Bluegreen Vacations Holding Corp - Quarter Report: 2011 March (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

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

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 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		Smaller reporting company þ
				(Do not check if a smaller reporting company)

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

YES o      NO þ

The number of shares outstanding of each of the registrant’s classes of common stock as of May 10, 2011 is as follows:

Class A Common Stock of $.01 par value, 68,521,497 shares outstanding as of May 10, 2011.
Class B Common Stock of $.01 par value, 6,859,751 shares outstanding as of May 10, 2011.

 

 

BFC Financial Corporation

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Financial Condition as of March 31, 2011 and December 31, 2010 — Unaudited			3
Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010 — Unaudited			4
Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2011 and 2010 — Unaudited			6
Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2011 — Unaudited			7
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010 — Unaudited			8
Notes to Unaudited Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			54
Item 4T. Controls and Procedures			100
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			101
Item 1A. Risk Factors			103
Item 6. Exhibits			103
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

Consolidated Statements of Financial Condition — Unaudited
(In thousands, except share data)

		March 31,				December 31,
		2011				2010
ASSETS
Cash and cash equivalents		$	164,845				178,868
Interest bearing deposits in other banks			656,424				455,538
Restricted cash (including held by variable interest entities (“VIE”) of $38,735 in 2011 and $41,243 in 2010)			60,954				62,249
Securities available for sale at fair value			414,499				465,020
Investment securities at cost or amortized cost (fair value: $1,833 in 2011 and $2,033 in 2010)			1,833				2,033
Tax certificates, net of allowance of $9,287 in 2011 and $8,811 in 2010			77,837				89,789
Federal Home Loan Bank (“FHLB”) stock, at cost which approximates fair value			43,557				43,557
Loans held for sale			49,455				29,765
Loans receivable, net of allowance for loan losses of $155,051 in 2011 and $162,139 in 2010			2,813,530				3,009,721
Notes receivable (including gross securitized notes of $505,459 in 2011 and $533,479 in 2010) net of allowance of $86,370 in 2011 and $93,398 in 2010			556,452				574,969
Accrued interest receivable			20,601				22,010
Real estate inventory			337,188				343,497
Real estate owned and other repossessed assets			75,146				74,488
Investments in unconsolidated affiliates			12,869				12,455
Properties and equipment, net			213,788				218,665
Goodwill and intangible assets, net			89,834				91,159
Assets held for sale			36,909				37,334
Prepaid Federal Deposit Insurance Corporation (“FDIC”) deposit insurance assessment			18,823				22,008
Other assets			80,908				79,941
Total assets		$	5,725,452				5,813,066
LIABILITIES AND EQUITY
Liabilities:
Interest bearing deposits		$	2,735,701				2,758,032
Non-interest bearing deposits			878,873				792,012
Deposits held for sale			390,432				341,146
Total deposits			4,005,006				3,891,190
Advances from FHLB			45,000				170,000
Securities sold under agreements to repurchase			17,006				21,524
Other short term borrowings			1,367				1,240
Receivable-backed notes payable, (including $430,329 held by VIE in 2011 and $459,030 in 2010)			536,407				569,214
Notes and mortgage notes payable and other borrowings			228,867				239,571
Junior subordinated debentures			465,453				461,568
Deferred income taxes			30,457				28,663
Deferred gain on settlement of investment in subsidiary			—				11,305
Other liabilities			179,610				186,634
Total liabilities			5,509,173				5,580,909
Commitments and contingencies
Preferred stock of $.01 par value; authorized - 10,000,000 shares:
Redeemable 5% Cumulative Preferred Stock — $.01 par value; authorized 15,000 shares issued and outstanding 15,000 shares with redemption value of $1,000 per share			11,029				11,029
Equity:
Class A common stock of $.01 par value, authorized 150,000,000 shares; issued and outstanding 68,521,497 in 2011 and 2010			685				685
Class B common stock of $.01 par value, authorized 20,000,000 shares; issued and outstanding 6,859,751 in 2011 and 2010			69				69
Additional paid-in capital			231,522				230,748
Accumulated deficit			(91,652	)			(88,853	)
Accumulated other comprehensive (loss) income			(228	)			223
Total BFC Financial Corporation (“BFC”) shareholders’ equity			140,396				142,872
Noncontrolling interests			64,854				78,256
Total equity			205,250				221,128
Total liabilities and equity		$	5,725,452				5,813,066

See Notes to Unaudited Consolidated Financial Statements.

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

		For the Three Months Ended
		March 31,
		2011				2010
						(As Revised)
Revenues
Real Estate and Other:
Sales of real estate		$	41,623				27,852
Other resorts and communities operations revenue			17,634				16,021
Other revenues			11,035				11,187
Interest income			22,433				24,214
			92,725				79,274
Financial Services:
Interest income			40,064				48,087
Service charges on deposits			12,032				15,048
Other service charges and fees			7,191				7,378
Securities activities, net			(24	)			3,138
Other non-interest income			3,527				2,526
			62,790				76,177
Total revenues			155,515				155,451
Costs and Expenses
Real Estate and Other:
Cost of sales of real estate			9,675				8,103
Cost of sales of other resorts and communities operations			13,967				12,690
Interest expense, net of interest capitalized			18,625				21,258
Selling, general and administrative expenses			51,798				54,104
			94,065				96,155
Financial Services:
Interest expense			8,527				11,844
Provision for loan losses			27,812				30,755
Employee compensation and benefits			19,290				25,378
Occupancy and equipment			12,585				13,582
Advertising and promotion			1,695				1,944
Check losses			299				432
Professional fees			3,359				2,887
Supplies and postage			902				998
Telecommunication			575				534
Provision for tax certificates			779				733
Lease termination costs			(849	)			—
Employee termination costs			(154	)			—
Impairment of loans held for sale			628				—
Impairment of real estate owned			2,323				143
FDIC deposit insurance assessment			3,305				2,358
Other expenses			4,563				5,021
			85,639				96,609
Total costs and expenses			179,704				192,764
Gain on settlement of investment in subsidiary			11,305				—
Equity in earnings from unconsolidated affiliates			1,777				193
Other income			574				438
Loss from continuing operations before income taxes			(10,533	)			(36,682	)
Less: Provision (benefit) for income taxes			1,793				(3,831	)
Loss from continuing operations			(12,326	)			(32,851	)
Loss from discontinued operations			—				(249	)
Net loss			(12,326	)			(33,100	)
Less: Net loss attributable to noncontrolling interests			(9,715	)			(13,320	)
Net loss attributable to BFC			(2,611	)			(19,780	)
Preferred stock dividends			(188	)			(188	)
Net loss allocable to common stock		$	(2,799	)			(19,968	)

