Bluegreen Vacations Holding Corp - Quarter Report: 2010 September (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

OR

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

BFC Financial Corporation

(Exact name of registrant as specified in its charter)

Florida		59-2022148
(State or other jurisdiction of incorporation or		(IRS Employer Identification Number)
organization)
2100 West Cypress Creek Road
Fort Lauderdale, Florida		33309
(Address of Principal executive office)		(Zip Code)

(954) 940-4900

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 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. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o            NO þ

The number of shares outstanding of each of the registrant’s classes of common stock as of November 10, 2010 is as follows:

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

 

 

BFC Financial Corporation

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Financial Condition as of September 30, 2010 and December 31, 2009 – Unaudited			3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009 – Unaudited			4
Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2010 and 2009 – Unaudited			6
Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2010 – Unaudited			7
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 – Unaudited			8
Notes to Unaudited Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			57
Item 4T. Controls and Procedures			114
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			115
Item 1A. Risk Factors			116
Item 6. Exhibits			117
SIGNATURES
EX-31.1
EX-31.2
EX-31.3
EX-32.1
EX-32.2
EX-32.3

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BFC Financial Corporation

		September 30,				December 31,
		2010				2009
ASSETS
Cash and cash equivalents		$	385,874				316,080
Interest bearing deposits at other financial institutions			47,990				—
Restricted cash			62,748				24,020
Securities available for sale, at fair value			490,634				346,375
Derivatives, at fair value			95				—
Investment securities at cost (fair value: $1,981 in 2010 and $9,654 in 2009)			1,981				9,654
Current income tax receivable			9,399				64,006
Tax certificates, net of allowance of $8,452 in 2010 and $6,781 in 2009			104,681				110,991
Federal Home Loan Bank (“FHLB”) stock, at cost which approximates fair value			45,259				48,751
Loans held for sale			2,839				4,547
Loans receivable, net of allowance for loan losses of $185,947 in 2010 and $187,218 in 2009			3,226,715				3,678,894
Notes receivable including gross securitized notes, net of allowance of $80,754 in 2010 and $3,986 in 2009			598,693				277,274
Retained interest in notes receivable sold			—				26,340
Accrued interest receivable			23,290				32,279
Real estate inventory			460,712				494,291
Real estate owned and other repossessed assets			67,783				46,477
Investments in unconsolidated affiliates			12,776				15,272
Properties and equipment, net			236,636				289,209
Goodwill			12,241				12,241
Intangible assets, net			78,016				81,686
Assets held for sale			37,209				—
Assets held for sale from discontinued operations			—				71,900
Other assets			96,619				96,750
Total assets		$	6,002,190				6,047,037
Assets of consolidated variable interest entities (“VIEs”) included in total assets above
Restricted cash		$	39,388
Securitized notes receivable, gross			551,899
Total assets of consolidated VIEs		$	591,287
LIABILITIES AND EQUITY
Liabilities:
Interest bearing deposits		$	2,688,407				3,133,360
Non-interest bearing deposits			805,501				815,458
Deposits held for sale			339,360				—
Total deposits			3,833,268				3,948,818
Advances from FHLB			180,000				282,012
Securities sold under agreements to repurchase			19,138				24,468
Short-term borrowings			1,810				2,803
Receivable-backed notes payable			590,052				237,416
Notes and mortgage notes payable and other borrowings			357,123				395,361
Junior subordinated debentures			457,699				447,211
Deferred income taxes			32,514				31,204
Liabilities related to assets held for sale			100				—
Liabilities related to assets held for sale from discontinued operations			—				76,351
Other liabilities			229,218				186,453
Total liabilities			5,700,922				5,632,097
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 a 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			230,589				227,934
(Accumulated deficit) retained earnings			(50,729	)			16,608
Accumulated other comprehensive income (loss)			3,639				(237	)
Total BFC Financial Corporation (“BFC”) shareholders’ equity			184,253				245,059
Noncontrolling interests			105,986				158,852
Total equity			290,239				403,911
Total liabilities and equity		$	6,002,190				6,047,037
Liabilities of consolidated VIEs included in total liabilities above
Receivable-backed notes payable		$	468,325
Total liabilities of consolidated VIEs		$	468,325

