BFC FINANCIAL CORP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Fiscal Year Ended Commission File Number
December 31, 1993 0-9811
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BFC FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Florida 59-2022148
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(State of Organization) (I.R.S. Employer Identification Number)

1750 E. Sunrise Boulevard
Ft. Lauderdale, Florida 33304
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(Address of Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (305) 760-5200
Securities registered pursuant to Section 12(b) of the Act:

Common Stock $.01 par Value NONE
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(Title of Class) (Name of Exchange on Which Registered)

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

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
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Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendments to
this form 10-K. [X]

State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant: as of March 18, 1994, $3,916,000.

Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:

Common stock of $.01 par value, 2,305,682 shares outstanding.

Documents Incorporated by Reference in Part IV of this Form 10-K:

Proxy Statement - Prospectus dated June 20, 1980; Annual Report on Form 10-K
for the year ended December 31, 1987.

PART I

ITEM 1. BUSINESS

General Description of Business

BFC Financial Corporation is a savings bank holding company operating
principally through its approximately 48.17% owned subsidiary, BankAtlantic, A
Federal Savings Bank ("BankAtlantic"). BFC Financial Corporation and its
subsidiaries are collectively identified herein as the "Registrant", "BFC" or
the "Company". The Company acquired control of BankAtlantic in 1987 for a
total investment of approximately $43 million. From 1987 through June 1993,
BFC increased its ownership in BankAtlantic and BankAtlantic was consolidated
in BFC Financial Corporation's financial statements since October 1987.
During November 1993, a public offering of 2,070,000 million shares of
BankAtlantic common stock at a price of $13.50 per common share was
consummated. Of the shares sold, 1,400,000 shares were sold by BFC Financial
Corporation. Net proceeds to BFC Financial Corporation from the sale amounted
to approximately $17.7 million. Upon the sale of the 2,070,000 shares, BFC
Financial Corporation's ownership of BankAtlantic decreased from 77.83% to
48.17%. With the Company's ownership position less than 50%, BankAtlantic is
no longer consolidated in BFC Financial Corporation's financial statements.
BankAtlantic represented approximately 97% of the Company's consolidated
assets when it was consolidated with the Company. Now based on the equity
method of accounting for the Company's investment in BankAtlantic, the
investment represents approximately 43% of the Company's consolidated assets.
At September 30, 1993, BankAtlantic ranked seventh in size among all savings
institutions headquartered in the State of Florida and first in size among all
financial institutes headquartered in Broward County, Florida based on its
total assets at such date.

During March 1992, BFC, which was formerly known as BankAtlantic Financial
Corporation changed its name to BFC Financial Corporation, to eliminate
confusion with its subsidiary, BankAtlantic, A Federal Savings Bank.

In addition to its investment in BankAtlantic, the Company owns and manages
real estate. Since its inception in 1980, and prior to the acquisition of
control of BankAtlantic, the Company's primary business was the organization,
sale and management of real estate investment programs. Effective as of
December 31, 1987, the Company ceased the organization and sale of new real
estate investment programs, but continues to manage the real estate assets
owned by its existing programs. Subsidiaries of the Company continue to serve
as the corporate general partners of 4 public limited partnerships which file
periodic reports with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Subsidiaries
of the Company also serve as corporate general partners of a number of private
limited partnerships formed in prior years.

The Company and/or its predecessors and affiliates have been engaged in real
estate investment activities since 1972. Registrant was organized in its
current corporate form in 1980 as the result of a statutory merger which
consolidated I.R.E. Series I, Inc., I.R.E. Series II, Inc. and I.R.E. Series
III, Inc. Such corporations were originally organized as limited partnerships
sponsored by predecessors and affiliates of the Company.

In March 1989, (the "1989 Exchange") the Company acquired all of the assets
and liabilities of three affiliated public limited partnerships, I.R.E. Real
Estate Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23 and
I.R.E. Real Estate Fund, Ltd.- Series 24 in exchange for approximately
$30,000,000 in subordinated unsecured debentures which mature in 2009. In
connection with the transaction, the Company acquired 14 real properties, 3 of
which are still owned by the Company.

In February 1991, the Company acquired all of the assets and liabilities of
two affiliated public limited partnerships, I.R.E. Real Estate Fund, Ltd. -
Series 25 and I.R.E. Real Estate Fund, Ltd. - Series 27 in exchange for
approximately $9,308,000 in subordinated unsecured debentures which mature in
2011. In June 1991, the Company acquired all of the assets and liabilities of
an affiliated public limited partnership, I.R.E. Real Estate Income Fund,
Ltd., in exchange for approximately $6,057,000 in subordinated unsecured
debentures that mature in 2011. In connection with these transactions, (the
"1991 Exchange") the Company acquired 8 real properties, 4 of which are still
owned by the Company.

Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange offers and in December 1992, a jury returned a verdict
for $8 million but extinguished approximately $16 million of subordinated
debentures issued in connection with the 1989 Exchange. As discussed above,
BFC sold 1.4 million BankAtlantic shares in November 1993. The proceeds from
such sale provided BFC with the current resources necessary to allow it to
attempt to negotiate settlements with respect to these lawsuits. In March
1994, a settlement agreement, with respect to the lawsuits against the Company
pertaining to the 1991 Exchange, was entered into whereby BFC Financial
Corporation will pay approximately eighty-one percent of the face amount of
the outstanding debentures held by class members and the debentures will be
canceled pursuant to the procedures outlined in the agreement. The settlement
is subject to, among other things, court approval. (See Item 3. "Legal
Proceedings" and "Liquidity and Capital Resources" in Managements Discussion
and Analysis.) The Company is pursuing discussions with the remaining
plaintiffs in litigation relating to the Exchange offers with a view to
settling the ongoing litigation but there is no assurance that a settlement
will be resolved.

The Company is actively seeking buyers for all of the real property held by it
with a view to selling the properties and reducing mortgage indebtedness.

As indicated above, during 1987, the Company acquired a controlling interest
in BankAtlantic and became a savings bank holding company. Although the
Company's current ownership in BankAtlantic is less than 50%, the Company's
principal business is still the business of the savings bank as conducted by
BankAtlantic. Therefore, set forth below, as excerpted from BankAtlantic's
1993 Annual Report on Form 10-K, is a description of BankAtlantic's business.
A description of the Company's real estate partnership program business and
related real estate activities follows.

The Business Of BankAtlantic

General

BankAtlantic is a federal savings bank headquartered in Ft. Lauderdale,
Florida that provides traditional retail banking services, a full range of
commercial banking products and related financial services directly and
through subsidiary corporations. The principal business of BankAtlantic is
attracting checking and savings deposits from the public and general business
customers and using these deposits to originate commercial, mortgage and
installment loans and to make other permitted investments such as
mortgage-backed securities and tax certificates and other investment
securities. BankAtlantic has attempted to shift its primary activities from
those of a traditional savings and loan to those generally associated with
commercial banking. In an effort to cause its loan portfolio to adjust more
rapidly to market conditions, BankAtlantic has shifted its emphasis in lending
from fixed-rate, long-term residential loans to shorter term and variable rate
consumer and commercial loans and investments. BankAtlantic operates through
31 branch offices located in Dade, Broward and Palm Beach Counties in South
Florida. Based on its consolidated assets at September 30, 1993, BankAtlantic
is currently the largest independent financial institution headquartered in
Broward County, Florida and seventh in size among all savings institutions
headquartered in the State of Florida. BankAtlantic is regulated and examined
by the Office of Thrift Supervision ("OTS") and its deposit accounts are
insured up to applicable limits by the Federal Deposit Insurance Corporation
("FDIC").

BankAtlantic's revenues are derived principally from interest earned on loans,
mortgage-backed securities and tax certificates and other investment
securities. BankAtlantic's major expense items are interest paid on deposits
and borrowings, the provision for loan losses and general and administrative
expenses.

Lending Activities

General - BankAtlantic's lending activities are currently divided into three
primary segments: residential real estate lending, commercial lending
(consisting of commercial real estate and commercial business lending) and
installment lending (primarily consisting of loans secured by second liens on
residential real property, loans secured by automobiles and boats and
unsecured signature loans). See "Regulation and Supervision" for a
description of restrictions on BankAtlantic's lending activities.

Commercial lending is currently BankAtlantic's main lending focus.
Substantially all of BankAtlantic's commercial loans are made in or relate to
Dade, Broward and Palm Beach Counties, Florida. BankAtlantic's residential
real estate lending consists primarily of home mortgage loans secured by
residential real estate located in Dade, Broward and Palm Beach Counties,
Florida. Installment loans are primarily solicited through mass market
advertising and through the distribution and display of advertising materials
at branch offices.

BankAtlantic's loan underwriting procedures are designed to assess both the
borrower's ability to make principal and interest payments and the value of
the collateral securing the loan. Employment and financial information is
solicited from prospective borrowers, credit records are reviewed and the
value of any collateral for the loan is analyzed. Loan information supplied
by a prospective borrower is independently verified. Loan officers or other
loan production personnel in a position to directly benefit monetarily through
loan solicitation fees from individual loan transactions do not have approval
authority and commercial and residential loans of $500,000 or more and
installment loans of $100,000 or more, require the approval of BankAtlantic's
Major Loan Committee. The Major Loan Committee consists of the Chairman of
the Board, the Vice Chairman, the President, the Senior Executive Vice
President, certain Executive Vice Presidents and certain other officers of
BankAtlantic.

Interest rates and origination fees charged on loans originated by
BankAtlantic are generally competitive with other financial institutions and
other mortgage originators in BankAtlantic's general market area under the
provisions of the Community Reinvestment Act of 1977, as amended (the "CRA").
BankAtlantic has an affirmative obligation to serve the credit needs of the
communities in which it operates, and management believes that BankAtlantic
fulfills its obligations under the CRA. See "Regulation and
Supervision--Community Reinvestment."

Commercial Real Estate Loans - BankAtlantic's commercial real estate loans
include permanent mortgage loans on commercial and industrial properties,
construction loans secured by income producing properties (or for residential
development and land acquisition) and development loans. BankAtlantic
generally lends not more than 70% of the securing property's appraised value
and requires borrowers to maintain, at BankAtlantic, appropriate escrow
accounts for the secured property's real estate taxes and insurance. In
making lending decisions, BankAtlantic generally considers, among other
things, the overall quality of the loan, the credit of the borrower, the
location of the real estate, the projected income stream of the property and
the reputation and quality of management constructing or administering the
property. No one factor is determinative and such factors may be accorded
different weights in any particular lending decision. As a general rule,
BankAtlantic also requires that these loans be guaranteed by one or more
individuals who have made a significant equity investment in the property.
Commercial real estate loans generally have shorter terms, adjust more rapidly
to interest rate fluctuations and bear higher rates of interest than
alternative investments. Income from this type of loan should be more
responsive to changes in the general level of interest rates. However,
construction and permanent commercial real estate lending is generally
considered to have higher credit risk than single-family residential lending
because repayment typically is dependent on the successful operation of the
related real estate project and thus may be subject, to a greater extent, to
adverse conditions in the real estate market or the economy, generally.
Construction loans involve additional risks because loan funds are advanced
based on the security of the project under construction, which is of uncertain
value prior to completion, and because it is relatively difficult to evaluate
accurately the total amount required to complete a project.

Commercial Business Loans - BankAtlantic's corporate lending activities are
generally directed to small to medium size companies located in Dade, Broward
and Palm Beach Counties, Florida. BankAtlantic's corporate lending division
makes both secured and unsecured loans, although the majority of such lending
is done on a secured basis. The development of ongoing customer relationships
with commercial borrowers is an important part of BankAtlantic's efforts to
attract more low-interest and non-interest bearing demand deposits and to
generate other fee-based, non-lending services. The average corporate loan is
approximately $1 million and is generally secured by the receivables,
inventory, equipment, and/or general corporate assets of the borrower. These
loans are originated on both a line of credit basis, and on a fixed-term basis
ranging from one to five years in duration. Commercial business loans
generally have annual maturities and prime-based interest rates. However,
commercial business loans generally have a higher degree of credit risk than
residential loans because they are more likely to be adversely affected by
unfavorable economic conditions.

Residential Mortgage Loans - BankAtlantic's branch banking network is largely
responsible for a majority of its residential loan originations. BankAtlantic
originates fixed rate and adjustable rate mortgage ("ARM") loans with 15 and
30-year amortization periods; however, substantially all of these loans are
sold to correspondents. Applicable regulations require that all loans in
excess of 90% of appraised value be insured by private mortgage insurance.
BankAtlantic's policy is to require private mortgage insurance on all
residential loans with a loan to value ratio greater than 80%. In connection
with residential loans insured by the Federal Housing Administration or
guaranteed by the Veterans Administration, BankAtlantic may lend up to the
maximum percentage of the appraised value acceptable to the insuring or
guaranteeing agency. Appraised values are determined by on-site inspections
conducted by qualified independent appraisers. BankAtlantic does not
presently originate a significant amount of residential mortgage loans for its
portfolio and follows regulatory and agency guidelines when it originates such
loans for sale.

Federal regulations permit savings institutions to originate and purchase
mortgage loans secured by one- to-four family residences on which the payment
amount, the loan terms, the principal balance or a combination thereof change
periodically as a result of changes in interest rates. Pursuant to such
regulations, changes in the interest rate must be based on the movement of an
index that is beyond the control of the institution and must be agreed to by
the institution and the borrower. Under such regulations, "ARMs" must specify
the maximum interest rate which may be imposed during the term of the loan.
One-to-four family residential loans generally are of a longer duration and
bear lower rates of interest than commercial or installment loans; however,
there is a lower credit risk associated with these types of loans.
BankAtlantic generally does not purchase individual residential mortgage
loans.

Installment Loans - BankAtlantic significantly reduced its installment lending
activities during early 1991 by eliminating indirect consumer loans
(installment loans made by others and acquired by BankAtlantic) and
significantly decreasing originations of direct installment loans (loans made
directly to consumers rather than through dealers). However, during 1993,
BankAtlantic has focused on originating installment loans directly through its
branch network and slightly increased the volume of its direct installment
lending during the latter part of the year. It is anticipated that volume of
direct installment lending will increase in 1994 from 1993 levels. Federal
savings institutions are authorized to make secured and unsecured consumer
installment loans in an aggregate amount up to 35% of their assets. In
addition, BankAtlantic has lending authority above this 35% limit for certain
consumer loans, such as second mortgages, home improvement loans, mobile home
loans and loans secured by savings accounts. Installment loans typically
involve a higher degree of credit risk than one-to-four family residential
loans secured by first mortgages, but they generally carry higher yields and
have shorter terms to maturity. Second mortgage loans are secured by a junior
lien on residential real property and are typically based on a maximum 80%
loan-to-value ratio. Personal loans may be secured by various forms of
collateral, both real and personal, or to a minimal extent, may be made on an
unsecured basis. Such loans generally bear interest at floating rates with
the exception of personal unsecured loans which bear interest at a fixed rate.

Prior to 1991, BankAtlantic funded dealer reserves to dealers who originated
consumer loans which were then purchased by BankAtlantic ("indirect consumer
loans"). The risk of any amounts advanced to the dealer is primarily
associated with loan performance but, secondarily, is dependent on the
financial condition of the dealer. The dealer is generally responsible to
BankAtlantic for the amount of the reserve only if a loan giving rise to the
reserve becomes delinquent or is prepaid. However, the dealer's ability to
refund any portion of the unearned reserve to BankAtlantic is subject to
economic conditions, generally, and the financial condition of the dealer. A
decline in economic conditions could adversely affect both the performance of
the loans and the financial condition of the dealer. There is no assurance
that BankAtlantic can successfully recover amounts advanced in the event it
pursues the dealer for amounts due. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition" regarding recovery from
BankAtlantic's fidelity bond carrier of certain amounts associated with
certain indirect consumer loans.

Loan Commitments - BankAtlantic issues commitments to make residential and
commercial real estate loans and commercial business loans on specified terms
which are conditioned upon the occurrence of stated events. Loan commitments
are generally issued in connection with (i) the origination of loans for the
financing of residential properties by prospective purchasers, (ii)
construction or permanent loans secured by commercial and multi-unit
residential income-producing properties and (iii) loans to corporate borrowers
in connection with loans secured by corporate assets.

The commitment procedure followed by BankAtlantic depends on the type of loan
underlying the commitment. Residential loan commitments are generally limited
to 30 days and are issued after the loan is approved. However, loan
commitments may be extended based on the circumstances. BankAtlantic offers
interest rate "locks" for periods of up to 150 days. BankAtlantic also issues
short-term commitments on commercial real estate loans and commercial business
loans. Short-term commitments generally remain open for no more than 90 days.
BankAtlantic usually charges a commitment fee of 1% to 2% on short-term
commitments relating to commercial real estate loans and commercial business
loans. In most cases, half of the fee is payable upon the acceptance of the
commitment and is non-refundable. If the loan is ultimately made, the
remainder of the commitment fee is collected at closing.

Loan Servicing Rights - BankAtlantic generally retains servicing rights on
loans which it sells and has sought to purchase additional servicing rights
from third parties. BankAtlantic derives fees for providing the servicing of
mortgage loans, including, among other fees, assumption fees and late charges.
The amount of revenue earned from loan servicing is dependent on the
prepayments of the underlying loans. Generally, as interest rates fall, loan
prepayments accelerate, resulting in lower net revenues earned on loan
servicing rights. Conversely, as interest rates rise, loan prepayments
decline, resulting in higher net revenues earned on loan servicing rights.

Usury Limitations - The maximum rate of interest that BankAtlantic may charge
for any particular loan transaction varies depending upon the purpose of the
loan, the nature of the borrower, the security and other various factors set
forth in Florida and federal interest rate laws. Under Florida law,
BankAtlantic is not subject to any usury ceiling on loans secured by a first
lien on residential real estate and certain other secured loans. Other types
of loans are subject to Florida's statutory usury ceiling which is currently
18% per annum, although certain types of loans in excess of $500,000 may
legally carry an interest rate of up to 25% per annum.

Non-Performing and Classified Assets, Loan Delinquencies and Defaults - When a
borrower fails to make a required payment on a loan, BankAtlantic attempts to
have the deficiency cured by communicating with the borrower. In most cases,
deficiencies are cured promptly. If the delinquency is not cured within 90
days, it is BankAtlantic's general policy to institute appropriate legal
action to collect the loan, including foreclosing on any collateral securing
the loan and obtaining a deficiency judgment against the borrower, if
appropriate.

Current regulations provide for the classification of loans and other assets
considered by examiners to be of lesser quality as "special mention,"
"substandard," "doubtful" or "loss" assets. The special mention category
applies to assets not warranting classification as substandard but possessing
credit deficiencies or potential weaknesses necessitating management's close
attention. Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that
such weaknesses make collection of the loan or liquidation in full on the
basis of currently existing facts, conditions and values, highly questionable
or improbable. Assets classified as a loss are considered uncollectible and
of such little value that their continued treatment as assets is not
warranted.

The asset classification regulations require insured institutions to classify
their own assets and to establish prudent general allowances for loan losses.
However, regulators have considerable discretion to review asset
classifications and loss allowances of insured institutions, and, if a
regulator concludes that the valuation allowances established by an
institution are inadequate, the regulator may determine, subject to certain
reviews, the need for, and extent of, any increase necessary in the
institution's general allowance for loan losses.

Management of BankAtlantic has identified certain assets as "Risk elements".
These assets include: (i) loans accounted for on a non-accrual basis; (ii)
loans not included in category (i), which are contractually 90 days or more
past due as to interest or principal payments; (iii) assets acquired in
settlement of loans; and (iv) restructured loans. Non-accrual loans are loans
on which interest recognition has been suspended until realized because of
doubts as to the borrower's ability to repay principal or interest.
Restructured loans are loans on which the terms have been altered to provide a
reduction or deferral of interest or principal because of a deterioration in
the borrower's financial position. Such restructured loans may be removed
from the restructured category based upon various factors, including a period
of satisfactory loan performance under the revised terms.

Allowance for Loan Losses - Management of BankAtlantic establishes allowances
for loan losses in amounts which it believes are sufficient to provide for
potential future losses. In establishing its allowance for loan losses,
management considers past loss experience, present indicators such as
delinquency rates, economic conditions, collateral values and the potential
for loan losses in future periods. The evaluation of potential losses in
BankAtlantic's loan portfolio includes a review of all loans for which full
collectibility may not be reasonably assured. Increases in the allowance for
loan losses are recorded when losses are both probable and estimable. In the
case of loans in foreclosure or probable foreclosure, the estimated fair value
of the underlying collateral, and such other factors which, in management's
judgment, deserve recognition under existing economic conditions are
considered in estimating loan losses.

Investment Activities

BankAtlantic maintains an investment portfolio consisting primarily of
mortgage-backed securities and tax certificates. Additionally, BankAtlantic
has purchased banker's acceptances, which have been classified as loans.
Federal regulations limit the types and quality of instruments in which
BankAtlantic may invest.

Mortgage-backed securities are pools of residential loans which are made to
consumers and then generally sold to governmental agencies, such as the
Government National Mortgage Corporation ("GNMA"), the Federal National
Mortgage Corporation ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). Mortgage-backed securities are either 15-30 year maturity, 5-7
year balloon maturity or ARMs. BankAtlantic generally invests in ARMs or 5-7
year balloon maturity mortgage-backed securities.

Banker's acceptances are unconditional obligations of the issuing bank and are
collateralized by various means, including inventory and receivables of
borrowers of the issuing bank.

BankAtlantic's portfolio also includes tax lien certificates issued by various
counties in the State of Florida. Tax certificates represent a priority lien
against real property for which assessed real estate taxes are delinquent.
Although tax certificates have no stated maturity, the certificate holder has
the right to collect the delinquent tax amount, plus interest, and can file
for a deed to the underlying property if the delinquent tax amount is unpaid
at the end of two years. If the certificate holder does not file for the deed
within seven years, the certificate becomes null and void. BankAtlantic's
experience with this type of investment has been favorable as rates earned are
generally higher than many alternative investments, substantial repayment
generally occurs over a two year period and losses to date, have been minimal.
The primary risks BankAtlantic has experienced with tax certificates have
related to the risk that additional funds may be required to purchase other
certificates relating to the property, the risk that the liened property may
be unusable and the risk that potential environmental concerns may make taking
title to the property untenable.

The OTS is reviewing the amount, and procedures utilized in the acquisition
and administration of tax certificates by savings institutions. The purpose
of such review is believed to be the establishment of specific regulatory
guidelines and procedures so as to insure safety and soundness, generally.
BankAtlantic has participated with the OTS in this review and, based upon
current practices, BankAtlantic believes its procedures comply with applicable
safety and soundness requirements. Additionally, the Southeast Regional
Office of the OTS requested that BankAtlantic limit its purchases of tax
certificates at 1993 tax certificate auctions to an aggregate amount not to
exceed $85 million. Based on market conditions, BankAtlantic purchased only
approximately $64 million in tax certificates at auctions in 1993.
BankAtlantic is also aware that on November 17, 1992, the FDIC issued an
Interpretive Letter stating its view that it constitutes an unsafe or unsound
banking practice for a non-member commercial bank to invest in tax
certificates. Although the FDIC currently has supervisory and examination
jurisdiction with respect to thrifts such as BankAtlantic (see "Regulation and
Supervision"), BankAtlantic is unaware of any similar statement published by
the FDIC concerning investments in tax certificates by savings banks.
BankAtlantic has been advised that the FDIC may be preparing or may have
issued a memorandum or policy statement concerning tax certificates and has
made a request under the Freedom of Information Act to obtain a copy of any
such memorandum or policy statement. However, to date, the FDIC has not made
any such memorandum or policy statement publicly available. If the FDIC or
the OTS were to make a determination in the future that such investments are
improper, either regulator could seek to impose restrictions or sanctions,
prohibit or limit investments in tax certificates or require additional
regulatory reserves with respect to these investments. For descriptions of
BankAtlantic's investments in tax certificates and other investment
securities, see Note 3 to the Consolidated Financial Statements. Based upon
current discussions with the Southeast Regional Office of the OTS,
BankAtlantic believes the OTS has completed its current review of tax
certificate investments and has determined that savings institutions may
continue to invest in tax certificates, subject to certain volume limitations
and adherence to specific underwriting, asset classification and other
procedural guidelines. BankAtlantic believes it is in a position to comply
with OTS requirements and that compliance will not significantly change
BankAtlantic's tax certificate investment activities or practices. For a
discussion of regulatory limitations on BankAtlantic's investments, see
"Regulation and Supervision."

Sources of Funds

General - Historically, deposits have been the principal source of
BankAtlantic's funds for use in lending and for other general business
purposes. Loan repayments, sales of securities, advances from the Federal
Home Loan Bank ("FHLB") of Atlanta and other borrowings, including the
issuance of subordinated debentures, and the use of repurchase agreements have
been additional sources of funds. Loan amortization payments, deposit inflows
and outflows are significantly influenced by general interest rates.
Borrowings may be used by BankAtlantic on a short-term basis to compensate for
reductions in normal sources of funds such as savings inflows, and to provide
additional liquidity investments. On a long-term basis, borrowings may
support expanded lending activities. Historically, BankAtlantic has borrowed
primarily from the FHLB of Atlanta and through the use of repurchase
agreements.

Deposit Activities - BankAtlantic offers several types of deposit programs
designed to attract both short-term and long-term funds from the general
public by providing an assortment of accounts and rates. BankAtlantic believes
that its product line is comparable to that offered by its competitors.
BankAtlantic offers the following accounts: commercial and retail demand
deposit accounts; regular passbook and statement savings accounts; money
market accounts; fixed-rate, fixed-maturity certificates of deposit, ranging
in maturity from 30 days to 8 years; variable-maturity jumbo certificates of
deposit; and various NOW accounts. BankAtlantic also offers IRA and Keogh
retirement accounts. BankAtlantic's deposit accounts are insured by the FDIC
through the Savings Association Insurance Fund ("SAIF") up to a maximum of
$100,000 for each insured depositor.

BankAtlantic solicits deposits through advertisements in newspapers and
magazines of general circulation and on radio and television in Dade, Broward
and Palm Beach Counties, Florida. Most of its depositors are residents of
these three counties at least part of the year. BankAtlantic does not hold
any deposits obtained through brokers.

Borrowings - BankAtlantic has utilized wholesale repurchase agreements as a
means of obtaining funds and increasing yields on its investment portfolio.
In a wholesale repurchase transaction, BankAtlantic sells a portion of its
current investment portfolio (usually government and mortgage-backed
securities) at a negotiated rate and agrees to repurchase the same or
substantially identical assets on a specified date. Proceeds from such
transactions are treated as secured borrowings pursuant to applicable
regulations. See Note 14 to the Consolidated Financial Statements.

BankAtlantic is a member of the FHLB and is authorized to apply for secured
advances from the FHLB of Atlanta. See "Regulation and Supervision."
BankAtlantic has used advances from the FHLB to repay other borrowings, meet
deposit withdrawals and expand its lending and short-term investment
activities. See Note 13 to the Consolidated Financial Statements.

Competition

Based on its total assets, at September 30, 1993, BankAtlantic ranked seventh
in size among all savings institutions headquartered in the State of Florida
and first in size among all financial institutions headquartered in Broward
County, Florida.

BankAtlantic has substantial competition in attracting and retaining deposits
and in lending funds. The primary factors in competing for deposits are the
range and quality of financial services offered, the ability to offer
attractive rates and the availability of convenient office locations. There
is direct competition for deposits from credit unions and commercial banks and
other savings institutions. Additional significant competition for savings
deposits comes from other investment alternatives, such as money market mutual
funds and corporate and government securities. The primary factors in
competing for loans are the range and quality of lending services offered,
interest rates and loan origination fees. Competition for origination of real
estate loans normally comes from other savings and financial institutions,
commercial banks, mortgage bankers and insurance companies.

Past legislative and regulatory action has increased competition between
savings institutions and other financial institutions, such as commercial
banks, by expanding the ranges of financial services that may be offered by
savings institutions (e.g., interest bearing checking accounts, trust services
and consumer and commercial lending authority), while reducing or eliminating
the difference between thrift institutions and commercial banks with respect
to long-term lending authority, taxation and maximum rates of interest that
may be paid on savings deposits. Current and future regulatory requirements
may adversely affect BankAtlantic's competitive position by restricting its
operations.

BankAtlantic's operating goal is to provide a broad range of financial
services with a strong emphasis on customer service to individuals and
businesses in South Florida.

REGULATION AND SUPERVISION

General

BankAtlantic is a member of the FHLB system and its deposit accounts are
insured up to applicable limits by the FDIC. BankAtlantic is subject to
supervision, examination and regulation by the OTS and to a lesser extent by
the FDIC as the insurer of its deposits. BankAtlantic must file reports with
the OTS and the FDIC concerning its activities and financial condition, in
addition to obtaining regulatory approvals prior to entering into certain
transactions. There are periodic examinations by the OTS and the FDIC to
examine BankAtlantic's compliance with various regulatory requirements. The
regulatory structure also gives regulatory authorities extensive discretion in
connection with their supervisory and enforcement policies with respect to the
classification of non-performing and other assets and the establishment of
adequate loan loss reserves for regulatory purposes. Additionally, as a
company having a class of publicly held equity securities, BankAtlantic is
subject to the reporting and other requirements of the Securities Exchange Act
of 1934, as amended.

Legislative Developments

In recent years, measures have been taken to reform the thrift and banking
industries and to strengthen the insurance funds for depository institutions.
The most significant of these measures was the Financial Institution Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"), which has had a major impact
on the operations and regulation of savings associations generally. In 1991,
a comprehensive deposit insurance and banking reform plan, the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), became law.
Although FDICIA's primary purpose is to recapitalize the Bank Insurance Fund
(the "BIF") of the FDIC, FDICIA also affects the supervision and regulation of
all federally insured depository institutions, including federal savings banks
such as BankAtlantic.

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 -
FIRREA, enacted in response to concerns regarding the soundness of the thrift
industry, brought about a significant regulatory restructuring, limited
savings institutions' business activities and increased savings institutions'
regulatory capital requirements. FIRREA abolished the FHLB Board and the
Federal Savings and Loan Insurance Corporation ("FSLIC") and established the
OTS as the primary federal regulator for savings institutions. Deposits at
BankAtlantic are insured through the SAIF, a separate fund managed by the FDIC
for institutions whose deposits were formerly insured by the FSLIC.
Regulatory functions relating to deposit insurance are generally exercised by
the FDIC.

The Federal Deposit Insurance Corporation Improvement Act of 1991 - FDICIA
authorizes the regulators to take prompt corrective action to solve the
problems of critically undercapitalized institutions. As a result, banking
regulators are required to take certain supervisory actions against
undercapitalized institutions, the severity of which increases as an
institution's level of capitalization decreases. Pursuant to FDICIA, federal
banking agencies have established the levels at which an insured institution
is considered to be "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." See "Savings Institution Regulations--Prompt Regulatory
Action" below for a discussion of the applicable capital levels. Based upon
these established capital levels, BankAtlantic meets the definition of a "well
capitalized" institution.

FDICIA requires federal banking agencies to revise their risk-based capital
requirements to include components for interest rate risk, concentration of
credit risk and the risk of non-traditional activities. See "Savings
Institution Regulations--Regulatory Capital" below for a discussion of the
interest rate risk component in the risk-based capital requirement effective
June 30, 1994.

In addition, FDICIA requires each federal banking agency to establish
standards relating to internal controls, information systems, and internal
audit systems that are designed to assess the financial condition and
management of the institution, loan documentation, credit underwriting,
interest rate exposure, asset growth, and compensation, fees and benefits.
FDICIA lowered the Qualified Thrift Lender ("QTL") investment percentage
applicable to institutions insured by SAIF. See "Regulation and
Supervision--Savings Institution Regulations--Qualified Thrift
Lender--Insurance of Accounts." FDICIA further requires annual on-site full
examinations of depository institutions, with certain exceptions, and annual
reports on institutions' financial and management controls.

Other proposals are currently being considered which could have a significant
impact on BankAtlantic, including proposals, which would consolidate the
regulatory agencies having authority over financial institutions. It is not
yet clear which, if any, proposals will be adopted or the impact such
proposals may have on BankAtlantic.

Savings Institution Regulations

Regulatory Capital - Both the OTS and the FDIC have promulgated regulations
setting forth capital requirements applicable to savings institutions. The
effect and interrelationship of these regulations are discussed below.

Savings institutions must meet the OTS' specific capital standards which by
law must be no less stringent than capital standards applicable to national
banks with exceptions for risk-based capital requirements to reflect interest
rate risk or other risk. Capital calculated pursuant to the OTS' regulations
varies substantially from capital calculated pursuant to generally accepted
accounting principles ("GAAP"). At December 31, 1993, BankAtlantic met all
applicable capital requirements. The capital requirements are as follows:

(a) The leverage limit requires savings institutions to maintain core
capital of at least 3% of adjusted total assets. Adjusted total assets are
calculated as GAAP total assets, minus intangible assets (except those
included in core capital as described below). Core capital consists of common
shareholders' equity, including retained earnings, noncumulative perpetual
preferred stock and related surplus, less specified intangible assets (a
percentage of purchased mortgage servicing rights ("PMSRs")).

In addition, a portion of PMSRs may be included in core capital.
Generally, an amount may be included in core capital equal to the lowest of
(i) 90% of the fair market value of readily marketable PMSRs or (ii) the
current amortized book value as determined under GAAP. However, the amount of
PMSRs included in core capital is limited to a maximum of 50% of core capital.

(b) Under the tangible capital requirement, savings institutions must
maintain tangible capital in an amount not less than 1.5% of adjusted total
assets. Tangible capital is defined in the same manner as core capital,
except that all intangible assets, except PMSRs, must be deducted. The
percentage of PMSRs which may be included in tangible capital is equal to the
lesser of (a) 100% of the amount of tangible capital that exists before the
deduction of any disallowed PMSRs or (b) the amount of PMSRs allowed to be
included in core capital.

(c) The risk-based standards of the OTS currently require maintenance
of core capital equal to at least 4% of risk-weighted assets, and total
capital equal to at least 8% of risk-weighted assets. Total capital includes
core capital plus supplementary capital, but supplementary capital that may be
included in computing total capital for this purpose may not exceed core
capital. Supplementary capital includes cumulative perpetual preferred stock,
allowable subordinated debt and general loan loss allowances, within specified
limits. Such general loss allowances may not exceed 1.25% of risk-weighted
assets. Additionally, investments in non-includable subsidiaries will be
subject to a 100% exclusion from risk-based capital by July 1, 1994.

Risk-weighted assets are determined by assigning to all assets
designated risk weights ranging from 0% to 100%, based on the credit risk
assumed to be associated with the particular asset. Generally, zero weight is
assigned to risk-free assets, such as cash and unconditionally guaranteed
United States government securities such as mortgage-backed securities issued
or guaranteed by GNMA. A weight of 20% is assigned to, among other things,
certain obligations of United States government-sponsored agencies (such as
the FNMA and the FHLMC), stock of a FHLB and high quality mortgage-related
securities. A weight of 50% is assigned to qualifying mortgage loans and
certain other residential mortgage-related securities. A weight of 100% is
assigned to consumer, commercial and other loans, repossessed assets and
assets that are 90 days or more past due and all other assets not identified
in the categories above.

In addition to the capital requirements set forth in the OTS' regulations, the
OTS has delegated to its Regional Directors the authority to establish higher
individual minimum capital requirements for savings institutions based upon a
determination that the institution's capital is or may become inadequate in
view of its circumstances. For example, circumstances which may be considered
by the Regional Directors are the institution: (i) receiving special
supervisory attention; (ii) having or expected to have losses resulting in
capital inadequacy; (iii) having a high degree of exposure to interest-rate,
prepayment, credit or similar risks or a high proportion of off-balance sheet
risk; (iv) having poor liquidity or cash flow; (v) growing, internally or
through acquisitions, at such a rate that supervisory problems are presented
that are not dealt with adequately by other OTS regulations; (vi) having
potential adverse effects from the activities or condition of its affiliates
or others with which it has significant business relationships, including
concentrations of credit; (vii) having a portfolio reflecting weak credit
quality; (viii) having inadequate underwriting policies or procedures for
loans and investments; (ix) having a record of operational losses that exceeds
the average of other, similarly situated savings institutions; (x) having
management deficiencies; or (xi) having a poor record of supervisory
compliance.

In August 1993, the OTS adopted a final rule incorporating an interest-rate
risk component into the risk-based capital regulation. Under the rule, an
institution with a greater than "normal" level of interest-rate risk will be
subject to a deduction of its interest-rate risk component from total capital
for purposes of calculating the risk-based capital requirement. As a result,
such an institution will be required to maintain additional capital in order
to comply with the risk-based capital requirement. An institution with a
greater than "normal" interest-rate risk is defined as an institution that
would suffer a loss of net portfolio value exceeding 2.0% of the estimated
market value of its assets in the event of a 200 basis point increase or
decrease (with certain minor exceptions) in interest rates. The interest-rate
risk component will be calculated, on a quarterly basis, as one-half of the
difference between an institution's measured interest-rate risk and 2.0%
multiplied by the market value of its assets. The rule also authorizes the
director of the OTS, or his designee, to waive or defer an institution's
interest-rate risk component on a case-by-case basis. The final rule is
effective as of January 1, 1994, subject however to a two quarter "lag" time
between the reporting date of the data used to calculate an institution's
interest-rate risk and the effective date of each quarter's interest-rate risk
component. Thus, an institution with greater than "normal" risk will not be
subject to any deduction from total capital until July 1, 1994.

Additionally, the Office of the Comptroller of the Currency (the "OCC"), which
is the primary regulator for national banks, has adopted a final rule
increasing the leverage ratio requirements for all but the most highly rated
national banks. Pursuant to FIRREA, the OTS is required to issue capital
standards for savings institutions that are no less stringent than those
applicable to national banks. Accordingly, savings institutions must
maintain a leverage ratio (defined as the ratio of core capital to adjusted
total assets) of between 4% and 5%. The OTS indicated in the final rule that
it intended to lower the leverage ratio requirement (in its prompt corrective
action regulation) to 3.0% from the current level of 4.0%, on July 1, 1994.
If this rule and the interest rate component discussed above were in effect at
December 31, 1993, BankAtlantic believes it would be in full compliance with
the new rules and would have risk-based capital substantially in excess of
applicable risk-based capital requirements.

The OTS also issued a final rule, effective March 1, 1994, which excludes core
deposit intangibles ("CDIs") in the determination of regulatory capital. As
BankAtlantic's CDIs have been fully amortized at December 31, 1993,
BankAtlantic is not currently effected by this exclusion from capital.

Insurance of Accounts - BankAtlantic's deposits are insured by the SAIF up to
$100,000 for each insured account holder, the maximum amount currently
permitted by law. Pursuant to the FDICIA, the FDIC adopted transitional
regulations implementing risk-based insurance premiums that became effective
on January 1, 1993. Under these regulations, institutions are divided into
groups based on criteria consistent with those established pursuant to the
prompt regulatory action provisions of the FDICIA (see "Savings Institution
Regulations -- Prompt Regulatory Action" below). Each of these groups is
further divided into three subgroups, based on a subjective evaluation of
supervisory risk to the insurance fund posed by the institution. Insurance
premiums range from 23 to 31 basis points, with well capitalized institutions
in the highest supervisory subgroup paying 23 basis points and
undercapitalized institutions in the lowest supervisory subgroup paying 31
basis points.

As an insurer, the FDIC issues regulations and conducts examinations of its
insured members. Insurance of deposits by the SAIF may be terminated by the
FDIC, after notice and hearing, upon a finding that an institution has engaged
in unsafe and unsound practices, is in an unsafe and unsound condition to
continue operations, or has violated any applicable law, regulation, rule,
order or condition imposed by the OTS or the FDIC. When conditions warrant,
the FDIC may impose less severe sanctions as an alternative to termination of
insurance. BankAtlantic's management does not know of any present condition
pursuant to which the FDIC would seek to impose sanctions on BankAtlantic or
terminate insurance of its deposits.

Prompt Regulatory Action - The OTS and other federal banking regulators have
established capital levels for institutions to implement the "prompt
regulatory action" provisions of the FDICIA. Capital levels have been
established for which an insured institution will be categorized as well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized or critically undercapitalized. The FDICIA requires federal
banking regulators, including the OTS, to take prompt corrective action to
solve the problems of those institutions that fail to satisfy their applicable
minimum capital requirements. The level of regulatory scrutiny and
restrictions imposed become increasingly severe as an institution's capital
level falls.

A "well capitalized" institution must have risk-based capital of 10% or more,
core capital of 5% or more and Tier 1 risk-based capital (based on the ratio
of core capital to risk-weighted assets) of 6% or more and may not be subject
to any written agreement, order, capital directive or prompt corrective action
directive issued by the OTS to meet and maintain a specific capital level for
a specific capital measure. An institution will be categorized as:
"adequately capitalized" if it has total risk-based capital of 8% or more,
Tier 1 risk-based capital of 4% or more and core capital of 4% or more;
"undercapitalized" if it has total risk-based capital of less than 8%, Tier 1
risk-based capital of less than 4% or core capital of less than 4%;
"significantly undercapitalized" if it has total risk-based capital of less
than 6%, Tier 1 risk-based capital of less than 3% or core capital of less
than 3%; and "critically undercapitalized" if it has tangible capital of less
than 2%. Any savings institution that fails its regulatory capital
requirement is subject to enforcement action by the OTS or the FDIC.
BankAtlantic meets the capital requirements of a well capitalized institution
as defined above.

An undercapitalized institution is required to submit an acceptable capital
restoration plan to its appropriate federal banking agency. The plan must
specify (i) the steps the institution will take to become adequately
capitalized, (ii) the capital levels to be attained each year, (iii) how the
institution will comply with any regulatory sanctions then in effect against
the institution and (iv) the types and levels of activities in which the
institution will engage. The banking agency may not accept a capital
restoration plan unless the agency determines, among other things, that the
plan is based on realistic assumptions, and is likely to succeed in restoring
the institution's capital and would not appreciably increase the risk to which
the institution is exposed.

Under FDICIA, an insured depository institution cannot make a capital
distribution (as broadly defined to include, among other things, dividends,
redemptions and other repurchases of stock), or pay management fees to any
person that controls the institution, if thereafter it would be
undercapitalized. The appropriate federal banking agency, however, may (after
consultation with the FDIC) permit an insured depository institution to
repurchase, redeem, retire or otherwise acquire its shares if such action (i)
is taken in connection with the issuance of additional shares or obligations
in at least an equivalent amount and (ii) will reduce the institution's
financial obligations or otherwise improve its financial condition. An
undercapitalized institution is generally prohibited from increasing its
average total assets. An undercapitalized institution is also generally
prohibited from making any acquisitions, establishing any branches or engaging
in any new line of business except in accordance with an accepted capital
restoration plan or with the approval of the FDIC. In addition, the
appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.

FDICIA provides that the appropriate federal regulatory agency must require an
insured depository institution that (i) is significantly undercapitalized or
(ii) is undercapitalized and either fails to submit an acceptable capital
restoration plan within the time period allowed by regulation or fails in any
material respect to implement a capital restoration plan accepted by the
appropriate federal banking agency, to take one or more of the following
actions: (i) sell enough shares, including voting shares, to become adequately
capitalized; (ii) merge with (or be sold to) another institution (or holding
company), but only if grounds exist for appointing a conservator or receiver;
(iii) restrict certain transactions with banking affiliates as if the "sister
bank" exception to the requirements of Section 23A of the Federal Reserve Act
("FRA") did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior officer who held office for more than 180 days immediately before
the institution became undercapitalized; provided that in requiring dismissal
of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior officers; (xi) cease accepting
deposits from correspondent depository institutions; (xii) divest certain
non-depository affiliates which pose a danger to the institution; (xiii) be
divested by a parent holding company; and (xiv) take any other action which
the agency determines would better carry out the purposes of the prompt
corrective action provisions.

In addition to the foregoing sanctions, without the prior approval of the
appropriate federal banking agency, a significantly undercapitalized
institution may not pay any bonus to any senior officer or increase the rate
of compensation for such an officer without regulatory approval. Furthermore,
in the case of an undercapitalized institution that has failed to submit or
implement an acceptable capital restoration plan, the appropriate federal
banking agency cannot approve any such bonus.

Not later than 90 days after an institution becomes critically
undercapitalized, the appropriate federal banking agency for the institution
must appoint a receiver or, with the concurrence of the FDIC, a conservator,
unless the agency, with the concurrence of the FDIC, determines that the
purposes of the prompt corrective action provisions would be better served by
another cause of action. The FDICIA requires that any alternative
determination be "documented" and reassessed on a periodic basis.
Notwithstanding the foregoing, a receiver must be appointed after 270 days
unless the FDIC determines that the institution has positive net worth, is in
compliance with a capital plan, is profitable or has a sustainable upward
trend in earnings and is reducing its ratio of non-performing loans to total
loans and the head of the appropriate federal banking agency and the
chairperson of the FDIC certify that the institution is viable and not
expected to fail.

The FDIC is required, by regulation or order, to "restrict the activities" of
such critically undercapitalized institutions. The restrictions must include
prohibitions on the institution's doing any of the following without prior
approval of the FDIC: entering into any material transactions not in the usual
course of business, extending credit for any highly leveraged transaction,
engaging in any "covered transaction" (as defined in Section 23A of the FRA)
with an affiliate, paying "excessive compensation or bonuses," and paying
interest on "new or renewed liabilities" that would increase the institution's
average cost of funds to a level significantly exceeding prevailing rates in
the market.

Appointment of Receiver or Conservator - The grounds for appointment of a
conservator or receiver for a savings institution include the following
events: (i) "substantially insufficient capital;" (ii) incurrence or likely
incurrence of losses that will substantially deplete all of the institution's
capital in the absence of reasonable prospects for replenishing that capital
without federal assistance; (iii) a violation of law or regulation that is
likely to weaken the institution's condition; (iv) assets insufficient for the
satisfaction of its obligations; (v) substantial dissipation of assets or
earnings; (vi) unsafe and unsound condition; (vii) willful violation of cease
and desist orders; (viii) concealment of information; (ix) inability to meet
obligations in the normal course of business; (x) violations of law; (xi)
consent by resolution of the institution's board of directors or shareholders;
(xii) cessation of insured status; (xiii) under-capitalization; and (xiv)
other capital problems.

Supervisory Agreement - On April 16, 1991, BankAtlantic voluntarily entered
into a Supervisory Agreement with the OTS. The Supervisory Agreement required
BankAtlantic to implement additional policies and reporting procedures
relating to the internal operations of BankAtlantic within specified time
frames, and to particularly address concerns relating to classified assets,
general valuation allowances and the policies, procedures, information
reporting and guidelines in the consumer loan department. On March 16, 1994,
the OTS notified BankAtlantic that it had been released from the Supervisory
Agreement, BankAtlantic's management does not believe that the Agreement had
any material impact on BankAtlantic's business or operations.

Restrictions on Dividends and Other Capital Distributions - Current
regulations applicable to the payment of cash dividends by savings
institutions impose limits on capital distributions based on an institution's
regulatory capital levels and net income. An institution that meets or
exceeds all of its fully phased-in capital requirements (both before and after
giving effect to the distribution) and is not in need of more than normal
supervision would be a "Tier 1 association." A Tier 1 association may make
capital distributions during a calendar year up to the greater of (i) 100% of
net income for the current calendar year plus 50% of its capital surplus or
(ii) 75% of its net income over the most recent four quarters. Any additional
capital distributions would require prior regulatory approval.

An institution that meets the minimum regulatory capital requirements but does
not meet the fully phased-in capital requirements would be a "Tier 2
association," which may make capital distributions of between 25% and 75% of
its net income over the most recent four-quarter period, depending on the
institution's risk-based capital level. A "Tier 3 association" is defined as
an institution that does not meet all of the minimum regulatory capital
requirements and therefore may not make any capital distributions without the
prior approval of the OTS.

Savings institutions must provide the OTS with at least 30 days written notice
before making any capital distributions. All such capital distributions are
also subject to the OTS' right to object to a distribution on safety and
soundness grounds.

The FHLB System - BankAtlantic is a member of the FHLB system, which consists
of 12 regional FHLBs governed and regulated by the Federal Housing Finance
Board ("FHFB"). The FHLBs provide a central credit facility for member
institutions. BankAtlantic, as a member of the FHLB of Atlanta, is required
to acquire and hold shares of capital stock in the FHLB of Atlanta in an
amount at least equal to the greater of 1% of the aggregate principal amount
of its unpaid residential mortgage loans, home purchase contracts and similar
obligations as of the close of each calendar year, or 5% of its borrowings
from the FHLB of Atlanta (including advances and letters of credit issued by
the FHLB on BankAtlantic's behalf). BankAtlantic is currently in compliance
with this requirement.

Each FHLB makes loans (advances) to members in accordance with policies and
procedures established by the board of directors of the FHLB. These policies
and procedures are subject to the regulation and oversight of the FHFB. The
FHLB Act establishes collateral requirements for advances from the FHLB.
First, all advances from the FHLB must be fully secured by sufficient
collateral as determined by the FHLB of Atlanta. The FHLB Act prescribes
eligible collateral as first mortgage loans less than 90 days delinquent or
securities evidencing interests therein, securities (including mortgage-backed
securities) issued, insured or guaranteed by the federal government or any
agency thereof, deposits with the FHLB and, to a limited extent, real estate
with readily ascertainable value in which a perfected security interest may be
obtained. All long-term advances are required to provide funds for
residential home financing. The FHLB of Atlanta has established standards of
community service that members must meet to maintain access to long-term
advances.

Fees and Assessments of the OTS - The OTS has adopted regulations to assess
fees on savings institutions to fund the operations of the OTS. The
regulations provide for the OTS' assessments to be made based on the total
consolidated assets of a savings institution as shown on its most recent
report to the agency. Troubled savings institutions (generally, those
operating in conservatorship or with the lowest two (of five) supervisory
subgroup ratings) are to be assessed at a rate 50% higher than similarly sized
thrifts that are not experiencing problems.

Investment Activities - As a federally-chartered savings bank, BankAtlantic is
subject to various restrictions and prohibitions with respect to its
investment activities. These restrictions and prohibitions are set forth in
the Home Owner's Loan Act ("HOLA") and in the rules of the OTS and include
dollar amount limitations and procedural limitations. BankAtlantic is in
compliance with these restrictions.

Under the Federal Deposit Insurance Act ("FDIA"), a savings institution is
required to provide 30 days' prior notice to the FDIC and the OTS of its
desire to establish or acquire a new subsidiary or conduct any new activity
through a subsidiary. The institution is also required to conduct the
activities of the subsidiary in accordance with the OTS' orders and
regulations. The Director of the OTS has the power to force divestiture of
any subsidiary or the termination of any activity it determines is a serious
threat to the safety, soundness or stability of the savings institution or is
otherwise inconsistent with sound banking principles. Additionally, the FDIC
is authorized to determine whether any specific activity poses a threat to the
SAIF and to prohibit any member of the SAIF from engaging directly in the
activity, even if it is an activity that is permissible for a
federally-chartered savings institution or for a subsidiary of a
state-chartered savings institution.

Safety and Soundness - The FDIA authorizes the appropriate federal agency (in
the case of BankAtlantic, the OTS) to prescribe, for all federally insured
depository institutions, operational, managerial and compensation standards
for internal controls, information systems, loan documentation, credit
underwriting, interest rate exposure, asset growth and compensation and
benefits for bank officers, employees, directors and principal shareholders.
The statute further empowers the OTS to set standards for any other facet of
institution operations not specifically covered in this list. The OTS is
required to prescribe asset quality, earnings and stock valuation standards
specifying: (i) a maximum ratio of classified assets to capital; (ii) minimum
earnings sufficient to absorb losses without impairing capital; (iii) to the
extent feasible, a minimum ratio of market value to book value for publicly
traded shares of the institution; and (iv) such other standards relating to
asset quality, earnings and valuation as the OTS deems appropriate.

An institution failing to meet these standards must file a plan to bring the
institution into compliance and have the plan approved by the OTS. Continued
non-compliance allows the OTS to prohibit growth, require higher capital,
restrict interest rates paid on deposits or take any other appropriate action.

Loans to One Borrower - Generally, a savings institution's total loans and
extensions of credit to one borrower or related group of borrowers,
outstanding at one time and not fully secured by readily marketable
collateral, may not exceed 15% of the institutions' unimpaired capital and
surplus. Except as set forth below for certain highly rated securities, an
institution's investment in commercial paper and corporate debt securities of
any one issuer or related entity must be aggregated "loans" for purposes of
the immediately preceding sentence.

Savings institutions may invest, in addition to the 15% general limitation, up
to 10% of unimpaired capital and surplus in commercial paper of one issuer
rated by two nationally recognized rating services in the highest category, or
in corporate debt securities rated in one of the two highest categories by at
least one such service. A savings institution may also lend up to 10% of
unimpaired capital and surplus, if the loan is fully secured by readily
marketable collateral which is defined to include certain securities and
bullion, but generally does not include real estate.

A savings institution which meets its fully phased-in capital requirements may
make loans to one borrower to develop domestic residential housing units, up
to the lesser of $30,000,000 or 25% of the savings institution's unimpaired
capital and surplus if certain other conditions are satisfied. These loans
are an alternative to the 15% limitation and not in addition to that
limitation. At December 31, 1993, BankAtlantic was in compliance with the
loans to one borrower limitations.

Qualified Thrift Lender ("QTL") - BankAtlantic, like all other savings
institutions, is required to meet the QTL test for, among other things, future
eligibility for advances from the FHLB. The QTL test requires that a savings
institution's qualified thrift investments equal or exceed 65% of the savings
institution's portfolio assets calculated on a monthly average basis in nine
out of every twelve months. For the purposes of the QTL test, portfolio
assets are total assets less intangibles, properties used to conduct business
and liquid assets (up to 10% of total assets). The following assets are
included as qualified thrift investments without limit: (i) domestic
residential housing or manufactured housing loans; (ii) home equity loans and
mortgage-backed securities secured by residential housing or manufactured
housing loans; and (iii) certain obligations of the FDIC and other related
entities. Other qualifying assets which may be included up to an aggregate of
20% of portfolio assets are: (i) 50% of originated residential mortgage loans
sold within 90 days of origination; (ii) investments in debt or equity
securities of service corporations that derive at least 80% of their gross
revenues from housing-related activities; (iii) 200% of certain loans to and
investments in low-cost, one-to-four family housing; (iv) 200% of loans for
residential real property, churches, nursing homes, schools and small
businesses in areas where credit needs of low-to-moderate income families are
not met; (v) other loans for churches, schools, nursing homes and hospitals;
and (vi) consumer and education loans up to 10% of total portfolio assets.