(CONTINUED)

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,
		2011				2010
						(As Revised)
Basic and Diluted (Loss) Earnings Per Common Share Attributable to BFC (Note 18):
Basic Loss Per Common Share
Loss per share from continuing operations		$	(0.04	)			(0.26	)
Loss per share from discontinued operations			—				—
Net loss per common share		$	(0.04	)			(0.26	)
Diluted Loss Per Common Share
Loss per share from continuing operations		$	(0.04	)			(0.26	)
Loss per share from discontinued operations			—				—
Net loss per common share		$	(0.04	)			(0.26	)
Basic weighted average number of common shares outstanding			75,381				75,376
Diluted weighted average number of common and common equivalent shares outstanding			75,381				75,376
Amounts attributable to BFC common shareholders:
Loss from continuing operations		$	(2,799	)			(19,719	)
Loss from discontinued operations			—				(249	)
Net loss		$	(2,799	)			(19,968	)

See Notes to Unaudited Consolidated Financial Statements.

Consolidated Statements of Comprehensive Loss — Unaudited
(In thousands)

		For the Three Months Ended
		March 31,
		2011				2010
						(As Revised)
Net loss		$	(12,326	)			(33,100	)
Other comprehensive income, net of tax:
Unrealized (losses) gains on securities available for sale, net of tax of $0 in 2011 and $969 in 2010			(864	)			2,470
Realized gains reclassified into net loss			—				(3,139	)
Other comprehensive income			(864	)			(669	)
Comprehensive loss			(13,190	)			(33,769	)
Less: Comprehensive loss attributable to noncontrolling interests			(10,128	)			(14,712	)
Total comprehensive loss attributable to BFC		$	(3,062	)			(19,057	)

See Notes to Unaudited Consolidated Financial Statements.

Consolidated Statement of Changes in Equity — Unaudited
For the Three Months Ended March 31, 2011
(In thousands)

																										Accumulated
																										Other
																										Compre-				Total				Non-
		Shares of Common								Class A				Class B				Additional								hensive				BFC				controlling
		Stock Outstanding								Common				Common				Paid-in				Accumulated				Income				Shareholders’				Interest in				Total
		Class A				Class B				Stock				Stock				Capital				Deficit				(Loss)				Equity				Subsidiaries				Equity
Balance, December 31, 2010			68,521				6,860			$	685			$	69			$	230,748			$	(88,853	)		$	223			$	142,872			$	78,256			$	221,128
Net loss			—				—				—				—				—				(2,611	)							(2,611	)			(9,715	)			(12,326	)
Other comprehensive loss			—				—				—				—				—				—				(451	)			(451	)			(413	)			(864	)
Net effect of subsidiaries’ capital transactions attributable to BFC			—				—				—				—				609				—				—				609				—				609
Noncontrolling interest net effect of subsidiaries’ capital transactions			—				—				—				—				—				—				—				—				(3,274	)			(3,274	)
Cash dividends on 5% Preferred Stock			—				—				—				—				—				(188	)			—				(188	)			—				(188	)
Share-based compensation related to stock options			—				—				—				—				165				—				—				165				—				165
Balance, March 31, 2011			68,521				6,860			$	685			$	69			$	231,522			$	(91,652	)		$	(228	)		$	140,396			$	64,854			$	205,250

See Notes to Unaudited Consolidated Financial Statements.

Consolidated Statements of Cash Flows — Unaudited
(In thousands)

		For the Three Months Ended
		March 31,
		2011				2010
						(As Revised)
Net cash provided by operating activities		$	48,887				29,102
Investing activities:
Proceeds from redemption and maturity of investment securities and tax certificates			20,767				34,866
Purchase of investment securities and tax certificates			(9,415	)			(21,953	)
Purchase of securities available for sale			(8,149	)			(13,351	)
Proceeds from sales of securities available for sale			1,194				68,963
Proceeds from maturities of securities available for sale			56,282				32,138
Proceeds from the maturities of interest bearing deposits			2,480				—
Decrease in restricted cash			1,295				6,707
Distributions from unconsolidated affiliates			139				140
Net repayments of loans			135,346				118,217
Proceeds from the sales of loans transferred to held for sale			3,100				26,421
Improvements to real estate owned			—				(779	)
Proceeds from sales of real estate owned			3,245				3,269
Proceeds from the sale of office property and equipment			106				539
Purchases of office property and equipment			(980	)			(2,612	)
Net cash provided by investing activities			205,410				252,565
Financing activities:
Net increase in deposits			113,815				93,871
Net repayments from FHLB advances			(125,010	)			(130,000	)
Net (decrease) increase in securities sold under agreements to repurchase			(4,518	)			206
Increase (decrease) in short term borrowings			127				(175	)
Prepayment of bonds payable			—				(661	)
Repayment of notes, mortgage notes and bonds payable			(53,472	)			(51,576	)
Proceeds from notes, mortgage notes and bonds payable			9,238				8,205
Payments for debt issuance costs			(742	)			—
Preferred stock dividends paid			(188	)			(188	)
Proceeds from issuance of BankAtlantic Bancorp Class A common stock to non-BFC shareholders			—				65
Non-controlling interest distributions			(3,871	)			(134	)
Net cash used in financing activities			(64,621	)			(80,387	)
Increase in cash and cash equivalents			189,676				201,280
Cash and cash equivalents at beginning of period			588,846				316,080
Cash and cash equivalents held for sale			(333	)			—
Cash and cash equivalents at end of period		$	778,189	(a)			517,360