BFC Financial Corporation

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Revenues
Real Estate and Other:
Sales of real estate, net of estimated uncollectibles		$	57,919				130				130,089				3,324
Other resorts and communities operations revenue			17,603				—				50,546				—
Other revenues			15,942				845				40,021				2,606
Interest income			20,869				—				81,051				—
			112,333				975				301,707				5,930
Financial Services:
Interest income			44,706				54,561				136,441				174,948
Service charges on deposits			15,214				19,767				45,764				57,799
Other service charges and fees			7,495				7,355				22,612				22,439
Securities activities, net			(552	)			4,774				2,898				9,906
Other non-interest income			4,708				3,158				9,725				9,087
			71,571				89,615				217,440				274,179
Total revenues			183,904				90,590				519,147				280,109
Costs and Expenses
Real Estate and Other:
Cost of sales of real estate			21,840				31,664				44,380				33,658
Cost of sales of other resorts and communities operations			13,401				—				38,456				—
Interest expense			24,847				3,128				64,847				8,606
Selling, general and administrative expenses			67,790				10,996				184,394				33,225
Impairment of goodwill			—				2,001				—				2,001
			127,878				47,789				332,077				77,490
Financial Services:
Interest expense			9,126				15,805				30,921				61,378
Provision for loan losses			24,410				63,586				103,718				151,357
Employee compensation and benefits			23,549				24,876				74,082				79,617
Occupancy and equipment			13,263				14,553				40,590				44,306
Advertising and promotion			2,026				1,549				6,209				6,360
Check losses			763				1,146				1,716				2,981
Professional fees			6,209				3,470				13,920				9,491
Supplies and postage			983				1,035				2,902				3,038
Telecommunication			702				353				1,898				1,637
Cost associated with debt redemption			—				5,431				60				7,463
Provision for (recovery from) tax certificates			885				(198	)			3,752				2,702
Impairment of goodwill			—				—				—				8,541
Impairment of assets held for sale			4,469				—				4,469				—
Impairment of real estate held for development and sale			—				1,131				1,511				1,165
Impairment of real estate owned			500				137				1,864				760
Lease termination costs, net			1,093				383				1,308				1,684
Employee termination costs			2,103				78				2,103				2,024
FDIC special assessment			—				—				—				2,428
Other expenses			6,617				8,004				23,049				22,900
			96,698				141,339				314,072				409,832
Total costs and expenses			224,576				189,128				646,149				487,322

(continued)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
(Loss) gain on settlement of investment in Woodbridge’s subsidiary			—				—				(1,135	)			40,369
Equity in earnings from unconsolidated affiliates			317				12,213				786				29,463
Impairment of unconsolidated affiliates			—				(10,780	)			—				(31,181	)
Impairment of investments							—				—				(2,396	)
Other income			498				766				2,135				2,525
Loss from continuing operations before income taxes			(39,857	)			(96,339	)			(125,216	)			(168,433	)
Less: Provision (benefit) for income taxes			(996	)			3				(5,195	)			3
Loss from continuing operations			(38,861	)			(96,342	)			(120,021	)			(168,436	)
(Loss) income from discontinued operations			—				(1,367	)			2,465				2,169
Net loss			(38,861	)			(97,709	)			(117,556	)			(166,267	)
Less: Net loss attributable to noncontrolling interests			(11,239	)			(43,697	)			(52,919	)			(88,943	)
Net loss attributable to BFC			(27,622	)			(54,012	)			(64,637	)			(77,324	)
Preferred stock dividends			(188	)			(188	)			(563	)			(563	)
Net loss allocable to common stock		$	(27,810	)			(54,200	)			(65,200	)			(77,887	)
Basic and Diluted (Loss) Earnings Per Common Share Attributable to BFC (Note 22):
Basic (Loss) Earnings Per Common Share
Loss per share from continuing operations		$	(0.37	)			(1.08	)			(0.90	)			(1.68	)
(Loss) earnings per share from discontinued operations			—				(0.01	)			0.03				0.01
Net loss per common share		$	(0.37	)			(1.09	)			(0.87	)			(1.67	)
Diluted (Loss) Earnings Per Common Share
Loss per share from continuing operations		$	(0.37	)			(1.08	)			(0.90	)			(1.68	)
(Loss) earnings per share from discontinued operations			—				(0.01	)			0.03				0.01
Net loss per common share		$	(0.37	)			(1.09	)			(0.87	)			(1.67	)
Basic weighted average number of common shares outstanding			75,381				49,509				75,379				46,599
Diluted weighted average number of common and common equivalent shares outstanding			75,381				49,509				75,379				46,599
Amounts attributable to BFC common shareholders:
Loss from continuing operations		$	(27,810	)			(53,337	)			(67,665	)			(78,125	)
(Loss) income from discontinued operations			—				(863	)			2,465				238
Net loss attributable to BFC common shareholders		$	(27,810	)			(54,200	)			(65,200	)			(77,887	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Net loss		$	(38,861	)			(97,709	)			(117,556	)			(166,267	)
Other comprehensive income, net of tax:
Unrealized gains on securities available for sale			219				8,232				5,294				21,953
Unrealized loss associated with investment in unconsolidated affiliates			—				(986	)			—				(381	)
Pro-rata share of cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests in notes receivable sold			—				—				—				(1,251	)
Realized (gains) loss reclassified into net loss			249				(4,773	)			(2,890	)			(7,510	)
Other comprehensive income			468				2,473				2,404				12,811
Comprehensive loss			(38,393	)			(95,236	)			(115,152	)			(153,456	)
Less: Comprehensive loss attributable to noncontrolling interests			(11,560	)			(46,447	)			(53,466	)			(87,051	)
Total comprehensive loss attributable to BFC		$	(26,833	)			(48,789	)			(61,686	)			(66,405	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation

