
notes receivable/payable
    
    
    
    
    
    $
    
    
    
    $
    60
    
    
    $
    (60
    )
    
    $
    Interest income (expense) from cash
balance/securities sold under
agreements to repurchase
    
    
    
    
    
    $
    8
    
    
    $
    (28
    )
    
    $
    20
    
    
    $
    Fees income (expense) relating to
the issuance of common stock, net
of income tax
    
    
    
    
    
    $
    (166
    )
    
    $
    166
    
    
    $
    
    
    
    $
    For the nine months ended September 30, 2006Shared service income (expense)
    
    
    (a
    )
    
    $
    1,483
    
    
    $
    (373
    )
    
    $
    (922
    )
    
    $
    (188
    )Interest income (expense) from cash
balance/securities sold under
agreements to repurchase
    
    
    
    
    
    $
    32
    
    
    $
    (453
    )
    
    $
    421
    
    
    $
    For the nine months ended September 30, 2005Shared service income (expense)
    
    
    (b
    )
    
    $
    (262
    )
    
    $
    646
    
    
    $
    (580
    )
    
    $
    196Interest income (expense) from
notes receivable/payable
    
    
    
    
    
    $
    
    
    
    $
    880
    
    
    $
    (880
    )
    
    $
    Interest income (expense) from cash
balance/securities sold under
agreements to repurchase
    
    
    
    
    
    $
    22
    
    
    $
    (283
    )
    
    $
    261
    
    
    $
    Fees income (expense) relating to
the issuance of common stock, net
of income tax
    
    
    
    
    
    $
    (1,361
    )
    
    $
    1,361
    
    
    $
    
    
    
    $
    At September 30, 2006Cash and cash equivalents and
(securities sold under agreements
to repurchase)
    
    
    
    
    
    $
    1,071
    
    
    $
    (6,661
    )
    
    $
    5,590
    
    
    $
    Shared services receivable (payable)
    
    
    
    
    
    $
    316
    
    
    $
    (68
    )
    
    $
    (203
    )
    
    $
    (45
    )At December 31, 2005Cash and cash equivalents and
(securities sold under agreements
to repurchase)
    
    
    
    
    
    $
    1,115
    
    
    $
    (6,238
    )
    
    $
    5,123
    
    
    $
    Notes receivable (payable)
    
    
    
    
    
    $
    
    
    
    $
    223
    
    
    $
    (223
    )
    
    $
    
 
 (a)
    
    Effective January 1, 2006, BFC maintained arrangements with BankAtlantic Bancorp,
Levitt and Bluegreen to provide shared service operations in the areas of human resources,
risk management, investor relations and executive office administration. Pursuant to this
arrangement, certain employees from BankAtlantic were transferred to BFC to staff BFCs
shared service operations. The cost of shared services are allocated based upon the usage
of the respective services. Also as part of the shared service arrangement, the Company
reimburses BankAtlantic Bancorp and Bluegreen for office facilities costs relating to the
Company and its shared service operations. 39




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##### Table of Contents



(b)
    
    In 2005, BankAtlantic Bancorp maintained service arrangements with BFC and Levitt,
pursuant to which BankAtlantic Bancorp provided certain human resources, risk management,
project planning, system
support and investor and public relations services. For such services BankAtlantic Bancorp
was compensated on a cost plus 5% basis. Additionally, in 2005 Levitt reimbursed
BankAtlantic for office facilities costs.  Class A
    
    
    WeightedCommon
    
    
    AverageStock
    
    
    PriceOptions outstanding
    
    
    306,598
    
    
    $
    10.48Options nonvested
    
    
    245,143
    
    
    $
    11.39
      40




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18. (Loss) Earnings Per Share
   For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Basic (loss) earnings per shareNumerator:Net (loss) income allocable to common stock
    
    $
    (1,355
    )
    
    
    1,962
    
    
    
    (2,068
    )
    
    
    8,916Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (290
    )Net (loss) income allocable to common stock
    
    $
    (1,355
    )
    
    $
    1,870
    
    
    $
    (2,068
    )
    
    $
    8,626Denominator:Weighted average number of common shares outstanding
    
    
    35,820
    
    
    
    34,144
    
    
    
    35,574
    
    
    
    30,375Eliminate RAG weighted average number of common shares
    
    
    (2,393
    )
    
    
    (2,393
    )
    
    
    (2,393
    )
    
    
    (2,393
    )Basic weighted average number of common shares
outstanding
    
    
    33,427
    
    
    
    31,751
    
    
    
    33,181
    
    
    
    27,983Basic (loss) earnings per share:(Loss) earnings per share from continuing operations
    
    $
    (0.04
    )
    
    
    0.06
    
    
    
    (0.06
    )
    
    
    0.32(Loss) earnings per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Basic (loss) earnings per share
    
    $
    (0.04
    )
    
    
    0.06
    
    
    
    (0.06
    )
    
    
    0.31Diluted (loss) earnings per shareNumeratorNet (loss) income available to common shareholders
    
    $
    (1,355
    )
    
    $
    1,870
    
    
    $
    (2,068
    )
    
    $
    8,626Effect of securities issuable by subsidiaries
    
    
    (13
    )
    
    
    (94
    )
    
    
    (68
    )
    
    
    (399
    )Net (loss) income available after assumed dilution
    
    $
    (1,368
    )
    
    $
    1,776
    
    
    $
    (2,136
    )
    
    $
    8,227DenominatorBasic weighted average number of common shares
outstanding
    
    
    33,427
    
    
    
    31,751
    
    
    
    33,181
    
    
    
    27,983Common stock equivalents resulting from stock-based
compensation
    
    
    
    
    
    
    2,370
    
    
    
    
    
    
    
    2,488Diluted weighted average shares outstanding
    
    
    33,427
    
    
    
    34,121
    
    
    
    33,181
    
    
    
    30,471Diluted (loss) earnings per share:(Loss) earnings per share from continuing operations
    
    $
    (0.04
    )
    
    
    0.05
    
    
    
    (0.06
    )
    
    
    0.28(Loss) earnings per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Diluted (loss) earnings per share
    
    $
    (0.04
    )
    
    
    0.05
    
    
    
    (0.06
    )
    
    
    0.27
  41




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19. Parent Company Financial Information
    September 30,
    
    
    December 31,2006
    
    
    2005AssetsCash and cash equivalents
    
    $
    18,567
    
    
    $
    26,683Investment securities
    
    
    2,048
    
    
    
    2,034Investment in Benihana, Inc.
    
    
    20,000
    
    
    
    20,000Investment in venture partnerships
    
    
    929
    
    
    
    950Investment in BankAtlantic Bancorp, Inc.
    
    
    113,572
    
    
    
    112,218Investment in Levitt Corporation
    
    
    58,685
    
    
    
    58,111Investment in and advances to wholly owned subsidiaries
    
    
    1,478
    
    
    
    1,631Loans receivable
    
    
    1,000
    
    
    
    2,071Other assets
    
    
    2,984
    
    
    
    960Total assets
    
    $
    219,263
    
    
    $
    224,658Liabilities and Shareholders EquityAdvances from wholly owned subsidiaries
    
    $
    1,006
    
    
    $
    462Other liabilities
    
    
    6,984
    
    
    
    7,417Deferred income taxes
    
    
    33,866
    
    
    
    33,699Total liabilities
    
    
    41,856
    
    
    
    41,578Total shareholders equity
    
    
    177,407
    
    
    
    183,080Total liabilities and shareholders equity
    
    $
    219,263
    
    
    $
    224,658
 42




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For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    525
    
    
    $
    435
    
    
    $
    1,701
    
    
    $
    1,067Expenses
    
    
    2,063
    
    
    
    8,525
    
    
    
    6,424
    
    
    
    12,667(Loss) before undistributed earnings from
subsidiaries
    
    
    (1,538
    )
    
    
    (8,090
    )
    
    
    (4,723
    )
    
    
    (11,600
    )Equity from earnings in BankAtlantic Bancorp
    
    
    504
    
    
    
    3,520
    
    
    
    3,712
    
    
    
    13,088Equity from earnings in Levitt
    
    
    494
    
    
    
    1,780
    
    
    
    262
    
    
    
    7,741Equity from (loss) earnings in other subsidiaries
    
    
    (314
    )
    
    
    6,070
    
    
    
    (489
    )
    
    
    5,825Income (loss) before income taxes
    
    
    (854
    )
    
    
    3,280
    
    
    
    (1,238
    )
    
    
    15,054Provision for income taxes
    
    
    314
    
    
    
    1,131
    
    
    
    268
    
    
    
    5,576(Loss) income from continuing operations
    
    
    (1,168
    )
    
    
    2,149
    
    
    
    (1,506
    )
    
    
    9,478Discontinued operations, net of tax
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (290
    )Net (loss) income
    
    
    (1,168
    )
    
    
    2,057
    
    
    
    (1,506
    )
    
    
    9,1885% Preferred Stock dividends
    
    
    187
    
    
    
    187
    
    
    
    562
    
    
    
    562Net (loss) income allocable to common shareholders
    
    $
    (1,355
    )
    
    $
    1,870
    
    
    $
    (2,068
    )
    
    $
    8,626
  For the Nine Months EndedSeptember 30,2006
    
    
    2005Operating Activities:Net cash used in operating activities
    
    $
    (2,427
    )
    
    $
    (524
    )Investing Activities:Investment in real estate limited partnership
    
    
    (972
    )
    
    
    Additions to office property and equipment
    
    
    
    
    
    
    (29
    )Investment in Benihana convertible preferred stock
    
    
    
    
    
    
    (10,000
    )Net cash used in investing activities
    
    
    (972
    )
    
    
    (10,029
    )Financing Activities:Issuance of common stock net of issuance costs
    
    
    
    
    
    
    46,263Repayments of borrowing
    
    
    
    
    
    
    (11,483
    )Proceeds from the issuance of Class B Common Stock upon exercise of stock
options
    
    
    
    
    
    
    172Borrowings
    
    
    
    
    
    
    1,000Payment of the minimum withholding tax upon the exercise of stock options
    
    
    (4,155
    )
    