(CONTINUED)

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

		For the Three Months Ended
		March 31,
		2011				2010
						(As Revised)
Supplemental cash flow information:
Interest paid on borrowings and deposits		$	19,584				21,215
Income taxes paid			3,277				128
Supplementary disclosure of non-cash investing and financing activities:
Loans and tax certificates transferred to real estate owned			6,679				7,503
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
Decrease in BFC accumulated other comprehensive income, net of taxes			(451	)			723
Net increase in BFC shareholders’ equity from the effect of subsidiaries’ capital transactions, net of taxes			609				814
Net decrease in equity resulting from cumulative effect of change in accounting principle			—				(2,569	)

See Notes to Unaudited Consolidated Financial Statements.

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. 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”).

          Generally accepted accounting principles (“GAAP”) require that BFC consolidate the financial results of the entities in which it has controlling interest. As a consequence, the assets and liabilities of all such entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including BankAtlantic Bancorp, Bluegreen and Woodbridge Holdings, LLC, a wholly-owned subsidiary of BFC (“Woodbridge”), are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution from those entities. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At March 31, 2011, we owned approximately 52% of Bluegreen’s common stock and had an approximately 45% ownership interest and 70% voting interest in BankAtlantic Bancorp.

          Our business activities currently consist of (i) Real Estate and Other and (ii) Financial Services. We currently report our results of operations through six reportable segments. Our Real Estate and Other business activities include the following four reportable segments: BFC Activities; Real Estate Operations; and Bluegreen Resorts and Bluegreen Communities, the segments through which Bluegreen’s results of operations are reported. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and contain the other two reportable segments: BankAtlantic and BankAtlantic Bancorp Parent Company. See Note 15 for additional information about our segments.

          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, 2011; the consolidated results of operations, comprehensive loss and cash flows for the three months ended March 31, 2011 and 2010; and the changes in consolidated equity for the three months ended March 31, 2011. Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. These unaudited consolidated financial statements and related notes are presented as permitted by Form 10-Q and 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, 2010. All significant inter-company balances and transactions have been eliminated in consolidation. As used throughout this document, the term “fair value” reflects the Company’s estimate of fair value as discussed herein. Certain amounts for prior periods have been reclassified to conform to the current period’s presentation.

          Revisions to Consolidated Financial Statements

          On November 16, 2009, we purchased an additional 7.4 million shares of Bluegreen’s common stock. This share purchase increased our ownership interest in Bluegreen 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 GAAP, Bluegreen’s results are consolidated in our financial statements. The Company accounted for the acquisition of a controlling interest in Bluegreen in accordance with the accounting guidance for business combinations, pursuant to which management was required to evaluate the fair value of Bluegreen’s assets and liabilities as of the acquisition date. As previously disclosed, the allocation of the purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and was subject to change within the measurement period as valuations were finalized. Additionally, any offset relating to amortization/accretion was also retrospectively adjusted in the appropriate periods. As discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, during the fourth quarter of 2010, the

Company finalized its valuations and adjusted the preliminary value assigned to the assets and liabilities of Bluegreen in order to reflect additional information obtained since the November 16, 2009 share acquisition date. These changes resulted in the following adjustments at December 31, 2009: a decrease of approximately $6.9 million to real estate inventory; an increase in other assets of approximately $3.5 million; an increase in other liabilities of approximately $4.1 million; and a decrease in deferred income taxes of approximately $7.1 million. Such adjustments resulted in a decrease to the “bargain purchase gain” related to the share acquisition for the year ended December 31, 2009 from $183.1 million to $182.8 million. The Company’s Consolidated Statement of Operations for the three months ended March 31, 2010 was revised to reflect the impact of the amortization/accretion associated with the above adjustments which resulted in a decrease to the net loss for the quarter of approximately $88,000 compared to the previously reported amount.