																										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, 2009			68,521				6,854			$	685			$	69			$	227,934			$	16,608			$	(237	)		$	245,059			$	158,852			$	403,911
Cumulative effect of change in accounting principle (Note 2)			—				—				—				—				—				(2,137	)			925				(1,212	)			(811	)			(2,023	)
Balance beginning of year, as adjusted										$	685			$	69			$	227,934			$	14,471			$	688			$	243,847			$	158,041			$	401,888
Net loss			—				—				—				—				—				(64,637	)			—				(64,637	)			(52,919	)			(117,556	)
Other comprehensive income (loss)			—				—				—				—				—				—				2,951				2,951				(547	)			2,404
Issuance of Class B Common Stock from exercise of options			—				6				—				—				2				—				—				2				—				2
Net effect of subsidiaries’ capital transactions attributable to BFC			—				—				—				—				1,772				—				—				1,772				—				1,772
Noncontrolling interest net effect of subsidiaries’ capital transactions			—				—				—				—				—				—				—				—				1,411				1,411
Cash dividends on 5% Preferred Stock			—				—				—				—				—				(563	)			—				(563	)			—				(563	)
Share-based compensation related to stock options			—				—				—				—				881				—				—				881				—				881
Balance, September 30, 2010			68,521				6,860			$	685			$	69			$	230,589			$	(50,729	)		$	3,639			$	184,253			$	105,986			$	290,239

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation

		For the Nine Months Ended
		September 30,
		2010				2009
Net cash provided by operating activities		$	246,196				25,754
Investing activities:
Purchase of interest-bearing deposits in other financial institutions			(47,990	)			—
Proceeds from redemption and maturity of investment securities and tax certificates			107,238				170,087
Purchase of investment securities and tax certificates			(97,285	)			(123,250	)
Proceeds from sales of securities available for sale			92,109				318,779
Proceeds from maturities of securities available for sale			96,420				116,743
Purchase of securities available for sale			(322,872	)			(75,500	)
(Increase) decrease in restricted cash			(2,970	)			12,971
Cash paid in settlement of Woodbridge subsidiary’s bankruptcy			—				(12,430	)
Purchases of FHLB stock			—				(2,295	)
Redemption of FHLB stock			3,492				8,151
Investments in unconsolidated affiliates			—				(973	)
Distributions from unconsolidated affiliates			85				564
Net decrease in loans receivable			283,226				305,467
Proceeds from the sale of loans receivable			29,421				5,427
Improvements to real estate owned			(945	)			(1,018	)
Proceeds from sales of real estate owned			18,899				3,715
Proceeds from the sale of assets			75,306				—
Disposals of office properties and equipment			507				—
Purchases of office property and equipment, net			(5,455	)			(3,016	)
Cash from consolidation of Pizza Fusion			—				3,000
Net cash provided by investing activities			229,186				726,422
Financing activities:
Net (decrease) increase in deposits			(115,550	)			39,683
Prepayment of FHLB advances			(2,068	)			(1,159,463	)
Net (repayments) proceeds from FHLB advances			(100,000	)			527,000
Decrease in short-term borrowings			(6,323	)			(250,488	)
Prepayment of notes and bonds payable			(661	)			—
Repayment of notes, mortgage notes and bonds payable			(256,944	)			(2,612	)
Proceeds from notes, mortgage notes and bonds payable			84,509				132
Payments for debt issuance costs			(3,198	)			(1,167	)
Preferred stock dividends paid			(563	)			(563	)
Purchase and retirement of Woodbridge common stock			—				(13	)
Proceeds from the issuance of BankAtlantic Bancorp Class A common stock from non-BFC shareholders			4,601				45,377
BankAtlantic Bancorp common stock dividends paid to non-BFC shareholders			—				(198	)
Proceeds from the exercise of BFC stock options			2				—
Proceeds from the issuance of common stock in Pizza Fusion			1,279				—
Non-controlling interest distributions			(5,770	)			—
Net cash used in financing activities			(400,686	)			(802,312	)
Increase (decrease) in cash and cash equivalents			74,696				(50,136	)
Cash and cash equivalents at beginning of period			316,080				278,937
Cash and cash equivalents held for sale			(4,902	)			—
Cash and cash equivalents at end of period		$	385,874				228,801