Any savings institution that fails to meet the QTL test must convert to a
commercial bank charter or limit its future investments and activities to
those permitted for both savings institutions and national banks.
Additionally, any such savings institution that does not convert to a
commercial bank charter will be ineligible to receive future advances from the
FHLB and, beginning three years after the loss of QTL status, will be required
to repay all outstanding advances from the FHLB and dispose of or discontinue
all preexisting investments and activities not permitted for both savings
institutions and national banks. If an institution converts to a commercial
bank charter, it will remain insured by the SAIF until December 31, 1993, or
until the FDIC permits it to transfer to BIF, if later. Generally, a transfer
to BIF is not permitted until August 1994. If any institution that fails the
QTL test and is subject to these restrictions on activities and advances and
is controlled by a holding company, then, within one year after the failure,
the holding company must register as a bank holding company and will be
subject to all restrictions on bank holding companies. At December 31, 1993,
BankAtlantic was in compliance with current QTL requirements.

Transaction with Affiliates - As a federally chartered savings institution,
BankAtlantic is subject to the OTS' regulations relating to transactions with
affiliates, including officers and directors. BankAtlantic is subject to
substantially similar restrictions regarding affiliate transactions as those
imposed on member banks under Sections 22(g), 22(h), 23A, and 23B of the FRA.

Sections 22(g) and 22(h) establish restrictions on loans to directors,
controlling shareholders and their related companies and certain officers.
Section 22(g) provides that no institution may extend credit to an executive
officer unless (i) the bank would be authorized to make such extension of
credit to borrowers other than its officers, (ii) the extension of credit is
on terms not more favorable than those afforded to other borrowers, (iii) the
officer has submitted a detailed current financial statement and (iv) the
extension of credit is on the condition that it shall become due and payable
on demand at any time that the officer is indebted to any other bank or banks
on account of extensions of credit in any one of the following three
categories, respectively, in an aggregate amount greater than the amount of
credit of the same category that could be extended to the officer by the
institution: (a) an extension of credit secured by a first lien on a dwelling
which is expected to be owned by the officer and used by the officer as his or
her residence; (b) an extension of credit to finance the education of the
children of the officer; or (c) for any other purpose prescribed by the OTS.
Section 22(g) also imposes reporting requirements on both the officers to whom
it applies and on the institution. Section 22(h) requires that loans to
directors, controlling shareholders and their related companies and certain
officers be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and that those loans do not involve more than the normal risk of
repayment or present other unfavorable features.

Section 23A limits transactions with any one affiliate to 10% of the
institution's capital and surplus (including supervisory goodwill to the
extent that it may be included in core capital through July 1, 1995) and
limits aggregate affiliate transactions to 20% of such capital and surplus.
Sections 23A and 23B provide that a loan transaction with an affiliate
generally must be collateralized (other than by a low-quality asset or by
securities issued by an affiliate) and that all covered transactions as well
as the sale of assets, the payment of money or the providing of services by a
savings institution to an affiliate must be on terms and conditions that are
substantially the same, or at least as favorable to the savings institution,
as those prevailing for comparable non-affiliated transactions. A covered
transaction is defined as a loan to an affiliate, the purchase of securities
issued by an affiliate, the purchase of assets from an affiliate (with some
exceptions), the acceptance of securities issued by an affiliate as collateral
for a loan or the issuance of a guarantee, acceptance or letter of credit on
behalf of an affiliate. The OTS regulations clarify that transactions between
either a thrift or a thrift subsidiary and an unaffiliated person that benefit
an affiliate are considered covered transactions. A savings institution may
make loans to or otherwise extend credit to an affiliate only if the affiliate
is engaged solely in activities permissible for bank holding companies. In
addition, no savings institution may purchase the securities of any affiliate
other than the shares of a subsidiary. The Director of the OTS may further
restrict these transactions in the interest of safety and soundness. At
December 31, 1993, BankAtlantic was in compliance with the restrictions
regarding affiliate transactions.

Subordinated Debentures - Insured institutions may increase their regulatory
risk-based capital by selling subordinated debentures only with the prior
written approval of the OTS. Applicable regulations also prohibit the
inclusion in regulatory risk-based capital of subordinated debentures which
have an original maturity of less than seven years and restrict the timing of
sinking fund payments with respect to such securities. Pursuant to FIRREA,
maturing capital instruments issued on or before November 7, 1989 includable
as regulatory capital must be amortized pursuant to a schedule that permits
100% to be included when the years to maturity are greater than or equal to
seven, and decreases by approximately one-seventh each year thereafter.
Subordinated debentures issued after November 7, 1989 may, subject to
regulatory approval prior to inclusion, be includable in regulatory capital,
but such inclusion is limited based on one of two elections to be chosen by
the issuing institution. The institution may elect to phase capital inclusion
out on a straight-line basis over the last five years to maturity of the
instrument, or may elect to limit the inclusion of the subordinated debt with
less than seven years to maturity to 20% of the institution's capital. The
OTS is permitted to determine the treatment of subordinated debentures if an
institution is in receivership. At December 31, 1993, all of BankAtlantic's
subordinated debentures had been redeemed.

Liquidity Requirements of the OTS - The OTS' regulations currently require all
member savings institutions to maintain an average daily balance of liquid
assets (cash, certain time deposits, banker's acceptances, specified United
States government, state or federal agency obligations and other corporate
debt obligations and commercial paper) equal to 5% of the sum of the average
daily balance during the preceding calendar month of net withdrawable accounts
and short-term borrowings payable in one year or less. The liquidity
requirement may vary from time to time (between 4% and 10%) depending upon
economic conditions and savings flows of all savings institutions. All
savings institutions are also required to maintain an average daily balance of
short-term liquid assets (generally having maturities of 12 months or less)
equal to at least 1% of the average daily balance of net withdrawable accounts
and current borrowings. Monetary penalties may be imposed by the OTS for
failure to meet liquidity requirements. At December 31, 1993 BankAtlantic was
in compliance with all applicable liquidity requirements.

The Federal Reserve System - BankAtlantic is subject to certain regulations
promulgated by the Federal Reserve Board (the "FRB"). Pursuant to such
regulations, savings institutions are required to maintain non-interest
bearing reserves against their transaction accounts (which include deposit
accounts that may be accessed by writing checks) and non-personal time
deposits. The FRB has authority to adjust reserve percentages and to impose
in specified circumstances emergency and supplemental reserves in excess of
the percentage limitations otherwise prescribed. The balances maintained to
meet the reserve requirements imposed by the FRB may be used to satisfy
liquidity requirements which may be imposed by the OTS. In addition, FRB
regulations limit the periods within which depository institutions must
provide availability for and pay interest on deposits to transaction accounts.
Depository institutions are required to disclose their check holding policies
and any changes to those policies in writing to customers. BankAtlantic
believes that it is in compliance with all such FRB regulations.

Community Reinvestment - Under the CRA, as implemented by OTS regulations, a
savings institution has a continuing and affirmative obligation consistent
with its safe and sound operation to help meet the credit needs of its entire
community, including low- and moderate-income neighborhoods. CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community,
consistent with CRA. CRA requires the OTS, in connection with its examination
of a savings institution, to assess the institution's record of meeting the
credit needs of its community and to take such record into account in its
evaluation of certain applications by such institution. Effective July 1,
1990, the CRA, as amended by FIRREA, requires public disclosure of an
institution's CRA rating and requires that the OTS provide a written
evaluation of an institution's CRA performance utilizing a four-tiered
descriptive rating system. The four ratings are "outstanding record of
meeting community credit needs", "satisfactory record of meeting community
credit needs", "needs to improve record of meeting community credit needs" and
"substantial non-compliance in meeting community credit needs." An
institution's CRA rating is taken into account in determining whether to grant
charters, branches and other deposit facilities, relocations, mergers,
consolidations and acquisitions. Poor CRA performance may be the basis for
denying an application. BankAtlantic received a "satisfactory record of
meeting community credit needs" during its most recent OTS examination.

Holding Company Regulation - By virtue of its ownership of approximately
48.17% of the Common Stock, BFC Financial Corporation ("BFC") is a savings
institution holding company subject to the regulatory oversight of the OTS.
As such, BFC is required to register and file reports with the OTS and is
subject to regulation and examination by the OTS. In addition, the OTS has
enforcement authority over BFC and its non-savings institution subsidiaries.
Among other things, this authority permits the OTS to restrict or prohibit
activities that are determined to be a serious risk to the subsidiary savings
institution. As an insured institution and a subsidiary of a savings
institution holding company, BankAtlantic is subject to restrictions in its
dealings with BFC and any other companies that are "affiliates" of BFC under
the HOLA, and certain provisions of the FRA that are made applicable to
savings institutions by FIRREA and OTS regulations.

As a result of FIRREA, a savings institution's transactions with its
affiliates are subject to limitations set forth in the HOLA and OTS
regulations, which incorporate Section 23A, 23B, 22(g) and 22(h) of the FRA
and Regulation O adopted by the FRB. Under Section 23A, an "affiliate" of an
institution is defined generally as (i) any company that controls the
institution and any other company that is controlled by the company that
controls the institution, (ii) any company that is controlled by the
shareholders who control the institution or any company that controls the
institution or (iii) any company that is determined by regulation or order to
have a relationship with the institution (or any subsidiary or affiliate of
the institution) such that "covered transactions" with the company may be
affected by the relationship to the detriment of the institution. "Control"
is determined to exist if a percentage stock ownership test is met or if there
is control over the election of directors or the management or policies of the
company or institution. "Covered transactions" generally include loans or
extensions of credit to an affiliate, purchases of securities issued by an
affiliate, purchases of assets from an affiliate) (except as may be exempted
by order or regulation), and certain other transactions. See "Transaction
with Affiliates" above for a general discussion of the restrictions on dealing
with affiliates.

Further, BankAtlantic is currently considering the formation of a holding
company which would own 100% of BankAtlantic's common stock. Any such
formation will be subject to shareholder approval and will involve the
exchange of BankAtlantic shares for shares in the new entity. If approved, a
shareholder's proportionate ownership position in the new entity would be
equal to the proportionate interest previously held in BankAtlantic. BFC has
indicated that it would vote in favor of this type of shareholder proposal.

Capital Maintenance Agreement

Pursuant to an agreement entered into on May 10, 1989 between BFC, its
affiliates and BankAtlantic's primary regulator, BFC is obligated to infuse
additional capital into BankAtlantic in the event that BankAtlantic's net
capital (as defined) falls below the lesser of the industry's minimum capital
requirement (as defined) or 6% of BankAtlantic's assets. This obligation will
expire ten years from the date of the agreement, or at such earlier time as
BankAtlantic's net capital exceeds its fully phased-in capital requirement (as
defined) for a period of two consecutive years. BankAtlantic's capital has
exceeded its fully phased-in capital requirement since December 31, 1992.

New Accounting Standards and Policies

During May 1993, the Financial Accounting Standards Board approved two new
accounting standards. Financial Accounting Standards No. 114--Accounting by
Creditors for Impairment of a Loan ("FAS 114"), and Financial Accounting
Standards No. 115--Accounting for Certain Investments in Debt and Equity
Securities ("FAS 115"). FAS 114 addresses the collectibility of both
contractual interest and contractual principal of all receivables when
assessing the need for a loss accrual. This standard requires that unpaid
loans be measured at the present value of expected cash flows by discounting
those cash flows at the loan's effective interest rate. FAS 114 must be
adopted by 1995, prospectively. If BankAtlantic implemented FAS 114 at
December 31, 1993, its effect would be immaterial. BankAtlantic intends to
adopt FAS 114 in 1995.

In a related matter, in August 1993, the OTS issued Regulatory Bulletin 31
"Classification of Assets", which incorporates the OTS policy on the
classification of troubled, collateral-dependent loans.

Effective September 1993, OTS' policy for troubled, collateral-dependent loans
(where proceeds for repayment can be expected to come only from the operation
and sale of the collateral) is as follows:

(a) For a troubled, collateral-dependent loan where, based on current
information and events, it is probable that the lender will be unable to
collect all amounts due (both principal and interest), any excess of the
recorded investment in the loan over its "value" should be classified Loss,
and the remainder should generally be classified Substandard.

(b) For a troubled, collateral-dependent loan, the "value" is either
(1) the present value of the expected future cash flows, discounted at the
loan's effective interest rate, based on the original contractual terms
("loan-rate present value"); (2) the loan's observable market price; or (3)
the fair value of the collateral.

(c) For a troubled, collateral-dependent loan, it is probable that
the lender will be unable to collect all amounts due when the expected future
cash flows, on an undiscounted basis, from the operation and sale of the
collateral over a period of time not to exceed the intermediate term (e.g.,
five years) are less than the principal and interest payments due according to
the contractual terms of the loan agreement. The term "all amounts due" is
based on the original contractual terms, except as discussed below.

(d) For a troubled, collateral-dependent loan (whether or not
restructured) where, based on current information it is probable, but not
reasonably assured, that the lender will be able to collect all amounts due
(both principal and interest), any excess of the recorded investment in the
loan over its value should be classified Doubtful, and the remainder should
generally be classified Substandard.

An exception to this policy is for a loan that was restructured in a troubled
debt restructuring involving a modification of terms prior to December 31,
1993. For loans restructured before December 31, 1993, the evaluation for
probability of collection may be based on the collectibility of principal and
interest under the restructured contractual terms. For all restructured
loans, including loans modified before and after December 31, 1993, that
become impaired after modification, the measurement of value is based on the
same standard discussed above: (1) the present value of the expected future
cash flows discounted at the loan's original contractual interest rate; (2)
the loan's observable market price; or (3) the fair value of the collateral,
if the loan is collateral dependent.

OTS does not allow savings institutions to use general valuation allowances to
cover any amount considered to be a Loss under the above policy; however,
specific valuation allowances may be used in lieu of charge-offs.
BankAtlantic experienced no material write-downs as the result of complying
with Regulatory Bulletin 31.

FAS 115 addresses the valuation and recording of debt securities as
held-to-maturity, trading and available for sale. Under this standard, only
debt securities that BankAtlantic has the positive intent and ability to hold
to maturity would be classified as held to maturity and reported at amortized
cost. All others would be reported at fair value. FAS 115 must be adopted by
January 1,1994, prospectively. If FAS 115 were effective at December 31,
1993, BankAtlantic does not believe that it would be required to reclassify
its debt securities. The effect of implementation increased stockholders'
equity by approximately $2.7 million on January 1, 1994. However,
BankAtlantic believes that implementation of FAS 115 may result in the
volatility of capital amounts reported over time and could in the future
negatively impact the institution's regulatory capital position.

FEDERAL AND STATE TAXATION

For federal income tax purposes, BankAtlantic reports its income and expenses
on the accrual method of accounting. Savings institutions that meet certain
definitional tests and other conditions prescribed by the Internal Revenue
Code of 1986 (the "Code"), relating primarily to the composition of their
assets and the nature of their business activities are, within certain
limitations, permitted to establish, and deduct additions to, reserves for bad
debts in amounts in excess of those which would otherwise be allowable on the
basis of actual loss experience. A qualifying savings institution may elect
annually, and is not bound by such election in any subsequent year, one of the
following two methods for computing additions to its bad debt reserves for
losses on "qualifying real property loans" (generally, loans secured by
interests in improved real property): (i) the experience method or (ii) the
percentage of taxable income method. BankAtlantic has utilized both the
percentage of taxable income method and the experience method in computing the
tax-deductible addition to its bad debt reserves. Additions to the reserve
for losses on non-qualifying loans, however, must be computed under the
experience method and reduce the current year's addition to the reserve for
losses on qualifying real property loans, unless that addition also is
determined under the experience method. The sum of the addition to each
reserve for each year is BankAtlantic's annual bad debt deduction. If the
percentage of BankAtlantic's specified qualifying assets (generally, loans
secured by residential real estate or deposits, banker's acceptances,
educational loans, cash, government obligations and certain certificates of
deposit) were to fall below 60% of its total assets, BankAtlantic would not be
eligible to claim further bad debt reserve deductions, and would recapture
into income all previously accumulated bad debt reserves. As of December 31,
1993, BankAtlantic's qualifying assets were in excess of 60% of total assets.

The experience method allows a savings institution to deduct the greater of an
amount based upon a six-year moving average of loan losses or an amount
determined with respect to its bad debt reserve for the "base year". The
"base year" is, for these purposes, the last taxable year beginning before
1988. For the past four taxable years, BankAtlantic has utilized the
experience method.

Under the percentage of taxable income method, the bad debt deduction equals
8% of taxable income determined without regard to that deduction and with
certain adjustments. The percentage bad debt deduction thus computed is
reduced by the amount permitted as a deduction for the addition to the reserve
for losses on non-qualifying loans, which must be computed under the
experience method. The availability of the percentage of taxable income
method permits qualifying savings institutions to be taxed at a lower maximum
effective federal income tax rate than that applicable to corporations
generally. The effective maximum marginal federal income tax rate applicable
to a qualifying savings institution (exclusive of the alternative minimum
tax), assuming the maximum percentage bad debt deduction, is approximately
32.2%.

The percentage of taxable income method is available only to the extent that
amounts accumulated in reserves for losses on qualifying real property loans
do not exceed 6% of such loans at year-end. Use of this method is further
limited to the greater of (i) the amount which, when added to the amount
computed for the addition to the reserve for losses on non-qualifying loans,
equals the amount by which 12% of savings deposits or withdrawable accounts of
depositors at year-end exceeds the sum of surplus, undivided profits and
reserves at the beginning of the year or (ii) the amount determined under the
experience method. None of these limitations would have restricted the
deduction for the addition to the reserve for bad debts available to
BankAtlantic for 1993. BankAtlantic's reserve for bad debts included $6.6
million, for which no deferred income taxes have been provided at December 31,
1993.

To the extent that (i) a savings institution's reserve for losses on
qualifying real property loans exceeds the amount that would have been allowed
under the experience method and (ii) it makes distributions to shareholders
that are considered to result in withdrawals from that excess bad debt
reserve, then the amounts withdrawn will be included in its taxable income.
The amount considered to be withdrawn by a distribution will be the amount of
the distribution plus the amount necessary to pay the tax with respect to the
withdrawal. Dividends paid out of the savings institution's current or
accumulated earnings and profits, as calculated for federal income tax
purposes, will not be considered to result in withdrawals from its bad debt
reserves.

The Internal Revenue Service has examined the consolidated federal income tax
returns of BankAtlantic through calendar year 1988.

In February 1992, FAS 109, Accounting for Income Taxes, was issued, and it
significantly changes the method of accounting for deferred income taxes. The
standard requires the use of the asset and liability method in accounting for
income taxes and eliminates, on a prospective basis, the former exception for
the provision of deferred income taxes on thrift bad debt reserves.
BankAtlantic implemented, on a prospective basis, FAS 109 on January 1, 1993,
and there was no cumulative effect adjustment required upon implementation.

New Tax Legislation - The Omnibus Budget Reconciliation Act of 1993 (the
"Omnibus Act") was passed by Congress and signed into law by the President
during August, 1993. The Omnibus Act increased the maximum federal income tax
rate applicable to BankAtlantic from 34% to 35% retroactive to January 1,
1993. The effect of the Omnibus Act on BankAtlantic at the date of enactment
was to increase the income tax provision by approximately $175,000.

BankAtlantic may also be impacted by other provisions of the Omnibus Act
either directly as a consequence of additional provisions applicable to it or
indirectly as a consequence of their impact on BankAtlantic's borrowers or the
economy in general.

Florida Franchise Tax - The State of Florida imposes a corporate franchise tax
on savings and loan institutions at the rate of 5.5% on taxable income as
determined for Florida franchise tax purposes, in lieu of the Florida
corporate income tax. Taxable income for this purpose is based on federal
taxable income in excess of $5,000 as adjusted by certain items. A credit is
available against up to 65% of the franchise tax otherwise due for certain
intangible taxes imposed by the State of Florida. The corporate franchise
tax, exclusive of this credit availability, is substantially equivalent to the
Florida corporate income tax.

Real Estate and Other Activities

As discussed in "General Description of Business", the Company prior to its
investment in BankAtlantic had been primarily engaged in the real estate
business. From 1981 through 1987, eleven public real estate partnerships were
formed for which the Company provided property management, for fees, and
administrative and accounting services, for cost reimbursements. In March
1989, February 1991 and June 1991, the assets and liabilities of six
partnerships were exchanged for subordinated debentures of the Company. Three
other partnerships have been or are in the process of being liquidated. It is
the Company's intent to liquidate the assets acquired in the Exchanges and at
December 31, 1993 only seven of the twenty-two properties acquired in the 1989
and 1991 Exchanges remain.

In addition to its investment in BankAtlantic and unrelated to the public
limited partnership programs and its property management activities noted in
the paragraphs above, the Company holds mortgage notes receivable of
approximately $9.1 million which were received in connection with the sale of
properties previously owned by the Company.

Holding Company Regulation - As the holder of approximately 48.2% of
BankAtlantic's Common Stock, BFC is a non-diversified savings and loan holding
company within the meaning of the National Housing Act of 1934, as amended.
As such, BFC is registered with and is subject to examination and supervision
by the OTS as well as subject to certain reporting requirements. As an FDIC-
insured subsidiary of a savings bank holding company, BankAtlantic is subject
to certain restrictions in dealing with BFC and with other persons affiliated
with BFC.

Employees

At December 31, 1993, BankAtlantic employed approximately 603 full-time (with
an additional 19 employees on leave of absence) and 20 part-time employees.
In addition to the above BFC Financial Corporation employed 5 full-time and 1
part-time employee. Management believes that its relations with its employees
are satisfactory. The employee benefits offered by the Company are considered
by management to be generally competitive with employee benefits provided by
other major employers in Florida. The Company's employees are not represented
by any collective bargaining group.

ITEM 2. Properties

BankAtlantic's principal and executive offices are located at 1750 East
Sunrise Boulevard, Fort Lauderdale, Florida 33304. In addition to its
principal office, BankAtlantic currently conducts business at 30 branch
offices located in Dade, Broward and Palm Beach Counties, Florida.
BankAtlantic owns the land and building on which its executive offices are
located and also owns 20 of the branch offices. BankAtlantic leases either
the land, the building or both in connection with the operation of its 10
other branch offices. BankAtlantic has seven leased branch office sites in
Broward County, with lease expiration dates ranging from 1994 to 1998; two
leased branch office sites in Dade County, with lease expiration dates ranging
from 1995 to 2003; and one leased branch office in Palm Beach County, with a
lease expiring in 1999. BankAtlantic also maintains a ground lease for a
drive-in facility in Broward County which expires in 1999. At December 31,
1993, the aggregate net book value of premises and equipment, including
leasehold improvements and equipment, was $37.4 million.

Other Properties Held By the Company at December 31, 1993

Prior to January 31, 1994, BFC's principal executive offices of approximately
6,200 square feet of office space was located at 1320 South Dixie Highway,
Coral Gables, Florida. The space was leased pursuant to a lease expiring upon
the giving of six (6) months written notice to landlord and was utilized by
the Company and its affiliates other than BankAtlantic. Effective January 31,
1994, BFC relocated its offices to approximately 1,500 square feet located in
BankAtlantic's executive offices. The space is leased pursuant to a lease
with BankAtlantic on terms no less favorable than could be obtained from an
independent third party, expiring December 20, 1994.

The commercial properties listed below are not utilized by the Company but are
held by the Company as investments. All are zoned for their current uses.
Lease terms do not include options.

Land Approximately subject to an
Springfield, Massachusetts 5 acres estate for
years
expiring in
2006

Land and Restaurant Building 5,000 square subject to a
Galesburg, Illinois foot building net lease
expiring
in 1995

Clinton Plaza Shopping 129,575 square owned, subject
Center, Knoxville, TN feet leasable to a ground
lease

IBM Executive Office 48,050 square owned
Building, Kingsport, TN feet leasable

Delray Industrial Park 134,237 square owned
Delray Beach, FL feet leasable

Burlington Manufacturers
Outlet Center 277,965 square owned
Burlington, NC feet leasable

Pinebrook Square 285,365 square owned
Charlotte, NC feet leasable

Professional Towers 128,125 square owned
Louisville, KY feet leasable

Lennar Medical
Professional Center 75,584 square owned
Miami, FL feet leasable

ITEM 3. LEGAL PROCEEDINGS

The following is a description of certain lawsuits to which the Company is a
party.

Timothy J. Chelling vs. BFC Financial Corporation, Alan B. Levan, I.R.E.
Advisors Series 21, Corp. and First Equity Corporation, U.S. District Court,
Southern District of Florida Case No. 89-1850-Civ Nesbitt. John D. Purcell
and Debra A. Purcell vs. BFC Financial Corporation, Alan B. Levan, Scott
Kranz, Frank Grieco, I.R.E. Advisors Series 23, Corp. and First Equity
Corporation, U.S. District Court, Southern District of Florida, Case No.
89-1284- Civ-Ryskamp. William A. Smith and Else M. Smith vs. BFC Financial
Corporation, Alan B. Levan and I.R.E. Advisors Series 24, Corp. and First
Equity Corporation, U.S. District Court, Southern District of Florida, Case
No. 89-1605- Civ-Marcus.

These actions were filed by the plaintiffs as class actions during September
1989, June 1989 and August 1989, respectively. The actions arose out of an
Exchange Offer made by the Company to the limited partners of I.R.E. Real
Estate Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23, and
I.R.E. Real Estate Fund, Ltd. - Series 24. The plaintiffs, who were limited
partners of the above named partnerships who did not consent to the Exchange
Offer, brought this action purportedly on behalf of all limited partners that
did not consent to the Exchange Offer. The Exchange Offer was made through
the solicitation of consents pursuant to a Proxy Statement/Prospectus dated
February 14, 1989 and was approved by the holders of a majority of the limited
partnership interests of each of the Partnerships in March 1989. Messrs.
Levan, Grieco and Kranz served as individual general partners of each of the
Partnerships, and Mr. Levan is the President and a director of the Company.

The plaintiffs alleged that the Proxy Statement/Prospectus contained material
misstatements and omissions, that defendants violated the federal securities
laws in connection with the offer and Exchange, that the Exchange breached the
respective Limited Partners Agreement and that the defendants violated the
Florida Limited Partnership statute in effectuating the Exchange. The
complaint also alleged that the defendant general partners violated their
fiduciary duties to the plaintiffs.

In a memorandum opinion and order dated December 17, 1991, the Court granted
the defendant's motion for summary judgement and denied the plaintiff's motion
for summary judgement, ruling that the Exchange did not violate the
partnership agreements or the Florida partnership statute. In July 1992, the
Court granted summary judgment in favor of the defendants and dismissed the
plaintiffs' claims for breach of fiduciary duty.

Subsequently, the court entered summary judgment in favor of the defendants on
all claims of misrepresentations or omissions except with respect to the
statement in the Proxy Statement/Prospectus to the effect that BFC, Alan Levan
and the Managing General Partners believed the Exchange transaction was fair.
The case on that issue was tried in December 1992, and the jury returned a
verdict in the amount of $8 million but extinguished approximately $16 million
of debentures held by the plaintiffs. BFC Financial Corporation would record a
pre-tax gain of approximately $6 million from the reduction in its debt
resulting from the verdict, but it nonetheless believes that the verdict was
not supported by the evidence at trial. Based on the verdict, BFC Financial
Corporation would record a pre-tax gain of approximately $6 million from the
extinguishment of the $16 million of outstanding debt. No amounts have been
reflected in the financial statements because the judgement amount was less
that the Company's carrying amount of the debentures and related accrued
interest and because the Company intends to appeal the verdict.

The court denied plaintiffs' motion for prejudgment interest as to Series 21
and Series 23 and awarded prejudgment interest to plaintiffs in Series 24 to
be calculated to run from March 31, 1989 through December 18, 1992, the date
of entry of final judgment, at the rate of 3.54%. The plaintiffs appealed the
court's denial for prejudgment interest in Series 21 and Series 23.

The Company also appealed the judgment as well as the court's denial of
various post-trial motions filed by the Company. Pursuant to the request of
the Eleventh Circuit Court of Appeals, the parties submitted briefs regarding
the issue of whether the Eleventh Circuit has jurisdiction to hear the appeal.
In February 1994, the Eleventh Circuit Court dismissed the appeal for lack of
jurisdiction.

In September 1993, the court granted the Company's motion to stay of the
execution of the final judgment pending appeal and to allow alternative form
of security. In December 1993, the Company filed with the district court a
motion to correct the judgment to reflect the cancellation of the outstanding
debentures, which motion is still pending.

Arthur Arrighi, et al. vs. KPMG Peat Marwick, BFC Financial Corporation; Alan
B. Levan; Frank V. Grieco; Glen Gilbert; Al DiBenedetto; BankAtlantic, A
Federal Savings Bank; Georgeson & Company, Inc.,; First Equity Corporation of
Florida; I.R.E. Advisors Series 25, Corp.; I.R.E. Advisors Series 27, Corp.;
I.R.E. Income Advisors, Corp.; and National Realty Consultants, in the United
States District Court for the District of New Jersey, Case No. 92-1206-CDR.
This case was filed on March 20, 1992 by more than 2,000 former limited
partners in Series 25, Series 27 and Income Fund. The complaint alleged that
BFC and certain other defendants developed a fraudulent scheme commencing in
1972 to sell the plaintiffs limited partnership units with the undisclosed
goal of later taking over the assets of the partnerships in exchange for
securities in a new entity in which the defendant Alan B. Levan would be a
major shareholder. The complaint further alleged that the defendants made
material misrepresentations and omissions in connection with the sale of the
original limited partnership units in the 1980s and in connection with the
1991 Exchange, and fraudulently tallied the votes in connection with the 1991
Exchange and Solicitation of Consents described above.

On March 2, 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately eighty-one percent (81%) of the
face amount of the outstanding debentures held by plaintiffs and the
debentures will be canceled pursuant to the procedures outlined in the
agreement. The settlement is subject to, among other things, court approval.
Upon effectiveness, the settlement of this action will be dismissed with
prejudice and the parties will exchange releases.

Marjory Meador, Shirley B. Daniels, Robert A. and Ruby L. Avans, and Dr. and
Mrs. Czerny, individually and on behalf of all others similarly situated,
Plaintiffs, vs. BFC Financial Corporation; BankAtlantic, A Federal Savings
Bank; Alan B. Levan; I.R.E. Advisors Series 21, Corp.; I.R.E. Advisors Series
23, Corp.; I.R.E. Advisors Series 24, Corp.; I.R.E. Advisors Series 25, Corp.;
I.R.E. Advisors Series 27, Corp.; I.R.E. Income Advisors Corp.; and First
Equity Corporation of Florida; Defendants, in the Circuit Court of the
Seventeenth Judicial Circuit in and for Broward County, Florida, Case No. 91-
29892 (CA-17). This action was filed as a class action during October 1991
and is brought on behalf of all persons who were limited partners in (a)
I.R.E. Real Estate Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. -
Series 23, or I.R.E. Real Estate Fund, Ltd. -Series 24 on the effective date
of the 1989 Exchange Transaction not otherwise included in the action by
limited partners who voted against the Exchange; or (b) were limited partners
in I.R.E. Real Estate Fund, Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. -
Series 27 or I.R.E. Real Estate Income Fund, Ltd. on the effective dates of
the 1991 Exchange Transactions. The action alleges breach of the limited
partnership agreements, breach of fiduciary duty, aiding and abetting a breach
of fiduciary duty by BFC Financial Corporation and BankAtlantic, and negligent
misrepresentation by all defendants. The action seeks damages in an unstated
amount, imposition of a constructive trust on the assets of the exchanging
partnerships, attorney's fees, costs and such other relief as the courts may
deem appropriate. Plaintiffs have voluntarily dismissed all claims which
arose out of or related to the 1991 Exchange.

Shirley B. Daniels, Robert S. and Ruby L. Avans, and Dr. and Mrs. Czerny,
individually and on behalf of all others similarly situated, Plaintiffs, vs.
BFC Financial Corporation; BankAtlantic, A Federal Savings Bank; Alan B.
Levan; I.R.E. Advisors Series 25, Corp.; I.R.E. Advisors Series 27, Corp.;
I.R.E. Income Advisors Corp.; First Equity Corporation of Florida, Defendants,
in the United States District Court for the Southern District of Florida, Fort
Lauderdale Division, Case No. 92-6588-Civ-King. On January 18, 1991, BFC
issued a prospectus and solicitation of consents in which it offered to
exchange up to $17 million in subordinated unsecured debentures for all of the
assets and liabilities of I.R.E. Real Estate Fund, Ltd.- ("Series 25"), I.R.E.
Real Estate Fund, Ltd.- ("Series 27"), I.R.E. Real Estate ("Income Fund") and
I.R.E. Pension Investors, Ltd the ("1991 Exchange"). The 1991 Exchange was
approved by a majority of the limited partners in all of the partnerships
except I.R.E. Pension Investors, Ltd. The Exchange subsequently was
effectuated without I.R.E. Pension Investors, Ltd.

In December 1992, plaintiffs filed an amended complaint, the result of which
is to enlarge the class to all limited partners in the 1991 Exchange.
Plaintiffs allege that the defendants orchestrated the Exchange for their own
benefit and caused the issuance of the Exchange Offer and Solicitation of
Consents, which contained materially misleading statements and omissions. The
complaint contains counts against BFC for violations of the Securities Act and
the Exchange Act.

Plaintiffs also allege that Alan Levan and the managing general partners
breached the limited partnership agreements, breached fiduciary duties and
that BFC and BankAtlantic aided and abetted these alleged breach of fiduciary
duties, that Alan Levan, the managing general partners, BFC and BankAtlantic
committed fraud in connection with the 1991 Exchange and made certain
negligent misrepresentations to the plaintiffs. The complaint seeks damages
and prejudgment interest in an unspecified amount, attorneys' fees and costs.
The defendants have filed an answer and affirmative defenses to the amended
complaint.

On March 2, 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately eighty-one percent (81%) of the
face amount of the outstanding debentures held by plaintiffs and the
debentures will be canceled pursuant to the procedures outlined in the
agreement. The settlement is subject to, among other things, court approval.
Upon effectiveness, the settlement of this action will be dismissed with
prejudice and the parties will exchange releases.

Cheryl and Wayne Hubbell, et al., vs. I.R.E. Advisors Series 26, Corp. et al.,
in the California Superior Court in Los Angeles, California, Case No.
BC049913. This action was filed as a class action during March 1992 on behalf
of all purchasers of I.R.E. Real Estate Fund, Ltd. - Series 25, I.R.E. Real
Estate Fund, Ltd. - Series 26, I.R.E. Real Estate Fund, Ltd. - Series 27,
I.R.E. Real Estate Growth Fund, Ltd. - Series 28 and I.R.E. Real Estate Income
Fund, Ltd. against the managing and individual general partners of the above
named partnerships and the officers and directors of those entities. The
plaintiffs allege that the offering materials distributed in connection with
the promotions of these limited partnerships contained misrepresentations of
material fact and that the defendants misrepresented and concealed material
facts from the plaintiffs during the time the partnerships were in existence.
The complaint asserts two causes of action for fraud, one of which is based on
a claim for intentional misrepresentation and concealment and one of which is
based on a claim of negligent misrepresentation. The complaint also contains
a claim for breach of fiduciary duty. The complaint seeks unspecified
compensatory and punitive damages, attorneys' fees and costs. Plaintiffs filed
an amended complaint, which the Court dismissed in February 1993 pursuant to a
motion to dismiss filed by the Defendants. Plaintiffs thereafter filed a
second amended complaint in February 1993. which was also dismissed.
Plaintiffs filed a third amended complaint which defendants answered in April
1993. Management intends to vigorously defend this action.

Martha Hess, et. al., on behalf of themselves and all others similarly
situated, v. Gordon, Boula, Financial Concepts, Ltd., KFB Securities, Inc., et
al. In the Circuit Court of Cook County, Illinois. On or about May 20,
1988, an individual investor filed the above referenced action against two
individual defendants, who allegedly sold securities without being registered
as securities brokers, two corporations organized and controlled by such
individuals, and against approximately sixteen publicly offered limited
partnerships, including two partnerships that the Company acquired the assets
and liabilities of in the 1991 Exchange transaction, (the "predecessor
partnerships") interests in which were sold by the individual and corporate
defendants.

Plaintiff alleged that the sale of limited partnership interests in the
predecessor partnerships (among other affiliated and unaffiliated
partnerships) by persons and corporations not registered as securities brokers
under the Illinois Securities Act constitutes a violation of such Act, and
that the Plaintiff, and all others who purchased securities through the
individual or corporate defendants, should be permitted to rescind their
purchases and recover their principal plus 10% interest per year, less any
amounts received. The predecessor partnerships' securities were properly
registered in Illinois and the basis of the action relates solely to the
alleged failure of the Broker Dealer to be properly registered.

In November 1988, Plaintiff's class action claims were dismissed by the Court.
Amended complaints, including additional named plaintiffs, were filed
subsequent to the dismissal of the class action claims. Motions to dismiss
were filed on behalf of the predecessor partnerships and the other
co-defendants. In December 1989, the Court ordered that the predecessor
partnerships and the other co-defendants rescind sales of any plaintiff that
brought suit within three years of the date of sale. Under the Court's order
of December 1989, one of the predecessor partnerships rescinded sales of
$41,500 of units.

Plaintiffs appealed, among other items, the Court's order with respect to
plaintiffs that brought suit after three years of the date of sale In
February 1993, the Appellate court ruled that the statute of limitations was
tolled during the pendency of the class action claims. Therefore, those
investors that brought suit within 3.6 years and potentially 4 years from the
date of sale may be entitled to rescission. The Company and the other co-
defendants sought leave to appeal before the Illinois Supreme Court and on
October 6, 1993, the leave to appeal was denied. Plaintiff's claims are now
pending in Circuit Court. Plaintiffs have indicated that they will file
amended complaints against the predecessor partnerships and other co-
defendants. The amended complaints will include both individual and class
claims. The individual and corporate defendants sold a total of $1,890,500 of
limited partnership interests in the predecessor partnerships. Limited
partners holding approximately $1,042,800 of limited partnership interests
have filed an action for recision. Under the appellate decision, if recision
was made to all limited partners that filed an action, refunds, at March 31,
1993, (including interest payments thereon) would amount to approximately
$1,800,000. A provision for such amount has been made in the accompanying
financial statements.

Short vs. Eden United, Inc., et al. in the Marion County Superior Court, State
of Indiana. Civil Division Case No. S382 0011. In January, 1982, an individual
filed suit against a subsidiary of the Company, Eden United, Inc. ("Eden"),
seeking return of an earnest money deposit held by an escrow agent and
liquidated damages in the amount of $85,000 as a result of the failure to
close the purchase and sale of an apartment complex in Indianapolis, Indiana.
Eden was to have purchased the apartment complex from a third party and then
immediately resell it to plaintiff. The third party was named as a
co-defendant and such third party has also filed a cross claim against Eden,
seeking to recover the earnest money deposit. In September 1983, Plaintiff
filed an amended complaint, naming additional subsidiaries of the Company and
certain officers of the Company as additional defendants. The amended
complaint sought unspecified damages based upon alleged fraud and interference
with contract. In interrogatory answers served in September 1987, Plaintiff
stated for the first time that he was seeking damages in the form of lost
profits in the amount of approximately $6,350,000. The case went to trial
during October 1988. On April 26, 1989, the Court entered a judgement against
Eden, the Company and certain additional subsidiaries of the Company jointly
and severally in the sum of $85,000 for liquidated damages with interest
accruing at 8% per annum from September 1, 1981, normal compensatory damages
of $1.00, and punitive damages in the sum of $100,000. The judgement also
rewards the Plaintiff the return of his $85,000 escrow deposit, and awards the
third party $85,000 in damages plus interest accruing from September 14, 1981
against Eden. The Company has charged expense for the above amounts. Both
Short and the Company appealed the judgement and in June 1991, the appellate
court reversed the trial court's decision on the issue of compensatory
damages, determined that Short maybe entitled to an award of compensatory
damages and remanded the case to the trial court to determine the amount of
compensatory damages to be awarded. The Indiana Supreme Court denied review.
A hearing on remand was held on February 3, 1993. On February 25, 1994, the
court on remand awarded plaintiff a judgment in the amount of $85,000 for
liquidated damages for breach of contract jointly and severally from the
subsidiary, the Registrant and certain named affiliates, plus prejudgment
interest of $52,108 through May 1, 1989, plus post-judgment interest of 10%
per annum thereafter until paid. Additionally, plaintiff was awarded a
judgment against the defendants in the amount of $2,570,000 for tortious
interference, plus prejudgment interest of $469,400 through May 1, 1989, plus
post-judgment interest of 10% per annum thereafter until paid. The Registrant
which was advised of the courts decision on March 2, 1994 intends to appeal
the trial court's order.

Scott Kranz and Investment Management Group, Inc. vs. Alan B. Levan, BFC
Financial Corporation, I.R.E. Investments, Inc., Frank V. Grieco, I.R.E.
Advisors Series 23, Corp., I.R.E. Advisors Series 24, Corp., I.R.E. Advisors
Series 25, Corp., I.R.E. Advisors Series 26, Corp., and I.R.E. Real Estate
Institutional Corp., in the Eleventh Judicial Circuit in and for Dade County,
Florida, Case No. 85-08751 (the "employment case"), Scott G. Kranz in the name
of I.R.E. Realty Advisory Group, Inc., vs I.R.E. Realty Advisory Group, Inc.
et al in the Eleventh Judicial Circuit in and for Dade County, Florida, Case
No. 84-40012 (CA25) (the "appraisal case"). On March 5, 1985 Scott Kranz and
Investment Management Group, Inc. filed suit seeking damages in excess of
$1,800,000 and punitive damages of at least $10,000,000 plus costs.
Investment Management Group, Inc. ("IMG") is a real estate development
corporation of which Scott Kranz is the President. Until his termination on
August 1, 1984, Scott Kranz was associated with Registrant and/or various of
its affiliates either individually or through IMG. The Complaint alleges that
Alan B. Levan, acting on his own behalf and on behalf of Registrant and
certain unnamed affiliates and in combination with one or more unnamed
defendants wrongfully caused the termination of certain contractual
relationships between the Company and Scott Kranz and IMG and of Scott Kranz
as general partner of five publicly registered real estate limited
partnerships.

On October 29, 1984, Scott G. Kranz, a 10% shareholder of I.R.E. Realty
Advisory Group, Inc. ("RAG"), of which Registrant is a 50% shareholder, filed
suit in the name of RAG seeking a declaration of the rights and liabilities of
the parties in relation to a merger effective August 21, 1984 by and among
Gables Advisors, Inc., I.R.E. Real Estate Funds, Inc. and RAG. Plaintiff seeks
damages in the amount of the fair market value of his shares in RAG as of the
day before the merger. He further claims punitive damages, attorneys fees and
costs.

On January 30, 1985, plaintiff amended his complaint, to add claims of breach
of statutory duty and willful failure to submit the merger transactions to a
vote at a meeting of shareholders, in addition to a claim for punitive
damages. On June 17, 1985, Plaintiff again amended his complaint adding a
claim of constructive fraud. In March 1986, Plaintiff's motion for summary
judgement was denied. On January 21, 1987, the Court ordered this action
consolidated for trial with the action described immediately above.

Defendants denied Plaintiff's claims and filed a counterclaim. The defendants
also filed a motion to strike all of Kranz's and IMG's pleadings in both cases
and to enter a default judgement against Kranz and IMG for gross and
continuing violations of discovery orders. By order dated June 26, 1990, the
judge struck all of the pleadings filed by Kranz and IMG including both of
their complaints and both of their answers to the Company's counterclaims. On
February 12, 1991, the trial judge entered final judgement in favor of the
individual defendants, Alan Levan and Frank Grieco, specifically reserving
jurisdiction for further proceedings as to the corporate entities to enter
final judgement against the plaintiffs on the complaint. Kranz and IMG
appealed the judgement in favor of the individual defendants and the judgement
was affirmed. The corporate defendants have filed a motion for entry of
judgment against Kranz and IMG and requesting damages and attorney's fees.

Joseph Roma vs. I.R.E. Advisors Series 29, Corp., et al., in the Circuit Court
of Cook County, Illinois, County Department, Chancery Division, Case No.
91CH2429. - This action was filed as a class action during March 1991. The
action, brought on behalf of investors in I.R.E. Real Estate Fund, Ltd. -
Series 29 ("Series 29"), alleged fraud and fraudulent inducement, breach of
fiduciary duty, negligent misrepresentation and violations of the Blue Sky
Laws by defendants relating to their promotion, marketing, control and
management of Series 29, a public limited partnership. The action sought
rescission of the investments, contracts and agreements relating to
investments in Series 29, damages in an unstated amount and other relief as
the court deemed appropriate. This action was dismissed by the court.
Plaintiffs appealed such dismissal and in February 1994, the Appellate Court
affirmed the dismissal in favor of all defendants.

John F. Weaver, Trustee for the Bankruptcy Estate of Milton A. Turner vs.
I.R.E. Real Estate Investments, Inc., in the United States Bankruptcy Court
for the Eastern District of Tennessee, Case No. 3-89-01210. - On July 25,
1991, an action was filed by John Weaver alleging that the conveyance of
Turner's equity of $1,642,001 under a wrap note to I.R.E. Real Estate
Investments, Inc. (successor to I.R.E. Real Estate Fund, Ltd. - Series 23) in
connection with the sale of property by Series 23 to Turner was a fraudulent
conveyance, as defined, in that Turner conveyed an asset, namely the
cancellation of a wrap note and wrap trust, without fair consideration while
insolvent. The trial on the complaint to avoid fraudulent conveyance was
heard before the Bankruptcy Court in May 1993. Judgment was entered in favor
of BFC and the complaint was dismissed. No appeal was taken from the judgment
and it is now final.

Alan B. Levan and BFC Financial Corporation v. Capital Cities/ABC, Inc. and
William H. Wilson, in the United States District Court for the Southern
District of Florida, Case No. 92-325-Civ-Atkins. On November 29, 1991, The
ABC television program 20/20 broadcast a story about Alan B. Levan and BFC
which purportedly depicted some securities transactions in which they were
involved. The story contained numerous false and defamatory statements about
the Company and Mr. Levan and, February 7, 1992, a defamation lawsuit was
filed on behalf of the Company and Mr. Levan against Capital Cities/ABC, Inc.
and William H. Wilson, the producer of the broadcast. In July 1993, a
magistrate recommended that summary judgment be entered against Mr. Levan on
their defamation claims. Objections to and an appeal from that recommendation
were filed with the presiding judge. Such appeal remains pending.

On March 21, 1988, an action captioned Elliot Borkson, et al. vs. Alan Levan,
Jack Abdo and BankAtlantic, Case No. 88-12063, was filed by a group of
approximately 54 shareholders of BankAtlantic in the Circuit Court of the
Eleventh Judicial Circuit in and for Dade County, Florida. The complaint
alleges that Messrs. Levan and Abdo breached their fiduciary duties as
directors of BankAtlantic by disregarding the rights of minority shareholders
under a certain option agreement between BFC and a third party dated April 9,
1986, by taking actions to depress the value of BankAtlantic's stock, by
denying access to BankAtlantic's books and records and by allegedly wasting
corporate assets. BankAtlantic is a nominal party to the proceeding.
Plaintiffs seek punitive damages of $10.0 million, compensatory damages,
attorneys' fees, costs and injunctive relief. Discovery is proceeding and the
defendants are vigorously defending the action. No trial date has been set.

Counsel has obtained a letter from counsel for plaintiffs in which counsel for
plaintiffs conclude that there is insufficient evidence to maintain the claim
against the defendants. This matter has been set for jury trial during the
two-week period commencing June 6, 1994.

Elliot Borkson, et al vs. BFC Financial Corporation. Circuit Court of the 11th
Judicial Circuit in and for Dade County Florida. Case No. 88-11171 (CA 10). In
March 1988, a group of approximately 54 shareholders of BankAtlantic filed a
class action suit against Registrant alleging Registrant had breached its
agreement, contained in an option agreement ("the Pearce Agreement") pursuant
to which Registrant had purchased shares of BankAtlantic, to offer to acquire
all of the remaining outstanding shares of BankAtlantic at a price equal to
the greater of (i) $18 per share or (ii) an amount per share which, in the
opinion of an investment banking firm of recognized national standing, is fair
to the stockholders of BankAtlantic. Such obligation was subject to receipt of
all required regulatory approvals and was relieved if there occurred a
material adverse change in financial conditions affecting the savings and loan
industry. Plaintiffs seek to recover compensatory damages arising from
Registrant's alleged breach of contract, costs, interest and attorneys fees.
In April 1988, BankAtlantic joined in a motion to stay the proceedings pending
resolution of a similar action filed in Pennsylvania and transferred to the
United States District Court for the Southern District of Florida. The stay
with respect to the proceedings remains in effect.

Marvin E. Blum, et al vs. BFC Financial Corporation; Alan B. Levan and Jack
Abdo. Case No. 88-6277, U.S. District Court for the Southern District of
Florida. This litigation was commenced on February 11, 1988, by International
Apparel Associates as a class action against BFC Financial Corporation and
Alan Levan. Subsequently, the Borkson plaintiffs and their counsel were
substituted for International Apparel, with Dr. Marvin Blum being designated
as the class representative. Jack Abdo was also added as a party defendant.
The plaintiff class was certified by the district court as "all persons, other
than defendants, and their affiliates, officers, and members of their
immediate family who owned shares of BankAtlantic common stock on February 6,
1988, or their successors in interest".

The Second Amended Complaint, upon which this action is presently based,
asserts a claim for breach of contract and a claim for violation of Section
10(b) of the Securities Exchange Act of 1934. Plaintiffs allege that they, as
minority shareholders of BankAtlantic, A Federal Savings Bank, are third party
beneficiaries of an option agreement between BFC Financial Corporation and Dr.
Pearce requiring BFC Financial Corporation to offer to purchase all their
shares of BankAtlantic subject to certain conditions. Plaintiffs claim that
none of the conditions set forth in the Pearce Agreement arose to excuse BFC
Financial Corporation from offering to buy the shares; defendants claim that
those conditions did in fact occur and that BFC Financial Corporation did not,
therefore, have any obligation to offer to purchase the shares. Plaintiffs
also allege that defendants made certain misrepresentations regarding their
intentions to perform pursuant to the Pearce agreement, which defendants deny.
Settlement negotiations, which had been progressing, have terminated. The
plaintiffs have requested that this matter be rescheduled for trial. Pretrial
conference has been conducted, however, no trial date has been set.

During 1989 and 1991, the Company exchanged subordinated debentures for the
assets and liabilities of certain affiliated partnerships. While, to the
Company's knowledge, no formal order of investigation is pending, the
Securities and Exchange Commission ("SEC") has advised the Company that it is
currently reviewing the transactions.

Following is a description of additional legal proceedings in which the
Company's significant subsidiary, BankAtlantic, is a party:

Caroline Berger, on behalf of herself and all others similarly situated vs.
Joseph Giarizzo, Ron Scott, Leon Martin, Paul Tedaldy, Sal Giarizzo, James
Gansky, Harbor Crest Assocs. Ltd., Queens Window Systems Ltd., Dartmouth Plan
Inc., Wendover Funding, Inc., Midwest Federal Savings Bank, Sterling Resources
Ltd., Bencharge Credit Service of New York, Inc., Skopbank, David Beyer,
Jeffrey Beyer, BankAtlantic, National City Bank of Akron, Suburban Equity
Corp., Oxford Home Equity Loan Co., National Westminster Bank, Embanque
Capital Corp., Chrysler First, Capital Resources Corp., Green Point Savings,
United States District Court, Eastern District of New York, CV-90-2500, Platt,
C.J. This action was originally filed on July 13, 1990 by the plaintiff,
Caroline Berger ("Berger"), in her individual capacity, against Joseph
Giarizzo, Harbor Crest Associates, Ltd., Queens Window Systems Ltd., Dartmouth
Plan, Inc., Wendover Funding Inc., Midwest Federal Savings Bank, Sterling
Resources Ltd., Bencharge Credit Service of New York Inc., SkopBank, David
Beyer and Jeffrey Beyer. The original complaint asserted a variety of state
and federal causes of action. The plaintiff, Berger, is allegedly suing on
behalf of herself and all others similarly situated. Berger asserts that she
was defrauded by Dartmouth Plan Inc., Midwest Federal Savings Bank and by
Harbor Crest, a home improvement contractor affiliated with Dartmouth. The
plaintiff maintains that Dartmouth and Harbor Crest operated a scheme pursuant
to which Harbor Crest would identify individuals on small incomes with little
or no education and sell them home improvements at substantially marked up
prices. The plaintiff also maintains that the home improvements were provided
in a shoddy and unprofessional manner and that the requirements of the truth
in lending laws were not met.
In related matters, BankAtlantic is represented by counsel in connection
with a suit filed by the New Jersey Attorney General has filed suit against
Sterling and certain contractors originating Sterling paper (some of which was
subsequently sold to BankAtlantic). In that action, the New Jersey Attorney
General seeks civil remedies against the contractor and Sterling and seeks to
cancel or modify the mortgage loans. These are some of the same Sterling
loans discussed above. The New Jersey Attorney General staff has stated that
some of the New Jersey customers have better claims than others and have asked
BankAtlantic to recommend a procedure for independent evaluation of any claims
relating to these loans. On June 15, 1992, BankAtlantic sent the New Jersey
Attorney General a written recommendation regarding the procedures that should
be utilized to evaluate the claims relating to the Sterling loans held by
BankAtlantic on a case-by-case basis. The New Jersey Attorney General is in
the process of reviewing and revising the suggested procedures.

In an action entitled BankAtlantic, A Federal Savings Bank, a federally
chartered savings bank vs. National Union Fire Insurance Co. of Pittsburgh,
Pennsylvania, a Pennsylvania corporation, United States District Court,
Southern District of Florida, 91-2940-CIV-MORENO, BankAtlantic and National
Union entered into a Covenant Not To Execute (the "Covenant"). Pursuant to
the Covenant, BankAtlantic will continue to pursue its litigation against
National Union but has agreed to limit execution on any judgment obtained
against National Union to $18 million. Further, BankAtlantic agreed to join
certain third parties as defendants in the action. Pursuant to the Covenant,
National Union paid BankAtlantic approximately $6.1 million on execution of
the Covenant, and agreed to pay an additional $3 million, which was paid when
due on November 1993, and approximately $2.9 million on November 1, 1994.
Further, National Union agreed to reimburse BankAtlantic for additional losses
(as defined) incurred by it in connection with the Subject Portfolio, if any,
provided that in no event will National Union be obligated to pay BankAtlantic
in the aggregate more than $18 million. In the event of recovery by
BankAtlantic of damages against third party wrongdoers, BankAtlantic will be
entitled to retain such amounts until such amounts plus any payments received
from National Union equal $22 million. Thereafter National Union will be
entitled to any such recoveries to the extent of its payments to BankAtlantic.