    
    5% Preferred Stock dividends paid
    
    
    (562
    )
    
    
    (562
    )Net cash used in (provided by) financing activities
    
    
    (4,717
    )
    
    
    35,390(Decrease) increase in cash and cash equivalents
    
    
    (8,116
    )
    
    
    24,837Cash at beginning of period
    
    
    26,683
    
    
    
    1,520Cash at end of period
    
    $
    18,567
    
    
    $
    26,357Supplementary disclosure of non-cash investing
and financing activitiesInterest paid on borrowings
    
    $
    
    
    
    $
    268Net decrease in shareholders equity from
the effect of subsidiaries capital transactions, net of income taxes
    
    
    (267
    )
    
    
    (542
    )(Decrease) increase in accumulated other comprehensive income, net of taxes
    
    
    106
    
    
    
    (55
    )(Decrease) increase in shareholders equity for the tax effect related to the
Exercise of employee stock options
    
    
    
    
    
    
    (12
    )Issuance and retirement of Common Stock accepted
as consideration for the exercise price of stock options
    
    
    4,155
    
    
    
    Decrease in advances due from wholly-owned subsidiaries
    
    
    
    
    
    
    (23,744
    )
  43




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20. Nonmonetary Transactions
   21. Settlement of Compliance Matter
  22. Litigation
  23. Subsequent Event
  44




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24. New Accounting Pronouncements
     45




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46




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BFC Financial Corporation and Subsidiaries
 
 Managements Discussion and Analysis of Financial Condition
 and Results of Operations
 Overview
      47




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PercentShares
    
    Percent of
    
    ofOwned
    
    Ownership
    
    VoteBankAtlantic BancorpClass A Common Stock
    
    
    8,329,236
    
    
    
    14.84
    %
    
    
    7.87
    %Class B Common Stock
    
    
    4,876,124
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    13,205,360
    
    
    
    21.65
    %
    
    
    54.87
    %LevittClass A Common Stock
    
    
    2,074,243
    
    
    
    11.15
    %
    
    
    5.91
    %Class B Common Stock
    
    
    1,219,031
    
    
    
    100.00
    %
    
    
    47.00
    %Total
    
    
    3,293,274
    
    
    
    16.61
    %
    
    
    52.91
    %
 Forward Looking Statement
   
    
    the impact of economic, competitive and other factors affecting the Company and its
subsidiaries, and their operations, markets, products and services;
    
    that BFC may not have sufficient available cash to make desired investments or to fund
operations;
    
    that BFC shareholders interests may be diluted in transactions utilizing BFC stock for
consideration and investments in its subsidiaries may be diluted by transactions entered
into by the subsidiaries;
    
    that the performance of entities in which the Company holds interests may not be as
anticipated; and
    
    that BFC will be subject to the unique business and industry risks and characteristics
of each entity in which an investment is made.
  
    
    credit risks and loan losses and the related sufficiency of the allowance for loan
losses; including the impact on the credit quality of BankAtlantic loans of changes in the
real estate market;
 48




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
    
    changes in interest rates and the effects of, and changes in, trade, monetary and fiscal
policies and laws including the impact on the 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 BankAtlantic Bancorp activities and the value of its
assets;
    
    BankAtlantics seven-day banking initiative, new store expansion program, Orlando store
expansion program and other growth, marketing or advertising initiatives not resulting in
continued growth of low cost deposits or producing results which justify their costs;
    
    successfully opening the anticipated number of new stores in 2006 and 2007 and achieving
growth and profitability at those new stores;
    
    the impact of periodic testing of goodwill and other intangible assets for impairment;
and
    
    that past performance, actual or estimated new account openings and growth rates may not
be indicative of future results.
  
    
    ability to implement a strategy to improve its operating results and return to profitability;
    
    operations, products and services, changes in economic or regulatory policies;
    
    the volatility of the stock market and fixed income markets, as well as its finance,
investment banking and capital markets areas, including that the associated increased
headcount will produce results which justify the increased expenses; and
    
    additional risks and uncertainties that are subject to change and may be outside of Ryan Becks control.
 With respect to Levitt Corporation (Levitt), the risks and uncertainties that may affect Levitt are:
 
    
    the impact of economic, competitive and other factors affecting Levitt and its operations;
    
    the market for real estate generally and in the areas where Levitt has developments,
including the impact of market conditions on Levitts margins;
    
    the need to offer additional incentives to buyers to generate sales;
    
    the effects of increases in interest rates;
    
    Cancellation of existing sales and the ability to consummate sales contracts included in Levitts backlog;
    
    Levitts ability to realize the expected benefits of its expanded platform, technology
investments, growth initiatives and strategic objectives;
    
    Levitts ability to timely close land sales and to deliver homes from backlog, shorten
delivery cycles and improve operational and construction efficiency;
    
    the realization of cost saving associated with reductions of workforce and the ability
to limit overhead and costs commensurate with sales;
    
    the actual costs of disposition of Levitts assets in the Tennessee operations may
exceed current estimates; and
    
    Levitts success at managing the risks involved in the foregoing.
  49




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Critical Accounting Policies
  Share-Based Compensation
    50




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Summary of Consolidated Results of Operations by Segment
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005BFC Activities
    
    $
    (2,170
    )
    
    $
    (3,133
    )
    
    $
    (5,489
    )
    
    $
    (11,316
    )Financial Services
    
    
    2,338
    
    
    
    16,260
    
    
    
    17,172
    
    
    
    60,675Homebuilding & Real Estate Development
    
    
    2,972
    
    
    
    10,708
    
    
    
    1,575
    
    
    
    46,578Eliminations
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    (796
    )3,140
    
    
    
    23,738
    
    
    
    13,258
    
    
    
    95,141Noncontrolling interest
    
    
    4,308
    
    
    
    21,589
    
    
    
    14,764
    
    
    
    85,663(Loss) income from continuing operations
    
    
    (1,168
    )
    
    
    2,149
    
    
    
    (1,506
    )
    
    
    9,478Discontinued operations, less income taxes
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (290
    )Net (loss) income
    
    
    (1,168
    )
    
    
    2,057
    
    
    
    (1,506
    )
    
    
    9,1885% Preferred Stock dividends
    
    
    187
    
    
    
    187
    
    
    
    562
    
    
    
    562Net (loss) income allocable to common stock
    
    $
    (1,355
    )
    
    $
    1,870
    
    
    $
    (2,068
    )
    
    $
    8,626
 Accounting for the Impairment of Disposal of Long-Lived
Assets
  51




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BFC Activities
    For the Three Months
    
    
    Change
    
    
    For the Nine Months
    
    
    ChangeEnded September 30,
    
    
    2006 vs.
    
    
    Ended September 30,
    
    
    2006 vs.2006
    
    
    2005
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2005RevenuesInterest and dividend
income
    
    $
    634
    
    
    $
    540
    
    
    $
    94
    
    
    $
    1,750
    
    
    $
    1,028
    
    
    $
    722Other income, net
    
    
    709
    
    
    
    228
    
    
    
    481
    
    
    
    2,740
    
    
    
    598
    
    
    
    2,1421,343
    
    
    
    768
    
    
    
    575
    
    
    
    4,490
    
    
    
    1,626
    
    
    
    2,864Cost and ExpensesInterest expense
    
    
    1
    
    
    
    24
    
    
    
    (23
    )
    
    
    17
    
    
    
    336
    
    
    
    (319
    )Employee compensation
and benefits
    
    
    2,339
    
    
    
    1,864
    
    
    
    475
    
    
    
    7,075
    
    
    
    4,684
    
    
    
    2,391Other expenses
    
    
    858
    
    
    
    972
    
    
    
    (114
    )
    
    
    2,616
    
    
    
    2,656
    
    
    
    (40
    )3,198
    
    
    
    2,860
    
    
    
    338
    
    
    
    9,708
    
    
    
    7,676
    
    
    
    2,032Loss before income
taxes
    
    
    (1,855
    )
    
    
    (2,092
    )
    
    
    237
    
    
    
    (5,218
    )
    
    
    (6,050
    )
    
    
    832Provision for income
taxes
    
    
    315
    
    
    
    1,041
    
    
    
    (726
    )
    
    
    271
    
    
    
    5,266
    
    
    
    (4,995
    )Noncontrolling interest
    
    
    (4
    )
    
    
    17
    
    
    
    (21
    )
    
    
    (8
    )
    
    
    35
    
    
    
    (43
    )Loss from continuing
operations
    
    
    (2,166
    )
    
    
    (3,150
    )
    
    
    984
    
    
    
    (5,481
    )
    
    
    (11,351
    )
    
    
    5,870Discontinued
operations,
less income taxes
    
    
    
    
    
    
    (92
    )
    
    
    92
    
    
    
    
    
    
    
    (290
    )
    
    
    290Net loss
    
    $
    (2,166
    )
    
    $
    (3,242
    )
    
    $
    1,076
    
    
    $
    (5,481
    )
    
    $
    (11,641
    )
    
    
    6,160
  52




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Liquidity and Capital Resources of BFC
  For the Nine Months EndedSeptember 30,2006
    
    
    2005Net cash provided by (used in):Operating activities
    
    $
    (3,934
    )
    
    $
    (2,123
    )Investing activities
    
    
    743
    
    
    
    (8,415
    )Financing activities
    
    
    (4,731
    )
    
    
    34,906(Decrease) increase in cash and cash equivalents
    
    
    (7,922
    )
    
    
    24,368Cash and cash equivalents at beginning of period
    
    
    26,806
    
    
    
    2,227Cash and cash equivalents at end of period
    
    $
    18,884
    
    
    $
    26,595
  
    
    Dividends from BankAtlantic Bancorp and Levitt;
    
    Dividends from Benihana;
    
    Revenues from CCC advisory fees;
    
    Revenues from shared services activities in 2006;
    
    Net proceeds of approximately $46.4 million, after underwriting discounts, commissions
and offering expenses, from the sale of 5,957,555 shares of Class A Common Stock during
2005, and
    
    Principal and interest payments on loans receivable.
  