(continued)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Consolidated Statements of Cash Flows — Unaudited
(In thousands)

		For the Nine Months Ended
		September 30,
		2010				2009
Supplemental cash flow information:
Interest paid on borrowings and deposits		$	74,836				78,149
Income taxes refunded, net of payments			59,793				—
Supplementary disclosure of non-cash investing and financing activities:
Loans and tax certificates transferred to real estate owned			40,942				21,268
Long-lived assets held-for-use transferred to assets held for sale			1,919				—
Long-lived assets held-for-sale transferred to assets held for use			1,239				—
Transfers to assets held-for-sale:
Cash			4,902
Office properties and equipment			32,307
Securities purchased pending settlement			5,239				—
Net increase in BFC accumulated other comprehensive income, net of taxes			2,951				10,919
Net increase in BFC shareholders’ equity from the effect of subsidiaries’ capital transactions, net of taxes			1,772				7,818
Net decrease in equity resulting from cumulative effect of change in accounting principle (See Note 2)			(2,023	)			—
Net increase in shareholders’ equity resulting from the cumulative impact of accounting changes recognized by Bluegreen on retained interests in notes receivable sold			—				485
BFC and Woodbridge Merger related transactions:
Increase in BFC’s Class A Common Stock			—				448
Increase in additional paid-in-capital			—				99,135
Decrease in BFC’s non-controlling interest in Woodbridge			—				(99,583	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation

Notes to Unaudited Consolidated Financial Statements

1. Presentation of Interim Financial Statements

          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, including Core Communities, LLC and its subsidiaries (“Core” or “Core Communities”). 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 previously disclosed, 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. Woodbridge is the parent company of Core.

          On November 16, 2009, an additional 7.4 million shares of the common stock of Bluegreen were purchased, increasing our ownership interest to approximately 16.9 million shares, or approximately 52%, of Bluegreen’s outstanding common stock. Accordingly, we are deemed to have a controlling interest in Bluegreen and, under generally accepted accounting principles (“GAAP”), Bluegreen’s results since November 16, 2009, the date of the share purchase, are consolidated in BFC’s financial statements. Prior to November 16, 2009, the investment in Bluegreen’s shares represented approximately 29% of Bluegreen’s common stock and Bluegreen was accounted for using the equity method.

          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, Woodbridge and Core 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 September 30, 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 accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments, which include normal recurring adjustments, except the adjustments described below, as are necessary for a fair statement of the Company’s consolidated financial condition at September 30, 2010, the consolidated results of operations, comprehensive loss for the three and nine months ended September 30, 2010 and 2009, the changes in consolidated equity for the nine months ended September 30, 2010 and consolidated cash flows for the nine months ended September 30, 2010 and 2009. Operating results for the three and nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. The unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. All significant inter-company balances and transactions have been eliminated in consolidation.

          During the third quarter of 2010, the Company recorded adjustments to sales of real estate, net of estimated uncollectibles, and interest income on notes receivable to correct amounts previously recorded in the first and second quarters of 2010 in connection with the consolidation of the financial statements of Bluegreen.

          The impact of these adjustments was an increase in sales of real estate, net of estimated uncollectibles of approximately $6.0 million and a decrease in interest income on notes receivable of $5.8 million, resulting in a net increase in notes receivable of approximately $200,000.

          Additionally, during the third quarter of 2010, the Company recorded an adjustment to interest expense to properly recognize interest expense using the default rates applicable on the defaulted debt at Woodbridge and Core in accordance with their respective loan agreements for the fourth quarter of 2009 and the first and second quarters of 2010. This adjustment resulted in a $3.1 million increase in both interest expense and accrued interest liability.

          The impact of these adjustments was not material to the Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2010 or the Company’s consolidated financial statements for the applicable prior periods.

          Certain amounts for prior periods have been reclassified to conform to the current period’s presentation.

          As a result of the Woodbridge merger on September 21, 2009 and the Bluegreen share acquisition on November 16, 2009, the Company reorganized its reportable segments to better align its segments with the current operations of its businesses. The Company’s business activities currently consist of (i) Real Estate and Other Activities and (ii) Financial Services Activities. 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. As a result of this reorganization, our BFC Activities segment now includes activities formerly reported in the Woodbridge Other Operations segment and our Real Estate Operations segment is comprised of what was previously identified as the Land Division.

