Bluegreen Vacations Holding Corp - Annual Report: 2010 (Form 10-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K


þ		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2010


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

(Exact name of registrant as specified in its charter)


Florida		59-2022148

(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)


2100 West Cypress Creek Road Fort Lauderdale, Florida		33309

(Address of principal executive office)		(Zip Code)

(954) 940-4900
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None.

Securities registered pursuant to Section 12(g) of the Act:

Class A Common Stock, $.01 par Value

Class B Common Stock, $.01 par Value
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO þ

On June 30, 2010, the aggregate market value of the registrant’s voting common equity held by non-affiliates was $24.9 million computed by reference to the closing price of the registrant’s Class A Common Stock on such date. The registrant does not have any non-voting common equity.

The number of outstanding shares of each of the registrant’s classes of common stock, as of March 28, 2011 was as follows:

Class A Common Stock, $.01 par value: 68,521,497 shares outstanding
Class B Common Stock, $.01 par value: 6,859,751 shares outstanding

Documents Incorporated by Reference

Portions of the registrant’s Definitive Proxy Statement on Schedule 14A relating to the registrant’s 2011 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.

The audited financial statements of Bluegreen Corporation for the three years ended December 31, 2010 are incorporated by reference into Part II, Item 8 of this Form 10-K and are filed as Exhibit 99.1 to this Form 10-K.

BFC Financial Corporation
Annual Report on Form 10-K for the Year Ended December 31, 2010

TABLE OF CONTENTS


	Page
PART I
Item 1. Business		3

Item 1A. Risk Factors		37

Item 1B. Unresolved Staff Comments		59

Item 2. Properties		60

Item 3. Legal Proceedings		61

Item 4. (Removed and Reserved)		66

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		67

Item 6. Selected Financial Data		69

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		71

Item 7A. Quantitative and Qualitative Disclosures About Market Risk		154

Item 8. Financial Statements and Supplementary Data		158

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		285

Item 9A. Controls and Procedures		286

Item 9B. Other Information		288

PART III

Item 10. Directors, Executive Officers and Corporate Governance		288

Item 11. Executive Compensation		288

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		288

Item 13. Certain Relationships and Related Transactions, and Director Independence		288

Item 14. Principal Accounting Fees and Services		288

PART IV

Item 15. Exhibits, Financial Statement Schedules		289

SIGNATURES		291
EX-10.3
EX-21.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-31.3
EX-32.1
EX-32.2
EX-32.3
EX-99.1

PART I

ITEM 1. BUSINESS

Except for historical information contained herein, the matters discussed in this document contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. When used in this document and in any documents incorporated by reference herein, the words “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and similar expressions identify certain of such forward-looking statements. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of BFC Financial Corporation (“BFC” and, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. When considering those forward-looking statements, the reader should keep in mind the risks, uncertainties and other cautionary statements made in this report. The reader should not place undue reliance on any forward-looking statement, which speaks only as of the date made. This document also contains information regarding the past performance of our investments and the reader should note that prior or current performance of investments and acquisitions is not a guarantee or indication of future performance.

Some factors which may affect the accuracy of the forward-looking statements apply generally to the financial services, real estate, resort development and vacation ownership, and restaurant industries, while other factors apply more specifically to us. Risks and uncertainties associated with BFC, including its wholly-owned Woodbridge subsidiary, include, but are not limited to:

	•		risks associated with the Company’s current business strategy, including the risk that BFC will not be in a position to provide strategic support to its affiliated entities or that such support will not achieve the anticipated benefits;

	•		BFC has negative cash flow and limited sources of cash which may present certain risks to its ongoing operations;

	•		the impact of economic, competitive and other factors affecting the Company and its subsidiaries, and their operations, markets, products and services;

	•		the risk that creditors of the Company’s subsidiaries or other third parties may seek to recover distributions or dividends made by such subsidiaries or other amounts owed by such subsidiaries from their respective parent companies, including BFC;

	•		BFC’s shareholders’ interests may be diluted if additional shares of BFC’s common stock are issued, and BFC’s public company investments may be diluted if BankAtlantic Bancorp, Bluegreen or Benihana issue additional shares of its stock;

	•		adverse conditions in the stock market, the public debt market and other capital markets and the impact of such conditions on the activities of the Company and its subsidiaries;

	•		the impact of the current economic downturn on the price and liquidity of BFC’s common stock and on BFC’s ability to obtain additional capital, including the risk that if BFC needs or otherwise believes it is advisable to issue debt or equity securities to fund its operations, it may not be possible to issue any such securities on favorable terms, if at all;

	•		strategic alternatives being evaluated by entities in which the Company has investments may not ultimately be pursued or consummated on terms expected or at all;

	•		the performance of entities in which the Company has made investments may not be profitable or their results as anticipated;

	•		BFC is dependent upon dividends from its subsidiaries to fund its operations, and currently BankAtlantic Bancorp is prohibited from paying dividends and may not pay dividends in the future, whether as a result of such restrictions continuing in the future or otherwise, and Bluegreen has historically not paid dividends on its common stock, and even if paid, BFC has historically experienced and may continue to experience negative cash flow;

	•		the uncertainty regarding the amount of cash that will be required to be paid to Woodbridge shareholders who exercised appraisal rights in connection with Woodbridge’s merger with BFC;

	•		the risk that negotiations and agreements relating to the resolution of Woodbridge’s indebtedness and releases under any or all of the debt may not be obtained;

	•		risks associated with the securities we hold directly or indirectly, including the risk that we may record further impairment charges with respect to such securities in the event trading prices decline in the future;

	•		the preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions, and any changes in estimates, judgments and assumptions used could have a material adverse impact on our financial condition and operating results;

	•		the risk that the amount of any tax refund that we may receive in the future may be less than expected, or received later than expected;

	•		uncertainties regarding enacted or currently proposed legislation regarding regulation of companies within the financial services industry, including bank holding companies, and the potential impact of such legislation on our operations and the operations of BankAtlantic Bancorp, as well as the risk that BFC will be required by the OTS to enter into a Cease and Desist Order with respect to its ownership of BankAtlantic Bancorp;

	•		the risks related to litigation and other legal proceedings against BFC and its subsidiaries, including the costs and expenses of such proceedings, including legal and other professional fees, as well as the impact of any finding of liability or damages on our financial condition and operating results; and

	•		the Company’s success at managing the risks involved in the foregoing.

With respect to BFC’s subsidiary, BankAtlantic Bancorp, and its subsidiary, BankAtlantic, the risks and uncertainties include, but are not limited to:

	•		the impact of economic, competitive and other factors affecting BankAtlantic Bancorp and its operations, markets, products and services, including the impact of the changing regulatory environment, a continued or deepening recession, continued decreases in real estate values, and increased unemployment or sustained high unemployment rates on its business generally, BankAtlantic’s regulatory capital ratios, the ability of its borrowers to service their obligations and its customers to maintain account balances and the value of collateral securing its loans;

	•		credit risks and loan losses, and the related sufficiency of the allowance for loan losses, including the impact on the credit quality of BankAtlantic Bancorp’s loans (including those held in the asset workout subsidiary of BankAtlantic Bancorp) of a sustained downturn in the economy and in the real estate market and other changes in the real estate markets in BankAtlantic Bancorp’s trade area and where its collateral is located;

	•		the risks of additional charge-offs, impairments and required increases in BankAtlantic Bancorp’s allowance for loan losses associated with the economy;

	•		the impact of regulatory proceedings and litigation regarding overdraft fees;

	•		the risks associated with maintaining compliance with the Cease and Desist Orders entered into by BankAtlantic Bancorp and BankAtlantic, including risks that compliance will adversely impact operations, risks associated with failing to comply with regulatory mandates and the risk of imposition of additional regulatory requirements and/or fines;

	•		the uncertain impact of legal proceedings on BankAtlantic Bancorp’s financial condition or operations including the risk that the securities class action litigation verdict may not be overturned on appeal;

	•		the risk that changes in interest rates and the effects of, and changes in, trade, monetary and fiscal policies and laws including their impact on BankAtlantic’s net interest margin;

	•		adverse conditions in the stock market, the public debt market and other financial and credit markets and the impact of such conditions on BankAtlantic Bancorp’s activities and ability to raise capital;

	•		the sale of BankAtlantic’s Tampa branches may not be completed as announced or at all and may not have the positive financial impact currently anticipated;

	•		BankAtlantic Bancorp’s expense reduction initiatives may not be successful and additional cost savings may not be achieved;

	•		BankAtlantic Bancorp may raise additional capital and such capital may be highly dilutive to BankAtlantic Bancorp’s shareholders, including BFC, or may not be available, and depending on the number of shares issued, BankAtlantic Bancorp’s ability to use its net operating loss carryforwards against taxable income may be limited;

	•		the risks associated with the impact of periodic valuation testing of goodwill, deferred tax assets and other assets; and

	•		BankAtlantic Bancorp’s success at managing the risks involved in the foregoing.

With respect to BFC’s 52% owned subsidiary, Bluegreen, the risks and uncertainties include, but are not limited to:

	•		the overall state of the economy, interest rates and the availability of financing may affect Bluegreen’s ability to market vacation ownership interests (“VOIs”) and residential homesites;

	•		Bluegreen would incur substantial losses and its liquidity position could be adversely impacted if the customers it finances default on their obligations;

	•		while Bluegreen has attempted to restructure its business to reduce its need for and reliance on financing for liquidity in the short term, there is no assurance that such restructuring will be successful or that its business and profitability will not otherwise continue to depend on its ability to obtain financing, which may not be available on favorable terms, or at all;

	•		Bluegreen’s results of operations and financial condition in the past have been and may in the future continue to be adversely impacted if its estimates concerning its notes receivable are incorrect;

	•		Bluegreen’s future success depends on its ability to market its products successfully and efficiently;

	•		Bluegreen is subject to the risks of the real estate market and the risks associated with real estate development, including the continued decline in real estate values and the deterioration of real estate sales;

	•		Bluegreen may not be successful in increasing or expanding its fee-based services relationships and its fee-based service activities may not be profitable, which may have an adverse impact on its results of operations and financial condition;

	•		Bluegreen’s exploration of strategic alternatives for its Bluegreen Communities involves a number of risks;

	•		claims for development-related defects could adversely affect Bluegreen’s financial condition and operating results;

	•		the resale market for VOIs could adversely affect Bluegreen’s business;

	•		Bluegreen’s initiatives to increase the amount of cash received upon sales of VOI’s and to achieve selling and marketing efficiencies in its Bluegreen Resorts segment may not be successful;

	•		Bluegreen may be adversely affected by extensive federal, state and local laws and regulations and changes in applicable laws and regulations, including with respect to the imposition of additional taxes on operations, and results of audits of Bluegreen’s tax returns or those of its subsidiaries may have a material and adverse impact on its financial condition;

	•		low consumer demand for homesites has had and may continue to have an adverse impact on Bluegreen’s Communities segment;

	•		environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on Bluegreen’s business;

	•		the ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain, renew, or extend credit facilities, debt, or otherwise raise capital;

	•		in the near term, Bluegreen has significant debt maturing and advance periods expiring on its receivable-backed credit facilities, which could adversely impact its liquidity position, and, it may not be successful in refinancing or renewing the debt on favorable terms, if at all;

	•		Bluegreen’s financial statements are prepared based on certain estimates, including those related to future cash flows which in turn are based upon expectations of its performance given current and projected forecasts of the economy and real estate markets, and Bluegreen’s results and financial condition may be materially and adversely impacted if the adverse conditions in the real estate market continue for longer than expected or deteriorate further or if its performance does not otherwise meet its expectations;

	•		the loss of the services of Bluegreen’s key management and personnel could adversely affect its business; and

	•		Bluegreen’s success at managing the risks involved in the foregoing.

In addition to the risks and factors identified above and in PART I, Item 1A of this report, reference is also made to other risks and factors detailed in reports filed by the Company, BankAtlantic Bancorp and Bluegreen with the Securities and Exchange Commission (the “SEC”). The Company cautions that the foregoing factors are not exclusive.

The Company

We are a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), and a non-controlling interest in Benihana, Inc. (“Benihana”). As a result of its position as the controlling shareholder of BankAtlantic Bancorp, BFC is a “unitary savings bank holding company” regulated by the Office of Thrift Supervision (“OTS”). As of December 31, 2010, we had total consolidated assets of approximately $5.8 billion and shareholders’ equity attributable to BFC of approximately $142.9 million.

Historically, BFC’s business strategy has been to invest in and acquire businesses in diverse industries either directly or through controlled subsidiaries. However, BFC believes that, in the short term, the Company’s and its shareholders’ interests are best served by BFC providing strategic support to its existing investments. In furtherance of this strategy, the Company took several steps in 2009 and 2010, including those described below, which it believes will enhance the Company’s prospects. During the third quarter of 2009, BFC and Woodbridge Holdings Corporation consummated their merger pursuant to which Woodbridge became a wholly-owned subsidiary of BFC. During the fourth quarter of 2009, our ownership interest in Bluegreen increased to 52% as a result of the purchase of an additional 23% interest in Bluegreen. We have also increased our investment in BankAtlantic Bancorp through our participation in BankAtlantic Bancorp’s rights offerings to its shareholders during the third quarter of 2009 and the second quarter of 2010, which in the aggregate increased our economic interest in BankAtlantic Bancorp to 45% and our voting interest in BankAtlantic Bancorp to 71%. In the future, we will consider other opportunities that could alter our ownership in our affiliates or seek to make opportunistic investments outside of our existing portfolio; however, we do not currently have pre-determined parameters as to the industry or structure of any future investment. In furtherance of our goals, we will continue to evaluate various financing transactions that may present themselves, including raising additional debt or equity as well as other alternative sources of new capital.

During July 2010, Benihana announced its intention to engage in a formal review of strategic alternatives, including a possible sale of the company. During March 2011, Bluegreen announced its intention to evaluate strategic alternatives for the Bluegreen Communities division, including a possible sale of the division or disposition of its assets. Each company has engaged advisors to assist it in pursuing strategic alternatives. BFC is supportive of Benihana and Bluegreen in achieving their objectives.

On September 21, 2009, we consummated our merger with Woodbridge Holdings Corporation pursuant to which Woodbridge Holdings Corporation merged with and into Woodbridge Holdings, LLC, “Woodbridge” which continued as the surviving company of the merger and the successor entity to Woodbridge Holdings Corporation. Pursuant to the terms of the merger, which was approved by each company’s shareholders at their respective meetings held on September 21, 2009, each outstanding share of Woodbridge’s Class A Common Stock automatically converted into the right to receive 3.47 shares of our Class A Common Stock. Shares otherwise issuable to us attributable to the shares of Woodbridge’s Class A Common Stock and Class B Common Stock owned by us were canceled in connection with the merger. As a result of the merger, Woodbridge Holdings Corporation’s separate corporate existence ceased and its Class A Common Stock is no longer publicly traded. See Note 3 of the “Notes to Consolidated Financial Statements” for additional information about the merger.

On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares, or 52%, of Bluegreen’s outstanding stock. As a result of the purchase, we hold a controlling interest in Bluegreen and, since November 16, 2009, we have consolidated Bluegreen’s results into our financial statements. Any reference to Bluegreen’s results of operations for 2009 includes only 45 days of activity for Bluegreen relating to the period from November 16, 2009, the date of the share purchase, through December 31, 2009 (the “Bluegreen Interim Period”). Prior to November 16, 2009, our approximate 29% equity investment in Bluegreen was accounted for under the equity method. See Note 4 of the “Notes to Consolidated Financial Statements” for additional information about the Bluegreen share acquisition on November 16, 2009.

In addition to our merger with Woodbridge and our acquisition of additional shares of Bluegreen’s common stock, we also increased our investment in BankAtlantic Bancorp during 2009 and 2010 through our participation in shareholder rights offerings engaged in by BankAtlantic Bancorp during the years. Specifically, we exercised subscription rights in BankAtlantic Bancorp’s rights offerings to purchase an aggregate of 14.9 million shares of BankAtlantic Bancorp’s Class A Common Stock during the third quarter of 2009 and 10.0 million shares of BankAtlantic Bancorp’s Class A Common Stock during June and July 2010. In the aggregate, these purchases increased our ownership interest in BankAtlantic Bancorp from approximately 30% to 45% and our voting interest in BankAtlantic Bancorp from approximately 59% to 71%.

As a holding company with controlling positions in BankAtlantic Bancorp and Bluegreen, generally accepted accounting principles (“GAAP”) requires the consolidation of the financial results of both entities. As a consequence, the assets and liabilities of both entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including Woodbridge, are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution. The recognition by BFC of income from controlled entities is determined based on the total

percent of economic ownership in those entities. At December 31, 2010, we owned approximately 52% of Bluegreen’s common stock and had an approximately 45% ownership interest and 71% voting interest in BankAtlantic Bancorp.

Available Information

Our corporate website is www.bfcfinancial.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, are available free of charge through our website, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The Company’s Internet website and the information contained on or connected to it are not incorporated into this Annual Report on Form 10-K.

Recent Developments

Deconsolidation of Certain Subsidiaries of Core — In early 2010, we made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. As of the date of this filing, Core has relinquished virtually all of the land it had owned in both Florida and South Carolina to its lenders and, in turn, was released from the debt obligations associated therewith. See “Business Segments — Real Estate Operations” below for further information about the deconsolidation of certain subsidiaries of Core.

BankAtlantic Bancorp and BankAtlantic — On February 23, 2011, BankAtlantic Bancorp and BankAtlantic each entered into a Stipulation and Consent to Issuance of Order to Cease and Desist with the OTS. See “Business Segments — Financial Services” below for further information about these orders and the requirements and restrictions that they impose on BankAtlantic Bancorp and BankAtlantic.

BFC Parent Company (“BFC Parent”) — BFC Parent has committed that it will not, without the prior written non-objection of the OTS, incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with BankAtlantic’s compliance requirements applicable to it; declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter; or enter into any new agreements, contracts or arrangements or materially modify any existing agreements, contracts or arrangements with BankAtlantic not consistent with past practices.

Business Segments

The Company’s business activities currently consist of (i) Real Estate and Other Activities and (ii) Financial Services. We currently report the results of operations through six reportable segments: These segments include the following four reportable segments which comprise our Real Estate and Other Activities: BFC Activities; Real Estate Operations; and Bluegreen Resorts and Bluegreen Communities, the segments through which Bluegreen’s results of operations are reported. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and contain the other two reportable segments: BankAtlantic and BankAtlantic Bancorp Parent Company.

The presentation and allocation of the assets, liabilities and results of operations of each segment may not reflect the actual economic costs of the segment as a stand-alone business. If a different basis of allocation were utilized, the relative contributions of the segment might differ but, in management’s view, the relative trends in segments would not likely be impacted. See also Item 7 of this report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 34 of the “Notes to Consolidated Financial Statements” contained in Item 8 of this report for a discussion of trends, results of operations, and other relevant information on each segment.

Real Estate and Other Activities

Our Real Estate and Other business activities include four business segments: BFC Activities, Real Estate Operations, and Bluegreen’s two business segments, Bluegreen Resorts and Bluegreen Communities.

BFC Activities

The BFC Activities segment consists of BFC operations, our investment in Benihana, and the other operations described below.

BFC operations primarily consist of our corporate overhead and general and administrative expenses, including the expenses of Woodbridge, the financial results of a venture partnership that BFC controls and other equity investments, as well as income and expenses associated with BFC’s shared service operations which provides human resources, risk management, investor relations, executive office administration and other services to BankAtlantic Bancorp and Bluegreen. BFC Activities also includes investments made by BFC/CCC, Inc., our wholly owned subsidiary (“BFC/CCC”).

Investment in Benihana

Benihana is a NASDAQ-listed company with two classes of common shares: Common Stock (BNHN) and Class A Common Stock (BNHNA). We own 800,000 shares of Benihana Series B Convertible Preferred Stock (“Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into an aggregate of 1,578,943 shares of Benihana’s Common Stock at a conversion price of $12.67 per share of Convertible Preferred Stock, subject to adjustment from time to time upon certain defined events. Based on the number of currently outstanding shares of Benihana’s capital stock, the Convertible Preferred Stock, if converted, would represent an approximate 19% voting interest and an approximate 9% economic interest in Benihana. Holders of the Convertible Preferred Stock are entitled to receive cumulative quarterly dividends at an annual rate equal to $1.25 per share, payable on the last day of each calendar quarter. The Convertible Preferred Stock is subject to mandatory redemption of $20 million plus accumulated dividends on July 2, 2014 unless we elect to extend the mandatory redemption date to a date not later than July 2, 2024. At December 31, 2010, the closing price of Benihana’s Common Stock was $8.01 per share. The market value of the 800,000 shares of Convertible Preferred Stock we own if converted to Benihana’s Common Stock at December 31, 2010 would have been approximately $12.6 million. During July 2010, Benihana announced its intention to engage in a formal review of strategic alternative in the event that a sale transaction is consummated, the Company would receive a minimum of $20 million in consideration for its shares of the Convertible Preferred Stock.

In December 2008, the Company performed an impairment evaluation of its investment in the Convertible Preferred Stock and determined that there was an other-than-temporary decline of approximately $3.6 million and, accordingly, the investment was written down to its fair value at that time of approximately $16.4 million. Concurrent with management’s evaluation of the impairment of this investment at December 31, 2008, it made the determination to reclassify this investment from investment securities to investment securities available for sale. At December 31, 2010, the Company’s estimated fair value of its investment in Benihana’s Convertible Preferred Stock was approximately $21.1 million. BFC will continue to monitor this investment to determine whether any further other-than-temporary impairment charges may be required in future periods. The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana’s Convertible Preferred Stock.

Other Operations

Other operations include the consolidated operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), a restaurant operator and franchisor engaged in the quick service and organic food industries, and the activities of Snapper Creek Equity Management, LLC (“Snapper Creek”), and other investments and joint ventures.

During the third quarter of 2009, we exercised our option to purchase 521,740 shares of Series B Convertible Preferred Stock of Pizza Fusion at a price of $1.15 per share, or an aggregate purchase price of $600,000, resulting in an ownership interest of approximately 45% in Pizza Fusion. On January 15, 2010, we purchased an additional 307,692 shares of Pizza Fusion’s common stock in Pizza Fusion’s offering, in a private placement transaction, of up to $3 million of its common stock at a purchase price of $1.30 per share, or an aggregate purchase price of $400,000. In connection with that purchase, we also received warrants to purchase an additional 61,538 shares of Pizza Fusion’s common stock at an exercise price of $1.56 per share. As of December 31, 2010, Pizza Fusion had 18 restaurants,

including 1 restaurant owned by Pizza Fusion and 17 franchised restaurants, operating in seven states and Saudi Arabia and had entered into franchise agreements for an additional 7 stores. Pizza Fusion has faced several challenges, including the effect of the current economic downturn on consumer spending patterns and the tightening of the credit markets on the ability of new franchisees to obtain financing. During 2009, the Company performed its annual review of goodwill for impairment and determined that the discounted value of estimated cash flows was below the carrying value of its investment in Pizza Fusion, resulting in a write-off of the entire $2.0 million of goodwill relating to this investment. Pizza Fusion is in its early stages and it will require additional financial support in order to continue operations under its current business plan. Pizza Fusion’s audited financial statements for its fiscal year ended September 30, 2010 included a going concern opinion. We currently have no plans to make a further investment in Pizza Fusion and Pizza Fusion has not recently been successful in its efforts to raise additional capital.

Prior to obtaining a controlling interest in Bluegreen on November 16, 2009, we accounted for our investment in Bluegreen under the equity method of accounting and our interest in Bluegreen’s earnings or losses was included in the BFC Activities segment. Historically, the cost of the Bluegreen investment was adjusted to recognize our interest in Bluegreen’s earnings or losses. The difference between a) our ownership percentage in Bluegreen multiplied by its earnings and b) the amount of our equity in earnings of Bluegreen as reflected in our financial statements related to the amortization or accretion of purchase accounting adjustments made at the time of the initial acquisition of Bluegreen’s common stock in 2002 and a basis difference due to impairment charges recorded on the investment, as described in Note 16 of the “Notes to Consolidated Financial Statements”.

Real Estate Operations

The Real Estate Operations segment is comprised of the operations of Woodbridge and the subsidiaries through which Woodbridge historically conducted its real estate business activities. It currently includes the operations of Carolina Oak, which engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008, and Cypress Creek Holdings, LLC (“Cypress Creek Holdings”), which engages in leasing activities. The Real Estate Operations segment also includes the business activities of Core, until the fourth quarter of 2010, at which time certain subsidiaries of Core were deconsolidated from our financial statements as discussed below.

Core Communities

Historically, the activities of Core Communities focused on the development of a master-planned community in Port St. Lucie, Florida called Tradition, Florida and a community outside of Hardeeville, South Carolina called Tradition Hilton Head. Until 2009, Tradition, Florida was in active development as was Tradition Hilton Head, although in a much earlier stage.

During 2010, demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.

In December 2010, Core and one of its subsidiaries entered agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefor, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.

On June 10, 2010, Core sold its two commercial leasing projects (sometimes referred to herein as the “Projects”) to Inland Real Estate Acquisition, Inc. (“Inland”) for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. The sale resulted in net cash proceeds to Core of approximately $1.5 million. See Note 6 for further information regarding the Projects.

Carolina Oak

In 2007, Woodbridge acquired from Levitt and Sons LLC, a former wholly-owned subsidiary of Woodbridge (“Levitt and Sons”), all of the outstanding membership interests in Carolina Oak, a South Carolina limited liability company (formerly known as Levitt and Sons of Jasper County, LLC). As a result of the significant challenges faced

Real Estate

during 2009, Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, the inventory of real estate at Carolina Oak was reviewed for impairment and a $16.7 million impairment charge was recorded to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

Cypress Creek Holdings

Since 2005, Cypress Creek Holdings has owned an 80,000 square foot office building in Fort Lauderdale, Florida. The building was previously 50% occupied by an unaffiliated third party pursuant to a lease which expired in March 2010. The tenant opted not to renew the lease and vacated the space as of March 31, 2010. All efforts to lease the space to date have been unsuccessful. As of December 31, 2010 and 2009, we evaluated the value of the office building for impairment in accordance with the accounting guidance for the impairment or disposal of long-lived assets and determined that the carrying value exceeded the fair value. Accordingly, during 2010 and 2009, the Company recognized impairment charges related to the office building of $3.9 million and $4.3 million, respectively. During the first quarter of 2011, Cypress Creek Holdings’ lender with respect to the office building agreed to permit Cypress Creek Holdings to pursue a short sale of the building. Whether a lease or sale will ultimately be consummated and Cypress Creek Holdings’ obligations to the lender in the event of a short sale are uncertain at this time.

Levitt and Sons

Acquired in December 1999, Levitt and Sons was a developer of single family homes and town home communities for active adults and families in Florida, Georgia, Tennessee and South Carolina. Increased inventory levels combined with weakened consumer demand for housing and tightened credit requirements negatively affected sales, deliveries and margins throughout the homebuilding industry. Levitt and Sons experienced decreased orders, decreased margins and increased cancellation rates on homes in backlog. Excess supply, particularly in Florida, in combination with a reduction in demand resulting from tightened credit requirements and reductions in credit availability, as well as buyers’ fears about the direction of the market, exerted continuous downward pricing pressure for residential homes.

On November 9, 2007 (the “Petition Date”), Levitt and Sons and substantially all of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”).

In connection with the filing of the Chapter 11 Cases, we deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from our financial results of operations. As a result of the deconsolidation of Levitt and Sons, we recorded our interest in Levitt and Sons under the cost method of accounting. During June 2008, Woodbridge entered into a settlement agreement (the “Settlement Agreement”) with the Debtors and the Joint Committee of Unsecured Creditors appointed in the Chapter 11 Cases (the “Joint Committee”). Pursuant to the Settlement Agreement, as it was subsequently amended, Woodbridge agreed to (i) pay $8 million to the Debtors’ bankruptcy estates (sometimes referred to herein as the “Debtors’ Estate”), (ii) place $4.5 million in a release fund to be disbursed to third party creditors in exchange for a third party release and injunction, (iii) make a $300,000 payment to a deposit holders fund and (iv) share a percentage of any tax refund attributable to periods prior to the bankruptcy with the Debtors’ Estate. In addition, Woodbridge agreed to waive and release substantially all of the claims it had against the Debtors, including administrative expense claims through July 2008, and the Debtors (joined by the Joint Committee) agreed to waive and release any claims they had against Woodbridge and its affiliates. On February 20, 2009, the Bankruptcy Court entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Joint Committee. That order also approved the settlement pursuant to the Settlement Agreement, as amended. No appeal or rehearing of the court’s order was filed by any party, and the settlement was consummated on March 3, 2009,

Real Estate

at which time payment was made in accordance with the terms and conditions of the Settlement Agreement, as amended. Under the cost method of accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the Settlement Agreement), was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary. In the fourth quarter of 2009, we accrued approximately $10.7 million in connection with a portion of a tax refund of which the Debtors’ Estate is entitled to pursuant to the Settlement Agreement. As a result, the gain on settlement of investment in subsidiary for the year ended December 31, 2009 was $29.7 million. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.0 million representing the portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service (“IRS”) guidance that will likely be required to be paid to the Debtors’ Estate. We have placed into escrow approximately $8.4 million, which represents the portion of the tax refund received to date from the IRS that is payable to the Debtors’ Estate. At December 31, 2010, this amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition.

Bluegreen

Bluegreen is a leading provider of “Colorful Places to Live and Play™” through two divisions: Bluegreen Resorts and Bluegreen Communities. In 2010, Bluegreen Resorts sales represented 96% of Bluegreen’s system-wide sales while Bluegreen Communities represented 4% of sales. Bluegreen Resorts markets, sells and manages real estate-based vacation ownership interests (“VOIs”) in resorts generally located in popular, high-volume, “drive-to” vacation destinations, which were developed or acquired by Bluegreen or developed by others. Bluegreen Resorts also provides fee-based services to third party resort developers and timeshare property owners’ associations. These services include selling and marketing third-party developers’ VOIs, mortgage servicing, construction management, title, and resort management. Bluegreen Communities acquires, develops and subdivides property and markets residential land home sites. The majority of these home sites are sold directly to retail customers who seek to build a home, in some cases on properties featuring a golf course and related amenities. On March 24, 2011, Bluegreen announced that Bluegreen had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There can be no assurance, however, regarding the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to Bluegreen’s financial condition and operating results or otherwise achieve the benefits Bluegreen expects to realize from the transaction.

Bluegreen Resorts

From its inception in 1994, Bluegreen Resorts has been involved in the vacation ownership industry. As of December 31, 2010, Bluegreen were selling VOIs in the Bluegreen Vacation Club at 20 sales offices at resorts located in the United States and Aruba. Bluegreen believes the Bluegreen Vacation Club allows its VOI owners to customize their vacation experience in a more flexible manner than traditional fixed-week vacation ownership programs. A deeded real estate interest in a Bluegreen Vacation Club VOI in any of Bluegreen resorts entitles the buyer to an annual or biennial allotment of “points” in perpetuity. Club members may use their points to stay in one of 27 Bluegreen Vacation Club — Club Resorts and 29 other Club Associated Resorts as well as having access to other vacation options, including cruises and stays at over 4,000 resorts offered through Resort Condominiums International, LLC (“RCI”), an unaffiliated external exchange network. Club members who acquired or upgraded their VOIs on or after November 1, 2007 also have access to 21 Shell Vacation Club (“Shell”) resorts, through Bluegreen’s Select Connections™ joint venture with Shell. Shell is an unaffiliated privately-held resort developer.

During 2010, Bluegreen continued to expand its fee-based service business. Bluegreen believes that it can leverage its expertise in sales and marketing, mortgage servicing, fee-based management services, title and construction management by offering these fee-based services to third party timeshare developers and property owners’ associations. Bluegreen fee-based services business generates positive cash flows and typically requires less capital investment than its traditional vacation ownership business.

Real Estate

Since Bluegreen’s inception, it has generated approximately 353,000 VOI sales transactions, which include over 9,000 VOI sales transactions on behalf of third party developers. Bluegreen Resorts’ estimated remaining life-of-project sales of Bluegreen-owned inventory at December 31, 2010, were approximately $2.9 billion, (this includes approximately $1.0 billion of which relates to fully developed inventory). For the year ended December 31, 2010, Bluegreen Resorts recognized system-wide sales segment operating profit of $290.3 million and $63.7 million, respectively. The 2010 segment operating profit reflects a non-cash charge of $21.2 million to increase the allowance for loan losses on our VOI notes receivable generated prior to November 1, 2008 (the date we implemented Fair Isaac Corporation (“FICO®”)-based credit underwriting standards).

Bluegreen also offers a Sampler program that allows purchasers of this product to enjoy substantially the same amenities, activities and services offered to Bluegreen Vacation Club members during a trial period which is generally one or two years. Bluegreen believes that it benefits from the sampler program as it gives them an opportunity to market their VOIs to customers when they use their trial memberships at Bluegreen resorts and to recapture a portion of the costs incurred in connection with the initial marketing to prospective customers.

In addition to the sampler program described above, Bluegreen Resorts uses a variety of methods to attract prospective purchasers of VOIs including marketing of mini-vacations either through face-to-face contact at retail and leisure locations or through telemarketing campaigns and marketing to current owners of VOIs.

Purchasers of VOIs are required to make a down payment of at least 10% of the VOI sales price and, subject to meeting eligibility requirements, may finance the balance of the sales price over a period of up to ten years. As part of Bluegreen’s continued efforts to improve its cash flows from operations, beginning in 2009, Bluegreen began incentivizing its sales associates to encourage higher cash down payments, and as a result, Bluegreen has increased both the percentage of its sales that are 100% cash and its average down payment on financed sales. Including down payments received on financed sales, 54% of Bluegreen’s 2010 sales were paid in cash within approximately 30 days from the contract date. Due to a significant reduction of liquidity in the receivable-backed credit markets commencing in the fourth quarter of 2008, and due to Bluegreen’s continued desire to manage efficiencies in its timeshare marketing costs, Bluegreen purposely and significantly reduced its sales volumes in the fourth quarter of 2008. Since that time, Bluegreen has and intends to continue to adjust its sales volumes based on available liquidity in the receivable credit markets, the success of Bluegreen’s efforts to increase the amount of cash paid at or shortly after the time that sales contracts are entered into and its ability to achieve desired levels of marketing efficiencies.

As of December 31, 2010, Bluegreen’s VOI receivables portfolio totaled approximately $705.4 million in principal amount.

To maintain liquidity associated with Bluegreen’s VOI receivables, Bluegreen has historically had credit facilities pursuant to which it pledged or sold its consumer notes receivable. From time to time, Bluegreen also engages in private placement securitization transactions and similar arrangements to pay down all or a portion of its note receivable credit facilities. During 2010, Bluegreen successfully entered into new credit facilities, renewed or extended certain of its existing credit facilities, and completed two term securitization transactions. The challenging credit markets have negatively impacted Bluegreen’s financing activities in recent years compared to historical levels. While the credit markets appear to be recovering and Bluegreen entered into term securitizations and new financing facilities during 2010 as described further in Bluegreen’s Liquidity and Capital Resources above, the number of banks and other finance companies in the market to provide “warehouse” lines of credit for timeshare receivables have decreased in recent years as several firms have left the space. Bluegreen continues to actively pursue additional credit facility capacity, capital markets transactions and alternative financing solutions, and hopes that its business model and financial profile will position Bluegreen to maintain its existing credit relationships as well as attract new sources of capital.

Bluegreen Communities

Bluegreen Communities acquires, develops and subdivides property and marketing residential land home sites. The majority of homesites are sold directly to retail customers who seek to build a home generally in the future (in some cases on properties featuring a golf course and other related amenities). Bluegreen Communities has historically sought to acquire and develop land near major metropolitan centers, but outside the perimeter of intense subdivision development, and in popular retirement areas.

Our Bluegreen Communities’ business has been, and continues to be, adversely impacted by the deterioration in the real estate market. Beginning in the fourth quarter of 2008 and in response to the challenging economic

Real Estate

environment, Bluegreen focused its efforts on selling homesites in completed sections of its communities and a result, significantly reduced its overall spending on development activities. Bluegreen has also significantly reduced prices on certain of its homesites in an attempt to increase sales activity. The carrying value of Bluegreen Communities inventory was $78.2 million as of December 31, 2010. For the year ended December 31, 2010, Bluegreen Communities recognized sales of $12.0 million and generated a segment operating loss of $26.9 million. The operating loss reflects non-cash impairment charges of $14.9 million associated with the write-down of the inventory balances of certain phases of its projects.

As of December 31, 2010, Bluegreen Communities was actively engaged in marketing and selling homesites directly to retail consumers in communities primarily located in Texas, Georgia, and North Carolina. Bluegreen marketing of communities focuses on internet advertising, consumer and broker outreach programs and billboards.

Bluegreen also currently owns and operates two daily fee golf courses which Bluegreen believes increase the marketability of adjacent homesites and communities.

On March 24, 2011, Bluegreen announced that Bluegreen had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There can be no assurance, however, regarding the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to Bluegreen’s financial condition and operating results or otherwise achieve the benefits Bluegreen expects to realize from the transaction.

Financial Services
(BankAtlantic Bancorp)

Financial Services

Our Financial Services business activities are comprised of the operations of BankAtlantic Bancorp. BankAtlantic Bancorp presents its results in two reportable segments and its results of operations are consolidated with BFC Financial Corporation. The only assets available to BFC Financial Corporation from BankAtlantic Bancorp are dividends when and if declared and paid by BankAtlantic Bancorp. BankAtlantic Bancorp is a separate public company and its management prepared the following Item 1. Business regarding BankAtlantic Bancorp which was included in BankAtlantic Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission. Accordingly, references to “the Company”, “the Parent 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 , Woodbridge or Bluegreen.

BankAtlantic Bancorp is a Florida-based bank holding company and owns BankAtlantic and its subsidiaries. BankAtlantic provides a full line of products and services encompassing retail and business banking.

Recent Developments

On February 23, 2011, the Parent Company and BankAtlantic each entered into a Stipulation and Consent to Issuance of Order to Cease and Desist with the Office of Thrift Supervision (“OTS”), the Parent Company’s and BankAtlantic’s primary regulator. The Order to Cease and Desist to which the Parent Company is subject is referred to as the “Company Order,” the Order to Cease and Desist to which BankAtlantic is subject is referred to as the “Bank Order” and the Company Order and Bank Order are referred to collectively as the “Orders.” The OTS issued the Orders due primarily to the Company’s losses over the past three years, high levels of classified assets and inadequate levels of capital based on BankAtlantic’s risk profile as determined by the OTS’s recent examination. Under the terms of the Company Order, the Parent Company is required to submit written plans to the OTS on or prior to March 31, 2011 that will address, among other things, how the Parent Company intends to maintain and enhance its and BankAtlantic’s capital and set forth the Parent Company’s business plan for the year ending December 31, 2011. In addition, the Parent Company is prohibited from taking certain actions without receiving the prior written non-objection of the OTS, including, without limitation, declaring or paying any dividends or other capital distributions and incurring certain indebtedness. The Parent Company is also required to ensure BankAtlantic’s compliance with the terms of the Bank Order as well as all applicable laws, rules, regulations and agency guidance.

BankAtlantic is required to attain by June 30, 2011 and maintain a tier 1 (core) capital ratio equal to or greater than 8% and a total risk-based capital ratio equal to or greater than 14%. At December 31, 2010, BankAtlantic had a tier 1 (core) capital ratio of 6.22% and a total risk-based capital ratio of 11.72%. The Parent Company and BankAtlantic will seek to meet the higher capital requirements through the expected net gain upon consummation of its Tampa branch sale anticipated to close June 2011 (subject to regulatory approvals and customary conditions) and through other efforts that may include the issuance of its Class A Common Stock through a public or private offering. Based on asset reductions associated with the Tampa branch sale and deposit levels as of December 31, 2010, BankAtlantic estimates that the Tampa transaction will add over 130 basis points (1.30%) to its regulatory capital ratios. While BankAtlantic is taking steps to achieve the capital ratios set forth in the Bank Order by June 30, 2011, such ratios may not be attained by that date or at all.

BankAtlantic is also required to, among other things, revise certain of its plans, programs and policies and submit to the OTS certain written plans, including a capital plan, a contingency plan (only in the event it fails to timely attain and maintain the increased capital ratio requirements), a revised business plan and a plan to reduce BankAtlantic’s delinquent loans and non-performing and other “problem” assets. In addition, the Bank Order requires BankAtlantic to limit its asset growth and restricts BankAtlantic from originating or purchasing new commercial real estate loans or entering into certain material agreements, in each case without receiving the prior written non-objection of the OTS. Separately, the OTS has confirmed that it has no objection to the origination of new loans to facilitate the sale of certain assets, the renewal, extension, modification of existing commercial real estate loans or the funding on existing commitments of commercial real estate loans, subject in each case to compliance with applicable regulations and BankAtlantic’s policies. The Bank Order also imposes restrictions on BankAtlantic’s ability to pay dividends and other distributions.

The Orders also include certain restrictions on compensation paid to the senior executive officers of the Company and BankAtlantic, and restrictions on agreements with affiliates. The Orders became effective on February 23, 2011 and will remain in effect until terminated, modified or suspended by the OTS.

Financial Services
(BankAtlantic Bancorp)

BankAtlantic

BankAtlantic is a federally-chartered, federally-insured savings bank organized in 1952. It is one of the largest financial institutions headquartered in Florida and provides traditional retail banking services and a wide range of business banking products and related financial services through a network of branches in southeast Florida and the Tampa Bay area, primarily in the metropolitan areas surrounding the cities of Miami, Ft. Lauderdale, West Palm Beach and Tampa, which are located in the heavily-populated Florida counties of Miami-Dade, Broward, Palm Beach, Hillsborough and Pinellas. In January 2011, BankAtlantic entered into a purchase and assumption agreement with PNC Financial Services Group Inc. (“PNC”) to sell its Tampa branches and related facilities in order to concentrate its efforts on its core markets in southeast Florida. The transaction, which is subject to regulatory approvals and other customary closing conditions, is anticipated to close in June 2011.

BankAtlantic’s primary business activities include:

	•		attracting checking and savings deposits from individuals and business customers,

	•		originating commercial non-mortgage, consumer and small business loans,

	•		holding and actively managing its commercial real estate loan portfolio,

	•		purchasing wholesale residential loans, and

	•		purchasing investments including primarily mortgage-backed and municipal securities and tax certificates.

BankAtlantic’s business strategy

BankAtlantic began its “Florida’s Most Convenient Bank” strategy in 2002, when it introduced seven-day banking in Florida. This banking initiative contributed to a significant increase in core deposits (demand deposit accounts, NOW checking accounts and savings accounts). BankAtlantic’s core deposits increased from approximately $600 million as of December 31, 2001 to $2.8 billion as of December 31, 2010. Additionally, while the increase in core deposits during 2009 and 2010 may reflect, in part, favorable market conditions generally, we believe that the implementation of new strategies in 2008 further extend our visibility in the market and increased customer loyalty contributed significantly to the increase in core deposit balances.

Over the past three years, management has implemented initiatives with a view to managing capital in the current adverse economic environment. These initiatives primarily included reducing risk-based asset levels through loan and securities repayments in the ordinary course, reducing total assets, eliminating cash dividends to the Parent Company and reducing expenses. These initiatives, while important to maintaining capital ratios, have also had the effect of negatively impacting results from operations as the reduction in asset levels resulted in a reduction of earning assets adversely impacting our net interest income. BankAtlantic’s regulatory capital ratios have also been enhanced through capital contributions from the Parent Company. During the years ended December 31, 2010, 2009 and 2008, the Parent Company contributed capital of $28 million, $105 million and $65 million, respectively, to BankAtlantic. As a result of the contributions and BankAtlantic’s core operations, BankAtlantic was able to maintain the following capital ratios over the past three years:


		For the Years Ended December 31,
		2010		2009		2008
Total risk-based capital	%		11.72		12.56		11.63
Tier 1 risk-based capital	%		9.68		10.63		9.80
Tier 1/core capital	%		6.22		7.58		6.80

As described in “Recent Developments,” BankAtlantic will be required pursuant to the Bank Order to maintain a core capital ratio of 8% and a total risk based capital ratio of 14% as of June 30, 2011. BankAtlantic’s regulatory capital requirements were raised based on the determination by the OTS that BankAtlantic had inadequate capital given its level of criticized assets and its concentration of high risk commercial real estate and construction loans as well as excessive losses over the past three years.

The economic recession and the substantial decline in real estate values throughout the United States, and particularly in Florida, have had an adverse impact on the credit quality of BankAtlantic’s loan portfolio.

Financial Services
(BankAtlantic Bancorp)

BankAtlantic’s non-performing assets increased from $197.9 million at December 31, 2007 to $438.9 million at December 31, 2010. In response, we have taken steps to attempt to address credit risk which included:

	•		Focused efforts and enhanced staffing relating to loan work-outs, collection processes and valuations;

	•		Ceased originating land and residential acquisition, development and construction loans;

	•		Substantially reduced home equity loan originations through underwriting requirements based on lower loan to value ratios;

	•		Froze certain home equity loan unused lines of credit based on declines in borrower credit scores or the market value of loan collateral; and

	•		Transferred certain non-performing commercial real estate loans to the Parent Company in March 2008 in exchange for $94.8 million.

BankAtlantic continued initiatives to decrease operating expenses during 2010. These initiatives included, among others, lowering advertising and marketing expenditures, reducing store and call center hours, consolidating back-office operations and staffing levels, and renegotiating vendor contracts. During 2011, management intends to seek additional efficiencies through the sale of its Tampa branches. BankAtlantic is also continuing to evaluate its products and services as well as its delivery systems and back-office support infrastructure with a view toward enhancing its operational efficiency.

As part of BankAtlantic’s efforts to diversify its loan portfolio and reduce its concentration on commercial real estate and construction loans, BankAtlantic’s loan originations during 2010 were focused on small business and commercial non-mortgage loans originated through its retail and lending networks. BankAtlantic anticipates that it will continue to emphasize small business and commercial non-real estate lending and that the percentage represented by its commercial real estate and residential mortgage loan portfolio balances will decline during 2011, through the scheduled repayment of existing loans and the fact that BankAtlantic is generally not originating new commercial real estate loans.

Loan products

BankAtlantic offers a number of lending products. Historically, primary lending products have included residential loans, commercial real estate loans, consumer loans, and small business and commercial non-mortgage loans.

Residential: BankAtlantic purchases residential loans in the secondary markets that have been originated by other institutions. These loans, which are serviced by independent servicers, are secured by properties located throughout the United States. Residential loans are typically purchased in bulk and are generally non-conforming loans under agency guidelines due primarily to the size of the individual loans (“jumbo loans”). Some of the purchased residential loans are interest-only loans. These loans result in possible future increases in a borrower’s loan payments when the contractually required repayments increase due to interest rate adjustments or when required amortization of the principal amount commences. These payment increases could affect a borrower’s ability to repay the loan and result in increased defaults and losses. At December 31, 2010, BankAtlantic’s residential loan portfolio included $550.2 million of interest-only loans, $52.1 million of which will become fully amortizing and have interest rates reset in 2011. The credit scores and loan-to-value ratios for interest-only loans are similar to those of amortizing loans. BankAtlantic sought to manage the credit risk associated with these loans by limiting purchases of interest-only loans to those originated to borrowers that it believed to be credit worthy and with loan-to-value and total debt to income ratios within agency guidelines. BankAtlantic did not purchase or originate sub-prime, option-arm, “pick-a-payment” or negative amortizing residential loans. Loans in the purchased residential loan portfolio generally do not have prepayment penalties. As part of its initiative to reduce assets with a view toward improving liquidity and regulatory capital ratios, BankAtlantic purchased $9.9 million and $6.5 million of these loans during 2010 and 2009, respectively.

BankAtlantic originates residential loans to customers that are then sold on a servicing released basis to a correspondent. It also originates and holds certain residential loans, which are made primarily to “low to moderate income” borrowers in accordance with requirements of the Community Reinvestment Act. The underwriting of these loans generally follows government agency guidelines and independent appraisers typically perform on-site inspections and valuations of the collateral.

Commercial Real Estate: BankAtlantic provided commercial real estate loans for acquisition, development and construction of various types of properties including office buildings, retail shopping centers, residential construction and other non-residential properties. BankAtlantic also provided loans to acquire or refinance existing income-producing properties. These loans were primarily secured by property located in Florida. Commercial real

Financial Services
(BankAtlantic Bancorp)

estate loans were generally originated in amounts based upon the appraised value of the collateral or estimated cost to construct, generally had a loan-to value ratio at the time of origination of less than 80%, and generally required that one or more of the principals of the borrowing entity guaranteed these loans. Most of these loans have variable interest rates and are indexed to either prime or LIBOR rates. Due to high concentrations of commercial real estate and construction loans in BankAtlantic’s loan portfolio, BankAtlantic ceased the origination of commercial real estate loans during the year ended December 31, 2010. Additionally, pursuant to the Bank Order, BankAtlantic has agreed to cease the purchase or origination of new commercial real estate loans unless it receives the prior written non-objection of the OTS Regional Director. However, BankAtlantic may originate new loans to facilitate the sale of nonperforming assets or criticized assets, fund commercial real estate loan commitments entered into before November 1, 2010, make protective advances for taxes and insurance and renew, extend or modify existing commercial real estate loans, provided that such funding complies with regulatory underwriting guidelines and BankAtlantic’s lending policies.

BankAtlantic’s commercial real estate loan portfolio is divided into four loan classes; commercial residential, commercial owner occupied, commercial land, and commercial other.

Commercial residential real estate loans have resulted in significant losses to BankAtlantic. This class of loans is divided into three categories — builder land bank loans, land acquisition and development loans, and land acquisition, development and construction loans. The builder land bank loan category consists of land loans to borrowers who have or had land purchase option agreements with regional and/or national builders. These loans were originally underwritten based on projected sales of the developed lots to the builders/option holders, and timely repayment of the loans is primarily dependent upon the sale of the property pursuant to the options. If the lots are not sold as originally anticipated, the borrowers may not be in a position to service the loans, with the likely result being an increase in loan losses in this category. The land acquisition and development loan category consists of loans secured by residential land which was intended to be developed by the borrower and sold to homebuilders. We believe that the underwriting on these loans was generally more stringent than builder land bank loans, as an option agreement with a regional or national builder did not exist at the origination date. The land acquisition, development and construction loans are secured by residential land which was intended to be fully developed by the borrower who also might have plans to construct homes on the property. These loans generally involved property with a longer investment and development horizon, and were guaranteed by the borrower or individuals so it was expected that the borrower would have the ability to service the debt for a longer period of time. However, based on the declines in value in the Florida real estate market, all loans collateralized by Florida real estate expose the Bank to significant risk.

Commercial real estate owner occupied loans are also real estate collateralized loans; however, the primary source of repayment is the cash flow from the business operated on the premises of the collateralized property.

Commercial real estate land loans include loans secured by the sale of land and commercial land held for investment purposes. These loans are generally to borrowers that intend to expand the zoning of the property and ultimately sell the property to developers. These loans are considered higher risk than owner occupied or loans with income producing collateral as the repayment of the loan is dependent on the sale of the collateral or the financial strength of the borrower or guarantors.

Commercial other real estate loans are primarily secured by income producing property which includes shopping centers, office buildings, self storage facilities, and warehouses.

BankAtlantic has sold participations in certain commercial real estate loans that it originated. BankAtlantic administers the loans and provides participants periodic reports on the progress of the project for which the loan was made. Major decisions regarding the loans are made by the participants on either a majority or unanimous basis. As a result, BankAtlantic generally cannot significantly modify the loans without either majority or unanimous consent of the participants. BankAtlantic’s sale of loan participations has the effect of reducing its exposure on individual projects, and was required in some cases in order to comply with the regulatory “loans to one borrower” limitations. BankAtlantic has also purchased commercial real estate loan participations from other financial institutions, and in such cases BankAtlantic may not be in a position to control decisions made with respect to the loans.

Financial Services
(BankAtlantic Bancorp)

Standby Letters of Credit and Commitments: Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is the same as extending loans to customers. BankAtlantic may hold certificates of deposit, liens on corporate assets and liens on residential and commercial property as collateral for letters of credit. BankAtlantic issues commitments for commercial real estate and commercial non-mortgage loans.

Commercial non-mortgage loans: These loans are generally business loans secured by the receivables, inventory, equipment, and/or general corporate assets of the borrowers. These loans generally have variable interest rates that are Prime or LIBOR based and are typically originated for terms ranging from one to five years.

Consumer: Consumer loans primarily consist of loans to individuals originated through BankAtlantic’s retail network. Approximately 97% of consumer loans are home equity lines of credit secured by a first or second mortgage on the primary residence of the borrower, substantially all of which is located in Florida. Approximately 26% of home equity lines of credit balances are secured by a first mortgage on the property. Home equity lines of credit have prime-based interest rates and generally mature in 15 years. Other consumer loans generally have fixed interest rates with terms ranging from one to five years. The credit quality of consumer loans is adversely impacted by increases in the unemployment rate and declining real estate values. During the past three years, BankAtlantic experienced higher than historical losses in this portfolio as a result of deteriorating economic conditions in Florida. In an attempt to address this issue, BankAtlantic has adopted more stringent underwriting criteria for consumer loans which has had the effect of significantly reducing consumer loan originations.

Small Business: BankAtlantic originates small business loans to companies located primarily in markets within BankAtlantic’s branch network. Small business loans are primarily originated on a secured basis and do not generally exceed $2.0 million. These loans are generally originated with maturities ranging from one to three years or are due upon demand. Lines of credit extended to small businesses are due upon demand. Small business loans have either fixed or variable prime-based interest rates.

The composition of the loan portfolio was (in millions):


	As of December 31,
	2010						2009						2008						2007						2006
	Amount			Pct			Amount			Pct			Amount			Pct			Amount			Pct			Amount			Pct
Loans receivable:
Real estate loans:
Residential	$	1,222			40.31			1,550			42.35			1,930			45.34			2,156			47.66			2,151			46.81
Consumer — home equity		604			19.92			670			18.31			719			16.89			676			14.94			562			12.23
Construction and development		145			4.78			223			6.09			301			7.07			416			9.20			475			10.34
Commercial		744			24.54			897			24.51			930			21.85			882			19.49			973			21.17
Small business		203			6.70			213			5.82			219			5.14			212			4.69			187			4.07
Other loans:
Commercial non-mortgage		134			4.42			154			4.21			143			3.36			131			2.9			157			3.42
Small business non-mortgage		99			3.26			99			2.70			108			2.54			106			2.34			98			2.13
Consumer		19			0.63			21			0.57			26			0.61			31			0.68			26			0.57
Loans held for sale		21			0.69			4			0.11			3			0.07			4			0.09			9			0.20

Total		3,191			105.26			3,831			104.67			4,379			102.87			4,614			101.99			4,638			100.94

Adjustments:
Unearned discounts (premiums)		(2	)		(0.06	)		(3	)		(0.08	)		(3	)		(0.07	)		(4	)		(0.09	)		(1	)		(0.02	)
Allowance for loan losses		161			5.31			174			4.75			125			2.94			94			2.08			44			0.96

Total loans receivable, net	$	3,032			100.00			3,660			100.00			4,257			100.00			4,524			100.00			4,595			100.00

At March 31, 2008, BankAtlantic transferred $101.5 million of non-performing commercial loans to a subsidiary of the Parent Company. These loans are not reported in the above table as of December 31, 2010, 2009 and 2008.

Financial Services
(BankAtlantic Bancorp)

Included in BankAtlantic’s commercial and construction and development loan portfolios were the following commercial residential loans (in millions):


	As of December 31,
	2010		2009		2008		2007
Builder land bank loans	$	10		44		62		150
Land acquisition and development loans		119		172		210		245
Land acquisition, development and construction loans		4		11		32		108

Total commercial residential loans	$	133		227		304		503

Investments

Securities available for sale: BankAtlantic invests in obligations of, or securities guaranteed by the U.S. government or its agencies. These include mortgage-backed securities and real estate mortgage investment conduits (“REMICs”). BankAtlantic’s securities available for sale portfolio at December 31, 2010 reflects a decision to seek high credit quality and securities guaranteed by government sponsored enterprises in an attempt to minimize credit risk in its investment portfolio to the extent possible. During 2010, BankAtlantic began investing in municipal and agency securities that mature in less than two years. These short-term investments carried higher yields than alternative short-term investments. The available for sale securities portfolio serves as a source of liquidity as well as a means to moderate the effects of interest rate changes. The decision to purchase and sell securities from time to time is based upon a current assessment of the economy, the interest rate environment, and capital and liquidity strategies and requirements. BankAtlantic’s investment portfolio does not include credit default swaps, commercial paper, collateralized debt obligations, structured investment vehicles, auction rate securities, trust preferred securities or equity securities in Fannie Mae or Freddie Mac.

Tax Certificates: Tax certificates are evidences of tax obligations that are sold through auctions or bulk sales by various state and local taxing authorities. A tax obligation arises when the property owner fails to timely pay the real estate taxes on the property. Certain municipalities bulk sale their entire tax certificates for the prior year by auctioning the portfolio to the highest bidder instead of auctioning each certificate separately. Tax certificates represent a priority lien against the real property for the delinquent real estate taxes. The minimum repayment to satisfy the lien is the certificate amount plus the interest accrued through the redemption date, plus applicable penalties, fees and costs. Tax certificates have no payment schedule or stated maturity. If the certificate holder does not file for the deed within established time frames, the certificate may become null and void and lose its value. BankAtlantic’s experience with this type of investment has generally been favorable because the rates earned are generally higher than many alternative investments and substantial repayments typically occur over a one-year period. During 2008, BankAtlantic discontinued acquiring tax certificates through bulk acquisitions as it experienced higher than historical losses from these types of acquisitions. During 2009 and 2010, BankAtlantic purchased tax certificates primarily in Florida and expects that the majority of tax certificates it acquires in 2011 will be in Florida.

Financial Services
(BankAtlantic Bancorp)

The composition, yields and maturities of BankAtlantic’s securities available for sale, investment securities and tax certificates were as follows (dollars in thousands):


											Corporate
			Treasury						Mortgage-		Bond				Weighted
	Tax		and		Tax-Exempt		Taxable		Backed		and				Average
	Certificates		Agencies		Securities		Securities		Securities		Other		Total		Yield
December 31, 2010
Maturity: (1)
One year or less	$	34,725		—		160,395		19,922		—		—		215,042		1.70	%
After one through five years		56,013		60,143		1,728		—		216		—		118,100		3.24
After five through ten years		—		—				—		24,406		—		24,406		3.64
After ten years		—		—				—		156,261		—		156,261		2.57

Fair values (2)	$	90,738		60,143		162,123		19,922		180,883		—		513,809		2.41	%

Amortized cost (2)	$	89,789		60,000		162,113		19,936		171,253				503,091		3.37	%

Weighted average yield based on fair values		5.46		5.66		0.95		1.32		3.41		—		2.41
Weighted average maturity (yrs)		2.1		2.7		0.50		0.53		20.58		—		7.88

December 31, 2009
Fair values (2)	$	112,472		—		—		—		319,292		250		432,014		4.00	%

Amortized cost (2)	$	110,991		—		—		—		307,314		250		418,555		5.35	%

December 31, 2008
Fair values (2)	$	224,434		—		—		—		699,224		250		923,908		5.25	%

Amortized cost (2)	$	213,534		—		—		—		687,344		250		901,128		6.00	%


(1)		Except for tax certificates, maturities are based upon contractual maturities. Tax certificates do not have stated maturities, and estimates in the above table are based upon historical repayment experience (generally 2 years).

(2)		Equity and tax exempt securities held by the Parent Company with a cost of $1.5 million, $1.5 million and $3.6 million and a fair value of $1.5 million, $1.5 million and $4.1 million, at December 31, 2010, 2009 and 2008, respectively, were excluded from the above table. At December 31, 2010, equities held by BankAtlantic with a cost of $1.3 million and a fair value of $1.3 million were excluded from the above table.

A summary of the amortized cost and gross unrealized appreciation or depreciation of estimated fair value of tax certificates and securities available for sale follows (in thousands):


	December 31, 2010 (1)
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Appreciation		Depreciation			Fair Value
Tax certificates:
Cost equals market	$	89,789		949		—			90,738
Securities available for sale:
Investment securities:
Cost equals market		—		—		—			—
Market over cost		76,436		41		—			76,477
Cost over market		105,613		—		(45	)		105,568
Mortgage-backed securities :
Cost equals market		—		—		—			—
Market over cost		231,253		9,773		—			241,026
Cost over market		—		—		—			—

Total	$	503,091		10,763		(45	)		513,809


(1)		The above table excludes equity securities held by the Parent Company with a cost and fair value of $1.5 million at December 31, 2010 and equities held by BankAtlantic with a cost and fair value of $1.3 million at December 31, 2010.

Financial Services
(BankAtlantic Bancorp)

Deposit products and borrowed funds:

Deposits: BankAtlantic offers checking and savings accounts to individuals and business customers. These include commercial demand deposit accounts, retail demand deposit accounts, savings accounts, money market accounts, certificates of deposit, various NOW accounts and IRA and Keogh retirement accounts. BankAtlantic also obtains deposits from municipalities. BankAtlantic solicited deposits from customers in its geographic market through marketing and relationship banking activities primarily conducted through its sales force and store network. BankAtlantic primarily solicited deposits at its branches (or stores) through its “Florida’s Most Convenient Bank” initiative and more recently through its relationship marketing strategy. The Dodd-Frank Wall Street Reform and Consumer Protection Act permanently raised the maximum standard deposit insurance to $250,000 per depositor and the Act provides full deposit insurance coverage on non-interest bearing deposit accounts until January 1, 2013. See note 19 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s deposit accounts.

Federal Home Loan Bank (“FHLB”) Advances: BankAtlantic is a member of the FHLB of Atlanta and can obtain secured advances from the FHLB of Atlanta. These advances can be collateralized by a security lien against its residential loans, certain commercial loans, consumer home equity loans and securities. In addition, BankAtlantic must maintain certain levels of FHLB stock based upon outstanding advances. See note 20 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s FHLB Advances.

Other Short-Term Borrowings: BankAtlantic’s short-term borrowings generally consist of securities sold under agreements to repurchase and treasury tax and loan borrowings.

	•		Securities sold under agreements to repurchase include a sale of a portion of its current investment portfolio (usually mortgage-backed securities and REMICs) at a negotiated rate and an agreement to repurchase the same assets on a specified future date. BankAtlantic issues repurchase agreements to institutions and to its customers. These transactions are collateralized by securities in its investment portfolio but are not insured by the Federal Deposit Insurance Corporation (“FDIC”). See note 21 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s securities sold under agreements to repurchase borrowings.

	•		Treasury tax and loan borrowings represent BankAtlantic’s participation in the Federal Reserve Treasury Investment Program. Under this program, the Federal Reserve places funds with BankAtlantic obtained from treasury tax and loan payments received by financial institutions. See note 22 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s treasury tax and loan borrowings.

BankAtlantic’s other borrowings have floating interest rates and consist of mortgage-backed bond and subordinated debentures. See note 23 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s other borrowings.

Parent Company

The Parent Company’s operations primarily consist of financing the capital needs of BankAtlantic and its subsidiaries and management of the asset work-out subsidiary. In March 2008, the Parent Company used a portion of the proceeds obtained from the sale of Ryan Beck to Stifel to purchase from BankAtlantic $101.5 million of non-performing loans at BankAtlantic’s carrying value. These loans are held in an asset workout subsidiary wholly-owned by the Parent Company, which has entered into an agreement with BankAtlantic pursuant to which BankAtlantic services the transferred non-performing loans. The Parent also has arrangements with BFC Financial Corporation (“BFC”) for BFC to provide certain human resources, insurance management, investor relations, real estate advisory services and other administrative services to the Parent and its subsidiaries. The largest expense of the Parent Company is interest expense on junior subordinated debentures issued in connection with trust preferred securities. The Company has the right to defer quarterly payments of interest on the junior subordinated debentures for a period not to exceed 20 consecutive quarters without default or penalty. During all four quarters of 2009 and 2010 and during the first quarter of 2011, the Company notified the trustees under its junior subordinated debentures that it has elected to defer its quarterly interest payments. During the deferral period, the respective trusts suspend the declaration and payment of dividends on the trust preferred securities. Additionally, during the deferral period, the Company may not pay dividends on or repurchase its common stock. The Parent Company deferred the interest and dividend payments in order to preserve its liquidity in response to current economic conditions.

Financial Services
(BankAtlantic Bancorp)

The Parent Company had the following cash and investments as of December 31, 2010 (in thousands). We may not receive proceeds equal to the estimated fair value upon the liquidation of the private investment securities.


	As of December 31, 2010
			Gross
	Carrying		Unrealized		Estimated
(in thousands)	Value		Depreciation		Fair Value
Cash and cash equivalents	$	12,226		—		12,226
Securities available for sale		10		2		8
Private investment securities		1,500		—		1,500

Total	$	13,736		2		13,734

The Parent Company’s work-out subsidiary had the following loans and real estate owned as of December 31, 2010:


(in millions)	Amount
Commercial residential real estate loans	$	10
Commercial other		7

Total commercial loans		17
Real estate owned		10

Total loans and real estate owned	$	27

Employees

Management believes that its relations with its employees are satisfactory. The Company currently maintains employee benefit programs that are considered by management to be generally competitive with programs provided by other major employers in its markets.

As of December 31, 2010, the Company and its subsidiaries had approximately 5,084 employees, including 44 employees at BFC Parent and BFC Shared Service operations, 5 employees supporting Woodbridge and its subsidiaries, 8 employees supporting BankAtlantic Bancorp Parent Company, 1,202 employees supporting BankAtlantic (including 162 part time employees) and 3825 employees supporting Bluegreen, of which 355 were located in Bluegreen’s headquarters in Boca Raton, Florida and 3,470 were located in regional field offices throughout the United States and Aruba. The field personnel at Bluegreen include 85 field employees supporting Bluegreen Communities and 3,385 field employees supporting Bluegreen Resorts. Five Bluegreen employees in New Jersey are represented by a collective bargaining unit.

Competition

Bluegreen

Bluegreen Resorts competes with various high profile and well-established operators, many of which have greater liquidity and financial resources than Bluegreen. Many of the world’s most recognized lodging, hospitality and entertainment companies develop and sell VOIs in resort properties. Major companies that now operate or are developing or planning to develop vacation ownership resorts directly or through subsidiaries include Marriott International, Inc., the Walt Disney Company, Hilton Hotels Corporation, Hyatt Corporation, Four Seasons Hotels and Resorts, Starwood Hotels and Resorts Worldwide, Inc. and Wyndham Worldwide Corporation. Bluegreen Resorts also competes with numerous other smaller owners and operators of vacation ownership resorts. In addition to competing for sales leads, prospects and fee-based service clients, Bluegreen Resorts competes with other VOI developers for marketing, sales, and resort management personnel. Bluegreen Communities competes with builders, developers and others for the acquisition of property and with local, regional and national developers, homebuilders and others with respect to the sale of homesites. Bluegreen will compete with others on the basis of its reputation and the price, location and quality of the product it offers for sale.

BankAtlantic Bancorp

The banking and financial services industry is very competitive and is in a transition period. The financial services industry continues to experience a severe downturn and increased competition in the marketplace. We expect continued consolidation in the financial services industry creating larger financial institutions. Our primary method of competition is emphasis on relationship banking, customer service and convenience.

BankAtlantic faces substantial competition for both loans and deposits. Competition for loans comes principally from other banks, savings institutions and other lenders. This competition could decrease the number and size of loans that BankAtlantic makes and the interest rates and fees that it receives on these loans.

BankAtlantic competes for deposits with banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds and mutual funds, many of which are uninsured. These competitors may offer higher interest rates than BankAtlantic, which could decrease the deposits that BankAtlantic attracts or require BankAtlantic to increase its rates to attract new deposits. Increased competition for deposits could increase BankAtlantic’s cost of funds, reduce its net interest margin and adversely affect its results of operations.

Regulation

BFC

The Company owns approximately 44% of the outstanding shares of BankAtlantic Bancorp’s Class A Common Stock and all of BankAtlantic Bancorp’s Class B Common Stock, which in the aggregate represents an approximately 45% equity interest and 71% voting interest in BankAtlantic Bancorp. BankAtlantic Bancorp is the holding company of BankAtlantic by virtue of its ownership of 100% of BankAtlantic’s outstanding common stock. Accordingly, each of BFC and BankAtlantic Bancorp is a unitary savings and loan holding company subject to regulatory oversight and examination by the OTS, including normal supervision and reporting requirements. Therefore, the regulations discussed below relating to BankAtlantic Bancorp are also applicable to BFC. Additionally, the Company, BankAtlantic Bancorp and Bluegreen are each subject to the reporting and other requirements of the Exchange Act.

BFC, on a parent company only basis, may not, without the prior written non-objection of the OTS:

	(i)		incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with BankAtlantic’s compliance requirements applicable to it;

	(ii)		declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter; or

	(iii)		enter into any new agreements, contracts or arrangements or materially modify any existing agreements, contracts or arrangements with BankAtlantic not consistent with past practices.

BFC has also committed to the OTS that it will develop an enterprise risk management function that assesses and evaluates the risks within the holding company.

Regulation of Federal Savings Associations

Holding Company

We and BankAtlantic Bancorp are each a unitary savings and loan holding company within the meaning of the Home Owners’ Loan Act (“HOLA”), as amended, or HOLA. As such, we are each registered with the Office of Thrift Supervision (“OTS”), and are each subject to OTS regulations, examinations, supervision and reporting requirements. In addition, the OTS has enforcement authority over each of us. Among other things, this authority permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the financial safety, soundness or stability of a subsidiary savings association. Recent changes in the law will, during 2011, shift principal regulatory jurisdiction over BankAtlantic Bancorp and BFC to the Federal Reserve. Management is in the process of evaluating the potential practical implications of this shift in regulatory jurisdiction, such as possible changes in how regulators will examine BankAtlantic Bancorp and BFC and what new or different standards they may apply. As a result of this shift, management expects that BFC and BankAtlantic Bancorp, at its parent company level, will at some point be subject to minimum capital ratios for the first time. To date, regulators have not announced specifics about the change in regulatory jurisdiction in enough detail that would allow management to understand what the consequences of the shift will be.

HOLA prohibits a savings and loan holding company, directly or indirectly, or through one or more subsidiaries, from:

	•		acquiring another savings institution or its holding company without prior written approval of the OTS;

	•		acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary savings institution, a non-subsidiary holding company, or a non-subsidiary company engaged in activities other than those permitted by HOLA; or

	•		acquiring or retaining control of a depository institution that is not insured by the FDIC.

In evaluating an application by a holding company to acquire a savings institution, the OTS must consider the financial and managerial resources and future prospects of the company and savings institution involved, the effect of the acquisition on the risk to the insurance funds, the convenience and needs of the community and competitive factors.

As a unitary savings and loan holding company, neither BFC nor BankAtlantic Bancorp is generally restricted under existing laws as to the types of business activities in which it may engage, provided that BankAtlantic continues to satisfy the Qualified Thrift Lender, or QTL, test. See “Regulation of Federal Savings Associations — BankAtlantic — QTL Test” for a discussion of the QTL requirements. If either BFC or BankAtlantic Bancorp was to make a non-supervisory acquisition of another savings institution or of a savings institution that meets the QTL test and is deemed to be a savings institution by the OTS and that will be held as a separate subsidiary, then BFC or BankAtlantic Bancorp, as the case may be, would become a multiple savings and loan holding company within the meaning of HOLA and would be subject to limitations on the types of business activities in which it can engage. HOLA limits the activities of a multiple savings institution holding company and its non-insured institution subsidiaries primarily to activities permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act, subject to the prior approval of the OTS, and to other activities authorized by OTS regulation.

Transactions between BankAtlantic, including any of BankAtlantic’s subsidiaries, and BFC, BankAtlantic Bancorp or any other affiliate of BankAtlantic, are subject to various conditions and limitations. See “Regulation of Federal Savings Associations — BankAtlantic — Transactions with Related Parties.” Pursuant to the Bank Order, BankAtlantic must seek approval from the OTS prior to any declaration of the payment of any dividends or other capital distributions. See “Regulation of Federal Savings Associations — BankAtlantic — Limitation on Capital Distributions” and Note 2 to the “Notes to Consolidated Financial Statements”.

The following discussion is intended to be a summary of the material banking statutes and regulations applicable to BFC, BankAtlantic Bancorp and BankAtlantic, and it does not purport to be a comprehensive description of such statutes and regulations, nor does it include every federal and state statute and regulation applicable to BFC, BankAtlantic Bancorp and BankAtlantic.

The Dodd-Frank Act

On July 21, 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act is expected to have a broad impact on the financial services industry, imposing significant regulatory and compliance changes, including the designation of certain financial companies as systemically significant, the imposition of increased capital, leverage, and liquidity requirements, and numerous other provisions designed to improve supervision and oversight of, and strengthen the safety and soundness within, the financial services sector. Additionally, the Dodd-Frank Act establishes a new framework of authority to conduct systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, or Council, the Federal Reserve, the Office of the Comptroller of the Currency (the “OCC”), and the FDIC. Of particular relevance to BFC and BankAtlantic Bancorp, the Dodd-Frank Act makes fundamental changes to the federal supervisory oversight structure for federal thrifts and savings and loan holding companies.

The following items provide a brief description of certain provisions of the Dodd-Frank Act.

	•		Principal changes for federal thrifts and savings and loan holding companies. The Dodd-Frank Act preserves the charter for federal thrifts, but will eliminate the OTS as the primary federal regulator for federal thrifts and savings and loan holding companies. The OTS will be abolished by April 2012 and its functions and personnel distributed among the OCC, FDIC, and the Federal Reserve. Primary jurisdiction for the supervision and regulation of federal thrifts, including BankAtlantic, will be transferred to the OCC; supervision and regulation of savings and loan holding companies, including BFC and BankAtlantic Bancorp, will be transferred to the Federal Reserve. Although the Dodd-Frank Act maintains the federal thrift charter, it eliminates certain benefits of the charter and imposes new penalties for failure to comply with the QTL test. Under the Dodd-Frank Act, risk-based and leverage capital standards currently applicable to U.S. insured depository institutions will be imposed on U.S. bank holding companies and savings and loan holding companies, and depository institutions and their holding companies will be subject to minimum risk-based and leverage capital requirements on a consolidated basis. In addition, the Dodd-Frank Act requires that savings and loan holding companies be well-capitalized and well managed in the same manner as bank holding companies in order to engage in the expanded financial activities permissible only for a financial holding company.

	•		Source of strength. The Dodd-Frank Act requires all companies, including savings and loan holding companies, that directly or indirectly control an insured depository institution to serve as a source of strength for the institution. Under this requirement, regulations may seek to require BFC and/or BankAtlantic Bancorp to provide financial assistance to BankAtlantic.

	•		Limitation on federal preemption. The Dodd-Frank Act significantly reduces the ability of national banks and federal thrifts to rely upon federal preemption of state consumer financial laws. Although the OCC, as the new primary regulator of federal thrifts, will have the ability to make preemption determinations where certain conditions are met, the broad rollback of federal preemption has the potential to create a patchwork of federal and state compliance obligations. This could, in turn, result in significant new regulatory requirements applicable to BFC, BankAtlantic Bancorp and BankAtlantic, potentially significant changes in our operations and increases in our compliance costs. It could also result in uncertainty concerning compliance, with attendant regulatory and litigation risks.

	•		Mortgage loan origination and risk retention. The Dodd-Frank Act contains additional regulatory requirements that may affect our operations and result in increased compliance costs. For example, the Dodd-Frank Act imposes new standards for mortgage loan originations on all lenders, including banks and thrifts, in an effort to require steps to verify a borrower’s ability to repay. In addition, the Dodd-Frank Act generally requires lenders or securitizers to retain an economic interest in the credit risk relating to loans the lender sells or mortgage and other asset-backed securities that the securitizer issues. The risk retention requirement generally will be 5%, but could be increased or decreased by regulation.

	•		Imposition of restrictions on certain activities. The Dodd-Frank Act requires new regulations for the over-the-counter derivatives market, including requirements for clearing, exchange trading, capital, margin, and reporting. Additionally, the Dodd-Frank Act requires that certain swaps and derivatives activities be “pushed out” of insured depository institutions and conducted in non-bank affiliates, significantly restricts the ability of a member of a depository institution holding company group to invest in or sponsor certain private funds, and broadly restricts such entities from engaging in “proprietary trading,” subject to limited exemptions. These restrictions may affect our ability to manage certain risks in our business.

	•		Expanded FDIC resolution authority. While insured depository institutions are currently subject to the FDIC’s resolution process, the Dodd-Frank Act creates a new mechanism for the FDIC to conduct the orderly liquidation of certain “covered financial companies,” including bank and thrift holding companies and systemically significant non-bank financial companies. Upon certain findings being made, the FDIC may be appointed receiver for a covered financial company, and would be tasked with conducting an orderly liquidation of the entity. The FDIC liquidation process is modeled on the existing Federal Deposit Insurance Act, or FDI Act, bank resolution regulations, and generally gives the FDIC more discretion than in the traditional bankruptcy context.

	•		Consumer Financial Protection Bureau (CFPB). The Dodd-Frank Act creates a new independent CFPB within the Federal Reserve. The CFPB is tasked with establishing and implementing rules and regulations under certain federal consumer protection laws with respect to the conduct of providers of certain consumer financial products and services. The CFPB has rulemaking authority over many of the statutes governing products and services offered to bank and thrift consumers. For banking organizations with assets of $10 billion or more, the CFPB has exclusive rule making and examination, and primary enforcement authority under federal consumer financial law. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB. Compliance with any such new regulations would increase our cost of operations.

	•		Deposit insurance. The Dodd-Frank Act makes permanent the general $250,000 deposit insurance limit for insured deposits. The Dodd-Frank Act also extends until January 1, 2013, federal deposit coverage for the full net amount held by depositors in non-interest bearing transaction accounts. Amendments to the FDI Act also revise the assessment base against which an insured depository institution’s deposit insurance premiums paid to the Deposit Insurance Fund (“DIF”) will be calculated. Under the amendments, the assessment base will no longer be the institution’s deposit base, but rather its average consolidated total assets less its average tangible equity. Additionally, the Dodd-Frank Act makes changes to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds. Several of these provisions could increase the FDIC deposit insurance premiums paid by BankAtlantic.

	•		Transactions with affiliates and insiders. The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered credit transactions must be satisfied. Insider transaction limitations are expanded through the strengthening of loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivatives transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors.

	•		Enhanced lending limits. The Dodd-Frank Act strengthens the existing limits on a depository institution’s credit exposure to one borrower. Federal banking law currently limits a federal thrift’s ability to extend credit

			to one person (or group of related persons) in an amount exceeding certain thresholds. The Dodd-Frank Act expands the scope of these restrictions to include credit exposure arising from derivative transactions, repurchase agreements, and securities lending and borrowing transactions.

	•		Corporate governance. The Dodd-Frank Act addresses many investor protection, corporate governance and executive compensation matters that will affect most U.S. publicly traded companies. The Dodd-Frank Act: (1) grants stockholders of U.S. publicly traded companies an advisory vote on executive compensation; (2) enhances independence requirements for compensation committee members; (3) requires companies listed on national securities exchanges to adopt incentive-based compensation clawback policies for executive officers; and (4) provides the SEC with authority to adopt proxy access rules that would allow stockholders of publicly traded companies to nominate candidates for election as directors and to have those nominees included in a company’s proxy materials.

Many of the requirements of the Dodd-Frank Act will be implemented over time and most will be subject to regulations adopted over the course of several years. Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full extent of the impact such requirements will have on our operations is uncertain. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to our business practices, impose more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements may negatively impact our results of operations and financial condition.

BankAtlantic

BankAtlantic is a federal savings association and is subject to extensive regulation, examination, and supervision by the OTS, as its chartering agency and primary regulator, and the FDIC, as its deposit insurer. BankAtlantic’s deposit accounts are insured up to applicable limits by the FDIC, which is administered by the FDIC. BankAtlantic must file reports with the OTS and the FDIC concerning its activities and financial condition. Additionally, BankAtlantic must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other depository institutions, and must submit applications or notices prior to forming certain types of subsidiaries or engaging in certain activities through its subsidiaries. The OTS and the FDIC conduct periodic examinations to assess BankAtlantic’s safety and soundness and compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which a savings association can engage and is intended primarily for the protection of the insurance fund and depositors. The OTS and the FDIC have significant discretion in connection with their supervisory and enforcement activities and examination policies. Any change in such applicable activities or policies, whether by the OTS, the FDIC or Congress, could have a material adverse impact on BFC, BankAtlantic Bancorp and BankAtlantic, and the operations of each company.

Recent changes in law will shift principal regulatory jurisdiction over thrift institutions, including BankAtlantic (and as discussed above, BFC and BankAtlantic Bancorp) from the OTS to the OCC during 2011. We are in the process of evaluating the potential implications of this shift in regulatory jurisdiction, such as possible changes in how BankAtlantic’s regulators will examine it and what new or different standards they may apply to BankAtlantic. Because BankAtlantic does not have plans to convert to a national bank, we currently believe the existing OTS regulations will initially continue to apply to BankAtlantic, although the OCC may decide to modify these regulations.

The following discussion is intended to be a summary of the material banking statutes and regulations applicable to BankAtlantic, and it does not purport to be a comprehensive description of such statutes and regulations, nor does it include every federal and state statute and regulation applicable to BankAtlantic. See “Regulation of Federal Savings Associations-Holding Company-The Dodd-Frank Act” for a summary of the Dodd-Frank Act.

Business Activities. BankAtlantic derives its lending and investment powers from HOLA and the regulations of the OTS thereunder. Under these laws and regulations, BankAtlantic may invest in:

	•		mortgage loans secured by residential and commercial real estate;

	•		commercial and consumer loans;

	•		certain types of debt securities; and

	•		certain other assets.

BankAtlantic may also establish service corporations to engage in activities not otherwise permissible for BankAtlantic, including certain real estate equity investments and securities and insurance brokerage. These investment powers are subject to limitations, including, among others, limitations that require debt securities acquired by BankAtlantic to meet certain rating criteria and that limit BankAtlantic’s aggregate investment in various types of loans to certain percentages of capital and/or assets.

Loans to One Borrower. Under HOLA, savings associations are generally subject to the same limits on loans to one borrower as are imposed on national banks. Generally, under these limits, the total amount of loans and extensions of credit made by a savings association to one borrower or related group of borrowers outstanding at one time and not fully secured by collateral may not exceed 15% of the savings association’s unimpaired capital and unimpaired surplus. In addition to, and separate from, the 15% limitation, the total amount of loans and extensions of credit made by a savings association to one borrower or related group of borrowers outstanding at one time and fully secured by readily-marketable collateral may not exceed 10% of the savings association’s unimpaired capital and unimpaired surplus. Readily-marketable collateral includes certain debt and equity securities and bullion, but generally does not include real estate. At December 31, 2010, BankAtlantic’s limit on loans to one borrower was approximately $57.0 million. At December 31, 2010, BankAtlantic’s largest aggregate amount of loans to one borrower was approximately $35.6 million and the second largest borrower had an aggregate balance of approximately $32.1 million.

QTL Test. HOLA requires a savings association to meet a QTL test by maintaining at least 65% of its “portfolio assets” in certain “qualified thrift investments” on a monthly average basis in at least nine months out of every twelve months. A savings association that fails the QTL test must either operate under certain restrictions on its activities or convert to a bank charter. The Dodd-Frank Act imposes additional restrictions on the ability of any savings association that fails to become or remain a QTL to pay dividends. Specifically, the savings association is not only subject to the general dividend restrictions as would apply to a national bank (as under prior law), but also is prohibited from paying dividends at all (regardless of financial condition) unless required to meet the obligations of a company that controls the thrift, permissible for a national bank and specifically approved by the OCC and the Federal Reserve. In addition, violations of the QTL test now are treated as violations of federal banking laws subject to enforcement action. At December 31, 2010, BankAtlantic maintained approximately 73% of its portfolio assets in qualified thrift investments. BankAtlantic had also satisfied the QTL test in each of the nine months prior to December 2010 and, therefore, was a QTL.

Capital Requirements. OTS regulations generally require savings associations to meet three minimum capital standards:

	•		a tangible capital requirement for savings associations to have tangible capital in an amount equal to at least 1.5% of adjusted total assets;

	•		a leverage ratio requirement:

	•		for savings associations assigned the highest composite rating of 1, to have core capital in an amount equal to at least 3% of adjusted total assets; or

	•		for savings associations assigned any other composite rating, to have core capital in an amount equal to at least 4% of adjusted total assets, or a higher percentage if warranted by the particular circumstances or risk profile of the savings association; and

•

a risk-based capital requirement for savings associations to have capital in an amount equal to at least 8% of risk-weighted assets.

In determining the amount of risk-weighted assets for purposes of the risk-based capital requirement, a savings association must compute its risk-based assets by multiplying its assets and certain off-balance sheet items by risk-weights assigned by the OTS capital regulations. The OTS monitors the risk management of individual institutions. The OTS may impose an individual minimum capital requirement on institutions that it believes exhibit a higher degree of risk.

See Note 27 to the “Notes to the Consolidated Financial Statements” for actual capital amounts and ratios and a discussion of the increased capital ratios required by the Bank Order.

There currently are no regulatory capital requirements directly applicable to BFC or BankAtlantic Bancorp as unitary savings and loan holding companies apart from the regulatory capital requirements for savings associations that are applicable to BankAtlantic. As a result of the Dodd-Frank Act, the risk-based and leverage capital standards

currently applicable to U.S. insured depository institutions and U.S. bank holding companies will in the future become applicable to savings and loan holding companies. The Dodd-Frank Act generally authorizes the Federal Reserve to promulgate capital requirements for savings and loan holding companies.

Limitation on Capital Distributions. The OTS regulations impose limitations upon certain capital distributions by savings associations, such as certain cash dividends, payments to repurchase or otherwise acquire its shares, payments to shareholders of another institution in a cash-out merger and other distributions charged against capital.

The OTS regulates all capital distributions by BankAtlantic directly or indirectly to BankAtlantic Bancorp, including dividend payments generally. BankAtlantic currently must file an application to receive the approval of the OTS for a proposed capital distribution, as the total amount of all of BankAtlantic’s capital distributions (including any proposed capital distribution) for the applicable calendar year exceeds BankAtlantic’s net income for that year-to-date period plus BankAtlantic’s retained net income for the preceding two years.

Regulations restrict the payment of dividends by financial institutions if, after paying those dividends, it would fail to meet the required minimum levels under risk-based capital guidelines and the minimum leverage and tangible capital ratio requirements, or in the event the financial institution was notified by regulators that it was in need of more than normal supervision. Under the FDI Act, an insured depository institution, such as BankAtlantic, is prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become “undercapitalized.” Payment of dividends by BankAtlantic also may be restricted at any time at the discretion of the appropriate regulator if it deems the payment to constitute an unsafe and unsound banking practice. Additionally, the Dodd-Frank Act imposes additional restrictions on the ability of any savings association that fails to become or remain a QTL to pay dividends. The Bank Order and the Company Order current prohibit BankAtlantic and BankAtlantic Bancorp from paying dividends or other capital distributions without the prior written non-objection of the Regional Director of the OTS. In addition, BFC has committed that it will not, without the prior written non-objection of the OTS, pay any dividends or make any other capital distributions other than dividends on BFC’s 5% preferred stock consistent with its historical practice.

Liquidity. BankAtlantic is required to maintain sufficient liquidity to ensure its safe and sound operation, in accordance with OTS regulations.

Assessments. The OTS charges assessments to recover the costs of examining savings associations and their affiliates, processing applications and other filings, and covering direct and indirect expenses in regulating savings associations and their affiliates. These assessments are based on three components:

	•		the size of the savings association, on which the basic assessment is based;

	•		the savings association’s supervisory condition, which results in an additional assessment based on a percentage of the basic assessment for any savings association with a composite rating of 3, 4 or 5 in its most recent safety and soundness examination; and

	•		the complexity of the savings association’s operations, which results in an additional assessment based on a percentage of the basic assessment for any savings association that has more than $1 billion in trust assets that it administers, loans that it services for others or assets covered by its recourse obligations or direct credit substitutes.

These assessments are paid semi-annually. During the year ended December 31, 2010, assessment expense was approximately $1.3 million. The Dodd-Frank Act provides various agencies with the authority to assess additional supervision fees.

Branching. Subject to certain limitations, HOLA and the OTS regulations permit federally chartered savings associations to establish branches in any state or territory of the United States. Pursuant to the Bank Order, BankAtlantic must limit its asset growth, unless it receives the prior written non-objection of the OTS.

Community Reinvestment. Under the Community Reinvestment Act, or CRA, a savings institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA requires the OTS to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by the institution. This assessment focuses on three tests:

	•		a lending test, to evaluate the institution’s record of making loans in its designated assessment areas;

	•		an investment test, to evaluate the institution’s record of investing in community development projects, affordable housing, and programs benefiting low or moderate income individuals and businesses; and

	•		a service test, to evaluate the institution’s delivery of banking services throughout its designated assessment area.

The OTS assigns institutions a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” The CRA requires all institutions to disclose their CRA ratings to the public. BankAtlantic received a “satisfactory” rating in its most recent CRA evaluation. Regulations also require all institutions to disclose certain agreements that are in fulfillment of the CRA. BankAtlantic has no such agreements in place at this time.

Transactions with Related Parties. BankAtlantic’s authority to engage in transactions with its “affiliates” is limited by Sections 23A and 23B of the Federal Reserve Act, or FRA, by Regulation W of the Federal Reserve Board, or FRB, implementing Sections 23A and 23B of the FRA, and by OTS regulations. BankAtlantic’s authority to engage in transactions with affiliates is further limited under the Bank Order. The applicable OTS regulations for savings associations regarding transactions with affiliates generally conform to the requirements of Regulation W, which is applicable to national banks. In general, an affiliate of a savings association is any company that controls, is controlled by, or is under common control with, the savings association, other than the savings association’s subsidiaries. For instance, BFC and BankAtlantic Bancorp are deemed affiliates of BankAtlantic under these regulations.

Generally, Section 23A limits the extent to which a savings association may engage in “covered transactions” with any one affiliate to an amount equal to 10% of the savings association’s capital stock and surplus, and contains an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of the savings association’s capital stock and surplus. A covered transaction generally includes:

	•		making or renewing a loan or other extension of credit to an affiliate;

	•		purchasing, or investing in, a security issued by an affiliate;

	•		purchasing an asset from an affiliate;

	•		accepting a security issued by an affiliate as collateral for a loan or other extension of credit to any person or entity; and

	•		issuing a guarantee, acceptance or letter of credit on behalf of an affiliate.

Section 23A also establishes specific collateral requirements for loans or extensions of credit to, or guarantees, or acceptances of letters of credit issued on behalf of, an affiliate. Section 23B requires covered transactions and certain other transactions to be on terms and under circumstances, including credit standards, that are substantially the same, or at least as favorable to the savings association, as those prevailing at the time for transactions with or involving non-affiliates. Additionally, under the OTS regulations, a savings association is prohibited from:

	•		making a loan or other extension of credit to an affiliate that is engaged in any non-bank holding company activity; and

	•		purchasing, or investing in, securities issued by an affiliate that is not a subsidiary.

Sections 22(g) and 22(h) of the FRA, Regulation O of the FRB, Section 402 of the Sarbanes-Oxley Act of 2002, and OTS regulations impose limitations on loans and extensions of credit from BankAtlantic, BankAtlantic Bancorp and BFC to their executive officers, directors, controlling shareholders and their related interests. The applicable OTS regulations for savings associations regarding loans by a savings association to its executive officers, directors and principal shareholders generally conform to the requirements of Regulation O, which is applicable to national banks. The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates under Section 23A and Section 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and an increase the amount of time for which collateral requirements regarding covered transactions must be satisfied. The ability of the Federal Reserve to grant exemptions from these restrictions is also narrowed by the Dodd-Frank Act, including by requiring coordination with other bank regulators.

Enforcement. Under the FDI Act, the OTS has primary enforcement responsibility over savings associations and has the authority to bring enforcement action against all “institution-affiliated parties,” including any controlling stockholder or any shareholder, attorney, appraiser and accountant who knowingly or recklessly participates in any violation of applicable law or regulation, breach of fiduciary duty, or certain other wrongful actions that have, or are likely to have, a significant adverse effect on an insured savings association or cause it more than minimal loss. In addition, the FDIC has back-up authority to take enforcement action for unsafe and unsound practices. Formal enforcement action can include the issuance of a capital directive, cease and desist order, removal of officers and/or directors, institution of proceedings for receivership or conservatorship and termination of deposit insurance. As

previously disclosed, BankAtlantic and BankAtlantic Bancorp have entered into the Bank Order and the Company Order, respectively, and BFC may in the future be required to enter into a Cease and Desist Order with the OTS based on the condition of BankAtlantic. BankAtlantic and BankAtlantic Bancorp have agreed pursuant to the Bank Order and the Company Order, and BFC committed to the OTS, that no new arrangements may be entered into with affiliates without required prior regulatory notice.

Examination. A savings institution must demonstrate to the OTS its ability to manage its compliance responsibilities by establishing an effective and comprehensive oversight and monitoring program. The degree of compliance oversight and monitoring by the institution’s management impacts the scope and intensity of the OTS’ examinations of the institution. Institutions with significant management oversight and monitoring of compliance will generally receive less extensive OTS examinations than institutions with less oversight.

Standards for Safety and Soundness. Pursuant to the requirements of the FDI Act, the OTS, together with the other federal bank regulatory agencies, has adopted the Interagency Guidelines Establishing Standards for Safety and Soundness, (the “Guidelines”.) The Guidelines establish general safety and soundness standards relating to internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits. In general, the Guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the Guidelines. If the OTS determines that a savings association fails to meet any standard established by the Guidelines, then the OTS may require the savings association to submit to the OTS an acceptable plan to achieve compliance. If a savings association fails to comply, the OTS may seek an enforcement order in judicial proceedings and impose civil monetary penalties.

Shared National Credit Program. The Shared National Credit Program is an interagency program, established in 1977, to provide a periodic credit risk assessment of the largest and most complex syndicated loans held or agented by financial institutions subject to supervision by a federal bank regulatory agency. The Shared National Credit Program is administered by the FRB, FDIC, OTS and the OCC. The Shared National Credit Program covers any loan or loan commitment of at least $20 million (i) which is shared under a formal lending agreement by three or more unaffiliated financial institutions or (ii) a portion of which is sold to two or more unaffiliated financial institutions with the purchasing financial institutions assuming their pro rata share of the credit risk. The Shared National Credit Program is designed to provide uniformity and efficiency in the federal banking agencies’ analysis and rating of the largest and most complex credit facilities in the country by avoiding duplicate credit reviews and ensuring consistency in rating determinations. The federal banking agencies use a combination of statistical and judgmental sampling techniques to select borrowers for review each year. The selected borrowers are reviewed and the credit quality rating assigned by the applicable federal banking agency’s examination team will be reported to each financial institution that participates in the loan as of the examination date. The assigned ratings are used during examinations of the other financial institutions to avoid duplicate reviews and ensure consistent treatment of these loans. BankAtlantic has entered into participations with respect to certain of its loans and has acquired participations in the loans of other financial institutions which are subject to this program and accordingly these loans may be subject to this additional review.

Real Estate Lending Standards. The OTS and the other federal banking agencies adopted regulations to prescribe standards for extensions of credit that are secured by liens on or interests in real estate or are made for the purpose of financing the construction of improvements on real estate. The OTS regulations require each savings association to establish and maintain written internal real estate lending standards that are consistent with OTS guidelines and with safe and sound banking practices and which are appropriate to the size of the savings association and the nature and scope of its real estate lending activities.

Prompt Corrective Regulatory Action. Under the OTS Prompt Corrective Action (“PCA”) Regulations, the OTS is required to take certain, and is authorized to take other, supervisory actions against undercapitalized savings associations, such as requiring compliance with a capital restoration plan, restricting asset growth, acquisitions, branching and new lines of business and, in extreme cases, appointment of a receiver or conservator. The severity of the action required or authorized to be taken increases as a savings association’s capital deteriorates. Under PCA regulations, savings associations are classified into five categories of capitalization as “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” Generally, a savings association is categorized as “well capitalized” if:

	•		its total capital is at least 10% of its risk-weighted assets;

	•		its core capital is at least 6% of its risk-weighted assets;

	•		its core capital is at least 5% of its adjusted total assets; and

	•		it is not subject to any written agreement, order, capital directive or prompt corrective action directive issued by the OTS, or certain regulations, to meet or maintain a specific capital level for any capital measure.

BankAtlantic’s regulatory capital amounts and ratios met the OTS “well capitalized” category during the year ended December 31, 2010. However, the Bank Order requires that BankAtlantic maintain capital ratios that exceed the PCA “well capitalized” amounts and ratios. For a discussion on required capital ratios and amounts pursuant to the Bank Order, see Note 2 to the “Notes to Consolidated Financial Statements.”

By January 2012, the OCC will assume the OTS’ powers with respect to federal savings associations (like BankAtlantic), as well as rule making authority over all savings associations (except for the limited rulemaking authority transferred to the Federal Reserve). Although the federal banking agencies have substantially similar capital adequacy standards and utilize the same accounting standards, some differences in capital standards exist, such as the regulatory treatment of noncumulative perpetual preferred stock and the risk-weightings assigned to certain assets.

OTS regulations do not require savings and loan holding companies, such as BankAtlantic Bancorp, to maintain specific minimum capital ratios. As a result of the Dodd-Frank Act, risk-based and leverage capital standards currently applicable to U.S. insured depository institutions and U.S. bank holding companies will in the future become applicable to savings and loan holding companies such as BankAtlantic Bancorp. The Dodd-Frank Act generally authorizes the Federal Reserve to promulgate capital requirements for savings and loan holding companies.

In addition, the Dodd-Frank Act requires the federal banking agencies to adopt capital requirements which address the risks that the activities of an institution poses to the institution and public and private stakeholders. The federal banking agencies may change existing capital guidelines or adopt new capital guidelines in the future pursuant to the Dodd-Frank Act or other regulatory or supervisory changes.

Insurance of Deposit Accounts. Savings associations are subject to a risk-based assessment system for determining the deposit insurance assessments to be paid by them.

Until December 31, 2006, the FDIC had assigned each savings institution to one of three capital categories based on the savings institution’s financial information as of its most recent quarterly financial report filed with the applicable bank regulatory agency prior to the assessment period. The FDIC had also assigned each savings institution to one of three supervisory subcategories within each capital category based upon a supervisory evaluation provided to the FDIC by the savings institution’s primary federal regulator and information that the FDIC determined to be relevant to the savings institution’s financial condition and the risk posed to the previously existing deposit insurance funds. A savings institution’s deposit insurance assessment rate depended on the capital category and supervisory subcategory to which it was assigned. Insurance assessment rates ranged from 0.00% of deposits for a savings institution in the highest category (i.e., well capitalized and financially sound, with no more than a few minor weaknesses) to 0.27% of deposits for a savings institution in the lowest category (i.e., undercapitalized and substantial supervisory concern).

On January 1, 2007, the Federal Deposit Insurance Reform Act of 2005, or the Reform Act, became effective. The Reform Act, among other things, merged the Bank Insurance Fund and the Savings Association Insurance Fund, both of which were administered by the FDIC, into a new fund administered by the FDIC, the DIF, and increased the coverage limit for certain retirement plan deposits to $250,000, but maintained the basic insurance coverage limit of $100,000 for other depositors. On October 3, 2008, the Emergency Economic Stabilization Act of 2008, or the Stabilization Act, temporarily raised the basic insurance coverage limit to $250,000. The Dodd-Frank Act makes permanent the $250,000 insurance limit for insured deposits. Also as a result of the Dodd-Frank Act, unlimited coverage for non-interest bearing demand transaction accounts will be provided until January 1, 2013.

As a result of the Reform Act, the FDIC now assigns each savings institution to one of four risk categories based upon the savings institution’s capital evaluation and supervisory evaluation. The capital evaluation is based upon financial information as of the savings institution’s most recent quarterly financial report filed with the applicable bank regulatory agency at the end of each quarterly assessment period. The supervisory evaluation is based upon the results of examination findings by the savings institution’s primary federal regulator and information that the FDIC has determined to be relevant to the savings institution’s financial condition and the risk posed to the DIF. A savings institution’s deposit insurance base assessment rate depends on the risk category to which it is assigned. In April 2009, the FDIC implemented regulations to improve the way its insurance base assessment rates differentiate risk among

insured institutions and make the risk-based system fairer by limiting the subsidization of riskier institutions by safer institutions. The Dodd-Frank Act changes the way an insured depository institution’s deposit insurance premiums are calculated. Because the new base assessment under the Dodd-Frank Act is larger than the current insurance base assessment, the proposed assessment rates are lower than the current rates. The insurance base assessment will no longer be the way an insured depository institution’s deposit premiums are calculated. For the quarter which began January 1, 2011, insurance base assessment rates range from 12 cents per $100 (but could be as low as 7 cents per $100, after computing applicable adjustments) in assessable deposits for a savings institution in the least risk category to 45 cents per $100 (but could be as high as 77.5 cents per $100, after computing applicable adjustments) in assessable deposits for a savings institution in the most risk category. BankAtlantic’s FDIC deposit insurance premium increased from $2.8 million for the year ended December 31, 2008 to $10.1 million for the same 2010 period. BankAtlantic expects its FDIC insurance premium to further increase during 2011 from the amounts assessed during 2010 based on its last OTS examination report.

The FDIC is authorized to raise the assessment rates in certain circumstances, which would affect savings institutions in all risk categories. The FDIC is also authorized to impose special assessments. The FDIC has exercised its authority to raise assessment rates and impose special assessments several times in the past, including a $2.4 million assessment during 2009. There was no corresponding assessment during 2010. The FDIC could raise rates and impose special assessments in the future. Increases in deposit insurance premiums and the imposition of special assessments would have an adverse effect on our earnings. Amendments to the FDI Act also revise the assessment base against which an insured depository institution’s deposit insurance premiums paid to DIF will be calculated. Under the amendments, the assessment base will no longer be the institution’s deposit base, but rather its average consolidated total assets less its average tangible equity. Additionally, the Dodd-Frank Act makes changes to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds.

Continued action by the FDIC to replenish the DIF as well as the changes contained in the Dodd-Frank Act may result in higher assessment rates, which could reduce our profitability or otherwise negatively impact our operations.

Privacy and Security Protection. BankAtlantic is subject to regulations implementing the privacy and security protection provisions of the Gramm-Leach-Bliley Act, or GLBA. These regulations require a savings association to disclose to its customers and consumers its policy and practices with respect to the privacy, and sharing with nonaffiliated third parties, of its customers and consumers’ “nonpublic personal information.” Additionally, in certain instances, BankAtlantic is required to provide its customers and consumers’ with the ability to “opt-out” of having BankAtlantic share their nonpublic personal information with nonaffiliated third parties. These regulations also require savings associations to maintain policies and procedures to safeguard their customers and consumers’ nonpublic personal information. BankAtlantic has policies and procedures designed to comply with GLBA and applicable privacy and security regulations.

Insurance Activities. BankAtlantic is generally permitted to engage in certain insurance activities through its subsidiaries. OTS regulations implemented pursuant to GLBA prohibit, among other things, depository institutions from conditioning the extension of credit to individuals upon either the purchase of an insurance product or annuity or an agreement by the consumer not to purchase an insurance product or annuity from an entity that is not affiliated with the depository institution. The regulations also require prior disclosure of this prohibition to potential insurance product or annuity customers.

Federal Home Loan Bank System. BankAtlantic is a member of the Federal Home Loan Bank, or FHLB, of Atlanta, which is one of the twelve regional FHLB’s composing the FHLB system. Each FHLB provides a central credit facility primarily for its member institutions as well as other entities involved in home mortgage lending. Any advances from a FHLB must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for residential housing finance. As a member of the FHLB of Atlanta, BankAtlantic is required to acquire and hold shares of capital stock in the FHLB of Atlanta. BankAtlantic was in compliance with this requirement with an investment in FHLB of Atlanta stock at December 31, 2010 of approximately $43.6 million. During the year ended December 31, 2010, the FHLB of Atlanta paid dividends of approximately $0.1 million on the capital stock held by BankAtlantic.

Federal Reserve System. BankAtlantic is subject to provisions of the FRA and the FRB’s regulations, pursuant to which depository institutions may be required to maintain non-interest-earning reserves against their deposit accounts and certain other liabilities. Currently, federal savings associations must maintain reserves against transaction accounts (primarily NOW and regular interest and non-interest bearing checking accounts). The FRB regulations establish the specific rates of reserves that must be maintained, which are subject to adjustment by the FRB. BankAtlantic is currently in compliance with those reserve requirements. The required reserves must be maintained in the form of vault cash, a non-interest-bearing account at a Federal Reserve Bank, or a pass-through account as defined by the FRB. The FRB pays targeted federal funds rates on the required reserves which are lower than the yield on our traditional investments.

Anti-Terrorism and Anti-Money Laundering Regulations. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, provides the federal government with additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. By way of amendments to the Bank Secrecy Act, or BSA, the USA PATRIOT Act puts in place measures intended to encourage information sharing among bank regulatory and law enforcement agencies. In addition, certain provisions of the USA PATRIOT Act impose affirmative obligations on a broad range of financial institutions, including savings associations.

Among other requirements, the USA PATRIOT Act and the related OTS regulations require savings associations to establish anti-money laundering programs that include, at a minimum:

	•		internal policies, procedures and controls designed to implement and maintain the savings association’s compliance with all of the requirements of the USA PATRIOT Act, the BSA and related laws and regulations;

	•		systems and procedures for monitoring and reporting of suspicious transactions and activities;

	•		a designated compliance officer;

	•		employee training;

	•		an independent audit function to test the anti-money laundering program;

	•		procedures to verify the identity of each customer upon the opening of accounts; and

	•		heightened due diligence policies, procedures and controls applicable to certain foreign accounts and relationships.

Additionally, the USA PATRIOT Act requires each financial institution to develop a customer identification program, or CIP, as part of its anti-money laundering program. The key components of the CIP are identification, verification, government list comparison, notice and record retention. The purpose of the CIP is to enable the financial institution to determine the true identity and anticipated account activity of each customer. To make this determination, among other things, the financial institution must collect certain information from customers at the time they enter into the customer relationship with the financial institution. This information must be verified within a reasonable time through documentary and non-documentary methods. Furthermore, all customers must be screened against any CIP-related government lists of known or suspected terrorists.

The USA Patriot Act established the Office of Foreign Assets Control (“OFAC”), which is a division of the Treasury Department, and is responsible for helping to ensure that United States entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress. OFAC has sent banking regulatory agencies lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts. If BankAtlantic identifies a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze or reject such account or transaction, evaluate the need to file a suspicious activity report and notify the Financial Crimes Enforcement Network (“FinCEN”).

Consumer Protection. BankAtlantic is subject to federal and state consumer protection statutes and regulations, including the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act, the Fair Debt Collection Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Gramm-Leach-Biley Act, the Real Estate Settlement Procedures Act, the Right to Financial Privacy Act, the Home Mortgage Disclosure Act, laws regarding unfair and deceptive trade practices; and usury laws. Among other things, these acts:

•		require lenders to disclose credit terms in meaningful and consistent ways;

•		require financial institutions to establish policies and procedures regarding identity theft and notify customers of certain information concerning their credit reporting;

•		prohibit discrimination against an applicant in any consumer or business credit transaction;

•		prohibit discrimination in housing-related lending activities;

•		require certain lender banks to collect and report applicant and borrower data regarding loans for home purchase or improvement projects;

•		require lenders to provide borrowers with information regarding the nature and cost of real estate settlements;

•		prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; and

•		prescribe penalties for violations of the requirements of consumer protection statutes and regulations.

Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those listed above. These federal, state and local laws regulate the manner in which financial institutions deal with customers when taking deposits, making loans, or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability. The creation of the CFPB by the Dodd-Frank Act is likely to lead to enhanced and strengthened enforcement of consumer financial protection laws.

Bluegreen

The vacation ownership and real estate industries are subject to extensive and complex federal, state, and local governmental regulation. Bluegreen is subject to various federal, state, local and foreign environmental, zoning, consumer protection and other statutes and regulations regarding the acquisition, subdivision, marketing and sale of real estate and VOIs and various aspects of its financing operations. On a federal level, the Federal Trade Commission has taken an active regulatory role through the Federal Trade Commission Act, which prohibits unfair or deceptive acts or unfair competition in interstate commerce. In addition, many states have what are known as “Little FTC Acts” that apply to intrastate activity. In addition to the laws applicable to its customer financing and other operations discussed below, Bluegreen is or may be subject to the Fair Housing Act and various other federal statutes and regulations. Bluegreen is also subject to various foreign laws with respect to La Cabana Beach and Racquet Club in Oranjestad, Aruba and Blue Water Resort in Nassau, Bahamas. In addition, there can be no assurance that in the future, VOIs will not be deemed to be securities subject to regulation as such, which could have a material adverse effect on Bluegreen. There is no assurance that the cost of complying with applicable laws and regulations will not be significant or that we will maintain compliance at all times with all applicable laws, including those discussed below. Any failure to comply with current or future applicable laws or regulations could have a material adverse effect on Bluegreen.