    
    Fund minimum withholding tax liability of approximately $4.2 million upon exercise of
options in 2006. The Company retired shares of the Companys common stock delivered by the
option holders as consideration for the option holders minimum tax withholding;
    
    Repayment of $10.5 million outstanding under the Companys revolving line of credit
during 2005 and payment of mortgage payables;
    
    Fund a $1.0 million investment in a real estate limited partnership during 2006;
    
    Purchase 400,000 shares of Benihana Convertible Preferred Stock for $10.0 million in 2005;
    
    Fund the payment of dividends on the Companys 5% Cumulative Convertible Preferred Stock; and
    
    Fund BFCs operating and general and administrative expenses.
   54




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Consolidated Financial Condition
 Consolidated Assets and Liabilities
  
    
    Decline in cash and due from deposit institutions of approximately $89.0 million
resulted from: i) Approximately $33.0 million at BankAtlantic Bancorp primarily due to
lower cash letter balances associated with an increased frequency of inter-day clearings
from check image processing; ii) lower cash balance at BFC of approximately $7.9 million
primarily due to cash used in operations of approximately $3.9 million and financing
activities of $4.7 million; and iii) lower cash balances at Levitt of approximately $48.3
million primarily due to cash used in operations and investing activities of $239.9
million, partially offset by an increase in cash provided by financing activities of
$191.6 million;
    
    Increase of approximately $6.3 million in securities owned associated with Ryan
Becks trading activities;
    
    Decline in securities available for sale of approximately $10.7 million reflecting
BankAtlantics investment strategy to limit asset growth in response to the relatively
flat yield curve during the period;
    
    Higher investment securities balances at BankAtlantic of approximately $34.0 million
due to purchases of tax certificates at annual auctions;
    
    Increase in investment in FHLB stock at BankAtlantic of approximately $17.9 million
related to additional FHLB advance borrowings;
    
    Decline in loans receivable primarily due to pay-down of Levitts loans receivable.
This decline was slightly offset by an increase in BankAtlantics loans receivable
balances associated with recent residential loan purchases and growth in home equity,
small business and corporate loan portfolios partially offset by lower commercial real
estate loan balances;
    
    Decline in commercial real estate loan balances primarily resulting from
BankAtlantics decision to cease condominium lending, and $112.0 million of
participations sold being treated as loan sales as a result of amendments of the
applicable participation agreements during 2006 instead of as secured borrowings as they
were at December 31, 2005;
    
    Increase in residential loans held for sale associated with BankAtlantics program to
originate loans with a commitment to sell the loans to a correspondent;
    
    Increase in real estate held for development and sale of approximately $237.5 million
primarily resulting from an increase in inventory of real estate at Levitt;
    
    Increase in investment in unconsolidated subsidiaries primarily from Bluegreens
equity earnings and BankAtlantic Bancorps investments in rental real estate joint
ventures;
    
    Increase in accrued interest receivable at BankAtlantic resulting from higher rates on
earning assets during the period;
    
    Increase in property and equipment of approximately $73.4 million associated with
BankAtlantics branch expansion initiatives and Levitts increase of approximately $26.0
million associated with increased investment in commercial properties under construction
at Core Communities, and Levitts support for infrastructure in Levitts master planned
communities, and hardware and software in connection with Levitts systems upgrade;
    
    Decrease in goodwill is due to Levitts impairment charge on its Tennessee operations
(see note 10); and
    
    Increase in due from clearing agent of approximately $13.6 million associated with
Ryan Beck trading activities.
  
    
    Decrease in deposit account balances of approximately $77.2 million resulting from a
significant decline in money market account balances at BankAtlantic associated with
higher short term interest rates partially offset by growth in low-cost deposits and
certificates of deposit;
 57




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##### Table of Contents




    
    Increase in FHLB advances of approximately $403.5 million at BankAtlantic to fund
asset growth, deposit run-off and repayments of short-term borrowings;
    
    Decrease in secured borrowings of approximately $138.3 million at BankAtlantic
(associated with loan participations sold without recourse that are accounted for as
secured borrowings) due to loan repayments and a management decision to amend
participation agreements to qualify as loan sales instead of secured borrowing
arrangements;
    
    Increase in subordinated debentures, notes and bonds payable of approximately $155.6
million was primarily related to project debt associated with 2006 land acquisitions and
land development activities at Levitt, partially offset with declines in notes payable
resulting from the repayment of construction loans to an unrelated financial institution
at BankAtlantic Bancorps real estate joint venture that is consolidated in the Companys
financial statements;
    
    Increase in junior subordinated debentures of approximately $30.9 million associated
with Levitt;
    
    Increase in due to clearing agent and securities sold but not yet purchased of
approximately $50.0 million associated with Ryan Becks trading activities; and
    
    Declines in other liabilities primarily associated with a reduction in accrued
employee compensation and benefits reflecting the payout of 2005 annual bonuses during
the first quarter of 2006 as well as the reduction in a $10 million reserve for the
anti-money laundering and bank secrecy act regulatory compliance matters based on payment
of that amount, partially offset with an increase in Levitts accounts payable and
accrued liabilities relating to accruals for certain construction related accruals, and
the timing of invoices processed.
 Noncontrolling Interest
  September 30,
    
    
    December 31,2006
    
    
    2005BankAtlantic Bancorp
    
    $
    410,976
    
    
    $
    404,118Levitt
    
    
    294,647
    
    
    
    291,675Joint Venture Partnerships
    
    
    713
    
    
    
    729$
    706,336
    
    
    $
    696,522
   58




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Shareholders Equity
  59




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##### Table of Contents



Financial Services
 Our Financial Services segment consists of BankAtlantic Bancorp, which is consolidated
with BFC Financial Corporation. The only assets available to BFC Financial Corporation from
BankAtlantic Bancorp are dividends when and if paid by BankAtlantic Bancorp. BankAtlantic Bancorp
is a separate public company and its management prepared the following discussion regarding
BankAtlantic Bancorp which was included in BankAtlantic Bancorps Quarterly Report on Form 10-Q for
the quarter ended September 30, 2006 filed with the Securities and Exchange Commission.
Accordingly, references to the Company, we, us or our in the following discussion under the
caption Financial Services are references to BankAtlantic Bancorp and its subsidiaries, and are
not references to BFC Financial Corporation.
   Critical Accounting Policies
  60




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Share-based Compensation
    Summary Consolidated Results of Operations by Segment
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeBankAtlantic
    
    $
    9,651
    
    
    $
    19,291
    
    
    $
    (9,640
    )
    
    $
    32,821
    
    
    $
    54,923
    
    
    $
    (22,102
    )Ryan Beck
    
    
    (4,842
    )
    
    
    423
    
    
    
    (5,265
    )
    
    
    (8,774
    )
    
    
    15,984
    
    
    
    (24,758
    )Parent Company
    
    
    (2,471
    )
    
    
    (3,454
    )
    
    
    983
    
    
    
    (6,875
    )
    
    
    (10,232
    )
    
    
    3,357Net income
    
    $
    2,338
    
    
    $
    16,260
    
    
    $
    (13,922
    )
    
    $
    17,172
    
    
    $
    60,675
    
    
    $
    (43,503
    )
 61




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For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
     For the Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
  Consolidated Provision for Income Taxes
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeIncome before
income taxes
    
    $
    1,167
    
    
    $
    23,148
    
    
    $
    (21,981
    )
    
    $
    19,593
    
    
    $
    92,482
    
    
    $
    (72,889
    )Provision for
income taxes
    
    
    (1,171
    )
    
    
    6,888
    
    
    
    (8,059
    )
    
    
    2,421
    
    
    
    31,807
    
    
    
    (29,386
    )Consolidated net
income
    
    $
    2,338
    
    
    $
    16,260
    
    
    $
    (13,922
    )
    
    $
    17,172
    
    
    $
    60,675
    
    
    $
    (43,503
    )Effective tax rate
    
    
    -100.34
    %
    
    
    29.76
    %
    
    
    N/A
    
    
    
    12.36
    %
    
    
    34.39
    %
    
    
    -22.04
    %
  62




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BankAtlantic Results of Operations
 Net interest income
 Average Balance Sheet - Yield / Rate AnalysisFor the Three Months EndedSeptember 30, 2006
    
    
    September 30, 2005(in thousands)
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateLoans:Residential real estate
    
    $
    2,130,077
    
    
    
    27,891
    
    
    
    5.24
    %
    
    $
    2,245,067
    
    
    
    27,676
    
    
    
    4.93
    %Commercial real estate
    
    
    1,498,192
    
    
    
    32,979
    
    
    
    8.81
    
    
    
    1,639,530
    
    
    
    30,839
    
    
    
    7.52Loan participations sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,633
    
    
    
    2,637
    
    
    
    7.09Consumer
    
    
    563,001
    
    
    
    11,024
    
    
    
    7.83
    
    
    
    527,189
    
    
    
    8,433
    
    
    
    6.40Lease financing
    
    
    76
    
    
    
    3
    
    
    
    15.79
    
    
    
    2,768
    
    
    
    66
    
    
    
    9.54Commercial business
    
    
    152,720
    
    
    
    3,405
    
    
    
    8.92
    
    
    
    90,578
    
    
    
    1,828
    
    
    
    8.07Small business
    
    
    267,263
    
    
    
    5,489
    
    
    
    8.22
    
    
    
    216,931
    
    
    
    4,268
    
    
    
    7.87Total loans
    
    
    4,611,329
    
    
    
    80,791
    
    
    
    7.01
    
    
    
    4,869,696
    
    
    
    75,747
    
    
    
    6.22Investments  tax exempt
    
    
    397,436
    
    
    
    5,806
    (1)
    
    
    5.84
    
    
    
    386,097
    
    
    
    5,617
    (1)
    
    
    5.82Investments  taxable
    
    
    660,785
    
    
    
    9,993
    
    
    
    6.05
    
    
    
    712,092
    
    
    
    9,348
    
    
    
    5.25Total interest earning assets
    
    
    5,669,550
    
    
    
    96,590
    
    
    
    6.81
    %
    
    
    5,967,885
    
    
    