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

          The Company’s financial statements for the three months ended March 31, 2010 contained herein reflect the adjustments and revisions described above. The Company will present the impact of these adjustments and revisions for the three and six months ended June 30, 2010 and for the three and nine months ended September 30, 2010 in future filings when it discloses them as comparable periods. The quarterly period adjustments and revisions were previously disclosed in Note 40 to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

          The following table summarizes the quarterly results for the three months ended March 31, 2010 as it was previously reported and as revised (in thousands):

						For the Three Months Ended
						March 31, 2010
										(As Previously
						(As Revised)				Reported)
Revenues			(1	)		$	155,451				152,180
Costs and expenses			(2	)			192,764				192,780
							(37,313	)			(40,600	)
Equity in earnings from unconsolidated affiliates							193				4
Other income							438				754
Loss from continuing operations before income taxes							(36,682	)			(39,842	)
Less: Benefit for income taxes			(3	)			(3,831	)			(4,591	)
Loss from continuing operations							(32,851	)			(35,251	)
Discontinued operations, net of income tax							(249	)			(249	)
Net loss							(33,100	)			(35,500	)
Less: Net loss attributable to noncontrolling interests			(4	)			(13,320	)			(14,665	)
Net loss attributable to BFC							(19,780	)			(20,835	)
Preferred Stock dividends							(188	)			(188	)
Net loss allocable to common stock						$	(19,968	)			(21,023	)
Basic Loss per Common Share
Loss per share from continuing operations						$	(0.26	)			(0.28	)
Loss per share from discontinued operations							—				—
Net loss per common share						$	(0.26	)			(0.28	)
Diluted Loss per Common Share
Loss per share from continuing operations						$	(0.26	)			(0.28	)
Loss per share from discontinued operations							—				—
Net loss per common share						$	(0.26	)			(0.28	)

          The principal amount of BankAtlantic Bancorp loans set forth in the table in Note 10 to the Company’s financial statements in the Company’s Form 10-K for the year ended December 31, 2010 were incorrectly identified as reflecting loan-to-value ratios obtained as of the first quarter of 2010 when in fact the amounts instead reflected loan-to-value ratios at loan origination. The table below labeled “As Corrected” reflects loan-to-value ratios as of December 31, 2010 based on first quarter of 2010 valuations. The table below labeled “As Reported” reflects the table contained in the Form 10-K for the year ended December 31, 2010 which reflects loan-to-value ratios at origination.

		As Reported								As Corrected
		As of December 31, 2010								As of December 31, 2010
		Residential				Residential				Residential				Residential
Loan-to-value ratios		Interest Only				Amortizing				Interest Only				Amortizing
Ratios not available		$	—				78,031				59,520				185,610
=<60%			107,063				144,744				47,605				145,075
60.1% - 70%			118,679				103,891				33,005				49,732
70.1% - 80%			290,840				309,925				37,808				48,586
80.1% - 90%			17,055				23,982				47,574				47,039
>90.1%			16,609				13,212				324,734				197,743
Total		$	550,246				673,785				550,246				673,785

2. Liquidity and Regulatory Considerations

BFC

          Liquidity Considerations

          Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen and Woodbridge are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, including tax refunds received as a result of tax law changes, short-term investments, and dividends from Benihana. We also expect to receive an additional $7.5 million tax refund, net of amounts payable under the settlement agreement related to the bankruptcy filing of Levitt and Sons LLC and substantially all of its subsidiaries, as discussed in Note 16 below.

          We intend to use our available funds to fund operations and meet our obligations. We may also use available funds to make additional investments in the companies within our consolidated group, including participations in BankAtlantic Bancorp’s recently announced rights offering, invest in equity securities and other investments, or repurchase shares of our common stock pursuant to our share repurchase program. On September 21, 2009, our Board of Directors approved a share repurchase program which authorizes the repurchase of up to 20,000,000 shares of Class A and Class B Common Stock at an aggregate cost of no more than $10 million. The share repurchase program replaced our $10 million repurchase program that our Board of Directors approved in October 2006 which placed a limitation on the number of shares which could be repurchased under the program at 1,750,000 shares of Class A Common Stock. The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the years ended December 31, 2010 or 2009, or during the three months ended March 31, 2011.

          During June and July 2010, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock in connection with the exercise of subscription rights granted to it in BankAtlantic Bancorp’s rights offering. The aggregate purchase price for those shares was $15.0 million. BFC exercised its basic subscription rights to purchase 5,986,865 shares, and the remaining 4,013,135 shares were acquired by BFC pursuant to its over-subscription request. The shares acquired in the rights offering increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 8% to 45% and BFC’s voting interest in BankAtlantic Bancorp by approximately 5% to 71% as of July 2010. BankAtlantic Bancorp recently announced its intention to pursue a new rights offering to its shareholders of up to $30 million of its Class A Common Stock. We currently intend to support the rights offering and have indicated our willingness to participate; however, the amount of our investment in the rights offering has not yet been determined by our Board of Directors.

          Since March 2009, BFC has not received cash dividends from BankAtlantic Bancorp. BankAtlantic

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

          We believe that our current financial condition and credit relationships, together with anticipated cash flows from operating activities and other sources of funds, including tax refunds and, if determined to be advisable, proceeds from the disposition of certain properties or investments, will allow us to meet our anticipated near-term liquidity needs at least through March 31, 2012. With respect to long-term liquidity requirements, we may also seek to raise funds, subject to compliance with our commitment to the OTS described below, through the incurrence of long-term secured or unsecured indebtedness, the issuance of equity and/or debt securities or through the sale of assets; however these alternatives may not be available to us on attractive terms, or at all.

          Regulatory Considerations

          BFC, on a parent company only basis, has committed that it will not, without the prior written non-objection of the OTS:

	(i)		incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with BankAtlantic’s compliance requirements applicable to it;
	(ii)		declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter; or
	(iii)		enter into any new agreements, contracts or arrangements or materially modify any existing agreements, contracts or arrangements with BankAtlantic not consistent with past practices.

          As described below, BankAtlantic Bancorp and BankAtlantic each entered into Cease and Desist Orders with the OTS during February 2011. (See “BankAtlantic Bancorp and BankAtlantic — Regulatory Considerations” below for a discussion regarding the terms of the Cease and Desist Orders.) Based on its ownership interest in BankAtlantic Bancorp, BFC may in the future be required to enter into a Cease and Desist Order with the OTS addressing its ownership and oversight of those companies.

