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Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 2010
OR
o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number
001-09071
BFC Financial Corporation
(Exact name of registrant as specified in its charter)
     
Florida   59-2022148
     
(State or other jurisdiction of incorporation or
organization)
  (IRS Employer Identification Number)
     
2100 West Cypress Creek Road    
Fort Lauderdale, Florida   33309
     
(Address of Principal executive office)   (Zip Code)
(954) 940-4900
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES x     NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES o     NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer o   Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o     NO x
The number of shares outstanding of each of the registrant’s classes of common stock as of August 9, 2010 is as follows:
Class A Common Stock of $.01 par value, 68,521,497 shares outstanding.
Class B Common Stock of $.01 par value, 6,859,751 shares outstanding.
 
 

 


 

BFC Financial Corporation
TABLE OF CONTENTS
                 
PART I.   FINANCIAL INFORMATION        
       
 
       
    Item 1.          
       
 
       
            3  
       
 
       
            4  
       
 
       
            6  
       
 
       
            7  
       
 
       
            8  
       
 
       
            10  
       
 
       
    Item 2.       53  
       
 
       
    Item 4T.       107  
       
 
       
PART II.   OTHER INFORMATION        
       
 
       
    Item 1.       108  
       
 
       
    Item 1A.       108  
       
 
       
    Item 6.       108  
       
 
       
    SIGNATURES  
 
       
 EX-31.1
 EX-31.2
 EX-31.3
 EX-32.1
 EX-32.2
 EX-32.3

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PART I — FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BFC Financial Corporation
Consolidated Statements of Financial Condition — Unaudited
(In thousands, except share data)
                 
    June 30,     December 31,  
    2010     2009  
ASSETS
               
Cash and cash equivalents
  $ 500,422       316,080  
Interest bearing deposits at other financial institutions
    33,863        
Restricted cash
    50,618       24,020  
Securities available for sale, at fair value
    327,246       346,375  
Derivatives, at fair value
    638        
Investment securities at cost or amortized cost (fair value: $1,981 in 2010 and $9,654 in 2009)
    1,981       9,654  
Current income tax receivable
    8,390       64,006  
Tax certificates, net of allowance of $8,175 in 2010 and $6,781 in 2009
    139,731       110,991  
Federal Home Loan Bank (“FHLB”) stock, at cost which approximates fair value
    48,751       48,751  
Loans held for sale
    5,861       4,547  
Loans receivable, net of allowance for loan losses of $187,862 in 2010 and $187,218 in 2009
    3,371,577       3,678,894  
Notes receivable including gross securitized notes, net of allowance of $67,051 in 2010 and $3,986 in 2009
    620,498       277,274  
Retained interest in notes receivable sold
          26,340  
Accrued interest receivable
    23,837       32,279  
Real estate inventory
    482,898       494,291  
Real estate owned and other repossessed assets
    55,412       46,477  
Investments in unconsolidated affiliates
    12,486       15,272  
Properties and equipment, net
    278,433       289,209  
Goodwill
    12,241       12,241  
Intangible assets, net
    79,136       81,686  
Assets held for sale
          71,900  
Other assets
    96,246       96,750  
 
           
Total assets
  $ 6,150,265       6,047,037  
 
           
 
Assets of consolidated variable interest entities (“ VIEs”) included in total assets above
               
Restricted cash
  $ 33,011          
Securitized notes receivable, gross
    567,818          
 
             
Total assets of consolidated VIEs
  $ 600,829          
 
             
 
               
LIABILITIES AND EQUITY
               
Liabilities:
               
Interest bearing deposits
  $ 3,085,772       3,133,360  
Non-interest bearing deposits
    898,708       815,458  
 
           
Total deposits
    3,984,480       3,948,818  
Advances from FHLB
    115,000       282,012  
Securities sold under agreements to repurchase
    24,724       24,468  
Short-term borrowings
    2,071       2,803  
Receivable-backed notes payable
    592,533       237,416  
Notes and mortgage notes payable and other borrowings
    369,510       395,361  
Junior subordinated debentures
    453,829       447,211  
Deferred income taxes
    33,548       31,204  
Liabilities related to assets held for sale
          76,351  
Other liabilities
    234,849       186,453  
 
           
Total liabilities
    5,810,544       5,632,097  
 
           
 
               
Commitments and contingencies
               
 
               
Preferred stock of $.01 par value; authorized - 10,000,000 shares:
               
Redeemable 5% Cumulative Preferred Stock — $.01 par value; authorized 15,000 shares; issued and outstanding 15,000 shares with a redemption value of $1,000 per share
    11,029       11,029  
 
           
 
               
Equity:
               
Class A common stock of $.01 par value, authorized 150,000,000 shares; issued and outstanding 68,521,497 in 2010 and 2009
    685       685  
Class B common stock of $.01 par value, authorized 20,000,000 shares; issued and outstanding 6,859,251 in 2010 and 6,854,251 in 2009
    69       69  
Additional paid-in capital
    229,857       227,934  
(Accumulated deficit) retained earnings
    (22,919 )     16,608  
Accumulated other comprehensive income (loss)
    2,850       (237 )
 
           
Total BFC Financial Corporation (“BFC”) shareholders’ equity
    210,542       245,059  
Noncontrolling interests
    118,150       158,852  
 
           
Total equity
    328,692       403,911  
 
           
Total liabilities and equity
  $ 6,150,265       6,047,037  
 
           
 
Liabilities of consolidated VIEs included in total liabilities above
               
Receivable-backed notes payable
  $ 485,946          
 
             
Total liabilities of consolidated VIEs
  $ 485,946          
 
             
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Operations — Unaudited
(In thousands, except per share data)
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Revenues
                               
Real Estate and Other:
                               
Sales of real estate, net of estimated uncollectibles
  $ 53,575       1,767       72,170       3,194  
Other resorts and communities operations revenue
    16,922             32,943        
Other revenues
    12,892       869       24,079       1,761  
Interest income
    30,171             60,182        
 
                       
 
    113,560       2,636       189,374       4,955  
 
                       
 
                               
Financial Services:
                               
Interest income
    43,648       57,479       91,735       120,387  
Service charges on deposits
    15,502       19,347       30,550       38,032  
Other service charges and fees
    7,739       8,059       15,117       15,084  
Securities activities, net
    312       692       3,450       5,132  
Other non-interest income
    2,491       3,279       5,017       5,929  
 
                       
 
    69,692       88,856       145,869       184,564  
 
                       
 
Total revenues
    183,252       91,492       335,243       189,519  
 
                       
 
                               
Costs and Expenses
                               
Real Estate and Other:
                               
Cost of sales of real estate
    13,644       1,301       22,540       1,994  
Cost of sales of other resorts and communities operations
    12,365             25,055        
Interest expense
    20,069       3,230       40,000       5,478  
Selling, general and administrative expenses
    62,266       11,274       116,604       22,229  
 
                       
 
    108,344       15,805       204,199       29,701  
 
                       
 
                               
Financial Services:
                               
Interest expense
    9,951       20,814       21,795       45,573  
Provision for loan losses
    48,553       43,494       79,308       87,771  
Employee compensation and benefits
    25,155       25,935       50,533       54,741  
Occupancy and equipment
    13,745       14,842       27,327       29,753  
Advertising and promotion
    2,239       1,979       4,183       4,811  
Check losses
    521       991       953       1,835  
Professional fees
    4,824       2,695       7,711       6,021  
Supplies and postage
    921       999       1,919       2,003  
Telecommunication
    662       586       1,196       1,284  
Cost associated with debt redemption
    53       1,441       60       2,032  
Provision for tax certificates
    2,134       1,414       2,867       2,900  
Restructuring charges and exit activities
    1,726       1,406       1,726       3,281  
Impairment of goodwill
                      8,541  
Impairment of real estate owned
    1,221       411       1,364       623  
FDIC special assessment
          2,428             2,428  
Other expenses
    9,060       7,466       16,432       14,896  
 
                       
 
    120,765       126,901       217,374       268,493  
 
                       
Total costs and expenses
    229,109       142,706       421,573       298,194  
 
                       
(Loss) gain on settlement of investment in Woodbridge’s subsidiary
    (1,135 )           (1,135 )     40,369  
Gain on sale of asset
    275             275        
Equity in earnings from unconsolidated affiliates
    276       10,755       469       17,250  
Impairment of unconsolidated affiliates
                      (20,401 )
Impairment of investments
                      (2,396 )
Other income
    924       794       1,362       1,759  
 
                       
Loss from continuing operations before income taxes
    (45,517 )     (39,665 )     (85,359 )     (72,094 )
Less: Provision (benefit) for income taxes
    392             (4,199 )      
 
                       
Loss from continuing operations
    (45,909 )     (39,665 )     (81,160 )     (72,094 )
Income from discontinued operations
    2,714       139       2,465       3,536  
 
                       
Net loss
    (43,195 )     (39,526 )     (78,695 )     (68,558 )
Less: Net loss attributable to noncontrolling interests
    (27,015 )     (26,617 )     (41,680 )     (45,246 )
 
                       
Net loss attributable to BFC
    (16,180 )     (12,909 )     (37,015 )     (23,312 )
Preferred stock dividends
    (187 )     (187 )     (375 )     (375 )
 
                       
Net loss allocable to common stock
  $ (16,367 )     (13,096 )     (37,390 )     (23,687 )
 
                       
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Operations — Unaudited
(In thousands, except per share data)
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Basic and Diluted (Loss) Earnings Per Common Share
                               
Attributable to BFC (Note 22):
                               
Basic (Loss) Earnings Per Common Share
                               
Loss per share from continuing operations
  $ (0.26 )     (0.29 )     (0.53 )     (0.55 )
Earnings per share from discontinued operations
    0.04             0.03       0.03  
 
                       
Net loss per common share
  $ (0.22 )     (0.29 )     (0.50 )     (0.52 )
 
                       
 
                               
Diluted (Loss) Earnings Per Common Share
                               
Loss per share from continuing operations
  $ (0.26 )     (0.29 )     (0.53 )     (0.55 )
Earnings per share from discontinued operations
    0.04             0.03       0.03  
 
                       
Net loss per common share
  $ (0.22 )     (0.29 )     (0.50 )     (0.52 )
 
                       
 
                               
Basic weighted average number of common shares outstanding
    75,379       45,126       75,378       45,120  
 
                       
 
                               
Diluted weighted average number of common and common equivalent shares outstanding
    75,379       45,126       75,378       45,120  
 
                       
 
                               
Amounts attributable to BFC common shareholders:
                               
Loss from continuing operations
  $ (19,081 )     (13,129 )     (39,855 )     (24,788 )
Income from discontinued operations
    2,714       33       2,465       1,101  
 
                       
Net loss attributable to BFC common shareholders
  $ (16,367 )     (13,096 )     (37,390 )     (23,687 )
 
                       
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Comprehensive Loss — Unaudited
(In thousands)
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Net loss
  $ (43,195 )     (39,526 )     (78,695 )     (68,558 )
 
                       
 
                               
Other comprehensive income, net of tax:
                               
Unrealized gains on securities available for sale
    1,636       6,705       5,075       13,721  
Unrealized gains associated with investment in unconsolidated affiliates
          132             605  
Pro-Rata share of cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests in notes receivable sold
          (1,251 )           (1,251 )
Realized gains reclassified into net loss
          (693 )     (3,139 )     (2,737 )
 
                       
Other comprehensive income
    1,636       4,893       1,936       10,338  
 
                       
 
                               
Comprehensive loss
    (41,559 )     (34,633 )     (76,759 )     (58,220 )
Less: Comprehensive loss attributable to noncontrolling interests
    (25,849 )     (25,864 )     (41,906 )     (40,604 )
 
                       
Total comprehensive loss attributable to BFC
  $ (15,710 )     (8,769 )     (34,853 )     (17,616 )
 
                       
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statement of Changes in Equity — Unaudited
For the Six Months Ended June 30, 2010
(In thousands)
                                                                                 
                                                    Accumulated                    
                                                    Other                    
                                (Accumulated     Compre-     Total     Non-        
    Shares of Common     Class A     Class B     Additional     Deficit)     hensive     BFC     controlling        
    Stock Outstanding     Common     Common     Paid-in     Retained     Income     Shareholders’     Interest in     Total  
    Class A     Class B     Stock     Stock     Capital     Earnings     (Loss)     Equity     Subsidiaries     Equity  
Balance, December 31, 2009
    68,521       6,854     $ 685     $ 69     $ 227,934     $ 16,608     $ (237 )   $ 245,059     $ 158,852     $ 403,911  
Cumulative effect of change in accounting principle (Note 2)
                                  (2,137 )     925       (1,212 )     (811 )     (2,023 )
                     
Balance beginning of year, as adjusted
                  $ 685     $ 69     $ 227,934     $ 14,471     $ 688     $ 243,847     $ 158,041     $ 401,888  
Net loss
                                  (37,015 )             (37,015 )     (41,680 )     (78,695 )
Other comprehensive income (loss)
                                        2,162       2,162       (226 )     1,936  
Issuance of Class B Common Stock from exercise of options
          5                   2                   2             2  
Net effect of subsidiaries’ capital transactions attributable to BFC
                            1,249                   1,249             1,249  
Noncontrolling interest net effect of subsidiaries’ capital transactions
                                                    2,015       2,015  
Cash dividends on 5% Preferred Stock
                                  (375 )           (375 )           (375 )
Share-based compensation related to stock options
                            672                   672             672  
     
Balance, June 30, 2010
    68,521       6,859     $ 685     $ 69     $ 229,857     $ (22,919 )   $ 2,850     $ 210,542     $ 118,150     $ 328,692  
     
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Cash Flows — Unaudited
(In thousands)
                 
    For the Six Months Ended  
    June 30,  
    2010     2009  
Net cash provided by operating activities
  $ 176,257       11,017  
 
           
Investing activities:
               
Purchase of interest-bearing deposits in other financial institutions
    (33,863 )      
Proceeds from redemption and maturity of investment securities and tax certificates
    68,993       98,569  
Purchase of investment securities and tax certificates
    (93,142 )     (107,816 )
Purchase of securities available for sale
    (84,762 )      
Proceeds from sales of securities available for sale
    73,540       205,679  
Proceeds from maturities of securities available for sale
    64,943       80,047  
Decrease in restricted cash
    9,160       13,443  
Cash paid in settlement of Woodbridge subsidiary’s bankruptcy
          (12,430 )
Purchases of FHLB stock
          (2,295 )
Redemption of FHLB stock
          8,151  
Investments in unconsolidated affiliates
          (630 )
Distributions from unconsolidated affiliates
    85       398  
Net decrease in loans
    183,598       185,352  
Proceeds from the sale of loans receivable
    26,871       5,427  
Improvements to real estate owned
    (800 )     (577 )
Proceeds from sales of real estate owned
    12,362       1,372  
Proceeds from the sale of assets
    75,305        
Disposals of office properties and equipment
    528       144  
Purchases of office property and equipment
    (4,101 )     (2,072 )
Investment in of acquisition of Pizza Fusion
          3,000  
 
           
Net cash provided by investing activities
    298,717       475,762  
 
           
Financing activities:
               
Net increase in deposits
    35,662       135,251  
Prepayment of FHLB advances
    (2,061 )     (526,032 )
Net (repayments) proceeds from FHLB advances
    (165,000 )     154,000  
Decrease in short-term borrowings
    (476 )     (254,658 )
Prepayment of notes and bonds payable
    (661 )      
Repayment of notes, mortgage notes and bonds payable
    (178,600 )     (1,656 )
Proceeds from notes, mortgage notes and bonds payable
    21,508       132  
Payments for debt issuance costs
    (958 )     (294 )
Preferred stock dividends paid
    (375 )     (375 )
Purchase and retirement of Woodbridge common stock
          (13 )
Payments for the issuance costs of BankAtlantic Bancorp Class A common stock
    (118 )      
BankAtlantic Bancorp common stock dividends paid to non-BFC shareholders
          (198 )
Proceeds from the exercise of BFC stock options
    2        
Proceeds from the issuance of common stock in Pizza Fusion
    783        
BankAtlantic Bancorp non-controlling interest distributions
    (338 )      
 
           
Net cash used in financing activities
    (290,632 )     (493,843 )
 
           
Increase (decrease) in cash and cash equivalents
    184,342       (7,064 )
Cash and cash equivalents at beginning of period
    316,080       278,937  
 
           
Cash and cash equivalents at end of period
  $ 500,422       271,873  
 
           
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Consolidated Statements of Cash Flows — Unaudited
(In thousands)
                 
    For the Six Months Ended  
    June 30,  
    2010     2009  
Supplemental cash flow information:
               
Interest paid on borrowings and deposits
  $ 50,691       54,641  
Income taxes refunded; net of payments
    60,222        
Supplementary disclosure of non-cash investing and financing activities:
               
Loans and tax certificates transferred to real estate owned
    22,115       16,403  
Long-lived assets held-for-use transferred to assets held for sale
    1,919        
Long-lived assets held-for-sale transferred to assets held for use
    1,239        
Securities purchased pending settlement
    30,002        
Net increase in BFC shareholders’ equity from the effect of subsidiaries’ capital transactions, net of taxes
    1,249       732  
Net decrease in equity resulting from cumulative effect of change in accounting principle (See Note 2)
    (2,023 )      
Net increase in shareholders’ equity resulting from the cumulative impact of accounting changes recognized by Bluegreen on retained interests in notes receivable sold
          485  
See Notes to Unaudited Consolidated Financial Statements.