    90,712
    
    
    
    6.08
    %Goodwill and core deposit intangibles
    
    
    77,913
    
    
    
    
    
    
    
    
    
    
    
    79,494Other non-interest earning assets
    
    
    371,752
    
    
    
    
    
    
    
    
    
    
    
    312,261Total Assets
    
    $
    6,119,215
    
    
    
    
    
    
    
    
    
    
    $
    6,359,640Deposits:Savings
    
    $
    367,829
    
    
    
    721
    
    
    
    0.78
    %
    
    $
    303,268
    
    
    
    229
    
    
    
    0.30
    %NOW
    
    
    727,517
    
    
    
    1,149
    
    
    
    0.63
    
    
    
    666,567
    
    
    
    773
    
    
    
    0.46Money market
    
    
    733,058
    
    
    
    4,019
    
    
    
    2.18
    
    
    
    904,382
    
    
    
    3,729
    
    
    
    1.64Certificate of deposit
    
    
    858,688
    
    
    
    9,206
    
    
    
    4.25
    
    
    
    781,044
    
    
    
    5,788
    
    
    
    2.94Total interest bearing deposits
    
    
    2,687,092
    
    
    
    15,095
    
    
    
    2.23
    
    
    
    2,655,261
    
    
    
    10,519
    
    
    
    1.57Short-term borrowed funds
    
    
    378,063
    
    
    
    5,117
    
    
    
    5.37
    
    
    
    256,492
    
    
    
    2,151
    
    
    
    3.33Advances from FHLB
    
    
    1,354,944
    
    
    
    18,509
    
    
    
    5.42
    
    
    
    1,659,411
    
    
    
    17,332
    
    
    
    4.14Secured borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,633
    
    
    
    2,637
    
    
    
    7.09Long-term debt
    
    
    37,283
    
    
    
    805
    
    
    
    8.57
    
    
    
    35,447
    
    
    
    645
    
    
    
    7.22Total interest bearing liabilities
    
    
    4,457,382
    
    
    
    39,526
    
    
    
    3.52
    
    
    
    4,754,244
    
    
    
    33,284
    
    
    
    2.78Demand deposits
    
    
    1,043,574
    
    
    
    
    
    
    
    
    
    
    
    1,000,694Non-interest bearing other liabilities
    
    
    53,567
    
    
    
    
    
    
    
    
    
    
    
    56,659Total Liabilities
    
    
    5,554,523
    
    
    
    
    
    
    
    
    
    
    
    5,811,597Stockholders equity
    
    
    564,692
    
    
    
    
    
    
    
    
    
    
    
    548,043Total liabilities and stockholders
equity
    
    $
    6,119,215
    
    
    
    
    
    
    
    
    
    
    $
    6,359,640Net tax equivalent interest income/
net interest spread
    
    
    
    
    
    $
    57,064
    
    
    
    3.29
    %
    
    
    
    
    
    $
    57,428
    
    
    
    3.30
    %Tax equivalent adjustment
    
    
    
    
    
    
    (2,032
    )
    
    
    
    
    
    
    
    
    
    
    (1,966
    )Capitalized interest from
real estate operations
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    477Net interest income
    
    
    
    
    
    
    55,107
    
    
    
    
    
    
    
    
    
    
    
    55,939MarginInterest income/interest earning
assets
    
    
    
    
    
    
    
    
    
    
    6.81
    %
    
    
    
    
    
    
    
    
    
    
    6.08
    %Interest expense/interest earning
assets
    
    
    
    
    
    
    
    
    
    
    2.77
    
    
    
    
    
    
    
    
    
    
    
    2.21Net interest margin (tax equivalent)
    
    
    
    
    
    
    
    
    
    
    4.04
    %
    
    
    
    
    
    
    
    
    
    
    3.87
    %Net interest margin (tax equivalent)
excluding secured borrowings
    
    
    
    
    
    
    
    
    
    
    4.04
    %
    
    
    
    
    
    
    
    
    
    
    3.96
    %
 
 (1)
    
    The tax equivalent basis is computed using a 35% tax rate. For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
   64




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65




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Bank Operations Business SegmentAverage Balance Sheet - Yield / Rate AnalysisFor the Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2005(in thousands)
    
    Average
    
    
    Revenue/
    
    
    Yield/
    
    
    Average
    
    
    Revenue/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateLoans:Residential real estate
    
    $
    2,073,923
    
    
    
    79,890
    
    
    
    5.14
    %
    
    $
    2,198,170
    
    
    
    80,782
    
    
    
    4.90
    %Commercial real estate
    
    
    1,511,983
    
    
    
    94,775
    
    
    
    8.36
    
    
    
    1,708,272
    
    
    
    89,460
    
    
    
    6.98Loan participations sold
    
    
    41,306
    
    
    
    2,401
    
    
    
    7.75
    
    
    
    158,587
    
    
    
    7,281
    
    
    
    6.12Consumer
    
    
    549,939
    
    
    
    30,676
    
    
    
    7.44
    
    
    
    506,902
    
    
    
    22,376
    
    
    
    5.89Lease financing
    
    
    237
    
    
    
    23
    
    
    
    12.94
    
    
    
    4,561
    
    
    
    365
    
    
    
    10.67Commercial business
    
    
    135,035
    
    
    
    8,914
    
    
    
    8.80
    
    
    
    90,199
    
    
    
    5,047
    
    
    
    7.46Small business
    
    
    254,325
    
    
    
    15,262
    
    
    
    8.00
    
    
    
    206,389
    
    
    
    11,978
    
    
    
    7.74Total loans
    
    
    4,566,748
    
    
    
    231,941
    
    
    
    6.77
    
    
    
    4,873,080
    
    
    
    217,289
    
    
    
    5.95Investments  tax exempt
    
    
    396,348
    
    
    
    17,355
    (1)
    
    
    5.84
    
    
    
    362,988
    
    
    
    15,775
    (1)
    
    
    5.79Investments  taxable
    
    
    610,894
    
    
    
    26,422
    
    
    
    5.77
    
    
    
    722,477
    
    
    
    28,423
    
    
    
    5.25Total interest earning assets
    
    
    5,573,990
    
    
    
    275,718
    
    
    
    6.60
    %
    
    
    5,958,545
    
    
    
    261,487
    
    
    
    5.85
    %Goodwill and core deposit
intangibles
    
    
    78,300
    
    
    
    
    
    
    
    
    
    
    
    79,923Other non-interest earning
assets
    
    
    364,851
    
    
    
    
    
    
    
    
    
    
    
    297,873Total Assets
    
    $
    6,017,141
    
    
    
    
    
    
    
    
    
    
    $
    6,336,341Deposits:Savings
    
    $
    354,765
    
    
    
    1,557
    
    
    
    0.59
    %
    
    $
    295,450
    
    
    
    628
    
    
    
    0.28
    %NOW
    
    
    750,771
    
    
    
    3,106
    
    
    
    0.55
    
    
    
    672,224
    
    
    
    2,097
    
    
    
    0.42Money market
    
    
    775,833
    
    
    
    11,977
    
    
    
    2.06
    
    
    
    910,697
    
    
    
    9,727
    
    
    
    1.43Certificate of deposit
    
    
    849,011
    
    
    
    25,061
    
    
    
    3.95
    
    
    
    780,258
    
    
    
    15,896
    
    
    
    2.72Total interest bearing deposits
    
    
    2,730,380
    
    
    
    41,701
    
    
    
    2.04
    
    
    
    2,658,629
    
    
    
    28,348
    
    
    
    1.43Short-term borrowed funds
    
    
    342,413
    
    
    
    12,760
    
    
    
    4.98
    
    
    
    325,670
    
    
    
    6,955
    
    
    
    2.86Advances from FHLB
    
    
    1,177,389
    
    
    
    45,655
    
    
    
    5.18
    
    
    
    1,604,169
    
    
    
    46,610
    
    
    
    3.88Secured borrowings
    
    
    41,306
    
    
    
    2,401
    
    
    
    7.75
    
    
    
    158,587
    
    
    
    7,281
    
    
    
    6.12Long-term debt
    
    
    37,253
    
    
    
    2,469
    
    
    
    8.86
    
    
    
    36,148
    
    
    
    1,823
    
    
    
    6.74Total interest bearing
liabilities
    
    
    4,328,741
    
    
    
    104,986
    
    
    
    3.24
    
    
    
    4,783,203
    
    
    
    91,017
    
    
    
    2.54Demand deposits
    
    
    1,072,867
    
    
    
    
    
    
    
    
    
    
    
    965,900Non-interest bearing other
liabilities
    
    
    58,383
    
    
    
    
    
    
    
    
    
    
    
    49,823Total Liabilities
    
    
    5,459,991
    
    
    
    
    
    
    
    
    
    
    
    5,798,926Stockholders equity
    
    
    557,150
    
    
    
    
    
    
    
    
    
    
    
    537,415Total liabilities and
stockholders equity
    
    $
    6,017,141
    
    
    
    
    
    
    
    
    
    
    $
    6,336,341Net tax equivalent interest
income/
net interest spread
    
    
    
    
    
    $
    170,732
    
    
    
    3.36
    %
    
    
    
    
    
    $
    170,470
    
    
    
    3.31
    %Tax equivalent adjustment
    
    
    
    
    
    
    (6,074
    )
    
    
    
    
    
    
    
    
    
    
    (5,521
    )Capitalized interest from
real estate operations
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    1,366Net interest income
    
    
    
    
    
    
    165,502
    
    
    
    
    
    
    
    
    
    
    
    166,315MarginInterest income/interest
earning assets
    
    
    
    
    
    
    
    
    
    
    6.60
    %
    
    
    
    
    
    
    
    
    
    
    5.85
    %Interest expense/interest
earning assets
    
    
    
    
    
    
    
    
    
    
    2.52
    
    
    
    
    
    
    
    
    
    
    
    2.04Net interest margin (tax
equivalent)
    
    
    
    
    
    
    
    
    
    
    4.08
    %
    
    
    
    
    
    
    
    
    
    
    3.81
    %Net interest margin (tax
equivalent)
excluding secured borrowings
    
    
    