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. Woodbridge was the obligor under a $37.2 million loan that was collateralized by the Carolina Oak property. During November 2009, the lender filed an action against Woodbridge and Carolina Oak alleging default under a promissory note and breach of a guaranty related to the loan. During December 2009, the OTS closed the lender and appointed the Federal Deposit Insurance Corporation (the “FDIC”) as receiver. The FDIC subsequently sold the loan to an investor group. Effective April 26, 2011, Woodbridge and Carolina Oak entered into a settlement agreement with the investor group to resolve the disputes and litigation between them. Under the terms and conditions of the settlement agreement, (i) Woodbridge paid $2.5 million to the investor group, (ii) Carolina Oak conveyed to the investor group the real property securing the loan and (iii) the investor group agreed not to pursue certain remedies, including a deficiency judgment, and after the expiration of an agreed-upon time, to fully release Woodbridge and Carolina Oak, in each case subject to certain conditions. At March 31, 2011, the carrying amount of Carolina Oak’s inventory was approximately $10.8 million.

          On September 21, 2009, BFC consummated its merger with Woodbridge pursuant to which Woodbridge merged with and into a wholly-owned subsidiary of BFC. Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised

their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. One Dissenting Holder, which held approximately 400,000 shares of Woodbridge’s Class A Common Stock, has withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. The appraisal rights litigation thereafter commenced and is currently ongoing. The outcome of the litigation is uncertain and there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

Core Communities

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

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

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

BankAtlantic Bancorp and BankAtlantic

Regulatory Considerations

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

          Pursuant to the terms of the Bank Order, BankAtlantic is required to attain by June 30, 2011 and maintain a tier 1 (core) capital ratio equal to or greater than 8% and a total risk-based capital ratio equal to or greater than 14%. At March 31, 2011, BankAtlantic had a tier 1 (core) capital ratio of 5.97% and a total risk-based capital ratio of 11.77%. Under the terms of the Bank Order, BankAtlantic has revised certain of its plans, programs and policies and submitted to the OTS certain written plans, including a capital plan, a revised business plan and a plan to reduce BankAtlantic’s delinquent loans and non-performing assets. If BankAtlantic fails to comply with the capital plan and/or fails to attain and maintain the increased capital ratio requirements, or upon any written request from the OTS, BankAtlantic is required to submit a contingency plan, which must detail actions which BankAtlantic would, in its case, take to either merge with or be acquired by another banking institution. BankAtlantic will not be required to implement such contingency plan until such time as it receives written notification from the OTS to do so. In addition, the Bank Order requires BankAtlantic to limit its asset growth and restricts BankAtlantic from originating or purchasing new commercial real estate loans or entering into certain material agreements, in each case without receiving the prior written non-objection of the OTS. Separately, the OTS has confirmed that it has no objection to BankAtlantic originating loans to facilitate the sale of certain assets or the renewal, extension or modification of existing commercial real estate loans, subject in each case to compliance with applicable regulations and bank policies. The Bank Order prohibits the payment of dividends and other distributions without the prior written non-objection of the OTS. The Orders also include certain restrictions on compensation paid to the senior executive officers of BankAtlantic Bancorp Parent Company and BankAtlantic, and restrictions on agreements with affiliates.

          BankAtlantic Bancorp Parent Company and BankAtlantic will seek to meet the higher capital requirements of the Bank Order through the estimated financial impact upon consummation of the proposed sale to PNC Financial Services Group, Inc. of BankAtlantic’s Tampa branch network anticipated to close in June 2011, subject to customary closing conditions and regulatory requirements, and through other efforts that may include the issuance of BankAtlantic Bancorp’s Class A Common Stock through a public or private offering, and specifically through the rights offering to BankAtlantic Bancorp’s shareholders announced on May 2, 2011. BankAtlantic is also pursuing other initiatives to improve its regulatory capital position including: operating strategies to increase revenues and to reduce non-interest expenses, asset balances and non-performing loans. There can be no assurance that BankAtlantic Bancorp Parent Company or BankAtlantic will be able to execute these or other strategies in order to meet and maintain BankAtlantic’s new minimum regulatory capital levels by the required time frames.

          Each Order became effective on February 23, 2011 and will remain in effect until terminated, modified or suspended by the OTS. No fines or penalties were imposed in connection with either Order. While the Orders formalize steps that BankAtlantic Bancorp believes are already underway, if there is any material failure by BankAtlantic Bancorp Parent Company or BankAtlantic to comply with the terms of the Orders, or if unanticipated market factors emerge, and/or if BankAtlantic Bancorp is unable to raise required additional capital, successfully execute its plans, or comply with other regulatory requirements, then the OTS could take further action, which could

include the imposition of fines and/or additional enforcement actions. Enforcement actions broadly available to regulators include the issuance of a capital directive, removal of officers and/or directors, institution of proceedings for receivership or conservatorship, and termination of deposit insurance. Any such action would have a material adverse effect on BankAtlantic Bancorp’s business, results of operations and financial position.

          Liquidity Considerations

          Both BankAtlantic Bancorp Parent Company and BankAtlantic actively manage liquidity and cash flow needs. BankAtlantic Bancorp Parent Company had cash of $13.1 million as of March 31, 2011. BankAtlantic Bancorp Parent Company 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 $73.1 million would be due in December 2013 if interest is deferred until that date. BankAtlantic Bancorp Parent Company’s operating expenses for the year ended December 31, 2010 were $6.4 million and $1.0 million during the three months ended March 31, 2011. BankAtlantic’s liquidity is dependent, in part, on its ability to maintain or increase deposit levels and the availability of its lines of credit borrowings with the Federal Home Loan Bank (“FHLB”), as well as the Treasury and Federal Reserve lending programs.