On July 21, 1987, a foreclosure action captioned Atlantic Federal Savings and
Loan Association of Fort Lauderdale and BankAtlantic Development Corporation
vs. Promenade at Inverrary, et. al., Case No. 87-19998CM, was filed in the
Circuit Court of the Seventeenth Judicial Circuit in and for Broward County,
Florida, against Promenade at Inverrary. On November 27, 1991, the state
court judge entered a final judgment in favor of BankAtlantic and BankAtlantic
Development Corporation for $11,957,820.73 and against the Kozich defendants
on their counterclaims. BankAtlantic, and two other financial institutions (a
junior mortgagee who challenged the priority of certain of one of the other
institution's mortgages on the borrower's properties) were ordered to attend
mediation shortly before a November 1992 trial date. At mediation, a
settlement was reached whereby the other institution agreed to sell certain of
its mortgages at a discount and assign them to BankAtlantic, dismiss its
defenses to the second amended complaint so that BankAtlantic could proceed to
complete the foreclosure without the necessity of trial and dismiss the
appeals it had taken in both the state and bankruptcy courts. In exchange for
BankAtlantic's payment of a nominal sum, the other institution agreed to
dismiss its challenge to the priority of one of the other institution's
mortgages and thereby release its mortgages from the properties. The trial
court entered an order allowing BankAtlantic to credit the bid at the
foreclosure sale for the amount of the junior mortgages that were assigned to
it from the other institution. The Bankruptcy Court has released the five
Kozich properties from bankruptcy and the trustee turned the properties over
to a management company selected by BankAtlantic until the foreclosure case
was completed in 1993. BankAtlantic now owns the properties and is seeking to
dispose of the subject properties.

An action to recover $750,000 captioned BankAtlantic, A Federal Savings Bank,
f/k/a Atlantic Federal Savings and Loan Association of Fort Lauderdale, vs.
Jetborne International, Inc., a Delaware corporation, Allen Blattner,
individually and Benjamin Friedman, individually, was filed on April 28, 1989,
in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County,
Florida; Case No. 89-18792 CA 16, for breach of three separate promissory
notes for $250,000 each executed by Allen Blattner, individually. As
disclosed previously on Form 10K, BankAtlantic also sought to enforce a
guarantee executed by Jetborne International of all three promissory notes.
On September 12, 1991, judgement was entered in favor of BankAtlantic and
against all defendants. Judgments against Jetborne and Allen Blattner were in
the amount of $706,800 and $769,282, respectively. On December 12, 1991 an
involuntary bankruptcy petition was filed against Jetborne. Jetborne did not
contest the bankruptcy filing and converted to a voluntary proceeding.
BankAtlantic is pursuing its claim as a creditor in the bankruptcy proceeding
on the judgment against Allen Blattner. Jetborne has filed a Plan of
Reorganization in its bankruptcy case which was confirmed in 1993.
BankAtlantic has reached an agreement as to the treatment of BankAtlantic's
claim. Jetborne paid BankAtlantic $100,000 in the first quarter of 1994 and
the remainder of BankAtlantic's claim is to be paid in full over a period of
approximately five years.

On July 2, 1990, an action entitled BankAtlantic, A Federal Savings Bank,
f/k/a Atlantic Federal Savings and Loan Association of Fort Lauderdale vs.
Aircraft Modular Products, Inc., Case No. 90-31870 CA19, was filed in the
Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida
by BankAtlantic seeking to enforce a guaranty. This case is related to
BankAtlantic vs. Jetborne et. al. described above. The defendant, Aircraft
Modular Products, Inc., is a subsidiary of Jetborne International. The
guaranty executed by Jetborne of Allen Blattner's indebtedness also includes
"subsidiaries". As part of the preliminary settlement reached between
BankAtlantic and Jetborne as described above, BankAtlantic released its claims
against Aircraft Modular Products, Inc. and its indebtedness is to be
satisfied in full under Jetborne's Plan of Reorganization, and BankAtlantic
was released by Aircraft Modular Products from any claim.

BankAtlantic is also a defendant in various other legal proceedings arising in
the ordinary course of its business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

a) The following table sets forth the high bid and low offer prices on
the NASD OTC Bulletin Board of Registrant's common stock for the last three
quarters of 1993, as reported to the Registrant by the National Quotation
Bureau, and the quarter end market price for the year 1992 and the first
quarter of 1993, as reported on the pink sheets.

Year:
High Low
Quarter Market Price Bid Offer
------- ------------ ----- -----
1992:
1st Quarter .50
2nd Quarter .75
3rd Quarter .75
4th Quarter 2.00

1993:
1st Quarter 2.25
2nd Quarter 3.00 2.25
3rd Quarter 5.00 2.00
4th Quarter 5.00 3.00

b) The approximate number of shareholders of record of common stock as of
March 18, 1994 was 1,350.

c) No dividends have been paid by Registrant since its inception.

There are no restrictions on the payment of dividends by Registrant except
that no dividends may be paid to the holders of any equity securities of the
Company while any deferred interest on the Company's Exchange debentures
remains unpaid. Since December 31, 1991, the Company has deferred the
interest payments relating to the debentures issued in both the 1989 Exchange
and the 1991 Exchange, amounting to a total of approximately $12.1 million.

Additionally, as noted in Part I, Item I under "Business - Regulation -
Dividend Restrictions," there are restrictions on the payment of dividends by
BankAtlantic.

ITEM 6. SELECTED FINANCIAL DATA

BFC FINANCIAL CORPORATION AND SUBSIDIARIES
Selected Consolidated Financial Data
(In thousands, except for per share data and percents.)

Years Ended December 31,
-----------------------------------------------------------
1993 (l) 1992 1991 1990 1989 (c)
--------- --------- --------- --------- ---------
Net interest income (expense) $ (7,997) 53,430 48,119 44,710 $39,959
Provision for loan losses - 6,650 17,540 17,655 5,350
Non-interest income 13,779 23,296 17,954 20,904 15,520
Non-interest expense 7,085 58,866 71,118 62,501 62,813
Earnings (loss) before income tax
expense, cumulative effect of
change in accounting for income
taxes and extraordinary items (1,303) 11,210 (22,585) (14,542) (12,684)
Income tax expense (benefit) - 9,201 (4,876) (1,976) (4,694)
Extraordinary items, net of income
taxes and minority interest - 548 (d) 350 (e) 40 (f) 1,057 (g)
Cumulative effect of change in
accounting for income taxes (501) (k) - - - -
Net income (loss) (1,804) 2,557 (17,359) (12,526) (6,933)
Earnings (loss) per common share
before extraordinary items (1.18) 0.78 (10.71) (7.49) (4.55)
Net earnings (loss) per common share (1.47) 1.10 (10.51) (7.47) (3.98)
Ratio of earnings to fixed charges (h) (0.30) (0.09) (0.21) (0.35) (0.09)
Dollar deficiency of earnings to
fixed charges (h) 11,796 10,126 10,783 8,551 6,687

December 31,
-----------------------------------------------------------
1993 (l) 1992 1991 1990 1989 (C)
--------- --------- --------- --------- ---------
Loans receivable, net 9,179 566,023 739,287 976,007 1,128,191
Mortgage-backed securities - 486,886 457,038 434,957 454,970
Tax certificates and other
investment securities (j) 20,644 125,047 110,667 116,427 151,788
Total assets 87,495 1,340,465 1,512,146 1,927,084 1,948,123
Customer deposits - 1,108,115 1,255,573 1,456,050 1,430,502
Advances from Federal Home Loan Bank - 66,100 37,277 62,993 79,102
Securities sold under agreements to
repurchase - 21,532 57,132 246,979 250,875
Capital notes and other
subordinated debentures - 7,928 14,856 25,185 24,294
Exchange debentures, net 35,651 38,996 38,818 26,946 26,567
Mortgage payables and other borrowings 30,367 32,168 46,748 24,902 40,916
Redeemable common stock 5,776 5,776 5,776 5,776 5,776
Stockholders' equity (deficit) (6,988) (4,916) (7,473) 9,939 22,221
Book value per share excluding
redeemable common stock (4.11) (2.89) (4.39) 5.78 12.21
Book value per share including
redeemable common stock (a) (.59) 0.42 (0.83) 7.58 12.88
Return on assets (a) (2.12)% 0.2 % (1.0)% (0.6)% (0.3)%
Return on equity excluding
redeemable common stock (a) N/A (30.6)% (556.7)% (78.6)% (26.2)%
Return on equity including
redeemable common stock (a) (237.1)% (99.2)% (195.2)% (57.7)% (22.5)%
Equity to assets ratio excluding
redeemable common stock (a) (5.9)% (0.6)% 0.2 % 0.9 % 1.3 %
Equity to assets ratio including
redeemable common stock (a) .9% (0.2)% 0.5 % 1.1 % 1.5 %

The following information relates to the Company's savings bank subsidiary.

Years Ended December 31,
-----------------------------------------------------------
1993 1992 1991 1990 1989 (C)
Average yield on loans, mortgage- --------- --------- --------- --------- ---------
backed securities tax certificates
and investment securities 8.0 % 9.1 % 10.0 % 10.2 % 10.1 %
Average cost of deposits and
borrowings 3.2 % 4.5 % 6.2 % 7.4 % 8.0 %
Net interest spread during period (i) 4.8 % 4.7 % 3.7 % 2.8 % 2.0 %

December 31,
-----------------------------------------------------------
1993 1992 1991 1990 1989 (C)
--------- --------- --------- --------- ---------
Period end information:
Net interest spread at end of
period (i) 4.4 % 4.6 % 4.3 % 2.8 % 2.3 %
Number of:
Offices (all full service) 31 31 34 46 46
Deposit accounts 113,459 120,558 144,942 165,486 175,547
Total loans 19,163 27,761 36,936 46,218 49,926

The following table illustrates weighted average yields earned on interest-earning assets
and weighted average rates paid on interest-bearing liabilities at December 31, 1993:

FINANCIAL HIGHLIGHTS
At period end:
Average yield on mortgage-backed
securities 6.3 %
Average yield on total loans 8.0 %
Average yield on tax certificates
and other investment securities 8.9 %
Average yield on interest bearing
assets 7.3 %
Average cost of deposits 2.8 %
Average cost of FHLB advances and
other borrowings 3.8 %
Average cost of interest-bearing
liabilities 3.0 %
- --------------------------------------------------------------------------------------------------

(a) Ratios were computed using quarterly averages.
(b) Since its inception, the Company has not paid any dividends.
(c) As restated.
(d) Utilization of state net operating loss carryforwards net of minority interest of $208,000.
(e) Gain on early retirement of capital notes, net of applicable income taxes of $340,000
and minority interest of $197,000.
(f) Gain on purchase of debentures less applicable income taxes of $24,000.
(g) Gain on early extinguishment of FHLB advances net of applicable income taxes of $1.2 million
and minority interest of $1.1 million. Also including the gain on purchase
of debentures less applicable income taxes of $53,000.
(h) The operations of BankAtlantic have been eliminated since there is a dividend
restriction between BankAtlantic and the Company.
(i) Interest rate spread is the sum of interest earned on interest earning assets
divided by the total of interest earning assets; less the sum of interest
expense divided by total interest bearing liabilities. Interest rate spread
during periods is based upon daily average balances of interest bearing
assets and liabilities. Period end interest rate spread uses period end balances
at period end interest rates applicable thereto.
(j) Excludes Federal Home Loan Bank stock. Includes interest-bearing deposits
in other banks, and securities purchased under agreement to resell.
(k) Cumulative effect of change in accounting for income taxes.
(l) BankAtlantic is not included in the consolidated amounts.

ITEM 7. BFC FINANCIAL CORPORATION'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General - The Company became a savings bank holding company during 1987 by
acquiring a controlling interest in BankAtlantic, A Federal Savings Bank
("BankAtlantic"). The Company's ownership interest in BankAtlantic has been
recorded by the purchase method of accounting. On November 12, 1993,
BankAtlantic closed a public offering of 1.8 million common shares. Of the
1.8 million shares sold, 400,000 shares were sold by BankAtlantic and 1.4
million by the Company. On November 10, 1993, the underwriters exercised the
option to purchase 270,000 additional shares of BankAtlantic's common stock.
Upon the sale of the 2,070,000 shares of BankAtlantic, the company's ownership
of BankAtlantic was reduced to 48.17%. Because of the decrease in ownership,
the Company's investment, commencing in 1993 is carried on the equity method
rather than consolidated. Therefore, the discussion in management's
discussion and analysis of financial condition and results of operations which
follows relates to the changes of BFC Financial Corporation and subsidiaries
excluding BankAtlantic. The following table presents comparative information
for 1992 and 1991 as if BankAtlantic was carried on the equity basis for those
periods also. For information relating to changes affecting BankAtlantic for
1993 and 1992, see management's discussion and analysis of financial condition
and results of operations of BankAtlantic, A Federal Savings Bank and
Subsidiaries, included elsewhere herein. See note 2 of notes to consolidated
financial statements for a discussion of the Company's investment in
BankAtlantic.

1993 1992 1991
------------------------------
Interest income:
Interest and fees on loans 767 913 1,534
Interest and dividends on tax certificates
and other investment securities 299 257 181
------------------------------
1,066 1,170 1,715
------------------------------
Interest expense:
Interest on exchange debentures 6,031 5,163 4,199
Interest-other 3,032 4,309 4,828
------------------------------
9,063 9,472 9,027
------------------------------
Net interest (expense) (7,997) (8,302) (7,312)
------------------------------
Non-interest income:
Equity in earnings of BankAtlantic
before accounting for income taxes
and extraordinary items 10,764 12,683 (6,926)
Gain on sale of BankAtlantic common stock 1,050 - -
Earnings on real estate operations 1,647 3,200 3,326
Other 318 335 441
------------------------------
13,779 16,218 (3,159)
------------------------------
Non-interest expense:
Employee compensation and benefits 1,453 1,416 2,257
Occupancy and equipment 331 159 213
Provision for litigation 4,034 1,800 -
Foreclosed asset activity, net - 67 -
Write down of real estate acquired in
debenture exchanges - 89 3,353
Other 1,267 1,828 1,415
------------------------------
7,085 5,359 7,238
------------------------------
Income (loss) before cumulative effect of
change on accounting for income taxes and
extraordinary item (1,303) 2,557 (17,709)
Extraordinary item - BankAtlantic - - 350
Cumulative effect of change in accounting
for income taxes (501) - -
------------------------------
Net income (loss) (1,804) 2,557 (17,359)
==============================

In addition to its investment in BankAtlantic, the Company owns and manages
real estate. Since its inception in 1980 and prior to the acquisition of
control of BankAtlantic in 1987, the Company's primary business was the
organization, sale and management of real estate investment programs.
Effective as of December 31, 1987, the Company ceased the organization and
sale of new real estate investment programs, but continues to manage the real
estate assets owned by its existing programs. At December 31, 1993,
subsidiaries of the Company continue to serve as the corporate general
partners of 4 public limited partnerships which file periodic reports with the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended. Subsidiaries of the Company also serve as corporate general
partners of a number of private limited partnerships formed in prior years.

In March 1989, the Company acquired all of the assets and liabilities of three
affiliated public limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series
21, I.R.E. Real Estate Fund, Ltd. - Series 23 and I.R.E. Real Estate Fund,
Ltd. - Series 24 in exchange for approximately $30,000,000 in subordinated
unsecured debentures which mature in 2009 (the "1989 Exchange"). In
connection with the transaction, the Company acquired 14 real properties, 3 of
which are still owned by the Company.

In February 1991, the Company acquired all of the assets and liabilities of
two affiliated public limited partnerships, I.R.E. Real Estate Fund, Ltd. -
Series 25 and I.R.E. Real Estate Fund, Ltd. - Series 27 in exchange for
approximately $9,308,000 in subordinated unsecured debentures which mature in
2011 (the "1991 Exchange"). In June 1991, the Company acquired all of the
assets and liabilities of an affiliated public limited partnership, I.R.E.
Real Estate Income Fund, Ltd., in exchange for approximately $6,057,000 in
subordinated unsecured debentures that mature in 2011. In connection with
these transactions, the Company acquired 8 real properties, 4 of which are
still owned by the Company.

The Company is actively seeking buyers for the properties held by it with a
view to selling the properties and reducing mortgage indebtedness. See note 2
of notes to consolidated financial statements for more information on these
transactions. Litigation has been brought against the Company relating to
both the 1989 and 1991 Exchange transactions. In December 1992, a jury
returned a verdict in favor of the plaintiffs for approximately $8 million but
extinguished approximately $16 million of subordinated debt. In March 1994,
the Company entered into an agreement to settle litigation relating to the
1991 exchange transaction. See "Legal Proceedings".

Net loss amounted to approximately $1.8 million in 1993 and net earnings
amounted to approximately $2.6 million in 1992 as compared to a net loss of
approximately $17.4 million in 1991. A major component in each of the above
amounts related to the Company's ownership position in BankAtlantic.
Operations for 1993 included a charge aggregating $501,000 from the cumulative
effect of a change in accounting for income taxes. Operations for 1991
include extraordinary gain of $350,000 (the 1991 extraordinary gain of
$350,000 related to BankAtlantic). During 1993 and 1992, the Company recorded
net earnings from BankAtlantic of approximately $10.8 and 12.7 million and
during 1991 the Company recorded a net loss from BankAtlantic of approximately
$6,576,000 after the extraordinary item. Exclusive of the Company's ownership
of BankAtlantic, the Company and its other subsidiaries generated net losses
in 1993, 1992 and 1991 of $12.6 million. $10.1 million, and $10.8 million,
respectively. Approximately $6,031,000, $5,163,000, and $4,199,000 of 1993,
1992 and 1991 operations related to interest expense on the debentures issued
in the Exchange transactions described above. Approximately $4.0 million of
1993 operations related to a provision for the Short litigation and
approximately $1.8 million of 1992 operations related to a provision arising
from an appellate court decision in connection with the Hess litigation. (See
Item 3. "Legal Proceedings.") Approximately $3,353,000 of 1991 operations
resulted from the write-down of real estate owned, of which $2,882,000 related
to properties acquired in the 1989 Exchange and $471,000 related to an
apartment complex acquired in October 1990 through foreclosure.

In addition to its investment in BankAtlantic, the Company's other primary
sources of revenues are from the net interest earnings on its mortgage note
receivables, fees received for property management services rendered to
affiliated public limited partnerships and operation of the properties
acquired in the 1989 and 1991 Exchange transactions.

Results of Operations - The Company reported a net loss of approximately $1.8
million for the year ended December 31, 1993, as compared to net earnings of
$2.6 million for the year ended December 31, 1992 and a net loss of $17.4
million for the year ended December 31, 1991. The 1993 net loss included a
$501,000 charge due to the cumulative effect of a change in accounting for
income taxes. (See note 18 of notes to consolidated financial statements.)
Operations for the fourth quarter and year 1993 included the gain on the sale
of 1.4 million shares of BankAtlantic common stock as discussed further in
note 2 of notes to consolidated financial statements. The 1992 net income
included a $548,000 net extraordinary gain during the fourth quarter, net of
minority interest of $208,000, for the utilization of state net operating loss
carryforwards from BankAtlantic.

Net Interest Expense - BFC net interest expense decreased by $305,000 for the
year ended December 31, 1993 as compared with the same period in 1992
primarily due to a decrease in interest expense, partially offset with by
decrease in interest income. The decrease in interest expense for the year
ended December 31, 1993 as compared to the same period in 1992 was primarily
due to a reduction in interest expense - other. This decrease was offset with
an increase in interest payable on the Exchange debentures. Other interest
expense decreased for the year ended December 31, 1993 as compared to the 1992
and 1991 periods primarily due to the elimination of mortgage debt principally
related to the sale of two properties acquired in the 1991 Exchange, the
foreclosure of one property during the first quarter of 1993, acquired in the
1989 Exchange and other reductions in borrowing. Interest on the Exchange
debentures increased for the year ended December 31, 1993 as compared to the
same period in 1992 due to the accrual of interest on the previously deferred
interest relating to the debentures issued in both 1989 and 1991 exchange
transactions.

Interest on Exchange debentures for 1992 increased as compared to 1991 because
1992 reflects a full year of interest on both the 1989 and 1991 Exchange
debentures as compared to 1991 which includes only ten months relating to the
February 1991 Exchange transaction and six months relating to the June 1991
Exchange transaction.

Non-Interest Income - Non-interest income decreased approximately $2.4 million
for the year ended December 31, 1993 as compared to 1992 primarily due to the
decline in equity in earnings of BankAtlantic of approximately $1.9 million
caused by BFC's decreased ownership of BankAtlantic resulting from the
November 1993 sale of 1,400,000 shares of BankAtlantic common stock, a decline
in earnings from real estate operations and a decline in non-interest income,
other. Partially offsetting these declines was a gain of $1.1 million
relating to the sale of BankAtlantic common stock.

On November 12, 1993, BankAtlantic closed a public offering of 1.8 million
common shares at a price of $13.50 per common share. Of the 1.8 million
shares sold, 400,000 shares were sold by BankAtlantic and 1.4 million were
sold by BFC. Net proceeds to BFC from the sale on the 1.4 million shares was
approximately $17.7 million and a net cost of approximately $16.6 million,
including purchase accounting of $1.4 million, was recorded on the sale of
BankAtlantic common stock, resulting in a net gain of approximately $1.1
million on the sale.

In connection with the public offering, BankAtlantic granted the underwriters
a 30 day option to purchase up to 270,000 additional shares of common stock to
cover over - allotments. On November 10, 1993, the underwriters exercised
this option to purchase the 270,000 shares. Upon the sale of 2,070,000
shares, BFC's ownership of BankAtlantic decreased from 77.83% to 48.17%. The
decrease of BFC's ownership in BankAtlantic investment in common stock
resulted in the deconsolidation of the Company's assets and business
operations for the year 1993 and the $10.8 million in equity in earnings of
BankAtlantic was separately accounted for in the consolidated financial
statements for the year ended December 31, 1993.

Earnings on Real Estate Operations - Earnings on real estate operations
include earnings from the 1989 and 1991 Exchange properties and BFC deferred
profit recognition on sales of real estate by the Company and its subsidiaries
other than BankAtlantic (excluding the 1989 and 1991 Exchange properties).
Earnings on real estate operations for the years ended December 31, 1993,
1992, and 1991 amounted to $1.6 million, $3.2 million, and $3.3 million,
respectively. The decrease in earnings on real estate operations for the year
ended December 31, 1993 as compared to the same periods in 1992 and 1991 was
primarily due to the disposal of properties acquired in the 1991 Exchange
transaction and an increase in legal fees associated with litigation relating
to the Exchanges.

Non-Interest Income-Other - The decrease of non-interest income, other for the
year ended December 31, 1992 as compared to the same period in 1991 was
primarily due to reduction of property management fee income due to the sale
of properties acquired in the 1989 and 1991 Exchanges.

Non-Interest Expense -The increase in non-interest expense for the year ended
December 31, 1993 as compared to the same period in 1992 was primarily due to
an increase in the provision for litigation and an increase in occupancy and
equipment expense. This increase was offset with a decrease in other non-
interest expense.

Provision for Litigation - The 1993 provision for litigation was due to a $4.0
million provision in connection with the court decision in the Short vs. Eden
United, Inc. litigation and the $1.8 million 1992 provision was attributable
to an appellate court decision in the Hess litigation. (See Item 3, "Legal
Proceedings".)

Occupancy and Equipment - Occupancy and equipment expense increased in 1993
compared to 1992 primarily due to the accrual of expenses in connection with
the relocation of the Company's offices. Non-interest expense, other
decreased primarily due to a loss in 1992 relating to the pay-off of a
mortgage receivable at a discount, the write down in 1992 of a mortgage
receivable, the write-off of some receivables from affiliated partnerships and
legal fees incurred in 1992 in connection with the Exchange litigation.

Financial Condition - BFC's total assets at December 31, 1993, and at December
31, 1992, were $87.5 million and $1.3 billion, respectively. The majority of
the difference at December 31, 1993 as compared to December 31, 1992 is due to
the deconsolidation in 1993 of BankAtlantic. The decrease of $2.0 million and
$1.8 million in real estate acquired in the 1989 and 1991 Exchange
transactions and mortgage payables and other borrowings, respectively, was
attributable to the sale of properties acquired in the 1991 Exchange and the
foreclosure of a property acquired in the 1989 Exchange.

Purchase Accounting - The acquisition of BankAtlantic has been accounted for
as a purchase and accordingly, the assets and liabilities acquired have been
revalued to reflect market values at the dates of acquisition. The discounts
and premiums arising as a result of such revaluation are generally being
accreted or amortized (i.e. added into income or deducted from income), net of
tax, using the level yield or interest method over the remaining life of the
assets and liabilities. The net impact of such accretion, amortization and
other purchase accounting adjustments for 1993 was to decrease net loss by
approximately $191,000, increase net earnings during 1992 by approximately
$807,000, and increase net loss during 1991 by approximately $792,000.

Liquidity and Capital Resources - In connection with certain litigation
related to the 1989 Exchange transaction (See Item 3. "Litigation", Timothy
J. Chelling vs. BFC Financial Corporation, et.al.), in December 1992, a jury
found that BFC Financial Corporation's issuance of debentures was unfair to
investors. The jury found that those limited partners who did not vote in
favor of the transaction are entitled to receive $8 million, rather than the
approximately $16 million of subordinated debentures which were issued to them
as a consequence of the Exchange. Based on the verdict, the Company would
record a pre-tax gain from the reduction of its debt of approximately $6
million, but it nonetheless believes the verdict was not supported by the
evidence at trial. Accordingly, the Company intends to appeal the verdict and
the gain is not reflected in the financial statements. The court denied
plaintiffs' motion for prejudgment interest as to Series 21 and Series 23 and
awarded prejudgment interest to plaintiffs in Series 24 to be calculated to
run from March 31, 1989 through December 18, 1992, the date of entry of final
judgment, at the rate of 3.54%. In connection with the stay of the judgment
without a bond and to secure the final judgment during the pendency of the
appeal, BFC agreed to place shares of the BankAtlantic Common Stock owned by
it into an escrow or collateral account for the benefit of the plaintiffs.
Initially 800,000 shares have been delivered pursuant to the agreement but
additional shares will be delivered in the event that the market value of the
800,000 shares delivered falls below $10 million.

In connection with the litigation related to the purchase and sale of an
apartment complex in Indiana (See item 3. "Litigation ", Short vs Eden
United, Inc., et.al.), on February 25, 1994, the court on remand awarded
plaintiff a judgment totaling approximately $4.5 million, including interest.
The Company intends to appeal the trial court's order and may have to post a
bond during the appeal process. The Company had accrued approximately
$400,000 in prior years and based upon this order, at December 31, 1993,
accrues an additional $4.1 million bringing to a total of $4.5 million the
provision for this litigation in the financial statements.

In connection with other litigation against the Company relating to the 1991
Exchange transaction (See item 3. "Litigation ", Arthur Arrighi, et.al. and
Shirley B. Daniels, Robert and Ruby Avans, et.al.), on March 2, 1994, the
parties entered into an agreement to settle these actions pursuant to which
BFC will pay approximately eighty-one percent (81%) of the face amount of the
outstanding debentures held by plaintiffs and the debentures will be canceled
pursuant to the procedures outlined in the agreement. The settlement is
subject to, among other things, court approval. Upon effectiveness, the
settlement of this action will be dismissed with prejudice and the parties
will exchange releases.

On November 12, 1993, a public offering of 1.8 million BankAtlantic common
shares at a price of $13.50 per common share was closed. Of the 1.8 million
shares sold, 400,000 shares were sold by BankAtlantic and 1.4 million shares
were sold by BFC. Net proceeds to BFC and BankAtlantic from the sale was
approximately $17.7 million and $4.6 million, respectively. In connection
with the public offering, BankAtlantic granted the underwriters a 30 day
option to purchase up to 270,000 additional shares of common stock to cover
over-allotments. On November 10, 1993, the underwriters exercised this option
to purchase the 270,000 shares, with a settlement date of November 18, 1993.
The additional net proceeds to BankAtlantic will be approximately $3.4
million. Upon the sale of the 2,070,000 shares, BFC's ownership of
BankAtlantic decreased from 77.83% to 48.17%. Proceeds from such sales will
be utilized to fund the Exchange II settlements. The Company, during March
1993 placed $12.5 million in an escrow account to fund the settlement.

In addition to the litigation discussed above, an appellate court has entered
an order reversing a lower court decision in favor of the Company and its
affiliates which related to the sale of units in two partnerships which
participated in the 1991 Exchange transaction. (See Item 3. "Litigation",
Martha Hess, et.al. vs Gordon, Boula, et.al.) The effect of this decision,
which the Company intends to appeal, is to create a potential liability of
approximately $1.8 million. Such amount was accrued at December 31, 1992.
There is no requirement for a bond in connection with the appeal of this
matter.

The Company's ability to meet its obligations and to pay interest on its
Exchange debentures is substantially dependent on the earnings and regulatory
capital position of BankAtlantic. However, pursuant to the terms of the
debentures issued in the 1989 and 1991 Exchange transactions, the Company may
elect to defer interest payments on its subordinated debentures if management
of the Company determines in its discretion that the payment of interest would
impair the operations of the Company. Such deferral does not create a
default. Since December 31, 1991, the Company has deferred interest payments
amounting to approximately $12 million. The Company, not considering
BankAtlantic, has sufficient current liquidity to meet its normal operating
expenses, but it is not anticipated that it will make current payments of
interest on the Exchange debentures until at least such time as the issues
relating to the $8 million judgment discussed above and the other litigation
discussed in Item 3. "Litigation" have been resolved.

Pursuant to an agreement entered into on May 10, 1989 between BFC, its
affiliates and BankAtlantic's primary regulator, BFC is obligated to infuse
additional capital into BankAtlantic in the event that BankAtlantic's net
capital (as defined) falls below the lesser of the industry's minimum capital
requirement (as defined) or six percent of BankAtlantic's assets. However,
there is no assurance that BFC will be in a position to infuse additional
capital in the event it is called upon to do so. This obligation will expire
ten years from the date of the agreement, or at such earlier time as
BankAtlantic's net capital exceeds its fully phased-in capital requirement (as
defined) for a period of two consecutive years. BankAtlantic's net capital
exceeded its fully phased in capital requirement at December 31, 1993.

Effective June 30, 1993, the Company exercised its warrants which were held to
purchase 1,126,327 shares of BankAtlantic's common stock by tendering
approximately $2.0 million of BankAtlantic subordinated debentures, including
accrued interest. The purchase increased BFC's ownership percentage of
BankAtlantic's common stock to 77.83%. On November 1993, BFC decreased its
ownership percentage of BankAtlantic's common stock to 48.17% primarily due to
the sale of 1.4 million shares of BankAtlantic common stock.

An OTS regulation, effective August 1, 1990, limits all capital distributions
made by savings institutions, including cash dividends, by permitting only
certain institutions that meet specified capital levels to make capital
distributions without prior OTS approval. The regulation established a three-
tiered system, with the greatest flexibility afforded to well-capitalized
institutions. An institution that meets all of its fully phased-in capital
requirements and is not in need of more than normal supervision would be a
"Tier 1 Institution". An institution that meets its minimum regulatory
capital requirements but does not meet its fully phased-in capital
requirements would be a "Tier 2 Institution". An institution that does not
meet all of its minimum regulatory capital requirements would be "Tier 3
Institution". A Tier 1 Institution may, after prior notice but without the
approval of the OTS, make capital distributions during a calendar year up to
100% of net income earned to date during the current calendar year plus 50% of
its capital surplus ("surplus" being the amount of capital over its fully
phased-in capital requirement). Any additional capital distributions would
require prior regulatory approval. A Tier 2 Institution may, after prior
notice but without the approval of the OTS, make capital distributions of
between 50% and 75% of its net income over the most recent four-quarter period
(less any dividends previously paid during such four-quarter period) depending
on how close the institution is to its fully phased-in risk-based capital
requirement. A Tier 3 Institution would not be authorized to make any capital
distributions without the prior approval of the OTS. Notwithstanding the
provision described above, the OTS also reserves the right to object to the
payment of a dividend on safety and soundness grounds. In August and December
1993, BankAtlantic declared cash dividends of $0.06 per share, payable
September 1993 and January 1994, respectively, to its common stockholders. A
15% common stock dividend was declared in May, 1993. In March 1994, the Board
of Directors declared a cash dividend of $0.06 per share, payable in April
1994 to its common stockholders.

BankAtlantic presently meets all required and fully phased-in capital
requirements and has had operating income in the prior eight quarters.
BankAtlantic has indicated that it expects to continue dividend payments on
its non-cumulative preferred stock.

Future cash dividends on common and preferred stock will be subject to
declaration by BankAtlantic's Board of Directors, in its discretion, to
additional regulatory notice or approval, and continued compliance with
capital requirements. See note 29 of the Notes to the Consolidated Financial
Statements.

Cash Flows - A summary of the Company's consolidated cash flows follows (in
thousands):

December 31,
---------------------------------------
1993 1992 1991
---- ---- ----
Net cash provided (used) by:
Operating activities $ (523) 17,638 23,415
Investing activities 1,384 139,627 405,103
Financing activities (932) (164,465) (435,814)
------- ------- -------
Decrease in cash
and due from depository
institutions $ (71) (7,200) (7,296)
======= ======= =======

The changes in cash flow used or provided in operating activities are affected
by the changes in operations, which are discussed elsewhere herein, and by
certain other adjustments. These adjustments include additions to operating
cash flows for non-operating charges such as depreciation and the provision
for loan losses and write downs of assets. Cash flow of operating activities
is also adjusted to reflect the use or the providing of cash for increases and
decreases respectively, in operating assets and decreases or increases,
respectively, of operating liabilities. Accordingly, the changes in cash flow
of operating activities in the periods indicated above has been impacted not
only by the changes in operations during the periods but also by these other
adjustments.

The primary sources of funds to the Company for the year ended December 31,
1993 was the proceeds received of approximately $17.7 million from the sale of
BankAtlantic's common stock, revenues from property operations, collections on
mortgage receivables and the dividend from BankAtlantic. These funds,
excluding the proceeds from the sale of BankAtlantic common stock, were
primarily utilized for operating expenses at the properties, capital
improvements at the properties, mortgage payables on the properties and
general and administrative expenses. The proceeds from the sale of
BankAtlantic common stock will be utilized to fund the Exchange II
settlements.

Investing activities for the years ended December 31, 1993 included proceeds
from the sale of BankAtlantic common stock of approximately $17.7 million and
December 31, 1992, and 1991, included proceeds from the sale of real estate
acquired in the 1991 and 1989 Exchange transactions of $5.6 million, and $7.6
million, respectively. The other major portions of the cash flows indicated
above for financing and investing activities relate to BankAtlantic for the
year ended December 31, 1992 and 1991.

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

Virtually all of the assets and liabilities of BankAtlantic are monetary in
nature. As a result, interest rates have a more significant impact on
BankAtlantic's performance than the effects of general price levels. Although
interest rates generally move in the same direction as inflation, the
magnitude of such changes varies. The possible effect of fluctuating interest
rates is discussed more fully under BankAtlantic's section of managements
discussion and analysis of financial condition and results of operations
entitled "Interest Rate Sensitivity". BFC does not believe that inflation has
had any material impact on the Company, however, economic conditions generally
have had an adverse effect on the values and operations of its real estate
assets.

ITEM 8. INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report

Financial Statements:

Consolidated Statements of Financial Condition - December 31, 1993 and
1992

Consolidated Statements of Operations - For each of the Years in the
Three Year Period ended December 31, 1993

Consolidated Statements of Stockholders' Equity (Deficit) - For each of
the Years in the Three Year Period ended December 31, 1993

Consolidated Statements of Cash Flows - For each of the Years in the
Three Year Period ended December 31, 1993

Notes to Consolidated Financial Statements

Independent Auditors' Report

The Board of Directors
BFC Financial Corporation:

We have audited the accompanying consolidated statements of financial
condition of BFC Financial Corporation and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of operations,
stockholders equity (deficit) and cash flows for each of the years in the
three year period ended December 31, 1993. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of BFC
Financial Corporation and subsidiaries at December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.

As discussed in note 25 to the consolidated financial statements, BFC
Financial Corporation is a defendant in various lawsuits, the ultimate outcome
of which cannot be presently determined. The consolidated financial
statements do not include any adjustments that might result from these
uncertainties.

As discussed in notes 1 and 2 to the consolidated financial statements, in
1993, BFC Financial Corporation sold certain of its investment in the
outstanding common stock of BankAtlantic, A Federal Savings Bank ("the Bank")
and, as a result, no longer controlled a majority voting interest in the Bank
as of December 31, 1993. As a result, the Company utilized the equity method
of accounting for its investment in the Bank in 1993 and accordingly,
financial position, results of operations and cash flows were not consolidated
as in 1992 and 1991.

As discussed in note 18 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's SFAS No. 109,
"Accounting for Income Taxes".

KPMG PEAT MARWICK

Fort Lauderdale, Florida
March 30, 1994

BFC FINANCIAL CORPORATION
Consolidated Statements of Financial Condition

December 31, 1993 and December 31, 1992
(in thousands, except share data)

ASSETS
---------

1993 1992
--------- ---------
Cash and due from depository institutions $ 78 31,357
Tax certificates and other investment securities, net
(at cost which approximates market value) 20,644 125,047
Investment in BankAtlantic, a Federal Savings Bank 36,436 -
Loans receivable (net of unearned discount of
$1,733 in 1992) 9,179 574,882
Loans originated for resale - 7,641
Less: allowance for loan losses - (16,500)
---------- ----------
Total loans receivable, net 9,179 566,023
---------- ----------
Mortgage-backed securities (approximate market value
$353,984 in 1992) - 349,531
Mortgage-backed securities available for sale
(approximate market value of $145,011
in 1992) - 137,355
Accrued interest receivable 8 22,196
Real estate owned - 14,997
Real estate acquired in debenture exchange, net 18,315 20,330
Office properties and equipment, net 28 36,032
Federal Home Loan Bank stock at cost,
which approximates market value
($924 in 1992 available for sale) - 8,366
Investment in and advances to joint ventures - 1,217
Excess cost over fair value of net
assets acquired, net - 1,925
Dealer reserves, net - 4,533
Other assets 2,807 21,556
---------- ----------
Total assets $ 87,495 1,340,465
========== ==========

(Continued)

LIABILITIES AND STOCKHOLDERS' DEFICIT
---------------------------------------------------

1993 1992
--------- ---------
Deposits $ - 1,108,115
Advances from Federal Home Loan Bank - 66,100
Securities sold under agreements
to repurchase - 21,532
Capital notes and other subordinated
debentures - 7,928
Exchange debentures, net 35,651 38,996
Mortgages payable and other borrowings 30,367 32,168
Drafts payable - 1,246
Advances by borrowers for taxes and insurance - 9,193
Deferred interest on the exchange debentures 12,049 6,126
Other liabilities 8,602 22,527
Deferred income taxes 2,038 2,380
---------- ----------
Total liabilities 88,707 1,316,311

Commitments and contingencies

Minority interest - 16,258
Preferred stock of BankAtlantic - 7,036
Redeemable common stock (353,478 shares) (redemption
amount $299 in 1993 and $655 in 1992) 5,776 5,776

Stockholders' deficit:
Preferred stock of $.01 par value; authorized
10,000,000 shares; none issued - -
Special class A common stock of $.01 par value;
authorized 20,000,000 shares; none issued - -
Common stock of $.01 par value; authorized
20,000,000 shares; issued 2,351,021 in 1993 and 1992 17 17
Additional paid-in capital 15,264 15,532
Accumulated deficit (21,989) (20,185)
Less: treasury stock (45,339 shares for 1993 and 1992) (280) (280)
---------- ----------
Total stockholders' deficit (6,988) (4,916)
---------- ----------
Total liabilities and stockholders' deficit $ 87,495 1,340,465
========== ==========

See accompanying notes to consolidated financial statements.

BFC FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Operations

For each of the years in the three year period ended
December 31, 1993
(in thousands, except per share data)

1993 1992 1991
--------- --------- ---------
Interest income:
Interest and fees on loans $ 767 63,181 91,200
Interest on mortgage-backed
securities - 37,170 35,173
Interest on mortgage-backed
securities available for sale - 642 1,172
Interest and dividends on tax
certificates and other
investment securities 299 17,320 20,518
---------- ---------- ----------
Total interest income 1,066 118,313 148,063
---------- ---------- ----------
Interest expense:
Interest on deposits - 47,393 83,227
Interest on advances from FHLB - 3,697 3,587
Interest on securities sold under
agreements to repurchase - 2,881 1,671
Interest on capital notes
and other subordinated
debentures - 1,440 2,020
Interest on exchange debentures 6,031 5,163 4,199
Interest - other 3,032 4,309 5,240
---------- ---------- ----------
Total interest expense 9,063 64,883 99,944
---------- ---------- ----------
Net interest income (expense) (7,997) 53,430 48,119
Provision for loan losses - 6,650 17,540
---------- ---------- ----------
Net interest income (expense) after
provision for loan losses (7,997) 46,780 30,579
---------- ---------- ----------
Non-interest income:
Loan servicing and
other loan fees - 3,189 4,344
Gain on sales of loans - 976 330
Gain on sales of mortgage-backed
securities - 8,116 748
Gain on sales of
investment securities - 143 85
Equity in earnings of
BankAtlantic 10,764 - -
Gain on sale of BankAtlantic
common stock 1,050
Earnings on real estate
operations 1,647 3,200 3,384
Non interest income -
other 318 7,672 9,063
---------- ---------- ----------
Total non-interest income 13,779 23,296 17,954
---------- ---------- ----------
(Continued)
Non-interest expenses:
Employee compensation and benefits 1,453 20,618 26,319
Occupancy and equipment 331 8,747 10,629
Federal insurance premium - 2,772 3,281
Advertising and promotion - 480 1,143
(Income) loss from joint venture
investments - 245 (2,335)
Foreclosed asset activity, net - 4,390 9,451
Write-down of real estate acquired
in debenture exchanges - 89 2,882
(Recovery) write-down of dealer
reserve - (2,739) 2,739
Provision for branch consolidation - 2,085
Provision for litigation 4,034 1,800 -
Minority interest in BankAtlantic - 3,964 (2,977)
Non interest expenses - other 1,267 18,500 17,901
---------- ---------- ----------
Total non-interest expenses 7,085 58,866 71,118
---------- ---------- ----------
Income (loss) before cumulative
effect of change in accounting
for income taxes, income taxes
and extraordinary items (1,303) 11,210 (22,585)
Provision (benefit) for income
taxes - 9,201 (4,876)
---------- ---------- ----------
Income (loss) before
cumulative effect of change in
accounting for income taxes
and extraordinary items (1,303) 2,009 (17,709)
Cumulative effect of change in
accounting for income taxes (501) - -
Extraordinary items:
Gain on early retirement of capital
notes net of applicable income
taxes of $340 and minority
interest of $197 - - 350
Utilization of state net
operating loss carryforwards,
net of minority interest of
$208,000 - 548 -
---------- ---------- ----------
Net income (loss) $ (1,804) 2,557 (17,359)
========== ========== ==========
Earnings (loss) per share:
Net earnings (loss) before
cumulative effect of change
in accounting for income taxes
and extraordinary items $ (1.18) 0.78 (10.71)
Cumulative effect of change
in accounting for income taxes (0.29) - -
Extraordinary items - 0.32 .20
---------- ---------- ----------
Net earnings (loss) per share $ (1.47) 1.10 (10.51)
========== ========== ==========
Weighted average number of shares
outstanding 1,702 1,702 1,718
========== ========== ==========

See accompanying notes to consolidated financial statements.
BFC FINANCIAL CORPORATION
Consolidated Statements of Stockholders' Equity (Deficit)

For each of the years in the three year period ended December 31, 1993
(in thousands, except share data)

Addi-
tional Accu- Trea-
Common Paid-in mulated sury
Stock Capital Deficit Stock Total
-------- -------- -------- -------- --------
Balance at December 31, 1990 18 15,584 (5,383) (280) 9,939

Purchase of treasury stock - - - (53) (53)

Retirement of treasury stock (1) (52) - 53 -

Net (loss) - - (17,359) - (17,359)
-------- -------- -------- -------- --------
Balance at December 31, 1991 17 15,532 (22,742) (280) (7,473)

Net income - - 2,557 - 2,557
-------- -------- -------- -------- --------
Balance at December 31, 1992 17 15,532 (20,185) (280) (4,916)

Effect of issuance of
BankAtlantic's common stock
to BankAtlantic minority
shareholders - (268) - - (268)

Net (loss) - - (1,804) - (1,804)
-------- -------- -------- -------- --------
Balance at December 31, 1993 17 15,264 (21,989) (280) (6,988)
======== ======== ======== ======== ========

See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows

For each of the years in the three year period ended December 31, 1993
(In thousands)

1993 1992 1991
--------- --------- ---------
Operating activities:
Income (loss) before extraordinary items
and cumulative effect of change in
accounting for income taxes $ (1,303) 2,009 (17,709)
Adjustments to reconcile income (loss)
before extraordinary items and
cumulative effect of change in
accounting for income taxes to net cash
provided (used) by operating activities:
Equity in earnings of BankAtlantic (10,764) - -
Provision for loan losses - 6,650 17,540
Provision for declines in real estate owned - 3,916 10,626
FHLB stock dividends - (498) (618)
Depreciation 1,658 4,998 4,920
Amortization of purchased servicing rights - 2,573 1,274
Increase (decrease) in deferred
income taxes - 1,775 (4,480)
Utilization of net operating loss
carryforwards before minority interest - 756 -
Net accretion of securities - (456) (243)
Net amortization of deferred loan
origination fees - (41) (40)
Accretion on exchange debentures
and mortgage payables 285 505 783
Tax effect of real estate acquired
in debenture exchange (92) (136) (189)
Amortization of discount on
loans receivable (70) (107) (321)
Loss (gain) on sales of real estate owned - (602) 59
Proceeds from loans originated for sale - 37,030 15,279
Origination of loans for sale - (39,888) (18,756)
Write-off of office properties
and equipment - 600 461
Loss of mortgage receivables - 408 17
Gain on sales of loans - (976) (330)
Gain on sales of mortgage-backed
securities available for sale - (8,116) (748)
Gain on sale of BankAtlantic common stock (1,050) - -
Gain on sales of investment
securities - (143) (85)
Loss (gain) on sales of office
properties and equipment - 71 (7)
Loss (income) from joint
venture operations - 245 (2,335)
Decrease in drafts payable - (9,410) (1,403)
Decrease in accrued
interest receivable - 2,257 4,615
Increase in exchange debentures
deferred interest 5,923 4,985 1,140
Increase (decrease) in other liabilities 354 (1,444) 4,163
Decrease (increase) in other assets 502 (4,236) 3,522
Minority interest of BankAtlantic - 3,964 (2,977)
(Continued)
1993 1992 1991
--------- --------- ---------
Purchase accounting adjustments:
Amortization of excess cost over fair
value of net assets acquired - 320 238
Amortization of intangible assets - - 296
Amortization (accretion) of purchase
accounting adjustments, net - 1,263 (986)
Amortization of dealer reserve - 6,406 5,491
Write-down of dealer reserve - - 2,739
Prepayments of dealer reserve - - (1,417)
Provision for tax certificates losses - 1,160 811
Provision for branch consolidation - - 2,085
Provision for litigation 4,034 1,800 -
---------- ---------- ----------
Net cash (used) provided by
operating activities $ (523) 17,638 23,415
---------- ---------- ----------

Investing activities:
Cash received in debenture exchange $ - - 4,613
Sales of real estate acquired in
debenture exchanges - 5,563 7,598
Proceeds from the sale of
BankAtlantic common stock 17,691 - -
Increase in BankAtlantic investment
in common stock (1,971) - -
Dividends received from BankAtlantic
investment in common stock 271 - -
Proceeds from sales of
investment securities - 2,137 30,235
Purchase of tax certificates and
other investment securities (14,245) (129,415) (123,451)
Proceeds from redemption and
maturities of tax certificates
and other investment securities - 111,070 118,447
Loan sales - - -
Loans purchased - - (2,182)
Principal reduction on loans 252 299,347 298,462
Loans originated - (136,179) (122,511)
Proceeds from sales of mortgage-backed
securities available for sale - 155,243 70,903
Mortgage-backed securities purchased - (271,041) (98,587)
Principal collected on mortgage-backed
securities - 95,266 56,634
Proceeds from sales of real estate owned - 12,589 2,937
Purchases and additional investments in
real estate owned - - (1,374)
Additions to office
properties and equipment (32) (748) (1,037)
Sales of office equipment - 105 525
Advances to joint ventures - (26) (2,690)
Repayments of advances to joint ventures - 77 12,929
Investments in joint ventures - - (115)
Cash distributions from joint ventures - - 561
FHLB stock sales - 142 3,071
FHLB stock purchased - (65) -
Improvements to real estate acquired in
debenture exchanges (582) (606) (1,094)
(Continued)

1993 1992 1991
--------- --------- ---------
Servicing rights purchased - (3,832) (3,457)
Settlement of amount due from broker - - 154,686
---------- ---------- ----------
Net cash provided by investing
activities $ 1,384 139,627 405,103
---------- ---------- ----------

Financing activities:
Net decrease in deposits $ - (190,907) (272,307)
Interest credited to deposits - 43,509 71,853
Proceeds from FHLB advances - 107,300 -
Repayments of FHLB advances - (78,400) (25,700)
Net decrease in securities sold
under agreement to repurchase - (35,600) (189,847)
Preferred stock issuance costs - - (353)
Payment for exchange of capital notes
for preferred stock - - (1,855)
Redemption of capital notes - (7,022) (338)
Receipts of advances by borrowers for
taxes and insurance, net - 33,933 34,794
Payment for advances by borrowers for
taxes and insurance - (33,220) (32,678)
Increase (decrease) in federal funds
purchased - - (14,500)
Increase in borrowings - - 1,722
Repayments of borrowings (932) (4,058) (6,408)
Purchase of treasury stock - - (53)
Proceeds from the issuance of
subordinated debt - - 8
Loan cost - - (160)
Common stock and warrants purchased by
minority shareholders of BankAtlantic - - 8
---------- ---------- ----------
Net cash (used) by
financing activities (932) (164,465) (435,814)
---------- ---------- ----------
Decrease in cash
and cash equivalents (71) (7,200) (7,296)
Cash and due from depository
institutions at beginning of period 149 38,557 45,853
---------- ---------- ----------
Cash and due from depository
institution at end of period $ 78 31,357 38,557
========== ========== ==========

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

For the years ended December 31, 1993, 1992 and 1991

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation - The financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP").
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statements of consolidated financial
condition and income and expenses for the periods presented. Actual results
could differ significantly from those estimates.

Material estimates that are particularly susceptible to significant change in
the next year relate to the determination of the allowance for real estate
acquired in connection with the Exchange transactions and in satisfaction of
loans. In connection with the determination of the allowance for loan losses
and real estate owned, management obtains independent appraisals for
significant properties, when it is deemed prudent.

Where applicable, reference is made to the financial statements and notes to
consolidated financial statements of BankAtlantic, A Federal Savings Bank and
Subsidiaries, included elsewhere herein. Differences in amounts between those
financial statements and these financial statements would primarily pertain to
amounts related to BFC Financial Corporation or purchase accounting
adjustments discussed in note 2 of the notes to consolidated financial
statements of BFC Financial Corporation and Subsidiaries.

Principles of Consolidation - BFC Financial Corporation ("BFC" or "the
Company") is a savings and loan holding company as a consequence of its
ownership of the common stock of BankAtlantic, A Federal Savings Bank
("BankAtlantic"). The consolidated financial statements for the year 1993
include the accounts of BFC Financial Corporation, and its wholly-owned
subsidiaries. Because the Company's ownership interest in BankAtlantic was
reduced below 50% in 1993, BankAtlantic is not consolidated but is carried on
the equity method for 1993. The consolidated financial statements for the
years 1992 and 1991 include the accounts of BFC Financial Corporation, its
majority-owned subsidiary, BankAtlantic, and its wholly owned subsidiaries.
The 1993 operations includes the equity in earnings from BankAtlantic. For
1992 and 1991, the adjustments to operations relating to changes in the
Company's percentage ownership of BankAtlantic are reflected in minority
interest. All significant intercompany accounts and transactions have been
eliminated in consolidation.

Cash Equivalents - Cash and due from banks include demand deposits at other
financial institutions.

Tax Certificates and Other Investment Securities and Mortgage-Backed
Securities - In 1992 and 1991, substantially all of these securities are
owned by BankAtlantic. Tax certificates, other investment securities and
mortgage-backed securities held for investment are carried at cost.

Real Estate Owned - Real estate acquired in the Exchange transactions
discussed in note 2 is stated at the lower of cost or net realizable value in
the accompanying statements of financial condition.

Profit on real estate sold is recognized when the collectibility of the sales
price is reasonably assured and BankAtlantic is not obligated to perform
significant activities after the sale. Any estimated loss is recognized in
the period in which it becomes apparent.

Office Properties and Equipment - Land is carried at cost. Office properties
and equipment are carried at cost less accumulated depreciation. Depreciation
is computed on the straight-line method over the estimated useful lives of the
assets which generally range up to 50 years for buildings and 10 years for
equipment. The cost of leasehold improvements is being amortized using the
straight-line method over the terms of the related leases.

Expenditures for new properties and equipment and major renewals and
betterments are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred and gains or losses on disposal of assets are
reflected in current operations.

Income Taxes - The Company does not include BankAtlantic and its subsidiaries
in its consolidated income tax return with its wholly-owned subsidiaries,
since the Company owns less than 80% of the outstanding stock of BankAtlantic.
Income taxes are provided on the Company's interest in the portion of the
BankAtlantic's earnings not subject to the 80% dividends received exclusion.
Deferred income taxes are provided on elements of income that are recognized
for financial accounting purposes in periods different than such items are
recognized for income tax purposes.

In February 1992, the Financial Accounting Standard Board ("FASB") issued
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). FAS 109 requires a change from the deferred method to the
asset and liability method to account for income taxes. Under the asset and
liability method of FAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to the differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under FAS 109, the effect of a change in tax rates on
deferred tax assets and liabilities is recognized in the period that includes
the statutory enactment date. BFC adopted FAS 109, as of January 1, 1993.
The cumulative effect of this change in accounting for income taxes was a
charge aggregating approximately $501,000.

Pursuant to the deferred method under APB Opinion 11, which was applied in
1992 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rates applicable for the year
of the calculation. Under the deferred method, deferred taxes are not adjusted
for subsequent changes in tax rates.

The Omnibus Budget Reconciliation Act of 1993 (the "Omnibus Act") was passed
by Congress and signed into law by the President during August 1993. The
Omnibus Act increased the maximum federal income tax rate applicable to BFC
from 34% to 35% retroactive to January 1, 1993. This change did not have a
material impact on the Company.