    
    
    
    
    
    
    
    4.11
    %
    
    
    
    
    
    
    
    
    
    
    3.91
    %
 
 (1)
    
    The tax equivalent basis is computed using a 35% tax rate. 66




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For the Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
  Provision for Loan Losses
 For the Three Months Ended
    
    
    For the Nine Months Ended(in thousands)
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Balance, beginning of period
    
    $
    42,012
    
    
    $
    43,650
    
    
    $
    41,192
    
    
    $
    46,010Charge-offs:Consumer loans
    
    
    (210
    )
    
    
    (99
    )
    
    
    (367
    )
    
    
    (209
    )Residential real estate loans
    
    
    (111
    )
    
    
    (191
    )
    
    
    (239
    )
    
    
    (445
    )Small business
    
    
    (93
    )
    
    
    (68
    )
    
    
    (408
    )
    
    
    (663
    )Continuing loan products
    
    
    (414
    )
    
    
    (358
    )
    
    
    (1,014
    )
    
    
    (1,317
    )Discontinued loan products
    
    
    (22
    )
    
    
    (222
    )
    
    
    (138
    )
    
    
    (1,057
    )Total charge-offs
    
    
    (436
    )
    
    
    (580
    )
    
    
    (1,152
    )
    
    
    (2,374
    )Recoveries:Commercial business loans
    
    
    80
    
    
    
    120
    
    
    
    360
    
    
    
    1,351Commercial real estate loans
    
    
    10
    
    
    
    5
    
    
    
    19
    
    
    
    11Small business
    
    
    193
    
    
    
    290
    
    
    
    452
    
    
    
    694Consumer loans
    
    
    79
    
    
    
    89
    
    
    
    194
    
    
    
    172Residential real estate loans
    
    
    170
    
    
    
    55
    
    
    
    348
    
    
    
    56Continuing loan products
    
    
    532
    
    
    
    559
    
    
    
    1,373
    
    
    
    2,284Discontinued loan products
    
    
    138
    
    
    
    476
    
    
    
    690
    
    
    
    1,281Total recoveries
    
    
    670
    
    
    
    1,035
    
    
    
    2,063
    
    
    
    3,565Net recoveries
    
    
    234
    
    
    
    455
    
    
    
    911
    
    
    
    1,191Provision for (recovery from)
loan losses
    
    
    271
    
    
    
    (3,410
    )
    
    
    414
    
    
    
    (6,506
    )Balance, end of period
    
    $
    42,517
    
    
    $
    40,695
    
    
    $
    42,517
    
    
    $
    40,695
    67




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September 30,
    
    
    December 31,
    
    
    September 30,2006
    
    
    2005
    
    
    2005NONPERFORMING ASSETSNonaccrual:Tax certificates
    
    $
    760
    
    
    $
    388
    
    
    $
    385Loans
    
    
    32,895
    
    
    
    6,801
    
    
    
    6,883Total nonaccrual
    
    
    33,655
    
    
    
    7,189
    
    
    
    7,268Repossessed assets:Real estate owned
    
    
    1,439
    
    
    
    967
    
    
    
    912Other
    
    
    
    
    
    
    
    
    
    
    46Total nonperforming assets, net
    
    $
    35,094
    
    
    $
    8,156
    
    
    $
    8,226AllowancesAllowance for loan losses
    
    $
    42,517
    
    
    $
    41,192
    
    
    $
    40,695Allowance for tax certificate losses
    
    
    3,650
    
    
    
    3,271
    
    
    
    3,661Total allowances
    
    $
    46,167
    
    
    $
    44,463
    
    
    $
    44,356POTENTIAL PROBLEM LOANSContractually past due 90 days or
more
    
    $
    
    
    
    $
    
    
    
    $
    Performing impaired loans
    
    
    172
    
    
    
    193
    
    
    
    203Restructured loans
    
    
    
    
    
    
    77
    
    
    
    81Total potential problem loans
    
    $
    172
    
    
    $
    270
    
    
    $
    284
   68




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##### Table of Contents



BankAtlantics Non-Interest Income
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeOther service charges and fees
    
    $
    6,779
    
    
    $
    5,824
    
    
    $
    955
    
    
    $
    20,354
    
    
    $
    16,911
    
    
    $
    3,443Service charges on deposits
    
    
    24,008
    
    
    
    16,415
    
    
    
    7,593
    
    
    
    64,381
    
    
    
    44,148
    
    
    
    20,233Income (loss) from real
estate operations
    
    
    
    
    
    
    1,142
    
    
    
    (1,142
    )
    
    
    (982
    )
    
    
    5,038
    
    
    
    (6,020
    )Securities activities, net
    
    
    
    
    
    
    23
    
    
    
    (23
    )
    
    
    457
    
    
    
    117
    
    
    
    340Gain associated with
debt redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,528
    
    
    
    
    
    
    
    1,528Losses (gains) on sales of
office
properties and equipment, net
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )
    
    
    1,775
    
    
    
    1,215
    
    
    
    560Other
    
    
    2,925
    
    
    
    2,314
    
    
    
    611
    
    
    
    8,163
    
    
    
    6,795
    
    
    
    1,368Non-interest income
    
    $
    33,709
    
    
    $
    25,718
    
    
    $
    7,991
    
    
    $
    95,676
    
    
    $
    74,224
    
    
    $
    21,452
     69




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BankAtlantics Non-Interest Expense
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeEmployee compensation
and benefits
    
    $
    37,524
    
    
    $
    28,106
    
    
    $
    9,418
    
    
    $
    108,398
    
    
    $
    82,081
    
    
    $
    26,317Occupancy and equipment
    
    
    14,809
    
    
    
    10,826
    
    
    
    3,983
    
    
    
    40,765
    
    
    
    30,108
    
    
    
    10,657Advertising and promotion
    
    
    8,855
    
    
    
    5,518
    
    
    
    3,337
    
    
    
    24,274
    
    
    
    16,651
    
    
    
    7,623Amortization of intangible assets
    
    
    385
    
    
    
    401
    
    
    
    (16
    )
    
    
    1,174
    
    
    
    1,227
    
    
    
    (53
    )Cost associated with
debt redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,457
    
    
    
    
    
    
    
    1,457Professional fees
    
    
    1,928
    
    
    
    2,642
    
    
    
    (714
    )
    
    
    6,141
    
    
    
    7,175
    
    
    
    (1,034
    )Impairment of office
properties and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,706
    
    
    
    (3,706
    )Check losses
    
    
    2,855
    
    
    
    1,434
    
    
    
    1,421
    
    
    
    5,976
    
    
    
    2,549
    
    
    
    3,427Other
    
    
    8,855
    
    
    
    7,795
    
    
    
    1,060
    
    
    
    26,593
    
    
    
    21,805
    
    
    
    4,788Non-interest expense
    
    $
    75,211
    
    
    $
    56,722
    
    
    $
    18,489
    
    
    $
    214,778
    
    
    $
    165,302
    
    
    $
    49,476
  .
 70




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71




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Provision for Income Taxes
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeIncome before
income taxes
    
    $
    13,333
    
    
    $
    28,345
    
    
    $
    (15,012
    )
    
    $
    45,986
    
    
    $
    81,743
    
    
    $
    (35,757
    )Provision for
income taxes
    
    
    3,682
    
    
    
    9,054
    
    
    
    (5,372
    )
    
    
    13,165
    
    
    
    26,820
    
    
    
    (13,655
    )BankAtlantic net
income
    
    $
    9,651
    
    
    $
    19,291
    
    
    $
    (9,640
    )
    
    $
    32,821
    
    
    $
    54,923
    
    
    $
    (22,102
    )Effective tax rate
    
    
    27.62
    %
    
    
    31.94
    %
    
    
    -4.32
    %
    
    
    28.63
    %
    
    
    32.81
    %
    
    
    -4.18
    %
  72




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Ryan Beck Holdings, Inc. Results of Operations
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeNet interest income:Broker dealer interest
and dividends
    
    $
    3,856
    
    
    $
    3,756
    
    
    $
    100
    
    
    $
    12,085
    
    
    $
    10,192
    
    
    $
    1,893Interest expense
    
    
    (1,436
    )
    
    
    (819
    )
    
    
    (617
    )
    
    
    (4,571
    )
    
    
    (2,289
    )
    
    
    (2,282
    )Net interest income
    
    
    2,420
    
    
    
    2,937
    
    
    
    (517
    )
    
    
    7,514
    
    
    
    7,903
    
    
    
    (389
    )Non-interest income:Principal transactions
    
    
    19,976
    
    
    
    22,894
    
    
    
    (2,918
    )
    
    
    68,064
    
    
    
    79,386
    
    
    
    (11,322
    )Investment banking
    
    
    2,921
    
    
    
    3,741
    
    
    
    (820
    )
    
    
    9,940
    
    
    
    41,017
    
    
    
    (31,077
    )Commissions
    
    
    19,194
    
    
    
    21,390
    
    
    
    (2,196
    )
    
    
    63,990
    
    
    
    61,183
    
    
    
    2,807Other
    
    
    3,114
    
    
    
    2,343
    
    
    
    771
    
    
    
    9,154
    
    
    
    7,383
    
    
    
    1,771Non-interest income
    
    
    45,205
    
    
    
    50,368
    
    
    
    (5,163
    )
    
    
    151,148
    
    
    
    188,969
    
    
    
    (37,821
    )Non-interest expense:Employee compensation
and benefits
    
    
    40,943
    
    
    
    39,358
    
    
    
    1,585
    
    
    
    127,731
    
    
    
    127,561
    
    
    
    170Occupancy and equipment
    
    
    4,369
    
    
    
    4,025
    
    
    
    344
    
    
    
    12,167
    
    
    
    11,929
    
    
    
    238Advertising and promotion
    
    
    1,479
    
    
    
    1,072
    
    
    
    407
    
    
    
    4,372
    
    
    
    4,085
    
    
    
    287Professional fees
    
    
    2,888
    
    
    
    1,411
    
    
    
    1,477
    
    
    
    6,744
    
    
    
    4,419
    
    
    