Bluegreen’s customer financing activities are also subject to extensive regulation, which can include, but are not limited to: the Truth-in-Lending Act and Regulation Z; the Fair Housing Act; the Fair Debt Collection Practices Act; the Equal Credit Opportunity Act and Regulation B; the Electronic Funds Transfer Act and Regulation E; the Home Mortgage Disclosure Act and Regulation C; Unfair or Deceptive Acts or Practices and Regulation AA; the Patriot Act; the Right to Financial Privacy Act; the Gramm-Leach-Bliley Act; the Fair and Accurate Credit Transactions Act; and anti-money laundering laws, among others.

ITEM 1A. RISK FACTORS

We have in the past incurred cash flow deficits at the BFC parent company (“BFC Parent”) level which we expect will continue in the future.

BFC is engaged in making investments in operating businesses. In the past, BFC Parent has not had revenue generating operating activities and has incurred cash flow deficits. We expect to continue to incur cash flow deficits in the foreseeable future. We have financed operating cash flow deficits with available working capital, issuances of equity or debt securities, and with dividends from our subsidiaries, which we have been dependent upon to fund our operations. Currently, BankAtlantic Bancorp is restricted from paying dividends and these restrictions will continue for the foreseeable future. In addition, Bluegreen has historically not paid dividends on its common stock. As a result, if cash flow is not sufficient to fund our operating expenses in the future, we may be forced to continue to reduce operating expenses, to liquidate some of our investments or to seek to fund our operations from the proceeds of additional equity or debt financing. There is no assurance that any such financing would be available on commercially reasonable terms, if at all, or that we would not be forced to liquidate our investments at depressed prices.

Adverse conditions and events where our investments are currently concentrated or in the industries in which our subsidiaries operate could continue to adversely impact our results and future growth.

BankAtlantic Bancorp’s business, the location of BankAtlantic’s branches and the real estate collateralizing its commercial real estate loans and home equity loans, as well as our operations, are concentrated in Florida. The downturn in economic conditions generally and the economy of Florida in particular has adversely impacted our results and operations. Further, Florida is subject to the risks of natural disasters, such as tropical storms and hurricanes. The continued impact of the economic downturn, natural disasters or adverse changes in laws or regulations applicable to us or the companies in which we hold investments could impact our operating results and financial condition. These factors may particularly affect the credit quality of BankAtlantic’s assets, the desirability of our properties and the financial condition and performance of our customers. In addition, Bluegreen’s operations, which are primarily conducted within the vacation ownership and real estate industry, have also been adversely impacted by the current economic downturn. The persistence or further deterioration of the current adverse economic conditions could have a material adverse effect on our business and results of operations.

Our activities and our subsidiaries’ activities are subject to a wide range of regulatory requirements applicable to financial institutions and holding companies, and noncompliance with such regulations could have a material adverse effect on our business.

The Company and BankAtlantic Bancorp are each grandfathered unitary savings and loan holding companies and have broad authority to engage in various types of business activities. However, the OTS, our primary regulator, can stop either of us from engaging in activities or limit those activities if it determines that there is reasonable cause to believe that the continuation of any particular activity constitutes a serious risk to the financial safety, soundness or stability of BankAtlantic. Unlike bank holding companies, as unitary savings and loan holding companies, BFC and BankAtlantic Bancorp are not currently subject to capital requirements. However, it is anticipated that capital requirements will in the future be imposed on savings and loan holding companies. In addition, future regulations may be adopted which may affect BFC’s operations or ability to continue to engage in certain of its current activities.

Regulatory restrictions, BankAtlantic’s performance or the terms of indebtedness limit or restrict BankAtlantic Bancorp’s and Bluegreen’s ability to pay dividends which may impact our cash flow.

At December 31, 2010, we held approximately 52% and 45% of the outstanding common stock of Bluegreen and BankAtlantic Bancorp, respectively.

BankAtlantic Bancorp is a separate publicly traded company whose Board of Directors includes a majority of independent directors as required by the listing standards of the New York Stock Exchange. Dividends by BankAtlantic Bancorp are subject to a number of conditions, including the cash flow and profitability of BankAtlantic Bancorp, declaration of dividends by BankAtlantic Bancorp’s Board of Directors, compliance with the terms of outstanding indebtedness, and regulatory restrictions applicable to BankAtlantic Bancorp and BankAtlantic. Decisions made by BankAtlantic Bancorp’s Board are not within our control and may not be made in our best interests. On February 23,

2011, BankAtlantic Bancorp entered into the Company Order which, among other things, restricts BankAtlantic Bancorp’s ability to pay dividends or make any other capital distributions without receiving the prior written non-objection of the OTS. In addition, during February 2009, BankAtlantic Bancorp elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt. BankAtlantic Bancorp is permitted to defer quarterly interest payments for up to 20 consecutive quarters. During the deferral period, BankAtlantic Bancorp is prohibited from paying dividends to its shareholders, including BFC. While BankAtlantic Bancorp can end the deferral period at any time, BankAtlantic Bancorp has indicated that it anticipates that it may continue to defer such interest payments for the foreseeable future. Accordingly, BFC does not expect to receive dividends from BankAtlantic Bancorp for the foreseeable future.

Bluegreen is a separate publicly traded company whose Board of Directors includes a majority of independent directors as required by the listing standards of the New York Stock Exchange. Decisions made by Bluegreen’s Board are not within our control and may not be made in our best interests. Bluegreen has not paid cash dividends during the three years ending December 31, 2010. Future dividends from Bluegreen are subject to approval by Bluegreen’s Board and will depend upon, among other factors, Bluegreen’s results of operations, financial condition and operating and capital needs. Bluegreen may also be limited contractually from paying dividends by the terms of its credit facilities. Accordingly, it is unlikely that BFC will receive dividends from Bluegreen for the foreseeable future.

We are subject to the risks faced by the companies in which we currently hold investments.

Our primary holdings consist of our direct and indirect investments in BankAtlantic Bancorp, Bluegreen, and Benihana. As a result, we are subject to the risks faced by these companies in their respective industries. Each has been adversely affected by a downturn in the economy, loss of consumer confidence and disruptions in the credit markets. Our current business plan includes a focus on providing strategic support to the companies within our consolidated group, and in which we hold investments. Such support may include further investments in one or more of those companies. Any such additional investments will further expose us to the risks faced by those companies.

We will be required to make a cash payment to shareholders of Woodbridge who exercised appraisal rights in connection with our merger.

Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share in cash, or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. As of the date of this filing, one Dissenting Holder which held approximately 400,000 shares of Woodbridge’s Class A Common Stock had withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective views of the fair value of Woodbridge’s Class A Common Stock prior to the merger. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain. As a result, there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders and such amount may be greater than the $4.6 million that is currently accrued. Any significant increase in the obligation to Dissenting Holders who exercised their appraisal rights could have a material adverse effect on our financial condition.

Dividends and distributions from our subsidiaries to their respective parent companies may be subject to claims in the future from creditors of the subsidiary.

Subsidiaries have in the past and may in the future make dividends or distributions to their parent companies. Dividend payments and other distributions by a subsidiary to its parent company may, in certain circumstances, be

subject to claims made by creditors of the subsidiary which made the payment or distribution. Any such claim, if successful, may have a material and adverse impact on the financial condition of the parent company against which the claim was brought.

There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP. Any changes in estimates, judgments and assumptions used could have a material adverse effect on our financial position and operating results.

The consolidated financial statements included in the periodic reports we file with the SEC, including those included as part of this Annual Report on Form 10-K, are prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions that affect reported amounts of assets (including goodwill and other intangible assets), liabilities and related reserves, revenues, expenses and income. This includes estimates, judgments and assumptions for assessing the amortization /accretion of purchase accounting fair value differences and the future value of goodwill and other intangible assets pursuant to applicable accounting guidance. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. However, estimates, judgments and assumptions are inherently subject to change in the future. As a result, our estimates, judgments and assumptions may prove to be incorrect and our actual results may differ from these estimates under different assumptions or conditions. If any estimates, judgments or assumptions change in the future, or our actual results differ from our estimates or assumptions, we may be required to record additional expenses or impairment charges, which would be recorded as a charge against our earnings and could have a material adverse impact on our financial condition and operating results.

Certain members of our Board of Directors and certain of our executive officers are also directors and executive officers of our affiliates.

Alan B. Levan, our Chairman and Chief Executive Officer, and John E. Abdo, our Vice Chairman, are also members of the Boards of Directors and/or executive officers of BankAtlantic Bancorp, BankAtlantic, Bluegreen and Benihana. Neither Mr. Levan nor Mr. Abdo is obligated to allocate a specific amount of time to the management of the Company, and they may devote more time and attention to the operations of our affiliates than they devote directly to our operations. Jarett S. Levan, a member of our Board of Directors, is the President of BankAtlantic Bancorp and the Chief Executive Officer of BankAtlantic and a member of the Board of each of them, and D. Keith Cobb, a member of our Board of Directors, is a member of the Boards of Directors of BankAtlantic Bancorp and BankAtlantic.

Risks Associated with Our Investments in the Restaurant Industry

We have an investment in preferred shares of Benihana which are convertible to shares of Benihana’s Common Stock. Benihana operates 97 restaurants in the United States, including 63 Benihana Teppanyaki restaurants, nine Haru sushi restaurants and 25 RA Sushi Bar restaurants. In addition, 23 franchised Benihana teppanyaki restaurants operate in the United States, Latin America and the Caribbean. We also have an investment in Pizza Fusion, a restaurant operator and franchisor engaged in the organic and quick service food industries. As such, we are subject to the risks faced by these companies and the value of our investments will be influenced by the financial performance of these companies. Some of the risk factors common to the restaurant industry which might affect the performance of these companies include:

	•		the current economic downturn has adversely impacted consumer spending patterns and has had negative effects on consumer discretionary spending;

	•		the limited availability and high cost of credit may continue or deteriorate further;

	•		higher than normal food costs may adversely impact our results of operations;

	•		existing or new restaurants may not perform as expected;

	•		the inability to construct new restaurants and remodel existing restaurants within projected budgets and time periods;

	•		increases in the minimum wage;

	•		increases in unemployment;

	•		intense competition in the restaurant industry;

	•		the food service industry is affected by litigation and publicity concerning food quality, health and other issues, which could cause customers to avoid a particular restaurant, result in significant liabilities or litigation costs or damage reputation or brand recognition; and

	•		implementing growth and renovation strategies may strain available resources.

In addition, Pizza Fusion is a relatively new company and requires additional financial support in order to continue its operations under its current business plan. Pizza Fusion’s audited financial statements for its fiscal year ended September 30, 2010 included a going concern opinion. We currently have no plans to make a further investment in Pizza Fusion and Pizza Fusion has not recently been successful in raising additional capital. If Pizza Fusion’s business or prospects do not improve, if it is unable to raise required capital to fund its operations or if it otherwise is required to curtail or cease its operations, we may suffer a total loss of our investment in Pizza Fusion.

Our portfolio of equity securities and our investments in BankAtlantic Bancorp, Benihana and Bluegreen subjects us to equity pricing risks.

Because BankAtlantic Bancorp and Bluegreen are consolidated in the Company’s financial statements, the decline in the market price of their stock would not impact the Company’s consolidated financial statements. However, a decline in the market price of the securities of either of these companies would likely have an adverse effect on the market price of our common stock. The market price of our common stock and our equity securities are important to our valuation and ability to obtain equity or debt financing.

We also have an investment in Benihana Series B Convertible Preferred Stock (“Benihana Preferred Stock”) for which no current market exists (unless converted into Common Stock). The 800,000 shares of Benihana Preferred Stock owned by the Company are convertible into 1,578,943 shares of Benihana Common Stock. At December 31, 2010, if converted, the aggregate market value of such shares would have been $12.6 million. The ability to realize or liquidate this investment will depend on future market and economic conditions, the ability to register our sale of shares of Benihana’s Common Stock in the event of the conversion of our shares of Benihana Convertible Preferred stock and the possible sale of Benihana, all of which are subject to significant risk.

Our net operating loss carryforwards that existed at the time of our merger with Woodbridge will be substantially limited.

We have experienced and continue to experience net operating losses. Under the Internal Revenue Code, we may utilize our net operating loss carryforwards in certain circumstances to offset future taxable income and to reduce federal income tax liability, subject to certain requirements and restrictions. Our merger with Woodbridge, which was consummated on September 21, 2009, resulted in an “ownership change”, as defined in Section 382 of the Internal Revenue Code. As a result, our ability in the future to use our historic net operating loss carryforwards will be substantially limited, which could have a negative impact on our financial position and results of operations. We believe that BFC may utilize Woodbridge’s net operating loss carryforwards following the merger of the companies on September 21, 2009. Accordingly, in September 2009, our Board of Directors adopted a shareholder rights plan designed to preserve shareholder value and protect our ability to use Woodbridge’s net operating loss carryforwards by providing a deterrent to holders of less than 5% of our common stock from acquiring a 5% or greater ownership interest in our common stock. However, there is no assurance that the shareholder rights plan will successfully prevent against an “ownership change” or otherwise preserve our ability to utilize our net operating loss carryforwards to offset any future taxable income, nor is there any assurance that we will be in a position to utilize our net operating loss carryforwards in the future even if we do not experience an “ownership change.”

We may issue additional securities in the future.

Other than our commitment to the OTS, there is generally no restriction on our ability to issue debt or equity securities which are pari passu or have a preference over our common stock. Authorized but unissued shares of our capital stock are available for issuance from time to time at the discretion of our Board of Directors, including issuances in connection with acquisitions, and any such issuance may be dilutive to our shareholders. There is also no restriction on the ability of BankAtlantic Bancorp or Bluegreen to issue additional capital stock or on Bluegreen’s ability to incur additional indebtedness. Any future securities issuances by BankAtlantic Bancorp or Bluegreen may dilute our economic investment or voting interest in those companies.

Our control position may adversely affect the market price of BankAtlantic Bancorp’s Class A Common Stock and Bluegreen’s common stock.

As of December 31, 2010, we owned all of BankAtlantic Bancorp’s issued and outstanding Class B Common Stock and approximately 27.3 million shares, or approximately 44%, of BankAtlantic Bancorp’s issued and outstanding Class A Common Stock, representing approximately 71% of BankAtlantic Bancorp’s total voting power. Additionally, we own approximately 16.9 million shares, or approximately 52%, of Bluegreen’s issued and outstanding common stock. Accordingly, we hold a controlling position with respect to BankAtlantic Bancorp and Bluegreen and have the voting power to significantly influence the outcome of any shareholder vote of the companies, except with respect to BankAtlantic Bancorp in those limited circumstances where Florida law mandates separate class votes. Our control position may have an adverse effect on the market prices of BankAtlantic Bancorp’s Class A Common Stock and Bluegreen’s common stock.

Alan B. Levan And John E. Abdo’s control position may adversely affect the market price of our common stock.

Alan B. Levan, our Chairman of the Board of Directors and Chief Executive Officer, and John E. Abdo, our Vice Chairman of the Board of Directors, may be deemed to beneficially own shares of our common stock, including shares that may be acquired pursuant to the exercise of stock options, representing approximately 71.6% of our total voting power. These shares consist of 10,931,215 shares, or 15.9%, of our Class A Common Stock and 6,521,228 shares, or 87.3%, of our Class B Common Stock. Additionally, Alan B. Levan and John E. Abdo have agreed to vote their shares of our Class B Common Stock in favor of the election of the other to our Board of Directors for so long as they are willing and able to serve as directors of the Company. Further, John E. Abdo has agreed, subject to certain exceptions, not to transfer certain of his shares of our Class B Common Stock and to obtain the consent of Alan B. Levan prior to the conversion of certain of his shares of our Class B Common Stock into shares of our Class A Common Stock. Since our Class A Common Stock and Class B Common Stock vote as a single class on most matters, Alan B. Levan and John E. Abdo effectively have the voting power to control the outcome of any shareholder vote (except in those limited circumstances where Florida law mandates that the holders of our Class A Common Stock vote as a separate class) and to elect the members of our Board of Directors. Alan B. Levan and John E. Abdo’s control position may have an adverse effect on the market price of our common stock. Alan B. Levan’s and John E. Abdo’s interests may conflict with the interests of our other shareholders.

The terms of our Articles of Incorporation, which establish fixed relative voting percentages between our Class A Common Stock and Class B Common Stock, may not be well accepted by the market.

Our Class A Common Stock and Class B Common Stock generally vote together as a single class. The Class A Common Stock possesses in the aggregate 22% of the total voting power of all our common stock and the Class B Common Stock possesses in the aggregate the remaining 78% of the total voting power. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, at which time the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53% and the Class B Common Stock will have the remaining 47%. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 500,000 shares, at which time the fixed voting percentages will be eliminated. These changes in the relative voting power represented by each class of our common stock are based only on the number of shares of Class B Common Stock outstanding. Thus issuances of Class A Common Stock will have no effect on these provisions. If additional shares of Class A Common Stock are issued, the disparity between the equity interest represented by the Class B Common Stock and its voting power will widen. While the amendment creating this capital structure was approved by our shareholders, the fixed voting percentage provisions are somewhat unique. If the market does not view this structure favorably, the trading price and market for our Class A Common Stock would be adversely affected.

The loss of the services of our key management and personnel could adversely affect our business.

Our ability to successfully implement our business strategy will depend on our ability to attract and retain experienced and knowledgeable management and other professional staff. There is no assurance that we will be successful in attracting and retaining key management personnel.

We are subject to litigation against BFC and its subsidiaries, and the impact of any finding of liability or damages could adversely impact our financial condition and operating results.

We and our subsidiaries are subject to legal proceedings as described in Item 3, “Legal Proceedings” in this report. While we believe, we have meritorious defenses in the pending legal actions, the ultimate outcomes of these matters are uncertain. Judgments against, or damages, fines or penalties imposed on, us or our subsidiaries in these actions may have a material adverse impact on our operating results and financial condition.

The default by Woodbridge under the terms of its outstanding indebtedness has resulted in acceleration of the debt and may result in a judgment against Woodbridge.

A lender with respect to approximately $37.2 million of debt that is collateralized by property owned by Carolina Oak and with respect to which Woodbridge is the obligor previously declared the debt to be in default. Woodbridge disputed the fact that an event of default occurred under the terms of its indebtedness. Through a series of events, the loan was eventually sold to an investor group. The parties have since participated in a court-ordered mediation, agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

We are subject to environmental laws related to our real estate activities and the cost of compliance could adversely affect our business.

As a current or previous owner or operator of real property, we may be liable under federal, state, and local environmental laws, ordinances and regulations for the costs of removal or remediation of hazardous or toxic substances on, under or in the property. These laws often impose liability whether or not we knew of, or were responsible for, the presence of such hazardous or toxic substances. The cost of investigating, remediation or removing such hazardous or toxic substances may be substantial.

Levitt and Sons had surety bonds on most of their projects, some of which were subject to indemnity by Woodbridge.

Levitt and Sons had $33.3 million in surety bonds relating to its ongoing projects at the time of the filing of the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, Woodbridge could be responsible for up to $7.6 million plus costs and expenses in accordance with the surety indemnity agreements it executed. At December 31, 2010, we had a $0.5 million in surety bonds accrual related to certain Levitt and Sons bonds where management believes it to be probable that Woodbridge will be required to reimburse the surety under applicable indemnity agreements. It is unclear whether and to what extent the remaining outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Woodbridge may be responsible for additional amounts beyond the previous accrued amount. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay.

RISKS RELATED TO BLUEGREEN

Bluegreen presents its results in two reportable segments. Bluegreen’s results of operations for the Bluegreen Interim Period are consolidated in BFC Financial Corporation’s financial statements. Bluegreen is a separate public company and its management prepared the following discussion regarding Bluegreen which was included in Bluegreen’s Annual Report on Form 10-K for the year ended December 31, 2010 which was filed with the Securities and Exchange Commission on March 31, 2011. Accordingly, references to “we”, “us” or “our” in this section are references to Bluegreen and its subsidiaries, and are not references to BFC, Woodbridge, or BankAtlantic Bancorp.

The overall state of the economy, interest rates and the availability of financing affect our ability to market VOIs and residential homesites.

Our business has been adversely affected by unfavorable general economic and industry conditions, including high unemployment rates and job insecurity, declines in discretionary spending, housing values and availability of financing, and geopolitical conflicts. If recent recovery trends do not continue or, economic conditions deteriorate, our business and results may be adversely impacted, particularly if financing for us or for our customers is unavailable or if changes in general economic conditions adversely affect our customers’ ability to pay amounts owed under our notes receivable. Further, because our operations are conducted mainly within the vacation ownership industry, any adverse changes affecting the industry, such as an oversupply of vacation ownership units, a reduction in demand for such units, changes in travel and vacation patterns, changes in governmental regulation of the industry, continued disruptions in the credit markets and unavailability of financing, imposition of increased taxes by governmental authorities, the declaration of bankruptcy and/or credit defaults by other vacation ownership companies and negative publicity for the industry, could also have a material adverse effect on our business.

We would incur substantial losses and our liquidity position could be adversely impacted if the customers we finance default on their obligations.

Prior to December 15, 2008, we did not perform credit checks on the purchasers of our VOIs in connection with our financing of their purchases. Effective December 15, 2008, we implemented a FICO® score-based credit underwriting program, and we enhanced this credit underwriting program during January 2010. While our loan portfolio originated after December 15, 2008 has experienced defaults at a lower rate than loans originated prior to that date, there is no assurance that our FICO® score-based underwriting standards will result in decreased default rates or otherwise result in the improved performance of our receivables. The conditions in the mortgage industry, including both credit sources as well as borrowers’ financial profiles, have deteriorated in recent years. As of December 31, 2010, approximately 4.8% of our vacation ownership receivables and approximately 11.5% of residential land receivables were more than 30 days past due. Although in many cases we may have recourse against a buyer for the unpaid purchase price, certain states have laws that limit our ability to recover personal judgments against customers who have defaulted on their loans or the cost of doing so may not be justified. Historically, we have generally not pursued such recourse against our customers. In the case of our VOI receivables, if we are unable to collect the defaulted amount due, we traditionally have terminated the customer’s interest in the Bluegreen Vacation Club and then remarketed the recovered VOI. Irrespective of our remedy in the event of a default, we cannot recover the marketing, selling and administrative costs associated with the original sale. In addition, we will need to incur such costs again in order to resell the VOI or homesite. In 2010, we recorded charges of approximately $69.7 million to increase our provision for loan losses. If default rates for our borrowers remain at current levels or increase, it may require an increase in the provision for loan losses. In addition, it may cause buyers of, or lenders whose loans are secured by, our VOI notes receivable to reduce the amount of availability under receivables purchase and credit facilities, or to increase the interest costs associated with such facilities. In such an event, the cost of financing may increase and we may not be able to secure financing on terms acceptable to us, if at all, which would adversely affect our earnings, financial position and liquidity.

Under the terms of our pledged and receivable sale facilities, we may be required, under certain circumstances, to replace receivables or to pay down the loan to within permitted loan-to-value ratios. Additionally, the terms of our securitization-type transactions i.) require us to repurchase or replace loans if we breach any of the representations and warranties we made at the time we sold the receivables and ii.) include provisions that in the event of defaults by customers in excess of stated thresholds would require substantially all of our cash flow from our retained interest in the receivable portfolios sold to be paid to the parties who purchased the receivables from us. In addition, we guaranteed certain payments under the Legacy Securitization (described in further detail in Note 23 to the Consolidated Financial Statements). Substantially all of the timeshare receivables backing the notes subject to the

Legacy Securitization were generated prior to December 15, 2008, when we implemented our FICO score-based credit underwriting program, and relate to loans to borrowers with FICO® scores below 600.

While we have attempted to restructure our business to reduce our need for and reliance on financing for liquidity in the short term, there is no assurance that such restructuring will be successful or that our business and profitability will not otherwise continue to depend on our ability to obtain financing, which may not be available on favorable terms, or at all.

We offer financing of up to 90% of the purchase price to purchasers of our VOIs and homesites. However, we incur selling, marketing and administrative cash expenditures prior to and concurrent with the sale. These costs generally exceed the down payment we receive at the time of the sale. Accordingly, our ability to borrow against or sell the notes receivable we receive from our customers has been a critical factor in our continued liquidity, and we therefore have historically depended on funds from our credit facilities and securitization transactions to finance our operations. The disruption in the credit markets since 2007 has made obtaining additional and replacement external sources of liquidity more difficult and more costly. The number of banks and other finance companies willing to provide “warehouse” lines of credit for timeshare receivables has decreased in recent years. In addition, the term securitization market has become unavailable for extended periods of time in the past. If our pledged receivables facilities terminate or expire and we are unable to extend them or replace them with comparable facilities, or if we are unable to continue to participate in securitization-type transactions and “warehouse” facilities on acceptable terms, our liquidity, cash flow, and profitability would be materially and adversely affected.

In addition, financing for real estate acquisition and development and the capital markets for corporate debt have been limited. In response to these conditions, during 2008, we adopted initiatives which included limiting sales and encouraging higher down payments on sales, in an attempt to conserve cash. We also have increased our focus on expanding our fee-based service business. However, there is no assurance that our implementation of these initiatives will enhance our financial position or otherwise be successful. If these initiatives do not have their intended results, our financial condition may be materially and adversely impacted.

In addition, notwithstanding our implementation of the initiatives implemented since 2008 to improve our cash position, we anticipate that we will continue to seek and use external sources of liquidity, including funds that we obtain pursuant to additional borrowings under our existing credit facilities, under credit facilities that we may obtain in the future, under securitizations in which we may participate in the future or pursuant to other borrowing arrangements, to:

	•		support our operations;

	•		finance the acquisition and development of VOI inventory and residential land;

	•		finance a substantial percentage of our sales; and

	•		satisfy our debt and other obligations.

Our ability to service or to refinance our indebtedness or to obtain additional financing (including our ability to consummate future term securitizations) depends on the credit markets and on our future performance, which is subject to a number of factors, including the success of our business, results of operations, leverage, financial condition and business prospects, prevailing interest rates, general economic conditions and perceptions about the residential land and vacation ownership industries. We have approximately $52.4 million of indebtedness which becomes due during 2011. Historically, much of our debt has been renewed or refinanced in the ordinary course of business. But there is no assurance that we will be able to obtain sufficient external sources of liquidity on attractive terms, or at all, or otherwise renew, extend or refinance a significant portion of our outstanding debt. Any of these occurrences may have a material and adverse impact on our liquidity and financial condition.

Our future success depends on our ability to market our products successfully and efficiently.

We compete for customers with other hotel and resort properties and vacation ownership resorts. The identification of sales prospects and leads, and the marketing of our products to them are essential to our success. We have incurred and will continue to incur the expenses associated with marketing programs in advance of closing sales to the leads that we identify. If our lead identification and marketing efforts do not yield enough leads or we are unable to successfully convert sales leads to sales, we may be unable to recover the expense of our marketing programs and systems and our business would be adversely affected.

We are subject to the risks of the real estate market and the risks associated with real estate development, including the decline in real estate values and the deterioration of real estate sales.

Real estate markets are cyclical in nature and highly sensitive to changes in national and regional economic conditions, including:

	•		levels of unemployment;

	•		levels of discretionary disposable income;

	•		levels of consumer confidence;

	•		the availability of financing;

	•		overbuilding or decreases in demand;

	•		interest rates; and

	•		federal, state and local taxation methods.

The adverse trends experienced in the real estate market since 2007 have exerted pressure upon our Bluegreen Communities and Bluegreen Resorts divisions. Particularly, low consumer demand for homesites has had, and may continue to have, an adverse impact on Bluegreen Communities’ operations. Further, while general economic trends have recently shown signs of improvement, a deterioration in general economic conditions or continued adverse conditions in the real estate market would have a material adverse effect on our business.

To the extent we decide to acquire more real estate inventory in the future for eventual sale by Bluegreen Resorts or Bluegreen Communities, the availability of land at favorable prices at that time will be critical to our profitability and the ability to cover our significant selling, general and administrative expenses, cost of capital and other expenses. If we are unable to acquire such land or, in the case of Bluegreen Resorts, resort properties, at a favorable cost, it could have an adverse impact on our results of operations. While we believe that the property we have purchased at our adjusted carrying amounts will generate appropriate margins, land prices remain significantly below historical levels, and the projects we acquired prior to or during the recent economic downturn may have been purchased at higher price levels than available in the current market.

The profitability of our real estate development activities is also impacted by the cost of construction materials and services. Should the cost of construction materials and services rise, the ultimate cost of our Bluegreen Resorts’ and Bluegreen Communities’ inventories when developed could increase and have a material, adverse impact on our results of operations.

We may not be successful in increasing or expanding our fee-based services relationships, and our fee-based service activities may not be profitable, which may have an adverse impact on our results of operations and financial condition.

In July 2009, we began offering fee-based marketing and sales services to third-party developers. During 2010, we continued to expand our fee-based service business, which we believe enables us to leverage our expertise in sales and marketing, resort management, mortgage servicing, construction management and title services. We currently intend for our fee-based services to become an increasing portion of our resorts business over time as they generally produce positive cash flow and typically require less capital investment than our traditional vacation ownership business. We have attempted to structure these activities to cover our costs and generate a profit. However, our fee-based services business remains relatively new and we have limited experience in its pricing and operation. In addition, while our fee-based marketing and sales services do not require us to use our receivable credit facility capacity, our clients do typically have to maintain their own receivable-backed credit facilities. Should our clients not be able to maintain said facilities, our fee-based marketing and sales business could be materially adversely impacted. Alternatively, we could attempt to structure other arrangements where we would utilize our receivable credit facilities in order to provide fee-based marketing and sales services, which would reduce the credit otherwise available to us. In addition, when we perform fee-based sales and marketing services, we sell VOIs in a resort developed by a third party as an interest in the Bluegreen Vacation Club. This subjects us to a number of risks typically associated with selling products developed by others under your own brand name, including litigation risks. Additionally, demand for the third party resorts may be below our expectations and the third party developers may not satisfy their obligations. While we attempt to mitigate these risks by performing due diligence on the resorts in which we sell VOIs and by typically performing resort management services at those resorts, there is no assurance that we will be successful in mitigating or managing the risks, which may have a material and adverse impact on our results of operations and financial condition. For these and

other reasons, certain of which may be beyond our control, there is no assurance that we will be successful in increasing our fee-based services relationships or operating our fee-based services business on a profitable basis, and any failure to do so would have a material adverse impact on our results of operations and financial condition.

Our results of operations and financial condition may be materially and adversely impacted if Bluegreen Resorts does not continue to participate in exchange networks or its customers are not satisfied with the networks in which it participates.

All of our VOI resorts are currently affiliated with RCI, and most of our Club Resorts have been awarded RCI’s highest designation (Gold Crown). A VOI owner’s participation in the RCI exchange network allows an owner to exchange their annual VOI for occupancy at over 4,000 participating resorts, based upon availability and the owner payment of a variable exchange fee. In 2010, approximately 6% of our owners utilized the RCI exchange network for an exchange of two or more nights. We also have a joint venture with Shell, called Select Connections™, which currently gives Bluegreen Vacation Club members who acquired or upgraded their VOIs on or after November 1, 2007 access to 21 Shell resorts and provides members of Shell access to Bluegreen Vacation Club resorts. In addition, certain Bluegreen Vacation Club members may use their points for a variety of hotel stays, RV site stays within the Coast to Coast network, or various cruise vacations. There is no assurance that our resorts will continue to participate in the RCI or Select Connections™ exchange networks in which they currently participate or through which Bluegreen Vacation Club members have access to alternative vacation destinations. There is also no assurance that any or all of these networks will continue to operate effectively or that our customers will continue to be satisfied with the networks. If any of these events should occur, our results of operations and financial condition may be materially and adversely impacted.

Our exploration of strategic alternatives for Bluegreen Communities involves a number of risks.

On March 24, 2011, we announced that we had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There is no assurance regarding the timing or success of pursuing any of the alternatives we may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to our financial condition and operating results or otherwise achieve the benefits hoped to be realized from the transaction. Further, the strategic review process may divert management’s attention from our other business activities, result in the loss of key employees, result in decreased consumer demand or other unforeseen consequences. To the extent that additional market information is obtained during the strategic review process which indicates that the carrying value of our Communities’ inventory exceeds its fair value, additional impairment charges relating to the value of the inventory may result. The occurrence of any of these events could have a material and adverse impact on our financial condition and operating results.

Claims for development-related defects could adversely affect our financial condition and operating results.

We engage third-party contractors to construct our resorts and to develop our communities. However, our customers may assert claims against us for construction defects or other perceived development defects, including, without limitation, structural integrity, the presence of mold as a result of leaks or other defects, water intrusion, asbestos, electrical issues, plumbing issues, road construction, water and sewer defects and defects in the engineering of amenities. In addition, certain state and local laws may impose liability on property developers with respect to development defects discovered in the future. We could have to accrue a significant portion of the cost to repair such defects in the quarter when such defects arise or when the repair costs are reasonably estimable. A significant number of claims for development-related defects could adversely affect our liquidity, financial condition and operating results.

The resale market for VOIs could adversely affect our business.

Based on our experience at our resorts and at destination resorts owned by third parties, we believe that resales of VOIs generally are made at net sales prices below their original customer purchase prices. The relatively lower sales prices are partly attributable to the high marketing and sales costs associated with the initial sales of such VOIs. Accordingly, the initial purchase of a VOI may be less attractive to prospective buyers. Also, buyers who seek to resell their VOIs compete with our efforts to sell our VOIs. While VOI resale clearing houses or brokers currently do not have a material impact on our business, if a secondary market for VOIs were to become more organized and liquid, the resulting availability of resale VOIs at lower prices could adversely affect our sales prices and the number of sales we can close, which in turn would adversely affect our business and results of operations.

We may be adversely affected by extensive federal, state and local laws and regulations and changes in applicable laws and regulations, including with respect to the imposition of additional taxes on operations. In addition, results of audits of our tax returns or those of our subsidiaries may have a material and adverse impact on our financial condition.

The federal government and the states and local jurisdictions in which we operate have enacted extensive regulations that affect the manner in which we market and sell VOIs and homesites and conduct our other business operations. In addition, many states have adopted specific laws and regulations regarding the sale of VOIs and homesites. Many states, including Florida and South Carolina, where some of our resorts are located, extensively regulate the creation and management of timeshare resorts, the marketing and sale of timeshare properties, the escrow of purchaser funds prior to the completion of construction and closing, the content and use of advertising materials and promotional offers, the delivery of an offering memorandum and the creation and operation of exchange programs and multi-site timeshare plan reservation systems. Moreover, with regard to sales conducted in South Carolina, the closing of real estate and mortgage loan transactions must be conducted under the supervision of an attorney licensed in South Carolina and otherwise in accordance with South Carolina’s Time Sharing Transaction Procedures Act. Most states also have other laws that regulate our activities, such as:

	•		timeshare project registration laws;

	•		real estate licensure laws;

	•		mortgage licensure laws;

	•		sellers of travel licensure laws;

	•		anti-fraud laws;

	•		consumer protection laws;

	•		telemarketing laws;

	•		prize, gift and sweepstakes laws; and

	•		consumer credit laws.

We currently are authorized to market and sell VOIs and homesites in all states in which our operations are currently conducted. If our agents or employees violate applicable regulations or licensing requirements, their acts or omissions could cause the states where the violations occurred to revoke or refuse to renew our licenses, render our sales contracts void or voidable, or impose fines on us based on past activities. See “Item 3 — Legal Proceedings.”

In addition, the federal government and the states and local jurisdictions in which we conduct business have generally enacted extensive regulations relating to direct marketing and telemarketing, including the federal government’s national “Do Not Call” list. The regulations have impacted our marketing of VOIs, and we have taken steps in an attempt to decrease our dependence on restricted calls. However, these steps have increased and are expected to continue to increase our marketing costs. We cannot predict the impact that these legislative initiatives or any other legislative measures that may be proposed or enacted in the future may have on our marketing strategies and results. Further, from time to time, complaints are filed against the Company by individuals claiming that they received calls in violation of the regulation.

Currently, most states have taxed VOIs as real estate, imposing property taxes that are billed to the respective property owners’ associations that maintain the related resorts and have not sought to impose sales tax upon the sale of the VOI or accommodations tax upon the use of the VOI. From time to time, however, various states have attempted to promulgate new laws or apply existing laws impacting the taxation of vacation ownership interests to require that sales or accommodations taxes be collected. Should new state or local laws be implemented or interpreted to impose sales or accommodations taxes on VOIs, our resorts business could be materially adversely affected.

From time to time, consumers file complaints against us in the ordinary course of our business. We could be required to incur significant costs to resolve these complaints or enter into consents with regulators regarding our activities. There is no assurance that we will remain in material compliance with all applicable federal, state and local laws and regulations, or that violations of applicable laws will not have adverse implications for us, including negative public relations, potential litigation and regulatory sanctions. The expense, negative publicity and potential sanctions associated with any failure to comply with applicable laws or regulations could have a material adverse effect on our results of operations, liquidity or financial position.

In addition, there is no assurance that, in the future, VOIs will not be deemed to be securities under federal or state law and therefore subject to applicable securities regulation, which could have a material adverse effect on us due to, among other things, the cost of compliance with such regulations.

Environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on our business.

Under various federal, state and local laws, ordinances and regulations, as well as common law, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances, including mold, located on, in or emanating from property that we own, lease or operate, as well as related costs of investigation and property damage at such property. These laws often impose liability without regard to whether we knew of, or were responsible for, the presence of the hazardous or toxic substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect our ability to sell or lease our property or to borrow money using such real property or receivables generated from the sale of such real property as collateral. Noncompliance with environmental, health or safety requirements may require us to cease or alter operations at one or more of our properties. Further, we may be subject to common law claims by third parties based on damages and costs resulting from violations of environmental regulations or from contamination associated with one or more of our properties.

The ratings of third-party rating agencies could adversely impact our ability to obtain, renew, or extend credit facilities, debt, or otherwise raise capital.

Rating agencies from time to time review prior corporate and specific transaction ratings in light of tightened ratings criteria. In connection with any decisions by rating agencies to downgrade their original ratings on certain bond classes in our securitizations, holders of such bonds may be required to sell bonds in the market place and such sales could occur at a discount, which could impact the perceived value of such bonds and our ability to sell future bonds at favorable terms, if at all.

In addition, if rating agencies were to downgrade our corporate credit ratings, our ability to raise capital and/or issue debt at favorable terms or at all could be adversely impacted. Such a downgrade could materially adversely affect our liquidity, financial condition and results of operations.

There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with generally accepted accounting principles (“GAAP”). Any changes in estimates, judgments and assumptions used could have a material adverse impact on our operating results and financial condition.

The consolidated financial statements included in this Annual Report on Form 10-K are prepared in accordance with GAAP, which involves making estimates, judgments and assumptions. These estimates, judgments and assumptions include, but are not limited to, those related to future cash flows which in turn are based upon expectations of our performance given current and projected forecasts of the economy in general and the real estate markets. If any estimates, judgments or assumptions change in the future, including in the event the adverse conditions in the real estate market continue for longer than expected or deteriorate further or if our performance does not otherwise meet our expectations, we may be required to record impairment charges against our earnings, which could have a material adverse impact on our operating results and financial condition. In addition, GAAP requirements as to how certain estimates are made may result, for example, in asset valuations which ultimately would not be realized if we were to attempt to sell the asset.

The loss of the services of our key management and personnel could adversely affect our business.

BFC Financial Corporation holds a majority of our outstanding common stock, which may adversely affect the market price of our common stock.

BFC Financial Corporation (“BFC”) beneficially owns 16,922,953 shares, or approximately 52%, of our issued and outstanding common stock. As a result, BFC is in a position to elect our Board of Directors and significantly influence the outcome of any shareholder vote. This control position may have an adverse effect on the market price of our common stock. Alan B. Levan, our Chairman, and John E. Abdo, our Vice Chairman, are also Chairman and Vice Chairman, respectively, of BFC.

RISKS RELATED TO BANKATLANTIC BANCORP AND BANKATLANTIC

Financial Services Risk Factors

Our Financial Services activities consist of BankAtlantic Bancorp (and its federal savings bank subsidiary, BankAtlantic), whose results of operations are consolidated with BFC. The only assets available to BFC from BankAtlantic Bancorp are dividends when and if declared and paid by BankAtlantic Bancorp. BankAtlantic Bancorp is a separate public company and its management prepared the following discussion which was included in BankAtlantic Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010 which was filed with the Securities and Exchange Commission on March 31, 2011. Accordingly, references to “the Company”, “the Parent Company”, “we”, “us” or “our” in this section under the caption “Financial Services” are references to BankAtlantic Bancorp and its subsidiaries, and are not references to BFC Financial Corporation, Bluegreen Corporation or Woodbridge.

Failure to comply with the Cease and Desist Orders could result in further regulatory action and/or fines and efforts to comply with the Orders could have a material adverse effect on our business and results of operations.

On February 23, 2011, the Parent Company entered into the Company Order and BankAtlantic entered into the Bank Order with the OTS, the Parent Company’s and BankAtlantic’s primary regulator (See “Business-Recent Developments” for a description of the terms of the Orders).

Any material failure by the Company or BankAtlantic to comply with the terms of the Orders could result in additional enforcement actions by the OTS and/or the imposition of fines. For example, if BankAtlantic does not meet the capital ratio requirements in the Bank Order, BankAtlantic would be required to submit a contingency plan that is acceptable to the OTS and that would detail steps to be taken by BankAtlantic that would lead to a potential sale of BankAtlantic. BankAtlantic would be required to implement the contingency plan upon written notification from the OTS. Further, efforts to comply with the Orders may have material adverse effects on the operations and financial condition of the Company.

Our recent financial performance and the regulatory actions by the OTS, combined with continued capital and credit market volatility, may adversely affect our ability to access capital and may have a material adverse effect on our business, financial condition and results of operations.

The Company has incurred losses of $145.5 million, $185.8 million and $202.6 million during the years ended December 31, 2010, December 31, 2009 and December 31, 2008, respectively. As part of its efforts to maintain regulatory capital ratios, BankAtlantic has reduced its assets and repaid borrowings. However, the reduction of earning asset balances has resulted in reduced income, while at the same time BankAtlantic has experienced significant credit losses.

The Parent Company contributed $28 million and $105 million to the capital of BankAtlantic during the years ended December 31, 2010 and December 31, 2009, respectively. At December 31, 2010, the Parent Company had $12.2 million of liquid assets. While a wholly-owned work-out subsidiary of the Parent Company also holds a portfolio of approximately $13.7 million of non-performing loans, net of reserves, $2.8 million of performing loans and $10.2 million of real estate owned which it could seek to liquidate, the Parent Company’s sources of funds to continue to support BankAtlantic are limited.

The Parent Company’s ability to contribute additional capital to BankAtlantic will depend on its ability to raise capital in the secondary markets and on its ability to liquidate its portfolio of non-performing loans and real estate owned. Its ability to raise additional capital will depend on, among other things, conditions in the financial markets at the time, which are outside of our control, and our financial condition, results of operations and prospects. The entry into the Orders may also make it more difficult to raise additional capital. Such capital may not be available to us on acceptable terms or at all. The Parent Company may not be able to provide additional capital, as needed, to BankAtlantic and BankAtlantic may not be able to raise needed capital directly. The failure to obtain capital in amounts needed to meet the higher capital requirements under the Bank Order would cause BankAtlantic to fail to comply with the Bank Order and may have a material adverse effect on our results of operation and financial condition.

In light of the need for the Parent Company to be in a position to provide capital to BankAtlantic, as well as the anticipated imposition of capital requirements on thrift holding companies under the Dodd-Frank Act, the Parent Company has and will continue to evaluate raising additional funds through the issuance of securities. Any such financing could be obtained through additional public offerings, private offerings, in privately negotiated transactions, through a rights offering or otherwise. We could also pursue these financings at the Parent Company level or directly at BankAtlantic or both. Issuances of equity directly at BankAtlantic would dilute the Parent Company’s interest in BankAtlantic. During February 2010, we filed a shelf registration statement with the SEC registering up to $75 million of our Class A Common Stock and/or other securities in the future. We currently have $55 million remaining on this shelf registration statement. Additionally, in September 2010, the Parent Company filed a separate registration statement on Form S-1 with the SEC for registering $125 million of Class A Common Stock. The Form S-1 registration statement has not yet been declared effective. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. The terms and pricing of any future transaction by the Parent Company or BankAtlantic could result in additional substantial dilution to our existing shareholders. As a result, our shareholders bear the risks of future offerings at the Parent Company level reducing the price of our Class A Common Stock, and diluting their holdings in the Company, and future offerings directly at BankAtlantic diluting the Parent Company’s interest in BankAtlantic. Additionally, depending on the amount of shares issued in any future offering, the Company’s ability to use its NOLs in future periods may be substantially limited.

The decline in the Florida real estate market has adversely affected, and may continue to adversely affect, our earnings and financial condition.

The continued deterioration of economic conditions in the Florida residential real estate market, including the continued decline in median home prices year-over-year in all major metropolitan areas in Florida, and the downturn in the Florida commercial real estate market, resulted in a substantial increase in BankAtlantic’s non-performing assets and provision for loan losses over the past three years. The housing industry has been in a substantial and prolonged downturn reflecting, in part, decreased availability of mortgage financing for residential home buyers, reduced demand for new construction resulting in a significant over-supply of housing inventory and increased foreclosure rates. Additionally, the deteriorating condition of the Florida economy and these adverse market conditions have negatively impacted the commercial non-residential real estate market. BankAtlantic’s earnings and financial condition were adversely impacted over the past three years as the majority of its loans are secured by real estate in Florida. We expect that our earnings and financial condition will continue to be unfavorably impacted if market conditions do not improve or deteriorate further in Florida. At December 31, 2010, BankAtlantic’s loan portfolio included $305.7 million of non-accrual loans concentrated in Florida.

Our loan portfolio is concentrated in loans secured by real estate, a majority of which are located in Florida, which makes us very susceptible to credit losses given the current depressed real estate market.

Conditions in the United States real estate market have deteriorated significantly beginning in 2007, particularly in Florida, BankAtlantic’s primary lending area. BankAtlantic’s loan portfolio is concentrated in commercial real estate loans (most of which are located in Florida and many of which involve residential land development), residential mortgages (nationwide), and consumer home-equity loans (throughout BankAtlantic’s markets in Florida). BankAtlantic has a heightened exposure to credit losses that may arise from this concentration as a result of the significant downturn in the Florida real estate markets. At December 31, 2010, BankAtlantic’s loan portfolio included $2.1 billion of loans concentrated in Florida, which represented approximately 64% of its loan portfolio.

We believe that BankAtlantic’s commercial residential loan portfolio has exposure to further declines in the Florida real estate market. As of December 31, 2010: (i) the “builder land bank loan” category held by BankAtlantic consisted of 4 loans aggregating $10.6 million, all of which were on non-accrual; (ii) the “land acquisition and development loan” category held by BankAtlantic consisted of 24 loans aggregating $118.8 million, of which thirteen loans totaling $61.9 million were on non-accrual; (iii) the “land acquisition, development and construction loan” category held by BankAtlantic consisted of 3 loans aggregating $3.5 million, none of which were on non-accrual.

In addition to the loans described above, during 2008, the Parent Company formed an asset workout subsidiary which acquired non-performing commercial residential real estate loans from BankAtlantic. The balance of these non-performing loans as of December 31, 2010 was $14.5 million, including $3.7 million, $3.6 million and $1.6 million of “builder land bank loans”, “land acquisition and development loans”, and “land acquisition, development and construction loans”, respectively.

Market conditions have resulted in, and may in the future result in, our commercial real estate borrowers having difficulty selling lots or homes in their developments for an extended period, which in turn could result in an increase in residential construction loan delinquencies and non-accrual balances. Additionally, if the current depressed economic environment continues or deteriorates further, collateral values may decline further which likely would result in increased credit losses in these loans.

Included in the commercial and construction and development real estate loan portfolio are approximately $781.6 million of commercial non-residential and commercial land loans. A borrower’s ability to repay commercial land loans is dependent on the success of the real estate project. A borrower’s ability to repay commercial non-residential loans is dependent upon maintaining tenants through the life of the loan or the borrower’s successful operation of a business. Weak economic conditions may impair a borrower’s business operations and typically slow the execution of new leases. Such economic conditions may also lead to existing lease turnover. As a result of these factors, vacancy rates for retail, office and industrial space are expected to continue to rise in 2011 which could result in falling rents. The combination of these factors could result in further deterioration in real estate market conditions and BankAtlantic may recognize higher credit losses on these loans, which would adversely affect our results of operations and financial condition.

BankAtlantic’s commercial real estate loan portfolio includes 10 large lending relationships totaling $266 million, including relationships with unaffiliated borrowers involving lending commitments in each case in excess of $20 million. Defaults by any of these borrowers could have a material adverse effect on BankAtlantic’s results.

The Parent Company has deferred interest on its outstanding junior subordinated debentures and anticipates that it will continue to defer this interest for the foreseeable future, which could adversely affect its financial condition and liquidity.

The Parent Company began deferring interest on all of its $294 million of junior subordinated debentures as of March 2009 which resulted in the deferral and accrual of $28.2 million of regularly scheduled quarterly interest payments that would otherwise have been paid during the years ended December 31, 2010 and 2009. The terms of the junior subordinated debentures allow the Parent Company to defer interest payments for up to 20 consecutive quarterly periods, and the Parent Company anticipates that it will continue to defer such interest for the foreseeable future. During the deferral period, interest continues to accrue on the junior subordinated debentures, as well as on the deferred interest, at the relevant stated coupon rate, and at the end of the deferral period, the Parent Company will be required to pay all interest accrued during the deferral period. In the event that the Parent Company elects to defer interest on its junior subordinated debentures for the full 20 consecutive quarterly periods permitted under the terms of the junior subordinated debentures, the Parent Company would owe approximately $74 million of accrued interest as of December 31, 2013 (based on average interest rates applicable at December 31, 2010, which were at historically low interest rate levels). As most of the outstanding junior subordinated debentures bear interest at rates that are indexed to LIBOR, if LIBOR rates increase, the interest that would accrue during the deferral period would be significantly higher and likewise increase the amount the Parent Company would owe at the conclusion of the deferral period.

BankAtlantic obtained a significant portion of its non-interest income through service charges on core deposit accounts, and recent legislation designed to limit service charges could reduce our fee income.

BankAtlantic’s deposit account growth has generated a substantial amount of service charge income. The largest component of this service charge income historically has been overdraft fees. Changes in banking regulations, in particular the Federal Reserve’s new rules prohibiting banks from automatically enrolling customers in overdraft protection programs, which became effective July 1, 2010, had a significant adverse impact on our service charge income during the year ended December 31, 2010 and this impact is expected to continue in 2011. Additionally, the Dodd-Frank Act has established a consumer protection agency which may further limit the assessment of overdraft fees. Changes in customer behavior, modification of our service charge practices as well as increased competition from other financial institutions could also result in declines in deposit accounts or in overdraft frequency resulting in a decline in service charge income. Further, the downturn in the Florida economy could result in the inability to collect overdraft fees. The reduction in deposit account fee income during 2010 had an adverse impact on our earnings and further reductions during 2011 would likewise impact our earnings.

The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may have a material effect on our operations.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, which imposes significant regulatory and compliance changes. Currently, we believe the key effects of the Dodd-Frank Act on our business are:

	•		changes to the thrift supervisory structure, including the elimination of the Office of Thrift Supervision and the transfer of oversight of federally chartered thrift institutions to the OCC;

	•		changes to regulatory capital requirements at the holding company level;

	•		creation of new government regulatory agencies;

	•		limitations on federal preemption;

	•		limitations on debit card interchange fees;

	•		changes in insured depository institution regulations; and

	•		mortgage loan origination and risk retention.

Many provisions of the Dodd-Frank Act remain subject to regulatory rulemaking and implementation, the effects of which are not yet known. As a result, it is difficult to gauge the ultimate impact of certain provisions of the Dodd-Frank Act because the implementation of many concepts is left to regulatory agencies. For example, the Consumer Financial Protection Bureau (CFPB) is given the power to adopt new regulations to protect consumers and is given control over existing consumer protection regulations adopted by federal banking regulators.

The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements or with any future changes in laws or regulations may negatively impact our results of operations and financial condition. See “Regulation of Federal Savings Associations-BankAtlantic-The Dodd-Frank Act” for a more detailed description of the Dodd-Frank Act.

Deposit insurance premium assessments may increase substantially, which would adversely affect expenses.

BankAtlantic’s FDIC deposit insurance expense for the year ended December 31, 2010 was $10.1 million. As a result of recent economic conditions and the enactment of the Dodd-Frank Act, the FDIC has increased the deposit insurance assessment rates and raised deposit premiums for insured depository institutions. In addition, BankAtlantic’s annual insurance rates are expected to increase in 2011 based on the results of its latest regulatory risk profile. BankAtlantic’s prepaid insurance assessment was $22.0 million at December 31, 2010. If the economy worsens and the number of bank failures significantly increase, or if the FDIC otherwise determines that increased premiums are necessary, BankAtlantic may be required to pay additional FDIC specific assessments or incur increased annual insurance rates which would increase our expenses and adversely impact our results.

The Parent Company and BankAtlantic are each subject to significant regulation and the Company’s activities and the activities of the Company’s subsidiaries, including BankAtlantic, are subject to regulatory requirements that could have a material adverse effect on the Company’s business.

The Parent Company is a “grandfathered” unitary savings and loan holding company and has broad authority to engage in various types of business activities. The OTS, among other things, can prevent us from engaging in activities or limit those activities if it determines that there is reasonable cause to believe that the continuation of any particular activity constitutes a serious risk to the financial safety, soundness or stability of BankAtlantic.

Unlike bank holding companies, as a unitary savings and loan holding company, we have not historically been subject to capital requirements. However, capital requirements may be imposed on savings and loan holding companies in the future. The Dodd-Frank Act may, among other things, eliminate the status of a “savings and loan holding company” and require us to register as a bank holding company, which would subject us to regulatory capital requirements. Further, the regulatory bodies having authority over us may adopt regulations in the future that would affect our operations, including our ability to engage in certain transactions or activities.

An increase in BankAtlantic’s allowance for loan losses will result in reduced earnings.

As a lender, BankAtlantic is exposed to the risk that its customers will be unable to repay their loans according to their terms and that any collateral securing the payment of their loans will not be sufficient to assure full repayment. BankAtlantic’s management evaluates the collectability of BankAtlantic’s loan portfolio and provides an allowance for loan losses that it believes is adequate based upon such factors as:

	•		the risk characteristics of various classifications of loans;

	•		previous loan loss experience;

	•		specific loans that have probable loss potential;

	•		delinquency trends;

	•		estimated fair value of the collateral;

	•		current economic conditions;

	•		the views of its regulators; and

	•		geographic and industry loan concentrations.

Many of these factors are difficult to predict or estimate accurately, particularly in a changing economic environment. The process of determining the estimated losses inherent in BankAtlantic’s loan portfolio requires subjective and complex judgments and the level of uncertainty concerning economic conditions may adversely affect BankAtlantic’s ability to estimate the losses which may be incurred in its loan portfolio. If BankAtlantic’s evaluation is incorrect and borrower defaults cause losses exceeding the portion of the allowance for loan losses allocated to those loans, or if BankAtlantic perceives adverse trends that require it to significantly increase its allowance for loan losses in the future, our earnings could be significantly and adversely affected.

At December 31, 2010, BankAtlantic’s allowance for loan losses was $161.3 million which represented approximately 5.08% of total loans and 43.5% of non-performing loans.

BankAtlantic’s interest-only residential loans expose it to greater credit risks.

As of December 31, 2010, approximately $550.2 million of BankAtlantic’s purchased residential loan portfolio consisted of interest-only loans, representing approximately 45% of the total purchased residential loan portfolio. While these loans are not considered sub-prime or negative amortizing loans, these loans have reduced initial loan payments with the potential for significant increases in monthly loan payments in subsequent periods, even if interest rates do not rise, as required amortization of the principal commences. During the year ended December 31, 2011, approximately $52.1 million of the loans in this portfolio will begin principal amortization. Monthly loan payments also increase if interest rates increase. This presents a potential repayment risk if the borrower is unable to meet the higher debt service obligations or refinance the loan. As previously noted, current economic conditions in the residential real estate markets and the mortgage finance markets have made it more difficult for borrowers to refinance their mortgages which also increases our exposure to loss.

Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future.

At December 31, 2010 and 2009, the Company’s non-performing loans totaled $385.5 million and $331.0 million, or 12.0% and 9.0% of our loan portfolio, respectively. At December 31, 2010 and 2009, the Company’s non-performing assets (which include non-performing loans and foreclosed real estate) were $463.6 million and $379.7 million, or 10.3% and 7.9% of our total assets, respectively. In addition, the Company had approximately $38.2 million and $72.9 million in accruing loans that were 30-89 days delinquent at December 31, 2010 and 2009, respectively. Our non-performing assets adversely affect our net income in various ways. Until economic and real estate market conditions improve, particularly in Florida but also nationally, we expect to continue to incur additional losses relating to an increase in non-performing loans and non-performing assets. We generally do not record interest income on non-performing loans or real estate owned. When we receive the collateral in foreclosures or similar proceedings, we are required to mark the related collateral to the then fair market value, generally based on appraisals of the property obtained by us, which often results in an additional loss. These loans and real estate owned also increase our risk profile, and increases in the level of non-performing loans and non-performing assets impact our regulators’ view of appropriate capital levels, which was the major contributing factor to the imposition by the OTS of the Orders. Our regulators will likely require us to maintain enhanced capital levels until, at a minimum, our levels of non-performing loans and assets are substantially reduced. While we seek to manage our nonperforming assets, decreases in the value of these assets or

deterioration in our borrowers’ financial condition, which is often impacted by economic and market conditions beyond our control, could adversely affect our business, results of operations and financial condition. In addition, the resolution of non-performing assets requires significant commitments of management time.

BankAtlantic’s consumer loan portfolio is concentrated in home equity loans collateralized by Florida properties primarily located in the markets where BankAtlantic operates its branch network.

The decline in residential real estate prices and higher unemployment throughout Florida has, over the past three years, resulted in an increase in mortgage delinquencies and higher foreclosure rates. Additionally, in response to the turmoil in the credit markets, financial institutions have tightened underwriting standards which has limited borrowers’ ability to refinance. These conditions have adversely impacted delinquencies and credit loss trends in BankAtlantic’s home equity loan portfolio and it does not currently appear that these conditions will improve significantly in the near term. Approximately 74% of the loans in BankAtlantic’s home equity portfolio are residential second mortgages that exhibit higher loss severity than residential first mortgages. If current economic conditions do not improve and home prices continue to fall, BankAtlantic may continue to experience higher credit losses from this loan portfolio. Since the collateral for this portfolio consists primarily of second mortgages, it is unlikely that BankAtlantic will be successful in recovering all or any portion of its loan proceeds in the event of a default unless BankAtlantic is prepared to repay the first mortgage and such repayment and the costs associated with a foreclosure are justified by the value of the property.

Changes in interest rates could adversely affect our net interest income and profitability.

The majority of BankAtlantic’s assets and liabilities are monetary in nature. As a result, the earnings and growth of BankAtlantic are significantly affected by interest rates, which are subject to the influence of economic conditions generally, both domestic and foreign, events in the capital markets and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve Board. The nature and timing of any changes in such policies or general economic conditions and their effect on BankAtlantic cannot be controlled and are extremely difficult to predict. Changes in interest rates can impact BankAtlantic’s net interest income as well as the valuation of its assets and liabilities.

Banking is an industry that depends to a large extent on its net interest income. Net interest income is the difference between:

	•		interest income on interest-earning assets, such as loans; and

	•		interest expense on interest-bearing liabilities, such as deposits.

Changes in interest rates can have differing effects on BankAtlantic’s net interest income. In particular, changes in market interest rates, changes in the relationships between short-term and long-term market interest rates, or the yield curve, or changes in the relationships between different interest rate indices can affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income and therefore reduce BankAtlantic’s net interest income. While BankAtlantic has attempted to structure its asset and liability management strategies to mitigate the impact on net interest income of changes in market interest rates, BankAtlantic may not be successful in doing so.

Loan and mortgage-backed securities prepayment decisions are also affected by interest rates. Loan and securities prepayments generally accelerate as interest rates fall. Prepayments in a declining interest rate environment reduce BankAtlantic’s net interest income and adversely affect its earnings because:

	•		it amortizes premiums on acquired loans and securities, and if loans or securities are prepaid, the unamortized premium will be charged off; and

	•		the yields it earns on the investment of funds that it receives from prepaid loans and securities are generally less than the yields that it earned on the prepaid loans.

Significant loan prepayments in BankAtlantic’s mortgage and investment portfolios in the future could have an adverse effect on BankAtlantic’s earnings as proceeds from the repayment of loans may be reinvested in loans with lower interest rates. Additionally, increased prepayments associated with purchased residential loans may result in increased amortization of premiums on acquired loans, which would reduce BankAtlantic’s interest income.

In a rising interest rate environment, loan and securities prepayments generally decline, resulting in yields that are less than the current market yields. In addition, the credit risks of loans with adjustable rate mortgages may worsen as interest rates rise and debt service obligations increase.

BankAtlantic uses a computer model using standard industry software to assist it in its efforts to quantify BankAtlantic’s interest rate risk. The model measures the potential impact of gradual and abrupt changes in interest rates on BankAtlantic’s net interest income. While management would attempt to respond to the projected impact on net interest income, management’s efforts may not be successful.

BankAtlantic is subject to liquidity risk as its loans are funded by its deposits.

Like all financial institutions, BankAtlantic’s assets are primarily funded through its customer deposits and changes in interest rates, availability of alternative investment opportunities, a loss of confidence in financial institutions in general or BankAtlantic in particular, and other factors may make deposit gathering more difficult. If BankAtlantic experiences decreases in deposit levels, it may need to increase its borrowings, which may not be available in sufficient amounts, or liquidate a portion of its assets, which may not be readily saleable. Additionally, interest rate changes or further disruptions in the capital markets may make the terms of borrowings and deposits less favorable. For a further discussion on liquidity, refer to “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources.”

BankAtlantic has significantly reduced operating expenses over the past three years and BankAtlantic may not be able to continue to reduce expenses without adversely impacting its operations.

BankAtlantic’s operating expenses have declined from $330.6 million for the year ended December 31, 2008 to $236.3 million for the year ended December 31, 2010. BankAtlantic reorganized its operations during this period and significantly reduced operating expenses while focusing on its core businesses and seeking to maintain quality customer service. While management is focused on reducing overall expenses, BankAtlantic may not be successful in efforts to further reduce expenses or to maintain its current expense structure. BankAtlantic’s inability to reduce or maintain its current expense structure may have an adverse impact on our results.

Prior to 2009, the Parent Company relied on dividends from BankAtlantic to service its debt and pay dividends, but no dividends from BankAtlantic are anticipated or contemplated for the foreseeable future.

BankAtlantic has not paid a dividend to the Parent Company since September 2008 and the Bank Order prohibits BankAtlantic from paying dividends to the Parent Company without the prior written non-objection of the OTS. As such, BankAtlantic does not intend to pay dividends to the Parent Company for the foreseeable future. For a further discussion refer to “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources.”

The cost and outcome of pending legal proceedings may impact our results of operations.

BankAtlantic Bancorp, BankAtlantic and their subsidiaries are currently parties in ongoing litigation, legal and regulatory proceedings which have resulted in a significant increase in non-interest expense relating to legal and other professional fees. Pending proceedings include class action securities litigation, an SEC investigation, the Orders and an overdraft fee investigation, as well as litigation arising out of our banking operations including workouts and foreclosures, potential class actions by customers relating to service and overdraft fees assessed to their accounts, and legal proceedings associated with our tax certificate business and relationships with third party tax certificate ventures. While, based on current information, we believe that we have meritorious defenses in these proceedings, we anticipate continued elevated legal and related costs as parties to the actions and the ultimate outcomes of the matters are uncertain. Additionally, our insurance carrier for claims under our director and officer liability insurance denied insurance coverage for the class action securities litigation on the grounds that the jury found intentional wrongful acts by certain senior executive officers of the Company. While the Company disputes the validity of the denial of coverage, the Company does not expect to receive additional reimbursements for litigation costs associated with class action securities litigation unless it is successful in contesting the denial of insurance coverage. The insurer and the Company have agreed to a tolling agreement where neither party will take legal action related to the insurance coverage dispute through September 1, 2011 or a later date if extended. As such, if the Company is not successful in the appeals process, a potential securities litigation unfavorable judgment could have a material adverse impact on the Company’s financial statements.

Further reductions in BankAtlantic’s assets may adversely affect our earnings and/or operations.

BankAtlantic has reduced its assets and repaid borrowings in order to improve its liquidity and regulatory capital ratios. The reduction of earning asset balances has reduced our net interest income. Our net interest income was $163.3 million for the year ended December 31, 2009 and $151.3 million for the year ended December 31, 2010. The reduction in net interest income from earning asset reductions has previously been offset by lower operating expenses in prior periods. Our ability to further reduce expenses without adversely affecting our operations may be limited and as a result, further reductions in our earning asset balances in future periods may adversely affect earnings and/or operations.

Adverse market conditions have affected and may continue to affect the financial services industry as well as our business and results of operations.

Our financial condition and results of operations have been, and may continue to be, adversely impacted as a result of the downturn in the U.S. housing and commercial real estate markets and general economic conditions. Dramatic declines in the national and, in particular, Florida housing markets over the past three years, with falling home prices and increasing foreclosures and unemployment, have negatively impacted the credit performance of our loans and resulted in significant asset impairments at all financial institutions, including government-sponsored entities, major commercial and investment banks, and regional and community financial institutions including BankAtlantic. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. The continuing economic pressure on consumers and lack of confidence in the financial markets has adversely affected and may continue to adversely affect our business, financial condition and results of operations. Further negative market and economic developments may cause adverse changes in payment patterns, causing increases in delinquencies and default rates, which may impact our charge-offs and provisions for loan losses. Continuing economic deterioration that affects household and/or corporate incomes could also result in reduced demand for credit or fee-based products and services. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on BankAtlantic and others in the financial services industry. In particular, we may face the following risks in connection with these events:

	•		BankAtlantic’s borrowers may be unable to make timely repayments of their loans, or the value of real estate collateral securing the payment of such loans may continue to decrease which could result in increased delinquencies, foreclosures and customer bankruptcies, any of which would increase levels of non-performing loans resulting in significant credit losses, and increased expenses and could have a material adverse effect on our operating results.

	•		Further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations, may result in an inability to borrow on favorable terms or at all from other financial institutions or government entities.

	•		Increased regulation of the industry may increase costs, decrease fee income and limit BankAtlantic’s activities and operations.

	•		Increased competition among financial services companies based on the recent consolidation of competing financial institutions and the conversion of investment banks into bank holding companies may adversely affect BankAtlantic’s ability to competitively market its products and services.

	•		BankAtlantic may be required to pay higher FDIC deposit premiums and assessments.

	•		Continued asset valuation declines could adversely impact our credit losses and result in additional impairments of goodwill and other assets.

Our loan portfolio subjects us to high levels of credit and counterparty risk.

We are exposed to the risk that our borrowers or counter-parties may default on their obligations. Credit risk arises through the extension of loans, certain securities, letters of credit, and financial guarantees and through counter-party exposure on trading and wholesale loan transactions. In an attempt to manage this risk, we seek to establish policies and procedures to manage both on and off-balance sheet (primarily loan commitments) credit risk.

BankAtlantic reviews the creditworthiness of individual borrowers or counter-parties, and limits are established for the total credit exposure to any one borrower or counter-party; however, such limits may not have the effect of adequately limiting credit exposure. In addition, when deciding whether to extend credit or enter into other

transactions with customers and counterparties, we often rely on information furnished to us by such customers and counterparties, including financial statements and other financial information, and representations of the customers and counterparties that relates to the accuracy and completeness of the information. While we take all actions we deem necessary to ensure the accuracy of the information provided to us, all the information provided to us may not be accurate or we may not successfully identify all information needed to fully assess the risk which may expose us to increased credit risk and counterparty risk.

BankAtlantic also enters into participation agreements with or acquires participation interests from other lenders to limit its credit risk, but will continue to be subject to risks with respect to its interest in the loan, as well as not being in a position to make independent determinations with respect to its interest. Further, the majority of BankAtlantic’s residential loans are serviced by others. The servicing agreements may restrict BankAtlantic’s ability to initiate work-out and modification arrangements with borrowers which could adversely impact BankAtlantic’s ability to minimize losses on non-performing loans.

The Company is also exposed to credit and counterparty risks with respect to loans held in its asset workout subsidiary.

Adverse events in Florida, where our business is currently concentrated, could adversely impact our results and future growth.

BankAtlantic’s business, the location of its stores, the primary source of repayment for its small business loans and the real estate collateralizing its commercial real estate loans (and the loans held by our asset workout subsidiary) and its consumer home equity loans are primarily concentrated in Florida. As a result, we are exposed to geographic risks as increasing unemployment, declines in the housing industry and declines in the real estate market have generally been more severe in Florida than in the rest of the country. Adverse changes in laws and regulations in Florida would have a greater negative impact on our revenues, financial condition and business than on similar institutions in markets outside of Florida. Further, the State of Florida is subject to the risks of natural disasters such as tropical storms and hurricanes, which may disrupt our operations, adversely impact the ability of our borrowers to timely repay their loans and the value of any collateral held by us, or otherwise have an adverse effect on our results of operations. The severity and impact of tropical storms, hurricanes and other weather related events are unpredictable.

Risks Related to Our Common Stock

The Company is controlled by BFC Financial Corporation and its controlling shareholders and this control position may adversely affect the market price of the Company’s Class A Common Stock.

As of December 31, 2010, BFC Financial Corporation (“BFC”) owned all of the Company’s issued and outstanding Class B Common Stock and 27,333,428 shares, or approximately 43%, of the Company’s issued and outstanding Class A Common Stock. BFC’s holdings represent approximately 71% of the Company’s total voting power. Additionally, Alan B. Levan, our Chairman and Chief Executive Officer, and John E. Abdo, our Vice Chairman, beneficially own shares of BFC’s Class A and Class B Common Stock representing approximately 71.6% of BFC’s total voting power. The Company’s Class A Common Stock and Class B Common Stock vote as a single group on most matters. Accordingly, BFC, directly, and Messrs. Levan and Abdo, indirectly through BFC, are in a position to control the Company, elect the Company’s Board of Directors and significantly influence the outcome of any shareholder vote, except in those limited circumstances where Florida law mandates that the holders of the Company’s Class A Common Stock vote as a separate class. This control position may have an adverse effect on the market price of the Company’s Class A Common Stock.

BFC can reduce its economic interest in us and still maintain voting control.

Our Class A Common Stock and Class B Common Stock generally vote together as a single class, with our Class A Common Stock possessing a fixed 53% of the aggregate voting power of all of our common stock and our Class B Common Stock possessing a fixed 47% of such aggregate voting power. Our Class B Common Stock currently represents approximately 2% of our common equity and 47% of our total voting power. As a result, the voting power of our Class B Common Stock does not bear a direct relationship to the economic interest represented by the shares. Any issuance of shares of our Class A Common Stock will further dilute the relative economic interest of our Class B Common Stock, but will not decrease the voting power represented by our Class B Common Stock. Further, our Restated Articles of Incorporation provide that these relative voting percentages will remain fixed until such time as

BFC and its affiliates own less than 487,613 shares of our Class B Common Stock, which is approximately 50% of the number of shares of our Class B Common Stock that BFC now owns, even if additional shares of our Class A Common Stock are issued. Therefore, BFC may sell up to approximately 50% of its shares of our Class B Common Stock (after converting those shares to Class A Common Stock), and significantly reduce its economic interest in us, while still maintaining its voting power. If BFC were to take this action, it would widen the disparity between the equity interest represented by our Class B Common Stock and its voting power. Any conversion of shares of our Class B Common Stock into shares of our Class A Common Stock would further dilute the voting interests of the holders of our Class A Common Stock.

Provisions in our charter documents may make it difficult for a third party to acquire us and could depress the price of our Class A Common Stock.

Our Restated Articles of Incorporation and Amended and Restated Bylaws contain provisions that could delay, defer or prevent a change of control of the Company or our management. These provisions could make it more difficult for shareholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our Class A Common Stock. These provisions include:

	•		the provisions in our Restated Articles of Incorporation regarding the voting rights of our Class B Common Stock;

	•		the authority of our board of directors to issue additional shares of common or preferred stock and to fix the relative rights and preferences of the preferred stock without additional shareholder approval;

	•		the division of our board of directors into three classes of directors with three-year staggered terms; and

	•		advance notice procedures to be complied with by shareholders in order to make shareholder proposals or nominate directors.

A sustained decline in the Company’s Class A Common Stock price may result in the delisting of its Class A Common Stock from the New York Stock Exchange.

The Company’s Class A Common Stock currently trades on the New York Stock Exchange. Like many other companies involved in the financial services industry over the last several years, the trading price of the Company’s Class A Common Stock has experienced a substantial decline. A listed company would be deemed to be below compliance with the continued listing standards of the New York Stock Exchange if, among other things, the listed company’s average closing price was less than $1.00 over a consecutive 30 trading day period or the listed company’s average market capitalization was less than $15 million over a consecutive 30 trading day period. As of February 28, 2011, the average market price of the Company’s Class A Common Stock over the prior 30 trading day period was approximately $1.06, and the Company’s average market capitalization over that period was approximately $65 million. However, the market price of the Company’s Class A Common Stock is subject to significant volatility and it may decrease in the future so as to cause the Company not to comply with the New York Stock Exchange’s requirement for continued listing.

If the Company does not meet the requirements for continued listing, then the Company’s Class A Common Stock will be delisted from the New York Stock Exchange. In such case, the Company would attempt to cause its Class A Common Stock to be eligible for quotation on the OTC Bulletin Board. However, in such event, the trading price of the Company’s Class A Common Stock would likely be adversely impacted, it may become more difficult for the holders of the Company’s Class A Common Stock to sell or purchase shares of the Company’s Class A Common Stock, and it may become more difficult for the Company to raise capital, which could materially and adversely impact our business, prospects, financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

The principal executive offices of BFC, Woodbridge, BankAtlantic Bancorp and BankAtlantic are located at 2100 West Cypress Creek Road, Fort Lauderdale, Florida, 33309. The property is owned by BankAtlantic. BFC and BFC Shared Service Corporation (“BFC Shared Service”) lease office space within the building from BankAtlantic, and Woodbridge sub-leases certain office space from BFC.

We own an office building located at 2200 West Cypress Creek Road, Fort Lauderdale, Florida 33309. We continue to seek to sell the building or lease the vacant space available at this office building to third parties, including to affiliates.

Bluegreen’s principal executive office is located in Boca Raton, Florida in approximately 158,838 square feet of leased space. At December 31, 2010, Bluegreen also maintained sales offices at 20 of its resorts, as well as regional administrative offices in Orlando, Florida and Indianapolis, Indiana for its Resorts division. In addition, Bluegreen maintains five regional sales/administrative offices for its Communities division.

The following table sets forth, with respect to BankAtlantic, owned and leased branches by region at December 31, 2010:


	Miami -				Palm
	Dade		Broward		Beach		Tampa
Owned full-service branches		9		13		25		7
Leased full-service branches		10		11		5		5
Ground leased full-service branches (1)		3		3		1		7

Total full-service branches		22		27		31		19


Lease expiration dates		2011-2020		2011-2015		2011-2016		2011-2023

Ground lease expiration dates		2026-2027		2017-2072		2026		2026-2032


(1)		Branches in which BankAtlantic owns the building and leases the land.

The following table sets forth BankAtlantic’s leased drive-through facilities and leased back-office facilities by region at December 31, 2010:


	Miami -				Palm				Orlando /
	Dade		Broward		Beach		Tampa		Jacksonville
Leased drive-through facilities		1		2		—		—		—

Leased drive through expiration dates		2015		2011-2014		—		—		—

Leased back-office facilities		1		—		—		2		1

Leased back-office expiration dates		2018		—		—		2012-2014		2013

In January 2011, BankAtlantic entered into an agreement with PNC Bank to sell its 19 branches and two related facilities in Tampa. The transaction is anticipated to close in June 2011, and is subject to regulatory approvals and other customary terms and conditions. The 19 affected branches will operate normally through completion of the transaction.

In prior years, BankAtlantic had acquired land and executed operating leases for store expansion. As of December 31, 2010, BankAtlantic is seeking to sublease the leased properties, and sell the parcels of land which were not used for branch expansion. The following table sets forth the executed leases and land purchased for store expansion as of December 31, 2010:


	Miami -				Palm		Tampa		Orlando /
	Dade		Broward		Beach		Bay		Jacksonville
Executed leases held for sublease		—		2		1		4		2

Executed lease expiration dates		—		2013-2030		2028		2028-2048		2028-2029

Land held for sale		—		—		1		1		4

ITEM 3. LEGAL PROCEEDINGS

BFC and its Wholly Owned Subsidiaries

Woodbridge Holdings, LLC v. Prescott Group Aggressive Small Cap Master Fund, G.P., Cede & Co., William J. Maeck, Ravenswood Investments III, L.P., and The Ravenswood Investment Company, Circuit Court, 17^th Judicial Circuit, Broward County, Florida

Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. One Dissenting Holder, which held approximately 400,000 shares of Woodbridge’s Class A Common Stock, has withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. The appraisal rights litigation thereafter commenced and is currently ongoing. The outcome of the litigation is uncertain and there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

National Bank of South Carolina v. Core Communities of South Carolina, LLC, et al., South Carolina Court of Common Pleas, Fourteenth Judicial Circuit

On January 13, 2010, National Bank of South Carolina filed a complaint in the South Carolina Court of Common Pleas, Fourteenth Judicial Circuit, to commence foreclosure proceedings related to property at Tradition Hilton Head which served as collateral under a note and mortgage executed and delivered by Core South Carolina, LLC, a wholly owned subsidiary of Core, in favor of the lender. Core was secondarily liable as a guarantor for the loan, and Synovus Bank (successor by merger to National Bank of South Carolina) commenced an action to enforce Core’s guarantee. With Core’s concurrence, the property which served as collateral for the loan was placed under the control of a court-appointed receiver. During December 2010, Core and Core South Carolina, on the one hand, and Synovus Bank, on the other hand, executed agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, which resolved the pending litigation and foreclosure disputes between them. Pursuant to the agreements, (i) Core South Carolina transferred to Synovus Bank all of Core South Carolina’s right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property which had a book value as of September 30, 2010 of approximately $1.0 million, and (ii) Synovus Bank released Core and Core South Carolina from any claims arising from or relating to the loan.

Investors Warranty of America, Inc. v. Core Communities of South Carolina, LLC and Core Communities, LLC, et. al., Circuit Court, Jasper County, South Carolina, and Investors Warranty of America, Inc. v. Core Communities, LLC and Horizons Acquisition 5, LLC, Circuit Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida

On April 7, 2010, Investors Warranty of America filed a complaint with the Circuit Court of Jasper County, South Carolina to commence foreclosure proceedings related to property at Tradition Hilton Head which served as collateral for a loan to Core and its subsidiary with a balance of approximately $27.2 million at March 31, 2010. On April 8, 2010, Investors Warranty of America filed a complaint with the Circuit Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida to commence foreclosure proceedings related to property at Tradition, Florida which served as collateral for a loan to Core and its subsidiary with a balance of approximately $86.5 million at March 31,

2010. Investors Warranty of America subsequently assigned and conveyed its interests in both the Florida and South Carolina loan facilities to PSL Acquisitions, LLC (“PSLA”).On November 8, 2010, Core and its applicable subsidiaries, on the one hand, and PSLA, on the other hand, executed an agreement to resolve the disputes between them. Pursuant to the agreement, Core and its subsidiaries (i) pledged additional collateral to PSLA consisting of membership interests in certain subsidiaries of Core, (ii) granted security interests in the acreage owned by the subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land, (iii) agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and (iv) agreed to an entry into consensual judgments of foreclosure in both foreclosure actions. PSLA agreed not to enforce a deficiency judgment against Core and, in February 2011, has released Core, BFC and each of their affiliates from any claims arising from or relating to the loans.

AmTrust Bank v. Woodbridge Holdings, LLC and Carolina Oak Homes, LLC, United States District Court for the Southern District of Florida

During November 2009, AmTrust Bank filed a two count complaint against Woodbridge and Carolina Oak, alleging default under a promissory note and breach of a guaranty related to an approximately $37.2 million loan that is collateralized by property owned by Carolina Oak. During December 2009, the OTS closed AmTrust and appointed the FDIC as receiver. On March 3, 2010, the FDIC filed a motion to substitute as the real party in interest and filed a notice of removal. The FDIC subsequently sold the loan to an investor group. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

Robert D. Dance, individually and on behalf of all others similarly situated v. Woodbridge Holdings Corp. (formerly known as Levitt Corp.), Alan B. Levan, and George P. Scanlon, Case No. 08-60111-Civ-Graham/O’Sullivan, Southern District of Florida

On January 25, 2008, plaintiff Robert D. Dance filed a purported class action complaint as a putative purchaser of securities against Woodbridge and certain of its officers and directors, asserting claims under the federal securities law and seeking damages. This action was filed in the United States District Court for the Southern District of Florida and is captioned Dance v. Levitt Corp. et al., No. 08-CV-60111-DLG. The securities litigation purports to be brought on behalf of all purchasers of Woodbridge’s securities beginning on January 31, 2007 and ending on August 14, 2007. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by issuing a series of false and/or misleading statements regarding financial results, prospects and condition.

Westchester Fire Insurance Company vs. City of Brooksville, United States District Court, Middle District of Florida, Tampa Division, Case No. 8:09 CV 00062-T23 TBM

This litigation arose from a dispute regarding liability under two performance bonds for infrastructure issued in connection with a plat issued by the City of Brooksville for a single family housing project that was not commenced. The project had been abandoned by Levitt and Sons prior to its bankruptcy filing as non-viable as a consequence of the economic downturn and, in connection with the Levitt and Sons bankruptcy, the mortgagee, Key Bank, was permitted by agreement to initiate and conclude a foreclosure leading to the acquisition of the property by Key Bank’s subsidiary. The City of Brooksville contended that, notwithstanding that the development had not proceeded and was not likely to proceed at any known time in the future, it was entitled to recover the face amount of the bonds in the approximate amount of $5.4 million. Woodbridge filed a suit for declaratory judgment (in the name of its surety, Westchester) against the City of Brooksville contending that the obligation under the bonds had terminated. In August 2010, Woodbridge was granted a motion for summary judgment. Subsequent to the motion being granted, the municipality appealed the decision.

Bluegreen Corporation

In 2005, the State of Tennessee Audit Division (the “Division”) audited certain subsidiaries within Bluegreen Resorts for the period from December 1, 2001 through December 31, 2004. On September 23, 2006, the Division issued a notice of assessment for approximately $0.7 million of accommodations tax based on the use of Bluegreen Vacation Club accommodations by Bluegreen Vacation Club members who became members through the purchase of non-Tennessee property. Bluegreen believes the attempt to impose such a tax is contrary to Tennessee law and have vigorously opposed, and intend to continue to vigorously oppose, such assessment by the Division. An informal conference was held in December 2007 to discuss this matter with representatives of the Division. No formal resolution of the issue was reached during the conference and no further action has to date been initiated by the State of Tennessee. While the timeshare industry has been successful in challenging the imposition of sales taxes on the use of accommodations by timeshare owners, there is no assurance that we will be successful in contesting the current assessment.

In Cause No. 2006-Ca-3374, styled Joseph M. Scheyd, Jr., P.A. vs. Bluegreen Vacations Unlimited, Inc.; Hubert A. Laird; and MSB of Destin, Inc.,in the Circuit Court of the First Judicial Circuit in and for Okaloosa County, Florida, the Plaintiff as escrow agent brought an interpleader action seeking a determination as to whether Bluegreen, as purchaser, or Hubert A. Laird and MSB of Destin, Inc. as seller, were entitled to the $1.4 million escrow deposit being maintained with the escrow agent pursuant to a purchase and sale contract for real property located in Destin, Florida. Both Bluegreen and the seller brought cross-claims for breach of the underlying purchase and sale contract. The seller’s complaint, as amended, includes a fraud allegation, contends that Bluegreen failed to perform under the terms of the purchase and sale contract and claims entitlement to the full amount in escrow. Bluegreen maintains that its decision not to close on the purchase of the property was proper under the terms of the purchase and sale contract and therefore are entitled to a return of the full escrow deposit. A trial date of May 31, 2011 has been set for this matter. Bluegreen believes the seller’s allegations are without merit and intends to vigorously defend this claim.

The Office of the Attorney General for the State of Florida (the “AGSF”) has advised Bluegreen that it has accumulated a number of consumer complaints over the past six years against Bluegreen and/or its affiliates related to its timeshare sales and marketing, and has requested that Bluegreen respond on a collective basis as to how it had or would resolve the complaints. Bluegreen has determined that many of these complaints were previously addressed and/or resolved by Bluegreen. The AGSF has also requested that Bluegreen enter into a written agreement in which the parties establish a process and timeframe for determining consumer eligibility for relief (including where applicable monetary restitution, if any). Bluegreen does not believe this matter will have a material effect on Bluegreen’s results of operations, financial condition or its sales and marketing activities in Florida.

Bluegreen Southwest One, L.P. (“Southwest”), a subsidiary of Bluegreen Corporation, is the developer of the Mountain Lakes subdivision in Texas. In Cause No. 28006, styled Betty Yvon Lesley et a1. v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. et al., in the 266th Judicial District Court, Erath County, Texas, the plaintiffs filed a declaratory judgment action against Southwest seeking to develop their reserved mineral interests in, on and under the Mountain Lakes subdivision. The plaintiffs’ claims are based on property law, oil and gas law, contract and tort theories. The property owners association and some of the individual landowners have filed cross actions against Bluegreen, Southwest and individual directors of the property owners association related to the mineral rights and certain amenities in the subdivision as described below. On January 17, 2007, the court ruled that the restrictions placed on the development that prohibited oil and gas production and development were invalid and not enforceable as a matter of law, that such restrictions did not prohibit the development of the plaintiffs’ prior reserved mineral interests and that Southwest breached its duty to lease the minerals to third parties for development. The court further ruled that Southwest was the sole holder of the right to lease the minerals to third parties. The order granting the plaintiffs’ motion was severed into Cause No. 28769, styled Betty Yvon Lesley et a1. v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. et al. in the 266th Judicial District Court, Erath County, Texas. Southwest appealed the trial court’s ruling. On January 22, 2009, in Bluegreen Southwest One, L.P. et al. v. Betty Yvon Lesley et al., in the 11th Court of Appeals, Eastland, Texas, the Appellate Court reversed the trial court’s decision and ruled in Southwest’s favor and determined that all executive rights were owned by Southwest and then transferred to the individual property owners in connection with the sales of land. All property owner claims were decided in favor of Southwest. It was also decided that Southwest did not breach a fiduciary duty to the plaintiffs as an executive rights holder. On May 14, 2009, the plaintiffs filed an appeal with the Texas Supreme Court asking the Court to reverse the Appellate Court’s decision in favor of Southwest. On September 15, 2010 the Court heard oral arguments on whether to reverse or affirm the Appellate Court’s decision. No information is available as to when the Texas Supreme Court will render a decision on the appeal.

On September 14, 2009, in Cause No. 09-09-08763-CV, styled William Marshall and Patricia Marshall, et al. v Bluegreen Southwest One, L.P., Bluegreen Southwest Land, Inc., Bluegreen Corporation, Stephen Davis, and Bluegreen Communities of Texas, L.P., in the 284th Judicial District of Montgomery County, Texas, the plaintiffs brought suit alleging fraud,, negligent misrepresentation, breach of contract, and negligence with regards to the Ridgelake Shores subdivision, developed in Montgomery County, Texas, specifically, the usability of the lakes within the community for fishing and sporting and the general level of quality at the community. The lawsuit sought material damages and the payment of costs to remediate the lake. On September 10, 2010, a tentative settlement of this matter was reached, pursuant to which Bluegreen agreed to pay $0.3 million to provide for improvements to the fish habitat and general usability of the lake environment. The settlement agreement has since been fully executed and as of December 31, 2010 Bluegreen has paid $0.2 million of the agreed upon settlement payment. Bluegreen has accrued the remaining $0.1 million due. Improvements to the lake are ongoing and Bluegreen will disburse the remaining funds as they are needed to complete the improvements.

On September 18, 2008, in Cause No. 2008-5U-CV-1358-WI, styled Paul A. Schwarz and Barbara S. Schwarz v. Bluegreen Communities of Georgia, LLC and Bluegreen Corporation, in the United States District Court for the Southern District of Georgia, Brunswick Division, the plaintiffs brought suit alleging fraud and misrepresentation with regards to the construction of a marina at the Sanctuary Cove subdivision located in Camden County, Georgia. The plaintiffs subsequently withdrew the fraud and misrepresentation counts and filed a count alleging violation of racketeering laws, including mail fraud and wire fraud. On January 25, 2010, the plaintiffs filed a second complaint seeking approval to proceed with the lawsuit as a class action on behalf of more than 100 persons claimed to have been harmed by the alleged activities in a similar manner. Bluegreen has filed a response with the Court in opposition to class certification. No decision has yet been made by the Court as to whether they will certify a class. Bluegreen denies the allegations and intend to vigorously defend the lawsuit.

On June 3, 2010, in Cause No. 16-2009-CA-008028, styled Community Cable Service, LLC v. Bluegreen Communities of Georgia, LLC and Sanctuary Cove at St. Andrews Sound Community Association, Inc., a/k/a Sanctuary Cove Home Developers Association, Inc., in the Circuit Court of the Fourth Judicial Circuit in and for Duval County, Florida, the plaintiffs filed suit alleging breach by Bluegreen Communities of Georgia and the community association of a bulk cable TV services contract at Bluegreen’s Sanctuary Cove single family residential community being developed in Waverly, Georgia. In its complaint, the plaintiffs alleged that approximately $0.2 million in unpaid bulk cable fees are due from the defendants, and that the non-payment of fees will continue to accrue on a monthly basis. Bluegreen and the community association allege incomplete performance under the contract by the plaintiffs and that the cable system installed was inferior and did not comply with the requirements of the contract. The case went to mediation on September 20, 2010, but no resolution was reached. A trial date has been set for May 5, 2011 in this matter. Bluegreen intends to vigorously defend the lawsuit.

Other Matters

In addition to the matters disclosed above, from time to time in the ordinary course of business we receive individual consumer complaints, as well as complaints received through regulatory and consumer agencies, including Offices of State Attorney Generals. We take these matters seriously and attempt to resolve any such issues as they arise.

Additionally, Bluegreen becomes subject to claims or proceedings from time to time relating to the purchase, subdivision, sale or financing of real estate. From time to time, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties.

BankAtlantic Bancorp

In re BankAtlantic Bancorp, Inc. Securities Litigation, No. 0:07-cv-61542-UU, United States District Court, Southern District of Florida

On October 29, 2007, Joseph C. Hubbard filed a class action in the United States District Court for the Southern District of Florida against BankAtlantic Bancorp and four of its current or former officers. The Defendants in this action are BankAtlantic Bancorp, Inc., James A. White, Valerie C. Toalson, Jarett S. Levan, John E. Abdo and Alan B. Levan. The Complaint, which was later amended, alleges that during the purported class period of November 9,

2005 through October 25, 2007, BankAtlantic Bancorp and the named officers knowingly and/or recklessly made misrepresentations of material fact regarding BankAtlantic and specifically BankAtlantic’s loan portfolio and allowance for loan losses. The Complaint sought to assert claims for violations of the Securities Exchange Act of 1934 and Rule 10b-5 and unspecified damages. On December 12, 2007, the Court consolidated into Hubbard a separately filed action captioned Alarm Specialties, Inc. v. BankAtlantic Bancorp, Inc., No. 0:07—cv-61623-WPD. On February 5, 2008, the Court appointed State-Boston Retirement System lead plaintiff and Lubaton Sucharow LLP to serve as lead counsel pursuant to the provisions of the Private Securities Litigation Reform Act.

On November 18, 2010, a jury returned a verdict awarding $2.41 per share to shareholders who purchased shares of BankAtlantic Bancorp’s Class A Common Stock during the period of April 26, 2007 to October 26, 2007 and retained those shares until the end of the period. The jury rejected the plaintiffs’ claim for the six month period from October 19, 2006 to April 25, 2007. Plaintiffs prior to the beginning of the trial abandoned any claim for any prior period. BankAtlantic Bancorp has filed motions to set aside the verdict, which are fully briefed, and the judge has indicated that if those are denied she will certify issues to the United States Court of Appeals to the Eleventh Circuit before any judgment is entered or claims are satisfied.

BankAtlantic Bancorp intends to vigorously prosecute post-trial motions and an appeal and then subsequently assert all meritorious available defenses in any claims process.

D.W. Hugo, individually and on behalf of Nominal Defendant BankAtlantic Bancorp, Inc. vs. BankAtlantic Bancorp, Inc., Alan B. Levan, Jarett S. Levan, Jay C. McClung, Marcia K. Snyder, Valerie Toalson, James A. White, John E. Abdo, D. Keith Cobb, Steven M. Coldren, and David A. Lieberman, Case No. 0:08-cv-61018-UU, United States District Court, Southern District of Florida

On July 2, 2008, D.W. Hugo filed a purported class action which was brought as a derivative action on behalf of BankAtlantic Bancorp pursuant to Florida laws in the United States District Court, Southern District of Florida against BankAtlantic Bancorp and the above listed officers and directors. The Complaint alleges that the individual defendants breached their fiduciary duties by engaging in certain lending practices with respect to BankAtlantic Bancorp’s Commercial Real Estate Loan Portfolio. The Complaint further alleges that BankAtlantic Bancorp’s public filings and statements did not fully disclose the risks associated with the Commercial Real Estate Loan Portfolio and seeks damages on behalf of BankAtlantic Bancorp. This shareholder derivative action is based on the same factual allegations made in BankAtlantic Bancorp, Inc. Securities Litigation and has been stayed pending final resolution of that case. BankAtlantic Bancorp believes the claims to be without merit and intends to vigorously defend this action.

Albert R. Feldman, Derivatively on behalf of Nominal Defendant BankAtlantic Bancorp, Inc. v. Alan B. Levan, et al., Case No. 0846795 07

On December 2, 2008, the Circuit Court for Broward County stayed a separately filed action captioned Albert R. Feldman, Derivatively on behalf of Nominal Defendant BankAtlantic Bancorp, Inc. vs. Alan B. Levan, et al., Case No. 0846795 07. The Feldman case is a derivative case with allegations virtually identical to those made in the Hugo case. The court granted the motion to stay the action pending further order of the court and allowing any party to move for relief from the stay, provided the moving party gives at least thirty days’ written notice to all of the non-moving parties. BankAtlantic Bancorp believes the claims to be without merit and intends to vigorously defend the actions.

Wilmine Almonor, individually and on behalf of all others similarly situated, vs. BankAtlantic Bancorp, Inc., Steven M. Coldren, Mary E. Ginestra, Willis N. Holcombe, Jarett S. Levan, John E. Abdo, David A. Lieberman, Charlie C. Winningham II, D. Keith Cobb, Bruno L. DiGiulian, Alan B. Levan, James A. White, the Security Plus Plan Committee, and Unknown Fiduciary Defendants 1-50, No. 0:07-cv-61862- DMM, United States District Court, Southern District of Florida.

On December 20, 2007, Wilmine Almonor filed a purported class action in the United States District Court for the Southern District of Florida against BankAtlantic Bancorp and the above-listed officers, directors, employees, and organizations. The Complaint alleges that during the purported class period of November 9, 2005 to present, BankAtlantic Bancorp and the individual defendants violated the Employment Retirement Income Security Act (“ERISA”) by permitting company employees to choose to invest in BankAtlantic Bancorp’s Class A common stock in light of the facts alleged in BankAtlantic Bancorp, Inc. securities lawsuit. The Complaint seeks to assert claims for breach of fiduciary duties, the duty to provide accurate information, the duty to avoid conflicts of interest under ERISA and seeks unspecified damages. On February 18, 2009, the Plaintiff filed a Second Amended Complaint, which, for the

first time, identified by name the following additional Defendants that Plaintiff had previously attempted to identify by position: Anne B. Chervony, Lewis F. Sarrica, Susan D. McGregor, Jeff Callan, Patricia Lefebvre, Jeffrey Mindling, Tim Watson, Gino Martone, Jose Valle, Juan Carlos Ortigosa, Gerry Lachnicht, Victoria Bloomenfeld, Rita McManus, and Kathleen Youlden.

On July 14, 2009, the Court granted in part Defendants’ motion to dismiss the Second Amended Complaint, dismissing the following individual Defendants from Count II: Lewis Sarrica, Susan McGregor, Patricia Lefebvre, Jeffrey Mindling and Gerry Lachnicht. On July 28, 2009, the Court denied Plaintiff’s motion for class certification. On January 13, 2010, the Court ruled that the Plaintiff’s status as a Plan representative threatens the interests of the Plan, and in turn other Plan participants, and threatens the integrity of the judicial process. The court denied the Plaintiff’s request to proceed as a Plan representative and accordingly, the case was limited to the Plaintiff’s individual claim. On June 2, 2010, the parties entered a stipulation of dismissal with prejudice with respect to the Plaintiff’s individual claim and on that same date, the court entered an order of dismissal with respect to those claims.

Jordan Arizmendi, et al., individually and on behalf of all others similarly situated, v. BankAtlantic, Case No. 09-059341 (19), Circuit Court of the 17th Judicial Circuit for Broward County, Florida.

On November 8, 2010, two pending class action cases against BankAtlantic — Farrington v. BankAtlantic, and Rothman v. BankAtlantic — were consolidated, and a Consolidated Amended Class Action Complaint (“Complaint”) was filed. New purported named plaintiffs were added, and the case is now styled as Jordan Arizmendi, et al., individually and on behalf of all others similarly situated, v. BankAtlantic. The Complaint, which asserts claims for breach of contract and breach of the duty of good faith and fair dealing, alleges that the Bank improperly re-sequenced debit card transactions, improperly assessed overdraft fees on positive balances, and improperly imposed sustained overdraft fees on customers one day sooner than provided for under the applicable account agreement.

SEC Investigation

In October 2008, BankAtlantic Bancorp received a notice of investigation from the Securities and Exchange Commission, Miami Regional Office and at that time and subsequently, have received subpoenas for information. The subpoenas request a broad range of documents relating to, among other matters, recent and pending litigation to which BankAtlantic Bancorp is or was a party, certain of BankAtlantic Bancorp’s non-performing, non-accrual and charged-off loans, BankAtlantic Bancorp’s cost saving measures, loan classifications, BankAtlantic Bancorp’s asset workout subsidiary, any purchases or sales of BankAtlantic Bancorp’s common stock by officers or directors of BankAtlantic Bancorp and communications with the OTS related to the Orders. Various current and former employees have also received subpoenas for documents and testimony. BankAtlantic Bancorp is fully cooperating with the SEC.

Office of Thrift Supervision Investigation

On January 6, 2011, the Office of Thrift Supervision advised BankAtlantic that it had determined, subject to receipt of additional information from BankAtlantic, that BankAtlantic engaged in deceptive and unfair practices in violation of Section 5 of the Federal Trade Commission Act relating to certain of BankAtlantic’s deposit-related products. The OTS provided BankAtlantic the opportunity to respond with any additional or clarifying information, and BankAtlantic submitted a written response to the OTS on February 7, 2011 addressing the OTS’s position.

In the ordinary course of business, the Company and its subsidiaries are also parties to lawsuits as plaintiff or defendant involving its bank operations, lending, tax certificates activities and real estate activities. Additionally, from time to time, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties. Although the Company believes it has meritorious defenses in the pending legal actions and that the outcomes of these pending legal matters should not materially impact us, the ultimate outcomes of these matters are uncertain.

ITEM 4. REMOVED AND RESERVED

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

			Our Class A Common Stock and Class B Common Stock have substantially identical terms, except as follows:

	•		Holders of our Class A Common Stock are entitled to one vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of the total voting power. Holders of Class B Common Stock have the remaining 78% of the total voting power. If the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53% and the Class B Common Stock will have the remaining 47%. If the number of shares of Class B Common Stock outstanding decreases to 500,000, the fixed voting percentages will be eliminated, and holders of our Class A Common Stock and holders of our Class B Common Stock will each be entitled to one vote per share.

	•		Each share of Class B Common Stock is convertible at the option of the holder thereof into one share of Class A Common Stock.

In addition to any other approval required by Florida law, the foregoing voting structure may not be amended without the approval of holders of a majority of the outstanding shares of our Class B Common Stock, voting as a separate class.

Market Information

Our Class A Common Stock is quoted on the Pink Sheets Electronic Quotation Service (“Pink Sheets”) under the ticker symbol “BFCF.PK.” Our Class B Common Stock is quoted on the OTC Bulletin Board under the ticker symbol “BFCFB.OB.”

The following table sets forth, for the indicated periods, (i) the high and low trading prices for our Class A Common Stock as quoted on the Pink Sheets and (ii) the high and low trading prices for our Class B Common Stock as reported by the National Association of Securities Dealers Automated Quotation System. The over-the-counter stock prices do not include retail mark-ups, mark-downs or commissions.


	Class A Common Stock				Class B Common Stock
	High		Low		High		Low
2009
First Quarter	$	0.32	$	0.06	$	0.25	$	0.25
Second Quarter	$	0.51	$	0.16	$	0.51	$	0.25
Third Quarter	$	0.70	$	0.26	$	0.40	$	0.30
Fourth Quarter	$	0.74	$	0.31	$	1.24	$	0.31

2010
First Quarter	$	0.55	$	0.26	$	0.65	$	0.60
Second Quarter	$	0.99	$	0.39	$	1.25	$	0.85
Third Quarter	$	0.44	$	0.30	$	0.85	$	0.85
Fourth Quarter	$	0.38	$	0.20	$	0.85	$	0.35

Holders

On March 25, 2011, there were approximately 672 record holders of our Class A Common Stock and approximately 441 record holders of our Class B Common Stock.

Dividends

We have never paid cash dividends on our common stock. In addition, we recently committed that we will not, without the prior written non-objection of the OTS, declare or pay any dividends or other capital distributions on our common stock.

See also “Management’s Discussion and Analysis of Financial Condition and Operating Results” and Note 2 of the consolidated financial statements for a discussion regarding restrictions on the ability of BankAtlantic Bancorp, BankAtlantic and Bluegreen to pay dividends to holders of their common stock.

Issuer Purchases of Equity Securities

On September 21, 2009, BFC’s Board of Directors approved a share repurchase program which authorizes the repurchase of up to 20,000,000 shares of Class A and Class B Common Stock at an aggregate cost of no more than $10 million. This program replaces the $10 million repurchase program that BFC’s Board of Directors approved in October 2006 which placed a limitation on the number of shares which could be repurchased under the program at 1,750,000 shares of Class A Common Stock. In 2008, BFC repurchased 100,000 shares of Class A Common Stock at an aggregate cost of $54,000 under the prior program. The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased for the year ended December 31, 2010 or 2009.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data as of and for the years ended December 31, 2006 through 2010. Certain selected financial data presented below is derived from our consolidated financial statements. This table is a summary and should be read in conjunction with the consolidated financial statements and related notes thereto which are included elsewhere in this report.

(Dollars in thousands, except for per share data)


	For the Years Ended December 31,
Statement of Operations Data:	2010			2009			2008			2007			2006
				As Revised (e)
Revenues
Real Estate and Other	$	398,480			54,279			16,870			415,881			573,574
Financial Services		284,196			354,087			449,571			520,793			507,746

		682,676			408,366			466,441			936,674			1,081,320


Costs and Expenses
Real Estate and Other		451,779			207,295			76,470			711,073			617,211
Financial Services		426,856			573,467			634,970			579,458			474,311

		878,635			780,762			711,440			1,290,531			1,091,522


Gain on bargain purchase of Bluegreen		—			182,849			—			—			—
(Loss) gain on settlement of investment in Woodbridge’s subsidiary		(977	)		29,679			—			—			—
Gain on extinguishment of debt		13,049			—			—			—			—
Equity in (loss) earnings from unconsolidated affiliates		(851	)		33,381			15,064			12,724			10,935
Impairment of unconsolidated affiliates		—			(31,181	)		(96,579	)		—			—
Impairment on investment		—			(2,396	)		(15,548	)		—			—
Other income		2,691			9,763			9,826			17,183			11,479

(Loss) income from continuing operations before income taxes		(182,047	)		(150,301	)		(332,236	)		(323,950	)		12,212
Less: (Benefit) provision for income taxes		105			(68,900	)		15,763			(70,246	)		(516	)

(Loss) income from continuing operations		(182,152	)		(81,401	)		(347,999	)		(253,704	)		12,728
Discontinued operations		1,965			(11,931	)		19,388			8,799			(10,554	)
Extraordinary gain		—			—			9,145			2,403			—

Net (loss) income		(180,187	)		(93,332	)		(319,466	)		(242,502	)		2,174
Less: Net (loss) income attributable to noncontrolling interests		(76,339	)		(120,611	)		(260,567	)		(212,043	)		4,395

Net (loss) income attributable to BFC		(103,848	)		27,279			(58,899	)		(30,459	)		(2,221	)
Preferred Stock dividends		(750	)		(750	)		(750	)		(750	)		(750	)

Net (loss) income allocable to common stock	$	(104,598	)		26,529			(59,649	)		(31,209	)		(2,971	)


Common Share Data (a), (b) (c) Basic (Loss) Earnings Per Common Share
(Loss) earnings per share from continuing operations	$	(1.42	)		0.71			(1.63	)		(0.90	)		(0.04	)
Earnings (loss) per share from discontinued operations		0.03			(0.24	)		0.11			0.03			(0.05	)
Earnings per share from extraordinary gain		—			—			0.20			0.06			—

Net (loss) income per common share	$	(1.39	)		0.47			(1.32	)		(0.81	)		(0.09	)


Diluted (Loss) Earnings Per Common Share
(Loss) earnings per share from continuing operations	$	(1.42	)		0.71			(1.63	)		(0.90	)		(0.04	)
Earnings (loss) per share from discontinued operations		0.03			(0.24	)		0.11			0.03			(0.05	)
Earnings per share from extraordinary gain		—			—			0.20			0.06			—

Net (loss) income per common share	$	(1.39	)		0.47			(1.32	)		(0.81	)		(0.09	)


Basic weighted average number of common shares outstanding		75,379			57,235			45,097			38,778			33,249

Diluted weighted average number of common and common equivalent shares outstanding		75,379			57,235			45,097			38,778			33,249

Item 6. Selected Financial Data — continued
(Dollars in thousands)


	December 31,
Balance Sheet (at period end)	2010		2009		2008		2007		2006
			As Revised (e)
Loans, loans held for sale and notes receivable, net	$	3,614,455		3,963,086		4,317,645		4,528,538		4,603,505
Real estate inventory	$	343,497		484,927		268,763		270,229		847,492
Securities	$	556,842		467,520		979,417		1,191,173		1,081,980
Total assets	$	5,813,066		6,042,101		6,395,582		7,114,433		7,605,766
Deposits	$	3,891,190		3,948,818		3,919,796		3,953,405		3,867,036
Securities sold under agreements to repurchase and federal funds purchased	$	22,764		27,271		279,726		159,905		128,411
Other borrowings (d)	$	1,440,353		1,362,000		1,556,362		1,992,718		2,398,662
BFC shareholders’ equity	$	142,872		245,083		112,867		184,037		177,585
Noncontrolling interests	$	78,256		159,312		262,554		558,950		698,323
Total equity	$	221,128		404,395		375,421		742,987		875,908


(a)		Since its inception, BFC has not paid any cash dividends on its common stock.

(b)		While the Company has two classes of common stock outstanding, the two-class method is not presented because the Company’s capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes.

(c)		Prior to the merger of I.R.E. Realty Advisory Group, Inc. (“I.R.E. RAG”) with and into the Company during November 2007, the 4,764,285 shares of the Company’s Class A Common Stock and 500,000 shares of the Company’s Class B Common Stock that were owned by I.R.E. RAG were considered outstanding. However, because the Company owned 45.5% of the outstanding common stock of I.R.E. RAG, 2,165,367 shares of Class A Common Stock and 227,250 shares of Class B Common Stock were eliminated from the number of shares outstanding for purposes of computing earnings per share.

(d)		Other borrowings include advances from FHLB, notes and mortgage notes payable, and other borrowings, receivable-backed notes payable and junior subordinated debentures.

(e)		See Notes 1 of the “Notes to Consolidated Financial Statements” for additional information about our revisions to the Company’s consolidated financial statements.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) is a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), and a non-controlling interest in Benihana, Inc. (“Benihana”). As a result of its position as the controlling shareholder of BankAtlantic Bancorp, BFC is a “unitary savings bank holding company” regulated by the Office of Thrift Supervision (“OTS”).