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BFC Financial Corporation
Notes to Unaudited Consolidated Financial Statements
1. Presentation of Interim Financial Statements
     BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) is a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), a controlling interest in Core Communities, LLC (“Core” or “Core Communities”) and a non-controlling interest in Benihana, Inc. (“Benihana”). As a result of its position as the controlling shareholder of BankAtlantic Bancorp, BFC is a “unitary savings bank holding company” regulated by the Office of Thrift Supervision (“OTS”).
     As previously disclosed, on September 21, 2009, BFC consummated its merger with Woodbridge Holdings Corporation pursuant to which Woodbridge Holdings Corporation merged with and into Woodbridge Holdings, LLC (“Woodbridge”), BFC’s wholly-owned subsidiary which continued as the surviving company of the merger and the successor entity to Woodbridge Holdings Corporation. As a result of the merger, Woodbridge Holdings Corporation’s separate corporate existence ceased and its Class A Common Stock is no longer publicly traded.
     On November 16, 2009, an additional 7.4 million shares of the common stock of Bluegreen was purchased for an aggregate purchase price of approximately $23 million. As a result, our ownership interest increased to approximately 16.9 million shares, or approximately 52%, of Bluegreen’s outstanding common stock. Accordingly, we are now deemed to have a controlling interest in Bluegreen and, under generally accepted accounting principles (“GAAP”), Bluegreen’s results since November 16, 2009, the date of the share purchase, are consolidated in BFC’s financial statements. Prior to November 16, 2009, the approximate 29% equity investment in Bluegreen was accounted for using the equity method. See Note 4 for additional information about the Bluegreen share acquisition.
     GAAP requires that BFC consolidate the financial results of the entities in which it has controlling interest. As a consequence, the assets and liabilities of all such entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including BankAtlantic Bancorp, Bluegreen, Woodbridge and Core are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution from those entities. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At June 30, 2010, we owned approximately 43% of BankAtlantic Bancorp’s Class A and Class B common stock, representing in the aggregate approximately 69% of BankAtlantic Bancorp’s total voting power, and approximately 52% of Bluegreen’s common stock. See Note 4 for information regarding our participation in BankAtlantic Bancorp’s recently completed rights offering to its shareholders.
     The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments, which include normal recurring adjustments, as are necessary for a fair statement of the Company’s consolidated financial condition at June 30, 2010, the consolidated results of operations, comprehensive loss and cash flows for the three and six months ended June 30, 2010 and 2009, and the changes in consolidated equity for the six months ended June 30, 2010. Operating results for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. All significant inter-company balances and transactions have been eliminated in consolidation.
     Certain amounts for prior periods have been reclassified to conform to the current period’s presentation.
     As a result of the Woodbridge merger on September 21, 2009 and the Bluegreen share acquisition on November 16, 2009, the Company reorganized its reportable segments to better align its segments with the current operations of its businesses. The Company’s business activities currently consist of (i) Real Estate and Other Activities and (ii) Financial Services Activities. The Company currently reports the results of operations of these business activities through six reportable segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. As a result of this reorganization, our BFC Activities segment now includes activities formerly reported in the Woodbridge Other Operations segment and our Real Estate Operations segment is comprised of what was previously identified as the Land Division.

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     In December 2009, Core Communities reinitiated efforts to sell two of its commercial leasing projects (the “Projects”) and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Due to this decision, the assets associated with the Projects were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations in the Consolidated Statements of Operations. On June 10, 2010, Core sold the Projects to Inland Real Estate Acquisition, Inc. (“Inland”) for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. See Note 5 for further information.
     On February 28, 2007, BankAtlantic Bancorp completed the sale to Stifel Financial Corp (“Stifel”) of Ryan Beck Holdings, Inc. (“Ryan Beck”), a subsidiary of BankAtlantic Bancorp engaged in retail and institutional brokerage and investment banking. Under the terms of the Ryan Beck sales agreement, BankAtlantic Bancorp received additional consideration based on Ryan Beck revenues over the two year period following the closing of the sale. Included in the Company’s Consolidated Statement of Operations in discontinued operations for the six months ended June 30, 2009 was $4.2 million of earn-out consideration.
2. Cumulative Effect of Change in Accounting Principle
     On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities (“QSPEs”) associated with prior securitization transactions which previously qualified for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. Accordingly, Bluegreen’s special purpose finance entities and BankAtlantic Bancorp’s factoring joint venture are now consolidated in BFC’s financial statements. The consolidation of Bluegreen’s special purpose finance entities resulted in a one-time non-cash after-tax reduction to retained earnings of $2.1 million. No charges were recorded to retained earnings in connection with the consolidation of BankAtlantic Bancorp’s factoring joint venture.
     The consolidation of Bluegreen’s special purpose finance entities also resulted in the following impacts to BFC’s Consolidated Statement of Financial Condition at January 1, 2010: (1) assets increased by $413.8 million, primarily representing the consolidation of notes receivable, net of allowance, partially offset by the elimination of retained interests; (2) liabilities increased by $416.1 million, primarily representing the consolidation of non-recourse debt obligations to securitization investors, partially offset by the elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.3 million, including a decrease to noncontrolling interest of approximately $1.1 million.

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     The impact of the adoption of the change in accounting principle on the related assets, related liabilities, noncontrolling interests and total equity are as follows (in thousands):
                                         
            Consolidation        
                    BankAtlantic              
    December 31,     Bluegreen’s     Bancorp’s               January 1,  
    2009     QSPEs     Joint Venture (1)     Total       2010  
     
Restricted cash
  $ 24,020       36,518             36,518       60,538  
Loans receivable
    3,678,894             3,214       3,214       3,682,108  
Notes receivable
    277,274       377,265             377,265       654,539  
Real estate inventory
    494,291       16,403             16,403       510,694  
Retained interest in notes receivable sold
    26,340       (26,340 )           (26,340 )      
Investment in unconsolidated affiliates
    15,272             (3,256 )     (3,256 )     12,016  
Other assets
    96,750       9,970       367       10,337       107,087  
     
Change in related assets
  $ 4,612,841       413,816       325       414,141       5,026,982  
     
 
                                       
Other liabilities
  $ 186,453       3,544       18       3,562       190,015  
Deferred income taxes
    31,204       1,233             1,233       32,437  
Receivable -backed notes payable
    237,416       411,369             411,369       648,785  
     
Change in related liabilities
  $ 455,073       416,146       18       416,164       871,237  
     
 
                                       
Total BFC’s shareholders’ equity
  $ 245,059       (1,212 )           (1,212 )     243,847  
Noncontrolling interests
    158,852       (1,118 )     307       (811 )     158,041  
     
Total equity
  $ 403,911       (2,330 )     307       (2,023 )     401,888  
     
 
(1)   As a result of the adoption of the accounting guidance associated with the consolidation of VIEs, we consolidated BankAtlantic Bancorp’s factoring joint venture, BankAtlantic Business Capital, LLC (“BBC”). Prior to January 1, 2010, the investment in BBC was accounted for using the equity method of accounting.
3. Liquidity
     BFC
     Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen, Woodbridge and Core are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, short-term investments, dividends or distributions from subsidiaries and dividends from Benihana. As discussed further in this report, recent tax law changes have resulted in the receipt of significant tax refunds.
     We may use our available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments, fund operations or repurchase shares of our Class A Common Stock pursuant to our share repurchase program. The current program authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the six months ended June 30, 2010 or the year ended December 31, 2009. As discussed further in this report, during June and July 2010, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock for an aggregate purchase price of $15 million as a result of its exercise of subscription rights distributed in BankAtlantic Bancorp’s recently completed rights offering to its shareholders.
     Since March 2009, BFC has not received cash dividends from BankAtlantic Bancorp and does not expect to receive cash dividends from BankAtlantic Bancorp for the foreseeable future because BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock. Furthermore, certain of Bluegreen’s credit facilities contain terms which may limit the payment of cash dividends.
     We believe that our current financial condition and credit relationships, together with anticipated cash from operating activities and other sources of funds, including tax refunds and proceeds from the disposition of certain properties or investments, will provide for anticipated near-term liquidity needs. With respect to long-term liquidity requirements, BFC may also seek to raise funds through the issuance of long-term secured or unsecured indebtedness, equity and/or debt securities or through the sale of assets; however, there is no assurance that any of these alternatives will be available to BFC on attractive terms, or at all.

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     Woodbridge
     The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure and while there may have been an issue with respect to compliance with certain covenants in the loan agreements, we do not believe that an event of default had occurred as was alleged. Woodbridge continues to seek a satisfactory conclusion with regard to the debt, however, the outcome of these efforts and the litigation is uncertain.
     As previously disclosed, under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve the merger between Woodbridge and BFC and properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares as determined in accordance with the provisions of Florida law in lieu of the shares of BFC’s Class A Common Stock that they would otherwise have been entitled to receive. Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. Woodbridge is currently a party to legal proceedings relating to the Dissenting Holders appraisal process. In December 2009, a $4.6 million liability was recorded with a corresponding reduction to additional paid-in capital, which is reflected in the Company’s Consolidated Statements of Financial Condition representing in the aggregate Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain. As a result, there is no assurance as to the amount of the payment that will ultimately be required to be made to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.
     Core Communities
     During 2009, the recession continued and the demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. The decrease in land sales in 2009 and continued cash flow deficits contributed to, among other things, the deterioration of Core’s liquidity. As a result, Core severely limited its development expenditures in Tradition, Florida and has completely discontinued development activity in Tradition Hilton Head. Its assets have been impaired significantly and in an effort to bring about an orderly liquidation without a bankruptcy filing, Core commenced negotiations with all of its lenders and is seeking to liquidate its assets in an orderly way. Core is currently in default under the terms of all of its outstanding debt totaling approximately $139.2 million. Core continues to pursue all options with its lenders, including offering deeds in lieu and other similar transactions wherein Core would relinquish title to substantially all of its assets. During February 2010, with Core’s concurrence, a significant portion of the land in Tradition Hilton Head was placed under the control of a court appointed receiver. In connection with the receivership, Core entered into a separate agreement with the lender that, among other things, grants Core a right of first refusal to purchase the $25.3 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory that had a net carrying value of $33 million, net of impairment charges during 2009 of approximately $29.6 million. Separately, on April 7, 2010 and April 8, 2010, another of Core’s lenders filed a foreclosure action in South Carolina and Florida, respectively, seeking foreclosure of mortgage loans totaling approximately $113.8 million, plus additional interest and costs and expenses, including attorneys’ fees. Core is currently in negotiations with the lender regarding, among other things, accelerating the foreclosure actions, granting the lender a perfected first lien and security interest in certain additional Core subsidiaries, and releasing and indemnifying Core from any future obligations. As of June 30, 2010, the net carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of foreclosure proceedings was $82 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge during the six months ended June 30, 2010. While negotiations with its lenders continue, there is no assurance that Core will be successful in reaching any agreement with its lenders with respect to resolution of its obligations.

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     Core is also a party to a certain Development Agreement with the city of Hardeeville, SC, under which Core is obligated to fund $1 million towards the building of a fire station. Funding was scheduled in three installments: the first installment of $100,000 was due on October 21, 2009; the second installment of $450,000 was due on January 1, 2010; and the final installment of $450,000 was due on April 1, 2010. Additionally, Core was obligated to fund certain staffing costs of $200,000 under the terms of this agreement. Core did not pay any of the required installments and has not funded the $200,000 payment for staffing. On November 5, 2009, Core received a notice of default from the city for nonpayment. In the event that Core is unable to obtain additional funds to make these payments, it may be unable to cure the default on its obligation to the city, which could result in a loss of entitlements associated with the development project.
     On June 10, 2010, Core sold the Projects to Inland for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. The sale resulted in net cash proceeds to Core of approximately $1.5 million. See Note 5 for further information regarding the Projects.
     Based on an ongoing evaluation of its cost structure and in light of current market conditions, Core reduced its head count by 41 employees during 2009, resulting in approximately $1.3 million of severance charges recorded during the fourth quarter of 2009. In the three and six months ended June 30, 2010, severance related payments at Core totaled approximately $378,000 and $1.0 million, respectively.
     The negative impact of the adverse real estate market conditions on Core, together with Core’s limited liquidity, have caused substantial doubt regarding Core’s ability to continue as a going concern if Woodbridge chooses not to provide Core with the cash needed to meet its obligations when and as they arise. Woodbridge has not committed to fund any of Core’s obligations or cash requirements, and it is not currently anticipated that Woodbridge will provide additional funds to Core. As a result, the consolidated financial statements and the financial information provided for Core do not include any adjustments that might result from the outcome of this uncertainty. See Note 19 for Core’s results which are reported in the Real Estate Operations segment.
     BankAtlantic Bancorp and BankAtlantic
     Both BankAtlantic Bancorp Parent Company and BankAtlantic actively manage their liquidity and cash flow needs. BankAtlantic Bancorp Parent Company had cash of $8.4 million as of June 30, 2010, does not have debt maturing until March 2032 and has the ability to defer interest payments on its junior subordinated debentures until December 2013; however, based on current interest rates, accrued and unpaid interest of approximately $72.6 million would be due in December 2013 if interest is deferred until that date. BankAtlantic Bancorp Parent Company’s operating expenses for the three and six months ended June 30, 2010 were $3.4 million and $5.0 million, respectively, and $1.9 million and $3.6 million for the three and six months ended June 30, 2009, respectively. BankAtlantic’s liquidity is dependent, in part, on its ability to maintain or increase deposit levels and the availability of borrowings under its lines of credit and Treasury and Federal Reserve lending programs. As of June 30, 2010, BankAtlantic had $454 million of cash and approximately $788 million of available unused borrowings, consisting of $588 million of unused FHLB line of credit capacity, $191 million of unpledged securities, and $9 million of available borrowing capacity at the Federal Reserve. However, such available borrowings are subject to periodic reviews and may be terminated, suspended or reduced at any time. Additionally, interest rate changes, additional collateral requirements, disruptions in the capital markets or deterioration in BankAtlantic’s financial condition may reduce the amounts it is able to borrow or make terms of the borrowings and deposits less favorable. As a result, there is a risk that the cost of funds will increase or that the availability of funding sources may decrease.
     The substantial uncertainties throughout the Florida and national economies and the U.S. banking industry coupled with current market conditions have adversely affected BankAtlantic Bancorp’s and BankAtlantic’s results. As of June 30, 2010, BankAtlantic’s capital was in excess of all regulatory “well capitalized” levels. However, the OTS, in its discretion, can at any time require an institution to maintain capital amounts and ratios above the established “well capitalized” requirements based on its view of the risk profile of the specific institution. BankAtlantic’s communications with the OTS include providing information on an ad-hoc, one-time or regular basis related to areas of regulatory oversight and bank operations. As part of such communications, BankAtlantic has provided to its regulators forecasts, strategic business plans and other information relating to anticipated asset balances, asset quality, capital levels, expenses, anticipated earnings, levels of brokered deposits and liquidity, and has indicated that BankAtlantic has no plans to pay dividends to BankAtlantic Bancorp Parent Company. If higher capital requirements are imposed by its regulators, BankAtlantic could be required to raise additional capital. If BankAtlantic is required to raise additional capital, there is no assurance that BankAtlantic Bancorp Parent Company or BankAtlantic would be successful in raising the additional capital on favorable terms or at all and it may involve the issuance of securities in transactions highly dilutive to BankAtlantic Bancorp’s existing shareholders, including BFC. Although BankAtlantic Bancorp and BankAtlantic have experienced operating losses since June 2007, BankAtlantic maintains capital at “well capitalized” levels and BankAtlantic Bancorp Parent Company believes that it maintains sufficient liquidity to fund operations at least through June 30, 2011. However, if unanticipated market factors emerge and/or BankAtlantic Bancorp is unable to execute its plans or if BankAtlantic or BankAtlantic Bancorp requires capital and BankAtlantic Bancorp is unable to raise capital, it could have a material adverse impact on BFC’s business, results of operations and financial condition.

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4. Share Acquisitions
Bluegreen Share Acquisition
     On November 16, 2009, approximately 7.4 million shares of common stock of Bluegreen were purchased for an aggregate purchase price of approximately $23 million, increasing our interest from 9.5 million shares, or 29%, of Bluegreen’s common stock to 16.9 million shares, or 52%, of Bluegreen’s common stock which represents a controlling interest in Bluegreen. As a result, the Company consolidates all of Bluegreen’s wholly-owned subsidiaries and entities in which Bluegreen holds a controlling financial interest. The Company also consolidates Bluegreen/Big Cedar Vacations, LLC (the “Bluegreen/Big Cedar Joint Venture”), in which Bluegreen holds a 51% equity interest, has an active role as the day-to-day manager of its activities, and has majority voting control of its management committee. The operating results of Bluegreen are included in the Company’s Bluegreen Resorts and Bluegreen Communities segments.
     As part of the accounting for the November 2009 Bluegreen share acquisition, management is continuing to evaluate the fair value of Bluegreen’s inventory and certain of Bluegreen’s contracts, and as such, certain amounts at December 31, 2009 and June 30, 2010 are estimates and are subject to revision as more detailed analyses are completed and additional information becomes available. Any change resulting from the final evaluation of the inventory and contracts of Bluegreen as of the acquisition date may change the amount of the $183.1 million “bargain purchase gain” recorded during the fourth quarter of 2009.
Additional Shares Purchased in BankAtlantic Bancorp’s Rights Offering
     On June 18, 2010, BankAtlantic Bancorp commenced a rights offering (the “Rights Offering”) to its shareholders of record as of the close of business on June 14, 2010 (the “Record Date”). In the Rights Offering, BankAtlantic Bancorp distributed to each eligible shareholder 0.327 subscription rights for each share of BankAtlantic Bancorp’s Class A Common Stock and Class B Common Stock owned as of the close of business on the Record Date. Fractional subscription rights were rounded up to the next largest whole number. Each subscription right entitled the holder thereof to purchase one share of BankAtlantic Bancorp’s Class A Common Stock at the purchase price of $1.50 per share. Shareholders who exercised their basic subscription rights in full were also given the opportunity to request to purchase any additional shares of BankAtlantic Bancorp’s Class A Common Stock that remained unsubscribed for at the expiration of the Rights Offering at the same $1.50 per share purchase price, subject to certain determinations and allocations. The Rights Offering expired on July 20, 2010.
     During June 2010, BFC exercised its basic subscription rights, in full, amounting to 5,986,865 shares of BankAtlantic Bancorp’s Class A Common Stock, and requested to purchase an additional 4,013,135 shares of BankAtlantic Bancorp’s Class A Common Stock to the extent available. In connection with the exercise of its subscription rights, BFC delivered to BankAtlantic Bancorp $15.0 million in cash, which represented the full purchase price for all of the shares subscribed for by BFC. In exchange, BFC was issued 4,697,184 shares of BankAtlantic Bancorp’s Class A Common Stock on June 28, 2010, which represented a portion of its basic subscription rights exercise. The issuance of these shares increased BFC’s ownership interest in BankAtlantic Bancorp from 37% to 43% and BFC’s voting interest in BankAtlantic Bancorp from 66% to 69%. The balance of BFC’s subscription was treated as an advance to BankAtlantic Bancorp, as evidenced by a related $8.0 million promissory note executed by BankAtlantic Bancorp in favor of BFC. The promissory note had a scheduled maturity of July 30, 2010 and was payable in cash or shares of BankAtlantic Bancorp’s Class A Common Stock issuable to BFC in connection with its exercise of subscription rights in the Rights Offering. The promissory note was eliminated in consolidation as of June 30, 2010. See Note 21, Certain Relationships and Related Party Transactions, for further information regarding the promissory note. In July 2010, in connection with the completion of the Rights Offering, the promissory note was satisfied in accordance with its terms through the issuance to BFC of the additional 5,302,816 shares of BankAtlantic Bancorp’s Class A Common Stock subscribed for by BFC in the Rights Offering, which increased BFC’s ownership interest in BankAtlantic Bancorp to 45% and BFC’s voting interest in BankAtlantic Bancorp to 71%.