    2,325Communications
    
    
    3,472
    
    
    
    3,371
    
    
    
    101
    
    
    
    11,356
    
    
    
    10,084
    
    
    
    1,272Floor broker and
and clearing fees
    
    
    1,823
    
    
    
    2,305
    
    
    
    (482
    )
    
    
    6,684
    
    
    
    6,685
    
    
    
    (1
    )Other
    
    
    1,602
    
    
    
    1,604
    
    
    
    (2
    )
    
    
    5,229
    
    
    
    5,376
    
    
    
    (147
    )Minority interest 
hedge fund
    
    
    (1,004
    )
    
    
    
    
    
    
    (1,004
    )
    
    
    (627
    )
    
    
    
    
    
    
    (627
    )Non-interest expense
    
    
    55,572
    
    
    
    53,146
    
    
    
    2,426
    
    
    
    173,656
    
    
    
    170,139
    
    
    
    3,517Income (loss) before
income taxes
    
    
    (7,947
    )
    
    
    159
    
    
    
    (8,106
    )
    
    
    (14,994
    )
    
    
    26,733
    
    
    
    (41,727
    )Income taxes
    
    
    (3,105
    )
    
    
    (264
    )
    
    
    (2,841
    )
    
    
    (6,220
    )
    
    
    10,749
    
    
    
    (16,969
    )Net (loss) income
    
    $
    (4,842
    )
    
    $
    423
    
    
    $
    (5,265
    )
    
    $
    (8,774
    )
    
    $
    15,984
    
    
    $
    (24,758
    )
 For the Three and Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
  73




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.
        74




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Parent Company Results of Operations
 For the Three Months
    
    
    For the Nine Months(in thousands)
    
    Ended September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeNet interest income:Interest and dividend income
    
    $
    598
    
    
    $
    471
    
    
    $
    127
    
    
    $
    1,857
    
    
    $
    1,762
    
    
    $
    95Interest expense
    
    
    (5,716
    )
    
    
    (4,929
    )
    
    
    (787
    )
    
    
    (16,391
    )
    
    
    (14,269
    )
    
    
    (2,122
    )Net interest expense
    
    
    (5,118
    )
    
    
    (4,458
    )
    
    
    (660
    )
    
    
    (14,534
    )
    
    
    (12,507
    )
    
    
    (2,027
    )Non-interest income:Income from unconsolidated
subsidiaries
    
    
    266
    
    
    
    142
    
    
    
    124
    
    
    
    1,364
    
    
    
    410
    
    
    
    954Securities activities, net
    
    
    2,243
    
    
    
    158
    
    
    
    2,085
    
    
    
    7,156
    
    
    
    256
    
    
    
    6,900Other
    
    
    
    
    
    
    150
    
    
    
    (150
    )
    
    
    4
    
    
    
    658
    
    
    
    (654
    )Non-interest income
    
    
    2,509
    
    
    
    450
    
    
    
    2,059
    
    
    
    8,524
    
    
    
    1,324
    
    
    
    7,200Non-interest expense:Employee compensation
and benefits
    
    
    1,107
    
    
    
    991
    
    
    
    116
    
    
    
    3,655
    
    
    
    2,999
    
    
    
    656Professional fees
    
    
    212
    
    
    
    186
    
    
    
    26
    
    
    
    582
    
    
    
    1,151
    
    
    
    (569
    )Other
    
    
    291
    
    
    
    171
    
    
    
    120
    
    
    
    1,152
    
    
    
    661
    
    
    
    491Non-interest expense
    
    
    1,610
    
    
    
    1,348
    
    
    
    262
    
    
    
    5,389
    
    
    
    4,811
    
    
    
    578Loss before income taxes
    
    
    (4,219
    )
    
    
    (5,356
    )
    
    
    1,137
    
    
    
    (11,399
    )
    
    
    (15,994
    )
    
    
    4,595Income taxes
    
    
    (1,748
    )
    
    
    (1,902
    )
    
    
    154
    
    
    
    (4,524
    )
    
    
    (5,762
    )
    
    
    1,238Net loss
    
    $
    (2,471
    )
    
    $
    (3,454
    )
    
    $
    983
    
    
    $
    (6,875
    )
    
    $
    (10,232
    )
    
    $
    3,357
       75




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76




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BankAtlantic Bancorp Consolidated Financial Condition
  
    
    Decline in cash and due from deposit institutions from lower cash letter balances
associated with an increased frequency of inter-day clearings from check image
processing;
    
    Increase in securities owned associated with Ryan Becks trading activities;
    
    Decline in securities available for sale reflecting an investment strategy to limit
asset growth in response to the relatively flat yield curve during the period;
    
    Higher investment securities balances due to purchases of tax certificates at annual auctions;
    
    Increased investment in FHLB stock related to additional FHLB advance borrowings;
    
    Slight increase in loans receivable balances associated with recent residential loan
purchases and growth in home equity, small business and corporate loan portfolios
partially offset by lower commercial real estate loan balances;
    
    Lower commercial real estate loan balances primarily resulting from a decision to
cease condominium lending, and $112 million of participations sold being treated as loan
sales during 2006 instead of secured borrowings at December 31, 2005 as a result of
amendments of the applicable participation agreements;
    
    Increase in residential loans held for sale associated with a program to originate
loans with a commitment to sell the loans to a correspondent;
    
    Increase in accrued interest receivable resulting from higher rates on earning assets
during the period;
    
    Increase in real estate held for development resulting from an increase in real estate
inventory at a real estate joint venture;
    
    Increase in investment in unconsolidated subsidiaries associated with $5.5 million of
investments in two rental real estate joint ventures partially offset by a distribution
from another investment in a rental real estate joint venture originated during 2005;
    
    Increase in due from clearing agent associated with Ryan Beck trading activities; and
    
    Increase in office properties and equipment associated with BankAtlantics branch
expansion initiatives.
  
    
    Lower deposit account balances resulting from a significant decline in money market
account balances associated with higher short term interest rates partially offset by
growth in low-cost deposits and certificates of deposit;
    
    Increase in FHLB advances to fund asset growth, deposit run-off and repayments of
short-term borrowings;
    
    Decrease in secured borrowings (associated with loan participations sold without
recourse that are accounted for as secured borrowings) due to loan repayments and a
management decision to amend participation agreements to qualify as loan sales instead of
secured borrowing arrangements;
    
    Decline in notes payable resulting from the repayment of construction loans to an
unrelated financial institution at a real estate joint venture that is consolidated in
the Companys financial statements;
    
    Increase in due to clearing agent and securities sold but not yet purchased associated
with Ryan Becks trading activities; and
    
    Declines in other liabilities associated with a reduction in Ryan Becks accrued
employee compensation and benefits reflecting the payout of 2005 annual bonuses during
the first quarter of 2006 as well as the reduction in a $10 million reserve for the
anti-money laundering and bank secrecy act regulatory compliance matters based on payment
of that amount.
  77




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Liquidity and Capital Resources
 BankAtlantic Bancorp, Inc. Liquidity and Capital Resources
       78




---



##### Table of Contents



BankAtlantic Liquidity and Capital Resources
      79




---



##### Table of Contents



Minimum RatiosAdequately
    
    WellActual
    
    Capitalized
    
    CapitalizedAmount
    
    Ratio
    
    Ratio
    
    RatioAt September 30, 2006:Total risk-based capital
    
    $
    526,738
    
    
    
    12.02
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based capital
    
    $
    458,741
    
    
    
    10.47
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    458,741
    
    
    
    7.54
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    458,741
    
    
    
    7.54
    %
    
    
    4.00
    %
    
    
    5.00
    %At December 31, 2005:Total risk-based capital
    
    $
    512,664
    
    
    
    11.50
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 risk-based capital
    
    $
    446,419
    
    
    
    10.02
    %
    
    
    4.00
    %
    
    
    6.00
    %Tangible capital
    
    $
    446,419
    
    
    
    7.42
    %
    
    
    1.50
    %
    
    
    1.50
    %Core capital
    
    $
    446,419
    
    
    
    7.42
    %
    
    
    4.00
    %
    
    
    5.00
    %
  Ryan Beck & Co., Inc. Liquidity and Capital Resources
     80




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Consolidated Off Balance Sheet Arrangements  Contractual Obligations
 (in thousands)
    
    Payments Due by Period (1)(2)Less than
    
    
    
    
    
    
    
    
    
    
    After 5Contractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsTime deposits
    
    $
    874,956
    
    
    $
    778,922
    
    
    $
    83,803
    
    
    $
    12,165
    
    
    $
    66Long-term debt
    
    
    293,458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293,458Advances from FHLB
    
    
    1,687,062
    
    
    
    1,640,062
    
    
    
    15,000
    
    
    
    32,000
    
    
    
    Operating lease obligations
    
    
    128,488
    
    
    
    19,413
    
    
    
    33,974
    
    
    
    21,197
    
    
    
    53,904Pension obligation
    
    
    12,114
    
    
    
    913
    
    
    
    2,157
    
    
    
    2,760
    
    
    
    6,284Other obligations
    
    
    43,025
    
    
    
    20,525
    
    
    
    5,400
    
    
    
    5,900
    
    
    
    11,200Securities sold but not yet purchased
    
    
    68,820
    
    
    
    68,820
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    3,107,923
    
    
    $
    2,528,655
    
    
    $
    140,334
    
    
    $
    74,022
    
    
    $
    364,912
 
 (1)
    
    Payments due by period are based on contractual maturities(2)
    
    The above table excludes interest payments on interest bearing liabilities 81




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##### Table of Contents



Homebuilding & Real Estate Development
 Our Homebuilding & Real Estate Development segment consists of Levitt, which is
consolidated with BFC Financial Corporation. The only assets available to BFC Financial Corporation
are dividends when and if paid by Levitt. Levitt is a separate public company and its management
prepared the following discussion regarding Levitt which was included in Levitts Quarterly Report
on Form 10-Q for the quarter ended September 30, 2006 filed with the Securities and Exchange
Commission. Accordingly, references to the Company, we, us or our in the following
discussion under the caption Homebuilding & Real Estate Development are references to Levitt and
its subsidiaries, and are not references to BFC Financial Corporation.
  .
 82




