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

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the Quarter Ended March 31, 2010

OR

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

Commission File Number
001-09071

BFC Financial Corporation

(Exact name of registrant as specified in its charter)

Florida		59-2022148
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

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)

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 x   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.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company x

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

YES o   NO x

The number of shares outstanding of each of the registrant’s classes of common stock as of May 17, 2010 is as follows:

Class A Common Stock of $.01 par value, 68,521,497 shares outstanding as of May 17, 2010.
Class B Common Stock of $.01 par value, 6,859,251 shares outstanding as of May 17, 2010.

 

 

BFC Financial Corporation

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION
		Item 1.		Financial Statements:
				Consolidated Statements of Financial Condition as of March 31, 2010 and December 31, 2009 — Unaudited			3
				Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009 — Unaudited			4
				Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2010 and 2009 — Unaudited			6
				Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2010 — Unaudited			7
				Consolidated Statements of Cash Flows for the Three Months Ended March 31, 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			48
		Item 4T.		Controls and Procedures			95
PART II.		OTHER INFORMATION
		Item 1.		Legal Proceedings			96
		Item 1A.		Risk Factors			96
		Item 6.		Exhibits			96
		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
Consolidated Statements of Financial Condition — Unaudited
(In thousands, except share data)

		March 31,				December 31,
		2010				2009
ASSETS
Cash and cash equivalents and due from depository institutions		$	516,860				315,580
Short-term investments			500				500
Restricted cash			53,178				24,020
Securities available for sale, at fair value			278,476				346,375
Investment securities at cost or amortized cost (fair value: $1,981 in 2010 and $9,654 in 2009)			1,981				9,654
Current income tax receivable			64,006				64,006
Tax certificates, net of allowance of $7,341 in 2010 and $6,781 in 2009			88,438				110,991
Federal Home Loan Bank (“FHLB”) stock, at cost which approximates fair value			48,751				48,751
Loans held for sale			5,030				4,547
Loans receivable, net of allowance for loan losses of $177,597 in 2010 and $187,218 in 2009			3,499,925				3,678,894
Notes receivable including gross securitized notes, net of allowance of $81,116 in 2010 and $3,986 in 2009			626,131				277,274
Retained interest in notes receivable sold			—				26,340
Accrued interest receivable			29,756				32,279
Real estate inventory			505,066				494,291
Real estate owned and other repossessed assets			51,365				46,477
Investments in unconsolidated affiliates			12,225				15,272
Properties and equipment, net			283,593				289,209
Goodwill			12,241				12,241
Intangible assets, net			80,182				81,686
Assets held for sale			71,293				71,900
Other assets			121,743				96,750
Total assets		$	6,350,740				6,047,037
LIABILITIES AND EQUITY
Liabilities:
Interest bearing deposits		$	3,146,223				3,133,360
Non-interest bearing deposits			896,466				815,458
Total deposits			4,042,689				3,948,818
Advances from FHLB			152,008				282,012
Securities sold under agreements to repurchase			24,674				24,468
Federal funds purchased and other short term borrowings			2,628				2,803
Receivable-backed notes payable			619,563				237,416
Notes and mortgage notes payable and other borrowings			381,260				395,361
Junior subordinated debentures			450,374				447,211
Deferred income taxes			27,756				31,204
Liabilities related to assets held for sale			76,297				76,351
Other liabilities			194,023				186,453
Total liabilities			5,971,272				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 6,854,251 in 2010 and 2009			69				69
Additional paid-in capital			229,083				227,934
(Accumulated deficit) retained earnings			(6,552	)			16,608
Accumulated other comprehensive income (loss)			2,380				(237	)
Total BFC Financial Corporation (“BFC”) shareholders’ equity			225,665				245,059
Noncontrolling interests			142,774				158,852
Total equity			368,439				403,911
Total liabilities and equity		$	6,350,740				6,047,037

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Consolidated Statements of Operations — Unaudited
(In thousands, except per share data)