As of December 31, 2010, BFC and its subsidiaries had total consolidated assets and liabilities of approximately $5.8 billion and $5.6 billion, respectively and total equity of approximately $221.1 million, including noncontrolling interests equity of approximately $78.3 million.

During July 2010, Benihana announced its intention to engage in a formal review of strategic alternatives, including a possible sale of the company. During March 2011, Bluegreen announced its intention to evaluate strategic alternatives for the Bluegreen Communities division, including a possible sale of Bluegreen Communities. Each company has engaged advisors to assist it in pursuing strategic alternatives. BFC is supportive of Benihana and Bluegreen in achieving their objectives.

During 2010, the following developments had significant financial impact:

Deconsolidation of Certain Subsidiaries of Core —In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with its lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.

In December 2010, Core and one of its subsidiaries entered agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefore, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.

Revisions to Consolidated Financial Statements — The allocation of the Bluegreen purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and is subject to change within the measurement period as valuations are finalized. If the amounts are changed within the measurement period in a business combination, then the adjustment to change these provisional amounts are retrospectively adjusted as of the date of acquisition. Additionally, any offset relating to amortization/accretion is also retrospectively adjusted in the appropriate periods. The company finalized the valuations in the fourth quarter of 2010. These adjustments resulted in a decrease in total assets and total liabilities of approximately $3.4 million and $3.0 million, respectively, and a decrease in total equity of approximately $0.4 million. Furthermore, the net income attributable to BFC decreased by approximately $289,000 and earnings per share from continuing operations decreased by approximately $0.01 per common share. For

further discussion on such adjustments, see Note 4 — Share Acquisitions of the “Notes to Consolidated Financial Statements”.

Additionally, during the fourth quarter, management identified certain errors in its previously reported financial statements for 2010 and 2009. Because these errors are not material to the Company’s financial statements for 2010 or 2009, individually or in the aggregate, the Company corrected these errors as revisions to its quarterly financial statements in 2010 and its December 31, 2009 financial statements. These adjustments include entries to correct errors in the following areas: the recognition of interest income associated with the acquired notes receivable in accordance with the accounting guidance Loans and Debt Securities with Deteriorated Credit Quality; an adjustment to the provision for loan losses for the acquired notes receivable; interest expense recognition for notes payable of certain defaulted debt at Core Communities and Carolina Oak at the defaulted interest rate, where the stated interest rate was previously used; the recognition of income tax benefits associated with unrealized gains in accumulated other comprehensive income; and an adjustment to deferred taxes to correct an impairment to real estate inventory which was reflected post the acquisition date and accounted for as a temporary difference, which should have been included in the determination of deferred taxes at the acquisition date, November 16, 2009, as part of the Bluegreen purchase price allocation.

The impact for the three months ended March 31, 2010, was an increase to sales of real estate of $10.2 million, net of allowance, a decrease to interest income of $5.8 million, an increase to interest expense of $1.3 million, and a decrease in income tax benefit of $653,000. The impact for the three months ended June 30, 2010, was an increase to sales of real estate of $12.3 million, net of allowance, a decrease to interest income of $6.5 million, an increase to interest expense of $1.3 million, and an increase in income tax provision of $2.2 million. The impact for the three months ended September 30, 2010, was a decrease to sales of real estate of $5.8 million, net of allowance, an increase to interest income of $2.6 million, a decrease to interest expense of $3.2 million, and an increase in income tax benefit of $1.8 million. For further discussion on such adjustments, see Note 40 — Selected Quarterly Results (Unaudited). The Company will correct these amounts in future filings when it discloses them as comparable periods.

The impact for the six months ended June 30, 2010, was an increase to sales of real estate of $22.5 million, net of allowance, a decrease to interest income of $ 12.3 million, an increase to interest expense of $2.6 million, and an income tax benefit of $2.9 million.

The impact for the nine months ended September 30, 2010 was an increase to sales of real estate of $16.8 million, net of allowance, a decrease to interest income of $9.7 million, a decrease to interest expense of $471,000, and an income tax provision of $1.1 million.

The impact of these adjustments for 2009 was an increase to sales of real estate of $2.4 million, an increase to interest expense of $579,000, an increase to the bargain purchase gain of $4.2 million, and an income tax benefit related to other comprehensive income of $2.8 million.

Additional recent developments and related financial matters are discussed below.

BFC Financial Corporation Summary of Consolidated Results of Operations

The table below sets forth the Company’s summarized results of operations (in thousands):


	For the Years Ended December 31,
	2010			2009			2008
				As Revised
Real Estate and Other	$	(38,159	)		106,876			(128,755	)
Financial Services		(143,993	)		(188,277	)		(219,244	)

Loss from continuing operations		(182,152	)		(81,401	)		(347,999	)
Discontinued operations, less income tax		1,965			(11,931	)		19,388
Extraordinary gain, net of income tax		—			—			9,145

Net loss		(180,187	)		(93,332	)		(319,466	)
Less: Net loss attributable to noncontrolling interests		(76,339	)		(120,611	)		(260,567	)

Net (loss) income attributable to BFC		(103,848	)		27,279			(58,899	)
5% Preferred stock dividends		(750	)		(750	)		(750	)

Net (loss) income allocable to common stock	$	(104,598	)		26,529			(59,649	)

The Company reported a net loss attributable to BFC of $103.8 million in 2010, as compared to net income attributable to BFC of $27.3 million in 2009 and net loss attributable to BFC of $58.9 million in 2008. Results for the years ended December 31, 2010, 2009 and 2008 include $2.0 million of income, an $11.9 million loss and $19.4 million of income, respectively, related to discontinued operations, which were associated with Ryan Beck and Core Communities commercial leasing projects, as discussed further in Note 6 of the “Notes to Consolidated Financial Statements”. Real Estate and Other results for 2009 include an approximately $182.8 million bargain purchase gain associated with Bluegreen’s share acquisition on November 16, 2009. See Note 4 of the “Notes to Consolidated Financial Statements”.

The Company’s Real Estate and Other business activities are reported in four segments which are i) BFC Activities ii) Real Estate Operations, iii) Bluegreen Communities and iv) Bluegreen Resorts. BFC’s consolidated financial statements include the results of operations of Bluegreen from November 16, 2009 (when we acquired a controlling interest in Bluegreen) through December 31, 2009. Accordingly, Bluegreen’s results of operations since November 16, 2009 are reported through the Bluegreen Resorts and Bluegreen Communities segments. Prior to

November 16, 2009, we owned approximately 9.5 million shares of Bluegreen’s common stock representing approximately 29% of such stock, and the investment in Bluegreen was accounted for under the equity method of accounting. Our interest in Bluegreen’s earnings and losses prior to November 16, 2009 are included in our BFC Activities segment. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and are reported in two segments: BankAtlantic and BankAtlantic Bancorp Parent Company.

The results of our business segments and other information related to each segment are discussed below in BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. See also Note 34 of the “Notes to Consolidated Financial Statements” contained in Item 8 of this report.

Consolidated Financial Condition

Consolidated Assets and Liabilities

Total assets at December 31, 2010 and 2009 were $5.8 billion and $6.0 billion, respectively. The changes in components of total assets between December 31, 2009 and December 31, 2010 are summarized below. On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities associated with prior securitization transactions that previously qualified for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. Accordingly, Bluegreen’s consolidated special purpose finance entities and BankAtlantic Bancorp’s consolidated factoring joint venture are now consolidated in BFC’s financial statements. The consolidation of Bluegreen’s special purpose finance entities resulted in a one-time non-cash after-tax reduction to retained earnings of $2.4 million and the following impacts to the Company’s Consolidated Statement of Financial Condition at January 1, 2010: (1) assets increased by $413.8 million, primarily representing the consolidation of notes receivable, net of allowance, partially offset by the elimination of Bluegreen’s retained interests; (2) liabilities increased by $416.7 million, primarily representing the consolidation of non-recourse debt obligations associated with third parties, partially offset by the elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.9 million, including a decrease of approximately $1.5 million to noncontrolling interests (see Note 5 of the “Notes to Consolidated Financial Statements” for further information). The consolidation of BankAtlantic Bancorp’s factoring joint venture did not have any impact on our consolidated financial statements other than a decrease in investments in unconsolidated affiliates. Other than such increases and decreases, the changes in components of total assets from December 31, 2009 to December 31, 2010 were primarily comprised of:

	•		an increase in BankAtlantic Bancorp’s interest-bearing deposits in other banks primarily reflecting $284 million of higher cash balances at the Federal Reserve Bank and investments in $46 million of short-term time deposits at other banks;

	•		an increase in securities available for sale reflecting BankAtlantic Bancorp’s purchase of $182 million of agency and municipal securities that mature in less than one year partially offset by the sale of $44 million of mortgage-backed securities as well as repayments;

	•		a decrease in BankAtlantic Bancorp’s tax certificate balances primarily relating to redemptions, partially offset by the purchase of $102 million of tax certificates during 2010;

	•		a decline in BankAtlantic Bancorp’s FHLB stock related to lower FHLB advance borrowings;

	•		an increase in BankAtlantic Bancorp’s loans held for sale associated with the transfer of commercial real estate loans into the held for sale classification;

	•		a decrease in BankAtlantic Bancorp’s loans receivable balances associated with $166 million of net-charge-offs, $61 million of loans transferred to real estate owned, $112 million of loan sales and repayments of loans in the ordinary course of business combined with a significant decline in loan originations and purchases;

	•		a decrease in current income tax receivables primarily resulting from the receipt of income tax refunds associated with recent tax law changes which extended the net operating loss carry-back period from two years to up to five years;

	•		a decrease in real estate inventory of $121.9 million at Core due to the relinquishment of title to substantially all of the land both in Florida and South Carolina to its lenders, and a decrease in real estate inventory reflecting a sale of $6.5 million at BankAtlantic,

	•		an increase in real estate owned associated with BankAtlantic Bancorp’s commercial real estate and residential loan foreclosures;

	•		a decrease in BankAtlantic Bancorp’s accrued interest receivables primarily resulting from tax certificate activities and lower loan balances partially offset by higher securities available for sale accrued interest receivable associated with the purchases of agency and municipal securities;

	•		a decrease in office properties and equipment resulting from BankAtlantic Bancorp’s depreciation and the transfer of BankAtlantic Bancorp’s $31.5 million of fixed assets to assets held for sale net of impairments in connection with its decision to seek a buyer for its Tampa branch network;

	•		additional decreases in properties and equipment due to an impairment charge of $3.9 million to an office building located in Fort Lauderdale, Florida and the transfer of Core’s irrigation facilities in settlement of its debt obligations in Florida and South Carolina;

	•		an increase in BankAtlantic Bancorp’s assets held for sale associated with cash and fixed assets transferred to held for sale upon the announcement that BankAtlantic intended to seek a buyer for its Tampa branches; and

	•		a decrease in assets held for sale from discontinued operations resulting from the sale of Core’s Projects in June 2010;

The Company’s total liabilities at each of December 31, 2010 and 2009 were $5.6 billion. Other than increases due to the above described change in accounting principle at January 1, 2010, the primary changes in components of total liabilities are summarized below:

	•		a decrease in BankAtlantic’s interest bearing deposit account balances associated with the transfer of $255.6 million of Tampa-based interest-bearing deposits to deposits held for sale and lower time deposits partially offset by higher interest bearing checking account balances reflecting the historically low interest rate environment during 2010;

	•		a decrease in BankAtlantic’s non-interest-bearing deposit balances primarily due to the transfer of $85.5 million of Tampa-based non-interest bearing deposits to held for sale and higher average balances per customer account;

	•		lower FHLB advances at BankAtlantic and short term borrowings due to repayments using proceeds from the loan repayments;

	•		a decrease in notes and mortgages notes payable and other borrowings at Core of approximately $112.3 million due to debt settlement agreements with its lenders to relinquish properties that serve as collateral for the debts and ownership interest in certain subsidiaries (see Notes 2 and 23 of the Notes to Consolidated Financial Statements), and a decrease in BankAtlantic Bancorp’s bonds payable associated with the repayment of a $0.7 million mortgage-backed bond;

	•		an increase in BankAtlantic Bancorp’s junior subordinated debentures liability due to interest deferrals; and

	•		a decrease in liabilities related to assets held for sale from discontinued operations resulting from the sale of Core’s Projects in June 2010.

Redeemable 5% Cumulative Preferred Stock

On June 7, 2004, the Board of Directors of the Company designated 15,000 shares of the Company’s preferred stock as 5% Cumulative Preferred Stock (“5% Preferred Stock”). On June 21, 2004, the Company sold all 15,000 shares of the 5% Preferred Stock to an investor group in a private offering.

The 5% Preferred Stock has a stated value of $1,000 per share. The shares of 5% Preferred Stock may be redeemed at the option of the Company, from time to time, at redemption prices (the “Redemption Price”) ranging from $1,025 per share during 2011 to $1,000 per share during and after 2015. The 5% Preferred Stock liquidation preference is equal to its stated value of $1,000 per share plus any accumulated and unpaid dividends or an amount equal to the Redemption Price in a voluntary liquidation or winding up of the Company. Holders of the 5% Preferred Stock are entitled to receive, when and as declared by the Company’s Board of Directors, cumulative quarterly cash dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance, payable quarterly. Since June 2004, the Company has paid quarterly dividends on the 5% Preferred Stock of $187,500. The 5% Preferred Stock has no voting rights except as required by Florida law.

On December 17, 2008, the Company amended its Articles of Incorporation (the “Amendment”) to change certain of the previously designated relative rights, preferences and limitations of the Company’s 5% Preferred Stock. The Amendment eliminated the right of the holders of the 5% Preferred Stock to convert their shares of 5% Preferred Stock into shares of the Company’s Class A Common Stock. The Amendment also requires the Company to redeem shares of the 5% Preferred Stock with the net proceeds it receives in the event (i) the Company sells any of its shares of Benihana Series B Convertible Preferred Stock (the “Convertible Preferred Stock”), (ii) the Company sells any shares of Benihana’s common stock received upon conversion of Benihana’s Convertible Preferred Stock or (iii) Benihana redeems any shares of Benihana’s Convertible Preferred Stock owned by the Company. Additionally, in the event the Company defaults on its obligation to make dividend payments on the 5% Preferred Stock, the Amendment entitles the holders of BFC’s 5% Preferred Stock to receive directly from Benihana certain payments on the shares of Benihana’s Convertible Preferred Stock owned by the Company or on the shares of Benihana’s common stock received by the Company upon conversion of Benihana’s Convertible Preferred Stock.

In December 2008, based on an analysis of the 5% Preferred Stock after giving effect to the Amendment, the Company determined that the 5% Preferred Stock met the requirements to be re-classified outside of permanent equity at its fair value at the effective date of the Amendment of approximately $11.0 million into the mezzanine category as Redeemable 5% Cumulative Preferred Stock. The remaining amount of approximately $4.0 million continues to be

classified in Additional Paid in Capital in the Company’s Consolidated Statements of Financial Condition. The fair value of the 5% Preferred Stock was calculated by using an income approach by discounting estimated cash flows at a market discount rate.

Noncontrolling Interest

The following table summarizes the noncontrolling interests held by others in our subsidiaries (in thousands):


	December 31,
	2010		2009
			As Revised
BankAtlantic Bancorp	$	7,823		88,910
Bluegreen		44,362		42,731
Joint ventures		26,071		27,671

	$	78,256		159,312

Critical Accounting Policies

Management views critical accounting policies as accounting policies that are important to the understanding of our financial statements and also involve estimates and judgments about inherently uncertain matters. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated statements of financial condition and assumptions that affect the recognition of income and expenses on the consolidated statement of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in subsequent periods relate to the determination of the allowance for loan losses, the valuation of real estate acquired in connection with foreclosure or in satisfaction of loans, the valuation of the fair value of assets and liabilities in the application of the acquisition method of accounting, evaluation of goodwill and other intangible assets for impairment, the valuation of real estate and its impairment reserves, revenue and cost recognition on percent complete projects, estimated costs to complete construction, the valuation of investments in unconsolidated subsidiaries, accounting for deferred tax asset valuation allowance, accounting for uncertain tax positions, accounting for contingencies, and assumptions used in the valuation of stock based compensation. The accounting policies that we have identified as critical accounting policies are: (i) allowance for loan losses and notes receivable; (ii) the valuation of retained interests in notes receivable sold and the related gains on sales of notes receivable; (iii) Bluegreen acquired notes receivable; (iv) impairment of goodwill and long-lived assets; (v) valuation of securities as well as the determination of other-than-temporary declines in value; (vi) accounting for business combinations; (vii) the valuation of real estate; (viii) revenue and cost recognition on percent complete projects; (ix) estimated cost to complete construction; (x) accounting for deferred tax asset valuation allowance; and (xi) accounting for contingencies . See also Note 1, Summary of Significant Accounting Policies, of the “Notes to Consolidated Financial Statements” included in Item 8 of this report for a detailed discussion of our significant accounting policies.

Business Combinations

In December 2007, the FASB revised its authoritative guidance for business combinations which significantly changed the accounting for business combinations. Under this guidance, subject to limited exceptions, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value. Additionally, due diligence and transaction costs incurred to effect a business combination are expensed as incurred, as opposed to being capitalized as part of the acquisition purchase price. This guidance also includes a substantial number of new disclosure requirements. The Company adopted this guidance on January 1, 2009.

The Company accounts for its acquisitions in accordance with the accounting guidance for business combinations. If the Company makes a “bargain purchase”, the Company recognizes a gain in the income statement on the acquisition date. A bargain purchase is a business combination in which the amounts of the identifiable net assets acquired and the liabilities assumed, as measured on the acquisition date in accordance with the accounting guidance for business combinations, exceeds the aggregate of (i) the consideration transferred, as measured in accordance with the accounting guidance, which generally requires acquisition date fair value; (ii) the fair value of any non-controlling interest in the acquiree, and (iii) in a business combination achieved in stages, the acquisition date fair value of the Company’s previously held equity interest in the acquiree. This allocation process requires extensive use of estimates

and assumptions, including estimates of future cash flows to be generated by the acquired assets. The Company may utilize independent third parties to assist the Company in assessing market conditions when appropriate. The Company is also required to periodically review these judgments and estimates and adjust them accordingly. If conditions change from those expected, it is possible that the results could change in future periods. Certain identifiable intangible assets, such as management contracts, are not amortized, but instead are reviewed for impairment on at least an annual basis, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company accounted for the acquisition of a controlling interest in Bluegreen in November 2009 as a bargain purchase. Accordingly, judgments regarding the value of Bluegreen’s assets and liabilities as of the acquisition date have had, and may continue to have, a significant impact on the Company’s operating results.

The Company accounted for the acquisition of a controlling interest in Bluegreen in November 2009 in accordance with the accounting guidance of business combinations. As part of the accounting for the November 2009 Bluegreen share acquisition, management was required to evaluate the fair value of Bluegreen’s inventory and certain of Bluegreen’s contracts. Based on preliminary estimates made as part of the evaluation, the Company recorded a $183.1 million “bargain purchase gain” during the fourth quarter of 2009. However, as previously disclosed, the allocation of the purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and is subject to change within the measurement period as valuations are finalized. If the amounts are changed within the measurement period in a business combination, then the adjustment to change these provisional amounts are retrospectively adjusted as of the date of acquisition. Additionally, any offset relating to amortization/accretion is also retrospectively adjusted in the appropriate periods. During the fourth quarter of 2010, the Company adjusted the preliminary value assigned to the assets and liabilities of Bluegreen in order to reflect additional information obtained since the acquisition date. These adjustments resulted in a decrease in total assets and total liabilities of approximately $3.4 million and $3.0 million, respectively, and a decrease in total equity of approximately $0.4 million. Furthermore, the net income attributable to BFC decreased by approximately $289,000 and earnings per share from continuing operations decreased by approximately $0.01 per common share.

Fair Value Measurements

We are required to disclose the fair value of our investments under accounting guidance for fair value measurements. Based on this accounting guidance, fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, this accounting guidance establishes a three-tier fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The three-tier fair value hierarchy prioritizes the inputs used in measuring fair value as follows:

	•		Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;

	•		Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

	•		Level 3. Unobservable inputs, when there is little or no market data, which require the reporting entity to develop its own assumptions.

In determining fair value, we are sometimes required to use various valuation techniques. When valuation techniques other than those described as Level 1 are utilized, management must make estimates and judgments in determining the fair value for its investments. The degree to which management’s estimates and judgments is required is generally dependent upon the market pricing available for the investments, the availability of observable inputs, the frequency of trading in the investments and the investment’s complexity. If we make different judgments regarding unobservable inputs, we could potentially reach different conclusions regarding the fair value of our investments.

Intangible Assets

We evaluate our intangible assets when events and circumstances indicate that assets may be impaired and when the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The carrying value of these assets is dependent upon estimates of future earnings that they are expected to generate. If cash flows decrease significantly, intangible assets may be impaired and would be written down to their fair value. The estimates of useful lives and expected cash flows require us to make significant judgments regarding future periods that are subject to outside factors.

Intangible assets include management contracts in the amount of $63 million at December 31, 2010, which were originated in connection with the November 16, 2009 acquisition of a controlling interest in Bluegreen. Such management contracts are not amortized, but instead are reviewed for impairment at least annually, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

At December 31, 2010 and 2009, other intangible assets also consist of core deposit intangible assets of approximately $12.7 million and $16.2 million, respectively, which were initially recorded at fair value and then amortized over the average life of the respective assets, ranging from 7 years to 10 years.

Revenue Recognition and Inventory Cost Allocation

The Company’s revenue and all related costs and expenses from house and land sales are recognized at the time that closing has occurred, when title and possession of the property and the risks and rewards of ownership transfer to the buyer, and when the Company does not have a substantial continuing involvement in accordance with the accounting guidance for sales of real estate. In order to properly match revenues with expenses, the Company estimates construction and land development costs incurred and to be incurred, but not paid at the time of closing. Estimated costs to complete are determined for each closed home and land sale based upon historical data with respect to similar product types and geographical areas and allocated to closings along with actual costs incurred based on a relative sales value approach. To the extent the estimated costs to complete have significantly changed, the Company will adjust cost of sales in the current period for the impact on cost of sales of previously sold homes and land to ensure a consistent margin of sales is maintained.

Revenue is recognized for certain land sales on the percentage-of-completion method when the land sale takes place prior to all contracted work being completed. Pursuant to the requirements of the accounting guidance for sales of real estate, if the seller has some continuing involvement with the property and does not transfer substantially all of the risks and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the seller’s continuing involvement. In the case of land sales, this involvement typically consists of final development activities. The Company recognizes revenue and related costs as work progresses using the percentage of completion method, which relies on estimates of total expected costs to complete required work. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs at the time of sale. Actual revenues and costs to complete construction in the future could differ from current estimates. If the estimates of development costs remaining to be completed are significantly different from actual amounts, then the revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.

In accordance with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Codification Standards (“ACS”) 970-605, Real Estate-Revenue Recognition, Bluegreen recognizes revenue on VOI and homesite sales when a minimum of 10% of the sales price has been received in cash (buyer’s commitment), the legal rescission period has expired, collectibility of the receivable representing the remainder of the sales price is reasonably assured and it has completed substantially all of its obligations with respect to any development related to the real estate sold. Bluegreen believes its methodology to estimate the collectibility of the receivables representing the remainder of the sales price of real estate sold is reasonably reliable. See the further discussion of Bluegreen’s policies regarding the estimation of credit losses on notes receivable below. Should Bluegreen become unable to reasonably estimate the collectibility of receivables, it may have to defer the recognition of sales and its results of operations could be negatively impacted. Under timeshare accounting rules, the buyer’s minimum cash down payment towards the purchase of VOIs is met only if the cash down payment received, reduced by the value of certain incentives provided to the buyer at the time of sale, is at least 10% of the sales price. If, after consideration of the value of the incentive, the total down payment received from the buyer is less than 10% of the sales price, the VOI sale, and the related cost of sales and direct selling expenses, are deferred until such time that sufficient cash is received from the customer, generally through

receipt of mortgage payments. Changes to the quantity, type, or value of sales incentives that Bluegreen provides to buyers of VOIs may result in additional VOI sales being deferred, which could materially adversely impact Bluegreen’s results of operations.

In cases where all development has not been substantially completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of accounting. Should Bluegreen’s estimates of the total anticipated cost of completing Bluegreen Resorts’ or Bluegreen Communities’ projects increase, Bluegreen may be required to defer a greater amount of revenue or may be required to defer revenue for a longer period of time, which could materially adversely impact its results of operations.

The timeshare accounting rules require the use of the relative sales value method for relieving VOI inventory and recording cost of sales. Under the relative sales value method, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage—the ratio of total estimated development cost to total estimated VOI revenue, including the estimated incremental revenue from the resale of repossessed VOI inventory, generally as a result of the default of the related receivable. For Communities’ real estate projects, costs are allocated to individual homesites in the Communities’ projects based on the relative estimated sales value of each homesite without regard to defaults or repossessed inventory. Under this method, the allocated cost of a homesite is relieved from inventory and recognized as cost of sales upon recognition of the related sale. Should Bluegreen’s estimates of the sales values of its VOI and homesite inventories differ materially from their ultimate selling prices, Bluegreen’s gross profit could be adversely impacted.

Fee-Based Sales Commissions and Other Operations Revenue

In addition to sales of real estate, Bluegreen also generates revenue from the activities listed below. The table provides a brief description of the applicable revenue recognition policy:


Activity		Revenue is recognized as:
Fee-based sales commissions		The sale transaction with the VOI purchaser is consummated in accordance with the terms of the agreement with the third-party developer and the related consumer rescission period has passed.

Resort Management and service fees		Management services are rendered. ⁽¹⁾

Resort title fees		Escrow amounts are released and title documents are completed.

Rental and sampler program		Guests complete stays at the resorts. Rental and sampler program proceeds are classified as a reduction to “cost of other resort and communities operations”.

Communities realty commissions		Sales of third-party-owned real estate are completed.

Golf course and ski hill daily fees		Services are provided.


⁽¹⁾		In connection with its management of the property owner’s associations, among other things, Bluegreen acts as agent for the property owner’s association to operate the respective resorts as provided under the management agreement. In certain cases, the personnel at the resort are Bluegreen employees. The property owners’ association bears all of the economic costs of such personnel and generally pays Bluegreen in advance of, or simultaneously to, the payment of payroll. In accordance with the accounting guidance for reporting revenues gross versus net, reimbursements from the property owners’ associations relating to direct pass-through costs are recorded net of the related expenses.

Allowance for Loan Losses on VOI Notes Receivables

Bluegreen records an estimate of expected uncollectibility on VOI notes receivable as a reduction of revenue at the time of recognition of a timeshare sale. Estimates of uncollectible VOI notes receivable are based on historical uncollectibles for similar VOI notes receivable over the applicable historical period, using a technique referred to as static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of those notes.

Bluegreen also considers certain qualitative data, including the aging of the respective receivables, current default trends by origination year, current economic conditions, and the FICO scores of the buyers. Additionally, under timeshare accounting requirements, no consideration is given for future recoveries of defaulted inventory in the estimate of uncollectible VOI notes receivable. Bluegreen reviews the reserve for loan losses on at least a quarterly basis. If defaults increase, results of operations could be materially adversely impacted. During 2010, Bluegreen recorded $21.2 million of charges as a result of changing the estimate of future loan losses on loans originated prior to implementation of FICO^® score-based credit underwriting standards in December of 2008.

Acquired Notes Receivable-As part of the Bluegreen share acquisition, the Company acquired assets including a pool of notes receivable consisting principally of homogenous consumer timeshare loans originated by Bluegreen. Consistent with the accounting guidance, the Company has elected an accounting policy based on expected cash flows including, following the guidance on maintaining the integrity of a pool of multiple loans accounted for as a single asset. The loans have common risk characteristics as defined in the accounting guidance Loans and Debt Securities with Deteriorated Credit Quality, including similar risk ratings, as defined and monitored by risk rating agencies, term, purpose and similar collateral type (Vacation Ownership Interests (“VOI’s”)). The Company evaluates the pool of loans accounted for as a single asset for indications of further impairment. Purchased loans are considered to be impaired if the Company does not expect to receive all contractually required cash flows due to concerns about credit quality. The excess of the cash flows expected to be collected measured as of the acquisition date, over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan using a level yield methodology. The difference between contractually required payments as of the acquisition date and the cash flows expected to be collected is referred to as the nonaccretable difference.

Subsequent decreases to expected principal cash flows result in a charge to provision for credit losses and a corresponding increase to a valuation allowance included in the allowance for loan losses. Subsequent increases in expected principal cash flows result in a recovery of any previously recorded allowance for loan losses, to the extent applicable, and a reclassification from nonaccretable difference to accretable yield for any remaining increase. Changes in expected interest cash flows may result in reclassifications to/from the nonaccretable difference. Loan disposals, which may include receipt of payments in full from the borrower or foreclosure, result in removal of the loan from the loan pool at its allocated carrying amount.

Retained Interest in Notes Receivable Sold

Bluegreen periodically sells notes receivable originated by its vacation ownership business in connection with the sale of VOIs. In connection with such transactions, Bluegreen retains interest in the notes receivable sold. Prior to the adoption of Accounting Standards Update (“ASU”) 2009-17, these retained interests were reported as assets and treated as available-for-sale investments and, accordingly, carried at fair value. Changes in the fair values of the retained interests in notes receivable sold considered temporary were included in its shareholders’ equity as accumulated other comprehensive income, net of income taxes. The portion of other-than-temporary declines in fair value that represented credit losses were charged to operations.

Subsequent to the adoption of ASU 2009-17 Bluegreen consolidated special purpose finance entities associated with prior securitization transactions that previously qualified for off-balance-sheet sales treatment and as a result, the retained interests were eliminated. See Note 5 for additional information related to the impact of the adoption of ASU 2009-17.

Allowance for loan losses

The allowance for loan losses is maintained at an amount that BankAtlantic Bancorp believes to be a reasonable estimate of probable losses inherent in its loan portfolio. BankAtlantic Bancorp has developed policies and procedures for evaluating its allowance for loan losses which considers all information available to BankAtlantic Bancorp. However, BankAtlantic Bancorp relies on estimates and judgments regarding issues where the outcome is unknown. As a consequence, if circumstances differ and the amount of losses actually realized in BankAtlantic Bancorp’s loan portfolio could be significantly higher or lower from its estimates and judgments, the allowance for loan losses may decrease or increase significantly.

The calculation of BankAtlantic Bancorp’s allowance for loan losses consists of two components. The first component requires identifying impaired loans based on BankAtlantic Bancorp’s management classification and, if necessary, assigning a valuation allowance to the impaired loans. Valuation allowances are established using

BankAtlantic Bancorp’s management estimates of the fair value of collateral or based on valuation models that present value estimated expected future cash flows discounted at the loans effective interest rate. These valuations are based on available information and require estimates and subjective judgments about fair values of the collateral or expected future cash flows. Most of BankAtlantic Bancorp’s loans do not have an observable market price, and an estimate of the collection of contractual cash flows is based on the judgment of management. It is likely that materially different results would be obtained if different assumptions or conditions were to prevail. As a consequence of the estimates and assumptions required to calculate the first component of the allowance for loan losses, a change in these highly uncertain estimates could have a materially favorable or unfavorable impact on our financial condition and results of operations.

The second component of the allowance for loan losses requires BankAtlantic Bancorp to group loans that have similar credit risk characteristics so as to form a basis for estimating probable losses inherent in the group of loans based on historical loss percentages and delinquency trends as it relates to the group. BankAtlantic Bancorp’s management assigns a quantitative allowance to these groups of loans by utilizing historical loss experiences. BankAtlantic Bancorp’s management uses its judgment to determine the length of the time used in the historical loss experience. During the year ended December 31, 2008, management used a 2 year loss experience to calculate the loss experience. However, due to the rapid decline in economic conditions and real estate values, during 2009, management shortened its historical loss experience by portfolio to between six months and one year, in order to reflect the current heighted loss experience in the quantitative allowance. The shortened historical loss experience assumption remained throughout 2010. The historical loss period is selected based on management’s judgment and a change in this loss period may result in material changes to the quantitative loss allowance. BankAtlantic Bancorp’s management also assigns a qualitative allowance to these groups of loans in order to adjust the historical data, if necessary, for qualitative factors that exist currently that were not present in the historical data. These qualitative factors include delinquency trends, actual loan classification migration trends, economic and business conditions, concentration of credit risk, loan-to-value ratios, non-performing loan trends and external factors. In deriving the qualitative allowance BankAtlantic Bancorp’s management uses significant judgment to qualitatively adjust the historical loss experiences for current trends that existed at period end that were not reflected in the calculated historical loss ratios and to adjust the allowance for the changes in the current economic climate compared to the economic environment that existed historically. A subsequent change in data trends or the external environment may result in material changes in this component of the allowance from period to period.

Management believes that the allowance for loan losses reflects a reasonable estimate of incurred credit losses as of the statement of financial condition date. As of December 31, 2010, BankAtlantic Bancorp’s allowance for loan losses was $162.1 million. See “Provision for Loan Losses” for a discussion of the amounts of BankAtlantic Bancorp’s allowance assigned to each loan product. The estimated allowance, which was derived from the above methodology, may be significantly different from actual realized losses. Actual losses incurred in the future are highly dependent upon future events, including the economies of geographic areas in which BankAtlantic Bancorp holds loans, especially in Florida. These factors are beyond management’s control. Accordingly, BankAtlantic Bancorp may incur credit losses in excess of the amounts estimated by its allowance for loan losses. In addition, various regulatory agencies, as an integral part of their examination process, periodically review its allowance for loan losses. Such agencies may require BankAtlantic Bancorp to recognize additions to the allowance based on its judgments and information available to them at the time of their examination and such judgments may differ from management’s judgment.

BankAtlantic Bancorp analyzes its loan portfolio quarterly by monitoring the loan mix, credit quality, loan-to-value ratios, concentration by geographical area, vintage, historical trends and economic conditions. As a consequence, the allowance for loan losses estimates will change from period to period. During the three year period ended December 31, 2006, real estate markets experienced significant price increases accompanied by an abundance of available mortgage financing. Additionally, based on historical loss experience during that time, BankAtlantic Bancorp’s credit policies focused its loan production on collateral based loans and the discontinuation of certain loan products. These factors, other internal metrics and external market factors favorably impacted their provision for loan losses and allowance for loan losses during the years ended December 31, 2006. Conversely, during the four years ended December 31, 2010, the real estate market (and particularly the residential real estate market) and general economic conditions, both nationally and in Florida, rapidly deteriorated with significant reductions in the market prices and volume of residential real estate sold, plummeting collateral values, dramatic increases in unemployment and severe tightening of credit availability to borrowers. The impact of these rapidly deteriorating real estate market conditions and adverse economic conditions on our loan portfolios resulted in a significant increase in the ratio of allowance for loan losses to total loans from 0.94% at December 31, 2006 to 5.08% at December 31, 2010. We believe that our performance in subsequent periods will be highly sensitive to changes in the Florida real estate market as well

as the length of the current downturn in real estate valuation, availability of mortgage financing and the severity of unemployment in Florida and nationally. If the current negative real estate and economic conditions continue or deteriorate further BankAtlantic Bancorp is likely to experience significantly increased credit losses.

Valuation of investment securities

We record our securities available for sale and derivative instruments in our statement of financial condition at fair value. We also disclose fair value estimates in our statement of financial condition for investment securities at cost. We generally use market and income approach valuation techniques and a fair value hierarchy to prioritize the inputs used in valuation techniques. Our policy is to use quoted market prices (Level 1 inputs) when available. However quoted market prices are not available for BankAtlantic Bancorp’s mortgage-backed securities, REMIC’s, other securities and certain equity securities, which therefore requires the use of Level 2 or Level 3 inputs. The classification of assumptions as Level 2 or Level 3 inputs is based on judgments and the classification of the inputs could change based on the availability of observable market data.

BankAtlantic Bancorp subscribes to a third-party service to assist it in determining the fair value of mortgage-backed securities and real estate mortgage conduits. The estimated fair value of these securities at December 31, 2010 was $241.0 million. Matrix pricing are used to value these securities as identical securities that are not traded on active markets. Matrix pricing computes the fair value of mortgage-backed securities and real estate mortgage conduits based on the coupon rate, maturity date and estimates of future repayment rates obtained from trades of securities with similar characteristics and from market data obtained from brokers. BankAtlantic Bancorp considers the above inputs Level 2. Upon the sale of securities, BankAtlantic Bancorp back-tests the values obtained from matrix pricing for reasonableness. The valuations obtained from matrix pricing are not actual transactions and may not reflect the actual amount that would be realized upon sale. While the interest rate and prepayment assumptions used in matrix pricing are representative of assumptions that BankAtlantic Bancorp believes market participants would use in valuing these securities, different assumptions may result in significantly different results. Additionally, current observable data may not be available in subsequent periods which would cause BankAtlantic Bancorp to utilize Level 3 inputs to value these securities. The mortgage-backed and REMIC securities that BankAtlantic owns are government agency guaranteed with minimal credit risk. These securities are of high credit quality and BankAtlantic believes could be liquidated in the near future; however, the price obtained upon sale could be higher or lower than the fair value obtained through matrix pricing. In light of the current volatility and uncertainty in credit markets, it is difficult to estimate with accuracy the price that could be obtained for these securities and the time that it could take to sell them in an orderly transaction.

Other-than-temporary impairment of securities

We perform an evaluation on a quarterly basis to determine if any of our equity investments and debt securities are other-than-temporarily impaired. In making this determination, we consider the extent and duration of the impairment, the nature and financial condition of the issuer and our ability and intent to hold securities for a period sufficient to allow for any anticipated recovery in market value. If an equity security is determined to be other-than-temporarily impaired, we record an impairment loss as a charge to income for the period in which the impairment loss is determined to exist, resulting in a reduction to our earnings for that period. If a debt security is determined to be other-than-temporarily impaired, we record an impairment loss as a charge to income if we intend to sell the securities before they recover or if we do not expect to recover the securities historical cost due to credit loss. Management exercises significant judgment in estimating the amount of specific valuation allowances in an impairment which is generally based on the present value of expected cash flows. As of December 31, 2010, BankAtlantic Bancorp had $105.6 million of impaired securities with an unrealized loss of $48,000. There is no assurance that we will not determine that we have additional impaired securities in the future, particularly as a result of current market uncertainties and the challenging economic and credit market conditions.

Impairment of Goodwill and Long Lived Assets

Goodwill Impairment

We test goodwill for impairment annually or when events or circumstances occur that may result in goodwill impairment during interim periods. On the BankAtlantic Bancorp level, the test requires BankAtlantic Bancorp to determine the fair value of its reporting units and compare the reporting units’ fair value to its carrying value. BankAtlantic Bancorp’s reporting units are comprised of Community Banking, Commercial Lending, Tax Certificate Operations, Capital Services and Investment Operations. The fair values of the reporting units are estimated using discounted cash flow present value valuation models and market multiple techniques.

While management of BankAtlantic Bancorp believes the sources utilized to arrive at the fair value estimates are reliable, different sources or methods could have yielded different fair value estimates. These fair value estimates require a significant amount of judgment. If the fair value of a reporting unit is below the carrying amount, a second step of the goodwill impairment test is performed. This second step requires BankAtlantic Bancorp to determine the fair value of all assets (recognized and unrecognized) and liabilities in a manner similar to a business combination purchase price allocation. Since there is no active market for many of BankAtlantic Bancorp’s assets, management derives the fair value of the majority of these assets using net present value models. As a consequence, BankAtlantic Bancorp’s management estimates rely on assumptions and judgments regarding issues where the outcome is unknown and, as a result, actual results or values may differ significantly from these estimates. Additionally, declines in the market capitalization of BankAtlantic Bancorp’s common stock affect the aggregate fair value of the reporting units. Changes in management’s valuation of BankAtlantic Bancorp reporting units and the underlying assets as well as declines in BankAtlantic Bancorp’s market capitalization may affect future earnings through the recognition of additional goodwill impairment charges.

During the years ended December 31, 2009 and 2008, goodwill impairment charges for BankAtlantic Bancorp were approximately $8.5 million (net of a purchase accounting adjustment from step acquisition of approximately $0.6 million) and $48.3 million, respectively. As of December 31, 2010, the remaining goodwill was $12.2 million.

In determining the fair value of the reporting units, BankAtlantic Bancorp used a combination of discounted cash flow techniques and market multiple methodologies. These methods utilize assumptions for expected cash flows, discount rates, and comparable financial institutions to determine market multiples. The aggregate fair value of all reporting units derived from the above valuation techniques was compared to BankAtlantic Bancorp’s market capitalization adjusted for a control premium in order to determine the reasonableness of the financial model output. A control premium represents the value an investor would pay above minority interest transaction prices in order to obtain a controlling interest in the subject company. The values separately derived from each valuation technique (i.e., discounted cash flow and market multiples) were used to develop an overall estimate of a reporting unit’s fair value. Different weighting of the various fair value techniques could result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value. BankAtlantic Bancorp used financial projections over a period of time, considered necessary to achieve a steady state of cash flows for each reporting unit. The primary assumptions in the projections were anticipated loan and deposit growth, interest rates and revenue growth. The discount rates were estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk and size premium adjustments specific to a particular reporting unit. The estimated fair value of a reporting unit is highly sensitive to changes in the discount rate and terminal value assumptions. Minor changes in these assumptions could impact significantly the fair value assigned to a reporting unit. Future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value.

When the estimated fair value of a reporting unit is below the carrying value, goodwill may be impaired, and the second step of the goodwill impairment evaluation is performed. The second step involves calculating the implied fair value of the reporting unit’s goodwill. The implied fair value of goodwill is determined in the same manner as it is determined in a business combination. The fair value of the reporting unit’s assets and liabilities, including previously unrecognized intangible assets, is individually determined. The excess fair value of the reporting unit over the fair value of the reporting unit’s net assets is the implied goodwill. Significant judgment and estimates are involved in estimating the fair value of the assets and liabilities of the reporting unit.

The value of the implied goodwill is highly sensitive to the estimated fair value of the reporting unit’s net assets. The fair value of the reporting unit’s net assets is estimated using a variety of valuation techniques, including the following:

	•		recent data observed in the market, including for similar assets,

	•		cash flow modeling based on projected cash flows and market discount rates, and

	•		estimated fair value of the underlying loan collateral.

The estimated fair values reflect assumptions regarding how a market participant would value the net assets and includes appropriate credit, liquidity, and market risk premiums that are indicative of the current environment. If the implied fair value of the goodwill for the reporting unit exceeds the carrying value of the goodwill for the reporting unit, no goodwill impairment is recorded. Changes in the estimated fair value of the individual assets and liabilities may result in a different amount of implied goodwill, and the amount of goodwill impairment, if any. Future changes in the fair value of the reporting unit’s net assets may result in future goodwill impairment.

Impairment of Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When testing a long-lived asset for recoverability, it may be necessary to review estimated lives and adjust the depreciation period. Changes in circumstances and the estimates of future cash flows, as well as evaluating estimated lives of long-lived assets, are subjective and involve a significant amount of judgment. A change in the estimated life of a long-lived asset may substantially change depreciation and amortization expense in subsequent periods. At the BankAtlantic Bancorp level, for purposes of recognition and measurement of an impairment loss, BankAtlantic Bancorp is required to group long-lived assets at the lowest level for which identifiable cash flows are independent of other assets. These cash flows are based on projections from management reports which are based on subjective interdepartmental allocations. Real estate inventory and other long-lived real estate assets are evaluated for impairment on a project-by-project basis. Fair values are not available for many of our long-lived assets, and estimates must be based on available information, including prices of similar assets and present value valuation techniques using Level 3 unobservable inputs. Long-lived assets subject to the above impairment analysis include property and equipment, internal-use software, real estate inventory and real estate owned.

We generally utilize broker price opinions, third party offers to purchase, discounted cash flows or third party appraisals to assist us in determining the fair value of real estate inventory, operating lease contracts and real estate owned. The appraiser or brokers use professional judgment in determining the fair value of the properties and we may also adjust these values for changes in market conditions subsequent to the valuation date when current appraisals are not available. The assumptions used to calculate the fair values are generally Level 3 inputs and are highly subjective and extremely sensitive to changes in market conditions. The amount ultimately realized upon the sale of these properties or the termination of operating leases may be significantly different than the recorded amounts. The assumptions used are representative of assumptions that we believe market participants would use in determining fair value of these assets or lease contracts, but different assumptions may result in significantly different results. BankAtlantic Bancorp also validates its assumptions by comparing completed transactions with its prior period fair value estimates and may check its assumptions against multiple valuation sources. The outstanding balance of real estate owned and real estate inventory was $74.5 million and $343.5 million, respectively, as of December 31, 2010. The minimum lease payments of operating lease contracts executed for BankAtlantic’s branch expansion were $27.4 million at December 31, 2010. Future events, including declines in real estate values, may result in additional impairments of long-lived assets or operating leases.

Accounting for Deferred Tax Asset Valuation Allowance

The Company reviews the carrying amount of its deferred tax assets quarterly to determine if the establishment of a valuation allowance is necessary. If, based on the available evidence, it is more-likely-than-not that all or a portion of the Company’s deferred tax assets will not be realized, a deferred tax valuation allowance would be established. Consideration is given to all positive and negative evidence related to the realization of the deferred tax assets.

In evaluating the available evidence, management considers historical financial performance, expectation of future earnings, length of statutory carry forward periods, experience with operating loss and tax credit carry forwards not expiring unused, tax planning strategies and timing of reversals of temporary differences. Significant judgment is

required in assessing future earnings trends and the timing of reversals of temporary differences. The Company’s evaluation is based on current tax laws as well as management’s expectations of future performance based on its strategic initiatives. Changes in existing tax laws and future results differing from expectations may result in significant changes in the deferred tax assets valuation allowance.

Based on our evaluation as of December 31, 2010, 2009 and 2008, a net deferred tax asset valuation allowance was established for the entire amount of the Company and its subsidiaries’ net deferred tax assets as the realization of these assets did not meet the more-likely-than-not criteria of the Accounting Standards Codification (“ASC”). During the fourth quarter of 2008, market conditions in the financial services industry significantly deteriorated with the bankruptcies and government bail-outs of large financial services entities. This market turmoil led to a tightening of credit, lack of consumer confidence, increased market volatility and widespread reduction in business activity. These economic conditions, as well as the continued deterioration in real estate markets, especially in Florida, adversely effected BankAtlantic’s business. As a consequence of the worsening economic conditions during the fourth quarter of 2008, it appeared more-likely-than-not that the Company and its subsidiaries would not realize its deferred tax assets resulting in a deferred tax asset valuation allowance for the entire amount of its net deferred tax assets. During the year ended December 31, 2010, the Company recognized significant losses and economic conditions, while showing signs of recovery, did not significantly improve, resulting in the Company and its subsidiaries maintaining its deferred tax valuation allowance for the entire amount of its deferred tax asset. However, significant judgment is required in evaluating the positive and negative evidence for the establishment of the deferred tax asset valuation allowance, and if future events differ from expectations or if there are changes in the tax laws, a substantial portion or the entire deferred tax asset benefit may be realized in the future. The Company’s net deferred tax assets can be carried forward for 20 years and applied to offset future taxable income. In November 2009, net operating loss tax laws changed enabling the Company’s subsidiaries to recognize a benefit in the aggregate of approximately $66.3 million associated with the Company’s 2009 taxable loss. The Company’s subsidiaries received part of the cash proceeds from the net operating loss carryback during the year ended December 31, 2010, and the Company expects to receive an additional $10.8 million when the final review is completed by the Internal Revenue Service. See Note 25 of the Notes to Consolidated Financial Statements for additional information.

Impact of Inflation

The financial statements and related financial data and notes presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.

Unlike most industrial companies, virtually all of the Company’s and its subsidiaries’ assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general price levels. Although interest rates generally move in the same direction as inflation, the magnitude of such changes varies. Furthermore, as it relates to Bluegreen, increases in Bluegreen’s construction and development costs would result in increases in the sales price of its VOIs. There is no assurance that Bluegreen will be able to increase or maintain the current level of its sales prices or that increased construction costs will not have a material adverse impact on Bluegreen’s gross margin. In addition, inflation is often accompanied by higher interest rates which could have a negative impact on consumer demand and the costs of financing activities. Rising interest rates as well as increased materials and labor costs may reduce margins.

BFC Activities

BFC Activities consists primarily of (i) BFC operations, (ii) our investment in Benihana and (iii) Woodbridge other operations.

BFC operations primarily consist of our corporate overhead and general and administrative expenses, including the expenses of Woodbridge, the financial results of a venture partnership that BFC controls and other equity investments, as well as income and expenses associated with human resources, risk management, investor relations, executive office administration and other services that BFC provides to BankAtlantic Bancorp and Bluegreen. BFC operations also include investments made by BFC/CCC, Inc. Woodbridge other operations consists of the operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), a restaurant operator and franchisor engaged in the quick service and organic food industries, and the activities of Snapper Creek Equity Management, LLC (“Snapper Creek”).

On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock for an aggregate purchase price of approximately $23 million, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares or 52%. As a result of the purchase, we have a controlling interest in Bluegreen and, accordingly, have consolidated Bluegreen’s results since November 16, 2009 into our financial statements and include those results in the Bluegreen Resorts and Bluegreen Communities segments. Prior to November 16, 2009, Woodbridge other operations included an equity investment in Bluegreen.

The discussion that follows reflects the operations and related matters of BFC Activities (in thousands).


										Change			Change
	For the Years Ended December 31,									2010 vs.			2009 vs.
	2010			2009			2008			2009			2008
				(As Revised)
Revenues
Other revenues	$	1,781			1,296			—			485			1,296

		1,781			1,296			—			485			1,296

Cost and Expenses
Cost of sales of real estate		—			7,749			59			(7,749	)		7,690
Interest expense, net		6,264			6,511			7,641			(247	)		(1,130	)
Impairment of goodwill		—			2,001			—			(2,001	)		2,001
Selling, general and administrative expenses		25,602			30,388			36,886			(4,786	)		(6,498	)

		31,866			46,649			44,586			(14,783	)		2,063
Gain on bargain purchase of Bluegreen		—			182,849			—			(182,849	)		182,849
(Loss) gain on settlement of investment in Woodbridge’s subsidiary		(977	)		16,296			—			(17,273	)		16,296
Equity in (loss) earnings from unconsolidated affiliates		(2,045	)		32,276			8,844			(34,321	)		23,432
Impairment of unconsolidated affiliates		—			(31,181	)		(96,579	)		31,181			65,398
Impairment of investments		—			(2,396	)		(15,548	)		2,396			13,152
Investment gains		—			6,654			2,076			(6,654	)		4,578
Other income		6,481			5,775			8,970			706			(3,195	)

(Loss) income from continuing operations before income taxes		(26,626	)		164,920			(136,823	)		(191,546	)		301,743
Less: Benefit for income taxes		(7,097	)		(35,503	)		(14,887	)		28,406			(20,616	)

(Loss) income from continuing operations		(19,529	)		200,423			(121,936	)		(219,952	)		322,359
Extraordinary gain		—			—			9,145			—			(9,145	)

Net (loss) income	$	(19,529	)		200,423			(112,791	)		(219,952	)		313,214

For the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

Other revenues for the years ended December 31, 2010 and 2009 related to franchise revenues generated by Pizza Fusion totaling $1.8 million and $1.3 million, respectively.

Cost of sales of real estate for the year ended December 31, 2009 was $7.7 million as a result of capitalized interest written-off in connection with the impairment charges of inventory of real estate recorded in Core and Carolina Oak.

BFC Activities

General and administrative expenses decreased $4.8 million to $25.6 million for the year ended December 31, 2010 from $30.4 million for 2009. The decrease in general and administrative expenses in 2010 was primarily attributable to lower compensation and benefits expense and the elimination of public company related costs since the merger of Woodbridge and BFC in 2009. This was offset in part by higher accrued audit fees incurred during 2010 and a write-off of intangible assets related to Pizza Fusion in 2009. Included in general and administrative expenses are fees earned in connection with certain management advisory services provided by a wholly owned subsidiary of BFC.

Interest expense consists of interest incurred less interest capitalized. Interest incurred totaled $6.3 million and $7.4 million for the years ended December 31, 2010 and 2009, respectively. No interest was capitalized for the year ended December 31, 2010 while $931,000 was capitalized for 2009. This resulted in interest expense of $6.3 million in the year ended December 31, 2010, compared to $6.5 million in 2009.

During the year ended December 31, 2009, we wrote-off the full $2.0 million of goodwill related to our investment in Pizza Fusion.

During the year ended December 31, 2009, we recorded impairment charges of $2.4 million on our investment in Office Depot’s common stock. The Company sold its remaining shares of Office Depot’s common stock during the fourth quarter of 2009.

The increase in other income for the year ended December 31, 2010 compared to the same period in 2009 was primarily due real estate advisory fees. In June 2010, BankAtlantic Bancorp Parent Company and BankAtlantic entered into a real estate advisory service agreement with BFC for assistance relating to the work-out of loans and the sale of real estate owned. During the year ended December 31, 2010, BFC recognized approximately $787,000 of real estate advisory service fees under this agreement.

During the second quarter of 2010, we recognized a tax benefit of approximately $7.6 million resulting from an expected additional tax refund of approximately $5.8 million due to a recent change in IRS guidance, approximately $1.0 million of which we anticipate paying to the Debtors’ Estate pursuant to the Settlement Agreement related to the Chapter 11 Cases, and a tax benefit of $1.8 million associated with a reduction in the deferred tax valuation allowance from continuing operations to reflect the future taxable income associated with unrealized gains in accumulated other comprehensive income. The $1.0 million expected to be paid to the Debtors’ Estates was recorded in the (loss) gain on settlement of investment in Woodbridge’s subsidiary and is subject to change pending a final review of the $5.8 million expected tax refund by the IRS. The gain on settlement of investment in Woodbridge’s subsidiary during the year ended December 31, 2009 reflected the reversal into income of the loss in excess of investment in Levitt and Sons after the settlement of Levitt and Sons’ bankruptcy was finalized, which resulted in a $40.4 million gain on a consolidated basis in the first quarter of 2009. The $40.4 million gain was reduced by the $10.7 million accrual, representing the portion of the tax refund due to the Levitt and Sons’ estate, resulting in a $29.7 million gain on settlement of investment in Woodbridge’s subsidiary, of which $16.3 million was recorded in the BFC Activities segment.

For the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Cost of sales of real estate for the year ended December 31, 2009 increased to $7.7 million as a result of a capitalized interest write-off recorded in connection with the impairment charges of inventory of real estate recorded in Core and Carolina Oak. Cost of sales of real estate for the year ended December 31, 2008 was $59,000 and related to the expensing of interest previously capitalized as a result of sales at Core and Carolina Oak.

BFC Activities

General and administrative expenses decreased $6.5 million to $30.4 million for the year ended December 31, 2009 compared to $36.9 million for 2008. The decrease was attributable to lower professional services as we incurred costs associated with certain of our securities investments in the year ended December 31, 2008 while these costs were not incurred in the year ended December 31, 2009, and lower severance charges related to the reductions in workforce associated with the bankruptcy filing of Levitt and Sons. In addition, we also had lower insurance costs, as Levitt and Sons’ related insurance costs were not incurred after June 30, 2008, and lower incentive expenses. These decreases were offset in part by incurred franchise expenses related to Pizza Fusion in the year ended December 31, 2009, compared to no franchise expenses in 2008 period as we acquired Pizza Fusion in September 2008.

Interest incurred totaled $7.4 million and $8.6 million for the years ended December 31, 2009 and 2008, respectively, while interest capitalized totaled $931,000 for the year ended December 31, 2009 and $927,000 for 2008. This resulted in interest expense of $6.5 million in the year ended December 31, 2009, compared to $7.6 million in 2008. The decrease in interest expense was mainly due to the repayment of an intersegment loan in June 2008, which resulted in lower interest expense in 2009, and lower interest rates in 2009 compared to 2008.

During the year ended December 31, 2009, we wrote-off the full amount of goodwill related to our investment in Pizza Fusion in the amount of $2.0 million.

Prior to the consolidation of Bluegreen into our consolidated financial statements on November 16, 2009, we accounted for our investment in Bluegreen under the equity method of accounting. Our interest in Bluegreen’s earnings during the period from January 1 through November 16, 2009 was $32.3 million (after the amortization of approximately $28.4 million related to the change in the basis as a result of the impairment charges on this investment during the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009. For the year ended December 31, 2008, our interest in Bluegreen’s earnings was $8.8 million (after the amortization of approximately $9.2 million related to the change in the basis as a result of the impairment charge on this investment at September 30, 2008). We reviewed our investment in Bluegreen for impairment on a quarterly basis or as events or circumstances warranted for other-than-temporary declines in value. Based on the results of the evaluations of the investment in Bluegreen, other-than-temporary impairment charges of approximately $31.2 million and $94.4 million were recorded during the years ended December 31, 2009 and 2008, respectively. In the year ended December 31, 2007, no other-than-temporary charges related to the investment in Bluegreen were recorded.

Investment gains were approximately $6.7 million for the year ended December 31, 2009 compared to $2.1 million in 2008. This increase was primarily due to a gain related to the sale of our shares in Office Depot during 2009. This was offset by a realized gain on the sale of publicly traded equity securities in 2008 of approximately $796,000 by venture partnership that BFC controls.

The decrease in other income for the year ended December 31, 2009 compared to the same period in 2008 was primarily due to a decline in interest income from approximately $1.6 million for the year ended December 31, 2009 compared to $3.8 million in 2008. This decrease was primarily due to lower cash balances and lower interest rates in 2009 compared to 2008.

Income tax benefit includes the amount of the expected refund from the Department of the Treasury of approximately $34.6 million. In November 2009, the Workers, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted. The Act includes a provision that allows most businesses to elect to increase the net operating loss (“NOLs”) carryback period from two years under current law to as much as five years for NOLs generated in either 2008 or 2009 (but not both). BFC anticipates that this election will benefit the Company by allowing it to carryback Woodbridge’s NOLs that were generated in 2008 and obtain refunds of taxes paid in the carryback years.

2008 Step acquisitions — Purchase Accounting

BFC’s acquisition in 2008 of additional shares of BankAtlantic Bancorp’s Class A Common Stock, was accounted for as a step acquisition under the purchase method of accounting then in effect. Accordingly, the assets and liabilities acquired were revalued to reflect market values at the date of acquisition. The discounts and premiums arising as a result of such revaluation are generally being accreted or amortized, net of tax, over the remaining life of the assets and liabilities.

BFC Activities

In 2010, the net impact of purchase accounting decreased our consolidated net loss by approximately $1.2 million, of which $2.4 million, $728,000 and $189,000 related to BankAtlantic Bancorp’s loans receivable, properties and equipment and other assets, respectively, partially offset by the effect of purchase accounting associated with core deposit intangible asset of approximately $2.3 million. In 2009, the net impact of purchase accounting increased our consolidated net loss by approximately $5.9 million, including an $8.9 million loss due to the purchase accounting associated with Core’s real estate impairment, partially offset by the effect of purchase accounting associated with property and equipment of approximately $1.2 million, loans receivable of approximately $2.2 million and goodwill of approximately $583,000. In 2008, the net impact of purchase accounting decreased our consolidated net loss by approximately $8.4 million, of which approximately $4.7 million and $1.7 million was due to effects of purchase accounting associated with the investment in Bluegreen and goodwill, respectively.

BFC Activities- Liquidity and Capital Resources

As of December 31, 2010 and 2009, we had cash, cash equivalents and short-term investments totaling approximately $29 million and $45 million, respectively. The decrease in cash, cash equivalents and short-term investments was due to BFC’s operating and general and administrative expenses, junior subordinated debentures interest payments of approximately $6.0 million, and the purchase of shares of BankAtlantic Bancorp’s Class A Common Stock in BankAtlantic Bancorp’s 2010 rights offering to its shareholders. This decrease was offset in part by the receipt of an income tax refund, net of amounts owed to the Levitt and Sons bankruptcy estate resulting from recent tax law changes as discussed below.

During 2010, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock in connection with the exercise of subscription rights granted to it in BankAtlantic Bancorp’s rights offering. The aggregate purchase price for those shares was $15.0 million. BFC exercised its basic subscription rights to purchase 5,986,865 shares, and the remaining 4,013,135 shares were acquired by BFC pursuant to its over-subscription request. The shares acquired in the rights offering increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 8% to 45% and BFC’s voting interest in BankAtlantic Bancorp by approximately 5% to 71%.

Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen and Woodbridge are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, short-term investments, dividends or distributions from our subsidiaries and dividends from Benihana. As discussed further in this report, recent tax law changes have resulted in the receipt of significant tax refunds. We have received approximately $29.2 million of tax refunds and expect to receive an additional approximately $10.8 million when the final review is completed by the Internal Revenue Service. Pursuant to the Settlement Agreement relating to the Chapter 11 Cases, we agreed that a portion of the tax refund attributable to the Debtors’ Estate for periods prior to the bankruptcy would be paid to the estate, and it is estimated that approximately $11.7 million will be paid to the Debtors’ Estate pursuant to the Settlement Agreement.

We will use our available funds to fund operations and meet our obligations. We may also use available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments, or repurchase shares of our common stock pursuant to our share repurchase program.

Since March 2009, BFC has not received cash dividends from BankAtlantic Bancorp. BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock without first receiving a written non-objection from the OTS. In addition, during February 2009, BankAtlantic Bancorp elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt. BankAtlantic Bancorp is permitted to defer quarterly interest payments for up to 20 consecutive quarters. During the deferral period, BankAtlantic Bancorp is prohibited from paying dividends to its shareholders, including BFC. While BankAtlantic Bancorp can end the deferral period at any time, BankAtlantic Bancorp has indicated that it anticipates that it may continue to defer such interest payments for the foreseeable future. Furthermore, BFC has not received cash dividends from Bluegreen and does not expect to receive cash dividends from Bluegreen in the foreseeable future. Certain of Bluegreen’s credit facilities contain terms which may limit the payment of cash dividends.

BFC, on a parent company only basis, has committed that it will not, without the prior written non-objection of the OTS, (i) incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with

BFC Activities

BankAtlantic’s compliance requirements applicable to it or (ii) declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter.

We believe that our current financial condition and credit relationships, together with anticipated cash flows from operating activities and other sources of funds, including tax refunds and proceeds from the disposition of certain properties or investments, will provide for anticipated near-term liquidity needs. With respect to long-term liquidity requirements, in addition to the foregoing, BFC may also seek to raise funds through the incurrence of long-term secured or unsecured indebtedness (subject to compliance with its commitment to the OTS), the issuance of equity and/or debt securities or through the sale of assets; however, there is no assurance that any of these alternatives will be available to BFC on attractive terms, or at all.

On September 21, 2009, our Board of Directors approved a share repurchase program which authorizes the repurchase of up to 20,000,000 shares of Class A and Class B Common Stock at an aggregate cost of no more than $10 million. The share repurchase program replaced our $10 million repurchase program that our Board of Directors approved in October 2006 which placed a limitation on the number of shares which could be repurchased under the program at 1,750,000 shares of Class A Common Stock. The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the year ended December 31, 2010 or 2009.

The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and, as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

During 2008, Woodbridge entered into a settlement agreement, as amended (the “Settlement Agreement”), with the Debtors and the Joint Committee of Unsecured Creditors (the “Joint Committee”) appointed in the Chapter 11 cases related to the Levitt and Sons bankruptcy filing. Pursuant to the Settlement Agreement, among other things, (i) Woodbridge agreed to pay $8 million to the Levitt and Sons bankruptcy estates (the “Debtors Estate”), establish a $4.5 million release fund to be disbursed to third party creditors in exchange for a third party release and injunction, pay an additional $300,000 to a deposit holders fund and waive and release substantially all of the claims it had against the Debtors, including its administrative expense claims through July 2008, and (ii) the Debtors (joined by the Joint Committee) agreed to waive and release any claims they had against Woodbridge and its affiliates. The Settlement Agreement also provided that if, within one year after the Bankruptcy Court’s confirmation of the Settlement Agreement, Section 172 of the Internal Revenue Code was amended to permit a carry back of tax losses from calendar years 2007 or 2008 to one or more years preceding calendar year 2005, then Woodbridge would share a portion of any resulting tax refund with the Debtors and the Joint Committee based on an agreed upon formula. The Settlement Agreement was subject to a number of conditions, including the approval of the Bankruptcy Court. On February 20, 2009, the Bankruptcy Court entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Joint Committee. That order also approved the settlement pursuant to the Settlement Agreement. No appeal or rehearing of the Bankruptcy Court’s order was timely filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the Settlement Agreement. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the Settlement Agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary.

BFC Activities

In November 2009, the Workers, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted. The Act extended the net operating loss (“NOL”) carry-back period from two years to up to five years for the 2008 and 2009 tax years and, as a result, allowed us to increase our NOL carryback period to as much as five years for NOLs generated in 2008 or 2009 and obtain refunds of taxes paid in the newly included carryback years. The amount of the expected refund to the Company has been determined to be approximately $40.0 million, of which approximately $29.2 million has been received. The balance of the tax refund claim of approximately $10.8 million will most likely be paid when the Internal Revenue Service completes its review. As described above, under the terms of the Settlement Agreement, a portion of the refund will be payable to the Debtors Estate. Accordingly, in the fourth quarter of 2009, we accrued approximately $10.7 million in connection with the portion of the tax refund which may be payable to the Debtors Estate pursuant to the Settlement Agreement. The gain on settlement of investment in subsidiary of $40.4 million recorded in the first quarter of 2009 was reduced by the $10.7 million accrual recorded in the fourth quarter of 2009 resulting in a $29.7 million gain on settlement of investment in subsidiary for the year ended December 31, 2009. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.0 million, representing the portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service guidance that will likely be required to be paid to the Debtors Estate pursuant to the Settlement Agreement. As of December 31, 2010, we have a liability of approximately $11.7 million, representing the portion of tax refunds to be shared with the Debtors Estate pursuant to the Settlement Agreement. As of December 31, 2010, $8.4 million of the $11.7 million portion of the tax refund to be paid to the Debtors Estate was received and placed in an escrow account. The $8.4 million amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition.

On September 21, 2009, BFC and Woodbridge consummated their merger pursuant to which Woodbridge merged with BFC. In connection with the merger, Dissenting Holders who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock exercised their appraisal rights and are entitled to receive an amount equal to the fair value of their shares calculated in accordance with Florida law. The Dissenting Holders have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain. There is no assurance as to the amount of cash that we will be required to pay to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

The Company owns 800,000 shares of Benihana’s Convertible Preferred Stock, which it purchased for $25.00 per share. The Convertible Preferred Stock is convertible into Benihana’s common stock. Based on the number of currently outstanding shares of Benihana’s capital stock, the Convertible Preferred Stock, if converted, would represent an approximate 19% voting interest and an approximate 9% economic interest in Benihana’s capital stock. The Company receives cumulative quarterly dividends on its shares of Benihana’s Convertible Preferred Stock at an annual rate equal to 5% or $1.25 per share, payable on the last day of each calendar quarter. The Convertible Preferred Stock is subject to mandatory redemption of $20 million plus accumulated dividends on July 2, 2014 unless we elect to extend the mandatory redemption date to a date not later than July 2, 2024. Benihana is currently considering strategic alternatives, including a possible sale of the company. In the event that a sale transaction is consummated the Company would receive a minimum of $20 million in consideration for its shares of the Convertible Preferred Stock.

On June 21, 2004, the Company sold 15,000 shares of its 5% Preferred Stock to an investor group in a private offering. The Company’s 5% Preferred Stock has a stated value of $1,000 per share. The shares of 5% Preferred Stock may be redeemed at the option of the Company, from time to time, at redemption prices ranging from $1,025 per share for the year 2011 to $1,000 per share for the year 2015 and thereafter. The 5% Preferred Stock liquidation preference is equal to its stated value of $1,000 per share plus any accumulated and unpaid dividends or an amount equal to the applicable redemption price in a voluntary liquidation or winding up of the Company. Holders of the 5% Preferred Stock have no voting rights, except as provided by Florida law, and are entitled to receive, when and as declared by the Company’s Board of Directors, cumulative quarterly cash dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance. Since June 2004, the Company has paid quarterly dividends on the 5% Preferred Stock of $187,500. On December 17, 2008, the Company amended certain of the previously designated relative rights, preferences and limitations of the Company’s 5% Preferred Stock. The amendment eliminated the right of the holders of the 5% Preferred Stock to convert their shares of Preferred Stock into shares of the Company’s Class A Common Stock.

BFC Activities

The amendment also requires the Company to redeem shares of the 5% Preferred Stock with the net proceeds it receives in the event (i) the Company sells any of its shares of Benihana’s Convertible Preferred Stock, (ii) the Company sells any shares of Benihana’s Common Stock received upon conversion of Benihana’s Convertible Preferred Stock or (iii) Benihana redeems any shares of its Convertible Preferred Stock owned by the Company. Additionally, in the event the Company defaults on its obligation to make dividend payments on its 5% Preferred Stock, the amendment entitles the holders of the 5% Preferred Stock, in place of the Company, to receive directly from Benihana certain payments on the shares of Benihana’s Convertible Preferred Stock owned by the Company or on the shares of Benihana’s Common Stock received by the Company upon conversion of Benihana’s Convertible Preferred Stock.

A wholly-owned subsidiary of BFC/CCC has a 10% interest in a limited liability company that owned two commercial properties in Hillsborough County, Florida. During the fourth quarter of 2010, the limited liability company recorded an impairment charge related to these properties, $1.9 million of which was recognized by BFC/CCC’s wholly-owned subsidiary. The $1.9 million impairment charge exceeded the carrying value of our investment. At December 31, 2010, the Company classified the negative basis of the investment of approximately $1.3 million in other liabilities on the Company’s Consolidated Statement of Financial Condition. At December 31, 2009, the carrying amount of this investment was approximately $690,000, and is included as an asset in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the commercial properties in November 2006, BFC and the unaffiliated member each guaranteed the payment of up to a maximum of $5.0 million for certain environmental indemnities and specific obligations that are not related to the financial performance of the assets. BFC and the unaffiliated member also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates. On March 25, 2011, the limited liability company reached a settlement with its lender and has conveyed the commercial properties securing the loan via a deed in lieu of foreclosure. BFC and BFC/CCC’s wholly-owned subsidiary were released from all obligations and guarantees related to the two commercial properties.

A wholly-owned subsidiary of BFC/CCC has a 50% limited partner interest in a limited partnership that has a 10% interest in a limited liability company that owns an office building in Tampa, Florida. At December 31, 2010 and 2009, the carrying amount of this investment was approximately $282,000 and $319,000, respectively, which is included in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the office building by the limited liability company in June 2007, BFC guaranteed the payment of certain environmental indemnities and specific obligations that are not related to the financial performance of the asset up to a maximum of $15.0 million, or $25.0 million in the event of any petition or involuntary proceeding under the U.S. Bankruptcy Code or similar state insolvency laws or in the event of any transfer of interests not in accordance with the loan documents. BFC and the unaffiliated members also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates. No amounts are recorded in the Company’s financial statements for the obligations associated with this guarantee based on the potential indemnification by unaffiliated members and the limit of the specific obligations to non-financial matters.

Real Estate

Real Estate Operations Segment

The Real Estate Operations segment includes the subsidiaries through which Woodbridge historically conducted its real estate business activities. These activities were concentrated in Florida and South Carolina and included the development and sale of land, the construction and sale of single family homes and townhomes and the leasing of commercial properties through Core prior to its liquidation in 2010 and Carolina Oak, which was engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008. The Real Estate Operations segment includes the operations of Cypress Creek Holdings, which engages in leasing activities.

Woodbridge’s operations historically were concentrated in the real estate industry which is cyclical in nature. During 2010, the demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million was recorded and is included in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.

In December 2010, Core and one of its subsidiaries entered agreements, including without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefor, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.

In December 2009, Core Communities reinitiated efforts to sell two of its commercial leasing projects (the “Projects”) and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Due to this decision, the assets associated with the Projects were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Accordingly, the results of operations for the Projects are included in the Company’s Consolidated Statements of Operations in discontinued operations. On June 10, 2010, Core sold the Projects for approximately $75.4 million. As a result of the sale, a $2.6 million gain on sale of discontinued operations was realized in the second quarter of 2010. See Note 6 of the “Notes to Consolidated Financial Statements” for further information.

In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and, as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement

Real Estate

agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

Real Estate Operations


										Change			Change
	For the years ended December 31,									2010 vs			2009 vs
	2010			2009			2008			2009			2008
	(As Revised)
Revenues:
Sales of real estate	$	2,739			6,605			13,752			(3,866	)		(7,147	)
Other revenues		1,397			2,312			3,033			(915	)		(721	)

		4,136			8,917			16,785			(4,781	)		(7,868	)


Costs and expenses:
Cost of sales of real estate		23,232			82,105			22,724			(58,873	)		59,381
Interest expense, net		12,745			6,293			2,075			6,452			4,218
Selling, general and administrative expenses		9,481			16,451			20,648			(6,970	)		(4,197	)
Other expense		3,889			5,433			—			(1,544	)		5,433

Total costs and expenses		49,347			110,282			45,447			(60,935	)		64,835


Gain on extinguishment of debt		13,049			—			—			13,049			—
Interest income and other income		892			526			3,341			366			(2,815	)

Loss before income taxes		(31,270	)		(100,839	)		(25,321	)		69,569			(75,518	)
(Provision) benefit for income taxes		—			—			—			—			—

Loss from continuing operations, net of taxes		(31,270	)		(100,839	)		(25,321	)		69,569			(75,518	)
Discontinued operations:
Net income (loss) from discontinued operations, net of taxes		2,465			(15,632	)		2,783			18,097			(18,415	)

Net loss	$	(28,805	)		(116,471	)		(22,538	)		87,666			(93,933	)

For the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

Revenues from sales of real estate decreased to $2.7 million for the year ended December 31, 2010 from $6.6 million for 2009. During the year ended December 31, 2010, Core sold approximately 8 acres, generating revenues of approximately $2.5 million, compared to the sale of approximately 13 acres, which generated revenues of approximately $1.1 million in 2009. Core did not recognize deferred revenue for the year ended December 31, 2010, but recognized approximately $5.3 million on previously sold land for the year ended December 31, 2009. Core did not recognize any look back revenue for the year ended December 31, 2010 while an insignificant amount was recognized for the same period in 2009. There were no home sales at Carolina Oak in the year ended December 31, 2010. During 2009, Carolina Oak generated $320,000 in revenues from the sale of 1 unit.

Other revenues decreased to $1.4 million for the year ended December 31, 2010 compared to $2.3 million for 2009. The decrease was primarily due to lower rental income as a tenant did not renew its lease agreement which expired in March 2010.

Cost of sales of real estate for the year ended December 31, 2010 decreased to $23.2 million from $82.1 million for 2009 due to the recognition of lower impairment charges associated with inventory of real estate and decreased sales and selling efforts during 2010. We recorded approximately $20.8 million of impairment charges in 2010 compared to $80.3 million in 2009. Costs of sales of real estate before impairment charges for the years ended December 31, 2010 and 2009 were $2.4 million and $1.8 million, respectively.

Real Estate

Selling, general and administrative expenses decreased to $9.5 million for the year ended December 31, 2010 from $16.4 million in 2009. The decrease reflected the ceasing of real estate activities at Core, including specifically lower compensation and benefits expense and lower office related expenses reflecting a reduction in force at Core in 2009 and 2010, lower sales and marketing expenses as neither Core nor Carolina Oak engaged in advertising activities for the year ended December 31, 2010, and lower developer expenses related to property owner associations in Tradition, Florida. In addition, there was lower severance expense at Core for the year ended December 31, 2010 compared to 2009. These decreases were slightly offset by an increase in professional services related to the restructuring and property tax expenses in the year ended December 31, 2010 compared to 2009.

Gain on extinguishment of debt consists of the above described $13.0 million gain attributable to the troubled debt restructuring relating to the resolution of a $25 million loan made to a subsidiary of Core, as to which Core was secondarily liable as a guarantor. See Note 2 of the “Notes to Consolidated Financial Statements” for further details.

Interest incurred totaled $12.7 million for the year ended December 31, 2010 and $8.3 million for 2009 period. No interest was capitalized in the year ended December 31, 2010 compared to $2.0 for 2009 period. During the year ended December 31, 2010, we recorded interest expense at the default rate of interest in accordance with the terms of our loan agreements. Additionally, during the third quarter of 2009, the Company ceased capitalizing interest in light of the significantly reduced development activities in Florida and the suspended development activities in South Carolina. These factors resulted in a net higher interest expense recognized in the year ended December 31, 2010 compared to 2009. Historically, the capitalized interest allocated to inventory is charged to cost of sales as land and homes are sold. Cost of sales of real estate for the year ended December 31, 2010 and 2009 did not include any significant amounts of previously capitalized interest.

Other expense decreased to $3.9 million for the year ended December 31, 2010 from $5.4 million in 2009. The decrease was primarily due to lower impairment charges related to property and equipment held at Cypress Creek Holdings and Core recorded for the year ended December 31, 2010 compared to 2009.

Income from discontinued operations, all of which related to Core’s Projects, increased to $2.5 million in the year ended December 31, 2010 from a loss of $15.6 million in 2009. The increase includes the impact of a gain of approximately $2.6 million recorded in connection with the sale of the Projects in June 2010.

For the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Revenues from sales of real estate decreased to $6.6 million for the year ended December 31, 2009 from $13.8 million for 2008. Revenues from sales of real estate for the years ended December 31, 2009 and 2008 were comprised of land and home sales, recognition of deferred revenue and look back revenue. During the year ended December 31, 2009, Core sold approximately 13 acres, generating revenues of approximately $1.1 million, compared to the sale of approximately 35 acres, which generated revenues of approximately $9.1 million, net of deferred revenue, in 2008. Core recognized deferred revenue on previously sold land of approximately $5.3 million for the year ended December 31, 2009, compared to approximately $1.9 million in 2008. Look back revenues for the years ended December 31, 2009 and 2008 were approximately $32,000 and $145,000, respectively. We also earned $320,000 in revenues in 2009 from sales of real estate as a result of 1 unit sold in Carolina Oak, compared to revenues from sales of real estate of $2.5 million in 2008 as a result of 8 units sold in Carolina Oak.

Other revenues decreased to $2.3 million for the year ended December 31, 2009 compared to $3.0 million for 2008. The decrease in other revenues was primarily due to a decrease in marketing fees collected at Core Communities and fewer impact fees earned in 2009 compared to 2008.

Cost of sales of real estate increased to $82.1 million for the year ended December 31, 2009 from $22.7 million for 2008 due to impairment charges of $80.3 million associated with inventory of real estate recorded in 2009 compared to $13.7 million in impairment charges of inventory of real estate in 2008. Costs of sales of real estate before impairment charges for the years ended December 31, 2009 and 2008 were $1.8 million and $9.0 million, respectively.

Real Estate

The decrease in cost of sales of real estate excluding impairment charges was due to a decrease in sales of real estate at Core and Carolina Oak in 2009 compared to 2008.

Selling, general and administrative expenses decreased to $16.4 million for the year ended December 31, 2009 from $20.6 million for 2008. The decrease was a result of, among other things, lower sales and marketing expenses as a result of a reduced marketing budget, lower developer expenses related to property owner associations in Tradition, Florida, lower compensation and benefits expense, and lower office related expenses. These decreases were partially offset by an increase in severance charges as a result of reductions in force at Core in 2009 and an increase in property tax expense.

Interest incurred totaled $8.3 million for the year ended December 31, 2009 and $11.0 million for 2008. Interest capitalized totaled $2.0 million for the year ended December 31, 2009 and $8.9 million for 2008. Net interest expense increased in the year ended December 31, 2009 compared to the year ended December 31, 2008 primarily as a result of the Company’s decision to stop the capitalization of interest in light of the significantly reduced development activities in Florida and the ceasing of development activities in South Carolina. The increase was partially offset by lower interest rates during the year ended December 31, 2009 compared to 2008. Historically, the capitalized interest allocated to inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2009 and 2008 included previously capitalized interest of approximately $64,000 and $268,000, respectively.

Interest and other income decreased to $526,000 during 2009 from $3.3 million during 2008. This decrease was primarily due to lower forfeited deposits received in 2009, and the repayment of an intersegment loan in June 2008, of which the related interest was eliminated in consolidation.

Income from discontinued operations, which relates to the income generated by Core’s Projects, decreased to a loss of $15.6 million in the year ended December 31, 2009 from income of $2.8 million in 2008. The decrease was mainly due to impairment charges in the amount of $13.6 million recorded in the year ended December 31, 2009 compared to no impairment charges recorded in 2008. In addition, three ground lease parcels comprised of approximately 5 acres were sold in 2008 and were accounted for as discontinued operations and resulted in a $2.5 million gain on sale of real estate assets for the year ended December 31, 2008, compared to no comparable sales in discontinued operations in 2009.

The value of acres subject to third party sales contracts was approximately $2.5 million at December 31, 2009 compared to $1.1 million at December 31, 2008. While backlog is not an exclusive indicator of future sales activity, it provides an indication of potential future sales activity.

Real Estate Operations-Liquidity and Capital Resources

At December 31, 2010 and December 31, 2009, Core had cash and cash equivalents of $1.0 million and $2.9 million, respectively. Cash decreased by $1.9 million during the year ended December 31, 2010 primarily due to the payment of Core’s general and administrative expenses, including legal and professional fees and severance payments in connection with the winding up of Core’s operations in Florida and South Carolina. Legal and professional fees include payments to the receiver for services related to the settlement of Core’s defaulted debt with its lenders.

During 2009, the recession continued and the demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. The decrease in land sales in 2009 and continued cash flow deficits contributed to, among other things, the deterioration of Core’s liquidity. As a result, Core ceased all development in Tradition, Florida and Tradition Hilton Head. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land.

Real Estate

Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefore, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with the accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011. See Notes 2 and 23 of the “Notes to Consolidated Financial Statements” for further information.

Off Balance Sheet Arrangements and Contractual Obligations

The following table summarizes our Real Estate and Other contractual obligations (excluding Bluegreen) as of December 31, 2010 (in thousands):


			Less than 12		13-36		37-60		More than 60
Category (1)	Total		months		Months		Months		Months
Long Term Debt Obligations	$	160,861		64,654		503		10,652		85,052
Operating Lease Obligations		342		251		72		19		—

Total Obligations	$	161,203		64,905		575		10,671		85,052


(1)		Long-term debt obligations consist of notes, mortgage notes and bonds payable and junior subordinated debentures. Operating lease obligations consist of lease commitments. The timing of contractual payments for debt obligations assumes the exercise of all extensions available at our sole discretion. Long-term debt obligations and long-term debt obligations include defaulted loans totaling approximately $64.4 million as of December 31, 2010 of which repayment of the outstanding debt was accelerated by the lender and is currently being shown as immediately due and payable in less than 12 months. See Note 2 of the “Notes to Consolidated Financial Statements” included in Item 8 of this report for more information regarding the defaulted loans.

(2)		These amounts represent scheduled principal payments.

In addition to the above contractual obligations, we have $2.4 million in unrecognized tax benefits in accordance with accounting guidance for uncertainty in income taxes, which provides guidance for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on a tax return.

Real Estate

Levitt and Sons, Woodbridge’s former wholly-owned homebuilding subsidiary, had approximately $33.3 million of surety bonds related to its ongoing projects at November 9, 2007, the date on which Levitt and Sons and substantially all of its subsidiaries filed voluntary bankruptcy petitions. In the event that these obligations are drawn and paid by the surety, Woodbridge could be responsible for up to $7.6 million plus costs and expenses in accordance with the surety indemnity agreements executed by Woodbridge. At December 31, 2010 and December 31, 2009, Woodbridge had $490,000 and $527,000, respectively, in surety bond accruals related to certain bonds where management believes it to be probable that Woodbridge will be required to reimburse the surety under applicable indemnity agreements. Woodbridge reimbursed the surety approximately $348,000 and $532,000 during the year ended December 31, 2009 and 2008, respectively, in accordance with the indemnity agreement for bond claims paid during the period. No reimbursements were made in the year ended December 31, 2010. It is unclear whether and to what extent the remaining outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Woodbridge may be responsible for additional amounts beyond the previous accrued amount. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay. In September 2008, a surety filed a lawsuit to require Woodbridge to post collateral against a portion of the surety bonds exposure in connection with demands made by a municipality. Based on claims made by the municipality on the bonds, the surety requested that Woodbridge post a $4.0 million escrow deposit while the matter was being litigated. While Woodbridge did not believe that the municipality had the right to demand payment under the bonds, Woodbridge complied with that request. In August 2010, a motion for summary judgment was entered in Woodbridge’s favor terminating any obligations under the bonds. The municipality has appealed the decision.

Real Estate

Bluegreen

The Company’s consolidated financial statements for the year ended December 31, 2010 and for the Interim Period (the period from November 16, 2009, the date on which the Company acquired additional shares of Bluegreen’s common stock resulting in the Company having a controlling interest in Bluegreen, through December 31, 2009) include the results of operations of Bluegreen. Bluegreen’s results of operations are reported through two reportable segments, which are Bluegreen Resorts and Bluegreen Communities. Prior to November 16, 2009, our earnings attributable to Bluegreen were reported as part of Woodbridge other operations, which is currently included in the BFC Activities segment. Bluegreen is a separate public company, and the following discussion is derived from or includes disclosure prepared by Bluegreen’s management and included in its Annual Report on Form 10-K for the year ended December 31, 2010. Accordingly, unless noted to the contrary or the context otherwise requires, references to the “Company”, “we”, “us” or “our” in the following discussion are references to Bluegreen and its subsidiaries, and are not references to BFC.

Bluegreen’s 2010 results reflect an increased focus on its fee-based service business and its continuing efforts to improve cash flows from operations through initiatives designed to increase cash received upon sales of VOIs and to achieve selling and marketing efficiencies in its Bluegreen Resorts segment. While Bluegreen believes that its cash flows from operations and its Bluegreen Resorts business operating results reflect the success of these efforts, the Bluegreen Communities business continued to be impacted by low consumer demand for homesites. On March 24, 2011, Bluegreen announced that it has engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There can be no assurance, however, the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that such alternatives, if pursued and ultimately consummated, will result in improvements to its financial condition and operating results or otherwise achieve the benefits Bluegreen expects to realize from the transaction.

As discussed in Note 2 to our consolidated financial statements, Bluegreen adopted ASU 2009-16 and ASU 2009-17 effective January 1, 2010, which resulted in consolidation of the special purpose finance entities associated with past securitization transactions which were previously reported “off-balance sheet.” In addition to the material changes to Bluegreen’s consolidated balance sheet, the consolidation of these special purpose finance entities impacted our Consolidated Statement of Operations during 2010, by increasing Bluegreen’s interest income from VOI notes receivable and increasing interest expense on notes payable compared to prior periods. Bluegreen’s statements of operations for the years ended December 31, 2009 and 2008 and its balance sheet as of December 31, 2009 have not been retrospectively adjusted to reflect the adoption of ASU 2009-16 and ASU 2009-17. Therefore, 2010 results will not be comparable to prior period amounts, particularly with regards to: vacation ownership sales and services; interest expense and interest income.

During the year ended December 31, 2010:

	•		Bluegreen generated “free cash flow” (cash flow from operating and investing activities) of $158.0 million.

	•		VOI system-wide sales, which include sales of third-party developer inventory, totaled $290.3 million.

	•		Bluegreen’s sales and marketing fee-based service business sold $78.8 million of third-party developer inventory and earned sales and marketing commissions of $53.0 million. Including Bluegreen’s resort management, resort title, construction management and other operations, Bluegreen’s total resort fee-based services revenues were $118.9 million in 2010.

	•		Bluegreen recorded a non-cash charge of $21.2 million to increase the allowance for loan losses on its VOI notes receivable generated prior to December 15, 2008 (the date Bluegreen implemented FICO®-score based credit underwriting standards), as Bluegreen now anticipates that lower FICO® receivables may experience higher losses later in their contractual term than originally estimated.

	•		Bluegreen Communities business generated a segment operating loss of $26.9 million.

	•		Bluegreen successfully completed the securitization of $162.3 million of VOI notes receivable.

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Bluegreen believes its fee-based service business enables Bluegreen to leverage its management, sales and marketing, mortgage servicing, title and construction experience to generate fee-based-service relationships with third parties. Bluegreen’s provision of these services requires significantly less capital investment than its traditional vacation ownership business. Bluegreen began selling and marketing third party vacation ownership inventory in July of 2009, and during 2010, Bluegreen sold $78.8 million, of third-party inventory and earned sales and marketing commissions of approximately $53.0 million. At December 31, 2010, Bluegreen had six fee-based sales and marketing service contracts as compared to four at December 31, 2009. In addition to the sales and marketing of third-party VOIs, Bluegreen also generated fee-based income by providing resort and reservation management services, title services, construction consulting services (where Bluegreen manages the construction, design and development of VOI inventory for third parties), and mortgage servicing of the VOI notes originated from the sales of certain of the third-party VOIs. Bluegreen’s goal is for fee-based services to become an increasing portion of its resorts business over time, however, there is no assurance that this will be the case.

Additionally, consistent with Bluegreen’s initiatives to improve liquidity, Bluegreen further increased both the percentage of its sales that are 100% cash and its average down payment on financed sales. Including down payments received on financed sales, 54% of Bluegreen’s sales were received in cash within approximately 30 days from the contract date in 2010. Refer to Liquidity and Capital Resources section below for additional information.

Bluegreen believes that its other resort fee-based services and finance operations represent recurring cash-generating sources of income which do not require material liquidity support from the credit markets. Bluegreen also believes, based on anticipated sales levels, that it has adequate timeshare inventory to satisfy its projected sales for a number of years. However, Bluegreen Resorts’ sales and marketing operations are materially dependent on the availability of liquidity in the credit markets, as further discussed in the Liquidity and Capital Resources section below. Due to a significant reduction of liquidity in the receivable-backed credit markets commencing in the fourth quarter of 2008, and due to Bluegreen’s continued desire to manage efficiencies of its timeshare marketing costs, Bluegreen purposely and significantly reduced its sales volumes in the fourth quarter of 2008 and thereafter. Since that time, Bluegreen has and intends to continue to adjust its sales volumes based on available liquidity in the receivable credit markets, its level of cash sales and its ability to achieve desired levels of marketing efficiencies.

Bluegreen’s Communities business has been, and continues to be, adversely impacted by the deterioration in the real estate markets. Bluegreen has experienced a material decrease in demand, and a significant decrease in sales volume. Bluegreen has significantly reduced prices on certain of its homesites in an attempt to increase sales activity. During 2010, Bluegreen recorded non-cash impairment charges of $14.9 million to write down the carrying amount of certain phases of its communities properties to their estimated fair value less cost to sell. On March 24, 2011, Bluegreen announced that it had engaged advisors to explore strategic alternatives for Bluegreen Communities, including the possible sale of the division. There can be no assurance, however, regarding the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to Bluegreen’s financial condition and operating results or otherwise achieve the benefits it may expect to realize from the transaction. In the event that adverse conditions in the real estate market continue or deteriorate further, the carrying value of its Bluegreen Communities inventory would be reevaluated and could result in additional material impairment charges. Impairment charges may also be required to the extent that additional market information obtained during the strategic review process indicates that the carrying value of Bluegreen’s Communities inventory exceeds its fair value.

Bluegreen has historically experienced and expect to continue to experience seasonal fluctuations in its gross revenues and results of operations. This seasonality may result in fluctuations in its quarterly operating results. Although Bluegreen typically sees more potential customers at its sales offices during the quarters ending in June and September, ultimate recognition of the resulting sales during these periods may be delayed due to down payment requirements for recognition of real estate sales under GAAP or due to the timing of development and the requirement that Bluegreen uses the percentage-of-completion method of accounting.

Bluegreen believes that relatively high unemployment in the United States and adverse economic conditions in general have adversely impacted, and may continue to adversely impact, the performance of its notes receivable portfolio in the form of relatively higher defaults and lower prepayment rates than have historically been experienced. Bluegreen’s estimates regarding its allowance for loan losses involves interpretation of historical data, assumptions relative to the impact of loan seasoning, prepayments and estimates of the effect of the higher default experience over the past two years on remaining performance. To the extent that these estimates change, Bluegreen’s results of

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operations could be adversely affected. As a result of changes in Bluegreen’s estimates related to the future performance of loans originated prior to its implementation of FICO® score-based credit underwriting standards in December 2008, during 2010 Bluegreen recorded charges of $21.2 million. Bluegreen anticipates that its FICO® score-based credit underwriting standards on new loan originations which were implemented in December 2008 and enhanced in January 2010 and higher levels of customer equity in the existing loan portfolio will have a favorable impact on the performance of the portfolio over time, although there is no assurance that this will be the case. While Bluegreen believes its notes receivable are adequately reserved at this time, there can be no assurance that future defaults will occur at expected levels. If the future performance of its loans varies from Bluegreen’s expectations and estimates, additional charges may be required in the future.

Bluegreen reviews financial information, allocates resources and manages its business as two segments, Bluegreen Resorts and Bluegreen Communities. The information reviewed is based on internal reports and excludes an allocation of general and administrative expenses attributable to corporate overhead. The information provided is based on a managements approach and is used by us for the purpose of tracking trends and changes in results. It does not reflect the actual economic costs, contributions or results of operations of the segments as stand-alone businesses. If a different basis of presentation or allocation were utilized, the relative contributions of the segments might differ but the relative trends, in Bluegreen’s view, would likely not be materially impacted.

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Bluegreen Segments Financial Results

The following tables include Bluegreen’s financial results for the year ended December 31, 2010 and the Bluegreen Interim Period (from November 16, 2009 to December 31, 2009). No comparative analysis was performed as Bluegreen’s results prior to November 16, 2009 are not included in the financial results below, but rather our earnings attributable to Bluegreen were reported in our BFC Activities segment.

Twelve months Ended December 31, 2010


	Bluegreen Resorts						Bluegreen Communities						Total
				Percentage						Percentage						Percentage
	Amount			of Sale			Amount			of Sale			Amount			of Sale
	( in thousands, except percentage)
System-wide sales (1)	$	290,280						12,003						302,283
Changes in sales deferred under timeshare accounting rules		818						—						818
Estimated uncollectible VOI notes receivable		(24,441	)					—						(24,441	)

System-wide sales, net		266,657			100	%		12,003			100	%		278,660			100	%

Less: Sales of third party VOIs		(78,805	)		-30	%		—			—			(78,805	)		-28	%
Adjustment to allowance for loan losses		(21,228	)		-8	%		—			—			(21,228	)		-8	%

Sales of real estate		166,624			62	%*		12,003			100	%		178,627			64	%*
Cost of real estate sales		(19,862	)		-11	%*		(23,552	)		-196	%		(43,414	)		-22	%*

Gross profit		146,762			89	%		(11,549	)		-96	%		135,213			78	%
Fee-based sales commission		52,966			20	%		—			—			52,966			19	%
Other resort fee-based services revenue		65,979			25	%		—			—			65,979			24	%
Other revenues		—			—			1,696			14	%		1,696			1	%
Cost of other operations		—			—			(3,514	)		-29	%		(3,514	)		-1	%
Cost of other resort fee-based services		(46,863	)		-18	%		—			—			(46,863	)		-17	%
Selling and marketing expenses		(139,770	)		-52	%		(4,684	)		-39	%		(144,454	)		-52	%
Segment general and administrative expenses(2)		(15,341	)		-6	%		(8,839	)		-74	%		(24,180	)		-9	%

Segment operating profit	$	63,733			24	%		(26,890	)		-224	%		36,843			13	%


*		Percentages for cost of real estate sales and gross profit are calculated as a percentage of sales of real estate.

(1)		Includes sales of VOI’s made on behalf of third parties, which are effected through the same process as the sale of Bluegreen’s vacation ownership inventory, and involve similar selling and marketing costs.

(2)		General and administrative expenses attributable to corporate overhead have been excluded from the tables. Corporate general and administrative expenses (excluding mortgage operations) totaled $42.5 million for the Bluegreen Interim Period. (See “Corporate General and Administrative Expenses” below for further discussion).

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Bluegreen Interim Period:


	Bluegreen Resorts						Bluegreen Communities						Total
				Percentage						Percentage						Percentage
	Amount			of Sale			Amount			of Sale			Amount			of Sale
	( in thousands, except percentage)
	(As Revised)												(As Revised)
System-wide sales (1)	$	29,538						3,139						32,677
Estimated uncollectible VOI notes receivable		(3,041	)					—						(3,041	)

System-wide sales, net		26,497			100	%		3,139			100	%		29,636			100	%

Less: Sales of third party VOIs
Adjustment to allowance for loan losses		(8,875	)		-33	%		—			—			(8,875	)		-30	%

Sales of real estate		17,622			67	%		3,139			100	%		20,761			70	%
Cost of real estate sales		(3,118	)		-18	%*		(1,788	)		-57	%		(4,906	)		-24	%*

Gross profit		14,504			82	%*		1,351			43	%		15,855			76	%*
Fee-based sales commission		5,354			20	%		—			—			5,354			18	%
Other resort fee-based services revenue		5,239			20	%		—			—			5,239			18	%
Other revenues		—			—			593			19	%		593			2	%
Cost of other operations		—			—			(1,480	)		-47	%		(1,480	)		-5	%
Cost of other resort fee-based services		(3,538	)		-13	%		—			—			(3,538	)		-12	%
Selling and marketing expenses		(14,334	)		-54	%		(1,023	)		-33	%		(15,357	)		-52	%
Segment general and administrative expenses (2)		(1,441	)		-5	%		(2,715	)		-86	%		(4,156	)		-14	%

Segment operating profit	$	5,784			22	%		(3,274	)		-104	%		2,510			8	%


*		Percentages for cost of real estate sales and gross profit are calculated as a percentage of sales of real estate.

(1)		Includes sales of VOI’s made on behalf of third parties, which are effected through the same process as the sale of Bluegreen’s vacation ownership inventory, and involve similar selling and marketing costs.

(2)		General and administrative expenses attributable to corporate overhead have been excluded from the tables. Corporate general and administrative expenses (excluding mortgage operations) totaled $4.0 million for the Bluegreen Interim Period. (See “Corporate General and Administrative Expenses” below for further discussion).

Bluegreen Resorts — Year ended December 31, 2010 compared to the Interim Period December 31, 2009

Resort Sales and Marketing

System-wide sales of VOIs. System-wide sales of VOIs, include sales of Bluegreen-owned VOIs as well as sales of VOIs made on behalf of third parties. Bluegreen began selling and marketing vacation ownership inventory on behalf of third parties for a fee (one of our “fee-based services”) in July of 2009. The sales on behalf of third parties are transacted through the same selling and marketing process used to sell its owned VOI inventory.

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The following table sets forth certain information for sales of both Bluegreen VOIs and VOI sales made on behalf of outside developers for a fee for the periods indicated. The information is provided before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with timeshare accounting rules:


	For the Year Ended
	2010			Interim Period
Number of sales offices at period-end		20			21
Number of Bluegreen VOI sales transactions		18,504			1,625
Number of sales made on behalf of outside developers for a fee		6,526			694
Total number of VOI sales transactions		24,930			2,319
Average sales price per transaction	$	12,006			11,703
Number of total prospectus tours		160,281			16,140
Sale-to-tour conversion ratio — total prospects		15.6	%		14.4	%
Number of new prospects tours		92,847			5,974
Sale-to-tour conversion ratio — new prospects		10.6	%		10.9	%

Sales of Real Estate. Sales of Bluegreen Resorts real estate were $166.6 million in 2010. Sales of Bluegreen Resorts real estate represent sales of Bluegreen owned VOIs, as adjusted by changes in sales deferred under timeshare accounting rules, the impact of estimated uncollectible VOI notes receivable and adjustment to allowance for loan losses described below.

Sales of Bluegreen-owned VOIs are impacted by the timing of when a sale meets the criteria for revenue recognition. Sales of Bluegreen-owned VOIs that do not meet the revenue recognition criteria as of the end of a period are deferred to a future period until such time as the revenue recognition criteria are met. During 2010, due to timing of revenue recognition Bluegreen realized a net recognition of approximately $0.8 million of sales, due to the timing of revenue recognition.

VOI revenue is reduced by Bluegreen’s estimate of future uncollectible VOI notes receivable. Estimated losses for uncollectible VOI notes receivable vary with the amount of financed sales during the period, and changes in Bluegreen’s estimates of future note receivable performance for newly originated loans and the future performance of its existing loan portfolio. During the years ended December 31, 2010, Bluegreen reduced revenue by $24.4 million for the estimated future uncollectibles on loans originated in these periods.

Additionally, during 2010, Bluegreen recorded charges of $21.2 million to increase its allowance for uncollectible notes receivable in connection with the lower FICO® score loans generated prior to November 1, 2008, the date at which Bluegreen implemented FICO® score-based credit standards. In connection with Bluegreen’s analysis of loan performance performed during 2010, Bluegreen concluded that these lower FICO® score loans have not experienced the same benefit of seasoning as other loans in the same vintage historically have, thus resulting in the probability of higher future defaults on such loans. While Bluegreen believes its notes receivable are adequately reserved at this time, there can be no assurance that defaults have stabilized or that they will not increase.

Sales of Bluegreen Resorts real estate (prior to changes in sales deferred under timeshare accounting rules, the impact of estimated uncollectible VOI notes receivable and adjustment to allowance for loan losses described above) were $211.5 million in 2010.

Cost of Real Estate Sales. Bluegreen Resorts’ cost of sales was $19.9 million in 2010. Cost of sales varies between periods based on the sales volumes, the relative costs of the specific VOIs sold in each respective period and the size of the point packages of the VOIs sold. Additionally, cost of sales during 2010 was impacted by the decrease in the overall carrying cost of Bluegreen’s VOI inventory due to the adoption of ASU 2009-16 and ASU 2009-17, effective January 1, 2010. In addition, the increase in Bluegreen’s loan loss reserve during 2010 impacted Bluegreen’s future projected product margins, which decreased the carrying cost of inventory in accordance with applicable timeshare accounting rules.

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During the year ended December 31, 2010, Bluegreen Resorts’ gross profit percentage was 89%. The gross profit percentage during 2010 was affected by the carrying cost of Bluegreen’s VOI inventory as a result of the adoption of the new accounting standards on January 1, 2010 as described above.

Fee-Based Sales Commission Revenue. As described above, in July 2009, Bluegreen began selling and marketing third parties’ vacation ownership inventory for a fee. Bluegreen earned commissions for the sales of third-party inventory upon the closing of the respective sales transaction.

During the year ended December 31 2010, Bluegreen sold $78.8 million of third-party developer inventory and earned sales and marketing commissions of $53.0 million. Based on an allocation of selling, marketing and segment general and administrative expenses to these sales, Bluegreen believes it generated approximately $10.8 million in pre-tax profits by providing these sales and marketing fee-based services during the year ended December 2010. Bluegreen anticipates that fee-based services will be a greater portion of its revenues in the future, although there is no assurance that this will be the case.

Selling and Marketing Expenses. Selling and marketing expenses for Bluegreen Resorts were $139.8 million during 2010. Selling and marketing expenses in 2010 reflected expanded marketing activity consistent with the increase in Bluegreen’s system-wide sales of VOIs. As a percentage of system-wide sales, net, selling and marketing expenses was 52% during 2010. Overall sale-to-tour ratios decreased slightly during 2010 and sales to owners, which carry a relatively lower marketing cost, accounted for 58% of system-wide sales during 2010.

General and Administrative Expenses. General and administrative expenses for Bluegreen Resorts were $15.3 million during 2010. General and administrative expenses for Bluegreen Resorts during 2010 includes additional spending required to support the increased level of sales activity. As a percentage of system-wide sales, net, general and administrative expenses was at 6% during 2010.

Other Resort Fee-Based Services

The following sets forth the pre-tax profit generated by Bluegreen’s other resort fee-based services (in thousands):


	For the Year Ended
	2010			Interim Period
Fee-based management services	$	24,756			2,725
Title operations		7,182			442
Net carrying cost of developer inventory		(8,561	)		(392	)

Other		(4,261	)		(313	)

Total	$	19,116			2,462

Other Resort Fee-Based Services Revenue. Bluegreen’s other resort fee-based services revenue consists primarily of fees earned for providing management services and fees earned for providing title services for VOI transactions. In exchange for fees, Bluegreen provides management services to the Bluegreen Vacation Club and to a majority of the property owners’ associations of the Club Resorts and Club Associate Resorts. In connection with Bluegreen’s management services provided to Bluegreen Vacation Club, Bluegreen manages the club reservation system, and provides owner services as well as billing and collections services.

Revenues generated by other resort fee-based services were $66.0 million during 2010. Revenues related to other resort fee-based services in 2010 reflects additional fees earned by providing services to more VOI owners and from managing more timeshare resorts on behalf of property owners’ associations. As of December 31, 2010, Bluegreen managed 41 timeshare resort properties and hotels. Additionally, Bluegreen’s revenues related to title services increased due to a reduction in its processing back-log and the increase in the number of system-wide VOI sales transactions.

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Bluegreen intends to continue to pursue its efforts to provide resort management and title services to resort developers and others, on a cash-fee basis. While there is no assurance that Bluegreen will be successful, Bluegreen hopes that this will become an increasing portion of its business over time.

Cost of Other Resort Fee-Based Services. Cost of other resort fee-based services was $46.9 million in 2010. The cost during 2010 includes additional service volumes as described above. Additionally, the carrying costs of Bluegreen’s VOI inventory includes maintenance fees and developer subsidies on VOIs in Bluegreen-owned inventory, paid to the property owners’ associations that maintain the resorts. Bluegreen partially mitigates this expense, to the extent possible, through the rental of its owned VOIs. Accordingly, the net carrying cost of developer inventory fluctuates with the number of VOIs Bluegreen holds and the number of resorts subject to developer subsidy arrangements, as well as revenue realized from rental and sampler activity. During 2010, the carrying cost of Bluegreen’s developer inventory totaled approximately $20.5 million and was offset by rental and sampler revenues, net of expenses, of $11.9 million during 2010.

Bluegreen Communities — Year ended December 31, 2010 compared to the Interim Period

The table below sets forth the number of homesites sold by Bluegreen Communities and the average sales price per homesite for the periods indicated, before giving effect to the percentage-of-completion method of accounting, and excluding sales of bulk parcels:


	Year ended
	December 31,		Interim
	2010		Period
Number of homesites sold		239		50
Average sales price per homesite	$	61,071	$	66,004

Sales at Bluegreen Communities have been, and continue to be, adversely impacted by the weakening of the economy in general and the deterioration of the real estate markets, in particular. Bluegreen has experienced continued low demand, especially for its higher priced premium homesites. In response to the deterioration in the real estate markets and in order to stay competitive in certain markets where its competitors have in certain communities aggressively reduced prices, Bluegreen has significantly reduced prices on completed homesites. In addition, during 2009, Bluegreen substantially sold out of certain of its communities, which also contributed to the decrease in sales in 2010.

On March 24, 2011, Bluegreen announced that it had engaged advisors to explore strategic alternatives for Bluegreen Communities, including the possible sale of the division. There can be no assurance regarding the timing or success these efforts, or that any such alternatives, if pursued and ultimately consummated, will improve Bluegreen’s financial condition and operating results or otherwise achieve the benefits it may expect to result from the transaction. In the event that adverse conditions in the real estate market continue or deteriorate further, the carrying value of Bluegreen Communities’ inventory would be reevaluated and could result in additional material impairment charges. Impairment charges may also be required to the extent that additional market information obtained during the strategic review process indicates that the carrying value of Bluegreen’s Communities inventory exceeds its fair value.

Bluegreen Communities’ sales during 2010 reflected the application of the percentage-of-completion method of accounting. Excluding the impact of percentage-of-completion method of accounting, Bluegreen Communities sales during 2010 decreased.

Bluegreen Communities’ homesite inventory consists of substantially completed homesites held for sale and land held for the future development of additional homesites. As a result of Bluegreen’s continued depressed sales volume, reduced prices, and the impact of current sales levels on the forecasted sell-out period of its projects, during the year ended December 31, 2010, Bluegreen recorded non-cash charges to cost of real estate sales of approximately $14.9, net of purchase accounting adjustments, to write-down the carrying amount of certain phases of its properties to their estimated fair value, less costs to sell, if applicable. Bluegreen calculated the estimated fair value less costs to sell of these properties based on its analysis of their estimated future cash flows, discounted at rates commensurate with the inherent risk. Bluegreen estimated future cash flows based upon what they believe to be market participants’

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expectations of future performance, given current and projected forecasts of the economy and real estate markets in general as well as the forecasted sell-out periods for each community. As of December 31, 2010, Bluegreen evaluated the carrying value of its Bluegreen Communities inventory (carrying value was $78.2 million, net of purchase accounting adjustments, as of December 31, 2010) based upon the probability-weighted average cash flows at various outcomes, including to develop and sell such inventory as retail homesites or to execute on various strategic alternatives which Bluegreen may pursue in the near term. Based on the sales prices currently being realized on its homesites and forecasts of sales pace, Bluegreen believes that its Bluegreen Communities’ inventory carrying value is appropriate. Should the adverse conditions in the real estate markets where Bluegreen operates continue longer than forecasted or deteriorate further, or if its performance does not otherwise meet Bluegreen’s expectations, or estimates change as they explore strategic alternatives, additional material charges may be recorded.