Excess Cost Over Fair Value of Net Assets Acquired (Goodwill) - The ownership
position in BankAtlantic was acquired at different times. At the February
1987, October 1989, June 1990, October 1990 and November 1991 acquisitions,
the fair market value of the net assets of BankAtlantic were greater than the
Company's cost. At other increases in ownership, the Company's cost was in
excess of the fair market value of BankAtlantic's net assets. The excess of
fair market value over cost was recorded as a reduction to the fair market
value of non-current assets, including identified intangible assets. The
excess of cost over fair market value was recorded as goodwill and is being
amortized on the straight line basis over a 15 year period. Identified
intangibles consist of loan servicing and escrows. These intangibles are
amortized over the remaining life of the applicable loan and escrow accounts
using the level yield method and at the end of 1993 had been completely
amortized. The minor 3.3%, 4%, 0.5% and 2.4% increases in ownership of
BankAtlantic in October 1989, June 1990, October 1990 and November 1991 were
recorded utilizing BankAtlantic's cost basis of assets and liabilities as fair
market value. The excess of such cost over the Company's purchase price was
recorded as a reduction to property and equipment and is being amortized on a
straight-line basis over a ten year period.

Redeemable Common Stock - In May 1989, the Company exchanged, among other
things, 353,478 shares of its common stock (including 117,483 shares of
treasury stock) for 282,782 shares of common stock of BankAtlantic (See also
Note 2). The exchange ratio for the shares was 1.25 to 1. The original
holders of the Company's shares issued in this transaction have the right to
require the Company, at any time, to purchase such shares for the higher of
(i) their book value as of the date of notice or (ii) the average market value
of such shares. The term "average market value" is defined as the product of
(i) the average of the closing price of the common stock as reported on the
over-the-counter market for the (x) 20 trading days prior to the date of the
notice, (y) the date of the notice, if a trading day, and (z) 20 trading days
following the date of the notice, times (ii) the number of shares of common
stock held by the original holders. The Company and Alan B. Levan,
individually, have the right to buy and to require the original holders to
sell such shares to each, respectively, on the same terms indicated above. At
the transaction date the book value of the shares was greater than their
market value. Accordingly, the amount initially recorded for this redeemable
common stock, $5,776,000, was at book value. Amounts subsequently reflected
in the Company's Statements of Financial Condition will be adjusted to reflect
the maximum liability based on the higher of either the market price or the
book value of the shares. However, such liability will not be reduced from
the amount initially reflected at the time of acquisition. There has been no
adjustment to the amount stated since the May 1989 acquisition date. In
February 1994, the parties mutually agreed to cancel the agreement with
respect to the requirement to buy and or sell shares. Therefore, during the
first quarter of 1994, the amount classified as redeemable common stock will
be reclassified to the stockholders' deficit section of the Statement of
financial condition.

Earnings (Loss) Per Common Share - Earnings (loss) per share is computed using
the more dilutive of (a) the weighted average number of shares outstanding, or
(b) the weighted average number of shares outstanding assuming that the shares
of redeemable common stock are reacquired for debt, from the latter of their
date of issuance (May 10, 1989) or the beginning of the computation period, at
the greater of the amount originally recorded, or the higher of the then book
value or market price of the shares. Computation (b) has been utilized,
assuming a rate of 12% on indebtedness for 1993, 1992 and 1991. Shares issued
in connection with a 1984 acquisition are considered outstanding after
elimination of 250,000 shares, representing the Company's 50% ownership of the
shares issued in the acquisition.

Reclassifications - For comparative purposes, certain prior year balances have
been reclassified to conform with the 1993 financial statement presentation.

New Accounting Standards - During May 1993, the Financial Accounting Standards
Board approved two new accounting standards. Statement of Financial
Accounting Standards No. 114 - Accounting by Creditors for Impairment of a
Loan ("FAS 114"), and Statement of Financial Accounting Standards No. 115 -
Accounting for Certain Investments in Debt and Equity Securities ("FAS 115").

FAS 114 addresses the collectibility of both contractual interest and
contractual principal of all receivables when assessing the need for a loss
accrual. This standard requires that unpaid loans be measured at the present
value of expected cash flows by discounting those cash flows at the loan's
effective interest rate. FAS 114 must be adopted by 1995, prospectively. The
Company intends to implement FAS 114 in 1995. At December 31, 1993, the
effect of implementation of this standard on the Company is estimated to be
immaterial.

FAS 115 addresses the valuation and recording of debt securities as held-to-
maturity, trading and available for sale. Under this standard, only debt
securities that the Company has the positive intent and ability to hold to
maturity would be classified as held to maturity and reported at amortized
cost. All others would be reported at fair value. FAS 115 must be adopted by
1994, prospectively. If FAS 115 were effective at December 31, 1993, the
Company does not believe that based on its current portfolio any adjustment
would be required.

See note 1 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

2. INVESTMENTS IN BANKATLANTIC AND OTHER ACQUISITIONS AND DISPOSITIONS

The Company has acquired its current 48.17% ownership of BankAtlantic through
various acquisitions and sales as follows (Amounts adjusted for June 1993 15%
stock dividend):

Cumulative
Shares Ownership %
---------- ------------
Prior to 1987 333,155 9.9%
February 1987 1,214,952 43.7%
October 1987 345,000 53.4%
May 1989 325,199 62.3%
October 1989 495,506 65.6%
June 1990 541,430 69.6%
October 1990 24,150 70.1%
November 1991 115,000 72.5%
June 1993 1,126,327 77.8%
November 1993 (1,400,000) 48.2%

The Company's ownership of BankAtlantic has been recorded by the purchase
method of accounting. Since January 1, 1987 to December 1992, the accounts of
BankAtlantic have been consolidated with those of the Company. The shares in
the May 1989 acquisition were acquired from Mr. John Abdo and certain members
of his family ("Mr. Abdo") in exchange for, among other things, 353,478 shares
of the Company's redeemable common stock.

The shares in the October 1989 acquisition were acquired directly from
BankAtlantic in connection with an offering by BankAtlantic of 500,000 units,
at $12.00 per unit, to its existing stockholders. Each unit consisted of one
share of its common stock and three warrants, with each warrant entitling the
holder to purchase one share of common stock at an exercise price of $10.00 at
any time prior to May 31, 1991.

On June 30, 1990, BFC exercised its warrants and converted $2.5 million of
subordinated debt of BankAtlantic to 541,430 shares of BankAtlantic common
stock, increasing BFC's ownership percentage of BankAtlantic to 69.6%. (See
note 15.)

In October 1990, the Company increased its ownership of BankAtlantic to 70.12%
by purchasing 24,150 shares of BankAtlantic common stock from the BankAtlantic
Security Plus Plan (the "Plan") at a cost of $2.625 per share (average of bid
and asked price on date of purchase). The Plan disposed of these shares in
order to meet employees withdrawal requests.

In November 1991, BFC purchased 115,000 shares of BankAtlantic common stock
from an unaffiliated third party at a cost of approximately $0.761 per share,
increasing BFC's ownership of BankAtlantic to 72.5%.

In June 1993, the Company exercised its right to purchase 1,126,327 shares of
BankAtlantic's common stock at the exercise price of $1.75 per share, for a
total purchase price of $1,971,072. The payment of $1,971,072 was through the
tender of subordinated debentures held by BFC as of February 28, 1993 and the
related accrued interest as of that date. The debentures were issued to BFC
in connection with the use of funds from and escrow account established by BFC
to make preferred stock dividend payments, and in connection with the related
accrued interest on the debentures through February 1993. As a result of the
above transaction, BFC increased its ownership in BankAtlantic to 77.83% of
BankAtlantic's outstanding common stock. During July 1993, BFC received
$83,704 for the interest accrued on the subordinated debentures from February
28, 1993 to June 30, 1993. Share and exercise price were adjusted subject to
the dilution provisions contained in the subordinated debt agreement to
reflect BankAtlantic's 15% common stock dividend of June 7, 1993.

The aggregate purchase price allocation for the June 30, 1993 acquisition of
BankAtlantic's common stock is as follows (in thousands):

Company's interest in net assets of BankAtlantic
(book value on dates of acquisition) $ 3,550

Company's ownership interest of capital contributions 1,530
Adjustment to net assets:
Accretion on investment and mortgage-
backed securities 1,099
Accretion loans receivable 684
Increase in other assets 39
Premium on deposits (553)
Premium on FHLB advances (43)
Increase in other liabilities (5)
Increase in deferred income taxes (80)
Decrease in office properties and equipment (4,250)
-------
Purchase price of interest in BankAtlantic's
common stock $ 1,971
=======

The adjustment to net assets indicated above are non-cash investing and
financing activities.

On November 12, 1993, a public offering of 1.8 million BankAtlantic common
shares at a price of $13.50 per common share was closed. Of the 1.8 million
shares sold, 400,000 shares were sold by BankAtlantic and 1.4 million shares
were sold by BFC. Net proceeds to BFC and BankAtlantic from the sale were
approximately $17.7 million and $4.6 million, respectively. In connection
with the public offering, BankAtlantic granted the underwriters a 30 day
option to purchase up to 270,000 additional shares of common stock to cover
over-allotments. On November 10, 1993, the underwriters exercised this option
to purchase the 270,000 shares, with a settlement date of November 18, 1993.
The additional net proceeds to BankAtlantic was approximately $3.4 million.
Upon the sale of the 2,070,000 shares, BFC's ownership of BankAtlantic
decreased to 48.17%. The sale of the BankAtlantic shares provided the Company
with the current liquidity to enable it to hold settlement discussions on the
Exchange litigation discussed below.

During 1992, the effect of purchase accounting, including income taxes and net
amortization/accretion of adjustments to net assets acquired was to increase
consolidated net earnings by approximately $807,000 and decrease consolidated
net loss during 1993 and increase consolidated net loss in 1991 by
approximately $252,000 and $792,000, respectively. The 1991 net loss includes
an extraordinary gain of $350,000 as discussed in note 15. Assuming no sales
or dispositions of the related assets or liabilities, the Company does not
believe the net increase (decrease) in earnings resulting from the net
amortization/accretion of the adjustments to net assets acquired resulting
from the use of the purchase method of accounting will be significant in
future years.

Excess cost over fair value of net assets acquired at December 31, 1993 and
1992, was approximately $1,068,000 and $1,925,000, respectively. As a result
of the deconsolidation in 1993, excess cost over fair value of net assets
acquired at December 31, 1993 is included in the investment of BankAtlantic in
the accompanying statements of financial condition.

A reconciliation of the carrying value in BankAtlantic to BankAtlantic's
Stockholders equity is as follows:

BankAtlantic Stockholders' equity $ 90,652
Preferred stock (7,036)
-------
BankAtlantic common stockholders' equity 83,616
Partnership percentage 48.17%
------
40,278
Purchase accounting adjustments (3,842)
------
Investment in BankAtlantic $ 36,436
=======

BFC also owns 5,600 shares of BankAtlantic 12.25% Series A Preferred Stock,
529 shares of BankAtlantic 10.00% Series B Preferred Stock and 4,636 shares of
BankAtlantic 8.00% Series C Preferred Stock. The aggregate purchase price
relating to the acquisition of these shares was approximately $100,000.

See the consolidated financial statements of BankAtlantic, A Federal Savings
Bank and Subsidiaries, included elsewhere herein.

On February 27, 1991 and June 12, 1991, the Company exchanged (the "1991
Exchange") approximately $9.3 million and $6.1 million (the "Original
Principal Amount") of its subordinated unsecured debentures (the "Debentures")
for all of the assets and liabilities of two and one affiliated limited
partnership(s), respectively. The major assets and liabilities of these
partnerships consisted principally of eight commercial real estate properties
and related non-recourse mortgage debt.

On March 29, 1989, the Company exchanged (the "1989 Exchange") approximately
$30 million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships. The major assets and liabilities of these
partnerships consisted principally of fourteen commercial real estate
properties, and related non-recourse mortgage debt.

The Debentures in the 1991 Exchange bear interest at a rate equal to 10.5% per
annum until March 31, 1992, 11.5% per annum thereafter until March 31, 1993
and 12.5% per annum thereafter until maturity on July 1, 2011. The Debentures
in the 1989 Exchange bear interest at a rate equal to 8% per annum until June
30, 1990, 9% per annum thereafter until June 30, 1991, and 10% thereafter
until maturity on July 1, 2009. Interest on the Debentures in the 1991 and
1989 Exchange are due at maturity but is anticipated to be paid quarterly
unless management reasonably determines that such quarterly interest payments
would impair the operations of the Company. Any interest not paid quarterly
by the Company ("Deferred Interest") will accrue interest at the same rate as
the Debentures until paid. In the event the Company determines not to pay
interest on the Debentures for eight quarters, the interest rate on the
Debentures in the 1991 and 1989 Exchanges will increase to, and remain at, 13%
and 12%, respectively, per annum until maturity. No dividends may be paid to
the holders of any equity securities of the Company while any deferred
interest remains unpaid. Since December 31, 1991, the Company has deferred
the interest payments relating to the debentures issued in both the 1989
Exchange and the 1991 Exchange and therefore,the interest on the debentures in
the 1991 and 1989 Exchange is now 13% and 12%, respectively per annum. The
deferred interest on the exchange debentures was approximately $12 million and
$6.1 million at December 31, 1993 and 1992, respectively. Debenture holders
are also entitled to receive 100% of the aggregate Net Proceeds (as defined in
the Debenture) received by the Company in excess of the Original Principal
Amount of the Debentures issued, payable on the Distribution Date (as defined
below) in cash or additional Debentures (the "Additional Consideration"). The
Distribution Date is the earlier of February 1995 or 90 days after the sale of
all of the real estate acquired in the 1991 Exchange. The Distribution Date
was June 1993 for the 1989 Exchange. At that time, there was no Additional
Consideration due with respect to the 1989 Exchange. Any Debentures issued in
payment of the Additional Consideration will be identical to the Debentures
originally issued, except there will be no further Additional Consideration
payable with respect thereto.

For financial statement purposes, the Debentures in the 1991 and 1989 Exchange
have been discounted to yield 19% and 12%, respectively, over their term and
the non-recourse mortgage debt has been discounted to yield 11% over its term.
Such mortgage debt in the 1991 Exchange: a) had original aggregate outstanding
stated principal balances of approximately $37.0 million; b) had maturities at
various dates between 1991 and 2009; c) had stated interest rates ranging from
8.75% to 12.0%; and d) required aggregate monthly payments of approximately
$376,000 for principal and interest. Such mortgage debt in the 1989 Exchange:
a) had original aggregate outstanding stated principal balances of
approximately $28.7 million; b) had maturities at various dates between 1991
and 2003; c) had stated interest rates ranging from 7.75% to 13.5%; and d)
required aggregate monthly payments of approximately $275,000 for principal
and interest. No value has been assigned to the Additional Consideration in
the 1991 Exchange. However, future financial statements will reflect accruals
as a "Cost of Sale", to the extent appropriate, for any anticipated Additional
Consideration payable based on sales of properties received by the Company in
this transaction, through the date of the financial statements. To the extent
Additional Consideration is payable on the Distribution Date relating to
unsold properties, the basis in such properties will be increased at such time
by the fair value of the Additional Consideration payable as a consequence
thereof. For purposes of determining Net Proceeds, such unsold properties will
be appraised by an independent certified appraisal firm within 90 days of the
Distribution Date.

A summary of the non-cash investing and financing activities related to the
1991 transaction is as follows (in thousands):
1991
----
Subordinated Debentures issued $ 11,926
Non-recourse mortgage debt related to real
estate acquired 38,612
Other liabilities assumed 1,421
Real estate acquired (46,057)
Other assets acquired (1,289)
-------
Net cash received $ 4,613
=======

Through December 31, 1993, three properties acquired in the 1991 Exchange were
sold to unaffiliated third parties. The properties had an aggregate sales
price of approximately $28.3 million. Stated mortgage debt of approximately
$18 million was eliminated including the remaining $2.0 million balance on a
$5.0 million note that was also secured by 2,370,846 shares of BankAtlantic
stock owned by BFC. Cash proceeds from the sales, after prorations and
closing costs, of approximately $8.2 million was received.

Through December 31, 1993, ten properties acquired in the 1989 Exchange were
sold to unaffiliated third parties. The properties had an aggregate sales
price of approximately $42.3 million. Stated mortgage debt of approximately
$21.1 million was eliminated and cash proceeds, after prorations and closing
costs, of approximately $20.0 million was received. No Additional
Consideration is estimated to be payable with respect to these sales.

In litigation brought against the Company in connection with the 1989 and 1991
Exchanges, some plaintiffs have sought to impose a constructive trust on
property acquired by the Company in the Exchanges. A network television
program has given wide publicity to these claims which may impair the ability
of the Company to sell or refinance properties acquired in the Exchanges.
There is no assurance that liquidity will be available from the disposition or
refinancing of Exchange properties. In connection with the October and
November 1992 sales of two properties acquired in the 1991 Exchange, BFC has
agreed to limit the disposition of proceeds from these sales pending
resolution of certain litigation or further order of the court. At December
31, 1992 and 1993, approximately $3.5 million currently held in escrow is
included in "Tax certificates and other investment securities" in the
accompanying financial statements.

On December 17, 1992, a jury found that BFC Financial Corporation's issuance
in 1989 of debentures in exchange for the assets and liabilities of three
affiliated public limited partnerships was unfair to investors. The jury
determined that BFC Financial Corporation, the affiliated Managing General
Partners and BFC Financial Corporation's President, Alan Levan, did not
believe that the terms of the Exchange were fair to the limited partners as
stated in the prospectus. Based on that determination, the jury found that
those limited partners who did not vote in favor of the transaction are
entitled to receive approximately $8 million, the amount which they claimed
they would have received if the partnerships had been liquidated, rather than
the approximately $16 million of subordinated debentures which were issued to
them as a consequence of the Exchange and those debentures will be
extinguished in connection with the verdict. BFC Financial Corporation would
record a pre-tax gain of approximately $6 million from the reduction in its
debt resulting from the verdict, but it nonetheless believes that the verdict
was not supported by the evidence at trial. The Company intends to appeal the
verdict. No amounts have been reflected in the financial statements because
the judgement amount was less than the Company's carrying amount of the
debentures and related accrued interest and because the Company intends to
appeal the verdict.

In March 1994, an agreement was entered into to settle the litigation
pertaining to the 1991 Exchange. Pursuant to the agreement, the company will
pay approximately eighty-one percent (81%) of the face amount of the
outstanding debentures held by plaintiffs and the debentures will be canceled
pursuant to the procedures outlined in the agreement. The settlement is
subject to, among other things, court approval. Upon effectiveness, the
settlement of this action will be dismissed with prejudice and the parties
will exchange releases.

Other lawsuits have been filed against the Company in connection with the
Exchange offers. The Company is pursuing discussions with the remaining
plaintiffs in litigation relating to the Exchange offers with a view to
settling the ongoing litigation but there is no assurance that a settlement
will be reached.

3. TAX CERTIFICATES AND OTHER INVESTMENT SECURITIES

A comparison of the book value, gross unrealized appreciation, gross
unrealized depreciation and approximate market value of tax certificates and
other investment securities is as follows (in thousands):

1992
----
Gross Gross Approximate
Book Unrealized Unrealized Market
Value Appreciation Depreciation Value
------ ------------ ------------ -----------

Tax certificates-net $ 120,295 - - 120,295
Asset-backed securities 129 - - 129
Treasury bills 3,514 - - 3,514
Repurchase agreements 725 - - 725
Certificate of deposits 220 - - 220
Other securities 164 - - 164
-------- ------- ------- -------
Total tax certificates
and other investment
securities $ 125,047 - - 125,047
========= ======= ======= =======

Included in tax certificates and other investment securities at December 31,
1993 was approximately $3,304,000, $16,881,000 and $459,000 of U.S. Treasury
Bills, commercial paper and other investments, respectively. Market value at
December 31, 1993 approximates book value.

See note 2 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

4. LOANS RECEIVABLE - NET

Loans receivable, net consist of the following (in thousands):

1993 1992
------- -------
Real estate loans:
Conventional mortgages - $ 147,654
Conventional mortgages available for sale - 7,641
Construction and development - 12,961
FHA and VA insured - 9,854
Commercial 13,161 170,257
Other loans:
Second Mortgages - 72,508
Commercial (non-real estate) - 33,071
Deposit overdrafts - 356
Installment loans held by individuals - 140,553

-------- --------
13,161 594,855

Deduct:
Undisbursed portion of loans in process - 6,492
Deferred loan fees, net - 55
Unearned discounts on purchased loans - 29
Unearned discounts on installment loans - 1,704
Deferred profit related to real estate sales 3,982 4,052
Allowance for loan losses - 16,500
------- -------
Loans receivable - net $ 9,179 566,023
======= =======

Included in loans receivable, net at December 31, 1993 and 1992 was
approximately $8,083,000 and $8,252,000, respectively, of loans due from
affiliates.

Activity in the allowance for loan losses is (in thousands):

For the Years Ended
December 31,
------------------------------

1992 1991
------ ------
Balance, beginning of period $ 13,750 $ 15,741
Charge-offs:
Commercial loans (776) (1,694)
Installment loans (10,430) (18,903)
Real estate mortgages (1,473) (259)
---------- --------
(12,679) (20,856)
---------- --------

Recoveries:
Commercial loans 175 191
Installment loan 8,584 1,035
Real estate mortgages 20 99
---------- ---------
8,779 1,325
---------- ---------
Net charge-offs (3,900) (19,531)
Additions charged to operations 6,650 17,540
---------- ---------
Balance, end of period $ 16,500 $ 13,750
========== =========

Average outstanding loans during the period $ 662,809 $ 891,385
========== =========

Ratio of net charge-offs to average
outstanding loans .59% 2.19%
========== =========

See note 3 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

5. MORTGAGE-BACKED SECURITIES

See note 4 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

6. ACCRUED INTEREST RECEIVABLE

Accrued interest relates to the following (in thousands):

1993 1992
------ ------
Loans receivable $ - $ 4,166
Tax certificates and other
investment securities 8 14,370
Mortgage-backed securities - 3,660
------- -------
$ 8 $ 22,196
======= ========
See note 5 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

7. NON-PERFORMING ASSETS AND RESTRUCTURED LOANS

See note 6 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

8. REAL ESTATE ACQUIRED IN DEBENTURE EXCHANGE

Real estate acquired in debenture exchange consists of the following (in
thousands):

December 31
---------------------------
Estimated Lives 1993 1992
--------------- -------- -------
Land - $ 3,912 4,074
Buildings and improvements 14 to 31.5 years 29,509 31,126
-------- -------
33,421 35,200
Less:
Accumulated depreciation 5,295 3,942
Deferred profit 7,957 7,957
Allowance for real estate owned (a) 1,854 2,971
-------- -------
15,106 14,870
-------- -------
$ 18,315 20,330
======== =======

(a) The Company provided an allowance for three properties' net carrying
value in 1992 and 1991 of $2,971,000 and $2,882,000, respectively, based on
estimated sales price. During 1993 the allowance declined because one of the
three properties was deeded back to the lender.

In connection to the property deeded back to the lender the following 1993
non-cash items were removed from the financial statements:

Land $ 162
Building 2,200
Less: accumulated depreciation 281
-----
2,081
Less: prior years write-down
of real estate 1,117
-----
964
Mortgage payables eliminated 954
Accrued interest payable eliminated 10
-----
-
=====

Condensed operations and significant cash flows for real estate acquired in
the debenture Exchange is as follows for the year ended December 31, 1993,
1992 and 1991 (in thousands) (a):

1993 1992 1991
-------- -------- -------
Operating Information:
- ----------------------
Revenues:
Property operations $ 6,805 9,724 9,257
Net gain (loss) on sales and
dispositions - 2,935 2,643
Deferred (gain) loss on sales
and dispositions - (2,935) (2,643)
-------- -------- -------
Net revenues 6,805 9,724 9,257
-------- -------- -------

Cost and expenses:
Mortgage interest 2,514 3,524 3,319
Depreciation 1,633 2,239 2,003
Property operating expenses 3,483 4,250 3,790
Write-down of real estate - 89 2,882
-------- -------- -------
Total costs and expenses 7,630 10,102 11,994
-------- -------- -------
Excess (deficit) of revenues
over expenses (825) (378) (2,737)
======== ======== =======

Cash Flow Information:
Operating activities:
Excess (deficit) of revenues
over expenses $ (825) (378) (2,737)
Depreciation 1,633 2,239 2,003
Write down of real estate - 89 2,882
------- ------- ------
Cash provided by
operating activities 808 1,950 2,148
------- ------- ------
Investing activities:
Proceeds from sales of
real estate (b) - 5,563 7,598
Property improvements (582) (606) (1,094)
------- -------- ------
Net cash provided by
investing activities (582) 4,957 6,504
------- -------- ------
Total cash provided $ 226 6,907 8,652
======= ======== ======

(a) Operating and cash flow information does not include interest expense for
the debentures issued in connection with the acquisition of this real estate.
Mortgage interest is included with "Interest Other", interest on loans
receivable is included with "Interest and fees on loans" and interest on other
investments is included with "Interest and dividends on tax certificates and
other investment securities" in the accompanying statements of consolidated
operations. See also note 2 for additional information on the debenture
Exchange and sale of properties.

(b) In connection with the 1992 sales of two properties acquired in the 1991
Exchange, BFC has agreed to limit disposition of proceeds from the sales
pending resolution of certain litigation. (Approximately $3.5 million.) (See
also note 2.)

9. OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment consist of the following (in thousands):

December 31,
------------
Estimated Lives 1993 1992
--------------- ------ ------
Land - $ - 9,838
Buildings and improvements 30 to 50 years - 35,158
Furniture and equipment 5 to 10 years 1,259 14,071
------ ------
Total 1,259 59,067
Less accumulated depreciation 1,231 23,035
------ ------
Office properties and equipment-net $ 28 36,032
====== ======
See note 7 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

10. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

See note 20 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

11. Other Assets

A detail of other assets at December 31, 1993 and 1992 follows (in thousands):

1993 1992
---- ----
Other intangible assets, net:
Excess of fair value of pension plan assets
over projected benefit obligation $ - 1,048
Loan servicing fees - -
Purchased servicing rights, net of
amortization - 7,282
Repossessed collateral on consumer loans - 461
Receivable from insurance carrier - 6,485
Other 2,807 6,280
------ ------

$ 2,807 21,556
====== ======

12. DEPOSITS

Deposits at December 31, 1992 are as follows (in thousands):

Weighted
Average Rate at 1992
----
December 31, 1992 Amount Percent
----------------- ------ -------
Interest-free checking - $ 52,426 4.73%
Insured money fund savings 3.07% 330,255 29.80%
NOW accounts 1.61% 143,580 12.96%
Savings accounts 2.06% 130,379 11.77%
------- ------
Total non-certificate accounts 2.30% 656,640 59.26%
------- ------
Certificate accounts:
0.00% to 3.00% - 72,657 6.56%
3.01% to 4.00% - 164,378 14.83%
4.01% to 5.00% - 87,327 7.89%
5.01% to 6.00% - 47,015 4.24%
6.01% to 7.00% - 35,939 3.24%
7.01% and greater - 44,012 3.97%
------- ------
Total certificate accounts 4.46% 451,328 40.73%
------- ------

Total deposit accounts 1,107,968 99.99%
--------- ------
Interest earned not credited to
deposit accounts 147 .01%
--------- ------
Total 3.18% $ 1,108,115 100.00%
========= =======

Interest expense by deposit category is (in thousands):

For the Years Ended
December 31,
----------------------
1992 1991
---- ----
Money fund savings and NOW
accounts $ 14,028 24,861
Savings accounts 3,298 5,101
Certificate accounts 30,319 53,842
Less early withdrawal penalty (252) (577)
------ ------
Total $ 47,393 83,227
====== ======

See note 8 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

13. ADVANCES FROM FEDERAL HOME LOAN BANK

See note 9 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

14. SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE

See note 10 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

15. CAPITAL NOTES AND OTHER SUBORDINATED DEBENTURES, COMMON STOCK WARRANTS,
AND COMMON STOCK OPTIONS AT BANKATLANTIC

See note 11 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

16. INTEREST RATE SWAPS

In March 1991, a $35.0 million interest rate swap expired. This agreement
called for fixed rate interest payments by BankAtlantic of 12.00% in exchange
for variable rate payments based on the corporate bond equivalent of the three
month U.S. Treasury Bill rate. The net interest expense relating to interest
rate swaps was approximately $450,000 for the year ended December 31, 1991
($406,000 reflected in consolidation after purchase accounting adjustments).
The impact related to these agreements on the Company's results of operations,
after purchase adjustments, income taxes and minority interests, is
insignificant. (See note 2.) BankAtlantic was exposed to credit loss in the
event of nonperformance by the other party to the agreements, however no
performance by the counterparty was required during the term of the agreement.

See note 12 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

17. MORTGAGES PAYABLE AND OTHER BORROWINGS

Mortgages payable and other borrowings at December 31, 1993 and 1992 are
summarized as follows (in thousands):

Approximate
Type of Debt Maturity Interest Rate 1993 1992
- ------------ -------- ------------- ---- ----
Related to mortgage 6% - Prime
receivables 1994-2010 plus 1% $ 5,105 5,335
Related to real estate 1994-2003 7.75%- Prime
plus 1.5% 24,312 25,814
Other borrowings 1994 Prime
plus 1% 950 1,019
------ ------
$ 30,367 32,168
======= ======

All mortgage payables and other borrowings above are from unaffiliated
parties. Included in 1993 and 1992 amounts related to other borrowings is
approximately $950,000 and $1,019,000, respectively due to financial
institutions. At December 31, 1993, $3,266,000 included above in related to
real estate was in default. The Company and the lender have agreed to an
extension but the terms and documentation have not yet been finalized. At
December 31, 1993, $950,000 included above in other borrowings is in default.
The lender has exercised the acceleration provision in the note and the
Company is attempting to negotiate an extension.

At December 31, 1993 the aggregate principal amount of the above indebtedness
maturing in each of the next five years is approximately as follows (in
thousands):
Years ended
December 31, Amount
------------ ------
1994 $ 5,598
1995 4,524
1996 10,175
1997 4,065
1998 881
Thereafter 5,124
------
$30,367
======

The above amounts relate entirely to the Company and its subsidiaries other
than BankAtlantic. The majority of the Company's (not including BankAtlantic)
marketable securities, mortgage receivables and real estate acquired in the
1989 and 1991 debenture Exchange are as to real estate and marketable
securities, encumbered by, or, as to mortgages receivable, subordinate to
mortgages payable and other debt. (See also note 28.)

In June 1991, BFC's $6.4 million credit line and unsecured $1.0 million line
of credit were consolidated, restated and amended into a promissory note in
the original principal amount of $5.0 million. Security for the $5.0 million
note included 2,370,846 shares of BankAtlantic owned by BFC, deeds of trust on
three properties and an assignment of a mortgage receivable. In October 1992,
the above promissory note was satisfied and the collateral released.

18. INCOME TAXES

BFC adopted FAS 109 as of January 1, 1993. The cumulative effect of this
change in accounting for income taxes was a charge aggregating approximately
$501,000.

The tax effects of temporary differences that give rise to significant
components of the deferred tax assets and tax liabilities at December 31, 1993
were (in thousands):

Deferred tax assets:
Real estate, net $ 1,898
Mortgages payable 7
Litigation accruals 2,205
Other liabilities 12
Net operating loss carryforwards 9,394
-----
Total gross deferred tax assets 13,516
Less:
Valuation allowance 9,073
------
Net deferred tax assets 4,443

Deferred tax liabilities:
Investment in BankAtlantic 3,269
Exchange Debentures 3,212
------
Total gross deferred tax liabilities 6,481
------
Deferred income taxes at December 31, 1993 2,038
Deferred income taxes at January 1, 1993 2,038
------
Deferred income tax expense for 1993 $ -
======

The provision for income tax expense (benefit) consists of the following (in
thousands):

For the Years Ended
December 31,
--------------------------------------
1993 1992 1991
---- ---- ----
Current:
Federal $ - 6,469 (396)
State - 201 -
----- ----- -----
$ - 6,670 (396)
----- ----- -----

Deferred :
Federal - 1,792 (4,480)
State - (17) -
----- ----- -----
- 1,775 (4,480)
----- ----- -----
Utilization
of net operating
loss carryforward (1):
Federal - (389) -
State - 1,145 -
----- ----- -----
- 756 -
----- ----- -----

Total $ - 9,201 (4,876)
===== ===== ======

(1) Represents extraordinary item, before minority interest of $208,000.

A reconciliation from the statutory federal income tax rates of 35% in 1993,
and 34% in 1992 and 1991 to the effective tax rate is as follows (in
thousands):

Year Ended December 31,
-------------------------------------------------
1993 (2) 1992 (1) 1991 (1)
------------ ------------ -----------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Expected tax expense (benefit) (1) $ (4,223) (35.0) 5,159 34.0 (8,691) (34.0)
Provision for state taxes
net of federal benefit - - 877 5.8 - -
Purchase accounting 462 3.8 274 1.8 243 .9
Taxes related to subsidiaries
not consolidated for income
tax purposes - - 894 5.9 (436) (1.7)
Tax exempt interest and
dividend received deduction - - (115) (.8) (58) (.2)
Tax benefit not recognized 3,678 30.5 2,549 16.8 4,120 16.1
Other, net 83 .7 (437) (2.9) (54) (.2)
---- ---- ----- ---- ----- ----

$ - - 9,201 60.6 (4,876) (19.1)
==== ==== ===== ==== ===== ====

(1) Expected tax is computed based upon earnings (loss) before minority
interest in BankAtlantic and extraordinary items.

(2) Expected tax is computed based upon the Company's loss before
equity in earnings of BankAtlantic.

At December 31, 1993, the Company had estimated state net operating loss carry
forwards for state income tax purposes of approximately $21,935,000 of which
$793,000 expires in 2002, $3,240,000 expires in 2003, $586,000 expires in 2004
$2,757,000 expires in 2005, $2,001,000 expires in 2006, $4,235,000 expires in
2007 and $8,323,000 expires in 2008. The Company also has a net operating
loss carry forward for federal income tax purposes of approximately
$26,839,000 of which $237,000 expires in 2003, $1,089,000 expires in 2004,
$5,237,000 expires in 2005, $4,743,000 expires in 2006, $7,181,000 expires in
2007 and $8,323,000 expires in 2008. BankAtlantic is not included in the
Company's consolidated tax return.

The Company made income tax payments of $1,900 and $3,600 during the years
ended December 31, 1993 and 1992, respectively.

See note 13 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

19. STOCKHOLDERS' EQUITY

The Company's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of $.01 par value preferred stock. The Board of Directors
has the authority to divide the authorized preferred stock into series or
classes having the relative rights, preferences and limitations as may be
determined by the Board of Directors without the prior approval of
shareholders. The Board of Directors has the power to issue this preferred
stock on terms which would create a preference over the Company's common stock
with respect to dividends, liquidation and voting rights. No further vote of
security holders would be required prior to the issuance of the shares.

The Company's Articles of Incorporation authorize the Company to issue
20,000,000 shares of Special Class A Common Stock, par value $.01 per share.
To the extent permitted by law, the Special Class A Common Stock may be issued
in one or more series as determined from time to time by the Board of
Directors and having the relative rights and preferences determined by the
Board of Directors which are set forth in the Articles of Incorporation.
However, in no event will the voting rights of shares of Special Class A
Common Stock equal or exceed the voting rights of the Company's present Common
Stock. At such time as the Board of Directors authorizes the issuance of the
newly created Special Class A Common Stock the Company's presently outstanding
Common Stock will be automatically redesignated Class B Common Stock and
holders thereof shall have the right at any time to convert their shares to
shares of the Special Class A Common Stock on a one-for-one basis at the
holder's sole election.

20. EARNINGS ON REAL ESTATE OPERATIONS

Following are the components of earnings on real estate operations for each of
the years in the three year period ending December 31, 1993 (in thousands)
(a):

1993 1992 1991
------ ------ ------
Deferred profit recognized $ 70 67 63
Operations of properties acquired in
debenture Exchange (see note 8) 1,577 3,133 3,321
------ ------ ------
$ 1,647 3,200 3,384
====== ====== ======

(a) The above amounts relate entirely to the company and its subsidiaries
other than BankAtlantic.

21. OTHER NON-INTEREST INCOME

Included in other non-interest income is approximately $5.0 million, and $5.2
million of checking account fees for the years ended December 31, 1992, and
1991, respectively, and a $415,000 recovery of prior periods reconciliation
differences was also included in other non-interest income for December 31,
1991. Also, included in other non-interest income for the years ended
December 31, 1993, 1992, and 1991,is approximately $69,000, $69,000, and
$273,000, respectively, of property management fees earned from services
provided to affiliated public real estate partnerships.

22. RELATED PARTY TRANSACTIONS

(a) Related party transactions arise from transactions with affiliated
entities. In addition to transactions described in notes 2, 4 and 10, a
summary of significant originating related party transactions is as follows
(in thousands):
Year Ended December 31,
------------------------
1993 1992 1991
------ ------ ------
Property management fee revenue $ 69 69 273
===== ====== ======

Reimbursement revenue for
administrative, accounting
and legal services $ 114 143 339
====== ====== ======

(b) The Company has a 49.5% interest and affiliates and third parties have a
50.5% interest in a limited partnership formed in 1979, for which the
Company's Chairman serves as the individual General Partner. The partnership's
primary asset is real estate subject to net lease agreements. The Company's
cost for this investment (approximately $441,000) and was written off in 1990
due to the bankruptcy of the entity leasing the real estate. Any recovery
will be recognized in income when received.

(c) The Company had amounts due from affiliates as follows (in thousands):

December 31,
--------------
Description 1993 1992
----------- ---- ----

8.5% wraparound mortgage note, due in
monthly installments until maturity
in December 1998, when a balloon
payment of $153,174 is due $ - 187

Other receivables, due primarily
from affiliated partnerships
collected in the subsequent quarter 129 235
---- ----

$ 129 422
==== ====

(d) Alan B. Levan, President and Chairman of the Board of the Company also
serves as Chairman of the Board and Chief Executive Officer of BankAtlantic

(e) John E. Abdo, a director of the Company also serves as Vice Chairman of
the Board of Directors of BankAtlantic and President of BankAtlantic
Development Corporation a wholly owned subsidiary of BankAtlantic.

(f) In May 1986, the Company issued 895 shares of stock to an officer. The
aggregate price, which was at the then market value of $19.00 per share, was
approximately $17,000 and payment for the shares is in the form of a
non-interest bearing note that matures in May 1996 and is secured by
collateral other than the stock issued.

(g) Florida Partners Corporation acquired 100,000 of the 850,000 shares of
the common stock sold by the Company in February 1987 and, in June 1990,
acquired in a privately negotiated transaction, an additional 33,314 shares of
the Company's common stock. Alan B. Levan is the principal shareholder and
Chairman of the Board of Florida Partners Corporation. Other members of the
Company's Board of Directors also hold positions with Florida Partners
Corporation.

23. EMPLOYEE BENEFIT PLANS

The Company's 1983 Stock Incentive Plan provided for the grant of stock
options to purchase up to 125,000 shares of the Company's common stock to
various employees of the Company and its subsidiaries upon terms and
conditions (including price, exercise date and number of shares) determined by
a committee appointed by the Board of Directors to administer the plan. The
exercise price of $12.00 per share was equal to or greater than the market
price as of the date of grant. Such options generally become exercisable over
an approximate four year period. The plan expired in 1992 and the 28,211
options outstanding at the end of 1991 were canceled.

On November 19, 1993, BFC Financial Corporation's stockholders approved a
Stock Option Plan under which options to purchase up to 250,000 shares of
common stock may be granted. The plan provided for the grant of both
incentive stock options and non-qualifying options. The exercise price of an
incentive stock option will not be less than the fair market value of the
common stock on the date of the grant. The exercise price of non-qualifying
options will be determined by a committee of the Board of Directors. On
November 22, 1993, in accordance with the terms of the Stock Option Plan,
non-qualifying stock options for 10,000 shares of common stock were granted to
non-employee directors. The options were issued at $4.50 per share, the fair
market value at the date of grant.

The Company has an employee's profit-sharing plan which provides for
contributions to a fund, to be held in trust by a corporate fiduciary, of a
sum as defined, but not to exceed the amount permitted under the Internal
Revenue Service Code as deductible expense. The provision charged to
operations was approximately $5,000 for each of the years ended December 31,
1993, 1992 and 1991. Contributions are funded on a current basis.

24. PENSION PLAN OF BANKATLANTIC

See note 14 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

25. LITIGATION

The following is a description of certain lawsuits to which the Company is a
party.

Timothy J. Chelling vs. BFC Financial Corporation, Alan B. Levan, I.R.E.
Advisors Series 21, Corp. and First Equity Corporation, U.S. District Court,
Southern District of Florida Case No. 89-1850-Civ Nesbitt. John D. Purcell
and Debra A. Purcell vs. BFC Financial Corporation, Alan B. Levan, Scott
Kranz, Frank Grieco, I.R.E. Advisors Series 23, Corp. and First Equity
Corporation, U.S. District Court, Southern District of Florida, Case No.
89-1284- Civ-Ryskamp. William A. Smith and Else M. Smith vs. BFC Financial
Corporation, Alan B. Levan and I.R.E. Advisors Series 24, Corp. and First
Equity Corporation, U.S. District Court, Southern District of Florida, Case
No. 89-1605- Civ-Marcus.

These actions were filed by the plaintiffs as class actions during September
1989, June 1989 and August 1989, respectively. The actions arose out of an
Exchange Offer made by the Company to the limited partners of I.R.E. Real
Estate Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23, and
I.R.E. Real Estate Fund, Ltd. - Series 24. The plaintiffs, who were limited
partners of the above named partnerships who did not consent to the Exchange
Offer, brought this action purportedly on behalf of all limited partners that
did not consent to the Exchange Offer. The Exchange Offer was made through
the solicitation of consents pursuant to a Proxy Statement/Prospectus dated
February 14, 1989 and was approved by the holders of a majority of the limited
partnership interests of each of the Partnerships in March 1989. Messrs.
Levan, Grieco and Kranz served as individual general partners of each of the
Partnerships, and Mr. Levan is the President and a director of the Company.

The plaintiffs alleged that the Proxy Statement/Prospectus contained material
misstatements and omissions, that defendants violated the federal securities
laws in connection with the offer and Exchange, that the Exchange breached the
respective Limited Partners Agreement and that the defendants violated the
Florida Limited Partnership statute in effectuating the Exchange. The
complaint also alleged that the defendant general partners violated their
fiduciary duties to the plaintiffs.

In a memorandum opinion and order dated December 17, 1991, the Court granted
the defendant's motion for summary judgement and denied the plaintiff's motion
for summary judgement, ruling that the Exchange did not violate the
partnership agreements or the Florida partnership statute. In July 1992, the
Court granted summary judgment in favor of the defendants and dismissed the
plaintiffs' claims for breach of fiduciary duty.

Subsequently, the court entered summary judgment in favor of the defendants on
all claims of misrepresentations or omissions except with respect to the
statement in the Proxy Statement/Prospectus to the effect that BFC, Alan Levan
and the Managing General Partners believed the Exchange transaction was fair.
The case on that issue was tried in December 1992, and the jury returned a
verdict in the amount of $8 million but extinguished approximately $16 million
of debentures held by the plaintiffs. BFC Financial Corporation would record a
pre-tax gain of approximately $6 million from the reduction in its debt
resulting from the verdict, but it nonetheless believes that the verdict was
not supported by the evidence at trial. Based on the verdict, BFC Financial
Corporation would record a pre-tax gain of approximately $6 million from the
extinguishment of the $16 million of outstanding debt. No amounts have been
reflected in the financial statements because the judgement amount was less
that the Company's carrying amount of the debentures and related accrued
interest and because the Company intends to appeal the verdict.

The court denied plaintiffs' motion for prejudgment interest as to Series 21
and Series 23 and awarded prejudgment interest to plaintiffs in Series 24 to
be calculated to run from March 31, 1989 through December 18, 1992, the date
of entry of final judgment, at the rate of 3.54%. The plaintiffs appealed the
court's denial for prejudgment interest in Series 21 and Series 23.

The Company also appealed the judgment as well as the court's denial of
various post-trial motions filed by the Company. Pursuant to the request of
the Eleventh Circuit Court of Appeals, the parties submitted briefs regarding
the issue of whether the Eleventh Circuit has jurisdiction to hear the appeal.
In February 1994, the Eleventh Circuit Court dismissed the appeal for lack of
jurisdiction.

In September 1993, the court granted the Company's motion to stay of the
execution of the final judgment pending appeal and to allow alternative form
of security. In December 1993, the Company filed with the district court a
motion to correct the judgment to reflect the cancellation of the outstanding
debentures, which motion is still pending.

Arthur Arrighi, et al. vs. KPMG Peat Marwick, BFC Financial Corporation; Alan
B. Levan; Frank V. Grieco; Glen Gilbert; Al DiBenedetto; BankAtlantic, A
Federal Savings Bank; Georgeson & Company, Inc.,; First Equity Corporation of
Florida; I.R.E. Advisors Series 25, Corp.; I.R.E. Advisors Series 27, Corp.;
I.R.E. Income Advisors, Corp.; and National Realty Consultants, in the United
States District Court for the District of New Jersey, Case No. 92-1206-CDR.
This case was filed on March 20, 1992 by more than 2,000 former limited
partners in Series 25, Series 27 and Income Fund. The complaint alleged that
BFC and certain other defendants developed a fraudulent scheme commencing in
1972 to sell the plaintiffs limited partnership units with the undisclosed
goal of later taking over the assets of the partnerships in exchange for
securities in a new entity in which the defendant Alan B. Levan would be a
major shareholder. The complaint further alleged that the defendants made
material misrepresentations and omissions in connection with the sale of the
original limited partnership units in the 1980s and in connection with the
1991 Exchange, and fraudulently tallied the votes in connection with the 1991
Exchange and Solicitation of Consents described above.

On March 2, 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately eighty-one percent (81%) of the
face amount of the outstanding debentures held by plaintiffs and the
debentures will be canceled pursuant to the procedures outlined in the
agreement. The settlement is subject to, among other things, court approval.
Upon effectiveness, the settlement of this action will be dismissed with
prejudice and the parties will exchange releases. Settlement of this matter
will result in a gain to BFC for financial statement purposes.

Marjory Meador, Shirley B. Daniels, Robert A. and Ruby L. Avans, and Dr. and
Mrs. Czerny, individually and on behalf of all others similarly situated,
Plaintiffs, vs. BFC Financial Corporation; BankAtlantic, A Federal Savings
Bank; Alan B. Levan; I.R.E. Advisors Series 21, Corp.; I.R.E. Advisors Series
23, Corp.; I.R.E. Advisors Series 24, Corp.; I.R.E. Advisors Series 25, Corp.;
I.R.E. Advisors Series 27, Corp.; I.R.E. Income Advisors Corp.; and First
Equity Corporation of Florida; Defendants, in the Circuit Court of the
Seventeenth Judicial Circuit in and for Broward County, Florida, Case No. 91-
29892 (CA-17). This action was filed as a class action during October 1991
and is brought on behalf of all persons who were limited partners in (a)
I.R.E. Real Estate Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. -
Series 23, or I.R.E. Real Estate Fund, Ltd. -Series 24 on the effective date
of the 1989 Exchange Transaction not otherwise included in the action by
limited partners who voted against the Exchange; or (b) were limited partners
in I.R.E. Real Estate Fund, Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. -
Series 27 or I.R.E. Real Estate Income Fund, Ltd. on the effective dates of
the 1991 Exchange Transactions. The action alleges breach of the limited
partnership agreements, breach of fiduciary duty, aiding and abetting a breach
of fiduciary duty by BFC Financial Corporation and BankAtlantic, and negligent
misrepresentation by all defendants. The action seeks damages in an unstated
amount, imposition of a constructive trust on the assets of the exchanging
partnerships, attorney's fees, costs and such other relief as the courts may
deem appropriate. Plaintiffs have voluntarily dismissed all claims which
arose out of or related to the 1991 Exchange.

Shirley B. Daniels, Robert S. and Ruby L. Avans, and Dr. and Mrs. Czerny,
individually and on behalf of all others similarly situated, Plaintiffs, vs.
BFC Financial Corporation; BankAtlantic, A Federal Savings Bank; Alan B.
Levan; I.R.E. Advisors Series 25, Corp.; I.R.E. Advisors Series 27, Corp.;
I.R.E. Income Advisors Corp.; First Equity Corporation of Florida, Defendants,
in the United States District Court for the Southern District of Florida, Fort
Lauderdale Division, Case No. 92-6588-Civ-King. On January 18, 1991, BFC
issued a prospectus and solicitation of consents in which it offered to
exchange up to $17 million in subordinated unsecured debentures for all of the
assets and liabilities of I.R.E. Real Estate Fund, Ltd.- ("Series 25"), I.R.E.
Real Estate Fund, Ltd.- ("Series 27"), I.R.E. Real Estate ("Income Fund") and
I.R.E. Pension Investors, Ltd the ("1991 Exchange"). The 1991 Exchange was
approved by a majority of the limited partners in all of the partnerships
except I.R.E. Pension Investors, Ltd. The Exchange subsequently was
effectuated without I.R.E. Pension Investors, Ltd.

In December 1992, plaintiffs filed an amended complaint, the result of which
is to enlarge the class to all limited partners in the 1991 Exchange.
Plaintiffs allege that the defendants orchestrated the Exchange for their own
benefit and caused the issuance of the Exchange Offer and Solicitation of
Consents, which contained materially misleading statements and omissions. The
complaint contains counts against BFC for violations of the Securities Act and
the Exchange Act.

Plaintiffs also allege that Alan Levan and the managing general partners
breached the limited partnership agreements, breached fiduciary duties and
that BFC and BankAtlantic aided and abetted these alleged breach of fiduciary
duties, that Alan Levan, the managing general partners, BFC and BankAtlantic
committed fraud in connection with the 1991 Exchange and made certain
negligent misrepresentations to the plaintiffs. The complaint seeks damages
and prejudgment interest in an unspecified amount, attorneys' fees and costs.
The defendants have filed an answer and affirmative defenses to the amended
complaint.

On March 2, 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately eighty-one percent (81%) of the
face amount of the outstanding debentures held by plaintiffs and the
debentures will be canceled pursuant to the procedures outlined in the
agreement. The settlement is subject to, among other things, court approval.
Upon effectiveness, the settlement of this action will be dismissed with
prejudice and the parties will exchange releases. Settlement of this matter
will result in a gain to BFC for financial statement purposes.

Cheryl and Wayne Hubbell, et al., vs. I.R.E. Advisors Series 26, Corp. et al.,
in the California Superior Court in Los Angeles, California, Case No.
BC049913. This action was filed as a class action during March 1992 on behalf
of all purchasers of I.R.E. Real Estate Fund, Ltd. - Series 25, I.R.E. Real
Estate Fund, Ltd. - Series 26, I.R.E. Real Estate Fund, Ltd. - Series 27,
I.R.E. Real Estate Growth Fund, Ltd. - Series 28 and I.R.E. Real Estate Income
Fund, Ltd. against the managing and individual general partners of the above
named partnerships and the officers and directors of those entities. The
plaintiffs allege that the offering materials distributed in connection with
the promotions of these limited partnerships contained misrepresentations of
material fact and that the defendants misrepresented and concealed material
facts from the plaintiffs during the time the partnerships were in existence.
The complaint asserts two causes of action for fraud, one of which is based on
a claim for intentional misrepresentation and concealment and one of which is
based on a claim of negligent misrepresentation. The complaint also contains
a claim for breach of fiduciary duty. The complaint seeks unspecified
compensatory and punitive damages, attorneys' fees and costs. Plaintiffs filed
an amended complaint, which the Court dismissed in February 1993 pursuant to a
motion to dismiss filed by the Defendants. Plaintiffs thereafter filed a
second amended complaint in February 1993. which was also dismissed.
Plaintiffs filed a third amended complaint which defendants answered in April
1993. Management intends to vigorously defend this action.

Martha Hess, et. al., on behalf of themselves and all others similarly
situated, v. Gordon, Boula, Financial Concepts, Ltd., KFB Securities, Inc., et
al. In the Circuit Court of Cook County, Illinois. On or about May 20,
1988, an individual investor filed the above referenced action against two
individual defendants, who allegedly sold securities without being registered
as securities brokers, two corporations organized and controlled by such
individuals, and against approximately sixteen publicly offered limited
partnerships, including two partnerships that the Company acquired the assets
and liabilities of in the 1991 Exchange transaction, (the "predecessor
partnerships") interests in which were sold by the individual and corporate
defendants.

Plaintiff alleged that the sale of limited partnership interests in the
predecessor partnerships (among other affiliated and unaffiliated
partnerships) by persons and corporations not registered as securities brokers
under the Illinois Securities Act constitutes a violation of such Act, and
that the Plaintiff, and all others who purchased securities through the
individual or corporate defendants, should be permitted to rescind their
purchases and recover their principal plus 10% interest per year, less any
amounts received. The predecessor partnerships' securities were properly
registered in Illinois and the basis of the action relates solely to the
alleged failure of the Broker Dealer to be properly registered.

In November 1988, Plaintiff's class action claims were dismissed by the Court.
Amended complaints, including additional named plaintiffs, were filed
subsequent to the dismissal of the class action claims. Motions to dismiss
were filed on behalf of the predecessor partnerships and the other
co-defendants. In December 1989, the Court ordered that the predecessor
partnerships and the other co-defendants rescind sales of any plaintiff that
brought suit within three years of the date of sale. Under the Court's order
of December 1989, one of the predecessor partnerships rescinded sales of
$41,500 of units.

Plaintiffs appealed, among other items, the Court's order with respect to
plaintiffs that brought suit after three years of the date of sale In
February 1993, the Appellate court ruled that the statute of limitations was
tolled during the pendency of the class action claims. Therefore, those
investors that brought suit within 3.6 years and potentially 4 years from the
date of sale may be entitled to rescission. The Company and the other co-
defendants sought leave to appeal before the Illinois Supreme Court and on
October 6, 1993, the leave to appeal was denied. Plaintiff's claims are now
pending in Circuit Court. Plaintiffs have indicated that they will file
amended complaints against the predecessor partnerships and other co-
defendants. The amended complaints will include both individual and class
claims. The individual and corporate defendants sold a total of $1,890,500 of
limited partnership interests in the predecessor partnerships. Limited
partners holding approximately $1,042,800 of limited partnership interests
have filed an action for recision. Under the appellate decision, if recision
was made to all limited partners that filed an action, refunds, at March 31,
1993, (including interest payments thereon) would amount to approximately
$1,800,000. A provision for such amount has been made in the accompanying
financial statements.