		For the Three Months Ended
		March 31,
		2010				2009
Revenues
Real Estate and Other:
Sales of real estate		$	18,595				1,427
Other resorts and communities operations revenue			16,021				—
Other revenues			11,187				892
Interest income			30,011				—
			75,814				2,319
Financial Services:
Interest income			47,603				62,908
Service charges on deposits			15,048				18,685
Other service charges and fees			7,378				7,025
Securities activities, net			3,138				4,440
Other non-interest income			3,199				2,650
			76,366				95,708
Total revenues			152,180				98,027
Costs and Expenses
Real Estate and Other:
Cost of sales of real estate			8,896				693
Cost of sales of other resorts and communities operations			12,690				—
Interest expense			19,931				2,248
Selling, general and administrative expenses			54,654				10,955
			96,171				13,896
Financial Services:
Interest expense			11,844				24,775
Provision for loan losses			30,755				44,277
Employee compensation and benefits			25,378				28,806
Occupancy and equipment			13,582				14,911
Advertising and promotion			1,944				2,832
Check losses			432				844
Professional fees			2,887				3,326
Supplies and postage			998				1,004
Telecommunication			534				698
Cost associated with debt redemption			7				591
Provision for tax certificates			733				1,486
Restructuring charges and exit activities			143				1,875
Impairment of goodwill			—				8,541
Other expenses			7,372				7,642
			96,609				141,608
Total costs and expenses			192,780				155,504
Gain on settlement of investment in Woodbridge’s subsidiary			—				40,369
Equity in earnings from unconsolidated affiliates			4				6,495
Impairment of unconsolidated affiliates			—				(20,401	)
Impairment of investments			—				(2,396	)
Other income			754				981
Loss from continuing operations before income taxes			(39,842	)			(32,429	)
Less: Benefit for income taxes			(4,591	)			—
Loss from continuing operations			(35,251	)			(32,429	)
(Loss) income from discontinued operations			(249	)			3,397
Net loss			(35,500	)			(29,032	)
Less: Net loss attributable to noncontrolling interests			(14,665	)			(18,629	)
Net loss attributable to BFC			(20,835	)			(10,403	)
Preferred stock dividends			(188	)			(188	)
Net loss allocable to common stock		$	(21,023	)			(10,591	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Consolidated Statements of Operations — Unaudited
(In thousands, except per share data)

		For the Three Months Ended
		March 31,
		2010				2009
Basic and Diluted (Loss) Earnings Per Common Share Attributable to BFC (Note 21):
Basic (Loss) Earnings Per Common Share
Loss per share from continuing operations		$	(0.28	)			(0.26	)
Earnings per share from discontinued operations			—				0.03
Net loss per common share		$	(0.28	)			(0.23	)
Diluted (Loss) Earnings Per Common Share
Loss per share from continuing operations		$	(0.28	)			(0.26	)
Earnings per share from discontinued operations			—				0.03
Net loss per common share		$	(0.28	)			(0.23	)
Basic weighted average number of common shares outstanding			75,376				45,114
Diluted weighted average number of common and common equivalent shares outstanding			75,376				45,114
Amounts attributable to BFC common shareholders:
Loss from continuing operations		$	(20,774	)			(11,659	)
(Loss) income from discontinued operations			(249	)			1,068
Net loss attributable to BFC common shareholders		$	(21,023	)			(10,591	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Consolidated Statements of Comprehensive Loss — Unaudited
(In thousands)