In addition to the inventory charges described above, during 2010, Bluegreen Communities’ gross margins were negatively impacted by additional reductions in sales prices of certain completed homesites. Variations in cost structures and the market pricing of homesites available for sale as well as the opening of phases of projects, which include premium homesites (e.g., water frontage, preferred views, larger acreage homesites, etc.), also impact the gross margin of Bluegreen Communities from period to period.

Other operations of Bluegreen Communities’ business historically included the operation of several daily fee golf courses, as well as realty resale operations at several of our residential land communities. On December 30, 2009, Bluegreen sold four of its golf courses located in North Carolina and Virginia and have reported the operating results of these golf courses as discontinued operations. Bluegreen continues to own and operate two golf courses.

During 2010 Bluegreen continued to focus its marketing efforts on internet, billboards, and regionally based advertising. While Bluegreen believes this focus will lead to an increase in interest in its properties, Bluegreen continues to experience relatively lower sales conversion rates. Bluegreen Communities’ total selling and marketing expenses during 2010 remained level with the expenses incurred during 2009. As a percentage of sales, selling and marketing expenses were 39% during 2010 representing an increase over historical amounts. The increase in selling and marketing expenses as a percentage of sales in 2010 is the result of lower sales in 2010.

Bluegreen Communities’ general and administrative expenses during 2010 included costs to settle litigation and a higher proportion of real estate taxes being expensed as incurred rather than capitalized into inventory due to reduced construction and development spending.

Finance Operations

As of December 31, 2010, Bluegreen’s finance operations included the excess interest spread earned on $668.4 million of notes receivable. This amount reflects the consolidation on January 1, 2010 of notes receivable held by special purpose finance entities that were previously not consolidated by Bluegreen in accordance with then-prevailing generally accepted accounting principles.

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Profit from Notes Receivable Portfolio and Mortgage Servicing Operations. The following table details the sources of income and related expenses associated with Bluegreen’s notes receivable portfolio (in thousands):


	For the Year Ended
	2010		Interim Period
Interest income:
VOI notes receivable	$	93,425		10,169
Retained interest on notes receivable sold		—		2,027
Other		189		(14	)

Total interest income		93,614		12,182


Servicing fee income
Fee-based services		191		—

Total income		93,805		12,182


Interest expense:
Receivable-backed notes payable		42,289		5,328
Cost of mortgage servicing operations		2,349		—

Total expense		44,638		5,328


	$	49,167		6,854

Interest income on notes receivable during 2010 reflects a higher average balance of Bluegreen’s vacation ownership notes receivable and to a lesser extent, higher interest rates charged on timeshare loans originated after November 1, 2008. As discussed above, the average balances of Bluegreen’s notes receivable increased during 2010 as a result of the consolidation of notes receivable held by seven of Bluegreen’s special purpose finance entities that were previously reported “off-balance-sheet.” Accordingly, Bluegreen previously did not recognize interest income on such notes receivable, but instead recognized interest income through the accretion of interest on its retained interests in the notes held by these entities.

Mortgage Servicing Operations. Bluegreen’s mortgage servicing operations include processing payments, and collection of notes receivable owned by Bluegreen, as well as on notes receivable owned by third parties. In addition, Bluegreen’s mortgage servicing operations facilitate the monetization of its VOI notes receivable through its various credit facilities, as well as perform monthly reporting activities for Bluegreen’s lenders and receivable investors. Prior to the adoption of ASU 2009-16 and ASU 2009-17 on January 1, 2010, Bluegreen recognized servicing fee income for providing mortgage servicing for notes receivable that had been sold to off-balance-sheet special purpose finance entities and for providing loan services to third-party portfolio owners on a cash-fee basis. Effective January 1, 2010, Bluegreen ceased recognizing servicing fee income for providing mortgage servicing to its special purpose finance entities as such entities are now consolidated by Bluegreen. While Bluegreen still receives mortgage servicing fees for servicing its securitized notes receivable, these amounts are now accounted for as a component of interest income.

During 2010, servicing fee income represented mortgage servicing fees earned for servicing the loan portfolio of a third-party developer in connection with one of Bluegreen’s fee-based services arrangements. As of December 31, 2010, the total amount of notes receivable serviced by Bluegreen under this arrangement was $23.8 million.

Interest Expense. Interest expense on receivable-backed notes payable in 2010 reflects a higher average debt balance of additional non-recourse receivable-backed debt recorded on Bluegreen’s balance sheet as a result of the consolidation of seven special purpose finance entities as of January 1, 2010. As of December 31, 2010, the outstanding balance of the non-recourse receivable-backed debt previously reported “off-balance sheet” was $328.6 million.

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Bluegreen’s other interest expense, which is mainly comprised of interest on lines of credit and notes payable and our subordinated debentures, was $22.6 million during 2010.

Other interest expense during 2010 reflects a lower average debt balance as a result of the repayment of Bluegreen’s lines-of-credit and notes payable and lower interest rates on its junior subordinated debentures, which was offset by higher interest rates on certain extensions to its existing debt agreements.

Bluegreen’s effective cost of borrowing was 7.46% during 2010.

A portion of Bluegreen’s interest expense, which directly relates to interest on development spending, is capitalized to construction in progress. Interest expense capitalized to construction in progress varies based upon the amount of construction and development spending during the period. Total interest expense capitalized to construction in progress was insignificant during 2010 due to a significantly reduced level of construction and development spending during the period.

Corporate General and Administrative Expenses. Bluegreen’s corporate general and administrative expenses consist primarily of expenses associated with administering the various support functions at its corporate headquarters, including accounting, human resources, information technology, treasury, and legal. Overall corporate and general administrative costs may fluctuate between periods for various reasons, including but not limited to the timing of professional services and litigation expenses. In addition, consistent with Bluegreen’s segment reporting treatment, changes in the payroll accrual between reporting periods for the entire company are recorded as corporate general and administrative expense. Corporate general and administrative expenses, excluding mortgage servicing operations, were $42.5 million for 2010, which reflected lower litigation costs, the benefit of higher than expected forfeitures on certain stock grants and lower company-wide benefit costs.

Non-controlling Interests in Income of Consolidated Subsidiary. Bluegreen includes the results of operations and financial position of Bluegreen/Big Cedar Vacations, LLC (the “Subsidiary”), its 51%-owned subsidiary, in its consolidated financial statements. The non-controlling interests in income of consolidated subsidiary is the portion of Bluegreen’s consolidated pre-tax income that is attributable to Big Cedar, LLC, the unaffiliated 49% interest holder in the Subsidiary. Non-controlling interests in income of consolidated subsidiary was $8.8 million for 2010.

Provision (Benefit) for Income Taxes. Bluegreen’s annual effective tax rate has historically ranged between 35% and 40%, based upon the mix of taxable earnings among the various states in which Bluegreen operates.

Bluegreen’s Liquidity and Capital Resources

Bluegreen’s primary sources of funds from internal operations are: (i) cash sales, (ii) down payments on homesite and VOI sales which are financed, (iii) proceeds from the sale of, or borrowings collateralized by, notes receivable, including cash received from its residual interests in such transactions, (iv) cash from finance operations, including principal and interest payments received on the purchase money mortgage loans arising from sales of VOIs and homesites and mortgage servicing fees, and (v) net cash generated from sales and marketing fee-based services and other resort fee-based services, including its resorts management operations, and other communities operations.

Sales of VOIs accounted for 96% of Bluegreen’s system-wide sales during 2010. As a result of initiatives implemented in the fourth quarter of 2008, Bluegreen has in recent years realized higher down payments and a higher percentage of cash sales in connection with VOI sales compared to prior years. Including down payments received on financed sales, 54% of Bluegreen’s VOI sales were paid in cash within approximately 30 days from the contract date.

While the vacation ownership business has historically been capital intensive, Bluegreen’s principal goals in the current environment are to emphasize the generation of “free cash flow” (defined as cash flow from operating and

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investing activities) by i) incentivizing its sales associates to generate higher percentages of Bluegreen’s sales in cash compared to historical levels; ii) maintaining sales volumes that allow it to focus on what Bluegreen believes to be the most efficient marketing channels available to it; iii) minimizing capital and inventory expenditures; and iv) utilizing its sales and marketing, mortgage servicing, resort management services, title and construction expertise to pursue fee-based-service business relationships that require minimal up-front capital investment and have the potential to produce strong cash flows for Bluegreen.

Historically, Bluegreen’s business model has depended on the availability of credit in the commercial markets. VOI sales are generally dependent upon Bluegreen providing financing to its buyers. Bluegreen’s ability to sell and/or borrow against its notes receivable from VOI buyers is a critical factor in its continued liquidity. When Bluegreen sells VOIs, a financed buyer is only required to pay a minimum of 10% to 20% of the purchase price in cash at the time of sale; however, selling, marketing, and administrative expenses attributable to the sale are primarily cash expenses that generally exceed the buyer’s minimum required down-payment. Accordingly, having financing facilities available for the hypothecation, sale, or transfer of these vacation ownership receivables is a critical factor in Bluegreen’s ability to meet its short and long-term cash needs. Historically, Bluegreen has relied on its ability to sell receivables in the term securitization market in order to generate liquidity and create capacity in its receivable facilities. In addition, maintaining adequate VOI inventory to sell and pursue growth into new markets has historically required Bluegreen to incur debt for the acquisition, construction and development of new resorts. Although Bluegreen believes that it currently has adequate completed VOIs in inventory to satisfy its needs for the next several years, and therefore, expect acquisition and development expenditures to remain at current levels in the near future, Bluegreen may decide to acquire or develop more inventory in the future, which would increase its acquisition and development expenditures and may require it to incur additional debt.

During 2010, Bluegreen successfully renewed and extended several of its existing credit facilities. Bluegreen also entered into a $20.0 million timeshare receivables hypothecation facility with National Bank of Arizona and a $20.0 million timeshare receivables purchase facility with Quorum Federal Credit Union. Additionally, Bluegreen successfully completed two securitization transactions. In September of 2010, Bluegreen securitized $36.1 million of the lowest FICO® score loans previously financed by the BB&T purchase facility for gross proceeds of $24.3 million and in December of 2010, Bluegreen securitized an additional $126.2 million of its higher-FICO® score loans for gross proceeds of $107.6 million, a portion of which was used to repay all amounts then outstanding under the Company’s existing receivables purchase facility with BB&T.

The challenging credit markets have negatively impacted Bluegreen’s financing activities in recent years compared to historical levels. While the credit markets appear to be recovering and Bluegreen consummated term securitizations and entered into new financing facilities during 2010, the number of banks and other finance companies in the market which provide “warehouse” lines of credit for timeshare receivables has decreased. There is no assurance that Bluegreen will be able to renew its existing receivable-backed lines of credit when their current advance periods expire or secure new future financing for its VOI notes receivable on acceptable terms, if at all. In addition, the securitization market has become unavailable for extended periods of time in the past and there can be no assurances that it will not become unavailable to Bluegreen in the future.

Further, while Bluegreen may seek to raise additional debt or equity financing in the future to fund operations or repay outstanding debt, there is no assurance that such financing will be available to Bluegreen on favorable terms or at all. If Bluegreen’s efforts are unsuccessful, its liquidity would be significantly adversely impacted. In light of the current trading price of Bluegreen’s common stock, financing involving the issuance of Bluegreen’s common stock or securities convertible into its common stock would be highly dilutive to Bluegreen’s existing shareholders.

Bluegreen’s levels of debt and debt service requirements have several important effects on its operations, including the following: (i) Bluegreen’s significant cash requirements to service debt reduces the funds available for operations and future business opportunities and increases its vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii) Bluegreen’s leverage position increases its vulnerability to economic and competitive pressures; (iii) the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to Bluegreen’s indebtedness requires Bluegreen to meet certain financial tests and restrict its ability to, among other things, borrow additional funds, dispose of assets, make investments, or pay cash dividends on or repurchase common stock; and (iv) Bluegreen’s leverage position may limit funds available for working capital, capital expenditures, acquisitions and general corporate purposes. Certain of Bluegreen’s financing arrangements materially limit its ability to pay cash dividends on its common stock or its ability to repurchase shares in

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the near term. Certain of Bluegreen’s competitors operate on a less leveraged basis and have greater operating and financial flexibility than Bluegreen.

Credit Facilities

The following is a discussion of Bluegreen’s material purchase and credit facilities, including those that were important sources of its liquidity as of December 31, 2010. These facilities do not constitute all of Bluegreen’s outstanding indebtedness as of December 31, 2010. Bluegreen’s other indebtedness includes outstanding junior subordinated debentures, borrowings collateralized by real estate inventories that were not incurred pursuant to a significant credit facility, and capital leases.

Credit Facilities for Bluegreen Receivables with Future Availability

Bluegreen maintains various credit facilities with financial institutions that provide receivable financing for its operations. Bluegreen had the following credit facilities with future availability as of December 31, 2010 (in thousands):


							Advance
			Outstanding		Availability		Period	Borrowing
			Balance		as of		Expiration;	Rate; Rate as
	Borrowing		As of December		December 31,		Borrowing	of December
	Limit		31, 2010		2010		Maturity	31, 2010
BB&T Purchase Facility⁽¹⁾	$	75,000	$	—	$	75,000	December 2011; September 2023	Prime Rate +2.00%⁽²⁾; 5.25%%
Quorum Facility		20,000		108		19,892	December 2011; December 2030	8.00%


	$	95,000	$	108	$	94,892

Bluegreen had the following credit facilities with future availability as of February 28, 2011 (in thousands):


			Outstanding
			Balance		Availability		Advance Period	Borrowing Rate;
			As of		as of		Expiration;	Rate as of
	Borrowing		February 28,		February		Borrowing	February 28,
	Limit		2011		28, 2011		Maturity	2011
BB&T Purchase Facility⁽¹⁾	$	75,000	$	1,026	$	73,974	December 2011; September 2023		Prime Rate +2.00%⁽²⁾; 5.25%
Quorum Facility		20,000		706		19,294	December 2011; December 2030	8.00%
NBA Receivables Facility⁽³⁾		20,000		17,290		2,710	June 2011; June 2018	LIBOR+5.25%; 6.75%⁽⁵⁾
Liberty Bank Facility⁽⁴⁾		60,000		46,978		13,022	February 2013; February 2016	Prime Rate +2.25%; 6.50%⁽⁶⁾

	$	175,000	$	66,000	$	109,000


⁽¹⁾		Facility is revolving during the advance period, providing additional availability as the facility is paid down, subject to eligible collateral and applicable terms and conditions.

⁽²⁾		The borrowing rate is subject to tiered increases once the outstanding balance equals or exceeds $25.0 million, subject to a maximum interest rate of the Prime Rate plus 3.5%, once the facility equals or exceeds $50.0 million.

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⁽³⁾		We have received a term sheet to amend our existing National Bank of Arizona (“NBA”) facility to allow us to pledge additional timeshare receivables up to the borrowing limit, with the additional advances not to exceed $5.0 million. There can be no assurances that we will close on this amendment on favorable terms, if at all.

⁽⁴⁾		In February of 2011, we revised the terms of and extended the revolving advance period of the Liberty Bank Facility with certain existing participants in the Liberty-led syndicate. In addition to the $ 47.0 million outstanding to the extending participants reflected in this table, an additional $ 17.4 million is outstanding as of February 28, 2011 to the other participants. This amount outstanding to the other participants does not reduce the availability under the extended Liberty Bank Facility. See Other Outstanding Receivable-Backed Notes Payable below for further information regarding the terms of this amendment and extension.

⁽⁵⁾		Interest charged on this facility is subject to a floor of 6.75%

⁽⁶⁾		Interest charged on this facility is subject to a floor of 6.50%

BB&T Purchase Facility. Bluegreen has a $75.0 million timeshare notes receivable purchase facility with Branch Banking and Trust Company (“BB&T”) (the “BB&T Purchase Facility”). The BB&T Purchase Facility provides a revolving advance period through December 17, 2011. The interest rates on future advances under the facility are the Prime Rate plus 2.0%, subject to tiered increases once the outstanding balance equals or exceeds $25.0 million, subject to a maximum interest rate of the Prime Rate plus 3.5%, once the facility equals or exceeds $50.0 million. Additionally, Bluegreen receive all of the excess cash flows generated by the timeshare receivables transferred to BB&T under the facility (excess meaning after customary payment of fees, interest and principal under the facility). The BB&T Purchase Facility provides for the financing of its timeshare receivables at an advance rate of 67.5%, subject to the terms of the facility.

While ownership of the receivables is transferred for legal purposes, the transfers of receivables under the facility are accounted for as secured borrowings. Accordingly, the receivables are reflected as assets and the associated obligations are reflected as liabilities on Bluegreen’s balance sheet. The BB&T Purchase Facility is nonrecourse and is not guaranteed by us.

As of December 31, 2010, the entire $75.0 million facility was available to be drawn upon, subject to eligible collateral and what Bluegreen believes to be customary terms and conditions.

Quorum Facility. On December 22, 2010, we entered into a new timeshare receivables purchase facility (the “Quorum Facility”) with Quorum Federal Credit Union (“Quorum”). The Quorum Facility allows for the sale of timeshare notes receivable on a non-recourse basis, pursuant to the terms of the facility and subject to certain conditions precedent. Quorum has agreed to purchase eligible timeshare receivables or certain of its subsidiaries up to an aggregate $20.0 million purchase price through December 22, 2011. The terms of the Quorum Facility reflect an 80% advance rate and at a program fee rate of 8% per annum through August 31, 2001, and at terms to be agreed upon through December 22, 2011. Eligibility requirements for receivables sold include, amongst others, that the obligors under the timeshare notes receivable sold be members of Quorum at the time of the note sale. The Quorum Facility contemplates the ability of Quorum to purchase additional receivables subject to advance rates, fees and other terms to be agreed upon from time to time over and above the initial $20.0 million commitment, pursuant to the terms of the facility and subject to certain conditions precedent. Bluegreen will receive all of the excess cash flows generated by the receivables transferred to Quorum under the facility (excess meaning after customary payment of fees and return of amounts invested by Quorum under the facility on a pro-rata basis as borrowers make payments on their timeshare loans).

Other Outstanding Receivable-Backed Notes Payable

Bluegreen has outstanding obligations under various receivable-backed credit facilities that have no remaining future availability as the advance periods have expired. Bluegreen had the following outstanding balances under such credit facilities as of December 31, 2010 (in thousands):

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Balance as of

Borrowing Rate;

December 31,

Borrowing

Rate as of December

2010

Maturity

31, 2010

Liberty Bank Facility

67,514

August 27, 2014

Prime + 2.25%;
6.50 % ⁽¹⁾

GE Bluegreen/Big Cedar Facility

23,877

August 16, 2016

30 day LIBOR+1.75%;
2.01%

Legacy Securitization ⁽²⁾

22,960

September 2, 2025

12%⁽²⁾

RFA Receivables Facility

3,159

February 15, 2015

30 day LIBOR+4.00%;
4.26%

NBA Receivable Facility

18,351

September 30, 2017

30 Day LIBOR +
5.25%; 6.75% ⁽³⁾

Non-recourse Securitization Debt

436,271

Varies

572,132


(1)		Interest charged on this facility is subject to a floor of 6.50%

(2)		Legacy Securitization debt bears interest at a coupon rate of 12% and was issued at a discount resulting in an effective yield of 18.5%. The associated debt balance is presented net of the discount of $2.6 million.

(3)		Interest charged on this facility is subject to a floor of 6.75%

Liberty Bank Facility. As of December 31, 2010, Bluegreen had a $75.0 million revolving timeshare receivables hypothecation facility with a syndicate of lenders led by Liberty Bank and assembled by Wellington Financial (“Liberty Bank Facility”). During 2010, Bluegreen pledged $27.6 million of VOI notes receivable to this facility and received cash proceeds of $27.4 million. Bluegreen also repaid $18.9 million on the facility. As of December 31, 2010, Bluegreen had no availability under the facility as the revolving advance period has expired.

In February of 2011, Bluegreen revised the terms of and extended the Liberty Bank Facility. The revised $60.0 million facility (“New Liberty Bank Facility”) provides for an 85% advance on eligible receivables pledged under the facility during a two-year period ending in February 2013, subject to terms and conditions Bluegreen believes to be customary for transactions of this type. Availability under the New Liberty Bank Facility is reduced by amounts currently outstanding to certain syndicate participants under the existing Liberty Bank Facility. At February 28, 2011, the time of the transaction, such currently outstanding amounts under the existing Liberty Bank Facility were approximately $47.0 million, therefore, initial availability under the New Liberty Bank Facility was approximately $13.0 million, but as outstanding amounts on the existing facility amortize over time, the New Liberty Bank Facility will revolve up to $60.0 million, subject to eligible collateral and customary terms and conditions. Principal and interest will be paid as cash is collected on the pledged receivables, with the remaining balance due in February 2016.

Indebtedness under the New Liberty Bank Facility bears interest at the Prime Rate plus 2.25%, subject to a floor of 6.50%.

As a result of the significant non-cash charges associated with loan loss reserves and Communities’ inventory impairments as of December 31, 2010, Bluegreen would have been in violation of one of the original net worth covenants under the Liberty Bank Facility as of that date. However, in March 2011, Liberty Bank confirmed that the covenants contained in the New Liberty Bank Facility superseded the covenants contained in the original facility. Bluegreen was in compliance with all applicable covenants as of December 31, 2010.

The GE Bluegreen/Big Cedar Receivables Facility. In April 2007, the Bluegreen/Big Cedar Joint Venture entered into a $45.0 million revolving VOI receivables credit facility with GE (the “GE Bluegreen/Big Cedar Receivables Facility”). Bluegreen Corporation has guaranteed the full payment and performance of the Bluegreen/Big Cedar Joint Venture in connection with the GE Bluegreen/Big Cedar Receivables Facility. The advance period under

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this facility expired on April 16, 2009, and all outstanding borrowings are scheduled to mature no later than April 16, 2016. The facility includes affirmative, negative and financial covenants and events of default. All principal and interest payments received on pledged receivables are applied to principal and interest due under the facility. Indebtedness under the facility bears interest adjusted monthly at a rate equal to the 30 day LIBOR rate plus 1.75%. During 2010, Bluegreen repaid $8.9 million on this facility.

Legacy Securitization. In September 2010, Bluegreen completed a securitization transaction of the lowest FICO®-score loans previously financed in the BB&T Purchase Facility. Substantially all of the timeshare receivables included in this transaction were generated prior to November 1, 2008, the date that Bluegreen implemented its FICO® score-based credit underwriting program, and had FICO® scores below 600.

In this securitization, BXG Legacy 2010 LLC, a wholly-owned special purpose subsidiary of Bluegreen, issued $27.0 million of notes payable secured by a portfolio of timeshare receivables totaling $36.1 million. While the notes payable have a coupon rate of 12%, they were sold at a $2.7 million discount to yield an effective rate of 18.5%. The notes payable generated gross proceeds to Bluegreen of $24.3 million (before fees and reserves and expenses believed to be customary for transactions of this type), which was used to repay a portion of the outstanding balance under the BB&T Purchase Facility.

Bluegreen guaranteed the principal payments for defaulted vacation ownership loans in the Legacy Securitization at amounts equivalent to the then-current advance rate inherent in the notes, any shortfalls in monthly interest distributions to the Legacy Securitization investors and any shortfall in the ultimate principal payment on the notes upon their stated maturity in September 2025. During 2010, Bluegreen repaid $1.7 million of the outstanding balance on the Legacy Securitization notes payable.

NBA Receivables Facility. In September, 2010, Bluegreen/Big Cedar Joint Venture entered into a $20.0 million timeshare receivables hypothecation facility with National Bank of Arizona (“NBA”). Bluegreen Corporation has guaranteed the full payment and performance of Bluegreen/Big Cedar Joint Venture in connection with this facility. The facility provides for an 85% advance on $23.5 million of eligible receivables, all of which were pledged under the facility at closing, subject to terms and conditions which Bluegreen believes to be customary for facilities of this type. All principal and interest payments received on pledged receivables are applied to principal and interest due under the facility, with the remaining balance due in September 2017. Indebtedness under this facility bears interest at the 30-day LIBOR plus 5.25%, subject to a floor of 6.75% (6.75% as of December 31, 2010). During 2010, Bluegreen repaid $1.6 million on this facility.

Bluegreen received a term sheet from NBA to amend its existing facility to allow them to pledge additional timeshare receivables up to the borrowing limit, with the additional advances not to exceed $5.0 million. There can be no assurances that Bluegreen will close on this amendment on favorable terms, if at all.

Receivable-Backed Notes Payable Previously Reported as Off-Balance-Sheet — Non-Recourse Securitization Debt

See Note 23 to the Consolidated Financial Statements for information related to the debt obligations that were previously reported off-balance-sheet.

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Credit Facilities for Bluegreen Inventories without Existing Future Availability

Bluegreen has outstanding obligations under various credit facilities and other notes payable collateralized by our Resorts or Communities inventories. As of December 31, 2010, these included the following significant items (in thousands):

Balance as of

Borrowing Rate;

December 31,

Borrowing

Rate as of

2010

Maturity⁽¹⁾

December 31, 2010

RFA AD&C Facility

52,264

Varies by loan ⁽²⁾

30 day LIBOR+4.50%;4.76%

H4BG Communities Facility

30,842

December 31, 2012

Prime + 2.00%;8.00% ⁽³⁾

Textron AD&C Facility

9,290

Varies by loan ⁽²⁾

Prime + 1.25 - 1.50%;4.50%-4.75%

Wells Fargo Term Loan

30,776

April 30, 2012

30 day LIBOR + 6.87%;7.13%

123,172


(1)		Repayment of the outstanding amount is effected through release payments as the related collateral is sold, subject to periodic minimum required amortization between December 31, 2010 and maturity.

(2)		The maturity dates for this facility vary by loan as discussed below.

(3)		The interest rate on this facility is subject to the following floors: (1) 8.0% until the balance of the loan is less than or equal to $20 million, and (2) 6.0% thereafter.

RFA AD&C Facility. In September 2010, GMAC assigned all rights, title, and interest in this facility (previously known as GMAC AD&C Facility) to Resort Finance America, LLC (“RFA”). This assignment did not affect any of the material financial terms of the loan agreement. This facility was used to finance the acquisition and development of certain of Bluegreen’s resorts and currently has two outstanding project loans. The maturity date for the project loan collateralized by Bluegreen’s Bluegreen Club 36^TM resort in Las Vegas, Nevada (the “Club 36 Loan”) is June 30, 2012. Approximately $49.9 million was outstanding on the Club 36 Loan as of December 31, 2010, $27.3 million of which is due by October 31, 2011. The maturity date for the project loan collateralized by Bluegreen’s Fountains resort in Orlando, Florida (the “Fountains Loan”) is March 31, 2011. Approximately $2.4 million was outstanding on this loan as of December 31, 2010. Principal payments are effected through agreed-upon release prices as timeshare interests in the resorts collateralizing the RFA AD&C Facility are sold, subject to periodic minimum required amortization on the Club 36 Loan and the Fountains Loans. As of December 31, 2010, Bluegreen had no availability under this facility. During 2010, Bluegreen repaid $35.2 million of the outstanding balance under this facility.

H4BG Communities Facility. The H4BG Communities Facility is secured by the real property homesites (and personal property related thereto) at the following Bluegreen Communities projects (the “Secured Projects”): Havenwood at Hunter’s Crossing (New Braunfels, Texas); The Bridges at Preston Crossings (Grayson County, Texas); King Oaks (College Station, Texas); Vintage Oaks at the Vineyard (New Braunfels, Texas); and Sanctuary Cove at St. Andrews Sound (Waverly, Georgia). In addition, the H4BG Communities Facility is secured by Bluegreen’s golf courses: The Bridges at Preston Crossings (Grayson County, Texas) and Sanctuary Cove (Waverly, Georgia).

Principal payments are effected through agreed-upon release prices as real estate collateralizing the H4BG Communities Facility is sold, subject to minimum required amortization. The interest rate on the H4BG Communities Facility is the Prime Rate plus 2%, subject to the following floors: (1) 8% until the balance of the loan is less than or equal to $20 million, and (2) 6% thereafter. During 2010, Bluegreen repaid $7.6 million on this facility.

Textron AD&C Facility. In April 2008, Bluegreen Vacations Unlimited, Inc. (“BVU”), Bluegreen’s wholly-owned subsidiary, entered into a $75.0 million, revolving master acquisition, development and construction facility loan agreement (the “Textron AD&C Facility”) with Textron Financial Corporation (“Textron”). The Textron AD&C Facility has historically been used to facilitate the borrowing of funds for resort acquisition and development activities. Bluegreen guaranteed all sub-loans under the master agreement. Interest on the Textron AD&C Facility is equal to the Prime Rate plus 1.25% — 1.50% and is due monthly. The advance period under the Textron AD&C Facility has expired.

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On October 28, 2009, Bluegreen entered into an amendment to the Textron AD&C Facility and a sub-loan under the Facility used to fund the acquisition and development of our Odyssey Dells Resort (the “Odyssey Sub-Loan”). The amendment to the Odyssey Sub-Loan extended the final maturity of outstanding borrowings under the Odyssey Sub-Loan to December 31, 2011, and revised the periodic minimum required principal amortization. As amended, Bluegreen’s minimum required principal payments are $1.0 million per quarter through maturity. Bluegreen pays Textron principal payments as we sell timeshare interests that collateralize the Odyssey Sub-Loan, subject to periodic minimum required principal amortization. As of December 31, 2010, Bluegreen’s outstanding borrowings under the Sub-Loan totaled approximately $3.6 million.

The sub-loan used to acquire Bluegreen’s Atlantic Palace Resort in Atlantic City, New Jersey was $5.7 million as of December 31, 2010 (the “Atlantic Palace Sub-Loan”). Bluegreen pays Textron principal payments as it sells timeshare interests that collateralize the Atlantic Palace Sub-Loan, subject to periodic minimum required principal amortization. The final maturity of outstanding borrowings under the Atlantic Palace Sub-Loan is April 2013.

Bluegreen guaranteed all sub-loans under the Textron AD&C Facility. Interest on the Textron AD&C Facility is equal to the Prime Rate plus 1.25% — 1.50% and is due monthly. During 2010, Bluegreen repaid $3.5 million under this facility.

Wells Fargo Term Loan. On April 30, 2010, Bluegreen entered into a definitive agreement with Wells Fargo, which amended, restated and consolidated its then existing notes payable and line-of-credit issued with Wachovia Bank, N.A. into a single term loan with Wells Fargo (the “Wells Fargo Term Loan”). The notes payable and line-of-credit which were consolidated into the Wells Fargo Term Loan had a total outstanding balance of $36.4 million as of April 30, 2010. In connection with the closing of the Wells Fargo Term Loan, Bluegreen made a principal payment of $0.4 million, reducing the balance to $36.0 million, and paid accrued interest on the then-existing Wachovia debt. Principal payments are effected through agreed-upon release prices as real estate collateralizing the Wells Fargo Term Loan is sold, subject to minimum remaining required amortization as of December 31, 2010, of $10.6 million in 2011 and $20.2 million in 2012. In addition to the resort projects previously pledged as collateral for the various notes payable to Wachovia, Bluegreen pledged additional timeshare interests, resorts real estate, and the residual interests in certain of its sold VOI notes receivable as collateral for the Wells Fargo Term Loan. As required by the terms of the Wells Fargo Term Loan, Wells Fargo received, as additional collateral, the residual interest in the 2010 Term Securitization. The Wells Fargo Term Loan bears interest at the 30-day LIBOR plus 6.87% (7.13% as of December 31, 2010).

During 2010, Bluegreen repaid $5.6 million on this facility.

Commitments

Bluegreen’s material commitments as of December 31, 2010 included the required payments due on its receivable-backed debt, lines-of-credit and other notes payable, commitments to complete its Bluegreen Resorts and Communities projects based on its sales contracts with customers and commitments under noncancelable operating leases.

The following tables summarize the contractual minimum principal and interest payments, respectively, required on all of Bluegreen’s outstanding debt (including Bluegreen’s receivable-backed debt, lines-of-credit and other notes and debentures payable) and Bluegreen’s noncancelable operating leases by period date, as of December 31, 2010, (in thousands):


			Purchase									More
			Accounting			Less than		13-36		37-60		than 60
Category	Total		Adjustments			12 months		Months		Months		Months
Long Term Debt Obligations(1)	$	768,001		(56,877	)		52,396		74,522		93,732		604,228
Operating Lease Obligations		58,390		—			9,379		12,986		9,819		26,206

Total Obligations	$	826,391		(56,877	)		61,775		87,508		103,551		630,434


(1)		Contractual minimum principal payments for Legacy Securitization included in the Receivable-backed notes payable after 5 years balance is presented net of discount of $2.6 million.

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Bluegreen estimates that the cash required to satisfy development obligations related to resort buildings and resort amenities was approximately $6.0 million as of December 31, 2010. Bluegreen estimates that the cash required to satisfy its development obligations related to Communities was approximately $5.0 million as of December 31, 2010. These amounts assume that Bluegreen is not obligated to develop any building, project or amenity in which a commitment has not been made pursuant to a sales contract with a customer; however, Bluegreen anticipates that it will incur such obligations in the future. Bluegreen plans to fund these expenditures over the next three to ten years, primarily with cash generated from operations. There is no assurance that Bluegreen will be able to generate the cash from operations necessary to complete these commitments or that actual costs will not exceed the amounts estimated.

Bluegreen believes that its existing cash, anticipated cash generated from operations, anticipated future permitted borrowings under existing or proposed credit facilities and anticipated future sales of notes receivable under the purchase facilities and one or more replacement facilities Bluegreen intends to put in place will be sufficient to meet its anticipated working capital, capital expenditures and debt service requirements, including the contractual payment obligations set forth above, for the foreseeable future, subject to the successful implementation of ongoing strategic initiatives and receivable-backed credit facility extensions discussed above and the ongoing availability of credit. Bluegreen will continue its efforts to renew, extend or replace any credit and receivables purchase facilities that have expired or that will expire in the near term. Bluegreen may, in the future, also obtain additional credit facilities and may issue corporate debt or equity securities. Any debt incurred or issued by Bluegreen may be secured or unsecured, bear fixed or variable rate interest and may be subject to such terms as the lender may require and management believes acceptable. There can be no assurance that the credit facilities or receivables purchase facilities which have expired or which are scheduled to expire in the near term will be renewed or replaced or that sufficient funds will be available from operations or under existing, proposed or future revolving credit or other borrowing arrangements or receivables purchase facilities to meet Bluegreen’s cash needs, including its debt service obligations. To the extent Bluegreen is not able to sell notes receivable or borrow under such facilities, its ability to satisfy its obligations would be materially adversely affected.

Bluegreen’s credit facilities, indentures, and other outstanding debt instruments, and receivables purchase facilities include what Bluegreen believes to be customary conditions to funding, eligibility requirements for collateral, cross-default and other acceleration provisions, certain financial and other affirmative and negative covenants, including, among others, limits on the incurrence of indebtedness, the repurchase of securities, payment of dividends, investments in joint ventures and other restricted payments, the incurrence of liens, and transactions with affiliates, as well as covenants concerning net worth, fixed charge coverage requirements, debt-to-equity ratios, portfolio performance requirements, cash balances and events of default or termination. No assurance can be given that Bluegreen will not be required to seek waivers of such covenants, that Bluegreen will be successful in obtaining waivers, or that such covenants will not limit Bluegreen’s ability to raise funds, sell receivables, satisfy or refinance our obligations or otherwise adversely affect its operations. Further, although Bluegreen does not currently believe that any such transactions currently are, or are likely to be, structured so as to materially limit its ability to pay cash dividends on its common stock or its ability to repurchase shares in the near term, there is no assurance this will remain true in the future. In addition, Bluegreen’s future operating performance and ability to meet its financial obligations will be subject to future economic conditions and to financial, business and other factors, many of which will be beyond Bluegreen’s control.

Off-balance-sheet Arrangements

As of December 31, 2010, Bluegreen did not have any “off-balance sheet” arrangements.

118

Financial Services
(BankAtlantic Bancorp)

Financial Services

Our Financial Services activities of BFC are comprised of the operations of BankAtlantic Bancorp and its subsidiaries. BankAtlantic Bancorp in 2010 presents its results in two reportable segments and its results of operations are consolidated in 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 Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission. Accordingly, references to “the Company”, “The Parent 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, Woodbridge or Bluegreen.

Loss from continuing operations from each of the Company’s reportable business segments
follows (in thousands):


	For the Years Ended December 31,
	2010			2009			2008
BankAtlantic	$	(115,910	)		(148,708	)		(166,144	)
Parent Company		(26,840	)		(40,812	)		(53,100	)
Loss from continuing

operations	$	(142,750	)		(189,520	)		(219,244	)

For the Year Ended December 31, 2010 as Compared to 2009

The decrease in BankAtlantic’s net loss during the year ended December 31, 2010 compared to the same 2009 period resulted primarily from a $75.4 million decrease in the provision for loan losses and $22.5 million of lower non-interest expenses, partially offset by $12.0 million and $23.5 million of decreased net interest income and non-interest income, respectively.

The substantial decrease in the provision for loan losses related primarily to a reduction in charge-offs, lower commercial real estate loan balances, and lower real estate value declines. We believe that the reduction in the provision for loan losses reflects significant real estate loan write-downs in prior periods. However, if economic and real estate market conditions deteriorate further, particularly in Florida, we believe that higher provisions for loan losses may be required in future periods.

The decreased non-interest income was due primarily to lower revenues from service charges reflecting declines in the total number of accounts which incurred overdraft fees and a decrease in the frequency of overdrafts per deposit account. We believe that the decline in the number of accounts incurring overdraft fees is the result of our focus on seeking to attract customers who maintain deposit accounts with higher balances, the adoption of new Federal Reserve overdraft rules, other modifications to our overdraft policies and changes in customer behavior. We currently expect this decline in overdraft fees to continue as we have introduced new fee based deposit products and revised our overdraft protection products and practices in a manner that will likely result in lower fees.

The decline in BankAtlantic’s net interest income resulted primarily from lower earning asset balances and higher non-performing asset balances as well as an increase in lower yielding interest bearing cash balances with the Federal Reserve Bank and other lower yielding investments reflecting management’s decision to increase liquidity. The decline in earning assets was the result of lower loan originations and purchases, reduced acquisitions of tax certificates and sales of agency securities.

The decrease in non-interest expenses reflects lower compensation and occupancy expenses associated with efforts to increase operating efficiencies and $7.5 million of costs associated with debt redemptions in 2009 compared to $60,000 of costs associated with debt redemptions in 2010. The lower non-interest expenses were partially offset by higher professional fees associated primarily with the class-action securities litigation and secondarily from legal costs associated with the regulatory environment, tax certificate activities litigation, loan modifications and loan work-outs.

During the year ended December 31, 2010, non-interest expenses included $4.5 million of impairments on assets transferred to held-for-sale in connection with the Tampa branch sale, $4.0 million of employee severance

119

Financial Services
(BankAtlantic Bancorp)

associated with 2010 workforce reductions, $6.2 million of real estate impairments and lease termination costs associated with properties acquired for branch expansion and a $1.2 million loss on the sale of a real estate project. During the year ended December 31, 2009, non-interest expenses included $2.0 million of employee severance associated with 2009 workforce reductions and $3.3 million of real estate impairments and lease termination costs.

The decrease in the Parent Company’s loss for the year ended December 31, 2010 compared to the same 2009 period resulted primarily from a $12.9 million decline in the provision for loan losses and lower compensation expenses partially offset by higher professional fees. The substantial improvement in the provision for loan losses reflects lower loan balances from loan sales, short sales and charge-offs. Loan receivable balances declined from $48.0 million at December 31, 2009 to $17.3 million at December 31, 2010. The decline in compensation expense reflects substantially lower executive bonuses during 2010 compared to 2009. The increase in professional fees resulted from higher consulting costs associated with investment banking and advisory services as well as increased legal expenses incurred in connection with the SEC investigation, regulatory environment, general corporate matters and foreclosure costs associated with non-performing loans held in a work-out subsidiary of the Parent Company.

For the Year Ended December 31, 2009 as Compared to 2008

The lower loss from continuing operations at BankAtlantic during 2009 compared to the same 2008 period was primarily the result of a $31.7 million income tax benefit recognized by BankAtlantic during 2009 in connection with a change in tax regulations which enabled BankAtlantic to utilize additional net operating losses. During 2008, BankAtlantic established a deferred tax valuation allowance on the entire amount of net deferred tax assets resulting in a tax provision of $31.1 million. BankAtlantic’s 2009 loss before income taxes increased by $45.4 million compared to 2008. The higher 2009 loss primarily resulted from a $78.9 million increase in the provision for loan losses, a $30.3 million reduction in net interest income and $8.0 million of lower non-interest income. The increase in BankAtlantic’s loss before income taxes was partially offset by $71.8 million of lower non-interest expenses. The substantial increase in the provision for loan losses resulted primarily from a significant increase in charge-offs and loan loss reserves in our consumer, residential and commercial real estate loan portfolios.

The reduction in BankAtlantic’s net interest income was primarily due to a decline in earning assets. The reduction in non-interest income related primarily to a decline in overdraft fees. This overdraft fee income decline reflected, in part, management’s focus on targeting retail customers and businesses that maintain higher average deposit balances which generally will result in fewer overdrafts per account. BankAtlantic, during 2009, continued to reduce expenses with a view towards increasing operating efficiencies. These operating expense initiatives included workforce reductions, consolidation of certain back-office facilities, renegotiation of vendor contracts, outsourcing of certain back-office functions, reduction in marketing expenses and other targeted expense reductions. Also, restructuring charges and other impairments declined by $33.0 million. These expense reductions were partially offset by $8.2 million of additional FDIC insurance premiums, including a $2.4 million FDIC special assessment in June 2009.

The decrease in the Parent Company segment loss during 2009 compared to 2008 reflected a $6.0 million reduction in the provision for loan losses and $4.9 million of reduced net interest expense. The provision for loan losses for both years was associated with non-performing loans acquired from BankAtlantic in March 2008. The 2009 provision for loan losses represented additional charge-offs and specific reserves associated with these loans due to declining real estate collateral values. The improvement in net interest expense reflected historically low LIBOR interest rates during 2009. The majority of the Parent Company’s debt is indexed to the three-month LIBOR interest rate. The decline in interest rates was partially offset by interest accrued on the junior subordinated debentures deferred interest. Parent Company operating expenses were higher by $0.3 million during 2009 compared to 2008. Lower property management costs associated with non-performing loans during 2009 were offset by higher compensation expenses.

Discontinued Operations for the Years Ended December 31, 2010, 2009 and 2008

During the year ended December 31, 2010, the Parent Company recognized $0.5 million of indemnification losses pursuant to the Ryan Beck merger agreement with Stifel. During the years ended December 31, 2009 and 2008, the Parent Company recognized $3.7 million and $16.6 million, respectively, in discontinued operations relating to additional proceeds received in connection with contingent earn-out payments under the Ryan Beck merger agreement with Stifel.

120

Financial Services
(BankAtlantic Bancorp)

BankAtlantic Results of Operations

Key Events Impacting BankAtlantic’s Operations Over Past 8 Years:

In April 2002, BankAtlantic launched its “Florida’s Most Convenient Bank” initiative which resulted in significant demand deposit, NOW checking and savings account growth (we refer to these accounts as “core deposit” accounts) and subsequently this initiative contributed to a significant increase in core deposit balances from $600 million at December 31, 2001 to approximately $2.8 billion at December 31, 2010. Core deposits represented 73% of BankAtlantic’s total deposits at December 31, 2010, compared to 26% of total deposits at December 31, 2001.

In 2004, BankAtlantic announced its de novo store expansion strategy and opened 32 stores as of December 31, 2008 in connection with this strategy. BankAtlantic’s non-interest expenses substantially increased as a result of the hiring of additional personnel, increased marketing to support new stores, increased leasing and operating costs for the new stores and expenditures for back-office technologies to support a larger institution.

During the fourth quarter of 2005, the growth in core deposits slowed reflecting rising short-term interest rates and increased competition among financial institutions. In response to these market conditions, BankAtlantic significantly increased its marketing expenditures and continued its new store expansion program in an effort to sustain core deposit growth. The number of new core deposit accounts opened increased from 226,000 during 2005 to 270,000 during 2006, while core deposit balances grew to $2.2 billion at December 31, 2006 from $2.1 billion at December 31, 2005. In response to adverse economic conditions and the slowed deposit growth, BankAtlantic significantly reduced its marketing expenditures beginning during the fourth quarter of 2006 as part of an overall effort to reduce its non-interest expenses.

During the fourth quarter of 2007, BankAtlantic decided to delay its retail network expansion, consolidate certain back-office facilities and implement other initiatives to reduce non-interest expenses.

During the latter half of 2007, the real estate markets deteriorated rapidly throughout the United States, and particularly in Florida where BankAtlantic’s commercial and consumer real estate loans are concentrated. In response to these market conditions, BankAtlantic significantly increased its allowance for loan losses for commercial loans collateralized by real estate and to a lesser extent home equity consumer loans.

As economic conditions deteriorated in late 2007 and during 2008, real estate property values continued to decline. The adverse economic and real estate market conditions severely impacted the credit quality of BankAtlantic’s loan portfolio. In March 2008, the Parent Company purchased $101.5 million of non-performing loans from BankAtlantic and during the year contributed $65 million of capital to BankAtlantic. During the fourth quarter of 2008, financial and credit markets experienced further rapid deterioration, investor confidence in financial institutions was significantly and adversely affected, and the market capitalization of the Company’s Class A Common Stock declined significantly. As BankAtlantic’s non-performing loans increased, additional loan loss reserves were established, impairments of long-lived assets were recognized and earnings were adversely affected. As a consequence of the substantial losses during 2007 and 2008, the deterioration in the price of the Company’s Class A Common Stock and the unprecedented economic and market uncertainty, BankAtlantic recognized a $48.3 million non-cash goodwill impairment charge and established a $66.9 million non-cash deferred tax valuation allowance.

During 2009, in response to the continued deteriorating economic conditions, including continued falling real estate collateral values and rising unemployment, and the significant adverse impact on the credit quality of our assets and our results of operations, BankAtlantic reduced its assets, repaid its wholesale borrowings and increased core deposits with a view toward strengthening its liquidity and regulatory capital ratios. However, the credit quality of its loans continued to deteriorate in 2009, and BankAtlantic’s losses continued. As a result, the Company contributed an additional $105 million of capital to BankAtlantic. Additionally, as a consequence of the adverse economic environment, an additional $22.5 million of restructuring charges and asset impairments were recognized during 2009.

During 2010, BankAtlantic continued to reduce its expenses and assets in order to improve its liquidity and capital ratios. The Company contributed $28 million of capital to BankAtlantic. As a consequence of these actions, BankAtlantic was successful in enhancing its liquidity and maintaining its required regulatory capital levels throughout 2010 despite incurring losses during 2010. During the third quarter of 2010, BankAtlantic began seeking a buyer for its Tampa branches in order to focus on its core markets in southeast Florida. In January 2011, BankAtlantic entered into

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an agreement to sell its Tampa branches to PNC Financial Services Group Inc. BankAtlantic expects that the sale of the Tampa branches will also strengthen its regulatory capital ratios and reduce operating expenses.

The following table is a condensed income statement summarizing BankAtlantic’s results of operations (in thousands):


	For the Years Ended									Change			Change
	December 31,									2010 vs			2009 vs
	2010			2009			2008			2009			2008

Net interest income	$	151,334			163,324			193,648			(11,990	)		(30,324	)
Provision for loan losses		(138,825	)		(214,244	)		(135,383	)		75,419			(78,861	)

Net interest income (expense) after provision for loan losses		12,509			(50,920	)		58,265			63,429			(109,185	)
Non-interest income		105,762			129,292			137,308			(23,530	)		(8,016	)
Non-interest expense		(236,315	)		(258,799	)		(330,623	)		22,484			71,824

BankAtlantic (loss) income before income taxes		(118,044	)		(180,427	)		(135,050	)		62,383			(45,377	)
Benefit/(provision) for income taxes		2,134			31,719			(31,094	)		(29,585	)		62,813

BankAtlantic net loss	$	(115,910	)		(148,708	)		(166,144	)		32,798			17,436

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BankAtlantic’s Net Interest Income
The following table summarizes net interest income:


	For the Years Ended
	December 31, 2010						December 31, 2009						December 31, 2008
	Average		Revenue/		Yield/		Average		Revenue/		Yield/		Average		Revenue/		Yield/
(Dollars are in thousands)	Balance		Expense		Rate		Balance		Expense		Rate		Balance		Expense		Rate
Interest earning assets
Loans: (a)
Residential real estate	$	1,392,600		68,392		4.91		1,758,188		89,836		5.11		2,053,645		111,691		5.44
Commercial real estate		1,043,261		39,758		3.81		1,204,005		46,746		3.88		1,238,307		69,642		5.62
Consumer		661,718		19,285		2.91		723,135		21,104		2.92		743,863		33,950		4.56
Commercial business		135,669		9,036		6.66		143,224		7,461		5.21		132,565		9,516		7.18
Small business		307,269		19,295		6.28		316,328		20,010		6.33		320,853		22,162		6.91

Total loans		3,540,517		155,766		4.40		4,144,880		185,157		4.47		4,489,233		246,961		5.50

Investment securities (b)		719,429		20,251		2.81		706,953		37,857		5.35		1,098,895		65,570		5.97
Federal funds sold		2,303		7		0.30		14,760		33		0.22		44,031		754		1.71

Total investment securities		721,732		20,258		2.81		721,713		37,890		5.25		1,142,926		66,324		5.80

Total interest earning assets		4,262,249		176,024		4.13		4,866,593		223,047		4.58		5,632,159		313,285		5.56

Total non-interest earning assets		296,336						319,520						482,322

Total assets	$	4,558,585						5,186,113						6,114,481

Interest bearing liabilities
Deposits:
Savings	$	441,286		1,112		0.25		436,169		1,612		0.37		503,464		4,994		0.99
NOW, money funds and checking		1,878,123		9,288		0.49		1,589,340		9,961		0.63		1,506,479		17,784		1.18
Certificate accounts		758,000		12,111		1.60		1,192,012		30,311		2.54		1,088,170		41,485		3.81

Total interest bearing deposits		3,077,409		22,511		0.73		3,217,521		41,884		1.30		3,098,113		64,263		2.07

Securities sold under agreements to repurchase and federal funds purchased		35,056		46		0.13		108,248		237		0.22		141,654		2,699		1.91
Advances from FHLB		107,455		1,209		1.13		553,146		16,522		2.99		1,417,718		50,942		3.59
Subordinated debentures and notes payable		22,125		924		4.18		22,757		1,080		4.75		26,004		1,733		6.66

Total interest bearing liabilities		3,242,045		24,690		0.76		3,901,672		59,723		1.53		4,683,489		119,637		2.55

Non-interest bearing liabilities
Demand deposit and escrow accounts		903,122						809,900						828,825
Other liabilities		55,221						62,343						50,584

Total non-interest bearing liabilities		958,343						872,243						879,409

Stockholders’ equity		358,197						412,198						551,583

Total liabilities and stockholders’ equity	$	4,558,585						5,186,113						6,114,481

Net interest income/net interest spread				151,334		3.37				163,324		3.05				193,648		3.01

Net interest income				151,334						163,324						193,648

Margin
Interest income/interest earning assets		%				4.13						4.58						5.56
Interest expense/interest earning assets						0.58						1.23						2.12

Net interest margin		%				3.55						3.35						3.44


(a)		Includes non-accruing loans, and as such, the average yield on loans reflects the impact of these non-interest earning assets.

(b)		Average balances were based on amortized cost.

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For the Year Ended December 31, 2010 as Compared to 2009

The decrease in net interest income primarily resulted from a significant reduction in earning assets and secondarily from an increase in non-performing assets partially offset by an improvement in the net interest margin.

The average balance of earning assets declined by $604.3 million during year ended December 31, 2010 compared to the same 2009 period. This decline in interest earning assets significantly reduced our net interest income. The decline in average earning assets reflects a management decision to slow the origination and purchase of loans, sell agency securities and reduce the purchase of tax certificates in an effort to enhance liquidity and improve regulatory capital ratios. BankAtlantic also experienced significant residential loan and mortgage backed securities repayments due to normal loan amortization as well as a significant amount of loan refinancing associated with low residential mortgage interest rates during 2009 and 2010. These repayments during 2010 resulted in significant increases in cash which was used, in part, for the purchase of short-term investments and increased interest earning cash balances at the Federal Reserve Bank. The average balances of these short-term investments and Federal Reserve balances were $338.7 million during the year ended December 31, 2010 compared to $45.7 million for 2009.

The net interest spread and margin improved due to a decline in the cost of funds. The decline resulted primarily from a change in our funding mix and secondarily from a decline in deposit interest rates in the industry. BankAtlantic used a portion of the funds from the reduction in assets to repay FHLB advances and short term wholesale borrowings. As a consequence, BankAtlantic’s funding mix changed from higher rate FHLB advances and short-term borrowings to lower rate deposits. The decline in interest bearing deposit rates reflects the lower interest rate environment and a change in the deposit funding mix from time deposits to NOW deposit accounts. Time deposits generally have higher interest rates than NOW accounts. Deposits which BankAtlantic receives in connection with its participation in the Certificate of Deposit Account Registry Services (“CDARS”) program from other participating CDARS institutions are included in BankAtlantic’s financial statements as brokered deposits. Average brokered deposits declined from $189.5 million during 2009 to $23.8 million, of which $18.8 million of the 2010 brokered deposits were CDARS related deposits. BankAtlantic ceased originating brokered deposits during 2009 and is restricted under the Bank Order from origination or renewing brokered deposits in subsequent periods.

The improved cost of funds was partially offset by lower interest earning asset yields primarily due to the change in the mix of earning assets as proceeds from the repayment of loans were reinvested in lower yielding short-term investments. Also contributing to the decline in loan receivable average yields was a significant increase in non-performing loans. Non-performing loans were $371.0 million, $286.1 million and $208.1 million at December 31, 2010, 2009 and 2008, respectively.

The low interest rates during 2010 had a favorable impact on our net interest margin.

For the Year Ended December 31, 2009 as Compared to 2008

The decrease in net interest income primarily resulted from a significant reduction in earning assets and an increase in non-performing assets partially offset by an improvement in the net interest spread.

The decline in average earning assets reflects a management decision to reduce assets in order to improve liquidity and regulatory capital ratios. As a consequence, average loans during 2009 declined by $344.4 million compared to 2008 with $295.5 million of the average loan decline associated with the purchased residential loan portfolio. BankAtlantic experienced significant residential loan repayments due to the large volume of loan refinancing associated with historically low residential mortgage interest rates during 2009. During 2009, BankAtlantic reduced the purchase of tax certificates from $368.4 million during 2008 to $65.7 million during 2009 and sold $284 million of mortgage-backed securities.

The net interest spread improved due to a change in our funding mix. BankAtlantic used the funds from deposit growth and the reduction in assets to repay FHLB advances and short term wholesale borrowings. The interest earning asset yield declines were primarily due to lower interest rates during 2009 compared to 2008, changes in the earning asset portfolio mix and a significant increase in non-performing loans. The lower interest rate environment during 2009 compared to 2008 had a significant impact on commercial, small business and consumer loan yields, as a majority of these loans have adjustable interest rates indexed to prime or LIBOR. The average prime interest rate declined from 8.05% at December 31, 2007 to 3.25% at December 31, 2009, and the average three-month LIBOR

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interest rate declined from 5.30% at December 31, 2007 to 0.69% at December 31, 2009. Additionally, average earning loan yields were adversely affected by a significant increase in non-performing loans.

The decline in interest bearing deposit rates reflects the lower interest rate environment and an increase in NOW deposit accounts. The increase in certificate accounts reflects higher average brokered deposit account balances during 2009 compared to 2008. Deposits which BankAtlantic receives in connection with its participation in the CDARS program from other participating CDARS institutions are included in BankAtlantic’s financial statements as brokered deposits. Average brokered deposits increased from $81.5 million during 2008 to $189.5 million during 2009, of which approximately 45% of average brokered deposits during 2009 consisted of CDARS related deposits.

In order to improve the net interest margin and lower borrowing costs in subsequent periods, BankAtlantic prepaid $692 million of FHLB advances during the fourth quarter of 2008. BankAtlantic funded the advance repayments with short term borrowings that were at significantly lower interest rates than the repaid advances.

The following table summarizes the changes in net interest income (in thousands):


	Year Ended									Year Ended
	December 31, 2010									December 31, 2009
	Compared to 2009									Compared to 2009
	Volume (a)			Rate			Total			Volume (a)			Rate			Total

Increase (decrease) due to:
Loans	$	(26,589	)		(2,802	)		(29,391	)		(15,383	)		(46,421	)		(61,804	)
Taxable investment securities (b)		351			(17,957	)		(17,606	)		(20,988	)		(6,725	)		(27,713	)
Federal funds sold		(38	)		12			(26	)		(65	)		(656	)		(721	)

Total earning assets		(26,276	)		(20,747	)		(47,023	)		(36,436	)		(53,802	)		(90,238	)

Deposits:
Savings		13			(513	)		(500	)		(249	)		(3,133	)		(3,382	)
NOW, money funds, and checking		1,428			(2,101	)		(673	)		519			(8,342	)		(7,823	)
Certificate accounts		(6,934	)		(11,266	)		(18,200	)		2,641			(13,815	)		(11,174	)

Total deposits		(5,493	)		(13,880	)		(19,373	)		2,911			(25,290	)		(22,379	)

Securities sold under agreements to repurchase		(96	)		(95	)		(191	)		(73	)		(2,389	)		(2,462	)
Advances from FHLB		(5,015	)		(10,298	)		(15,313	)		(25,824	)		(8,596	)		(34,420	)
Subordinated debentures		(26	)		(130	)		(156	)		(154	)		(499	)		(653	)

		(5,137	)		(10,523	)		(15,660	)		(26,051	)		(11,484	)		(37,535	)

Total interest bearing liabilities		(10,630	)		(24,403	)		(35,033	)		(23,140	)		(36,774	)		(59,914	)

Change in tax equivalent interest income	$	(15,646	)		3,656			(11,990	)		(13,296	)		(17,028	)		(30,324	)


(a)		Changes attributable to rate/volume have been allocated to volume.

(b)		Average balances were based on amortized cost.

The decline in net interest income during 2010 was due primarily to the decline in average earning assets and a reduction in average yields on earning assets partially offset by lower rates on interest-bearing liabilities. Average earning assets declined by $604.3 million, reducing net interest income by $47.0 million. Average interest-bearing liabilities declined by $659.6 million, reducing interest expense by $35.0 million. Average interest-bearing liabilities declined more than average earnings assets due to an increase in non-interest bearing demand deposits of $93.2 million. The lower yields on total earning assets reduced interest income by $20.7 million while declines in interest rates on total interest bearing liabilities reduced interest expense by $24.4 million. As discussed above, the lower yields on interest earning assets reflect the declining interest rate environment as well as the funds obtained from the repayment of higher yielding securities and loans being reinvested in lower yielding short term investments. The lower rates on interest bearing liabilities reflect the maturity and prepayments of higher rate FHLB advances and other wholesale borrowings funded by the reduction in interest earning assets, and the lower interest rates on deposits due to industry trends.

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The decline in net interest income during 2009 was primarily due to the decline in average earning assets and secondarily due to the decline in average yields on earning assets. Average earning assets declined by $765.6 million, reducing net interest income by $90.2 million. Average interest-bearing liabilities declined by $781.8 million, reducing interest expense by $59.9 million. The lower yields on total earning assets reduced interest income by $53.8 million while declines in interest rates on total interest bearing liabilities reduced interest expense by $36.8 million. As discussed above, the lower yields on interest earning assets reflect the effect of the significant decline during 2009 of LIBOR and prime interest rate indices on the interest rates on our loans in our portfolio.

BankAtlantic’s Asset Quality

Changes in the allowance for loan losses were as follows (in thousands):


	For the Years Ended December 31,
	2010			2009			2008			2007			2006

Balance, beginning of period	$	173,588			125,572			94,020			43,602			41,192
Charge-offs:
Commercial non-mortgage		(996	)		(516	)		—			—			—
Commercial real estate loans		(86,426	)		(96,300	)		(60,057	)		(12,562	)		(7,000	)
Small business		(7,873	)		(9,105	)		(4,886	)		(2,554	)		(951	)
Consumer loans		(39,483	)		(40,223	)		(28,942	)		(7,065	)		(681	)
Residential real estate loans		(18,305	)		(23,264	)		(4,816	)		(461	)		(239	)

Continuing loan products		(153,083	)		(169,408	)		(98,701	)		(22,642	)		(8,871	)
Discontinued loan products		—			(13	)		—			—			(34	)

Total charge-offs		(153,083	)		(169,421	)		(98,701	)		(22,642	)		(8,905	)

Recoveries:
Commercial non-mortgage		98			492			7			96			291
Commercial real estate loans		1,337			700			—			304			419
Small business		626			494			428			417			566
Consumer loans		1,011			561			365			578			536
Residential real estate loans		1,166			912			397			15			348

Continuing loan products		4,238			3,159			1,197			1,410			2,160
Discontinued loan products		649			34			113			808			581

Total recoveries		4,887			3,193			1,310			2,218			2,741

Net charge-offs		(148,196	)		(166,228	)		(97,391	)		(20,424	)		(6,164	)
Provision for loan losses		138,825			214,244			135,383			70,842			8,574
Transfer to held for sale		(2,908	)
Transfer specific reserves to Parent Company		—			—			(6,440	)		—			—

Balance, end of period	$	161,309			173,588			125,572			94,020			43,602

The decline in the provision for loan losses during the year ended December 31, 2010 as compared to 2009 reflects lower charge-offs, declines in loan balances and what we believe are indicators of slowing declines in property values during 2010 compared to 2009. The year-over-year increases in the provision for loan losses and charge-offs for 2007, 2008 and 2009 compared to the prior periods resulted primarily from the rapid decline in real estate values nationally, and in Florida, and the substantial downturn in the homebuilding industry coupled with the deteriorating economic environment that began in 2007. BankAtlantic has a high concentration of commercial borrowers in the homebuilding industry and the majority of its residential and consumer home equity loans are to retail customers. The ability of these retail customers to repay their loans is adversely affected by rising unemployment rates. In December 2009, the national unemployment rate rose to almost 10% and the Florida unemployment rate increased from 4.1% at December 31, 2007 to 7.6% at December 31, 2008, and stood at 11.8% at December 31, 2009. The Florida and national unemployment rates were 11.7% and 9.4%, respectively, at December 31, 2010. Rising national unemployment has resulted in higher delinquencies and foreclosures on residential real estate loans, including the jumbo residential loans which comprise the majority of our residential loan portfolio. We believe the stabilizing of the unemployment rate and the relative slowing of the rate of property value declines resulted in lower charge-offs and provisions for loan losses

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during 2010 compared to 2009. However, we believe that if real estate and general economic conditions and unemployment trends in Florida do not improve, the credit quality of our loan portfolio will continue to deteriorate, and we would expect an increase in loan delinquencies and non-accrual loan balances as well as additional provisions for loan losses in future periods. Additionally, if jumbo residential loan delinquencies and foreclosures continue to increase nationwide, additional provisions for losses in our residential loan portfolio may be required.

We continued to incur losses in our commercial residential real estate and consumer home equity loan portfolios. We also began experiencing higher losses during 2009 and 2010 in our commercial non-residential, residential and small business loan portfolios as the deteriorating economic environment has adversely impacted these borrowers. In response to these trends, we significantly reduced purchases of residential loans and tightened consumer home equity loan underwriting requirements for new loans and froze certain borrowers’ home equity loan commitments where borrowers’ current credit scores were significantly lower than at the date of loan origination or where current collateral values were substantially lower than at loan origination.

We believe that high unemployment and declining real estate values adversely impacted charge-off trends of commercial real estate, consumer home equity and residential loans. Commercial real estate loan charge-offs during 2010 and 2009 resulted primarily from our commercial residential development loans. The majority of the commercial residential loan charge-offs during 2010 and 2009 were from updated loan collateral fair value estimates reflecting the continued deterioration in the Florida residential real estate market. We are hopeful that charge-offs and non-performing commercial residential loans may have peaked and may decline in future periods due to significant reductions in outstanding balances from December 2008 to December 2010; however, this may not be the case, and we may experience the same or higher levels of charge-offs and non-accrual loans in this category. With respect to commercial nonresidential loans and small business loans, we expect that any impact on charge-offs in these loan categories will depend in large part on the Florida economy. However, if market conditions do not improve or deteriorate further, we would expect additional credit losses in these loan portfolios.

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Financial Services
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At the indicated dates, BankAtlantic’s non-performing assets and other accruing impaired loans (contractually past due 90 days or more, performing impaired loans or troubled debt restructured loans) were (in thousands):


	As of December 31,
	2010		2009		2008		2007		2006

NON-PERFORMING ASSETS
Non-accrual assets:
Tax certificates	$	3,636		2,161		1,441		2,094		632
Residential (1)		86,538		76,401		34,734		8,678		2,629
Commercial real estate (2)		243,299		167,867		161,947		165,818		—
Commercial non-mortgage		16,123		18,063		—		—		—
Small business		10,879		9,338		4,644		877		244
Consumer		14,120		14,451		6,763		3,218		1,563

Total non-accrual assets (3)		374,595		288,281		209,529		180,685		5,068

Repossessed assets:
Residential real estate		16,418		9,607		2,285		413		617
Commercial real estate		44,136		25,442		16,500		16,763		21,130
Small business real estate		3,693		580		260		—		—
Consumer real estate		81		306		—		40		—
Other repossessed assets		—		10		—		—		—

Total repossessed assets		64,328		35,945		19,045		17,216		21,747

Total non-performing assets	$	438,923		324,226		228,574		197,901		26,815

Total non-performing assets as a percentage of:
Total assets		9.82		6.82		4.00		3.21		0.43

Loans, tax certificates and real estate owned		13.08		8.13		4.95		4.10		0.55

TOTAL ASSETS	$	4,469,168		4,755,122		5,713,690		6,161,962		6,187,122

TOTAL LOANS, TAX CERTIFICATES AND NET REAL ESTATE OWNED	$	3,355,711		3,987,248		4,620,956		4,827,114		4,907,660

Allowance for loan losses	$	161,309		173,588		125,572		94,020		43,602

Tax certificates	$	89,789		110,991		213,534		188,401		199,090

Allowance for tax certificate losses	$	8,811		6,781		6,064		3,289		3,699

ACCRUING IMPAIRED LOANS
Contractually past due 90 days or more (4)	$	—		9,960		15,721		—		—
Performing impaired loans (5)		11,880		6,150		—		—		163
Troubled debt restructured loans		96,006		107,642		25,843		2,488		—

TOTAL ACCRUING IMPAIRED LOANS	$	107,886		123,752		41,564		2,488		163


(1)		Includes $38.9 million, $41.3 million and $20.8 million of interest-only residential loans as of December 31, 2010, 2009 and

		2008, respectively.

(2)		Excluded from the above table as of December 31, 2010, 2009 and 2008 were $14.5 million, $44.9 million and $79.3 million, respectively, of commercial residential loans that were transferred to a work-out subsidiary of the Parent Company in March 2008.

(3)		Includes $143.8 million, $45.7 million and $2.3 million of troubled debt restructured loans as of December 31, 2010, 2009 and 2008, respectively.

(4)		The majority of these loans had matured and the borrowers continue to make payments under the matured loan agreement or the loan had sufficient collateral to prevent a loss.

(5)		BankAtlantic believes that it will ultimately collect the principal and interest associated with these loans; however, the timing of the payments may not be in accordance with the contractual terms of the loan agreement.

Non-performing assets increased from $26.8 million at December 31, 2006 to $438.9 million at December 31, 2010 resulting primarily from a substantial increase in non-accrual loans.

The increase in non-accrual loans during the three year period ended December 31, 2010 reflects the general deterioration in the national and Florida economy, high unemployment, and the depressed residential real estate market

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as well as longer than historical time-frames to foreclose on and sell homes. Additionally, during 2010, the commercial non-residential real estate market continued to deteriorate resulting in an increase in troubled shopping centers, storage facilities, and office buildings. Residential non-accrual loans increased due to prolonged foreclosure time frames, declining property values and high unemployment rates. Non-accrual commercial non-mortgage and small business loans increased primarily due to the deteriorating financial condition of certain of our borrowers, which we believe is the result of Florida’s depressed economy and a reduction in consumer spending associated with high unemployment. The increase in commercial real estate non-accrual loans during the three year period ended December 31, 2010 reflects the migration of commercial residential loans to a non-accrual classification during the entire period as well as commercial non-residential loans migrating to non-accrual status during the year ended December 31, 2010.

The higher repossessed assets balances at December 31, 2010 compared to prior periods reflect increased foreclosures of commercial real estate and residential loans. BankAtlantic attempts to modify loans to credit worthy borrowers; however, the majority of BankAtlantic’s non-accrual commercial real estate loans are collateral dependent resulting in BankAtlantic having limited alternatives on such loans other than initiating the foreclosure process. We also initiate the foreclosure process on non-accrual residential loans upon unsuccessful loan modification attempts. As a consequence of the increase in non-accrual loans, we expect repossessed assets to significantly increase in the foreseeable future.

BankAtlantic’s other accruing impaired loans at December 31, 2010 and 2009 significantly increased compared to prior periods primarily due to an increase in troubled debt restructured loans (“TDR”). In response to current market conditions, BankAtlantic has developed loan modification programs for certain borrowers experiencing financial difficulties. During the year ended December 31, 2010 and 2009, BankAtlantic modified the terms of certain commercial, small business, residential and consumer home equity loans. Generally, the concessions made to borrowers experiencing financial difficulties included the reduction of the loan’s contractual interest rate, conversion of amortizing loans to interest only payments or the deferral of interest payments to the maturity date of the loan. Loans that are not delinquent at the date of TDR modification are generally not placed on non-accrual. TDR modified non-accrual loans are not returned to an accruing status and BankAtlantic does not reset days past due on delinquent TDR modified loans until the borrower demonstrates a sustained period of performance under the TDR modified terms, which is generally performance over a six month period. However, TDR modification of loans may not result in increased collections from the borrower, and TDR modified loans which return to an accruing status may subsequently be returned to nonaccrual status.

BankAtlantic’s troubled debt restructured loans by loan type were as follows (in thousands):


	As of December 31,
	2010				2009				2008
	Non-accrual		Accruing		Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	130,783		70,990		32,225		83,767		—		25,843
Small business		2,990		9,401		4,520		7,325		2,289		—
Consumer		3,070		12,638		1,774		12,969		—		—
Residential		6,917		2,977		7,178		3,580		—		—

Total	$	143,760		96,006		45,697		107,641		2,289		25,843

BankAtlantic experienced unfavorable credit quality trends during 2010 in commercial loans collateralized by commercial retail income producing properties which make up the largest component of BankAtlantic’s non-accrual commercial real estate loans. As a consequence, we may experience higher credit losses in this loan class in future periods.

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BankAtlantic’s commercial loan portfolio includes large loan balance lending relationships. Seven relationships accounted for 54% of our $243.3 million of non-accrual commercial real estate loans as of December 31, 2010. The following table outlines general information about these relationships as of December 31, 2010 (in thousands):

Unpaid

Principal

Recorded

Specific

Date loan

Date Placed

Default

Collateral

Date of Last

Relationships

Balance

Investment

Reserves

Originated

on Nonaccrual

Date (3)

Type

Full Appraisal

Residential Land Developers

Relationship No. 1 (1)

41,233

16,858

358

Q3-2004

Q4-2008

Land A&D (4)

Q4-2010

Commercial Land Developers

Relationship No. 2

14,000

6,975

Q2-2005

Q4-2010

)

Land A&D (4)

Q4-2009

Relationship No. 3

26,210

10,657

Q1-1995

Q4-2009

Land A&D (4)

Q2-2010

Relationship No. 4

17,777

8,634

Q3-2006

Q1-2010

Commercial mixed-use

Q4-2010

Total

57,987

26,266

Commercial Non-Residential Developers

Relationship No. 5

15,403

1,895

Q3-2007

Q4-2010

)

Construction 5+

Q1-2010

Relationship No. 6

25,079

8,359

Q3-2006

Q2-2010

)

Self Storage

Q2-2010

Relationship No. 7

16,331

4,147

Q1-2007

Q3-2010

)

Shopping Center

Q4-2010

Total

56,813

14,401

Total of Large Relationships

156,033

131,658

41,025


(1)		During 2010 and 2009, BankAtlantic recognized partial charge-offs on relationship No. 1 of $14.6 million and $8.1 million.

(2)		A modification was executed, and the loan is reported as a troubled debt restructured loan, but is not in default as of December 31, 2010.

(3)		The default date is defined as the date of the initial missed payment prior to default.

(4)		Acquisition and development (“A&D”).

The loans that comprise the above relationships are all collateral dependent. As such, we established specific reserves or recognized partial charge-offs on these loans based on our determination of the fair value of the collateral less costs to sell. The fair value of the collateral was determined using unadjusted third party appraisals for all relationships. BankAtlantic performs quarterly impairment analyses on these credit relationships and may reduce appraised values if market conditions significantly deteriorate subsequent to the appraisal date. However, BankAtlantic’s policy is to obtain a full appraisal within one year from the date of the prior appraisal, unless the loan is in the process of foreclosure. A new appraisal is obtained at the date of foreclosure.

Our residential loan portfolio does not include negative amortization, option ARM or subprime products; however, the majority of our residential loans are purchased residential jumbo loans and certain of these loans potentially have outstanding loan balances significantly higher than related collateral values as a result of real estate value declines in the housing markets. Additionally, loans that were originated during 2005, 2006 and 2007 have experienced greater deterioration in collateral value than loans originated in prior years resulting in higher loss experiences in these groups of loans. Also, we have residential loans in California, Florida, Arizona and Nevada, which are states that have experienced especially elevated foreclosures and delinquency rates.

Our purchased residential loan portfolio includes interest-only loans. The terms of these loans provide for possible future increases in a borrower’s loan payments when the contractually required repayments increase due to interest rate changes and the required amortization of the principal amount begins. These payment increases could affect a borrower’s ability to meet the debt service on or repay the loan and lead to increased defaults and losses which could result in additional provisions for residential loan losses.

At December 31, 2010, BankAtlantic’s residential loan portfolio included $550.2 million of interest-only loans. Approximately $54.9 million of interest only residential loans became fully amortizing during the year ending December 31, 2010 and $52.1 million of interest-only residential loans are scheduled to become amortizing loans during the year ending December 31, 2011.

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The following table presents relevant data regarding our purchased residential loans by year of origination segregated by amortizing and interest only loans (dollars in thousands):


	Amortizing Purchased Residential Loans
Year of	Unpaid		Recorded		LTV at			Current			FICO Scores		Current		Amount		Debt Ratios
Origination	Principal		Investment		Origination			LTV (1)			at Origination		FICO Scores (2)		Delinquent		at Origination (3)

2007	$	42,249		40,916		65.04	%		115.05	%		741		740		6,273		33.32	%
2006		49,081		47,887		70.79	%		122.31	%		736		721		5,709		35.83	%
2005		67,760		64,927		73.88	%		116.24	%		725		714		11,851		35.83	%
2004		294,404		292,274		68.39	%		82.97	%		733		726		23,025		34.79	%
Prior to 2004		135,924		135,732		67.68	%		60.06	%		732		728		5,757		34.31	%


	Interest Only Purchased Residential Loans
Year of	Unpaid		Recorded		LTV at			Current			FICO Scores		Current		Amount		Debt Ratios
Origination	Principal		Investment		Origination			LTV (1)			at Origination		FICO Scores (2)		Delinquent		at Origination (3)

2007	$	78,271		75,357		72.49	%		129.40	%		750		741		15,134		34.08	%
2006		182,168		176,126		73.89	%		124.26	%		740		741		30,198		35.00	%
2005		155,098		153,978		70.57	%		118.40	%		740		744		5,616		34.42	%
2004		74,016		73,611		70.24	%		99.12	%		744		717		6,877		32.13	%
Prior to 2004		71,174		71,174		58.42	%		80.59	%		742		733		2,197		31.90	%

The following table presents relevant data regarding our purchased residential loans by geographic area segregated by amortizing and interest only loans (dollars in thousands):


	Amortizing Purchased Residential Loans
	Unpaid		Recorded		LTV at			Current			FICO Scores		Current		Amount		Debt Ratios
State	Principal		Investment		Origination			LTV (1)			at Origination		FICO Scores (2)		Delinquent		at Origination (3)

Arizona	$	10,706		10,510		68.02	%		126.62	%		729		735		1,227		32.91	%
California		145,772		142,735		68.80	%		87.30	%		737		734		15,472		35.34	%
Florida		85,754		83,537		69.37	%		103.52	%		723		710		12,059		35.08	%
Nevada		6,585		6,585		71.29	%		116.93	%		743		734		570		36.62	%
Other States		354,626		352,387		68.50	%		82.71	%		733		731		23,762		34.11	%


	Interest Only Purchased Residential Loans
	Unpaid		Recorded		LTV at			Current			FICO Scores		Current		Amount		Debt Ratios
State	Principal		Investment		Origination			LTV (1)			at Origination		FICO Scores (2)		Delinquent		at Origination (3)

Arizona	$	17,180		16,746		71.21	%		148.12	%		758		751		2,772		31.61	%
California		161,445		158,305		70.44	%		108.90	%		741		736		21,153		33.78	%
Florida		36,528		33,835		69.63	%		141.25	%		746		733		12,081		32.36	%
Nevada		8,727		7,291		74.66	%		197.75	%		741		723		4,559		34.64	%
Other States		336,847		334,067		70.20	%		110.51	%		741		742		19,455		34.31	%


(1)		Current loan-to-values (“LTV”) for the majority of the portfolio were obtained as of the first quarter of 2010 from automated valuation models.

(2)		Current FICO scores based on borrowers for which FICO scores were available as of the second quarter of 2010.

(3)		Debt ratio is defined as the portion of the borrower’s income that goes towards debt service.

The table below presents the allocation of the allowance for loan losses by various loan classifications (“Allowance for Loan Losses”), the percent of allowance to each loan category (“ALL to gross loans percent”) and the

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percentage of loans in each category to gross loans (“Loans to gross loans percent”). The allowance shown in the table should not be interpreted as an indication that charge-offs in future periods will occur in these amounts or percentages or that the allowance accurately reflects future charge-off amounts or trends (dollars in thousands):


	December 31, 2010								December 31, 2009								December 31, 2008
			ALL			Loans					ALL			Loans					ALL			Loans
			to gross			by					to gross			by					to gross			by
	ALL		loans			category			ALL		loans			category			ALL		loans			category
	by		in each			to gross			by		in each			to gross			by		in each			to gross
	category		category			loans			category		category			loans			category		category			loans

Commercial non-mortgage	$	10,786		8.05	%		4.14	%		4,515		2.94	%		3.94	%		3,173		2.22	%		3.15	%
Commercial real estate		83,029		8.70			29.46			91,658		7.71			30.49			75,850		5.44			30.69
Small business		11,514		3.80			9.35			7,998		2.56			8.02			8,133		2.49			7.20
Residential real estate		23,937		1.96			37.80			27,000		1.74			39.85			6,034		0.31			42.56
Consumer		32,043		5.14			19.25			42,417		6.14			17.70			32,382		4.35			16.40

	$	161,309		4.98			100.00			173,588		4.45			100.00			125,572		2.76			100.00


	December 31, 2007								December 31, 2006
			ALL			Loans					ALL			Loans
			to gross			by					to gross			by
	ALL		loans			category			ALL		loans			category
	by		in each			to gross			by		in each			to gross
	category		category			loans			category		category			loans

Commercial non-mortgage	$	2,668		2.04	%		2.65	%		2,359		1.50	%		3.07	%
Commercial real estate		72,948		4.51			32.78			24,632		1.28			37.54
Small business		4,576		1.44			6.43			4,495		1.58			5.57
Residential real estate		4,177		0.19			43.82			4,242		0.20			42.33
Consumer		9,651		1.37			14.32			7,874		1.34			11.49

	$	94,020		1.90			100.00			43,602		0.85			100.00

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Included in allowance for loan losses in the above table were specific reserves. BankAtlantic’s specific reserves by loan type were as follows (in thousands):


	As of December 31,
	2010		2009		2008		2007		2006

Commercial non-mortgage	$	9,020		174		—		594		—
Commercial real estate		62,986		42,523		29,208		17,015		—
Small business		2,936		753		300		200		—
Consumer		1,791		4,621		—		—		—
Residential		12,034		8,784		—		—		—

Total	$	88,767		56,855		29,508		17,809		—

Residential real estate and home equity consumer loans that are 120 days past due are generally written down to estimated collateral value less costs to sell. As a consequence of longer than historical timeframes to foreclose and sell residential real estate and the rapid decline in residential real estate values where our collateral is located, BankAtlantic began performing quarterly impairment evaluations during 2009 on residential real estate and real estate secured consumer loans that were written down in prior periods to determine whether specific reserves were necessary for further estimated market value declines. BankAtlantic also may establish specific reserves on loans that are individually evaluated for impairment (generally commercial and small business loans). The significant increase in commercial loan specific reserves reflects declines in collateral values since December 31, 2006.

Commercial real estate loans account for the majority of the allowance for loan losses for each of the years in the five year period ended December 31, 2010. The commercial real estate loan allowance as of December 31, 2006 was associated with a slow-down in the homebuilding industry. The substantial increase in the commercial real estate allowance for loan losses during 2007, 2008 and 2009 resulted in large part from a rapid and prolonged deterioration in the Florida real estate market, and the significant downturn in the residential real estate market nationally. During 2008 and 2007, home sales and median home prices declined significantly on a year-over-year basis in all major metropolitan areas in Florida, with conditions deteriorating rapidly during the fourth quarter of 2008 in response to the overall loss of confidence in the financial markets. The housing industry was experiencing a dramatic downturn and market conditions in the housing industry continued to worsen throughout 2008 reflecting, in part, decreased availability of mortgage financing for residential home buyers, reduced demand for new construction resulting in a significant over-supply of housing inventory, and increased foreclosure rates. During 2009, the decline in median home prices slowed and medium to low priced home sales began to recover from the 2008 lows. Also, during 2009 we began experiencing higher levels of commercial non-residential real estate classified assets and charge-offs resulting from declining real estate values and financial difficulties of our borrowers who experienced reduced cash flows from declining rental income. Accordingly, the allowance for loan losses for commercial real estate loans was increased to reflect higher estimated losses for this loan product as the then current economic and market conditions resulted in unfavorable delinquency trends. During 2010, we partially charged off or placed specific reserves on a significant portion of our commercial residential and commercial land loans. In addition, the balances of our commercial real estate loans declined significantly and the migration of loans to adversely classified risk ratings slowed resulting in a decrease in the commercial real estate quantitative allowance for loan losses at December 31, 2010 compared to December 31, 2009.

There are three categories of loans in our commercial residential loan portfolio that have resulted in the majority of losses in our commercial real estate loan portfolio. The loan balance in these categories aggregated $132.9 million at December 31, 2010 compared to $226.9 million at December 31, 2009. These categories are as follows:

The “builder land bank loan” category consisted of 4 loans and aggregated $10.6 million at December 31, 2010 compared to 7 loans aggregating $43.7 million at December 31, 2009. This category consists of land loans to borrowers who have or had land purchase option agreements with regional and/or national builders. These loans were originally underwritten based on projected sales of the developed lots to the builders/option holders, and timely repayment of the loans is primarily dependent upon the sale of the property pursuant to the options. If the lots are not sold as originally anticipated, the borrower may not be in a position to service the loan, with the likely result being an increase in loan losses in this category. All four loans in this category totaling $10.6 million were on nonaccrual at December 31, 2010 compared to six loans in this category totaling $42.6 million on non-accrual at December 31, 2009. BankAtlantic established $1.5 million and $23.2 million of specific reserves on these loans as of December 31, 2010 and 2009, respectively.

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The “land acquisition and development loan” category consisted of 24 loans and aggregated $118.8 million at December 31, 2010 compared to 27 loans aggregating $171.9 million at December 31, 2009. This loan category generally consists of loans secured by residential land which is intended to be developed by the borrower and sold to homebuilders. These loans are generally underwritten more stringently than builder land bank loans, as an option agreement with a regional or national builder did not exist at the origination date. Thirteen loans in this category totaling $61.9 million were on nonaccrual at December 31, 2010 compared to ten loans totaling $60.2 million on non-accrual at December 31, 2009. BankAtlantic established $14.1 million and $7.1 million of specifics reserves on these loans as of December 31, 2010 and 2009, respectively.

The “land acquisition, development and construction loan” category consisted of 3 loans and aggregated $3.5 million at December 31, 2010 compared to 6 loans aggregating $11.3 million at December 31, 2009. This category generally consists of loans secured by residential land which will be fully developed by the borrower who may also construct homes on the property. These loans generally involve property with a longer investment and development horizon, are guaranteed by the borrower or individuals and/or are secured by additional collateral or equity such that it is expected that the borrower will have the ability to service the debt for a longer period of time. There were no loans in this category on nonaccrual at December 31, 2010 compared to one loan totaling $3.8 million on non-accrual at December 31, 2009.

During 2010, BankAtlantic experienced heightened delinquencies and charge-offs associated with commercial non-residential loans. Commercial non-residential loans generally represent permanent financing for income producing properties and financing for the construction of income producing properties. At December 31, 2010, BankAtlantic had $133.5 million of commercial non-residential loans on nonaccrual compared to $27.8 million at December 31, 2009.

The allowance for consumer loans has increased for each of the years in the four year period ended December 31, 2009, and declined at December 31, 2010 from 2009 levels. The increase during 2006 was largely associated with the growth in outstanding home equity loans throughout the period and the change in policy during 2004 to permit higher loan-to-value ratio loans based on Beacon scores. The increase in the allowance for loan losses for consumer loans during 2007 compared to 2006 reflects unfavorable home equity loan delinquency trends, higher non-performing home equity loans and a significant increase in charge-offs during the fourth quarter of 2007. The significant increase in the allowance for consumer loan losses during 2008 compared to 2007 was primarily due to a significant increase in consumer home equity loan charge-offs, higher non-performing loans and adverse delinquency trends. The adverse delinquency trends continued during 2009 as residential property values in Florida continued to decline. The decrease in the allowance for loan losses at December 31, 2010 compared to 2009 reflects what we believe to be declining charge-off and delinquency trends during 2010.

During 2007, the residential allowance for loan losses was maintained at 2006 levels as the portfolio experienced minimal credit losses and no adverse delinquency trends. During 2008, as property values nationwide declined and unemployment rates increased, our residential loan portfolio began experiencing unfavorable delinquency trends and increased charge-offs. These unfavorable delinquency trends accelerated throughout 2009 and remained at 2009 levels during 2010. Jumbo residential loan credit trends for loans originated in 2005, 2006 and 2007 displayed higher loss severity than loans originated in other years and losses on prime credit quality jumbo residential loans out-paced losses on other prime based loans during 2009. As a consequence of these adverse trends, the residential allowance for loan losses significantly increased at December 31, 2009 compared to the same 2008 and 2007 periods. During 2010, residential loan delinquencies and the loss severity on BankAtlantic’s non-performing residential loans stabilized resulting in a decline in the residential quantitative allowance for losses at December 31, 2010 compared to December 31, 2009. Residential home prices are forecasted to decline slightly in most markets during 2011 and improve during the year ended December 31, 2012. A decline in residential home prices during 2011 may also result in additional delinquencies and losses in our commercial residential real estate portfolio in subsequent periods.

The allowance for small business loan losses during 2007 was maintained at 2006 levels as delinquency trends and credit losses remained unchanged. As economic conditions worsened during the latter half of 2008, we began experiencing adverse trends and higher credit losses in our small business loan portfolio. In response to these adverse trends, we increased the small business allowance for loan losses significantly at December 31, 2008 compared to December 31, 2007. During 2009, the small business allowance for loan losses was maintained at 2008 levels as delinquencies and charge-offs trends stabilized. During 2010, small business delinquencies remained at 2009 levels while charge-offs declined; however, criticized small business loans increased from 2009 levels resulting in an increase in the small business allowance for loan losses at December 31, 2010 compared to December 31, 2009.

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As discussed in Item 1A. under Risk Factors, and elsewhere in this annual report on Form 10-K, in the event of a sustained decline in real estate markets, and residential real estate in particular, and a sustained slowdown in the economy in general, we may experience further deterioration in the credit quality and performance of our loan portfolio. As a consequence, if conditions do not improve, we will experience an increase in levels of non-performing assets and these increases will likely be experienced across various loan categories.

BankAtlantic’s Non- Interest Income

The following table summarizes the significant components of and changes in non-interest income (in thousands):


	For the Years Ended						Change			Change
	December 31,						2010 vs.			2009 vs.
	2010		2009		2008		2009			2008
Service charges on deposits	$	59,844		75,739		93,905		(15,895	)		(18,166	)
Other service charges and fees		30,140		29,542		28,959		598			583
Securities activities, net		2,864		11,161		2,395		(8,297	)		8,766
Income from unconsolidated subsidiaries		—		479		1,509		(479	)		(1,030	)
Gains on sales of loans		259		467		265		(208	)		202
Other		12,655		11,904		10,275		751			1,629

Non-interest income	$	105,762		129,292		137,308		(23,530	)		(8,016	)

The lower revenues from service charges on deposits during each of the years in the three year period ended December 31, 2010 primarily resulted from lower overdraft fee income. This decrease in overdraft fee income reflects a decline in the total number of accounts which incurred overdraft fees and a decrease in the frequency of overdrafts per deposit account. We believe that the decline in the number of accounts incurring overdraft fees reflected our efforts to seek customers who maintain deposit accounts with higher balances, regulatory changes, and changes in customer behavior. The Federal Reserve adopted new overdraft rules (effective July 1, 2010 for new customers and August 15, 2010 for existing customers), which among other requirements, prohibit banks from automatically enrolling customers in overdraft protection programs. Additionally, Congress has established a consumer protection agency which may further limit the assessment of overdraft fees. In response to the changing industry practices and regulations, BankAtlantic during the fourth quarter of 2010 began converting certain deposit products to fee-based accounts that encourage higher checking account balances and the use of multiple bank products in order to eliminate or reduce fees. Additionally, during the first quarter of 2011 BankAtlantic revised its overdraft policies instituting a cap on the number of overdrafts, eliminating overdraft charges on small overdraft amounts and lowering the overdraft protection amount per day. We anticipate that these trends will continue and that our overdraft fee income will be lower in future periods partially offset by increased fees from the new deposit products and expanded use of the banks services by deposit customers.

The increase in service charges and fees during the year ended December 31, 2010 compared to the same 2009 period primarily resulted from higher interchange income from the use of check cards by our customers partially offset by lower fee income from our cruise ship operations. The increased interchange income reflects higher debit card transaction volume for 2010 compared to 2009.

The increase in other service charges and fees during 2009 compared to 2008 was primarily due to higher fees associated with a new vendor contract and an increase in cruise ship surcharge income associated with an increased number of automated teller machines (“ATM”) on cruise ships.

Securities activities, net during the year ended December 31, 2010 includes $3.1 million of gains from the sales of $43.8 million of agency securities and $11.9 million of municipal securities, respectively. The net proceeds from the sales of securities were used to enhance BankAtlantic’s liquidity. BankAtlantic also recognized a $0.3 million loss in connection with foreign currency derivative contracts entered into as an economic hedge of foreign currency in cruise ship ATMs.

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Financial Services
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Securities activities, net during the year ended December 31, 2009 includes $11.2 million of gains from the sale of $284.0 million of agency securities. The net proceeds from the sales of securities were used to pay down FHLB advances.

Securities activities, net during the year ended December 31, 2008 includes $1.0 million of gains from the sale of MasterCard International stock obtained in MasterCard’s initial public offering in September 2006. Additionally, BankAtlantic sold $210.4 million of agency securities and realized gains of $0.9 million. BankAtlantic also recognized gains of $0.4 million in connection with the execution of covered calls on its agency securities portfolio.

Income from unconsolidated subsidiaries for 2009 and 2008 represents $0.5 million and $0.5 million, respectively, of equity earnings in a joint venture that factors receivables. The factoring joint venture was consolidated as of January 1, 2010 upon the implementation of new accounting guidance for the consolidation of variable interest entities. The Company has limited the funding of the factoring joint venture to a maximum of $10 million.

Gains on loan sales during each of the years in the three year period ended December 31, 2010 were primarily from the sale of residential loans originated with the assistance of independent mortgage brokers. During the year ended December 31, 2010, BankAtlantic transferred $71.7 million of commercial loans to held for sale and sold $52.0 million of those loans.

Other non-interest income consisted of the following (in thousands):


	For the Years Ended December 31,
	2010		2009		2008

Broker commissions	$	3,901		3,969		2,100
Safe deposit box rental		1,200		1,183		1,136
Income from leases		1,149		1,127		1,291
Fee income		1,997		1,868		1,946
Other		4,408		3,757		3,802

Total other income	$	12,655		11,904		10,275

The increase in other non-interest income for the year ended December 31, 2010 compared to the same 2009 period was primarily the result of $1.0 million received from BankAtlantic’s on-line banking service provider as a result of business interruption issues relating to the conversion to the service provider’s products. The above increases in other non-interest income were partially offset by $0.1 million of foreign currency exchange losses associated with foreign currency held in cruise ship ATMs and lower commissions from sales of investment products during 2010 compared to 2009.

The increase in other non-interest income for the year ended December 31, 2009 compared to the same 2008 period was primarily the result of higher commissions earned on the sale of investment products to BankAtlantic’s customers. Commissions from the sales of investment products for the year ended December 31, 2010, 2009 and 2008 were $3.9 million, $4.0 million and $2.1 million, respectively.

136

Financial Services
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BankAtlantic’s Non- Interest Expense

The following table summarizes the significant components and changes in non-interest expense (in thousands):


	For the Years Ended							Change			Change
	December 31,							2010 vs.			2009 vs.
	2010		2009			2008		2009			2008

Employee compensation and benefits	$	91,131		103,209			125,851		(12,078	)		(22,642	)
Occupancy and equipment		53,585		58,574			64,774		(4,989	)		(6,200	)
Advertising and promotion		8,305		8,395			16,056		(90	)		(7,661	)
Check losses		2,421		4,188			8,767		(1,767	)		(4,579	)
Professional fees		17,365		12,574			10,979		4,791			1,595
Supplies and postage		3,813		4,084			4,580		(271	)		(496	)
Telecommunication		2,513		2,464			4,430		49			(1,966	)
Provision for tax certificates		4,552		3,388			7,286		1,164			(3,898	)
Loss on sale of real estate held for development and sale		1,228		—			92		1,228			(92	)
Impairment of real estate held for development and sale		—		3,871			1,169		(3,871	)		2,702
Cost associated with debt redemption		60		7,463			1,238		(7,403	)		6,225
Lease termination costs		3,601		2,156			199		1,445			1,957
Employee termination costs		3,971		2,024			2,171		1,947			(147	)
Impairment of real estate held for sale		2,604		1,158			4,758		1,446			(3,600	)
Impairment of real estate owned		6,064		4,124			1,465		1,940			2,659
Impairment of assets held for sale		4,469		—			—		4,469			—
Impairment of goodwill		—		9,124			48,284		(9,124	)		(39,160	)
FDIC special assessment		—		2,428			—		(2,428	)		2,428
Gain (loss) on sale of real estate		997		(342	)		124		1,339			(466	)
Amortization of intangible assets		1,248		1,303			1,359		(55	)		(56	)
Other		28,388		28,614			27,041		(226	)		1,573

Total non-interest expense	$	236,315		258,799			330,623		(22,484	)		(71,824	)

BankAtlantic’s non-interest expense for 2010, 2009 and 2008 was $236.3 million, $258.8 million and $330.6 million, respectively. Excluding $20.8 million, $29.9 million and $59.6 million of impairments and costs associated with debt redemptions, BankAtlantic’s non-interest expense would have been $215.5 million, $228.9 million and $271.1 million, for 2010, 2009 and 2008, respectively. The reduction in non-interest expense during the three year period reflects management’s efforts to reduce expenses and increase operating efficiencies. In response to the adverse economic environment, we consolidated certain back-office facilities, sold five central Florida stores, renegotiated vendor contracts, continued staff reductions, out-sourced certain back-office functions and initiated other targeted expense reduction programs. In January 2011, we agreed to sell 19 branches and 2 related facilities in the Tampa area and the associated deposits to PNC. The transaction is expected to close during June 2011 and we expect the sale of the Tampa branches to reduce annual non-interest expenses by approximately $15 to $20 million. Management continues to explore opportunities to further reduce operating expenses and increase operating efficiencies; however, we may not be successful in these efforts.

The substantial decline in employee compensation and benefits during each of the years in the three year period ended December 31, 2010 resulted primarily from workforce reductions, normal attrition, as well as declines in personnel related to reduced store lobby and call center hours. As a consequence of the work force reductions and normal attrition, the number of full-time equivalent employees declined from 2,385 at December 31, 2007 to 1,283 at December 31, 2010, or 46%. The decline in the work force resulted in lower employee benefits, payroll taxes and recruitment advertising. Also contributing to the decline in compensation was lower incentive bonuses during 2010 compared to 2009 and 2008. Incentive bonuses were $2.5 million, $6.1 million and $6.2 million during the years ended December 31, 2010, 2009 and 2008, respectively. BankAtlantic incurred lower employee benefit costs related

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to the discontinuation of the 401(k) Plan employer match and the employee profit sharing plan. Costs associated with these benefit Plans were $0, $0.7 million and $4.9 million for the years ended December 31, 2010, 2009 and 2008, respectively. Pension costs associated with BankAtlantic’s frozen defined benefit plan were $1.3 million and $2.0 million during 2010 and 2009 compared to a pension benefit of $0.2 million during 2008. Share-based compensation expense was $0.8 million, $2.0 million and $1.2 million during the years ended December 31, 2010, 2009 and 2008, respectively. The reduction in share based compensation expense reflects that no share based awards were granted to employees during 2009 and 2008 and the reversal of prior period share based compensation expense as the forfeiture rate on outstanding options was increased from 18% to 50% reflecting the significant reduction in the workforce throughout the three year period.

The decline in occupancy and equipment for each of the years in the three years ended December 31, 2010 primarily resulted from the consolidation of back-office facilities resulting in lower depreciation and rent expense. Depreciation and rent expenses were $16.2 million and $11.4 million for the year ended December 31, 2010 compared to $18.2 million and $12.8 million during year ended December 31, 2009, respectively, and $20.7 million and $14.6 million, respectively, during the year ended December 31, 2008. The remaining decline in occupancy and equipment expenses was primarily due to lower building maintenance, utilities and real estate taxes during the 2010 period compared to the same 2009 and 2008 periods.

During the year ended December 31, 2009, BankAtlantic modified its marketing focus from growing deposit account volume to enhancing BankAtlantic’s relationship with customers. As a result, BankAtlantic significantly reduced direct mail advertising and reduced gifts to customers upon the opening of deposit accounts. Direct mail advertising and customer gift expenses declined from $10.1 million for the year ended December 31, 2008 to $3.2 million and $2.4 million during the same 2009 and 2010 periods.

We believe that the substantial decline in check losses during each of the years in the three year period ended December 31, 2010 primarily related to revisions to our overdraft policies which began in 2008 as well as lower volume of new account growth.

The higher professional fees during the year ended December 31, 2010 compared to the same 2009 period primarily resulted from legal and related costs in connection with the class-action securities litigation and secondarily from legal costs associated with tax certificate litigation, loan modifications and loan work-outs. Legal expenses were $11.4 million during the year ended December 31, 2010 compared to $8.3 million during the same 2009 period. Legal expenses during the year ended December 31, 2010 were partially offset by $4.5 million of insurance reimbursements in connection with the class action securities litigation. During 2010, litigation costs on cases alleging claims covered by insurance exceeded the deductible under our director and officer liability insurance and we began receiving eligible cost reimbursements from the insurance carrier. Insurance claim reimbursements are recognized as a reduction to legal fees when the claim is approved by the insurance carrier. In December 2010 our insurance carrier for claims under our director and officer liability insurance denied insurance coverage in connection with the class action securities litigation for both the defense costs and any unfavorable judgment against the Company on the grounds that the jury found intentional wrongful acts by certain senior executive officers of the Company. While the Company disputes the validity of the denial of coverage, the Company does not expect to receive additional reimbursement for litigation costs associated with the class action securities litigation, unless the Company is able to successfully contest the denial of insurance coverage. Additionally, BankAtlantic engaged consulting firms during 2010 for assistance in process improvements and efficiency initiatives as well as evaluating sources of non-interest income. Consulting fees were $1.5 million during 2010 compared to $0.6 million during the same 2009 period.

The higher professional fees for 2009 compared to 2008 were mainly associated with legal costs in connection with loan modifications, commercial loan work-outs, class-action securities litigation and tax certificate activities litigation.

The lower telecommunication costs for the years ended December 31, 2010 and 2009 compared to the same 2008 period primarily resulted from switching during 2008 to a new vendor on more favorable terms.

The provision for tax certificate losses for each of the years in the three year period ended December 31, 2010 reflect charge-offs and increases in the allowance for tax certificate losses associated with certificates acquired through bulk purchases in markets which are now distressed. We ceased the bulk acquisition of tax certificates and our out-of-state tax certificate portfolio has been reduced through redemptions.

138

Financial Services
(BankAtlantic Bancorp)

Loss on the sale of real estate held for development and sale during the year ended December 31, 2010 reflects the sale of a real estate project for a loss shown on the above table. The loss on the sale of real estate held for development and sale during the year ended December 31, 2008 reflects the sale of vertical construction associated with the real estate project.

Impairment of real estate held for development and sale during the years ended December 31, 2009 and 2008 represent fair value adjustments to real estate inventory associated with the real estate project described above.

The costs associated with debt redemptions during the year ended December 31, 2010 reflects the prepayment of a $2 million FHLB advance obligation and $0.7 million repayment of a mortgage-backed bond that was scheduled to mature in September 2013.

The costs associated with debt redemptions were the result of prepayment penalties incurred upon the prepayment of $760 million and $692 million of FHLB advances in 2009 and 2008, respectively. The prepayments in 2009 and 2008 were part of our effort to improve our liquidity and net interest margin as short term borrowing interest rates were at historical lows.

Lease termination costs and impairment of real estate held for sale represent impairments associated with the decision to sell properties or terminate leases acquired for future branch expansion prior to December 2007.

Employee termination costs reflect severance charges in connection with workforce reductions in each of the years in the three year period ended December 31, 2010.

Real estate owned impairments during 2010 and 2009 reflect a $3.6 million and $3.1 million write-down associated with a real estate development acquired during the fourth quarter of 2006 when BankAtlantic took possession of the collateral securing a land acquisition and development loan and, secondarily, from write-downs of residential, commercial and tax certificate real estate owned. Impairment of real estate owned during 2008 was primarily associated with properties in distressed markets acquired through tax certificate activities.

The impairment of assets held for sale relates to a management decision to pursue a sale of BankAtlantic’s Tampa branches. As a consequence, BankAtlantic reclassified its Tampa office properties and equipment to held-for-sale and recognized a $4.5 million impairment charge at the transfer date.

BankAtlantic tests goodwill for potential impairment annually or during interim periods if impairment indicators exist. Based on the results of an interim impairment evaluation, BankAtlantic recorded an impairment charge of $9.1 million during the three months ended March 31, 2009. BankAtlantic performed its annual goodwill impairment test as of September 30, 2010 and determined that its remaining goodwill of $13.1 million in its capital services reporting unit was not impaired, as the fair value of our capital services reporting unit exceeded the fair value of the net assets by $14.1 million. If market conditions do not improve or deteriorate further, BankAtlantic may recognize additional goodwill impairment charges in future periods.

Based on the results of a goodwill impairment evaluation during 2008, BankAtlantic recorded an impairment charge of $48.3 million. All goodwill in the amount of $31.0 million relating to BankAtlantic’s commercial lending reporting unit and all goodwill in the amount of $17.3 million relating to BankAtlantic’s community banking reporting unit were determined to be impaired. The impairments in the community banking and commercial lending business units reflect the on-going negative trends in the financial services industry affecting the Company’s market capitalization and the credit quality of BankAtlantic’s loan portfolios.

In October 2008, the FDIC adopted a restoration plan to restore its insurance fund to a predefined level. In June 2009, the FDIC imposed a special assessment on all depository institutions of five basis points on adjusted total assets. BankAtlantic’s portion of the FDIC depository institution special assessment was $2.4 million.

During the year ended December 31, 2010, 2009, and 2008 BankAtlantic sold $25.9 million, $6.4 million and $3.7 million, respectively, of real estate owned for losses and gains as shown on the above table.

Amortization of intangible assets consisted of the amortization of acquired core deposit intangible assets, which are being amortized over an estimated life of ten years.

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Financial Services
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Other expenses during the year ended December 31, 2010 remained at 2009 levels as higher deposit insurance premiums and the costs to manage and sell real estate owned were partially offset by lower operating expenses. The increase in other non-interest expense for the year ended December 31, 2009 compared to the same 2008 period relates to higher deposit insurance premiums. BankAtlantic’s deposit insurance premiums, were $10.1 million, $8.6 million and $2.8 million for the years ended December 31, 2010, 2009 and 2008, respectively. These higher deposit insurance premiums were partially offset by lower general operating expenses relating management’s expense reduction initiatives.

BankAtlantic’s Provision for Income Taxes


	For the Years Ended									Change			Change
	December 31,									2010 vs.			2009 vs.
($ in thousands)	2010			2009			2008			2009			2008

Loss before income taxes	$	(118,044	)		(180,427	)		(135,050	)		62,383			(45,377	)
Benefit/(provision) for income taxes		2,134			31,719			(31,094	)		(29,585	)		62,813

BankAtlantic net loss	$	(115,910	)		(148,708	)		(166,144	)		32,798			17,436

Effective tax rate		1.81	%		17.58	%		-23.02	%

Due to BankAtlantic’s recent history of losses and the sustained deterioration in economic conditions, BankAtlantic maintains a deferred tax valuation allowance for its entire amount of net deferred tax assets. The benefit for income taxes during 2010 primarily represents a reduction in the deferred tax valuation allowance from continuing operations to reflect the future taxable income associated with unrealized gains in accumulated other comprehensive income. The 2009 benefit for income taxes was due primarily to a change in tax laws in November 2009 that extended the net operating loss carry back period for 2009 taxable losses from two years to five years which resulted in BankAtlantic recognizing a $31.7 million income tax benefit.

The difference between the effective tax rate and the expected federal income tax rate of 35% during 2008 was due primarily to the disallowance of tax benefits associated with losses during 2008 and net deferred tax assets as a result of the establishment of a deferred tax valuation allowance.

140

Financial Services
(BankAtlantic Bancorp)

Parent Company Results of Operations

The following table is a condensed income statement summarizing the Parent Company’s segment results of operations (in thousands):


	For the Years Ended									Change			Change
	December 31,									2010 vs.			2009 vs.
	2010			2009			2008			2009			2008

Net interest income (expense):
Interest income on loans	$	228			352			261			(124	)		91
Interest and dividend income on investments		72			221			1,184			(149	)		(963	)
Interest expense on junior subordinated debentures		(14,872	)		(15,535	)		(21,262	)		663			5,727

Net interest expense		(14,572	)		(14,962	)		(19,817	)		390			4,855
Provision for loan losses		(5,536	)		(18,414	)		(24,418	)		12,878			6,004

Net interest expense after Provision for loan losses		(20,108	)		(33,376	)		(44,235	)		13,268			10,859

Non-interest income:
Income from unconsolidated subsidiaries		1,054			487			600			567			(113	)
Securities activities, net		—			19			(356	)		(19	)		375
Other income		1,257			1,058			1,027			199			31

Non-interest income		2,311			1,564			1,271			747			293

Non-interest expense:
Employee compensation and benefits		2,819			5,036			3,046			(2,217	)		1,990
Professional fees		3,074			2,055			1,782			1,019			273
Advertising and promotion		293			251			279			42			(28	)
Other		2,857			1,658			3,634			1,199			(1,976	)

Non-interest expense		9,043			9,000			8,741			43			259

Loss before income taxes		(26,840	)		(40,812	)		(51,705	)		13,972			10,893
(Provision) benefit for income taxes		—			—			(1,395	)		—			1,395

Parent Company loss	$	(26,840	)		(40,812	)		(53,100	)		13,972			12,288

Parent Company interest on loans during 2010, 2009 and 2008 represented interest income from two commercial real estate loans acquired in a March 2008 loan transfer from BankAtlantic that were returned to an accrual status during 2008 as the borrowers’ cash flow improved upon obtaining tenants for properties serving as collateral.

Interest and dividend income on investments during the years ended December 31, 2010 and 2009 were comprised primarily of earnings from a BankAtlantic reverse repurchase agreement account and dividends from an equity investment. Interest and dividend income on investments during the year ended December 31, 2008 was comprised primarily of interest and dividends associated with a portfolio of debt and equity securities managed by a money manager as well as earnings from a reverse repurchase account with BankAtlantic. Earnings from the BankAtlantic reverse repurchase account were $17,000, $28,000 and $0.2 million, respectively, during the years ended December 31, 2010, 2009 and 2008.