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     BFC’s acquisition of shares of BankAtlantic Bancorp’s Class A Common Stock in the Rights Offering is being accounted for as an equity transaction in accordance with Financial Accounting Standards Board (“FASB”) authoritative guidance in connection with noncontrolling interests in consolidated financial statements which provides that changes in a parent’s ownership interest which do not result in the parent losing its controlling interest are reported as equity transactions.
5. Discontinued Operations
Real Estate
     Core Communities
     In December 2009, Core Communities reinitiated efforts to sell the Projects and began soliciting bids from several potential buyers for the immediate sale of the Projects in their present condition. Due to this decision, the assets associated with the Projects were classified as discontinued operations for all periods presented in accordance with the accounting guidance for the disposal of long-lived assets.
     The assets were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations in the Consolidated Statements of Operations. Depreciation related to these assets held for sale ceased in December 2009. The Company elected not to separate these assets in the Consolidated Statements of Cash Flows for the periods presented. Management reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that an impairment charge was necessary to write down the aggregate carrying value of the Projects to fair value less the estimated costs to sell and, accordingly, recorded an impairment charge of approximately $13.6 million in the fourth quarter of 2009.
     On June 10, 2010, Core sold the Projects to Inland for approximately $75.4 million. As a result of the sale, a gain on sale of discontinued operations of approximately $2.6 million was realized in the second quarter of 2010. In connection with the sale, the lender reduced the outstanding balance of the loans related to the assets held for sale by approximately $800,000 as a result of negotiations with the lender. Core used the proceeds from the sale to Inland to repay these loans. As a result, Core was released from its obligations with the lender.
     The following table summarizes information regarding the assets held for sale and liabilities related to the assets held for sale for the Projects (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
     
Restricted cash
  $       538  
Property and equipment, net
          61,588  
Other assets
          9,774  
     
Assets held for sale
  $       71,900  
     
 
               
Accounts payable, accrued liabilities and other
  $       1,602  
Notes and mortgage payable
          74,749  
     
Liabilities related to assets held for sale
  $       76,351  
     

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     The following table summarizes the results of operations for the Projects (in thousands):
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2010     2009     2010     2009  
         
Revenue and other income
  $ 1,117       2,181       2,951       4,183  
Costs and expenses
    1,020       2,042       3,103       4,848  
         
Income (loss) before income taxes
    97       139       (152 )     (665 )
Gain on sale of discontinued operations
    2,617             2,617        
(Provision) benefit for income taxes
                       
         
Income (loss) from discontinued operations
  $ 2,714       139       2,465       (665 )
         
Financial Services
     On February 28, 2007, BankAtlantic Bancorp sold Ryan Beck to Stifel. The Stifel sales agreement provided for contingent earn-out payments, payable in cash or shares of Stifel common stock, at Stifel’s election, based on certain defined Ryan Beck revenues over the two-year period immediately following the Ryan Beck sale, which ended on February 28, 2009. The contingent earn-out payments were accounted for when earned as additional proceeds from the sale of Ryan Beck common stock. BankAtlantic Bancorp received additional earn-out consideration of $4.2 million during the six months ended June 30, 2009. The $4.2 million of earn-out consideration is included as discontinued operations in the Company’s Consolidated Statements of Operations for the six months ended June 30, 2009.
6. Fair Value Measurement
     Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three main valuation techniques to measuring the fair value of assets and liabilities: the market approach, the income approach and the cost approach. The accounting literature defines an input fair value hierarchy that has three broad levels and gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
     The valuation techniques are summarized below:
     The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
     The income approach uses financial models to convert future amounts to a single present amount. These valuation techniques include present value and option-pricing models.
     The cost approach is based on the amount that currently would be required to replace the service capacity of an asset. This technique is often referred to as current replacement costs.
     The input fair value hierarchy is summarized below:
     Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at each reporting date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available.

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     Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly (for example, a principal-to-principal market); inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).
     Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
     The following table presents major categories of the Company’s assets measured at fair value on a recurring basis at June 30, 2010 (in thousands):
                                 
            Fair Value Measurements using  
            Quoted prices in              
            Active Markets     Significant Other     Significant  
            for Identical     Observable     Unobservable  
    June 30,     Assets     Inputs     Inputs  
Description   2010     (Level 1)     (Level 2)     (Level 3)  
Mortgage-backed securities
  $ 135,573             135,573        
REMICS (1)
    87,270             87,270        
Agency bonds
    50,101             50,101        
Municipal bonds
    570             570        
Other bonds
    250                   250  
Foreign currency put options
    638       638              
Benihana Convertible Preferred Stock
    20,159                   20,159  
Other equity securities
    33,323       33,323              
 
                       
Total
  $ 327,884       33,961       273,514       20,409  
 
                       
 
(1)   Real estate mortgage investment conduits (REMICS) are pass-through entities that hold residential loans. Investors in these entities are issued ownership interests in the entities in the form of a bond. The securities are guaranteed by government agencies.
     The following table presents major categories of the Company’s assets measured at fair value on a recurring basis as of December 31, 2009 (in thousands):
                                 
            Quoted prices in              
            Active Markets     Significant Other     Significant  
            for Identical     Observable     Unobservable  
    December 31,     Assets     Inputs     Inputs  
Description   2009     (Level 1)     (Level 2)     (Level 3)  
Mortgage-backed securities
  $ 211,945             211,945        
REMICS (1)
    107,347             107,347        
Other bonds
    250                   250  
Benihana Convertible Preferred Stock
    17,766                   17,766  
Other equity securities
    9,067       9,067              
 
                       
Total securities available for sale at fair value
    346,375       9,067       319,292       18,016  
Retained interest in notes receivable sold
    26,340                   26,340  
 
                       
Total
  $ 372,715       9,067       319,292       44,356  
 
                       
 
(1)   Real estate mortgage investment conduits (REMICS) are pass-through entities that hold residential loans. Investors in these entities are issued ownership interests in the entities in the form of a bond. The securities are guaranteed by government agencies.
     There were no recurring liabilities measured at fair value on a recurring basis in the Company’s financial statements.

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     The following table presents major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2010 (in thousands):
                         
    For the Three Months Ended June 30, 2010  
            Benihana        
            Convertible        
    Other Bonds     Preferred Stock     Total  
     
Beginning Balance
  $ 250       20,247       20,497  
Total gains and losses (realized/unrealized)
                 
Included in earnings
                 
Included in other comprehensive income
          (88 )     (88 )
Purchases, issuances, and settlements
                 
Transfers in and/or out of Level 3
                 
     
Balance at June 30, 2010
  $ 250       20,159       20,409  
     
     The following table presents major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2009 (in thousands):
                                 
    Three Months Ended June 30, 2009  
            Benihana              
            Convertible     Equity        
    Other Bonds     Preferred Stock     Securities     Total  
     
Beginning Balance
  $ 250       16,384       1,252       17,886  
Total gains and losses (realized/unrealized)
                   
Included in earnings
                (1,378 )     (1,378 )
Included in other comprehensive income
          4,127       336       4,463  
Purchases, issuances, and settlements
                       
Transfers in and/or out of Level 3
                       
     
Ending balance
  $ 250       20,511       210       20,971  
     
     The following tables present major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2010 and 2009 (in thousands):
                                         
    For the Six Months Ended June 30, 2010  
    Retained                            
    Interests in             Benihana              
    Notes     Other     Convertible     Equity        
    Receivable Sold     Bonds     Preferred Stock     Securities     Total  
     
Beginning Balance
  $ 26,340       250       17,766             44,356  
Total gains and losses (realized/unrealized)
Included in earnings
                             
Cumulative effect of change in accounting principle (1)
    (26,340 )                       (26,340 )
Included in other comprehensive income
                2,393             2,393  
Purchases, issuances, and settlements
                             
Transfers in and/or out of Level 3
                             
     
Balance at June 30, 2010
  $       250       20,159             20,409  
     
(1)   Retained interests in notes receivable sold was eliminated upon a change in accounting principle. For further information see Note 2.

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    For the Six Months Ended June 30, 2009  
            Benihana              
    Other     Convertible     Equity        
    Bonds     Preferred Stock     Securities     Total  
     
Beginning Balance
  $ 250       16,426       1,588       18,264  
Total gains and losses (realized/unrealized)
                               
Included in earnings
                (1,378 )     (1,378 )
Included in other comprehensive income
          4,085             4,085  
Purchases, issuances, and settlements
                       
Transfers in and/or out of Level 3
                       
     
Ending balance
  $ 250       20,511       210       20,971  
     
     The valuation techniques and the inputs used in our financial statements to measure the fair value of our recurring financial instruments are described below.
     The fair values of agency bonds, municipal bonds mortgage-backed and real estate mortgage conduit securities are estimated using independent pricing sources and matrix pricing. Matrix pricing uses a market approach valuation technique and Level 2 valuation inputs as quoted market prices are not available for the specific securities that BankAtlantic Bancorp owns. The independent pricing sources value these securities using observable market inputs including: benchmark yields, reported trades, broker/dealer quotes, issuer spreads and other reference data in the secondary institutional market which is the principal market for these types of assets. To validate fair values obtained from the pricing sources, BankAtlantic Bancorp reviews fair value estimates obtained from brokers, investment advisors and others to determine the reasonableness of the fair values obtained from independent pricing sources. BankAtlantic Bancorp reviews any price that it determines may not be reasonable and requires the pricing sources to explain the differences in fair value or reevaluate its fair value.
     Other bonds and equity securities are generally fair valued using the market approach and quoted market prices (Level 1) or matrix pricing (Level 2 or Level 3) with inputs obtained from independent pricing sources, if available. Also non-binding broker quotes are obtained to validate fair values obtained from matrix pricing. However, for certain equity and debt securities in which observable market inputs cannot be obtained, these securities are valued either using the income approach and pricing models that BankAtlantic Bancorp has developed or based on observable market data that BankAtlantic Bancorp adjusted based on judgment of the factors BankAtlantic Bancorp believes a market participant would use to value the securities (Level 3).
     The fair value of foreign currency put options was obtained using the market approach and quoted market prices using Level 1 inputs.
     The estimated fair value of the Company’s investment in Benihana’s Series B Convertible Preferred Stock (“Convertible Preferred Stock”) was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the underlying shares of Benihana’s common stock that BFC would receive upon conversion of its shares of Benihana Convertible Preferred Stock.
     The following table presents major categories of assets measured at fair value on a non-recurring basis as of June 30, 2010 (in thousands):
                                         
            Fair Value Measurements Using        
            Quoted prices in                    
            Active Markets     Significant     Significant        
            for Identical     Other Observable     Unobservable        
    June 30,     Assets     Inputs     Inputs     Total  
Description   2010     (Level 1)     (Level 2)     (Level 3)     Impairments  
     
Loans measured for impairment using the fair value of the underlying collateral
  $ 302,199                   302,199       74,584  
Impaired real estate owned
    6,578                   6,578       1,364  
Impaired real estate held for sale
    3,490                   3,490       1,532  
     
Total
  $ 312,267                   312,267       77,480  
     

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     The following table presents major categories of assets measured at fair value on a non-recurring basis as of June 30, 2009 (in thousands):
                                         
            Fair Value Measurements Using        
            Quoted prices in                    
            Active Markets     Significant     Significant        
            for Identical     Other Observable     Unobservable        
    June 30,     Assets     Inputs     Inputs     Total  
Description   2009     (Level 1)     (Level 2)     (Level 3)     Impairments  
     
Loans measured for impairment using the fair value of the underlying collateral
  $ 177,326                   177,326       37,744  
Impaired real estate owned
    2,955                   2,955       623  
Impaired real estate held for sale
    2,130                   2,130       33  
Impaired goodwill
                            8,541  
Investment in Bluegreen
    23,984       23,984                   20,401  
     
Total
  $ 206,395       23,984             182,411       67,342  
     
     There were no material liabilities measured at fair value on a non-recurring basis in the Company’s financial statements.
     Loans Receivable Measured For Impairment
     Impaired loans receivable are generally valued based on the fair value of the underlying collateral. BankAtlantic Bancorp primarily uses third party appraisals to assist in measuring non-homogenous impaired loans. These appraisals generally use the market or income approach valuation technique and use market observable data to formulate an opinion of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral or properties, and these values may also be adjusted for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans receivable, judgment on market conditions is used to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed, and the amount of time required to sell out the real estate project may be derived from current appraisals of similar projects. As a consequence, the calculation of the fair value of the collateral uses Level 3 inputs. BankAtlantic Bancorp generally uses third party broker price opinions or an automated valuation service to measure the fair value of the collateral for impaired homogenous loans in the establishment of specific reserves or charge-downs when these loans become 120 days delinquent. The third party valuations from real estate professionals use Level 3 inputs in the determination of the fair values.
     Impaired Real Estate Owned and Real Estate Held for Sale
     Real estate is generally valued with the assistance of third party appraisals or broker price opinions. These appraisals generally use the market approach valuation technique and use market observable data to formulate an opinion of the fair value of the properties. However, the appraisers or brokers use professional judgments in determining the fair value of the properties and these values may also be adjusted for changes in market conditions subsequent to the valuation date. As a consequence of using broker price opinions and adjustments to appraisals, the fair values of the properties are considered a Level 3 valuation.
     Impaired Goodwill
     In determining the fair value of BankAtlantic Bancorp’s reporting units in the test of goodwill for impairment, BankAtlantic Bancorp uses discounted cash flow valuation techniques. This method requires assumptions for expected cash flows and applicable discount rates. The aggregate fair value of all reporting units derived from the above valuation methodology was compared to BankAtlantic Bancorp’s market capitalization adjusted for a control premium in order to determine the reasonableness of the financial model output. A control premium represents the value an investor would pay above minority interest transaction prices in order to obtain a controlling interest in the respective company. BankAtlantic Bancorp used financial projections over a period of time considered necessary to achieve a steady state of cash flows for each reporting unit. The primary assumptions in the projections include anticipated growth in loans, tax certificates, securities, interest rates and revenue. The discount rates are estimated based on a Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk and size premium adjustments specific to a particular reporting unit. The estimated fair value of a reporting unit is highly sensitive to changes in the discount rate and terminal value assumptions and, accordingly, minor changes in these assumptions could significantly impact the fair value assigned to a reporting unit. Future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. As a result of the significant judgments used in determining the fair value of the reporting units, the fair values of the reporting units use Level 3 inputs in the determination of fair value.

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     Included on the Company’s Consolidated Statements of Financial Condition as of June 30, 2010 and December 31, 2009 is goodwill of $12.2 million associated with BankAtlantic’s capital services reporting unit which was tested for potential impairment on September 30, 2009 (the annual testing date) and was determined not to be impaired. There were no events that occurred since the annual testing date that BankAtlantic Bancorp believes would more likely than not reduce the carrying value of BankAtlantic’s capital services reporting unit below its fair value.
Financial Disclosures about Fair Value of Financial Instruments
     The following table presents information for financial instruments at June 30, 2010 and December 31, 2009 (in thousands):
                                 
    June 30, 2010     December 31, 2009  
    Carrying     Fair     Carrying     Fair  
    Amount     Value     Amount     Value  
Financial assets:
                               
Cash and cash equivalents
  $ 500,422       500,422       316,080       316,080  
Interest bearing deposits in other financial institutions
    33,863       33,863              
Restricted cash
    50,618       50,618       24,020       24,020  
Securities available for sale
    327,246       327,246       346,375       346,375  
Derivatives
    638       638              
Investment securities
    1,981       1,981       9,654       9,654  
Tax Certificates
    139,731       142,302       110,991       112,472  
Federal home loan bank stock
    48,751       48,751       48,751       48,751  
Retained interest in notes receivable sold
                26,340       26,340  
Loans receivable including loans held for sale, net
    3,377,438       3,004,589       3,683,441       3,381,796  
Notes receivable
    620,498       655,000       277,274       277,274  
 
                               
Financial liabilities:
                               
Deposits
  $ 3,984,480       3,987,121       3,948,818       3,950,840  
Advances from FHLB
    115,000       115,000       282,012       282,912  
Securities sold under agreements to repurchase and short-term borrowings
    26,795       26,795       27,271       27,271  
Receivable-backed notes payable
    592,533       580,318       237,416       237,416  
Notes and mortgage notes payable and other borrowings
    369,510       367,464       395,361       392,047  
Mortgage payables associated with assets held for sale
                74,749       74,749  
Junior subordinated debentures
    453,829       219,938       447,211       170,598  
     Management has made estimates of fair value that it believes to be reasonable. However, because there is no active market for many of these financial instruments and management has derived the fair value of the majority of these financial instruments using the income approach technique with Level 3 unobservable inputs, there is no assurance that the estimated value would be received upon sale or disposition of the asset or pay the estimated value upon disposition of the liability in advance of its scheduled maturity. Management estimates used in its net present value financial models rely on assumptions and judgments regarding issues where the outcome is unknown and actual results or values may differ significantly from these estimates. 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.