		For the Three Months Ended
		March 31,
		2010				2009
Net loss		$	(35,500	)			(29,032	)
Other comprehensive income, net of tax:
Unrealized gains on securities available for sale			3,439				7,016
Unrealized gains associated with investment in unconsolidated affiliates			—				473
Realized gains reclassified into net loss			(3,139	)			(2,044	)
Other comprehensive income			300				5,445
Comprehensive loss			(35,200	)			(23,587	)
Less: Comprehensive loss attributable to noncontrolling interests			(16,057	)			(14,740	)
Total comprehensive loss attributable to BFC		$	(19,143	)			(8,847	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Consolidated Statement of Changes in Equity — Unaudited
For the Three Months Ended March 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, 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			—				—				—				—				—				(20,835	)							(20,835	)			(14,665	)			(35,500	)
Other comprehensive income (loss)			—				—				—				—				—				—				1,692				1,692				(1,392	)			300
Net effect of subsidiaries’ capital transactions attributable to BFC			—				—				—				—				814				—				—				814				—				814
Noncontrolling interest net effect of subsidiaries’ capital transactions			—				—				—				—				—				—				—				—				790				790
Cash dividends on 5% Preferred Stock			—				—				—				—				—				(188	)			—				(188	)			—				(188	)
Share-based compensation related to stock options			—				—				—				—				335				—				—				335				—				335
Balance, March 31, 2010			68,521				6,854			$	685			$	69			$	229,083			$	(6,552	)		$	2,380			$	225,665			$	142,774			$	368,439

See Notes to Unaudited Consolidated Financial Statements.

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

		For the Three Months Ended
		March 31,
		2010				2009
Net cash provided by (used in) operating activities		$	29,102				(5,013	)
Investing activities:
Proceeds from redemption and maturity of investment securities and tax certificates			34,866				43,528
Purchase of investment securities and tax certificates			(21,953	)			(29,491	)
Purchase of securities available for sale			(13,351	)			—
Proceeds from sales of securities available for sale			68,963				162,170
Proceeds from maturities of securities available for sale			32,138				37,561
Decrease in restricted cash			6,707				12,713
Cash paid in settlement of Woodbridge subsidiary’s bankruptcy			—				(12,430	)
Purchases of FHLB stock			—				(2,295	)
Redemption of FHLB stock			—				8,151
Investments in unconsolidated affiliates			—				(461	)
Distributions from unconsolidated affiliates			140				224
Net decrease in loans			118,217				69,773
Proceeds from the sale of loans receivable			26,421				—
Improvements to real estate owned			(779	)			—
Proceeds from sales of real estate owned			3,269				602
Purchases of office property and equipment, net			(2,073	)			(973	)
Acquisition of Pizza Fusion			—				3,000
Net cash provided by investing activities			252,565				292,072
Financing activities:
Net increase in deposits			93,871				128,618
Net repayments of FHLB advances			(130,000	)			(150,591	)
Net increase (decrease) in short term borrowings			31				(188,521	)
Prepayment of notes and bonds payable			(661	)			—
Repayment of notes, mortgage notes and bonds payable			(51,576	)			(583	)
Proceeds from notes, mortgage notes and bonds payable			8,205				132
Preferred stock dividends paid			(188	)			(188	)
Purchase and retirement of Woodbridge common stock			—				(13	)
Proceeds from issuance of BankAtlantic Bancorp Class A common stock to non-BFC shareholders			65				—
BankAtlantic Bancorp common stock dividends paid to non-BFC shareholders			—				(198	)
BankAtlantic Bancorp non-controlling interest distributions			(134	)			—
Net cash used in financing activities			(80,387	)			(211,344	)
Increase in cash and cash equivalents			201,280				75,715
Cash and cash equivalents at beginning of period			316,080				278,937
Cash, cash equivalents and short term investments at end of period		$	517,360				354,652

See Notes to Unaudited Consolidated Financial Statements.

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

		For the Three Months Ended
		March 31,
		2010				2009
Supplemental cash flow information:
Interest paid on borrowings and deposits		$	21,215				29,424
Income taxes paid			128				—
Supplementary disclosure of non-cash investing and financing activities:
Loans and tax certificates transferred to real estate owned			7,503				3,388
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				—
Increase in BFC accumulated other comprehensive income, net of taxes			1,692				1,556
Net increase in BFC shareholders’ equity from the effect of subsidiaries’ capital transactions, net of taxes			814				391
Net decrease in equity resulting from cumulative effect of change in accounting principle (See Note 2)			(2,023	)			—

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”), a controlling interest in Core Communities, LLC (“Core” or “Core Communities”) 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 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.