Interest expense for the years ended December 31, 2010, 2009 and 2008 represents interest expense recognized on the Parent Company’s junior subordinated debentures. The decline in interest expense reflects the historically low three month LIBOR interest rates during 2009 and 2010. The decline in interest rates was partially offset by deferred interest on the junior subordinated debentures. As previously discussed, the Parent Company has elected to defer the payment of interest on all of its junior subordinated debentures, commencing with the first quarter of 2009. The Parent Company is permitted under the terms of its obligations to defer interest payments for up to 20 consecutive quarterly periods. During the deferral period, interest will continue to accrue on the debentures and on the deferred interest, and

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Financial Services
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the Company will continue to recognize such deferred interest as interest expense in its financial statements. As a consequence, the Parent Company’s junior subordinated debentures average balances increased from $300.0 million during 2009 to $314.1 million during 2010. Average interest rates on junior subordinated debentures decreased from 5.18% during the year ended December 31, 2009 to 4.73% during the same 2010 period due to a decrease in LIBOR.

Income from unconsolidated subsidiaries during 2010, 2009 and 2008 represents equity earnings from trusts formed to issue trust preferred securities.

During the year ended December 31, 2009, the Parent Company redeemed its investment in a private equity security for a $1.5 million gain and sold shares of Stifel common stock received from the sale of Ryan Beck for a $0.1 million gain. Also, during 2009 the Parent Company recognized a $1.6 million other-than-temporary decline in value from an equity investment in an unrelated financial institution.

During 2008, the Parent Company sold $54.2 million of equity securities from its managed investment portfolio, $108.4 million of Stifel common stock and warrants to acquire 722,586 shares of Stifel common stock for a net gain of $4.2 million. The majority of the $181.8 million of proceeds from the sale of securities and warrants was used to purchase $94.5 million of non-performing loans from BankAtlantic and to contribute $65 million of capital to BankAtlantic. The Parent Company also recognized other-than-temporary impairment charges of $4.6 million associated with an investment in a private limited partnership and an equity investment in a private placement.

Other income during the year ended December 31, 2010 included $0.1 million of gains on the sale of loans. The majority of other income during the years ended December 31, 2010, 2009 and 2008 primarily represent fees charged to BankAtlantic for executive management services. These fees are eliminated in the Company’s consolidated financial statements.

The Parent Company’s compensation expense during the years ended December 31, 2010, 2009 and 2008 represents salaries, benefits and incentives for executive officers and administrative personnel. The higher compensation expense during 2009 compared to 2010 and 2008 primarily reflects higher incentive performance bonuses during 2009. Incentive performance bonuses based on specific performance criteria were $0.2 million, $2.9 million and $1.6 million during the years ended December 31, 2010, 2009 and 2008, respectively.

The increase in professional fees during 2010 primarily resulted from higher consulting costs associated with investment banking and other advisory services. Consulting costs were $1.5 million, $0.3 million and $0.6 million during the years ended December 31, 2010, 2009 and 2008, respectively. The remaining professional fees were legal costs during each of the years in the three year period ended December 31, 2010. The legal fees were incurred in connection with the Securities and Exchange Commission formal investigation, general corporate matters and foreclosure costs associated with non-performing loans held in a work-out subsidiary of the Parent Company.

Advertising costs during each of the years in the three year period ended December 31, 2010 represents investor relations expenditures, the cost of shareholder correspondence and the annual meeting of shareholders.

Included other expenses during the years ended December 31, 2010, 2009 and 2008 were property management costs and real estate owned losses of $1.9 million, $0.9 million and $2.5 million, respectively. The Parent Company also incurred $0.2 million of loan servicing fees paid to BankAtlantic for each of the years ended December 31, 2010, 2009 and 2008 related to the loans held by its asset workout subsidiary. Also included in other expenses for the years ended December 31, 2010, 2009 and 2008 were $0.6 million, $0.3 million and $0.3 million, respectively, of fees paid to BFC for investor relations, risk management, real estate advisory and human resources services provided to the Parent Company by BFC.

The Parent company did not recognize a tax benefit in connection with its 2010 and 2009 losses. The Parent Company recognized a provision for income taxes of $1.4 million in 2008. These amounts represent effective tax rates of 0%, 0% and 2.65% for 2010, 2009 and 2008, respectively. The change in the Parent Company’s effective tax rate during the periods was primarily due to the disallowance of tax benefits associated with the Parent Company’s 2010, 2009 and 2008 losses as a result of a deferred tax valuation allowance established during 2008 on the Parent Company’s net deferred tax assets.

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Financial Services
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Credit Quality

To provide greater flexibility in holding and managing non-performing loans and to improve BankAtlantic’s financial condition, the Parent Company formed an asset workout subsidiary which acquired non-performing commercial real estate and commercial residential real estate loans from BankAtlantic for $94.8 million in cash on March 31, 2008. BankAtlantic transferred $101.5 million of non-performing loans to the Parent Company’s subsidiary at the loan’s carrying value inclusive of $6.4 million in specific allowances for loan losses and $0.3 million of escrow balances. The work-out subsidiary of the Parent Company entered into a servicing arrangement with BankAtlantic with respect to these loans.

The composition of non-performing loans acquired from BankAtlantic as of March 31, 2008 was as follows (in thousands):


	Amount
Nonaccrual loans:
Commercial residential real estate:
Builder land loans	$	32,039
Land acquisition and development		19,809
Land acquisition, development and Construction		34,915

Total commercial residential real estate		86,763
Commercial non-residential real estate		14,731

Total non-accrual loans		101,494
Allowance for loan losses — specific reserves		(6,440	)

Non-accrual loans, net	$	95,054

The composition of the transferred non-performing loans and real estate owned at the indicated dates was as follows (in thousands):


	December 31,			December 31,
	2010			2009
Non-accrual loans:
Commercial residential real estate:
Builder land loans	$	3,743			14,060
Land acquisition and development		3,605			10,376
Land acquisition, development and construction		1,637			14,903

Total commercial residential real estate		8,985			39,339
Commercial non-residential real estate		5,523			5,558

Total non-accrual loans		14,508			44,897
Allowance for loan losses — specific reserves		(830	)		(13,630	)

Non-accrual loans, net		13,678			31,267
Performing commercial non-residential loans, net of allowance for loan losses		2,811			3,116

Loans receivable, net	$	16,489			34,383

Real estate owned	$	10,160			10,532

During the year ended December 31, 2010, the Parent Company foreclosed on a $5.7 million land acquisition, development and construction loan, and a $7.9 million builder land bank loan. The properties obtained from foreclosures were sold for cash proceeds of $9.8 million. The work-out subsidiary also received $0.4 million of loan principal repayments during the year ended December 31, 2010.

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Financial Services
(BankAtlantic Bancorp)

During the year ended December 31, 2009, the Parent Company’s work-out subsidiary received proceeds of $6.3 million from loan payments and the sale of a foreclosed property, transferred a $1.0 million loan from non-accrual to performing, charged-down $16.5 million of loans and foreclosed on five properties aggregating $10.5 million.

The Parent Company’s non-accrual loans include large loan balance lending relationships. Three relationships account for 75% of its $14.5 million of non-accrual loans as of December 31, 2010. The following table outlines general information about these relationships as of December 31, 2010 (in thousands):

Unpaid

Principal

Outstanding

Specific

Date loan

Date Placed

Default

Collateral

Date of Last

Relationships

Balance

Reserves

Originated

on Nonaccrual

Date (3)

Type (4)

Full Appraisal

Commercial Business

Relationship No. 1

5,523

830

Q4-2005

Q4-2007

Commercial Land

Q4-2010

Residential Land Developers

Relationship No. 2 (1)

19,881

3,743

—

Q1-2005

Q4-2007

Q1-2008

Builder Land

Q4-2010

Relationship No. 3 (2)

7,383

1,639

Q1-2006

Q1-2008

Land A&D

Q2-2010

Total Residential Land Developers

27,264

5,382

—

Total

32,787

10,905

830


(1)		During 2008, 2009 and 2010, the Parent Company recognized partial charge-offs on relationship No. 2 of $12.0 million, $1.7 million and $2.3 million, respectively.

(2)

During 2010, the Parent Company recognized partial charge-offs on relationship No. 3 aggregating $5.7 million.

(3)

The default date is defined as the date of the initial missed payment prior to default.

(4)

Acquisition and development (“A&D”).

The loans that comprise the above relationships are all collateral dependent. As such, we established specific reserves or recognized partial charge-offs on these loans based on the fair value of the collateral less costs to sell. The fair value of the collateral was determined using unadjusted third party appraisals for all relationships. Management performs quarterly impairment analyses on these credit relationships subsequent to the date of the appraisal and may reduce appraised values if market conditions significantly deteriorate subsequent to the appraisal date. However, our policy is to obtain a full appraisal within one year from the date of the prior appraisal, unless the loan is in the process of foreclosure. A full appraisal is obtained at the date of foreclosure.

Changes in the Parent Company’s allowance for loan losses were as follows (in thousands):


	For the Years
	Ended December 31,
	2010			2009

Balance, beginning of period	$	13,630			11,685
Loans charged-off		(18,222	)		(16,469	)
Recoveries of loans previously charged-off		—			—

Net (charge-offs)		(18,222	)		(16,469	)
Transfer to held for sale		(114	)		—
Provision for loan losses		5,536			18,414

Balance, end of period	$	830			13,630

The provision for loan losses during the year ended December 31, 2010 and 2009 resulted from additional impairments due to updated loan collateral fair value estimates reflecting the continued deterioration in the Florida residential real estate market. As previously stated, if market conditions do not improve in the Florida real estate market, additional provisions for loan losses and charge-offs may be required in subsequent periods.

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Financial Services
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Liquidity and Capital Resources

BankAtlantic Bancorp, Inc.

Currently, the Parent Company’s principal source of liquidity is its cash and funds obtained from its wholly-owned work-out subsidiary. The Parent Company also may obtain funds through dividends, and through the issuance of equity and debt securities, although no dividends from BankAtlantic are anticipated or contemplated for the foreseeable future. The Parent Company has used its funds to contribute capital to its subsidiaries, pay debt service and shareholder dividends, repay borrowings, invest in equity securities and other investments, and fund operations, including funding servicing costs and real estate owned operating expenses of its wholly-owned work-out subsidiary. At December 31, 2010, BankAtlantic Bancorp had approximately $322.4 million of junior subordinated debentures outstanding with maturities ranging from 2032 through 2037. The aggregate annual interest obligations on this indebtedness totaled approximately $14.3 million based on interest rates at December 31, 2010, which are generally indexed to three-month LIBOR. In order to preserve liquidity in the current economic environment, the Parent Company elected in February 2009 to commence deferring interest payments on all of its outstanding junior subordinated debentures and to cease paying cash dividends on its common stock. The terms of the junior subordinated debentures and the trust documents allow the Parent Company to defer payments of interest for up to 20 consecutive quarterly periods without default or penalty. During the deferral period, the respective trusts have suspended the declaration and payment of dividends on the trust preferred securities. The deferral election began as of March 2009, and regularly scheduled quarterly interest payments aggregating $28.2 million that would otherwise have been paid during the 24 months ended December 31, 2010 were deferred. The Parent Company has the ability under the junior subordinated debentures to continue to defer interest payments through ongoing appropriate notices to each of the trustees, and will make a decision each quarter as to whether to continue the deferral of interest. During the deferral period, interest will continue to accrue on the junior subordinated debentures at the stated coupon rate, including on the deferred interest, and the Parent Company will continue to record the interest expense associated with the junior subordinated debentures. During the deferral period, the Parent Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures. The Parent Company may end the deferral by paying all accrued and unpaid interest. The Parent Company anticipates that it will continue to defer interest on its junior subordinated debentures and will not pay dividends on its common stock for the foreseeable future. If the Parent Company continues to defer interest on its junior subordinated debentures through the year ended December 31, 2013, it will owe an aggregate of approximately $74.0 million of unpaid interest based on average interest rates as of December 31, 2010. The Company’s financial condition and liquidity could be adversely affected if interest payments were deferred for a prolonged time period.

During each of the years in the two year period ended December 31, 2010, the Parent Company did not receive dividends from BankAtlantic. The ability of BankAtlantic to pay dividends or make other distributions to the Parent Company in subsequent periods is subject to the Office of Thrift Supervision (“OTS”) approval as provided in the Bank Order. It is unlikely that the OTS will approve a dividend from BankAtlantic based on BankAtlantic’s regulatory capital levels. As such, the Parent Company does not expect to receive cash dividends from BankAtlantic for the foreseeable future. The Parent Company may receive dividends from its asset work-out subsidiary upon the monetizing of the subsidiaries’ non-performing loans and real estate owned. However, the Parent Company may not be able to monetize the loans or real estate owned on acceptable terms, if at all.

In February 2010, the Company filed a registration statement with the Securities and Exchange Commission registering to offer, from time to time, up to $75 million of Class A Common Stock, preferred stock, subscription rights, warrants or debt securities. A description of the securities offered and the expected use of the net proceeds from any sales will be outlined in a prospectus supplement if and when offered. As a result of the completion of the rights offering discussed below, $55 million of securities remain available for future issuance under this registration statement.

During June 2010, the Company distributed to each holder of record who owned shares of the Company’s Class A Common Stock and Class B Common Stock on June 14, 2010 non-transferable subscription rights to purchase 0.327 shares of Class A Common Stock for each share of Class A and Class B Common Stock owned on that date. The rights offering was for an aggregate amount of $25 million with a subscription price of $1.50 per share. Shareholders who exercised their basic subscription rights in full were given the opportunity to request to purchase additional shares of the Company’s Class A Common Stock that were not subscribed for in the rights offering. The rights offering was completed on July 20, 2010 with the Company issuing an aggregate of 13,340,379 shares of Class A Common Stock for net proceeds of approximately $20 million, including 10,000,000 shares issued to BFC.

145

Financial Services
(BankAtlantic Bancorp)

In October 2010, the Company filed a registration statement with the Securities and Exchange Commission registering the offer and sale of up to $125 million of Class A Common Stock through an underwritten public offering. This registration statement has not yet been declared effective and it is uncertain whether the Company will pursue the sale of any of the shares of Class A Common Stock under this registration statement.

During January 2010, the Parent Company commenced cash offers to purchase all of its outstanding trust preferred securities having an aggregate principal amount of approximately $285 million at a purchase price of $200 per $1,000 liquidation amount, or an aggregate of $57 million. During February 2010, the offer to purchase with respect to the approximate $55 million of publicly traded trust preferred securities issued by BBC Capital Trust II expired without any such trust preferred securities being repurchased, while the expiration date for the offers to purchase relating to the remaining $230 million of trust preferred securities was extended. In August 2010, we terminated the offers with respect to the remaining $230 million of trust preferred securities and dismissed a lawsuit filed against one of the trustees which was the holder of a portion of a series of trust preferred securities held in a collateralized debt obligation pool. Upon the termination of the offers, the Company recognized $0.8 million of tender transaction costs included in other expenses in the Company’s statement of operations during the year ended December 31, 2010.

On August 28, 2009, the Company distributed to each record holder of its Class A Common Stock and Class B Common Stock as of August 24, 2009 non-transferable subscription rights to purchase 4.441 shares of its Class A Common Stock for each share of Class A and Class B Common Stock owned on that date. The subscription price was $2.00 per share and the Company completed the rights offering on September 29, 2009 and issued 37,980,936 shares of its Class A Common Stock to exercising shareholders, including 14,943,731 shares issued to BFC. The net proceeds from this rights offering were $75.5 million, net of offering costs. The Company used the net proceeds to contribute $75 million of capital to BankAtlantic.

During the years ended December 31, 2010 and 2009, the Parent Company contributed $28 million and $105 million, respectively, of capital to BankAtlantic.

The Parent Company is generally required to provide BankAtlantic with managerial assistance and capital. Any such financing could be sought through public or private offerings, including a rights offering, in privately negotiated transactions or otherwise. Additionally, we could pursue financings at the Parent Company level or directly at BankAtlantic or both. Any financing involving the issuance of our Class A Common Stock or securities convertible or exercisable for our Class A Common Stock could be highly dilutive for our existing shareholders and any issuance of stock at the BankAtlantic level would dilute the Company’s ownership interest in BankAtlantic. Such financing may not be available to us on favorable terms or at all.

The Parent Company has the following cash and investments that it believes provide a source for potential liquidity based on values at December 31, 2010.


	As of December 31, 2010
			Gross
	Carrying		Unrealized		Estimated
(in thousands)	Value		Depreciation		Fair Value

Cash and cash equivalents	$	12,226		—		12,226
Securities available for sale		10		2		8
Private investment securities		1,500		—		1,500

Total	$	13,736		2		13,734

The non-performing loans transferred to the wholly-owned subsidiary of the Company may also provide a potential source of liquidity through workouts, repayments of the loans or sales of interests in the subsidiary. The balance of these loans and real estate owned at December 31, 2010 was $26.6 million. During the year ended December 31, 2010, the Parent Company received net cash flows of $10.2 million from its work-out subsidiary.

146

Financial Services
(BankAtlantic Bancorp)

BankAtlantic Liquidity and Capital Resources

BankAtlantic’s primary sources of funds are deposits; principal repayments of loans, tax certificates and securities available for sale; proceeds from the sale of loans and securities available for sale; proceeds from securities sold under agreements to repurchase; advances from FHLB; Treasury and Federal Reserve lending programs; interest payments on loans and securities; capital contributions from the Parent Company and other funds generated by operations. These funds are primarily utilized to fund loan disbursements and purchases, deposit outflows, repayments of securities sold under agreements to repurchase, repayments of advances from FHLB and other borrowings, purchases of tax certificates and securities available for sale, acquisitions of properties and equipment, and operating expenses. BankAtlantic’s liquidity will depend on its ability to generate sufficient cash to support loan demand, to meet deposit withdrawals, and to pay operating expenses. BankAtlantic’s securities portfolio provides an internal source of liquidity through its short-term investments as well as scheduled maturities and interest payments. Loan repayments and loan sales also provide an internal source of liquidity. BankAtlantic reduced its loan portfolio during 2010 and reinvested the excess cash proceeds in short term investments and interest bearing deposits at other banks in order to improve its liquidity. BankAtlantic’s liquidity is also dependent, in part, on its ability to maintain or increase deposit levels and availability under lines of credit and Treasury and Federal Reserve lending programs. BankAtlantic’s ability to increase or maintain deposits is impacted by competition from other financial institutions and alternative investments as well as the current low interest rate environment. Such competition, an increase in interest rates or an increase in liquidity needs, may require BankAtlantic to offer higher interest rates to maintain deposits, which may not be successful in generating deposits, and which would increase its cost of funds or reduce its net interest income. BankAtlantic is restricted by the OTS from offering interest rates on its deposits which are significantly higher than market area rates. Additionally, BankAtlantic’s current lines of credit may not be available when needed as these lines of credit are subject to periodic review and may be terminated or reduced at the discretion of the issuing institutions or reduced based on availability of qualifying collateral. BankAtlantic’s unused lines of credit increased from $760 million as of December 31, 2009 to $843 million as of December 31, 2010 due to lower FHLB advance outstanding balances and increases in available collateral resulting from the purchase of agency and municipal securities partially offset by lower loan balances. Additionally, interest rate changes, additional collateral requirements, disruptions in the capital markets, deterioration in BankAtlantic’s financial condition, litigation or regulatory action may make borrowings unavailable or make terms of the borrowings and deposits less favorable. There is a risk that our cost of funds will increase and that the borrowing capacity from funding sources may decrease.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law permanently raising the maximum standard deposit insurance to $250,000 per depositor, for each ownership category as defined by the FDIC. The Act also provides for full deposit insurance on non-interest bearing deposit accounts until December 31, 2012.

In October 2008, the FDIC adopted a restoration plan that increased the rates depository institutions pay for deposit insurance. Under the restoration plan, the assessment rates were raised by 7 basis points for all depository institutions beginning on January 1, 2009 and the assessment rates were raised again on April 1, 2009 based on the risk rating of each financial institution. Additionally, the FDIC imposed a 5 basis point special assessment as of June 30, 2009 that was paid in September 2009. As a consequence of the increased assessment rates, BankAtlantic’s FDIC insurance premium increased from $2.8 million during the year ended December 31, 2008 to $10.1 million during the year ended December 31, 2010. In September 2009, the FDIC required financial institutions to prepay, in December 2009, their estimated quarterly FDIC insurance assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. During the fourth quarter of 2009, BankAtlantic remitted $31.3 million to the FDIC for prepaid assessments. Included in the Company’s statement of financial condition as of December 31, 2010 and 2009 was $31.3 million and $23.4 million, respectively, of prepaid FDIC deposit assessments.

The FHLB has granted BankAtlantic a line of credit capped at 30% of assets subject to available collateral, with a maximum term of ten years. BankAtlantic utilized its FHLB line of credit to borrow $170 million and to obtain a $222 million letter of credit primarily securing public deposits as of December 31, 2010. The line of credit is secured by a blanket lien on BankAtlantic’s residential mortgage loans and certain commercial real estate and consumer home equity loans. BankAtlantic’s unused available borrowings under this line of credit were approximately $612 million at December 31, 2010. An additional source of liquidity for BankAtlantic is its securities portfolio. As of December 31, 2010, BankAtlantic had $195 million of unpledged securities that could be sold or pledged for additional borrowings with the FHLB, the Federal Reserve or other financial institutions. BankAtlantic is a participating institution in the Federal Reserve Treasury Investment Program for up to $2.2 million in funding and at December 31, 2010, BankAtlantic had $1.2 million of short-term borrowings outstanding under this program. BankAtlantic is also eligible to

147

Financial Services
(BankAtlantic Bancorp)

participate in the Federal Reserve’s discount window program under its secondary credit program. The amount that can be borrowed under this program is dependent on the delivery of collateral to the Federal Reserve, and BankAtlantic had unused available borrowings of approximately $35.5 million as of December 31, 2010, with no amounts outstanding under this program at December 31, 2010. We are not permitted to incur day-light overdrafts in our Federal Reserve bank account and accordingly, our intent is to continue to maintain sufficient funds at the Federal Reserve to support intraday activity. The above lines of credit are subject to periodic review and any of the above borrowings may be limited, or may not be available to us at all or additional collateral could be required, in which case BankAtlantic’s liquidity could be materially adversely affected.

BankAtlantic also has various relationships to execute repurchase agreements, which may to a limited extent be utilized as an alternative source of liquidity. At December 31, 2010, BankAtlantic had $21.5 million of securities sold under agreements to repurchase outstanding, representing 0.5% of total assets. Additional repurchase agreement borrowings are subject to available collateral. Additionally, BankAtlantic had total cash on hand or with other financial institutions of $558.8 million at December 31, 2010. BankAtlantic’s ending cash on hand or with other financial institutions was significantly higher than BankAtlantic’s average cash on hand or with other financial institutions during the year ended December 31, 2010 of $360.0 million. The higher balances at year-end reflect the anticipated sale of the Tampa branches and a management decision to maintain higher liquidity at period end.

Brokered deposits have previously served as an additional source of liquidity. Included in deposits at December 31, 2010 was $14.1 million in brokered deposits. BankAtlantic is currently restricted by the OTS from acquiring additional brokered deposits or renewing its existing brokered deposits, and expects the balance of its brokered deposits to decline for the foreseeable future.

BankAtlantic’s liquidity may be affected by unforeseen demands on cash. Our objective in managing liquidity is to maintain sufficient resources of available liquid assets to address our funding needs. Multiple market disruptions and regulatory actions have made it more difficult for us and for financial institutions in general to borrow money. We cannot predict with any degree of certainty how long these adverse market conditions may continue, nor can we anticipate the degree that such market conditions may impact our operations. Deterioration in the performance of other financial institutions may adversely impact the ability of all financial institutions to access liquidity. Further deterioration in the financial markets may further impact us or result in additional market-wide liquidity problems, and affect our liquidity position. We believe BankAtlantic has improved its liquidity position during the year ended December 31, 2010 by reducing assets, increasing agency guaranteed securities and paying down borrowings.

BankAtlantic’s commitment to originate and purchase loans was $23.3 million and $2.6 million, respectively, at December 31, 2010 compared to $62.6 million of commitments to originate loans at December 31, 2009. BankAtlantic had no commitments to purchase loans at December 31, 2009. At December 31, 2010, total loan commitments represented approximately 0.8% of net loans receivable.

At December 31, 2010, BankAtlantic had mortgage-backed securities of approximately $22.7 million pledged to secure securities sold under agreements to repurchase.

148

Financial Services
(BankAtlantic Bancorp)

A significant source of our liquidity is repayments and maturities of loans and securities. The table below presents the contractual principal repayments and maturity dates of our loan portfolio and securities available for sale at December 31, 2010. The total amount of principal repayments on loans and securities contractually due after December 31, 2011 was $2.8 billion, of which $1.1 billion have fixed interest rates and $1.7 billion have floating or adjustable interest rates. Actual principal repayments may vary from the amounts due at scheduled payment dates where the borrower fails to make all or a portion of the required payments or BankAtlantic agrees to extend the scheduled payment dates and/or modifies the amount due on such dates. The table below represents the amounts due based on the contractual terms of the loans or securities and actual principal repayments may differ from information shown below (in thousands):


	Outstanding at
	December 31,		For the Period Ending December 31,
	2010		2011		2012-2013		2014-2018		2019-2023		2024-2028		>2028

Commercial real estate	$	1,112,291		444,144		318,351		201,850		112,638		34,583		725
Residential real estate		1,222,194		18,336		3,797		48,285		147,424		18,723		985,629
Consumer		623,387		4,534		13,580		427,531		170,210		7,532		—
Commercial business		233,241		151,529		19,635		58,022		4,055		—		—

Total loans	$	3,191,113		618,543		355,363		735,688		434,327		60,839		986,354

Total securities available for sale (1)	$	423,071		180,317		61,873		565		27,299		28,849		124,168


(1)		Does not include $1.3 million of equity securities.

Loan maturities and sensitivity of loans to changes in interest rates for commercial business and real estate construction loans at December 31, 2010 were (in thousands):


	Commercial		Real Estate
	Business		Construction		Total

One year or less	$	169,475		131,979		301,454
Over one year, but less than five years		60,094		11,738		71,832
Over five years		3,673		1,340		5,013

	$	233,242		145,057		378,299

Due After One Year:
Pre-determined interest rate	$	62,928		10,529		73,457
Floating or adjustable interest rate		839		2,549		3,388

	$	63,767		13,078		76,845

BankAtlantic’s geographic loan concentration based on outstanding loan balances at December 31, 2010 was:


Florida	64	%
Eastern U.S.A.	19	%
Western U.S.A.	14	%
Central U.S.A	3	%

	100	%

The loan concentration for loans BankAtlantic originated is primarily in Florida. The concentration in locations other than Florida relates primarily to purchased wholesale residential real estate loans.

149

Financial Services
(BankAtlantic Bancorp)

At the indicated dates, BankAtlantic’s capital amounts and ratios were (dollars in thousands):


	Actual
	Amount		Ratio
At December 31, 2010:
Total risk-based capital	$	334,601		11.72	%
Tier 1 risk-based capital		276,362		9.68
Tangible capital		276,362		6.22
Tier 1/Core capital		276,362		6.22

At December 31, 2009:
Total risk-based capital	$	422,724		12.56	%
Tier 1 risk-based capital		357,660		10.63
Tangible capital		357,660		7.58
Tier 1/Core capital		357,660		7.58

Savings institutions are also subject to the provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”). Regulations implementing the prompt corrective action provisions of FDICIA define specific capital categories based on FDICIA’s defined capital ratios, as discussed more fully in Part I under “Regulation of Federal Savings Banks”.

Pursuant to the February 2011 Bank Order, BankAtlantic is required to attain by June 30, 2011 and maintain a tier 1/core capital ratio equal to or greater than 8% and a total risk-based capital ratio equal to or greater than 14%. BankAtlantic had maintained its regulatory capital ratios at levels that exceed prompt corrective action “well capitalized” requirements during the year ended December 31, 2010. However, based on BankAtlantic’s risk profile, the OTS raised its regulatory capital requirements above the “well capitalized” amounts. The Parent Company and BankAtlantic will seek to meet the higher capital requirements through the anticipated net gain upon consummation of the Tampa branch sale to PNC and through other efforts that may include the issuance of its Class A Common Stock through a public or private offering. Additionally, BankAtlantic may continue to seek to reduce its asset size in order to improve its regulatory capital ratios, although this may make it more difficult to achieve profitability. The Company may not be successful in raising additional capital in subsequent periods and the sale of the Tampa branches may not be consummated in the time frame anticipated, upon the contemplated terms, or at all. The inability to raise capital or otherwise meet regulatory requirements could have a material adverse impact on the Company’s business, results of operations and financial condition.

Consolidated Cash Flows

A summary of our consolidated cash flows follows (in thousands):


	For the Years Ended December 31,
	2010			2009			2008

Net cash provided by (used in):
Operating activities	$	117,766			30,949			64,138
Investing activities		336,314			869,633			292,495
Financing activities		(175,119	)		(824,742	)		(322,250	)

Increase in cash and cash equivalents	$	278,961			75,840			34,383

The increase in cash flows from operating activities during 2010 compared to 2009 primarily reflects a decline in other assets associated with the $31.7 million net operating loss carryback cash receipts and lower operating expenses during 2010 compared to 2009.

150

Financial Services
(BankAtlantic Bancorp)

The decrease in cash flows from operating activities during 2009 compared to 2008 was primarily due to an increase in other assets reflecting the $31.3 million prepayment of FDIC insurance assessments and lower non-interest expenses partially offset by a decline in net interest income and non-interest income.

The decrease in cash flows from investing activities during 2010 compared to 2009 primarily resulted from the higher purchases of short-term securities available for sale and tax certificates during 2010 compared to 2009. The decrease in investing activities from securities purchases was partially offset by higher loan repayments and loan sales during 2010 compared to 2009.

The increase in cash flows from investing activities during 2009 compared to 2008 primarily resulted from a decline in interest earning assets as loan and securities repayments exceeded loan originations and securities purchased. Additionally, in order to further reduce assets during 2009, the Company sold securities available for sale. The Company reduced its total assets during 2009 and 2008 in order to improve its liquidity and regulatory capital levels in response to the difficult economic environment.

The increase in cash flows from financing activities during 2010 compared to 2009 primarily resulted form the significant prepayment of FHLB and short term borrowings during 2009. FHLB advance and short term borrowing balances declined from $1,251.5 million at December 31, 2008 to $309.3 million at December 31, 2009 to $192.8 million at December 31, 2010. The above increases in cash flows from financing activities were partially offset by a decline in deposit balances during 2010 compared to an increase in deposit balances during 2009.

The decrease in cash flows from financing activities during 2009 compared to 2008 resulted from the prepayment of FHLB advances and short term borrowings. Funds from the repayment of loans and the sales of securities available for sale were used to repay borrowings. The above declines in financing cash flows were partially offset by proceeds from the issuance of common stock and deposit growth.

Off Balance Sheet Arrangements, Contractual Obligations and Loan Commitments

The table below summarizes the Company’s loan commitments at December 31, 2010 (in thousands):


	Amount of Commitment Expiration Per Period
	Total
	Amounts		Less than						After 5
Commercial Commitments	Committed		1 year		1-3 years		4-5 years		years

Lines of credit	$	388,712		81,708		—		—		307,004
Standby letters of credit		9,804		9,804		—		—		—
Other commercial commitments		25,855		25,855		—		—		—

Total commercial commitments	$	424,371		117,367		—		—		307,004

Lines of credit are primarily revolving lines to home equity and business loan customers. The business loans usually expire in less than one year and the home equity lines generally expire in 15 years.

Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the performance of a customer to a third party. BankAtlantic standby letters of credit are generally issued to customers in the construction industry guaranteeing project performance. These types of standby letters of credit had a maximum exposure of $8.3 million at December 31, 2010. BankAtlantic also issues standby letters of credit to commercial lending customers guaranteeing the payment of goods and services. These types of standby letters of credit had a maximum exposure of $1.5 million at December 31, 2010. Those guarantees are primarily issued to support public and private borrowing arrangements and have maturities of one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. BankAtlantic may hold certificates of deposit and residential and commercial real estate liens as collateral for such commitments, similar to other types of borrowings.

Other commercial commitments are agreements to lend funds to a customer subject to conditions established in the commitment. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment

151

Financial Services
(BankAtlantic Bancorp)

amounts do not necessarily represent future cash requirements. BankAtlantic evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral required by BankAtlantic in connection with an extension of credit is based on management’s credit evaluation of the counter-party.

At December 31, 2010, the Company did not have off balance sheet arrangements that would have a material effect on the Company’s consolidated financial statements.

The table below summarizes the Company’s contractual obligations at December 31, 2010 (in thousands):


	Payments Due by Period (2)
			Less than						After 5
Contractual Obligations	Total		1 year		1-3 years		4-5 years		years

Time deposits	$	660,134		516,920		122,227		20,984		3
Long-term debt		344,385		—		46,537		3,653		294,195
Advances from FHLB (1)		170,000		170,000		—		—		—
Operating lease obligations held for sublease		35,411		1,541		3,063		3,163		27,644
Operating Tampa lease obligations		27,411		1,727		3,195		2,968		19,521
Operating lease obligations held for use		32,943		5,388		8,841		4,973		13,741
Pension obligation		18,443		1,496		3,155		3,545		10,247
Other obligations		14,006		2,806		6,400		4,800		—

Total contractual cash obligations	$	1,302,733		699,878		193,418		44,086		365,351


(1)		Payments due by period are based on contractual maturities

(2)		The above table excludes interest payments on interest bearing liabilities

Long-term debt primarily consists of the junior subordinated debentures issued by the Parent Company as well as BankAtlantic’s subordinated debentures.

Operating lease obligations held for sublease represent minimum future lease payments on executed leases that the Company intends to sublease or terminate. These lease agreements were primarily initiated in connection with BankAtlantic’s branch expansion program.

Operating Tampa lease obligations represent minimum future lease payments associated with our Tampa branches. BankAtlantic expects to assign these leases to PNC upon consummation of the agreement to sell the Tampa branches.

Operating lease obligations held for use represent minimum future lease payments in which the Company is the lessee for real estate and equipment leases.

The pension obligation represents the accumulated benefit obligation of the Company’s defined benefit plan at December 31, 2010. The payments represent the estimated benefit payments through 2020, the majority of which are anticipated to be funded through plan assets. The table does not include estimated benefit payments after 2021. The actuarial present value of the projected accumulated benefit obligation was $34.0 million at December 31, 2010. The plan was underfunded by $9.7 million as of December 31, 2010. The Company is required to fund plan deficits over a seven year period which would include a contribution of $0.5 million to the pension plan for the year ended December 31, 2010. The Company’s future cash contribution may increase or decrease depending on the performance of the plan assets and the increase or decrease of the projected benefit obligation in subsequent periods.

Pursuant to the Ryan Beck sale agreement, the Parent Company agreed to indemnify Stifel and its affiliates against any claims of any third party losses attributable to disclosed or undisclosed liabilities that arose out of the conduct or activities of Ryan Beck prior to the Stifel acquisition of Ryan Beck. The indemnification of the third party losses is limited to those losses which individually exceed $100,000, and in the aggregate exceed $3 million with a $20 million limitation on the indemnity. The indemnified losses include federal taxes and litigation claims. The indemnification period for claims asserted ended on August 31, 2009. Included in the Company’s consolidated statement of operations in discontinued operations during each of the years in the two years ended December 31, 2010 was $0.5 million in indemnification costs.

152

Financial Services
(BankAtlantic Bancorp)

BankAtlantic has terminated various operating leases originally executed for store expansion or back-office facilities. In certain lease terminations the landlord consents to the assignment of the lease to a third party; however, BankAtlantic remains secondarily liable for the lease obligation. As of December 31, 2010, BankAtlantic was secondarily liable for $9.4 million of lease payments under leases that were assigned to third parties. BankAtlantic uses the same credit policies in assigning these leases to third parties as it does in originating loans.

Other obligations are primarily legally binding agreements with vendors for advertising, marketing and sponsorship services as well as unrecognized tax benefits.

The Company and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its bank operations, lending and tax certificates. Although the Company believes it has meritorious defenses in all current legal actions, the outcome of litigation and regulatory matters and timing of ultimate resolution are inherently difficult to predict and uncertain.

Reserves are accrued for matters in which it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. These accrual amounts as of December 31, 2010 are not material to the Company’s financial statements. The actual costs of resolving these legal claims may be substantially higher or lower than the amounts accrued for these claims. (Refer to note 27, Commitments and Contingencies, for disclosure on range of reasonably possible losses estimated for legal claims).

153

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

BFC

Market risk is defined as the risk of loss arising from adverse changes in market valuations resulting from interest rate risk, foreign currency exchange rate risk, commodity price risk and equity price risk. BFC’s primary market risk is equity price risk and interest rate risk.

Because BankAtlantic Bancorp and Bluegreen are consolidated in BFC’s financial statements, a significant change in the market price of the stock of those companies would not directly impact BFC’s financial results, but would likely have an effect on the market price of BFC’s common stock. The market price of BFC’s common stock and the market prices of BankAtlantic Bancorp’s and Bluegreen’s common stock are important to the valuation and financing capability of BFC. BFC also owns 800,000 shares of Benihana’s Convertible Preferred Stock for which no market is available. The ability to realize or liquidate this investment will depend on future market and economic conditions and the ability to register the shares of Benihana’s Common Stock acquired by BFC in the event it converts its shares of Benihana’s Convertible Preferred stock, all of which are subject to significant risk. At December 31, 2010, the closing price of Benihana’s Common Stock was $8.01 per share. At December 31, 2010, the market value of the 800,000 shares of Benihana’s Convertible Preferred Stock owned by BFC, if converted to Benihana’s Common Stock, would have been approximately $12.6 million.

Woodbridge

Woodbridge may be subject to interest rate risk on its and its subsidiaries’ long term debt. As previously discussed, during the fourth quarter of 2010, Core relinquished to its lenders title to substantially all of the land Core owned in both Florida and South Carolina and pledged its ownership interests in several of its subsidiaries. In turn, the lenders released Core and its subsidiaries from their obligations with respect to the debt. As of December 31, 2010 (and after giving effect to the resolution of Core’s debt), Woodbridge, including its wholly-owned Carolina Oak subsidiary, had $91.3 million in borrowings with adjustable rates tied to the Prime Rate and/or LIBOR and $42.3 million in borrowings with fixed or initially-fixed rates. This includes $37.2 million of indebtedness tied to the Prime Rate for which Woodbridge is the obligor that is alleged to be in default. As previously discussed, Woodbridge and Carolina Oak are negotiating with the investor group which holds the note to finalize a settlement agreement to resolve the debt. There is no assurance that the settlement agreement will be entered into on the contemplated terms, or at all.

Bluegreen

Bluegreen have increased the sales prices of its VOIs periodically and have experienced increased construction and development costs from time to time during the last several years. There is no assurance that Bluegreen will be able to increase or maintain the current level of its sales prices or that increased construction costs will not have a material adverse impact on its gross margin. In addition, to the extent that inflation in general or increased prices for Bluegreen VOIs adversely impacts consumer demand, Bluegreen’s results of operations could be adversely impacted. While Bluegreen have previously reduced sales prices of its homesites in response to low levels of consumer demand, these same factors may continue to affect its Bluegreen Communities segment in the future.

During 2010, Bluegreen’s total revenues and net assets denominated in a currency other than U.S. dollars represented approximately 3% and less than 1% of our consolidated revenues and its consolidated assets, respectively. Sales generated by Bluegreen Properties, N.V., its subsidiary in Aruba, are transacted in U.S. dollars. The effects of changes in foreign currency exchange rates have not historically been significant to its operations or net assets.

As of December 31, 2010, Bluegreen had fixed interest rate debt of approximately $556.1 million and floating interest rate debt of approximately $268.8 million before purchase accounting adjustment. In addition, the majority of Bluegreen’s notes receivable from VOI and homesite customers were comprised of fixed rate loans. The floating interest rates are based either upon the prevailing prime or LIBOR rates. For floating rate financial instruments, interest rate changes do not generally affect the market value of debt but do impact future earnings and cash flows, assuming other factors are held constant. Conversely, for fixed rate financial instruments, interest rate changes affect the market value of the debt but do not impact earnings or cash flows.

To the extent inflationary trends, tightened credit markets or other factors affect interest rates, Bluegreen debt service costs may increase. If interest rates increased or decreased one percentage point, the effect on interest expense related to Bluegreen’s variable-rate debt would be an annual increase or a decrease of approximately $2.7 million, based on December 31, 2010 balances. A similar change in interest rates would affect the total fair value of Bluegreen’s fixed rate debt by an immaterial amount. This analysis does not consider the effects of changes in the level of overall economic activity that could result due to interest rate changes. Further, in the event of a change in interest rates, Bluegreen would likely attempt to take actions to mitigate any exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the foregoing sensitivity analysis assumes no changes in our financial structure.

154

BankAtlantic Bancorp

The amount of BankAtlantic’s interest earning assets and interest-bearing liabilities expected to re-price, prepay or mature in each of the indicated periods was as follows (in thousands):


	BankAtlantic Re-pricing Gap Table
	As of December 31, 2010
	1 Year			3 Years			5 Years			More Than
	or Less			or Less			or Less			5 Years			Total
Interest earning assets:
Loans:
Residential loans (1)
Fixed rate	$	111,266			75,170			44,668			176,672			407,776
Hybrids ARM less than 5 years		11,358			6,262			243			108			17,971
Hybrids ARM more than 5 years		364,823			235,574			130,028			68,833			799,258
Commercial loans		789,029			159,673			67,379			27,518			1,043,599
Small business loans		153,964			94,869			34,620			22,381			305,834
Consumer		605,346			5,060			3,099			8,812			622,317

Total loans		2,035,786			576,608			280,037			304,324			3,196,755

Investment securities
Mortgage backed securities		45,331			41,248			20,027			64,647			171,253
Other investment securities		329,457			1,734			—			9,807			340,998
Tax certificates		89,789			—			—			—			89,789

Total investment securities		464,577			42,982			20,027			74,454			602,040

Total interest earning assets		2,500,363			619,590			300,064			378,778			3,798,795

Total non-earning assets		669,718			—			—			655			670,373

Total assets	$	3,170,081			619,590			300,064			379,433			4,469,168


Total interest bearing liabilities	$	3,100,738			119,437			19,182			2,310			3,241,667
Non-interest bearing liabilities		158,353			234,742			153,591			680,816			1,227,502

Total non-interest bearing liabilities and equity	$	3,259,091			354,179			172,773			683,126			4,469,169

GAP (repricing difference)	$	(600,374	)		500,154			280,883			376,469
Cumulative GAP	$	(600,374	)		(100,220	)		180,663			557,132
Repricing Percentage		-13.43	%		11.19	%		6.28	%		8.42	%

Cumulative Percentage		-13.43	%		-2.24	%		4.04	%		12.47	%


(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.

BankAtlantic’s residential loan portfolio includes interest-only loans. These loans are scheduled to re-price as follows (in thousands):


Year Ending December 31,	Amount (1)
2011	$	52,146
2012		48,257
2013		96,267
2014		38,655
2015		123,507
Thereafter		191,414

Total interest only loans	$	550,246


(1)		The above table assumes no prepayments.

155

The majority of BankAtlantic’s assets and liabilities are monetary in nature, subjecting BankAtlantic to significant interest rate risk because its assets and liabilities re-price at different times, market interest rates change differently among each rate indices and certain interest earning assets, primarily residential loans, may be prepaid before maturity as interest rates change.

BankAtlantic has developed a model using standard industry software to measure its interest rate risk. The model performs a sensitivity analysis that measures the effect on its net interest income of changes in interest rates. The model measures the impact that parallel interest rate shifts of 100 and 200 basis points would have on net interest income over a 12 month period.

The model calculates the change in net interest income by:

Calculating interest income and interest expense from existing assets and liabilities using current re-pricing, 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; and

iii.

Calculating the percentage change in net interest income calculated in (i) and (ii).

Management of BankAtlantic has made estimates of cash flow, prepayment, repricing and volume assumptions that it believes to be reasonable. Actual results will differ from the simulated results due to changes in interest rates that differ from the assumptions in the simulation model.

In assessing the interest rate risk during 2010 certain assumptions were utilized in preparing the following table. These assumptions related to:

•

Interest rates,

•

Loan prepayment rates,

•

Deposit decay rates,

•

Re-pricing of certain borrowings, and

•

Reinvestment in earning assets.

The prepayment assumptions used in the model were:


•	Fixed rate mortgages	30	%
•	Fixed rate securities	26	%
•	Tax certificates	70	%
•	Adjustable rate mortgages	16	%
•	Adjustable rate securities	25	%

Deposit runoff assumptions used in the model are as follows:


	Within			1-3			3-5			Over 5
	1 Year			Years			Years			Years
Money fund savings accounts decay rates		17	%		17	%		16	%		14	%
NOW and savings accounts decay rates		37	%		32	%		17	%		17	%

156

Presented below is an analysis of the BankAtlantic estimated net interest income over a twelve month period calculated utilizing the Company’s model (dollars are in thousands):


As of December 31, 2010
	Net
Changes	Interest		Percent
in Rate	Income		Change
+200 bp	$	155,248		7.18	%
+100 bp		149,079		2.92	%
0		144,845		—
-100 bp		139,818		-3.47	%
-200 bp		136,919		-5.47	%


As of December 31, 2009
	Net
Changes	Interest		Percent
in Rate	Income		Change
+200 bp	$	166,800		1.93	%
+100 bp		164,645		0.62	%
0		163,634		—
-100 bp		164,519		0.54	%
-200 bp		162,552		-0.66	%

BankAtlantic Bancorp Parent Company has $322.4 million of outstanding junior subordinated debentures at December 31, 2010 of which $254.8 million bear interest at variable interest rates and adjust quarterly and $67.5 million bear interest at an 8.5% fixed rate. As of December 31, 2010, $290.1 million of the junior subordinated debentures are callable and $32.3 million become callable in 2012.

157

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

BFC FINANCIAL CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Certified Public Accounting Firm

Financial Statements:

Consolidated Statements of Financial Condition as of December 31, 2010 and 2009

Consolidated Statements of Operations for each of the years in the three year period ended December 31, 2010

Consolidated Statements of Comprehensive Income (Loss) for each of the years in the three year period ended December 31, 2010

Consolidated Statements of Changes in Equity for each of the years in the three year period ended December 31, 2010

Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 2010

Notes to Consolidated Financial Statements

Bluegreen Corporation

On November 16, 2009, we acquired approximately 7.4 million additional shares of Bluegreen’s common stock, increasing our ownership interest to 16.9 million shares, or approximately 52%, of Bluegreen’s outstanding common stock. Accordingly, we currently have a controlling interest in Bluegreen and, under generally accepted accounting principles (“GAAP”), Bluegreen’s results from the November 16, 2009 acquisition date are consolidated in our financial statements. Prior to November 16, 2009, we owned approximately 9.5 million shares, representing approximately 29%, of Bluegreen’s outstanding common stock. The approximately 29% investment in Bluegreen was accounted for under the equity method of accounting and, under GAAP, we reported our interest in Bluegreen’s earnings or losses in our consolidated financial statements. In accordance with applicable accounting guidance relating to Bluegreen’s status as a “significant subsidiary” during the year ended December 31, 2009, we have attached as Exhibit 99.1 to this Annual Report on Form 10-K Bluegreen’s audited financial statements for each of the years in the three year period ended December 31, 2010, including the report of Ernst & Young LLP, Bluegreen’s independent registered public accounting firm.

158

Report of Independent Registered Certified Public Accounting Firm

To the Board of Directors and Shareholders of

BFC Financial Corporation

In our opinion, based on our audits and the report of other auditors, the accompanying consolidated statements of financial condition and the related consolidated statements of operations, of comprehensive income (loss), of changes in equity and of cash flows present fairly, in all material respects, the financial position of BFC Financial Corporation and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, based on our audit and the report of other auditors, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We did not audit the financial statements or internal control over financial reporting of Bluegreen Corporation (“Bluegreen”), an approximately 52 percent-owned consolidated subsidiary of the Company at December 31, 2010 and 2009. The 2010 Bluegreen financial statements audited by other auditors were prepared on a “historical” basis (prior to purchase accounting adjustments from the November 2009 acquisition discussed in Note 4 to the financial statements) and reflect total assets of $1,255.9 million and total revenue of $365.7 million (subsequently adjusted by the Company to total assets of $1,195.8 million and total revenue of $392.9 million for the application and subsequent effect of purchase accounting adjustments.) The 2009 Bluegreen financial statements audited by other auditors were prepared on a “historical” basis (prior to purchase accounting adjustments from the November 2009 acquisition) and reflect total assets of $1,131.3 million (subsequently adjusted by the Company to $889.3 million for the application and subsequent effect of purchase accounting adjustments). Additionally, we did not audit the financial statements of Bluegreen, an approximately 29 percent-owned equity investment of the Company as of and for the year ended December 31, 2008, which statements represent equity in the net gain (loss) of approximately ($154,000) (prior to the amortization of basis difference of $13.9 million) for the year ended December 31, 2008. We audited the purchase accounting adjustments necessary to convert the “historical” basis financial statements of Bluegreen to the basis reflected in the Company’s 2010 and 2009 consolidated financial statements, as well as the other-than-temporary impairment and amortization of the basis difference recorded in the Company’s 2008 financial statements. The financial statements and internal control over financial reporting of Bluegreen Corporation were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the historical amounts included for Bluegreen Corporation and as to the effectiveness of its internal control over financial reporting as of December 31, 2010, is based solely on the report of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits and the report of other auditors provide a reasonable basis for our opinions.

159

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for transfers of financial assets and consolidation of variable interest entities in 2010. As discussed in Note 1, on November 16, 2009, the Company purchased a controlling interest in Bluegreen and, effective that date, consolidated the financial statements of Bluegreen in the Company’s consolidated financial statements. As discussed in Note 1, the Company changed the manner in which it accounts for business combinations and noncontrolling interests in 2009.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management’s assessment and our audit of BFC Financial Corporation’s internal control over financial reporting also included controls over the preparation of financial statements in accordance with the instructions to the Consolidated Financial Statements for Savings and Loan Holding Companies (OTS Form H-(b) 11) to comply with the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA). A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Miami, Florida
April 8, 2011

160

BFC Financial Corporation

Consolidated Statements of Financial Condition
(In thousands, except share data)

December 31,

2010 2009

(As Revised)

ASSETS

Cash and cash equivalents
$ 178,868 189,728

Interest bearing deposits in other banks
455,538 126,352

Restricted cash ($41,243 held by variable interest entities (“VIE”) at December 31, 2010)
62,249 24,020

Securities available for sale at fair value
465,020 346,375

Investment securities at cost or amortized cost (fair value: $2,033 in 2010 and $9,654 in 2009)
2,033 9,654

Current income tax receivable
9,399 64,006

Tax certificates, net of allowance of $8,811 in 2010 and $6,781 in 2009
89,789 110,991

Federal Home Loan Bank (“FHLB”) stock, at cost which approximates fair value
43,557 48,751

Loans held for sale
29,765 4,547

Loans receivable, net of allowance for loan losses of $162,139 in 2010 and $187,218 in 2009
3,009,721 3,678,894

Notes receivable, including gross securitized notes of $533,343 at December 31, 2010, net of allowance of $93,398 in 2010 and $3,986 in 2009
574,969 279,645

Retained interest in notes receivable sold
— 26,340

Accrued interest receivable
22,010 32,279

Real estate inventory
343,497 484,927

Real estate owned and other repossessed assets
74,488 46,477

Investments in unconsolidated affiliates
12,455 15,272

Properties and equipment, net
218,665 289,209

Goodwill
12,241 12,241

Intangible assets, net
78,918 83,743

Assets held for sale
37,334 —

Assets held for sale from discontinued operations
— 71,900

Prepaid Federal Deposit Insurance Corporation (“FDIC”) deposit insurance assessment
22,008 31,250

Other assets
70,542 65,500

Total assets
$ 5,813,066 6,042,101

LIABILITIES AND EQUITY

Liabilities:

Interest bearing deposits
$ 2,758,032 3,133,360

Non-interest bearing deposits
792,012 815,458

Deposits held for sale
341,146 —

Total deposits
3,891,190 3,948,818

Advances from FHLB
170,000 282,012

Securities sold under agreements to repurchase
21,524 24,468

Other short term borrowings
1,240 2,803

Receivable-backed notes payable, (including $459,030 held by VIE at December 31, 2010)
569,214 237,416

Notes and mortgage notes payable and other borrowings
239,571 395,361

Junior subordinated debentures
461,568 447,211

Deferred income taxes
28,663 25,205

Deferred gain on settlement of investment in subsidiary
11,305 —

Liabilities related to assets held for sale
87 —

Liabilities related to assets held for sale from discontinued operations
— 76,351

Other liabilities
186,547 187,032

Total liabilities
5,580,909 5,626,677

Commitments and contingencies

Preferred stock of $.01 par value; authorized - 10,000,000 shares:

Redeemable 5% Cumulative Preferred Stock — $.01 par value; authorized 15,000 shares issued and outstanding 15,000 shares with redemption value of $1,000 per share
11,029 11,029

Equity:

Class A common stock of $.01 par value, authorized 150,000,000 shares; issued and outstanding 68,521,497 in 2010 and 2009
685 685

Class B common stock of $.01 par value, authorized 20,000,000 shares; issued and outstanding 6,859,751 in 2010 and 6,854,251 in 2009
69 69

Additional paid-in capital
230,748 227,934

(Accumulated deficit) retained earnings
(88,853 ) 18,166

Accumulated other comprehensive income (loss)
223 (1,771 )

Total BFC Financial Corporation (“BFC”) shareholders’ equity
142,872 245,083

Noncontrolling interests
78,256 159,312

Total equity
221,128 404,395

Total liabilities and equity
$ 5,813,066 6,042,101

See Notes to Consolidated Financial Statements.

161

Table of Contents

BFC Financial Corporation

Consolidated Statements of Operations
(In thousands, except per share data)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Revenues

Real Estate and Other:

Sales of real estate
$ 181,366 27,406 13,837

Other resorts and communities operations revenue
67,675 5,832 —

Other revenues
55,826 8,859 3,033

Interest income
93,613 12,182 —

398,480 54,279 16,870

Financial Services:

Interest income
178,735 225,762 314,538

Service charges on deposits
59,844 75,739 93,905

Other service charges and fees
30,140 29,542 28,959

Securities activities, net
2,864 11,180 2,039

Other non-interest income
12,613 11,864 10,130

284,196 354,087 449,571

Total revenues
682,676 408,366 466,441

Costs and Expenses

Real Estate and Other:

Cost of sales of real estate
66,646 108,661 12,838

Cost of sales of other resorts and communities operations
50,377 5,018 —

Interest expense, net of interest capitalized
85,002 18,131 8,431

Selling, general and administrative expenses
245,865 67,035 55,201

Impairment of goodwill
— 2,001 —

Other expenses
3,889 6,449 —

451,779 207,295 76,470

Financial Services:

Interest expense
39,665 74,852 140,502

Provision for loan losses
144,361 232,658 159,801

Employee compensation and benefits
93,950 108,245 128,897

Occupancy and equipment
53,589 58,576 64,782

Advertising and promotion
8,598 8,646 16,335

Check losses
2,421 4,188 8,767

Professional fees
20,438 14,629 12,761

Supplies and postage
3,954 4,173 4,662

Telecommunication
2,533 2,481 4,452

Cost associated with debt redemption
60 7,463 1,238

Provision for tax certificates
4,552 3,388 7,286

Lease termination costs
3,601 2,156 199

Employee termination costs
3,971 2,024 2,171

Impairment of assets held for sale
4,469 — —

Impairment of goodwill
— 8,541 46,564

Impairment of real estate held for sale
2,604 1,158 4,758

Impairment of real estate owned
6,830 4,124 1,465

FDIC special assessment
— 2,428 —

FDIC deposit insurance assessment
10,148 8,562 2,793

Other expenses
21,112 25,175 27,537

426,856 573,467 634,970

Total costs and expenses
878,635 780,762 711,440

(CONTINUED)

See Notes to Consolidated Financial Statements.

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Table of Contents

BFC Financial Corporation

Consolidated Statements of Operations
(In thousands, except per share data)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Gain on bargain purchase of Bluegreen
$ — 182,849 —

(Loss) gain on settlement of investment in Woodbridge’s subsidiary
(977 ) 29,679 —

Gain on extinguishment of debt
13,049 — —

Equity in (loss) earnings from unconsolidated affiliates
(851 ) 33,381 15,064

Impairment of unconsolidated affiliates
— (31,181 ) (96,579 )

Impairment of investments
— (2,396 ) (15,548 )

Investment gains
— 6,654 2,076

Other income
2,691 3,109 7,750

Loss from continuing operations before income taxes
(182,047 ) (150,301 ) (332,236 )

Less: Provision (benefit) for income taxes
105 (68,900 ) 15,763

Loss from continuing operations
(182,152 ) (81,401 ) (347,999 )

Income (loss) from discontinued operations
1,965 (11,931 ) 19,388

Extraordinary gain
— 9,145

Net loss
(180,187 ) (93,332 ) (319,466 )

Less: Net loss attributable to noncontrolling interests
(76,339 ) (120,611 ) (260,567 )

Net (loss) income attributable to BFC
(103,848 ) 27,279 (58,899 )

Preferred stock dividends
(750 ) (750 ) (750 )

Net (loss) income allocable to common stock
$ (104,598 ) 26,529 (59,649 )

Basic and Diluted (Loss) Earnings Per Common Share Attributable to BFC (Note 39):

Basic (Loss) Earnings Per Common Share

(Loss) earnings per share from continuing operations
$ (1.42 ) 0.71 (1.63 )

Earnings (loss) per share from discontinued operations
0.03 (0.24 ) 0.11

Earnings per share from extraordinary gain
— 0.20

Net (loss) income per common share
$ (1.39 ) 0.47 (1.32 )

Diluted (Loss) Earnings Per Common Share

(Loss) earnings per share from continuing operations
$ (1.42 ) 0.71 (1.63 )

(Loss) earnings per share from discontinued operations
0.03 (0.24 ) 0.11

Earnings per share from extraordinary gain
— 0.20

Net (loss) income per common share
$ (1.39 ) 0.47 (1.32 )

Basic weighted average number of common shares outstanding
75,379 57,235 45,097

Diluted weighted average number of common and common equivalent shares outstanding
75,379 57,235 45,097

Amounts attributable to BFC common shareholders:

(Loss) income from continuing operations, net of tax
$ (106,837 ) 40,391 (73,752 )

Income (loss) from discontinued operations, net of tax
2,239 (13,862 ) 4,958

Extraordinary gain, net of tax
— — 9,145

Net income (loss)
$ (104,598 ) 26,529 (59,649 )

See Notes to Consolidated Financial Statements.

163

Table of Contents

BFC Financial Corporation

Consolidated Statements of Comprehensive Income (Loss)
(In thousands)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Net loss
$ (180,187 ) (93,332 ) (319,466 )

Other comprehensive income (loss), net of tax:

Unrealized gains (loss) on securities available for sale
4,340 13,876 (14,576 )

Provision (benefit) for income taxes
1,310 555 (6,647 )

Unrealized gains (loss) on securities available for sale, net of tax
3,030 13,321 (7,929 )

Net change from defined benefit plan
1,655 7,765 (13,911 )

Provision for income taxes
— 2,222 2,112

Net change from defined benefit plan, net of tax
1,655 5,543 (16,023 )

Unrealized losses associated with retained interests in notes receivables sold
— (1,513 ) —

Benefit for income taxes
— (588 ) —

Unrealized losses associated with retained interests in notes receivables sold, net of tax
— (925 ) —

Unrealized gains (losses) associated with investment in unconsolidated affiliates
— 29 (2021 )

Benefit for income taxes
— — (184 )

Unrealized gains (losses) associated with investment in unconsolidated affiliates, net of tax
— 29 (1,837 )

Reclassification adjustments:

Realized net periodic pension (costs) income
(1,356 ) (2,005 ) 248

Net realized (gains) loss on securities available for sale
(3,296 ) (12,435 ) 10,502

Reclassification adjustments
(4,652 ) (14,440 ) 10,750

Other comprehensive income (loss), net of tax
33 3,528 (15,039 )

Comprehensive loss
(180,154 ) (89,804 ) (334,505 )

Less: Comprehensive loss attributable to noncontrolling interest
(77,375 ) (117,610 ) (271,712 )

Total comprehensive (loss) income attributable to BFC
$ (102,779 ) 27,806 (62,793 )

See Notes to Consolidated Financial Statements.

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Table of Contents

BFC Financial Corporation

Consolidated Statements of Changes in Equity
For each of the years in the three year period ended December 31, 2010

(In thousands)

Accumulated

Other

(Accumulated Compre- Total Non-

Shares of Common Class A Class B Additional Deficit) hensive BFC controlling

Stock Outstanding Common Common Paid-in Retained Income Shareholders’ Interest in Total

Class A Class B Stock Stock Capital Earnings (Loss) Equity Subsidiaries Equity

Balance, December 31, 2007
38,233 6,876 382 69 131,189 50,801 1,596 184,037 558,950 742,987

Net loss
— — — — — (58,899 ) — (58,899 ) (260,567 ) (319,466 )

Other comprehensive loss, net of taxes
— — — — — — (3,894 ) (3,894 ) (11,145 ) (15,039 )

Issuance of restricted

Class A Common Stock
120 — — — — — — — — —

Transfer of shares of Common Stock
1 (1 ) — — — — — — —

Purchase and retirement of Class A Common Stock
(100 ) — — — (54 ) — — (54 ) — (54 )

Net effect of subsidiaries’ capital transactions attributable to BFC, net of taxes
— — — — 2,398 — — 2,398 — 2,398

Noncontrolling interests net effect of subsidiaries’ capital transactions
— — — — — — — — (24,684 ) (24,684 )

Cash dividends on 5% Preferred Stock
— — — — — (750 ) — (750 ) — (750 )

Re-classification of the 5% Preferred Stock
—

to Redeemable Preferred stock
— — — — (11,029 ) — — (11,029 ) — (11,029 )

Share-based compensation related to stock options and restricted stock
— — — — 1,058 — — 1,058 — 1,058

Balance, December 31, 2008
38,254 6,875 382 69 123,562 (8,848 ) (2,298 ) 112,867 262,554 375,421

Net income (loss)
— — — — — 27,279 — 27,279 (120,611 ) (93,332 )

Noncontrolling interests from acquisitions
— — — — — — — — 71,344 71,344

Other comprehensive income, net of taxes
— — — — — — 527 527 3,001 3,528

Merger transaction (Note 3)
30,246 — 303 — 94,676 — — 94,979 (99,583 ) (4,604 )

Transfer of shares of Common Stock
21 (21 ) — — — — — — — —

Pro rata share of the cumulative effect of accounting changes recognized by

Bluegreen on retained interests in notes receivable sold
— — — — — 485 — 485 1,575 2,060

Net effect of subsidiaries’ capital transactions attributable to BFC
— — — — 8,333 — — 8,333 — 8,333

Noncontrolling interest net effect of subsidiaries’ capital transactions
— — — — — — — — 41,032 41,032

Cash dividends on 5% Preferred Stock
— — — — — (750 ) — (750 ) — (750 )

Share-based compensation related to stock options and restricted stock
— — — — 1,363 — — 1,363 — 1,363

Balance, December 31, 2009 (As Revised)
68,521 6,854 $ 685 $ 69 $ 227,934 $ 18,166 $ (1,771 ) $ 245,083 $ 159,312 $ 404,395

Cumulative effect of change
— —

in accounting principle (Note 5)
— — — — — (2,421 ) 925 (1,496 ) (1,073 ) (2,569 )

Balance beginning of year, as adjusted
$ 685 $ 69 $ 227,934 $ 15,745 $ (846 ) $ 243,587 $ 158,239 $ 401,826

Net loss
— — — — — (103,848 ) — (103,848 ) (76,339 ) (180,187 )

Other comprehensive income (loss)
— — — — — — 1,069 1,069 (1,036 ) 33

Issuance of Class B Common Stock from exercise of options
— 6 — — 2 — — 2 — 2

Net effect of subsidiaries’ capital transactions attributable to BFC
— — — — 1,760 — — 1,760 — 1,760

Noncontrolling interest net effect of subsidiaries’ capital transactions
— — — — — — — — (2,608 ) (2,608 )

Cash dividends on 5% Preferred Stock
— — — — — (750 ) — (750 ) — (750 )

Share-based compensation related to stock options
— — — — 1,052 — — 1,052 — 1,052

Balance, December 31, 2010
68,521 6,860 $ 685 $ 69 $ 230,748 $ (88,853 ) $ 223 $ 142,872 $ 78,256 $ 221,128

See Notes to Consolidated Financial Statements.

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BFC Financial Corporation

Consolidated Statements of Cash Flows
(In thousands)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Operating activities:

Net loss
$ (180,187 ) (93,332 ) (319,466 )

Adjustment to reconcile net loss to net cash provided by operating activities:

Extraordinary gain
— — (9,145 )

Discontinued operations attributable to noncontrolling interest
— — (12,144 )

Provision for loan valuation allowances, net
155,743 240,169 168,552

Provision for notes receivable allowances, net
46,059 3,986 —

Restructuring charges, impairments and exit activities
14,645 9,209 8,564

Realized gain on extinguishment of debt
(13,837 ) — —

Depreciation, amortization and accretion, net
7,447 24,016 28,389

Share-based compensation expense
5,082 4,724 3,821

Securities activities, net
(2,864 ) (17,834 ) (4,116 )

Net losses (gains) on sales of real estate owned, real estate, loans held for sale and office properties and equipment
1,779 (515 ) (2,448 )

Net gain on sale of assets
(2,104 ) — —

Stifel stock received as earn-out consideration pursuant to the Ryan Beck sales agreement
— (8,589 ) (11,309 )

Gain on bargain purchase of Bluegreen
— (182,849 ) —

Loss (gain) on settlement of investment in Woodbridge’s subsidiary
977 (29,679 ) —

Originations of loans held for sale, net
(49,593 ) (74,764 ) (59,323 )

Proceeds from sales of loans held for sale
52,678 74,325 53,564

Equity in loss (earnings) from unconsolidated affiliates
851 (33,339 ) (14,019 )

Impairment of unconsolidated affiliates
— 31,181 96,579

Impairment of investments
— 2,396 15,548

Impairment of real estate inventory and long lived assets
36,553 94,212 3,605

Impairment of goodwill
— 10,542 46,564

Impairment of fixed assets
— 20,698 —

Deferred income tax (benefit) provision
(875 ) 869 50,260

Decrease (increase) in income tax receivable
23,825 (66,386 ) —

Deferred interest on junior subordinated debentures
14,051 14,139 —

Interest accretion on retained interests in notes receivable sold
— 2,065 —

Net losses associated with debt redemption
60 7,463 1,238

Decrease (increase) in real estate inventory
23,975 (2,610 ) (8,582 )

Increase in securities owned, net
— (103 ) —

Decrease in accrued interest receivable
10,269 9,538 4,454

Decrease (increase) in other assets
49,237 (23,181 ) 15,584

Decrease in notes receivable
64,604 3,431 —

Decrease in customer deposits
— — (123 )

Increase (decrease) in other liabilities
11,027 (13,259 ) (30,858 )

Net cash provided by operating activities
269,402 6,523 25,189

(CONTINUED)

See Notes to Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Cash Flows
(In thousands)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Investing activities:

Proceeds from redemption and maturity of investment securities and tax certificates
$ 118,471 228,522 349,397

Purchase of time deposits in banks
(45,560 ) — —

Purchase of investment securities and tax certificates
(102,118 ) (125,228 ) (377,983 )

Purchase of securities available for sale
(393,610 ) (91,141 ) (288,241 )

Proceeds from sales of securities available for sale
93,361 341,426 395,771

Proceeds from maturities of securities available for sale
192,233 146,543 145,610

Decrease (increase) in restricted cash
(2,545 ) 19,519 (19,081 )

Cash paid in settlement of Woodbridge subsidiary’s bankruptcy
— (12,430 ) —

Purchases of FHLB stock
— (2,295 ) (47,655 )

Redemption of FHLB stock
5,194 8,151 67,051

Investments in unconsolidated affiliates
— (1,629 ) (66 )

Distributions from unconsolidated affiliates
85 334 3,189

Net repayments of loans
382,759 351,811 23,285

Proceeds from the sale of loans receivable
59,697 14,483 10,100

Improvements to real estate owned
(970 ) (1,373 ) (19 )

Proceeds from sales of real estate owned
26,924 6,073 3,810

Proceeds from sales of property and equipment
75,306 9,555 6,693

Purchases of office property and equipment, net
(797 ) (5,121 ) (12,648 )

Net cash outflows from the sale of central Florida stores
— — (4,491 )

Deconsolidation of Woodbridge’s subsidiary cash balance
(1,267 ) — —

Net cash from consolidation of Bluegreen
— 28,682 —

Acquisition of Pizza Fusion
— 3,000 (3,000 )

Acquisition of BankAtlantic Bancorp Class A shares
— — (3,925 )

Net cash provided by investing activities
407,163 918,882 247,797

Financing activities:

Net (decrease) increase in deposits
(57,628 ) 29,022 (3,482 )

Prepayments of FHLB advances
(2,061 ) (1,159,463 ) (694,363 )

Net (repayments) proceeds of FHLB advances
(110,000 ) 467,000 262,808

Net decrease in securities sold under agreements to repurchase
(2,944 ) (16,919 ) (9,543 )

Net decrease in short term borrowings
(1,563 ) — —

Net (decrease) increase in federal funds purchased
— (235,536 ) 129,364

Prepayment of bonds payable
(661 ) — (2,751 )

Repayment of notes, mortgage notes and bonds payable
(408,747 ) (26,377 ) (32,055 )

Proceeds from notes, mortgage notes and bonds payable
198,503 10,576 27,522

Payments for debt issuance costs
(7,066 ) (1,167 ) (518 )

Proceeds from the exercise of stock options
2 — —

Preferred stock dividends paid
(750 ) (750 ) (750 )

Purchase and retirement of BFC Class A common stock
— — (54 )

Purchase and retirement of Woodbridge common stock
— (13 ) (1,439 )

Proceeds from the issuance of Pizza Fusion Class A common stock, net of issuance costs
1,256 — —

Proceeds from issuance of BankAtlantic Bancorp Class A common stock from non-BFC shareholders
4,601 45,563 103

BankAtlantic Bancorp common stock dividends paid to non-BFC shareholders
— (198 ) (636 )

Distribution from non-controlling interest
(10,891 ) — —

Distribution from venture partnership to minority holders
— — (410 )

Net cash used in financing activities
(397,949 ) (888,262 ) (326,204 )

Increase (decrease) in cash and cash equivalents
278,616 37,143 (53,218 )

Cash and cash equivalents at beginning of period
316,080 278,937 332,155

Cash and cash equivalents held for sale
(5,850 ) — —

Cash and cash equivalents at end of period (a)
$ 588,846 316,080 278,937

(a) Included in interest bearing deposits in other banks as of December 31, 2010 was $45.6 million of time deposit. These time deposits had original maturities of greater than 90 days and are not considered cash equivalents.

(CONTINUED)

See Notes to Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Cash Flows
(In thousands)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Supplemental cash flow information:

Interest paid on borrowings and deposits
$ 97,866 86,170 153,168

Income taxes (refunded) paid
(59,306 ) (2,379 ) (44,100 )

Supplementary disclosure of non-cash investing and financing activities:

Loans and tax certificates transferred to real estate owned
61,276 35,914 7,208

BFC and Woodbridge merger related transactions (see Note 3):

Increase in other liabilities
— 4,604 —

Increase in BFC’s Class A Common Stock
— 303 —

Increase in additional paid-in capital
— 94,676 —

Decrease in BFC’s non-controlling interest in Woodbridge
— (99,583 ) —

Long-lived assets held-for-use transferred to assets held for sale
2,842 — —

Long-lived assets held-for-sale transferred to assets held for use
1,239 — —

Inventory acquired through financing
13,200 — —

Securities purchased pending settlement
— 2,018 —

Decrease in additional paid in capital from the re-classification of the 5% Preferred Stock to Redeemable Preferred stock
— — 11,029

Increase (decrease) in BFC accumulated other comprehensive income, net of taxes
1,069 527 (3,894 )

Net increase in BFC shareholders’ equity from the effect of subsidiaries’ capital transactions, net of taxes
1,760 8,333 2,398

Net decrease in equity resulting from cumulative effect of change in accounting principle (See Note 5)
(2,569 ) — —

Net increase in shareholders’ equity resulting from the cumulative effect of accounting changes recognized by Bluegreen on retained interests in notes receivable sold
— 485 —

Transfers to assets held-for-sale:

Cash
5,850 — —

Office properties and equipment
31,484 — —

See Notes to Consolidated Financial Statements.

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BFC Financial Corporation

Notes to Consolidated Financial Statements

1. Business and Summary of Significant Accounting Policies

     Basis of Financial Statement Presentation — BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) is a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), and a non-controlling interest in Benihana, Inc. (“Benihana”). BFC also holds interests in other investments and subsidiaries. As a result of its position as the controlling shareholder of BankAtlantic Bancorp, BFC is a “unitary savings bank holding company” regulated by the Office of Thrift Supervision (“OTS”).

     On September 21, 2009, BFC consummated its merger with Woodbridge Holdings Corporation pursuant to which Woodbridge Holdings Corporation merged with and into Woodbridge Holdings, LLC (“Woodbridge”), BFC’s wholly-owned subsidiary which continued as the surviving company of the merger and the successor entity to Woodbridge Holdings Corporation. As a result of the merger, Woodbridge Holdings Corporation’s separate corporate existence ceased and its Class A Common Stock is no longer publicly traded.

     On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares, or 52%, of Bluegreen’s outstanding stock. As a result of the purchase, we now hold a controlling interest in Bluegreen and, accordingly, have consolidated Bluegreen’s results since November 16, 2009 into our financial statements. Any references to Bluegreen’s results of operations in 2009 includes only 45 days of activity for Bluegreen relating to the period from November 16, 2009, the date of the share purchase, through December 31, 2009 (the “Bluegreen Interim Period”). Prior to November 16, 2009, our approximate 29% equity investment in Bluegreen was accounted for under the equity method. See Note 4 for additional information about the Bluegreen share acquisition on November 16, 2009.

     GAAP requires that BFC consolidate the financial results of the entities in which it has controlling interest. As a consequence, the assets and liabilities of all such entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including BankAtlantic Bancorp, Bluegreen, and Woodbridge are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution from those entities. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At December 31, 2010, we owned approximately 52% of Bluegreen’s common stock and had an approximately 45% ownership interest and 71% voting interest in BankAtlantic Bancorp.

     The Company’s business activities currently consist of (i) Real Estate and Other and (ii) Financial Services. The Company currently reports the results of operations of these business activities through six reportable segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. Bluegreen’s results of operations are reported through the Bluegreen Resorts and Bluegreen Communities segments. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and are reported in two segments: BankAtlantic and BankAtlantic Bancorp Parent Company. See Note 34 for additional information about our segments.

     Revisions to Consolidated Financial Statements — The allocation of the Bluegreen purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and is subject to change within the measurement period as valuations are finalized. If the amounts are changed within the measurement period in a business combination, then the adjustment to change these provisional amounts are retrospectively adjusted as of the date of acquisition. Additionally, any offset relating to amortization/accretion is also retrospectively adjusted in the appropriate periods. The company finalized the valuations in the fourth quarter of 2010. These adjustments resulted in a decrease in total assets and total liabilities of approximately $3.4 million and $3.0 million, respectively, and a decrease in total equity of approximately $0.4 million. Furthermore, the net income attributable to BFC decreased by approximately $289,000 and earnings per share from continuing operations decreased by approximately $0.01 per common share. For further discussion on such adjustments, See Note 4 — Share Acquisitions.

     Additionally, during the fourth quarter, management identified certain errors in its previously reported financial statements for 2010 and 2009. Because these errors are not material to the Company’s financial statements for 2010 or 2009, individually or in the aggregate, the Company corrected these errors as revisions to its quarterly financial statements in 2010 and its December 31, 2009 financial statements. These adjustments include entries to correct errors in the following areas: the recognition of interest income associated with the acquired notes receivable in accordance with the accounting guidance Loans and Debt Securities with Deteriorated Credit Quality; an adjustment to the provision for loan losses for the acquired notes receivable; interest expense recognition for notes payable of certain defaulted debt at Core Communities and Carolina Oak at the defaulted interest rate, where the stated interest rate was previously used; the recognition of income tax benefits associated with unrealized gains in accumulated other comprehensive income; and an adjustment to deferred taxes to correct an impairment to real estate inventory which was reflected post the acquisition date and accounted for as a temporary difference, which should have been included in the determination of deferred taxes at the acquisition date, November 16, 2009, as part of the Bluegreen purchase price allocation.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

     The impact for the three months ended March 31, 2010, was an increase to sales of real estate of $10.2 million, net of allowance, a decrease to interest income of $5.8 million, an increase to interest expense of $1.3 million, and a decrease in income tax benefit of $653,000. The impact for the three months ended June 30, 2010, was an increase to sales of real estate of $12.3 million, net of allowance, a decrease to interest income of $6.5 million, an increase to interest expense of $1.3 million, and an increase in income tax provision of $2.2 million. The impact for the three months ended September 30, 2010, was a decrease to sales of real estate of $5.8 million, net of allowance, an increase to interest income of $2.6 million, a decrease to interest expense of $3.2 million, and an increase in income tax benefit of $1.8 million. For further discussion on such adjustments, see Note 40 — Selected Quarterly Results (Unaudited). The Company will correct these amounts in future filings when it discloses them as comparable periods.

     The impact for the six months ended June 30, 2010, was an increase to sales of real estate of $22.5 million, net of allowance, a decrease to interest income of $ 12.3 million, an increase to interest expense of $2.6 million, and an income tax benefit of $2.9 million.

     The impact for the nine months ended September 30, 2010 was an increase to sales of real estate of $16.8 million, net of allowance, a decrease to interest income of $9.7 million, a decrease to interest expense of $471,000, and an income tax provision of $1.1 million.

     The impact of these adjustments for 2009 was an increase to sales of real estate of $2.4 million, an increase to interest expense of $579,000, an increase to the bargain purchase gain of $4.2 million, and an income tax benefit related to other comprehensive income of $2.8 million.

          The accounting policies applied by the Company conform to accounting principles generally accepted in the United States of America.

          Use of Estimates — In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the statements of financial condition and operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the fair value of assets and liabilities acquired in business combinations, the allowance for loan losses, evaluation of goodwill, intangible and long-lived assets for impairment, valuation of securities, evaluation of securities for impairment and other-than-temporary declines in value, the valuation of real estate acquired in connection with foreclosure or in satisfaction of loans, revenue recognition on percent complete projects, determination of the valuation of real estate assets and impairment, estimated costs to complete construction, the amount of the deferred tax asset valuation allowance, accounting for uncertain tax positions, contingencies and litigation, and accounting for share-based compensation.

          Consolidation Policy — The consolidated financial statements include the accounts of all the Company’s wholly-owned subsidiaries, BankAtlantic Bancorp and Bluegreen, as well as other entities in which the Company and its subsidiaries hold controlling financial interests and variable interest entities (“VIEs”) if the Company is deemed the primary beneficiary of the entity. All significant inter-company accounts and transactions have been eliminated among consolidated entities.

          The results of operations of Bluegreen have been consolidated since November 16, 2009, the date of the additional share acquisition described above and in Note 4. The Company consolidates all of Bluegreen’s wholly-owned subsidiaries and entities in which Bluegreen holds a controlling financial interest. The Company also consolidates Bluegreen’s non-wholly owned subsidiary, Bluegreen/Big Cedar Vacations, LLC (the “Bluegreen/Big Cedar Joint Venture”), as Bluegreen holds a 51% equity interest in the Bluegreen/Big Cedar Joint Venture, has an active role as the day-to-day manager of the Bluegreen/Big Cedar Joint Venture’s activities, and has majority voting control of the Bluegreen/Big Cedar Joint Venture’s management committee.

          In 2008, Woodbridge, indirectly through a wholly-owned subsidiary, made a $3.0 million investment in Pizza Fusion. Pizza Fusion was determined to be a VIE under the provisions of the accounting guidance for consolidation of variable interest entities and Woodbridge’s wholly-owned subsidiary was determined to be the primary beneficiary. Therefore, the Company consolidated Pizza Fusion into its consolidated financial statements as of September 18, 2008. Woodbridge has subsequently made additional investments in Pizza Fusion totaling $1.0 million.

          On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities (“QSPEs”) associated with prior securitization transactions which previously qualified

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BFC Financial Corporation
Notes to Consolidated Financial Statements

for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. See Note 5 for additional information.

          Reclassifications — Certain amounts for prior years have been reclassified to conform to the revised financial statement presentation for 2010.

          In December 2009, Core Communities reinitiated efforts to sell two of its commercial leasing projects (the “Projects”) and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Due to this decision, the assets associated with the Projects were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Additionally, the results of operations for the Projects are included in the Company’s Consolidated Statements of Operations in discontinued operations for all the periods presented. On June 10, 2010, Core sold the Projects for approximately $75.4 million. As a result of the sale, a $2.6 million gain on sale of discontinued operations was realized in 2010. See Note 6 for further information.

          On February 28, 2007, BankAtlantic Bancorp completed the sale to Stifel Financial Corp (“Stifel”) of Ryan Beck Holdings, Inc. (“Ryan Beck”), a subsidiary of BankAtlantic Bancorp engaged in retail and institutional brokerage and investment banking. Discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2010 included liabilities recognized for indemnification obligations under the acquisition agreement. Discontinued operations for the years ended December 31, 2009 and 2008 included earn-out consideration received in accordance with the terms of the acquisition agreement net of indemnification obligations. See Note 6 for further information.

          Gain on settlement of investment in subsidiary — Under the accounting guidance for consolidation, consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owners. Under these rules, legal reorganization or bankruptcy represents conditions which can preclude consolidation or equity method accounting as control rests with the bankruptcy court, rather than the majority owner. As described elsewhere in this report in Note 27, Levitt and Sons declared bankruptcy on November 9, 2007. Therefore, in accordance with the accounting guidance for consolidation, Levitt and Sons was deconsolidated as of November 9, 2007, eliminating all future operations of Levitt and Sons from the Company’s financial results of operations, and the Company followed the cost method of accounting to record its interest in Levitt and Sons.

          During June 2008, Woodbridge entered into a settlement agreement (the “Settlement Agreement”) with the Debtors and the Joint Committee of Unsecured Creditors appointed in the Chapter 11 Cases (“the Joint Committee”). Pursuant to the Settlement Agreement, as it was subsequently amended, Woodbridge agreed to (i) pay $8 million to the Debtors’ Estate, (ii) place $4.5 million in a release fund to be disbursed to third party creditors in exchange for a third party release and injunction, (iii) make a $300,000 payment to a deposit holders fund and (iv) share a percentage of any tax refund attributable to periods prior to the bankruptcy with the Debtors’ Estate. In addition, Woodbridge agreed to waive and release substantially all of the claims it had against the Debtors, including administrative expense claims through July 2008, and the Debtors (joined by the Joint Committee) agreed to waive and release any claims they had against Woodbridge and its affiliates. On February 20, 2009, the Bankruptcy Court entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Joint Committee. That order also approved the settlement pursuant to the Settlement Agreement, as amended. No appeal or rehearing of the court’s order was filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the Settlement Agreement, as amended. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the Settlement Agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary. During the fourth quarter of 2009, we accrued $10.7 million in connection with the portion of the tax refund required to be paid to the Debtors’ Estate pursuant to the Settlement Agreement and as a result the gain on settlement of investment in Woodbridge’s subsidiary for the year ended December 31, 2009 was $29.7 million, net of the tax refund. Additionally, in 2010, we increased the $10.7 million accrual by approximately $1.0 million, representing the portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service (“IRS”) guidance that will likely be required to be paid to the Debtors’ Estate pursuant to the Settlement Agreement. The $1.0 million accrual was recorded in the (loss) gain on settlement of investment in Woodbridge’s subsidiary. As of December 31, 2010, we have a liability of approximately $11.7 million, representing the portion of the tax refunds to be shared with the Debtors’ Estate pursuant to the

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BFC Financial Corporation
Notes to Consolidated Financial Statements

Settlement Agreement. As of December 31, 2010, $8.4 million of the $11.7 million portion of the tax refund to be paid to the Debtors’ Estate was received and placed in an escrow account. The $8.4 million amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010.

          Deferred gain on settlement of investment in subsidiary — During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefore the lender agreed not to enforce a deficiency judgment against Core and, during February 2011,released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million was recorded and is included in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.

          Gain on Debt Extinguishment — In December 2010, Core and one of its subsidiaries entered agreements, including without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefore the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring, and a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.

          Cash and Cash Equivalents — Cash equivalents consist of cash, demand deposits at financial institutions (other than BankAtlantic), federal funds sold, Federal Reserve balances, money market funds and other short-term investments with original maturities at the date of purchase of 90 days or less. Federal funds sold are generally sold for one-day periods, and securities purchased under resell agreements are settled in less than 30 days. Cash and cash equivalents are held at various financial institutions located throughout the United States, Canada and Aruba and exceed federally insured amounts. However, the Company has not experienced any losses on such accounts and periodic evaluations of the relative credit standing of financial institutions maintaining the Company’s deposits are performed to evaluate and mitigate, if necessary, credit risk. Included in interest bearing deposits in other banks as of December 31, 2010 was $45.6 million of time deposits. These time deposits had original maturities of greater than 90 days and are not considered cash equivalents.

          Restricted Cash — Cash and interest bearing deposits are segregated into restricted accounts for specific uses in accordance with the terms of certain land sale contracts, home sales and other agreements and include customer deposits held in escrow accounts. Restricted funds may be utilized in accordance with the terms of the applicable governing documents. The majority of restricted funds are controlled by third-party escrow fiduciaries. Restricted cash as of December 31, 2010 includes the $8.4 million portion of a tax refund that we have placed in escrow and will be paid to the Debtors’ Estate pursuant to the terms of the Settlement Agreement related to the Chapter 11 cases. See Note 25-Income Taxes for further information.

          Investment Securities and Securities Available for Sale — The Company designates its securities as held to maturity, available for sale, or trading, depending on the Company’s intent with regard to its investments at the time of purchase. Debt securities that management has both the intent and ability to hold to maturity are classified as securities held-to-maturity and are stated at cost, net of unamortized premiums and unaccreted discounts.

          Debt securities not held to maturity and marketable equity securities not accounted for under the equity method of accounting are classified as available for sale and are recorded at fair value. Unrealized gains and losses, after

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applicable taxes, resulting from changes in fair value are recorded as a component of other comprehensive income (loss).

          Declines in the value of individual equity securities that are considered other than temporary result in write-downs of the securities to their fair value and the write-downs are included in the Consolidated Statements of Operations. Declines in debt securities held to maturity and available for sale that are considered other than temporary result in write-downs when it is more likely than not the Company will sell the securities before it recovers its cost. If the Company does not intend to sell an impaired debt security but does not expect to recover its cost, the Company determines whether a credit loss exists, and if so, the credit loss is recognized in the consolidated statements of operations and any remaining impairment is recognized in other comprehensive income. The review for other-than-temporary declines takes into account the length of time and the extent to which the fair value has been less than cost, and the financial condition and near-term prospects of the issuer.

          Securities acquired for short-term appreciation or other trading purposes are classified as trading securities and are recorded at fair value. Realized and unrealized gains and losses resulting from such fair value adjustments and from recording the results of sales are recorded in the consolidated statements of operations as securities activities, net.

          Equity securities that do not have readily determinable fair values are carried at historical cost. These securities are evaluated for other-than-temporary declines in value, and, if impaired, the historical cost of the securities is reduced to its estimated fair value and the impairment is recognized in the Consolidated Statements of Operations.

          Interest on securities, including the amortization of premiums and the accretion of discounts, is reported in interest income using the interest method over the lives of the securities, adjusted for actual prepayments. Gains and losses on the sale of securities are recorded on the trade date and recognized using the specific identification method.

          Financial instruments and derivatives — All derivatives are recognized on the consolidated statement of financial condition at their fair value with realized and unrealized gains and losses resulting from fair value adjustments recorded in securities activities, net in the consolidated statement of operations. There were $24,000 and $0 of derivatives outstanding as of December 31, 2010 and 2009, respectively.

          Tax Certificates — Tax certificates represent a priority lien against real property for which assessed real estate taxes are delinquent. Tax certificates are acquired from municipalities generally through public auction. Tax certificates are carried at cost less an allowance for tax certificate losses. Tax certificates and resulting deeds are classified as non-accrual when a tax certificate is 24 to 60 months, depending on the municipality, from the acquisition date. At that time, interest ceases to be accrued.

          Allowance for Tax Certificate Losses — The allowance represents management’s estimate of incurred losses in the portfolio that are probable and subject to reasonable estimation. In establishing its allowance for tax certificate losses, management considers past loss experience, present indicators, such as the length of time the certificate has been outstanding, economic conditions and collateral values.

          Loans Receivable — Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at their outstanding principal balances net of any unearned income, unamortized deferred fees or costs, premiums or discounts and an allowance for loan losses. Loan origination fees and direct loan origination costs are deferred and recognized in interest income over the estimated life of the loans using the interest method, adjusted for actual prepayments.

          Allowance for Loan Losses — The allowance for loan losses reflects management’s reasonable estimate of probable credit losses inherent in the loan portfolio based on management’s evaluation of credit risk as of period end. Loans are charged off against the allowance when management believes the loan is not collectible. Recoveries are credited to the allowance.

          The allowance consists of two components. The first component of the allowance is for loans that are individually evaluated for impairment. The process for identifying loans to be evaluated individually for impairment is based on management’s identification of criticized loans for commercial real estate, commercial non-real estate and small business loans. The evaluation of commercial real estate, commercial non-real estate and small business loans is part of the on-going monitoring of loan portfolio credit quality and management assigns these loans a risk classification.

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There are seven risk classifications in the “Pass” loan categories and there are four classifications in the criticized loan categories which are defined based on regulatory guidelines. Management evaluates criticized commercial real estate, commercial non-real estate and small business loans greater than $1.0 million for impairment quarterly. Once an individual loan is found to be impaired, an evaluation is performed to determine if a specific reserve needs to be assigned to the loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, impairment may be measured based on the observable market price of the loan or the fair value of the collateral if the loan is collateral dependent. Loans determined to be collateral dependent are measured based on the fair value of the collateral less costs to sell. Consumer and residential loans past due 120 days or more were also evaluated individually for impairment to determine if a specific reserve needs to be assigned to the loan by comparing the carrying amount or to the estimated fair value of the loan’s collateral less cost to sell.

          The second component of the allowance is for groups of loans with common characteristics that are evaluated in loan pools to estimate the inherent losses in the portfolio. Management of BankAtlantic Bancorp segregates loans into segments with certain common characteristics so as to form a basis for estimating losses as it relates to segment. The loan portfolio has the following loan segments: residential, consumer, commercial non-real estate, commercial real estate, and small business loans. The loss experience for each loan segment was derived by calculating a charge-off history by loan segment adjusted by an expected recovery rate. Based on the nature of each portfolio, a time frame is selected for the charge-off history in order to estimate the inherent loss in each segment. The loss factor that was calculated from the charge-off history by loan segment is adjusted by considering the following factors: delinquency and charge-off levels and trends; 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. Based on an analysis of the above factors, management may adjust the historical loss experience up or down to reflect current conditions that differ from the conditions that existed during the historical loss experience time frame.

          Allowance for Loan Losses on VOI Notes Receivable. Bluegreen records an estimate of expected uncollectibility on its VOI notes receivable as a reduction of revenue at the time it recognizes a timeshare sale. Bluegreen estimates uncollectible VOI notes receivable based on historical uncollectibles for similar VOI notes receivable over the applicable historical period, using a technique referred to as static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of those notes.

          Non-accrual and past due loans — Loans are considered past due if the required principal and interest have not been received based on the contractual terms of the loan. Loans are generally placed on non-accrual status at the earlier of the loan becoming 90 days past due as to either principal or interest or when the borrower has entered bankruptcy proceedings and the loan is delinquent. Commercial and small business loans may be placed on non-accrual status sooner due to material deterioration of conditions surrounding the repayment sources, which could include insufficient borrower capacity to service the debt, significantly delayed property sales or development schedules, declines in the loan-to-value of the loan’s collateral or other factors causing the full payment of the loan’s principal and interest to be in doubt. Accordingly, BankAtlantic Bancorp may place a loan on non-accrual status even when payments of principal or interest are not currently in default. However, exceptions to this policy may occur if there exists well secured collateral and the loan is in the process of collection. When a loan is placed on non-accrual, all accrued interest is reversed against interest income. Any payments received on non-accrual loans are applied against principal. Commercial and small business loans may be restored to accrual status when there has been a satisfactory period of performance and the loan is expected to perform in the future according to its contractual terms. Residential and consumer loans are returned to accrual status when the loan becomes less than 90 days past due. Commercial and small business loans are charged-off if the collection of principal or interest is considered doubtful. Consumer and residential real estate loans that are 120 days past due are charged down or a specific valuation allowance is established based on the collateral’s fair value less estimated selling costs. Consumer non-mortgage loans that are 120 days past due are charged off.

          Loans Held for Sale — Loans held for sale are reported at the lower of aggregate cost or estimated fair value. Loan origination fees and related direct loan origination costs on loans held for sale and premiums and discounts on purchased loans held for sale are deferred until the related loan is sold and included in gains and losses upon sale.

          Notes Receivable — Bluegreen’s notes receivable are carried at amortized cost less an allowance for bad debts. Interest income is suspended and previously accrued but unpaid interest income is reversed on all delinquent notes receivable when principal or interest payments are more than three months contractually past due and not resumed until such loans are less than three months past due. Notes receivable are generally charged off as uncollectible when they have become approximately 120 days past due.

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Notes to Consolidated Financial Statements

          Uncollectibles for vacation ownership interests (“VOI”) notes receivable are estimated in accordance with timeshare accounting rules. Under these rules, the estimate of uncollectibles is based on historical uncollectibles for similar VOI notes receivable over the applicable historical period. Bluegreen uses a static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of the notes. Bluegreen also considers whether the historical economic conditions are comparable to current economic conditions, as well as variations in underwriting standards. Additionally, under timeshare accounting rules no consideration is given for future recoveries of defaulted inventory in the estimate of uncollectible VOI notes receivable. Bluegreen reviews its reserve for loan losses on at least a quarterly basis. Loan origination costs are deferred and recognized over the life of the related notes receivable.

          Bluegreen estimates credit losses on its notes receivable portfolios generated in connection with the sale of homesites in accordance with the accounting rules for contingencies, as its notes receivable portfolios consist of large groups of smaller-balance, homogeneous loans. Under these accounting rules, the amount of loss is reduced by the estimated value of the defaulted inventory to be recovered.

          Acquired Notes Receivable — As part of the Bluegreen share acquisition, the Company acquired assets including a pool of notes receivable consisting principally of homogenous consumer timeshare loans originated by Bluegreen. Consistent with the accounting guidance, the Company has elected an accounting policy based on expected cash flows including, following the guidance on maintaining the integrity of a pool of multiple loans accounted for as a single asset. The loans have common risk characteristics as defined in the accounting guidance Loans and Debt Securities with Deteriorated Credit Quality, including similar risk ratings, as defined and monitored by risk rating agencies, term, purpose and similar collateral type (Vacation Ownership Interests (“VOI’s”)). The Company evaluates the pool of loans accounted for as a single asset for indications of further impairment. Purchased loans are considered to be impaired if the Company does not expect to receive all contractually required cash flows due to concerns about credit quality. The excess of the cash flows expected to be collected measured as of the acquisition date, over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan using a level yield methodology. The difference between contractually required payments as of the acquisition date and the cash flows expected to be collected is referred to as the nonaccretable difference.

          Subsequent decreases to expected principal cash flows result in a charge to provision for credit losses and a corresponding increase to a valuation allowance included in the allowance for loan losses. Subsequent increases in expected principal cash flows result in a recovery of any previously recorded allowance for loan losses, to the extent applicable, and a reclassification from nonaccretable difference to accretable yield for any remaining increase. Changes in expected interest cash flows may result in reclassifications to/from the nonaccretable difference. Loan disposals, which may include receipt of payments in full from the borrower or foreclosure, result in removal of the loan from the loan pool at its allocated carrying amount.

          Retained Interest in Notes Receivable Sold — Bluegreen periodically sells notes receivable originated by its vacation ownership business in connection with the sale of VOIs. In connection with such transactions, Bluegreen retains interest in the notes receivable sold. Prior to the adoption of Accounting Standards Update (“ASU”) 2009-17, these retained interests were reported as assets and treated as available-for-sale investments and, accordingly, carried at fair value. Changes in the fair values of the retained interests in notes receivable sold considered temporary were included in its shareholders’ equity as accumulated other comprehensive income, net of income taxes. The portion of other-than-temporary declines in fair value that represented credit losses were charged to operations.

          Subsequent to the adoption of ASU 2009-17 Bluegreen consolidated special purpose finance entities associated with prior securitization transactions that previously qualified for off-balance-sheet sales treatment and as a result, the retained interests were eliminated. See Note 5 for additional information related to the impact of the adoption of ASU 2009-17.

          Real Estate Owned (“REO”) — REO is recorded at the lower of cost or estimated fair value, less estimated selling costs when acquired. Write-downs required at the time of acquisition are charged to the allowance for loan losses or allowance for tax certificates losses. Expenditures for capital improvements are generally capitalized. Valuation allowance adjustments are made to reflect any subsequent declines in fair values. The costs of holding REO are charged to operations as incurred. Provisions and reversals in the REO valuation allowance are reflected in operations.

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Notes to Consolidated Financial Statements

          Real Estate Inventory — The Company’s real estate inventory is comprised of real estate holdings at Core and Carolina Oak, Bluegreen Resorts and Bluegreen Communities. Inventory at Core and Carolina Oak is stated at the lower of accumulated cost or estimated fair value less cost to sell and consists of land, land development costs, interest costs and other construction costs. As of December 31, 2010, with the exception of certain assets within Tradition Hilton Head, the operations of Core have been deconsolidated. See Note 2 and 14 for further detail.

          Bluegreen’s inventory is comprised of (i) in the Bluegreen Resorts segment, completed real estate-based VOIs, VOIs under construction and land held for future vacation ownership development and (ii) in the Bluegreen Communities segment, residential land acquired or developed for sale. Bluegreen carries its completed inventory at the lower of i) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest, real estate taxes plus other costs incurred during construction, or ii) estimated fair value, less costs to sell. VOI inventory and cost of sales is accounted for under the provisions of timeshare accounting rules, which defines a specific method of the relative sales value method for relieving VOI inventory and recording cost of sales. Under the relative sales value method required by timeshare accounting rules, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage—the ratio of total estimated development cost to total estimated VOI revenue, including the estimated incremental revenue from the resale of VOI inventory repossessed, generally as a result of the default of the related receivable. Also, pursuant to timeshare accounting rules, Bluegreen does not relieve inventory for VOI cost of sales related to anticipated credit losses (accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable). For Bluegreen Communities real estate projects, costs are allocated to individual home sites in the projects based on the relative estimated sales value of each home site in accordance with the accounting guidance for real estate, which defines the accounting for costs of real estate projects. Under this method, the allocated cost of a unit is relieved from inventory and recognized as cost of sales upon recognition of the related sale. Home sites reacquired upon default of the related receivable are considered held for sale and are recorded at fair value less costs to sell.

          Bluegreen periodically evaluates the recovery of the carrying amount of incomplete or undeveloped resort and residential communities’ properties under the accounting guidelines for Property, Plant and Equipment, which provides guidance relating to the accounting for the impairment or disposal of long-lived assets. During 2010, Bluegreen recorded $14.9 million in impairment charges to reduce the carrying value of inventory related to certain developed and undeveloped phases of its residential communities. See Note 14 for further discussion.

          Real estate inventory also includes BankAtlantic Bancorp’s investment in a real estate development and land acquired for branch expansion that BankAtlantic Bancorp has committed to sell.

          Capitalized Interest — Interest incurred relating to land under development and construction is capitalized to real estate inventory or property and equipment during the active development period. For inventory, interest is capitalized at the effective rates paid on borrowings during the pre-construction and planning stages and the periods that projects are under development. Capitalization of interest is discontinued if development ceases at a project. Capitalized interest is expensed as a component of cost of sales as related homes, land and units are sold. For property and equipment under construction, interest associated with these assets is capitalized as incurred to property and equipment and is expensed through depreciation once the asset is put into use.

          Impairment of Long Lived Assets — Long-lived assets consist of real estate inventory, property and equipment and other amortizable intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to estimated future undiscounted cash flows expected to be generated by the asset, or by using appraisals of the related assets. Using estimated future undiscounted cash flows or appraisals requires significant judgment and opinions in developing estimates. Real estate may also be valued using third party offers to purchase, discounted cash flows or broker price opinions. Appraisals generally use the market approach valuation technique and use market observable data to formulate an opinion of the fair value of the properties. However, the appraiser or brokers use professional judgment in determining the fair value of the properties, and the Company may also adjust these values for changes in market conditions subsequent to the valuation date when current appraisals are not available. As a consequence of using discounted cash flows, broker price opinions, offers to purchase and adjustments to appraisals, the fair values of the properties use Level 3 inputs in the determination of fair value.

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          The assumptions developed and used by management to evaluate impairment are subjective and involve significant estimates, and are subject to increased volatility due to the uncertainty of the current market environment. As a result, actual results could differ materially from management’s assumptions and estimates and may result in material inventory impairment charges in the future.

          Long-lived assets to be abandoned are considered held and used until disposed. The carrying value of a long-lived asset to be abandoned is depreciated over its shortened depreciable life when the Company commits to a plan to abandon the asset before the end of its previously estimated useful life. An impairment loss is recognized at the date a long-lived asset is exchanged for a similar productive asset if the carrying amount of the asset exceeds its fair value. Long-lived assets classified as held for sale are reported at the lower of its carrying amount or fair value less estimated selling costs and depreciation (amortization) ceases.

          Investments in Unconsolidated Affiliates — The Company follows the equity method of accounting to record its interests in entities in which it does not own the majority of the voting stock and to record its investment in variable interest entities in which it is not the primary beneficiary. Under the equity method, the initial investment in the entity is recorded at cost and is subsequently adjusted to recognize the Company’s share of the entity’s earnings or losses. Distributions received and other-than temporary impairments reduce the carrying amount of the investment.

          The Company reviews its equity and cost method investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment in which the Company evaluates, among other factors, the fair market value of the investments, general market conditions, the duration and extent to which the fair value of the investment is less than cost, and the Company’s intent and ability to hold the investment until it recovers. The Company also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, rating agency actions, changes in operations and financing cash flow factors. If a decline in the fair value of the investment is determined to be other-than-temporary, an impairment charge is recorded to reduce the investment to its fair value and a new cost basis in the investment is established.

          Properties and Equipment — Properties and equipment consists primarily of office properties, leasehold improvements, furniture and fixtures, equipment and computer software, golf course land and water treatment and irrigation facilities, and are carried at cost less accumulated depreciation. Land is carried at cost. Depreciation is primarily computed on the straight-line method over the estimated useful lives of the assets which generally range up to 40 years for buildings, from 3 to 11 years for office equipment, furniture and fixtures and up to 39 years for golf course land improvements. The cost of leasehold improvements is amortized using the straight-line method over the shorter of the terms of the related leases or the useful lives of the assets. Interest expense associated with the construction of certain fixed assets is capitalized as incurred and relieved to expense through depreciation once the asset is put into use. Direct costs associated with development of internal-use software are capitalized and amortized over 3 to 5 years. In cases where the Company determines that land and the related development costs are to be used as fixed assets, these costs are transferred from inventory of real estate to property and equipment.

          Expenditures for new properties, leasehold improvements and equipment and major renewals and betterments are capitalized. Expenditures for maintenance and repairs are expensed as incurred, and gains or losses on disposal of assets are reflected in current operations.

          Goodwill and Intangible Assets — Goodwill is recorded at the acquisition date of a business. Goodwill is not amortized, but instead tested for impairment at least annually or at interim periods if events occur that might result in a decline in the fair value of the reporting unit.

          Goodwill testing is a two-step process. The first step of the goodwill impairment test is used to identify potential impairment. This step compares the fair value of the reporting unit with its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is considered not impaired and the second step of the impairment test is not necessary. If the fair value of the reporting unit is less than the carrying value, then the second step of the test is used to measure the amount of goodwill impairment, if any, in the reporting unit. This step compares the current implied goodwill in the reporting unit to its carrying amount. If the carrying amount of the goodwill exceeds the implied goodwill, impairment is recorded for the excess. The implied goodwill is determined in the same manner as the amount of goodwill recognized in a business combination is determined.

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Notes to Consolidated Financial Statements

          Intangible assets consist of management contracts which are now consolidated in our financial statements as a result of the November 16, 2009 acquisition of additional Bluegreen shares. Such management contracts have indefinite useful lives and are not amortized, but instead are reviewed for impairment on at least an annual basis, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable. At December 31, 2010 and 2009, other intangible assets also consist of core deposit intangible assets of approximately $12.7 million and $16.2 million, respectively, which were initially recorded at fair value and then amortized over the average life of the respective assets, ranging from 7 years to 10 years.

          The Company evaluates the recovery of the carrying amount of its long-lived assets under applicable accounting guidance which requires that intangible assets deemed to have indefinite lives not be amortized, but rather be tested for impairment on at least an annual basis or when events and circumstances indicate that assets may be impaired and when the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The carrying value of these assets is dependent upon estimates of future earnings. If cash flows decrease significantly, intangible assets may be impaired and would be written down to their fair value. The estimates of useful lives and expected cash flows require the Company to make significant judgments regarding future periods that are subject to outside factors.

Revenue Recognition and Contracts Receivable

          The Company’s revenue and all related costs and expenses from house and land sales are recognized at the time that closing has occurred, when title and possession of the property and the risks and rewards of ownership transfer to the buyer, and when the Company does not have a substantial continuing involvement in accordance with the accounting guidance for sales of real estate. In order to properly match revenues with expenses, the Company estimates construction and land development costs incurred and to be incurred, but not paid at the time of closing. Estimated costs to complete are determined for each closed home and land sale based upon historical data with respect to similar product types and geographical areas and allocated to closings along with actual costs incurred based on a relative sales value approach. To the extent the estimated costs to complete have significantly changed, the Company will adjust cost of sales in the current period for the impact on cost of sales of previously sold homes and land to ensure a consistent margin of sales is maintained.

          Revenue is recognized for certain land sales on the percentage-of-completion method when the land sale takes place prior to all contracted work being completed. Pursuant to the requirements of the accounting guidance for sales of real estate, if the seller has some continuing involvement with the property and does not transfer substantially all of the risks and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the seller’s continuing involvement. In the case of land sales, this involvement typically consists of final development activities. The Company recognizes revenue and related costs as work progresses using the percentage of completion method, which relies on estimates of total expected costs to complete required work. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs at the time of sale. Actual revenues and costs to complete construction in the future could differ from current estimates. If the estimates of development costs remaining to be completed are significantly different from actual amounts, then the revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.

          The Company’s other revenues consist primarily of rental property income, marketing revenues, irrigation service fees, and title and mortgage revenue. Irrigation service connection fees are deferred and recognized systematically over the life of the irrigation plant. Irrigation usage fees are recognized when billed as the service is performed. Rental property income consists of rent revenue from long-term leases of commercial property. The Company reviews all new leases in accordance with the accounting guidance for leases. If the lease contains fixed escalations for rent, free-rent periods or upfront incentives, rental revenue is recognized on a straight-line basis over the life of the lease.

          In accordance with the requirements of the accounting guidance for real estate time-sharing activities, Bluegreen recognizes revenue on VOI and home site sales when a minimum of 10% of the sales price has been received in cash (demonstrating the buyer’s commitment), the legal rescission period has expired, collectability of the receivable representing the remainder of the sales price is reasonably assured and Bluegreen has completed substantially all of its obligations with respect to any development related to the real estate sold. Bluegreen believes that it uses a reasonably

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reliable methodology to estimate the collectability of the receivables representing the remainder of the sales price of real estate sold. See further discussion of Bluegreen’s policies regarding the estimation of credit losses on its notes receivable above. Should Bluegreen’s estimates regarding the collectability of its receivables change adversely, it may have to defer the recognition of sales and its results of operations could be negatively impacted. Under the provisions of timeshare accounting rules the calculation of the adequacy of a buyer’s commitment for the sale of VOIs requires that cash received towards the purchase of Bluegreen’s VOIs be reduced by the value of certain incentives provided to the buyer at the time of sale. If after considering the value of the incentive the 10% requirement is not met, the VOI sale, and the related cost and direct selling expenses, are deferred until such time that sufficient cash is received from the customer, generally through receipt of mortgage payments. Changes to the quantity, type, or value of sales incentives that Bluegreen provides to buyers of its VOIs may result in additional VOI sales being deferred, and thus its results of operations could be materially adversely impacted.