          As of March 31, 2011, BankAtlantic had $760 million of cash and short-term investments and approximately $920 million of available unused borrowings, consisting of $589 million of unused FHLB line of credit capacity, $297 million of unpledged securities, and $34 million of available borrowing capacity at the Federal Reserve. However, such available borrowings are subject to regular reviews and may be terminated, suspended or reduced at any time at the discretion of the issuing institution or based on the availability of qualifying collateral. Additionally, interest rate changes, additional collateral requirements, disruptions in the capital markets, adverse litigation or regulatory actions, or deterioration in BankAtlantic’s financial condition may reduce the amounts it is able to borrow, make borrowings unavailable or make terms of the borrowings and deposits less favorable. As a result, BankAtlantic’s cost of funds could increase and the availability of funding sources could decrease. Based on current and expected liquidity needs and sources, BankAtlantic Bancorp expects to be able to meet its obligations at least through March 31, 2012.

3. Bluegreen Share Acquisition

          As described above, on November 16, 2009, we purchased approximately 7.4 million shares of the common stock of Bluegreen 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, we hold a controlling interest in Bluegreen and, under GAAP, consolidate Bluegreen and all of Bluegreen’s consolidated entities into our financial statements. The operating results of Bluegreen are included in the Company’s Bluegreen Resorts and Bluegreen Communities segments.

          See Revisions to Consolidated Financial Statements under Note 1 above for a discussion regarding adjustments made to our previously reported financial statements resulting from our finalization during the fourth quarter of 2010 of our valuation of Bluegreen’s assets and liabilities as of the November 16, 2009 share acquisition date.

4. Discontinued Operations

          In December 2009, Core Communities reinitiated efforts to sell two of its commercial leasing projects (sometimes referred to herein as the “Projects”) and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Accordingly, the results of operations for the Projects are included in the Company’s Consolidated Statement of Operations for the three months ended March 31, 2010 as discontinued operations. On June 10, 2010, Core sold 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. In connection with the sale, the outstanding balance of the loans related to the assets held for sale was reduced to approximately $800,000 as a result of negotiations with the lender. Core used the proceeds from the sale to repay these loans. As a result, Core was released from its obligations to the lender with respect to the loans.

          The following table summarizes the results of operations for the Projects during the three months ended March 31, 2010 (in thousands):

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

5. Assets Held for Sale

          In August 2010, BankAtlantic announced that, due to the rapidly changing environment in Florida and the banking industry, it decided to focus on its core markets in South Florida and BankAtlantic began seeking a buyer for its 19 branches located in the Tampa, Florida area. In January 2011, BankAtlantic agreed to sell its 19 branches and 2 related facilities in the Tampa area and the associated deposits to an unrelated financial institution. The purchasing financial institution has agreed to pay i) a 10% premium for the deposits plus ii) the net book value of the acquired real estate and substantially all of the fixed assets associated with the branches and facilities. The purchasing financial institution and BankAtlantic have each received regulatory approval for the transaction. The transaction is anticipated to close during June 2011, subject to customary closing conditions and regulatory requirements.

          The assets and liabilities associated with the Tampa branches were as follows (in thousands):

		March 31, 2011				December 31, 2010
ASSETS
Cash and cash equivalents		$	6,184				5,850
Office properties and equipment			30,725				31,484
Total assets held for sale		$	36,909				37,334
LIABILITIES
Interest bearing deposits		$	294,746				255,630
Non-interest bearing deposits			95,686				85,516
Total deposits			390,432				341,146
Accrued interest payable			79				87
Total liabilities held for sale		$	390,511				341,233

6. Fair Value Measurement

          The following tables present major categories of the Company’s assets measured at fair value on a recurring basis as of March 31, 2011 and December 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		2011				(Level 1)				(Level 2)				(Level 3)
Mortgage-backed securities		$	103,790				—				103,790				—
REMICS (1)			59,254				—				59,254				—
Agency bonds			60,166				—				60,166				—
Municipal bonds			133,918				—				133,918				—
Taxable securities			17,620				—				17,620				—
Benihana Convertible Preferred Stock			20,951				—				—				20,951
Other equity securities			18,800				18,800				—				—
Total		$	414,499				18,800				374,748				20,951

						Fair Value Measurements Using
						Quoted prices in
						Active Markets				Significant Other				Significant
						for Identical				Observable				Unobservable
		December 31,				Assets				Inputs				Inputs
Description		2010				(Level 1)				(Level 2)				(Level 3)
Mortgage-backed securities		$	112,042				—				112,042				—
REMICS(1)			68,841				—				68,841				—
Agency bonds			60,143				—				60,143				—
Municipal bonds			162,123				—				162,123				—
Taxable securities			19,922				—				19,922				—
Foreign currency put options			24				24				—				—
Benihana Convertible Preferred Stock			21,106				—				—				21,106
Other equity securities			20,819				20,819				—				—
Total		$	465,020				20,843				423,071				21,106

          There were no liabilities measured at fair value on a recurring basis in the Company’s financial statements at March 31, 2011 or December 31, 2010.

          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, 2011 (in thousands):

		Benihana
		Convertible
		Preferred Stock
Beginning Balance		$	21,106
Total gains and losses (realized/unrealized)
Included in earnings (or changes in net assets)			—
Cumulative effect of change in accounting principle			—
Included in other comprehensive loss			(155	)
Purchases, issuances, and settlements			—
Transfers in and/or out of Level 3			—
Balance at March 31, 2011		$	20,951

          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			(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 valuation techniques and the inputs used in our financial statements to measure the fair value of our recurring financial instruments are described below.