     As BFC also previously disclosed, on November 16, 2009, an additional approximately 7.4 million shares of the common stock of Bluegreen was purchased for an aggregate purchase price of approximately $23 million. As a result, our ownership interest increased to approximately 16.9 million shares, or approximately 52%, of Bluegreen’s outstanding common stock. Accordingly, we are now 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 approximate 29% equity investment in Bluegreen was accounted for using the equity method. See Note 4 for additional information about the Bluegreen share acquisition.

     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 Woodbridge, Core, Bluegreen and BankAtlantic Bancorp, 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 March 31, 2010, we owned approximately 36% of BankAtlantic Bancorp’s Class A and Class B common stock, representing approximately 65% of BankAtlantic Bancorp’s total voting power, and approximately 52% of Bluegreen’s common stock.

     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, as are necessary for a fair statement of the Company’s consolidated financial condition at March 31, 2010; the consolidated results of operations, comprehensive loss and cash flows for the three months ended March 31, 2010 and 2009, and the changes in consolidated equity for the three months ended March 31, 2010. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These 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.

     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, in each case as described above, 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”). As a result of this decision, the assets associated with the Projects have been classified as discontinued operations for all periods presented. For further information see Note 5.

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 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 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, and resulted in a one-time non-cash after-tax reduction to retained earnings of $2.1 million, representing the cumulative effect of change in accounting principle associated with the consolidation of Bluegreen’s seven existing special purpose entities. 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 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 our subsidiaries and dividends from Benihana. As discussed further in this Report, recent tax law changes have resulted in the anticipated receipt of significant tax refunds by our subsidiaries. We may use our available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments or to otherwise fund operations. 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 certain terms which might limit the payment of cash dividends.

     We believe that our current financial condition and credit relationships, together with anticipated cash flows from operations and other sources of funds, including anticipated tax refunds due our subsidiaries and proceeds from the disposition of certain properties or investments, will provide for anticipated near-term liquidity needs. With respect to our long-term liquidity requirements, in addition to the foregoing BFC may seek funds through the issuance of long-term secured and unsecured indebtedness, equity and/or debt securities or through the sale of assets, as determined to be appropriate by the Company; however, there is no assurance that any of these alternatives will be available to BFC on attractive terms, or at all, particularly if the adverse current economic and financial market conditions continue.

     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, a further deterioration in consumer confidence, an overall softening of demand for new homes, a decline in the overall economy, increasing unemployment, a deterioration in the credit markets, and the direct and indirect impact of the turmoil in the mortgage loan market. 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. Furthermore, 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. Subsequently, the lender was taken over by the FDIC and accordingly, the FDIC now holds the loan. 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 is negotiating with representatives of the FDIC in an effort to bring about a satisfactory conclusion with regard to that debt. However, the outcome of the negotiations 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 which 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 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.

     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 severely limited its development expenditures in Tradition, Florida and has

completely discontinued development activity in 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 and is 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 $139.0 million (excluding loans associated with assets held for sale of $71.4 million). Core continues to pursue all options with its lenders, including offering deeds in lieu and other similar transactions wherein Core would relinquish title to substantially all of its assets. 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, grants Core a right of first refusal to purchase the $25.3 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory with a carrying value of $33.0 million, net of impairment charges of approximately $29.6 million in 2009. Separately, on April 7, 2010, and April 8, 2010, another of Core’s lenders filed a foreclosure action in South Carolina and Florida, respectively, seeking foreclosure of mortgage loans totaling approximately $113.7 million, plus additional interest and costs and expenses, including attorney fees. As of March 31, 2010, the carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of the foreclosure proceedings was $82.9 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge in the three months ended March 31, 2010. While negotiations with its lenders continue, there is no assurance that Core will be successful in reaching any agreement with its lenders with respect to resolution of these obligations.