Short vs. Eden United, Inc., et al. in the Marion County Superior Court, State
of Indiana. Civil Division Case No. S382 0011. In January, 1982, an individual
filed suit against a subsidiary of the Company, Eden United, Inc. ("Eden"),
seeking return of an earnest money deposit held by an escrow agent and
liquidated damages in the amount of $85,000 as a result of the failure to
close the purchase and sale of an apartment complex in Indianapolis, Indiana.
Eden was to have purchased the apartment complex from a third party and then
immediately resell it to plaintiff. The third party was named as a
co-defendant and such third party has also filed a cross claim against Eden,
seeking to recover the earnest money deposit. In September 1983, Plaintiff
filed an amended complaint, naming additional subsidiaries of the Company and
certain officers of the Company as additional defendants. The amended
complaint sought unspecified damages based upon alleged fraud and interference
with contract. In interrogatory answers served in September 1987, Plaintiff
stated for the first time that he was seeking damages in the form of lost
profits in the amount of approximately $6,350,000. The case went to trial
during October 1988. On April 26, 1989, the Court entered a judgement against
Eden, the Company and certain additional subsidiaries of the Company jointly
and severally in the sum of $85,000 for liquidated damages with interest
accruing at 8% per annum from September 1, 1981, normal compensatory damages
of $1.00, and punitive damages in the sum of $100,000. The judgement also
rewards the Plaintiff the return of his $85,000 escrow deposit, and awards the
third party $85,000 in damages plus interest accruing from September 14, 1981
against Eden. The Company has charged expense for the above amounts. Both
Short and the Company appealed the judgement and in June 1991, the appellate
court reversed the trial court's decision on the issue of compensatory
damages, determined that Short may be entitled to an award of compensatory
damages and remanded the case to the trial court to determine the amount of
compensatory damages to be awarded. The Indiana Supreme Court denied review.
A hearing on remand was held on February 3, 1993. On February 25, 1994, the
court on remand awarded plaintiff a judgment in the amount of $85,000 for
liquidated damages for breach of contract jointly and severally from the
subsidiary, the Registrant and certain named affiliates, plus prejudgment
interest of $52,108 through May 1, 1989, plus post-judgment interest of 10%
per annum thereafter until paid. Additionally, plaintiff was awarded a
judgment against the defendants in the amount of $2,570,000 for tortious
interference, plus prejudgment interest of $469,400 through May 1, 1989, plus
post-judgment interest of 10% per annum thereafter until paid. The Registrant
which was advised of the courts decision on March 2, 1994 intends to appeal
the trial court's order. A provision for the above is included in the
accompanying financial statements.

Scott Kranz and Investment Management Group, Inc. vs. Alan B. Levan, BFC
Financial Corporation, I.R.E. Investments, Inc., Frank V. Grieco, I.R.E.
Advisors Series 23, Corp., I.R.E. Advisors Series 24, Corp., I.R.E. Advisors
Series 25, Corp., I.R.E. Advisors Series 26, Corp., and I.R.E. Real Estate
Institutional Corp., in the Eleventh Judicial Circuit in and for Dade County,
Florida, Case No. 85-08751 (the "employment case"), Scott G. Kranz in the name
of I.R.E. Realty Advisory Group, Inc., vs I.R.E. Realty Advisory Group, Inc.
et al in the Eleventh Judicial Circuit in and for Dade County, Florida, Case
No. 84-40012 (CA25) (the "appraisal case"). On March 5, 1985 Scott Kranz and
Investment Management Group, Inc. filed suit seeking damages in excess of
$1,800,000 and punitive damages of at least $10,000,000 plus costs.
Investment Management Group, Inc. ("IMG") is a real estate development
corporation of which Scott Kranz is the President. Until his termination on
August 1, 1984, Scott Kranz was associated with Registrant and/or various of
its affiliates either individually or through IMG. The Complaint alleges that
Alan B. Levan, acting on his own behalf and on behalf of Registrant and
certain unnamed affiliates and in combination with one or more unnamed
defendants wrongfully caused the termination of certain contractual
relationships between the Company and Scott Kranz and IMG and of Scott Kranz
as general partner of five publicly registered real estate limited
partnerships.

On October 29, 1984, Scott G. Kranz, a 10% shareholder of I.R.E. Realty
Advisory Group, Inc. ("RAG"), of which Registrant is a 50% shareholder, filed
suit in the name of RAG seeking a declaration of the rights and liabilities of
the parties in relation to a merger effective August 21, 1984 by and among
Gables Advisors, Inc., I.R.E. Real Estate Funds, Inc. and RAG. Plaintiff seeks
damages in the amount of the fair market value of his shares in RAG as of the
day before the merger. He further claims punitive damages, attorneys fees and
costs.

On January 30, 1985, plaintiff amended his complaint, to add claims of breach
of statutory duty and willful failure to submit the merger transactions to a
vote at a meeting of shareholders, in addition to a claim for punitive
damages. On June 17, 1985, Plaintiff again amended his complaint adding a
claim of constructive fraud. In March 1986, Plaintiff's motion for summary
judgement was denied. On January 21, 1987, the Court ordered this action
consolidated for trial with the action described immediately above.

Defendants denied Plaintiff's claims and filed a counterclaim. The defendants
also filed a motion to strike all of Kranz's and IMG's pleadings in both cases
and to enter a default judgement against Kranz and IMG for gross and
continuing violations of discovery orders. By order dated June 26, 1990, the
judge struck all of the pleadings filed by Kranz and IMG including both of
their complaints and both of their answers to the Company's counterclaims. On
February 12, 1991, the trial judge entered final judgement in favor of the
individual defendants, Alan Levan and Frank Grieco, specifically reserving
jurisdiction for further proceedings as to the corporate entities to enter
final judgement against the plaintiffs on the complaint. Kranz and IMG
appealed the judgement in favor of the individual defendants and the judgement
was affirmed. The corporate defendants have filed a motion for entry of
judgment against Kranz and IMG and requesting damages and attorney's fees.

Joseph Roma vs. I.R.E. Advisors Series 29, Corp., et al., in the Circuit Court
of Cook County, Illinois, County Department, Chancery Division, Case No.
91CH2429. - This action was filed as a class action during March 1991. The
action, brought on behalf of investors in I.R.E. Real Estate Fund, Ltd. -
Series 29 ("Series 29"), alleged fraud and fraudulent inducement, breach of
fiduciary duty, negligent misrepresentation and violations of the Blue Sky
Laws by defendants relating to their promotion, marketing, control and
management of Series 29, a public limited partnership. The action sought
rescission of the investments, contracts and agreements relating to
investments in Series 29, damages in an unstated amount and other relief as
the court deemed appropriate. This action was dismissed by the court.
Plaintiffs appealed such dismissal and in February 1994, the Appellate Court
affirmed the dismissal as in favor of all defendants.

John F. Weaver, Trustee for the Bankruptcy Estate of Milton A. Turner vs.
I.R.E. Real Estate Investments, Inc., in the United States Bankruptcy Court
for the Eastern District of Tennessee, Case No. 3-89-01210. - On July 25,
1991, an action was filed by John Weaver alleging that the conveyance of
Turner's equity of $1,642,001 under a wrap note to I.R.E. Real Estate
Investments, Inc. (successor to I.R.E. Real Estate Fund, Ltd. - Series 23) in
connection with the sale of property by Series 23 to Turner was a fraudulent
conveyance, as defined, in that Turner conveyed an asset, namely the
cancellation of a wrap note and wrap trust, without fair consideration while
insolvent. The trial on the complaint to avoid fraudulent conveyance was
heard before the Bankruptcy Court in May 1993. Judgment was entered in favor
of BFC and the complaint was dismissed. No appeal was taken from the judgment
and it is now final.

Alan B. Levan and BFC Financial Corporation v. Capital Cities/ABC, Inc. and
William H. Wilson, in the United States District Court for the Southern
District of Florida, Case No. 92-325-Civ-Atkins. On November 29, 1991, The
ABC television program 20/20 broadcast a story about Alan B. Levan and BFC
which purportedly depicted some securities transactions in which they were
involved. The story contained numerous false and defamatory statements about
the Company and Mr. Levan and, February 7, 1992, a defamation lawsuit was
filed on behalf of the Company and Mr. Levan against Capital Cities/ABC, Inc.
and William H. Wilson, the producer of the broadcast. In July 1993, a
magistrate recommended that summary judgment be entered against Mr. Levan on
their defamation claims. Objections to and an appeal from that recommendation
were filed with the presiding judge. Such appeal remains pending.

On March 21, 1988, an action captioned Elliot Borkson, et al. vs. Alan Levan,
Jack Abdo and BankAtlantic, Case No. 88-12063, was filed by a group of
approximately 54 shareholders of BankAtlantic in the Circuit Court of the
Eleventh Judicial Circuit in and for Dade County, Florida. The complaint
alleges that Messrs. Levan and Abdo breached their fiduciary duties as
directors of BankAtlantic by disregarding the rights of minority shareholders
under a certain option agreement between BFC and a third party dated April 9,
1986, by taking actions to depress the value of BankAtlantic's stock, by
denying access to BankAtlantic's books and records and by allegedly wasting
corporate assets. BankAtlantic is a nominal party to the proceeding.
Plaintiffs seek punitive damages of $10.0 million, compensatory damages,
attorneys' fees, costs and injunctive relief. Discovery is proceeding and the
defendants are vigorously defending the action. No trial date has been set.

Counsel has obtained a letter from counsel for plaintiffs in which counsel for
plaintiffs conclude that there is insufficient evidence to maintain the claim
against the defendants. This matter has been set for jury trial during the
two-week period commencing June 6, 1994.

Elliot Borkson, et al vs. BFC Financial Corporation. Circuit Court of the 11th
Judicial Circuit in and for Dade County Florida. Case No. 88-11171 (CA 10). In
March 1988, a group of approximately 54 shareholders of BankAtlantic filed a
class action suit against Registrant alleging Registrant had breached its
agreement, contained in an option agreement ("the Pearce Agreement") pursuant
to which Registrant had purchased shares of BankAtlantic, to offer to acquire
all of the remaining outstanding shares of BankAtlantic at a price equal to
the greater of (i) $18 per share or (ii) an amount per share which, in the
opinion of an investment banking firm of recognized national standing, is fair
to the stockholders of BankAtlantic. Such obligation was subject to receipt of
all required regulatory approvals and was relieved if there occurred a
material adverse change in financial conditions affecting the savings and loan
industry. Plaintiffs seek to recover compensatory damages arising from
Registrant's alleged breach of contract, costs, interest and attorneys fees.
In April 1988, BankAtlantic joined in a motion to stay the proceedings pending
resolution of a similar action filed in Pennsylvania and transferred to the
United States District Court for the Southern District of Florida. The stay
with respect to the proceedings remains in effect.

Marvin E. Blum, et al vs. BFC Financial Corporation; Alan B. Levan and Jack
Abdo. Case No. 88-6277, U.S. District Court for the Southern District of
Florida. This litigation was commenced on February 11, 1988, by International
Apparel Associates as a class action against BFC Financial Corporation and
Alan Levan. Subsequently, the Borkson plaintiffs and their counsel were
substituted for International Apparel, with Dr. Marvin Blum being designated
as the class representative. Jack Abdo was also added as a party defendant.
The plaintiff class was certified by the district court as "all persons, other
than defendants, and their affiliates, officers, and members of their
immediate family who owned shares of BankAtlantic common stock on February 6,
1988, or their successors in interest".

The Second Amended Complaint, upon which this action is presently based,
asserts a claim for breach of contract and a claim for violation of Section
10(b) of the Securities Exchange Act of 1934. Plaintiffs allege that they, as
minority shareholders of BankAtlantic, A Federal Savings Bank, are third party
beneficiaries of an option agreement between BFC Financial Corporation and Dr.
Pearce requiring BFC Financial Corporation to offer to purchase all their
shares of BankAtlantic subject to certain conditions. Plaintiffs claim that
none of the conditions set forth in the Pearce Agreement arose to excuse BFC
Financial Corporation from offering to buy the shares; defendants claim that
those conditions did in fact occur and that BFC Financial Corporation did not,
therefore, have any obligation to offer to purchase the shares. Plaintiffs
also allege that defendants made certain misrepresentations regarding their
intentions to perform pursuant to the Pearce agreement, which defendants deny.
Settlement negotiations, which had been progressing, have terminated. The
plaintiffs have requested that this matter be rescheduled for trial. Pretrial
conference has been conducted, however, no trial date has been set.

During 1989 and 1991, the Company exchanged subordinated debentures for the
assets and liabilities of certain affiliated partnerships. While, to the
Company's knowledge, no formal order of investigation is pending, the
Securities and Exchange Commission ("SEC") has advised the Company that it is
currently reviewing the transactions.

26. COMMITMENTS AND CONTINGENCIES

See note 15 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

27. QUARTERLY FINANCIAL INFORMATION (unaudited)

Following is quarterly financial information for the years ended 1993, 1992
and 1991 (in thousands, except per share data):

Quarter Ended
--------------------------------------------------------------------------------
1993: March 31, June 30, September 30, December 31, Total
--------- -------- ------------- ------------ ------

Interest income $ 263 347 229 227 1,066
Interest expense 2,146 2,209 2,234 2,474 9,063
Net interest income after
provision for loan losses (1,883) (1,862) (2,005) (2,247) (7,997)
Income (loss) before cumulative effect
of change in accounting for
income taxes 32 1,095 793 (3,223) (1,303)
Net (loss) (469) 1,095 793 (3,223) (1,804)
======= ======= ====== ===== =======

(Loss) per share before
cumulative effect of change in
accounting for income taxes (a) $ (0.08) 0.53 0.36 (1.99) (1.18)
Cumulative effect of change in
accounting for income taxes (0.29) - - - (.29)
------- ------- ------ ----- -------
Net income (loss) per share $ (0.37) 0.53 0.36 (1.99) (1.47)
======= ======= ====== ===== =======

Quarter Ended
--------------------------------------------------------------------------------
1992: March 31, June 30, September 30, December 31, Total
--------- -------- ------------- ------------ ------
Interest income $ 31,177 30,161 29,871 27,104 118,313
Interest expense 18,506 16,999 16,062 13,316 64,883
Provision (recovery)
for loan losses 3,603 4,079 2,796 (3,828) 6,650
Net interest income after
provision for loan losses 9,068 9,083 11,013 17,616 46,780
Gain on sale of investments,
loans and mortgage-backed
securities 177 287 1,677 7,094 9,235
Income (loss) before
extraordinary item (1,277) (1,461) (212) 4,959 2,009
Net income (loss) (1,277) (1,461) (212) 5,507 2,557
====== ====== ===== ===== =====

Earnings (loss) per share before
extraordinary item $ (.85) (.96) (.23) 2.82 .78
Extraordinary item - - - .32 .32
------ ----- ----- ---- ----
Net earnings (loss) per share $ (.85) (.96) (.23) 3.14 1.10
====== ===== ===== ==== ====

Quarter Ended
--------------------------------------------------------------------------------

1991: March 31, June 30, September 30, December 31, Total
--------- -------- ------------- ------------ ------

Interest income $ 40,076 38,058 37,378 32,551 148,063
Interest expense 29,079 26,025 24,069 20,771 99,944
Provision for loan losses 1,818 2,271 8,624 4,827 17,540
Net interest income after
provision for loan losses 9,179 9,762 4,685 6,953 30,579
Gain on sale of investments,
loans and mortgage-backed
securities 96 873 88 106 1,163
Loss before extraordinary items (1,878) (3,294) (5,515) (7,022) (17,709)
Net (loss) (1,528) (3,294) (5,515) (7,022) (17,359)
====== ====== ====== ====== =======

(Loss) per share before extra-
ordinary items $ (1.19) (2.02) (3.31) (4.20) (10.71)
Extraordinary items (a) .20 - - - .20
------ ------ ----- ----- ------
Net (loss) per share $ (.99) (2.02) (3.31) (4.20) (10.51)
====== ====== ===== ===== ======

During the fourth quarter of 1993, the company's ownership interest in
BankAtlantic's decreased from 77.83% to 48.17% with the ownership percentage
less than 50% the accounts of BankAtlantic Financial Corporation have been
removed from the consolidated financial statement and the company's investment
in BankAtlantic Financial Corporation is recorded using the equity methods.
The effect of this change has been applied effective January 1, 1993. The
company's quarterly filings for the first three quarters of 1993 were done
with the accounts of BankAtlantic Financial Corporation on a consolidated
basis but are reflected herein without the inclusion of the accounts of
BankAtlantic Financial Corporation.

During the fourth quarter 1992, BankAtlantic sold approximately $115.4 million
of mortgage-backed securities at a gain of $6.8 million including purchase
accounting adjustments of $1.6 million. Additionally, BankAtlantic recovered
$3.3 million in expenses, recorded loan loss recoveries of $7.3 million and
increased interest income by $1.9 million for circumstances relating to the
Subject Portfolio and the Covenant Not to Execute discussed in note 30. Also
during the fourth quarter, the Company recorded a $548,000 ($.32 per share)
extraordinary gain, net of minority interest of $208,000 from the utilization
of state net operating loss carryforwards.

During the quarter ended March 31, 1991, an extraordinary gain of $350,000 net
of applicable taxes and minority interest amounting to $340,000 and $197,000,
respectively, was attributable to the early extinguishment of 1986 Notes.

28. PARENT COMPANY FINANCIAL INFORMATION

A summary of the Company's condensed statements of financial condition as of
December 31, 1993 and 1992, and condensed statements of operations and cash
flows for each of the years in the three year period ended December 31, 1993
follows (in thousands):

STATEMENTS OF FINANCIAL CONDITION

ASSETS
December 31,
------------
1993 1992
---- ----
Cash and short term investments $ (21) 133
Investments - other 17,169 489
Investment in BankAtlantic 36,436 42,984
Investment in other subsidiaries 34,562 40,125
Mortgages receivable 1,097 1,110
Subordinated debentures receivable from
BankAtlantic - 1,776
Other assets 923 944
------ ------
$ 90,166 87,561
====== ======

LIABILITIES AND STOCKHOLDERS' (DEFICIT)
December 31,
------------
1993 1992
---- ----
Exchange debentures, net $ 35,651 38,996
Mortgages payable and other debt 1,250 1,323
Deferred interest exchanged debentures 12,049 6,126
Other liabilities (primarily due to subsidiaries 40,390 38,218
other than BankAtlantic)
Deferred income tax 2,038 2,038
------ ------
Total liabilities 91,378 86,701

Redeemable common stock 5,776 5,776
Stockholders' (deficit)
Preferred stock of $.01 par value;
authorized 10,000,000 shares; none issued - -
Special class A common stock of $.01 par
value; authorized 20,000,000 shares: none issued - -
Common stock of $.01 par value;
authorized 20,000,000 shares; issued
2,351,021 in 1993 and 1992 17 17
Additional paid in capital 15,264 15,532
Accumulated deficit (21,989) (20,185)
Treasury stock (45,339 shares in 1993 and 1992) (280) (280)
------ -------
Total stockholders' (deficit) (6,988) (4,916)
------ -------
$ 90,166 87,561
======= =======

STATEMENTS OF OPERATIONS
1993 1992 1991
---- ---- ----
Revenue-interest and other $ 1,834 1,062 1,672
Expenses-interest and other 8,338 9,495 7,759
------ ------ -------
(Loss) before equity in earnings (loss) of
subsidiaries and extraordinary items (6,504) (8,433) (6,087)
Equity in earnings (loss) of BankAtlantic before
extraordinary items and cumulative effect
of change in accounting for income taxes 10,764 12,135 (6,926)
Equity in (loss) of other subsidiaries (5,563) (1,693) (4,696)
------ ------ -------
Earnings (loss) before income taxes,
extraordinary items and cumulative effect
of change in accounting for income taxes (1,303) 2,009 (17,709)
Income tax benefits - - -
------ ------ -------
Earnings (loss) before extraordinary items
and cumulative effect of change in
accounting for income taxes (1,303) 2,009 (17,709)
Cumulative effect of change in accounting
for income taxes (501) - -
Extraordinary item related to BankAtlantic - 548 350
------ ------ -------
Net earnings (loss) $ (1,804) 2,557 (17,359)
====== ====== =======

STATEMENTS OF CASH FLOWS
1993 1992 1991
---- ---- ----
Operating Activities:
Earnings (loss) before extraordinary items
and cumulative effect of change in
accounting for income taxes (1,303) 2,009 (17,709)
Adjustments to reconcile earnings (loss) to
net cash used by operating activities:
Equity in (earnings) loss of BankAtlantic
before extraordinary item (10,764) (12,135) 6,926
Equity in net loss of other subsidiaries 5,563 1,693 4,696
Depreciation 25 11 18
Amortization of discount on loans receivable - (43) (238)
Accretion on subordinated debentures 173 320 539
Tax effect on debentures (65) (107) (142)
Gain on sale of real estate owned - (90) -
Loss of mortgage receivables - 209 17
Gain on sale of BankAtlantic common stock (1,050) - -
Increase in deferred interest on the
exchange debentures 5,923 4,985 1,140
Decrease (increase) in other assets 215 269 (51)
Increase (decrease) in other liabilities 362 1,811 (287)
------ ------ ------
Net cash used by operating activities (921) (1,068) (5,091)
------ ------ ------

Investing Activities:
Cash used in debenture exchange - - (282)
Loans purchased or originated - - (2,182)
Principal collected on loans 13 1,013 87
Proceeds from sale of BankAtlantic
common stock 17,691 - -
Dividends from BankAtlantic common stock 271 - -
Increase in investment in BankAtlantic (1,971) (88)
Decrease (increase) in other investments (16,680) 717 (1,206)
Increase (decrease) in subordinated debentures
of BankAtlantic 1,776 (1,025) (751)
Advances (to) and from other subsidiaries (228) 3,273 13,403
Additions to office properties and equipment (32) (17) (11)
Proceeds from sale of real estate owned - 429 -
------ ------ ------
Net cash provided by investing activities 840 4,390 8,970
------ ------ ------

Financing Activities:
Borrowings - - 1,722
Repayment of borrowings (73) (3,098) (5,395)
Purchase of treasury stock - - (53)
Loan cost - - (160)
------ ------- ------
Net cash (used) by financing activities (73) (3,098) (3,886)
------ ------- ------

Increase (decrease) in cash and short term
investments (154) 224 (7)
Cash and short term investments at beginning of
period 133 (91) (84)
------ ------- ------

Cash and short term investments at end of period $ (21) 133 (91)
====== ======= =======

Interest paid on other borrowings and subordinated debentures amounted to
approximately $94,000, $342,000 and $3,720,000 for the years ended December
31, 1993, 1992 and 1991, respectively. Income taxes paid amounted to
approximately $3,600, and $4,000 for the years ended December 31, 1992, and
1991 respectively. Non-cash investing activities during 1991 consisted of
the Company's capitalization of subsidiaries contribution of the real estate,
related mortgage debt and other assets and liabilities received by the Company
in Exchange for its issuance of subordinated debentures. (See note 2.) Other
non-cash investing and financing activities of BFC are the retirement of
treasury stock, the issuance of redeemable common stock, loans transferred to
real estate owned and proceeds from sale of real estate owned.

Short term investments are defined as those investments with a maturity of
three months or less.

For a description of dividend restrictions related to BankAtlantic, see note
16 of notes to consolidated financial statements of BankAtlantic, A Federal
Savings Bank and Subsidiaries, included elsewhere herein.

29. REGULATORY MATTERS

See note 16 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

30. Dealer Reserve

See note 17 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

31. Consolidated Statements of Cash Flows

In addition to the non-cash investing and financing activities described in
notes 2 and 8, other non-cash investing and financing activities are as
follows:

December 31,
--------------------
1993 1992 1991
------ ------ ------
Retirement of treasury stock:
Decrease in treasury stock $ - - 53
Decrease in common stock - - (1)
Decrease in additional paid in capital - - l52
Securitization of loans - - 40,361
Loans transferred to REO and other
repossessed assets - 7,994 10,810
Effect of issuance of BankAtlantic
common stock to BankAtlantic minority
stockholders 268 - -
Loan charge-offs - 12,679 20,856
Costs of assets transferred to
available for sale - 305,731 67,269
Mortgages eliminated in connection with
sales of real estate acquired
in debenture Exchanges - 8,821 6,951
Real estate owned charge-offs - 2,398 6,973
BankAtlantic dividends on common stock
declared and not received 187 - -
Interest paid on borrowings 2,948 59,933 99,980

32. Estimated Fair Value of Financial Instruments

The information set forth below provides disclosure of the estimated fair
value of the Company's financial instruments presented in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" (FAS 107) issued by
the FASB.

Management has made estimates of fair value discount rates that it believes to
be reasonable. However, because there is no market for many of these
financial instruments, management has no basis to determine whether the fair
value presented would be indicative of the value negotiated in an actual sale.
The Company's 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 value for the 1989 Exchange debentures is based upon the value
established in a December 1992 jury verdict in connection with litigation
regarding that transaction. With respect to the 1991 Exchange debentures,
fair value has been determined based upon the amount included in a settlement
agreement regarding litigation pertaining to those debentures.

The following table presents information for the Company's financial
instruments as of December 31, 1993 and 1992 (in thousands):

1993 1992
-------------- --------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- ------- -------
Financial assets:
Cash and due from depository
institutions $ 78 78 31,357 31,357
Mortgage-backed securities - - 486,886 498,995
Tax certificates and other
investment securities 20,644 20,644 125,047 126,911
Loans receivable 9,179 9,179 582,523 607,153

Financial liabilities:
Deposits - - 1,108,115 1,118,194
Securities sold under agreements
to repurchase - - 21,532 21,532
Capital notes and other
subordinated debentures - - 7,928 8,572
Mortgage payable and other
borrowings 30,367 30,367 32,168 32,168
Exchange debentures, net 35,651 29,166 38,996 32,385
Advances from Federal Home
Loan Bank - - 66,100 66,921
======== ====== ======= =======

See note 21 of notes to consolidated financial statements of BankAtlantic, A
Federal Savings Bank and Subsidiaries, included elsewhere herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.
PART III
--------

Items 10 through 13 is incorporated by reference to the Company's definitive
proxy statement to be filed with the Securities and Exchange Commission, no
later than 120 days after the end of the year covered by this Form 10-K, or,
alternatively, by amendment to this Form 10-K under cover of Form 8 not later
than the end of such 120 day period.

PART IV
-------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)-1 Financial Statements - See Item 8

(a)-2 Financial Statement Schedules - All schedules are omitted as the
required information is either not applicable or presented in the financial
statements or related notes.

(a)-3 Index to Exhibits

(3) Articles of Incorporation, as amended - See Exhibit (3) of
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989.
By-laws - See Exhibit E of Proxy Statement/Prospectus dated June 20, 1980.

(4) Instruments defining the rights of security holders, including
indentures - Not applicable.

(9) Voting trust agreement - Not applicable.

(10) Material contracts:

- Proposed form of Supervisory Agreement. Attached as Exhibit 10.

- Stock Purchase Agreement dated as of December 22, 1987 by and
among John E. Abdo and certain members of his immediate family and BFC
Financial Corporation. See Exhibit (10) of Registrant's Annual Report on Form
10-K for the year ended December 31, 1987.

(11) Statement re computation of per share earnings - Not applicable.

(12) Statement re computation of ratios - Ratio of earnings to fixed
charges - attached as Exhibit 12.

(13) Annual Report to security holders, Form 10-Q or quarterly report
to security holders - Not applicable.

(16) Letter re change in certifying accountant - Not applicable.

(18) Letter re change in accounting principles - Not applicable.

(19) Previously unfiled documents - Not applicable.

(22) Subsidiaries of the registrant:
State of
Name Organization
---- ------------
BankAtlantic, A Federal Savings Bank Federal Charter
Realty 2000 Corporation Florida
Eden Services, Inc. Florida
Eden United, Inc. Florida
First Pensacola Mortgage Company, Inc. Florida
U.S. Capital Securities, Inc. Florida
I.R.E. Property Analysts, Inc. Florida
I.R.E. Realty Advisory Group, Inc. Florida
I.R.E. Real Estate Investments, Inc. Florida
I.R.E Real Estate Investments, Series 2, Inc. Florida
I.R.E. Property Management, Inc. Florida
I.R.E. Real Estate Funds, Inc. Florida
I.R.E. Advisors Series 21, Corp. Florida
I.R.E. Advisors Series 23, Corp. Florida
I.R.E. Advisors Series 24, Corp. Florida
I.R.E. Advisors Series 25, Corp. Florida
I.R.E. Advisors Series 26, Corp. Florida
I.R.E. Advisors Series 27, Corp. Florida
I.R.E. Advisors Series 28, Corp. Florida
I.R.E. Advisors Series 29, Corp. Florida
I.R.E. Income Advisors Corp. Florida
I.R.E. Pension Advisors, Corp. Florida
I.R.E. Pension Advisors II, Corp. Florida

(23) Published report regarding matters submitted to vote of security
holders - Not applicable.

(24) Consents of experts and counsel - Not applicable.

(25) Power of attorney - Not applicable.

(28) Additional exhibits - Not applicable.

(b) Reports on Form 8-K

No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.

(c) Exhibits - See 14(a) - 3 above.

(d) Financial statements of subsidiaries not consolidated and fifty percent
or less owned persons:

BankAtlantic, A Federal Savings Bank and Subsidiaries:

Consolidated Financial Statements:

Independent Auditors' Report

Consolidated Statements of Financial Condition as of
December 31, 1993 and 1992

Consolidated Statements of Operations for each of the
years in the three year period ended December 31, 1993

Consolidated Statements of Stockholders' Equity for each
of the years in the three year period ended December 31, 1993

Consolidated Statements of Cash Flows for each of the years in
the three year period ended December 31, 1993

Notes to Consolidated Financial Statements

Selected Consolidated Financial Data

Management's Discussion and Analysis of Results of Operations and
Financial Condition

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

BFC FINANCIAL CORPORATION
Registrant

By: /S/ Alan B. Levan
------------------------------
Alan B. Levan, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/S/ Alan B. Levan March 30, 1994
- ----------------------------------------
ALAN B. LEVAN, Director and
Principal Executive Officer

/S/ Glen R. Gilbert March 30, 1994
- ----------------------------------------
GLEN R. GILBERT, Chief Financial Officer

/S/ John E. Abdo March 30, 1994
- ----------------------------------------
JOHN E. ABDO, Director

/S/ Earl Pertnoy March 30, 1994
- ----------------------------------------
EARL PERTNOY, Director

/S/ Carl E.B. McKenry, Jr. March 30, 1994
- ----------------------------------------
CARL E. B. McKENRY, JR., Director

Consolidated Financial Statements:

Independent Auditors' Report

Consolidated Statements of Financial Condition as of
December 31, 1993 and 1992

Consolidated Statements of Operations for each of the
years in the three year period ended December 31, 1993

Consolidated Statements of Stockholders' Equity for each
of the years in the three year period ended December 31, 1993

Consolidated Statements of Cash Flows for each of the years in
the three year period ended December 31, 1993

Notes to Consolidated Financial Statements

Selected Consolidated Financial Data

Management's Discussion and Analysis of Results of Operations and
Financial Condition

INDEPENDENT AUDITORS' REPORT

The Board of Directors
BankAtlantic, A Federal Savings Bank:

We have audited the accompanying consolidated statements of financial
condition of BankAtlantic, A Federal Savings Bank ("the Bank") and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three year period ended December 31, 1993. These consolidated
financial statements are the responsibility of the Bank's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
BankAtlantic, A Federal Savings Bank and subsidiaries as of December 31, 1993
and 1992, and the results of their operations and their cash flows for each of
the years in the three year period ended December 31, 1993, in conformity with
generally accepted accounting principles.

As discussed in Note 13, the Bank changed its method of accounting for
income taxes on 1993 to adopt the provisions of the Financial Accounting
Standard Board's SFAS No. 109, "Accounting for Income Taxes."

March 8, 1994

KPMG Peat Marwick

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31,
1993 1992
---------- ----------
(In thousands,
except share data)
ASSETS

Cash and due from depository institutions $ 36,351 31,208
Tax certificates and other investment securities
(approximate market value $97,588 and $120,424) 97,701 120,424
Loans receivable (net of unearned discount
of $2,944 and $1,733) 607,135 565,521
Loans originated for resale 5,752 7,641
Less: Allowance for loan losses (17,000) (16,500)
---------- ----------
Total loans receivable, net 595,887 556,662
---------- ----------
Mortgage-backed securities (approximate market
value: $453,346 and $353,984) 443,249 349,531
Mortgage-backed securities available for sale
(approximate market value: $87,572 and $145,011) 83,116 137,963
Accrued interest receivable 17,574 22,188
Real estate owned 9,651 14,997
Office properties and equipment, net 37,373 38,596
Federal Home Loan Bank stock at cost, which
approximates market value ($1,288 and $924
available for sale) 8,730 8,366
Purchased mortgage servicing rights 19,833 7,282
Deferred tax asset, net 423 -
Other assets 9,307 15,854
---------- ----------
Total assets $ 1,359,195 1,303,071
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Deposits $ 1,076,360 1,108,115
Advances from FHLB 128,300 66,100
Securities sold under agreements to repurchase 21,135 21,532
Capital notes and other subordinated debentures - 9,524
Drafts payable 573 1,246
Advances by borrowers for taxes and insurance 15,991 9,193
Other liabilities 26,184 18,816
Deferred income taxes, net - 2,380
---------- ----------
Total liabilities 1,268,543 1,236,906
---------- ----------
Commitments and contingencies
Stockholders' equity:
Non-cumulative preferred stock, $25.00 per share
preference value, $0.01 par value:
10,000,000 shares authorized all series; 12.25%
Series A, 188,600; 10.00% Series B, 17,120;
8.00% Series C, 129,870 3 3
Additional paid-in capital - preferred stock 7,033 7,033
Common stock, $0.01 par value, authorized
15,000,000 shares; issued and outstanding,
6,478,605 and 4,681,628 shares 65 41
Additional paid-in capital 46,726 29,394
Retained earnings 36,825 29,694
---------- ----------
Total stockholders' equity 90,652 66,165
---------- ----------
Total liabilities and stockholders' equity $ 1,359,195 1,303,071
========== ==========
See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended
December 31,
1993 1992 1991
---------- ---------- ----------
(In thousands, except per share data)
Interest income:
Interest and fees on loans $ 47,649 62,229 89,638
Interest on mortgage-backed securities 24,891 36,541 34,364
Interest on mortgage-backed securities
available for sale 9,473 527 1,172
Interest and dividends on tax certificates
and other investment securities 11,903 17,179 20,358
Other 587 - -
---------- ---------- ----------
Total interest income 94,503 116,476 145,532
---------- ---------- ----------
Interest expense:
Interest on deposits 31,798 47,411 83,253
Interest on advances from FHLB 2,359 3,725 3,603
Interest on securities sold under
agreements to repurchase 1,082 2,881 1,671
Interest on capital notes and
other subordinated debentures 748 1,550 2,014
Other - - 457
---------- ---------- ----------
Total interest expense 35,987 55,567 90,998
---------- ---------- ----------
Net interest income 58,516 60,909 54,534
Provision for loan losses 3,450 6,650 17,540
---------- ---------- ----------
Net interest income after
provision for loan losses 55,066 54,259 36,994
Non-interest income:
Loan servicing and other loan fees 2,080 3,189 4,344
Gain on sales of loans 1,246 976 330
Gain on sales of mortgage-backed
securities - 5,726 748
Gain on sales of investment securities - 143 62
Other 8,265 7,337 8,622
---------- ---------- ----------
Total non-interest income 11,591 17,371 14,106
---------- ---------- ----------
Non-interest expenses:
Employee compensation and benefits 19,617 19,202 24,062
Occupancy and equipment 8,417 8,864 10,626
Federal insurance premium 2,750 2,772 3,281
Advertising and promotion 960 480 1,143
(Income) loss from joint venture
investments 25 245 (2,335)
Foreclosed asset activity, net 1,243 4,323 8,922
(Recovery) write-down of dealer reserve - (2,739) 2,739
Provision for branch consolidation - - 1,618
Other 10,474 13,990 15,108
---------- ---------- ----------
Total non-interest expenses 43,486 47,137 65,164
---------- ---------- ----------

(Continued)
For the Years Ended
December 31,
1993 1992 1991
---------- ---------- ----------
Income (loss) before income taxes
and extraordinary items 23,171 24,493 (14,064)
Provision (benefit) for income taxes 7,093 9,201 (4,841)
---------- ---------- ----------
Income (loss) before
extraordinary items 16,078 15,292 (9,223)
Extraordinary items - 756 660
---------- ---------- ----------
Net income (loss) 16,078 16,048 (8,563)
Dividends on non-cumulative preferred
stock paid by BFC escrow 147 880 715
Dividends on non-cumulative
preferred stock 733 0 0
---------- ---------- ----------
Total dividends on non-cumulative
preferred stock 880 880 715
---------- ---------- ----------
Net income (loss) on common shares $ 15,198 15,168 (9,278)
========== ========== ==========
Income (loss) per common and common
equivalent share:
Income (loss) before extraordinary items $ 2.52 3.07 (2.12)
Extraordinary items - 0.16 0.14
---------- ---------- ----------
Net income (loss) $ 2.52 3.23 (1.98)
========== ========== ==========
Income per common and common
equivalent share assuming full dilution:
Income before extraordinary item $ 2.51 2.65 N/A
Extraordinary item - 0.14 N/A
---------- ---------- ----------
Net income $ 2.51 2.79 N/A
========== ========== ==========
See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For Each of the Years in the Three Year Period Ended
December 31, 1993
Additional
Paid-in
Additional Capital
Common Paid-in Retained Preferred Preferred
Stock Capital Earnings Stock Stock Total
----- -------- -------- -------- -------- --------
(In thousands)

Balance,
December 31, 1990 $ 41 29,385 23,804 - - 53,230
Net loss - - (8,563) - - (8,563)
Dividends on
preferred stock - - (715) - - (715)
Conversion of
subordinated debt
to preferred stock - - - 3 7,033 7,036
Proceeds from issuance
of common stock
and warrants - 9 - - - 9
----- -------- -------- -------- -------- --------
Balance,
December 31, 1991 $ 41 29,394 14,526 3 7,033 50,997
Net income - - 16,048 - - 16,048
Dividends on
preferred stock - - (880) - - (880)
----- -------- -------- -------- -------- --------
Balance,
December 31, 1992 $ 41 29,394 29,694 3 7,033 66,165
Net income - - 16,078 - - 16,078
Dividends on
preferred stock - - (880) - - (880)
Dividends on common stock - - (738) - - (738)
15% common stock dividend 6 7,323 (7,329) - - 0
Common stock issued
to BFC upon conversion
of warrants 11 1,960 - - - 1,971
Proceeds from issuance
of common stock 7 8,049 - - - 8,056
----- -------- -------- -------- -------- --------

Balance 65 46,726 36,825 3 7,033 90,652
December 31, 1993 ===== ======== ======== ======== ======== ========

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,
1993 1992 1991
---------- ---------- ----------
(In thousands)
Operating activities:
Income (loss) before extraordinary item $ 16,078 15,292 (9,223)
Adjustments to reconcile income (loss)
before extraordinary item to net cash
provided by operating activities:
Provision for loan losses 3,450 6,650 17,540
Provision for declines in real estate owned 2,675 3,827 7,273
FHLB stock dividends (364) (498) (618)
Depreciation 3,408 3,332 2,868
Amortization of purchased mortgage
servicing rights 4,452 2,573 1,274
Increase (decrease) in deferred income taxes (2,803) 1,775 (4,480)
Utilization of net operating loss
carryforward - 756 -
Net accretion of securities 9 (456) (243)
Net amortization of deferred loan
origination fees (794) (41) (40)
Loss (gain) on sales of real estate owned (1,211) (648) 59
Proceeds from loans originated for sale 46,229 37,030 15,279
Origination of loans for sale (43,094) (39,888) (18,756)
Gain on sales of loans (1,246) (976) (330)
Gain on sales of mortgage-backed
securities available for sale - (5,726) (748)
Loss (gain) on sales of office properties
and equipment 73 71 (7)
Gain on sale of investment securities - (143) (62)
Loss (income) from joint venture operations 25 245 (2,335)
Decrease in accrued interest receivable 4,614 2,253 4,647
Amortization of dealer reserve 3,464 6,406 5,491
Prepayments of dealer reserve - - (1,417)
Write-down of dealer reserve - - 2,739
(Increase) decrease in other assets 3,057 (4,567) 3,481
Decrease in drafts payable (673) (9,410) (1,403)
Increase (decrease) in other liabilities 7,206 (757) 3,524
Write-off of office properties and equipment 222 - 461
Provision for branch consolidation - - 1,618
Provision for tax certificate losses 1,660 1,160 811
---------- ---------- ----------
Net cash provided by operating activities $ 46,437 18,260 27,403
---------- ---------- ----------
Investing activities:
Proceeds from sales of investment securities$ - 2,137 30,235
Purchase of tax certificates and
other investment securities (121,538) (125,197) (121,826)
Proceeds from redemption and maturities of
tax certificates and other investment
securities 142,559 110,695 117,714
Loans purchased (5,142) - -
Principal reduction on loans 289,037 297,263 298,076
Loans originated for portfolio (220,130) (136,179) (122,511)
Bankers acceptances purchased (109,931) - -
Proceeds from sales of mortgage-backed
securities available for sale - 155,243 70,903
(Continued)
For the Years Ended December 31,
1993 1992 1991
---------- ---------- ----------
Mortgage-backed securities purchased (206,854) (271,041) (98,587)
Principal collected on mortgage-backed
securities 168,016 95,266 56,634
Proceeds from sales of real estate owned 6,278 11,113 2,937
Purchases and additional investments
in real estate owned - - (1,374)
Additions to office properties and equipment (2,525) (728) (1,026)
Sales of office equipment 46 105 525
Advances to joint ventures - (26) (2,690)
Repayments of advances to joint ventures - 77 12,929
Investments in joint ventures - - (115)
Cash distributions from joint ventures - - 561
FHLB stock sales - 142 3,071
FHLB stock purchased - (65) -
Settlement of amount due from broker - - 154,686
Servicing rights purchased (17,003) (3,832) (3,457)
---------- ---------- ----------
Net cash provided (used) by
investing activities $ (77,187) 134,973 396,685
---------- ---------- ----------
Financing activities:
Net decrease in deposits $ (59,370) (190,907) (272,307)
Interest credited to deposits 27,615 43,509 71,853
Proceeds from FHLB advances 95,000 107,300 -
Repayments of FHLB advances (32,800) (78,400) (25,700)
Net decrease in securities sold under
agreements to repurchase (397) (35,600) (189,847)
Decrease in federal funds purchased - - (14,500)
Payments for exchange of capital
notes for preferred stock - - (1,855)
Redemption of capital notes and
other subordinated debentures (7,927) (7,022) (225)
Issuance of common stock and
warrants, net 8,056 - 9
Receipts of advances by borrowers
for taxes and insurance 43,782 33,933 34,794
Payment for advances by borrowers
for taxes and insurance (36,984) (33,220) (32,678)
Preferred stock issuance costs - - (353)
Proceeds from issuance of
subordinated debt - - 8
Preferred stock dividends paid (733) - -
Common stock dividends paid (349) - -
---------- ---------- ----------
Net cash provided (used) by
financing activities 35,893 (160,407) (430,801)
---------- ---------- ----------
Increase (decrease) in cash and
cash equivalents 5,143 (7,174) (6,713)
Cash and cash equivalents at
beginning of period 31,208 38,382 45,095

Cash and cash equivalents at ---------- ---------- ----------
end of period $ 36,351 31,208 38,382
========== ========== ==========

For the Years Ended December 31,
1993 1992 1991
---------- ---------- ----------
Supplementary disclosure of non-cash investing
and financing activities:
Interest paid on borrowings $ 36,536 55,795 92,814
Income taxes paid 11,198 5,800 355
Income taxes refunded 1,629 370 -
Loans transferred to real estate
owned 2,396 7,994 6,729
Loans charged-off 4,487 12,679 20,856
Real estate owned charged-off 775 1,927 6,973
Costs of assets transferred to
available for sale - 305,731 67,269
Capital notes exchanged for
preferred stock - - (8,389)
Preferred stock issued - - 7,389
Extraordinary gain from early
extinguishment of capital notes - - 660
Extraordinary gain-income
taxes payable - - 340
Subordinated debentures due to BFC
which was utilized by BFC to
exercise related warrants to
purchase common stock of
BankAtlantic 1,971 - -
Common stock issued to BFC upon
exercise of warrants (1,971) - -
Issuance of subordinated debentures
to BFC for payment of preferred
stock dividends 147 880 715
Preferred stock dividends paid by
BFC escrow (147) (880) (715)
Common stock dividends declared
and not paid 389 - -
Loans securitized - - 40,361
========== ========== ==========
See Notes to Consolidated Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

1. Summary of Significant Accounting Policies

Basis of Financial Statement Presentation - The financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP"). In preparing the financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statements of financial condition and
operations for the periods presented. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant
change in the next year relate to the determination of the allowance for loan
losses and the valuation of real estate acquired in connection with
foreclosure or in satisfaction of loans. In connection with the determination
of the allowances for loan losses and real estate owned, management obtains
independent appraisals for significant properties when it is deemed prudent.
Principles of Consolidation - The consolidated financial statements
include the accounts of BankAtlantic and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation. At December 31, 1993, BankAtlantic, a Federal Savings Bank
("BankAtlantic") was 48.17% owned by BFC Financial Corporation ("BFC").
Certain amounts for prior years have been reclassified to conform with
statement presentations for 1993. The reclassifications have no effect on the
financial position or results of operations as previously reported.

Cash Equivalents - Cash and due from depository institutions include
demand deposits at other financial institutions and federal funds sold.
Generally, federal funds are sold for one-day periods.
Tax Certificates, Other Investment Securities and Mortgage-Backed
Securities - Tax certificates, other investment securities and mortgage-backed
securities held for investment are carried at cost. Amortization of premiums
and accretion of discounts is based on the interest method which for mortgage-
backed securities relates to the estimated remaining lives of the underlying
loans. Mortgage-backed securities available for sale are carried at the lower
of aggregate cost or market value. The held for investment classification
includes only those securities that management has both the intent and ability
to hold until maturity.
The available for sale category would include all securities that
BankAtlantic may elect to sell when events which were not reasonably
foreseeable at the time of acquisition make a sale advisable including such
events as changes in the interest rate environment, changes in BankAtlantic's
interest rate position and sensitivity gap, nature of other available
investments, and existing and proposed regulatory requirements make such sales
likely. Securities transferred to the available for sale category are
transferred at the lower of aggregate cost or market value. Any excess of
aggregate cost over market is charged to operations at the time of transfer.
Gains or losses on sales of securities are determined by the specific
identification method.
Allowance for Loan Losses - The allowance for loan losses represents the
total amount available to absorb loan losses. Management believes that the
allowance for loan losses is adequate. The allowance is based on management's
evaluation, which includes a review of all loans on which full collectibility
may not be reasonably assured and considers, among other matters, the
estimated fair value of the underlying collateral on the loan and such factors
as changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific non-performing loans, and current economic
conditions and trends that may affect the borrower's ability to repay.
Increases in the allowance for loan losses are recorded when losses are both
probable and estimable. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review BankAtlantic's
allowance for loan losses. Such agencies may require BankAtlantic to
recognize additions to the allowance based on their judgments about
information available to them at the time of their examination.
Construction and Development Lending - BankAtlantic's construction and
development lending generally requires an equity investment in the form of
contributed assets from the borrower. Other than advances to joint ventures,
BankAtlantic has no loans which provide for a participation in profits at
December 31, 1993 and 1992. Accordingly, construction and development lending
arrangements have been classified and accounted for as loans. Non-Accrual
Loans and Real Estate Owned - Loans are generally placed on non-accrual status
when the loans become 90 days past due as to principal and interest or when,
in management's opinion, collection of interest or principal becomes
uncertain. Accrued interest is reversed against current income, amortization
of deferred net fees and discounts are discontinued, and interest income
collected is recognized when the loan is returned to a current status. Loans
that have been placed on non-accrual are generally not restored to an accrual
basis until all delinquent principal and/or interest has been brought current.
Real estate owned ("REO") is comprised of real estate acquired in
settlement of loans and loans treated as in-substance foreclosures. Real
estate acquired for development by BankAtlantic, or joint ventures in which
BankAtlantic has an equity interest, is stated at the lower of cost or
estimated net realizable value. During the period of the accompanying
financial statements, BankAtlantic did not have any real estate acquired for
development.
Profit on real estate sold is recognized when the collectibility of the
sales price is reasonably assured and BankAtlantic is not obligated to perform
significant activities after the sale. Any estimated loss is recognized in
the period in which it becomes apparent.
REO is recorded at the lower of the loan balance, plus acquisition
costs, or fair value, less estimated disposition costs. Expenditures for
capital improvements made thereafter are generally capitalized. Real estate
acquired in settlement of loans is anticipated to be sold and valuation
allowance adjustments are made to reflect any subsequent changes in fair
values from the initially recorded amount. Costs of holding REO are charged
to operations as incurred. Provisions and recoveries in the REO valuation
allowance are reflected in operations.
Office Properties and Equipment - Land is carried at cost. Office
properties and equipment are carried at cost less accumulated depreciation.
Depreciation is computed on the straight-line method over the estimated useful
lives of the assets which generally range up to 50 years for buildings and 10
years for equipment. The cost of leasehold improvements is being amortized
using the straight-line method over the terms of the related leases.
Expenditures for new properties and equipment and major renewals and
betterments are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred and gains or losses on disposal of assets are
reflected in current operations.
Investments in Joint Ventures - Investments in joint ventures are
accounted for by the equity method.
Loans Originated for Sale - Residential first mortgage loans originated
for sale are reported at the lower of cost or market. Loan origination fees
and related direct loan origination costs for these loans are deferred until
the related loan is sold. Generally these loans are committed for sale prior
to origination. Accordingly, the holding period for such loans is minimal.

Loan Origination and Commitment Fees, Premiums and Discounts on Loans
and Mortgage Banking Activities - Origination and commitment fees collected
are deferred net of direct costs and are being amortized to interest income
over the loan life using the level yield method. Amortization of deferred
fees is discontinued when collectibility of the related loan is deemed to be
uncertain. Commitment fees related to expired commitments are recognized as
income when the commitment expires.
Unearned discounts on installment, second mortgage and home improvement
loans are amortized to income using the level yield over the terms of the
related loans. Unearned discounts on purchased loans are amortized to income
using the effective interest method over the estimated life of the loans.
Loan Servicing Fees - BankAtlantic services mortgage loans for
investors. These mortgage loans serviced are not included in the accompanying
consolidated statements of financial condition. Loan servicing fees are based
on a stipulated percentage of the outstanding loan principal balances being
serviced and are recognized as income when related loan payments from
mortgagors are collected. Loan servicing costs are charged to expense as
incurred. Amounts paid for purchased mortgage servicing rights are amortized
to expense using the level yield over the estimated life of the loan, and
continually adjusted for prepayments. Management evaluates the carrying value
of purchased mortgage servicing by estimating the future net servicing income
of the portfolio on a discounted, disaggregated basis, based on estimates of
the remaining loan lives. Mortgage servicing rights related to loans
originated by BankAtlantic, are not capitalized.
Dealer Reserves, Net - The dealer reserve receivable represents the
portion of interest rates passed through to dealers on indirect consumer
loans. BankAtlantic had funded 0 - 100% of the total dealer reserve at the
inception of the loan. Dealer reserves are amortized over the contractual
life of the related loans, adjusted for actual prepayments, using the interest
method except for the Subject Portfolio discussed further in Note 17 herein.
Dealer reserves are stated net of accumulated amortization, allowances,
valuation adjustments, and any unfunded amounts due to the dealer.
Income Taxes - BankAtlantic and its subsidiaries file consolidated
federal and state income tax returns.
In February 1992, the FASB issued FAS 109. FAS 109, which was
implemented by BankAtlantic in 1993, requires a change from the deferred
method to the asset and liability method to account for income taxes. Under
the asset and liability method of FAS 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under FAS 109, the effect of a change in tax rates on
deferred tax assets and liabilities is recognized in the period that includes
the statutory enactment date.
Pursuant to the deferred method under APB Opinion 11, which was applied
in 1992 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the year of
the calculation. Under the deferred method, deferred taxes are not adjusted
for subsequent changes in tax rates.
Preferred Stock - All three Series of Preferred Stock have a preference
value of $25.00 per share and are redeemable by BankAtlantic at $25.25 per
share in 1994 and $25.00 thereafter. At December 31, 1993, no shares of
Preferred Stock had been redeemed.
Income (Loss) Per Common Share - In calculating income (loss) per common
and common equivalent share ("primary income per share") preferred stock
dividends are deducted from income before extraordinary item and the
resulting amount and any extraordinary item is divided by the weighted average
number of common and common equivalents shares outstanding, when dilutive.
Common stock equivalents consist of common stock warrants and options.
Income per common and common equivalent share assuming full dilution
("fully diluted income per share") is calculated as above and, if dilutive,
after adjustment for interest charges as a result of the hypothetical
conversion of the BFC subordinated debentures, through their actual conversion
date of June 30, 1993. Fully diluted income per share also utilizes the period
end market price of common stock if such price is greater than the average
market price utilized in computing primary income per share.
During 1991, no effect was given to options outstanding under
BankAtlantic's Stock Option Plan and the common stock warrants issued as a
result of the 1989 and 1991 rights offering and in connection with the
issuance of the 1990 and 1991 subordinated debentures since the effect of
their exercise was anti-dilutive. Common stock equivalents are not reflected
in income per share until the market price of the common stock obtainable has
been in excess of the exercise price for substantially all of three
consecutive months, ending with the last month of the period.

For the Years Ended
December 31
-------------------------------------
1993 1992 1991
---------- --------- ---------
Weighted average number of common and
common equivalent shares outstanding 6,054,402 4,694,099 4,680,439
========== ========= =========
Weighted average number of common and
common equivalent shares outstanding
assuming full dilution 6,091,800 5,440,798 N/A
========== ========== ==========

New Accounting Standards - During May 1993, the Financial Accounting
Standards Board approved two new accounting standards. Financial Accounting
Standards No. 114 - Accounting by Creditors for Impairment of a Loan ("FAS
114"), and Financial Accounting Standards No. 115 - Accounting for Certain
Investments in Debt and Equity Securities ("FAS 115").
FAS 114 addresses the collectibility of both contractual interest and
contractual principal of all receivables when assessing the need for a loss
accrual. This standard requires that unpaid loans be measured at the present
value of expected cash flows by discounting those cash flows at the loan's
effective interest rate. FAS 114 must be adopted by 1995, prospectively.
BankAtlantic intends to implement FAS 114 in 1995. At December 31, 1993, the
effect of implementation of this standard on BankAtlantic is estimated to be
immaterial.
FAS 115 addresses the valuation and recording of debt securities as
held-to-maturity, trading and available for sale. Under this standard, only
debt securities that BankAtlantic has the positive intent and ability to hold
to maturity would be classified as held to maturity and reported at amortized
cost. All others would be reported at fair value. FAS 115 must be adopted by
1994, prospectively. If FAS 115 were effective at December 31, 1993,
BankAtlantic does not believe that it would be required to reclassify its debt
securities and that the effect of implementation would be an increase in
stockholders' equity of approximately $2.7 million, net of tax; the amount
resulting when BankAtlantic implemented FAS 115 on January 1, 1994. However,
BankAtlantic believes that implementation of FAS 115 may result in the
volatility of capital amounts reported over time and could in the future
negatively impact the institution's regulatory capital position.