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     Interest bearing deposits in other financial institutions are certificates of deposits guaranteed by the FDIC with maturities of less than one year. Due to the FDIC guarantee and the short maturity of these certificates of deposit, the fair value of these deposits approximates the carrying value.
     Fair values are estimated for loan portfolios with similar financial characteristics. Loans receivable are segregated by category, and each loan category is further segmented into fixed and adjustable interest rate categories and into performing and non-performing categories.
     The fair value of performing loans is calculated by using an income approach with Level 3 inputs. The fair value of performing loans is estimated by discounting forecasted cash flows through the estimated maturity using estimated market discount rates that reflect the interest rate risk inherent in the loan portfolio. The estimate of average maturity is based on BankAtlantic Bancorp’s historical experience with prepayments for each loan classification, modified as required, by an estimate of the effect of current economic and lending conditions. Management of BankAtlantic Bancorp assigns a credit risk premium and an illiquidity adjustment to these loans based on risk grades and delinquency status.
     The fair value of tax certificates was calculated using the income approach with Level 3 inputs. The fair value is based on discounted expected cash flows using discount rates that we believe take into account the risk of the cash flows of tax certificates relative to alternative investments.
     The fair value of Federal Home Loan Bank stock is its carrying amount.
     The fair values of Bluegreen notes receivable are based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate.
     As permitted by applicable accounting guidance, the fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, savings and NOW accounts, and money market and checking accounts, is shown in the above table at its book value. The fair value of certificates of deposit is based on an income approach with Level 3 inputs. The fair value is calculated by using the discounted value of contractual cash flows with the discount rate estimated using current rates offered by BankAtlantic for similar remaining maturities.
     The fair value of short-term borrowings is calculated using the income approach with Level 2 inputs. Contractual cash flows are discounted based on current interest rates. The carrying value of these borrowings approximates fair value as maturities are generally less than thirty days.
     The fair value of FHLB advances was calculated using the income approach with Level 2 inputs. The fair value was based on discounted cash flows using rates offered for debt with comparable terms to maturity and issuer credit standing.
     The fair values of BankAtlantic’s subordinated debentures were based on discounted values of contractual cash flows at a market discount rate adjusted for non-performance risk.
     The estimated fair values of notes and mortgage notes payable and other borrowings, including receivable-backed notes payable were based upon current rates and spreads it would pay to obtain similar borrowings and also used discounted values of contractual cash flows at a market discount rate.
     The fair value of BankAtlantic Bancorp’s mortgage-backed bonds included in notes and mortgage notes payable and other borrowings as of December 31, 2009 was based on discounted values of contractual cash flows at a market discount rate. The mortgage-backed bonds were retired during the six months ended June 30, 2010 resulting in a $7,000 loss.
     In determining the fair value of BankAtlantic Bancorp’s junior subordinated debentures, BankAtlantic Bancorp used NASDAQ price quotes available with respect to its $64.8 million of publicly traded trust preferred securities related to its junior subordinated debentures (“public debentures”). However, $250.4 million of the outstanding trust preferred securities related to its junior subordinated debentures are not traded, but are privately held in pools (“private debentures”) and with no liquidity or readily determinable source for valuation. BankAtlantic Bancorp has deferred the payment of interest with respect to all of its junior subordinated debentures as permitted by the terms of these securities. Based on the deferral status and the lack of liquidity and ability of a holder to actively sell such private debentures, the fair value of these private debentures may be subject to a greater discount to par and have a lower fair value than indicated by the public debenture price quotes. However, due to their private nature and the lack of a trading market, fair value of the private debentures was not readily determinable at June 30, 2010 and December 31, 2009, and as a practical alternative, BankAtlantic Bancorp used the NASDAQ price quotes of the public debentures to value its remaining outstanding junior subordinated debentures whether privately held or publicly traded.

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     The estimated fair value of Woodbridge’s and Bluegreen’s junior subordinated debentures as of June 30, 2010 and December 31, 2009 were based on a discounted value of contractual cash flows at a market discount rate or market price quotes from the over-the-counter bond market.
     The carrying amount and fair values of BankAtlantic’s commitments to extend credit, standby letters of credit, financial guarantees and forward commitments are not considered significant. (See Note 20 for the contractual amounts of BankAtlantic’s financial instrument commitments.)
7. Securities Available for Sale
     The following tables summarize securities available for sale (in thousands):
                                 
    As of June 30, 2010  
            Gross     Gross        
    Amortized     Unrealized     Unrealized     Estimated  
    Cost     Gains     Losses     Fair Value  
Government agency securities:
                               
Mortgage-backed securities
  $ 127,159       8,414             135,573  
Agency bonds
    49,992       109             50,101  
REMICS (1)
    84,229       3,041             87,270  
 
                       
Total mortgage-backed securities
    261,380       11,564             272,944  
 
                       
Investment securities:
                               
Municipal bonds
    574             4       570  
Other bonds
    250                   250  
Benihana Convertible Preferred Stock
    16,426       3,733             20,159  
Equity and other securities
    33,151       174       2       33,323  
 
                       
Total investment securities
    50,401       3,907       6       54,302  
 
                       
Total
  $ 311,781       15,471       6       327,246  
 
                       
                                 
    As of December 31, 2009  
            Gross     Gross        
    Amortized     Unrealized     Unrealized     Estimated  
    Cost     Gains     Losses     Fair Value  
Government agency securities:
                               
Mortgage-backed securities
  $ 202,985       8,961       1       211,945  
REMICS (1)
    104,329       3,037       19       107,347  
 
                       
Total mortgage-backed securities
    307,314       11,998       20       319,292  
 
                       
Investment securities:
                               
Other bonds
    250                   250  
Benihana Convertible Preferred Stock
    16,426       1,340             17,766  
Equity and other securities
    8,947       126       6       9,067  
 
                       
Total investment securities
    25,623       1,466       6       27,083  
 
                       
Total
  $ 332,937       13,464       26       346,375  
 
                       
 
(1)   REMICS are pass-through entities that hold residential loans. Investors in these entities are issued ownership interests in the entities in the form of a bond. The securities are guaranteed by government agencies.

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     The following tables show the gross unrealized losses and fair value of the Company’s securities available for sale with unrealized losses that are deemed temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2010 and December 31, 2009 (in thousands):
                                                 
    As of June 30, 2010  
    Less Than 12 Months     12 Months or Greater     Total  
    Fair     Unrealized     Fair     Unrealized     Fair     Unrealized  
    Value     Losses     Value     Losses     Value     Losses  
             
Municipal bonds
    570       (4 )                 570       (4 )
Equity securities
                8       (2 )     8       (2 )
             
Total available for sale securities:
  $ 570       (4 )     8       (2 )     578       (6 )
             
                                                 
    As of December 31, 2009  
    Less Than 12 Months     12 Months or Greater     Total  
    Fair     Unrealized     Fair     Unrealized     Fair     Unrealized  
    Value     Losses     Value     Losses     Value     Losses  
             
Mortgage-backed securities
  $             159       (1 )     159       (1 )
REMICS
                21,934       (19 )     21,934       (19 )
Equity securities
    4       (6 )                 4       (6 )
             
Total available for sale securities:
  $ 4       (6 )     22,093       (20 )     22,097       (26 )
             
     The unrealized losses on the equity securities and municipal bonds is insignificant. Accordingly, the Company does not consider these investments other-than-temporarily impaired at June 30, 2010.
     Unrealized losses on debt securities outstanding greater than twelve months at December 31, 2009 were primarily the result of interest rate changes. These securities are guaranteed by government sponsored enterprises. These securities are of high credit quality, and management believes that these securities may recover their losses in the foreseeable future. Further, management does not currently intend to sell these debt securities and believes it will not be required to sell these debt securities before the price recovers.
     The scheduled maturities of debt securities available for sale were (in thousands):
                 
    Debt Securities  
    Available for Sale  
            Estimated  
    Amortized     Fair  
June 30, 2010 (1)   Cost     Value  
Due within one year
  $ 718       718  
Due after one year, but within five years
    50,138       50,245  
Due after five years, but within ten years
    27,708       28,585  
Due after ten years
    183,640       194,216  
 
           
Total
  $ 262,204       273,764  
 
           
 
(1)   Scheduled maturities in the above table are based on contractual maturities but may vary significantly from actual maturities due to prepayments.
     Included in Financial Services securities activities, net in the Company’s Consolidated Statements of Operations and Consolidated Statements of Cash Flows were (in thousands):
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2010     2009     2010     2009  
Gross gains on securities sales
  $       2,070       3,138       6,510  
 
                       
Gross losses on securities sales
                       
 
                       
Proceed from sales of securities
          43,277       46,911       205,679  
 
                       

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     Management reviews its investment portfolios for other-than-temporary declines in value quarterly. As a consequence of the BankAtlantic Bancorp’s review during 2009, the Company recognized $1.4 million of other-than-temporary declines in value related to an equity investment in an unrelated financial institution.
BFC — Benihana Investment
     The Company owns 800,000 shares of Benihana’s Convertible Preferred Stock. The Convertible Preferred Stock is convertible into an aggregate of 1,578,943 shares of Benihana’s Common Stock at a conversion price of $12.67, subject to adjustment from time to time upon certain defined events. Based on the number of currently outstanding shares of Benihana’s capital stock, the Convertible Preferred Stock, if converted, would represent an approximately 19% voting interest and an approximately 9% economic interest in Benihana.
     The Convertible Preferred Stock was acquired pursuant to an agreement with Benihana on June 8, 2004 to purchase an aggregate of 800,000 shares of Convertible Preferred Stock for $25.00 per share. The shares of the Convertible Preferred Stock have voting rights on an “as if converted” basis together with Benihana’s Common Stock on all matters put to a vote of the holders of Benihana’s Common Stock. The approval of a majority of the holders of the Convertible Preferred Stock then outstanding, voting as a single class, are required for certain events outside the ordinary course of business. Holders of the Convertible Preferred Stock are entitled to receive cumulative quarterly dividends at an annual rate equal to $1.25 per share, payable on the last day of each calendar quarter. The Convertible Preferred Stock is subject to mandatory redemption at the original issue price of $20 million plus accumulated dividends on July 2, 2014 unless BFC elects to extend the mandatory redemption date to a later date not to extend beyond July 2, 2024. At June 30, 2010, the closing price of Benihana’s Common Stock was $6.41 per share. The market value of the Convertible Preferred Stock if converted at June 30, 2010 would have been approximately $10.1 million.
     At June 30, 2010, the Company’s estimated fair value of its investment in Benihana’s Convertible Preferred Stock was approximately $20.2 million, which includes a gross unrealized gain of approximately $2.4 million for the six months ended June 30, 2010. The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the underlying shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana’s Convertible Preferred Stock.
8. Derivatives
     During the three months ended June 30, 2010, BankAtlantic expanded its cruise ship automated teller machine (“ATM”) operations and began dispensing foreign currency from certain ATMs on cruise ships. At June 30, 2010, BankAtlantic had $6.5 million of foreign currency in cruise ship ATMs and recognized a $0.7 million foreign currency unrealized exchange loss which is included in Financial Services — other non-interest income in the Company’s Consolidated Statement of Operations. BankAtlantic purchased foreign currency put options as an economic hedge for the foreign currency in its cruise ship ATMs. The terms of the put options and the fair value as of June 30, 2010 were as follows (in thousands, except strike price):
                                 
Contract   Expiration   Strike           Fair
Amount   Date   Price   Premium   Value
2,800     Nov-10   $ 1.34     $ 166       333  
  1,600     Dec-10     1.34       104       200  
  400     Jan-11     1.34       28       53  
  400     Apr-11     1.34       31       52  
                 
5,200    
 
          $ 329       638  
                 
     Included in Financial Services — securities activities, net in the Company’s Consolidated Statement of Operations was $0.3 million of unrealized gains associated with the above put options for the three and six months ended June 30, 2010. The put options were included in derivatives in the Company’s Consolidated Statement of Financial Condition as of June 30, 2010.

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9. Loans Receivable
     The consolidated loan portfolio consisted of the following (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
Real estate loans:
               
Residential
  $ 1,385,403       1,538,906  
Builder land loans
    23,482       57,807  
Land acquisition and development
    150,305       182,235  
Land acquisition, development and construction
    14,327       26,184  
Construction and development
    180,469       211,809  
Commercial
    707,850       688,386  
Consumer — home equity
    633,126       669,690  
Small business
    211,829       213,591  
Other loans:
               
Commercial business
    129,648       155,226  
Small business — non-mortgage
    95,717       99,113  
Consumer loans
    19,300       15,935  
Deposit overdrafts
    5,701       4,816  
 
           
Total gross loans
    3,557,157       3,863,698  
 
           
Adjustments:
               
Premiums, discounts and net deferred fees
    2,282       2,414  
Allowance for loan losses
    (187,862 )     (187,218 )
 
           
Loans receivable — net
  $ 3,371,577       3,678,894  
 
           
Loans held for sale
  $ 5,861       4,547  
 
           
     Loans held for sale at June 30, 2010 and December 31, 2009 are loans originated with the assistance of an independent mortgage company. The mortgage company provides processing and closing assistance to BankAtlantic. Pursuant to an agreement between the parties, the mortgage company purchases the loans from BankAtlantic within a defined period of time after the date of funding. BankAtlantic earns the interest income during the period that BankAtlantic owns the loan. Gains from the sale of loans held for sale were $87,000 and $141,000 for the three and six months ended June 30, 2010, respectively, and were $151,000 and $263,000 for the three and six months ended June 30, 2009, respectively.
     BankAtlantic Bancorp sold a land acquisition and development loan during the three months ended June 30, 2010, for net proceeds of $450,000 resulting in net charge-offs of $453,000. During the six months ended June 30, 2010 BankAtlantic Bancorp sold builder land bank loans and land acquisition and development loans for net proceeds of $26.9 million resulting in charge-offs of $20.1 million. Since BankAtlantic Bancorp had previously established $17.7 million of specific valuation allowances on these loans as of December 31, 2009, BankAtlantic Bancorp incurred a $2.4 million additional writedown in connection with the sales.
     Undisbursed loans in process consisted of the following components (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
Construction and development
  $ 33,403       43,432  
Commercial
    30,159       25,696  
 
           
Total undisbursed loans in process
  $ 63,562       69,128  
 
           

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     Allowance for Loan Losses (in thousands):
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Balance, beginning of period
  $ 177,597       158,397       187,218       137,257  
Loans charged-off
    (39,167 )     (30,332 )     (80,590 )     (54,261 )
Recoveries of loans previously charged-off
    879       661       1,926       1,453  
 
                       
Net charge-offs
    (38,288 )     (29,671 )     (78,664 )     (52,808 )
Provision for loan losses
    48,553       43,494       79,308       87,771  
 
                       
Balance, end of period
  $ 187,862       172,220       187,862       172,220  
 
                       
     The following summarizes impaired loans (in thousands):
                                 
    June 30, 2010     December 31, 2009  
    Gross             Gross        
    Recorded     Specific     Recorded     Specific  
    Investment     Allowances     Investment     Allowances  
         
Impaired loans with specific valuation allowances
  $ 368,312       101,100       249,477       70,485  
Impaired loans without specific valuation allowances
    208,734             196,018        
         
Total
  $ 577,046       101,100       445,495       70,485  
         
     Impaired loans without specific valuation allowances represent loans that were written-down to the fair value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the carrying value of the loan, loans in which the present value of the cash flows discounted at the loan’s effective interest rate was equal to or greater than the carrying value of the loan, or large groups of smaller-balance homogeneous loans that are collectively measured for impairment.
     BankAtlantic Bancorp continuously monitors collateral dependent loans and performs an impairment analysis on these loans quarterly. Generally, a full appraisal is obtained when a real estate loan is evaluated for impairment and an updated full appraisal is obtained within one year from the prior appraisal date, or earlier if management deems it appropriate based on significant changes in market conditions. In instances where a property is in the process of foreclosure, an updated appraisal may be postponed beyond one year, as an appraisal is required on the date of foreclosure; however, such loans are subject to quarterly impairment analyses. Included in total impaired loans as of June 30, 2010 was $396.8 million of collateral dependent loans, of which $197.7 million were measured for impairment using current appraisals and $199.1 million were measured by adjusting appraisals that were less than one year old, as appropriate, to reflect changes in market conditions subsequent to the last appraisal date. Appraised values were adjusted down by an aggregate amount of $37.2 million to reflect current market conditions on 30 loans due to property value declines since the last appraisal dates.
     As of June 30, 2010, impaired loans with specific valuation allowances had been previously written down by $88.3 million and impaired loans without specific valuation allowances had been previously written down by $58.6 million. BankAtlantic had commitments to lend $5.3 million of additional funds on impaired loans as of June 30, 2010.
     Interest income which would have been recorded under the contractual terms of impaired loans and the interest income actually recognized were (in thousands):
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2010     2009     2010     2009  
         
Contracted interest income
  $ 6,388       6,408       12,065       11,505  
Interest income recognized
    (769 )     (734 )     (1,013 )     (1,428 )
         
Foregone interest income
  $ 5,619       5,674       11,052       10,077  
         

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10. Notes Receivable
     The table below sets forth information relating to Bluegreen notes receivable (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
     
Notes receivable, gross
  $ 756,307       356,133  
Discount on notes receivable
    (68,758 )     (74,873 )
     
Notes receivable, net of discount
    687,549       281,260  
Allowance for loan losses
    (67,051 )     (3,986 )
     
Notes receivable, net
  $ 620,498       277,274  
     
     The accretable portion of the discount on the purchase price related to notes receivable acquired in connection with the Bluegreen share purchase on November 16, 2009 is being accreted using the effective interest method and recognized as interest income over the life of the loans. As a result, the Company recognized $3.3 million and $5.8 million, respectively, for the three and six months ended June 30, 2010 relating to the accretion of such discount.
     The table below sets forth the activity in the allowance for uncollectible notes receivable during the six months ended June 30, 2010 (in thousands):
         
Balance at December 31, 2009
  $ 3,986  
One-time impact of the amendment to the accounting guidance for transfer of financial assets and the amendment to the accounting guidance for the consolidation of VIEs (see Note 2)
    86,252  
Provision for loan losses
    11,995  
Write-offs of uncollectible receivables
    (35,182 )
 
     
Balance at June 30, 2010
  $ 67,051  
 
     
     All of Bluegreen’s vacation ownership interests (“VOIs”) notes receivable, which comprise the majority of the notes receivable, bear interest at fixed rates. The weighted-average interest rate charged on loans secured by VOIs was 15.2% and 14.9% at June 30, 2010 and December 31, 2009, respectively. Approximately 85% of Bluegreen’s notes receivable secured by home sites bear interest at variable rates, while the balance bears interest at fixed rates. The weighted-average interest rate charged on notes receivable secured by home sites was 7.9% and 8.8% at June 30, 2010 and December 31, 2009, respectively.
     Bluegreen’s VOI notes receivable are generally secured by property located in Florida, Louisiana, Nevada, New Jersey, Michigan, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia, Wisconsin, and Aruba. The majority of Bluegreen Communities notes receivables are secured by home sites in Georgia, Texas, and Virginia.
11. Variable Interest Entities — Bluegreen
     In accordance with the guidance for the consolidation of variable interest entities, Bluegreen analyzes its variable interests, including loans, guarantees, and equity investments, to determine if an entity in which it has a variable interest is a variable interest entity. Bluegreen’s analysis includes both quantitative and qualitative reviews. Bluegreen bases its quantitative analysis on the forecasted cash flows of the entity, and it bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability, and relevant financial agreements. Bluegreen also uses qualitative analyses to determine if it must consolidate a variable interest entity as the primary beneficiary.
     Bluegreen sells, without recourse, through special purpose finance entities, VOI notes receivable originated by Bluegreen Resorts. These transactions are designed to provide liquidity for Bluegreen and transfer the economic risks and certain of the benefits of the notes receivable to third parties. In a securitization, various classes of debt securities are issued by the special purpose finance entities that are generally collateralized by a single tranche of transferred assets, which consist of VOI notes receivable. Bluegreen services the notes receivable for a fee. With each securitization, Bluegreen generally retains a portion of the securities.