     In December 2009, Core reinitiated efforts to sell the Projects and began soliciting bids from several potential buyers to purchase the assets associated with the Projects. Core has accepted an offer to sell the Projects, which has been approved by the lender with substantially all of the proceeds going to satisfy Core’s obligations to the lender, and Core believes that it is probable that it will sell the Projects in 2010. However, there is no assurance that the transaction will close or that Core will be released from its obligations. As of the date of this filing, the sale was still in the due diligence phase. See Note 5 for further information regarding the Projects.

     Core is also a party to a certain Development Agreement with the city of Hardeeville, SC, under which Core is 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 October 21, 2009; the second installment of $450,000 was due on January 1, 2010; and the final installment 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 non payment. Core is in discussions with one of its lenders to fund the required payments out of an interest reserve account established under its loan agreement with that lender while it seeks to resolve this issue. However, in the event that Core is unable to obtain additional funds to 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.

     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 of severance charges recorded during the fourth quarter of 2009. In the first quarter of 2010, severance related payments at Core totaled approximately $577,000.

     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 if Woodbridge chooses not to provide Core with the cash needed to meet its obligations when and as they arise. 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. Core’s results are reported in the Real Estate Operations segment in Note 18. Core’s financial information included in the consolidated financial statements has been prepared assuming that Core will meet its obligations and continue as a going concern. As a result, 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.

     BankAtlantic Bancorp and BankAtlantic

     Both BankAtlantic Bancorp Parent Company and BankAtlantic actively manage liquidity and cash flow needs. BankAtlantic Bancorp Parent Company had cash of $5.1 million as of March 31, 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 $72.3 million would be due in December 2013 if interest is deferred until that date. BankAtlantic Bancorp Parent Company’s operating expenses for the three months ended March 31, 2010 and 2009 were $1.6 million and $1.7 million, respectively, and its non-interest income was $0.5 million and $0.5 million, respectively. At March 31, 2010, other assets included BankAtlantic Bancorp Parent Company’s $5.2 million receivable from the sale of a non-performing loan. The cash from the sale of the loan was received in April 2010. 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 March 31, 2010, BankAtlantic had $444 million of cash and approximately $802 million of available unused borrowings, consisting of $644 million of unused FHLB line of credit capacity, $73 million of unpledged securities, and $85 million of available borrowing capacity at the Federal Reserve. However, such available borrowings are subject to periodic 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 may reduce the amounts it is able to borrow or make terms of the borrowings and deposits less favorable. As a result, the cost of funds may increase and the availability of funding sources may decrease.

     The substantial uncertainties throughout the Florida and national economies and U.S. banking industry coupled with current market conditions have adversely affected BankAtlantic Bancorp’s and BankAtlantic’s results. As of March 31, 2010, BankAtlantic’s capital was in excess of all regulatory “well capitalized” levels. However, the OTS, at its discretion, can at any time require an institution to maintain capital amounts and ratios above the established “well capitalized” requirements 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 provided to its regulators forecasts, strategic business plans and other information relating to anticipated asset balances, asset quality, capital levels, expenses, anticipated earnings, levels of brokered deposits and liquidity, and has indicated that BankAtlantic has no plans to pay dividends to BankAtlantic Bancorp Parent Company. If higher capital requirements are imposed by its regulators, BankAtlantic could be required to raise additional capital. If BankAtlantic is required to raise additional capital, there is no assurance that BankAtlantic Bancorp Parent Company or BankAtlantic would be successful in raising additional capital on favorable terms or at all. Although BankAtlantic Bancorp and BankAtlantic have experienced operating losses since June 2007, BankAtlantic maintains capital at “well capitalized” levels and BankAtlantic Bancorp Parent Company believes that it maintains sufficient liquidity to fund operations at least through March 31, 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 BankAtlantic Bancorp’s business, results of operations and financial condition.