2. Tax Certificates and Other Investment Securities

A comparison of the book value, gross unrealized appreciation, gross
unrealized depreciation, and approximate market value of BankAtlantic's tax
certificates and other investment securities at December 31 was (in
thousands):

1993
----------------------------------------------------
Gross Gross Approximate
Book Unrealized Unrealized Market
Value Appreciation Depreciation Value
--------- ------------ ------------ ---------
Tax certificates-net $ 83,927 - - 83,927
Asset-backed securities 111 - - 111
Corporate bonds 3,663 - 7 3,656
Federal agency obligations 10,000 - 106 9,894
--------- ------------ ------------ ---------
Total tax certificates
and other investment
securities $ 97,701 - 113 97,588
========= ============ ============= =========

1992
====================================================
Gross Gross Approximate
Book Unrealized Unrealized Market
Value Appreciation Depreciation Value
--------- ------------ ------------ ---------
Tax certificates-net $ 120,295 - - 120,295
Asset-backed securities 129 - - 129
--------- ------------ ------------ ---------
Total tax certificates
and other investment
securities $ 120,424 - - 120,424
========= ============ ============= =========

Management considers approximate market value equivalent to book value
for tax certificates since these securities have no readily traded market.
However, for the fair value of tax certificates based on Financial Accounting
Standards Board Statement Number 107 ("FASB 107") assumptions, see Note 20.
Contractual or estimated maturities by category are shown below with
related market values as of December 31, 1993. Actual maturities will
probably differ from the maturities indicated below:

Book Value Market Value
------------- -------------
Tax Certificates (In thousands)

Due in one year or less $ 60,225 $ 60,225
Due after one year through five years 23,561 23,561
Due after five years through ten years 141 141
------------- -------------

Total Tax Certificates 83,927 83,927
------------- ------------

Other Investment Securities

Due in one year or less 10,024 9,918
Due after one year through five years 3,750 3,743
------------- -------------
Total Other Investments 13,774 13,661
------------- -------------
Total Tax Certificates and Other
Investment Securities $ 97,701 97,588
============= =============

During the year ended December 31, 1993, BankAtlantic invested in
repurchase agreements. The maximum amount of repurchase agreements
outstanding at any month end and the average amount invested for the period
was $29.0 million and $13.1 million, respectively. The underlying securities
were in the possession of BankAtlantic.
Proceeds from the sale of other investment securities were $2.1 million
and $30.2 million for the years ended December 31, 1992, and 1991,
respectively. The gross realized gains were $143,000 and $62,000 for the
years ended December 31, 1992 and 1991, respectively. There were no sales of
investment securities during the year ended December 31, 1993.
In Florida, tax certificates represent a priority lien against real
property for which assessed real estate taxes are delinquent. BankAtlantic's
experience with this type of investment has been favorable as rates earned are
generally higher than many alternative investments and substantial repayment
occurs over a two year period. The primary risks BankAtlantic has experienced
with tax certificates have related to the risk that additional funds may be
required to purchase other certificates related to the property, the risk that
the liened property may be unusable and the risk that potential environmental
concerns may make taking title to the property untenable.

3. Loans Receivable - Net
December 31
------------------------------
1993 1992
------------- -----------
(In thousands)
------------------------------
Real estate loans:
Conventional mortgages $ 120,531 $ 147,654
Conventional mortgages available for sale 5,752 7,641
Construction and development 11,333 12,961
FHA and VA insured 7,972 9,854
Commercial 198,095 156,844

Other loans:
Second mortgages 52,563 72,508
Commercial (non-real estate) 27,979 33,071
Banker's acceptance 110,652
Deposit overdrafts 419 356
Installment loans held by individuals 86,138 140,553
------------- -----------
Total gross loans 621,434 581,442

Deduct:
Undisbursed portion of loans in process 5,570 6,492
Deferred loan fees, net 33 55
Unearned discounts on commercial loans 2,124 -
Unearned discounts on installment and
purchased loans 820 1,733
Allowance for loan losses 17,000 16,500
------------- -----------
Loans receivable - net $ 595,887 556,662
============= ===========

No loans were securitized during the years ended December 31, 1993 and
1992. BankAtlantic is subject to economic conditions which could adversely
affect both the performance of the borrower or the collateral securing the
loan. At December 31, 1993, 79% of total aggregate outstanding loans were to
borrowers in Florida, 12% of total loans were to borrowers in the Northeastern
United States and 9% were to borrowers located elsewhere. Commitments to sell
residential mortgage loans were $12.8 million and $7.6 million at December 31,
1993 and 1992, respectively. Approximately $1.8 million and $5.0 million of
commitments to sell relate to residential mortgage loans with variable rates
of interest whereas $11.0 million and $2.7 million of commitments to sell
relate to residential mortgage loans with fixed rates of interest at December
31, 1993 and 1992, respectively. Such residential mortgage loan sales relate
to loans recently originated for sale.

Activity in the allowance for loan losses was (in thousands):

For the Years Ended (1)
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Balance, beginning of period $ 16,500 $ 13,750 $ 15,741
Charge-offs:
Commercial loans (835) (776) (1,694)
Installment loans (3,350) (10,430) (18,903)
Real estate mortgages (302) (1,473) (259)
------------- ---------- ----------
(4,487) (12,679) (20,856)
------------- ---------- ----------
Recoveries:
Commercial loans 262 175 191
Installment loans 1,259 8,584 1,035
Real estate mortgages 16 20 99
------------- ---------- ----------
1,537 8,779 1,325
------------- ---------- ----------
Net charge-offs (2,950) (3,900) (19,531)
Additions charged to operations 3,450 6,650 17,540
------------- ---------- ----------
Balance, end of period 17,000 16,500 13,750
============= ========== ==========
Average outstanding loans during
the period 532,317 652,374 876,283
============= ========== ==========
Ratio of net charge-offs to average
outstanding loans 0.56%(1) 0.60% 2.23%
============= ========== ==========

(1) Excludes banker's acceptances. The percentage would be 0.55% if
banker's acceptances were included.

Included in installment loan recoveries for 1993 and 1992 is
approximately $1.0 million and $7.3 million received from BankAtlantic's
fidelity bond carrier (see Note 17). The ratio of net charge-offs to average
outstanding loans, excluding this recovery, would have been 0.74% and 1.72%
for 1993 and 1992, respectively.
At December 31, 1993, 1992 and 1991, BankAtlantic serviced loans for the
benefit of others amounting to approximately $1.9 billion, $1.0 billion and
$868.4 million, respectively. At December 31, 1993 and 1992, other
liabilities includes approximately $2.4 million and $2.3 million,
respectively, of loan payments due to others.

Activity in purchased mortgage servicing rights was (in thousands):

For the Years Ended
December 31,
----------------------------------------
1993 1992 1991
------------- ----------- -----------

Balance, beginning of period $ 7,282 $ 6,023 $ 3,840
Servicing rights purchased 17,003 3,832 3,457
Amortization of purchased
servicing rights (4,452) (2,573) (1,274)
------------- ----------- -----------
Balance, end of period $ 19,833 7,282 6,023
============= =========== ===========

Aggregate loans to and repayments of loans by directors, executive officers,
principal stockholders and other related interests for the years ended
December 31, 1993 and 1992, were (in thousands):

Balance at Balance at Balance at
December 31, (2) (1)(2) December 31, (2) December 31,
1991 Additions Deletions 1992 Additions Deletions 1993
- ------------ --------- --------- ------------ ---------- --------- -----------
2,676 10 453 2,233 16 1,064 1,185

(1) $450 of the 1992 deletions relates to a loan to an executive
officer no longer employed by BankAtlantic.
(2) Not included herein are conventional mortgage loans of
approximately $372 to executive officers. These loans were originated for
sale and were sold to unrelated third parties.
(3) $772 of the 1993 deletions relates to a loan to a related party no
longer associated with BankAtlantic.

4. Mortgage-Backed Securities

Mortgage-backed securities held for investment consisted of (in
thousands):

Principal Unamortized Unearned Amortized
Balance Premiums Discounts Cost
---------- ----------- --------- ----------
December 31, 1993

FNMA $ 152,655 $ 1,639 $ 78 $ 154,216
FHLMC 287,665 2,096 728 289,033
---------- ----------- --------- ----------
Total $ 440,320 $ 3,735 $ 806 $ 443,249
========== =========== ========= ==========
December 31, 1992

FNMA $ 135,515 $ 739 $ 75 $ 136,179
FHLMC 214,297 210 1,155 213,352
---------- ----------- --------- ----------
Total $ 349,812 $ 949 $ 1,230 $ 349,531
========== =========== ========= ==========

The amortized cost, gross unrealized appreciation, gross unrealized
depreciation and approximate market value of mortgage-backed securities held
for investment was (in thousands):

Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Appreciation Depreciation Value
---------- ------------ ------------ ------------

December 31, 1993

FNMA $ 154,216 $ 3,109 $ - $ 157,325
FHLMC 289,033 7,055 67 296,021
---------- ------------ ------------ ------------
Total $ 443,249 $ 10,164 $ 67 $ 453,346
========== ============ ============ ============

December 31, 1992

FNMA $ 136,179 $ - $ 701 $ 135,478
FHLMC 213,352 5,186 32 218,506
---------- ------------ ------------ ------------
Total $ 349,531 $ 5,186 $ 733 $ 353,984
========== ============ ============ ============

BankAtlantic's held for investment portfolio at December 31, 1993
consisted of FNMA fixed rate 7 year balloon securities that mature in 1999,
FHLMC fixed rate 5 and 7 year balloon securities that mature in 1996 - 2000
and FHLMC adjustable rate securities that mature in 2022 and 2023. Pledged as
collateral were $3.7 million, $500,000 and $2.8 million of mortgage-backed
securities for commercial letters of credit, treasury tax and loan and retail
repurchase agreements, respectively.
An objective of BankAtlantic has been to improve its cumulative rate
sensitivity gap. In furtherance of this objective, BankAtlantic purchased,
from 1990 through December 31, 1993, approximately $504.8 million of five and
seven year balloon FNMA and FHLMC mortgage backed securities. Purchases of
this type of security are directed at reducing the intermediate term interest
rate sensitivity, reinvesting funds from principal repayments, reducing market
volatility compared to the longer term fixed rate mortgage-backed securities
and also providing future opportunities to improve liquidity.
Funds for the purchase of these securities were obtained from principal
repayments, proceeds from sales of longer term fixed rate mortgage-backed
securities, and short to intermediate term borrowings. Due to monetary policy
changes which resulted in additional interest rate cuts and the continued
outflow of time deposits, management decided in September 1992 to dispose of
the fixed rate mortgage-backed securities in order to, among other things,
fund substantially all of the purchases of these replacement securities.
BankAtlantic has the ability and intent to hold its remaining mortgage-
backed securities held for investment until their scheduled maturities.
Market values of the securities available for sale at December 31, 1993 were
greater than BankAtlantic's cost of such securities. All fixed rate mortgage-
backed securities having original maturities of 15 to 30 years are classified
as available for sale.

The amortized cost, gross unrealized appreciation, gross unrealized
depreciation and approximate market value at December 31, 1993 and 1992 of
mortgage-backed securities available for sale were (in thousands):

Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Appreciation Depreciation Value
---------- ------------ ------------ ------------

December 31, 1993

FNMA $ 24,712 $ 1,696 $ - $ 26,408
FHLMC 58,404 2,760 - 61,164
---------- ------------ ------------ ------------
Total $ 83,116 $ 4,456 $ - $ 87,572
========== ============ ============ ============

December 31, 1992

FNMA $ 38,487 $ 2,333 $ - $ 40,820
FHLMC 99,476 4,715 - 104,191
---------- ------------ ------------ ------------
Total $ 137,963 $ 7,048 $ - $ 145,011
========== ============ ============ ============

During the year ended December 31, 1993, there were no sales of
mortgage-backed securities.
During the year ended December 31, 1992, BankAtlantic transferred to
available for sale approximately $305.7 million of fixed rate mortgage-backed
securities and received proceeds amounting to $144.6 million for sales of FNMA
securities and $10.6 million of FHLMC securities for gross realized gains of
$5.2 million and $500,000, respectively.
Proceeds from the sales of FHLMC and FNMA securities were $ 49.0 million
and $ 21.9 million, respectively, for the year ended December 31, 1991. Gross
realized gains from the sales of FHLMC and FNMA securities were $174,000 and
$574,000, respectively, for the year ended December 31, 1991. All sales
occurred subsequent to classification as available for sale.

5. Accrued Interest Receivable

December 31
------------------------------
1993 1992
------------- ------------
(In thousands)
------------------------------
Loans receivable $ 3,403 $ 4,158
Tax certificates and other investment
Securities 10,473 14,370
Mortgage-backed securities 3,698 3,660
------------- ------------
$ 17,574 $ 22,188
============= ============

6. Non-Performing Assets and Restructured Loans

Risk elements consist of non-accrual loans, restructured loans, past-due
loans, REO, repossessed assets, and other loans which management has doubts
about the borrower's ability to comply with the contractual repayment term.
Non-accrual loans are loans on which interest recognition has been suspended
because of doubts as to the borrower's ability to repay principal or interest.
Restructured loans are where the terms have been altered to provide a
reduction or deferral of interest or principal because of a deterioration in
the borrower's financial position. BankAtlantic did not have any commitments
outstanding to lend additional funds on restructured loans at December 31,
1993. Past-due loans are accruing loans that are contractually past due 90
days or more as to interest or principal payments.

The following summarizes the risk elements at the dates indicated were
(in thousands):

For the Years Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Non-accrual $ 7,246 $ 10,436 $ 13,745
90 days or more past due 2,580 (1) 1,108 689
Real Estate Owned 9,651 14,997 21,295
Other Repossessed assets 512 461 902
------------- ---------- ----------
Total non-performing $ 19,989 $ 27,002 $ 36,631

Restructured $ 2,647 $ 2,661 $ 7,580
------------- ---------- ----------
Total risk elements $ 22,636 $ 29,663 $ 44,211
============= ========== ==========
(1) The majority of these loans have matured, but are current as to
payments under the prior loan terms.

At December 31, 1993, there were no loans which were not disclosed in
the above schedule where known information about the possible credit problems
of the borrowers caused management to have serious doubts as to the ability of
the borrower to comply with present loan repayment terms and which may result
in disclosure of such loans in the schedule above in the future.
Interest income which would have been recorded under the original terms
of non-accrual and restructured loans and the interest income actually
recognized are summarized below (in thousands):

For the Years Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Interest income which would have
been recorded $ 1,068 $ 1,301 $ 2,476
Interest income recognized (486) (311) (1,581)
------------- ---------- ----------
Interest income foregone $ 582 $ 990 $ 895
============= ========== ==========

The components of "Foreclosed asset activity, net" were (in thousands):

For the Years Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Real estate acquired in settlement
of loans:
Operating expenses (income), net $ (221) $ 1,144 $ 1,590
Provision of declines in REO 2,675 3,827 7,273
Net (gains) losses on sales (1,211) (648) 59
------------- ---------- ----------
$ 1,243 $ 4,323 $ 8,922
Total ============= ========== ==========

Activity in the allowance for real estate owned consisted of (in
thousands):

For the Years Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Balance, beginning of period $ 2,200 $ 300 $ -
Charge-offs:
Commercial loans $ (706) (1,816) (6,760)
Residential loans (69) (111) (213)
------------- ---------- ----------
(775) (1,927) (6,973)
2,675 $ 3,827 7,273
------------- ---------- ----------
$ 4,100 $ 2,200 $ 300
Total ============= ========== ==========

7. Office Properties and Equipment

December 31
------------------------------
1993 1992
------------- ------------
(In thousands)
------------------------------
Land $ 9,618 $ 9,838
Building and improvements 35,906 35,158
Furniture and equipment 16,139 14,362
------------- ------------
Total $ 61,663 $ 59,358
Less accumulated depreciation 24,290 20,762
------------- ------------
Other properties and equipment-net $ 37,373 $ 38,596
============= ============

8. Deposits

The weighted average nominal interest rate payable on deposit accounts
at December 31, 1993 and 1992 was 2.83% and 3.18%, respectively. The stated
rates and balances at which BankAtlantic paid interest on deposits were:

December 31,
-----------------------------------------------------------------
1993 1992
-----------------------------------------------------------------
Amount Percent Amount Percent
------------ ------------ ------------- -----------
(Dollars in thousands)

Interest free checking $ 62,065 $ 5.77% $ 52,426 4.73%
Insured money fund savings
2.52% at December 31, 1993
3.07% at December 31, 1992 301,572 28.01 330,255 29.80
Now accounts
1.79% at December 31, 1993
1.61% at December 31, 1992 152,186 14.14 143,580 12.96
Savings accounts
1.78% at December 31, 1993
2.06% at December 31, 1992 124,699 11.59 130,379 11.77
------------ ------------ ------------- -----------
Total non-certificate accounts 640,522 59.51 656,640 59.26
------------ ------------ ------------- -----------
Certificate accounts:
0.00% to 3.00% 106,521 9.90 72,657 6.56
3.01% to 4.00% 135,753 12.61 164,378 14.83
4.01% to 5.00% 105,214 9.77 87,327 7.89
5.01% to 6.00% 48,770 4.53 47,015 4.24
6.01% to 7.00% 15,690 1.46 35,939 3.24
7.01% and greater 23,757 2.21 44,012 3.97
------------ ------------ ------------- -----------
Total certificate accounts 435,705 40.48 451,328 40.73
------------ ------------ ------------- -----------
Total deposit accounts 1,076,227 99.99 1,107,968 99.99
------------ ------------ ------------- -----------
Interest earned not credited to deposit
accounts 133 0.01 147 0.01
------------ ------------ ------------- -----------
Total $ 1,076,360 100.00% $ 1,108,115 100.00%
============ ============ ============= ===========

Interest expense by deposit category was (in thousands):

For the Years Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Money fund savings and NOW accounts $ 11,413 $ 14,028 $ 24,861
Savings accounts 2,363 3,298 5,101
Certificate accounts - below
$100,000 16,247 27,449 50,647
Certificate accounts, $100,000 and
above 1,941 2,888 3,221
Less early withdrawal penalty (166) (252) (577)
-------------- ---------- ---------
Total $ 31,798 $ 47,411 $ 83,253
============== ========== =========

Included in other non-interest income is approximately $5.2 million,
$5.0 million and $5.2 million of checking account fees for the years ended
December 31, 1993, 1992 and 1991, respectively.
At December 31, 1993, the amounts of scheduled maturities of certificate
accounts were (in thousands):

1994 1995 1996 1997 1998 Thereafter
---------- -------- -------- --------- --------- ----------
0.00% to 3.00% $ 100,384 $ 4,445 $ 3 $ - $ - $ 1,689
3.01% to 4.00% 122,167 12,442 1,116 21 - 7
4.01% to 5.00% 36,933 49,543 12,387 4,623 1,700 28
5.01% to 6.00% 20,756 4,076 938 11,131 11,839 30
6.01% to 7.00% 7,988 702 1,965 4,407 427 201
7.01% and greater 7,341 9,050 6,834 331 199 2
---------- -------- -------- --------- --------- ----------
Total $ 295,569 $ 80,258 $ 23,243 $ 20,513 $ 14,165 $ 1,957
========== ======== ======== ========= ========= ==========

Time deposits $100,000 and over have the following maturities at (in
thousands):

December 31
------------------------------
1993 1992
------------- ------------
Less than 3 months $ 8,071 $ 2,976
3 to 6 months 6,377 7,104
6 to 12 months 15,784 16,827
More than 12 months 21,195 15,433
------------- ------------
Total $ 51,427 $ 42,340
============= ============

Beginning in 1990, the Office of the Comptroller for the State of
Florida ("Comptroller") commenced a review of BankAtlantic's procedures for
the assessment of fees on dormant accounts. The Comptroller subsequently
indicated that BankAtlantic was not in compliance with applicable Florida law
as interpreted by the Comptroller. The difference in interpretation concerns
approximately $500,000 and has not yet been resolved. BankAtlantic intends to
amend its procedures to satisfy the Comptroller's interpretation. However,
pending resolution of the issue and modification of the procedures, dormant
account assessments, approximately $10,000 per month, have been eliminated
since 1992, and an allowance has been established for the amount which is in
question.

9. Advances from Federal Home Loan Bank

Advances from Federal Home Loan Bank ("FHLB advances") incur interest
and were repayable as follows (in thousands):

Repayable During Year Interest December 31,
Ending December 31, ----------------------
Rate 1993 1992
-------------------------- ----------- ---------
1993 3.50% to 7.80% $ - $ 32,800
1994 3.25% to 7.80% 111,250 18,300
1995 4.92% to 7.80% 17,050 15,000
----------- ---------
Total $ 128,300 $ 66,100
=========== =========

Overnight FHLB advances at December 31, 1993 and 1992, amounted to $95.0
million and $26.0 million, respectively. At December 31, 1993 and 1992,
BankAtlantic pledged specific adjustable rate mortgage loans as collateral in
the amount of $33.3 million and $71.6 million, respectively, for FHLB
advances. During October, 1992 and December, 1993, the FHLB granted
BankAtlantic, subject to various terms and conditions, lines of credit of $300
million and $115 million expiring in October 1995 and December, 1994,
respectively. As of December 31, 1993 BankAtlantic had not utilized these
lines of credit.

10. Securities Sold Under Agreements to Repurchase

The following table provides information on the agreements (dollars in
thousands):

Periods Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Maximum borrowing at any month-end
within the period $ 69,295 $ 120,207 $ 87,252
Average borrowing during the period 33,962 73,309 25,426
Average interest cost during the
period 3.19% 3.93% 6.57%
Average interest at end of the period 3.30% 3.38% 4.62%
============= ========== ==========

Average borrowing was computed based on average daily balances during
the period. Average interest rate during the period was computed by dividing
interest expense for the period by the average borrowing during the period.

Securities sold under agreements to repurchase are summarized below (in
thousands):

December 31,
----------------------
1993 1992
----------- ---------
Agreements to repurchase the same security $ 18,152 $ 20,000
Customer repurchase agreements 2,983 1,532
----------- ---------
Total $ 21,135 $ 21,532
=========== =========

The following table lists the book and approximate market value of
securities sold under repurchase agreements, and the repurchase liability
associated with such transactions was (dollars in thousands):

Weighted
Approximate Average
Book Market Repurchase Interest
Value Value Balance Rate
--------- ------------ ------------ ----------
December 31, 1993
FNMA $ 13,406 $ 13,424 $ 13,165 $ 3.50%
FHLMC 10,983 11,521 7,970 2.96%
--------- ------------ ------------ ----------
Total $ 24,389 $ 24,945 $ 21,135 $ 3.30%
========= ============ ============ ==========

December 31, 1992
FHLMC $ 25,101 $ 25,833 $ 21,532 $ 3.38%
========= ============ ============ ==========

All repurchase agreements at December 31, 1993 and 1992, matured and
were repaid in January 1994 and 1993, respectively. These securities were
held by unrelated broker dealers.

11. Capital Notes and Other Subordinated Debentures, Preferred Stock, Common
Stock Warrants, and Common Stock Options

In order to increase its regulatory capital, BankAtlantic issued $25.0
million of its 1986 Capital Notes between January and August 1986. In March
1991, $10.2 million of 1986 Capital Notes were exchanged for noncumulative
preferred stock, cash payments and cash bonuses. The Preferred Stock was
recorded at a fair value of $7.0 million, net of offering costs of $353,000
and BankAtlantic recognized an extraordinary gain of $660,000 net of
applicable income taxes of $340,000 due to this early extinguishment of the
1986 Capital Notes. All three series of Preferred Stock have a preference
value of $25 per share and are redeemable by BankAtlantic at $25.25 per share
in 1994 and $25.00 per share thereafter. At December 31, 1993, no shares of
Preferred Stock have been redeemed. Effective July 31, 1992, BankAtlantic
redeemed approximately $6.9 million of 1986 Capital Notes. Such redemption
was at face value plus accrued interest and without payment of any penalty or
premium. The portion of 1986 Capital Notes selected for redemption had an
average interest rate of approximately 11.7%, and matured primarily in 1993.
At December 31, 1993 and 1992, BFC owned 5.600, 529 and 4,636 shares of
the Series A, B and C Preferred Stock, respectively. Such ownership was
obtained through open market purchases and represents approximately 2.97%,
3.09% and 3.57% of the Series A, B and C Preferred Stock, respectively.
As a condition of the exchange of 1986 Capital Notes for Preferred
Stock, BFC placed cash in an escrow account equal to dividends payable on the
Preferred Stock for the first two years. The amount placed in escrow was
approximately $1.7 million. This escrow account had been utilized by
BankAtlantic to pay the Preferred Shareholder dividends during the first two
years after issuance. Upon establishing the escrow account, BankAtlantic
entered into an agreement with BFC, that BFC will be issued 13% subordinated
debentures in the amount of the escrow utilized, as well as non-detachable
warrants to acquire additional shares of BankAtlantic common stock on the
basis of $1.75 per share purchase price to the extent of subordinated
debentures issued and any interest accrued and not currently paid thereon. As
of December 31, 1992, BankAtlantic had issued approximately $1.6 million of
subordinated debentures to BFC for the payment of monthly Preferred Stock
dividends. The related warrants were to expire at maturity of the related
subordinated debentures on March 7, 1998. At December 31, 1992, interest of
$180,000 had accrued to BFC on its debentures and approximately 1,017,750
warrants had been issued. The exercise price of the warrants subject to the
agreement was established at the greater of 120% of the average market price
of BankAtlantic stock during the 30 days prior to the funding of the escrow or
$1.74 per common share. At March 7, 1991, 120% of the average market price of
BankAtlantic common stock was $1.75, resulting in the exercise price of the
warrants being set at $1.75 per common share. The subordinated debentures
issued to BFC for payment of Preferred Stock dividends, related interest and
the dividends paid are reflected herein. For regulatory capital purposes,
dividend amounts, although paid by BFC, are not includable as capital and the
related subordinated debentures issued were not includable in determining
risk-based capital until BFC exercised the warrants issued to it in connection
with the subordinated debentures. Payments of any interest or principal to
BFC on any subordinated debentures issued to BFC in consideration of the
utilization of the escrowed amounts was subject to regulatory approvals.
Effective June 30, 1993, BFC exercised its warrants to acquire 1,126,327
shares of BankAtlantic's common stock at an exercise price of $1.75 per share.
The payment of the $1,971,072 purchase price was through the tender of
subordinated debentures held by BFC.
During July 1993, accrued interest of $83,704 was paid to BFC for
interest accrued on the subordinated debentures from March 1, 1993 to June 30,
1993. From March 1991 through February 1993, BFC provided funds for the
payment of dividends on BankAtlantic's preferred stock. BFC has no further
obligation to provide funds for payment of any dividends by BankAtlantic.
Future dividends, if declared, will be paid by BankAtlantic and will be
subject to receipt of all required regulatory approvals. BankAtlantic has
paid the preferred stock dividends since March 1993 and expects to continue
paying such dividends; subject to maintaining capital at least equal to the
fully phased-in capital requirements. Future payments will be subject to
approval by the Board of Directors, to additional regulatory notice or
approval, and continued compliance with capital requirements.
In July 1993, BankAtlantic received approval from the OTS to redeem all
remaining capital notes and other subordinated debentures. BankAtlantic
redeemed the $6.8 million of 1986 Capital Notes and $1 million of 14% other
subordinated debentures on August 31, 1993 at par. The Capital Notes bore
interest at a weighted average rate of 11.83%, substantially in excess of then
current market rates. Funds for the redemption were provided from loan
repayments.
On February 28, 1990, BankAtlantic filed an application with the OTS to
issue up to $12.0 million of subordinated debentures in private transactions
and to include such subordinated debentures as regulatory capital. This
offering was closed in 1990. During the quarter ended March 31, 1990, BFC
advanced BankAtlantic $2.5 million for the purchase of such subordinated
debentures, subject to regulatory approval. On May 30, 1990, BankAtlantic
received OTS approval, subject to certain conditions, to include up to $12.0
million of the subordinated debentures as regulatory capital. Effective March
30, 1990, BFC acquired $2.5 million of such subordinated debentures. In June
1990, a third party acquired $1.0 million of BankAtlantic's subordinated
debentures. The subordinated debentures had an interest rate of 14% per
annum. The subordinated debentures was issued with warrants entitling the
holder to purchase shares of BankAtlantic common stock at an exercise price of
$4.62 per share at any time prior to maturity. On June 30, 1990, BFC
exercised its warrants and converted $2.5 million of subordinated debentures
to 541,430 shares of BankAtlantic common stock, increasing BFC's common stock
ownership percentage of BankAtlantic to 69.9% at that time. The conversion of
the subordinated debentures to common stock was approved at BankAtlantic's
Annual Meeting of shareholders held on July 10, 1990. Included in risk-based
capital at December 31, 1992 was $3.8 million of Capital Notes and
subordinated debentures. The $1.0 million subordinated debentures issued to
the unaffiliated third party was to mature in June 1997 and had detachable
warrants to purchase 216,573 common shares of BankAtlantic, at $4.62 per
share. On March 31, 1991, BankAtlantic issued to its existing shareholders,
4,878 shares of common stock and $8,000 of 14% subordinated debentures, having
a March 1998 maturity date, with related warrants to purchase 4,600 shares of
common stock. The warrants for the 4.600 shares may be exercised at $1.74 per
share any time prior to maturity of the related debentures by payment of the
exercise price in cash or by surrendering related debentures having an
outstanding principal amount and accrued interest, if any, equal to the amount
payable or a combination thereof. The remaining $1.0 million and $8,000 of
subordinated debentures were redeemed along with the Capital Notes on August
31, 1993. However, the warrants related to such debentures are detachable and
may remain outstanding until the earlier of exercise or original maturity of
the subordinated debentures. The warrants outstanding at December 1993,
relating to the redeemed debentures are 216,573 and 4,025 with exercise prices
of $4.62 and $1.74, respectively.
On November 12, 1993, BankAtlantic closed a public offering of 1.8
million common shares at a price of $13.50 per common share. Of the 1.8
million shares sold, 400,000 shares were sold by BankAtlantic and 1.4 million
shares were sold by BFC. Net proceeds to BankAtlantic from the sale of the
400,000 shares were approximately $4.6 million. In connection with the public
offering, BankAtlantic granted the underwriters a 30 day option to purchase up
to 270,000 additional shares of common stock to cover over-allotments. On
November 10,1993, the underwriters exercised this option to purchase the
270,000 shares, with a closing date of November 18, 1993. The additional net
proceeds to BankAtlantic were approximately $3.4 million. Upon sale of the
2,070,000 shares, BFC's ownership of BankAtlantic changed from 77.83% to
48.17%.
On April 6, 1984, BankAtlantic's stockholders approved a Stock Option
Plan under which options to purchase up to 310,000 shares of common stock may
be granted. The plan provided for the grant of both incentive stock options
and non-qualifying options. The exercise price of an incentive stock option
will not be less than the fair market value of the common stock on the date of
the grant. The exercise price of non-qualifying options will be determined by
a committee of the Board of Directors.
On May 25, 1993, the Board of Directors authorized the issuance of
232,440 incentive stock options and 66,560 non-qualifying options. Of the
incentive and non-qualifying stock options, 43,560 were issued at 110% of the
fair market value at the date of grant. The remaining incentive and non-
qualifying stock options were issued at the fair market value at the date of
grant. Non-qualifying stock options for 23,000 shares were issued outside of
the Plan to non-employee directors. These options have similar terms and
conditions as non-qualifying options under the Plan.

A summary of plan activity was:

Exercisable Price
Shares Per Share
------------ --------------------------------
Outstanding December 31, 1990 71,191 $ 8.70 - 11.63
Expired (44,563) 11.30 - 11.63
Outstanding December 31, 1991
and 1992 26,628 8.70 - 11.63
Expired (173) 11.30
Issued 299,000 11.48 - 12.63
------------ --------------------------------
Outstanding December 31, 1993 325,455 $ 8.70 - 12.63
============ ================================

The stock options issued in May 1993 expire on May 25, 1998, and have
the following commencement dates based on applicable vesting schedules:
99,667 on May 25, 1993; 99,667 on May 25, 1994 and 99,666 on May 25, 1995.
The remaining 26,455 options outstanding may currently be exercised and will
expire in August 1996. At May 31, 1993, all issuable options under the Plan
were outstanding and no further options will be granted under the Plan.

12. Interest Rate Swaps

In March 1991, a $35.0 million interest rate swap expired. This
agreement called for fixed rate interest payments by BankAtlantic of 12.00% in
exchange for variable rate payments based on the corporate bond equivalent of
the three month U.S. Treasury Bill rate. The net interest expense relating to
the interest rate swap was approximately $450,000 for the year ended December
31, 1991. BankAtlantic was exposed to credit loss in the event of
nonperformance by the other party to the agreements, however no performance by
the counter-party was required during the term of the agreement.

13. Income Taxes

BankAtlantic is permitted under the Internal Revenue Code to deduct an
annual addition to a reserve for bad debts in determining taxable income,
subject to certain limitations. To the extent that (i) a savings
institution's reserve for losses on qualifying real property loans exceeds the
amount that would have been allowed under the experience method and (ii) it
makes distributions to shareholders that are considered to result in
withdrawals from that excess bad debt reserve, then the amounts withdrawn will
be included in its taxable income. The amount considered to be withdrawn by a
distribution will be the amount of the distribution plus the amount necessary
to pay the tax with respect to the withdrawal. Dividends paid out for the
savings institution's current or accumulated earnings and profits, as
calculated for federal income tax purposes, will not be considered to result
in withdrawals from its bad debt reserves. Accordingly, purchases of its
outstanding common or preferred stock by BankAtlantic could result in an
increase in BankAtlantic's taxable income in the period such stock is
repurchased. The increase in taxable income would be the lesser of the amount
repurchased divided by the reciprocal of the income tax rate or at December
31, 1993, $4.8 million.
BankAtlantic adopted FAS 109 as of January 1, 1993. The cumulative
effect of this change in accounting for income taxes was immaterial, and thus,
there was no cumulative effect adjustment. In accordance with FAS 109
deferred tax liabilities are not recognized on the base year tax bad debt
reserve unless it becomes apparent that the reserve will be reduced and result
in taxable income in the foreseeable future. At December 31, 1993,
BankAtlantic's base year tax bad debt reserve was $6.6 million for which no
deferred income taxes have been provided.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and tax liabilities at December 31, 1993
were:

(In thousands)

Deferred tax assets:
Bad debt reserves for financial statement purposes $ 5,686
Allowances recorded for financial statement purposes not
currently recognized for tax purposes 4,770
Deferred compensation accrued for financial statement
purposes not currently recognized for tax purposes 112
Unearned commitment fees 204
Other 228
---------------
Total gross deferred tax assets 11,000
Less valuation allowance (1,464)
---------------
Total deferred tax assets 9,536

Deferred tax liabilities:
Bad debt reserve recorded for tax purposes not
recorded for financial statement purposes 1,164
Office properties and equipment, due to differences in
depreciation 1,537
FHLB stock, due to differences in the recognition of
stock dividends 1,647
Deferred point income, due to differences in the
recognition of loan origination fees 1,507
Receivable from the carrier recorded for financial
statement purposes 865
Discount on mortgage-backed securities, due to the
accretion of discounts 848
Capital leases for financial reporting purposes and
operating leases for tax purposes 686
Pre-paid pension expenses 459
Other 400
---------------
Total gross deferred tax liabilities 9,113
---------------
Net deferred tax assets at December 31, 1993 423
Deferred income tax liability at December 31, 1992 2,380
---------------
Deferred income tax (benefit) for 1993 $ (2,803)
===============

The valuation allowance for deferred tax assets as of January 1, 1993
was $2.4 million. The net change in the total valuation allowance for the
year ended December 31, 1993 was a decrease of $963,000. The change in the
valuation allowance was due to management's determination that, more likely
than not, this deferred tax asset is realizable.

The provision (benefit) for income taxes consisted of (in thousands):

For the Years Ended
December 31,
---------------------------------------
1993 1992 1991
------------- ---------- ----------
Current:
Federal $ 9,695 $ 6,469 $ (361)
State 1,633 201 -
------------- ---------- ----------
11,328 6,670 (361)
------------- ---------- ----------
Deferred:
Federal (2,445) 1,792 (4,480)
State (358) (17) -
------------- ---------- ----------
(2,803) 1,775 (4,480)
------------- ---------- ----------
Utilization of net operating loss
carryforwards:
Federal - (389) -
State - 1,145 -
------------- ---------- ----------
- 756 -
------------- ---------- ----------

Settlement with IRS, net (1,432) - -
------------- ---------- ----------
Total $ 7,093 $ 9,201 $ (4,841)
============= ========== ==========

BankAtlantic's actual provision (benefit) differs from the Federal
expected income tax provision (benefit) as follows (in thousands):

For the Years Ended
December 31,
-----------------------------------
1993 1992 1991
--------- ---------- ----------
Income tax provision (benefit) at
expected federal income tax rate(1) $ 8,110 $ 8,328 $ (4,782)
Increase (decrease) resulting from:
Adjustment to allowance for loan
losses recognized for financial
statement purposes not currently
recognized for tax purposes 613 - -
Tax-exempt interest income (119) (115) (58)
Provision for state taxes net of
federal benefit 828 877 -
Other-net (4) 111 (1)
Change in the beginning of the
year balance of the valuation
allowance for deferred tax assets
allocated to income tax expense (963) - -
Adjustment to deferred tax assets
and liabilities for enacted
changes in the tax laws and rates 60 - -
Settlement with IRS, net(2) (1,432) - -
--------- ---------- ----------
Total $ 7,093 $ 9,201 $ (4,841)
========= ========== ==========

(1) The federal income tax rate is 35% for the year ended December 31, 1993
and 34% for the years ended December 31, 1992 and 1991.

(2) During the second quarter of 1993, BankAtlantic settled a claim with the
IRS relating to net operating loss carrybacks and previous Federal income tax
examinations through 1988, resulting in an increase in other interest income
of $587,000 and a reduction in the provision for income taxes of $1.4 million.

Deferred income tax expense (benefit) was comprised of (in thousands):

For the Years Ended
December 31,
-------------------------------------
1993 1992 1991
---------- ---------- ----------
Decrease in deferred loan origination fees $ (358) $ (435) $ (757)
Amortization of discount on U.S. government securities 319 167 106
Loss from joint ventures realized for financial statement purposes in
excess of amounts recognized for income taxes - (85) (85)
FHLB stock dividend (sale) 183 149 (181)
Increase (decrease) in leasing operations (336) 83 393
Provision for loan losses reported in financial statements in excess of
amount recognized for tax purposes (26) (2,784) 513
Adjustment to allowance for loan losses recognized for financial
statement purposes not currently recognized for tax purposes 613 - -
Expenses recorded for financial statement purposes not yet deductible
for tax purposes (1,144) (787) (1,158)
Increase (decrease) in deferred income taxes attributable to
realization (recognition) of net operating loss carryforward - 1,781 (1,996)
Fidelity bond carrier recoveries recorded for financial statement
purposes on the accrual basis and recorded on a cash basis
for tax (709) 4,270 -
Change in the beginning of the year balance of the valuation
allowance for deferred tax assets (963) - -
Adjustment to deferred tax assets and liabilities for enacted
changes in the tax laws and rates (60) - -
Other-net (442) (584) (289)
---------- ---------- ----------
Total-net $(2,803) $ 1,775 $(4,480)

At December 31, 1991, BankAtlantic had a net operating loss carryforward
for federal income tax purposes of approximately $5.2 million which would have
expired in 2006. All 1991 net operating loss carryforwards were utilized
during the year ended December 31, 1992.
At December 31, 1991, BankAtlantic had a net operating loss carryforward
for state income tax purposes of approximately $21.6 million of which
approximately $1.6 million expire in 1999, $4.7 million expire in 2003, $8.5
million expire in 2004, and $6.8 million expire in 2006. All state net
operating loss carryforwards were utilized during the year ended December 31,
1992.
On August 12, 1993, President Clinton signed the Omnibus Budget
Reconciliation Act of 1993 (the "Omnibus Act"). The most significant change
to be implemented by the 1993 Omnibus Act, as it relates to BankAtlantic, is
to increase the highest corporate rate from 34% to 35% retroactively to
January 1, 1993. The impact on BankAtlantic's Consolidated Statement of
Earnings at the enactment date was to increase the provision for income taxes
by approximately $175,000.

14. Pension Plan

BankAtlantic sponsors a non-contributory defined benefit pension plan
(the "Plan") covering substantially all of its employees. The benefits are
based on years of service and the employee's average earnings received during
the highest five consecutive years out of the last ten years of employment.
The funding policy is to contribute an amount not less than the ERISA minimum
funding requirement nor more than the maximum tax-deductible amount under
Internal Revenue Service rules and regulations. No contributions were made to
the Plan during the three years ended December 31, 1993.
Plan assets consist generally of fixed income investment securities, corporate
equities and cash equivalents as of the most recent reporting date.

The following table sets forth the Plan's funded status and amounts
recognized in BankAtlantic's Statements of Financial Condition:

December 31
------------------------------
1993 1992
------------- -----------
(In thousands)
------------------------------
Actuarial present value of accumulated benefit
obligation, including vested benefits of
$9,093 and $6,225 $ (9,555) $ (6,561)
--------------- -----------
Actuarial present value of projected benefit
for service rendered to date (12,609) (8,882)
Plan assets at fair value 11,362 11,002
Plan assets in excess (below) projected benefit --------------- -----------
obligation (1,247) 2,120
Unrecognized net loss from past experience
different from that assumed and effects
of changes in assumptions 4,805 1,694
Prior service cost not yet recognized in net
periodic pension cost (95) (11)

Unrecognized net asset at October 1, 1987 being
recognized over 15 years (2,344) (2,612)
--------------- -----------
Prepaid pension cost included in other assets $ 1,119 $ 1,191
=============== ===========

Net pension cost includes the following components:

For the Years Ended
December 31,
-----------------------------------
1993 1992 1991
--------- ---------- ----------
Service cost benefits earned during
the period $ 594 $ 610 $ 602
Interest cost on projected benefit
obligation 714 642 612
Actual return on plan assets (793) (325) (890)
Net amortization and deferral (442) (1,006) (224)
Curtailment gain - - (351)
--------- ---------- ----------
Net period pension benefit $ 73 $ (79) $ (251)
========= ========== ==========

During the year ended December 31, 1991, BankAtlantic reduced its work
force resulting in a pension curtailment gain of $351,000.

The assumptions used in accounting for the Plan were:

1993 1992 1991
--------- -------- -------
Weighted average discount rate 7.00% 8.25% 8.25%

Rate of increase in future compensation levels 4.00% 5.00% 5.00%

Expected long-term rate of return(1) 9.50% 9.50% 9.50%
======== ======== =======

(1) The expected long-term rate of return has been adjusted during 1994 to
9.00%.

BankAtlantic sponsors a defined contribution plan ("401k Plan") for all
employees that have completed six months of service. Employees can contribute
up to 14% of their salary, not to exceed $8,994 at December 31, 1993. For
employees that fall within the highly compensated criteria, maximum
contributions are 8% of salary. During part of 1991, BankAtlantic matched
employee contributions based on employee's salary and BankAtlantic's profits.
Effective October 1991, BankAtlantic's 401k Plan was amended to include only a
discretionary match as deemed appropriate by the Board of Directors. In
November 1993 and 1992, the Board of Directors declared discretionary matches
in the aggregate amount of approximately $60,000 and $40,000, respectively to
be paid during March 1994 and 1993 to participants of record as of December
31, 1993 and 1992. Included in employee compensation and benefits on the
consolidated statement of operations was $72,000 and $52,000 and $113,000 of
expenses related to the 401k Plan for the years ended December 31, 1993, 1992
and 1991, respectively.

15. Commitments and Contingencies

BankAtlantic is lessee under various operating leases for real estate
and equipment extending to the year 2072. The approximate minimum rental
under such leases, at December 31, 1993, for the periods shown was (in
thousands):

Year Ending December 31, Amount
-----------------
1994 $ 1,400
1995 1,083
1996 646
1997 247
1998 199
Thereafter 2,970
-----------------
Total $ 6,545
=================

Rental expense for premises and equipment was $2.3 million, $3.5 million
and $4.6 million for the years ended December 31, 1993, 1992 and 1991,
respectively. Included in other liabilities at December 31, 1993 and 1992, is
an allowance of $400,000 and $740,000, respectively, for future rental
payments on closed branches.
During the ordinary course of business, BankAtlantic and its
subsidiaries are involved as plaintiff or defendant in various lawsuits.
Management, based on discussions with legal counsel, is of the opinion that no
significant loss will result from these actions.
BankAtlantic is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby and documentary letters of credit. Those instruments involve, to
varying degrees, elements of credit risk in excess of the amount recognized in
the statement of financial position. BankAtlantic's exposure to credit loss
in the event of nonperformance by the other party to the financial instrument
for commitments to extend credit and standby letters of credit written is
represented by the contractual amount of those instruments. BankAtlantic uses
the same credit policies in making commitments and conditional obligations as
it does for on-balance-sheet instruments.

Financial instruments with off-balance sheet risk were (in thousands) :

December 31,
----------------------
1993 1992
----------- ---------
Commitments to extend credit, including the
undisbursed portion of loans in process $ 77,509 $ 32,834

Standby and documentary letters of credit $ 3,898 $ 7,154

Commitments to purchase mortgage-backed securities $ 10,000 $ 80,000

Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. BankAtlantic evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained if deemed necessary by BankAtlantic upon extension of credit is based
on management's credit evaluation of the counter-party. Collateral held
varies but may include first mortgages on commercial and residential real
estate. As part of the commitment for standby letters of credit, BankAtlantic
is required to collateralize 120% of the commitment balance with mortgage-
backed securities. At December 31, 1993, $7.5 million of mortgage-backed
securities were pledged against the commitment balance.

Standby letters of credit written are conditional commitments issued by
or for the benefit of BankAtlantic to guarantee the performance of a customer
to a third party. Those guarantees are primarily issued to support public and
private borrowing arrangements. The credit risk involved in issuing letters
of credit is essentially the same as that involved in extending loan
facilities to customers. BankAtlantic may hold certificates of deposit and
residential and commercial liens as collateral supporting those commitments
which are collateralized similar to other types of borrowings.
BankAtlantic is required to maintain average reserve balances with the
Federal Reserve Bank. Such reserves consisted of cash and amounts due from
banks of $9.4 million and $15.3 million at December 31, 1993 and 1992,
respectively.
BankAtlantic is a member of the FHLB system. As a member, BankAtlantic
is required to purchase and hold stock in the FHLB of Atlanta, in amounts at
least equal to the greater of (i) 1% of its aggregate unpaid residential
mortgage loans, home purchase contracts and similar obligations at the
beginning of each year or (ii) 5% of its outstanding advances from the FHLB of
Atlanta. As of December 31, 1993, BankAtlantic was in compliance with this
requirement with an investment of approximately $8.7 million in stock of the
FHLB of Atlanta.

16. Regulatory Matters

The Financial Institutions Reform Recovery and Enforcement Act of 1989
(FIRREA) was signed into law on August 9, 1989, and FIRREA's regulations for
savings institutions' minimum capital requirements went into effect on
December 7, 1989. The regulations require savings institutions to have
minimum regulatory tangible capital equal to 1.5% of adjusted total assets, a
minimum 3% core capital ratio and a minimum 8.0% risk-based capital ratio.
Among other things, the ability to include investments in impermissible
activities in core and tangible capital will be phased out by July 1, 1994.

At December 31, 1993, BankAtlantic's regulatory capital position was
(unaudited):
Tangible Core Risk-Based
Capital Capital Capital
------------- ----------- ----------
GAAP stockholders' equity $ 90,652 $ 90,652 $ 90,652
Adjustments:
Non-includable subsidiaries (642) (642) (642)
Additional capital:
Allowable allowances for loans
and tax certificates - - 9,035
------------- ----------- ----------
Regulatory capital 90,010 90,010 99,045
Minimum capital requirement 20,378 40,757 59,176
------------- ----------- ----------
Regulatory capital excess $ 69,632 $ 49,253 $ 39,869
============= =========== ==========

Regulatory capital as a percent of
adjusted total assets:
Required 1.50% 3.00% 8.00%
============= =========== ==========
Actual 6.63% 6.63% 13.40%
============= =========== ==========

In addition, savings institutions are also subject to the provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
which was signed into law on December 19, 1991. Regulations implementing the
prompt corrective action provisions of FDICIA became effective on December 19,
1992. In addition to the prompt corrective action requirements, FDICIA
includes significant changes to the legal and regulatory environment for
insured depository institutions, including reductions in insurance coverage
for certain kinds of deposits, increased supervision by the federal regulatory
agencies, increased reporting requirements for insured institutions, and new
regulations concerning internal controls, accounting and operations.

The FDICIA requires financial institutions to take certain actions relating
to their internal operations, including: providing annual reports on
financial condition and management to the appropriate Federal banking
regulators, having an annual independent audit of financial statements
performed by an independent public accountant, and establishing an independent
audit committee comprised solely of outside directors. The FDICIA also
imposes certain operational and managerial standards on financial institutions
relating to internal controls, loan documentation, credit underwriting,
interest rate exposure, asset growth and compensation, fees, and benefits.
The prompt corrective action regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in
declining order, are "well capitalized," "adequately capitalized,"
"undercapitalized" "significantly undercapitalized", and "critically
undercapitalized." Institutions categorized as "undercapitalized" or worse
are subject to certain restrictions, including requirements to file a capital
plan with the OTS, prohibitions on the payment of dividends and management
fees, restrictions on executive compensation, and increased supervisory
monitoring, among other things. Other restrictions may be imposed on the
institution either by the OTS or by the FDIC, including requirements to raise
additional capital, sell assets, or sell the entire institution. Once an
institution becomes "critically undercapitalized" it is generally placed in
receivership or conservatorship within 90 days.
To be considered "well capitalized," a savings institution must generally
have a core capital ratio of at least 5%, a Tier 1 risk-based capital ratio of
at least 6%, and a total risk-based capital ratio of at least 10%. An
institution is deemed to be "critically undercapitalized" if it has a tangible
equity ratio of 2% or less. At December 31, 1993 BankAtlantic's core, Tier 1
risk-based and total risk based capital ratios were 6.63%, 12.18% and 13.40%,
respectively, thus, meeting the requirements of "well capitalized"
(unaudited).
The payment of dividends by BankAtlantic is limited by federal regulations.
Effective August 1, 1990, the OTS adopted a new regulation that limits all
capital distributions made by savings institutions, including cash dividends,
by permitting only certain institutions that meet specified capital levels to
make capital distributions without prior OTS approval. The regulation
established a three-tiered system, with the greatest flexibility afforded to
well-capitalized institutions. An institution that meets all of its fully
phased-in capital requirements and is not in need of more than normal
supervision would be a "Tier 1 Institution." An institution that meets its
minimum regulatory capital requirements but does not meet its fully phased-in
capital requirements would be a "Tier 2 Institution." An institution that
does not meet all of its minimum regulatory capital requirements would be a
"Tier 3 Institution." A Tier 1 Institution may, after prior notice, but
without the approval of the OTS, make capital distributions during a calendar
year up to 100% of net income earned to date during the current calendar year
plus 50% of its capital surplus ("Surplus" being the amount of capital over
its fully phased-in capital requirement). Any additional capital
distributions would require prior regulatory approval. A Tier 2 institution
may, after prior notice, but without the approval of the OTS, make capital
distributions of between 50% and 75% of its net income over the most recent
four-quarter period (less any dividends previously paid during such four-
quarter period) depending on how close the institution is to its fully phased-
in risk-based capital requirement. A Tier 3 Institution would not be
authorized to make any capital distributions without the prior approval of the
OTS. Notwithstanding the provision described above, the OTS also reserves the
right to object to the payment of a dividend on safety and soundness grounds.
In August and December, 1993, BankAtlantic declared cash dividends of $0.06
per share (totaling $0.12 per share), payable September 1993 and January 1994,
respectively, to its common stockholders. A 15% common stock dividend was
declared in May, 1993. BankAtlantic expects to continue dividend payments on
its non-cumulative preferred stock. In March 1994, the Board of Directors
declared a cash dividend of $.06 per share payable in April 1994 to its common
stockholders.
On April 16, 1991, BankAtlantic voluntarily entered into a Supervisory
Agreement ("Agreement") with the OTS. The Agreement required BankAtlantic to
implement additional policies and reporting procedures relating to the
internal operations of BankAtlantic within specified time frames, and to
particularly address concerns relating to classified assets, general valuation
allowances and the policies, procedures, information reporting and guidelines
in the consumer loan department. Furthermore, BankAtlantic has agreed it will
not increase the level of its consumer loans above its April 16 1991 level of
consumer loans until such time as BankAtlantic's new consumer lending policy
is deemed acceptable by the OTS. BankAtlantic believes that it has addressed
the requirements of the agreements and that it is in compliance with such
agreements. BankAtlantic does not believe that the terms and conditions of
the agreements will have any material adverse effect on its anticipated
business or that they will materially effect BankAtlantic's relationships with
its customers or depositors and accordingly, should not have any significant
effect on its financial condition and results of operations.