          In cases where all development has not been completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of accounting. Should Bluegreen’s estimates of the total anticipated cost of completing any of its Bluegreen Resorts’ or Bluegreen Communities’ projects increase, it may be required to defer a greater amount of revenue or may be required to defer revenue for a longer period of time, and thus its results of operations could be materially adversely impacted.

          Contracts receivable included in other assets in the Company’s consolidated statement of financial condition consist of: (1) amounts receivable from customers on recent sales of VOIs pending recording of the customers’ notes receivable in Bluegreen’s loan servicing system; (2) receivables related to unclosed home site sales; and, (3) receivables from third-party escrow agents on recently closed home site sales.

          Under timeshare accounting rules, rental operations, including accommodations provided through the use of Bluegreen’s Sampler program, are accounted for as incidental operations whereby incremental carrying costs in excess of incremental revenue are charged to expense as incurred. Conversely, incremental revenue in excess of incremental carrying costs is recorded as a reduction to VOI inventory. Incremental carrying costs include costs that have been incurred by Bluegreen during the holding period of the unsold VOIs, such as developer subsidies and maintenance fees on the unsold VOI inventory. During the year ended December 31, 2010, all of Bluegreen’s rental revenue and sampler revenue earned in the Bluegreen Resorts segment were recorded as an off-set to cost of other resort and communities operations as such amounts were less than the incremental carrying cost.

          Bluegreen also generates revenue from the activities listed below. The table provides a brief description of the applicable revenue recognition policy:

Activity Revenue is recognized as:

Fee-based sales commission
The sale transaction with the VOI purchaser was consummated in accordance with the terms of the agreement with the third party developer and the related consumer recession period has passed.

Resort Management and service fees
Management services are rendered. ⁽¹⁾

Resort title fees
Escrow amounts are released and title documents are completed.

Rental and Sampler program
Guests complete stays at the resorts. Rental and Sampler program proceeds are classified as a reduction to “Cost of other resort and communities operations”.

Communities realty commissions
Sales of third-party-owned real estate are completed.

Golf course and ski hill daily fees
Services are provided.

⁽¹⁾ In connection with its management of the property owner’s associations, among other things, Bluegreen acts as agent for the property owner’s association to operate the respective resorts as provided under the management agreements. In certain cases, the personnel at the resort are Bluegreen employees. The property owners’ association bears all of the economic costs of such personnel and generally pays Bluegreen in advance of, or simultaneously to, the payment of payroll. In accordance with the accounting guidance for reporting revenues gross versus net, reimbursements from the property owners’ associations relating to direct pass-through costs are recorded net of the related expenses.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          The cost of other resort and communities operations consists of the costs associated with the various revenues described above as well as developer subsidies and maintenance fees on Bluegreen’s unsold VOIs.

          Deferred Financing Costs — Deferred financing costs are comprised of costs incurred in connection with securing financing from third-party lenders and are capitalized and amortized to interest expense over the terms of the related financing arrangements.

          Business Combinations — In December 2007, the FASB revised its authoritative guidance for business combinations which significantly changed the accounting for business combinations. Under this guidance, subject to limited exceptions, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value. Additionally, due diligence and transaction costs incurred to effect a business combination are expensed as incurred, as opposed to being capitalized as part of the acquisition purchase price. This guidance also includes a substantial number of new disclosure requirements. The Company adopted this guidance on January 1, 2009.

          The Company accounts for its acquisitions in accordance with the accounting guidance for business combinations. If the Company makes a “bargain purchase”, the Company recognizes a gain in the income statement on the acquisition date. A bargain purchase is a business combination in which the amounts of the identifiable net assets acquired and the liabilities assumed, as measured on the acquisition date in accordance with the accounting guidance for business combinations, exceeds the aggregate of (i) the consideration transferred, as measured in accordance with the accounting guidance, which generally requires acquisition date fair value; (ii) the fair value of any non-controlling interest in the acquiree, and (iii) in a business combination achieved in stages, the acquisition date fair value of the Company’s previously held equity interest in the acquiree. This allocation process requires extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. The Company may utilize independent third parties to assist the Company in assessing market conditions when appropriate. The Company is also required to periodically review these judgments and estimates and adjust them accordingly. If conditions change from those expected, it is possible that the results could change in future periods. Certain identifiable intangible assets, such as management contracts, are not amortized, but instead are reviewed for impairment on at least an annual basis, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company accounted for the acquisition of a controlling interest in Bluegreen in November 2009 as a bargain purchase. Accordingly, judgments regarding the value of Bluegreen’s assets and liabilities as of the acquisition date have had, and may continue to have, a significant impact on the Company’s operating results.

          Lease Termination Costs — Costs to terminate a lease contract before the end of its term are recognized and measured when the Company gives notice to the counterparty in accordance with the contract’s terms or has negotiated a termination of the contract with the counterparty. Contracts that have not been terminated and have no economic benefit to the Company are measured at fair value.

          Advertising — Advertising expenditures are expensed as incurred.

          Income Taxes — BFC and its subsidiaries in which it owns more than 80% of its outstanding equity file a consolidated U.S. federal and Florida income tax return. Other than Florida, the Company and its subsidiaries file separate state income tax returns for each jurisdiction. Subsidiaries in which the Company owns less than 80% of the outstanding equity are not included in the Company’s consolidated U.S. federal income tax return.

          The provision for income taxes is based on income before taxes reported for financial statement purposes after adjustment for transactions that do not have tax consequences. Deferred tax assets and liabilities are realized according to the estimated future tax consequences attributable to differences between the carrying value of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates as of the date of the statement of financial condition. The effect of a change in tax rates on deferred tax assets and liabilities is reflected in the period that includes the statutory enactment date. A deferred tax asset valuation allowance is recorded when it has been determined that it is more likely than not that deferred tax assets will not be realized. If a valuation allowance is needed, a subsequent change in circumstances that causes a change in judgment about the realization of the related deferred tax amount could result in the reversal of the deferred tax valuation allowance.

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          The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position taken or expected to be taken in a tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes.

          Noncontrolling Interests — In December 2007, the FASB issued guidance for noncontrolling interest and for the deconsolidation of a subsidiary. Specifically, this guidance requires that a noncontrolling interest (minority interest) be recognized as equity in the consolidated financial statements and itemized separately from the parent’s equity. This guidance also established accounting and reporting standards for the amount of consolidated net income attributable to the parent and to the noncontrolling interest and it also clarified that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this guidance required that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the noncontrolling equity investment on the deconsolidation date. This guidance also included expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. This guidance was effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company adopted this guidance on January 1, 2009. Noncontrolling interests reflect third parties’ ownership interests in entities that are consolidated and less than 100% owned.

          Accounting for Loss Contingencies — Loss contingencies, including legal actions, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

          Brokered Deposits — Brokered deposits are accounted for at historical cost and discounts or premiums, if any, are amortized or accreted using the effective interest method over the term of the deposit.

          Earnings (Loss) Per Share — Basic earnings (loss) per share excludes dilution and is computed by dividing net income (loss) allocable to common stock (after deducting preferred stock dividends) by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if options to acquire common shares of the Company were exercised. Common stock options, if dilutive, are considered in the weighted average number of dilutive common shares outstanding. The options or restricted stock are included in the weighted average number of dilutive common shares outstanding based on the treasury stock method, if dilutive. Diluted (loss) earnings per share is computed in the same manner as basic (loss) earnings per share, but it also takes into consideration the potential dilution from securities issued by subsidiaries that enable their holders to obtain the subsidiary’s common stock. The resulting net income (loss) amount is divided by the weighted average number of dilutive common shares outstanding, when dilutive.

          Stock-Based Compensation Plans — We account for stock-based compensation using the fair value method of expense recognition. The fair value of stock options is estimated using the Black-Scholes option-pricing model. The fair value of non-vested restricted common stock awards is generally the market price of the Company’s common stock on the grant date. Compensation expense for stock options and non-vested restricted common stock is based on the fair value of the award on the measurement date, which is generally the grant date. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the awards.

          Credit Risk Management — The Company has segregated BankAtlantic Bancorp’s loan portfolio into five segments in order to determine its allowance for loan losses. The five segments are commercial non-real estate, commercial real estate, residential, consumer and small business.

          Commercial non-real estate and small business loans are underwritten after evaluating the borrower’s business and its ability to comply with the note’s contractual terms. These loans are designed to promote relationship banking rather than transactional banking. These loans are generally underwritten based on the identified cash flows of the borrower’s business and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value.

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Additionally, these borrowers are primarily located in Florida and adverse economic events in Florida significantly impact the credit quality of this portfolio.

          Commercial real estate loans that are not land loans or commercial residential loans are primarily underwritten based on the cash flow of the borrower’s business and secondarily based on the fair value of the underlying collateral. Commercial real estate lending typically involves higher loan balances and the repayment of these loans is generally largely dependent on the operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans are adversely affected by downturns in the real estate markets or in the general economy where the property is located. The properties securing the commercial real estate portfolio are primarily located in Florida which increases the Company’s exposure to adverse economic events in Florida. BankAtlantic Bancorp monitors and evaluates commercial real estate loans based on collateral, risk grades and debt service coverage. Commercial land and commercial residential loans, which include builder land loans, land acquisition and development loans and land, acquisition, development and construction loans, are generally loans to developers and builders. These loans are generally underwritten based upon estimates of costs and value associated with the completed project and the repayment of these loans is often dependent on the success of the project. These loans are considered to have higher risks than other commercial real estate loans, as repayment is based on the success of the real estate project as opposed to established cash flows.

          BankAtlantic Bancorp’s residential loan portfolio consists primarily of purchased residential first mortgages that were originated by other financial institutions. BankAtlantic Bancorp purchases residential loans located throughout the country. The majority of these residential loans are jumbo residential loans. A jumbo loan has a principal amount above the industry-standard definition of conventional conforming loan limits. These loans could potentially have outstanding loan balances significantly higher than related collateral values in distressed areas of the country as a result of real estate value declines in the housing markets. Also included in this purchased residential loan portfolio are interest-only loans. The structure of these loans results in possible future increases in a borrower’s loan payments when the contractually required repayments change due to interest rate movement and the required amortization of the principal amount. These payment increases could affect a borrower’s ability to meet the debt service on or repay the loan and lead to increased defaults and losses. Real estate values nationwide have significantly declined since these loans were originated exposing BankAtlantic Bancorp to elevated credit risk in this portfolio.

          BankAtlantic Bancorp’s consumer loan portfolio consists primarily of home equity loans with the underlying collateral located in Florida. These loans were originated based primarily on credit scores and secondarily loan to value ratios. These loans are primarily second mortgages resulting in a limited ability to realize collateral value upon default. The default rates of consumer home equity and residential loans are adversely affected by rising unemployment and declining real estate values.

New Accounting Standards

          On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities associated with prior securitization transactions that previously qualified for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. Accordingly, Bluegreen’s consolidated special purpose finance entities and BankAtlantic Bancorp’s consolidated factoring joint venture are now consolidated in BFC’s financial statements. The consolidation of Bluegreen’s special purpose finance entities resulted in a one-time non-cash after-tax reduction to retained earnings of $2.4 million and the following impacts to the Company’s Consolidated Statement of Financial Condition at January 1, 2010: (1) assets increased by $413.8 million, primarily representing the consolidation of notes receivable, net of allowance, partially offset by the elimination of Bluegreen’s retained interests; (2) liabilities increased by $416.7 million, primarily representing the consolidation of non-recourse debt obligations associated with third parties, partially offset by the elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.9 million, including a decrease of approximately $1.4 million to noncontrolling interests (see Note 5 for further information). The consolidation of BankAtlantic Bancorp’s factoring joint venture did not have any impact on our consolidated financial statements other than a decrease in investments in unconsolidated affiliates.

          Beginning with the period ended March 31, 2010 new accounting guidance was implemented requiring the following additional disclosure regarding fair value measurements: (1) transfers in and out of Level 1 and 2

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measurements and the reasons for the transfers, and (2) a presentation of gross activity within the Level 3 roll forward. The guidance also included clarifications to existing disclosure requirements on the level of disaggregation and disclosures regarding inputs and valuation techniques. The guidance is applicable to all disclosures about recurring and nonrecurring fair value measurements. The effective date of the guidance was the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 roll forward information, which is required for annual reporting periods beginning after December 15, 2010 and for interim reporting periods within those years. The additional disclosures made in accordance with this new guidance did not have a material effect on the Company’s financial statements.

          In July 2010, the FASB issued new disclosure guidance about the “Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The new guidance requires enhanced disclosures related to the credit quality of financing receivables which includes the Company’s loans receivable and the allowance for loan losses, and provides that new and existing disclosures should be disaggregated based on how an entity develops its allowance for loan losses and how it manages credit exposures. Under the new guidance, additional disclosures required for loans receivable include information regarding the aging of past due receivables, credit quality indicators, and troubled debt restructure modifications of financing receivables. The new guidance became effective for periods ending after December 15, 2010, with the exception of the amendments to the roll forward of the allowance for credit losses which are effective for periods beginning after December 15, 2010. Disclosures about troubled debt restructured loans were deferred to coincide with the effective date of a proposed accounting standards’ update related to troubled debt restructurings, which is currently expected to be effective for periods ending after June 15, 2011. Comparative disclosures are required only for periods ending subsequent to initial adoption. The additional disclosures made in accordance with the new guidance did not have a material effect on the Company’s financial statements.

          In December 2010, the FASB issued new disclosure guidance that modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist such as the occurrence of an event or change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The new accounting guidance was effective for the Company on January 1, 2011 and the Company believes that the new guidance will not have a material effect on the Company’s financial statements

2. Liquidity and Regulatory Considerations

BFC

          Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen and Woodbridge are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, including tax refunds received as a result of tax law changes, short-term investments, and dividends from Benihana. As discussed elsewhere in this report, we also expect to receive an additional $10.8 million tax refund, of which approximately $3.3 million is due to the Debtors’ Estate pursuant to the previously describe Settlement Agreement.

          We may use our available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments, fund operations or repurchase shares of our common stock pursuant to our share repurchase program. The current program authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the years ended December 31, 2010 or 2009. As discussed further in this report, during June and July 2010, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock for an aggregate purchase price of $15 million as a result of its exercise of subscription rights distributed in BankAtlantic Bancorp’s rights offering to its shareholders.

          Since March 2009, BFC has not received cash dividends from BankAtlantic Bancorp and BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock without the prior written non-objection of the OTS. In addition, during February 2009, BankAtlantic Bancorp elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt. BankAtlantic Bancorp is permitted to defer quarterly interest payments for up to 20 consecutive quarters. During the deferral period, BankAtlantic Bancorp is prohibited from paying

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dividends to its shareholders, including BFC. While BankAtlantic Bancorp can end the deferral period at any time, BankAtlantic Bancorp has indicated that it anticipates that it may continue to defer such interest payments for the foreseeable future. Furthermore, BFC has not received cash dividends from Bluegreen and does not expect to receive cash dividends from Bluegreen in the foreseeable future. Certain of Bluegreen’s credit facilities contain terms which may limit the payment of cash dividends.

          We believe that our current financial condition and credit relationships, together with anticipated cash flows from operating activities and other sources of funds, including tax refunds and, if determined to be advisable, proceeds from the disposition of certain properties or investments, will provide for anticipated near-term liquidity needs. With respect to long-term liquidity requirements, BFC may also seek to raise funds, subject to compliance with our commitment to the OTS described below, through the incurrence of long-term secured or unsecured indebtedness, the issuance of equity and/or debt securities or through the sale of assets; however, there is no assurance that any of these alternatives will be available to BFC on attractive terms, or at all.

          BFC Regulatory Considerations

          BFC, on a parent company only basis, has committed that it will not, without the prior written non-objection of the OTS:

(i) incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with BankAtlantic’s compliance requirements applicable to it;

(ii) declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter or

(iii) enter into any new agreements, contracts or arrangements or materially modify any existing agreements, contracts or arrangements with BankAtlantic not consistent with past practices.

Woodbridge

          In 2007, Woodbridge acquired from Levitt and Sons LLC, a former wholly-owned subsidiary of Woodbridge (“Levitt and Sons”), all of the outstanding membership interests in Carolina Oak, a South Carolina limited liability company (formerly known as Levitt and Sons of Jasper County, LLC). As a result of the significant challenges faced during 2009, Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, the inventory of real estate at Carolina Oak was reviewed for impairment and a $16.7 million impairment charge was recorded to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

          As previously disclosed, under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve the merger between Woodbridge and BFC and properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares as determined in accordance with the provisions of Florida law in lieu of the shares of BFC’s Class A Common Stock that they would otherwise have been entitled to receive. Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. Woodbridge is currently a party to legal proceedings relating to the Dissenting Holders appraisal process. In December 2009, a $4.6 million liability was recorded with a corresponding reduction to additional paid-in capital, which is reflected in the Company’s Consolidated Statements of Financial Condition representing in the

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aggregate Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain. As a result, there is no assurance as to the amount of the payment that will ultimately be required to be made to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

Core Communities

          Historically, the activities of Core Communities focused on the development of a master-planned community in Port St. Lucie, Florida called Tradition, Florida and a community outside of Hardeeville, South Carolina called Tradition Hilton Head. Until 2009, Tradition, Florida was in active development as was Tradition Hilton Head, although in a much earlier stage.

          During 2010, demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with the various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefore, the lender agreed not to enforce a deficiency judgment against Core and, in February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with the accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.

          In December 2010, Core and one of its subsidiaries entered agreements, including without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefore, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with the accounting guidance, this transaction was accounted for as a troubled debt restructuring and accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.

     On June 10, 2010, Core sold its two commercial leasing projects referred to as “the Projects” to Inland Real Estate Acquisition, Inc. (“Inland”) for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. The sale resulted in net cash proceeds to Core of approximately $1.5 million. See Note 6 for further information regarding the Projects.

BankAtlantic Bancorp and BankAtlantic

Regulatory Considerations

     On February 23, 2011, BankAtlantic Bancorp, at its parent company level (“BankAtlantic Bancorp Parent Company”) and BankAtlantic each entered into a Stipulation and Consent to Issuance of Order to Cease and Desist with the Office of Thrift Supervision (“OTS”), BankAtlantic Bancorp Parent Company’s and BankAtlantic’s primary regulator. The Order to Cease and Desist to which BankAtlantic Bancorp Parent Company is subject is referred to as the “Company Order,” the Order to Cease and Desist to which BankAtlantic is subject is referred to as the “Bank

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Order” and the Company Order and Bank Order are referred collectively to as the “Orders.” The OTS issued the Orders due to BankAtlantic Bancorp’s losses over the past three years, high levels of classified assets and inadequate levels of capital based on BankAtlantic’s risk profile as determined by the OTS’s recent examination. BankAtlantic Bancorp Parent Company is required to submit updated written plans by March 31, 2011 to the OTS that will address, among other things, how BankAtlantic Bancorp Parent Company intends to maintain and enhance its and BankAtlantic’s capital and set forth BankAtlantic Bancorp Parent Company’s business plan for the year ending December 31, 2011. In addition, under the terms of the Company Order, BankAtlantic Bancorp Parent Company is prohibited from taking certain actions without receiving the prior written non-objection of the OTS, including, without limitation, declaring or paying any dividends or other capital distributions and incurring certain indebtedness. BankAtlantic Bancorp Parent Company is also required to ensure BankAtlantic’s compliance with the terms of the Bank Order as well as all applicable laws, rules, regulations and agency guidance.

          Pursuant to the terms of the Bank Order, BankAtlantic is required to attain by June 30, 2011 and maintain a tier 1 (core) capital ratio equal to or greater than 8% and a total risk-based capital ratio equal to or greater than 14%. At December 31, 2010, BankAtlantic had a tier 1 (core) capital ratio of 6.22% and a total risk-based capital ratio of 11.72%. Under the terms of the Bank Order, BankAtlantic is required to, among other things, revise certain of its plans, programs and policies and submit to the OTS certain written plans, including a capital plan, a revised business plan and a plan to reduce BankAtlantic’s delinquent loans and non-performing assets. If BankAtlantic fails to comply with the capital plan and/or fails to attain and maintain the increased capital ratio requirements, or upon any written request from the OTS, BankAtlantic is required to submit a contingency plan, which must detail actions which BankAtlantic would, in its case, take to either merge with or be acquired by another banking institution. BankAtlantic will not be required to implement such contingency plan until such time as it receives written notification from the OTS to do so. In addition, the Bank Order requires BankAtlantic to limit its asset growth and restricts BankAtlantic from originating or purchasing new commercial real estate loans or entering into certain material agreements, in each case without receiving the prior written non-objection of the OTS. Separately, the OTS has confirmed that it has no objection to BankAtlantic originating loans to facilitate the sale of certain assets or the renewal, extension or modification of existing commercial real estate loans, subject in each case to compliance with applicable regulations and bank policies. The Bank Order prohibits the payment of dividends and other distributions without the prior written non-objection of the OTS. The Orders also include certain restrictions on compensation paid to the senior executive officers of BankAtlantic Bancorp Parent Company and BankAtlantic, and restrictions on agreements with affiliates.

          BankAtlantic Bancorp Parent Company and BankAtlantic will seek to meet the higher capital requirements of the Bank Order through the estimated net gain upon consummation of its Tampa branch sale anticipated to close June 2011, subject to regulatory approvals and customary conditions and through other efforts that may include the issuance of BankAtlantic Bancorp’s Class A Common Stock through a public or private offering. BankAtlantic is also pursuing other initiatives to improve its regulatory capital position, including operating strategies to increase revenues and to reduce non-interest expenses, asset balances and non-performing loans. There can be no assurance that BankAtlantic Bancorp Parent Company or BankAtlantic will be able to execute such strategies in order to meet BankAtlantic’s new minimum regulatory capital levels by the required time frames.

          Each Order became effective on February 23, 2011 and will remain in effect until terminated, modified or suspended by the OTS. No fines or penalties were imposed in connection with either Order. While the Orders formalize steps that BankAtlantic Bancorp believes are already underway, any material failure by BankAtlantic Bancorp Parent Company or BankAtlantic to comply with the terms of the Orders, or if unanticipated market factors emerge, and/or if BankAtlantic Bancorp is unable to raise required additional capital, successfully execute its plans, or comply with other regulatory requirements, then the OTS could take further action, which could include the imposition of fines, and/or additional enforcement actions. Enforcement actions available to regulators include the issuance of a capital directive, removal of officers and/or directors, institution of proceedings for receivership or conservatorship, require dissolution or liquidation and terminate deposit insurance. Any such action would have a material adverse effect on BankAtlantic Bancorp’s business, results of operations and financial position.

          Liquidity Considerations

          Both BankAtlantic Bancorp Parent Company and BankAtlantic actively manage liquidity and cash flow needs. BankAtlantic Bancorp Parent Company had cash of $12.2 million as of December 31, 2010. BankAtlantic Bancorp Parent Company does not have debt maturing until March 2032 and has the ability to defer interest payments on its

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junior subordinated debentures until December 2013; however, based on current interest rates, accrued and unpaid interest of approximately $74.0 million would be due in December 2013 if interest is deferred until that date. BankAtlantic Bancorp Parent Company’s operating expenses for the year ended December 31, 2010 were $6.4 million. BankAtlantic’s liquidity is dependent, in part, on its ability to maintain or increase deposit levels and the availability of its lines of credit borrowings with the Federal Home Loan Bank (“FHLB”), as well as the Treasury and Federal Reserve lending programs.

          As of December 31, 2010, BankAtlantic had $558.8 million in cash and short-term investments and approximately $843 million of available unused borrowings, consisting of $612 million of unused FHLB line of credit capacity, $195 million of unpledged securities, and $36 million of available borrowing capacity at the Federal Reserve. However, such available borrowings are subject to regular reviews and may be terminated, suspended or reduced at any time at the discretion of the issuing institution or based on the availability of qualifying collateral. Additionally, interest rate changes, additional collateral requirements, disruptions in the capital markets, adverse litigation or regulatory actions, or deterioration in BankAtlantic’s financial condition may reduce the amounts it is able to borrow, make borrowings unavailable or make terms of the borrowings and deposits less favorable. As a result, BankAtlantic’s cost of funds could increase and the availability of funding sources could decrease. Based on current and expected liquidity needs and sources, BankAtlantic Bancorp expects to be able to meet its obligations at least through December 31, 2011.

3. Woodbridge Merger

          On September 21, 2009, Woodbridge Holdings Corporation and BFC consummated their merger, pursuant to which Woodbridge Holdings Corporation merged with and into a wholly-owned subsidiary of BFC. Upon the effectiveness of the merger, the subsidiary was re-named Woodbridge Holdings, LLC, and Woodbridge Holdings, LLC continued as the surviving company of the merger and the successor entity to Woodbridge Holdings Corporation. Pursuant to the terms of the merger, which was approved by the shareholders of Woodbridge and BFC at their respective meetings held on September 21, 2009, each outstanding share of Woodbridge’s Class A Common Stock automatically converted into the right to receive 3.47 shares of BFC’s Class A Common Stock. Shares otherwise issuable to BFC attributable to the shares of Woodbridge’s Class A Common Stock and Class B Common Stock owned by BFC were canceled in connection with the merger. The merger resulted in a net increase to BFC’s shareholders’ equity of approximately $95 million, comprised of an increase in common stock and additional paid-in capital of approximately $303,000 and $94.7 million, respectively, and a corresponding decrease to noncontrolling interest of approximately $99.6 million.

          Prior to the consummation of the merger, BFC owned approximately 22% of Woodbridge’s Class A Common Stock and all of Woodbridge’s Class B Common Stock, representing approximately 59% of the total voting power of Woodbridge. Since BFC had a controlling interest in Woodbridge, the financial results of Woodbridge prior to the merger were consolidated in BFC’s financial statements and continue to be consolidated in BFC’s financial statements. The merger was accounted for as an equity transaction for financial reporting and accounting purposes in accordance with recently adopted FASB authoritative guidance in connection with noncontrolling interests, which provides that changes in a parent’s ownership interest which do not result in the parent losing its controlling interest are reported as equity transactions.

          Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. One Dissenting Holder, which held approximately 400,000 shares of Woodbridge’s Class A Common Stock, has withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million

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shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. The appraisal rights litigation thereafter commenced and is currently ongoing. The outcome of the litigation is uncertain and there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

4. Share Acquisitions

Bluegreen Share Acquisition

          On November 16, 2009, the Company purchased approximately 7.4 million shares of the common stock of Bluegreen for an aggregate purchase price of approximately $23 million, increasing its interest from 29% to 52%, and resulting in the Company owning a controlling interest in Bluegreen. The Company previously accounted for its 29% equity interest in Bluegreen as an equity method investment. The fair value of the Company’s investment in Bluegreen immediately before the acquisition was $25.1 million after recognizing a loss resulting from the remeasurement of its investment in Bluegreen of $8.1 million, which is included in the gain on bargain purchase of Bluegreen in the Company’s consolidated statements of operations. Bluegreen’s results for the Bluegreen Interim Period and the year ended December 31, 2010 are consolidated into the Company’s financial statements. The Company consolidates all of Bluegreen’s wholly-owned subsidiaries and entities in which Bluegreen holds a controlling financial interest. The Company also consolidates Bluegreen’s non-wholly owned subsidiary, Bluegreen/Big Cedar Vacations, LLC (the “Bluegreen/Big Cedar Joint Venture”), as Bluegreen holds a 51% equity interest in the Bluegreen/Big Cedar Joint Venture, has an active role as the day-to-day manager of the Bluegreen/Big Cedar Joint Venture’s activities, and has majority voting control of the Bluegreen/Big Cedar Joint Venture’s management committee.

          Included in the Company’s consolidated statement of operations is revenue related to Bluegreen before purchase accounting adjustments of $33.5 million for the Bluegreen Interim Period in 2009. The operating results of Bluegreen for the Bluegreen Interim Period and the year ended December 31, 2010 are included in the Company’s Bluegreen Resorts and Bluegreen Communities segments. Prior to the November 16, 2009 acquisition date, the Company reported its interest in Bluegreen’s earnings and losses in the Woodbridge other operations segment.

          The Company accounted for the acquisition of a controlling interest in Bluegreen in November 2009 in accordance with the accounting guidance of business combinations. As part of the accounting for the November 2009 Bluegreen share acquisition, management was required to evaluate the fair value of Bluegreen’s inventory and certain of Bluegreen’s contracts. Based on preliminary estimates made as part of the evaluation, the Company recorded a $183.1 million “bargain purchase gain” during the fourth quarter of 2009. However, as previously disclosed, the allocation of the purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and is subject to change within the measurement period as valuations are finalized. If the amounts are changed within the measurement period in a business combination, then the adjustment to change these provisional amounts are retrospectively adjusted as of the date of acquisition. Additionally, any offset relating to amortization/accretion is also retrospectively adjusted in the appropriate periods. During the fourth quarter of 2010, the Company adjusted the preliminary value assigned to the assets and liabilities of Bluegreen in order to reflect additional information obtained since the acquisition date. These adjustments resulted in a decrease in total assets and total liabilities of approximately $3.4 million and $3.0 million, respectively, and a decrease in total equity of approximately $0.4 million. Furthermore, the net income attributable to BFC decreased by approximately $289,000 and earnings per share from continuing operations decreased by approximately $0.01 per common share.

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Notes to Consolidated Financial Statements

     The following table summarizes the aggregate purchase price allocation and fair value of the non-controlling interest in Bluegreen as of November 16, 2009 as it was previously reported and as revised (in thousands):

Fair Value

(As Revised) (As Previously Reported) Hierarchy

Cash and cash equivalents
$ 51,621 51,621 Level 1

Restricted cash
25,079 25,079 Level 1

Property and equipment
83,083 83,083 Level 3

Management contracts
63,000 63,000 Level 3

Real estate inventory (1)
307,014 313,869 Level 3

Notes receivable
285,000 285,000 Level 3

Retained interests in notes receivable sold
29,250 29,250 Level 3

Other assets (2)
44,440 40,983 Level 3

Fair value of assets
888,487 891,885

Accounts payable and other liabilities (3)
54,849 50,764 Level 3

Deferred income
10,996 10,996 Level 3

Deferred income taxes (4)
22,690 29,784 Level 3

Lines of credit and notes payable
198,947 198,947 Level 2

Junior subordinated debentures
56,783 56,783 Level 2

Receivable-backed notes payable
236,359 236,359 Level 2

Fair value of liabilities
580,624 583,633

Non-controlling interest (Big Cedar Joint Venture)
26,100 26,200 Level 3

Net assets acquired
281,763 282,052

Less: Cash consideration on acquisition of additional 23%
(22,939 ) (22,939 )

Less: Fair value of previously held equity interest
(25,126 ) (25,126 ) Level 1

Less: Fair value of non-controlling interest
(41,254 ) (41,254 ) Level 1

Less: Loss on previously held equity interest
(8,074 ) (8,074 )

Less: Loss on accumulated other comprehensive income attributable to previously held equity interest
(1,521 ) (1,521 )

Bargain purchase gain
$ 182,849 183,138

1) A decrease of approximately $6.9 million to real estate inventory due to the finalization of the measurement period adjustments.

2) An increase of $2.1 million of favourable lease contracts and a $1.4 million reclassification from real estate inventory to other assets due to the finalization of the measurement period adjustments.

3) A reclassification from real estate inventory to accrued liabilities due to the finalization of the measurement period adjustments.

4) A $2.9 million decrease due to the finalization of the measurement period adjustments, and a decrease of $4.2 million due to a correction of an error related to an impairment to real estate inventory which should have been included in the determination of deferred taxes as the acquisition date November 16, 2009, as part of the Bluegreen purchase price allocation. See Note 1 of the “Notes to the Consolidated Financial Statements”.

          As a result of the Company obtaining a controlling interest in Bluegreen, the Company’s previously held 29% equity interest in Bluegreen was re-measured to fair value. The fair value of the non-controlling interest was based on a market approach valuation technique and inputs categorized as Level 1 inputs under the accounting guidance for fair value measurements.

          The fair value of the assets acquired includes: notes receivable which were fair valued using an income approach and application of a discounted cash flow method; real estate inventory, including resorts and communities inventory which was valued using a combination of the income approach for the resorts inventory and independent appraisals for the communities real estate projects; retained interest in notes receivable sold representing Bluegreen’s economic interest in the notes receivable it sold in a structured financing transaction, which was fair valued using an income approach and a discount of the expected cash flows available to be distributed to investors; and intangible assets, representing management contracts which consist of Bluegreen’s contracts with various homeowners associations to manage, service, staff and maintain properties. The management contracts were fair valued using an income approach and excess earnings method whereby the revenues and costs attributable to the management contracts less charges for use of the contributory assets are used to determine excess earnings. The management contracts have indefinite useful lives and are not amortized, but instead are reviewed for impairment on at least an annual basis, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

          The liabilities subject to fair value determinations included: receivable-backed notes payable, notes payable and lines of credit, which were valued based on the underlying terms, including maturity dates of the loan facilities; junior subordinated debentures, which were valued based on a discounted cash flow analysis; and non-controlling interest in a joint venture with Big Cedar LLC, which was valued using a methodology consistent with the methodology used for the valuation of Bluegreen’s underlying assets and liabilities.

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Notes to Consolidated Financial Statements

Purchases of BankAtlantic Bancorp’s Class A Common Stock

          On June 18, 2010, BankAtlantic Bancorp commenced a rights offering (the “2010 Rights Offering”) to its shareholders of record as of the close of business on June 14, 2010 (the “Record Date”). In the 2010 Rights Offering, BankAtlantic Bancorp distributed to each eligible shareholder 0.327 subscription rights for each share of BankAtlantic Bancorp’s Class A Common Stock and Class B Common Stock owned as of the close of business on the Record Date. Fractional subscription rights were rounded up to the next largest whole number. Each subscription right entitled the holder thereof to purchase one share of BankAtlantic Bancorp’s Class A Common Stock at the purchase price of $1.50 per share. Shareholders who exercised their basic subscription rights in full were also given the opportunity to request to purchase any additional shares of BankAtlantic Bancorp’s Class A Common Stock that remained unsubscribed for at the expiration of the Rights Offering at the same $1.50 per share purchase price. The 2010 Rights Offering expired on July 20, 2010. BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock in the 2010 Rights Offering for an aggregate purchase price of $15.0 million. BFC exercised its basic subscription rights to purchase 5,986,865 shares, and the remaining 4,013,135 shares were acquired by BFC pursuant to its over-subscription request. The shares acquired in the 2010 Rights Offering increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 8% to 45% and BFC’s voting interest in BankAtlantic Bancorp by approximately 5% to 71%.

          During the third quarter of 2009, BankAtlantic Bancorp distributed to its shareholders 4.441 subscription rights for each share of BankAtlantic Bancorp’s Class A Common Stock and Class B Common Stock held on August 24, 2009 (the “2009 Rights Offering”). Each whole subscription right entitled the holder to purchase one share of BankAtlantic Bancorp’s Class A Common Stock at a purchase price of $2.00 per share. The 2009 Rights Offering commenced on August 28, 2009 and was completed on September 29, 2009. BFC exercised its subscription rights in the 2009 Rights Offering to purchase an aggregate of 14.9 million shares of BankAtlantic Bancorp’s Class A Common Stock for an aggregate purchase price of $29.9 million. This purchase increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 7% to 37% and increased BFC’s voting interest in BankAtlantic Bancorp by approximately 7% to 66%.

          BFC’s 2010 and 2009 acquisition of shares of BankAtlantic Bancorp’s Class A Common Stock were accounted for as an equity transaction in accordance with applicable Financial Accounting Standards Board (“FASB”) authoritative guidance effective on January 1, 2009, which provides that changes in a parent’s ownership interest which do not result in the parent losing its controlling interest are reported as equity transactions.

          From August 18, 2008 through August 28, 2008, BFC purchased an aggregate of 400,000 additional shares of BankAtlantic Bancorp’s Class A Common Stock on the open market for an aggregate purchase price of $2.8 million. BFC’s acquisition of the 400,000 shares of BankAtlantic Bancorp’s Class A Common Stock increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 4%. The excess of the fair value over the purchase price (negative goodwill) of $16.7 million was allocated as a pro rata reduction of the amounts that would otherwise have been assigned ratably to all of the non-current and non-financial assets acquired, except assets to be disposed of by sale and deferred tax assets, until the basis of such acquired assets was zero. The remaining unallocated negative goodwill of approximately $9.1 million was recognized as an extraordinary gain for the year ended December 31, 2008.

          From December 2, 2008 through December 11, 2008, BFC purchased an aggregate of 323,848 additional shares of BankAtlantic Bancorp’s Class A Common Stock on the open market for an aggregate purchase price of $1.1 million. BFC’s acquisition of the 323,848 shares of BankAtlantic Bancorp’s Class A Common Stock increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 3%. The excess of the fair value over the purchase price (negative goodwill) of $2.9 million was allocated ratably to all of the non-current and non-financial assets acquired, except assets to be disposed of by sale and deferred tax assets.

          The acquisition of additional shares of Class A Common Stock of BankAtlantic Bancorp in August 2008 and December 2008 were accounted for as step acquisitions under the purchase method of accounting in effect prior to January 1, 2009.

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Notes to Consolidated Financial Statements

5. Cumulative Effect of Change in Accounting Principle

          On January 1, 2010, the Company, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of variable interest entities (“VIEs”). As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities (“QSPEs”) associated with prior securitization transactions that previously qualified for off-balance sheet sales treatment, which resulted in a one-time non-cash after-tax reduction to retained earnings of $2.4 million. In addition, BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. No charges were recorded to retained earnings in connection with the consolidation of BankAtlantic Bancorp’s factoring joint venture.

          The consolidation of Bluegreen’s special purpose finance entities also resulted in the following impacts to BFC’s Consolidated Statement of Financial Condition at January 1, 2010: (1) assets increased by $413.8 million, primarily representing the consolidation of notes receivable, net of allowance, partially offset by the elimination of retained interests; (2) liabilities increased by $416.7 million, primarily representing the consolidation of non-recourse debt obligations to securitization investors, partially offset by the elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.9 million, including a decrease to noncontrolling interest of approximately $1.4 million.

          The impact of the adoption of the change in accounting principle on the related assets, related liabilities, noncontrolling interests and total equity are as follows (in thousands):

Consolidation

December 31,
2009 Bluegreen’s
QSPEs BankAtlantic
Bancorp’s
Joint Venture (1) Total January 1,
2010

(As Revised)

Restricted cash
$ 24,020 36,518 — 36,518 60,538

Loans receivable
3,678,894 — 3,214 3,214 3,682,108

Notes receivable
279,645 377,265 — 377,265 656,910

Real estate inventory
484,927 16,403 — 16,403 501,330

Retained interest in notes receivable sold
26,340 (26,340 ) — (26,340 ) —

Investment in unconsolidated affiliates
15,272 — (3,256 ) (3,256 ) 12,016

Other assets
65,500 9,970 367 10,337 75,837

Change in related assets
$ 4,574,598 413,816 325 414,141 4,988,739

Other liabilities
$ 187,032 3,544 18 3,562 190,594

Deferred income taxes
25,205 1,779 — 1,779 26,984

Receivable -backed notes payable
237,416 411,369 — 411,369 648,785

Change in related liabilities
$ 449,653 416,692 18 416,710 866,363

Total BFC’s shareholders’ equity
$ 245,083 (1,496 ) — (1,496 ) 243,587

Noncontrolling interests
159,312 (1,380 ) 307 (1,073 ) 158,239

Total equity
$ 404,395 (2,876 ) 307 (2,569 ) 401,826

(1) As a result of the adoption of the accounting guidance associated with the consolidation of VIEs, we consolidated BankAtlantic Bancorp’s factoring joint venture, BankAtlantic Business Capital, LLC (“BBC”). Prior to January 1, 2010, the investment in BBC was accounted for using the equity method of accounting.

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Notes to Consolidated Financial Statements

6. Discontinued Operations

Core Communities

          In December 2009, Core Communities reinitiated efforts to sell the Projects, its two commercial leasing projects, and began soliciting bids from several potential buyers for the immediate sale of the Projects in their present condition. Due to this decision, the assets associated with the Projects were classified as discontinued operations in accordance with the accounting guidance for the disposal of long-lived assets.

          The assets were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statement of Financial Condition at December 31, 2009. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations in the Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008. Depreciation related to these assets held for sale ceased in December 2009. The Company elected not to separate these assets in the Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008. Management reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that an impairment charge was necessary to write down the aggregate carrying value of the Projects to fair value less the estimated costs to sell and, accordingly, recorded an impairment charge of approximately $13.6 million in the fourth quarter of 2009.

          On June 10, 2010, Core sold the Projects for approximately $75.4 million. As a result of the sale, a gain on sale of discontinued operations of approximately $2.6 million was realized in the second quarter of 2010. In connection with the sale, the outstanding balance of the loans related to the assets held for sale was reduced by approximately $800,000 as a result of negotiations with the lender. Core used the proceeds from the sale to repay these loans. As a result, Core was released from its obligations to the lender with respect to the loans.

     The following table summarizes the assets held for sale and liabilities related to the assets held for sale for the Projects as of December 31, 2010 and 2009 (in thousands):

December 31,

2010 2009

Restricted cash
$ — 538

Property and equipment, net
— 61,588

Other assets
— 9,774

Assets held for sale
$ — 71,900

Accounts payable, accrued liabilities and other
$ — 1,602

Notes and mortgage payable
— 74,749

Liabilities related to assets held for sale
$ — 76,351

          The following table summarizes the results of operations for the Projects (in thousands):

For the Years Ended December 31,

2010 2009 2008

Revenue and other income
$ 2,951 8,497 11,203

Costs and expenses
3,103 24,129 8,420

(Loss) income before income taxes
(152 ) (15,632 ) 2,783

Gain on sale of discontinued operations
2,617 — —

Income (loss) from discontinued operations
$ 2,465 (15,632 ) 2,783

Ryan Beck

          On February 28, 2007, BankAtlantic Bancorp sold Ryan Beck to Stifel. Under the terms of the sales agreement, BankAtlantic Bancorp and several employees of Ryan Beck who held options to acquire Ryan Beck common stock exchanged their entire interest in Ryan Beck common stock and options to acquire Ryan Beck common

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Notes to Consolidated Financial Statements

stock for an aggregate of 3,701,400 shares of Stifel common stock, cash of $2.7 million and five-year warrants to purchase an aggregate of 750,000 shares of Stifel common stock at an exercise price of $24.00 per share (the “Warrants”). Of the total Ryan Beck sales proceeds, BankAtlantic Bancorp’s portion was 3,566,031 shares of Stifel common stock, cash of $2.6 million and Warrants to acquire an aggregate of 722,586 shares of Stifel common stock. BankAtlantic Bancorp sold its entire investment in 3,566,031 shares of Stifel common stock and warrants to acquire 722,586 shares of Stifel common stock during the year ended December 31, 2008 and recognized a gain of $2.8 million.

          The Stifel sales agreement provided for contingent earn-out payments, payable in cash or shares of Stifel common stock, at Stifel’s election, based on (a) defined Ryan Beck private client revenues during the two-year period immediately following the Ryan Beck sale up to a maximum of $40.0 million and (b) defined Ryan Beck investment banking revenues equal to 25% of the amount that such revenues exceeded $25.0 million during each of the two twelve-month periods immediately following the Ryan Beck sale. Included in the Company’s Consolidated Statement of Operations in discontinued operations during the years ended December 31, 2009 and 2008 was $4.2 and $16.6 million, respectively, of earn-out consideration.

          The Stifel sales agreement also required BankAtlantic Bancorp to indemnify Stifel for certain losses arising out of activities of Ryan Beck prior to the sale and asserted through August 31, 2009. Included in the Company’s Consolidated Statement of Operations in discontinued operations for each of the years in the two years ended December 31, 2010 is $0.5 million of indemnification expenses recognized by BankAtlantic Bancorp.

          In January 2011, BankAtlantic Bancorp and Stifel entered into a release and settlement agreement with respect to outstanding indemnity claims asserted by Stifel. BankAtlantic Bancorp agreed to pay Stifel $0.5 million to satisfy all of BankAtlantic Bancorp’s obligations to Stifel arising out of the indemnification agreement with the exception of one claim that was not covered by the settlement agreement. BankAtlantic Bancorp reserved all rights and defenses concerning its obligation to indemnify Stifel with respect to this claim.

7. Assets Held for Sale

     In August 2010, BankAtlantic announced that, due to the rapidly changing environment in Florida and the banking industry, it decided to focus on its core markets in South Florida and BankAtlantic began seeking a buyer for its 19 Tampa, Florida branches. As a consequence, BankAtlantic reclassified its fixed assets related to the Tampa branches to held-for-sale and recognized a $4.5 million impairment as these held-for-sale assets are accounted for at the lower of cost or fair value. In January 2011, BankAtlantic agreed to sell its 19 branches and 2 related facilities in the Tampa area and the associated deposits to an unrelated financial institution. The financial institution has agreed to pay i) a 10% premium for the deposits plus ii) the net book value of the acquired real estate and fixed assets associated with the branches and facilities. The transaction is anticipated to close during June 2011 and is subject to regulatory approvals and other customary terms and conditions.

          The assets and liabilities associated with the Tampa branches as of December 31, 2010 were as follows (in thousands):

ASSETS

Cash and cash equivalents
$ 5,850

Office properties and equipment
31,484

Total assets held for sale
$ 37,334

LIABILITIES

Interest bearing deposits
$ 255,630

Non-interest bearing deposits
85,516

Total deposits
341,146

Accrued interest payable
87

Total liabilities held for sale
$ 341,233

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Notes to Consolidated Financial Statements

8. Securities Available for Sale and Derivatives

The following tables summarize securities available-for-sale (in thousands):

As of December 31, 2010

Gross Gross

Amortized Unrealized Unrealized Estimated

Cost Gains Losses Fair Value

Government agency securities:

Mortgage-backed securities
$ 105,219 6,823 — 112,042

Agency bonds
60,000 143 — 60,143

Real estate mortgage investment conduits (1)
66,034 2,807 — 68,841

Total
231,253 9,773 — 241,026

Investment securities:

Municipal bonds
162,113 33 23 162,123

Other bonds
19,936 8 22 19,922

Benihana Convertible Preferred Stock
16,426 4,680 — 21,106

Equity and other securities
20,634 188 3 20,819

Total investment securities
219,109 4,909 48 223,970

Derivatives
24 — — 24

Total
$ 450,386 14,682 48 465,020

As of December 31, 2009

Gross Gross

Amortized Unrealized Unrealized Estimated

Cost Gains Losses Fair Value

Government agency securities:

Mortgage-backed securities
$ 202,985 8,961 1 211,945

Real estate mortgage investment conduits (1)
104,329 3,037 19 107,347

Total mortgage-backed securities
307,314 11,998 20 319,292

Investment Securities:

Other bonds
250 — — 250

Benihana Convertible Preferred Stock
16,426 1,340 — 17,766

Equity and other securities
8,947 126 6 9,067

Total investment securities
25,623 1,466 6 27,083

Total
$ 332,937 13,464 26 346,375

(1) Real estate mortgage investment conduits (“REMIC”) are pass-through entities that hold residential loans, and investors are issued ownership interests in the entities in the form of a bond. The securities were issued by government agencies.

          The following table shows the gross unrealized losses and fair value of the Company’s securities available for sale with unrealized losses that are deemed temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2010 and 2009 (in thousands):

As of December 31, 2010

Less Than 12 Months 12 Months or Greater Total

Fair Unrealized Fair Unrealized Fair Unrealized

Value Losses Value Losses Value Losses

Municipal Bonds
$ 90,413 (23 ) — — 90,413 (23 )

Taxable Securities
15,155 (22 ) — — 15,155 (22 )

Equity securities
— — 7 (3 ) 7 (3 )

Total available for sale securities:
$ 105,568 (45 ) 7 (3 ) 105,575 (48 )

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Notes to Consolidated Financial Statements

As of December 31, 2009

Less Than 12 Months 12 Months or Greater Total

Fair Unrealized Fair Unrealized Fair Unrealized

Value Losses Value Losses Value Losses

Mortgage-backed securities
$ — — 159 (1 ) 159 (1 )

REMICS
— — 21,934 (19 ) 21,934 (19 )

Equity securities
4 (6 ) — — 4 (6 )

Total available for sale securities:
$ 4 (6 ) 22,093 (20 ) 22,097 (26 )

          The unrealized losses on municipal bonds and taxable securities outstanding less than 12 months are primarily the result of interest rate changes. BankAtlantic Bancorp expects to receive cash proceeds for its entire investment upon maturity.

          Unrealized losses on debt securities outstanding greater than twelve months at December 31, 2009 were primarily the result of interest rate changes. The cash flows of these securities are guaranteed by government sponsored enterprises. These securities are of high credit quality, the unrealized loss is not significant and management of BankAtlantic has the intent and ability to hold the securities until the price recovers and expects that the securities would be settled at a price not less than the carrying amount.

          The unrealized loss on equity securities at December 31, 2010 and 2009 was not significant. Accordingly, the Company did not consider these investments other-than-temporarily impaired at December 31, 2010 or 2009.

          At December 31, 2010, the scheduled maturities of debt securities available for sale were (in thousands):

Debt Securities

Available for Sale

Estimated

Amortized Fair

December 31, 2010 (1) (2) Cost Value

Due within one year
$ 180,313 180,317

Due after one year, but within five years
61,832 61,971

Due after five years, but within ten years
23,574 24,474

Due after ten years
147,583 156,309

Total
$ 413,302 423,071

(1) Scheduled maturities in the above table may vary significantly from actual maturities due to repayments.

(2) Scheduled maturities are based upon contractual maturities.

          Included in Financial Services securities activities, net in the Company’s Consolidated Statement of Operations were $0.3 million of unrealized losses associated with put options for the year ended December 31, 2010.

          Included in Financial Services securities activities, net were (in thousands):

For the Years Ended December 31,

2010 2009 2008

Gross gains on securities sales
$ 3,140 11,238 6,302

Gross losses on securities sales
$ — — (5,103 )

Proceeds from sales of securities
$ 58,846 303,825 375,900

Other-than-temporary impairments
$ — (1,587 ) (3,413 )

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Notes to Consolidated Financial Statements

          Management reviews its securities available for sale portfolio for other-than-temporary declines in value quarterly. As a consequence of BankAtlantic Bancorp’s review during the year ended December 31, 2009 and 2008, the Company recognized a $1.6 million and $3.4 million, respectively, other-than-temporary decline in value related to an equity investment in an unrelated financial institution.

          BFC – Benihana Investment

          The Company owns 800,000 shares of Benihana Series B Convertible Preferred Stock (“Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into an aggregate of 1,578,943 shares of Benihana’s Common Stock at a conversion price of $12.67 per share of Convertible Preferred Stock, subject to adjustment from time to time upon certain defined events. Based on the number of currently outstanding shares of Benihana’s capital stock, the Convertible Preferred Stock, if converted, would represent an approximately 19% voting interest and an approximately 9% economic interest in Benihana.

          The Convertible Preferred Stock was acquired pursuant to an agreement with Benihana on June 8, 2004 to purchase an aggregate of 800,000 shares of Convertible Preferred Stock for $25.00 per share. The shares of the Convertible Preferred Stock have voting rights on an “as if converted” basis together with Benihana’s Common Stock on all matters put to a vote of the holders of Benihana’s Common Stock. The approval of a majority of the holders of the Convertible Preferred Stock then outstanding, voting as a single class, are required for certain events outside the ordinary course of business. Holders of the Convertible Preferred Stock are entitled to receive cumulative quarterly dividends at an annual rate equal to $1.25 per share, payable on the last day of each calendar quarter. The Convertible Preferred Stock is subject to mandatory redemption at the original issue price of $20 million plus accumulated dividends on July 2, 2014 unless BFC elects to extend the mandatory redemption date to a later date not to extend beyond July 2, 2024. At December 31, 2010, the closing price of Benihana’s Common Stock was $8.01 per share. The market value of the Convertible Preferred Stock if converted at December 31, 2010 would have been approximately $12.6 million. During July 2010, Benihana announced its intention to engage in a formal review of strategic alternatives, including a possible sale of the company. In the event that a sale transaction is consummated, the Company would receive a minimum of $20 million in consideration for its shares of the Convertible Preferred Stock.

          In December 2008, the Company performed an impairment evaluation of its investment in the Convertible Preferred Stock and determined that there was an other-than-temporary decline of approximately $3.6 million and, accordingly, the investment was written down to its fair value of approximately $16.4 million. Concurrent with management’s evaluation of the impairment of this investment at December 31, 2008, it made the determination to reclassify this investment from investment securities to investment securities available for sale. At December 31, 2010 and 2009, the Company’s estimated fair value of its investment in Benihana’s Convertible Preferred Stock was approximately $21.1 million and $17.8 million, respectively, which includes a gross unrealized gain of approximately $3.3 million and $1.3 million, respectively, for the years ended December 31, 2010 and 2009. BFC will continue to monitor this investment to determine whether any further other-than-temporary impairment charges may be required in future periods. The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the underlying shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana’s Convertible Preferred Stock. See Note 30 for additional information concerning the Benihana Convertible Preferred Stock.

          Office Depot Investment

          During March 2008, Woodbridge purchased 3,000,200 shares of Office Depot common stock at an average price of $11.33 per share for an aggregate purchase price of approximately $34.0 million. During June 2008, 1,565,200 of the shares were sold at an average price of $12.08 per share for an aggregate sales price of approximately $18.9 million resulting in a gain of approximately $1.2 million.

          In prior periods, impairment analyses were performed in connection with the Office Depot investment, which included an evaluation of, among other things, qualitative and quantitative factors relating to the performance of Office Depot and its stock price. As a result of these evaluations, it was determined that other-than-temporary impairment charges were required at December 31, 2008 and March 31, 2009 and accordingly, impairment charges of $12.0 million and $2.4 million were recorded during the quarters ended December 31 2008 and March 31, 2009, respectively.

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Notes to Consolidated Financial Statements

          During November 2009, we sold the remaining 1,435,000 shares of Office Depot common stock that we held at an average price of $5.95 per share, or total proceeds of approximately $8.5 million. As a result of the sale, a gain was realized of approximately $6.7 million in the fourth quarter of 2009.

          Derivatives

          During 2010, BankAtlantic expanded its cruise ship automated teller machine (“ATM”) operations and began dispensing foreign currency from certain ATMs on cruise ships. At December 31, 2010, BankAtlantic had $6.7 million of foreign currency in cruise ship ATMs and recognized $0.1 million of foreign currency unrealized exchange gains which were included in other income in the Company’s statement of operations for the year ended December 31, 2010. BankAtlantic purchased foreign currency put options as an economic hedge for the foreign currency in its cruise ship ATMs. The terms of the put options and the fair value as of December 31, 2010 were as follows (in thousands, except strike price):

Contract Expiration Strike Fair

Amount Date Price Premium Value

€ 400
Jan-11
1.34 28 8

400
Apr-11
1.34 31 16

€ 800

$ 59 24

9. Tax Certificates

          The following table summarizes tax certificates (in thousands):

As of December 31, 2010 As of December 31, 2009

Estimated Estimated

Amortized Fair Amortized Fair

Cost Value (1) Cost Value

Tax certificates

Net of allowance of $8,811 and $6,781, respectively
$ 89,789 90,738 110,991 112,472

(1) The estimated fair value was calculated at December 31, 2010 and 2009 using an expected cash flow model discounted at an interest rate that takes into account the risk of the cash flows of tax certificates relative to alternative investments.

          Included in tax certificates was $3.6 million and $2.2 million of non-accrual tax certificates as of December 31, 2010 and 2009, respectively.

          Activity in the allowance for tax certificate losses was (in thousands):

For the Years Ended December 31,

2010 2009 2008

Balance, beginning of period
$ 6,781 6,064 3,289

Charge-offs
(2,997 ) (2,965 ) (4,668 )

Recoveries
475 294 157

Net charge-offs
(2,522 ) (2,671 ) (4,511 )

Provision charged to non-interest expense
4,552 3,388 7,286

Balance, end of period
$ 8,811 6,781 6,064

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BFC Financial Corporation
Notes to Consolidated Financial Statements

10. Loans Receivable and Loans Held for Sale

The loan portfolio consisted of the following components (in thousands):

December 31,

2010 2009

Residential
$ 1,213,736 1,538,906

Commercial real estate:

Builder land loans
9,920 57,807

Land acquisition and development
119,189 182,235

Land acquisition, development and construction
4,046 26,184

Construction and development
141,535 211,809

Commercial
620,140 688,386

Commercial non-real estate
135,588 155,226

Small business:

Small business — real estate
203,479 213,591

Small business — non-real estate
99,190 99,113

Consumer:

Consumer — home equity
604,228 669,690

Consumer other
16,068 15,935

Deposit overdrafts
3,091 4,816

Total gross loans
3,170,210 3,863,698

Adjustments:

Premiums, discounts and net deferred fees
1,650 2,414

Allowance for loan losses
(162,139 ) (187,218 )

Loans receivable — net
$ 3,009,721 3,678,894

Loans held for sale
$ 29,765 4,547

          Undisbursed loans in process consisted of the following components (in thousands):

December 31,

2010 2009

Construction and development
$ 22,522 43,432

Commercial
24,647 25,696

Total undisbursed loans in process
$ 47,169 69,128

          BankAtlantic’s loan portfolio had the following geographic concentrations based on outstanding loan balances at December 31, 2010:

Florida
64 %

Eastern U.S.A.
19 %

Western U.S.A.
14 %

Central U.S.A
3 %

100 %

          BankAtlantic Bancorp segregates its loan portfolio into five segments in order to determine its allowance for loan losses. BankAtlantic Bancorp’s loan segments are: residential loans, commercial real estate loans, consumer loans, commercial non-real estate loans and small business and loans. BankAtlantic Bancorp further divides its loan segments into loan classes in order to monitor and assess credit risk. BankAtlantic Bancorp of loan segments and loan classes are described below:

          Residential — represents loans secured by one to four dwelling units. This loan segment is further divided into interest only loans and amortizing loans. Interest-only residential loans require the borrower to make monthly interest-

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BFC Financial Corporation
Notes to Consolidated Financial Statements

only payments for a fixed period of time and become fully amortizing thereafter. Amortizing residential loans require the borrower to make monthly principal and interest payments through maturity.

          Commercial real estate— represents loans for acquisition, development and construction of various types of properties including residential construction, office buildings, retail shopping centers, and other non-residential properties. BankAtlantic Bancorp’s commercial real estate loan portfolio is divided into four loan classes; commercial residential, commercial owner occupied, commercial land and commercial other.

          Commercial residential real estate loans — are loans to developers or home builders for the construction of one to four dwelling units. This class of loans is divided into three categories - builder land bank loans, land acquisition and development loans, and land acquisition, development and construction loans. The builder land bank loan category consists of land loans to borrowers who have or had land purchase option agreements with regional and/or national builders. The land acquisition and development loan category consists of loans secured by residential land which was intended to be developed by the borrower and sold to homebuilders. The land acquisition, development and construction loans are secured by residential land which was intended to be fully developed by the borrower/developer who also might have plans to construct homes on the property.

          Owner occupied commercial real estate loans — are also real estate collateralized loans; however, the primary source of repayment is the cash flow from the business operated on the premises of the collateralized property.

          Commercial real estate land loans — includes loans secured by the sale of land and commercial land held for investment purposes. These loans are generally to borrowers that intend to expand the zoning of the property and ultimately sell the property to developers.

          Commercial other real estate loans — are primarily secured by income producing property which includes shopping centers, office buildings, self storage facilities, and warehouses.

          Commercial non-real estate loans — generally represent business loans secured by the receivables, inventory, equipment, and/or general corporate assets of the business.

          Consumer loans — consists of loans to individuals originated through BankAtlantic Bancorp’s retail network. Approximately 97% of consumer loans are home equity lines of credit secured by a first or second mortgage on the primary residence of the borrower, substantially all of which is located in Florida.

          Small business loans — consists of loans that do not generally exceed $2.0 million originated to businesses. The principal source of repayment for these loans is generally from the cash flow of a business. BankAtlantic Bancorp’s small business loan portfolio is divided into two loan classes; small business real estate secured and small business non-real estate.

          Small business real estate secured loans — are generally secured by real estate where the business is located or real estate owned by the guarantor.

          Small business non-real estate loans — are generally business loans secured by the receivables, inventory, equipment, and/or general corporate assets of the business.

          Loans held for sale — Loans held for sale as of December 31, 2010 consisted of $27.9 million of commercial real estate loans transferred from held-to-maturity to the held-for-sale classification and $1.8 million of residential loans originated for sale. BankAtlantic Bancorp transfers loans to held-for-sale when based on the current economic environment and related market conditions it does not have the intent to hold those loans for the foreseeable future. BankAtlantic recognized $0.1 million of gains on the sale of commercial real estate loans for the year ended December 31, 2010. Residential loans originated for sale as of December 31, 2010 and 2009 were loans originated through the assistance of an independent mortgage company. The mortgage company provides processing and closing assistance to BankAtlantic. Pursuant to an agreement, this mortgage company purchases the loans from BankAtlantic within a defined period of time after the date of funding. BankAtlantic earns the interest income during the period of ownership. The sales price is negotiated quarterly for all loans sold during the quarter based on originated loan balance. Gains from the sale of loans held for sale were $0.4 million, $0.5 million and $0.3 million, respectively, for the years ended December 31, 2010, 2009 and 2008.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          The recorded investment of non-accrual loans receivable and loans held for sale as of December 31, 2010 was (in thousands):

Recorded

Loan Class Investment

Commercial non-real estate
$ 17,659

Commercial real estate:

Residential
95,482

Land
27,260

Owner occupied
4,870

Other
128,658

Small business:

Real estate
8,928

Non-real estate
1,951

Consumer
14,120

Residential:

Interest only
38,900

Amortizing
47,639

Total nonaccrual loans
$ 385,467

          An analysis of the age of the recorded investment in loans receivable and loans held for sale as of December 31, 2010 that were past due were as follows (in thousands):

Total

31-59 Days 60-89 Days 90 Days Total Loans

Past Due Past Due or More (1) Past Due Current Receivable (2)

Commercial non-real estate
$ — — 13,498 13,498 122,090 135,588

Commercial real estate:

Residential
4,700 — 53,791 58,491 84,325 142,816

Land
— — 23,803 23,803 34,237 58,040

Owner occupied
— — 3,862 3,862 107,235 111,097

Other
— 6,043 54,940 60,983 551,472 612,455

Small business:

Real estate
1,530 2,059 6,670 10,259 193,220 203,479

Non-real estate
— 67 25 92 99,098 99,190

Consumer
6,396 6,009 14,120 26,525 596,862 623,387

Residential:

Interest only
4,907 6,164 38,900 49,971 500,275 550,246

Amortizing
6,091 5,926 47,487 59,504 614,281 673,785

Total (1)
$ 23,624 26,268 257,096 306,988 2,903,095 3,210,083

(1) BankAtlantic Bancorp had no loans greater than 90 days and accruing

(2) Total loans receivable exclude purchase accounting of $8.5 million in connection with BFC’s share acquisitions of BankAtlantic Bancorp in 2008. The 2008 share acquisitions were accounted for as step acquisitions under the purchase method of accounting then in effect.

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Notes to Consolidated Financial Statements

          The activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2010 was as follows (in thousands):

Commercial

Commercial Real Small

Non-Real Estate Estate Business Consumer Residential Total

Allowance for Loan Losses:

Beginning balance
$ 4,515 105,288 7,998 42,417 27,000 187,218

Charge-off :
(996 ) (104,973 ) (7,873 ) (39,483 ) (18,305 ) (171,630 )

Recoveries :
716 1,661 626 1,042 1,166 5,211

Provision :
6,551 84,904 10,763 28,067 14,076 144,361

Transfer to held for sale:
— (3,021 ) — — — (3,021 )

Ending balance
$ 10,786 83,859 11,514 32,043 23,937 162,139

Ending balance individually

evaluated for impairment
$ 9,020 62,985 2,936 1,791 12,034 88,766

Ending balance collectively

evaluated for impairment
1,766 20,874 8,578 30,252 11,903 73,373

Total
$ 10,786 83,859 11,514 32,043 23,937 162,139

Loans receivables:

Ending balance individually

evaluated for impairment
$ 16,667 342,806 12,763 23,905 88,210 484,351

Ending balance collectively

evaluated for impairment
$ 118,921 581,602 289,906 599,482 1,135,821 2,725,732

Total (1)
$ 135,588 924,408 302,669 623,387 1,224,031 3,210,083

Purchases of loans
— — — — 6,511 6,511

Proceeds from loan sales
— 59,697 — — 52,678 112,375

Transfer to held for sale
— 27,928 — — — 27,928

(1) Total loans receivable exclude purchase accounting of $8.5 million in connection with BFC’s share acquisitions of BankAtlantic Bancorp in 2008. The 2008 share acquisitions were accounted for as step acquisitions under the purchase method of accounting then in effect.

Activity in the allowance for loan losses for the years ended December 31, 2009 and 2008 was as follows:

Allowance for Loan Losses (in thousands):

For Years Ended

December 31,

2009 2008

Balance, beginning of period
$ 137,257 94,020

Loans charged-off
(185,890 ) (117,874 )

Recoveries of loans previously charged-off
3,193 1,310

Net charge-offs
(182,697 ) (116,564 )

Provision for loan losses
232,658 159,801

Balance, end of period
$ 187,218 137,257

          Impaired Loans — Loans are considered impaired when, based on current information and events, the Company believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. For a loan that has been restructured, the contractual terms of the loan agreement refer to the contractual terms specified by the original loan agreement, not the contractual terms specified by the restructured agreement. Impairment is evaluated based on past due status for consumer and residential loans. Impairment is evaluated based on BankAtlantic Bancorp’s on-going credit monitoring process for commercial and small business loans which results in the evaluation for impairment of all criticized loans. Factors considered in determining if a loan is impaired are past payment history, strength of the borrower or guarantors, and cash flow associated with the collateral or business. If a loan is impaired, a specific valuation allowance is allocated, if necessary, based on the present value of estimated future cash flows using the loan’s existing interest rate or at the fair value of collateral if the loan is collateral dependent. BankAtlantic generally measures commercial and small business loans for impairment using the fair value of collateral less cost to sell method. Interest payments on impaired loans for all loan classes are generally applied to principal unless collectibility of the principal and interest amount is probable, in which case interest is recognized on an accrual basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          Impaired loans as of December 31, 2010 were as follows (in thousands):

Unpaid Average Interest

Recorded Principal Related Recorded Income

Investment (1) Balance Allowance Investment Recognized

With a related allowance recorded :

Commercial non-real estate
$ 16,809 16,809 9,850 14,850 —

Commercial real estate:

Residential
81,731 87,739 21,298 86,868 778

Land
15,209 15,209 8,156 21,010 18

Owner occupied
1,695 1,695 335 5,366 —

Other
95,693 96,873 33,197 96,800 —

Small business:

Real estate
2,602 2,602 1,733 2,838 21

Non-real estate
1,779 1,779 1,203 2,015 —

Consumer
3,729 5,029 1,791 4,665 —

Residential:

Residential-interest only
31,805 39,451 6,741 24,327 17

Residential-amortizing
24,619 28,712 5,293 16,525 34

Total with a related allowance recorded
$ 275,671 295,898 89,597 275,264 868

With no related allowance recorded:

Commercial non-real estate
$ 1,497 1,497 — 4,799 15

Commercial real estate:

Residential
44,835 116,092 — 42,295 267

Land
14,039 43,846 — 25,847 19

Owner occupied
3,922 3,922 — 3,878 56

Other
81,370 97,203 — 55,311 1,446

Small business:

Real estate
15,727 16,499 — 14,722 673

Non-real estate
172 197 — 358

Consumer
23,029 27,146 — 22,487 624

Residential:

Residential-interest only
7,427 10,078 — 16,694 —

Residential-amortizing
25,664 31,797 — 26,950 116

Total with no related allowance recorded
$ 217,682 348,277 — 213,341 3,216

Commercial non-real estate
$ 18,306 18,306 9,850 19,649 15

Commercial real estate
338,494 462,579 62,986 337,375 2,584

Small business
20,280 21,077 2,936 19,933 694

Consumer
26,758 32,175 1,791 27,152 624

Residential
89,515 110,038 12,034 84,496 167

Total
$ 493,353 644,175 89,597 488,605 4,084

(1) Recorded investment is defined as unpaid principal balance less charge downs

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          The following summarizes impaired loans (in thousands):

As of December 31, 2009 As of December 31, 2008

Gross Gross

Recorded Specific Recorded Specific

Investment Allowances Investment Allowances

Impaired loans with specific valuation allowances
$ 249,477 70,485 174,710 41,192

Impaired loans without specific valuation allowances
196,018 — 138,548 —

Total
$ 445,495 70,485 313,258 41,192

          Impaired loans without specific valuation allowances represent loans that were charged-down to the fair value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the carrying value of the loan, loans in which the present value of expected cash flows discounted at the loan’s effective interest rate was equal to or greater than the carrying value of the loan, or large groups of smaller-balance homogeneous loans that are collectively measured for impairment.

          BankAtlantic Bancorp continuously monitors collateral dependent loans and performs an impairment analysis on these loans quarterly. Generally, a full appraisal is obtained when a real estate loan becomes adversely classified and an updated full appraisal is obtained within one year from the prior appraisal date, or earlier if management deems it appropriate based on significant changes in market conditions. In instances where a property is in the process of foreclosure, an updated appraisal may be postponed beyond one year, as an appraisal is required on the date of foreclosure; however, such loans are subject to quarterly impairment analyses. Included in total impaired loans as of December 31, 2010 was $320.8 million of collateral dependent loans, of which $158.1 million were measured for impairment using current appraisals and $162.7 million were measured by adjusting appraisals to reflect changes in market conditions subsequent to the appraisal date. Appraised values were adjusted down by an aggregate amount of $25.5 million to reflect current market conditions on 22 loans due to estimated property value declines since the last appraisal dates.

          As of December 31, 2010, impaired loans with specific valuation allowances had been previously charged down by $20.2 million and impaired loans without specific valuation allowances had been previously charged down by $130.6 million. As of December 31, 2009, impaired loans with specific valuation allowances had been previously charged down by $38.6 million and impaired loans without specific valuation allowances had been previously charged down by $34.1 million.

          The average gross recorded investment in impaired loans was $493.4 million, $416.5 million and $192.8 million during the years ended December 31, 2010, 2009 and 2008, respectively.

          Interest income which would have been recorded under the contractual terms of impaired loans and the interest income actually recognized were (in thousands):

For the Years Ended December 31,

2010 2009 2008

Contracted interest income
$ 23,221 22,417 14,276

Interest income recognized
(4,084 ) (9,881 ) (3,368 )

Foregone interest income
$ 19,137 12,536 10,908

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          Credit Quality Information

          Management of BankAtlantic Bancorp monitors net charge-offs, levels of classified loans, impaired loans and general economic conditions nationwide and in Florida to assess loan credit quality. BankAtlantic Bancorp uses a risk grading matrix to monitor credit quality for commercial and small business loans. Risk grades are assigned to each commercial and small business loan upon origination. The loan officers monitor the risk grades and these risk grades are reviewed periodically by a third party consultant. BankAtlantic Bancorp assigns risk grades on a scale of 1 to 13. A general description of the risk grades is as follows:

          Grades 1 to 7 — The loans in these risk grades are generally well protected by the current net worth and paying capacity of the borrower or guarantors or by the fair value, less cost to sell, of the underlying collateral.

          Grade 8 to 9 — Not used.

          Grade 10 — These loans have potential weaknesses that deserve management’s close attention. While these loans do not expose BankAtlantic Bancorp to immediate risk of loss, if left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan.

          Grade 11 — These loans are inadequately protected by the current sound net worth and paying capacity of the borrower or guarantors or by the collateral pledged, if any. Loans in this grade have well-defined weaknesses that jeopardize the liquidation of the loan and there is a distinct possibility that BankAtlantic Bancorp may sustain some credit loss if the weaknesses are not corrected.

          Grade 12 — These loans have all the weaknesses of a Grade 11 with the added characteristic that the weaknesses make collection of BankAtlantic Bancorp’s investment in the loan highly questionable and improbable on the basis of currently known facts, conditions and fair values of the collateral.

          Grade 13 — These loans or portions thereof, are considered uncollectible and of such little value that continuance on BankAtlantic Bancorp’s books as an asset is not warranted without the establishment of a specific valuation allowance or a charge-off. Such loans are generally charged down or completely charged off.

          The following table presents risk grades for commercial and small business loans as of December 31, 2010 (in thousands):

Commercial Owner Occupied Other Small Small

Non Commercial Commercial Commercial Commercial Business Business

Real Estate Residential Land Real Estate Real Estate Real Estate Non-Real Estate

Risk Grade:

Grades 1 to 7
$ 81,789 16,250 27,387 101,855 314,402 169,979 84,584

Grade 10
12,827 7,572 956 704 119,508 3,098 3,665

Grade 11
40,972 118,994 29,697 8,538 178,545 30,402 10,941

Total
$ 135,588 142,816 58,040 111,097 612,455 203,479 99,190

     BankAtlantic Bancorp monitors the credit quality of residential loans through loan-to-value ratios of the underlying collateral. Elevated loan-to-value ratios indicate increased credit losses upon default which results in higher loan portfolio credit risk.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          The loan-to-value ratios of BankAtlantic Bancorp’s residential loans were as follows (in thousands):

Residential Residential

Loan to value ratios (1) Interest Only Amortizing

Ratios not available (2)
$ — 78,031

=<60%
107,063 144,744

60.1% — 70%
118,679 103,891

70.1% — 80%
290,840 309,925

80.1% — 90%
17,055 23,982

>90.1%
16,608 13,212

Total
$ 550,245 673,785

(1) Current loan-to-values (“LTV”) for the majority of the portfolio were obtained as of the first quarter of 2010 based on automated valuation models.

(2) Loans were originated under the Community Reinvestment Act program and are not monitored based on loan-to-value.

          BankAtlantic Bancorp monitors the credit quality of its consumer loans secured by real estate portfolio based on loan to value ratios at origination. BankAtlantic Bancorp’s experience indicates that default rates are significantly lower with loans that have lower loan to value ratios at origination.

          The loan to value ratios at loan origination of BankAtlantic Bancorp’s consumer loans secured by real estate as of December 31, 2010 were as follows (in thousands):

Consumer

Home

Loan to value ratios Equity

<70%
$ 363,653

70.1% — 80%
106,180

80.1% — 90%
72,529

90.1% — 100%
48,537

>100%
13,329

Total
$ 604,228

          BankAtlantic Bancorp monitors the credit quality of its consumer non-real estate loans based on loan delinquencies.

          Non-performing assets consist of non-accrual loans, non-accrual tax certificates, and real estate owned. Non-accrual loans are loans on which interest recognition has been suspended because of doubts regarding the borrower’s ability to repay principal or interest. Non-accrual tax certificates are tax deeds or certificates in which interest recognition has been suspended due to the aging of the certificate or deed.

Non-performing assets (in thousands):

As of December 31,

2010 2009 2008

Non-accrual — tax certificates
$ 3,636 2,161 1,441

Non-accrual — loans (1)

Residential
86,538 76,401 34,734

Commercial real estate and non-real estate
273,930 230,827 241,274

Small business
10,879 9,338 4,644

Consumer
14,120 14,451 6,763

Total non-accrual loans
385,467 331,017 287,415

Real estate owned
74,488 46,467 19,045

Other repossessed assets
— 10 —

Total non-performing assets
$ 463,591 379,655 307,901

(1) Included in non-accrual loans at December 31, 2010, 2009 and 2008 were $145.3 million, $45.7 million and $4.8 million, respectively, of troubled debt restructured loans.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

Accruing impaired loans (in thousands):

As of December 31,

2010 2009 2008

Performing impaired loans
$ 11,880 6,150 —

Loans 90 days past due and still accruing
— 9,960 15,721

Troubled debt restructured
96,006 107,642 28,173

Total accruing impaired loans
$ 107,886 123,752 43,894

          Performing impaired loans represent loans where BankAtlantic Bancorp anticipates collecting all of the principal and interest on the loans but where the timing of the payments may not be in accordance with the contractual terms of the loan agreement. Loans 90 days past due and still accruing are primarily loans that matured and are in the process of renewal, where the borrower continues to make payments under the matured loan agreement or the loan has collateral sufficient in management’s judgment to prevent a loss to BankAtlantic Bancorp. Troubled debt restructured loans are loans in which the original terms were modified granting the borrower loan concessions due to financial difficulties. Generally, the concessions made to borrowers experiencing financial difficulties include the reduction of the loan’s contractual interest rate, conversion of amortizing loans to interest only payments or the deferral of interest payments to the maturity date of the loan. BankAtlantic Bancorp had commitments to lend $13.5 million of additional funds on non-performing and accruing impaired loans as of December 31, 2010.

          Foreclosed asset activity in non-interest expense includes the following (in thousands):

For the Years Ended December 31,

2010 2009 2008

Real estate acquired in settlement of loans and tax certificates:

Operating expenses, net
$ 1,927 1,355 1,243

Impairment of REO
6,830 4,124 1,465

Net losses (gains) on sales
378 (341 ) 124

Net real estate owned losses
$ 9,135 5,138 2,832

11. Notes Receivable

          The table below sets forth information relating to Bluegreen’s notes receivable (in thousands):

December 31, December 31,

2010 2009

As Revised

Notes receivable, gross
$ 712,145 356,133

Purchase accounting adjustments
(43,778 ) (72,502 )

Notes receivable, net of purchase accounting adjustments
668,367 283,631

Allowance for loan losses
(93,398 ) (3,986 )

Notes receivable, net
$ 574,969 279,645

          Included in the table above are notes acquired through our November 2009 acquisition of approximately 7.4 million shares giving us a controlling interest in Bluegreen as discussed in Note 4. In accordance with applicable accounting guidance “Loans and Debt Securities Acquired with Deteriorated Credit Quality”, the Company has elected to recognize interest income on these notes receivable using the expected cash flows method. The Company treated expected prepayments consistently in determining its cash flows expected to be collected, such that the non-accretable difference is not affected and the difference between actual prepayments and

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expected prepayments shall not affect the non-accretable difference. The assumption for prepayment rates was derived from Bluegreen’s historical performance information for its off-balance sheet securitizations and ranges from 4% to 9%. As of December 31, 2010 and 2009, the outstanding contractual unpaid principal balance of the acquired notes was $250.6 million and $343.8 million, respectively. As of December 31, 2010 and 2009, the carrying amount of the acquired notes was $206.9 million and $271.3 million, respectively.

          The carrying amount of the acquired notes is included in the balance sheet amounts of notes receivable at December 31, 2010. The following is a reconciliation of accretable yield as of December 31, 2010:

          Accretable Yield

Balance at December 31, 2009
$ 102,665

Increase in cash flows expected
—

Accretion
(29,065 )

Reclassifications from nonaccretable difference
12,306

Balance at December 31, 2010
$ 85,906

          All of Bluegreen’s vacation ownership interests (“VOIs”) notes receivable, which comprise the majority of the notes receivable, bear interest at fixed rates. The weighted-average interest rate charged on loans secured by VOIs was 15.2% and 14.8% at December 31, 2010 and 2009, respectively. The majority of Bluegreen’s notes receivable secured by home sites bear interest at variable rates. The weighted-average interest rate charged on notes receivable secured by home sites was 7.8% and 8.8% at December 31, 2010 and 2009, respectively.

          Bluegreen’s VOI notes receivable are generally secured by properties located in Florida, Louisiana, Nevada, New Jersey, Michigan, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia, Wisconsin, and Aruba. The majority of Bluegreen Communities notes receivables are secured by home sites in Georgia, Texas, and Virginia.

          Future contractual principal payments on Bluegreen notes receivable during each of the five years subsequent to December 31, 2010, and thereafter are set forth below (in thousands):

As of December 31, 2010

2011
$ 80,284

2012
82,129

2013
89,486

2014
95,928

2015
99,282

Thereafter
265,036

712,145

Allowance for loan losses
(93,398 )

Notes receivable, net of allowance
618,747

Purchase accounting adjustments
(43,778 )

Total
$ 574,969

          Allowance for uncollectible notes receivable

          Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of receivables. In estimating future credit losses, Bluegreen does not use a single primary indicator of credit quality but instead evaluates its VOI notes based upon a combination of factors including its static pool analysis, the aging of the respective receivables, current default trends and prepayment rates by origination year, and the FICO scores of the buyers.

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Notes to Consolidated Financial Statements

          The table below sets forth the activity in the allowance for uncollectible notes receivable during the year ended December 31, 2010 (in thousands):

Balance at December 31, 2009 (a)
$ 3,986

One-time impact of the amendment to the accounting guidance for transfer of financial assets and the amendment to the accounting guidance for the consolidation of VIE (see Note 5)
86,252

Provision for loan losses
46,059

Write-offs of uncollectible receivables
(42,899 )

Balance at December 31, 2010
$ 93,398

(a) Allowance for uncollectible notes receivable represents amount attributable to new loan originations subsequent to the date of our acquisition of a controlling interest in Bluegreen (November 16, 2009).

The following table shows the aging of Bluegreen’s VOI notes receivable as of December 31, 2010 and 2009 (dollars in thousands):

2010 2009

Current
$ 655,304 $ 326,218

31-60 days
12,063 6,633

61-90 days
10,228 4,981

Over 91 days
27,785 13,400

Purchase accounting adjustments
(43,778 ) (72,502 )

Notes receivable net of purchase accounting adjustments
661,602 278,730

Allowance for loan losses
(93,398 ) (3,986 )

Total
$ 568,204 $ 274,744

12. Variable Interest Entities — Bluegreen

          In accordance with the guidance for the consolidation of variable interest entities, Bluegreen analyzes its variable interests, including loans, guarantees, and equity investments, to determine if an entity in which it has a variable interest is a variable interest entity. Bluegreen’s analysis includes both quantitative and qualitative reviews. Bluegreen bases its quantitative analysis on the forecasted cash flows of the entity, and it bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability, and relevant financial agreements. Bluegreen also uses qualitative analyses to determine if it must consolidate a variable interest entity as the primary beneficiary.

          Bluegreen sells through special purpose finance entities, VOI notes receivable originated by Bluegreen Resorts. These transactions are generally structured as non-recourse to Bluegreen, with the exception of one securitization transaction entered into in 2010, which was guaranteed by Bluegreen (refer to the description of the Legacy Securitization in Note 23). These transactions are generally designed to provide liquidity for Bluegreen and transfer the economic risks and certain of the benefits of the notes receivable to third parties. In a securitization, various classes of debt securities are issued by the special purpose finance entities that are generally collateralized by a single tranche of transferred assets, which consist of VOI notes receivable. Bluegreen services the notes receivable for a fee. With each securitization, Bluegreen generally retains a portion of the securities.

          Pursuant to generally accepted accounting principles in effect prior to 2010, seven of Bluegreen’s eight special purpose finance entities then in existence met the definition of a qualified special purpose entity, and were not consolidated in its financial statements. Upon the adoption of the new accounting guidance related to transfers of financial assets (see Note 5 for additional information), Bluegreen was required to evaluate these entities for

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consolidation. Since Bluegreen created these entities to serve as financing vehicles for holding assets and related liabilities, and the entities have no equity investment at risk, they are considered variable interest entities. Furthermore, since Bluegreen continues to service the notes and retain rights to receive benefits that are potentially significant to the entities, Bluegreen concluded that it is the entities’ primary beneficiary and, therefore, now consolidates these entities into its financial statements. Please see Note 5 for the impact of initial consolidation of these entities.

          At December 31, 2010, the principal balance of VOI notes receivable included within the Company’s Consolidated Statement of Financial Condition that are restricted to satisfy obligations of the variable interest entities’ obligations totaled $533.3 million. In addition, approximately $41.2 million of Bluegreen’s restricted cash is held in accounts for the benefit of the variable interest entities. Further, at December 31, 2010, the carrying amount of the consolidated liabilities included within the Company’s Consolidated Statement of Financial Condition for these variable interest entities totaled $459.0 million, comprised of $436.2 million of non-recourse receivable-backed notes payable and $22.8 million of receivable-backed notes payable which is recourse to Bluegreen. See Note 23, Debt.

          Under the terms of certain of Bluegreen’s timeshare note sales, Bluegreen has the right at its option to repurchase or substitute for defaulted mortgage notes at the outstanding principal balance plus accrued interest or, in some facilities, at 24% of the original sale price associated with the defaulted mortgage note. The transaction documents typically limit such repurchases or substitutions to 15-20% of the receivables originally funded into the transaction. Voluntary repurchases or substitutions by Bluegreen of defaulted notes during the year ended December 31, 2010 were $37.6 million.

13. Retained Interest in Notes Receivable Sold

          On January 1, 2010, we adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities (“QSPEs”) associated with prior securitization transactions which previously qualified for off-balance sheet sales treatment. Accordingly, Bluegreen’s special purpose finance entities are now consolidated in BFC’s financial statements. The consolidation of Bluegreen’s special purpose finance entities resulted in the elimination of the retained interests in notes receivable, for further information see Note 5.

          At December 31, 2009, Bluegreen’s retained interests in notes receivable sold classified as available-for-sale investments and their associated unrealized loss at December 31, 2009 were as follows (in thousands):

Gross Unrealized

Amortized Cost Loss Fair Value

2004 Term Securitization
$ 5,230 $ (300 ) $ 4,930

2004 GE Purchase Facility
1,750 (210 ) 1,540

2005 Term Securitization
5,410 (570 ) 4,840

2006 GE Purchase Facility
5,020 (850 ) 4,170

2006 Term Securitization
3,120 (230 ) 2,890

2007 Term Securitization
6,020 (460 ) 5,560

2008 Term Securitization
2,700 (290 ) 2,410

Total
$ 29,250 $ (2,910 ) $ 26,340

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Notes to Consolidated Financial Statements

          The following assumptions (which were classified as Level 3 inputs under the accounting guidance for fair value measurements) were used to measure the fair value of the above retained interests at December 31, 2009:

As of December 31,

2009

Prepayment rates
3.0% — 5.5 %

Loss severity rates
57.0% — 38.0 %

Default rates
16.5% — 1.2 %

Discount rates
25.0 %

          These assumptions took into account Bluegreen’s intended actions, which were subject to change from time to time, relating to its right to either acquire or substitute for defaulted loans, pursuant to the terms of each transaction.

          The net unrealized loss on Bluegreen’s retained interests in notes receivable sold, which was presented as a separate component of shareholders’ equity net of income taxes and non-controlling interest, was approximately $925,000 as of December 31, 2009. Bluegreen’s maximum exposure to loss as a result of its involvement with these special purpose entities was the value of its retained interest.

          The following table shows the hypothetical fair value of Bluegreen’s retained interests in notes receivable sold based on a 10% and a 20% adverse change in each of the assumptions used to measure the fair value of those retained interests at December 31, 2009 (dollars in thousands):

Hypothetical Fair Value at December 31, 2009

Prepayment Rate Loss Severity Rate Default Rate Discount Rate

Adverse Change Percentage 10% 20% 10% 20% 10% 20% 10% 20%

2004 Term Securitization
4,930 4,930 4,720 4,510 4,690 4,450 4,700 4,480

2004 GE Purchase Facility
1,540 1,540 1,440 1,340 1,410 1,290 1,440 1,350

2005 Term Securitization
4,840 4,830 4,090 3,350 4,060 3,450 4,460 4,110

2006 GE Purchase Facility
4,150 4,120 3,430 2,750 3,340 2,620 3,810 3,490

2006 Term Securitization
2,890 2,890 2,170 1,490 2,480 2,090 2,650 2,430

2007 Term Securitization
5,560 5,560 4,130 2,800 4,650 3,790 5,080 4,640

2008 Term Securitization
2,390 2,370 1,870 1,480 1,750 1,210 2,260 2,120

          The table below summarizes certain cash flows received from and (paid to) our qualifying special purpose finance subsidiaries during the 2009 Bluegreen Interim Period (in thousands):

Bluegreen Interim Period

Collections on previously sold receivables
$ (16,623 )

Servicing fees received
867

Resales of foreclosed assets
(1,405 )

Remarketing fees received
672

Cash received on retained interests in notes receivable sold
5,572

          In addition to the cash paid for the purchase of defaulted receivables, Bluegreen also acquires delinquent or defaulted receivables from its qualifying special purpose finance subsidiaries in exchange for unencumbered receivables (a process known as substitution). During the Bluegreen Interim Period, Bluegreen acquired notes receivable totaling $4.6 million through substitutions. Although Bluegreen is not obligated to repurchase or substitute for delinquent or defaulted notes receivable from its qualifying special purpose finance subsidiaries, it may do so from time to time. The VOIs securing the delinquent and defaulted receivables that Bluegreen received in this manner are typically recovered and put back in VOI inventory and resold in the normal course of business.

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Notes to Consolidated Financial Statements

          Quantitative information about the portfolios of VOI notes receivable previously sold without recourse in which Bluegreen holds the above retained interests at December 31, 2009 was as follows (in thousands):

As of December 31, 2009

Principal

Total Outstanding Amount

Principal of Sold Loans

Amount of 60 or More Balance Owed to

Sold Loans Days Past Due Note Holders

2004 Term Securitization
$ 28,552 $ 869 $ 26,765

2004 GE Purchase Facility
13,870 400 12,072

2005 Term Securitization
81,261 2,389 74,822

2006 GE Purchase Facility
69,003 2,353 61,433

2006 Term Securitization
71,450 2,502 66,206

2007 Term Securitization
137,645 4,251 123,935

2008 Term Securitization
51,810 1,530 46,136

Total
$ 453,591 $ 411,369

14. Real Estate Inventory

          Real estate inventory consisted of the following (in thousands):

December 31,

2010 2009

As Revised

Land and land development costs
$ 107,161 264,454

Bluegreen Resorts
230,346 212,662

Other costs
554 552

Land and facilities held for sale
5,436 7,259

Total
$ 343,497 484,927

          Inventory consisted of the combined real estate assets of Bluegreen Resorts, Bluegreen Communities, Carolina Oak, Core Communities, BankAtlantic’s residential construction development acquired in 2002, and BankAtlantic land and facilities held for sale for BankAtlantic’s store expansion program. During the fourth quarter of 2010, Core relinquished to its lenders title to substantially all of the land Core owned in both Florida and South Carolina and pledged its ownership interests in several Core subsidiaries. During February 2011, Core was released from any other claims arising from or relating to the loans. With the exception of certain assets within Tradition Hilton Head with a carrying value of $19.4 million at December 31, 2010, which are the subject of separate foreclosure proceedings that are not expected to begin until later in the first half of 2011, land and land development costs reflect an adjustment for the carrying value of $121.9 million in satisfaction of Core’s outstanding debt of $112.3 million related to those assets. See Note 23 under the caption Notes and Mortgage Notes Payable and Other Borrowings for further information regarding Core’s settlement of its debt obligations.

          Real estate inventory is reviewed for impairment on a project-by-project basis. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated future undiscounted cash flows expected to be generated by the asset, or by using appraisals of the related assets. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value. As a result of the impairment analyses performed, the Company recorded real estate inventory impairment charges of approximately

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$35.3 million related to Core Communities and Bluegreen Communities; $101.9 million related to Core Communities and Carolina Oak; and $3.5 million related to Carolina Oak for the years ended December 31, 2010, 2009 and 2008, respectively. Impairment charges of inventory of real estate are included in cost of sales in the Company’s Consolidated Statements of Operations.

          Land and land development costs at December 31, 2009 also consisted of real estate inventory from a residential construction development acquired by BankAtlantic in 2002. During the year ended December 31, 2010, BankAtlantic sold the real estate project for approximately $5.2 million and recognized a $1.2 million loss which is included in Financial Services — other expenses. During the years ended December 31, 2009 and 2008, BankAtlantic recognized $3.9 million and $1.2 million of impairments associated with this real estate project.

          Bluegreen reviews its undeveloped resort and residential communities’ properties for impairment under the accounting guidelines, which requires that such property be reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. As of December 31, 2010, Bluegreen evaluated the carrying value of it Bluegreen Communities undeveloped inventory based upon the probability weighted average cashflows at various outcomes including the development and sale of such inventory as retail homesites. In connection with this analysis, Bluegreen recorded an impairment charge (included in cost of real estate sales) of $14.9 million to write down the carrying amount of certain undeveloped phases in several of its residential communities properties in its Bluegreen Communities segment to fair value, as it determined that the carrying amounts of these homesites would not be recovered by estimated future cash flows. Bluegreen estimated the fair value of the underlying properties based on either the prices of comparable properties or its analysis of their estimated future cash flows (Level 3 inputs), discounted at rates commensurate with the risk inherent in the property. Bluegreen estimated future cash flows based upon its expectations of performance given current and projected forecasts of the economy and real estate markets in general. Should adverse conditions in the real estate market continue longer than forecasted or deteriorate further or if its performance does not meet the expectations on which its estimates were based, additional charges will be recorded in the future. Furthermore, should its intentions or estimates relative to its Bluegreen Communities business change in the future, the carrying values of the related inventory and its results of operations could be materially adversely affected.

15. Capitalized Interest

The following table is a summary of the Company’s consolidated interest expense and the amounts capitalized (in thousands):

For the Year Ended December 31,

2010 2009 2008

Real Estate and Other:

Interest incurred on borrowings
$ 85,241 21,189 18,283

Interest capitalized
(239 ) (3,058 ) (9,852 )

85,002 18,131 8,431

Financial Services:

Interest on deposits
22,511 41,884 64,263

Interest on advances from FHLB
1,209 16,523 50,942

Interest on short term borrowings
30 209 2,485

Interest on debentures and bonds payable
15,915 16,236 22,812

39,665 74,852 140,502

Total interest expense
$ 124,667 92,983 148,933

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16. Investments in Unconsolidated Affiliates

          The consolidated statements of financial condition include the following amounts for investments in unconsolidated affiliates (in thousands):

December 31,

2010 2009

Investments in joint ventures
$ 281 4,265

Investment in statutory business trusts
12,174 11,007

$ 12,455 15,272

          The consolidated statements of operations include the following amounts for equity (loss) earnings from unconsolidated affiliates (in thousands):

For the Years Ended December 31,

2010 2009 2008

Earnings from Bluegreen (1)
$ — 32,672 13,696

Earnings (loss) from joint ventures
(2,045 ) (396 ) (152 )

Earnings from statutory trusts
1,194 1,105 1,520

$ (851 ) 33,381 15,064

(1) 2009 earnings from Bluegreen are for the interim period from January 1, 2009 to November 15, 2009.

          During the year ended December 31, 2007, BankAtlantic invested in a joint venture involved in the factoring of accounts receivable. While BankAtlantic owns 50% of the entity, the maximum exposure to BankAtlantic from this investment is $10 million and under prior accounting guidance BankAtlantic was not considered the primary beneficiary. Accordingly, the factoring joint venture was presented under the equity method of accounting as a variable interest entity for the years ended December 31, 2009 and 2008 in the Company’s consolidated financial statements. The factoring joint venture was consolidated in the Company’s consolidated financial statements for the year ended December 31, 2010 upon the implementation of new accounting guidance effective January 1, 2010. Based on the new accounting guidance, BankAtlantic is considered the primary beneficiary as it is deemed to have the power to direct the activities of the factoring joint venture and has the obligation to absorb the majority of the entity’s losses.

          Investment in Bluegreen Corporation

          As previously discussed, approximately 7.4 million additional shares of Bluegreen’s common stock were purchased on November 16, 2009, increasing our ownership in Bluegreen to 16.9 million shares, or 52%, of Bluegreen’s outstanding common stock. As a result of the purchase, the Company has a controlling interest in Bluegreen and, accordingly, has consolidated Bluegreen’s results since November 16, 2009 into the Company’s financial statements.

          Prior to November 16, 2009, the investment in Bluegreen was accounted for using the equity method of accounting. The cost of the Bluegreen investment was adjusted to recognize the Company’s interest in Bluegreen’s earnings or losses. The difference between a) the Company’s ownership percentage in Bluegreen multiplied by its earnings and b) the amount of the Company’s equity in earnings of Bluegreen as reflected in the Company’s financial statements related to the amortization or accretion of purchase accounting made at the time of the initial acquisition of Bluegreen’s common stock and a basis difference due to impairment charges recorded on the investment in Bluegreen, as described below. Based on the results of the evaluations of the investment in Bluegreen, other-than-temporary impairment charges of approximately $31.2 million and $94.4 million were recorded during the years ended December 31, 2009 and 2008, respectively.

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Notes to Consolidated Financial Statements

          The following table shows the reconciliation of the Company’s pro rata share of Bluegreen’s net income to the Company’s share of total earnings from Bluegreen for the interim period from January 1, 2009 through November 15, 2009 (prior to our consolidation of Bluegreen in November 2009) and for year ended December 31 2008 (in thousands):

2009 2008

Pro rata share of Bluegreen’s net loss
$ 3,715 (154 )

Amortization of basis difference (a)
28,957 13,850

Total earnings from Bluegreen Corporation
$ 32,672 13,696

(a) As a result of the impairment charges previously taken under the equity method prior to our consolidation of Bluegreen in November 2009, a basis difference was created between the investment in Bluegreen and the underlying assets and liabilities carried on the books of Bluegreen. Therefore, earnings from Bluegreen were adjusted each period to reflect the amortization of this basis difference. As such, a methodology was established to allocate the impairment loss to the relative estimates of the fair value of Bluegreen’s underlying assets based upon the position that the impairment loss was a reflection of the perceived value of these underlying assets. The appropriate amortization was calculated based on the estimated useful lives of the underlying assets and other relevant data associated with each asset category.

     Statutory Business Trusts

          During the fourth quarter of 2008, Woodbridge determined that the fair value of its investment in its unconsolidated trusts, which consists of its common interests in subordinated trust debt securities of approximately $406,000, was less than the carrying value of this investment of $2.6 million primarily due to the deterioration of the market for these instruments and overall economic conditions. Accordingly, it was determined that an impairment charge of approximately $2.2 million was required at December 31, 2008. See Note 23 under the caption Junior Subordinated Debentures for additional information about the statutory business trusts which were formed for the purpose of issuing trust preferred securities and investing the proceeds thereof in junior subordinated debentures.

17. Properties and Equipment

          Properties and equipment was comprised of (in thousands):

December 31,

2010 2009

Land, buildings and building improvements
$ 224,847 265,901

Golf course land and improvements
6,123 6,177

Office equipment, furniture and fixtures
104,203 114,005

Water irrigation facilities
— 10,223

Total
335,173 396,306

Less accumulated depreciation
(116,508 ) (107,097 )

Properties and equipment — net
$ 218,665 289,209

During 2010 and 2009, the Company recognized impairment charges related to an office building located in Fort Lauderdale, Florida of $3.9 million and $4.3 million, respectively. In 2009, the Company recognized $2.2 million of impairment charges associated with Core’s irrigation facility in South Carolina. The impairment charges are included in our Real Estate and Other Activities in other expenses in the Company’s Consolidated Statements of Operations. In connection with the settlement of its debt obligations in South Carolina during the fourth quarter of 2010, Core transferred its ownership interest in the irrigation facility. See Note 23 under the caption Notes and Mortgage Notes Payable and Other Borrowings for further information regarding Core’s settlement of its debt obligations.

          Included in selling, general and administrative expense in the Company’s Consolidated Statements of Operations was approximately $10.8 million, $3.3 million and $2.4 million of depreciation expense for the years ended December 31, 2010, 2009 and 2008, respectively, in connection with our Real Estate and Other activities.

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Notes to Consolidated Financial Statements

          Included in Financial Services occupancy and equipment expense in the Company’s Consolidated Statements of Operations was $16.2 million, $18.2 million and $20.7 million of depreciation expense for the years ended December 31, 2010, 2009 and 2008, respectively. Also included in depreciation expense for the years ended December 31, 2010, 2009 and 2008 was $1.8 million, $2.4 million and $3.1 million, respectively, of software cost amortization. At December 31, 2010 and 2009, unamortized software costs were $1.9 million and $2.6 million, respectively.

18. Goodwill

          Goodwill is tested for potential impairment annually or during interim periods if impairment indicators exist. Goodwill of $12.2 million (net of purchase accounting of $0.9 million) included in the Company’s Consolidated Statements of Financial Condition as of December 31, 2010 and 2009 is associated with BankAtlantic’s capital services reporting unit. Goodwill was tested for impairment on September 30, 2010 (the annual testing date) and was determined not to be impaired. As of September 30, 2010, the estimated fair value of BankAtlantic capital services reporting unit exceeded the estimated fair value of the underlying assets by $14.1 million. If market conditions do not improve or deteriorate further, the Company may recognize goodwill impairment charges in future periods.

          The process of evaluating goodwill for impairment involves the determination of the fair value of the reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the view of current economic indicators and market valuations, and assumptions about BankAtlantic Bancorp’s strategic plans with regard to its operations. Due to the uncertainties associated with such estimates, actual results could differ materially from the estimates.

          In performing its impairment analysis, BankAtlantic Bancorp used a combination of the discounted cash flow methodology and a market multiple methodology to determine the fair value of each reporting unit. The aggregate fair value of BankAtlantic Bancorp’s reporting units was compared to its market capitalization adjusted for a control premium in order to determine the reasonableness of the financial model output. A control premium represents the value an investor would pay above minority interest transaction prices in order to obtain a controlling interest in the respective company.

          The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. A five year period is generally used in computing discounted cash flow values. The most significant assumptions used in the discounted cash flow methodology are the discount rate, the terminal value and the forecast of future cash flows.

          The market multiple methodology establishes fair value by comparing BankAtlantic Bancorp’s reporting units to other similar publicly traded companies. The market multiples that BankAtlantic Bancorp used in the determination of the fair value of the reporting units were its market capitalization to its tangible stockholders’ equity.

               In response to deteriorating economic and real estate market conditions and the effects that the external environment had on BankAtlantic’s business units, BankAtlantic, in the first quarter of 2009, continued to reduce its asset balances and borrowings with a view toward improving its regulatory capital ratios and revised its projected operating results to reflect a smaller organization in subsequent periods. Additionally, BankAtlantic Bancorp’s market capitalization continued to decline as the average closing price of BankAtlantic Bancorp’s Class A common stock on the New York Stock Exchange for the month of March 2009 was $1.57 compared to $4.23 for the month of December 2008, a decline of 63%. Management of BankAtlantic Bancorp believed that the foregoing factors indicated that the fair value of its reporting units might have declined below their carrying amount, and, accordingly, an interim goodwill impairment test was performed as of March 31, 2009. Based on the results of this interim goodwill impairment evaluation, an impairment charge of $8.5 million, net of a purchase accounting adjustment from step acquisition of approximately $0.6 million, was recorded during the three months ended March 31, 2009, relating to BankAtlantic’s tax certificate ($4.7 million) and investments ($4.5 million) reporting units. Additionally, during 2009, we also determined that all $2.0 million of the previously recorded goodwill related to our investment in Pizza Fusion was impaired. As a result, the Company recorded an impairment charge of $2.0 million which is included in the Company’s Real Estate and Other activities as impairment of goodwill in the Company’s Consolidated Statements of Operations for the year ended December 31, 2009.

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Notes to Consolidated Financial Statements

          Based on the results of the goodwill impairment evaluation during 2008, an impairment charge relating to BankAtlantic Bancorp of $46.6 million was recorded, net of BFC’s purchase accounting adjustment from step acquisition of approximately $1.7 million. The entire amount of goodwill, relating to BankAtlantic Bancorp’s commercial lending and community banking reporting units of $31.0 million and $17.3 million, respectively, was determined to be impaired. The goodwill impairment recognized during 2008 generally reflected the adverse conditions in the financial services industry, BankAtlantic Bancorp’s market capitalization declining significantly below its tangible book value and the effect that the continued deterioration in the general economy as well as the Florida real estate markets had on the credit quality of BankAtlantic’s loan portfolio.

19. Deposits

     The weighted average nominal interest rate payable on deposit accounts at December 31, 2010 and 2009 was 0.64% and 0.95%, respectively. The stated rates and balances on deposits were (dollars in thousands):

As of December 31,

2010 2009

Amount Percent Amount Percent

Interest free checking
$ 876,200 22.52 % 815,458 20.65 %

Insured money fund savings

0.46% at December 31, 2010
385,365 9.90 % 351,303 8.90 %

0.68 at December 31, 2009

NOW accounts

0.42% at December 31, 2010
1,516,781 38.98 % 1,409,138 35.69 %

0.63% at December 31, 2009

Savings accounts

0.24% at December 31, 2010
452,710 11.63 % 412,360 10.44 %

0.33% at December 31, 2009

Total non-certificate accounts
3,231,056 83.04 % 2,988,259 75.67 %

Certificate accounts:

Less than 2.00%
544,547 13.99 % 654,445 16.57 %

2.01% to 3.00%
65,353 1.68 % 211,590 5.36 %

3.01% to 4.00%
9,991 0.26 % 15,965 0.40 %

4.01% to 5.00%
38,965 1.00 % 51,699 1.31 %

5.01% to 6.00%
1,278 0.03 % 26,840 0.68 %

6.01% to 7.00%
— — 20 —

Total certificate accounts
660,134 16.96 % 960,559 24.33 %

Total deposit accounts
$ 3,891,190 100.00 % 3,948,818 100.00 %

          Included in the above table were Tampa branch deposits held for sale as follows (in thousands):

As of December 31, 2010

Amount Percent

Interest free checking
$ 85,516 25.07 %

Savings accounts
34,406 10.09

NOW accounts
146,213 42.86

Insured money fund savings
31,331 9.18

Certificate accounts
43,680 12.80

Total deposits held for sale
$ 341,146 100.00 %

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          Interest expense by deposit category was (in thousands):

For the Years Ended December 31,

2010 2009 2008

Money fund savings and NOW accounts
$ 9,287 9,961 17,783

Savings accounts
1,112 1,612 4,994

Certificate accounts — below $100,000
6,541 16,184 21,195

Certificate accounts, $100,000 and above
5,754 14,470 20,856

Less early withdrawal penalty
(183 ) (343 ) (565 )

Total
$ 22,511 41,884 64,263

          At December 31, 2010, the amounts of scheduled maturities of certificate accounts were (in thousands):

For the Years Ended December 31,

Interest Rate 2011 2012 2013 2014 2015 Thereafter

0.00% to 2.00%
$ 487,923 46,828 5,647 1,637 2,511 1

2.01% to 3.00%
18,774 26,861 5,439 4,605 9,674 —

3.01% to 4.00%
3,059 2,264 2,113 1,563 990 2

4.01% to 5.00%
6,297 25,973 6,691 — 4 —

5.01% to 6.00%
867 411 — — — —

Total
$ 516,920 102,337 19,890 7,805 13,179 3

          Time deposits of $100,000 and over had the following maturities (in thousands):

December 31,

2010

3 months or less
$ 48,501

4 to 6 months
52,233

7 to 12 months
130,769

More than 12 months
77,439

Total
$ 308,942

          Included in deposits at December 31, was (in thousands):

2010 2009

Brokered deposits
$ 14,065 72,904

Public deposits
214,421 223,554

Total institutional deposits
$ 228,486 296,458

          As of December 31, 2010, BankAtlantic established a letter of credit with the FHLB for $222 million securing public deposits.

20. Advances from Federal Home Loan Bank

          At December 31, 2010, BankAtlantic had $170.0 million of FHLB advances outstanding of which $105.0 million mature during the three months ending March 31, 2011, $45.0 million mature in June 2011 and $20 million mature in July 2011. These advances had a weighted average interest rate of 0.35% as of December 31, 2010. The average balance and average interest rate of FHLB advances outstanding during the year ended December 31, 2010 was $107.5 million and 1.13%, respectively.

          BankAtlantic’s line of credit with the FHLB is limited to 40% of assets, subject to available collateral, with a maximum term of 10 years. At December 31, 2010, $946.6 million of 1-4 family residential loans, $60.6 million of commercial real estate loans and $455.7 million of consumer loans were pledged against FHLB advances. In addition, $43.6 million of FHLB stock is pledged as collateral for the letter of credit and outstanding FHLB advances.

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BankAtlantic’s available borrowings under the FHLB line of credit were $611.9 million as of December 31, 2010, however, the FHLB line of credit is subject to periodic review and may be limited or not available to BankAtlantic when needed. BankAtlantic was informed by the FHLB that its FHLB line of credit will be reduced by approximately $168 million in April 2011 due to the issuance of the Bank Order.

          During the years ended December 31, 2010, 2009 and 2008, BankAtlantic incurred prepayment penalties of $53,000, $7.5 million and $1.6 million upon the repayment of $2 million, $760 million and $692 million of FHLB advances, respectively.

21. Securities Sold Under Agreements to Repurchase

     Securities sold under agreements to repurchase represent transactions where BankAtlantic sells a portion of its current investment portfolio (usually mortgage-backed securities and real estate mortgage investment conduits) at a negotiated rate and agrees to repurchase the same assets at a specified future date. BankAtlantic issues repurchase agreements to institutions and to its customers. These transactions are collateralized by securities available for sale. Customer repurchase agreements are not insured by the Federal Deposit Insurance Corporation (“FDIC”). At December 31, 2010 and 2009, the outstanding balances of customer repurchase agreements were $21.5 million and $24.5 million, respectively. There were no institutional repurchase agreements outstanding at December 31, 2010 and 2009. BankAtlantic had $195 million of securities that could be sold or pledged for additional repurchase agreement borrowings.