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##### Table of Contents



Executive Overview
   Homebuilding Overview
   83




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##### Table of Contents



Land Development Overview
   84




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##### Table of Contents



Critical Accounting Policies and Estimates
  Stock-based Compensation
   85




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##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeRevenuesSales of real estate
    
    $
    130,939
    
    
    
    128,520
    
    
    
    2,419
    
    
    
    387,140
    
    
    
    434,480
    
    
    
    (47,340
    )Title and mortgage operations
    
    
    936
    
    
    
    962
    
    
    
    (26
    )
    
    
    2,962
    
    
    
    2,857
    
    
    
    105Total revenues
    
    
    131,875
    
    
    
    129,482
    
    
    
    2,393
    
    
    
    390,102
    
    
    
    437,337
    
    
    
    (47,235
    )Costs and expensesCost of sales of real estate
    
    
    104,520
    
    
    
    98,455
    
    
    
    6,065
    
    
    
    307,485
    
    
    
    313,591
    
    
    
    (6,106
    )Selling, general and administrative
expenses
    
    
    32,736
    
    
    
    20,070
    
    
    
    12,666
    
    
    
    89,957
    
    
    
    62,675
    
    
    
    27,282Other expenses
    
    
    615
    
    
    
    1,448
    
    
    
    (833
    )
    
    
    7,906
    
    
    
    3,390
    
    
    
    4,516Total costs and expenses
    
    
    137,871
    
    
    
    119,973
    
    
    
    17,898
    
    
    
    405,348
    
    
    
    379,656
    
    
    
    25,692Earnings from Bluegreen Corporation
    
    
    6,923
    
    
    
    5,951
    
    
    
    972
    
    
    
    9,026
    
    
    
    12,818
    
    
    
    (3,792
    )Loss from real estate joint ventures
    
    
    (128
    )
    
    
    (207
    )
    
    
    79
    
    
    
    (205
    )
    
    
    (75
    )
    
    
    (130
    )Interest and other income
    
    
    3,569
    
    
    
    1,924
    
    
    
    1,645
    
    
    
    8,598
    
    
    
    4,699
    
    
    
    3,899Income before income taxes
    
    
    4,368
    
    
    
    17,177
    
    
    
    (12,809
    )
    
    
    2,173
    
    
    
    75,123
    
    
    
    (72,950
    )Provision for income taxes
    
    
    1,395
    
    
    
    6,469
    
    
    
    (5,074
    )
    
    
    598
    
    
    
    28,545
    
    
    
    (27,947
    )Net income
    
    $
    2,973
    
    
    
    10,708
    
    
    
    (7,735
    )
    
    
    1,575
    
    
    
    46,578
    
    
    
    (45,003
    )
 For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
    86




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87




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##### Table of Contents



For the Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
     88




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##### Table of Contents



89




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##### Table of Contents



HOMEBUILDING DIVISION RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands, except unit information)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeRevenuesSales of real estate
    
    $
    122,637
    
    
    
    110,674
    
    
    
    11,963
    
    
    
    357,486
    
    
    
    335,756
    
    
    
    21,730Title and mortgage operations
    
    
    936
    
    
    
    962
    
    
    
    (26
    )
    
    
    2,962
    
    
    
    2,857
    
    
    
    105Total revenues
    
    
    123,573
    
    
    
    111,636
    
    
    
    11,937
    
    
    
    360,448
    
    
    
    338,613
    
    
    
    21,835Costs and expensesCost of sales of real estate
    
    
    99,069
    
    
    
    87,266
    
    
    
    11,803
    
    
    
    288,185
    
    
    
    265,118
    
    
    
    23,067Selling, general and administrative expenses
    
    
    21,335
    
    
    
    13,755
    
    
    
    7,580
    
    
    
    59,475
    
    
    
    42,095
    
    
    
    17,380Other expenses
    
    
    615
    
    
    
    1,448
    
    
    
    (833
    )
    
    
    7,906
    
    
    
    2,713
    
    
    
    5,193Total costs and expenses
    
    
    121,019
    
    
    
    102,469
    
    
    
    18,550
    
    
    
    355,566
    
    
    
    309,926
    
    
    
    45,640(Loss) earnings from real estate joint ventures
    
    
    (154
    )
    
    
    
    
    
    
    (154
    )
    
    
    (154
    )
    
    
    104
    
    
    
    (258
    )Interest and other income
    
    
    939
    
    
    
    137
    
    
    
    802
    
    
    
    1,364
    
    
    
    550
    
    
    
    814Income before income taxes
    
    
    3,339
    
    
    
    9,304
    
    
    
    (5,965
    )
    
    
    6,092
    
    
    
    29,341
    
    
    
    (23,249
    )Provision for income taxes
    
    
    1,243
    
    
    
    3,502
    
    
    
    (2,259
    )
    
    
    2,912
    
    
    
    11,056
    
    
    
    (8,144
    )Net income
    
    $
    2,096
    
    
    
    5,802
    
    
    
    (3,706
    )
    
    
    3,180
    
    
    
    18,285
    
    
    
    (15,105
    )Homes delivered (units)
    
    
    403
    
    
    
    439
    
    
    
    (36
    )
    
    
    1,234
    
    
    
    1,388
    
    
    
    (154
    )Construction starts (units)
    
    
    483
    
    
    
    545
    
    
    
    (62
    )
    
    
    1,405
    
    
    
    1,370
    
    
    
    35Average selling price of homes delivered
    
    $
    304
    
    
    
    252
    
    
    
    52
    
    
    
    290
    
    
    
    242
    
    
    
    48Margin percentage on homes delivered
    
    
    19.2
    %
    
    
    21.2
    %
    
    
    -2.0
    %
    
    
    19.4
    %
    
    
    21.0
    %
    
    
    -1.6
    %Net new sales contracts (units)
    
    
    196
    
    
    
    243
    
    
    
    (47
    )
    
    
    1,034
    
    
    
    1,277
    
    
    
    (243
    )Net new sales contracts (value)
    
    $
    68,059
    
    
    
    82,725
    
    
    
    (14,666
    )
    
    
    354,750
    
    
    
    381,880
    
    
    
    (27,130
    )Backlog of homes (units)
    
    
    1,592
    
    
    
    1,703
    
    
    
    (111
    )
    
    
    1,592
    
    
    
    1,703
    
    
    
    (111
    )Backlog of homes (value)
    
    $
    554,589
    
    
    
    494,836
    
    
    
    59,753
    
    
    
    554,589
    
    
    
    494,836
    
    
    
    59,753
 For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
   90




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91




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##### Table of Contents



Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
        92




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##### Table of Contents



LAND DIVISION RESULTS OF OPERATIONS
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,(In thousands, except acres information)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeRevenuesSales of real estate
    
    $
    8,302
    
    
    
    17,914
    
    
    
    (9,612
    )
    
    
    29,660
    
    
    
    84,614
    
    
    
    (54,954
    )Total revenues
    
    
    8,302
    
    
    
    17,914
    
    
    
    (9,612
    )
    
    
    29,660
    
    
    
    84,614
    
    
    
    (54,954
    )Costs and expensesCost of sales of real estate
    
    
    4,760
    
    
    
    10,783
    
    
    
    (6,023
    )
    
    
    17,497
    
    
    
    38,055
    
    
    
    (20,558
    )Selling, general and administrative
expenses
    
    
    4,331
    
    
    
    2,436
    
    
    
    1,895
    
    
    
    10,151
    
    
    
    8,831
    
    
    
    1,320Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    (677
    )Total costs and expenses
    
    
    9,091
    
    
    
    13,219
    
    
    
    (4,128
    )
    
    
    27,648
    
    
    
    47,563
    
    
    
    (19,915
    )Interest and other income
    
    
    1,874
    
    
    
    609
    
    
    
    1,265
    
    
    
    4,973
    
    
    
    1,455
    
    
    
    3,518Income before income taxes
    
    
    1,085
    
    
    
    5,304
    
    
    
    (4,219
    )
    
    
    6,985
    
    
    
    38,506
    
    
    
    (31,521
    )Provision for income taxes
    
    
    423
    
    
    
    2,048
    
    
    
    (1,625
    )
    
    
    2,628
    
    
    
    14,860
    
    
    
    (12,232
    )Net income
    
    $
    662
    
    
    
    3,256
    
    
    
    (2,594
    )
    
    
    4,357
    
    
    
    23,646
    
    
    
    (19,289
    )Acres sold
    
    
    29
    
    
    
    109
    
    
    
    (80
    )
    
    
    134
    
    
    
    1,413
    
    
    
    (1,279
    )Margin percentage
    
    
    42.7
    %
    
    
    39.8
    %
    
    
    2.9
    %
    
    
    41.0
    %
    
    
    55.0
    %
    
    
    -14.0
    %Unsold saleable acres
    
    
    7,109
    
    
    
    7,520
    
    
    
    (411
    )
    
    
    7,109
    
    
    
    7,520
    
    
    
    (411
    )Acres subject to sales contracts
    
    
    69
    
    
    
    435
    
    
    
    (366
    )
    
    
    69
    
    
    
    435
    
    
    
    (366
    )Acres subject to sales contracts (value)
    
    $
    20,281
    
    
    
    43,427
    
    
    
    (23,146
    )
    
    
    20,281
    
    
    
    43,427
    
    
    
    (23,146
    )
   For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
  93




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Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
    94




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OTHER OPERATIONS RESULTS OF OPERATIONS
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeRevenuesSales of real estate
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Total revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Costs and expensesCost of sales of real estate
    
    
    749
    
    
    
    555
    
    
    
    194
    
    
    
    2,047
    
    
    
    12,505
    
    
    
    (10,458
    )Selling, general and administrative expenses
    
    
    7,070
    
    
    
    3,879
    
    
    
    3,191
    
    
    
    20,330
    
    
    
    11,749
    
    
    
    8,581Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    7,819
    
    
    
    4,434
    
    
    
    3,385
    
    
    
    22,377
    
    
    