4.		Bluegreen Share Acquisition

     On November 16, 2009, approximately 7.4 million shares of the 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 which represents a controlling interest in Bluegreen. As a result, 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 purchase 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 March 31, 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.

5.		Discontinued Operations

Real Estate

     Core Communities

     In December 2009, Core Communities reinitiated efforts to sell the Projects and began soliciting bids for the immediate sale of the Projects in their present condition from several potential buyers. As indicated below, Core has determined that it is probable that it will sell the Projects in 2010. Due to this decision, the assets associated with the Projects that are for sale have been classified as discontinued operations for all periods presented 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 Statements of Financial Condition. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations. Depreciation related to these assets held for sale ceased in December 2009. The Company has elected not to separate these assets in the Consolidated Statements of Cash Flows for the periods presented. 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. As of March 31, 2010, the Company determined that these assets were appropriately recorded at the lower of cost or fair value less the costs to sell.

     The following table summarizes information regarding the assets held for sale and liabilities related to the assets held for sale for the Projects as of March 31, 2010 and December 31, 2009 (in thousands):

		March 31,				December 31,
		2010				2009
Restricted cash		$	1,191				538
Property and equipment, net			61,608				61,588
Other assets			8,494				9,774
Assets held for sale		$	71,293				71,900
Accounts payable, accrued liabilities and other		$	1,764				1,602
Notes and mortgage payable			74,533				74,749
Liabilities related to assets held for sale		$	76,297				76,351

     The following table summarizes the results of operations for the Projects (in thousands):

		March 31,				March 31,
		2010				2009
Revenue and other income		$	1,834				2,002
Costs and expenses			2,083				2,806
Loss before income taxes			(249	)			(804	)
Benefit for income taxes			—				—
Loss from discontinued operations		$	(249	)			(804	)

     Core is the obligor under $71.4 million of loans as of March 31, 2010, which are collateralized by the Projects and these loans are currently in default. Core has accepted an offer to sell the Projects, which has been approved by the lender. It is anticipated that substantially all of the proceeds from the sale will be paid to the lender in satisfaction of Core’s obligations to the lender. However, there can be no assurance that the transaction will close or that Core will be released from its obligations. As of the date of this filing, the sale was still in the due diligence phase.

Financial Services

     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. The contingent earn-out payments were accounted for when earned as additional proceeds from the sale of Ryan Beck common stock. BankAtlantic Bancorp received additional earn-out consideration of $4.2 million during the three months ended March 31, 2009.

6.		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 the 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); 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.

     The following table presents major categories of the Company’s assets measured at fair value on a recurring basis at March 31, 2010 (in thousands):

						Fair Value Measurements Using
						Quoted prices in
						Active Markets				Significant Other				Significant
						for Identical				Observable				Unobservable
		March 31,				Assets				Inputs				Inputs
Description		2010				(Level 1)				(Level 2)				(Level 3)
Securities Available for Sale:
Mortgage-backed securities		$	152,594				—				152,594				—
REMICS (1)			89,648				—				89,648				—
Bonds			250				—				—				250
Benihana Convertible Preferred Stock			20,247				—				—				20,247
Other equity securities			15,737				15,737				—				—
Total securities available for sale at fair value		$	278,476				15,737				242,242				20,497

     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 (1)			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 liabilities measured at fair value on a recurring basis in the Company’s 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 three months ended March 31, 2010 (in thousands):

		Retained
		Interests in								Benihana
		Notes								Convertible				Equity
		Receivable Sold				Bonds				Preferred Stock				Securities				Total
Beginning Balance		$	26,340				250				17,766				—				44,356
Total gains and losses (realized/unrealized) Cumulative effect of change in accounting principle (1)			(26,340	)			—				—				—				(26,340	)
Included in other comprehensive income			—				—				2,481				—				2,481
Purchases, issuances, and settlements			—				—				—				—				—
Transfers in and/or out of Level 3			—				—				—				—				—
Balance at March 31, 2010		$	—				250				20,247				—				20,497