17. Subject Portfolio

From 1987 through 1990, BankAtlantic purchased in excess of $50 million of
indirect home improvement loans from certain dealers, primarily in the
northeastern United States. BankAtlantic ceased purchasing loans from such
dealers in the latter part of 1990. These dealers are affiliated with each
other but are not affiliated with BankAtlantic. In connection with loans
originated through these dealers, BankAtlantic funded amounts to the dealers
as a dealer reserve. Such loans and related dealer reserves are hereafter
referred to as the "Subject Portfolio." The risk of amounts advanced to the
dealers is primarily associated with loan performance but secondarily is
dependent on the financial condition of the dealers. The dealers were to be
responsible to BankAtlantic for the amount of the reserve only if the loan
giving rise to the reserve became delinquent or was prepaid. These dealers
have currently not indicated any financial ability to fund the dealer reserve.
In late 1990, questions arose relating to the practices and procedures used
in the origination and underwriting of the Subject Portfolio, which suggested
that the dealers, certain home improvement contractors and borrowers engaged
in practices intended to defraud BankAtlantic. Due to these questions and
potential exposure, BankAtlantic performed, and continues to perform, certain
investigations, notified appropriate regulatory and law enforcement agencies,
and notified its fidelity bond carrier. After an initial review and
discussions with the carrier, BankAtlantic concluded that any losses sustained
from the Subject Portfolio would adequately be covered by its fidelity bond
coverage and, in fact, on August 13, 1991, the carrier advanced $1.5 million
against BankAtlantic's losses. This payment and future payments by the
carrier were to be subject to identification and confirmation of the losses
which are appropriately covered under the fidelity bond.
Subsequently, commencing in September, 1991, as a consequence of issues
raised by the carrier, BankAtlantic reviewed the Subject Portfolio without
regard to the availability of any fidelity bond coverage. As a result of the
review, the provision for loan losses for the year ended December 31, 1991 was
increased by approximately $5.7 million, approximately $5.5 million of loans
were charged off, and $2.7 million of dealer reserves were charged to current
operations. On December 20, 1991, the carrier denied coverage and
BankAtlantic thereafter filed an appropriate action against the carrier.
On October 30, 1992, BankAtlantic and the carrier entered into the Covenant
Not To Execute (the "Covenant"). Pursuant to the Covenant, BankAtlantic will
continue to pursue its litigation against the carrier, which is currently in
the early stages of discovery, but has agreed to limit execution on any
judgement obtained against the carrier to $18 million. Further, BankAtlantic
agreed to join certain third parties as defendants in that action. The
carrier paid BankAtlantic $6.1 million during the fourth quarter of 1992 and
paid an additional $3 million in November 1993, and has agreed to pay an
additional $2.9 million in November 1994. Such amounts related to losses and
expenses previously charged to operations by BankAtlantic. Additional
reimbursements are made on a quarterly reporting basis commencing with the
period ended December 31, 1992. Reimbursable amounts are as defined in the
Covenant. Based upon such definitions BankAtlantic has and will continue to
record estimated charges to operations in advance of when such charges become
reimbursable. Amounts to be reimbursed will be reflected in the period for
which reimbursement is requested. Through December 31, 1993, the carrier has
paid or committed to pay approximately $15.4 million. The 1993 and 1994
committed amounts noted above have been accrued after imputing interest at 9%.
The financial statement effect of the Covenant for the fourth quarter and year
ended December 31, 1992 was to reduce expenses by $3.3 million, increase
interest income by $1.9 million and to record $7.3 million of loan loss
recoveries. The financial statement effect of the Covenant for 1993 was to
reduce expenses by $942,000, to increase interest income by $757,000 and
record $972,000 of loan loss recoveries. Included in other assets was a $3.3
million receivable due from the carrier at December 31, 1993. In no event
will the carrier be obligated to pay BankAtlantic in the aggregate more than
$18 million. However, in the event of recovery by BankAtlantic of damages
from third party wrongdoers, BankAtlantic will be entitled to retain such
amounts until such amounts, plus any payments received from the carrier equal
to $22 million. Thereafter, the carrier will be entitled to any such
recoveries to the extent of its payments to BankAtlantic. To the extent that
BankAtlantic incurs losses in excess of $18 million plus available recoveries
from third parties, BankAtlantic will be required to absorb any such losses.
At December 31, 1993, the remaining amount of reimbursement available from the
carrier was approximately $2.6 million. BankAtlantic does not currently
anticipate that the aggregate losses in the Subject Portfolio will exceed $18
million. BankAtlantic also agreed to exercise reasonable collection
activities with regard to the Subject Portfolio and to provide the carrier
with a credit for any recoveries with respect to such loans against future
losses that the carrier would otherwise be obligated to reimburse.
The balance of the loans and dealer reserve associated with the Subject
Portfolio amounted to approximately $24.4 million and zero at December 31,
1993, and $29.9 million and $2.5 million at December 31, 1992, respectively.
At December 31, 1993, 10% of the loans were secured by collateral in South
Florida and 90% of such loans were secured by collateral in the northeastern
United States. Collateral for these loans in generally a second mortgage on
the borrower's property. However, it appears that in most cases, the property
is encumbered with loans having high loan to value ratios. Although as
indicated above, the dealer reserves are not collateralized, the risk relating
to amounts advanced to the dealers are primarily associated with loan
performance. Loans in the "Subject Portfolio" are charged-off if payments are
more than 90 days delinquent.
Related to the above are suits filed in New Jersey and New York. The New
Jersey action seeks civil remedies against certain contractors and a dealer
and also seeks to cancel or modify certain mortgage loans. BankAtlantic had
purchased individual loans from the named dealer and such purchased loans
include loans for which a named contractor is listed as providing home
improvements. While BankAtlantic is not a party to that action, a status
conference was held in December 1993 which indicated that discovery is to be
completed by May 1994 and BankAtlantic must determine by April 1994 whether to
intervene in the action. The New York action purports to be a class action
against over 25 individuals and entities, including BankAtlantic. The named
plaintiffs purport to also represent other unnamed plaintiffs that may have
obtained loans from dealers who subsequently sold such loans to BankAtlantic.
Plaintiffs base their claims on various grounds and seek, among other things,
rescission of the loan agreements, damages, punitive damages, costs, attorney
fees, penalties under the truth in lending act and treble damages under RICO.
The plaintiffs' Motion to Certify the Class was made in November, 1993. The
court has not yet ruled on this motion.

18. Selected Quarterly Results (Unaudited)

The following tables summarize the quarterly results of operations for the
years ended December 31, 1993 and 1992 (in thousands except per share data):

First Second Third Fourth
1993 Quarter Quarter Quarter Quarter Total
----------- ---------- ------------ ------------ ---------
Interest income $ 24,636 $ 23,941 $ 23,318 $ 22,608 $ 94,503
Interest expense 9,760 9,157 8,548 8,522 35,987
------------ ---------- ------------ ------------ ---------
Net interest income $ 14,876 $ 14,784 $ 14,770 $ 14,086 $ 58,516
Provision for loan losses $ 1,614 $ 674 691 471 3,450
------------ ---------- ------------ ------------ ---------
Net interest income after provision
for loan losses $ 13,262 $ 14,110 $ 14,079 $ 13,615 $ 55,066
------------ ---------- ------------ ------------ ---------
Income before income taxes $ 4,802 $ 5,512 $ 6,950 $ 5,907 $ 23,171
------------ ---------- ------------ ------------ ---------
Net income $ 3,032 $ 4,886 $ 4,147 $ 4,013 $ 16,078
============ ========== ============ ============ =========
Income per common and common
equivalent share $ .58 $ .79 $ .65 $ .60 $ 2.52
------------ ---------- ------------ ------------ ---------
Income per common and common
equivalent share assuming full
dilution $ .49 $ .79 $ .65 $ .60 $ 2.51
------------ ---------- ------------ ------------ ---------
Weighted average number of common
and common equivalent shares
outstanding 4,805,397 5,952,312 6,023,554 6,362,486 6,054,402
------------ ---------- ------------ ------------ ---------
Weighted average number of common
and common equivalent shares
outstanding assuming full
dilution 5,897,467 5,952,312 6,028,324 6,362,486 6,091,800
------------ ---------- ------------ ------------ ---------

During the second quarter, BankAtlantic settled a claim with the IRS
relating to net operating loss carrybacks and previous Federal income tax
examinations through 1988, resulting in an increase in other interest income
of $587,000 and a reduction in the provision for income taxes of $1.4 million.
The weighted average number of common and common equivalent shares
outstanding during the first quarter of 1993 were not restated to reflect the
exercise of warrants by BFC.

First Second Third Fourth
1992 Quarter Quarter Quarter Quarter Total
----------- ---------- ----------- ----------- ----------
Interest income $ 30,617 $ 29,674 $ 29,747 $ 26,711 $ 116,476
Interest expense 16,141 14,617 13,659 11,150 55,567
----------- ---------- ----------- ----------- ----------
Net interest income $ 14,476 $ 15,057 $ 15,815 $ 15,561 $ 60,909
Provision for (recovery from) loan losses $ 3,603 $ 4,078 $ 2,797 $ (3,828) $ 6,650
---------- ---------- ----------- ----------- ----------
Net interest income after provision for
(recovery from) loan losses $ 10,873 $ 10,979 $ 13,018 $ 19,389 $ 54,259
---------- ---------- ----------- ----------- ----------
Income before income taxes $ 1,203 $ 1,353 $ 2,621 $ 19,316 $ 24,493
---------- ---------- ----------- ----------- ----------
Net income $ 808 $ 908 $ 1,751 $ 12,581 $ 16,048
========== ========== =========== =========== ==========
Income per common and common equivalent
share $ .12 $ .15 $ .33 $ 2.62 $ 3.23
---------- ---------- ----------- ----------- ----------
Income per common and common equivalent
share assuming full dilution $ .11 $ .13 $ .29 $ 2.18 $ 2.79
---------- ---------- ----------- ----------- ----------
Weighted average number of common and
common equivalent shares outstanding 4,681,629 4,684,138 4,684,267 4,726,362 4,694,099
---------- ---------- ----------- ----------- ----------
Weighted average number of common and
common equivalent shares outstanding
assuming full dilution 5,161,781 5,304,746 5,450,726 5,682,086 5,440,798
---------- ---------- ----------- ----------- ---------

During the fourth quarter, BankAtlantic sold approximately $115.4 million
of mortgage-backed securities at a gain of $5.2 million. Additionally,
BankAtlantic recovered $3.3 million in expenses, recorded loan loss recoveries
of $7.3 million and increased interest income by $1.9 million for
circumstances relating to the Subject Portfolio and the Covenant discussed in
Note 17. Also during the fourth quarter, BankAtlantic recorded a $756,000
($.16 and $.14 per share for primary and fully diluted income per share,
respectively) extraordinary gain from the utilization of state net operating
loss carryforwards.

19. Other Information

On November 14, 1991, BFC increased its common stock ownership in
BankAtlantic to 72.50% by acquiring in the open market an additional 115,000
shares of BankAtlantic common stock at a per share price of $.76. The
increase in ownership was subject to all regulatory approvals which have been
received. As further discussed in Note 11, BFC increased its common stock
ownership in BankAtlantic to 77.83% at June 30, 1993 and subsequently, in
November 1993, sold 1.4 million shares of BankAtlantic common stock to
decrease their ownership percentage to 48.17% at December 31, 1993.
The Chairman and President of BFC is Alan B. Levan, who also serves as the
Chairman and Chief Executive Officer of BankAtlantic. John E. Abdo, a
director of BFC, is the Vice Chairman of BankAtlantic and Chairman and
President of BankAtlantic Development Corporation, a wholly owned subsidiary
of BankAtlantic.
BankAtlantic is exploring the formation of a holding company which will own
100% of BankAtlantic's common stock. Any such formation would be subject to
shareholder approval and would generally involve a shareholder exchanging
their shares of BankAtlantic for shares in the new entity. At the time of any
such exchange, a shareholder's proportionate ownership position in the new
entity would be equal to the proportionate interest previously held in
BankAtlantic. BFC has indicated that it would vote in favor of this type of
shareholder proposal.

20. Investments In and Advances To Joint Ventures

BankAtlantic, through its wholly-owned subsidiary, BankAtlantic Development
Corporation ("BDC"), has non-consolidated equity interests ranging from 35% to
50% in joint ventures engaged primarily in the acquisition, development and
construction of various real estate projects. By December 31, 1991, all
development and construction activities had been completed and the remaining
real estate of the ventures consists of single family homes and lots held for
sale. Included in "Other Assets" in the consolidated statement of condition
is $1.2 million of investments and advances to joint ventures at December 31,
1993 and 1992, respectively.

Summarized combined financial information (unaudited) of the joint ventures
was (in thousands):

December 31
------------------------------
1993 1992
------------- -------------
Condensed Statements of Financial Condition
Assets:
Cash $ 864 $ 298
Real estate held for sale 313 1,014
Other assets 249 104
------------- -------------
Total income $ 1,426 $ 1,416
============= =============
Liabilities and partners' equity:
Loans and notes payable $ 1,264 $ 1,269
Accounts payable and other liabilities 448 378
Partners' (deficit) equity (286) (231)
------------- -------------
Total $ 1,426 $ 1,416
============= =============

For the Years Ended
December 31,
-----------------------------------
1993 1992 1991
--------- ---------- ----------
Condensed Statements of Operations
Income:
Sales $ 721 $ 160 $ 47,527
Cost of sales 725 162 40,983
--------- ---------- ----------
Net (loss) gain on sales (4) (2) 6,544
Interest and other income 87 90 2,208
--------- ---------- ----------
Total income 83 88 8,752
--------- ---------- ----------
Expenses:
Interest expense 73 84 1,433
Other expense 65 198 2,531
--------- ---------- ----------
Total expenses 138 282 3,964
--------- ---------- ----------
Net (loss) income $ (55) $ (194) $ 4,788
========= ========== ==========

Included in loans and notes payable above as of December 31, 1993 and 1992,
respectively, was $1.0 million due to BankAtlantic. These loans are included
with "Investments In and Advances To Joint Ventures" in BankAtlantic's
financial statements. During 1991, two joint venture projects were sold for
gains of $1.9 million and $1.2 million. Proceeds from the sales reduced the
investments in and advances to joint ventures by approximately $8.4 million in
1991.
During 1992, BDC established a $250,000 allowance account against its
investment in the remaining properties, of which a balance of $182,000
remained at December 31, 1993. Such amount is included in (income) loss from
joint venture investments in BankAtlantic's Consolidated Statement of
Operations, but is not in the condensed statement of the ventures due to a
dispute and related litigation with the joint venture partners.

21. Estimated Fair Value of Financial Instruments

The information set forth below provides disclosure of the estimated fair
value of BankAtlantic's financial instruments presented in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" (FAS 107) issued by
the FASB.
Management has made estimates of fair value discount rates that it believes
to be reasonable. However, because there is no market for many of these
financial instruments, management has no basis to determine whether the fair
value presented would be indicative of the value negotiated in an actual sale.
BankAtlantic's 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 such as commercial,
commercial real estate, residential mortgage, second mortgages, and other
installment. 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, except residential mortgage and
adjustable rate loans, is calculated by discounting scheduled cash flows
through the estimated maturity using estimated market discount rates that
reflect the credit and interest rate risk inherent in the loan. 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. For
performing residential mortgage loans, fair value is estimated by discounting
contractual cash flows adjusted for national historical prepayment estimates
using discount rates based on secondary market sources adjusted to reflect
differences in servicing and credit costs.
For adjustable rate loans, the fair value is estimated at book value after
adjusting for credit risk inherent in the loan. BankAtlantic's interest rate
risk is considered insignificant since the majority of BankAtlantic's
adjustable rate loans are based on prime rates or one year Constant Maturity
Treasuries ("CMT") rates and adjust monthly or generally not greater than one
year.
Fair values of non-performing loans are based on the assumption that non-
performing loans are on a non-accrual status discounted at market rates during
a 24 month work-out period. Assumptions regarding credit risk are
judgementally determined using available market information and specific
borrower information.
The fair value of tax certificates and other investment securities is
calculated by discounting estimated cash flows using estimated market discount
rates that reflect the credit and interest rate risk inherent in the
investment. Tax certificates do not have stated maturities. Estimated cash
flows were based on BankAtlantic's historical experience, modified by current
economic conditions.
Fair value of mortgage-backed securities is estimated based on bid prices
available from security dealers.
Under FAS 107, 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 equal to the amount payable on demand at
December 31, 1993. The fair value of certificates of deposit is based on the
discounted value of contractual cash flows. The discount rate is estimated
using alternative borrowing rates adjusted for maintenance and insurance
costs.
The book value of securities sold under agreements to repurchase
approximates market value. The fair values of advances from FHLB, capital
notes and other subordinated debentures were based upon comparable terms to
maturity, interest rates and issuer credit standing.
The following table presents information for BankAtlantic's financial
instruments at December 31, 1993 and 1992 (in thousands):

December 31,
-----------------------------------------------------------------
1993 1992
-----------------------------------------------------------------

Carrying Fair Carrying Fair
Amount Value Amount Value
------------ -------------- ------------- ------------
Financial assets:
Cash and due from depository
institutions $ 36,351 $ 36,351 $ 31,208 $ 31,208
Mortgage-backed securities 526,365 540,918 487,494 498,995
Tax certificates and other investment
securities 97,701 97,674 120,424 122,288
Loans receivable 595,887 606,772 556,662 581,292

Financial liabilities:
Deposits $ 1,076,360 $ 1,087,382 $ 1,108,115 $ 1,118,194
Securities sold under agreements to
repurchase 21,135 21,130 21,532 21,532
Capital notes and other subordinated
debentures - - 9,524 10,168
Advances from Federal Home Loan Bank 128,300 128,722 66,100 66,921
============= ============== ============== ============

The contract amount and related fees of BankAtlantic's commitments to
extend credit, standby letters of credit, and financial guarantees
approximates fair value (see Note 16 for the contractual amounts of
BankAtlantic's financial instrument commitments).

BankAtlantic, A Federal Savings Bank and Subsidiaries

ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Data
December 31,
-------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
(In thousands)
Statement of Financial Condition:
Total assets $1,359,195 1,303,071 1,455,822 1,896,587 1,886,453
Loans receivable-net 595,887 556,662 728,515 964,863 1,116,313
Mortgage-backed securities 526,365 487,494 460,780 439,509 461,406
Tax certificates and other
investment securities,
net (1) 97,701 120,424 109,076 115,763 142,057
Purchased mortgage
servicing rights and
other intangibles 19,833 7,655 6,748 4,663 4,067
Deposits 1,076,360 1,108,115 1,255,513 1,455,967 1,430,219
Advances from FHLB and
securities sold under
agreements to repurchase 149,435 87,632 94,332 309,879 329,875
Total stockholders' equity $ 90,652 66,165 50,997 53,230 57,977
========= ========= ========= ========= =========

For the Years Ended December 31,
------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
(In thousands, except share data)
Statement of Operations Data:
Total interest income $ 94,503 116,476 145,532 175,979 192,453
Total interest expense 35,987 55,567 90,998 127,718 149,451
--------- --------- --------- --------- ---------
Net interest income 58,516 60,909 54,534 48,261 43,002
Provision for loan losses 3,450 6,650 17,540 17,655 5,350
--------- --------- --------- --------- ---------
Net interest income after
provision for loan losses 55,066 54,259 36,994 30,606 37,652
--------- --------- --------- --------- ---------
Non-interest income:
Loan servicing and
other loan fees 2,080 3,189 4,344 4,188 3,409
Gain on sales of loans and
mortgage-backed securities 1,246 6,702 1,078 6,727 1,589
Gain (loss) on sales of
investment securities 0 143 62 (151) (282)
Other 8,265 7,337 8,622 7,772 7,747
--------- --------- --------- --------- ---------
Total non-interest income 11,591 17,371 14,106 18,536 12,463
--------- --------- --------- --------- ---------
Non-interest expenses:
Employee compensation
and benefits 19,617 19,202 24,062 26,254 26,745
Occupancy and equipment 8,417 8,864 10,626 11,218 10,659
Federal insurance premium 2,750 2,772 3,281 2,883 3,060
Advertising and promotion 960 480 1,143 2,498 2,728
(Income) loss from joint
venture investments 25 245 (2,335) 897 819
Foreclosed asset
activity-net 1,243 4,323 8,922 1,704 1,049
Other 10,474 11,251 19,465 12,887 13,881
--------- --------- --------- --------- ---------
Total non-interest expense 43,486 47,137 65,164 58,341 58,941
--------- --------- --------- --------- ---------
Income (loss) before income
taxes and extraordinary
items 23,171 24,493 (14,064) (9,199) (8,826)
Provision (benefit) for
income taxes 7,093 9,201 (4,841) (1,952) (2,941)
--------- --------- --------- --------- ---------
Income (loss) before
extraordinary items 16,078 15,292 (9,223) (7,247) (5,885)
Extraordinary items net
of taxes - 756 660 - 2,331
--------- --------- --------- --------- ---------
Net Income (loss) $ 16,078 16,048 (8,563) (7,247) (3,554)
========= ========= ========= ========= =========
Income (loss) per
common and common
equivalent share:
Income (loss) before
extraordinary items $ 2.52 3.07 (2.12) (1.64) (1.60)
Extraordinary items - 0.16 0.14 - 0.63
--------- --------- --------- --------- ---------
Net income (loss) $ 2.52 3.23 (1.98) (1.64) (0.97)
========= ========= ========= ========= =========

Actual common shares
outstanding at year end 6,478,605 4,681,628 4,681,628 4,676,750 4,135,320
========= ========= ========= ========= =========

Weighted average number of
common and common
equivalent shares
outstanding 6,054,402 4,694,099 4,680,439 4,409,743 3,669,019
========= ========= ========= ========= =========

Income per common and
common equivalent share
assuming full dilution:
Income before
extraordinary items $ 2.51 2.65 N/A N/A N/A
Extraordinary items - 0.14 N/A N/A N/A
--------- --------- --------- --------- ---------
Net income $ 2.51 2.79 N/A N/A N/A
========= ========= ========= ========= =========

Weighted average number of
common and common
equivalent shares assuming
full dilution 6,091,800 5,440,798 N/A N/A N/A
========= ========= ========= ========= =========

BankAtlantic, A Federal Savings Bank and Subsidiaries

SELECTED CONSOLIDATED FINANCIAL DATA

Years Ended December 31,
----------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
Other Financial and Statistical Data:
Performance Ratios:
Income (loss) on
average assets (5) 1.25 % 1.10 % (0.57)% (0.38)% (0.29)%
Income (loss) on
average equity (5) 21.32 % 27.09 % (16.36)% (12.48)% (10.26)%
Dividend payout percent (6) 4.78 % N/A N/A N/A N/A
Average equity to average
assets 5.85 % 4.07 % 3.51 % 3.08 % 2.81 %
Interest rate margin
during period 4.90 % 4.78 % 3.71 % 2.76 2.24 %
Average yield on loans,
mortgage-backed securities,
tax certificates, and
investment securities 7.95 % 9.14 % 9.89 % 10.05 % 10.05 %
Average cost of deposits
and borrowings 3.18 % 4.45 % 6.24 % 7.41 % 8.01 %
Net interest spread (7)
- during period 4.77 % 4.69 % 3.65 % 2.64 % 2.04 %
Net interest spread (7)
- end of period 4.36 % 4.63 % 4.28 % 2.80 % 2.32 %
Operating expenses as a
percent of net interest
income plus non-interest
income 62.03 % 60.22 % 94.94 % 87.34 % 106.27 %
Asset quality ratios:
Non-performing assets as
a percent of total loans
and real estate owned 3.21 % 4.59 % 4.80 % 4.36 % 1.79%
Charge-offs as a percent
of total loans 0.73 % 2.21 % 2.81 % 0.88 % 0.51%
Loan loss allowance as a
percent of total loans 2.77 % 2.88 % 1.85 % 1.61 % 0.52%
Loan loss allowance as a
percent of non-performing
loans 173.01 % 142.93 % 95.26 % 88.31 % 71.81%
Non-performing loans as a
percent of total loans 1.60 % 2.01 % 1.94 % 1.82 % 0.72%
Non-performing assets as a
percent of total assets 1.47 % 2.07 % 2.52 % 2.31 % 1.08%
Ratio of earnings
to fixed charges: (8)
Including interest on deposits 1.64 1.44 0.85 0.93 0.94
Excluding interest on deposits 6.53 4.00 (0.82) 0.71 0.79
Dollar deficiency of earnings
to fixed interest
charges (000's omitted) $ - $ - $ 14,064 $ 9,199 $ 8,826
Number of:
Offices (all full-service) 31 31 34 46 46
Deposit accounts 113,459 120,558 144,942 165,486 175,547
Total loans 19,163 27,761 36,936 46,218 42,926
======= ======= ======= ======= =======
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

General

BankAtlantic commenced operations in 1952 as Atlantic Federal Savings and
Loan Association, a federally chartered mutual savings and loan association;
converting to a stock association in 1983. In 1987, BFC Financial Corporation
acquired control of BankAtlantic. From 1952 to 1987, BankAtlantic operated as
a traditional savings and loan association. During the periods ended December
31, 1987 and 1988, BankAtlantic had a thin capital base (with a surplus of
only $258,000 of capital over the applicable requirements at December 31,
1988), high cost interest sensitive time deposits and borrowings, low levels
of fee income, poorly structured interest rate swaps, no automatic teller
machines, no drive through operations, outdated computer systems and a loan
portfolio primarily consisting of long term , fixed rate mortgages.
Additionally, shortly after the 1987 change in control, it was announced that
the FSLIC was insolvent and all savings and loans associations, including
BankAtlantic, were required to write-off their FSLIC secondary reserve fund
assets. Based on the industry wide problems and the institution's structure,
management concluded that a new direction and focus was required in order for
the institution to survive and prosper in the changing economic and regulatory
climate.
The fundamental strategy was to shift from traditional thrift activities to
activities more closely related to commercial banking. This strategy
emphasized changing the deposit mix to transaction accounts from time deposits
and providing a full range of other banking services to customers. Acting
upon this plan, the institution, in 1987, converted to a federal savings bank
and changed its name from Atlantic Federal Savings and Loan Association of
Fort Lauderdale to BankAtlantic, A Federal Savings Bank. This overall
strategy required substantial expenditures for marketing, equipment, computer
software and personnel.
During the same time period, regulations requiring increased capital ratios
for savings institutions were adopted. As a consequence, in addition to its
efforts to restructure its assets and liabilities, BankAtlantic was required
to focus on increasing capital. As of December 31, 1993, BankAtlantic met all
of the more stringent capital requirements established by FIRREA and FDICIA.
It did so by reducing its size, operations earnings and increasing its equity
capital.

Results of Operations

Net income of $16.1 million, $16.0 million and a net loss of $8.6 million
were recorded for the three years ended December 31, 1993, 1992 and 1991,
respectively. Operations for 1993 include, during the second quarter,
settlement of a claim with the Internal Revenue Service ("IRS") relating to
net operating loss carrybacks and previous federal income tax examinations
through 1988, resulting in an increase in other interest income of $587,000
and a reduction in the provision for income taxes of $1.4 million. Net income
during December 31, 1992 included a $756,000 net extraordinary gain during the
fourth quarter, resulting from the utilization of state net operating loss
carryforwards. Operations during the fourth quarter of 1992 also included
amounts relating to the October 30, 1992 Covenant and to the Subject
Portfolio. During the fourth quarter of 1992, and for the year ended December
31, 1992, the financial effect of the Covenant was to reduce expenses by $3.3
million, increase interest income by $1.9 million and recognize loan loss
recoveries of $7.3 million. The Covenant was operative for all of 1993 and
the financial effect of the Covenant for 1993 was to reduce expenses by
$942,000, increase interest income by $757,000 and recognize loan loss
recoveries of $972,000. Non-interest income for December 31, 1992 also
includes gains of $5.9 million from sales of mortgage-backed and investment
securities, compared to gains of $810,000 in 1991 and none in 1993, due to an
absence of such sales. The loss during December 31, 1991 included a $660,000
net extraordinary gain from BankAtlantic's early retirement of $10.2 million
of Capital Notes by exchanging cash payments, cash bonuses, and Non-Cumulative
Preferred Stock ("Preferred Stock") to Capital Noteholders. During 1991,
BankAtlantic wrote off $2.7 million in dealer reserves relating to loans in
the Subject Portfolio, which, as indicated above, was subsequently recovered
in 1992 from BankAtlantic's fidelity bond carrier.
Income per common and common equivalent share (primary income per share)
and income assuming full dilution (fully dilutive income per share) for the
years ended December 31, 1993 and 1992 were $2.52 and $2.51; $3.23 and $2.79,
respectively. For the year ended December 31, 1991, loss per common and
common equivalent share was $1.98. Although 1993 net earnings increased
compared to 1992, income per share in 1993 decreased due to the approximately
1.7 million of additional shares issued during 1993 relating to the second
quarter exercise of warrants to acquire common stock by BFC and also the
additional 670,000 shares issued in a November 1993 public offering. The
effect of these new shares and the impact relating to the calculation of
common stock equivalent shares outstanding decreased primary and fully
dilutive income per share during 1993. The average and end-of-period stock
price utilized in the calculation of dilutive securities was $12.88 and
$13.75, and $3.84 and $7.17 at December 31, 1993 and 1992, respectively.
Operations for the years ended December 31, 1993 and 1992 were also
favorably impacted by lower provisions for loan losses and improved results in
the operation and disposition of foreclosed properties as compared to each
prior year. Another significant operating benefit during the three year
period ended December 31, 1993 related to the interest rate environment and
BankAtlantic's interest rate sensitivity gap position during these periods.
From 1991 through mid-1993, BankAtlantic had a one-year negative interest rate
sensitivity gap. Since that time, BankAtlantic has had a positive one-year
interest rate sensitivity gap. A negative interest rate sensitivity gap
provides the potential for widening interest margins and increased earnings
during times of declining rates, the environment that existed during the
periods under discussion. However, a negative gap will correspondingly
negatively impact earnings when rates increase. During periods of declining
rates, a significant amount of repayments and prepayments of loans and
mortgage-backed securities occur due to refinancing alternatives at lower
rates. BankAtlantic continues to experience this type of activity which will
generally result in lower rates earned on interest-bearing assets newly
acquired or which bear floating interest rates compared to the interest rates
earned on prior year investments, loans and mortgage-backed securities.
However, rates earned in 1994 will benefit from the final amortization in 1993
of dealer reserves relating to the Subject Portfolio, such net amortization
amounted to approximately $2.2 million in 1993. Additional details concerning
the items discussed above are contained in specific sections and tables of
this Management's Discussion and Analysis.

Net-Interest Income

A financial summary of net interest income follows:

1993 1992
For the Years to to
Ended December 31, 1992 1991
------------------ ------------ --------------
1993 1992 1991 change change
------------ ------------ ------------- ------------ --------------
(In thousands)
Interest and fees on loans $ 47,649 $ 62,229 $ 89,638 $ (14,580) $ (27,409)
Interest on mortgage-backed
securities 24,891 36,541 34,364 (11,650) 2,177
Interest on mortgage-backed
securities available for sale 9,473 527 1,172 8,946 (645)
Interest and dividends on tax
certificates and other investment
securities 11,903 17,179 20,358 (5,276) (3,179)
Other interest income 587 - - 587 -
Interest on deposits (31,798) (47,411) (83,253) 15,613 35,842
Interest on advances from FHLB (2,359) (3,725) (3,603) 1,366 (122)
Interest on securities sold under
agreements to repurchase (1,082) (2,881) (1,671) 1,799 (1,210)
Interest on capital notes and other
subordinated debentures (748) (1,550) (2,014) 802 464
Other interest expense - - (457) - 457
------------ ------------ ------------- ------------ --------------
Net interest income $ 58,516 $ 60,909 $ 54,534 $ (2,393) $ 6,375
=========== =========== ============= ============ ==============

The changes in net interest income for the years ended December 31, 1993,
1992 and 1991 resulted from the following: the decrease in interest on loans
primarily resulted from lower average loan balances and secondarily lower
yields. BankAtlantic's average loan portfolio balances declined from $876.3
million during 1991 to $652.4 million during 1992 and to $532.3 million during
1993. These declines resulted from principal repayments exceeding loan
originations primarily due to reduced originations in consumer lending and
prepayments of residential loans and consumer loans. The average yield on
BankAtlantic's loan portfolio has declined from 10.23% for the year ended
December 31, 1991 to 8.95% for the year ended December 31, 1993. The decline
in loan yields reflects the general decline in market interest rates, and
repayment of higher yielding consumer loans. The decline in loan yields in
1993 was partially offset by an overall improvement in BankAtlantic's non-
accruing loan balances, resulting in fewer reversals of interest income. The
decrease in interest and dividends on tax certificates and other investment
securities resulted primarily from lower yields on tax certificates during the
comparable periods, and lower tax certificate balances during 1993 compared to
1992 and 1991. BankAtlantic purchased $78 million, $125.2 million and $121.8
million of tax certificates (at auctions and by purchases of deeds) during the
years ended December 31, 1993, 1992 and 1991, respectively. Decreased
interest on mortgage-backed securities resulted from lower yields earned on
the mortgage-backed securities portfolio, offset, in whole or in part, by
higher mortgage-backed securities portfolio balances in 1993 compared to 1992
and in 1992 compared to 1991. The higher balances and lower yields were the
result of BankAtlantic restructuring its securities portfolio during 1992 and
1993 by using proceeds from loan repayments and sales of long-term fixed rate
mortgage-backed securities to purchase adjustable rate and fixed rate five and
seven year balloon mortgage-backed securities. During the year ended December
31, 1993, BankAtlantic used principal repayments on loans and tax certificates
to purchase an additional $206.9 million of adjustable rate and fixed rate
seven year balloon mortgage-backed securities. These actions reflected
management's goal to minimize interest income volatility. Other interest
income was solely related to an IRS settlement in June 1993.
The decreases in interest expense on deposits resulted substantially from
lower certificate account balances and lower short-term interest rates in 1993
and 1992 compared to the preceding years, and the continuing change in the
deposit mix in 1993 from generally higher rate certificates of deposit to
lower rate transaction accounts. Average transaction accounts to total
deposits increased from 45.1% in 1991 to 51.3% and 58.5% in 1992 and 1993,
respectively. The change in the deposit mix resulted from management's
decision to pay commercial bank interest rates on time deposits and to
actively pursue transaction and relationship accounts. Management's goal in
changing the deposit mix is to improve BankAtlantic's net margin. Total
deposits declined by $179 million from $1.26 billion at December 31, 1991 to
$1.1 billion at December 31, 1993. During the period, time deposits declined
by $206 million, while non-interest bearing deposits increased by $14.5
million. Management believes that a significant portion of the decline is a
result of a historically low interest rate environment and the increasing
availability of alternative investments for time deposits. The decline in
interest on Capital Notes and other subordinated debentures was primarily due
to the July 1992 redemption at par of $6.9 million of 1986 Capital Notes, the
redemption of the remaining $67.8 million of both 1986 Capital Notes and the
$1 million of 14% subordinated debentures during the third quarter of 1993, at
par and the June 30, 1993 conversion of approximately $2.0 million of 13%
subordinated debentures due to BFC into common stock of BankAtlantic. The
Capital Notes and subordinated debentures were redeemed because the rates paid
on this debt was in excess of the then current market rates. The effect of
these redemptions on regulatory capital was not material. The decline in
interest on FHLB advances was due to the maturity of higher yielding FHLB
advances during 1992 and 1993, offset by higher balances of lower yielding
short-term adjustable rate FHLB advances during 1992. Interest on securities
sold under agreements to repurchase declined due to lower average borrowings
and yields in 1993 compared to 1992, while the benefit of decreased yields
paid during 1992 was more than offset by higher borrowings compared to 1991.
During each of the three years ended December 31, 1993, BankAtlantic's
average interest earning assets and average interest bearing liabilities
decreased and the average rates earned and paid, respectively, also declined.
The effect of lower rates and decreased volume resulted in lower interest
income of $22.6 million in 1993. This decline was partially offset by a $19.6
million benefit from lower interest expenses due to lower volume and lower
interest rates. These significant volume and rate changes occurred in 1992,
with lower interest income of $29.1 million and lower interest expense of
$35.4 million compared to 1991. Other interest expense declined in 1992 due
to the March 1991 expiration of a $35.0 million interest rate swap. Details
of these changes are further discussed below and are illustrated in the
"Yields Earned and Rates Paid" and "Rate/Volume Analysis" tables included
elsewhere herein.
The average interest margin was 4.90%, 4.78% and 3.71% for the three years
ended December 31, 1993, 1992 and 1991, respectively. The improved margin in
1993 compared to 1992 and 1991 resulted from the shift in the deposit mix
previously discussed, lower short term interest rates, the redemption of
Capital Notes and subordinated debentures, and the expiration of the interest
rate swap. The present interest rate environment is expected to continue to
reduce the average rate earned by BankAtlantic on its interest earning assets.
However, this reduction may be offset, in whole or in part, by lower borrowing
rates and a continued shift in the deposit mix to lower rate transaction
accounts from higher rate time deposits.
As described in "Asset and Liability Management", BankAtlantic has been
changing the composition of its loan portfolio to shorter term, adjustable
rate, higher yielding loans from traditional fixed rate, long term mortgage
loans. This change in portfolio composition is intended to produce a
continuing benefit in BankAtlantic's interest rate margin volatility. Shorter
term, adjustable rate, higher yielding loans include consumer, construction
and permanent (5-7 year) commercial real estate loans. These loans are
generally considered to involve a higher risk of default than single-family
residential loans. Repayment of construction and permanent commercial real
estate loans is generally dependent on the successful operation of the related
real estate project and thus may be subject, to a greater extent, to adverse
conditions in the real estate market or in the economy. Construction loans
involve additional risks because loan funds are advanced upon the security of
the project under construction, which is of uncertain value prior to
completion of construction.

Provision for Loan Losses and Declines in Value of Real Estate Owned

Management conducts a monthly review of BankAtlantic's allowance for loan
losses and all identified potentially problematic loans to determine if the
allowance is adequate to absorb estimated loan losses and to evaluate
appropriate courses of action. This review includes risk elements, all loans
for which full collectibility may not be reasonably assured, and takes into
consideration such factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific non-performing loans,
and current economic conditions and trends that may affect the borrower's
ability to repay. The review is conducted by using the most current
information available to BankAtlantic such as appraisals, inspection reports
and borrower financial statements. An evaluation is also made of the
estimated fair value of any underlying loan collateral.
During the years ended December 31, 1993, 1992 and 1991, the provision for
loan losses was $3.5 million, $6.7 million and $17.5 million, respectively.
The provision in each of these years was substantially impacted by installment
loan quality. Installment loan charge-offs amounted to $3.4 million, $10.4
million and $18.9 million in 1993, 1992 and 1991, respectively. Management
believes that the declines in charge-offs resulted from portfolio maturity and
runoff, lower interest rates and improved collection activity. Net
installment loan charge-offs of $2.1 million, $1.8 million and $17.9 million
in 1993, 1992 and 1991, respectively, were significantly impacted by the
recoveries associated with the October 1992 Covenant with an insurance
carrier. Installment loan recoveries from this source were $7.3 million in
1992 and $1 million in 1993. Charge-offs related to the installment loans for
which the Covenant was executed, declined from $5.5 million 1991 to $2.5
million in 1992 and to $1 million in 1993.
BankAtlantic's "risk elements" consist of restructured loans and "non-
performing" assets. The classification of loans as "non-performing" is based
upon management's evaluation of the overall loan portfolio and current and
anticipated future economic conditions. BankAtlantic generally designates any
loan that is 90 days or more delinquent as non-performing. BankAtlantic may
designate loans as non-performing prior to the loan becoming 90 days
delinquent, if the borrower's ability to repay is questionable. A "non-
performing" classification alone does not indicate an inherent principal loss;
however, it generally indicates that management does not expect the asset to
earn a market rate of return in the current period. Restructured loans are
loans for which BankAtlantic has modified the loan terms due to the financial
difficulties of the borrower. At both December 31, 1993 and 1992,
restructured loans were $2.7 million compared to $7.6 million in 1991. Non-
performing assets, net of write downs and allowances, decreased in 1993 by
$7.0 million to $20.0 million at December 31, 1993.
Risk elements, net of write downs and dispositions, decreased in 1993 by
$7.0 million to $22.6 million at December 31, 1993 and decreased in 1992 by
$14.5 million to $29.7 million at December 31, 1992. The 1993 decline
primarily resulted from sales of $5.1 million of real estate owned and a $3.2
million decline in non-accruing loans. The 1992 decrease primarily related to
a $6.3 million decrease in real estate owned, a $3.3 million decrease in non-
accrual assets, primarily consumer, and a $4.9 million decrease in
restructured loans. The decrease in real estate owned primarily resulted from
a provision for declines in value of real estate owned of $3.8 million, and
proceeds received from the sales of real estate owned of $11.1 million offset
by transfers of $2.4 million and $5.5 million of residential and commercial
loans to real estate owned. The $3.3 million decrease in non-accrual assets
resulted primarily from a $2.6 million and $476,000 decline in consumer and
tax certificate non-accruals as of December 31, 1992, respectively. The
decline in consumer non-accruals related to (a) repossessions occurring at an
earlier stage in the collection process, (b) a reduction in size of the
general loan portfolio, (c) charge-offs and (d) more stringent underwriting
standards on new loans. The non-accrual tax certificate decline resulted from
write-downs of affected certificates prior to reaching a non-accrual status.
The $4.9 million decrease in restructured loans resulted from $7.2 million of
commercial loans being taken off restructured status in 1992 offset by $2.3
million of commercial loans being restructured.
At December 31, 1993, gross real estate loans amounted to $343.7 million,
$134.3 million of which were residential loans which management believes carry
minimal credit risk. The remaining real estate loans consisted of $198.1
million of commercial real estate loans, and $11.3 million of construction and
development loans. Management believes that BankAtlantic's commercial real
estate loans are adequately collateralized and generally involve no unusual
risks of collectibility. Gross other loans amounted to $277.8 million, and
included commercial (non-real estate) loans, bankers acceptances and
installment (including second mortgage) loans of $28.0 million, $110.7 million
and $139.1 million, respectively. Commercial and installment loans involve
greater risks of collectibility, but management does not believe that such
risks have been greater than normal industry experience for these types of
loans except for the Subject Portfolio discussed under "Financial Condition."
Bankers acceptances are short-term loans with minimal credit risk. Management
estimates that net charge-offs for 1994 will be approximately $3-4 million for
consumer loans, and $2-3 million for real estate and other loans.
During the years ended December 31, 1993, 1992 and 1991, BankAtlantic's
provisions for declines in real estate owned were $2.7 million, $3.8 million
and $7.3 million, respectively. For the years ended December 31, 1993, 1992
and 1991, charge-offs were $775,000, $1.9 million and $7.0 million,
respectively. The allowance for real estate owned is established by
management based on its evaluation of the foreclosed properties. The 1993
charge-offs included a $350,000 write-off of an insubstance foreclosed
commercial real estate loan due to an unfavorable environmental analysis of
the property. The 1992 charge-offs included a $600,000 write down of a
shopping center. The remaining charge-offs for 1993 and 1992 were related to
various commercial and residential real estate properties. During 1991,
BankAtlantic wrote-down one commercial residential construction property by
$2.8 million and one commercial shopping center by $1.7 million. The
remaining 1991 charge-offs related to various commercial and residential real
estate properties based on the depressed real estate market in South Florida
and management's evaluation of the properties at the time.

Non-Interest Income

A financial summary of non-interest income follows:

1993 1992
For the Years to to
Ended December 31, 1992 1991
------------------ ------------ ----------
1993 1992 1991 change change
------------ ------------ ------------- ------------ ----------
(In thousands)
Loan servicing and other loan
fees $ 2,080 $ 3,189 $ 4,344 $ (1,109) $ (1,155)
Gain on sales of loans 1,246 976 330 270 646
Gain on sales of mortgage-backed
Securities - 5,726 748 (5,726) 4,978
Gain on sales of investment
securities - 143 62 (143) 81
Other 8,265 7,337 8,622 928 (1,285)
------------ ------------ ------------- ------------ ----------
Total non-interest income $ 11,591 $ 17,371 $ 14,106 $ (5,780) $ 3,265
============ ============ ============= ============ ==========

During 1993, 1992 and 1991, BankAtlantic paid $17.0 million, $3.8 million,
and $3.5 million, respectively, for the purchase of $1.2 billion, $333.8
million, and $253.0 million, respectively, of mortgage servicing from other
financial institutions. The purchase of servicing provides BankAtlantic with
an opportunity to replace normal run-off, upgrade its portfolio, and utilize
economies of scale in the loan servicing function. BankAtlantic upgraded its
portfolio by purchasing the servicing of loans with higher average balances
than contained in its previous portfolio. However, income from servicing
declined in 1993 and 1992 by $875,000 and $880,000, respectively, due to
accelerated amortization of servicing acquisition fees resulting from early
prepayments of the underlying mortgage loans. The early prepayments were
caused by the refinancing of mortgage loans due to declining long term
interest rates throughout the three years ended December 31, 1993. The
servicing purchased during 1993 related to recently originated loans in the
Southeast United States. The early prepayments were caused by the refinancing
of mortgage loans due to declining long-term interest rates throughout the two
years ended December 31, 1993. During 1991, prepayments were approximately 7%
of loans serviced, compared to approximately 22% in 1992 and 19% in 1993.
Based upon the significant amount of servicing purchased in 1993 relating to
recently originated loans and a relatively stable residential interest rate
environment, BankAtlantic's recent monthly prepayment experience has been less
than that experienced in 1992 and 1993. The impact of prepayments on
servicing income is partially offset by increased gains from sales of recently
originated residential loans. See also "Sales on Mortgage-Backed Securities,
Investment Securities and Loans."
The major component of non-interest income-other was fees from transaction
accounts which amounted to $5.2 million, $5.0 million and $5.2 million in
1993, 1992 and 1991, respectively. The increase in non-interest income-other
for the year ended December 31, 1993, as compared to the same period in 1991
was due to additional income received from a broker dealer that rents space in
BankAtlantic's branches and fee income received related to cashier and
operating checks. The decrease in non-interest income-other for the year
ended December 31, 1992, as compared to the same period in 1991, was due to a
reversal in 1991 of a $415,000 allowance related to reconciliation differences
recorded in prior years and a reversal in 1992 of dormant account fee income.
Beginning in 1990, the Office of the Comptroller for the State of Florida
("Comptroller") commenced a review of BankAtlantic's procedures for the
assessment of fees on dormant accounts. The Comptroller subsequently
indicated that BankAtlantic was not in compliance with applicable Florida law
as interpreted by the Comptroller. The difference in interpretation concerns
approximately $500,000 and has not yet been resolved. Pending resolution of
the issue and modification of the procedures, dormant account assessments,
approximately $10,000 per month, have been eliminated since 1992, and an
allowance has been established for the amount which is in question.

Non-Interest Expense

A financial summary of non-interest expense follows:

For the Years to to
Ended December 31, 1992 1991
------------------ ----------- -----------
1993 1992 1991 Change Change
------------- ------------ ------------- ----------- -----------
(In thousands)
Employee compensation and
benefits $ 19,617 $ 19,202 $ 24,062 $ 415 $ (4,860)
Occupancy and equipment 8,417 8,864 10,626 (447) (1,762)
Federal insurance premium 2,750 2,772 3,281 (22) (509)
Advertising and promotion 960 480 1,143 480 (663)
(Income) loss from joint venture
investments 25 245 (2,335) (220) 2,580
Foreclosed asset activity, net 1,243 4,323 8,922 (3,080) (4,599)
(Recovery) write-down of dealer
reserve - (2,739) 2,739 2,739 (5,478)
Provision for branch consolidation - - 1,618 - (1,618)
Other 10,474 13,990 15,108 (3,516) (1,118)
------------- ------------ ------------- ----------- -----------
$ 43,486 $ 47,137 $ 65,164 $ (3,651) $ (18,027)
============= ============ =========== =========== ===========

The decline in occupancy and equipment expenses for the year ending
December 31, 1993, as compared to December 31, 1992, primarily resulted from
BankAtlantic discontinuing its lease agreement on teller equipment as part of
its branch network modernization project. See "Liquidity and Capital
Resources" for a further discussion of these efforts. During the year ended
December 31, 1992, occupancy expenses declined from the comparable periods in
1991 due to BankAtlantic consolidating back office operations into bank owned
buildings during the latter part of 1990 and in 1991. The office space
consolidation resulted in a decline in rental expense of approximately $1.1
million during the year ended December 31, 1992, compared to the year ended
December 31, 1991.
Foreclosed asset activity, net decreased during 1993 compared to 1992,
primarily due to a decline in real estate owned which resulted in $1.4 million
lower related operating expenses, and $1.2 million lower provision for
declines in real estate owned and a $563,000 increased in gains on sales of
foreclosed properties. Foreclosed asset activity, net decreased for the year
ended December 31, 1992, compared to the year ended December 31, 1991. The
decline was the result of a $3.4 million decrease in the provision for
declines in value of real estate owned, a $446,000 decrease in expenses
associated with such real estate owned expenses and a $707,000 improvement in
net gains and losses on sales of real estate owned. For a further discussion,
see "Provision for Loan Losses and Declines in Value of Real Estate Owned."
Employee compensation and benefits during 1993 remained approximately at
1992 levels. The decline in employee compensation and benefits during 1992 as
compared to 1991 was due to BankAtlantic closing 15 branches, resulting in a
decline in the number of employees. In addition, the branch consolidation
also resulted in lower occupancy expenses during 1992 as compared to the same
period in 1991. During early 1992, BankAtlantic completed the consolidation
of 15 branches into existing branches. The consolidation, which commenced
during 1991, required a provision for costs relating to employee severance,
lease terminations and write-offs of leasehold improvements at December 31,
1991. Due primarily to the branch consolidation, and a reduction in
BankAtlantic's back office operations, BankAtlantic's full time equivalent
employees decreased from 765 at December 31, 1990, to 620 at December 31, 1992
and increased to 632 at December 31, 1993, resulting in a reduction of
employee compensation and benefits for the year ended December 31, 1992,
compared to the same period in 1991. The slight increase during 1993,
compared to 1992 related primarily to additional personnel and salary changes.
The 1991 reduction in employees and the branch consolidations resulted from
BankAtlantic downsizing its operations in order to gain operating efficiencies
and to assist it in meeting regulatory capital requirements. Included in
employee compensation and benefits was a $351,000 pension curtailment gain
arising from the reduction in work force during 1991.
The increase during the year ended December 31, 1993 compared to the year
ended December 31, 1992 in advertising and promotion was due to increased
media expenses incurred to promote new transaction account packages and to
originate residential mortgage loans for resale. The reduced advertising
during 1992, compared to 1991 was a result of BankAtlantic's downsizing
discussed above.
The decline in non-interest expense-other during the year ended December
31, 1993 compared to the same period in 1992 resulted from a $550,000 decline
in legal fees inclusive of $800,000, relating to the reimbursement under the
Covenant, and a $300,000 decline in supervisory and examination expenses which
management believes was due mainly to BankAtlantic's status as a well
capitalized institution. An additional $450,000 decrease related to improved
operations in the installment collections and repossessions areas. The
remaining decline in non-interest expense-other was due to lower operating
expenses in 1993 as compared to 1992. The decrease in non-interest expense-
other for the year ended December 31, 1992, was the result of a $568,000
recovery of legal fees pursuant to the Covenant and a $1.2 million decline in
repossession expenses and write-downs in 1992 compared to the same period in
1991. The decline in repossession expenses and write-downs resulted from
management's decision to charge-off consumer loans at an earlier stage in the
collection process during the latter part of 1991, and reduced consumer loan
originations.
Included in (income) loss from joint venture investments for the year ended
December 31, 1991 was a gain of $3.1 million. The gain was generated by one
of BankAtlantic's wholly-owned subsidiaries, BankAtlantic Development
Corporation ("BDC"), which participated with joint venture partners in the
sales of real estate projects. At December 31, 1991, all development and
construction activities had been completed and the remaining real estate of
the ventures consists of a minimal amount of single family homes and lots
available for sale. There were no significant sales of joint venture
properties during the year ended December 31, 1993 and 1992. Included in
(income) loss from joint venture investments for 1992 was a $250,000 allowance
against BankAtlantic's investment in the remaining properties. For the year
ended December 31, 1991, the gains on the sale of the joint venture properties
were partially offset by operations of the properties.
During the year ended December 31, 1991, BankAtlantic wrote down $2.7
million of dealer reserves related to the Subject Portfolio. During the year
ended December 31, 1992, BankAtlantic recovered the same amount from its
fidelity bond carrier pursuant to the Covenant.

Sale of Mortgage-Backed Securities, Investment Securities and Loans

During the year ended December 31, 1992, BankAtlantic, in its efforts to
reduce its interest rate sensitivity, transferred to available for sale all
fixed rate mortgage-backed securities having original terms of 15 and 30 years
to maturity. In accordance with then existing Generally Accepted Accounting
Principles ("GAAP"), assets available for sale are recorded at the lower of
cost or market and, since the aggregate market value was greater than cost at
the date of transfer and at all times subsequent, through December 31, 1993,
this reclassification had no effect on net income or stockholders' equity at
the transfer date and through December 31, 1993. upon implementation of FAS
15, commencing on January 1, 1994. During the year ended December 31, 1993,
there were no mortgage-backed securities or investment securities transferred
to available for sale. Approximately $139.4 million of Federal National
Mortgage Corporation ("FNMA") securities and $10.1 million of Federal Home
Loan Mortgage Corporation ("FHLMC") securities of the $305.7 million of
securities transferred to available for sale during 1992 were sold in 1992 for
gains of $5.2 million and $500,000, respectively. In addition, BankAtlantic
sold $2.0 million of federal agency obligations for a gain of $143,000. The
1992 gains on sales of investment securities and mortgage-backed securities
all resulted from sales of securities classified as available for sale.
Proceeds from these sales were used to purchase fixed rate balloon mortgage-
backed securities having five to seven year maturities, adjustable rate
mortgage-backed securities and tax certificates and to repay borrowings.
During the years ended December 31, 1993, 1992 and 1991, BankAtlantic sold
$45.0 million, $36.1 million and $14.9 million, respectively of recently
originated fixed rate and adjustable rate residential loans for gains of $1.2
million, $976,000 and $330,000, respectively. BankAtlantic currently sells
substantially all residential mortgage loans it originates. Commencing on
January 1, 1994, upon implementation of FAS 115, changes in carrying
classifying values of assets held for sale will be reflected as a component of
stockholders' equity. BankAtlantic currently sells substantially all
residential mortgage loans which it originates.
During the year ended December 31, 1991, BankAtlantic securitized $40.4
million of loans and sold the resulting FHLMC mortgage-backed securities for a
loss of $30,000. BankAtlantic also sold $8.5 million and $21.3 million of
FHLMC and FNMA securities and $30.0 million of treasury notes and federal
agency obligations for gains of $200,000, and $574,000 and $62,000,
respectively. BankAtlantic sold , for a total gain of $62,000.
BankAtlantic has the ability and positive intent to hold its mortgage-
backed securities held for investment until their scheduled maturities.
Market values of both investments and mortgage-backed securities available for
sale at December 31, 1993 were greater than BankAtlantic's cost of such
securities.

Financial Condition

BankAtlantic's total assets at December 31, 1993 and at December 31, 1992
were approximately $1.36 billion and $1.30 billion, respectively. At December
31, 1993, compared to December 31, 1992, mortgage-backed securities (including
mortgage-backed securities available for sale) and loans increased by $38.9
million and $39.7 million, while tax certificates and other investment
securities declined by $22.7 million. The increase in mortgage-backed
securities was due primarily to the purchase of approximately $206.9 million
of adjustable rate and balloon mortgage-backed securities during 1993. The
decrease in tax certificates and other investment securities was due to the
repayment of $112.9 million of tax certificates offset by the purchase of an
aggregate of approximately $78.2 million of tax certificates during 1993,
including both tax certificates purchased at the 1993 tax certificate auctions
(approximately $64 million) and tax certificates purchased in connection with
"Applications for Deed" in connection with obtaining title to the underlying
property (approximately $14 million). See "Business--Investment Activities".
The increase in loans was primarily due to the purchase of $110 million of
bankers acceptances, all of which mature by March 1994, offset by principal
repayments exceeding loan originations. However, 1993 loan originations
exceeded 1992 originations by approximately 50% and 1992 originations exceeded
1991 originations by 25%. Loan originations during the 1993 period amounted
to $263.2 million, compared to $289.0 million of loan repayments. At December
31, 1993, compared to December 31, 1992, deposits declined by $31.8 million.
The decline in deposits was related to decreased certificate and insured money
fund accounts, partially offset by increased deposits in interest-free
checking and lower costing NOW accounts. At December 31, 1993, BankAtlantic
met all applicable regulatory capital and liquidity requirements.