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     Pursuant to generally accepted accounting principles that were in effect prior to 2010, seven of Bluegreen’s eight special purpose finance entities met the definition of a qualified special purpose entity, and Bluegreen was not required to consolidate those seven entities in its financial statements. Upon the adoption of the new accounting guidance related to transfers of financial assets (see Note 2 for additional information), Bluegreen was required to evaluate these entities for consolidation. Since Bluegreen created these entities to serve as a financing vehicle for holding assets and related liabilities, and the entities have no equity investment at risk, they are considered variable interest entities. Furthermore, since Bluegreen continues to service the notes and retain rights to receive benefits that are potentially significant to the entities, Bluegreen concluded that it is the entities’ primary beneficiary and, therefore, now consolidates these entities into its financial statements. Please see Note 2 for the impact of initial consolidation of these entities.
     At June 30, 2010, the principal balance of VOI notes receivable included within the Company’s Consolidated Statement of Financial Condition that are restricted to satisfy obligations of the variable interest entities’ obligations totaled $567.8 million. In addition, approximately $33.0 million of Bluegreen’s restricted cash is held in accounts for the benefit of the variable interest entities. Further, at June 30, 2010, the carrying amount of the consolidated liabilities included within the Company’s Consolidated Statement of Financial Condition for these variable interest entities totaled $485.9 million, comprised of non-recourse receivable-backed notes payable. The debt of these entities is generally non-recourse to Bluegreen. See Note 15, Receivable-Backed Notes Payable, below.
     Under the terms of Bluegreen’s timeshare note sales, Bluegreen has the right at its option to repurchase or substitute for defaulted mortgage notes at the outstanding principal balance plus accrued interest or, in some facilities, at 24% of the original sale price associated with the defaulted mortgage note. The transaction documents typically limit such repurchases or substitutions to 15-20% of the receivables originally funded into the transaction. Voluntary repurchases or substitutions by Bluegreen of defaulted notes during the six months ended June 30, 2010 were $24.3 million.
12. Real Estate Inventory
     Real estate held for development and sale consisted of the following (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
Land and land development costs
  $ 244,344       264,454  
Bluegreen Resorts
    231,508       222,026  
Other costs
    518       552  
Land and facilities held for sale
    6,528       7,259  
 
           
Total
  $ 482,898       494,291  
 
           
     Inventory consisted of the combined real estate assets of Bluegreen Resorts, Bluegreen Communities, Core Communities, Carolina Oak, and BankAtlantic Bancorp’s land facilities held for sale.
     As a result of Bluegreen’s continued low sales volume, reduced prices, and the impact of reduced sales on the forecasted sell-out period of its communities projects, the Company recorded non-cash charges to cost of real estate sales of approximately $3.3 million, net of purchase accounting adjustments, during the six months ended June 30, 2010, to write-down the inventory balances of certain phases of Bluegreen’s completed communities properties, to their estimated fair value less costs to sell.
13. Investments in Unconsolidated Affiliates
     As previously discussed, approximately 7.4 million additional shares of Bluegreen’s common stock were purchased on November 16, 2009, increasing our ownership in Bluegreen to 16.9 million shares, or 52%, of Bluegreen’s outstanding common stock. As a result of the purchase, the Company has a controlling interest in Bluegreen and, accordingly, has consolidated Bluegreen’s results since November 16, 2009 into the Company’s financial statements.

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     Prior to November 16, 2009, the investment in Bluegreen was accounted for using the equity method of accounting. The cost of the Bluegreen investment was adjusted to recognize the Company’s interest in Bluegreen’s earnings or losses. The difference between a) the Company’s ownership percentage in Bluegreen multiplied by its earnings and b) the amount of the Company’s equity in earnings of Bluegreen as reflected in the Company’s financial statements related to the amortization or accretion of purchase accounting made at the time of the initial acquisition of Bluegreen’s common stock and a basis difference due to impairment charges recorded on the investment in Bluegreen, as described below. During the six months ended June 30, 2009, the Company recorded a $20.4 million impairment charge relating to our investment in Bluegreen. No impairment charges were recorded during the quarter ended June 30, 2009.
     The following table shows the reconciliation of the Company’s pro rata share of Bluegreen’s net income to the Company’s share of total earnings from Bluegreen for the three and six months ended June 30, 2009, prior to our consolidation of Bluegreen in November 2009 (in thousands):
                 
    Three Months Ended     Six Months Ended  
    June 30, 2009     June 30, 2009  
     
Pro rata share of Bluegreen’s net income
  $ 2,076       3,158  
Amortization of basis difference (a)
    8,638       13,892  
     
Total earnings from Bluegreen Corporation
  $ 10,714       17,050  
     
 
(a)   As a result of the impairment charges previously taken under the equity method prior to our consolidation of Bluegreen in November 2009, a basis difference was created between the investment in Bluegreen and the underlying assets and liabilities carried on the books of Bluegreen. Therefore, earnings from Bluegreen were adjusted each period to reflect the amortization of this basis difference. As such, a methodology was established to allocate the impairment loss to the relative estimates of the fair value of Bluegreen’s underlying assets based upon the position that the impairment loss was a reflection of the perceived value of these underlying assets. The appropriate amortization was calculated based on the estimated useful lives of the underlying assets and other relevant data associated with each asset category.
14. Goodwill
     The Company tests goodwill for potential impairment annually or during interim periods if impairment indicators exist. In response to the deteriorating economic and real estate environments and the effects that the external environment had on BankAtlantic Bancorp’s business units, BankAtlantic reduced its asset balances with a view toward strengthening its regulatory capital ratios and revised its projected operating results to reflect a smaller organization. Based on the results of an interim goodwill impairment evaluation undertaken during the first quarter of 2009, an impairment charge of $8.5 million, net of purchase accounting from the step acquisition of approximately $0.6 million, was recorded during the three months ended March 31, 2009. Management did not perform a goodwill impairment test as of June 30, 2009 as there were no significant changes in impairment indicators during the period. No such impairments were recorded during the six months ended June 30, 2010.
15. Notes and Mortgage Notes Payable and Other Borrowings
Woodbridge
     The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure and while there may have been an issue with respect to compliance with certain covenants in the loan agreements, we do not believe that an event of default had occurred as was alleged. Woodbridge continues to seek a satisfactory conclusion with regard to the debt; however, the outcome of these efforts and the litigation is uncertain.

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Core
     Core is currently in default under the terms of all of its outstanding debt totaling approximately $139.2 million. Core continues to pursue all options with its lenders, including offering deeds in lieu and other similar transactions wherein Core would relinquish title to substantially all of its assets. During February 2010, with Core’s concurrence, a significant portion of the land in Tradition Hilton Head was placed under the control of a court appointed receiver. In connection with the receivership, Core entered into a separate agreement with the lender that, among other things, grants Core a right of first refusal to purchase the $25.3 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory that had a net carrying value of $33 million, net of impairment charges during 2009 of approximately $29.6 million. Separately, on April 7, 2010 and April 8, 2010, another of Core’s lenders filed a foreclosure action in South Carolina and Florida, respectively, seeking foreclosure of mortgage loans totaling approximately $113.8 million, plus additional interest and costs and expenses, including attorneys’ fees. Core is currently in negotiations with the lender regarding, among other things, accelerating the foreclosure actions, granting the lender a perfected first lien and security interest in certain additional Core subsidiaries, and releasing and indemnifying Core from any future obligations. As of June 30, 2010, the net carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of foreclosure proceedings was $82 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge during the six months ended June 30, 2010. While negotiations with its lenders continue, there is no assurance that Core will be successful in reaching any agreement with its lenders with respect to resolution of its obligations.
Bluegreen
     Bluegreen’s pledged assets under its facilities and notes payable as of June 30, 2010 and December 31, 2009 had a carrying amount of approximately $388.5 million and $336.6 million, respectively.
     The GMAC AD&C Facility. During the six months ended June 30, 2010, Bluegreen repaid $15.9 million of the outstanding balance under this facility.
     H4BG Communities Facility. During April 2010, GMAC assigned all rights, title, and interest in the GMAC Communities Facility to H4BG, LP. This assignment did not affect any of the material financial terms of the loan agreement. During the six months ended June 30, 2010, Bluegreen repaid $3.2 million on this facility.
     The Wachovia Notes Payable. On April 30, 2010, Bluegreen executed an agreement with Wells Fargo Bank, N.A., the parent company of Wachovia (“Wells Fargo”), to refinance the remaining $21.9 million outstanding under the Wachovia Notes Payable into a new term loan. See Wells Fargo Term Loan below for further details.
     The Wachovia Line-of-Credit. On April 30, 2010, the remaining $14.5 million outstanding was refinanced by Wells Fargo. See Wells Fargo Term Loan below for further details.
     The Wells Fargo Term Loan. On April 30, 2010, Bluegreen entered into a definitive agreement with Wells Fargo, which amended, restated and consolidated Bluegreen’s notes payable to Wachovia and the line-of-credit issued by Wachovia into a single term loan with Wells Fargo (the “Wells Fargo Term Loan”). The notes payable and line of credit which were consolidated into the Wells Fargo Term Loan had a total outstanding balance of $36.4 million as of April 30, 2010. In connection with the closing of the Wells Fargo Term Loan, Bluegreen made a principal payment of $0.4 million, reducing the balance to $36.0 million, and paid accrued interest on the existing Wachovia debt. The interest rate on the Wells Fargo Term Loan at June 30, 2010 was 7.22%. Principal payments are effected through agreed-upon release prices as real estate collateralizing the Wells Fargo Term Loan is sold, subject to minimum remaining required amortization of $4.4 million in 2010, $10.6 million in 2011 and $20.2 million in 2012. In addition to the resort projects previously pledged as collateral for the various notes payable to Wachovia, Bluegreen pledged additional timeshare interests, resorts real estate, and the residual interests in certain of Bluegreen’s sold VOI notes receivables as collateral for the Wells Fargo Term Loan. Wells Fargo has the right to receive as additional collateral, the residual interest in one future transaction which creates such a retained interest. During the six months ended June 30, 2010, Bluegreen repaid $1.2 million on this facility.

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Receivable-Backed Notes Payable
     Bluegreen’s pledged receivables under its receivable-backed notes payable as of June 30, 2010 and December 31, 2009 had a principal balance before purchase accounting adjustments of approximately $695.7 million and $292.9 million, respectively.
     Liberty Bank Facility. During the six months ended June 30, 2010, Bluegreen pledged $22.9 million of VOI notes receivable to this facility and received cash proceeds of $20.6 million. Bluegreen also made repayments of $8.9 million on the facility during the six months ended June 30, 2010. In July 2010, Bluegreen transferred $4.7 million of VOI notes receivable to Liberty and received cash proceeds of $4.2 million.
     GE Bluegreen/Big Cedar Receivables Facility. During the six months ended June 30, 2010, Bluegreen repaid $4.6 million on this facility.
     The Wells Fargo Facility. During the six months ended June 30, 2010, Bluegreen repaid $7.1 million on this facility.
     BB&T Purchase Facility. During the six months ended June 30, 2010, Bluegreen made repayments of $17.5 million on the facility and did not pledge any additional VOI notes receivable to this facility. On June 29, 2010, BB&T extended the revolving advance period of the facility to August 30, 2010, with any further extension being subject to BB&T approval. No other significant changes were made to the terms of the facility in connection with this extension.
     As discussed further in Notes 2 and 11 above, on January 1, 2010, Bluegreen consolidated seven of its special purpose finance entities and associated receivable-backed notes payable. These entities and their associated debt were not required to be consolidated during periods prior to January 1, 2010. Historically, Bluegreen has been a party to a number of securitization-type transactions, in which it sold receivables to one of its special purpose finance entities which, in turn, sold the receivables either directly to third parties or to a trust established for the transaction. The receivables were sold on a non-recourse basis (except for breaches of certain representations and warranties). Under these arrangements, the cash payments received from obligors on the receivables sold are generally applied monthly to pay fees to service providers, make interest and principal payments to investors, and fund required reserves, if any, with the remaining balance of such cash retained by Bluegreen; however, to the extent the portfolio of receivables fails to satisfy specified performance criteria (as may occur due to an increase in default rates or loan loss severity) or other trigger events, the funds received from obligors are distributed on an accelerated basis to investors. Depending on the circumstances and the transaction, the application of the accelerated payment formula may be permanent or temporary until the trigger event is cured. As of June 30, 2010, Bluegreen was in compliance with all applicable terms and no trigger events had occurred.
     The table below sets forth the balances as of June 30, 2010 of Bluegreen’s receivable-back notes payable facilities (in thousands):
                 
Non-recourse receivable-backed notes   As of        
payable previously reported as off-balance   June 30, 2010        
sheet (1):   Debt Balance     Interest Rate  
BB&T Purchase Facility
  $ 113,799       5.75 %
GE 2004 Facility
    11,080       7.16 %
2004 Term Securitization
    22,772       5.27 %
2005 Term Securitization
    65,140       5.98 %
GE 2006 Facility
    55,995       7.35 %
2006 Term Securitization
    59,875       6.16 %
2007 Term Securitization
    113,830       7.32 %
2008 Term Securitization
    43,455       7.88 %
 
             
Total
  $ 485,946          
 
             
 
(1)   With the exception of the BB&T Purchase Facility, non-recourse receivable-backed notes payable were reported off-balance sheet prior to January 1, 2010.

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Junior Subordinated Debentures
     As more fully described in Note 23 “Junior Subordinated Debentures” to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, some of the Company’s subsidiaries have formed statutory business trusts (collectively, the “Trusts”), each of which issued trust preferred securities and invested the proceeds thereof in its junior subordinated debentures. The Trusts are variable interest entities in which the Company’s subsidiaries are not the primary beneficiaries as defined by the accounting guidance for consolidation. Accordingly, the Company does not consolidate the operations of the Trusts; instead, the Trusts are accounted for under the equity method of accounting.
     On March 30, 2010, the interest rate on the securities issued by Levitt Capital Trust (“LCT”) I contractually changed from a fixed-rate of 8.11% to a variable rate equal to the 3-month LIBOR + 3.85% (4.38% as of June 30, 2010).
     On July 30, 2010, the interest rate on the securities issued by the LCT II contractually changed from a fixed-rate of 8.09% to a variable rate equal to the 3-month LIBOR + 3.80%.
     On March 30, 2010, the interest rate on the securities issued by Bluegreen Statutory Trust (“BST”) I contractually changed from a fixed-rate of 9.160% to a variable rate equal to the 3-month LIBOR + 4.90% (5.43% as of June 30, 2010).
     On July 30, 2010, the interest rate on the securities issued by BST II and BST III contractually changed from a fixed-rate of 9.158% and 9.193%, respectively, to a variable rate equal to the 3-month LIBOR + 4.85%.
16. Development Bonds Payable
     In connection with the development of certain of Core’s projects, community development, special assessment or improvement districts were established that may have utilized tax-exempt bond financing to fund construction or acquisition of certain on-site and off-site infrastructure improvements near or at these communities. The obligation to pay principal and interest on the bonds issued by the districts is assigned to each parcel within the district, and a priority assessment lien may be placed on benefited parcels to provide security for the debt service. The bonds, including interest and redemption premiums, if any, and the associated priority lien on the property are typically payable, secured and satisfied by revenues, fees, or assessments levied on the property benefited. Core is required to pay the revenues, fees, and assessments levied by the districts on the properties it still owns that are benefited by the improvements. Core may also be required to pay down a specified portion of the bonds at the time each unit or parcel is sold. The costs of these obligations are capitalized to inventory during the development period and recognized as cost of sales when the properties are sold.
     Core’s bond financing at June 30, 2010 and December 31, 2009 consisted of district bonds totaling $218.7 million at each of these dates with outstanding amounts of approximately $173. 8 million and $170.8 million, respectively. Bond obligations at June 30, 2010 mature in 2035 and 2040. As of June 30, 2010, Core owned approximately 4% of the property subject to assessments within the community development district and approximately 91% of the property subject to assessments within the special assessment district. During the three months ended June 30, 2010 and 2009, Core recorded a liability of approximately $66,000 and $158,000, respectively, in assessments on property owned by it in the districts. During the six months ended June 30, 2010 and 2009, Core recorded a liability of approximately $225,000 and $317,000, respectively, in assessments on property owned by it in the districts. Core is responsible for any assessed amounts until the underlying property is sold and will continue to be responsible for the annual assessments through the maturity dates of the respective bonds issued if the property is never sold. Based on Core’s approximate 91% ownership interest in property within the special assessment district as of June 30, 2010, it will be responsible for the payment of approximately $10 million in assessments by March 2011. If Core sells land within the special assessment district and reduces its ownership percentage, the potential payment of approximately $10 million would decrease in relation to the decrease in the ownership percentage. In addition, Core has guaranteed payments for assessments under the district bonds in Tradition, Florida which would require funding if future assessments to be allocated to property owners are insufficient to repay the bonds. Management has evaluated this exposure based upon the criteria in accounting guidance for contingencies, and has determined that there have been no substantive changes to the projected density or land use in the development subject to the bond which would make it probable that Core would have to fund future shortfalls in assessments pursuant to the guarantees.