          The fair values of agency bonds, municipal bonds, taxable bonds, mortgage-backed securities and REMICs are estimated using independent pricing sources and matrix pricing. Matrix pricing uses a market approach valuation technique and Level 2 valuation inputs as quoted market prices are not available for the specific securities that BankAtlantic 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.

          Equity securities are generally fair valued using the market approach and quoted market prices (Level 1) or matrix pricing (Level 2 or Level 3) with inputs obtained from independent pricing sources, if available. Also non-binding broker quotes are obtained to validate fair values obtained from matrix pricing. However, certain equity and debt securities in which observable market inputs cannot be obtained are valued either using the income approach and pricing models that we have developed or based on observable market data that we adjust based on our judgment of the factors we believe a market participant would use to value the securities (Level 3).

          The fair value of foreign currency put options was obtained using the market approach and quoted market prices using Level 1 inputs as of December 31, 2010.

          The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana Convertible Preferred Stock.

          The following tables present major categories of assets measured at fair value on a non-recurring basis as of March 31, 2011 and 2010 (in thousands):

		Fair Value Measurements Using
						Quoted prices in												Total
						Active Markets				Significant				Significant				Impairment (1)
		As of				for Identical				Other Observable				Unobservable				For the Three
		March 31,				Assets				Inputs				Inputs				Months Ended
Description		2011				(Level 1)				(Level 2)				(Level 3)				March 31, 2011
Loans measured for impairment using the fair value of the underlying collateral		$	238,540				—				—				238,540				14,497
Impairment of loans held for sale			33,664				—				—				33,664				4,479
Impairment of real estate owned			19,728				—				—				19,728				2,323
Total		$	291,932				—				—				291,932				21,299

						Fair Value Measurements Using
						Quoted prices in												Total
						Active Markets				Significant				Significant				Impairments(1)
		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

          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 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 we may also adjust these values for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans, BankAtlantic Bancorp uses its judgment on market conditions to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed, and the amount of time required 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. These third party valuations from real estate professionals also use Level 3 inputs in the determination of the fair values.

          Loans Held for Sale

          Loans held for sale are valued using an income approach with Level 3 inputs as market quotes or sale transactions of similar loans are generally not available. The fair value is estimated by discounting forecasted cash flows using a discount rate that reflects the risks inherent in the loans held for sale portfolio. For non-performing loans held for sale the forecasted cash flows are based on the estimated fair value of the collateral less cost to sell adjusted for foreclosure expenses and other operating expenses of the underlying collateral until foreclosure and sale.

          Impaired Real Estate Owned

          Real estate is generally valued using 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 appraisers or brokers use professional judgments in determining the fair value of the properties and we may also adjust these values for changes in market conditions subsequent to the valuation date. As a consequence of using appraisals, broker price opinions and adjustments to appraisals, the fair values of the properties are considered Level 3 inputs.

Financial Disclosures about Fair Value of Financial Instruments

          The following table presents information for financial instruments at March 31, 2011 and December 31, 2010 (in thousands):

		March 31, 2011								December 31, 2010
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Financial assets:
Cash and cash equivalents		$	164,845				164,845				178,868				178,868
Interest bearing deposits in other banks			656,424				656,424				455,538				455,538
Restricted cash			60,954				60,954				62,249				62,249
Securities available for sale			414,499				414,499				465,020				465,020
Investment securities			1,833				1,833				2,033				2,033
Tax certificates			77,837				78,523				89,789				90,738
Federal home loan bank stock			43,557				43,557				43,557				43,557
Loans receivable including loans held for sale, net			2,862,985				2,565,616				3,039,486				2,689,890
Notes receivable			556,452				591,000				574,969				623,000
Financial liabilities:
Deposits		$	4,005,006				4,009,428				3,891,190				3,893,807
Advances from FHLB			45,000				44,994				170,000				170,038
Securities sold under agreements to repurchase and other short term borrowings			18,373				18,373				22,764				22,764
Receivable-backed notes payable			536,407				520,039				569,214				560,728
Notes and mortgage notes payable and other borrowings			228,867				227,865				239,571				224,866
Junior subordinated debentures			465,453				249,922				461,568				220,080

          Management has made estimates of fair value that it believes to be reasonable. However, because there is no active market for many of these financial instruments and management has derived the fair value of the majority of these financial instruments using the income approach technique with Level 3 unobservable inputs, it is possible that the Company or its subsidiaries may not receive the estimated value upon sale or disposition of the asset or pay the estimated value upon disposition of the liability in advance of its scheduled maturity. Management estimates used in its net present value financial models rely on assumptions and judgments regarding issues where the outcome is unknown and actual results or values may differ significantly from these estimates. These fair value estimates do not consider the tax effect that would be associated with the disposition of the assets or liabilities at their fair value estimates.

          Interest bearing deposits in other banks include $43.1 million of certificates of deposit guaranteed by the FDIC with maturities of less than one year. Due to the FDIC guarantee and the short-term maturity of these certificates of deposit, the fair value of these deposits approximates the carrying value.

          The fair value of tax certificates was calculated using the income approach with Level 3 inputs. The fair value is based on discounted expected cash flows using discount rates that take into account the risk of the cash flows of tax certificates relative to alternative investments.

          The fair value of FHLB stock is its carrying amount.