The following table provides information on the agreements to repurchase (dollars in thousands):

For the Years Ended December 31,

2010 2009 2008

Maximum borrowing at any month-end within the period
$ 31,101 39,286 55,179

Average borrowing during the period
$ 22,009 30,732 63,529

Average interest cost during the period
% 0.12 0.12 2.23

Average interest cost at end of the period
% 0.13 0.12 0.12

          The following table lists the amortized cost and estimated fair value of securities sold under repurchase agreements, and the repurchase liability associated with such transactions (dollars in thousands):

Weighted

Estimated Average

Amortized Fair Repurchase Interest

Cost Value Balance Rate

December 31, 2010 (1)

Mortgage-backed securities
$ 20,885 22,680 21,524 0.12 %

December 31, 2009 (1)

Mortgage-backed securities
$ 32,706 34,403 24,468 0.12 %

(1) At December 31, 2010 and 2009, all securities were classified as available for sale and were recorded at fair value in the consolidated statements of financial condition.

          All repurchase agreements existing at December 31, 2010 matured and were repaid in January 2011. These securities were held by unrelated broker dealers.

22. Other Short-Term Borrowings

          BankAtlantic participated in federal funds lines of credit with other financial institutions, treasury tax and loan program (“TTL”) with the Department of Treasury (the “Treasury”), the term auction facilities program (“TAF”) and the discount window with the Federal Reserve Board. Under the Treasury program, the Treasury, at its option, can invest up to $2.2 million with BankAtlantic at the federal funds rate less 25 basis points.

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          At December 31, 2010, BankAtlantic had pledged $34.6 million and $2.2 million of agency securities available for sale as collateral for the Federal Reserve discount window and the TTL program, respectively. At December 31, 2010, BankAtlantic had $1.2 million outstanding under the TTL program and had no borrowings outstanding under the federal funds purchased or discount window programs. At December 31, 2009, BankAtlantic had pledged $94.1 million and $4.0 million of agency securities available for sale as collateral for the Federal Reserve discount window and the TTL program, respectively. At December 31, 2009, BankAtlantic had $2.8 million outstanding under the TTL program and had no borrowings outstanding under the federal funds purchased or discount window programs.

          BankAtlantic’s available borrowings from lines of credit with other banking institutions, access to Treasury borrowings and the Federal Reserve discount window were $35.5 million as of December 31, 2010.

          The following table provides information on federal funds purchased, TAF and TTL borrowings (dollars in thousands):

As of December 31,

2010 2009 2008

Ending balance
$ 1,240 2,803 238,339

Maximum outstanding at any month end within period
$ 2,646 301,891 238,339

Average amount outstanding during period
$ 2,011 58,865 78,125

Average cost during period
% 0.02 0.29 2.23

23. Debt

Contractual minimum principal payments of debt outstanding at December 31, 2010 are as follows (in thousands):

Notes and

Mortgage Notes Recourse Non-recourse Junior

Payable Receivable Backed Receivable Backed Subordinated

and Lines of Credit Notes Payable Notes Payable Debentures Total

2011 (1)
117,273 — — — 117,273

2012
92,525 — — — 92,525

2013
4,525 — — 24,537 29,062

2014
11,094 67,313 — 3,653 82,060

2015
12,221 3,159 10,150 — 25,530

Thereafter
2,291 65,188 426,121 490,074 983,674

239,929 135,660 436,271 518,264 1,330,124

Purchase Accounting Adjustment
(358 ) — (2,717 ) (56,696 ) (59,771 )

239,571 135,660 433,554 461,568 1,270,353

(1) Includes loans that are currently in default and repayments of the entire amounts outstanding of approximately $64.4 million has been accelerated. Therefore, these notes are currently due. See below in Notes and Mortgage Notes Payable and Other Borrowings for further details.

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Notes to Consolidated Financial Statements

          Receivable- Backed Notes Payable

          The table below sets forth the balances of Bluegreen’s receivable-backed notes payable facilities (in thousands):

December 31, 2010 December 31, 2009

Principal Balance of Principal Balance of

Pledged/ Pledged/

Debt Interest Secured Debt Interest Secured

Balance Rate Receivables Balance Rate Receivables

Recourse receivable-backed notes payable:

Liberty Bank Facility
$ 67,514 6.50 % $ 77,377 $ 59,055 5.75 % $ 68,175

GE Bluegreen/Big Cedar Receivables Facility
23,877 2.01 % 29,232 32,834 1.98 % 35,935

Legacy Securitization (1)
22,759 12.00 % 34,232 — — —

NBA Receivables Facility
18,351 6.75 % 22,458 — — —

Wells Fargo Facility
— — — 14,409 4.00 % 15,926

RFA Receivables Facility
3,159 4.26 % 4,451 5,228 4.23 % 6,331

Total recourse debt
$ 135,660 $ 167,750 $ 111,526 $ 126,367

Non-recourse receivable-backed notes payable (2):

BB&T Purchase Facility
$ — — $ — $ 131,302 5.75 % $ 166,562

GE 2003 Facility
10,150 7.16 % 11,709 — — —

2004 Term Securitization
18,722 4.45-7.18 % 20,540 — — —

2005 Term Securitization
55,888 5.41-9.85 % 63,527 — — —

GE 2006 Facility
50,596 6.68-7.32 % 57,988 — — —

2006 Term Securitization
52,716 5.61-9.38 % 59,415 — — —

2007 Term Securitization
100,953 5.83-11.15 % 117,379 — — —

2008 Term Securitization
39,624 5.89-11.63 % 44,889 — — —

2010 Term Securitization
107,514 5.10-7.5 % 123,662 — — —

Big Cedar Quorum General Credit Union
108 8.00 % 136 — — —

Total non-recourse debt
$ 436,271 $ 499,245 $ 131,302 $ 166,562

Purchase accounting adjustments
2,717 ) (41,002 ) (5,412 ) (59,635 )

Total receivable- backed notes payable
$ 569,214 $ 625,993 $ 237,416 $ 233,294

(1) Legacy Securitization debt bears interest at a coupon rate of 12% and was issued at a discount resulting in an effective yield of 18.5%.

(2) As of December 31, 2009, with the exception of the BB&T Purchase Facility, all non-recourse receivable -backed notes payable were not consolidated in accordance with the accounting guidance then in effect.

          Liberty Bank Facility. As of December 31, 2010, Bluegreen had a $75.0 million revolving timeshare receivables hypothecation facility with a syndicate of lenders led by Liberty Bank and assembled by Wellington Financial (“Liberty Bank Facility”). During 2010, Bluegreen pledged $27.6 million of VOI notes receivable to this facility and received cash proceeds of $27.4 million. Bluegreen also repaid $18.9 million on the facility.

          In February 2011, Bluegreen revised the terms of and extended the Liberty Bank Facility. The revised $60.0 million facility (“New Liberty Bank Facility”) provides for an 85% advance on eligible receivables pledged under the facility during a two-year period ending in February 2013, subject to customary terms and conditions. Availability under the New Liberty Bank Facility is reduced by amounts currently outstanding to certain syndicate participants under the existing Liberty Bank Facility. At February 28, 2011, such outstanding amounts under the existing Liberty Bank Facility were approximately $47.0 million, therefore, initial availability under the New Liberty Bank Facility was approximately $13.0 million, but as outstanding amounts on the existing facility amortize over time, the New Liberty Bank Facility will revolve up to $60.0 million, subject to eligible collateral and customary terms and conditions. Principal and interest will be paid as cash is collected on the pledged receivables, with the remaining balance due in February 2016.

          Indebtedness under the New Liberty Bank Facility bears interest at the Prime Rate (as published in the Wall Street Journal) plus 2.25%, subject to a floor of 6.5%.

          As a result of the significant non-cash charges associated with loan loss reserves and Communities’ inventory impairments as of December 31, 2010, Bluegreen would have been in violation of one of the original net worth covenants under the Liberty Bank Facility as of that date. However, in March 2011, Liberty Bank confirmed that the covenants contained in the New Liberty Bank Facility superseded the covenants contained in the original facility. Bluegreen was in compliance with all applicable covenants as of December 31, 2010.

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Notes to Consolidated Financial Statements

          The GE Bluegreen/Big Cedar Receivables Facility. In April 2007, the Bluegreen/Big Cedar Joint Venture entered into a $45 million revolving VOI receivables credit facility with GE (the “GE Bluegreen/Big Cedar Facility”). Bluegreen Corporation has guaranteed the full payment and performance of the Bluegreen/Big Cedar Joint Venture in connection with the GE Bluegreen/Big Cedar Receivable Facility. The advance period under this facility expired on April 16, 2009, and all outstanding borrowings are scheduled to mature no later than April 16, 2016. The facility has detailed requirements with respect to the eligibility of receivables for inclusion and other conditions funding. The facility includes affirmative, negative and financial covenants and events of default. All principal and interest payments received on pledged receivables are applied to principal and interest due under the facility. Indebtedness under the facility bears interest adjusted monthly at a rate equal to the 30 day LIBOR rate plus 1.75%. During 2010, Bluegreen repaid $8.9 million on this facility.

          Lecacy Securitization. In September 2010, Bluegreen completed a securitization transaction of the lowest FICO^R-score loans previously financed in the BB&T Purchase Facility. Substantially all of the timeshare receivables included in this transaction were generated prior to December 15, 2008, the date that Bluegreen implemented its FICO^R score-based credit underwriting program, and had FICO^Rscores below 600.

          In this private placement transaction, BXG Legacy 2010 LLC, a wholly-owned special purpose subsidiary of Bluegreen, issued $27 million of notes payable secured by a portfolio of timeshare receivables totaling $36.1 million (the” Legacy Securitization”). While the notes payable have a coupon rate of 12%, they were sold at a $2.7 million discount to yield an effective rate of 18.5%. The notes payable generated gross proceeds to Bluegreen of $24.3 million (before fees and customary reserves and expenses), which was used to repay a portion of the outstanding balance under the BB&T Purchase Facility. During 2010, Bluegreen repaid $1.7 million on this facility.

          Bluegreen guaranteed the principal payments for defaulted vacation ownership loans in the Legacy Securitization at amounts equivalent to the then-current advance rate inherent in the notes, any shortfalls in monthly interest distributions to the Legacy Securitization investors and any shortfall in the ultimate principal payment on the notes upon their stated maturity in September 2025.

          NBA Receivables Facility. In September 2010, Bluegreen/Big Cedar Joint Venture entered into a $20.0 million timeshare receivables hypothecation facility with National Bank of Arizona (“NBA”). Bluegreen Corporation has guaranteed the full payment and performance of Bluegreen/Big Cedar Joint Venture in connection with this facility. The facility provides for an 85% advance on $23.5 million of eligible receivables, all of which were pledged under the facility at closing, subject to terms and conditions which Bluegreen believes to be customary for facilities of this type. All principal and interest payments received on pledged receivables are applied to principal and interest due under the facility, with the remaining balance due in September 2017. Indebtedness under this facility bears interest at the 30-day LIBOR plus 5.25%, subject to a floor of 6.75%. During 2010, Bluegreen repaid $1.6 million on this facility.

          Bluegreen has received a term sheet from NBA to amend its existing facility to allow Bluegreen to pledge additional timeshare receivables up to the borrowing limit, with the additional advances not to exceed $5.0 million. There can be no assurances that Bluegreen will close on this amendment on favorable terms, if at all.

          The Wells Fargo Facility. Bluegreen has a credit facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”). Historically, Bluegreen primarily used this facility for borrowings collateralized by the pledge of certain VOI receivables which typically have been its one-year term receivables. The borrowing period for advances on eligible receivables expired on December 31, 2009, and the facility was fully paid down in 2010.

          BB&T Purchase Facility. Bluegreen has a $75.0 million timeshare notes receivable purchase facility with Branch Banking and Trust Company (“BB&T”) (the “BB&T Purchase Facility”). The BB&T Purchase Facility provides for a revolving advance period through December 17, 2011. The interest rates on future advances under the facility are the Prime Rate plus 2.0%, subject to tiered increases once the outstanding balance equals or exceeds $25.0 million, subject to a maximum interest rate of the Prime Rate plus 3.5%, once the facility equals or exceeds $50.0 million. Additionally, Bluegreen receives all of the excess cash flows generated by the timeshare receivables transferred to BB&T under the facility (excess meaning after customary payment of fees, interest and principal under the facility). The BB&T Purchase Facility provides for the financing of Bluegreen’s timeshare receivables at an advance rate of 67.5%, subject to the terms of the facility.

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Notes to Consolidated Financial Statements

          While ownership of the receivables is transferred for legal purposes, the transfers of receivables under the facility are accounted for as secured borrowings. Accordingly, the receivables are reflected as assets and the associated obligations are reflected as liabilities on our balance sheet. The BB&T Purchase Facility is nonrecourse and is not guaranteed by Bluegreen.

          As of December 31, 2010, the entire $75.0 million BB&T facility was available, subject to eligible collateral and customary terms and conditions.

          2010 Term Securitization. On December 17, 2010, Bluegreen completed a private offering and sale of $107.6 million of investment-grade, timeshare loan-backed notes (the “2010 Term Securitization”). The 2010-A Term Securitization consisted of the issuance of $88.0 million of A rated and $19.6 million of BBB rated timeshare-loan backed notes with coupon rates of 5.1% and 7.5%, respectively, which blended to a weighted average coupon rate of 5.5%. The advance rate for this transaction was 85.25%. BB&T Capital Markets acted as the sole placement agent and initial purchaser.

          The amount of the timeshare receivables sold was $126.2 million, substantially all of which was provided at closing. Through the completion of this private offering Bluegreen repaid BB&T approximately $93.6 million, representing all amounts outstanding under the Company’s existing receivables purchase facility with BB&T, including accrued interest.

          While ownership of the timeshare receivables included in the 2010 Term Securitization is transferred and sold for legal purposes, the transfer of these timeshare receivables is accounted for as a secured borrowing.

          The 2010 Term Securitization is non-recourse and is not guaranteed by Bluegreen.

          Big Cedar Quorum Federal Credit Union. On December 22, 2010, Bluegreen entered into a new timeshare receivables purchase facility (the “Quorum Facility”) with Quorum Federal Credit Union (“Quorum”). The Quorum Facility allows for the sale of timeshare notes receivable on a non-recourse basis, pursuant to the terms of the facility and subject to certain conditions precedent. Quorum has agreed to purchase eligible timeshare receivables from us or certain of our subsidiaries up to an aggregate $20.0 million purchase price through December 22, 2011. The terms of the Quorum Facility reflect an 80% advance rate and a program fee rate of 8% per annum through August 31, 2011 and terms to be agreed upon through December 22, 2011. Eligibility requirements for receivables sold include, amongst others, that the obligors under the timeshare notes receivable sold be members of Quorum at the time of the note sale. The Quorum Facility contemplates the ability of Quorum to purchase additional receivables subject to advance rates, fees and other terms to be agreed upon from time to time over and above the initial $20.0 million commitment, pursuant to the terms of the facility and subject to certain conditions precedent. Subject to performance of the collateral, Bluegreen will receive all of the excess cash flows generated by the receivables transferred to Quorum under the facility (excess meaning after customary payment of fees and return of amounts invested by Quorum under the facility on a pro-rata basis as borrowers make payments on their timeshare loans).

          While ownership of any timeshare receivables financed through the Quorum facility are considered transferred and sold to Quorum for legal purposes, the transfer of these timeshare receivables is accounted for as a secured borrowing.

          Receivable-Backed Notes Payable Previously Reported as Off-Balance-Sheet

          As discussed in further detail in Note 5 above, on January 1, 2010, Bluegreen consolidated special purpose finance entities previously reported “off-balance-sheet” and associated receivable-backed notes payable. These entities and their associated debt were not required to be consolidated during periods prior to January 1, 2010. Historically, Bluegreen has been a party to a number of securitization-type transactions, in which it sold receivables to one of its special purpose finance entities which, in turn, sold the receivables either directly to third parties or to a trust established for the transaction. These receivables were typically sold on a non-recourse basis (except for breaches of certain representations and warranties). Under these arrangements, the cash payments received from obligors on the receivables sold are generally applied monthly to pay fees to service providers, make interest and principal payments to investors, and fund required reserves, if any, with the remaining balance of such cash retained by us; however, to the extent the portfolio of receivables fails to satisfy specified performance criteria (as may occur due to an increase in default rates or loan loss severity) or other trigger events, the funds received from obligors are distributed on an accelerated basis to investors. Depending on the circumstances and the transaction, the application of the accelerated payment formula may

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be permanent or temporary until the trigger event is cured. As of December 31, 2010, Bluegreen was in compliance with all applicable terms and no trigger events had occurred.

Notes and Mortgage Notes Payable and Other Borrowings

          The following debt facilities were outstanding at December 31, 2010 and 2009 (dollars in thousands):

December 31, Interest Maturity

2010 2009 Rate Date

Core Communities

Land development
$ — 25,000 5.00 % February 2012 (5)

Land acquisition
27,248 22,536 3.04% — 3.19 % October 2019 (4)

Land acquisition
— 4,712 6.88 % October 2019 (5)

Land acquisition
— 85,968 2.74% — 3.06 % June 2011 (5)

Development bonds
— 181 6% to 6.13% May 2035

Other borrowings
— 68 7.48 % August 2011

Carolina Oak

Borrowing base facility
37,174 37,174 3.25 % March 2011 (4)

Cypress Creek Holdings

Mortgage notes payable
11,387 11,607 5.47 % April 2015

Other borrowings
— 102 6.50 % June 2013

Bluegreen

The RFA AD&C Facility
52,264 87,415 4.76 % June 2012

H4BG Communities Facility
30,842 38,479 8.0% — 10.0 % December 2012

Wachovia Notes Payable
— 24,497 2.23% — 2.58 % Varies by loan

Wells Fargo Term Loan
30,776 0 7.13 % April 30, 2012

Wachovia Line-of-Credit
— 15,700 1.98 % April 2010

Foundation Capital
13,200 0 8.00 %

Textron AD&C Facility
9,290 12,757 4.50% — 4.75 % Varies by loan (3)

Fifth Third Bank Note Payable
3,154 3,381 3.26 % April 2023

Other
2,594 3,552 4.25% — 12.50 % From September 2010 to February 2023

Real Estate and Other
217,929 373,129

BankAtlantic

Subordinated debentures (1)
22,000 22,000 LIBOR + 3.45% November 2012

Mortgage-Backed Bonds
— 697 (2 ) September 2013

Total Financial Services
22,000 22,697

Fair value adjustment
(358 ) (465 )

Total Notes Payable
$ 239,571 395,361

(1) LIBOR interest rates are indexed to 3-month LIBOR and adjust quarterly.

(2) The bonds adjust semi-annually to the ten year treasury constant maturity rate minus 23 basis points.

(3) The maturity date for this facility varies by loan. The maturity date associated with the Odyssey Dells Resort loan, which had an outstanding balance of $3.6 million as of December 31, 2010, is December 31, 2011. The maturity date associated with the Atlantic Palace Resort, which had an outstanding balance of $5.7 million as of December 31, 2010, is April 2013.

(4) Represents original maturity dates. However, these loans are currently in default and repayment of the entire amounts outstanding under the notes has been accelerated. Therefore, these notes are currently due.

(5) Notes are the subject of legal proceedings in which Woodbridge relinquished title to all assets and transferred its interest in certain Core entities in exchange for full settlement of the debt which was received in February 2011.

          Core Communities and its subsidiaries

          During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with the accounting guidance for consolidation,

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Notes to Consolidated Financial Statements

Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s consolidated statement of financial position as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.

          In December 2010, Core and one of its subsidiaries entered agreements, including without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefore, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with the applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.

          Woodbridge

          The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

          Bluegreen

          RFA AD&C Facility. In September 2010, GMAC assigned all rights, title, and interest in the GMAC AD&C Facility to Resort Finance America, LLC (“RFA”). This assignment did not affect any of the material financial terms of the loan agreement. This facility was used to finance the acquisition and development of certain of Bluegreen’s resorts and currently has two outstanding project loans. The maturity date for the project loan collateralized by our Bluegreen Club 36^TM resort in Las Vegas, Nevada (the “Club 36 Loan”) is June 30, 2012. Approximately $49.9 million was outstanding on the Club 36 Loan as of December 31, 2010, $27.3 million of which is due by October 31, 2011. The maturity date for the project loan collateralized by our Fountains resort in Orlando, Florida (the “Fountains Loans”) is March 31, 2011. Approximately $2.4 million was outstanding on this loan as of December 31, 2010. Principal payments are effected through agreed-upon release prices as timeshare interests in the resorts collateralizing the RFA AD&C Facility are sold, subject to periodic minimum required amortization on the Club 36 Loan and the Fountains Loans. As of December 31, 2010, Bluegreen had no availability under this facility. During 2010, Bluegreen repaid $35.2 million of the outstanding balance under this facility.

          H4BG Communities Facility. Bluegreen has an outstanding balance under the H4BG Communities Facility, historically used to finance its Bluegreen Communities real estate acquisitions and development activities. The H4BG Communities Facility is secured by the real property homesites (and personal property related thereto) at the following Bluegreen Communities projects (the “Secured Projects”): Havenwood at Hunter’s Crossing (New Braunfels, Texas); The Bridges at Preston Crossings (Grayson County, Texas); King Oaks (College Station, Texas); Vintage Oaks at the Vineyard (New Braunfels, Texas); and Sanctuary Cove at St. Andrews Sound (Waverly, Georgia). In addition, the H4BG Communities Facility is secured by our golf courses: The Bridges at Preston Crossings (Grayson County, Texas) and Sanctuary Cove (Waverly, Georgia).

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          Principal payments are effected through agreed-upon release prices as real estate collateralizing the H4BG Communities Facility is sold, subject to minimum required amortization. The interest rate on the H4BG Communities Facility is the Prime Rate plus 2%, subject to the following floors: (1)  8% until the balance of the loan is less than or equal to $20 million, and (2) 6% thereafter. During 2010, Bluegreen repaid $7.6 million on this facility.

          The Wachovia Notes Payable. In April 2010, Bluegreen executed an agreement with Wells Fargo Bank, N.A, the parent Company of Wachovia (“Wells Fargo”), to refinance the then outstanding balance of $21.9 million under the Wachovia Notes Payable into a new term loan. See Wells Fargo Term Loan below for further details.

          The Wachovia Line-of-Credit. In April 2010, the then outstanding balance of $14.5 million was refinanced by Wells Fargo Bank, N.A. See Wells Fargo Term Loan below for further details.

          Wells Fargo Term Loan. On April 30, 2010, Bluegreen entered into a definitive agreement with Wells Fargo Bank, N.A. (“Wells Fargo”), which amended, restated and consolidated Bluegreen’s then existing notes payable and line-of-credit with Wachovia Bank, N.A. into a single term loan with Wells Fargo (the “Wells Fargo Term Loan”). The notes payable and line-of-credit which were consolidated into the Wells Fargo Term Loan had a total outstanding balance of $36.4 million as of April 30, 2010. In connection with the closing of the Wells Fargo Term Loan, Bluegreen made a principal payment of $0.4 million, reducing the balance to $36.0 million, and paid accrued interest on the then-existing Wachovia debt. Principal payments are effected through agreed-upon release prices as real estate collateralizing the Wells Fargo Term Loan is sold, subject to minimum remaining required amortization as of December 31, 2010, of $10.6 million in 2011 and $20.2 million in 2012. In addition to the resort projects previously pledged as collateral for the various notes payable to Wachovia, Bluegreen pledged additional timeshare interests, resorts real estate, and the residual interests in certain of our sold VOI notes receivable as collateral for the Wells Fargo Term Loan. As required by the terms of the Wells Fargo Term Loan, Wells Fargo received, as additional collateral, the residual interest in 2010 Term Securitization. The Wells Fargo Term Loan bears interest at the 30-day LIBOR plus 6.87% (7.13% as of December 31, 2010).

          During 2010, Bluegreen repaid $5.6 million on this facility.

          Textron AD&C Facility. In April 2008, BVU, Bluegreen’s wholly-owned subsidiary, entered into a $75.0 million, revolving master acquisition, development and construction facility loan agreement (the “Textron AD&C Facility”) with Textron Financial Corporation (“Textron”). The Textron AD&C Facility has historically been used to facilitate the borrowing of funds for resort acquisition and development activities. Bluegreen has guaranteed all sub-loans under the master agreement. Interest on the Textron AD&C Facility is equal to the prime rate plus 1.25% — 1.50% and is due monthly.

          On October 28, 2009, Bluegreen entered into an amendment to the Textron AD&C Facility and a sub-loan under the Facility used to fund the acquisition and development of our Odyssey Dells Resort (the “Odyssey Sub-Loan”). The amendment to the Odyssey Sub-Loan extended the final maturity of outstanding borrowings under the Odyssey Sub-Loan to December 31, 2011, and revised the periodic minimum required principal amortization. As amended, our next minimum required principal payment will be approximately $0.4 million in March 2010 with additional minimum required principal payments of $1.0 million per quarter thereafter through maturity. Bluegreen pays Textron principal payments as it sells timeshare interests that collateralize the Odyssey Sub-Loan, subject to periodic minimum required principal amortization. As of December 31, 2010, our outstanding borrowings under the Sub-Loan totaled approximately $3.6 million.

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Notes to Consolidated Financial Statements

          The sub-loan used to acquire Bluegreen’s Atlantic Palace Resort in Atlantic City, New Jersey was $5.7 million as of December 31, 2010 (the “Atlantic Palace Sub-Loan”). Bluegreen pays Textron principal payments as it sells timeshare interests that collateralize the Atlantic Palace Sub-Loan, subject to periodic minimum required principal amortization. The final maturity of outstanding borrowings under the Atlantic Palace Sub-Loan is April 2013.

          Bluegreen has guaranteed all sub-loans under the Textron AD&C Facility. Interest on the Textron AD&C Facility is equal to the prime rate plus 1.25% — 1.50% and is due monthly. During 2010, Bluegreen repaid $3.5 million under this facility.

          Fifth Third Bank Note Payable. In April 2008, Bluegreen purchased a building in Myrtle Beach, South Carolina. The purchase price was $4.8 million, of which $3.4 million was financed by a note payable to Fifth Third Bank. Interest is payable monthly through the earlier of the construction completion date or October 31, 2009, and bears interest at a rate equal to the one-month LIBOR plus 3.00%. Interest and principal payments are currently made monthly until maturity. The note payable matures in April 2023. During 2010, we repaid $0.2 million under this facility.

          Bank Atlantic

          In October 2002, BankAtlantic issued $22 million of floating rate subordinated debentures due in 2012. The subordinated debentures pay interest quarterly and are currently redeemable at a price based upon then-prevailing market interest rates. The subordinated debentures were issued by BankAtlantic in a private transaction as part of a larger pooled securities offering. The subordinated debentures qualify for inclusion in BankAtlantic’s total risk based capital.

          During the year ended December 31, 2010 the mortgage-backed bonds were retired. During the year ended December 31, 2008, the holder of a mortgage-backed bond issued by a financial institution acquired by BankAtlantic agreed to accept a $2.8 million payment for the retirement of $3.1 million in mortgage-backed bonds. Included in the Company’s Consolidated Statement of Operations in Financial Services — cost associated with debt redemption for the year ended December 31, 2008 is a $0.3 million gain from the early extinguishment of the mortgage-backed bonds.

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Notes to Consolidated Financial Statements

Junior Subordinated Debentures

     Junior subordinated debentures outstanding at December 31, 2010 and 2009 were as follows (in thousands):

December 31, Beginning

2010 2009 Optional

Issue Outstanding Outstanding Interest Maturity Redemption

Junior Subordinated Debentures Date Amount Amount Rate (1) Date Date

Levitt Capital Trust I (“LCT I”)
03/15/2005 $ 23,196 23,196 From fixed 8.11% to LIBOR + 3.85% 03/01/2035 3/15/2010

Levitt Capital Trust II (“LCT II”)
05/04/2005 30,928 30,928 From fixed 8.09% to LIBOR + 3.80% 06/30/2035 06/30/2010

Levitt Capital Trust III (“LCT III”)
06/01/2006 15,464 15,464 From fixed 9.25% to LIBOR + 3.80% 06/30/2036 06/30/2011

Levitt Capital Trust IV (“LCTIV”)
07/18/2006 15,464 15,464 From fixed 9.35% to LIBOR + 3.80% 09/30/2036 09/30/2011

Total Woodbridge Holdings
85,052 85,052

Bluegreen Statutory Trust I
03/15/2005 23,196 23,196 LIBOR +4.9% 3/30/2035 03/30/2010

Bluegreen Statutory Trust II
05/04/2005 25,774 25,774 LIBOR +4.85% 7/30/2035 07/30/2010

Bluegreen Statutory Trust III
05/10/2005 10,310 10,310 LIBOR +4.85% 7/30/2035 07/30/2010

Bluegreen Statutory Trust IV
04/24/2006 15,464 15,464 LIBOR +4.85% 6/30/2036 06/30/2011

Bluegreen Statutory Trust V
07/21/2006 15,464 15,464 LIBOR +4.85% 9/30/2036 09/30/2011

Bluegreen Statutory Trust VI
02/26/2007 20,619 20,619 LIBOR +4.8% 4/30/2037 04/30/2012

Total Bluegreen Corporation
110,827 110,827

BBX Capital Trust I(A)
06/26/2007 26,918 26,436 LIBOR + 1.45% 09/15/2037 09/15/2012

BBX Capital Trust II(A)
09/20/2007 5,389 5,290 LIBOR + 1.50% 12/15/2037 12/15/2012

BBX Capital Trust II
03/05/2002 67,546 62,097 8.50% 03/31/2032 03/31/2007

BBX Capital Trust III
06/26/2002 27,978 26,928 LIBOR + 3.45% 06/26/2032 06/26/2007

BBX Capital Trust IV
09/26/2002 27,950 26,914 LIBOR + 3.40% 09/26/2032 09/26/2007

BBX Capital Trust V
09/27/2002 11,180 10,766 LIBOR + 3.40% 09/30/2032 09/27/2007

BBX Capital Trust VI
12/10/2002 16,737 16,125 LIBOR + 3.35% 12/10/2032 12/10/2007

BBX Capital Trust VII
12/19/2002 27,866 26,874 LIBOR + 3.25% 12/26/2032 12/19/2007

BBX Capital Trust VIII
12/19/2002 16,575 15,969 LIBOR + 3.35% 01/07/2033 12/19/2007

BBX Capital Trust IX
12/19/2002 11,051 10,647 LIBOR + 3.35% 01/07/2033 12/19/2007

BBX Capital Trust X
03/26/2003 55,620 53,694 LIBOR + 3.15% 03/26/2033 03/26/2008

BBX Capital Trust XI
04/10/2003 11,029 10,637 LIBOR + 3.25% 04/24/2033 04/24/2008

BBX Capital Trust XII
03/27/2003 16,546 15,957 LIBOR + 3.25% 04/07/2033 04/07/2008

Total BankAtlantic Bancorp (2)
322,385 308,334

Purchase accounting adjustment
(56,696 ) (57,002 )

Total Junior Subordinated Debentures
$ 461,568 447,211

(1) LIBOR interest rates are indexed to three-month LIBOR and adjust quarterly.

(2) Included in the outstanding balances at December 31, 2010 and 2009 was $28.2 million and $14.1 million, respectively, of deferred interest. Interest can be deferred for 20 consecutive quarters with the entire amount of deferred interest due at the end of the deferral period. As of December 31, 2010, BankAtlantic Bancorp had deferred interest payments for 8 consecutive quarters. BankAtlantic Bancorp may end the deferral by paying all accrued and unpaid interest.

          These business trusts are variable interest entities in which Woodbridge, Bluegreen and BankAtlantic Bancorp are not the primary beneficiaries as defined by the accounting guidance for the consolidation of variable interest entities. Accordingly, the Company and its subsidiaries do not consolidate the operations of these business trusts; instead, they are accounted for under the equity method of accounting.

          Woodbridge Junior Subordinated Debentures

          Woodbridge formed four statutory business trusts which issued trust preferred securities to third parties and trust common securities to Woodbridge and used the proceeds to purchase an identical amount of junior subordinated debentures from Woodbridge. Interest on the junior subordinated debentures and distributions on these trust preferred securities are payable quarterly in arrears at the fixed rates as described in the above table until the optional redemption date and thereafter at the floating rates specified in the above table until the corresponding scheduled maturity date. The

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Notes to Consolidated Financial Statements

trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable, in whole or in part, at Woodbridge’s option at any time after five years from the issue date or sooner following certain specified events.

          Bluegreen Junior Subordinated Debentures

          Bluegreen formed statutory business trusts, each of which issued trust preferred securities and invested the proceeds thereof in its junior subordinated debentures. The trusts are variable interest entities in which Bluegreen is not the primary beneficiary as defined by the accounting guidance for the consolidation of variable interest entities. Accordingly, Bluegreen does not consolidate the operations of the Trusts; instead, the trusts are accounted for under the equity method of accounting. In each of these transactions, the applicable Trust issued trust preferred securities as part of a larger pooled trust securities offering which was not registered under the Securities Act of 1933. The applicable Bluegreen trust then used the proceeds from issuing the trust preferred securities to purchase an identical amount of junior subordinated debentures from Bluegreen. Interest on the junior subordinated debentures and distributions on the trust preferred securities are payable quarterly in arrears at the fixed rates as described in the above table until the optional redemption date and thereafter at the floating rates specified in the above table until the corresponding scheduled maturity date. Distributions on the trust preferred securities are cumulative and based upon the liquidation value of the trust preferred security. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part at Bluegreen’s option at any time after five years from the issue date or sooner following certain specified events. In addition, Bluegreen made an initial equity contribution to each Trust in exchange for its common securities, all of which are owned by Bluegreen, and those proceeds were also used to purchase an identical amount of junior subordinated debentures from Bluegreen. The terms of each trust’s common securities are nearly identical to the trust preferred securities.

          BankAtlantic Bancorp Junior Subordinated Debentures

          BankAtlantic Bancorp Parent Company has formed thirteen statutory business trusts (“Trusts”) for the purpose of issuing Trust Preferred Securities (“trust preferred securities”) and investing the proceeds thereof in junior subordinated debentures of BankAtlantic Bancorp Parent Company. The trust preferred securities are fully and unconditionally guaranteed by BankAtlantic Bancorp Parent Company. The Trusts used the proceeds from issuing trust preferred securities and the issuance of its common securities to BankAtlantic Bancorp Parent Company to purchase junior subordinated debentures from BankAtlantic Bancorp Parent Company. Interest on the junior subordinated debentures and distributions on the trust preferred securities are payable quarterly in arrears. Distributions on the trust preferred securities are cumulative and are based upon the liquidation value of the trust preferred security. BankAtlantic Bancorp Parent Company has the right, at any time, as long as there are no continuing events of default, to defer payments of interest on the junior subordinated debentures for a period not exceeding 20 consecutive quarters; but not beyond the stated maturity of the junior subordinated debentures. Beginning in February and March 2009 BankAtlantic Bancorp Parent Company notified the trustees of the junior subordinated debentures that it has elected to defer interest payments for the next regularly scheduled quarterly interest payment dates and BankAtlantic Bancorp Parent Company has continued to elect to defer interest payments for each subsequent quarterly interest payment date. BankAtlantic Bancorp Parent Company has the ability under the junior subordinated debentures to continue to defer interest payments through ongoing, appropriate notices to each of the trustees, and make a decision each quarter as to whether to continue the deferral of interest. BankAtlantic Bancorp Parent Company currently expects to continue to defer interest payments on the junior subordinated debentures for the foreseeable future. During the deferral period, interest will continue to accrue on the junior subordinated debentures at the stated coupon rate, including on the deferred interest, and BankAtlantic Bancorp Parent Company will continue to record the interest expense associated with the junior subordinated debentures. During the deferral period, BankAtlantic Bancorp Parent Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures. BankAtlantic Bancorp Parent Company may end the deferral by paying all accrued and unpaid interest. Deferred interest on junior subordinated debentures was $28.2 million as of December 31, 2010 as BankAtlantic Bancorp Parent Company elected to defer interest during each quarter of 2010 and 2009. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. BankAtlantic Bancorp Parent Company has the right to redeem the junior subordinated debentures after

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Notes to Consolidated Financial Statements

five years from issuance and in some instances sooner. The redemption of the subordinated debentures is subject to BankAtlantic Bancorp Parent Company having received regulatory approval, if required under applicable capital guidelines or regulatory policies.

          BankAtlantic Bancorp Indentures

          The indentures relating to the debentures (including those related to the junior subordinated debentures) contain certain customary covenants found in indentures under the Trust Indenture Act, including covenants with respect to the payment of principal and interest, maintenance of an office or agency for administering the debentures, holding of funds for payments on the debentures in trust, payment by BankAtlantic Bancorp of taxes and other claims, maintenance by BankAtlantic Bancorp of its properties and its corporate existence and delivery of annual certifications to the trustee.

24. Development Bonds Payable

          In connection with the development of certain of Core’s projects, community development, special assessment or improvement districts were established and had the ability to utilize tax-exempt bond financing to fund construction or acquisition of certain on-site and off-site infrastructure improvements near or at these communities. The obligation to pay principal and interest on the bonds issued by the districts was assigned to each parcel within the district, and a priority assessment lien was sometimes placed on benefited parcels to provide security for the debt service. The bonds, including interest and redemption premiums, if any, and the associated priority lien on the property was typically payable, secured and satisfied by revenues, fees, or assessments levied on the property benefited. Core was required to pay the revenues, fees, and assessments levied by the districts on any properties it owned that benefited by the improvements.

          Core’s bond financing related to improvements made to land that served as collateral for Core’s debt that was resolved during the fourth quarter of 2010. Accordingly, as of December 31, 2010, Core no longer owns any property within community development, special assessment, or improvement districts and was released from all debt obligations associated therewith. Core’s bond financing at December 31, 2009 consisted of district bonds totaling $218.7 million which was scheduled to mature from 2035 to 2040, with then outstanding amounts of approximately $170.8 million. During the years ended December 31, 2009 and 2008, Core recorded a liability of approximately $693,000 and $584,000, respectively, in assessments on property owned by it in the districts.

          Liabilities were recorded for estimated developer obligations that were fixed and determinable and user fees that were required to be paid or transferred at the time the parcel or unit was sold to an end user. At December 31, 2009, the liability related to developer obligations associated with Core’s ownership of the property was $3.3 million, of which $3.1 million is included in the liabilities related to assets held for sale in the accompanying consolidated statement of financial condition at such date.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

25. Income Taxes

          The provision (benefit) for income taxes consisted of (in thousands):

For the Years Ended December 31,

2010 2009 2008

Continuing operations:

Current:

Federal
$ (2,267 ) (67,213 ) (2,880 )

State
2,006 — (1 )

(261 ) (67,213 ) (2,881 )

Deferred:

Federal
2,965 369 14,308

State
(2,599 ) (1,318 ) 4,336

366 (1,687 ) 18,644

Provision (benefit) for income taxes
$ 105 (68,900 ) 15,763

          The Company’s actual provision (benefit) for income taxes from continuing operations differs from the expected Federal income tax provision as follows (dollars in thousands):

For the Years Ended December 31,

2010(1) 2009 (1) 2008 (1)

Income tax provision at expected federal income tax rate of 35%
$ (63,716 ) (35.00 )% $ (52,605 ) (35.00 )% $ (116,283 ) (35.00 )%

Increase (decrease) resulting from:

Provision (benefit) for state taxes, net of federal effect
(3,419 ) (1.88 ) (13,760 ) (9.15 ) (11,975 ) (3.60 )

Taxes related to subsidiaries not consolidated for income tax purposes
(3,496 ) (1.92 ) 2,100 1.40 (43,000 ) (12.94 )

Gain on bargain purchase of Bluegreen
— — (63,997 ) (42.58 ) — —

Increase in valuation allowance
67,215 36.92 44,861 29.85 190,516 57.34

Expired NOLs
— — — — 1,281 0.39

Gain on Levitt and Sons settlement
4,031 2.21 10,182 6.77 (20,981 ) (6.32 )

Goodwill impairment adjustment
— — 4,361 2.90 16,899 5.09

Tax credits
127 0.07 — — — —

Tax-exempt interest income
(160 ) (0.09 ) (3 ) (0.00 ) (152 ) (0.05 )

Other — net
(477 ) (0.26 ) (39 ) (0.03 ) (542 ) (0.16 )

Provision (benefit) for income taxes
$ 105 0.06 % $ (68,900 ) (45.84 )% $ 15,763 4.74 %

(1) Expected tax is computed based upon income (loss) from continuing operations before noncontrolling interest.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and tax liabilities were (in thousands):

December 31,

2010 2009 2008

Deferred tax assets:

Allowance for loan losses, REO, tax certificate losses and write-downs for financial statement purposes
$ 82,076 66,846 49,642

Federal and State NOL and tax credit carryforward
394,100 284,784 141,113

Capital loss carryover
2,978 2,978 —

Investment in Levitt and Sons
— 33,082 46,393

Compensation expensed for books and deferred for tax purposes
4 194 779

Real estate inventory capitalized costs for tax purposes in excess of amounts capitalized for financial statement purposes
4,979 82,479 2,398

Real estate valuation
90,936 49,259 1,295

Accumulated other comprehensive loss, net
1,278 2,409 2,906

Share based compensation
10,861 9,164 3,982

Income recognized for tax purposes and deferred for financial statement purposes
6,846 10,334 7,510

Investment in securities
— 825 5,965

Investment in unconsolidated affiliates
828 828 11,135

Property and equipment
4,535 2,731 —

Purchase accounting adjustments for bank acquisitions
507 — —

Other
19,176 21,368 9,143

Total gross deferred tax assets
619,104 567,281 282,261

Valuation allowance
(384,818 ) (318,306 ) (272,765 )

Total deferred tax assets
234,287 248,975 9,496

Deferred tax liabilities:

Installment sales treatment of notes
213,153 224,941 —

Intangible assets
24,593 23,355 —

Junior subordinate notes
21,869 20,979 —

Deferred loan income
1,674 1,188 1,468

Prepaid pension expense
1,630 1,852 2,625

Property and equipment
— — 3,073

Other
31 1,865 2,330

Total gross deferred tax liabilities
262,950 274,180 9,496

Net deferred tax (liability) asset
(28,663 ) (25,205 ) —

Less net deferred tax liability at beginning of period
25,205 — (16,331 )

Net deferred tax liability acquired due to purchase accounting
— — (39 )

Acquisition of Bluegreen
— 24,029 —

Effect of a change in accounting principle
— 86 —

Adoption of ASU 2009-16 and 17
1,781 — —

Increase in deferred tax liability from capital transactions
— — 2,011

Reduction in deferred tax valuation allowance for continuing operations
1,311 2,777 —

Decrease in BFC’s accumulated other comprehensive income
— — (981 )

Decrease in BankAtlantic Bancorp’s accumulated other comprehensive income
— — (3,304 )

Benefit (provision) for deferred income taxes
$ (366 ) 1,687 (18,644 )

          Activity in the deferred tax asset valuation allowance was (in thousands):

For the Years Ended December 31,

2010 2009 2008

Balance, beginning of period
$ 318,306 272,765 84,028

Other comprehensive income (loss)
841 792 (2,538 )

Increase in deferred tax valuation allowance
67,215 44,861 190,516

Increase in deferred tax valuation allowance-discontinued operations
(951 ) 6,030 —

Acquisition of control of Bluegreen
— (4,704 ) —

Increase in deferred tax allowance — paid in capital
(593 ) (1,438 ) 759

Balance, end of period
$ 384,818 318,306 272,765

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BFC Financial Corporation
Notes to Consolidated Financial Statements

Generally, the amount of tax expense or benefit allocated to continuing operations is determined without regard to the tax effects of other categories of income or loss, such as other comprehensive income. However, an exception to the general rule is provided when, in the presence of a valuation allowance against deferred tax assets, there is a pretax loss from continuing operations and pretax income from other categories. In such instances, income from other categories must offset the current loss from operations, the tax benefit of such offset being reflected in continuing operations. The Company reduced its deferred tax valuation allowance from continuing operations by $2.8 million during the year ended December 31, 2009 of which approximately $2.3 million was due to BankAtlantic Bancorp and $517,000 was due to BFC to reflect the future taxable income associated with unrealized gains in accumulated other comprehensive income. In 2010, BFC reduced its deferred tax valuation allowance from continuing operations by $1.3 million to reflect the future taxable income associated with BFC’s unrealized gains in accumulated other comprehensive income.

          BFC and its subsidiaries evaluate their deferred tax assets to determine if valuation allowances are required. In the evaluation, management considers net operating loss carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. Valuation allowances are established based on the consideration of all available evidence using a more likely than not standard. Based on evaluations, deferred tax valuation allowances of $67.2 million, $44.9 million and $190.5 million were established for the years ended December 31, 2010, 2009 and 2008, respectively.

          The deferred tax asset valuation allowance may be reversed when each of the companies and their respective subsidiaries generate sufficient taxable income in the future to utilize the tax benefits of the related deferred tax assets. The majority of the benefits of the net deferred tax assets can be carried forward for 20 years and applied to offset future taxable income. The deferred tax asset valuation allowance will be reversed if and when it becomes more likely than not that BFC and its subsidiaries will generate sufficient taxable income in the future to utilize the tax benefits of the related deferred tax assets.

          In November 2009, the Workers, Homeownership, and Business Assistance Act of 2009 was enacted. The act extended the net operating loss (“NOL”) carry-back period from two years to up to five years for the 2008 or the 2009 tax years. Included in the Company’s Consolidated Statements of Financial Condition at December 31, 2009 was a current income tax receivable of $31.8 resulting from BankAtlantic Bancorp’s election to carryback its 2009 NOL for five years, which was received in 2010. Also included in the Company’s Consolidated Statements of Financial Condition at December 31, 2010 and 2009 are current income tax receivables of $10.8 million and $34.6 million, respectively, resulting from Woodbridge’s election to carryback its 2008 NOL for five years. We have received approximately $29.2 million of tax refunds and expect to receive an additional $10.8 million when the final review is completed by the Internal Revenue Service. Under the terms of the Settlement Agreement entered into with the Joint Committee of Unsecured Creditors in the Chapter 11 Cases, we agreed to share with the Debtors’ Estate a portion of the tax refund attributable to periods prior to the bankruptcy. Accordingly, a liability of $11.7 million, which is the amount estimated to be due to the Debtors’ Estate under the Settlement Agreement, was established. As of December 31, 2010, $8.4 million of the $11.7 million portion of the tax refund to be paid to the Debtors’ Estate was received and placed in an escrow account. The $8.4 million amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          On January 1, 2007, the Company adopted the accounting guidance on uncertain income tax positions (ASC 740). These cumulative-effect adjustments represent the difference between the amount of tax benefits required to be recognized based on the application of ASC 740 and the amount of tax benefits recognized prior to the application of ASC 740. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows (in thousands):

For the Years Ended December 31,

2010 2009 2008

Balance as of beginning of period
$ 2,583 2,571 2,559

Additions based on tax positions related to current year
— 84 542

Additions based on tax positions related to prior year
— — 74

Lapse of Statute of Limitations
— — (575 )

Reductions of tax positions for prior years
(72 ) (29 )

Balance as of end of period
$ 2,583 2,583 2,571

          The recognition of these unrecognized tax benefits would result in a negligible impact to the Company’s consolidated effective tax rates for the years ended December 31, 2010, 2009 and 2008. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.

          BFC and its wholly-owned subsidiaries file consolidated U.S. federal and Florida income tax returns. BFC and its subsidiaries file separate state income tax returns for each jurisdiction, other than Florida. Subsidiaries in which BFC owns less than 80% of the outstanding equity are not included in BFC’s consolidated U.S. federal or Florida income tax return. Upon consummation of the merger with Woodbridge on September 21, 2009, Woodbridge became a wholly-owned subsidiary of BFC and its activities are included in the Company’s consolidated tax return from the date of the merger. Prior to the merger, Woodbridge was not included in the Company’s consolidated tax return. As BFC owns less than 80% of BankAtlantic Bancorp, Bluegreen and Pizza Fusion, those companies are not included in BFC’s consolidated tax return. BFC’s deferred tax assets and liabilities, including net operating loss carryforwards are specific to BFC and may not be utilized by BankAtlantic Bancorp, Bluegreen or Pizza Fusion.

          At December 31, 2010, BFC (excluding BankAtlantic Bancorp, pre-merger Woodbridge, Bluegreen and Pizza Fusion) had estimated state and federal net operating loss carryforwards of approximately $266.6 million (which expire from 2011 through 2030). A valuation allowance was established for these NOLs. BFC’s NOL carryforwards include approximately $12.3 million that are attributed to the exercise of stock options, and the tax benefits will be recognized in the financial statements until such deductions are utilized to reduce taxes payable. As a result of the merger of Woodbridge into BFC in September of 2009, BFC has likely undergone a “change of ownership” as that term is defined in the Internal Revenue Code. This change of ownership resulted in a significant limitation of the amount of BFC’s pre-merger net operating losses that can be utilized by BFC annually. Of the total net operating loss carryforward, approximately $83.0 million were generated by BFC prior to our merger with Woodbridge. However, Woodbridge’s pre-merger NOL’s are available to be used by BFC and are not subject to this limitation. On September 21, 2009, BFC adopted the rights agreement described in note 31 in these financial statements in an attempt to protect our ability to use available NOLs to offset future taxable income.

          BFC’s shift in business strategy, coupled with more recent economic developments, caused BFC to reconsider its previously disclosed tax planning strategy wherein BFC had intended to sell BankAtlantic Bancorp’s Class A Common Stock in order to generate sufficient taxable income to utilize expiring NOLs. Because BFC believes that its best long term potential is more likely to occur through the growth of the companies it controls, BFC’s current business strategy is to hold its investment in BankAtlantic Bancorp indefinitely and no longer intends to pursue such a tax planning strategy. Accordingly, based on BFC’s change in intent as to the expected manner of recovery of its investment in BankAtlantic Bancorp, BFC reversed its deferred tax liability of $29.3 million during the quarter ended September 30, 2008. BFC has the ability and intent to increase its ownership in BankAtlantic Bancorp to a level sufficient to effectuate a tax-free transaction. BFC also concluded that a valuation allowance was required because based on available evidence it was determined that it is more likely than not that all or some portion of the deferred tax asset will

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BFC Financial Corporation
Notes to Consolidated Financial Statements

not be realized, and BFC is not generating sufficient taxable income to utilize the benefit of the deferred tax asset. Therefore, BFC established a valuation allowance of approximately $28.3 million in 2008.

          As of September 21, 2009, the date on which its merger with BFC was consummated, Woodbridge had federal and Florida NOL carryforwards of approximately $105.3 million and $211.0 million, respectively, which expire beginning in 2027 through 2029. Woodbridge had established a valuation allowance for its entire deferred tax assets, net of the deferred tax liabilities.

          Prior to the merger, Woodbridge was subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Woodbridge is no longer subject to U.S. federal or state and local income tax examinations by tax authorities for tax years before 2005. In January of 2009, Woodbridge received a letter from the IRS stating that Woodbridge and its subsidiaries have been selected for an examination of the tax periods ending December 31, 2005, 2006 and 2007. In August of 2008, Woodbridge received $29.7 million from the Internal Revenue Service (IRS) in connection with the filing of a refund claim for the carry back to 2005 and 2006 of tax losses incurred in 2007. The examination of the 2007 tax refund claim was completed in May of 2010 with no changes. In April of 2010, both BankAtlantic Bancorp and Woodbridge were notified by the IRS that it would examine the 2009 and 2008 tax refund claims, respectively. Both examinations are in process and are expected to be concluded in 2011. While there is no assurance as to the results of these examinations, it is not currently anticipated that there will be any material adjustments to the refund claims.

          Bluegreen and its subsidiaries file income tax return in the U.S. federal jurisdiction and various states and foreign jurisdictions. With certain exceptions, Bluegreen is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2006. As of December 31, 2010, Bluegreen has federal NOL carryforwards related to continuing operations of approximately $150.4 million, which expire beginning in 2022 through 2029, and alternative minimum tax credit carryforwards of $38 million, which never expire. Additionally, as of December 31, 2010, Bluegreen had state operating loss carryforwards of approximately $460.7 million, which expire beginning in 2012 through 2030.

          In March 2011, Bluegreen received notice from the Minnesota Department of Revenue that Bluegreen Corporation’s Franchise Tax Returns for the years ended December 31, 2007 through 2009 were selected for audit. The audit field work has not yet been scheduled. While there is no assurance as to the results of the audit, Bluegreen does not currently anticipate any material adjustments in connection with this examination.

          Pizza Fusion files separate U.S. Federal and Florida income tax returns and is no longer subject to U.S. federal, state and local income tax examination by tax authorities for years before 2006. As of December 31, 2010, Pizza Fusion’s U.S. Federal and state NOL carryforwards was approximately $6 million which expire from 2027 through 2030.

          BankAtlantic Bancorp and its subsidiaries file a consolidated federal income tax return but separate state income tax returns. BankAtlantic Bancorp’s state NOL carryforwards were $728.1 million as of December 31, 2010 and expire from 2016 through 2030. BankAtlantic Bancorp’s income tax returns for all years subsequent to the 2003 tax year are subject to examination. Various state jurisdiction tax years remain open to examination. BankAtlantic Bancorp’s 2003 through 2009 federal income tax returns are currently under examination by the Internal Revenue Service, and no other income tax filings are under examination by any other taxing authority.

          Prior to December 31, 1996, BankAtlantic was permitted to deduct from taxable income an allowance for bad debts which was in excess of the provision for such losses charged to income. Accordingly, at December 31, 2010, BankAtlantic Bancorp had $21.5 million of excess allowance for bad debts for which no provision for income tax has been provided. If, in the future, this portion of retained earnings is distributed, or BankAtlantic no longer qualifies as a bank for tax purposes, federal income tax of approximately $7.5 million would be realized.

          As of December 31, 2010, deferred tax assets included $320.8 million, the amount of BankAtlantic Bancorp’s federal income tax NOL carry-forwards of which $69.6 million expire in 2028, $67.3 million expire in 2029, and $183.9 million expire in 2030. BankAtlantic Bancorp federal tax credit carry-forwards were $2.1 million at December 31, 2010 and expire from 2025 to 2029.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

26. Restructuring Charges, Impairments and Exit Activities

     Restructuring charges and exit activities include employee termination costs, lease contracts executed for branch expansion and real estate acquired for branch expansion. The following table provides information regarding liabilities associated with restructuring charges and exit activities (in thousands):

Severance Contract and Lease Independent

Related and Benefits Termination Contractor

Liability Liabilities Agreements Surety Bond Accrual Total

Balance at December 31, 2007
$ 2,056 2,000 1,421 1,826 7,303

Expenses incurred
4,409 2,525 — (150 ) 6,784

Amounts paid or amortized
(6,165 ) (2,359 ) (824 ) (532 ) (9,880 )

Balance at December 31, 2008
300 2,166 597 1,144 4,207

Bluegreen Balance at November 16, 2009
— 2,099 — — 2,099

Expenses incurred
3,424 2,376 43 (269 ) 5,574

Amounts paid or amortized
(2,600 ) (996 ) (640 ) (348 ) (4,584 )

Balance at December 31, 2009
1,124 5,645 — 527 7,296

Expenses incurred
4,834 3,705 — — 8,539

Amounts paid or amortized
(3,039 ) (2,710 ) — (37 ) (5,786 )

Balance at December 31, 2010
$ 2,919 6,640 — 490 10,049

     Employee Termination Benefits

          The 2010 employee termination expenses were primarily attributable to BankAtlantic Bancorp’s reduction in workforce impacting back office functions as well as its community banking and commercial lending business units. The employee termination costs associated with BankAtlantic Bancorp for the year 2010 was approximately $4.0 million, which is included in Financial Services- employee termination expenses in the Company’s Consolidated Statements of Operations. During the year ended December 31, 2009 and 2008, BankAtlantic Bancorp reduced its workforce primarily in the community banking and commercial lending business units and incurred employee termination expenses of approximately $2.0 million and $2.2 million, respectively, and such amounts are included in Financial Services — employee termination expenses in the Company’s Consolidated Statements of Operations. In 2010, 2009, and 2008, BankAtlantic Bancorp paid approximately $1.5 million, $2.2 million and $2.1 million, respectively, in employee termination benefits.

          Also, for the year ended December 31, 2010, 2009 and 2008, BFC incurred approximately $863,000, $1.4 million and $2.2 million, respectively in employee termination expenses primarily associated with a reduction in workforce at Core Communities, Woodbridge and BFC’s shared service operations. Included in 2010 employee termination expenses is approximately $600,000 associated with Core’s restructuring. In 2009, Core incurred approximately $1.4 million of employee termination expenses as a result of the challenging conditions in the real estate market. In 2008, Woodbridge reduced its workforce and incurred approximately $2.2 million of employee termination costs. In 2010, 2009 and 2008, BFC and Woodbridge paid in the aggregate approximately $1.5 million, $415,000 and $4.1 million, respectively, in employee termination benefits. The 2008 employee termination benefits were primarily associated with payments made to Levitt and Sons and Woodbridge employees as a result of Levitt and Sons bankruptcy.

Contract and Lease Termination

          At December 31, 2010, 2009 and 2008, BankAtlantic Bancorp contract and lease termination liability was approximately $5.9 million, $3.7 million and $1.5 million, respectively. During the years ended December 31, 2010, 2009 and 2008, BankAtlantic Bancorp incurred expenses of approximately $3.6 million, $2.2 million and $199,000 in lease termination, net. Beginning in December 2007, BankAtlantic decided to sell certain properties that it had acquired for its future store expansion program and to terminate or sublease certain back-office operating leases.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          During 2010, in connection with its restructuring obligations, Bluegreen made cash payments of $1.0 million related to lease terminations. As of December 31, 2010, Bluegreen’s remaining restructuring liability related entirely to lease termination obligations and was $0.7 million.

          As of December 31, 2009 and 2008, Woodbridge’s contract and lease termination liabilities were $244,000 and $704,000, respectively. Woodbridge had no such liabilities as of December 31, 2010. Included in these amounts were Woodbridge’s facilities accrual associated with property and equipment leases that Woodbridge entered into that were no longer providing a benefit, as well as termination fees related to contractual obligations that Woodbridge cancelled.

          In June 2008, BankAtlantic sold five branches in Central Florida to an unrelated financial institution. The following table summarizes the assets sold, liabilities transferred and cash outflows associated with the branches sold (in thousands):

Amount

Assets sold:

Loans
$ 6,470

Property and equipment
13,373

Total assets sold
19,843

Liabilities transferred:

Deposits
(24,477 )

Other liabilities
(346 )

Total liabilities transferred
(24,823 )

Net liabilities transferred
(4,980 )

Deposit premium
654

Purchase transaction costs
(165 )

Net cash outflows from sales of stores
$ (4,491 )

          Included in Financial Services other expenses during the year ended December 31, 2008 was a $0.3 million loss associated with the sale of five Central Florida stores.

27. Commitments and Contingencies

          The Company (including its subsidiaries) is a lessee under various operating leases for real estate and equipment extending to the year 2072. At December 31, 2010, the approximate minimum future rental payments under such leases, for the periods shown are (in thousands):

Year Ending December 31, Amount

2011
$ 18,286

2012
15,615

2013
12,542

2014
10,852

2015
10,090

Thereafter
87,112

Total
$ 154,496

          The Company and its subsidiaries incurred rent expense from continuing operations, for the periods shown (in thousands):

For the Years Ended December 31,

2010 2009 2008

Rental expense for premises and equipment
$ 22,466 $ 14,388 $ 14,407

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BFC Financial Corporation
Notes to Consolidated Financial Statements

BFC

          At June 30, 2009, a wholly-owned subsidiary of BFC/CCC, Inc. (“BFC/CCC”), had a 10% interest in a limited partnership as a non-managing general partner. The partnership owns an office building located in Boca Raton, Florida. In connection with the purchase of the office building in March 2006, BFC/CCC guaranteed repayment of a portion of the non-recourse loan on the property on a joint and several basis with the managing general partner. BFC/CCC’s maximum exposure under this guarantee agreement is $2.0 million (which is shared on a joint and several basis with the managing general partner). In July 2009, BFC/CCC’s wholly-owned subsidiary withdrew as partner of the limited partnership and transferred its 10% interest to another unaffiliated partner. In return, the partner to whom this interest was assigned agreed to use its reasonable best efforts to obtain the release of BFC/CCC from the guarantee. The partner was unable to secure such a release and that partner has agreed to indemnify BFC/CCC’s wholly-owned subsidiary for any losses that may arise under the guarantee after the date of the assignment. There are no carrying amounts on our financial statements at December 31, 2010 for this joint venture.

          A wholly-owned subsidiary of BFC/CCC has a 10% interest in a limited liability company that owned two commercial properties in Hillsborough County, Florida. During the fourth quarter of 2010, the limited liability company recorded an impairment charge related to these properties, $1.9 million of which was recognized by BFC/CCC’s wholly-owned subsidiary. The $1.9 million impairment charge exceeded the carrying value of our investment. At December 31, 2010, the Company classified the negative basis of the investment of approximately $1.3 million in other liabilities on the Company’s Consolidated Statement of Financial Condition. At December 31, 2009, the carrying amount of this investment was approximately $690,000, and is included as an asset in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the commercial properties in November 2006, BFC and the unaffiliated member each guaranteed the payment of up to a maximum of $5.0 million for certain environmental indemnities and specific obligations that are not related to the financial performance of the assets. BFC and the unaffiliated member also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates. On March 25, 2011, the limited liability company reached a settlement with its lender and has conveyed the commercial properties securing the loan via a deed in lieu of foreclosure. BFC and BFC/CCC’s wholly-owned subsidiary were released from all obligations and guarantees related to the two commercial properties.

          A wholly-owned subsidiary of BFC/CCC has a 50% limited partner interest in a limited partnership that has a 10% interest in a limited liability company that owns an office building in Tampa, Florida. At December 31, 2010 and 2009, the carrying amount of this investment was approximately $282,000 and $319,000, respectively, which is included in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the office building by the limited liability company in June 2007, BFC guaranteed the payment of certain environmental indemnities and specific obligations that are not related to the financial performance of the asset up to a maximum of $15.0 million, or $25.0 million in the event of any petition or involuntary proceeding under the U.S. Bankruptcy Code or similar state insolvency laws or in the event of any transfer of interests not in accordance with the loan documents. BFC and the unaffiliated members also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates. No amounts are recorded in the Company’s financial statements for the obligations associated with this guarantee based on the potential indemnification by unaffiliated members and the limit of the specific obligations to non-financial matters.

          Based on the current accounting guidance associated with the consolidation of variable interest entities implemented on January 1, 2010, we are not deemed the primary beneficiaries in connection with the above mentioned BFC/CCC investments and do not consolidate these entities into our financial statements. We do not have the power to direct the activities that can significantly impact the performance of these entities.

Woodbridge

          Levitt and Sons, Woodbridge’s former wholly-owned homebuilding subsidiary, had approximately $33.3 million of surety bonds related to its ongoing projects at November 9, 2007, the date on which Levitt and Sons and substantially all of its subsidiaries filed voluntary bankruptcy petitions (the “Chapter 11 Cases”). In the event that these obligations are drawn and paid by the surety, Woodbridge could be responsible for up to $7.6 million plus costs and expenses in accordance with the surety indemnity agreements executed by Woodbridge. At December 31, 2010 and

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BFC Financial Corporation
Notes to Consolidated Financial Statements

December 31, 2009, Woodbridge had $490,000 and $527,000, respectively, in surety bond accruals related to certain bonds where management believes it to be probable that Woodbridge will be required to reimburse the surety under applicable indemnity agreements. Woodbridge reimbursed the surety approximately $348,000 and $532,000 during the year ended December 31, 2009 and 2008, respectively, in accordance with the indemnity agreement for bond claims paid during the period. No reimbursements were made in the year ended December 31, 2010. It is unclear whether and to what extent the remaining outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Woodbridge may be responsible for additional amounts beyond the previous accrued amount. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay. In September 2008, a surety filed a lawsuit to require Woodbridge to post collateral against a portion of surety bond exposure in connection with demands made by a municipality. While Woodbridge did not believe that the municipality had the right to demand payment under the bonds. Based on claims by the municipality on the bonds, the surety requested that Woodbridge post a $4.0 million escrow deposit while the matter was being litigated with the municipality and Woodbridge complied with that request. In August 2010, a motion for summary judgment was entered in Woodbridge’s favor terminating any obligations under the bonds. The municipality has appealed the decision.

          On February 20, 2009, the Bankruptcy Court presiding over the Chapter 11 Cases entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Official Committee of Unsecured Creditors. That order also approved the settlement pursuant to the settlement agreement that was entered into with the Joint Committee of Unsecured Creditors (the “Settlement Agreement”). No appeal or rehearing of the Bankruptcy Court’s order was filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the settlement agreement as amended. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the settlement agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary. Pursuant to the settlement agreement, we agreed to share a percentage of any tax refund attributable to periods prior to the bankruptcy with the Debtors Estate. In the fourth quarter of 2009, we accrued approximately $10.7 million in connection with the portion of the tax refund which may be payable to the Debtors Estate pursuant to the settlement agreement. As a result, the gain on settlement of investment in subsidiary for the year ended December 31, 2009 was reduced to $29.7 million. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.0 million, representing a portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service (“IRS”) guidance that will likely be required to be paid to the Debtors Estate pursuant to the Settlement Agreement. We have placed into escrow approximately $8.4 million, which represents the portion of the tax refund received to date from the Internal Revenue Service that would be payable to the Debtors Estate under the Settlement Agreement. At December 31, 2010, this amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition.

          As previously disclosed, under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve the merger between Woodbridge and BFC and properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares as determined in accordance with the provisions of Florida law in lieu of the shares of BFC’s Class A Common Stock that they would otherwise have been entitled to receive. Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. Litigation with respect to the appraisal process is currently ongoing. In December 2009, a $4.6 million liability was recorded with a corresponding reduction to additional paid-in capital, which is reflected in the Company’s Consolidated Statements of Financial Condition representing in the aggregate Woodbridge’s offer to the Dissenting Holders. However, outcome of the appraisal rights litigation is uncertain. There is no assurance as to the amount of cash that we will be required to pay to the Dissenting Holders, and such amount may be greater than the $4.6 million that we have accrued.

Bluegreen

          In 2006, Bluegreen entered into a separation agreement with its former CEO, George Donovan. Under the terms of this agreement, Mr. Donovan will be paid a total of $3.0 million over a seven year period ending December 31, 2013 in exchange for his services to be available on a when and if needed basis. As of December 31, 2010, the remaining amount due to Mr. Donovan was $0.9 million, the present value of which is recorded as a liability in the Company’s consolidated balance sheet.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          In the ordinary course of its business, Bluegreen becomes subject to claims or proceedings from time to time relating to the purchase, subdivision, sale or financing of real estate. Additionally, from time to time, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties. Unless otherwise described below, Bluegreen believes that these claims are routine litigation incidental to its business.

BankAtlantic Bancorp

          In the normal course of business, BankAtlantic Bancorp and its subsidiaries is a party to financial instruments with off-balance-sheet risk. These financial instruments include commitments to extend credit and to issue standby and documentary letters of credit and involve, to varying degrees, elements of credit risk. BankAtlantic’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of those instruments. BankAtlantic uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

          Financial instruments with off-balance sheet risk were (in thousands):

As of December 31,

2010 2009

Commitments to sell fixed rate residential loans
$ 14,408 $ 23,255

Commitments to originate loans held for sale
12,571 18,708

Commitments to originate loans held to maturity
10,693 43,842

Commitments to purchase residential loans
2,590 —

Commitments to extend credit, including the undisbursed portion of loans in process
357,730 396,627

Standby letters of credit
9,804 13,573

Commercial lines of credit
77,144 74,841

          Commitments to extend credit are agreements to lend funds to a customer subject to conditions established in the commitment. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements at December 31, 2010. BankAtlantic has $20.1 million of commitments to extend credit at a fixed interest rate and $360.9 million of commitments to extend credit at a variable rate. BankAtlantic evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral required by BankAtlantic in connection with an extension of credit is based on management’s credit evaluation of the counter-party.

          Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the performance of a customer to a third party. BankAtlantic standby letters of credit are generally issued to customers in the construction industry guaranteeing project performance. These types of standby letters of credit had a maximum exposure of $8.3 million at December 31, 2010. BankAtlantic also issues standby letters of credit to commercial lending customers guaranteeing the payment of goods and services. These types of standby letters of credit had a maximum exposure of $1.5 million at December 31, 2010. Those guarantees are primarily issued to support public and private borrowing arrangements and generally have maturities of one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. BankAtlantic may hold certificates of deposit and residential and commercial liens as collateral for such commitments which are collateralized similar to other types of borrowings. Included in other liabilities at December 31, 2010 was $34,000 of unearned guarantee fees.

          BankAtlantic is required to maintain reserve balances with the Federal Reserve Bank. Such reserves consisted of cash and amounts due from banks of $29.4 million and $25.9 million at December 31, 2010 and 2009, respectively.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          As a member of the FHLB system, BankAtlantic is required to purchase and hold stock in the FHLB of Atlanta. As of December 31, 2010 BankAtlantic was in compliance with this requirement, with an investment of approximately $43.6 million in stock of the FHLB of Atlanta.

          Pursuant to the Ryan Beck sale agreement, BankAtlantic Bancorp agreed to indemnify Stifel and its affiliates against any claims of any third party losses attributable to disclosed or undisclosed liabilities that arise out of the conduct or activities of Ryan Beck prior to the Stifel acquisition of Ryan Beck. The indemnification of the third party losses is limited to those losses which individually exceed $100,000, and in the aggregate exceed $3 million with a $20 million limitation on the indemnity. The indemnified losses include federal taxes and litigation claims. The indemnification period for litigation claims asserted ended on August 31, 2009. Included in the Company’s Consolidated Statement of Operations in discontinued operations during each of the years in the two years ended December 31, 2010 was $0.5 million in indemnification costs.

          BankAtlantic has terminated various operating leases originally executed for store expansion or back-office facilities. In certain lease terminations, the landlord consents to the assignment of the lease to a third party; however, BankAtlantic remains secondarily liable for the lease obligation. As of December 31, 2010, BankAtlantic was secondarily liable for $9.4 million of lease payments associated with lease assignments. BankAtlantic uses the same credit policies in assigning these leases to third parties as it does in originating loans. BankAtlantic recognizes a lease guarantee obligation upon the execution of lease assignments and included in other liabilities at December 31, 2010 was $0.2 million of unamortized lease guarantee obligations.

          The FDIC is authorized to raise deposit assessment rates in certain circumstances, which would affect savings institutions in all risk categories. The FDIC has exercised this authority several times in the past and could raise rates in the future. In April 2009, the FDIC raised its assessment rates based on the risk rating of each financial institution and in June 2009 the FDIC imposed a 5 basis point special assessment. In September 2009, the FDIC required financial institutions to prepay, on December 31, 2009, their estimated FDIC insurance assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. Included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2009 was a $2.4 million FDIC special assessment and FDIC insurance assessments of $10.1 million, $8.6 million, and $2.8 million for the years ended December 31, 2010, 2009 and 2008, respectively. Included in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010 were prepaid FDIC assessments of $22.0 million. Continued increases in deposit insurance premiums would have an adverse effect on our earnings.

          BankAtlantic Bancorp and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its bank operations, lending and tax certificates. Although BankAtlantic Bancorp believes it has meritorious defenses in all current legal actions, the outcome of litigation and regulatory matters and timing of ultimate resolution are inherently difficult to predict and uncertain.

          Reserves are accrued for matters in which it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. These accrual amounts as of December 31, 2010 are not material to the Company’s financial statements. The actual costs of resolving these legal claims may be substantially higher or lower than the amounts accrued for these claims.

          A range of reasonably possible losses is estimated for matters in which it is reasonably possible that a loss has been incurred or that a loss is probable but not reasonably estimable. Management of BankAtlantic Bancorp currently estimates the aggregate range of reasonably possible losses as $9.9 million to $45.6 million in excess of the accrued liability relating to these legal matters. This estimated range of reasonably possible losses represents the estimated possible losses over the life of such legal matters, which may span a currently indeterminable number of years, and is based on information currently available as of December 31, 2010. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those matters for which a reasonable estimate is not possible are not included within this estimated range and, therefore, this estimated range does not represent BankAtlantic Bancorp’s maximum loss exposure.

          In certain matters BankAtlantic Bancorp is unable to estimate the loss or reasonable range of loss until additional developments in the case provide information sufficient to support an assessment of the loss or range of loss. Frequently in these matters the claims are broad and the plaintiffs’ have not quantified or factually supported the claim.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          BankAtlantic Bancorp believes that liabilities arising from litigation and regulatory matters, discussed below, in excess of the amounts currently accrued, if any, will not have a material impact to the financial statements. However, due to the significant uncertainties involved in these legal matters, BankAtlantic Bancorp may incur losses in excess of accrued amounts and an adverse outcome in these matters could be material to BankAtlantic Bancorp’s financial statements.

          The following is a description of BankAtlantic Bancorp’s ongoing litigation and regulatory matters:

Class action securities litigation

          In October 2007, BankAtlantic Bancorp and current or former officers of BankAtlantic Bancorp were named in a lawsuit which alleges that during the period of November 9, 2005 through October 25, 2007, BankAtlantic Bancorp and the named officers knowingly and/or recklessly made misrepresentations of material fact regarding BankAtlantic and specifically BankAtlantic’s loan portfolio and allowance for loan losses. The Complaint seeks to assert claims for violations of the Securities Exchange Act of 1934 and Rule 10b-5 and seeks unspecified damages. On November 18, 2010, a jury returned a verdict awarding $2.41 per share to shareholders who purchased shares of BankAtlantic Bancorp’s Class A Common Stock during the period of April 26, 2007 to October 26, 2007 who retained those shares until the end of the period. The jury rejected the plaintiffs’ claim for the six month period from October 19, 2006 to April 25, 2007. Prior to the beginning of the trial, the plaintiffs abandoned any claim for any prior period. BankAtlantic Bancorp has filed motions to set aside the verdict and the judge has indicated that if those are denied she will certify the jury verdict to the United States Court of Appeals to the Eleventh Circuit before any judgment is entered or claims process is commenced.

          In July 2008, BankAtlantic Bancorp, certain officers and Directors were named in a lawsuit which alleges that the individual defendants breached their fiduciary duties by engaging in certain lending practices with respect to BankAtlantic Bancorp’s Commercial Real Estate Loan Portfolio. The Complaint further alleges that BankAtlantic Bancorp’s public filings and statements did not fully disclose the risks associated with the Commercial Real Estate Loan Portfolio and seeks damages on behalf of BankAtlantic Bancorp. The case has been stayed pending final resolution of the class action securities litigation.

Class Action Overdraft Processing Litigation

          In November 2010, the two pending class action complaints against BankAtlantic associated with overdraft fees were consolidated. The Complaint, which asserts claims for breach of contract and breach of the duty of good faith and fair dealing, alleges that BankAtlantic improperly re-sequenced debit card transactions from largest to smallest, improperly assessed overdraft fees on positive balances, and improperly imposed sustained overdraft fees on customers. BankAtlantic has filed a motion to dismiss which is pending with the Court.

Office of Thrift Supervision Overdraft Processing Investigation

          On January 6, 2011, the Office of Thrift Supervision advised BankAtlantic that it had determined, subject to receipt of additional information from BankAtlantic, that BankAtlantic had engaged in deceptive and unfair practices in violation of Section 5 of the Federal Trade Commission Act, relating to certain of BankAtlantic’s deposit-related products. The OTS provided BankAtlantic the opportunity to respond with any additional or clarifying information, and BankAtlantic submitted a written response to the OTS on February 7, 2011 addressing the OTS’s position.

Securities and Exchange Commission Investigation

          BankAtlantic Bancorp has received a notice of investigation from the Securities and Exchange Commission, Miami Regional Office and subpoenas for information. The subpoenas request a broad range of documents relating to, among other matters, recent and pending litigation to which BankAtlantic Bancorp is or was a party, certain of BankAtlantic Bancorp’s non-performing, non-accrual and charged-off loans, BankAtlantic Bancorp’s cost saving measures, loan classifications, BankAtlantic Bancorp’s asset workout subsidiary and the recent Orders with the OTS entered into by BankAtlantic Bancorp Parent Company and BankAtlantic. Various current and former employees have also received subpoenas for documents and testimony. BankAtlantic Bancorp is fully cooperating with the SEC.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

28. Stock Option Plans

BFC

     BFC has a share based compensation plan (the “2005 Stock Incentive Plan”) under which restricted stock, incentive stock options and non-qualifying stock options are awarded. On May 19, 2009, the shareholders of BFC approved an amendment to the Company’s 2005 Stock Incentive Plan to, among other things, increase the maximum number of shares of the Company’s Class A Common Stock available for grant under the 2005 Stock Incentive Plan from 3,000,000 shares to 6,000,000 shares. BFC may grant incentive stock options only to its employees. BFC may grant non-qualified stock options and restricted stock awards to its directors, independent contractors and agents as well as employees.

     BFC also had a stock-based compensation plan (“1993 Plan”) which expired in 2004. No future grants can be made under the 1993 Plan; however, any previously issued options granted under that plan remain effective until either they expire, are forfeited, or are exercised. BFC’s 1993 Plan provided for the grant of stock options to purchase shares of BFC’s Class B Common Stock. The 1993 Plan provided for the grant of both incentive stock options and non-qualifying options and the maximum term of the options was ten years.

     On September 21, 2009, options to purchase an aggregate of approximately 1.8 million shares of common stock, which were previously granted to and held by BFC’s directors and employees, were re-priced to a new exercise price equal to the closing price of the Company’s Class A Common Stock as quoted on the Pink Sheets Electronic Quotation Service on September 21, 2009. The re-pricing did not impact any of the other terms, including the vesting schedules or expiration dates, of the previously granted stock options. The incremental compensation cost of the re-priced vested options was approximately $157,000 which was recognized in September 2009. The remaining incremental cost for the re-priced options that were unvested at the re-pricing date was approximately $125,000, of which approximately $85,000 was recognized in 2010 and $32,000 and $8,000 will be recognized in 2011 and 2012, respectively.

     Additionally, on September 21, 2009, following the Woodbridge merger, new options to purchase an aggregate of 753,254 shares of our Class A Common Stock at an exercise price of $0.41 per share, the closing price of a share of the stock on the grant date, were granted principally to Woodbridge’s directors, executive officers and employees. The weighted average estimated fair value of the options granted on September 21, 2009 was approximately $0.22 per share and the resulting compensation cost of approximately $166,000 is expected to be recognized over the requisite service period of four years. The options expire in five years and the options will vest in four equal annual installments, with the first such installment having vested on September 21, 2010.

     Assumptions used in estimating the fair value of employee options granted were formulated in accordance with FASB guidance under stock compensation and applicable guidance provided by the SEC. As part of this assessment, management determined that volatility should be based on the Company’s Class A Common Stock and derived from historical price volatility over the estimated life of the stock options granted. The expected term of an option is an estimate as to how long the option will remain outstanding based upon management’s expectation of employee exercise and post-vesting forfeiture behavior. Because there were no recognizable patterns, the simplified guidance was used to determine the estimated term of options based on the midpoint of the vesting term and the contractual term. The estimate of a risk-free interest rate is based on the U.S. Treasury implied yield curve in effect at the time of grant with a remaining term equal to the expected term. BFC has never paid cash dividends and does not currently intend to pay cash dividends on its common stock. In addition, BFC has committed not to pay dividends on its common stock without the prior written non-objection of the OTS. Therefore, a 0% dividend yield was assumed. Share-based compensation costs are recognized based on the grant date fair value. The grant date fair value for stock options is calculated using the Black-Scholes option pricing model net of an estimated forfeitures rate and recognizes the compensation costs for those options expected to vest on a straight-line basis over the requisite service period of the award. BFC based its estimated forfeiture rate of its unvested options on its historical experience.

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

          The option model used to calculate the fair value of the stock options which were re-priced and the stock options which were granted during 2009 and 2008 was the Black-Scholes model. The table below presents the weighted average assumptions used to value such options. There were no options granted to employees or non-employee directors during the year ended December 31, 2010, and no option were granted to employees during the year ended december 31, 2008.

Weighted Average

For the Year Ended

December 31,

Employees 2009

Expected volatility
87.11 %

Expected dividends
— %

Expected term (in years)
2.97

Average risk-free interest rate
1.50 %

Option value
$ 0.21

Weighted Average

For the Year Ended

December 31,

Non-Employee Directors 2009 2008

Expected volatility
81.83 % 50.81 %

Expected dividends
— % — %

Expected term (in years)
3.37 5.00

Average risk-free interest rate
1.73 % 3.35 %

Option value
$ 0.22 $ 0.40

          The following table sets forth information on outstanding options:

Weighted Weighted

Average Average Aggregate

Outstanding Exercise Remaining Intrinsic

Options Price Contractual Term Value ($000)

Outstanding at December 31, 2007
1,723,217 $ 5.07 6.31 $ —

Exercised
— 0.00

Forfeited
(30,000 ) 6.04

Expired
(147,407 ) 3.68

Granted
252,150 0.83

Outstanding at December 31, 2008
1,797,960 $ 4.57 6.35 $ —

Exercised
— 0.00

Forfeited (a)
(1,777,729 ) 4.60

Expired
(20,231 ) 2.14

Granted (a)
2,530,983 0.41

Outstanding at December 31, 2009
2,530,983 $ 0.41 5.19 $ —

Exercised
(5,500 ) 0.41 4

Forfeited
(13,017 ) 0.41

Expired
(20,290 ) 0.41

Granted
— 0.41

Outstanding at December 31, 2010
2,492,176 $ 0.41 4.24 $ —

Exercisable at December 31, 2010
1,514,741 $ 0.41 3.96 $ —

Available for grant at December 31, 2010
4,118,013

(a) The options which were re-priced during September 2009 were treated under GAAP as having been forfeited and replaced with new grants. Accordingly, these options are included as “Forfeited” and “Granted” options in the table.

          The weighted average grant date fair value of options granted during 2009 and 2008 was $0.22 and $0.40, respectively. Total unearned compensation cost related to BFC’s unvested stock options was $326,000 at December 31,

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BFC Financial Corporation
Notes to Consolidated Financial Statements

2010. The cost is expected to be recognized over a weighted average period of 1.36 years. At December 31, 2010, the unearned compensation cost associated with the cancellation of outstanding Woodbridge stock options in connection with the Woodbridge merger was $292,000 and will be recognized over a weighted average period of 1.34 years.

          During the year ended December 31, 2010, BFC received net proceeds of approximately $2,200 upon the exercise of stock options. The total intrinsic value of options exercised during the year ended December 31, 2010 was $4,000. There were no option exercises during the years ended December 31, 2009 or 2008.

          The following is a summary of BFC’s restricted stock activity:

Weighted

Unvested Average

Restricted Grant Date

Stock Fair Value

Outstanding at December 31, 2007
9,384 $ 5.62

Granted
120,480 0.83

Vested
(79,664 ) 0.60

Forfeited
— —

Outstanding at December 31, 2008
50,200 $ 1.26

Granted
—

Vested
(50,200 ) 0.22

Forfeited
— —

Outstanding at December 31, 2009
— $ —

Granted
— —

Vested
— —

Forfeited
— —

Outstanding at December 31, 2010
— $ —

          BFC recognized restricted stock compensation cost of approximately $0, $42,000 and $100,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

          In June 2008, the Board of Directors granted to non-employee directors an aggregate of 120,480 shares of restricted stock under the 2005 Stock Incentive Plan. Restricted stock was granted in Class A Common Stock and vested monthly over a twelve-month service period. The fair value of the 120,480 shares of restricted stock was approximately $100,000, and the cost was recognized over the 12 month service period from June 2008 through May 2009.

          Woodbridge Restricted Stock and Stock Option Plan Prior to the Merger

          Prior to its merger with BFC, Woodbridge had in place a stock compensation plan. The maximum term of options granted under the plan was 10 years. The vesting period for each grant was established by the Compensation Committee of Woodbridge’s Board of Directors. The vesting period for employees was generally five years utilizing cliff vesting. All options granted to directors vested immediately. Option awards issued became exercisable based solely on fulfilling a service condition. As of the date of the merger, no stock options granted under the plan had expired.

          Upon consummation of the merger on September 21, 2009, all options to purchase shares of Woodbridge’s Class A Common Stock outstanding at the effective time of the merger were canceled and the holders did not receive any consideration as a result of the cancellation. Restricted shares of Woodbridge’s Class A Common Stock were converted to restricted shares of BFC’s Class A Common Stock at the merger exchange ratio of 3.47 shares of BFC’s Class A Common Stock for each share of Woodbridge’s Class A Common Stock. Some of the directors, executive officers and employees of Woodbridge were also granted BFC stock options following the merger, as described above.

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

          The following table sets forth information regarding stock option activity under Woodbridge’s stock compensation plan prior to the merger:

Weighted Weighted Average Aggregate

Average Remaining Intrinsic

Number Exercise Contractual Value

of Options Price Term (thousands)

Options outstanding at December 31, 2007
372,532 $ 86.66 8.00 years $ —

Granted
36,398 6.70 —

Exercised
— — —

Forfeited
90,459 81.85 —

Options outstanding at December 31, 2008
318,471 $ 78.89 7.19 years —

Granted
— — —

Exercised
— — —

Cancelled
318,471 $ 78.89 —

Options outstanding at December 31, 2009
— $ — — $ —

Options exercisable at December 31, 2009
— $ — — $ —

Stock options available for equity compensation grants at December 31, 2009
—

          The fair value for the options granted during the year ended December 31, 2008 was estimated at the date of the grant using the following assumptions:

Year ended

December 31, 2008

Expected volatility
65.47 %

Expected dividend yield
0.00 %

Risk-free interest rate
4.16 %

Expected life
5 years

Forfeiture rate — executives
5 %

Forfeiture rate — non-executives
—

          Expected volatility was based on the historical volatility of Woodbridge’s stock. Due to the short period of time that Woodbridge’s stock was publicly traded, the historical volatilities of similar publicly traded entities were reviewed to validate Woodbridge’s expected volatility assumption. The expected dividend yield was based on an expected quarterly dividend. Historically, forfeiture rates were estimated based on historical employee turnover rates. In 2007 and 2008, there were substantial pre-vesting forfeitures as a result of the reductions in force related to the bankruptcy of Levitt and Sons and Woodbridge’s restructurings. As a result, Woodbridge adjusted its stock compensation to reflect actual forfeitures. In accordance with the accounting guidance for stock compensation, pre-vesting forfeitures result in a reversal of compensation cost whereas a post-vesting cancellation would not.

          Non-cash stock compensation expense for 2009 and 2008 related to unvested stock options in the aggregate amount of $991,000 and $840,000, respectively. Non-cash stock compensation expense for 2009 and 2008 included $1.5 million and $2.1 million, respectively, of amortization of stock option compensation, offset by $458,000 and $1.3 million, respectively, of a reversal of stock compensation previously expensed related to forfeited options. Non-cash stock compensation expense for 2009 and 2008 related to restricted stock awards in the aggregate amount of $88,000 and $152,000, respectively.

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

Bluegreen

          Under Bluegreen’s employee stock option plans, options and shares of restricted stock can be granted with various vesting periods. All of the options granted generally expire ten years from the date of grant, subject to alternative expiration dates under certain circumstances for non-employee director grants. Bluegreen’s options are granted at exercise prices that either equal or exceed the quoted market price of its common stock at the respective dates of grant.

          Options and unvested shares of restricted stock granted to employees vest 100% on the five-year anniversary of the date of grant. Options granted to non-employee directors generally vest immediately upon grant; certain grants vest on the five-year anniversary of the date of grant, subject to accelerated vesting pursuant to change in control provisions included in the terms of certain grants. Unvested shares of restricted stock granted to non-employee directors vest pro-rata on a monthly basis over a one year period from the date of grant.

          The following table represents certain information related to Bluegreen’s unrecognized compensation for its stock-based awards as of December 31, 2010 and 2009:

Weighted Average

Remaining Unrecognized

As of December 31, 2010 Recognition Period Compensation

(in years) (000’s)

Stock Option Awards
1.9 $ 1,873

Restricted Stock Awards
2.2 $ 4,687

Weighted

Average

Remaining

Recognition Unrecognized

As of December 31, 2009 Period Compensation

(in years) (000’s)

Stock Option Awards
2.4 $ 4,261

Restricted Stock Awards
3.1 $ 8,050

There were no grants of restricted stock or stock options during 2010.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          Changes in Bluegreen’s outstanding stock option plans are presented below (outstanding options in thousands).

Weighted

Average

Exercise Number of Aggregate

Outstanding Price Per Shares Intrinsic

Options Share Exercisable Value

Balance at November 16, 2009
2,795 $ 9.64 956 $ 7

Granted
— $ —

Forfeited
— $ —

Expired
— $ —

Exercised
— $ —

Balance at December 31, 2009
2,795 $ 9.64 956 $ 7

Granted
— $ —

Forfeited
(78 ) 12.88

Expired
— $ —

Exercised
— $ —

Balance at December 31, 2010
2,717 $ 9.53 1,310 $ 91

          The aggregate intrinsic value of Bluegreen stock options outstanding and exercisable was less than $.01 million as of December 31, 2010 and 2009. No stock options were exercised during 2010 and 2009.

          A summary of the status of Bluegreen’s unvested restricted stock awards and activity during the Bluegreen Interim Period are as follows (in thousands, except per option data):

Weighted-Average Grant-

Non-vested Restricted Shares Number of Shares Date Fair Value per Share

(In 000’s)

Unvested at November 16, 2009
1,441 $ 7.89

Granted
— —

Vested
(15 ) 2.75

Forfeited
— —

Unvested at December 31, 2009
1,426 $ 7.94

Granted
— —

Vested
(54 ) 2.75

Forfeited
(45 ) 8.28

Unvested at December 31, 2010
1,327 $ 8.14

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

BankAtlantic Bancorp Restricted Stock and Stock Option Plan

Stock Option Plans

Maximum Shares Class of Vesting Type of

Term Authorized (3) Stock Requirements Options (2)

2001 Amended and Restated Stock Option Plan (3)
10 years 783,778 Class A (1 ) ISO, NQ

2005 Restricted Stock and Option Plan (“BankAtlantic Bancorp Plan”) (4)
10 years 9,375,000 Class A (1 ) ISO, NQ

(1) Vesting is established by the BankAtlantic Bancorp Compensation Committee in connection with each grant of options or restricted stock. All BankAtlantic Bancorp directors’ stock options vest immediately.

(2) ISO — Incentive Stock Option NQ — Non-qualifying Stock Option

(3) In 2005, all shares remaining available for grant under the 2001 stock option plan were canceled.

(4) The BankAtlantic Bancorp Plan provides that up to 9,375,000 shares of BankAtlantic Bancorp Class A common stock may be issued for restricted stock awards and upon the exercise of options granted under the Plan. The BankAtlantic Bancorp Plan was amended in May 2009 to increase the allowable shares issuable from 1,200,000 to 9,375,000.

          BankAtlantic Bancorp recognizes stock based compensation costs based on the grant date fair value. The grant date fair value for stock options is calculated using the Black-Scholes option pricing model incorporating an estimated forfeiture rate and recognizes the compensation costs for those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of five years.

          During the year ended December 31, 2008, BankAtlantic Bancorp’s stock price exhibited higher volatility than its peer group. As a consequence, management began using its historical volatility as an indicator of future volatility. As part of its adoption of new accounting guidance on January 1, 2006, BankAtlantic Bancorp examined its historical pattern of option exercises in an effort to determine if there were any patterns based on certain employee populations. From this analysis, BankAtlantic Bancorp could not identify any employee population patterns in the exercise of its options. As such, BankAtlantic Bancorp used the guidance of SAB 107 to determine the estimated term of options issued subsequent to the adoption new accounting guidance. Based on this guidance, the estimated term was deemed to be the midpoint of the vesting term and the contractual term ((vesting term + original contractual term)/2).

          The table below presents the weighted average assumptions used to value options granted to employees and directors during the year ended December 31, 2008. There were no options granted to employees or directors during the years ended December 31, 2010 and 2009.

Weighted Average

2008

Volatility
46.09 %

Expected dividends
1.03 %

Expected term (in years)
5.00

Risk-free rate
3.29 %

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

          The following is a summary of BankAtlantic Bancorp’s Class A common stock option activity:

Weighted Weighted

Class A Average Average Aggregate

Outstanding Exercise Remaining Intrinsic

Options Price Contractual Term Value ($000)

Outstanding at December 31, 2007
1,064,498 56.17 6.2

Exercised
(6,630 ) 15.60

Forfeited
(126,678 ) 74.81

Expired
(111,526 ) 30.50

Granted
75,954 9.70

Outstanding at December 31, 2008
895,618 53.09 5.8

Exercised
— —

Forfeited
(38,337 ) 72.56

Expired
(77,062 ) 28.10

Granted
— —

Outstanding at December 31, 2009
780,219 54.61 5.2

Exercised
—

Forfeited
(156,191 ) 61.34

Expired
(42,287 ) 42.43

Granted
—

Outstanding at December 31, 2010
581,741 53.69 3.7 $ —

Exercisable at December 31, 2010
489,872 52.48 3.3 $ —

Available for grant at December 31, 2010
7,514,493

          The weighted average grant date fair value of options granted during 2008 was $3.95. The total intrinsic value of options exercised during the years ended December 31, 2008 was $25,000. There were no options granted or exercised during the years ended December 31, 2010 and 2009.

          Total unearned compensation cost related to BankAtlantic Bancorp’s nonvested Class A common stock options was $0.7 million at December 31, 2010. The cost is expected to be recognized over a weighted average period of 0.7 year.

          Included in the Company’s Consolidated Statements of Operations in Financial Services compensation expense was $1.5 million, $2.4 million and $1.8 million of BankAtlantic Bancorp share-based compensation expense for the years ended December 31, 2010, 2009 and 2008, respectively. There was no recognized tax benefit associated with the compensation expense for the years ended December 31, 2010, 2009 and 2008 as it was not more likely than not that the BankAtlantic Bancorp would realize the tax benefits associated with the share based compensation expense.

249

Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

The following is a summary of BankAtlantic Bancorp’s non-vested restricted Class A common share activity:

Class A Weighted

Non-vested Average

Restricted Grant Date

Stock Fair Value

Outstanding at December 31, 2007
30,689 $ 42.01

Vested
(10,295 ) 33.77

Forfeited
— —

Granted
5,455 9.70

Outstanding at December 31, 2008
25,849 38.47

Vested
(6,049 ) 26.56

Forfeited
— —

Granted
— —

Outstanding at December 31, 2009
19,800 42.11

Vested
(9,900 ) 38.52

Forfeited
(116,000 ) 1.82

Granted
1,675,000 1.24

Outstanding at December 31, 2010
1,568,900 $ 1.48

          In February 2010, BankAtlantic Bancorp Board of Directors granted to its employees 1,600,000 restricted shares of BankAtlantic Bancorp Class A Common Stock awards (“RSA”) under the BankAtlantic Bancorp, Inc. 2005 Restricted Stock and Option Plan. BankAtlantic Bancorp Board of Directors also granted 75,000 RSAs to employees of BFC that perform services for BankAtlantic Bancorp. The grant date fair value was calculated based on the closing price of BankAtlantic Bancorp’s Class A common stock on the grant date. The RSAs vest pro-rata over four years and had a fair value of $1.24 per share at the grant date.

          As of December 31, 2010, the total unrecognized compensation cost related to non-vested restricted stock compensation was approximately $1.6 million. The cost is expected to be recognized over a weighted-average period of approximately 3 years. The fair value of shares vested during the years ended December 31, 2010, 2009 and 2008 was $15,000, $19,000, and $90,000 respectively.

29. Employee Benefit Plans and Incentive Compensation Program

BFC and Woodbridge

          Defined Contribution 401(k) Plan

          During 2006, the BFC 401(k) Plan was merged into the BankAtlantic Security Plus 401(k) Plan. The Security Plus 401(k) Plan is a defined contribution plan established pursuant to Section 401(k) of the Internal Revenue Code. Employees who have completed 90 days of service and have reached the age of 18 are eligible to participate. During 2008 and through April 18, 2009, employer match was 100% of the first 3% of employee contributions and 50% of the next 2% of employee contributions. On April 18, 2009, the employer match was suspended due to economic conditions. During the years ended December 31, 2010, 2009 and 2008, BFC’s contributions amounted to $0, $49,000 and $118,000, respectively.

          During the first quarter of 2010, Woodbridge’s 401(k) Plan merged into the BankAtlantic Security Plus 401(k) Plan. During the years ended 2009 and 2008, Woodbridge’s contributions to the plan amounted to $163,000, and $302,000, respectively.

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

          BFC Deferred Retirement Agreement

          On September 13, 2005, the Company entered into an agreement with Glen R. Gilbert, the Company’s former Chief Financial Officer, pursuant to which the Company agreed to pay him a monthly retirement benefit of $5,449 beginning January 1, 2010. During the third quarter of 2005 BFC recorded the present value of the retirement benefit payment, as actuarially determined, in the amount of $482,444, payable as a life annuity with 120 payments at 6.5% interest. The interest on the retirement benefit is recognized monthly as compensation expense. At December 31, 2010 and 2009, the deferred retirement obligation balance was approximately $611,000 and $635,000, respectively, which represents the present value of accumulated benefit obligation and is included in other liabilities in the Company’s consolidated statements of financial condition. The compensation expense for the years ended December 31, 2010, 2009 and 2008 was approximately $41,000, $37,000 and $38,000, respectively. Mr. Gilbert retired as Chief Financial Officer on March 29, 2007.

          Incentive Compensation Program

          On September 29, 2008, Woodbridge’s Board of Directors approved the terms of an incentive program for certain employees, including certain executive officers, pursuant to which a portion of their compensation may be based on the cash returns realized on investments held by individual limited partnerships or other legal entities. Certain of the participants in this incentive program are also employees and executive officers of BFC. This incentive program qualifies as a liability-based plan and, accordingly, the components of the program are required to be evaluated in order to determine the estimated fair value of the liability, if any, to be recorded. Based on the evaluation performed at December 31, 2010 and 2009, it was determined that the liability for compensation under the executive compensation program as of December 31, 2010 and 2009 was not material.

Bluegreen

          Bluegreen’s Employee Retirement Plan is an Internal Revenue Code section 401(k) Retirement Savings Plan (the “Bluegreen Plan”). All U.S.-based employees at least 21 years of age with one year of employment with Bluegreen and 1,000 work hours are eligible to participate in the Bluegreen Plan. The Bluegreen Plan provides an annual employer discretionary matching contribution. During the year ended December 31, 2010 and for the Bluegreen Interim Period, Bluegreen did not make any contributions to the Bluegreen Plan.

          Five of Bluegreen’s employees in New Jersey are subject to the terms of collective bargaining agreements. These employees are located in New Jersey and comprise less than 1% of Bluegreen’s total workforce.

BankAtlantic Bancorp

          Defined Benefit Pension Plan:

          At December 31, 1998, BankAtlantic froze its defined benefit pension plan (the “Plan”). All participants in the Plan ceased accruing service benefits beyond that date and became vested. BankAtlantic Bancorp is subject to future pension expense or income based on future actual plan returns and actuarial values of the Plan obligations to employees.

251

Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

          The following tables set forth the Plan’s change in benefit obligation and change in plan assets (in thousands):

As of December 31,

2010 2009

Change in benefit obligation

Benefit obligation at the beginning of the year
$ 31,375 31,150

Interest cost
1,838 1,832

Actuarial loss (gains)
1,956 (510 )

Benefits paid
(1,194 ) (1,097 )

Projected benefit obligation at end of year
33,975 31,375

Change in plan assets

Fair value of Plan assets at the beginning of year
21,946 17,921

Actual return on Plan assets
2,737 5,122

Employer contribution
781 —

Benefits paid
(1,194 ) (1,097 )

Fair value of Plan assets as of actuarial date
24,270 21,946

Funded status at end of year
$ (9,705 ) (9,429 )

          Included in the Company’s statement of financial condition in other liabilities as of December 31, 2010 and 2009 was $9.7 million and $9.4 million, respectively, representing the under-funded pension plan amount as of that date.

          Amounts recognized in accumulated other comprehensive income consisted of (in thousands):

As of December 31,

2010 2009 2008

Net comprehensive loss
$ 15,852 13,929 19,690

The change in net comprehensive loss was as follows (in thousands):

For the Years Ended December 31,

2010 2009 2008

Change in comprehensive loss
$ 1,923 (5,761 ) 15,775

          Components of net periodic pension (income) expense are as follows (in thousands):

For the Years Ended December 31,

2010 2009 2008

Interest cost on projected benefit obligation
$ 1,838 1,832 1,719

Expected return on plan assets
(1,804 ) (1,475 ) (2,430 )

Amortization of unrecognized net gains and losses
1,322 1,648 463

Net periodic pension (income) expense (1)
$ 1,356 2,005 (248 )

(1) The estimated net loss for the pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $1.3 million.

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Table of Contents

BFC Financial Corporation
Notes to Consolidated Financial Statements

          The actuarial assumptions used in accounting for the Plan were:

For the Years Ended December 31,

2010 2009 2008

Weighted average discount rate used to determine benefit obligation
5.50 % 6.00 % 6.00

Weighted average discount rate used to to determine net periodic benefit cost
5.50 % 6.00 % 6.00

Rate of increase in future compensation levels
N/A N/A N/A

Expected long-term rate of return
8.50 % 8.50 % 8.50

          Actuarial estimates and assumptions are based on various market factors and are evaluated on an annual basis, and changes in such assumptions may impact future pension costs. The discount rate assumption is based on rates of high quality corporate bonds. The expected long-term rate of return was estimated using historical long-term returns based on the expected asset allocations. Current participant data was used for the actuarial assumptions for each of the three years ended December 31, 2010. BankAtlantic Bancorp contributed $0.8 million to the BankAtlantic Plan during the year ended December 31, 2101. BankAtlantic Bancorp did not make any contributions to the BankAtlantic Plan during the years ended December 31, 2009 and 2008. It is anticipated that BankAtlantic Bancorp will be required to contribute $0.5 million to the BankAtlantic Plan for the year ended December 31, 2011.

          The Plan’s investment policies and strategies are to invest in mutual funds that are rated with at least a 3-star rating awarded by Morningstar at the initial purchase. If a fund’s Morningstar rating falls below a 3-star rating after an initial purchase, it is monitored to determine that its under-performance can be attributed to market conditions rather than fund management deficiencies. Fund manager changes or changes in fund objectives could be cause for replacement of any mutual fund. The Plan also maintains an aggressive growth investment category which includes investments in equity securities and mutual funds. Both public and private securities are eligible for this category of investment, but no more than 5% of total Plan assets at the time of the initial investment may be invested in any one company. Beyond the initial cost limitation (5% at time of purchase), there is no limitation as to the percentage that any one investment can represent if it is achieved through growth. As a means to reduce negative market volatility and concentration, the Plan has a strategy of selling call options against certain stock positions within the portfolio when considered timely. At December 31, 2010, 2.5% of the Plan’s assets were invested in the aggressive growth category.

          The Plan’s targeted asset allocation was 72% equity securities, 25% debt securities and 3% cash during the year ended December 31, 2010. A rebalancing of the portfolio takes place on a quarterly basis when there has been a 5% or greater change from the prevailing benchmark allocation.

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Notes to Consolidated Financial Statements

     The fair values of the pension plan’s assets at December 31, 2010 by asset category are as follows (in thousands):

Quoted Prices

In Active Markets

for Identical

Assets

Asset Category (Level 1)

Cash
$ 462

Mutual Funds: (1)

US Large Cap Growth
1,152

US Large Cap Value
1,028

US Large Cap Blend
3,268

US Mid-Cap Growth
648

US Mid-Cap Value
1,273

US Mid-Cap Blend
982

US Small Cap Blend
250

International Equity
3,264

Balanced
11,334

Common Stock (2)
608

Total pension assets
$ 24,269

(1) The Plan maintains diversified mutual funds in an attempt to diversify risks and reduce volatility while achieving the targeted asset mix.

(2) This category invests in aggressive growth common stocks.

          The pension assets were measured using the market valuation technique with level 1 input. Quoted market prices are available for identical securities for the mutual funds and common stock and all the pension assets trade in active markets.

          The following benefit payments are expected to be paid (in thousands):

Pension

Expected Future Service Benefits

2011
$ 1,496

2012
1,549

2013
1,606

2014
1,681

2015
1,864

Years 2016-2020
10,247

     Defined Contribution 401(k) Plan:

The table below outlines the terms of the Security Plus 401(k) Plan and the associated employer costs (dollars in thousands):

For the Years Ended December 31,

2010 2009 2008

Employee salary contribution limit (1)
$ 16.5 16.5 15.5

Percentage of salary limitation
% 75 75 75

Total match contribution (2)
$ — 771 2,551

Vesting of employer match
Immediate Immediate Immediate

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Notes to Consolidated Financial Statements

(1) For the years ended December 31, 2010, 2009 and 2008, employees over the age of 50 were entitled to contribute $22,000, $22,000 and $20,500, respectively.

(2) The employer matched 100% of the first 3% of employee contributions and 50% of the next 2% of employee contributions. The Company discontinued the employer match on April 1, 2009.

2008 Expense Reduction Initiative

          BankAtlantic Bancorp established the 2008 Expense Reduction Initiative for all non-executive employees of BankAtlantic Bancorp and its subsidiaries. The awards were subject to achieving certain expense reduction targets. The 2008 Expense Reduction Initiative was discontinued during the year ended December 31, 2009. Included in the Consolidated Statement of Operations during the years ended December 31, 2008 was $2.2 million of expenses associated with the Expense Reduction Initiative.

30. Redeemable 5% Cumulative Preferred Stock

          On June 7, 2004, the Board of Directors of the Company designated 15,000 shares of the Company’s authorized preferred stock as 5% Cumulative Convertible Preferred Stock (“5% Preferred Stock”). On June 21, 2004, the Company sold all 15,000 shares of the Preferred Stock to an investor group in a private offering.

          The 5% Preferred Stock has a stated value of $1,000 per share. The shares of 5% Preferred Stock may be redeemed at the option of the Company, from time to time, at redemption prices (the “Redemption Price”) ranging from $1,025 per share for the year 2010 to $1,000 per share for the year 2015 and thereafter. The 5% Preferred Stock liquidation preference is equal to its stated value of $1,000 per share plus any accumulated and unpaid dividends or an amount equal to the Redemption Price in a voluntary liquidation or winding up of the Company. Holders of the 5% Preferred Stock are entitled to receive, when and as declared by the Company’s Board of Directors, cumulative quarterly cash dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance, payable quarterly. Since June 2004, the Company has paid quarterly dividends on the 5% Preferred Stock of $187,500. The 5% Preferred Stock has no voting rights except as required by Florida law.

          On December 17, 2008, the Company amended its Articles of Incorporation (the “Amendment”) to change certain of the previously designated relative rights, preferences and limitations of the Company’s 5% Preferred Stock. The Amendment eliminated the right of the holders of the 5% Preferred Stock to convert their shares of 5% Preferred Stock into shares of the Company’s Class A Common Stock. The Amendment also requires the Company to redeem shares of the 5% Preferred Stock with the net proceeds it receives in the event (i) the Company sells any of its shares of Benihana Series B Convertible Preferred Stock (the “Benihana Preferred Stock”), (ii) the Company sells any shares of Benihana’s common stock received upon conversion of the Benihana Preferred Stock or (iii) Benihana redeems any shares of the Benihana Preferred Stock owned by the Company. Additionally, in the event the Company defaults on its obligation to make dividend payments on its 5% Preferred Stock, the Amendment entitles the holders of the 5% Preferred Stock, in place of the Company, to receive directly from Benihana certain payments on the shares of Benihana Preferred Stock owned by the Company or on the shares of Benihana’s common stock received by the Company upon conversion of the Benihana Preferred Stock.

          In December 2008, based on an analysis of BFC 5% Preferred Stock after giving effect to the Amendment, the Company determined that BFC 5% Preferred Stock met the requirements to be re-classified outside of permanent equity at its fair value at the Amendment date of approximately $11.0 million into the mezzanine category as Redeemable 5% Cumulative Preferred Stock. The remaining amount of approximately $4.0 million continued to be classified as Additional Paid in Capital in the Company’s Consolidated Statements of Financial Condition. The fair value of the 5% Preferred Stock was calculated by using an income approach by discounting estimated cash flows at a market discount rate.

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Notes to Consolidated Financial Statements

31. Common Stock, Preferred Stock and Dividends

Common Stock

          On September 21, 2009, BFC adopted a rights agreement (“Rights Agreement”) designed to preserve shareholder value and protect our ability to use available net operating loss (“NOLs”) carryforwards. The Rights Agreement provides a deterrent to shareholders from acquiring a 5% or greater ownership interest in BFC’s Class A Common Stock and Class B Common Stock without the prior approval of BFC’s Board of Directors. Shareholders of BFC at September 21, 2009 were not required to divest any shares. The Rights Agreement was substantially similar to the rights agreement that Woodbridge had in place prior to the consummation of its merger with BFC.