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     A liability was recorded for the estimated developer obligations that are fixed and determinable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user. At June 30, 2010, the liability related to developer obligations associated with Core’s ownership of the property was $175,000 after the sale of Core’s commercial leasing projects in June 2010 (See Note 5 for information relating to the sale). At December 31, 2009, the liability related to developer obligations was $3.3 million, of which $3.1 million was included in the liabilities related to assets held for sale in the accompanying Consolidated Statements of Financial Condition as of December 31, 2009.
17. Interest Expense
     The following table is a summary of the Company’s consolidated interest expense and the amounts capitalized (in thousands):
                                 
    For the Three Months Ended,     For the Six Months Ended,  
    June 30,     June 30,  
    2010     2009     2010     2009  
Real Estate and Other:
                               
Interest incurred on borrowings
  $ 20,183       3,881       40,185       7,763  
Interest capitalized
    (114 )     (651 )     (185 )     (2,285 )
 
                       
 
    20,069       3,230       40,000       5,478  
 
                       
 
                               
Financial Services:
                               
Interest on deposits
    6,021       11,527       13,078       24,514  
Interest on advances from FHLB
    1       5,082       959       12,246  
Interest on short term borrowings
    7       19       15       191  
Interest on debentures and bonds payable
    3,922       4,186       7,743       8,622  
 
                       
 
    9,951       20,814       21,795       45,573  
 
                       
Total interest expense
  $ 30,020       24,044       61,795       51,051  
 
                       
18. Noncontrolling Interests
     The following table summarizes the noncontrolling interests held by others in the Company’s subsidiaries at June 30, 2010 and December 31, 2009 (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
BankAtlantic Bancorp
  $ 44,175       88,910  
Bluegreen
    42,726       41,905  
Joint ventures
    31,249       28,037  
 
           
 
  $ 118,150       158,852  
 
           
     The following table summarizes the noncontrolling interests (loss) earnings recognized by others with respect to the Company’s subsidiaries for the three and six months ended June 30, 2010 and 2009 (in thousands):
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Noncontrolling interest —
                               
Continuing Operations:
                               
BankAtlantic Bancorp
  $ (32,336 )     (26,868 )     (45,355 )     (59,517 )
Woodbridge
          412             12,322  
Bluegreen
    4,096             1,300        
Joint ventures
    1,225       (267 )     2,375       (486 )
 
                       
 
  $ (27,015 )     (26,723 )     (41,680 )     (47,681 )
 
                       
 
                               
Noncontrolling interest —
                               
Discontinued Operations:
                               
BankAtlantic Bancorp
  $                   2,943  
Woodbridge
          106             (508 )
 
                       
 
  $       106             2,435  
 
                       
Net Loss Attributable to Noncontrolling Interests
  $ (27,015 )     (26,617 )     (41,680 )     (45,246 )
 
                       

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19. Segment Reporting
     Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment.
     The information provided for segment reporting is based on internal reports utilized by management of the Company and its respective subsidiaries. The presentation and allocation of assets and results of operations may not reflect the actual economic costs of the segments as stand alone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ but the relative trends in segments’ operating results would, in management’s view, likely not be impacted.
     As a result of the Woodbridge merger on September 21, 2009 and the Bluegreen share acquisition on November 16, 2009, the Company reorganized its reportable segments to better align its segment reporting with the current operations of its businesses. The Company’s business activities currently consist of (i) Real Estate and Other activities and (ii) Financial Services activities. These business activities are reported through six segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. As a result of this reorganization, our BFC Activities segment now includes, in addition to other activities historically included in this segment, Woodbridge Other Operations (which was previously a separate segment). Our Real Estate Operations segment is now comprised of what was previously identified as our Land Division, including the real estate business activities of Core Communities and Carolina Oak.
     BFC’s consolidated financial statements include the results of operations of Bluegreen since November 16, 2009 when we acquired a controlling interest in Bluegreen, and Bluegreen’s results of operations are reported through the Bluegreen Resorts and Bluegreen Communities segments. Prior to November 16, 2009, we owned approximately 9.5 million shares of Bluegreen’s common stock, representing approximately 29% of such stock, the investment in Bluegreen was accounted for under the equity method of accounting, and our interest in Bluegreen’s earnings and losses was included in our BFC Activities segment. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and are reported in two segments: BankAtlantic and BankAtlantic Bancorp Parent Company.
     The accounting policies of the segments are generally the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Intersegment transactions are eliminated in consolidation. The Company evaluates segment performance based on its segment net income (loss).
     The following summarizes the aggregation of the Company’s operating segments into reportable segments:
BFC Activities
     The BFC Activities segment consists of BFC operations, our investment in Benihana, and other operations of Woodbridge described below. BFC operations primarily consist of our corporate overhead and general and administrative expenses, including the expenses of Woodbridge, the financial results of a venture partnership that BFC controls and other equity investments, as well as income and expenses associated with BFC’s shared service operations which provides services in the areas of human resources, risk management, investor relations, executive office administration and other services to BankAtlantic Bancorp and Bluegreen. This segment also includes investments made by BFC/CCC, Inc., our wholly owned subsidiary (“BFC/CCC”). Other operations includes the consolidated operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), a restaurant franchisor operating within the quick service and organic food industries, the activities of Cypress Creek Capital Holdings, LLC (“Cypress Creek Capital”) and Snapper Creek Equity Management, LLC (“Snapper Creek”) and other investments. In addition, prior to obtaining a controlling interest in Bluegreen on November 16, 2009, we accounted for our investment in Bluegreen under the equity method of accounting and our interest in Bluegreen’s earnings or loss was included in the BFC Activities segment.

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Real Estate Operations
     The Company’s Real Estate Operations segment consists of the operations of Core Communities, Carolina Oak, which was engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008, and Cypress Creek Holdings which engages in leasing activities.
Bluegreen Resorts
     Bluegreen Resorts develops, markets and sells VOIs in its resorts through the Bluegreen Vacation Club, and provides fee-based management services to resort property owners associations. Bluegreen Resorts also earns fees from third parties for providing sales, marketing, construction management, title and fee-based management services to third-party resort developers and owners.
Bluegreen Communities
     Bluegreen Communities acquires large tracts of real estate, which are subdivided, improved (in some cases to include a golf course on the property and other related amenities) and sold, typically on a retail basis as homesites.
BankAtlantic
     The Company’s BankAtlantic segment consists of the banking operations of BankAtlantic.
BankAtlantic Bancorp Parent Company
     The BankAtlantic Bancorp Parent Company segment consists of the operations of BankAtlantic Bancorp Parent Company, including the cost of acquisitions, asset and capital management and financing activities and the results of BankAtlantic Bancorp’s asset work out subsidiary.

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     The table below sets forth the Company’s segment information as of and for the three month periods ended June 30, 2010 and 2009 (in thousands):
                                                                 
                                            BankAtlantic     Unallocated        
                                            Bancorp     Amounts        
    BFC     Real Estate     Bluegreen     Bluegreen             Parent     and     Segment  
2010   Activities     Operations     Resorts     Communities     BankAtlantic     Company     Eliminations     Total  
Revenues:
                                                               
Sales of real estate
  $       2,455       48,183       2,937                         53,575  
Other resorts and communities operations revenue
                16,423       499                         16,922  
Other real estate revenues
    482       297       12,130                         (17 )     12,892  
Interest income
                            43,271       81       30,467       73,819  
Financial Services — non-interest income
                            26,271       274       (501 )     26,044  
 
                                               
Total revenues
    482       2,752       76,736       3,436       69,542       355       29,949       183,252  
 
                                               
 
                                                               
Costs and Expenses:
                                                               
Cost of sales of real estate
          2,175       9,065       2,404                         13,644  
Cost of sales of other revenues
                11,452       913                         12,365  
Interest expense
    1,643       1,867                   6,263       3,660       16,587       30,020  
Provision for loan losses
                            43,634       4,919             48,553  
Selling, general and administrative
    7,141       1,802       38,960       4,216                   10,147       62,266  
Other expenses
                            59,515       3,393       (647 )     62,261  
 
                                               
Total costs and expenses
    8,784       5,844       59,477       7,533       109,412       11,972       26,087       229,109  
 
                                               
 
                                                               
Loss on settlement of investment in Woodbridge’s subsidiary
    (1,135 )                                         (1,135 )
Gain on sale of assets
          275                                     275  
Equity in earnings from unconsolidated affiliates
    4                               237       35       276  
Other income
    1,772       433                               (1,281 )     924  
 
                                               
(Loss) income from continuing operations before income taxes
    (7,661 )     (2,384 )     17,259       (4,097 )     (39,870 )     (11,380 )     2,616       (45,517 )
Less: Provision (benefit) for income taxes
    (5,449 )                                   5,841       392  
 
                                               
(Loss) income from continuing operations
    (2,212 )     (2,384 )     17,259       (4,097 )     (39,870 )     (11,380 )     (3,225 )     (45,909 )
Income from discontinued operations
          2,714                                     2,714  
 
                                               
Net (loss) income
  $ (2,212 )     330       17,259       (4,097 )     (39,870 )     (11,380 )     (3,225 )     (43,195 )
 
                                               
Less: Net loss attributable to noncontrolling interests
                                                    (27,015 )     (27,015 )
 
                                                           
Net loss attributable to BFC
                                                  $ 23,790       (16,180 )
 
                                                           
 
                                                               
 
                                               
Total assets at June 30, 2010
  $ 166,260       180,635       901,087       105,339       4,611,282       401,842       (216,180 )     6,150,265  
 
                                               

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                            BankAtlantic     Unallocated        
                            Bancorp     Amounts        
    BFC     Real Estate             Parent     and     Segment  
2009   Activities     Operations     BankAtlantic     Company     Eliminations     Total  
Revenues:
                                               
Sales of real estate
  $       1,728                   39       1,767  
Other real estate revenues
    202       675                   (8 )     869  
Interest income
                56,991       196       292       57,479  
Financial Services — non-interest income
                32,751       (971 )     (403 )     31,377  
 
                                   
Total revenues
    202       2,403       89,742       (775 )     (80 )     91,492  
 
                                   
 
                                               
Costs and Expenses:
                                               
Cost of sales of real estate
    17       1,269                   15       1,301  
Interest expense
    1,883       1,347       16,913       4,002       (101 )     24,044  
Provision for loan losses
                35,955       7,539             43,494  
Selling, general and administrative
    7,550       4,211                   (487 )     11,274  
Other expenses
                61,077       1,860       (344 )     62,593  
 
                                   
Total costs and expenses
    9,450       6,827       113,945       13,401       (917 )     142,706  
 
                                   
 
                                               
Equity in earnings (loss) from unconsolidated affiliates
    10,697             25       (2 )     35       10,755  
Other income
    1,434       126                   (766 )     794  
 
                                   
Income (loss) from continuing operations before income taxes
    2,883       (4,298 )     (24,178 )     (14,178 )     106       (39,665 )
Less: Provision (benefit) for income taxes
                                   
 
                                   
Income (loss) from continuing operations
    2,883       (4,298 )     (24,178 )     (14,178 )     106       (39,665 )
Income from discontinued operations
          139                         139  
 
                                   
Net income (loss)
  $ 2,883       (4,159 )     (24,178 )     (14,178 )     106       (39,526 )
 
                                   
Less: Net loss attributable to noncontrolling interests
                                    (26,617 )     (26,617 )
 
                                           
Net loss attributable to BFC
                                  $ 26,723       (12,909 )
 
                                           
 
                                               
 
                                   
Total assets at June 30, 2009
  $ 200,494       373,774       5,189,711       469,533       (420,515 )     5,812,997  
 
                                   

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     The table below sets forth the Company’s segment information as of and for the six month periods ended June 30, 2010 and 2009 (in thousands):
                                                                 
                                            BankAtlantic     Unallocated        
                                            Bancorp     Amounts        
    BFC     Real Estate     Bluegreen     Bluegreen             Parent     and     Segment  
2010   Activities     Operations     Resorts     Communities     BankAtlantic     Company     Eliminations     Total  
Revenues:
                                                               
Sales of real estate
  $       2,455       63,112       6,603                         72,170  
Other resorts and communities operations revenue
                32,093       850                         32,943  
Other real estate revenues
    869       934       22,310                         (34 )     24,079  
Interest income
                            90,986       159       60,772       151,917  
Financial Services — non-interest income
                            54,528       543       (937 )     54,134  
 
                                               
Total revenues
    869       3,389       117,515       7,453       145,514       702       59,801       335,243  
 
                                               
 
                                                               
Costs and Expenses:
                                                               
Cost of sales of real estate
          2,175       12,173       8,192                         22,540  
Cost of sales of other revenues
                23,395       1,660                         25,055  
Interest expense
    3,481       3,850                   14,519       7,223       32,722       61,795  
Provision for loan losses
                            75,668       3,640             79,308  
Selling, general and administrative
    13,628       4,461       68,774       6,868                   22,873       116,604  
Other expenses
                            112,236       5,037       (1,002 )     116,271  
 
                                               
Total costs and expenses
    17,109       10,486       104,342       16,720       202,423       15,900       54,593       421,573  
 
                                               
 
                                                               
Loss on settlement of investment in Woodbridge’s subsidiary
    (1,135 )                                         (1,135 )
Gain on sale of assets
          275                                     275  
Equity in (loss) earnings from unconsolidated affiliates
    (27 )                             426       70       469  
Other income
    3,166       486                               (2,290 )     1,362  
 
                                               
(Loss) income from continuing operations before income taxes
    (14,236 )     (6,336 )     13,173       (9,267 )     (56,909 )     (14,772 )     2,988       (85,359 )
Less: Provision (benefit) for income taxes
    (5,647 )                       90             1,358       (4,199 )
 
                                               
(Loss) income from continuing operations
    (8,589 )     (6,336 )     13,173       (9,267 )     (56,999 )     (14,772 )     1,630       (81,160 )
Income from discontinued operations
          2,465                                     2,465  
 
                                               
Net (loss) income
  $ (8,589 )     (3,871 )     13,173       (9,267 )     (56,999 )     (14,772 )     1,630       (78,695 )
 
                                                   
Less: Net loss attributable to noncontrolling interests
                                                    (41,680 )     (41,680 )
 
                                                           
Net loss attributable to BFC
                                                  $ 43,310       (37,015 )
 
                                                           

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                            BankAtlantic     Unallocated        
                            Bancorp     Amounts        
    BFC     Real Estate             Parent     and     Segment  
2009   Activities     Operations     BankAtlantic     Company     Eliminations     Total  
Revenues:
                                               
Sales of real estate
  $       3,155                   39       3,194  
Other real estate revenues
    501       1,277                   (17 )     1,761  
Interest income
                119,400       405       582       120,387  
Financial Services — non-interest income
                65,538       (629 )     (732 )     64,177  
 
                                   
Total revenues
    501       4,432       184,938       (224 )     (128 )     189,519  
 
                                   
 
                                               
Costs and Expenses:
                                               
Cost of sales of real estate
    17       1,962                   15       1,994  
Interest expense
    2,772       2,706       37,553       8,232       (212 )     51,051  
Provision for loan losses
                79,475       8,296             87,771  
Selling, general and administrative
    14,543       8,649                   (963 )     22,229  
Other expenses
                132,780       3,564       (1,195 )     135,149  
 
                                   
Total costs and expenses
    17,332       13,317       249,808       20,092       (2,355 )     298,194  
 
                                   
 
                                               
Gain on settlement of investment in Woodbridge’s subsidiary
    26,985                         13,384       40,369  
Equity in earnings from unconsolidated affiliates
    16,962             103       116       69       17,250  
Impairment of unconsolidated affiliates
    (20,401 )                             (20,401 )
Impairment of investments
    (2,396 )                             (2,396 )
Other income
    2,879       410                   (1,530 )     1,759  
 
                                   
Income (loss) from continuing operations before income taxes
    7,198       (8,475 )     (64,767 )     (20,200 )     14,150       (72,094 )
Less: Provision (benefit) for income taxes
                                   
 
                                   
Income (loss) from continuing operations
    7,198       (8,475 )     (64,767 )     (20,200 )     14,150       (72,094 )
(Loss) income from discontinued operations
          (665 )           4,201             3,536  
 
                                   
Net income (loss)
  $ 7,198       (9,140 )     (64,767 )     (15,999 )     14,150       (68,558 )
 
                                       
Less: Net loss attributable to noncontrolling interests
                                    (45,246 )     (45,246 )
 
                                           
Net loss attributable to BFC
                                  $ 59,396       (23,312 )
 
                                           