Subject Portfolio

From 1987 through 1990, BankAtlantic purchased in excess of $50 million of
indirect home improvement loans from certain dealers, primarily in the
northeastern United States. BankAtlantic ceased purchasing loans from such
dealers in the latter part of 1990. These dealers are affiliated with each
other but are not affiliated with BankAtlantic. In connection with loans
originated through these dealers, BankAtlantic funded amounts to the dealers
as a dealer reserve. Such loans and related dealer reserves are hereafter
referred to as the "Subject Portfolio." The risk of amounts advanced to the
dealers is primarily associated with loan performance but secondarily is
dependent on the financial condition of the dealers. The dealers were to be
responsible to BankAtlantic for the amount of the reserve only if the loan
giving rise to the reserve became delinquent or was prepaid. These dealers
have currently not indicated any financial ability to fund the dealer
reserve.There is no assurance that if called upon, a dealer will have the
financial ability to fund the unearned dealer reserve.
In late 1990, questions arose relating to the practices and procedures used
in the origination and underwriting of the Subject Portfolio, which suggested
that the dealers, certain home improvement contractors and borrowers engaged
in practices intended to defraud BankAtlantic. Due to these questions and
potential exposure, BankAtlantic performed, and continues to perform, certain
investigations, notified appropriate regulatory and law enforcement agencies,
and notified its fidelity bond carrier. After an initial review and
discussions with the carrier, BankAtlantic concluded that any losses sustained
from the Subject Portfolio would adequately be covered by its fidelity bond
coverage and, in fact, on August 13, 1991, the carrier advanced $1.5 million
against BankAtlantic's losses. This payment and future payments by the
carrier were to be subject to identification and confirmation of the losses
which are appropriately covered under the fidelity bond.
Subsequently, commencing in September, 1991, as a consequence of issues
raised by the carrier, BankAtlantic reviewed the Subject Portfolio without
regard to the availability of any fidelity bond coverage. As a result of the
review, the provision for loan losses for the year ended December 31, 1991 was
increased by approximately $5.7 million, approximately $5.5 million of loans
were charged off, and $2.7 million of dealer reserves were charged to current
operations. On December 20, 1991, the carrier denied coverage and
BankAtlantic thereafter filed an appropriate action against the carrier.
On October 30, 1992, BankAtlantic and the carrier entered into the
Covenant. Pursuant to the Covenant, BankAtlantic will continue to pursue its
litigation against the carrier, which is currently in the early stages of
discovery, but has agreed to limit execution on any judgement obtained against
the carrier to $18 million. Further, BankAtlantic agreed to join certain
third parties as defendants in that action. The carrier paid BankAtlantic
$6.1 million during the fourth quarter of 1992 and paid an additional $3
million in November 1993, and has agreed to pay an additional $2.9 million in
November 1994. Such amounts related to losses and expenses previously charged
to operations by BankAtlantic. Additional reimbursements will be made on a
quarterly reporting basis commencing with the period ended December 31, 1992.
Reimbursable amounts are as defined in the Covenant. Based upon such
definitions BankAtlantic has and will continue to record estimated charges to
operations in advance of when such charges become reimbursable. Amounts to be
reimbursed will be reflected in the period for which reimbursement is
requested. Through December 31, 1993, the carrier has paid or committed to
pay approximately $15.4 million. The 1993 and 1994 committed amounts noted
above have been accrued after imputing interest at 9%. The financial
statement effect of the Covenant for the fourth quarter and year ended
December 31, 1992 was to reduce expenses by $3.3 million, increase interest
income by $1.9 million and to record $7.3 million of loan loss recoveries.
The financial statement effect of the Covenant for 1993 was to reduce expenses
by $942,000, to increase interest income by $757,000 and record $972,000 of
loan loss recoveries. Included in other assets was a $3.3 million receivable
due from the carrier at December 31, 1993. In no event will the carrier be
obligated to pay BankAtlantic in the aggregate more than $18 million.
However, in the event of recovery by BankAtlantic of damages from third party
wrongdoers, BankAtlantic will be entitled to retain such amounts until such
amounts, plus any payments received from the carrier equal to $22 million.
Thereafter, the carrier will be entitled to any such recoveries to the extent
of its payments to BankAtlantic. To the extent that BankAtlantic incurs
losses in excess of $18 million plus available recoveries from third parties,
BankAtlantic will be required to absorb any such losses. At December 31,
1993, the remaining amount of reimbursement available from the carrier was
approximately $2.6 million. BankAtlantic does not currently anticipate that
the aggregate losses in the Subject Portfolio will exceed $18 million.
BankAtlantic also agreed to exercise reasonable collection activities with
regard to the Subject Portfolio and to provide the carrier with a credit for
any recoveries with respect to such loans against future losses that the
carrier would otherwise be obligated to reimburse.
The balance of the loans and dealer reserve associated with the Subject
Portfolio amounted to approximately $24.4 million and zero at December 31,
1993, and $29.9 million and $2.5 million at December 31, 1992, respectively.
At December 31, 19932, 10% of the loans were secured by collateral in South
Florida and 90% of such loans were secured by collateral in the northeastern
United States. Collateral for these loans is generally a second mortgage on
the borrower's property. However, it appears that in most cases, the property
is encumbered with loans having high loan to value ratios. Although as
indicated above, the dealer reserves are not collateralized, the risk relating
to amounts advanced to the dealers are primarily associated with loan
performance. Loans in the "Subject Portfolio" are charged-off if payments are
more than 90 days delinquent.
Related to the above are suits filed in New Jersey and New York. The New
Jersey action seeks civil remedies against certain contractors and a dealer
and also seeks to cancel or modify certain mortgage loans. BankAtlantic had
purchased individual loans from the named dealer and such purchased loans
include loans for which a named contractor is listed as providing home
improvements. While BankAtlantic is not a party to that action, a status
conference was held in December 1993 which indicated that discovery is to be
completed by May 1994 and BankAtlantic must determine by April 1994 whether to
intervene in the action. The New York action purports to be a class action
against over 25 individuals and entities, including BankAtlantic. The named
plaintiffs purport to also represent other unnamed plaintiffs that may have
obtained loans from dealers who subsequently sold such loans to BankAtlantic.
Plaintiffs base their claims on various grounds and seek, among other things,
rescission of the loan agreements, damages, punitive damages, costs, attorney
fees, penalties under the truth in lending act and treble damages under RICO.
The plaintiffs' Motion to Certify the Class was made in November, 1993. The
court has not yet ruled on this motion.

Asset and Liability Management

During the past several years, BankAtlantic's operating objectives have
included actions to increase its regulatory capital and to reduce its negative
interest rate sensitivity gap. However, activities in furtherance of these
various objectives sometimes involve conflicting short term strategies. In
general, BankAtlantic has attempted to achieve these objectives through the
replacement of fixed rate, long term securities with floating rate mortgage-
backed securities or intermediate term fixed rate, balloon mortgage-backed
securities, restructuring deposit liabilities by reducing interest rate
sensitive certificates of deposit as a percent of total liabilities and
focusing on transaction accounts, and changing the emphasis of loan
originations. See "Sale of Mortgage-Backed Securities, Investment Securities
and Loans."
Included in these replacement securities are tax certificates, adjustable
rate mortgage-backed securities, five- and seven-year balloon mortgage-backed
securities amounting to approximately $83.9 million, $92.9 million and $350.3
million, respectively, at December 31, 1993.
BankAtlantic has been attempting to change the composition of its loan
portfolio from predominately long term, fixed rate mortgage loans by currently
emphasizing the origination of floating rate commercial business and
commercial real estate loans, which generally achieve a two to three year
duration. and mortgage loans, which are considered higher yielding. These
types of loans generally have higher interest rates than residential loans.
However, these loans also involve a greater credit risk and will generally
result in higher loan loss experience than that of traditional mortgage
lending. Management is of the opinion that the increased credit risk will be
offset by the increased rates earned on such loans and the positive effect
these shorter terms have on the interest rate sensitivity gap. Origination
and underwriting policies and practices for such loans are designed to limit
BankAtlantic's exposure to normal industry risk for this form of lending.
Additionally, as previously indicated, during the first quarter of 1991
BankAtlantic reduced loan production in its consumer lending portfolio, and
BankAtlantic is not currently originating indirect consumer loans. However,
BankAtlantic anticipates increasing 1994 consumer loan originations from
amounts originated in the prior three years. BankAtlantic continues to
originate fixed-rate mortgage loans with 15 and 30 year amortization periods,
but these loans are generally originated for sale. Included as loans at
December 31, 1993 are $110.7 million of banker's acceptances, all of which
were purchased in the fourth quarter of 1993 and all of which mature by March
1994. Based upon BankAtlantic's capital position, alternate uses for funds
and availability of acceptable borrowing alternatives, BankAtlantic may
continue to utilize banker's acceptances to increase net interest income.

Interest Rate Sensitivity

BankAtlantic's net earnings are materially affected by the difference
between the income it receives from its loan portfolio (including mortgage-
backed securities) and investment securities portfolio and its cost of funds.
The interest paid by BankAtlantic on deposits and borrowings determines its
cost of funds. The yield on BankAtlantic's loan portfolio changes principally
as a result of loan repayments and the rate and the volume of new loans.
Fluctuations in income from tax certificates and other investment securities
will occur based on the amount invested during the period and interest rate
levels yielded by such securities. BankAtlantic's net interest spread will
fluctuate in response to interest rate changes. because BankAtlantic's cost of
funds responds more quickly to changes in interest rates than does its income
from loans and investments
Like many savings institutions, BankAtlantic's interest rate sensitive
liabilities (generally, deposits with maturities of one year or less) has in
the past exceeded its interest rate sensitive assets (assets which reprice
based on an index or which have short term maturities). This imbalance is
referred to as a negative interest rate sensitivity gap, and measures an
institution's ability to adjust to changes in the general level of interest
rates. The effect of the "mismatch" is that a rise in interest rates will
have a negative impact on earnings as the cost of funds increases to a greater
extent than the yield earned on interest-earning assets, while a decline in
interest rates will have a positive impact on earnings. The larger the gap,
whether positive or negative, the greater the impact of changing interest
rates.
One of BankAtlantic's long term objectives has been the reduction of its
interest rate sensitivity gap. However, short-term strategies may differ from
this objective in order to meet other objectives, such as compliance with
applicable regulatory requirements. BankAtlantic has taken steps, when
possible, to minimize its interest rate sensitivity gap. Such actions have
included reducing fixed-rate mortgage loan production held in portfolio,
purchasing shorter term and adjustable rate mortgage-backed securities and
increasing its emphasis on the production of floating rate commercial business
loans and commercial real estate loans which generally have a shorter duration
and a higher yield than longer term fixed-rate residential mortgage loans.
Also, extensive efforts have been made to attract transaction accounts which
are generally less rate sensitive than other types of accounts. These actions
have involved employing experienced commercial bankers, focusing sales and
marketing on transaction oriented customer segments, training existing staff
in product sales and commercial operations, offering new transaction products,
improving data processing so as to handle increased check clearing and
building and remodeling branches so as to accommodate transaction account
customers. Further, BankAtlantic has reduced the rates which it offers on
certificates of deposit to the rates generally offered by commercial banks
(rates generally lower than those offered by savings and loan institutions).
Assets such as commercial loans are interest rate sensitive assets both
because they generally bear interest at an adjustable rate and because they
generally have a shorter term maturity. Consumer and commercial real estate
loans are generally considered interest rate sensitive because of the short
term nature of such loans. Long term residential loans are considered
interest rate sensitive only if they bear interest at an adjustable rate. On
the liability side, long term certificates of deposit are generally not
interest rate sensitive.
As a result of implementing and continuing these asset and liability
initiatives, and the accelerated prepayments of long-term mortgage loans due
to declining interest rates, BankAtlantic's one year interest rate gap, which
is the difference between the amount of interest bearing liabilities which are
projected to mature or reprice within one year and the amount of interest
earning assets which are similarly projected to mature or reprice, all divided
by total assets, amounted to a positive 3.79% at December 31, 1993 compared to
a negative 15.83% at December 31, 1992. The absolute amount of BankAtlantic's
one year gap changed from a negative $206.2 million at December 31, 1992 to a
positive $51.5 million at December 31, 1993.

Liquidity and Capital Resources

BankAtlantic's primary sources of funds have been deposits, principal
repayments of loans, mortgage-backed securities and tax certificates, proceeds
from the sale of loans originated for sale, mortgage-backed securities and
investment securities, proceeds from securities sold under agreements to
repurchase, advances from the FHLB, operations and capital transactions.
These funds were primarily utilized to fund loan disbursements, paydowns of
securities sold under agreements to repurchase, maturity of advances from the
FHLB, purchases of mortgage-backed securities and tax certificates, bankers
acceptances and payments of maturing certificates of deposit. During October,
1992 and December, 1993, the FHLB granted BankAtlantic, subject to various
terms and conditions, lines of credit of $300 million and $115 million
expiring in October 1995 and December, 1994, respectively. As of December 31,
1993 BankAtlantic had not utilized these lines of credit.
During the first quarter of 1993, management approved a plan to modernize
BankAtlantic's branch network. Management believes that the branch re-
engineering project will improve overall efficiencies and enable BankAtlantic
to offer additional products and financial services to its customers. In
order to achieve the branch modernization, management approved capital
expenditures of $2.1 million, of which approximately $965,000 was disbursed
for replacement equipment installed during 1993. The branch modernization
project is expected to be completed during the second quarter of 1994.
Regulations currently require that savings institutions maintain an average
daily balance of liquid assets (cash and short-term United States Government
and other specified securities) equal to 5% of net withdrawable accounts and
borrowings payable in one year or less. BankAtlantic had a liquidity ratio of
28.22% under these regulations at December 31, 1993, respectively. See
"Regulation and Supervision."
Total commitments to originate and purchase loans and mortgage-backed
securities, excluding the undisbursed portion of loans in process, were
approximately $64.3, $93.5 and $37.5 million at December 31, 1993, 1992 and
1991, respectively. BankAtlantic expects to fund its commitments out of loan
repayments and, for a limited period of time, short-term borrowings. At
December 31, 1993, loan commitments were approximately 9.11% of loans
receivable, net.
In order to increase its regulatory capital, BankAtlantic issued in prior
years, $25.0 million of its 1986 Capital Notes. On May 30, 1990, BankAtlantic
received OTS approval, subject to certain conditions, to issue up to an
additional $12.0 million of subordinated debt in private transactions and to
include such subordinated debentures as regulatory capital. On June 19, 1990,
an unaffiliated third party acquired $1.0 million of such subordinated
debentures bearing interest at the rate of 14% per annum and maturing in seven
years from the date of issuance, and including detachable warrants to purchase
216,450 shares of BankAtlantic's common stock, at $4.62 per share. BFC also
acquired $2.5 million of such subordinated debt and warrants. On June 30,
1990, BFC exercised its warrants and converted the debt for 541,430 shares of
BankAtlantic common stock.
During November 1990, BankAtlantic offered to the holders of the Capital
Notes, the option to exchange their Capital Notes for any one of three
combinations of non-cumulative Preferred Stock ("Preferred Stock"), cash
payments and cash bonuses. The Preferred Stock issued in this transaction
improved BankAtlantic's regulatory and equity capital. Effective July 31,
1992, BankAtlantic redeemed, at par and prior to scheduled maturity
approximately $6.9 million of the Capital Notes. This redemption had no
significant effect on liquidity and capital resources. In July 1993,
BankAtlantic received approval from the OTS to redeem all remaining Capital
Notes and other subordinated debentures. BankAtlantic redeemed the $7.8
million of Capital Notes and other subordinated debentures during the third
quarter of 1993 at par. The Capital Notes debt bore a weighted average rate
at 11.83%, substantially in excess of current market rates and at June 30,
1993, only $3.2 million relating to the Capital Notes and other subordinated
debentures was included in regulatory risk-based capital. Funds for the
redemption were provided from loan repayments.
On March 31, 1991, BankAtlantic issued to its existing shareholders, 4,878
shares of common stock and $8,000 of subordinated debentures with related
warrants to purchase 4,600 shares of common stock. The subordinated
debentures were redeemed in August 1993, whereas the warrants remain
outstanding. During the first quarter of 1993, warrants were exercised to
purchase 575 shares at a price of $1.74 per share.
Effective June 30, 1993, BFC exercised its warrants to purchase 1,126,327
shares of BankAtlantic common stock, resulting in BFC's ownership percentage
in BankAtlantic increasing to 77.83%. The purchase price in connection with
the exercise was paid by the tender and subsequent retirement of approximately
$2.0 million of subordinated debentures held by BFC. See Note 11 of the
Consolidated Financial Statements for further discussion.
On November 12, 1993, BankAtlantic sold, in a public offering, 400,000
common shares at a price of $13.50 per common share. As part of that
offering, BFC sold 1.4 million shares of BankAtlantic common stock. Net
proceeds to BankAtlantic from the sale of the 400,000 shares were
approximately $4.6 million. In connection with the public offering,
BankAtlantic granted the underwriters a 30-day option to purchase up to
270,000 additional shares of common stock to cover over-allotments. On
November 10, 1993, the underwriters exercised this option to purchase the
270,000 shares, with a closing date of November 18, 1993. The additional net
proceeds to BankAtlantic were approximately $3.4 million. Upon completion of
this public offering, BFC owned 48.17% of BankAtlantic common stock.The sale
decreased BFC's ownership in BankAtlantic to 48.17%.
As more fully described under "Regulation and Supervision--Capital
Requirements," BankAtlantic is required to meet all capital standards
promulgated pursuant to FIRREA and FDICIA. Under FIRREA, capital standards
are: core capital equal to at least 3.0% of adjusted total assets, tangible
capital equal to at least 1.5% of adjusted total assets, and total capital
equal to at least 8.0% of its risk-weighted assets. To be considered "well
capitalized" under FDICIA, a savings institution must generally have a core
capital ratio of at least 5%, a Tier 1 risk-based capital ratio of at least
6%, and a total risk-based capital ratio of at least 10%. BankAtlantic, at
December 31, 1993, met all regulatory capital requirements, and its regulatory
capital met the definition of "well capitalized."

At December 31, 1993, BankAtlantic's regulatory capital position was:

Tangible Core Risk-Based
Capital Capital Capital
----------- ------------ ------------
GAAP stockholders' equity $ 90,652 $ 90,652 $ 90,652
Adjustments:
Non-includable subsidiaries (642) (642) (642)
Additional capital:
Allowable allowances for loans and tax certificates - - 9,035
----------- ------------ --------------
Regulatory capital 90,010 90,010 99,045
Minimum capital requirement 20,378 40,757 59,176
----------- ------------ --------------
Regulatory capital excess $ 69,632 49,253 $ 39,869
=========== ============ ==============
Regulatory capital as a percent of adjusted total assets:
Required 1.50% 3.00% 8.00%
=========== ============ ============
Actual 6.63% 6.63% 13.40%
=========== ============ ============

Dividends

In August and December, 1993, BankAtlantic declared cash dividends of $0.06
per share (totaling $0.12 per share), payable September 1993 and January 1994,
respectively, to its common stockholders. A 15% common stock dividend was
declared in May, 1993. Where appropriate, amounts throughout this report have
been adjusted to reflect this stock dividend. BankAtlantic expects to
continue dividend payments on its non-cumulative preferred stock. In March
1994, the Board of Directors declared a cash dividend of $.06 per share
payable in April 1994 to its common stockholders.
Effective August 1, 1990, the OTS adopted a new regulation that limits all
capital distributions made by savings institutions, including cash dividends,
by permitting only certain institutions that meet specified capital levels to
make capital distributions without prior OTS approval. BankAtlantic presently
meets all required and fully phased-in capital requirements and has had
operating income in the prior eight quarters. BankAtlantic currently intends
to seek to pay Common Stock dividends on a regular basis in the future;
however, all such capital distributions will be subject to the OTS' right to
object to a distribution on safety and soundness grounds. BankAtlantic has
paid the preferred stock dividends since March 1993 and has received OTS
approval through June 1994 to pay the preferred stock dividends; subject to
maintaining capital at least equal to the fully phased in capital
requirements.
Future cash dividends on common and preferred stock will be subject to
declaration by the Board of Directors in its discretion, to additional
regulatory notice or approval, and continued compliance with capital
requirements. Accordingly, there is no assurance that such dividends will be
paid in the future.

Preferred Stock

All three Series of Preferred Stock have a preference value of $25.00 per
share and are redeemable by BankAtlantic at $25.25 per share in 1994 and
$25.00 thereafter. At December 31, 1993, no shares of Preferred Stock had
been redeemed.

Cash Flows

Liquidity refers to BankAtlantic's ability to generate sufficient cash to
meet funding needs to support loan demand, to meet deposit withdrawals and to
pay operating expenses. BankAtlantic's investment portfolio provides an
internal source of liquidity as a consequence of its short-term investments as
well as scheduled maturities and interest payments. Loan repayments and sales
also provide an internal source of liquidity.

A summary of BankAtlantic's consolidated cash flows follows (in thousands):

Years Ended
December 31,
-------------------------------------------------
1993 1992 1991
-------------- -------------- ------------

Net cash provided (used) by:
Operating activities $ 46,437 $ 18,260 $ 27,403
Investing activities (77,187) 134,973 396,685
Financing activities 35,893 (160,407) (430,801)
-------------- -------------- ------------
Increase (decrease) in cash and due from banks $ 5,143 $ (7,174) $ (6,713)
============== ============== ============

The changes in cash used or provided in operating activities are affected
by the changes in operations, which are discussed elsewhere herein, and by
certain other adjustments. These other adjustments include additions to
operating cash flows for nonoperating charges such as depreciation and the
provision for loan losses and write downs of assets. Cash flow of operating
activities is also adjusted to reflect the use or the providing of cash for
increases and decreases in operating assets and decreases or increases, in
operating liabilities. Accordingly, the changes in cash flow of operating
activities in the periods indicated above has been impacted not only by the
changes in operations during the periods but also by these other adjustments.
The reasons for the changes in investing and financing activities are
discussed in "Asset and Liability Management", "Liquidity and Capital
Resources" and "Sale of Mortgage-Backed Securities, Investment Securities and
Loans."
Management believes that BankAtlantic has adequate liquidity to meet its
business needs and regulatory requirements.

Impact of Inflation

The financial statements and related financial data and notes presented
herein have been prepared in accordance with GAAP, which require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in the relative purchasing power of money
over time due to inflation.
Unlike most industrial companies, virtually all of the assets and
liabilities of BankAtlantic are monetary in nature. As a result, interest
rates have a more significant impact on BankAtlantic's performance than the
effects of general price levels. Although interest rates generally move in
the same direction as inflation, the magnitude of such changes varies. The
possible effect of fluctuating interest rates is discussed more fully under
the previous section entitled "Interest Rate Sensitivity."

BankAtlantic, A Federal Savings Bank and Subsidiaries
YIELDS EARNED AND RATES PAID

For The Year Ended For The Year Ended For The Year Ended
December 31, 1993 December 31, 1992 December 31, 1991
------------------------ ------------------------ ------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
--------- --------- ------- --------- --------- ------- --------- --------- -------
(Dollars in Thousands)
Interest earnings assets
Loans: (1)
Real estate $ 322,376 $ 28,194 8.75 %$ 347,636 $ 31,966 9.20 %$ 422,200 $ 42,576 10.08 %
Installment 169,550 17,183 10.13 267,647 27,572 10.30 390,967 41,846 10.70
Bankers acceptances 9,379 314 3.35 - - - - - -
Commercial corporate 31,012 1,958 6.31 37,091 2,691 7.26 63,116 5,216 8.26
---------- ---------- ------ ---------- -------- ------ ---------- -------- ------
Total loans 532,317 47,649 8.95 652,374 62,229 9.54 876,283 89,638 10.23
---------- ---------- ------ ---------- -------- ------ ---------- -------- ------

Mortgage-backed securities 517,295 34,364 6.64 464,559 37,068 7.98 434,793 35,536 8.17

Tax certificates and other investment
securities (2) 130,788 11,881 9.08 156,666 17,146 10.94 157,293 20,175 12.83
Federal funds sold 693 22 3.17 919 33 3.59 3,275 183 5.59
---------- -------- ------ ---------- -------- ------ ---------- -------- ------
Total tax certificates and other
investment securities 131,481 11,903 9.05 157,585 17,179 10.90 160,568 20,358 12.68
---------- -------- ------ ---------- -------- ------ ---------- -------- ------

Total interest earning assets 1,181,093 93,916 7.95 % 1,274,518 116,476 9.14 % 1,471,644 145,532 9.89 %
---------- -------- ------ ---------- -------- ------ ---------- -------- ------

Non-interest earning assets
Cash and due from banks 33,568 28,268 34,366
Office properties and equipment 38,041 40,055 42,977
Other assets 53,426 60,684 72,063
Deferred/unearned income (227) (1,528) -
Less allowance for loan losses (16,915) (14,909) (14,173)
---------- ---------- ----------
Total non-interest earning assets 107,893 112,570 135,233
---------- ---------- ----------

Total assets $1,288,986 $1,387,088 $1,606,877
========== ========== ==========

Interest bearing liabilities
Deposits:
Savings $ 128,257 2,363 1.84 %$ 124,598 3,298 2.65 %$ 128,069 5,101 3.98 %
NOW, money funds and checking 484,936 11,413 2.35 442,813 14,028 3.17 490,808 24,861 5.07
Certificate accounts 435,565 18,022 4.14 539,157 30,085 5.58 753,656 53,291 7.07
---------- -------- ------ ---------- -------- ------ ---------- -------- ------
Total deposits 1,048,758 31,798 3.03 1,106,568 47,411 4.28 1,372,533 83,253 6.07
---------- -------- ------ ---------- -------- ------ ---------- -------- ------

Securities sold under agreements
to repurchase 33,962 1,082 3.19 73,309 2,881 3.93 25,426 1,671 6.57
Interest rate swaps - - - - - - - 451 -
Federal funds purchased - - - - - - 84 6 7.14
Advances from Federal Home
Loan Bank 43,006 2,359 5.49 56,386 3,725 6.61 42,187 3,603 8.54
Capital notes and other
subordinated debt 6,161 748 12.14 13,083 1,550 11.85 17,073 2,014 11.80
---------- -------- ------ ---------- -------- ------ ---------- -------- ------
Total interest bearing liabilities 1,131,887 35,987 3.18 % 1,249,346 55,567 4.45 % 1,457,303 90,998 6.24 %
---------- -------- ------ ---------- -------- ------ ---------- -------- ------

Non-interest bearing liabilities
Demand deposits 59,023 46,730 49,619
Other liabilities 21,623 32,925 41,049
Accrued interest on deposits 1,043 1,637 2,546
---------- ---------- ----------
81,689 81,292 93,214
---------- ---------- ----------
Stockholders' equity 75,410 56,450 56,360
---------- ---------- ----------
Total liabilities and stockholders'
equity $1,288,986 $1,387,088 $1,606,877
========== ========== ==========

Net interest income (3) $ 57,929 $ 60,909 $ 54,534
========== ========== ==========

Margin
Interest income/interest earning assets 7.95 % 9.14 % 9.89 %

Interest expense/interest earning assets 3.05 % 4.36 6.18
------ ------ ------
Net interest margin/earning assets 4.90 % 4.78 % 3.71 %
====== ====== ======

At period end
Interest income/interest earning assets 7.31 % 8.33 % 9.84 %
Interest expense/interest earning assets 2.95 % 3.70 % 5.56 %
------ ------ ------
4.36 % 4.63 % 4.28 %
====== ====== ======
(1) Includes non-accruing loans.
(2) Includes securities purchased under agreements to resell and interest bearing deposits.
(3) Excludes the IRS settlement interest income of $587,000.

BankAtlantic, A Federal Savings Bank and Subsidiaries

RATE/VOLUME ANALYSIS

Year to Date Year to Date
December 31, 1993 December 31, 1992
Compared to Compared to
Year to Date Year to Date
December 31, 1992 December 31, 1991
------------------------- -------------------------
Volume (1) Rate Total (2) Volume (1) Rate Total
--------- --------- --------- --------- --------- ---------

Increase (decrease) due to:
Loans $ (10,747) $ (3,833) $ (14,580) $ (21,353) $ (6,056) $ (27,409)
Mortgage-backed securities 3,503 (6,207) (2,704) 2,362 (830) 1,532
Tax certificates and other
investment securities:
Taxable (2,351) (2,914) (5,265) (63) (2,966) (3,029)
Federal funds sold (7) (4) (11) (85) (65) (150)
---------- ---------- ---------- ---------- ---------- ----------
Total earning assets (9,602) (12,958) (22,560) (19,139) (9,917) (29,056)
---------- ---------- ---------- ---------- ---------- ----------

Interest expense:
Deposits:
Savings 67 (1,002) (935) (96) (1,707) (1,803)
NOW, money funds, and checking 991 (3,606) (2,615) (1,497) (9,336) (10,833)
Certificate accounts (4,286) (7,777) (12,063) (11,977) (11,229) (23,206)
---------- ---------- ---------- ---------- ---------- ----------
Total deposits (3,228) (12,385) (15,613) (13,570) (22,272) (35,842)
---------- ---------- ---------- ---------- ---------- ----------

Securities sold under agreements
to repurchase (1,254) (545) (1,799) 1,881 (671) 1,210
Interest rate swaps - - - (457) - (457)
Federal funds purchased - - - - - -
Advances from Federal Home Loan Bank (734) (632) (1,366) 939 (817) 122
Capital notes and other subordinated
debentures (840) 38 (802) (472) 8 (464)
---------- ---------- ---------- ---------- ---------- ----------
(2,828) (1,139) (3,967) 1,891 (1,480) 411
---------- ---------- ---------- ---------- ---------- ----------
Total interest bearing liabilities (6,056) (13,524) (19,580) (11,679) (23,752) (35,431)
---------- ---------- ---------- ---------- ---------- ----------
Change in net interest income $ (3,546) $ 566 $ (2,980) $ (7,460) $ 13,835 $ 6,375
========== ========== ========== ========== ========== ==========

(1) Changes attributable to rate/volume have been allocated to volume.
(2) Excludes the 1993 IRS settlement interest income of $587,000.

RISK ELEMENTS

December 31,
---------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(In thousands)
Contractually Past Due
90 Days or More
- ------------------------- (1)
Commercial $ 2,580 1,108 689 - -
Consumer - - - 5,048 3,448
--------- --------- --------- --------- ---------
2,580 1,108 689 5,048 3,448
--------- --------- --------- --------- ---------

Non-Accrual
- -------------------------
1-4 Family 2,468 3,642 3,514 4,136 1,898
Commercial 3,802 5,317 5,660 8,641 2,745
Consumer 976 1,477 4,095 - -
Tax certificates - - 476 - -
--------- --------- --------- --------- ---------
7,246 10,436 13,745 12,777 4,643
--------- --------- --------- --------- ---------

Repossessed
- -------------------------
1-4 Family 319 756 1,660 1,379 1,107
Commercial real estate 9,332 14,241 19,635 22,082 9,444
Consumer 512 461 902 2,470 1,645
--------- --------- --------- --------- ---------
10,163 15,458 22,197 25,931 12,196
--------- --------- --------- --------- ---------

TOTAL NON-PERFORMING ASSETS$ 19,989 27,002 36,631 43,756 20,287
--------- --------- --------- --------- ---------

Restructured
- -------------------------
Commercial 2,647 2,661 7,580 3,781 4,428
--------- --------- --------- --------- ---------

TOTAL RISK ELEMENTS $ 22,636 29,663 44,211 47,537 24,715
========= ========= ========= ========= =========

Total risk elements as a
percentage of:
Total assets 1.67% 2.28% 3.04% 2.51% 1.31%
========= ========= ========= ========= =========
Loans and real estate
owned 3.64% 5.04% 5.79% 4.73% 2.18%
========= ========= ========= ========= =========

TOTAL ASSETS $1,359,195 1,303,071 1,455,822 1,896,587 1,886,453
========= ========= ========= ========= =========
TOTAL LOANS AND REAL ESTATE
OWNED $ 622,538 588,159 763,560 1,004,065 1,132,674
========= ========= ========= ========= =========

(1) The majority of these loans have matured, but are current as to
payments under the prior loan terms.

At December 31, 1993, there were no loans which were not disclosed in the
above schedule where known information about the possible credit problems of
the borrowers caused management to have serious doubts as to the ability of
the borrower to comply with present loan repayment terms and which may result
in disclosure of such loans in the schedule above in the future.

Interest income which would have been recorded under the original terms of
nonaccrual and restructured loans and the interest income actually recognized
for the years indicated are summarized below (in thousands):

For the Years Ended
December 31,
---------------------------
1993 1992 1991
-------- -------- --------
(In thousands)
Interest income which $
would have been recorded 1,068 1,301 2,476
Interest income recognized (486) (311) (1,581)
--------- --------- ---------
Interest income foregone 582 990 1,572
$ ========= ========= =========

Changes in the allowance for loan losses were:

For the Years Ended
December 31,
---------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(In thousands)
Balance, beginning
of period $ 16,500 13,750 15,741 5,810 5,611
Charge-offs:
Commercial loans (835) (776) (1,694) (2,349) (1,586)
Installment loans (3,350) (10,430) (18,903) (5,605) (3,801)
Real estate mortgages (302) (1,473) (259) (667) (380)
--------- --------- --------- --------- ---------
(4,487) (12,679) (20,856) (8,621) (5,767)
--------- --------- --------- --------- ---------
Recoveries:
Commercial loans 262 175 191 117 6
Installment loans 1,259 8,584 1,035 735 422
Real estate mortgages 16 20 99 45 188
--------- --------- --------- --------- ---------
1,537 8,779 1,325 897 616
--------- --------- --------- --------- ---------
Net charge-offs (2,950) (3,900) (19,531) (7,724) (5,151)
Additions charged to
operations 3,450 6,650 17,540 17,655 5,350
--------- --------- --------- --------- ---------
$ 17,000 16,500 13,750 15,741 5,810
========= ========= ========= ========= =========

Allowance as a percentage of (1)
Total loans 3.38% 2.88% 1.85% 1.61% 0.52%
Non-performing assets 85.05% 61.11% 37.54% 35.97% 28.64%
========= ========= ========= ========= =========

Ratio of net charge-offs to (1)
average outstanding loans 0.56% 0.60% 2.23% 0.69% 0.46%
========= ========= ========= ========= =========

(1) Excludes $110.7 million of banker's acceptances. Including these
banker's acceptances, its percentages would be 2.77% and 0.55%, respectively.

The allocation of the allowance for loan losses by loan category and the
percent of the related gross loans in each category to total loans follows (in
thousands):

December 31, 1993 December 31, 1992
------------------------------- --------------------------------
Allocation of Percent of Allocation of Percent of
allowance for gross loans in allowance for gross loans in
loan loss by each category loan loss by each category
category to total loans (1) category to total loans
------------- ------------------ -------------- ---------------

Commercial loans $ 1,924 5.48% $ 2,676 5.69%
Real estate mortgage 6,038 67.29 5,261 57.61
Installment 4,687 27.23 5,613 36.70
Unallocated 4,351 N/A 2,950 N/A
------------- ------------------ -------------- ---------------
$ 17,000 100.00% $ 16,500 100.00%

(1) Excludes banker's acceptances.

Prior to 1992, BankAtlantic did not allocate the allowance for loan loss by
category. Relevant information for prior years is discussed under "Provision
for Loan Losses and Declines in Value of Real Estate Owned."

Tax Certificate and Other Investment Securities

A comparison of the book value and approximate market value of tax
certificates and other investment securities wasis (in thousands):

December 31,
----------------------------------------------------------------------------
1993 1992 1991
--------------- -------------- --------------------------
Approx. Approx. Approx.
Book Market Book Market Book Market
Value Value Value Value Value Value
--------- --------- --------- --------- ------------- ------------

Tax certificates, net $ 83,927 $ 83,927 $ 120,295 $ 120,295 $ 106,926 $ 106,926
Asset-backed securities 111 111 129 129 156 156
Corporate bonds 3,663 3,656 - - - -
Federal Agency obligations 10,000 9,894 - - 1,994 2,103
---------- --------- --------- --------- ------------- ------------
$ 97,701 $ 97,588 $ 120,424 $ 120,424 $ 109,076 $ 109,185
========== ========= ========= ========= ============= ============

The maturities of tax certificates and other investment securities at December
31, 1993 were are (in thousands):

After 1 After 5
Year, but Years, but
Within Within Within
1 Year 5 Years 10 years Total
------------- --------------- -------------- -----------------

Tax certificates, net(1) $ 60,225 $ 23,561 $ 141 $ 83,927
Asset-backed securities(2) 24 87 - 111
Corporate bonds(2) - 3,663 - 3,663
Federal Agency obligations(2) 10,000 - - 10,000
------------- --------------- -------------- -----------------
$ 70,249 $ 27,311 $ 141 $ 97,701
============= =============== ============== =================
Average stated yield 8.85% 8.85% 8.79%
============= =============== ==============

(1) There is no contractual maturity; amounts indicated are based on
historical payment experience.

(2) Based upon contractual maturity.

Activity in the allowance for tax certificate losses was:

For the Years
Ended December 31,

--------------------------------------------

1993 1992 1991

------------- ------------ -------------

Balance, beginning of period $ 1,558 $ 795 $ 104
Charge-offs (810) (552) (395)
Recoveries 562 155 275
------------- ------------ -------------
Net charge-offs (248) (397) (120)
Additions charged to operations 1,660 1,160 811
------------- ------------ -------------
Balance, end of period $ 2,970 $ 1,558 $ 795
------------- ------------ -------------
Average yield on tax certificates
and other Investment securities
during the period 9.08% 10.94% 12.83%
============ ============ =============

Loan Activity - The following table shows loan activity by major categories
for the periods indicated (in thousands):

For the Years Ended
December 31,
---------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(In thousands)
Originations:
Residential loans $ 52,674 41,336 17,320 33,302 63,283
Construction loans 13,744 18,912 10,157 36,608 65,849
Commercial loans 186,584 108,744 85,931 93,085 275,904
Installment loans 10,222 7,075 27,859 211,184 223,419
--------- --------- --------- --------- ---------
Total originations 263,224 176,067 141,267 374,179 628,455
--------- --------- --------- --------- ---------

Purchases:(2)
Commercial loans 5,142 - - 20 -
Banker's acceptances 109,931 - - - -
Residential loans - - - 689 -
--------- --------- --------- --------- ---------
Total purchases 115,073 - - 709 -
--------- --------- --------- --------- ---------
Total loan production 378,297 176,067 141,267 374,888 628,455
--------- --------- --------- --------- ---------
Loan sales (44,983) (36,054) (14,949) (45,503) -
Principal reductions (289,037) (297,263) (298,076) 340,133 (549,064)
Loan securitization - - (40,361) (106,080) -
Transfer to real estate
owned(1) (2,396) (7,994) (6,729) (17,208) (2,532)
--------- --------- --------- --------- ---------
Net loan activity $ 41,881 (165,244) (218,848) (134,036) 76,859
========= ========= ========= ========= =========

(1) Includes foreclosures and loans treated as in substance foreclosures.
(2) Does not include individual installment loans purchased through
dealers.

Principal Repayments - The following table sets forth the scheduled
contractual principal repayments at maturity date of BankAtlantic's loan
portfolios and mortgage-backed securities at December 31, 1993. As of
December 31, 1993, the total amount of principal repayments on loans and
mortgage-backed securities contractually due after December 31, 1994 was
$928.4 million, $663.3 million of which had fixed interest rates and $265.1
million of which had floating or adjustable interest rates.

Year Ended December 31, (1)
(In thousands)
---------------------------------------------------------
1997- 1998- 2004-
1994 1995 1996 1998 2003 2008 >2009 Total
------- --------------------- ------- -------------- -------
Real estate
mortgage $ 59,702 11,155 13,167 54,889 76,913 21,989 94,535 332,350
Banker's
acceptances 110,652 - - - - - - 110,652
Real estate
construction 11,333 - - - - - - 11,333
Installment 15,947 7,296 8,948 9,816 23,513 16,179 57,421 139,120
Commercial non-
real estate 21,714 1,668 1,981 743 1,873 - - 27,979
------- ------ ------ ------- ------- ------ ------- -------
Total loans $219,348 20,119 24,096 65,448 102,299 38,168 151,956 621,434
======= ====== ====== ======= ======= ====== ======= =======
Total mortgage-
backed
securities $ 12 95 43,093 126,917 249,744 6,774 99,730 526,365
======= ====== ====== ======= ======= ====== ======= =======

(1) Does not include deductions for undisbursed portion of loans in
process, deferred loan fees, unearned discounts and allowance for loan losses.

Loan Concentration - BankAtlantic's loan concentration of total loans at
December 31, 1993 was:

Florida 79%
Northeast 12%
Other 9%

The loan concentration for BankAtlantic's portfolio is primarily in South
Florida where the economic conditions have improved in the latter part of 1992
and 1993. The concentration of BankAtlantic's loan portfolio in the
Northeastern states is primarily related to those loans identified in the
Subject Portfolio. Economic conditions in the Northeast have remained
sluggish with high rates of unemployment and declining real estate values,
however, 1993 has shown some signs of improvement. The rest of the portfolio
is throughout the United States without any specific concentration.
Loan maturities and sensitivity of loans to changes in interest rates for
commercial non-real estate loans and real estate construction loans at
December 31, 1993 were (in thousands):

Commercial
Non-Real Real Estate
Estate Construction Total
---------- ---------- ----------
One year or less $ 19,484 11,333 30,817
Over one year but less than five years 8,495 - 8,495
Over five years - - -
---------- ---------- ----------
$ 27,979 11,333 39,312
========== ========== ==========

Sensitivity of loans to changes in interest
rates - loans due agter one year

Pre-determined interest rate $ 6,399 - 6,399

Floating or adjustable interest rate 2,096 - 2,096
---------- ---------- ----------
$ 8,495 - 8,495
========== ========== ==========

Deposits - Deposit accounts consisted of the following (in thousands):

December 31,
------------------------------
1993 1992 1991
---------- ---------- ----------
Non-interest bearing deposits $ 62,065 52,426 47,576
Interest bearing deposits:
Insured money fund savings 301,572 330,255 312,781
NOW account 152,186 143,580 129,326
Savings account 124,699 130,379 124,163
Time deposits less than $100,000 384,411 409,135 580,489
Time deposits $100,000 and over 51,427 42,340 61,178
---------- ---------- ----------
Total $ 1,076,360 1,108,115 1,255,513
========== ========== ==========

Time deposits, $100,000 and over, have the following maturities at December
31, 1993:

Less than three months $ 8,071
3 to 6 months 6,377
6 to 12 months 15,784
More than 12 months 21,195
----------
$ 51,427
==========

The stated rates at which BankAtlantic paid interest on deposits were (in
thousands):

December 31,
------------------------------
1993 1992 1991
---------- ---------- ----------
Interest free checking $ 62,065 52,426 47,576
Insured money fund savings:
2.52% at December 31, 1993, 3.07% at
December 31, 1992 and 4.22% at
December 31, 1991 301,572 330,255 312,781
NOW account:
1.79% at December 31, 1993, 1.61% at
December 31, 1992 and 2.93% at
December 31, 1991 152,186 143,580 129,326
Savings account:
1.78% at December 31, 1993, 2.06% at
December 31, 1992 and 3.74% at
December 31, 1991 124,699 130,379 124,163
---------- ---------- ----------
Total non-certificate accounts 640,522 656,640 613,846
---------- ---------- ----------
Certificate accounts:
0.00% to 3.00% 106,521 72,657 3,059
3.01% to 4.00% 135,753 164,378 3,623
4.01% to 5.00% 105,214 87,327 81,104
5.10% to 6.00% 48,770 47,015 186,279
6.01% to 7.00% 15,690 35,939 196,738
7.01% and greater 23,757 44,012 170,595
---------- ---------- ----------
Total certificate accounts 435,705 451,328 641,398
---------- ---------- ----------
1,076,227 1,107,968 1,255,244
---------- ---------- ----------
Interest earned not credited to deposit
accounts 133 147 269
---------- ---------- ----------
Total deposit accounts $ 1,076,360 1,108,115 1,255,513
========== ========== ==========

Weighted average stated interest rate on
at the end of each respective period 2.83% 3.18% 5.10%
========== ========== ==========

At December 31, 1993, the amounts of scheduled maturities of certificate
accounts were:

1994 1995 1996 1997 1998 Thereafter
---------- ---------- ---------- ---------- ---------- ----------
0.00% to 3.00% 100,384 4,445 3 - - 1,689
3.01% to 4.00% 122,167 12,442 1,116 21 - 7
4.01% to 5.00% 36,933 49,543 12,387 4,623 1,700 28
5.01% to 6.00% 20,756 4,076 938 11,131 11,839 30
6.01% to 7.00% 7,988 702 1,965 4,407 427 201
7.01% and greater 7,341 9,050 6,834 331 199 2
---------- ---------- ---------- ---------- ---------- ----------
Total 295,569 80,258 23,243 20,513 14,165 1,957
========== ========== ========== ========== ========== ==========

The following table sets forth the deposit activities for the periods
indicated (in thousands):
December 31,
------------------------------
1993 1992 1991
---------- ---------- ----------
Net decrease before interest credited (59,370) (190,907) (272,307)
Interest credited 27,615 43,509 71,853
---------- ---------- ----------
Total (31,755) (147,398) (200,454)
========== ========== ==========

A summary of the cost and gross excess (deficiency) of market value
compared to cost of tax certificates and other investment securities and
mortgage-backed securities, including mortgage-backed securities available for
sale, follows:

December 31, 1993
---------------------------------------------
Gross Gross Approximate
Book Unrealized Unrealized Market
Value AppreciationDepreciation Value
----------- ----------- ----------- -----------
Tax certificates and other
investment securities:
Cost equals market $ 83,927 - - 83,927
Cost over market 13,774 - 113 13,661

Mortgage-backed securities:
Market over cost 489,453 14,620 - 504,073
Cost over market 36,912 - 67 36,845
----------- ----------- ----------- -----------
$ 624,066 14,620 180 638,506
=========== =========== =========== ===========

December 31, 1992
---------------------------------------------
Gross Gross Approximate
Book Unrealized Unrealized Market
Value AppreciationDepreciation Value
----------- ----------- ----------- -----------
Tax certificates and other
investment securities:
Cost equals market $ 120,424 - - 120,424

Mortgage-backed securities:
Market over cost 336,720 12,234 - 348,954
Cost over market 150,774 - 733 150,041
----------- ----------- ----------- -----------
$ 607,918 12,234 733 619,419
=========== =========== =========== ===========

December 31, 1991
---------------------------------------------
Gross Gross Approximate
Book Unrealized Unrealized Market
Value AppreciationDepreciation Value
----------- ----------- ----------- -----------
Tax certificates and other
investment securities:
Cost equals market $ 107,082 - - 107,082
Cost over market 1,994 109 - 2,103

Mortgage-backed securities:
Market over cost 454,596 22,950 - 477,546
Cost over market 6,184 - 74 6,110
----------- ----------- ----------- -----------
$ 569,856 23,059 74 592,841
=========== =========== =========== ===========

BankAtlantic, A Federal Savings Bank and Subsidiaries

Loans receivable composition, including mortgaged-backed securities, at the dates indicated was (dollars in thousands):

1993 1992 1991 1990 1989
------------- ------------- ------------- ------------- -------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
--------- ------- --------- ------- --------- ------- --------- ------- --------- -------

Loans receivable:
Real estate loans:
Conventional mortgages $ 120,531 20.23 % $ 147,654 26.52 % $ 185,677 25.49 % $ 260,577 27.00 % $ 393,783 35.28 %
Conventional mortgages
available for sale 5,752 0.96 7,641 1.37 3,807 0.52 - - - -
Construction and
development 11,333 1.90 12,961 2.33 23,913 3.28 33,452 3.47 62,903 5.63
FHA and VA insured 7,972 1.34 9,854 1.77 11,459 1.57 13,223 1.37 15,536 1.39
Commercial 198,095 33.24 156,844 28.18 157,878 21.67 186,205 19.30 211,471 18.94
Other loans:
Home improvement 52,563 8.82 72,508 13.03 100,556 13.80 104,546 10.84 66,838 5.99
Commercial (non-real
estate) 27,979 4.70 33,071 5.94 38,742 5.32 58,220 6.03 68,746 6.16
Bankers acceptances 110,652 18.57 - - - - - - - -
Installment loans held
by individuals 86,557 14.53 140,909 25.31 233,165 32.01 345,768 35.84 345,892 30.99
--------- ------- --------- ------- --------- ------- --------- ------- --------- -------
Total 621,434 104.29 581,442 104.45 755,197 103.66 1,001,991 103.85 1,165,169 104.38
--------- ------- --------- ------- --------- ------- --------- ------- --------- -------

Deduct:
Undisbursed portion of
loans in process 5,570 0.93 6,492 1.17 9,033 1.24 13,399 1.39 29,884 2.68
Deferred loan fees 33 0.01 55 0.01 99 0.01 385 0.04 780 0.07
Unearned discounts on
commercial loans 2,124 0.36 - - - - - - - -
Unearned discounts on
purchaed & installment
loans 820 0.14 1,733 0.31 3,800 0.52 7,603 0.79 12,382 1.11
Allowance for loan losses 17,000 2.85 16,500 2.96 13,750 1.89 15,741 1.63 5,810 0.52
--------- ------- --------- ------- --------- ------- --------- ------- --------- -------
Loans receivable, net $ 595,887 100.00 % $ 556,662 100.00 % $ 728,515 100.00 % $ 964,863 100.00 % $1,116,313 100.00 %
========= ======= ========= ======= ========= ======= ========= ======= ========= =======

Mortgage-backed securities:
FNMA participation
certificates 178,928 33.99 % $ 174,666 35.83 % $ 214,700 46.59 % $ 270,196 61.48 % $ 249,878 54.16 %
GNMA and FHLMC mortgage-
backed securities 347,437 66.01 312,828 64.17 246,080 53.41 169,313 38.52 211,528 45.84
Mortgage-backed --------- ------- --------- ------- --------- ------- --------- ------- --------- -------
securities $ 526,365 100.00 % $ 487,494 100.00 % $ 460,780 100.00 % $ 439,509 100.00 % $ 461,406 100.00 %
========= ======= ========= ======= ========= ======= ========= ======= ========= =======

/TABLE

BankAtlantic, A Federal Savings Bank and Subsidiaries

CUMULATIVE RATE SENSITIVITY GAP

0-90 91-180 181 Days 1-3 3-5 5-10 10-20 >20
Days Days - 1 Year Years Years Years Years Years Total
-------- -------- -------- -------- -------- -------- -------- -------- --------
(Dollars in thousands)
Interest earning assets:
Tax certificates and other
investment securities (5) $ 42,575 $ 17,074 $ 18,370 $ 25,392 $ 2,879 $ 141 $ - $ - $ 106,431
Residential loans (1) (2)
Conventional single family 7,084 6,150 10,039 21,978 8,622 9,577 585 21 64,056
Adjustable single family 31,576 15,571 23,052 - - - - - 70,199
Mortgage-backed securities
FHLMC and FNMA (3) 63,924 53,744 87,828 182,149 39,901 5,583 341 12 433,482
Adjustable montgage-backed
securities 47,770 1,722 42,657 734 - - - - 92,883
Commercial real estate loans 6,256 6,396 13,229 68,918 66,522 5,241 - - 166,562
Adjustable commercial real
estate loans 42,866 - - - - - - - 42,866
Other loans:
Commercial business 585 599 1,243 7,713 782 - - - 10,922
Commercial business adjustabl 17,057 - - - - - - - 17,057
Bankers acceptances 110,652 - - - - - - - 110,652
Installment 13,900 12,337 20,661 46,845 17,402 3,179 6,102 - 120,426
Installment prime rate 18,694 - - - - - - - 18,694
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total interest earning assets$ 402,939 $ 113,593 $ 217,079 $ 353,729 $ 136,108 $ 23,721 $ 7,028 $ 33 $1,254,230
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------

Interest bearing liabilities:
Money fund savings (4) 59,560 47,797 76,715 61,558 29,308 26,634 - - 301,572
Savings and NOW (4) 19,377 17,850 32,904 87,457 35,910 83,387 - - 276,885
Certificate accounts 117,628 85,151 92,790 103,501 34,678 1,957 - - 435,705
Borrowings:
Securities sold under
agreements to repurchase 21,135 - - - - - - - 21,135
Advances from FHLB 97,150 2,050 12,050 17,050 - - - - 128,300
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total interest bearing
liabilities $ 314,850 $ 152,848 $ 214,459 $ 269,566 $ 99,896 $ 111,978 $ - $ - $1,163,597
========== ========== ========== ========== ========== ========== ========== ========== ==========

GAP (repricing difference) $ 88,089 $ (39,255)$ 2,620 $ 84,163 $ 36,212 $ (88,257)$ 7,028 $ 33 $ 90,633

Cumulative GAP $ 88,089 $ 48,834 $ 51,454 $ 135,617 $ 171,829 $ 83,572 $ 90,600 $ 90,633

Cumulative ratio of GAP to
total assets 6.48 % 3.59 % 3.79 % 9.98 % 12.64 % 6.15 % 6.67 % 6.67 %
========== ========== ========== ========== ========== ========== ========== ==========

(1) Fixed rate mortgages are shown in periods which reflect normal amortization plus prepayments of 18-64% per annum depending
on coupon.
(2) Adjustable rate mortgages are shown in the periods in which the mortgages are scheduled for repricing.
(3) MBS are shown in periods which reflect normal amortization plus prepayments equal to BankAtlantic's experience of 42% per
annum.
(4) BankAtlantic determines deposit run-off on money fund checking, savings and NOW accounts based on statistics developed in
conjunction with the OTS. BankAtlantic does not believe its experience differs significantly from the OTS. Interest free
transaction accounts are non-interest bearing liabilities and are accordingly, excluded from the cumulative rate sensivity
gap analysis.

Within 1-3 3-5 Over 5
1 Year Years Years Years
-------- -------- -------- --------
Savings accounts decay rates 17% 17% 16% 14%
Insured money fund savings
(excluding tiered savings)
decay rates 79% 31% 31% 31%
NOW and tiered savings accounts
decay rates 37% 32% % 17% 17%
========== ========== ========== ==========

(5) Includes FHLB Stock.
/TABLE