          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 the three and nine month periods ended September 30, 2009 and the nine month period ended September 30, 2010. 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 5 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. Under the terms of the Ryan Beck sales agreement, BankAtlantic Bancorp received additional consideration based on Ryan Beck revenues over the two year period following the closing of the sale. BankAtlantic Bancorp also had certain indemnification obligations under the terms of the agreement. The $4.2 million of earn-out consideration is included in the Company’s Consolidated Statement of Operations as discontinued operations for the nine months ended September 30, 2009. See Note 5 for further information.

2. Cumulative Effect of Change in Accounting Principle

          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 for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. Accordingly, Bluegreen’s special purpose finance entities and BankAtlantic Bancorp’s 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 $2.1 million. 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 $416.1 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 $2.3 million, including a decrease to noncontrolling interest of approximately $1.1 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
										BankAtlantic
		December 31,				Bluegreen’s				Bancorp’s								January 1,
		2009				QSPEs				Joint Venture (1)				Total				2010
Restricted cash		$	24,020				36,518				—				36,518				60,538
Loans receivable			3,678,894				—				3,214				3,214				3,682,108
Notes receivable			277,274				377,265				—				377,265				654,539
Real estate inventory			494,291				16,403				—				16,403				510,694
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			96,750				9,970				367				10,337				107,087
Change in related assets		$	4,612,841				413,816				325				414,141				5,026,982
Other liabilities		$	186,453				3,544				18				3,562				190,015
Deferred income taxes			31,204				1,233				—				1,233				32,437
Receivable -backed notes payable			237,416				411,369				—				411,369				648,785
Change in related liabilities		$	455,073				416,146				18				416,164				871,237
Total BFC’s shareholders’ equity		$	245,059				(1,212	)			—				(1,212	)			243,847
Noncontrolling interests			158,852				(1,118	)			307				(811	)			158,041
Total equity		$	403,911				(2,330	)			307				(2,023	)			401,888

3. Liquidity

BFC

          Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen, Woodbridge and Core 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 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 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 nine months ended September 30, 2010 or the year ended December 31, 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 does not expect to receive cash dividends from BankAtlantic Bancorp for the foreseeable future because BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock. Furthermore, 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 or (ii) declare or make any dividends or other capital distributions.

          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, BFC may also seek to raise funds through the issuance of long-term secured or unsecured indebtedness, 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.

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 estimated 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 agreements, we do not believe that an event of default had occurred as was alleged. Woodbridge continues to seek a satisfactory conclusion with regard to the debt; however, the outcome of these efforts and the litigation is uncertain.

          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 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

          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 has ceased all development in Tradition, Florida and Tradition Hilton Head. Its assets have been impaired significantly and in an effort to bring about an orderly liquidation without a bankruptcy filing, Core commenced negotiations with all of its lenders seeking to liquidate its assets in an orderly way. Core is currently in default under the terms of all of its outstanding debt totaling approximately $139.4 million. During February 2010, with Core’s concurrence, a significant portion of the land in Tradition Hilton Head was placed under the control of a court appointed receiver. In connection with the receivership, Core entered into a separate agreement with the lender that, among other things, granted Core a right of first refusal to purchase the $25.6 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory that had a net carrying value of $32.3 million, net of impairment charges during 2009 of approximately $29.6 million. On September 1, 2010, the lender commenced an action to enforce the guarantee executed by Core in connection with the loan transactions between the lender and Core South Carolina, a wholly-owned subsidiary of Core. Through this action, the lender seeks to collect on approximately $25 million of indebtedness guaranteed by Core. On October 25, 2010, Core filed an answer and affirmative defenses asserting, among other things, that the claim on the guarantee is not ripe given the bank’s election to first foreclose against the underlying collateral. In addition, Core has raised additional equitable defenses to the claim on the guarantee. Discovery in the case has not yet commenced, and the trial date has been set. The amount of Core’s liability, if any, in this litigation has not been established.

          Separately, on April 7, 2010 and April 8, 2010, Investors Warranty of America, Inc. (“IWA”) filed actions in South Carolina and Florida, respectively, against Core and certain of its subsidiaries seeking foreclosure of mortgage loans totaling approximately $113.8 million, plus additional interest and costs and expenses, including attorneys’ fees. On September 8, 2010, Core and its applicable subsidiaries entered into an agreement with IWA, among other parties, relating to the foreclosure proceedings. IWA 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 which, upon the occurrence of certain events and subject to certain exceptions, provides for the resolution of the disputes between them. Pursuant to the agreement, Core and its subsidiaries agreed to, among other things, (i) pledge additional collateral to PSLA consisting of membership interests in certain subsidiaries of Core, (ii) grant security interests in the acreage owned by the subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land, (iii) the amendment of the complaint related to the Florida foreclosure action to include this additional collateral and (iv) the entry into consensual judgments of foreclosure in both foreclosure actions. Core also agreed to cooperate with PSLA in connection with the enforcement of its remedies against the collateral. PSLA has agreed, upon the occurrence of certain events and subject to certain exceptions, not to enforce a deficiency judgment against Core and has released Core from any other claims arising from or relating to the loans. As of September 30, 2010, the net carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of the foreclosure proceedings was $78.1 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge during the nine months ended September 30, 2010.