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20. Commitments, Contingencies and Financial Instruments with Off-Balance Sheet Risk
BFC
     A wholly-owned subsidiary of BFC/CCC has a 10% interest in a limited liability company that owns two commercial properties in Hillsborough County, Florida. At June 30, 2010 and December 31, 2009, the carrying amount of this investment was approximately $673,000 and $690,000, respectively, which is included in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the commercial properties in November 2006, BFC and the unaffiliated member each guaranteed the payment of up to a maximum of $5.0 million each for certain environmental indemnities and specific obligations that are not related to the financial performance of the assets. BFC and the unaffiliated member also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates.
     A wholly-owned subsidiary of BFC/CCC has a 50% limited partner interest in a limited partnership that has a 10% interest in a limited liability company that owns an office building in Tampa, Florida. At June 30, 2010 and December 31, 2009, the carrying amount of this investment was approximately $310,000 and $319,000, respectively, which is included in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the office building by the limited liability company in June 2007, BFC guaranteed the payment of certain environmental indemnities and specific obligations that are not related to the financial performance of the asset up to a maximum of $15.0 million, or $25.0 million in the event of any petition or involuntary proceeding under the U.S. Bankruptcy Code or similar state insolvency laws or in the event of any transfer of interests not in accordance with the loan documents. BFC and the unaffiliated members also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates.
     No amounts are recorded in the Company’s financial statements for the obligations associated with the above guarantees based on the potential indemnification by unaffiliated members and the limit of the specific obligations to non-financial matters.
     Based on the current accounting guidance associated with the consolidation of variable interest entities implemented on January 1, 2010, we are not classified as primary beneficiaries in connection with the above mentioned BFC/CCC investments and do not consolidate these entities into our financial statements. We do not have the power to direct the activities that can significantly impact the performance of these entities.
Core
     At each of June 30, 2010 and December 31, 2009, Core had outstanding surety bonds of approximately $860,000, which were related primarily to its obligations to various governmental entities to construct improvements in its various communities. It is estimated that approximately $495,000 of work remains to complete these improvements and it is not currently anticipated that any outstanding surety bonds will be drawn upon.
Woodbridge
     Levitt and Sons, Woodbridge’s former wholly-owned homebuilding subsidiary, had approximately $33.3 million of surety bonds related to its ongoing projects at November 9, 2007, the date on which Levitt and Sons and substantially all of its subsidiaries filed voluntary bankruptcy petitions (the “Chapter 11 Cases”). In the event that these obligations are drawn and paid by the surety, Woodbridge could be responsible for up to $7.6 million plus costs and expenses in accordance with the surety indemnity agreements executed by Woodbridge. At June 30, 2010 and December 31, 2009, Woodbridge had $490,000 and $527,000, respectively, in surety bond accruals related to certain bonds where management believes it to be probable that Woodbridge will be required to reimburse the surety under applicable indemnity agreements. Woodbridge reimbursed the surety approximately $37,000 during the six months ended June 30, 2009, in accordance with the indemnity agreement for bond claims paid during the period, while no reimbursements were made in the six months ended June 30, 2010. In addition, no reimbursements were made in the three months ended June 30, 2010 or 2009. It is unclear whether and to what extent the remaining outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Woodbridge may be responsible for additional amounts beyond its $490,000 accrual. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay. In September 2008, a surety filed a lawsuit to require Woodbridge to post collateral against a portion of the surety bonds exposure in connection with demands made by a municipality. Woodbridge believes that the municipality does not have the right to demand payment under the bonds and Woodbridge initiated a lawsuit against the municipality. However, based on claims made on the bonds, the surety requested that Woodbridge post a $4.0 million escrow deposit as security while the matter was being litigated with the municipality, and Woodbridge has complied with that request. In August 2010, Woodbridge was granted a motion for summary judgment terminating any obligations under the bonds. It is anticipated that the municipality will seek rehearing and, if it is denied, will prosecute an appeal of the court’s decision.

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     On February 20, 2009, the Bankruptcy Court presiding over the Chapter 11 Cases entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Official Committee of Unsecured Creditors. That order also approved the settlement pursuant to the settlement agreement that was entered into with the Joint Committee of Unsecured Creditors. No appeal or rehearing of the Bankruptcy Court’s order was filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the settlement agreement. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the settlement agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary. Pursuant to the settlement agreement, we agreed to share a percentage of any tax refund attributable to periods prior to the bankruptcy with the Debtors Estate. In the fourth quarter of 2009, we accrued approximately $10.7 million in connection with the portion of the tax refund which may be payable to the Debtors Estate pursuant to the settlement agreement. As a result, the gain on settlement of investment in subsidiary for the year ended December 31, 2009 was reduced to $29.7 million. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.1 million, representing a portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service guidance that will likely be required to be paid to the Debtors Estate pursuant to the Settlement Agreement. As of June 30, 2010, we had accrued a liability of approximately $11.8 million which represents a portion of tax refunds to be shared with the Debtors Estate pursuant to the settlement agreement.
     As previously disclosed, under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve the merger between Woodbridge and BFC and properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares as determined in accordance with the provisions of Florida law in lieu of the shares of BFC’s Class A Common Stock that they would otherwise have been entitled to receive. Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. Woodbridge is currently a party to legal proceedings relating to the Dissenting Holders appraisal process. In December 2009, a $4.6 million liability was recorded with a corresponding reduction to additional paid-in capital, which is reflected in the Company’s Consolidated Statements of Financial Condition representing in the aggregate Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain. There is no assurance as to the amount of cash that we will be required to pay to the Dissenting Holders, and such amount may be greater than the $4.6 million that we have accrued.
Bluegreen
Tennessee Tax Audit
     In 2005, the State of Tennessee Audit Division (the “Division”) audited certain subsidiaries within Bluegreen Resorts for the period from December 1, 2001 through December 31, 2004. On September 23, 2006, the Division issued a notice of assessment for approximately $652,000 of accommodations tax based on the use of Bluegreen Vacation Club accommodations by Bluegreen Vacation Club members who became members through the purchase of non-Tennessee property. Bluegreen believes the attempt to impose such a tax is contrary to Tennessee law and has vigorously opposed, and intends to continue to vigorously oppose, such assessment by the Division. An informal conference was held in December 2007 to discuss this matter with representatives of the Division. No formal resolution of the issue was reached during the conference and no further action has to date been initiated by the State of Tennessee. While the timeshare industry has been successful in challenging the imposition of sales taxes on the use of accommodations by timeshare owners, there is no assurance that Bluegreen will be successful in contesting the current assessment.

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Pennsylvania Attorney General Lawsuit
     On October 28, 2008, in Cause No. 479 M.D. 2008, styled Commonwealth of Pennsylvania Acting by Attorney General Thomas W. Corbett, Jr. v. Bluegreen Corporation, Bluegreen Resorts, Bluegreen Vacations Unlimited, Inc. and Great Vacation Destinations, Inc., in the Commonwealth Court of Pennsylvania, the Commonwealth of Pennsylvania acting through its Attorney General filed a lawsuit against Bluegreen Corporation, Bluegreen Resorts, Bluegreen Vacations Unlimited, Inc. and Great Vacation Destinations, Inc. (a wholly owned subsidiary of Bluegreen Corporation) alleging violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Laws. The lawsuit alleged that Bluegreen used sales and marketing methods or practices that were unlawful under Pennsylvania law and sought a permanent injunction preventing Bluegreen from using such methods and practices in the future. The lawsuit also sought civil penalties and restitution on behalf of Pennsylvania consumers. The lawsuit did not seek to permanently restrain Bluegreen or any of its affiliates from doing business in the Commonwealth of Pennsylvania. The parties reached a settlement on this matter and a consent was signed which received Court approval on May 26, 2010. Pursuant to the terms of the settlement, Bluegreen paid $200,000 to the Attorney General’s Office and agreed to a 30-day tail period within which additional consumers meeting certain eligibility requirements can apply for relief. That period has now ended with no material changes in the amounts payable by Bluegreen.
Destin, Florida Deposit Dispute Lawsuit
     In Cause No. 2006-Ca-3374, styled Joseph M. Scheyd, Jr., P.A. vs. Bluegreen Vacations Unlimited, Inc.,; Hubert A. Laird; and MSB of Destin, Inc., in the Circuit Court of the First Judicial Circuit in and for Okaloosa County, Florida, the Plaintiff as escrow agent brought an interpleader action seeking a determination as to whether Bluegreen, as purchaser, or Hubert A. Laird and MSB of Destin, Inc. as seller, were entitled to the $1.4 million escrow deposit being maintained with the escrow agent pursuant to a purchase and sale contract for real property located in Destin, Florida. Both Bluegreen and the seller have brought cross-claims for breach of the underlying purchase and sale contract. The seller alleges Bluegreen failed to perform under the terms of the purchase and sale contract and claims entitlement to the amount in escrow. Bluegreen maintains that its decision not to close on the purchase of the property was proper under the terms of the purchase and sale contract and therefore Bluegreen is entitled to a return of the full escrow deposit. The seller amended its complaint to include a fraud count. Bluegreen believes the fraud allegations are without merit and intends to vigorously defend this claim.
Mountain Lakes Mineral Rights
     Bluegreen Southwest One, L.P., (“Southwest”), a subsidiary of Bluegreen Corporation, is the developer of the Mountain Lakes subdivision in Texas. In Cause No. 28006, styled Betty Yvon Lesley et a1 v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. et al., in the 266th Judicial District Court, Erath County, Texas, the plaintiffs filed a declaratory judgment action against Southwest seeking to develop their reserved mineral interests in, on and under the Mountain Lakes subdivision. The plaintiffs’ claims are based on property law, oil and gas law, contract and tort theories. The property owners association and some of the individual landowners have filed cross actions against Bluegreen, Southwest and individual directors of the property owners association related to the mineral rights and certain amenities in the subdivision as described below. On January 17, 2007, the court ruled that the restrictions placed on the development that prohibited oil and gas production and development were invalid and not enforceable as a matter of law, that such restrictions did not prohibit the development of the plaintiffs’ prior reserved mineral interests and that Southwest breached its duty to lease the minerals to third parties for development. The court further ruled that Southwest was the sole holder of the right to lease the minerals to third parties. The order granting the plaintiffs’ motion was severed into a new cause styled Cause No. 28769 Betty Yvon Lesley et a1 v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. et al. in the 266th Judicial District Court, Erath County, Texas. Southwest appealed the trial court’s ruling. On January 22, 2009, in Bluegreen Southwest One, L.P. et al. v. Betty Yvon Lesley et al., in the 11th Court of Appeals, Eastland, Texas, the Appellate Court reversed the trial court’s decision and ruled in Southwest’s favor and determined that all executive rights were owned by Southwest and then transferred to the individual property owners in connection with the sales of land. All property owner claims were decided in favor of Southwest. It was also decided that Southwest did not breach a fiduciary duty to the plaintiffs as an executive rights holder. As a result of this decision, no damages or attorneys’ fees are owed to the plaintiffs. On May 14, 2009, the plaintiffs filed an appeal with the Texas Supreme Court asking the Court to reverse the Appellate Court’s decision in favor of Bluegreen. The Court has agreed to hear oral arguments from the parties on whether the Court should accept the plaintiffs’ appeal. No information is available as to when the Texas Supreme Court will render a decision as to whether or not it will take the appeal.

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     Separately, one of the amenity lakes in the Mountain Lakes development did not reach the expected water level after construction was completed. Owners of homesites within the Mountain Lakes subdivision and the property owners Association of Mountain Lakes have asserted cross claims against Southwest and Bluegreen regarding such failure as part of the Lesley litigation described above as well as in Cause No. 067-223662-07, Property Owners Association of Mountain Lakes Ranch, Inc. v. Bluegreen Southwest One, L.P. et al., in the 67th Judicial District Court of Tarrant County, Texas. This case has been settled and the entire $3.4 million settlement was paid in March of 2010. Additional claims may be pursued in the future by certain individual lot owners within the Mountain Lakes subdivision in connection with these matters, but it is not possible at this time to estimate the likelihood of loss or amount of potential exposure with respect to any such matters, including the likelihood that any such loss may exceed the amount accrued.
Catawba Falls Preserve Homeowner’s Association Demand Letter
     By letter dated October 2, 2008, the Catawba Falls Preserve Homeowners Association demanded payment for (i) construction of pedestrian pathways and certain equestrian stables allegedly promised by Bluegreen but never constructed, (ii) repairs to roads and culverts within the community, and (iii) landscaping improvements to the community’s gated entrance. The parties reached settlement with Bluegreen agreeing to pay the Association a nominal sum and convey to the Association title to two lots located within the Catawba Falls Preserve subdivision.
Marshall, et al. Lawsuit regarding Community Amenities
     On September 14, 2009, in Cause No. 09-09-08763-CV, styled William Marshall and Patricia Marshall, et al. v Bluegreen Southwest One, L.P., Bluegreen Southwest Land, Inc., Bluegreen Corporation, Stephen Davis, and Bluegreen Communities of Texas, L.P., Plaintiffs filed this action alleging fraud, negligent misrepresentation, breach of contract, and negligence with regards to the Ridgelake Shores subdivision, developed in Montgomery County, Texas, specifically, the usability of the lakes within the community for fishing and sporting and the general level of quality at the community. The lawsuit seeks material damages and the payment of costs to remediate the lake. Bluegreen intends to vigorously defend the lawsuit.
Schawrz, et al. Lawsuit regarding Community Amenities
     On September 18, 2008, in Cause No. 2008-5U-CV-1358-WI, styled Paul A. Schwarz and Barbara S. Schwarz v. Bluegreen Communities of Georgia, LLC and Bluegreen Corporation, Plaintiffs brought suit alleging fraud and misrepresentation with regards to the construction of a marina at the Sanctuary Cove subdivision located in Camden County, Georgia. Plaintiff subsequently withdrew the fraud and misrepresentation counts and filed a count alleging violation of racketeering laws, including mail fraud and wire fraud. On January 25, 2010, Plaintiffs filed a second complaint seeking approval to proceed with the lawsuit as a class action on behalf of more than 100 persons claimed to have been harmed by the alleged activities in a similar manner. Bluegreen has filed a response with the Court in opposition to class certification. No decision has yet been made by the Court as to whether they will certify a class. Bluegreen denies the allegations and intends to vigorously defend the lawsuit.
BankAtlantic Bancorp
     Financial instruments with off-balance sheet risk were (in thousands):
                 
    June 30,     December 31,  
    2010     2009  
Commitments to sell fixed rate residential loans
  $ 19,663       23,255  
Commitments to originate loans held for sale
    13,801       18,708  
Commitments to originate loans held to maturity
    16,312       43,842  
Commitments to extend credit, including the undisbursed portion of loans in process
    383,201       396,627  
Standby letters of credit
    14,665       13,573  
Commercial lines of credit
    87,960       74,841  
     Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the performance of a customer to a third party. BankAtlantic’s standby letters of credit are generally issued to customers in the construction industry guaranteeing project performance. These types of standby letters of credit had a maximum exposure of $12.8 million at June 30, 2010. BankAtlantic also issues standby letters of credit to commercial lending customers guaranteeing the payment of goods and services. These types of standby letters of credit had a maximum exposure of $1.8 million at June 30, 2010. These guarantees are primarily issued to support public and private borrowing arrangements and have maturities of one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. BankAtlantic may hold certificates of deposit and residential and commercial liens as collateral for such commitments. Included in other liabilities at June 30, 2010 and December 31, 2009 were in each period $5,000, of unearned guarantee fees. There were no obligations associated with these guarantees recorded in the financial statements.
     Management of BankAtlantic Bancorp, based on discussions with legal counsel, has recognized legal reserves of $1.0 million and believes its results of operations or financial condition will not be materially impacted by the resolution of these matters. However, there is no assurance that BankAtlantic Bancorp will not incur losses in excess of reserved amounts or in amounts that will be material to its results of operations or financial condition.

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Concentration of Credit Risk
     BankAtlantic has a high concentration of its consumer home equity and commercial loans in the State of Florida. Real estate values and general economic conditions have significantly deteriorated since the origination dates of these loans. If market conditions in Florida do not improve or deteriorate further, BankAtlantic may be exposed to significant credit losses in these loan portfolios.
     BankAtlantic purchases residential loans located throughout the country. The majority of these residential loans are jumbo residential loans. A jumbo loan has a principal amount above the industry-standard definition of conventional conforming loan limits. These loans could potentially have outstanding loan balances significantly higher than related collateral values in distressed areas of the country as a result of the decline in real estate values in residential housing markets. Also included in this purchased residential loan portfolio are interest-only loans. The structure of these loans results in possible increases in a borrower’s loan payments when the contractually required repayments change due to interest rate movement and the required amortization of the principal amount. These payment increases could affect a borrower’s ability to meet the debt service on or repay the loan and lead to increased defaults and losses. At June 30, 2010, BankAtlantic’s residential loan portfolio included $640.0 million of interest-only loans, which represents 48.8% of the residential loan portfolio, with 26.1% of the aggregate principal amount of these interest-only loans secured by collateral located in California. Interest only residential loans scheduled to become fully amortizing during the six months ended December 31, 2010 and during the year ended December 31, 2011 are $1.6 million and $58.4 million, respectively.
21. Certain Relationships and Related Party Transactions
     BFC is the controlling shareholder of BankAtlantic Bancorp and Bluegreen. Woodbridge Holdings Corporation (formerly Levitt Corporation) became a wholly owned subsidiary of BFC upon consummation of the merger between Woodbridge and BFC on September 21, 2009. Prior to the merger, BFC held an approximately 59% voting interest in Woodbridge. BFC also has a direct non-controlling interest in Benihana. Shares of BFC’s Class A and Class B common stock representing a majority of BFC’s total voting power are owned or controlled by the Company’s Chairman, President and Chief Executive Officer, Alan B. Levan, and by the Company’s Vice Chairman, John E. Abdo, both of whom are also directors of Bluegreen and Benihana, and executive officers and directors of BankAtlantic Bancorp and BankAtlantic.
     The following table presents related party transactions between the Company, BankAtlantic Bancorp, and Bluegreen at June 30, 2010 and December 31, 2009, and for the three and six months ended June 30, 2010 and 2009. Woodbridge’s 2009 amounts are included in the amounts set forth for BFC. Amounts related to BankAtlantic Bancorp and BankAtlantic and services provided to Bluegreen after we acquired a controlling interest in Bluegreen (in November 2009) were eliminated in consolidation.
                                 