          In connection with the consummation of BFC’s merger with Woodbridge on September 21, 2009, BFC’s Articles of Incorporation were amended to increase the number of authorized shares of BFC’s Class A Common Stock from 100,000,000 shares to 150,000,000 shares. BFC also amended its Articles of Incorporation on September 21, 2009 to set forth the designation and number of preferred shares as well as the relative rights, preferences and limitations of the preferred shares which may be issued under the terms and conditions of the Rights Agreement.

          On September 21, 2009, BFC’s Board of Directors approved a share repurchase program which authorizes the repurchase of up to 20,000,000 shares of Class A and Class B Common Stock at an aggregate cost of no more than $10 million. This program replaces the $10 million repurchase program that BFC’s Board of Directors approved in October 2006 which placed a limitation on the number of shares which could be repurchased under the program at 1,750,000 shares of Class A Common Stock. During the year ended December 31, 2008, BFC repurchased 100,000 shares of Class A Common Stock at an aggregate cost of $54,000 under the prior program. The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the year ended December 31, 2010 or 2009.

          The Company’s Articles of Incorporation authorize the Company to issue both Class A Common Stock, par value $.01 per share, and Class B Common Stock, par value $.01 per share. Holders of the Company’s Class A Common Stock are entitled to one vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of the total voting power. Holders of Class B Common Stock possess the remaining 78% of the total voting power. When the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B Common Stock will have the remaining 60%. When the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53% and the Class B Common Stock will have the remaining 47%. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 500,000 shares or less, at which time the fixed voting percentages will be eliminated, and holders of Class A Common Stock and holders of Class B Common Stock would then each be entitled to one vote per share held. Each share of Class B Common Stock is convertible at the option of the holder thereof into one share of Class A Common Stock.

Preferred Stock

          The Company’s authorized capital stock includes 10 million shares of preferred stock at a par value of $.01 per share. See Note 30 for further information.

Bylaw Amendments

          On February 11, 2008, our Board of Directors amended our By-laws to include advance notice procedures requiring, among other things, that a shareholder wishing to properly bring business before an annual meeting of the Company’s shareholders or nominate a candidate to serve on the Board of Directors of the Company must deliver written notice of such business or nomination to the Company’s Secretary (i) not less than 90 days nor more than 120 days prior to the anniversary date of the preceding year’s annual meeting of the Company’s shareholders or (ii) in the event that the annual meeting of the Company’s shareholders is called for a date that is not within 30 days before or after the anniversary date of the preceding year’s annual meeting of the Company’s shareholders, not later than the close

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Notes to Consolidated Financial Statements

of business on the tenth day after the earlier of notice of the date of the annual meeting of shareholders is mailed or public disclosure of the date of the annual meeting of shareholders is made.

          On September 21, 2009, in connection with the consummation of the Woodbridge merger, our Bylaws were further amended to increase the maximum size of the Board from 12 to 15 directors and to provide that each director thereafter elected or appointed to the Board would serve for a term expiring at our next annual meeting of shareholders. As a result of the latter amendment, following our 2012 Annual Meeting of Shareholders, we will no longer have a staggered Board.

Dividends

          BFC has never paid cash dividends on its common stock. BFC, on a parent company only basis, has committed that it will not, without the prior written non-objection of the OTS declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter, as discussed further in Note 30.

32. Noncontrolling Interests

          The following table summarizes the noncontrolling interests held by others in the Company’s subsidiaries at December 31, 2010 and 2009 (in thousands):

December 31,

2010 2009

As Revised

BankAtlantic Bancorp
$ 7,823 88,910

Bluegreen
44,362 42,731

Joint ventures
26,071 27,671

$ 78,256 159,312

     The following table summarizes the noncontrolling interests (loss) earnings recognized by others with respect to the Company’s subsidiaries for the years ended December 31, 2010, 2009 and 2008 (in thousands):

For the Years Ended December 31,

2010 2009 2008

As Revised

Noncontrolling interest — Continuing Operations

BankAtlantic Bancorp
$ (85,821 ) (127,716 ) (161,416 )

Woodbridge
— 6,008 (113,593 )

Bluegreen
1,776 2,168 —

Joint ventures
7,980 (3,002 ) 12

$ (76,065 ) (122,542 ) (274,997 )

Noncontrolling interest — Discontinued Operations:

BankAtlantic Bancorp
$ (274 ) 2,592 12,144

Woodbridge
— (661 ) 2,286

$ (274 ) 1,931 14,430

$ (76,339 ) (120,611 ) (260,567 )

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Notes to Consolidated Financial Statements

33. Fair Value Measurement

          Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three main valuation techniques to measuring fair value of assets and liabilities: the market approach, the income approach and the cost approach. The accounting literature defines an input fair value hierarchy that has three broad levels and gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

          The valuation techniques are summarized below:

          The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

          The income approach uses financial models to convert future amounts to a single present amount. These valuation techniques include present value and option-pricing models.

          The cost approach is based on the amount that currently would be required to replace the service capacity of an asset. This technique is often referred to as current replacement costs.

          The input fair value hierarchy is summarized below:

          Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at each reporting date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available.

          Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly (for example, a principal-to-principal market); and inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).

          Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

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Notes to Consolidated Financial Statements

          The following table presents major categories of the Company’s assets measured at fair value on a recurring basis as of December 31, 2010 (in thousands):

Fair Value Measurements Using

Quoted prices in Significant

Active Markets Other Significant

for Identical Observable Unobservable

December 31, Assets Inputs Inputs

Description 2010 (Level 1) (Level 2) (Level 3)

Mortgage-backed securities
$ 112,042 — 112,042 —

REMICS
68,841 — 68,841 —

Agency bonds
60,143 — 60,143 —

Municipal bonds
162,123 — 162,123 —

Taxable securities
19,922 — 19,922 —

Foreign currency put options
24 24 — —

Benihana Convertible Preferred Stock
21,106 — — 21,106

Other equity securities
20,819 20,819 — —

Total
$ 465,020 20,843 423,071 21,106

          The following table presents major categories of the Company’s assets measured at fair value on a recurring basis as of December 31, 2009 (in thousands):

Quoted prices in

Active Markets Significant Other Significant

for Identical Observable Unobservable

December 31, Assets Inputs Inputs

Description 2009 (Level 1) (Level 2) (Level 3)

Securities Available for Sale:

Mortgage-backed securities
$ 211,945 — 211,945 —

REMICS
107,347 — 107,347 —

Bonds
250 — — 250

Benihana Convertible Preferred Stock
17,766 — — 17,766

Other equity securities
9,067 9,067 — —

Total securities available for sale at fair value
$ 346,375 9,067 319,292 18,016

Retained interest in notes receivable sold
26,340 — — 26,340

Total assets measured at fair value on a recurring basis
$ 372,715 9,067 319,292 44,356

          There were no recurring liabilities measured at fair value in the Company’s financial statements.

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Notes to Consolidated Financial Statements

          The following table presents major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2009 and 2010 (in thousands):

Retained

Interests in Benihana

Notes Other Convertible Equity

Receivable Sold Bonds Preferred Stock Securities Total

Balance at December 31, 2008
$ — 250 16,426 1,588 18,264

Total gains and losses (realized/unrealized)
(2,910 ) — — — (2,910 )

Included in earnings
— — — (1,588 ) (1,588 )

Included in other comprehensive income (loss)
— — 1,340 — 1,340

Purchases, issuances, and settlements
29,250 — — — 29,250

Transfers in and/or out of Level 3
— — — —

Balance at December 31, 2009
26,340 250 17,766 — 44,356

Total gains and losses (realized/unrealized)
— — — — —

Included in earnings
— — — — —

Cumulative effect of change in accounting principle (1)
(26,340 ) — — — (26,340 )

Included in other comprehensive income
— — 3,340 — 3,340

Purchases, issuances, and settlements
— (250 ) — — (250 )

Transfers in and/or out of Level 3
— — — — —

Balance at December 31, 2010
$ — — 21,106 — 21,106

(1) Retained interests in notes receivable sold was eliminated upon a change in accounting principle. For further information see Note 5.

          The $1.6 million equity securities loss for the year ended December 31, 2009 represents an other-than-temporary impairment associated with a decline in value related to an equity investment in an unrelated financial institution.

          The valuation techniques and the inputs used in our financial statements to measure the fair value of our recurring financial instruments are described below.

          The fair values of agency bonds, municipal bonds, taxable bonds, mortgage-backed and real estate mortgage conduit securities (“REMICS”) are estimated using independent pricing sources and matrix pricing. Matrix pricing uses a market approach valuation technique and Level 2 valuation inputs as quoted market prices are not available for the specific securities that BankAtlantic owns. The independent pricing sources value these securities using observable market inputs including: benchmark yields, reported trades, broker/dealer quotes, issuer spreads and other reference data in the secondary institutional market which is the principal market for these types of assets. To validate fair values obtained from the pricing sources, BankAtlantic reviews fair value estimates obtained from brokers, investment advisors and others to determine the reasonableness of the fair values obtained from independent pricing sources. BankAtlantic reviews any price that it determines may not be reasonable and requires the pricing sources to explain the differences in fair value or reevaluate its fair value.

          Other bonds and equity securities are generally fair valued using the market approach and quoted market prices (Level 1) or matrix pricing (Level 2 or Level 3) with inputs obtained from independent pricing sources, if available. Also non-binding broker quotes are obtained to validate fair values obtained from matrix pricing. However, certain equity and debt securities in which observable market inputs cannot be obtained are valued either using the income approach and pricing models that we have developed or based on observable market data that we adjust based on our judgment of the factors we believe a market participant would use to value the securities (Level 3).

          The fair value of foreign currency put options was obtained using the market approach and quoted market prices using Level 1 inputs.

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Notes to Consolidated Financial Statements

          The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana Convertible Preferred Stock.

          The following tables present major categories of assets measured at fair value on a non-recurring basis as of December 31, 2010 and 2009 (in thousands):

Fair Value Measurements Using

Quoted prices in

Active Markets Significant Significant

for Identical Other Observable Unobservable

December 31, Assets Inputs Inputs Total

Description 2010 (Level 1) (Level 2) (Level 3) Impairments

Loans measured for impairment using the fair value of the underlying collateral
$ 395,333 — — 395,333 $ 146,521

Impairment of real estate owned
26,359 — — 26,359 6,830

Impairment of assets held for sale
13,878 13,878 4,469

Impairment of real estate inventory
5,435 — — 5,435 2,604

Total
$ 441,005 — — 441,005 $ 160,424

(1) Total impairments represents the amount of loss recognized during the year ended December 31, 2010 on assets that were measured at fair value as of December 31, 2010

          The following table presents major categories of assets measured at fair value on a non-recurring basis as of December 31, 2009 (in thousands):

Fair Value Measurements Using

Quoted prices in

Active Markets Significant Significant

for Identical Other Observable Unobservable

December 31, Assets Inputs Inputs Total

Description 2009 (Level 1) (Level 2) (Level 3) Impairments (1)

Loans measured for impairment using the fair value of the collateral
$ 259,392 — — 259,392 $ 189,193

Impaired real estate owned
16,980 — — 16,980 4,124

Impaired real estate inventory
145,586 — — 145,586 106,632

Impaired properties and equipment
14,260 — — 14,260 6,450

Impaired goodwill
— — — — 10,542

Investment in Bluegreen
— — — — 31,181

Total
$ 436,218 — — 436,218 $ 348,122

(1) Total impairments is defined as the amount of loss recognized during the year on assets that were measured at fair value as of the end of the year.

Loans Measured for Impairment

          Impaired loans are generally valued based on the fair value of the underlying collateral. Third party appraisals are primarily used to assist in non-homogenous impaired loans. These appraisals generally use the market or income approach valuation technique and use market observable data to formulate an opinion of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral or properties and BankAtlantic may also adjust these values for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans, BankAtlantic uses judgment on market conditions to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed and the amount of time required

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to sell out the real estate project may be derived from current appraisals of similar projects. As a consequence, the calculation of the fair value of the collateral uses Level 3 inputs. Third party brokered price options or an automated valuation service are generally use to measure the fair value of the collateral for impaired homogenous loans in the establishment of specific reserves or charge-downs when these loans become 120 days delinquent. These third party valuations from real estate professionals also use Level 3 inputs in the determination of the fair values.

Impairment of Real Estate, Assets Held for Sale and Properties and Equipment

          Real estate inventory and other long-lived real estate assets are evaluated for impairment in accordance with the accounting guidance for the impairment or disposal of long-lived assets. In accordance with this accounting guidance, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to estimated future undiscounted cash flows expected to be generated by the asset, or by using appraisals of the related assets. Using estimated future undiscounted cash flows or appraisals requires significant judgment and opinions in developing estimates. Real estate and assets held for sale may also be valued using third party offers to purchase the property, discounted cash flows or broker price opinions. Appraisals generally use the market approach valuation technique and use observable market data to formulate an opinion of the fair value of the properties. However, the appraisers or brokers use professional judgments in determining the fair value of the properties, and we may also adjust these values for changes in market conditions subsequent to the valuation date. As a consequence of using appraisals, discounted cash flows, broker price opinions, purchase offers and adjustments to appraisals, the fair values of the properties use Level 3 inputs in the determination of fair value.

Impaired Goodwill

          BankAtlantic Bancorp used discounted cash flow valuation techniques in determining the fair value of its reporting units in the test of goodwill for impairment. This method requires assumptions for expected cash flows and applicable discount rates. The aggregate fair value of all reporting units derived from the above valuation methodology was compared to BankAtlantic Bancorp’s market capitalization adjusted for a control premium in order to determine the reasonableness of the financial model output. A control premium represents the value an investor would pay above minority interest transaction prices in order to obtain a controlling interest in the respective company. BankAtlantic Bancorp used financial projections over a period of time considered necessary to achieve a steady state of cash flows for each reporting unit. The primary assumptions in the projections were anticipated loan, tax certificates and securities growth, interest rates and revenue growth. The discount rates were estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk and size premium adjustments specific to a particular reporting unit. The estimated fair value of a reporting unit is highly sensitive to changes in the discount rate and terminal value assumptions and, accordingly, minor changes in these assumptions could impact significantly the fair value assigned to a reporting unit. Future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. As a result of the significant judgments used in determining the fair value of the reporting units, the fair values of the reporting units use Level 3 inputs in the determination of fair value.

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Notes to Consolidated Financial Statements

Financial Disclosures about Fair Value of Financial Instruments

          The following table presents information for financial instruments at December 31, 2010 and 2009 (in thousands):

December 31, 2010 December 31, 2009

Carrying Fair Carrying Fair

Amount Value Amount Value

(As Revised)

Financial assets:

Cash and cash equivalents
$ 178,868 178,868 189,728 189,728

Interest bearing deposits in other banks
455,538 455,538 126,352 126,352

Restricted cash
62,249 62,249 24,020 24,020

Securities available for sale
465,020 465,020 346,375 346,375

Investment securities
2,033 2,033 9,654 9,654

Tax certificates
89,789 90,738 110,991 112,472

Federal Home Loan Bank stock
43,557 43,557 48,751 48,751

Retained interest in notes receivable sold
— — 26,340 26,340

Loans receivable including loans held for sale, net
3,039,486 2,689,890 3,683,441 3,381,796

Notes receivable
574,969 623,000 279,645 279,645

Financial liabilities:

Deposits
$ 3,891,190 3,893,807 3,948,818 3,950,840

Advances from FHLB
170,000 170,038 282,012 282,912

Securities sold under agreements to repurchase and other short term borrowings
22,764 22,764 27,271 27,271

Receivable-backed notes payable
569,214 560,728 237,416 237,416

Notes and mortgage notes payable and other borrowings
239,571 224,866 395,361 392,047

Mortgage payables and liabilities associated with assets held for sale
— — 74,749 74,749

Junior subordinated debentures
461,568 220,080 447,211 170,598

          Management has made estimates of fair value that it believes to be reasonable. However, because there is no active market for many of these financial instruments and management has derived the fair value of the majority of these financial instruments using the income approach technique with Level 3 unobservable inputs, there is no assurance that the Company or its subsidiaries would receive the estimated value upon sale or disposition of the asset or pay the estimated value upon disposition of the liability in advance of its scheduled maturity. Management estimates used in its net present value financial models rely on assumptions and judgments regarding issues where the outcome is unknown and actual results or values may differ significantly from these estimates. These fair value estimates do not consider the tax effect that would be associated with the disposition of the assets or liabilities at their fair value estimates.

          Interest bearing deposits in other banks include $45.6 million of certificates of deposits guaranteed by the FDIC with maturities of less than one year. Due to the FDIC guarantee and the short maturity of these certificates of deposit, the fair value of these deposits approximates the carrying value.

          The fair value of tax certificates was calculated using the income approach with Level 3 inputs. The fair value is based on discounted expected cash flows using discount rates that take into account the risk of the cash flows of tax certificates relative to alternative investments.

          The fair value of FHLB stock is its carrying amount.

          Fair values are estimated for loan portfolios with similar financial characteristics. Loans are segregated by category, and each loan category is further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories.

          The fair value of performing loans is calculated by using an income approach with Level 3 inputs. The fair value of performing loans is estimated by discounting forecasted cash flows through the estimated maturity using estimated market discount rates that reflect the interest rate risk inherent in the loan portfolio. The estimate of average maturity is based on BankAtlantic’s historical experience with prepayments for each loan classification, modified as required, by an estimate of the effect of current economic and lending conditions. Management assigns a credit risk

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Notes to Consolidated Financial Statements

premium and an illiquidity adjustment to these loans based on risk grades and delinquency status.

          The estimated fair value of Bluegreen notes receivable is based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate (the rate at which similar loans with similar maturities would be made to borrowers with similar credit risk).

          Bluegreen’s retained interests in VOI notes receivable sold were carried at fair value as of December 31, 2009. See Note 13 for additional information on the methods and assumptions used to estimate the fair value of these financial instruments.

          As permitted by applicable accounting guidance, the fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, savings and NOW accounts, and money market and checking accounts, is shown in the above table at book value. The fair value of certificates of deposit is based on an income approach with Level 3 inputs. The fair value is calculated by the discounted value of contractual cash flows with the discount rate estimated using current rates offered by BankAtlantic for similar remaining maturities.

          The fair value of short-term borrowings is calculated using the income approach with Level 2 inputs. Contractual cash flows are discounted based on current interest rates. The carrying value of these borrowings approximates fair value as maturities are generally less than thirty days.

          The fair value of FHLB advances was calculated using the income approach with Level 2 inputs. The fair value was based on discounted cash flows using rates offered for debt with comparable terms to maturity and issuer credit standing.

          The estimated fair values of notes and mortgage notes payable and other borrowings, including receivable-backed notes payable, were based upon current rates and spreads a party would pay to obtain similar borrowings. In addition, the fair value of BankAtlantic’s mortgage-backed bond for the year ended December 31, 2009 was based on discounted values of contractual cash flows at a market discount rate. The mortgage-backed bond was repaid in full during the year ended December 31, 2010.

          In determining the fair value of BankAtlantic Bancorp’s junior subordinated debentures, BankAtlantic Bancorp used NASDAQ price quotes available with respect to its $67.5 million of publicly traded trust preferred securities related to its junior subordinated debentures (“public debentures”). However, $254.9 million of the outstanding trust preferred securities related to its junior subordinated debentures are not traded, but are privately held in pools (“private debentures”) and with no liquidity or readily determinable source for valuation. BankAtlantic Bancorp has deferred the payment of interest with respect to all of its junior subordinated debentures as permitted by the terms of these securities. Based on the deferral status and the lack of liquidity and ability of a holder to actively sell such private debentures, the fair value of these private debentures may be subject to a greater discount to par and have a lower fair value than indicated by the public debenture price quotes. However, due to their private nature and the lack of a trading market, fair value of the private debentures was not readily determinable at December 31, 2010 and 2009, and as a practical alternative, BankAtlantic Bancorp used the NASDAQ price quotes of the public debentures to value its remaining outstanding junior subordinated debentures whether privately held or publicly traded.

          The estimated fair value of Woodbridge’s and Bluegreen’s junior subordinated debentures as of December 31, 2010 and 2009 were based on the discounted value of contractual cash flows at a market discount rate or market price quotes from the over-the-counter bond market.

          The carrying amount and fair values of BankAtlantic’s commitments to extend credit, standby letters of credit, financial guarantees and forward commitments are not significant. See Note 27 for the contractual amounts of BankAtlantic’s financial instrument commitments.

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Notes to Consolidated Financial Statements

Derivatives

          Commitments to originate residential loans held for sale and to sell residential loans are derivatives. The fair value of these derivatives was not included in the Company’s financial statements as the amount was not considered significant. These derivatives relate to a loan origination program with an independent mortgage company where the mortgage company purchases the originated loans from BankAtlantic generally within fourteen days after the funding date at a price negotiated quarterly for all loans sold during the quarter.

          Included in the proceeds received from the February 2007 sale of Ryan Beck to Stifel were warrants to acquire 722,586 shares of Stifel common stock at $24.00 per share. During the year ended December 31, 2008, all of the Stifel warrants were sold for a gain of $3.7 million. BankAtlantic Bancorp received gross proceeds of $14.4 million from the sale of the warrants.

          Depending on market conditions, BankAtlantic may write call options on purchased agency securities (“covered calls”). Included in the consolidated statement of operations in Financial Services securities activities — net during the years ended December 31, 2008 was covered call transaction gains of $0.4 million. BankAtlantic Bancorp had no call options outstanding as of December 31, 2010 and 2009.

          During 2010, BankAtlantic expanded its cruise ship automated teller machine (“ATM”) operations and began dispensing foreign currency from certain ATMs on cruise ships. BankAtlantic purchased foreign currency put options as an economic hedge for the foreign currency in its cruise ship ATMs. The foreign currency put options are valued based on market quotes, which is a level 1 input. Included in securities available for sale as of December 31, 2010 was $24,000 of foreign currency put options. Included in the Consolidated Statement of Operations in Financial Services securities activities, net during the years ended December 31, 2010 was foreign currency put option losses of $0.1 million.

34. Segment Reporting

          Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment.

          The information provided for segment reporting is based on internal reports utilized by management of the Company and its respective subsidiaries. The presentation and allocation of assets and results of operations may not reflect the actual economic costs of the segments as standalone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ but the relative trends in segments’ operating results would, in management’s view, likely not be impacted.

          The Company’s business activities currently consist of (i) Real Estate and Other activities and (ii) Financial Services activities. These business activities are reported through six segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. BFC Activities segment includes, in addition to other activities historically included in this segment, Woodbridge Other Operations (which was previously a separate segment). Our Real Estate Operations segment is comprised of what was previously identified as our Land Division, including the real estate business activities conducted by Core Communities and Carolina Oak prior to the suspension of those activities during 2010 and 2008, respectively.

          BFC’s consolidated financial statements include the results of operations of Bluegreen since November 16, 2009, when we acquired a controlling interest in Bluegreen. Bluegreen’s results of operations are reported through the Bluegreen Resorts and Bluegreen Communities segments. Prior to November 16, 2009, we owned approximately 9.5 million shares of Bluegreen’s common stock, representing approximately 29% of such stock, the investment in Bluegreen was accounted for under the equity method of accounting, and our interest in Bluegreen’s earnings and losses was included in our BFC Activities segment. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and are reported in two segments: BankAtlantic and BankAtlantic Bancorp Parent Company.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

          The Company evaluates segment performance based on its segment net income (loss).

          The following summarizes the aggregation of the Company’s operating segments into reportable segments:

BFC Activities

          The BFC Activities segment consists of BFC operations, dividends from our investment in Benihana, and other operations of Woodbridge described below. BFC operations primarily consist of our corporate overhead and general and administrative expenses, including the expenses of Woodbridge, the financial results of a venture partnership that BFC controls and other equity investments, as well as income and expenses associated with BFC’s shared service operations which provides human resources, risk management, investor relations and executive office administration services to BankAtlantic Bancorp and Bluegreen. This segment also includes investments made by our wholly owned subsidiary, BFC/CCC, Inc. Woodbridge’s other operations include the activities of Pizza Fusion, Cypress Creek Holdings and Snapper Creek , as well as certain other investments. Prior to obtaining a controlling interest in Bluegreen on November 16, 2009, we accounted for our investment in Bluegreen under the equity method of accounting and our interest in Bluegreen’s earnings or loss was included in the BFC Activities segment.

Real Estate Operations

          The Company’s Real Estate Operations segment consists of the operations of Core Communities, prior to the suspension of those activities in December 2010, Carolina Oak, which was engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008, and Cypress Creek Holdings which engages in leasing activities. Core Communities and certain subsidiaries of Core were deconsolidated from our financial statements during the fourth of quarter of 2010. See Note 2 for further information on Core.

Bluegreen Resorts

          Bluegreen Resorts markets, sells and manages real estate-based VOIs in resorts generally located in popular, high-volume, “drive-to” vacation destinations, which were developed or acquired by Bluegreen or developed by others. Bluegreen also earn fees from third-party resort developers and timeshare owners for providing services such as sales and marketing, mortgage servicing, construction management, title, and resort management.

Bluegreen Communities

          Bluegreen Communities acquires, develops and subdivides property and markets residential land homesites. The majority of these homesites are sold directly to retail customers who seek to build a home, in some cases on properties featuring a golf course and related amenities. Bluegreen Communities acquires, develops and subdivides property and markets residential land homesites. The majority of these homesites are sold directly to retail customers who seek to build a home, in some cases on properties featuring a golf course and related amenities. On March 24, 2011, Bluegreen announced that it had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division.

BankAtlantic

          The Company’s BankAtlantic segment consists of the banking operations of BankAtlantic. BankAtlantic activities consist of retail banking services delivered through a network of branches located in Florida.

BankAtlantic Bancorp Parent Company

          The BankAtlantic Bancorp Parent Company segment consists of the operations of BankAtlantic Bancorp Parent Company, including cost of acquisitions, asset and capital management and financing activities.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

The following tables present segment information for the years ended December 31, 2010, 2009 and 2008 (in thousands):

BankAtlantic Unallocated

Bancorp Amounts

BFC Real estate Bluegreen Bluegreen Parent and Segment

2010 Activities Operations Resorts Communities BankAtlantic Company Eliminations Total

Revenues:

Sales of real estate
$ — 2,739 166,624 12,003 — — — 181,366

Other resorts and communities operations revenue
— — 65,979 1,696 — — — 67,675

Other revenues
1,781 1,397 52,966 — — — (318 ) 55,826

Interest income
— — — — 176,025 300 96,023 272,348

Financial Services — non-interest income
— — — — 105,762 1,257 (1,558 ) 105,461

Total revenues
1,781 4,136 285,569 13,699 281,787 1,557 94,147 682,676

Costs and Expenses:

Cost of sale of real estate
— 23,232 19,862 23,552 — — — 66,646

Cost of sale of other resorts and communities operations
— — 46,863 3,514 — — — 50,377

Interest expense
6,264 12,745 — — 24,691 14,872 66,095 124,667

Provision for loan losses
— — — — 138,825 5,536 — 144,361

Selling, general and administrative
25,602 9,481 155,111 13,523 — — 42,148 245,865

Other expenses
— 3,889 — — 236,315 9,043 (2,528 ) 246,719

Total costs and expenses
31,866 49,347 221,836 40,589 399,831 29,451 105,715 878,635

Loss on settlement of investment in Woodbridge’s subsidiary
(977 ) — — — — — — (977 )

Gain on extinguishment of debt
— 13,049 — — — — — 13,049

Equity in earnings from unconsolidated affiliates
(2,045 ) — — — — 1,054 140 (851 )

Other income
6,481 892 — — — — (4,682 ) 2,691

(Loss) income from continuing operations before income taxes
(26,626 ) (31,270 ) 63,733 (26,890 ) (118,044 ) (26,840 ) (16,110 ) (182,047 )

Less: Provision (benefit) for income taxes
(7,097 ) — — — (2,134 ) — 9,336 105

(Loss) income from continuing operations
(19,529 ) (31,270 ) 63,733 (26,890 ) (115,910 ) (26,840 ) (25,446 ) (182,152 )

Income (loss) from discontinued operations
— 2,465 — — — (500 ) — 1,965

Net (loss) income
$ (19,529 ) (28,805 ) 63,733 (26,890 ) (115,910 ) (27,340 ) (25,446 ) (180,187 )

Less: Net loss attributable to noncontrolling interests
(76,339 ) (76,339 )

Net loss attributable to BFC
$ 50,893 (103,848 )

Total assets
$ 95,035 37,937 864,904 89,827 4,469,168 338,358 (82,163 ) 5,813,066

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Notes to Consolidated Financial Statements

BankAtlantic Unallocated

Bancorp Amounts

BFC Real estate Bluegreen Bluegreen Parent and Segment

Activities Operations Resorts Communities BankAtlantic Company Eliminations Total

2009 (As Revised) (As Revised) (As Revised)

Revenues:

Sales of real estate
$ — 6,605 17,622 3,139 — — 40 27,406

Other resorts and communities operations revenue
— — 5,239 593 — — — 5,832

Other revenues
1,296 2,312 5,354 — — — (103 ) 8,859

Interest income
— — — — 223,048 573 14,323 237,944

Financial Services — non-interest income
— — — — 128,813 1,077 (1,565 ) 128,325

Total revenues
1,296 8,917 28,215 3,732 351,861 1,650 12,695 408,366

Costs and Expenses:

Cost of sale of real estate
7,749 82,105 3,118 1,788 — — 13,901 108,661

Cost of sale of other resorts and communities operations
— — 3,538 1,480 — — — 5,018

Interest expense
6,511 6,293 — — 59,724 15,535 4,920 92,983

Provision for loan losses
— — — — 214,244 18,414 — 232,658

Impairment of goodwill
2,001 — — — — — — 2,001

Selling, general and administrative
30,388 16,451 15,775 3,738 — — 683 67,035

Other expenses
— 5,433 — — 258,799 9,000 (826 ) 272,406

Total costs and expenses
46,649 110,282 22,431 7,006 532,767 42,949 18,678 780,762

Gain on bargain purchase of Bluegreen
182,849 — — — — — — 182,849

Gain on settlement of investment in Woodbridge’s subsidiary
16,296 — — — — — 13,383 29,679

Equity in earnings from unconsolidated affiliates
32,276 — — — 479 487 139 33,381

Impairment of unconsolidated affiliates
(31,181 ) — — — — — — (31,181 )

Impairment of investments
(2,396 ) — — — — — — (2,396 )

Investment gains
6,654 — — — — — — 6,654

Other income
5,775 526 — — — — (3,192 ) 3,109

Income (loss) from continuing operations before income taxes
164,920 (100,839 ) 5,784 (3,274 ) (180,427 ) (40,812 ) 4,347 (150,301 )

Less: Benefit for income taxes
(35,503 ) — — — (31,719 ) — (1,678 ) (68,900 )

Income (loss) from continuing operations
200,423 (100,839 ) 5,784 (3,274 ) (148,708 ) (40,812 ) 6,025 (81,401 )

(Loss) income from discontinued operations
— (15,632 ) — — — 3,701 — (11,931 )

Net income (loss)
$ 200,423 (116,471 ) 5,784 (3,274 ) (148,708 ) (37,111 ) 6,025 (93,332 )

Less: Net loss attributable to noncontrolling interests
(120,611 ) (120,611 )

Net income attributable to BFC
$ 126,636 27,279

Total assets (As Revised)
$ 122,070 257,390 546,282 110,997 4,755,122 456,860 (206,620 ) 6,042,101

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Notes to Consolidated Financial Statements

BankAtlantic Unallocated

Bancorp Amounts

BFC Real estate Bluegreen Bluegreen Parent and Segment

2008 Activities Operations Resorts Communities BankAtlantic Company Eliminations Total

Revenues:

Sales of real estate
$ — 13,752 — — — — 85 13,837

Other resorts and communities operations revenue
— — — — — — — —

Other revenues
— 3,033 — — — — — 3,033

Interest income
— — — — 313,285 1,445 (192 ) 314,538

Financial Services — non-interest income
— — — — 135,800 670 (1,437 ) 135,033

Total revenues
— 16,785 — — 449,085 2,115 (1,544 ) 466,441

Costs and Expenses:

Cost of sale of real estate
59 22,724 — — — — (9,945 ) 12,838

Cost of sale of other resorts and communities operations
— — — — — — — —

Interest expense
7,641 2,075 — — 119,637 21,262 (1,682 ) 148,933

Provision for loan losses
— — — — 135,383 24,418 — 159,801

Impairment of goodwill
— — — — — — — —

Selling, general and administrative
36,886 20,648 — — — — (2,333 ) 55,201

Other expenses
— — — — 330,623 8,741 (4,697 ) 334,667

Total costs and expenses
44,586 45,447 — — 585,643 54,421 (18,657 ) 711,440

Equity in earnings from unconsolidated affiliates
8,844 — — — 1,508 601 4,111 15,064

Impairment of unconsolidated affiliates
(96,579 ) — — — — — — (96,579 )

Impairment of investments
(15,548 ) — — — — — — (15,548 )

Investment gains
2,076 — — — — — — 2,076

Other income
8,970 3,341 — — — — (4,561 ) 7,750

Loss from continuing operations before income taxes
(136,823 ) (25,321 ) — — (135,050 ) (51,705 ) 16,663 (332,236 )

Less: (Benefit) provision for income taxes
(14,887 ) — — — 31,094 1,395 (1,839 ) 15,763

Loss from continuing operations
(121,936 ) (25,321 ) — — (166,144 ) (53,100 ) 18,502 (347,999 )

Income from discontinued operations
— 2,783 — — — 16,605 — 19,388

Extraordinary gain, less income tax
9,145 — — — — — — 9,145

Net loss
$ (112,791 ) (22,538 ) — — (166,144 ) (36,495 ) 18,502 (319,466 )

Less: Net loss attributable to noncontrolling interests
(260,567 ) (260,567 )

Net loss attributable to BFC
$ 279,069 (58,899 )

Total assets
$ 218,167 384,261 — — 5,713,690 542,478 (463,014 ) 6,395,582

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Notes to Consolidated Financial Statements

35. Regulatory Matters

          Bluegreen

          The vacation ownership and real estate industries are subject to extensive and complex federal, state, and local governmental regulation. Bluegreen is subject to various federal, state, local and foreign environmental, zoning, consumer protection and other statutes and regulations regarding the acquisition, subdivision, marketing and sale of real estate and VOIs and various aspects of its financing operations. On a federal level, the Federal Trade Commission has taken an active regulatory role through the Federal Trade Commission Act, which prohibits unfair or deceptive acts or unfair competition in interstate commerce. In addition, many states have what are known as “Little FTC Acts” that apply to intrastate activity. In addition to the laws applicable to its customer financing and other operations discussed below, Bluegreen is or may be subject to the Fair Housing Act and various other federal statutes and regulations. Bluegreen is also subject to various foreign laws with respect to La Cabana Beach and Racquet Club in Oranjestad, Aruba. In addition, there can be no assurance that in the future, VOIs will not be deemed to be securities subject to regulation as such, which could have a material adverse effect on Bluegreen. There is no assurance that the cost of complying with applicable laws and regulations will not be significant or that we will maintain compliance at all times with all applicable laws, including those discussed below. Any failure to comply with current or future applicable laws or regulations could have a material adverse effect on Bluegreen.

          Bluegreen’s customer financing activities are also subject to extensive regulation, which can include, but are not limited to: the Truth-in-Lending Act and Regulation Z; the Fair Housing Act; the Fair Debt Collection Practices Act; the Equal Credit Opportunity Act and Regulation B; the Electronic Funds Transfer Act and Regulation E; the Home Mortgage Disclosure Act and Regulation C; Unfair or Deceptive Acts or Practices and Regulation AA; the Patriot Act; the Right to Financial Privacy Act; the Gramm-Leach-Bliley Act; the Fair and Accurate Credit Transactions Act; and anti-money laundering laws, among others.

          As a public company, Bluegreen is subject to reporting and other requirements of the Securities Exchange Act of 1934.

          BankAtlantic Bancorp and BFC

          BFC and BankAtlantic Bancorp are unitary savings bank holding companies subject to regulatory oversight. This oversight includes examination and supervision by, and reporting requirements to, the OTS. BFC and BankAtlantic Bancorp are also subject to the reporting and other requirements of the Securities Exchange Act of 1934.

          In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law permanently raising the maximum standard deposit insurance to $250,000 per depositor, for each ownership category as defined by the FDIC. The Act also provides for full deposit insurance coverage on non-interest bearing deposit accounts until December 31, 2012.

          The ability of BankAtlantic to pay dividends or make other distributions to BankAtlantic Bancorp in subsequent periods is subject to regulations and OTS approval and is based upon BankAtlantic’s regulatory capital levels and net income. Under the terms of the Order entered into by BankAtlantic with the OTS during the first quarter of 2011 (“the Bank Order”), BankAtlantic is prohibited from paying dividends to BankAtlantic Bancorp without the prior written non-objection of the OTS. The OTS would not approve any distribution that would cause BankAtlantic to fail to meet its capital requirements or if the OTS believes that a capital distribution by BankAtlantic constitutes an unsafe or unsound action or practice, and there is no assurance that the OTS will approve future capital distributions from BankAtlantic. Accordingly, BankAtlantic Bancorp does not expect to receive cash dividends from BankAtlantic in the foreseeable future. However, BankAtlantic Bancorp may receive dividends from its asset work-out subsidiary upon the monetizing of the subsidiaries’ non-performing loans. There is no assurance that BankAtlantic Bancorp will be able to monetize the loans on acceptable terms, if at all. During the year ended December 31, 2008, BankAtlantic paid $15 million of dividends to BankAtlantic Bancorp. BankAtlantic did not pay dividends to BankAtlantic Bancorp during the years ended December 31, 2010 and 2009.

          BFC did not receive dividends from BankAtlantic Bancorp during the year ended December 31, 2010. Under the terms of the Order entered into by BankAtlantic Bancorp with the OTS during the first quarter of 2011, BankAtlantic Bancorp is restricted from paying dividends on its common stock without the prior written non-objection of the OTS. In

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BFC Financial Corporation
Notes to Consolidated Financial Statements

addition, during February 2009, BankAtlantic Bancorp elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt. BankAtlantic Bancorp is permitted to defer quarterly interest payments for up to 20 consecutive quarters. During the deferral period, BankAtlantic Bancorp is prohibited from paying dividends to its shareholders, including BFC. While BankAtlantic Bancorp can end the deferral period at any time, BankAtlantic Bancorp has indicated that it anticipates that is may continue to defer such interest payments for the foreseeable future.

          BFC, on a parent company only basis, has committed that it will not, without the prior written non-objection of the OTS declare or pay any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter, as discussed further in Note 30. The Company has never paid cash dividends to its common shareholders.

          Pursuant to the terms of the Bank Order, BankAtlantic is required to attain by June 30, 2011 and maintain a tier 1 (core) capital ratio equal to or greater than 8% and a total risk-based capital ratio equal to or greater than 14%. At December 31, 2010, BankAtlantic had a tier 1 (core) capital ratio of 6.22% and a total risk-based capital ratio of 11.72%. During the years ended December 31, 2010 and 2009, BankAtlantic Bancorp Parent Company contributed $28 million and $105 million, respectively, of capital to BankAtlantic. BankAtlantic may not meet the required regulatory capital ratios in the timeframe set forth by the Bank Order or at all.

          BankAtlantic’s actual capital amounts and ratios are presented in the table and are compared to the prompt corrective action (“PCA”) “well capitalized” and the Bank Order capital requirements that BankAtlantic must attain and maintain as of June 30, 2011 (dollars in thousands):

Bank Order

PCA Defined Capital

Actual Well Capitalized Requirements

Amount Ratio Amount Ratio Amount Ratio

As of December 31, 2010

Total risk-based capital
$ 334,601 11.72 % $ 285,541 10.00 % $ 399,758 14.00 %

Tier I risk-based capital
$ 276,362 9.68 % $ 171,325 6.00 % $ 171,325 6.00 %

Tangible capital
$ 276,362 6.22 % $ 66,672 1.50 % $ 66,672 1.50 %

Core capital
$ 276,362 6.22 % $ 222,240 5.00 % $ 355,584 8.00 %

As of December 31, 2009:

Total risk-based capital
$ 422,724 12.56 % $ 336,466 10.00 %

Tier I risk-based capital
$ 357,660 10.63 % $ 201,880 6.00 %

Tangible capital
$ 357,660 7.58 % $ 70,814 1.50 %

Core capital
$ 357,660 7.58 % $ 236,046 5.00 %

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BFC Financial Corporation
Notes to Consolidated Financial Statements

36. Parent Company Financial Information

          The accounting policies of BFC Parent Company are generally the same as those described in the summary of significant accounting policies in Note 1. The Parent Company Condensed Statements of Financial Condition at December 31, 2010 and 2009 and Condensed Statements of Operations and Condensed Statements of Cash Flows for each of the years in the three-year period ended December 31, 2010 are shown below:

PARENT COMPANY CONDENSED STATEMENTS OF FINANCIAL CONDITION
(In thousands)

December 31,

2010 2009

(As Revised)

ASSETS

Cash and cash equivalents
$ 4,958 1,308

Securities available for sale
38,829 18,981

Investment in Woodbridge Holdings, LLC
115,999 197,288

Investment in BankAtlantic Bancorp, Inc.
2,377 47,555

Investment in and advances in other subsidiaries
113 2,376

Notes receivable due from Woodbridge Holdings, LLC
2,012 —

Other assets
1,444 1,121

Total assets
$ 165,732 268,629

LIABILITIES AND EQUITY

Advances from wholly owned subsidiaries
$ 942 818

Other liabilities
10,889 11,699

Total liabilities
11,831 12,517

Redeemable 5% Cumulative Preferred Stock
11,029 11,029

Shareholders’ equity
142,872 245,083

Total liabilities and Equity
$ 165,732 268,629

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PARENT COMPANY CONDENSED STATEMENTS OF OPERATIONS
(In thousands)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Revenues
$ 2,018 1,202 2,489

Expenses
8,586 8,567 11,405

(Loss) before earnings from subsidiaries
(6,568 ) (7,365 ) (8,916 )

Equity in (loss) earnings from Woodbridge Holdings, LLC
(39,368 ) 106,351 (22,758 )

Equity in loss in BankAtlantic Bancorp
(59,100 ) (57,895 ) (56,230 )

Equity in (loss) earnings from other subsidiaries
(2,361 ) (467 ) 15

(Loss) income before income taxes
(107,397 ) 40,624 (87,889 )

Benefit for income taxes
(1,310 ) (517 ) (14,887 )

(Loss) income from continuing operations
(106,087 ) 41,141 (73,002 )

Income (loss) from discontinued operations
2,239 (13,862 ) 4,958

Extraordinary gain, net of tax
— — 9,145

Net (loss) income
(103,848 ) 27,279 (58,899 )

5% Preferred Stock dividends
(750 ) (750 ) (750 )

Net (loss) income allocable to common stock
$ (104,598 ) 26,529 (59,649 )

PARENT COMPANY STATEMENTS OF CASH FLOWS
(In thousands)

For the Years Ended December 31,

2010 2009 2008

(As Revised)

Operating Activities:

Net cash used in operating activities
$ (9,161 ) (6,245 ) (5,508 )

Investing Activities:

Proceeds from the sale of securities available for sale
2,527 — 834

Proceeds from maturities of securities available for sale
38,068 — —

Distribution from subsidiaries
45,085 30,084 633

Additions to property and equipment
(65 ) — (11 )

Purchase of securities
(57,056 ) (1,111 ) —

Acquisition of BankAtlantic Bancorp Class A shares
(15,000 ) (29,888 ) (3,925 )

Net cash provided by (used in) investing activities
13,559 (915 ) (2,469 )

Financing Activities:

Proceeds from issuance of Common Stock upon exercise of stock option
2 — —

Purchase and retirement of the Company’s Class A common stock
— — (54 )

Preferred stock dividends paid
(750 ) (750 ) (750 )

Net cash used in financing activities
(748 ) (750 ) (804 )

Increase (decrease) in cash and cash equivalents
3,650 (7,910 ) (8,781 )

Cash at beginning of period
1,308 9,218 17,999

Cash at end of period
$ 4,958 1,308 9,218

Supplementary disclosure of non-cash investing and financing activities

BFC and Woodbridge Merger related transactions:

Increase in other liabilities
$ — 4,604 —

Increase in BFC’s Class A Common Stock
— 303 —

Increase in additional paid-in capital
— 94,676 —

Decrease in BFC’s non-controlling interest in Woodbridge
— (99,583 ) —

Net increase in shareholders’ equity from the effect of subsidiaries’ capital transactions, net of income taxes
1,760 8,332 2,398

(Decrease) increase in accumulated other comprehensive income, net of taxes
(1,069 ) 527 (3,894 )

Decrease in additional paid in capital from the re-classification of the 5% Preferred Stock to Redeemable Preferred stock
— — 11,029

BFC’s pro rata share of the cumulative effect of accounting changes recognized by Bluegreen
— 485 —

Net decrease in shareholders’ equity resulting from cumulative effect of change in accounting principle
(1,496 ) — —

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          On September 21, 2009, we consummated our merger with Woodbridge, pursuant to which Woodbridge became a wholly-owned subsidiary of BFC. For additional information see Note 3.

          During the year ended December 31, 2009 and 2008, BFC received dividends from BankAtlantic Bancorp of approximately $84,000 and $208,000, respectively. These dividends are included in operating activities in the Parent Company Condensed Statements of Cash Flow. BankAtlantic Bancorp did not pay dividends to BFC during 2010.

          During the years ended December 31, 2010 and 2009, BFC received distributions from Woodbridge totaling $45 million and $30 million, respectively.

          At December 31, 2010 and 2009, securities available for sale included approximately $17.6 million and $1.1 million, respectively, of readily marketable securities, as well as our investment in Benihana’s Convertible Preferred Stock of $21.1 million and $17.8 million, respectively.

          In December 2008, BFC Parent Company recorded an other-than-temporary impairment charge of $3.6 million on its investment in Benihana Convertible Preferred which is included in expenses in the Parent Company Condensed Statements of Operations. See Note 8 for further information.

          Approximately $4.7 million is included in other liabilities for the years ended December 31, 2010 and 2009 representing amounts due in connection with the settlement of a class action litigation that arose in connection with exchange transactions that BFC entered into in 1989 and 1991. BFC is required to repay this obligation as settlement holders submit their claims to BFC. During the years ended December 31, 2010, 2009 and 2008, the Company paid claims of approximately $24,600, $59,000 and $10,300, respectively, related to this obligation.

37. Litigation

BFC and its Wholly Owned Subsidiaries

Appraisal Rights

          Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. One Dissenting Holder which held approximately 400,000 shares of Woodbridge’s Class A Common Stock has withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. The appraisal rights litigation thereafter commenced and is currently ongoing. The outcome of the letigation is uncertain and there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

National Bank of South Carolina v. Core Communities of South Carolina, LLC, et al., South Carolina Court of Common Pleas, Fourteenth Judicial Circuit

On January 13, 2010, National Bank of South Carolina filed a complaint in the South Carolina Court of Common Pleas, Fourteenth Judicial Circuit, to commence foreclosure proceedings related to property at Tradition Hilton Head which

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served as collateral under a note and mortgage executed and delivered by Core South Carolina, LLC, a wholly owned subsidiary of Core, in favor of the lender. Core was secondarily liable as a guarantor for the loan, and Synovus Bank (successor by merger to National Bank of South Carolina) commenced an action to enforce Core’s guarantee. With Core’s concurrence, the property which served as collateral for the loan was placed under the control of a court-appointed receiver. During December 2010, Core and Core South Carolina, on the one hand, and Synovus Bank, on the other hand, executed agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, which resolved the pending litigation and foreclosure disputes between them. Pursuant to the agreements, (i) Core South Carolina transferred to Synovus Bank all of Core South Carolina’s right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property which had a book value as of September 30, 2010 of approximately $1.0 million, and (ii) Synovus Bank released Core and Core South Carolina from any claims arising from or relating to the loan.

Investors Warranty of America, Inc. v. Core Communities of South Carolina, LLC and Core Communities, LLC, et. al., Circuit Court, Jasper County, South Carolina, and

Investors Warranty of America, Inc. v. Core Communities, LLC and Horizons Acquisition 5, LLC, Circuit Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida

On April 7, 2010, Investors Warranty of America filed a complaint with the Circuit Court of Jasper County, South Carolina to commence foreclosure proceedings related to property at Tradition Hilton Head which served as collateral for a loan to Core and its subsidiary with a balance of approximately $27.2 million at March 31, 2010. On April 8, 2010, Investors Warranty of America filed a complaint with the Circuit Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida to commence foreclosure proceedings related to property at Tradition, Florida which served as collateral for a loan to Core and its subsidiary with a balance of approximately $86.5 million at March 31, 2010. Investors Warranty of America subsequently assigned and conveyed its interests in both the Florida and South Carolina loan facilities to PSL Acquisitions, LLC (“PSLA”). On November 8, 2010, Core and its applicable subsidiaries, on the one hand, and PSLA, on the other hand, executed an agreement to resolve the disputes between them. Pursuant to the agreement, Core and its subsidiaries (i) pledged additional collateral to PSLA consisting of membership interests in certain subsidiaries of Core, (ii) granted security interests in the acreage owned by the subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land, (iii) agreed to an the amendment of the complaint related to the Florida foreclosure action to include this additional collateral and (iv) agreed to an entry into consensual judgments of foreclosure in both foreclosure actions. PSLA agreed not to enforce a deficiency judgment against Core and during February 2011, has released Core, BFC and each of their affiliates from any claims arising from or relating to the loans.

AmTrust Bank v. Woodbridge Holdings, LLC and Carolina Oak Homes, LLC, United States District Court for the Southern District of Florida

          During November 2009, AmTrust Bank filed a two count complaint against Woodbridge and Carolina Oak, alleging default under a promissory note and breach of a guaranty related to an approximately $37.2 million loan that is collateralized by property owned by Carolina Oak. During December 2009, the OTS closed AmTrust and appointed the FDIC as receiver. On March 3, 2010, the FDIC filed a motion to substitute as the real party in interest and filed a notice of removal. The FDIC subsequently sold the loan to an investor group. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.

Class Action Litigation

          On January 25, 2008, plaintiff Robert D. Dance filed a purported class action complaint as a putative purchaser of securities against Woodbridge and certain of its officers and directors, asserting claims under the federal securities law and seeking damages. This action was filed in the United States District Court for the Southern District of Florida

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and is captioned Dance v. Levitt Corp. et al., No. 08-CV-60111-DLG. The securities litigation purports to be brought on behalf of all purchasers of Woodbridge’s securities beginning on January 31, 2007 and ending on August 14, 2007. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by issuing a series of false and/or misleading statements regarding financial results, prospects and condition.

Surety Bond Claim (Westchester Fire Insurance Company v. City of Brooksville)

     This litigation arose from a dispute regarding liability under two performance bonds for infrastructure issued in connection with a plat issued by the City of Brooksville for a single family housing project that was not commenced. The project had been abandoned by Levitt and Sons prior to its bankruptcy filing as non-viable as a consequence of the economic downturn and, in connection with the Levitt and Sons bankruptcy, the mortgagee, Key Bank, was permitted by agreement to initiate and conclude a foreclosure leading to the acquisition of the property by Key Bank’s subsidiary. The City of Brooksville contended that, notwithstanding that the development had not proceeded and was not likely to proceed at any known time in the future, it was entitled to recover the face amount of the bonds in the approximate amount of $5.4 million. Woodbridge filed a suit for declaratory judgment (in the name of its surety, Westchester) against the City of Brooksville contending that the obligation under the bonds had terminated. In August 2010, Woodbridge was granted a motion for summary judgment. Subsequent to the motion being granted, the municipality appealed the decision.

Bluegreen

Tennessee Tax Audit

In 2005, the State of Tennessee Audit Division (the “Division”) audited certain subsidiaries within Bluegreen Resorts for the period from December 1, 2001 through December 31, 2004. On September 23, 2006, the Division issued a notice of assessment for approximately $652,000 of accommodations tax based on the use of Bluegreen Vacation Club accommodations by Bluegreen Vacation Club members who became members through the purchase of non-Tennessee property. Bluegreen believes the attempt to impose such a tax is contrary to Tennessee law and have vigorously opposed, and intend to continue to vigorously oppose, such assessment by the Division. An informal conference was held in December 2007 to discuss this matter with representatives of the Division. No formal resolution of the issue was reached during the conference and no further action has to date been initiated by the State of Tennessee. While the timeshare industry has been successful in challenging the imposition of sales taxes on the use of accommodations by timeshare owners, there is no assurance that we will be successful in contesting the current assessment.

Destin, Florida Deposit Dispute Lawsuit

In Cause No. 2006-Ca-3374, styled Joseph M. Scheyd, Jr., P.A. vs. Bluegreen Vacations Unlimited, Inc.; Hubert A. Laird; and MSB of Destin, Inc., in the Circuit Court of the First Judicial Circuit in and for Okaloosa County, Florida, the Plaintiff as escrow agent brought an interpleader action seeking a determination as to whether Bluegreen, as purchaser, or Hubert A. Laird and MSB of Destin, Inc. as seller, were entitled to the $1.4 million escrow deposit being maintained with the escrow agent pursuant to a purchase and sale contract for real property located in Destin, Florida. Both Bluegreen and the seller brought cross-claims for breach of the underlying purchase and sale contract. The seller’s complaint, as amended, includes a fraud allegation, contends that Bluegreen failed to perform under the terms of the purchase and sale contract and claims entitlement to the full amount in escrow. Bluegreen maintains that its decision not to close on the purchase of the property was proper under the terms of the purchase and sale contract and therefore are entitled to a return of the full escrow deposit. A trial date of May 31, 2011 has been set for this matter. Bluegreen believes the seller’s allegations are without merit and intends to vigorously defend this claim.

Inquiry into Consumer Matters by the Office of the Florida Attorney General

The Office of the Attorney General for the State of Florida (the “AGSF”) has advised Bluegreen that it has accumulated a number of consumer complaints since 2005 against Bluegreen and/or its affiliates related to its timeshare sales and marketing, and has requested that Bluegreen respond on a collective basis as to how it had or would resolve the complaints. Bluegreen has determined that many of these complaints were previously addressed and/or resolved by Bluegreen. The AGSF has also requested that Bluegreen enter into a written agreement in which the parties establish a process and timeframe for determining consumer eligibility for relief (including where applicable monetary restitution, if any). Bluegreen does not believe this matter will have a material effect on Bluegreen’s results of operations, financial condition or its sales and marketing activities in Florida.

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Notes to Consolidated Financial Statements

Other Matters

In addition to the matters disclosed above, from time to time in the ordinary course of business Bluegreen receives individual consumer complaints, as well as complaints received through regulatory and consumer agencies, including Offices of State Attorney Generals. Bluegreen takes these matters seriously and attempts to resolve any such issues as they arise. Bluegreen’s goal is to cooperate fully with regulatory and consumer agencies with respect to any inquiries it receives.

Mountain Lakes Mineral Rights

Bluegreen Southwest One, L.P., (“Southwest”), a subsidiary of Bluegreen Corporation, is the developer of the Mountain Lakes subdivision in Texas. In Cause No. 28006, styled Betty Yvon Lesley et a1. v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. et al., in the 266th Judicial District Court, Erath County, Texas, the plaintiffs filed a declaratory judgment action against Southwest seeking to develop their reserved mineral interests in, on and under the Mountain Lakes subdivision. The plaintiffs’ claims are based on property law, oil and gas law, contract and tort theories. The property owners association and some of the individual landowners have filed cross actions against Bluegreen, Southwest and individual directors of the property owners association related to the mineral rights and certain amenities in the subdivision as described below. On January 17, 2007, the court ruled that the restrictions placed on the development that prohibited oil and gas production and development were invalid and not enforceable as a matter of law, that such restrictions did not prohibit the development of the plaintiffs’ prior reserved mineral interests and that Southwest breached its duty to lease the minerals to third parties for development. The court further ruled that Southwest was the sole holder of the right to lease the minerals to third parties. The order granting the plaintiffs’ motion was severed into a new cause styled Cause No. 28769 Betty Yvon Lesley et a1. v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. et al. in the 266th Judicial District Court, Erath County, Texas. Southwest appealed the trial court’s ruling. On January 22, 2009, in Bluegreen Southwest One, L.P. et al. v. Betty Yvon Lesley et al., in the 11th Court of Appeals, Eastland, Texas, the Appellate Court reversed the trial court’s decision and ruled in Southwest’s favor and determined that all executive rights were owned by Southwest and then transferred to the individual property owners in connection with the sales of land. All property owner claims were decided in favor of Southwest. It was also decided that Southwest did not breach a fiduciary duty to the plaintiffs as an executive rights holder. On May 14, 2009, the plaintiffs filed an appeal with the Texas Supreme Court asking the Court to reverse the Appellate Court’s decision in favor of Southwest. On September 15, 2010 the Court heard oral arguments on whether to reverse or affirm the Appellate Court’s decision. No information is available as to when the Texas Supreme Court will render a decision on the appeal.

Marshall, et al. Lawsuit Regarding Community Amenities

On September 14, 2009, in Cause No. 09-09-08763-CV, styled William Marshall and Patricia Marshall, et al. v Bluegreen Southwest One, L.P., Bluegreen Southwest Land, Inc., Bluegreen Corporation, Stephen Davis, and Bluegreen Communities of Texas, L.P., in the 284^th Judicial District of Montgomery County, Texas, the plaintiffs brought suit alleging fraud, negligent misrepresentation, breach of contract, and negligence with regards to the Ridgelake Shores subdivision, developed in Montgomery County, Texas, specifically, the usability of the lakes within the community for fishing and sporting and the general level of quality at the community. The lawsuit sought material damages and the payment of costs to remediate the lake. On September 10, 2010, a tentative settlement of this matter was reached, pursuant to which Bluegreen agreed to pay $0.3 million to provide for improvements to the fish habitat and general usability of the lake environment. The settlement agreement has since been fully executed and as of December 31, 2010, Bluegreen has paid $0.2 million of the agreed upon settlement payment. Bluegreen has accrued the remaining $0.1 million due. Improvements to the lake are ongoing and Bluegreen will disburse the remaining funds as they are needed to complete the improvements.

Schawrz, et al. Lawsuit Regarding Community Amenities

On September 18, 2008, in Cause No. 2008-5U-CV-1358-WI, styled Paul A. Schwarz and Barbara S. Schwarz v. Bluegreen Communities of Georgia, LLC and Bluegreen Corporation, in the United States District Court for the

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Notes to Consolidated Financial Statements

Southern District of Georgia, Brunswick Division, the plaintiffs brought suit alleging fraud and misrepresentation with regards to the construction of a marina at the Sanctuary Cove subdivision located in Camden County, Georgia. The plaintiffs subsequently withdrew the fraud and misrepresentation counts and filed a count alleging violation of racketeering laws, including mail fraud and wire fraud. On January 25, 2010, the plaintiffs filed a second complaint seeking approval to proceed with the lawsuit as a class action on behalf of more than 100 persons claimed to have been harmed by the alleged activities in a similar manner. Bluegreen has filed a response with the Court in opposition to class certification. No decision has yet been made by the Court as to whether they will certify a class. Bluegreen denies the allegations and intend to vigorously defend the lawsuit.

Community Cable Service, LLC Lawsuit

On June 3, 2010, in Case No. 16-2009-CA-008028, styled Community Cable Service, LLC v. Bluegreen Communities of Georgia, LLC and Sanctuary Cove at St. Andrews Sound Community Association, Inc., a/k/a Sanctuary Cove Home Developers Association, Inc., in the Circuit Court of the Fourth Judicial Circuit in and for Duval County, Florida, the plaintiffs filed suit alleging breach by the Bluegreen Communities of Georgia and the community association of a bulk cable TV services contract at Bluegreen’s Sanctuary Cove single family residential community being developed in Waverly, Georgia. In its complaint, the plaintiffs alleged that approximately $0.2 million in unpaid bulk cable fees are due from the defendants, and that the non-payment of fees will continue to accrue on a monthly basis. Bluegreen and the community association allege incomplete performance under the contract by the plaintiffs and that the cable system installed was inferior and did not comply with the requirements of the contract. The case went to mediation on September 20, 2010, but no resolution was reached. A trial date has been set for May 5, 2011 in this matter. Bluegreen intends to vigorously defend the lawsuit.

38. Certain Relationships and Related Party Transactions

          BFC is the controlling shareholder of BankAtlantic Bancorp and Bluegreen. Woodbridge Holdings Corporation became a wholly owned subsidiary of BFC upon consummation of the merger between Woodbridge and BFC on September 21, 2009. Prior to the merger, BFC held an approximately 59% voting interest in Woodbridge. BFC also has a direct non-controlling interest in Benihana. Shares of BFC’s Class A and Class B common stock representing a majority of BFC’s total voting power are owned or controlled by the Company’s Chairman, President and Chief Executive Officer, Alan B. Levan, and by the Company’s Vice Chairman, John E. Abdo, both of whom are also directors of Bluegreen and Benihana, and executive officers and directors of BankAtlantic Bancorp and BankAtlantic.

          The following table presents related party transactions relating to the shared service arrangements between BFC, BankAtlantic Bancorp and Bluegreen for the years ended December 31, 2010, 2009 and 2008. Amounts related to BankAtlantic Bancorp and BankAtlantic for all periods, and Bluegreen after we acquired a controlling interest in Bluegreen during November 2009 were eliminated in consolidation (in thousands).

For the Year Ended December 31, 2010

BFC BankAtlantic Bancorp Bluegreen

Shared service income (expense)
(a ) $ 2,565 (2,105 ) (460 )

Facilities cost and information technology
(b ) $ (544 ) 484 60

For the Year Ended December 31, 2009

BFC BankAtlantic Bancorp Bluegreen

Shared service income (expense)
(a ) $ 2,342 (1,805 ) (537 )

Facilities cost and information technology
(b ) $ (553 ) 479 54

For the Year Ended December 31, 2008

BFC BankAtlantic Bancorp Bluegreen

Shared service income (expense)
(a ) $ 2,022 (1,593 ) (429 )

Facilities cost and information technology
(b ) $ (440 ) 361 79

(a) Pursuant to the terms of shared service agreements between BFC and BankAtlantic Bancorp, subsidiaries of BFC provide human resources, risk management, investor relations, executive office administration and other services to BankAtlantic Bancorp. Additionally, BFC provides certain risk management and administrative

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services to Bluegreen. The costs of shared services are allocated based upon the usage of the respective services.

(b) As part of the shared service arrangement, BFC pays BankAtlantic and Bluegreen for the cost of office facilities utilized by BFC and its shared service operations. BFC also pays BankAtlantic for information technology related services pursuant to a separate agreement. BankAtlantic received approximately $154,000, $160,000 and $90,000 under the agreement during the years ended December 31, 2010, 2009 and 2008, respectively.

          As of December 31, 2010 and 2009, the Company had cash and cash equivalents accounts at BankAtlantic with balances of approximately $1.8 million and $20.9 million, respectively. These accounts were on the same general terms as deposits made by unaffiliated third parties. Additionally, during 2009, the Company invested funds through the Certificate of Deposit Account Registry Service (“CDARS”) program at BankAtlantic, which facilitates the placement of funds into certificates of deposits issued by other financial institutions in increments of less than the standard FDIC insurance maximum to insure that both principal and interest are eligible for full FDIC insurance coverage. At December 31, 2009, the Company had $7.7 million invested through the CDARS program at BankAtlantic. The Company did not have any funds invested through the CDARS program at BankAtlantic at December 31, 2010. The aggregate interest income recognized by the Company in connection with these funds held at BankAtlantic was approximately $1,000, $39,000 and $80,000 for the year ended December 31, 2010, 2009 and 2008, respectively.

          In June 2010, BankAtlantic Bancorp and BankAtlantic entered into a real estate advisory service agreement with BFC for assistance relating to the work-out of loans and the sale of real estate owned. Under the terms of the agreement, BFC receives a monthly fee of $12,500 from each of BankAtlantic and BankAtlantic Bancorp and, if BFC’s efforts result in net recoveries of any non-performing loan or the sale of real estate owned, BFC will receive a fee equal to 1% of the net value recovered. During the year ended December 31, 2010, BFC was paid an aggregate of approximately $787,000 of real estate advisory service fees under this agreement.

          On June 28, 2010, BFC loaned approximately $8.0 million to BankAtlantic Bancorp, and BankAtlantic Bancorp executed a promissory note in favor of BFC with a maturity date of July 30, 2010. The note provided for payment either in cash or shares of BankAtlantic Bancorp’s Class A Common Stock, depending on the results of BankAtlantic Bancorp’s rights offering and the number of shares allocable to BFC pursuant to its exercise of subscription rights in the rights offering. In July 2010, BankAtlantic Bancorp satisfied the promissory note in full through the issuance of 5,302,816 shares of BankAtlantic Bancorp’s Class A Common Stock to BFC. These shares were in addition to the 4,697,184 shares previously issued to BFC in the rights offering.

          The Company leases office space to Pizza Fusion for approximately $68,000 annually pursuant to a month-to-month lease which commenced in September 2008. During the years ended December 31, 2010, 2009 and 2008, Pizza Fusion paid approximately $48,000, $68,000 and $20,000, respectively, under the lease agreement.

          During the years ended December 31, 2010 and 2009, Bluegreen reimbursed the Company and Woodbridge approximately $1.4 million and $2.4 million, respectively, for certain expenses incurred in assisting Bluegreen in its efforts to explore potential additional sources of liquidity. Additionally, during the years ended December 31, 2010 and 2009, Bluegreen paid Snapper Creek, a subsidiary of BFC, approximately $1.3 million and $500,000, respectively, for a variety of management advisory services.

          Beginning in 2009, Bluegreen entered into a land lease with Benihana, who constructed and operates one of its restaurants on Bluegreen’s land parcel. During each of 2010 and 2009 Bluegreen received lease payments from Benihana of approximately $0.1 million.

          During December 2009, Snapper Creek was engaged by Benihana to provide certain management, financial advisory and other consulting services. For the year ended December 31, 2010, the consulting fees payable to Snapper Creek under this arrangement were approximately $650,000. The engagement ceased during November 2010. During 2010, Benihana engaged Risk Management Services (“RMS”), a wholly-owned subsidiary of BFC, to provide insurance and risk management services. For the year ended December 31, 2010, RMS received approximately $45,000 under this arrangement. The engagement ceased during January 2011.

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Notes to Consolidated Financial Statements

          In prior periods, BankAtlantic Bancorp issued options to purchase shares of BankAtlantic Bancorp’s Class A common stock to employees of BFC. Additionally, certain employees of BankAtlantic Bancorp have transferred to affiliate companies and BankAtlantic Bancorp has elected, in accordance with the terms of BankAtlantic Bancorp’s stock option plans, not to cancel the stock options held by those former employees. There were no options exercised by former BankAtlantic Bancorp employees during the years ended December 31, 2010, 2009 or 2008. BankAtlantic Bancorp from time to time also issues options and restricted stock awards to BFC employees that perform services for BankAtlantic Bancorp. During the year ended December 31, 2010, BankAtlantic Bancorp granted 75,000 restricted Class A common stock awards to BFC employees that perform services to BankAtlantic Bancorp. These stock awards vest pro-rata over a four year period. BankAtlantic Bancorp recorded $77,000, $50,000 and $26,000 of expenses relating to the awards described in this paragraph for the years ended December 31, 2010, 2009 and 2008, respectively.

          Options and non-vested restricted stock outstanding to employees of BFC consisted of the following as of December 31, 2010:

BankAtlantic Bancorp

Class A Weighted

Common Average

Stock Price

Options outstanding
47,761 $ 55.26

Non-vested restricted stock
75,000 —

          BankAtlantic Bancorp and its subsidiaries utilized certain services of Ruden, McClosky, Smith, Schuster & Russell, P.A. (“Ruden, McClosky”). Prior to his retirement in 2006, Bruno DiGiulian, a director of BankAtlantic Bancorp, was of counsel to Ruden, McClosky. Fees aggregating $181,000, $55,000, and $75,000 were paid by BankAtlantic Bancorp to Ruden, McClosky during the years ended December 31, 2010, 2009 and 2008, respectively. During the years ended December 31, 2010, 2009 and 2008, BFC paid Ruden, McClosky fees aggregating $203,000, $484,000 and $905,000, respectively.

          Certain of the Company’s affiliates, including its executive officers, have independently made investments with their own funds in both public and private entities that the Company sponsored in 2001 and in which it holds investments.

          Florida Partners Corporation owns 133,314 shares of BFC’s Class B Common Stock and 1,270,294 shares of BFC’s Class A Common Stock. Alan B. Levan may be deemed to be the controlling shareholder of Florida Partners Corporation, and is also a member of its Board of Directors.

39. Earnings (Loss) per Share

          The Company has two classes of common stock outstanding. The two-class method is not presented in the table below because the Company’s capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes. The number of options considered outstanding shares for diluted earnings per share is based upon application of the treasury stock method to the options outstanding as of the end of the period.

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Notes to Consolidated Financial Statements

          The following reconciles the numerators and denominators of the basic and diluted earnings (loss) per share computation for the years ended December 31, 2010, 2009 and 2008:

For the Years Ended December 31,

2010 2009 2008

(In thousands, except per share data) (As Revised)

Basic (loss) earnings per common share

Numerator:

Loss from continuing operations
$ (182,152 ) (81,401 ) (347,999 )

Less: Noncontrolling interests loss from continuing operations
(76,065 ) (122,542 ) (274,997 )

(Loss) income attributable to BFC
(106,087 ) 41,141 (73,002 )

Preferred stock dividends
(750 ) (750 ) (750 )

(Loss) income allocable to common stock
(106,837 ) 40,391 (73,752 )

Discontinued operations
1,965 (11,931 ) 19,388

Less: Noncontrolling interests (loss) income — discontinued operations
(274 ) 1,931 14,430

Discontinued operations attributable to BFC
2,239 (13,862 ) 4,958

Extraordinary gain attributable to BFC
— — 9,145

Net (loss) income allocable to common shareholders
$ (104,598 ) 26,529 (59,649 )

Denominator:

Basic weighted average number of common shares outstanding
75,379 57,235 45,097

Basic (loss) earnings per common share:

(Loss) earnings per share from continuing operations
$ (1.42 ) 0.71 (1.63 )

Earnings (loss) per share from discontinued operations
0.03 (0.24 ) 0.11

Earnings per share from extraordinary gain
— — 0.20

Basic earnings (loss) per share
$ (1.39 ) 0.47 (1.32 )

Diluted earnings (loss) per common share:

Numerator:

(Loss) income allocable to common stock after assumed dilution
(106,837 ) 40,391 (73,752 )

Discontinued operations allocable to common stock after assumed dilution
2,239 (13,862 ) 4,958

Net income (loss) allocable to common stock after assumed dilution
$ (104,598 ) 26,529 (59,649 )

Denominator

Diluted weighted average number of common shares outstanding
75,379 57,235 45,097

Diluted (loss) earnings per share

Earnings (loss) per share from continuing operations
$ (1.42 ) 0.71 (1.63 )

Earnings (loss) per share from discontinued operations
0.03 (0.24 ) 0.11

Earnings per share from extraordinary gain
— — 0.20

Diluted earnings (loss) per share
$ (1.39 ) 0.47 (1.32 )

          Options to acquire 2,492,176, 2,530,983 and 1,797,960 shares of common stock were anti-dilutive and not included in the calculation of diluted income (loss) per share for the years ended December 31, 2010, 2009 and 2008, respectively.

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40. Selected Quarterly Results (Unaudited)

          The following tables summarize the quarterly results of operations for the years ended December 31, 2010 and 2009 (in thousands except for per share data):

First First Second Second Third Third Fourth

2010 Quarter Quarter Quarter Quarter Quarter Quarter Quarter Total

(As Previously (As Previously (As Previously

(As-Revised) Reported) (As-Revised) Reported) (As-Revised) Reported)

Revenues (1)
$ 156,437 151,991 189,036 183,252 180,757 183,904 156,446 682,676

Costs and expenses (2)
194,066 192,464 229,715 229,109 221,116 224,576 233,738 878,635

(37,629 ) (40,473 ) (40,679 ) (45,857 ) (40,359 ) (40,672 ) (77,292 ) (195,959 )

(Loss) gain on settlement of Investment in subsidiary
— — (1,135 ) (1,135 ) — — 158 (977 )

Gain on extinguishment of debt
— — — — — — 13,049 13,049

Equity in earnings (loss) from unconsolidated affiliates
193 193 276 276 317 317 (1,637 ) (851 )

Other income
438 438 1,199 1,199 498 498 556 2,691

(Loss) income from continuing operations before income taxes
(36,998 ) (39,842 ) (40,339 ) (45,517 ) (39,544 ) (39,857 ) (65,166 ) (182,047 )

Less: (Benefit) provision for income taxes (3)
(3,831 ) (4,591 ) 2,856 392 (2,632 ) (996 ) 3,712 105

Loss from continuing Operations
(33,167 ) (35,251 ) (43,195 ) (45,909 ) (36,912 ) (38,861 ) (68,878 ) (182,152 )

Discontinued operations, net of income tax
(249 ) (249 ) 2,714 2,714 — — (500 ) 1,965

Net loss
(33,416 ) (35,500 ) (40,481 ) (43,195 ) (36,912 ) (38,861 ) (69,378 ) (180,187 )

Less: Net loss attributable to noncontrolling interests (4)
(13,320 ) (14,665 ) (25,219 ) (27,015 ) (12,091 ) (11,239 ) (25,709 ) (76,339 )

Net loss attributable to BFC
(20,096 ) (20,835 ) (15,262 ) (16,180 ) (24,821 ) (27,622 ) (43,669 ) (103,848 )

Preferred Stock dividends
(188 ) (188 ) (187 ) (187 ) (188 ) (188 ) (187 ) (750 )

Net loss allocable to common stock
$ (20,284 ) (21,023 ) (15,449 ) (16,367 ) (25,009 ) (27,810 ) (43,856 ) (104,598 )

Basic Earnings (Loss) Per Common Share

Loss per share from continuing operations
$ (0.27 ) (0.28 ) (0.24 ) (0.26 ) (0.33 ) (0.37 ) (0.58 ) (1.42 )

Earnings per share from discontinued operations
— — 0.04 0.04 — — — 0.03

Net loss per common share
$ (0.27 ) (0.28 ) (0.20 ) (0.22 ) (0.33 ) (0.37 ) (0.58 ) (1.39 )

Diluted Earnings (Loss) per Common Share

Loss per share from continuing operations
$ (0.27 ) (0.28 ) (0.24 ) (0.26 ) (0.33 ) (0.37 ) (0.58 ) (1.42 )

Earnings per share from discontinued operations
— — 0.04 0.04 — — — 0.03

Net loss per common share
$ (0.27 ) (0.28 ) (0.20 ) (0.22 ) (0.33 ) (0.37 ) (0.58 ) (1.39 )

Basic weighted average number of common shares outstanding
75,376 75,376 75,379 75,379 75,381 75,381 75,381 75,379

Diluted weighted average number of common and common equivalent shares outstanding
75,376 75,376 75,379 75,379 75,381 75,381 75,381 75,379

1) Includes corrections related to the provision for loan losses and recognition of interest income in accordance with the accounting guidance for Loans and Debt Securities with Deteriorated Credit Quality for the Bluegreen acquired notes receivable. These corrections are as follows (a) a $4.4 million increase to revenue for the quarter ended March 31, 2010 (b) a $5.8 million increase to revenue for quarter ended June 30, 2010 and (c) a $3.1 million decrease to revenue for the quarter ended September 30, 2010.

2) Includes certain corrections related to the interest rates used in the calculation of interest expense on defaulted notes payable at Core Communities and Carolina Oak and revisions related to the subsequent amortization from the measurement period adjustments of real estate inventory and certain contracts. These adjustments resulted in changes to costs and expenses by the following: (a) a $1.6 million increase for the quarter ended March 31, 2010 (b) a $606,000 increase for the quarter ended June 30, 2010 and (c) a decrease of $3.5 million for the quarter ended September 30, 2010.

3) Includes tax adjustments as they relate to the corrections noted above and the recognition of income tax benefits associated with unrealized gains in accumulated other comprehensive income at BankAtlantic Bancorp and BFC. The net adjustments are as follows: (a) a $760,000 decrease in tax benefit for the quarter ended March 31, 2010 (b) a $2.5 million increase in tax provision for the quarter ended June 30, 2010 and (c) a $1.6 million increase in tax benefit for the quarter ended September 30, 2010.

4) As a result of the revisions noted above, the net loss attributable to noncontrolling interest changed by the following: (a) a $1.3 million decrease for the quarter ended March 31, 2010 (b) a $1.8 million decrease for the quarter ended June 30, 2010 and (c) an $852,000 increase for the quarter ended September 30, 2010.

For the Six Months Ended For the Nine Months Ended

2010 June 30, 2010 September 30, 2010

(As Previously (As Previously

(As Revised) Reported) (As-Revised) Reported)

Revenues (1)
$ 345,473 335,243 526,230 519,147

Costs and expenses (2)
423,781 421,573 644,897 646,149

(78,308 ) (86,330 ) (118,667 ) (127,002 )

Loss on settlement of investment in subsidiary
(1,135 ) (1,135 ) (1,135 ) (1,135 )

Equity in earnings from unconsolidated affiliates
469 469 786 786

Other income
1,637 1,637 2,135 2,135

Loss from continuing operations before income taxes
(77,337 ) (85,359 ) (116,881 ) (125,216 )

Less: Benefit for income taxes (3)
(975 ) (4,199 ) (3,607 ) (5,195 )

Loss from continuing operations
(76,362 ) (81,160 ) (113,274 ) (120,021 )

Discontinued operations
2,465 2,465 2,465 2,465

Net loss
(73,897 ) (78,695 ) (110,809 ) (117,556 )

Less: Net loss attributable to noncontrolling interests (4)
(38,539 ) (41,680 ) (50,630 ) (52,919 )

Net loss attributable to BFC
(35,358 ) (37,015 ) (60,179 ) (64,637 )

Preferred Stock dividends
(375 ) (375 ) (563 ) (563 )

Net loss allocable to common stock
$ (35,733 ) (37,390 ) (60,742 ) (65,200 )

Basic (Loss) Earnings per Common Share

Loss per share from continuing operations
$ (0.50 ) (0.53 ) (0.84 ) (0.90 )

Earnings per share from discontinued operations
0.03 0.03 0.03 0.03

Net loss per common share
$ (0.47 ) (0.50 ) (0.81 ) (0.87 )

Diluted (Loss) Earnings per Common Share

Loss per share from continuing operations
$ (0.50 ) (0.53 ) (0.84 ) (0.90 )

Earnings per share from discontinued operations
0.03 0.03 0.03 0.03

Net loss per common share
$ (0.47 ) (0.50 ) (0.81 ) (0.87 )

Basic weighted average number of common shares outstanding
75,378 75,378 75,379 75,379

Diluted weighted average number of common and common equivalent shares outstanding
75,378 75,378 75,379 75,379

1) Includes corrections related to the provision for loan losses and recognition of interest income in accordance with the accounting guidance for Loans and Debt Securities with Deteriorated Credit Quality for the Bluegreen acquired notes receivable. These corrections are as follows: (a) a $10.2 million increase to revenue for the six months ended June 30, 2010 and (b) a $7.1 million increase to revenue for the nine months ended September 30, 2010.

2) Includes certain corrections related to the interest rates used in the calculation of interest expense on defaulted notes payable at Core Communities and Carolina Oak and revisions related to the subsequent amortization from the measurement period adjustments of real estate inventory and certain contracts. These adjustments resulted in changes to costs and expenses by the following: (a) a $2.2 million increase for the six months ended June 30, 2010 and (b) a $1.3 million decrease for the nine months ended September 30, 2010.

3) Includes tax adjustments as they relate to the corrections noted above and the recognition of income tax benefits associated with unrealized gains in accumulated other comprehensive income at BankAtlantic Bancorp and BFC. The net adjustments are as follows: (a) a $3.2 million decrease in tax benefit for the six months ended June 30, 2010 and (b) a $1.6 million decrease in tax benefit for the nine months ended September 30, 2010.

4) As a result of the revisions noted above, the net loss attributable to noncontrolling interest changed by the following: (a) $3.1 million decrease for the six months ended June 30, 2010 and (b) a $2.3 million decrease for the nine months September 30, 2010.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

First Second Third Fourth Fourth

2009 Quarter Quarter Quarter Quarter Quarter Total

(As Revised) (As Previously Reported) (As Revised)

Revenues (1)
$ 98,027 91,492 90,590 128,257 125,886 408,366

Costs and expenses
155,504 142,690 189,128 293,440 293,037 780,762

(57,477 ) (51,198 ) (98,538 ) (165,183 ) (167,151 ) (372,396 )

Gain on bargain purchase of Bluegreen (2)
— — — 182,849 183,138 182,849

Gain (loss) on settlement of investment in Woodbridge’s subsidiary
40,369 — — (10,690 ) (10,690 ) 29,679

Equity in earnings from unconsolidated affiliates
6,495 10,755 12,213 3,918 3,918 33,381

Impairment of unconsolidated affiliates
(20,401 ) — (10,780 ) — — (31,181 )

Impairment of investments
(2,396 ) — — — — (2,396 )

Investment gains
— — — 6,654 6,654 6,654

Other income
981 778 766 584 584 3,109

(Loss) income from continuing operations before income taxes
(32,429 ) (39,665 ) (96,339 ) 18,132 16,453 (150,301 )

Less: Provision (benefit) for income taxes (3)
— — 3 (68,903 ) (67,221 ) (68,900 )

(Loss) income from continuing operations
(32,429 ) (39,665 ) (96,342 ) 87,035 83,674 (81,401 )

Discontinued operations
3,397 139 (1,367 ) (14,100 ) (14,100 ) (11,931 )

Net (loss) income
(29,032 ) (39,526 ) (97,709 ) 72,935 69,574 (93,332 )

Less: Net loss attributable to noncontrolling interests (4)
(18,629 ) (26,617 ) (43,697 ) (31,668 ) (33,471 ) (120,611 )

Net (loss) income attributable to BFC
(10,403 ) (12,909 ) (54,012 ) 104,603 103,045 27,279

Preferred Stock dividends
(188 ) (187 ) (188 ) (187 ) (187 ) (750 )

Net (loss) income allocable to common stock
$ (10,591 ) (13,096 ) (54,200 ) 104,416 102,858 26,529

Basic Earnings (Loss) per Common Share

(Loss) earnings per share from continuing operations
$ (0.26 ) (0.29 ) (1.08 ) 1.33 1.32 0.71

Earnings (loss) per share from discontinued operations
0.03 — (0.01 ) (0.16 ) (0.16 ) (0.24 )

Net (loss) income per common share
$ (0.23 ) (0.29 ) (1.09 ) 1.18 1.16 0.47

Diluted Earnings (Loss) per Common Share

(Loss) earnings per share from continuing operations
$ (0.26 ) (0.29 ) (1.08 ) 1.32 1.30 0.71

Earnings (loss) per share from discontinued operations
0.03 — (0.01 ) (0.16 ) (0.16 ) (0.24 )

Net (loss) income per common share
$ (0.23 ) (0.29 ) (1.09 ) 1.15 1.14 0.47

Basic weighted average number of common shares outstanding
45,114 45,126 49,509 88,795 88,795 57,235

Diluted weighted average number of common and common equivalent shares outstanding
45,114 45,126 49,509 89,929 89,929 57,235

1) Includes a correction of approximately $2.4 million which increased revenue and is related to the provision for loan losses on the Bluegreen acquired notes receivable.

2) Includes a net decrease of approximately $289,000 as a result of the following (a) the measurement period adjustments of real estate inventory and certain contracts (See Note 4 of the “Notes to the Consolidated Financial Statements”) and (b) tax adjustment related to the deferred taxes calculated in the acquisition of the additional shares in Bluegreen (See Note 1).

3) Includes a $1.7 million increase to the tax benefit for the fourth quarter as it relates to the corrections noted above and the recognition of income tax benefits associated with unrealized gains in accumulated other comprehensive income at BankAtlantic Bancorp and BFC.

4) Includes a $1.8 million decrease in the loss attributable to noncontrolling interest in the fourth quarter due to the increase in revenue and the measurement period adjustments of real estate inventory and certain contracts as noted above.

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BFC Financial Corporation
Notes to Consolidated Financial Statements

41. Subsequent Event

          In February 2011 the Bluegreen/Big Cedar Joint Venture made a cash distribution of its operating proceeds to its members. The distribution totaled $7.4 million and was allocated to its members based on their respective distribution percentages resulting in a $3.8 million distribution to Bluegreen.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

          None.

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ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

          We have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to make known material information concerning the Company, including its subsidiaries, to those officers who certify our financial reports and to other members of our senior management. As of December 31, 2010, our management evaluated, with the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that, as of December 31, 2010, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and is accumulated and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosures.

          Our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, does not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of any control system is based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management’s Report on Internal Control over Financial Reporting

          Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting includes controls over the preparation of financial statements in accordance with the instruction to the consolidated financial statements for savings and loan holding companies (OTS Form H-(b) 11) to comply with the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. As of December 31, 2010, our management, with the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2010.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          PricewaterhouseCoopers LLP, our independent registered certified public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2010 as stated in its report which appears in this Annual Report on Form 10-K. See Item 8 “Financial Statements and Supplementary Data.”

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Changes in Internal Control over Financial Reporting

          There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION

          The Company’s 2011 Annual Meeting of Shareholders is scheduled to be held on May 17, 2011. Because this date is more than 30 days before the anniversary of the Company’s 2010 Annual Meeting of Shareholders, pursuant to the Company’s Bylaws, written notice from a shareholder interested in bringing business before the 2011 Annual Meeting of Shareholders or nominating a director candidate for election at the 2011 Annual Meeting of Shareholders must be received at the Company’s principal executive offices at 2100 West Cypress Creek Road, Fort Lauderdale, Florida 33309 by 5:00 p.m., Eastern time, on April 18, 2011. Any such written notice must be directed to the attention of the Company’s Secretary and comply with the applicable advance notice provisions of the Company’s Bylaws. Shareholder proposals intended to be considered for inclusion in the Company’s proxy materials for the 2011 Annual Meeting of Shareholders must comply with the requirements, including the proposal deadline, set forth above as well as all applicable SEC rules and regulations.

PART III

          Information required by Item 12 relating to our equity compensation plans is set forth below. The remaining information required by Items 10 through 14 will be provided by incorporating such information by reference to our Definitive Proxy Statement on Schedule 14A relating to our 2011 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2010. Alternatively, we may provide the remaining information required by Items 10 through 14 in an amendment to this Annual Report on Form 10-K under cover of Form 10-K/A to be filed with the Securities and Exchange Commission by the end of such 120 day period.

          The following table lists all securities authorized for issuance and outstanding under our equity compensation plans at December 31, 2010:

Number of securities

Remaining available for

Number of securities to Weighted-average future issuance under

be issued upon exercise exercise price of equity compensation plans

of outstanding options of outstanding options (excluding outstanding

Plan category warrants or rights warrants or rights options)

Equity compensation plans approved by security holders
2,492,176 $ 0.41 4,118,013

Equity compensation plans not approved by security holders
— — —

Total
2,492,176 $ 0.41 4,118,013

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents Filed as Part of this Report:

(1) Financial Statements

The following consolidated financial statements of BFC Financial Corporation and its subsidiaries are included herein under Part II, Item 8 of this Report.

Report of Independent Registered Certified Public Accounting Firm.

Consolidated Statements of Financial Condition as of December 31, 2010 and 2009.

Consolidated Statements of Operations for each of the years in the three year period ended December 31, 2010.

Consolidated Statements of Comprehensive Income (Loss) for each of the years in the three year period ended December 31, 2010.

Consolidated Statements of Changes in Equity for each of the years in the three year period ended December 31, 2010.

Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 2010.

Notes to Consolidated Financial Statements.

(2) Financial Statement Schedules

Audited Financial Statements of Bluegreen Corporation for each of the years in the three year period ended December 31, 2010 (See Exhibit 99.1).

Schedules not listed above are omitted as the required information is either not applicable or is presented in the financial statements or related notes.

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(3) Exhibits

The following exhibits are either filed as a part of or furnished with this report or are incorporated herein by reference to documents previously filed as indicated below:

Exhibit

Number Description Reference

3.1
Amended and Restated Articles of Incorporation, effective October 8, 1997 Exhibit 3.1 of Registrant’s Registration Statement on Form 8-A filed October 16, 1997

3.2
Amendment to the Amended and Restated Articles of Incorporation, effective June 18, 2002 Exhibit 4 of Registrant’s Current Report on Form 8-K, filed June 27, 2002

3.3
Amendment to the Amended and Restated Articles of Incorporation, effective April 15, 2003 Appendix B of Registrant’s Definitive Proxy Statement on Schedule 14A filed April 18, 2003

3.4
Amendment to the Amended and Restated Articles of Incorporation, effective February 7, 2005 Appendix A of Registrant’s Definitive Information Statement on Schedule 14C filed January 18, 2005

3.5
Amendment to the Amended and Restated Articles of Incorporation, effective June 22, 2004, as amended on December 17, 2008 Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed December 18, 2008

3.6
Amendment to the Amended and Restated Articles of Incorporation, effective May 19, 2009 Appendix A of Registrant’s Definitive Proxy Statement on Schedule 14A filed April 29, 2009

3.7
Amendment to the Amended and Restated Articles of Incorporation, effective September 21, 2009 Annex D of Registrant’s Joint Proxy Statement/Prospectus that forms a part of Amendment No. 1 to Registration Statement on Form S-4 filed August 14, 2009

3.8
Amendment to the Amended and Restated Articles of Incorporation, effective September 21, 2009 Exhibit 3.8 of Registrant’s Current Report on Form 8-K filed September 25, 2009

3.9
By-laws, as amended, effective September 21, 2009 Annex E of Registrant’s Joint Proxy Statement/Prospectus that forms a part of Amendment No. 1 to Registration Statement on Form S-4 filed August 14, 2009

10.1
BFC Financial Corporation 2005 Stock Incentive Plan, as amended on May 19, 2009 Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 29, 2009

10.2
BFC Financial Corporation Stock Option Plan Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on July 31, 1996.

10.3
Agreement by and between Core Communities, LLC, a Florida limited liability company, Horizons Acquisition 5, LLC, a Florida limited liability company, Core Communities of South Carolina, LLC, a South Carolina limited liability company and PSL Acquisitions, LLC, an Iowa limited liability company doing business in the State of Florida as PSL Acquisitions I, LLC Filed with this Report

21.1
Subsidiaries of the Registrant Filed with this Report

23.1
Consent of PricewaterhouseCoopers LLP Filed with this Report

23.2
Consent of Ernst & Young LLP Filed with this Report

31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed with this Report

31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed with this Report

31.3
Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed with this Report

32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished with this Report

32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished with this Report

32.3
Certification of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished with this Report

99.1
Audited financial statements of Bluegreen Corporation for each of the years in the three year period ended December 31, 2010 Filed with this Report

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BFC FINANCIAL CORPORATION

April 8, 2011 By:   /s/ Alan B. Levan
Alan B. Levan, Chairman of the Board,
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Alan B. Levan

April 8, 2011

Alan B. Levan
Chairman of the Board, President and Chief Executive Officer

/s/ John E. Abdo

April 8, 2011

John E. Abdo
Vice Chairman of the Board

/s/ Seth M. Wise

April 8, 2011

Seth M. Wise
Executive Vice President and Director

/s/ John K. Grelle

April 8, 2011

John K. Grelle
Chief Financial Officer

/s/ Maria R. Scheker

April 8, 2011

Maria R. Scheker
Chief Accounting Officer

/s/ D. Keith Cobb

April 8, 2011

D. Keith Cobb
Director

/s/ Darwin Dornbush

April 8, 2011

Darwin Dornbush
Director

/s/ Oscar J. Holzmann

April 8, 2011

Oscar J. Holzmann
Director

/s/ Jarett Levan

April 8, 2011

Jarett Levan
Director

/s/ Alan Levy

April 8, 2011

Alan Levy
Director

/s/ Joel Levy

April 8, 2011

Joel Levy
Director

/s/ William Nicholson

April 8, 2011

William Nicholson
Director

/s/ Neil A. Sterling

April 8, 2011

Neil A. Sterling
Director

291


																	Accumulated
																	Other
														(Accumulated			Compre-			Total			Non-
	Shares of Common						Class A		Class B		Additional			Deficit)			hensive			BFC			controlling
	Stock Outstanding						Common		Common		Paid-in			Retained			Income			Shareholders’			Interest in			Total
	Class A			Class B			Stock		Stock		Capital			Earnings			(Loss)			Equity			Subsidiaries			Equity
Balance, December 31, 2007		38,233			6,876			382		69		131,189			50,801			1,596			184,037			558,950			742,987
Net loss		—			—			—		—		—			(58,899	)		—			(58,899	)		(260,567	)		(319,466	)
Other comprehensive loss, net of taxes		—			—			—		—		—			—			(3,894	)		(3,894	)		(11,145	)		(15,039	)
Issuance of restricted
Class A Common Stock		120			—			—		—		—			—			—			—			—			—
Transfer of shares of Common Stock		1			(1	)		—		—		—						—			—			—			—
Purchase and retirement of Class A Common Stock		(100	)		—			—		—		(54	)		—			—			(54	)		—			(54	)
Net effect of subsidiaries’ capital transactions attributable to BFC, net of taxes		—			—			—		—		2,398			—			—			2,398			—			2,398
Noncontrolling interests net effect of subsidiaries’ capital transactions		—			—			—		—		—			—			—			—			(24,684	)		(24,684	)
Cash dividends on 5% Preferred Stock		—			—			—		—		—			(750	)		—			(750	)		—			(750	)
Re-classification of the 5% Preferred Stock																											—
to Redeemable Preferred stock		—			—			—		—		(11,029	)		—			—			(11,029	)		—			(11,029	)
Share-based compensation related to stock options and restricted stock		—			—			—		—		1,058			—			—			1,058			—			1,058

Balance, December 31, 2008		38,254			6,875			382		69		123,562			(8,848	)		(2,298	)		112,867			262,554			375,421
Net income (loss)		—			—			—		—		—			27,279			—			27,279			(120,611	)		(93,332	)
Noncontrolling interests from acquisitions		—			—			—		—		—			—			—			—			71,344			71,344
Other comprehensive income, net of taxes		—			—			—		—		—			—			527			527			3,001			3,528
Merger transaction (Note 3)		30,246			—			303		—		94,676			—			—			94,979			(99,583	)		(4,604	)
Transfer of shares of Common Stock		21			(21	)		—		—		—			—			—			—			—			—
Pro rata share of the cumulative effect of accounting changes recognized by
Bluegreen on retained interests in notes receivable sold		—			—			—		—		—			485			—			485			1,575			2,060
Net effect of subsidiaries’ capital transactions attributable to BFC		—			—			—		—		8,333			—			—			8,333			—			8,333
Noncontrolling interest net effect of subsidiaries’ capital transactions		—			—			—		—		—			—			—			—			41,032			41,032
Cash dividends on 5% Preferred Stock		—			—			—		—		—			(750	)		—			(750	)		—			(750	)
Share-based compensation related to stock options and restricted stock		—			—			—		—		1,363			—			—			1,363			—			1,363

Balance, December 31, 2009 (As Revised)		68,521			6,854		$	685	$	69	$	227,934		$	18,166		$	(1,771	)	$	245,083		$	159,312		$	404,395
Cumulative effect of change																					—						—
in accounting principle (Note 5)		—			—			—		—		—			(2,421	)		925			(1,496	)		(1,073	)		(2,569	)

Balance beginning of year, as adjusted							$	685	$	69	$	227,934		$	15,745		$	(846	)	$	243,587		$	158,239		$	401,826
Net loss		—			—			—		—		—			(103,848	)		—			(103,848	)		(76,339	)		(180,187	)
Other comprehensive income (loss)		—			—			—		—		—			—			1,069			1,069			(1,036	)		33
Issuance of Class B Common Stock from exercise of options		—			6			—		—		2			—			—			2			—			2
Net effect of subsidiaries’ capital transactions attributable to BFC		—			—			—		—		1,760			—			—			1,760			—			1,760
Noncontrolling interest net effect of subsidiaries’ capital transactions		—			—			—		—		—			—			—			—			(2,608	)		(2,608	)
Cash dividends on 5% Preferred Stock		—			—			—		—		—			(750	)		—			(750	)		—			(750	)
Share-based compensation related to stock options		—			—			—		—		1,052			—			—			1,052			—			1,052

Balance, December 31, 2010		68,521			6,860		$	685	$	69	$	230,748		$	(88,853	)	$	223		$	142,872		$	78,256		$	221,128


(a)		Included in interest bearing deposits in other banks as of December 31, 2010 was $45.6 million of time deposit. These time deposits had original maturities of greater than 90 days and are not considered cash equivalents.


							Fair Value
	(As Revised)			(As Previously Reported)			Hierarchy
Cash and cash equivalents	$	51,621			51,621		Level 1
Restricted cash		25,079			25,079		Level 1
Property and equipment		83,083			83,083		Level 3
Management contracts		63,000			63,000		Level 3
Real estate inventory (1)		307,014			313,869		Level 3
Notes receivable		285,000			285,000		Level 3
Retained interests in notes receivable sold		29,250			29,250		Level 3
Other assets (2)		44,440			40,983		Level 3

Fair value of assets		888,487			891,885


Accounts payable and other liabilities (3)		54,849			50,764		Level 3
Deferred income		10,996			10,996		Level 3
Deferred income taxes (4)		22,690			29,784		Level 3
Lines of credit and notes payable		198,947			198,947		Level 2
Junior subordinated debentures		56,783			56,783		Level 2
Receivable-backed notes payable		236,359			236,359		Level 2

Fair value of liabilities		580,624			583,633

Non-controlling interest (Big Cedar Joint Venture)		26,100			26,200		Level 3

Net assets acquired		281,763			282,052
Less: Cash consideration on acquisition of additional 23%		(22,939	)		(22,939	)
Less: Fair value of previously held equity interest		(25,126	)		(25,126	)	Level 1
Less: Fair value of non-controlling interest		(41,254	)		(41,254	)	Level 1
Less: Loss on previously held equity interest		(8,074	)		(8,074	)
Less: Loss on accumulated other comprehensive income attributable to previously held equity interest		(1,521	)		(1,521	)



Bargain purchase gain	$	182,849			183,138


1)		A decrease of approximately $6.9 million to real estate inventory due to the finalization of the measurement period adjustments.

2)		An increase of $2.1 million of favourable lease contracts and a $1.4 million reclassification from real estate inventory to other assets due to the finalization of the measurement period adjustments.

3)		A reclassification from real estate inventory to accrued liabilities due to the finalization of the measurement period adjustments.

4)		A $2.9 million decrease due to the finalization of the measurement period adjustments, and a decrease of $4.2 million due to a correction of an error related to an impairment to real estate inventory which should have been included in the determination of deferred taxes as the acquisition date November 16, 2009, as part of the Bluegreen purchase price allocation. See Note 1 of the “Notes to the Consolidated Financial Statements”.


			Consolidation
	December 31, 2009		Bluegreen’s QSPEs			BankAtlantic Bancorp’s Joint Venture (1)			Total			January 1, 2010
	(As Revised)
Restricted cash	$	24,020		36,518			—			36,518			60,538
Loans receivable		3,678,894		—			3,214			3,214			3,682,108
Notes receivable		279,645		377,265			—			377,265			656,910
Real estate inventory		484,927		16,403			—			16,403			501,330
Retained interest in notes receivable sold		26,340		(26,340	)		—			(26,340	)		—
Investment in unconsolidated affiliates		15,272		—			(3,256	)		(3,256	)		12,016
Other assets		65,500		9,970			367			10,337			75,837

Change in related assets	$	4,574,598		413,816			325			414,141			4,988,739


Other liabilities	$	187,032		3,544			18			3,562			190,594
Deferred income taxes		25,205		1,779			—			1,779			26,984
Receivable -backed notes payable		237,416		411,369			—			411,369			648,785

Change in related liabilities	$	449,653		416,692			18			416,710			866,363


Total BFC’s shareholders’ equity	$	245,083		(1,496	)		—			(1,496	)		243,587
Noncontrolling interests		159,312		(1,380	)		307			(1,073	)		158,239

Total equity	$	404,395		(2,876	)		307			(2,569	)		401,826


(1)		As a result of the adoption of the accounting guidance associated with the consolidation of VIEs, we consolidated BankAtlantic Bancorp’s factoring joint venture, BankAtlantic Business Capital, LLC (“BBC”). Prior to January 1, 2010, the investment in BBC was accounted for using the equity method of accounting.


ASSETS
Cash and cash equivalents	$	5,850
Office properties and equipment		31,484

Total assets held for sale	$	37,334

LIABILITIES
Interest bearing deposits	$	255,630
Non-interest bearing deposits		85,516

Total deposits		341,146
Accrued interest payable		87

Total liabilities held for sale	$	341,233


(1)		Real estate mortgage investment conduits (“REMIC”) are pass-through entities that hold residential loans, and investors are issued ownership interests in the entities in the form of a bond. The securities were issued by government agencies.


	As of December 31, 2010
	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Municipal Bonds	$	90,413		(23	)		—		—			90,413		(23	)
Taxable Securities		15,155		(22	)		—		—			15,155		(22	)
Equity securities		—		—			7		(3	)		7		(3	)

Total available for sale securities:	$	105,568		(45	)		7		(3	)		105,575		(48	)


	Debt Securities
	Available for Sale
			Estimated
	Amortized		Fair
December 31, 2010 (1) (2)	Cost		Value
Due within one year	$	180,313		180,317
Due after one year, but within five years		61,832		61,971
Due after five years, but within ten years		23,574		24,474
Due after ten years		147,583		156,309

Total	$	413,302		423,071


(1)		Scheduled maturities in the above table may vary significantly from actual maturities due to repayments.

(2)		Scheduled maturities are based upon contractual maturities.


Contract		Expiration	Strike				Fair
Amount		Date	Price		Premium		Value

€	400	Jan-11		1.34		28		8
	400	Apr-11		1.34		31		16

€	800				$	59		24


(1)		The estimated fair value was calculated at December 31, 2010 and 2009 using an expected cash flow model discounted at an interest rate that takes into account the risk of the cash flows of tax certificates relative to alternative investments.


	Recorded
Loan Class	Investment
Commercial non-real estate	$	17,659
Commercial real estate:
Residential		95,482
Land		27,260
Owner occupied		4,870
Other		128,658
Small business:
Real estate		8,928
Non-real estate		1,951
Consumer		14,120
Residential:
Interest only		38,900
Amortizing		47,639

Total nonaccrual loans	$	385,467


											Total
	31-59 Days		60-89 Days		90 Days		Total				Loans
	Past Due		Past Due		or More (1)		Past Due		Current		Receivable (2)
Commercial non-real estate	$	—		—		13,498		13,498		122,090		135,588
Commercial real estate:
Residential		4,700		—		53,791		58,491		84,325		142,816
Land		—		—		23,803		23,803		34,237		58,040
Owner occupied		—		—		3,862		3,862		107,235		111,097
Other		—		6,043		54,940		60,983		551,472		612,455
Small business:
Real estate		1,530		2,059		6,670		10,259		193,220		203,479
Non-real estate		—		67		25		92		99,098		99,190
Consumer		6,396		6,009		14,120		26,525		596,862		623,387
Residential:
Interest only		4,907		6,164		38,900		49,971		500,275		550,246
Amortizing		6,091		5,926		47,487		59,504		614,281		673,785

Total (1)	$	23,624		26,268		257,096		306,988		2,903,095		3,210,083


(1)		BankAtlantic Bancorp had no loans greater than 90 days and accruing

(2)		Total loans receivable exclude purchase accounting of $8.5 million in connection with BFC’s share acquisitions of BankAtlantic Bancorp in 2008. The 2008 share acquisitions were accounted for as step acquisitions under the purchase method of accounting then in effect.


				Commercial
	Commercial			Real			Small
	Non-Real Estate			Estate			Business			Consumer			Residential			Total
Allowance for Loan Losses:
Beginning balance	$	4,515			105,288			7,998			42,417			27,000			187,218
Charge-off :		(996	)		(104,973	)		(7,873	)		(39,483	)		(18,305	)		(171,630	)
Recoveries :		716			1,661			626			1,042			1,166			5,211
Provision :		6,551			84,904			10,763			28,067			14,076			144,361
Transfer to held for sale:		—			(3,021	)		—			—			—			(3,021	)

Ending balance	$	10,786			83,859			11,514			32,043			23,937			162,139

Ending balance individually
evaluated for impairment	$	9,020			62,985			2,936			1,791			12,034			88,766
Ending balance collectively
evaluated for impairment		1,766			20,874			8,578			30,252			11,903			73,373

Total	$	10,786			83,859			11,514			32,043			23,937			162,139

Loans receivables:
Ending balance individually
evaluated for impairment	$	16,667			342,806			12,763			23,905			88,210			484,351
Ending balance collectively
evaluated for impairment	$	118,921			581,602			289,906			599,482			1,135,821			2,725,732

Total (1)	$	135,588			924,408			302,669			623,387			1,224,031			3,210,083

Purchases of loans		—			—			—			—			6,511			6,511

Proceeds from loan sales		—			59,697			—			—			52,678			112,375

Transfer to held for sale		—			27,928			—			—			—			27,928


	For Years Ended
	December 31,
	2009			2008
Balance, beginning of period	$	137,257			94,020
Loans charged-off		(185,890	)		(117,874	)
Recoveries of loans previously charged-off		3,193			1,310

Net charge-offs		(182,697	)		(116,564	)
Provision for loan losses		232,658			159,801

Balance, end of period	$	187,218			137,257


(1)		Recorded investment is defined as unpaid principal balance less charge downs


	As of December 31, 2009				As of December 31, 2008
	Gross				Gross
	Recorded		Specific		Recorded		Specific
	Investment		Allowances		Investment		Allowances
Impaired loans with specific valuation allowances	$	249,477		70,485		174,710		41,192
Impaired loans without specific valuation allowances		196,018		—		138,548		—

Total	$	445,495		70,485		313,258		41,192


	Commercial						Owner Occupied		Other		Small		Small
	Non		Commercial		Commercial		Commercial		Commercial		Business		Business
	Real Estate		Residential		Land		Real Estate		Real Estate		Real Estate		Non-Real Estate
Risk Grade:
Grades 1 to 7	$	81,789		16,250		27,387		101,855		314,402		169,979		84,584
Grade 10		12,827		7,572		956		704		119,508		3,098		3,665
Grade 11		40,972		118,994		29,697		8,538		178,545		30,402		10,941

Total	$	135,588		142,816		58,040		111,097		612,455		203,479		99,190


	Residential		Residential
Loan to value ratios (1)	Interest Only		Amortizing
Ratios not available (2)	$	—		78,031
=<60%		107,063		144,744
60.1% — 70%		118,679		103,891
70.1% — 80%		290,840		309,925
80.1% — 90%		17,055		23,982
>90.1%		16,608		13,212

Total	$	550,245		673,785


(1)		Current loan-to-values (“LTV”) for the majority of the portfolio were obtained as of the first quarter of 2010 based on automated valuation models.

(2)		Loans were originated under the Community Reinvestment Act program and are not monitored based on loan-to-value.


	Consumer
	Home
Loan to value ratios	Equity
<70%	$	363,653
70.1% — 80%		106,180
80.1% — 90%		72,529
90.1% — 100%		48,537
>100%		13,329

Total	$	604,228


(1)		Included in non-accrual loans at December 31, 2010, 2009 and 2008 were $145.3 million, $45.7 million and $4.8 million, respectively, of troubled debt restructured loans.


Balance at December 31, 2009	$	102,665
Increase in cash flows expected		—
Accretion		(29,065	)
Reclassifications from nonaccretable difference		12,306

Balance at December 31, 2010	$	85,906


	As of December 31, 2010
2011	$	80,284
2012		82,129
2013		89,486
2014		95,928
2015		99,282
Thereafter		265,036

		712,145
Allowance for loan losses		(93,398	)

Notes receivable, net of allowance		618,747
Purchase accounting adjustments		(43,778	)

Total	$	574,969


Balance at December 31, 2009 (a)	$	3,986
One-time impact of the amendment to the accounting guidance for transfer of financial assets and the amendment to the accounting guidance for the consolidation of VIE (see Note 5)		86,252
Provision for loan losses		46,059
Write-offs of uncollectible receivables		(42,899	)

Balance at December 31, 2010	$	93,398


(a)		Allowance for uncollectible notes receivable represents amount attributable to new loan originations subsequent to the date of our acquisition of a controlling interest in Bluegreen (November 16, 2009).


	2010			2009
Current	$	655,304		$	326,218
31-60 days		12,063			6,633
61-90 days		10,228			4,981
Over 91 days		27,785			13,400
Purchase accounting adjustments		(43,778	)		(72,502	)

Notes receivable net of purchase accounting adjustments		661,602			278,730

Allowance for loan losses		(93,398	)		(3,986	)

Total	$	568,204		$	274,744