          Core was also a party to a certain Development Agreement with the city of Hardeeville, SC, under which Core was obligated to fund $1 million towards the building of a fire station. Funding was scheduled in three installments: the first installment of $100,000 was due on October 21, 2009; the second installment of $450,000 was due on January 1, 2010; and the final installment of $450,000 was due on April 1, 2010. Additionally, Core was obligated to fund certain staffing costs of $200,000 under the terms of this agreement. Core did not pay any of the required installments and has not funded the $200,000 payment for staffing. On November 5, 2009, Core received a notice of default from the city for nonpayment. In the event that Core does not make these payments, it may be unable to cure the default on its obligation to the city, which could result in a loss of entitlements associated with the development project.

          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 5 for further information regarding the Projects.

          Based on an ongoing evaluation of its cost structure and in light of current market conditions, Core reduced its head count by 41 employees during 2009, resulting in approximately $1.3 million in severance charges which were recorded during the fourth quarter of 2009. In the three and nine months ended September 30, 2010, severance related payments at Core totaled approximately $140,000 and $1.1 million, respectively.

          The negative impact of the adverse real estate market conditions on Core, together with Core’s limited liquidity, have caused substantial doubt regarding Core’s ability to continue as a going concern. Woodbridge has not committed to fund any of Core’s obligations or cash requirements, and it is not currently anticipated that Woodbridge will provide additional funds to Core. The consolidated financial statements and the financial information provided for Core do not include any adjustments that might result from the outcome of this uncertainty. See Note 19 for Core’s results which are reported in the Real Estate Operations segment.

BankAtlantic Bancorp and BankAtlantic

          Both BankAtlantic Bancorp Parent Company and BankAtlantic actively manage their liquidity and cash flow needs. BankAtlantic Bancorp Parent Company had cash of $12.2 million as of September 30, 2010, does not have debt maturing until March 2032 and has the ability to defer interest payments on its junior subordinated debentures until December 2013; however, based on current interest rates, accrued and unpaid interest of approximately $73.9 million would be due in December 2013 if interest is deferred until that date. BankAtlantic Bancorp Parent Company’s operating expenses for the three and nine months ended September 30, 2010 were $2.9 million and $7.9 million, respectively, and $2.2 million and $5.7 million for the three and nine months ended September 30, 2009, respectively. BankAtlantic’s liquidity is dependent, in part, on its ability to maintain or increase deposit levels and the availability of borrowings under its lines of credit and Treasury and Federal Reserve lending programs. As of September 30, 2010, BankAtlantic had $338 million of cash and short-term investments and approximately $915 million of available unused borrowings, consisting of $516 million of unused FHLB line of credit capacity, $391 million of unpledged securities, and $8 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. Additionally, interest rate changes, additional collateral requirements, disruptions in the capital markets or deterioration in BankAtlantic’s financial condition, litigation or regulatory action may 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.

          The substantial uncertainties throughout the Florida and national economies and the U.S. banking industry coupled with current market conditions have adversely affected BankAtlantic Bancorp’s and BankAtlantic’s results. As of September 30, 2010, BankAtlantic’s capital was in excess of all regulatory “well capitalized” levels. However, the OTS, in its discretion, can at any time require an institution to maintain capital amounts and ratios