     The following table presents major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2009 (in thousands):

						Benihana
						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			—				—				—				—
Included in other comprehensive loss			—				(42	)			(336	)			(378	)
Purchases, issuances, and settlements			—				—				—				—
Transfers in and/or out of Level 3			—				—				—				—
Balance at March 31, 2009		$	250				16,384				1,252				17,886

     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 mortgage-backed and real estate mortgage conduit securities 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 Bancorp 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 Bancorp 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 Bancorp 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.

     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 to value bonds and equity securities, if available. Also non-binding broker quotes are obtained to validate fair values obtained from matrix pricing. However, for certain equity and debt securities in which observable market inputs cannot be obtained, these securities are valued either using the income approach and pricing models that BankAtlantic Bancorp developed or based on observable market data that BankAtlantic Bancorp has adjusted based on management’s judgment of the factors a market participant would use to value the securities (Level 3).

     The estimated fair value of the Company’s investment in Benihana’s Series B Convertible Preferred Stock (“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 Convertible Preferred Stock.

     The following table presents major categories of assets measured at fair value on a non-recurring basis as of March 31, 2010 (in thousands):

						Fair Value Measurements Using
						Quoted prices in												Total
						Active Markets				Significant				Significant				Impairments
		As of				for Identical				Other Observable				Unobservable				For the Three
		March 31,				Assets				Inputs				Inputs				Months Ended
Description		2010				(Level 1)				(Level 2)				(Level 3)				March 31, 2010
Loans measured for impairment using the fair value of the collateral		$	189,832				—				—				189,832				21,581
Impaired real estate owned			665				—				—				665				143
Total		$	190,497				—				—				190,497				21,724

     The following table presents major categories of assets measured at fair value on a non-recurring basis as of March 31, 2009 (in thousands):

						Fair Value Measurements Using
						Quoted prices in												Total
						Active Markets				Significant				Significant				Impairments
		As of				for Identical				Other Observable				Unobservable				For the Three
		March 31,				Assets				Inputs				Inputs				Months Ended
Description		2009				(Level 1)				(Level 2)				(Level 3)				March 31, 2009
Loans measured for impairment using the fair value of the collateral		$	36,208				—				—				36,208				9,860
Impaired real estate owned			1,590				—				—				1,590				211
Impaired goodwill			—				—				—				—				8,541
Total		$	37,798				—				—				37,798				18,612

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

     Loans Receivable Measured For Impairment

     Impaired loans receivable are generally valued based on the fair value of the underlying collateral. BankAtlantic Bancorp primarily uses third party appraisals to assist in measuring 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 these values may also be adjusted for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans receivable, judgment on market conditions is used to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed, and the amount of time required 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. BankAtlantic Bancorp generally uses third party broker price opinions or an automated valuation service 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. The third party valuations from real estate professionals use Level 3 inputs in the determination of the fair values.

     Impaired Real Estate Owned

     Real estate owned is generally valued with the assistance of third party appraisals or broker price opinions. These 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 these values may also be adjusted for changes in market conditions subsequent to the valuation date when current appraisals are not available. As a consequence of using broker price opinions and adjustments to appraisals, the fair values of the properties use Level 3 inputs in the determination of fair value.

     Impaired Goodwill

     In determining the fair value of BankAtlantic Bancorp’s reporting units in the test of goodwill for impairment, BankAtlantic Bancorp uses discounted cash flow valuation techniques. 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 include anticipated growth in loan, tax certificates, securities, interest rates and revenue. The discount rates are estimated based on a 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 significantly impact 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.