          Fair values are estimated for BankAtlantic Bancorp 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 BankAtlantic Bancorp’s performing loans is calculated by using an income approach with Level 3 inputs. These fair values are estimated by discounting forecasted cash flows through the estimated maturity using estimated market discount rates that reflect the interest rate risk inherent in the loan portfolio. The estimate of average maturity is based on BankAtlantic’s historical experience with prepayments for each loan classification, modified as required by an estimate of the effect of current economic and lending conditions. Management of BankAtlantic Bancorp assigns a credit risk premium and an illiquidity adjustment to these loans based on risk grades and delinquency status.

          The estimated fair value of notes receivable is based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate (the rate at which similar loans with similar maturities would be made to borrowers with similar credit risk).

          As permitted by applicable accounting guidance, the fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, savings and NOW accounts, and money market and checking accounts, is shown in the above table at book value. The fair value of certificates of deposit is based on an income approach with Level 3 inputs. The fair value is calculated by the discounted value of contractual cash flows with the discount rate estimated using current rates offered by BankAtlantic for similar remaining maturities.

          The fair value of short-term borrowings is calculated using the income approach with Level 2 inputs. Contractual cash flows are discounted based on current interest rates. The carrying value of these borrowings approximates fair value as maturities are generally less than thirty days.

          The fair value of FHLB advances was calculated using the income approach with Level 2 inputs. The fair value was based on discounted cash flows using rates offered for debt with comparable terms to maturity and issuer credit standing.

          The estimated fair values of notes and mortgage notes payable and other borrowings, including receivable-backed notes payable, were based upon current rates and spreads a party would pay to obtain similar borrowings.

          In determining the fair value of BankAtlantic Bancorp’s junior subordinated debentures, BankAtlantic Bancorp used NASDAQ price quotes available with respect to its $69.0 million of publicly traded trust preferred securities related to its junior subordinated debentures (“public debentures”). However, $257.0 million of the outstanding trust preferred securities related to its junior subordinated debentures are not traded, but are privately held in pools (“private debentures”) and with no trading markets, sales history, liquidity or readily determinable source for valuation. BankAtlantic Bancorp has deferred the payment of interest with respect to all of its junior subordinated debentures as permitted by the terms of these securities. Based on the deferral status and the lack of liquidity and ability of a holder to actively sell such private debentures, the fair value of these private debentures may be subject to a greater discount to par and have a lower fair value than indicated by the public debenture price quotes. However, due to their private nature and the lack of a trading market, fair value of the private debentures was not readily determinable at March 31, 2011 and December 31, 2010, and as a practical alternative, BankAtlantic Bancorp used the NASDAQ price quotes of the public debentures to value its remaining outstanding junior subordinated debentures whether privately held or publicly traded.

          The estimated fair value of Woodbridge’s and Bluegreen’s junior subordinated debentures in the aggregate amount of $133.6 million and $115.7 million as of March 31, 2011 and December 31, 2010, respectively, 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.

          Derivatives

          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 16 for the contractual amounts of BankAtlantic’s financial instrument commitments.

          During the second quarter of 2010, BankAtlantic expanded its cruise ship automated teller machine (“ATM”) operations and began dispensing foreign currency from certain ATMs on cruise ships. At March 31, 2011, BankAtlantic had $7.1 million of foreign currency in cruise ship ATMs and recognized $0.4 million of foreign currency unrealized exchange gains which were included in other income in the Company’s statement of operations for the three months ended March 31, 2011. BankAtlantic purchased foreign currency put options as an economic hedge for the foreign currency in its cruise ship ATMs. The terms of the put options and the fair value as of March 31, 2011 were as follows (in thousands, except strike price):

Contract				Expiration				Strike								Fair
Amount				Date				Price				Premium				Value
€	400			11-Apr				$	1.34			$	31				—
€	400											$	31				—

          Included in Financial Services — securities activities, net in the Company’s statement of operations were $24,000 of unrealized losses associated with the above put options for the three months ended March 31, 2011.

7. Securities Available for Sale

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

		As of March 31, 2011
						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
Government agency securities:
Mortgage-backed securities		$	97,370				6,420				—				103,790
Agency bonds			60,000				166				—				60,166
REMICS			56,957				2,297				—				59,254
Total			214,327				8,883				—				223,210
Investment securities:
Municipal bonds			133,747				171				—				133,918
Other bonds			17,624				8				12				17,620
Benihana Convertible Preferred Stock			16,426				4,525				—				20,951
Equity and other securities			18,624				178				2				18,800
Total investment securities			186,421				4,882				14				191,289
Total		$	400,748				13,765				14				414,499

		As of December 31, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
Government agency securities:
Mortgage-backed securities		$	105,219				6,823				—				112,042
Agency bonds			60,000				143				—				60,143
REMICS			66,034				2,807				—				68,841
Total			231,253				9,773				—				241,026
Investment securities:
Municipal bonds			162,113				33				23				162,123
Other bonds			19,936				8				22				19,922
Benihana Convertible Preferred Stock			16,426				4,680				—				21,106
Equity and other securities			20,634				188				3				20,819
Total investment securities			219,109				4,909				48				223,970
Derivatives			24				—				—				24
Total		$	450,386				14,682				48				465,020

          The following tables show the gross unrealized losses and fair value of the Company’s securities available for sale with unrealized losses that are deemed temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of March 31, 2011 and December 31, 2010 (in thousands):

		As of March 31, 2011
		Less Than 12 Months								12 Months or Greater								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
Taxable Securities		$	12,767				12				—				—				12,767				12
Equity securities			—				—				8				2				8				2
Total available for sale securities:		$	12,767				12				8				2				12,775				14