above the established “well capitalized” requirements and otherwise restrict operations based on its view of the risk profile of the specific institution. BankAtlantic’s communications with the OTS include providing information on an ad-hoc, one-time or regular basis related to areas of regulatory oversight and bank operations. As part of such communications, BankAtlantic has and will continue to provide to its regulators, forecasts, strategic business plans and other information relating to anticipated asset balances, asset quality, capital levels, expenses, anticipated earnings and levels of brokered deposits and liquidity. Additionally, BankAtlantic is subject to various restrictions, the most significant of which include that BankAtlantic will not, unless pursuant to an approved business plan or permitted by the OTS, increase its assets, originate or purchase new commercial real estate loans, acquire or renew brokered deposits or pay dividends to BankAtlantic Bancorp Parent Company. Further, it will not solicit deposits by offering interest rates more than 75 basis points over the local market area rate. BankAtlantic currently expects to receive formal communication from the OTS that we anticipate will require BankAtlantic to maintain regulatory capital ratios at levels above the minimum amounts required for “well capitalized” institutions. Higher capital requirements could require BankAtlantic to raise additional capital or to reduce its asset size further, making it more difficult to achieve profitability. There is no assurance that the BankAtlantic Bancorp Parent Company or BankAtlantic would be successful in raising additional capital on favorable terms or at all, and if successful, may involve the issuance of securities in transactions highly dilutive to BankAtlantic Bancorp’s existing shareholders, including BFC. If BankAtlantic is not able to meet higher regulatory capital requirements, BankAtlantic’s results of operations would be materially adversely impacted. Although BankAtlantic Bancorp and BankAtlantic have experienced operating losses since June 2007, BankAtlantic Bancorp believes that it maintains sufficient liquidity to fund operations at least through September 30, 2011. However, if unanticipated market factors emerge and/or BankAtlantic Bancorp is unable to execute its plans or if BankAtlantic or BankAtlantic Bancorp requires capital and BankAtlantic Bancorp is unable to raise capital, it could have a material adverse impact on the Company’s business, results of operations and financial condition.

4. Share Acquisitions

Bluegreen Share Acquisition

          On November 16, 2009, approximately 7.4 million shares of common stock of Bluegreen were purchased for an aggregate purchase price of approximately $23 million, increasing our interest from 9.5 million shares, or 29%, of Bluegreen’s common stock to 16.9 million shares, or 52%, of Bluegreen’s common stock. As a result, the Company now holds a controlling interest in Bluegreen and, in accordance with GAAP, 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/Big Cedar Vacations, LLC (the “Bluegreen/Big Cedar Joint Venture”), in which Bluegreen holds a 51% equity interest, has an active role as the day-to-day manager of its activities, and has majority voting control of its management committee. The operating results of Bluegreen are included in the Company’s Bluegreen Resorts and Bluegreen Communities segments.

          As part of the accounting for the November 2009 Bluegreen share acquisition, management is continuing to evaluate the fair value of Bluegreen’s inventory and certain of Bluegreen’s contracts, and as such, certain amounts at December 31, 2009 and September 30, 2010 are estimates and are subject to revision as more detailed analyses are completed and additional information becomes available. Any change resulting from the final evaluation of the inventory and contracts of Bluegreen as of the acquisition date may change the amount of the $183.1 million “bargain purchase gain” recorded during the fourth quarter of 2009.

Additional Shares Purchased in BankAtlantic Bancorp’s Rights Offering

          On June 18, 2010, BankAtlantic Bancorp commenced a rights offering (the “Rights Offering”) to its shareholders of record as of the close of business on June 14, 2010 (the “Record Date”). In the 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 Rights Offering expired on July 20, 2010.

          As previously disclosed, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock in the 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 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%.

          BFC’s acquisition of shares of BankAtlantic Bancorp’s Class A Common Stock in the Rights Offering was accounted for as an equity transaction in accordance with applicable Financial Accounting Standards Board (“FASB”) authoritative guidance 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.

5. Discontinued Operations and Assets Held for Sale

Real Estate 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 three and nine months ended September 30, 2009 and the nine months ended September 30, 2010. 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 nine months ended September 30, 2010 and 2009. 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 to Inland 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 lender reduced the outstanding balance of the loans related to the assets held for sale by approximately $800,000 as a result of negotiations with the lender. Core used the proceeds from the sale to Inland to repay these loans. As a result, Core was released from its obligations with the lender.

          The following table summarizes information regarding the assets held for sale and liabilities related to the assets held for sale for the Projects (in thousands):

		September 30,				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 Three Months								For the Nine Months
		Ended September 30,								Ended September 30,
		2010				2009				2010				2009
Revenue		$	—				2,161				2,951				6,344
Costs and expenses			—				3,028				3,103				7,876
Loss before income taxes			—				(867	)			(152	)			(1,532	)
Gain on sale of discontinued operations			—				—				2,617				—
Net (loss) income		$	—				(867	)			2,465				(1,532	)

Financial Services- Discontinued Operations

          On February 28, 2007, BankAtlantic Bancorp sold Ryan Beck to Stifel. 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 certain defined Ryan Beck revenues during the two-year period immediately following the Ryan Beck sale, which ended on February 28, 2009, and required BankAtlantic Bancorp to indemnify Stifel for certain losses arising out of activities of Ryan Beck prior to the sale and asserted through September 30, 2009. BankAtlantic Bancorp recognized $4.2 million of earn-out consideration during the nine months ended September 30, 2009 and BankAtlantic Bancorp received $3.7 million in proceeds net of a $0.5 million indemnification obligation. In October 2010, BankAtlantic Bancorp received notice from Stifel that Stifel believes that BankAtlantic Bancorp is obligated to pay Stifel an additional $1.2 million based on such indemnification obligation. Management of BankAtlantic Bancorp believes that it has no liability beyond the previously satisfied $0.5 million indemnification obligation and accordingly, no additional obligation was recognized in connection with the indemnification obligation under the Ryan Beck sales agreement at September 30, 2010.