    24,254
    
    
    
    (1,877
    )Earnings from Bluegreen Corporation
    
    
    6,923
    
    
    
    5,951
    
    
    
    972
    
    
    
    9,026
    
    
    
    12,818
    
    
    
    (3,792
    )Earnings (loss) from real estate joint ventures
    
    
    26
    
    
    
    (207
    )
    
    
    233
    
    
    
    (51
    )
    
    
    (179
    )
    
    
    128Interest and other income
    
    
    777
    
    
    
    1,178
    
    
    
    (401
    )
    
    
    2,318
    
    
    
    2,694
    
    
    
    (376
    )(Loss) income before income taxes
    
    
    (93
    )
    
    
    2,488
    
    
    
    (2,581
    )
    
    
    (11,084
    )
    
    
    5,788
    
    
    
    (16,872
    )(Benefit) provision for income taxes
    
    
    (271
    )
    
    
    900
    
    
    
    (1,171
    )
    
    
    (5,006
    )
    
    
    2,055
    
    
    
    (7,061
    )Net income (loss)
    
    $
    178
    
    
    
    1,588
    
    
    
    (1,410
    )
    
    
    (6,078
    )
    
    
    3,733
    
    
    
    (9,811
    )
   For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
  95




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##### Table of Contents



Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
    96




---



##### Table of Contents



97




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##### Table of Contents



FINANCIAL CONDITION
 September 30, 2006 compared to December 31, 2005
   
    
    a net decrease in cash and cash equivalents of $48.3 million, which resulted from
cash used in operations and investing activities of $239.9 million, partially offset by
an increase in cash provided by financing activities of $191.6 million;
    
    a net increase in inventory of real estate of approximately $234.3 million, which
includes approximately $64.8 million in land acquisitions by our Homebuilding
Division; and
    
    an increase of $26.0 million in property and equipment associated with increased
investment in commercial properties under construction at Core Communities, support for
infrastructure in our master planned communities, and hardware and software acquired
for our systems upgrade.
   
    
    a net increase in notes and mortgage notes payable of $164.5 million, primarily
related to project debt associated with 2006 land acquisitions and land development
activities;
    
    an increase of $2.3 million in customer deposits due to a larger percentage of homes
in backlog coming from Florida which historically involves larger deposits.
    
    an increase of $30.9 million in junior subordinated debentures;
    
    an increase of $34.4 million in accounts payable and accrued liabilities, relating
to accruals for certain construction related accruals, and the timing of invoices
processed; and
    
    a decrease in the current tax liability of approximately $12.6 million relating
primarily to the decrease in pre-tax income realized by the Company and the timing of
estimated tax payments.
 LIQUIDITY AND CAPITAL RESOURCES
    98




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Off Balance Sheet Arrangements and Contractual Obligations
   Payments due by periodLess than
    
    
    2 - 3
    
    
    4 - 5
    
    
    More thanCategory (2)
    
    Total
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 yearsLong-term debt obligations (1)
    
    $
    603,222
    
    
    
    61,213
    
    
    
    349,206
    
    
    
    72,340
    
    
    
    120,463Operating lease obligations
    
    
    8,198
    
    
    
    2,209
    
    
    
    3,156
    
    
    
    1,208
    
    
    
    1,625Purchase obligations
    
    
    35,771
    
    
    
    35,771
    
    
    
    
    
    
    
    
    
    
    
    Total Obligations
    
    $
    647,191
    
    
    
    99,193
    
    
    
    352,362
    
    
    
    73,548
    
    
    
    122,088
 
 (1)
    
    Amounts exclude interest because terms of repayment are based on construction activity and
sales volume. In addition, a large portion of our debt is based on variable rates.(2)
    
    These amounts represent scheduled principal payments and some of those borrowings require
the repayment of specified amounts upon a sale of portions of the property securing those
obligations.  99




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##### Table of Contents



100




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   BFC Interest Rate Risk
  101




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##### Table of Contents



BankAtlantic Bancorp Consolidated Interest Rate Risk
 BankAtlantic Interest Rate Risk
  BankAtlantic Repricing Gap TableAs of September 30, 20061 Year
    
    
    3 Years
    
    
    5 Years
    
    
    More Thanor Less
    
    
    or Less
    
    
    or Less
    
    
    5 Years
    
    
    TotalInterest earning assets:Loans:Residential loans (1)Fixed rate
    
    $
    123,413
    
    
    
    161,980
    
    
    
    126,583
    
    
    
    262,685
    
    
    
    674,661Hybrids ARM less than 5 years
    
    
    166,324
    
    
    
    113,970
    
    
    
    43,083
    
    
    
    
    
    
    
    323,377Hybrids ARM more than 5 years
    
    
    260,290
    
    
    
    306,946
    
    
    
    285,703
    
    
    
    328,327
    
    
    
    1,181,266Commercial loans
    
    
    1,450,791
    
    
    
    102,701
    
    
    
    78,391
    
    
    
    22,865
    
    
    
    1,654,748Small business loans
    
    
    173,059
    
    
    
    73,267
    
    
    
    16,487
    
    
    
    9,927
    
    
    
    272,740Consumer
    
    
    537,779
    
    
    
    5,419
    
    
    
    12,683
    
    
    
    18,059
    
    
    
    573,940Total loans
    
    
    2,711,656
    
    
    
    764,283
    
    
    
    562,930
    
    
    
    641,863
    
    
    
    4,680,732Investment securitiesTax exempt securities
    
    
    661
    
    
    
    6,279
    
    
    
    29,433
    
    
    
    360,711
    
    
    
    397,084Taxable investment securities
    
    
    248,289
    
    
    
    84,230
    
    
    
    66,026
    
    
    
    66,860
    
    
    
    465,405Tax certificates
    
    
    191,760
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    191,760Total investment securities
    
    
    440,710
    
    
    
    90,509
    
    
    
    95,459
    
    
    
    427,571
    
    
    
    1,054,249Total interest earning assets
    
    
    3,152,366
    
    
    
    854,792
    
    
    
    658,389
    
    
    
    1,069,434
    
    
    
    5,734,981Total non-earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    447,484
    
    
    
    447,484Total assets
    
    $
    3,152,366
    
    
    
    854,792
    
    
    
    658,389
    
    
    
    1,516,918
    
    
    
    6,182,465Total interest bearing liabilities
    
    $
    3,408,303
    
    
    
    367,769
    
    
    
    268,407
    
    
    
    1,502,100
    
    
    
    5,546,579Non-interest bearing liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635,886
    
    
    
    635,886Total non-interest bearing liabilities
and equity
    
    $
    3,408,303
    
    
    
    367,769
    
    
    
    268,407
    
    
    
    2,137,986
    
    
    
    6,182,465GAP (repricing difference)
    
    $
    (255,937
    )
    
    
    487,023
    
    
    
    389,982
    
    
    
    (432,666
    )Cumulative GAP
    
    $
    (255,937
    )
    
    
    231,086
    
    
    
    621,068
    
    
    
    188,402Repricing Percentage
    
    
    -4.14
    %
    
    
    7.88
    %
    
    
    6.31
    %
    
    
    -7.00
    %Cumulative Percentage
    
    
    -4.14
    %
    
    
    3.74
    %
    
    
    10.05
    %
    
    
    3.05
    %
 
 1)
    
    Hybrid adjustable rate mortgages (ARM) earn fixed rates for designated periods and
adjust annually thereafter based on the one year U.S. Treasury note rate.   102




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##### Table of Contents



i.
    
    Calculating interest income and interest expense from existing assets and liabilities
using current repricing, prepayment and volume assumptions,ii.
    
    Estimating the change in expected net interest income based on instantaneous and
parallel shifts in the yield curve to determine the effect on net interest income; andiii.
    
    Calculating the percentage change in net interest income calculated in (i) and (ii).
   
    
    Interest rates,
    
    Loan prepayment rates,
    
    Deposit decay rates,
    
    Re-pricing of certain borrowings, and
    
    Reinvestment in earning assets.
  As of September 30, 2006NetChanges
    
    Interest
    
    Percentin Rate
    
    Income
    
    Change+200 bp
    
    $
    242,942
    
    
    
    -4.93
    %+100 bp
    
    $
    252,012
    
    
    
    -1.38
    %0
    
    $
    255,537
    
    
    
    0.00
    %-100 bp
    
    $
    257,200
    
    
    
    0.65
    %-200 bp
    
    $
    253,410
    
    
    
    -0.83
    %
  103




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##### Table of Contents



Consolidated Equity Price Risk
  AvailablePercent
    
    for SaleChange in
    
    Securities
    
    DollarFair Value
    
    Fair Value
    
    Change20%
    
    $
    116,065
    
    
    $
    19,34410%
    
    $
    106,393
    
    
    $
    9,6720%
    
    $
    96,721
    
    
    $
    -10%
    
    $
    87,049
    
    
    $
    (9,672
    )-20%
    
    $
    77,377
    
    
    $
    (19,344
    )
  Ryan Beck Market Risk
     High
    
    Low
    
    AverageVaR
    
    $
    416
    
    
    
    88
    
    
    
    205Aggregate Long Value
    
    $
    206,399
    
    
    
    83,886
    
    
    
    141,048Aggregate Short Value
    
    $
    145,920
    
    
    
    32,406
    
    
    
    72,583
 104




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##### Table of Contents



Levitt
   105




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##### Table of Contents



Item 4. Controls and Procedure
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
    106




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors.
  107




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##### Table of Contents



Item 6. Exhibits
 Exhibit 31.1
    
    Chief Executive Officer Certification pursuant to Section
302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Chief Financial Officer Certification pursuant to Section
302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Chief Executive Officer Certification pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002Exhibit 32.2
    
    Chief Financial Officer Certification pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
 108




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##### Table of Contents



BFC FINANCIAL CORPORATIONDate: November 9, 2006
    
    By:
    
    /s/ Alan B. LevanAlan B. Levan, Chief Executive OfficerDate: November 9, 2006
    
    By:
    
    /s/ Glen R. GilbertGlen R. Gilbert, Executive Vice President,and Chief Financial Officer
 109