     Goodwill of $12.2 million associated with BankAtlantic Bancorp’s capital services reporting unit was determined not to be impaired and is included on the Company’s Consolidated Statements of Financial Condition as of March 31, 2010 and December 31, 2009. The capital services goodwill was tested for potential impairment on September 30, 2009 (the annual testing date). There were no events that occurred since the annual testing date that BankAtlantic Bancorp believes would more likely than not reduce the carrying value of BankAtlantic Bancorp’s capital services reporting unit below its fair value.

Financial Disclosures about Fair Value of Financial Instruments

     The following table presents information for financial instruments at March 31, 2010 and December 31, 2009 (in thousands):

		March 31, 2010								December 31, 2009
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Financial assets:
Cash and cash equivalents		$	516,860				516,860				315,580				315,580
Federal funds sold and short-term investments			500				500				500				500
Restricted cash			53,178				53,178				24,020				24,020
Securities available for sale			278,476				278,476				346,375				346,375
Investment securities			1,981				1,981				9,654				9,654
Tax Certificates			88,438				90,130				110,991				112,472
Federal Home Loan Bank stock			48,751				48,751				48,751				48,751
Retained interest in notes receivable sold			—				—				26,340				26,340
Loans receivable including loans held for sale, net			3,504,955				3,223,475				3,683,441				3,381,796
Notes receivable			626,131				660,000				277,274				277,274
Financial liabilities:
Deposits		$	4,042,689				4,044,226				3,948,818				3,950,840
Advances from FHLB			152,008				152,009				282,012				282,912
Short term borrowings			27,302				27,302				27,271				27,271
Receivable-backed notes payable			619,563				598,319				237,416				237,416
Notes and mortgage notes payable and other borrowings			381,260				379,147				395,361				392,047
Mortgage payables associated with assets held for sale			74,533				74,533				74,749				74,749
Junior subordinated debentures			450,374				191,156				447,211				170,598

     Management of the respective consolidated companies have made estimates of fair value that they believe 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 and market approach techniques 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. Management estimates used in 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.

     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 Bancorp’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 of BankAtlantic Bancorp assigns a credit risk premium and an illiquidity adjustment to these loans based on risk grades.

     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 considered to be its carrying amount.

     The fair values of Bluegreen notes receivable are based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate.

     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 to equal to 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 it would pay to obtain similar borrowings and also used discounted values of contractual cash flows at a market discount rate.

     The fair value of BankAtlantic Bancorp’s mortgage-backed bond as of December 31, 2009 was based on discounted values of contractual cash flows at a market discount rate. The mortgage-backed bonds were retired during the three months ended March 31, 2010 resulting in a $7,000 loss.

     In determining the fair value of BankAtlantic Bancorp’s junior subordinated debentures, BankAtlantic Bancorp used NASDAQ price quotes available with respect to its $63.4 million of publicly traded trust preferred securities related to its junior subordinated debentures (“public debentures”). However, $248.3 million of the outstanding trust preferred securities related to its junior subordinated debentures are not traded, but are privately held in pools with no liquidity or readily determinable source for valuation (“private debentures”). 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 March 31, 2010 and December 31, 2009, and as a practical expedient, 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 March 31, 2010 and December 31, 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 considered significant. (See Note 19 for the contractual amounts of BankAtlantic’s financial instrument commitments.)

7.		Securities Available for Sale

     The following tables summarize securities available for sale (in thousands):

		As of March 31, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
Government agency securities:
Mortgage-backed securities		$	145,943				6,651				—				152,594
Real estate mortgage investment conduits (1)			86,544				3,104				—				89,648
Total mortgage-backed securities			232,487				9,755				—				242,242
Investment Securities:
Other bonds			250				—				—				250
Benihana Convertible Preferred Stock			16,426				3,821				—				20,247
Equity and other securities			15,580				161				4				15,737
Total investment securities			32,256				3,982				4				36,234
Total		$	264,743				13,737				4				278,476

		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