Financial Services- 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 Tampa operations which includes 19 branches. BankAtlantic engaged an investment banking firm to assist it in selling the Tampa operations. As a consequence, BankAtlantic reclassified its fixed assets related to the anticipated branch sale 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.

          The assets and liabilities associated with the Tampa operations as of September 30, 2010 were as follows:

ASSETS
Cash and cash equivalents		$	4,902
Office properties and equipment			32,307
Total assets held for sale		$	37,209
LIABILITIES
Interest bearing deposits		$	259,893
Non-interest bearing deposits			79,467
Total deposits			339,360
Accrued interest payable			100
Total liabilities held for sale		$	339,460

          BankAtlantic anticipates that the sale of the Tampa operations would reduce annual non-interest expenses by approximately $15 million to $20 million. However, there is no assurance that management will be able to sell its Tampa operations at acceptable terms or at all, and the terms of any such sale are uncertain.

6. Fair Value Measurement

          The following tables present major categories of the Company’s assets measured at estimated fair value on a recurring basis at September 30, 2010 and December 31, 2009 (in thousands):

						Fair Value Measurements using
						Quoted prices in
						Active Markets				Significant Other				Significant
						for Identical				Observable				Unobservable
		September 30,				Assets				Inputs				Inputs
Description		2010				(Level 1)				(Level 2)				(Level 3)
Mortgage-backed securities		$	123,927				—				123,927				—
REMICS (1)			78,805				—				78,805				—
Agency bonds			90,375				—				90,375				—
Municipal bonds			152,177				—				152,177				—
Foreign currency put options			95				95				—				—
Benihana Convertible Preferred Stock			21,393				—				—				21,393
Other equity securities			23,957				23,957				—				—
Total		$	490,729				24,052				445,284				21,393

						Fair Value Measurements using
						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)
Mortgage-backed securities		$	211,945				—				211,945				—
REMICS (1)			107,347				—				107,347				—
Other 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		$	372,715				9,067				319,292				44,356

There were no recurring liabilities measured at fair value on a recurring basis in the Company’s financial statements.

          The following tables present major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2010 and 2009 (in thousands):

		For the Three Months Ended September 30, 2010
						Benihana
		Other				Convertible
		Bonds				Preferred Stock				Total
Beginning Balance		$	250				20,159				20,409
Total gains and losses (realized/unrealized)
Included in earnings			—				—				—
Included in other comprehensive income			—				1,234				1,234
Purchases, issuances, and settlements			(250	)			—				(250	)
Transfers in and/or out of Level 3			—				—				—
Balance at September 30, 2010		$	—				21,393				21,393

		Three Months Ended September 30, 2009
						Benihana
						Convertible				Equity
		Other Bonds				Preferred Stock				Securities				Total
Beginning Balance		$	250				20,511				210				20,971
Total gains and losses (realized/unrealized)
Included in earnings			—				—				—				—
Included in other comprehensive income			—				773				(46	)			727
Purchases, issuances, and settlements			—				—				—				—
Transfers in and/or out of Level 3			—				—				—				—
Balance at September 30, 2009		$	250				21,284				164				21,698
The following tables present major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2010 and 2009 (in thousands):
		For the Nine Months Ended September 30, 2010
		Retained
		Interests in								Benihana
		Notes				Other				Convertible
		Receivable Sold				Bonds				Preferred Stock				Total
Beginning Balance		$	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			—				—				3,627				3,627
Purchases, issuances, and settlements			—				(250	)			—				(250	)
Transfers in and/or out of Level 3			—				—				—				—
Balance at September 30, 2010		$	—				—				21,393				21,393
		For the Nine Months Ended September 30, 2009
						Benihana
		Other				Convertible				Equity
		Bonds				Preferred Stock				Securities				Total
Beginning Balance		$	250				16,426				1,588				18,264
Total gains and losses (realized/unrealized)
Included in earnings (2)			—				—				(1,378	)			(1,378	)
Included in other comprehensive income			—				4,858				(46	)			4,812
Purchases, issuances, and settlements			—				—				—				—
Transfers in and/or out of Level 3			—				—				—				—
Balance at September 30, 2009		$	250				21,284				164				21,698