                    BankAtlantic        
            BFC     Bancorp     Bluegreen  
For the Three Months Ended June 30, 2010
                               
Shared service income (expense)
    (a )   $ 675       (550 )     (125 )
Facilities cost and information technology
    (a )   $ (141 )     127       14  
For the Three Months Ended June 30, 2009
                               
Shared service income (expense)
    (a )   $ 594       (458 )     (136 )
Facilities cost and information technology
    (a )   $ (122 )     108       14  
Interest income (expense) from cash balance/deposits
    (b )   $ 9       (9 )      
For the Six Months Ended June 30, 2010
                               
Shared service income (expense)
    (a )   $ 1,269       (1,042 )     (227 )
Facilities cost and information technology
    (a )   $ (280 )     253       27  
Interest income (expense) from cash balance/deposits
    (b )   $ 1       (1 )      
For the Six Months Ended June 30, 2009
                               
Shared service income (expense)
    (a )   $ 1,179       (906 )     (273 )
Facilities cost and information technology
    (a )   $ (257 )     226       31  
Interest income (expense) from cash balance/deposits
    (b )   $ 28       (28 )      
At June 30, 2010
                               
Cash and cash equivalents and (deposits)
    (b )   $ 3,773       (3,773 )      
At December 31, 2009
                               
Cash and cash equivalents and (deposits)
    (b )   $ 20,862       (20,862 )      

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(a)   Pursuant to the terms of shared service agreements between the Company and BankAtlantic Bancorp, subsidiaries of the Company provide shared service operations in the areas of human resources, risk management, investor relations, executive office administration and other services to BankAtlantic Bancorp. Additionally, the Company provides certain risk management and administrative services to Bluegreen. The costs of shared services are allocated based upon the usage of the respective services. Also, as part of the shared service arrangement, the Company pays BankAtlantic Bancorp and Bluegreen for office facilities costs relating to the Company and its shared service operations. In March 2008, BankAtlantic entered into an agreement with Woodbridge to provide information technology support in exchange for monthly payments to BankAtlantic of $10,000, including a one-time set up charge of $20,000 in 2009. Monthly payments were increased to $15,000 effective July 1, 2009.
 
(b)   As of June 30, 2010 and December 31, 2009, the Company had cash and cash equivalents accounts at BankAtlantic with balances of approximately $3.8 million and $20.9 million, respectively. These accounts were on the same general terms as deposits made by unaffiliated third parties. Additionally, during 2009, the Company invested funds through the Certificate of Deposit Account Registry Service (“CDARS”) program at BankAtlantic, which facilitates the placement of funds into certificates of deposits issued by other financial institutions in increments of less than the standard FDIC insurance maximum to insure that both principal and interest are eligible for full FDIC insurance coverage. At December 31, 2009, the Company had $7.7 million invested through the CDARS program at BankAtlantic. The Company did not have any funds invested through the CDARS program at BankAtlantic at June 30, 2010.
     In June 2010, BankAtlantic and BankAtlantic Bancorp Parent Company entered into a real estate advisory service agreement with BFC for assistance relating to the work-out of loans and the sale of real estate owned. BFC will receive a monthly fee of $12,500 from each of BankAtlantic and BankAtlantic Bancorp Parent Company and if BFC’s efforts result in net recoveries of any nonperforming loan or the sale of real estate owned, BFC will receive a fee equal to 1% of the net value recovered.
     On June 28, 2010, BFC loaned approximately $8.0 million to BankAtlantic Bancorp, and BankAtlantic Bancorp executed a promissory note agreement in favor of BFC with a maturity date of July 30, 2010. The note provided for payment either in cash or shares of BankAtlantic Bancorp’s Class A Common Stock, depending on the results of BankAtlantic Bancorp’s Rights Offering and the number of shares allocable to BFC pursuant to the offering. At June 30, 2010, the promissory note due from BankAtlantic Bancorp was eliminated in the Company’s consolidated financial statements. In July 2010, BankAtlantic Bancorp satisfied the promissory note in full through the issuance of 5,302,816 shares of BankAtlantic Bancorp’s Class A Common stock in respect of BFC’s exercise of both its Basic Subscription Rights and Over-Subscription Request in the Rights Offering.
     The Company leases office space to Pizza Fusion for approximately $68,000 annually pursuant to a month-to-month lease which commenced in September 2008. During each of the six months ended June 30, 2010 and 2009, Pizza Fusion paid approximately $36,000 under this lease agreement.
     During the six months ended June 30, 2010 and 2009, we were reimbursed approximately $1.6 million and $602,000, respectively, from Bluegreen for various advisory services and certain expenses incurred in assisting Bluegreen in its efforts to explore potential additional sources of liquidity.
     In prior periods, BankAtlantic Bancorp issued options to purchase shares of its Class A common stock to employees of Woodbridge prior to the spin-off of Woodbridge to BankAtlantic Bancorp’s shareholders. Additionally, certain employees of BankAtlantic Bancorp have transferred to affiliate companies and BankAtlantic Bancorp has elected, in accordance with the terms of BankAtlantic Bancorp’s stock option plans, not to cancel the stock options held by those former employees. BankAtlantic Bancorp accounts for these options to former employees as employee stock options because these individuals were employees of BankAtlantic Bancorp on the grant date.

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     Outstanding options to purchase BankAtlantic Bancorp stock held by former employees consisted of the following as of June 30, 2010:
                 
    Class A     Weighted  
    Common     Average  
    Stock     Price  
Options outstanding
    44,176     $ 52.38  
Options non-vested
    5,281     $ 95.10  
     During the year ended December 31, 2007, BankAtlantic Bancorp issued to BFC employees that performed services for BankAtlantic Bancorp options to acquire 9,800 shares of BankAtlantic Bancorp’s Class A common stock at an exercise price of $46.90. These options vest in five years and expire ten years from the grant date. BankAtlantic recorded $12,000 and $25,000 of service provider expenses relating to these options for the three and six months ended June 30, 2010 and 2009, respectively.
     Certain of the Company’s affiliates, including its executive officers, have independently made investments with their own funds in both public and private entities that the Company sponsored in 2001 and in which it holds investments.
     Florida Partners Corporation owns 133,314 shares of the Company’s Class B Common Stock and 1,270,294 shares of the Company’s Class A Common Stock. Alan B. Levan may be deemed to be the controlling shareholder of Florida Partners Corporation, and is also a member of its Board of Directors.
     During December 2009, BFC’s wholly owned subsidiary, Snapper Creek Equity Management, LLC, was engaged by Benihana to provide certain management, financial advisory and other consulting services. For the six months ended June 30, 2010, the consulting fees payable to Snapper Creek Equity Management under this arrangement were approximately $350,000. Benihana also recently engaged Risk Management Services (“RMS”), a wholly-owned subsidiary of BFC, to provide insurance and risk management services. Fees paid or owed to RMS under this arrangement were not significant for the six months ended June 30, 2010.

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22. Loss Per Common Share
     The following table presents the computation of basic and diluted loss per common share attributable to the Company (in thousands, except for per share data):
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Basic (loss) earnings per common share
                               
Numerator:
                               
Loss from continuing operations
  $ (45,909 )     (39,665 )     (81,160 )     (72,094 )
Less: Noncontrolling interests loss from continuing operations
    (27,015 )     (26,723 )     (41,680 )     (47,681 )
 
                       
Loss attributable to BFC
    (18,894 )     (12,942 )     (39,480 )     (24,413 )
Preferred stock dividends
    (187 )     (187 )     (375 )     (375 )
 
                       
Loss allocable to common stock
    (19,081 )     (13,129 )     (39,855 )     (24,788 )
 
                       
 
                               
Income from discontinued operations
    2,714       139       2,465       3,536  
Less: Noncontrolling interests income — discontinued operations
          106             2,435  
 
                       
Income from discontinued operations attributable to BFC
    2,714       33       2,465       1,101  
 
                       
 
                               
 
                       
Net loss allocable to common shareholders
  $ (16,367 )     (13,096 )     (37,390 )     (23,687 )
 
                       
 
                               
Denominator:
                               
 
                       
Basic weighted average number of common shares outstanding
    75,379       45,126       75,378       45,120  
 
                       
 
                               
Basic (loss) earnings per common share:
                               
Loss per share from continuing operations
  $ (0.26 )     (0.29 )     (0.53 )     (0.55 )
Earnings per share from discontinued operations
    0.04       0.00       0.03       0.03  
 
                       
Basic loss per share
  $ (0.22 )     (0.29 )     (0.50 )     (0.52 )
 
                       
 
                               
Diluted earnings (loss) per common share:
                               
Numerator:
                               
Loss allocable to common stock
  $ (19,081 )     (13,129 )     (39,855 )     (24,788 )
Income from discontinued operations allocable to common stock
    2,714       33       2,465       1,101  
 
                       
Net loss allocable to common stock
  $ (16,367 )     (13,096 )     (37,390 )     (23,687 )
 
                       
 
                               
Denominator
                               
 
                       
Diluted weighted average number of common shares outstanding
    75,379       45,126       75,378       45,120  
 
                       
 
                               
Diluted (loss) earnings per share
                               
Loss per share from continuing operations
  $ (0.26 )     (0.29 )     (0.53 )     (0.55 )
Earnings per share from discontinued operations
    0.04       0.00       0.03       0.03  
 
                       
Diluted loss per share
  $ (0.22 )     (0.29 )     (0.50 )     (0.52 )
 
                       
     During the three months ended June 30, 2010 and 2009, options to acquire 2,494,779 shares of Class A Common Stock and 1,777,729 shares of Class A Common Stock, respectively, and during the six months ended June 30, 2010 and 2009, options to acquire 2,494,779 shares of Class A Common Stock and 1,777,729 shares of Class A Common Stock, respectively, were anti-dilutive and not included in the calculation of diluted loss per share.

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23. Parent Company Financial Information
     BFC’s parent company accounting policies are generally the same as those described in the summary of significant accounting policies appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The Company’s investments in BankAtlantic Bancorp, Bluegreen and the Company’s wholly-owned subsidiaries and venture partnerships are presented in the parent company financial statements as if accounted for using the equity method of accounting.
     BFC’s parent company unaudited condensed statements of financial condition at June 30, 2010 and December 31, 2009, unaudited condensed statements of operations for the three and six month periods ended June 30, 2010 and 2009 and unaudited condensed statements of cash flows for the six months ended June 30, 2010 and 2009 are shown below:
Parent Company Condensed Statements of Financial Condition
(In thousands)
                 
    June 30,     December 31,  
    2010     2009  
Assets
               
Cash and cash equivalents
  $ 5,638       1,308  
Securities available for sale
    42,369       18,981  
Investment in Woodbridge Holdings, LLC
    146,255       197,264  
Investment in BankAtlantic Bancorp, Inc.
    27,598       47,555  
Investment in and advances in other subsidiaries
    2,062       2,218  
Notes receivable
    7,954        
Other assets
    1,784       1,279  
 
           
Total assets
  $ 233,660       268,605  
 
           
 
               
Liabilities and Shareholders’ Equity
               
Advances from wholly owned subsidiaries
  $ 833       818  
Other liabilities
    11,256       11,699  
 
           
Total liabilities
    12,089       12,517  
 
           
 
               
Redeemable 5% Cumulative Preferred Stock
    11,029       11,029  
 
               
Shareholders’ equity
    210,542       245,059  
 
           
Total liabilities and shareholders’ equity
  $ 233,660       268,605  
 
           
Parent Company Condensed Statements of Operations
(In thousands)
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2010     2009     2010     2009  
Revenues
  $ 542       333       805       616  
Expenses
    2,632       2,012       4,546       4,035  
 
                       
(Loss) before earnings (loss) from subsidiaries
    (2,090 )     (1,679 )     (3,741 )     (3,419 )
Equity in (loss) earnings in Woodbridge Holdings, LLC
    2,117       193       (8,549 )     3,928  
Equity in loss in BankAtlantic Bancorp
    (19,237 )     (11,464 )     (27,033 )     (24,823 )
Equity in earnings (loss) in other subsidiaries
    316       8       (157 )     (99 )
 
                       
Loss before income taxes
    (18,894 )     (12,942 )     (39,480 )     (24,413 )
Income taxes
                       
 
                       
Loss from continuing operations
    (18,894 )     (12,942 )     (39,480 )     (24,413 )
Equity in earnings in subsidiaries’ discontinued operations
    2,714       33       2,465       1,101  
 
                       
Net loss
    (16,180 )     (12,909 )     (37,015 )     (23,312 )
5% Preferred Stock dividends
    (187 )     (187 )     (375 )     (375 )
 
                       
Net loss allocable to common stock
  $ (16,367 )     (13,096 )     (37,390 )     (23,687 )
 
                       

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Parent Company Statements of Cash Flow
(In thousands)
                 
    For the Six Months  
    Ended June 30,  
    2010     2009  
Operating Activities:
               
Net cash used in operating activities
  $ (4,416 )     (3,006 )
 
           
 
               
Investing Activities:
               
Purchase of securities available for sale
    (35,011 )      
Proceeds from sales of securities available for sale
    2,499        
Proceeds from maturities of securities available for sale
    11,546        
Distribution from subsidiaries
    45,085       84  
Increase in note receivable due from BankAtlantic Bancorp
    (7,954 )      
Acquisition of BankAtlantic Bancorp Class A shares
    (7,046 )      
 
           
Net cash provided by investing activities
    9,119       84  
 
           
 
               
Financing Activities:
               
Proceeds from issuance of Common Stock upon exercise of stock option
    2        
Preferred stock dividends paid
    (375 )     (375 )
 
           
Net cash used in financing activities
    (373 )     (375 )
 
           
Increase (decrease) in cash and cash equivalents
    4,330       (3,297 )
Cash at beginning of period
    1,308       9,218  
 
           
Cash at end of period
  $ 5,638       5,921  
 
           
 
               
Supplementary disclosure of non-cash investing and financing activities
               
Net increase in shareholders’ equity from the effect of subsidiaries’ capital transactions, net of income taxes
  $ 1,249       732  
BFC’s prorata share of the cumulative effect of accounting changes recognized by Bluegreen
          486  
Net decrease in shareholders’ equity resulting from cumulative effect of change in accounting principle
    (1,212 )      
     During the six months ended June 30, 2010, BFC received cash dividends from Woodbridge in the amount of $45 million and no cash dividends from BankAtlantic Bancorp. For the six months ended June 30, 2009, BFC received cash dividends of $84,000 from BankAtlantic Bancorp and no cash dividends from Woodbridge.
     At June 30, 2010 and December 31, 2009, securities available for sale include approximately $22.1 million and $1.1 million, respectively, of readily marketable securities, as well as our investment in Benihana’s Convertible Preferred Stock of $20.2 million and $17.8 million at June 30, 2010 and December 31, 2009, respectively.

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24. Litigation
     Except as set forth below, there have been no material changes in our legal proceedings from those disclosed in Note 23 “Litigation” to the Company’s unaudited consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (see also Note 20 in this report for information relating to all of Bluegreen’s material legal proceedings).
Surety Bond Claim (Westchester Fire Insurance Company v. City of Brooksville)
     This litigation arose from a dispute regarding liability under two performance bonds for infrastructure issued in connection with a plat issued by the City of Brooksville for a single family housing project that was not commenced. The project had been abandoned by Levitt and Sons prior to its bankruptcy filing as non-viable as a consequence of the economic downturn and, in connection with the Levitt and Sons bankruptcy, the mortgagee, Key Bank, was permitted by agreement to initiate and conclude a foreclosure leading to the acquisition of the property by Key Bank’s subsidiary. The City of Brooksville contended that, notwithstanding that the development had not proceeded and was not likely to proceed at any known time in the future, it was entitled to recover the face of the amount of the bonds in the approximate amount of $5.4 million. The company filed a suit for declaratory judgment (in the name of its surety, Westchester) against the City of Brooksville contending that the obligation under the bonds had terminated. On August 2, 2010, the United States District Court for the Middle District of Florida granted Westchester’s motion for summary judgment, terminating any obligation under the bonds. It is anticipated that the City will seek rehearing and, if it is denied, will prosecute an appeal of the court’s decision.
     In the ordinary course of business, the Company and its subsidiaries are also parties to proceedings or lawsuits as plaintiff or defendant involving its operations and activities. Although the Company believes it has meritorious defenses in the pending legal actions and that the outcomes of these pending legal matters should not materially impact us, the ultimate outcomes of these matters are uncertain.
25. New Accounting Pronouncements
     Beginning with the period ended March 31, 2010, new accounting guidance was implemented requiring the following additional disclosure regarding fair value measurements: (1) transfers in and out of Level 1 and 2 measurements and the reasons for the transfers, and (2) a presentation of gross activity within the Level 3 roll forward. The guidance also included clarifications to existing disclosure requirements on the level of disaggregation and disclosures regarding inputs and valuation techniques. The guidance is applicable to all disclosures about recurring and nonrecurring fair value measurements. The effective date of the guidance was the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 roll forward information, which is required for annual reporting periods beginning after December 15, 2010 and for interim reporting periods within those years. The additional disclosures made in accordance with this new guidance did not have a material effect on the Company’s financial statements.
     In July 2010, the FASB issued new disclosure guidance about the “Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The new guidance provides enhanced disclosures related to the credit quality of financing receivables which includes the Company’s loans receivable and the allowance for credit losses, and provides that new and existing disclosures should be disaggregated based on how an entity develops its allowance for credit losses and how it manages credit exposures. Under the new guidance, additional disclosures required for loans receivable include information regarding the aging of past due receivables, credit quality indicators, and modifications of financing receivables. The new guidance is effective for periods ending after December 15, 2010, with the exception of the amendments to the roll forward of the allowance for credit losses and the disclosures about modifications which are effective for periods beginning after December 15, 2010. Comparative disclosures are required only for periods ending subsequent to initial adoption. The Company is currently assessing the effects of adopting the provisions of this new guidance.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
     The objective of the following discussion is to provide an understanding of the financial condition and results of operations of BFC Financial Corporation and its subsidiaries for the three and six months ended June 30, 2010 and 2009. As of June 30, 2010, BFC had total assets of approximately $6.2 billion, liabilities of approximately $5.8 billion and equity of approximately $328.7 million, including noncontrolling interest of approximately $118.2 million.
     BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) is a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), a non-controlling interest in Benihana Inc. (“Benihana”), and a controlling interest in Core Communities, LLC (“Core” or “Core Communities”). As a result of our position as the controlling shareholder of BankAtlantic Bancorp, we are a “unitary savings bank holding company” regulated by the Office of Thrift Supervision (“OTS”).
     Historically, BFC’s business strategy has been to invest in and acquire businesses in diverse industries either directly or through controlled subsidiaries. However, BFC believes that, in the short term, the Company’s and its shareholders’ interests are best served by BFC providing strategic support to its existing investments. In furtherance of this strategy, the Company took several steps in 2009 and 2010, including those described below, which it believes will enhance the Company’s prospects. During the third quarter of 2009, BFC and Woodbridge Holdings Corporation consummated their merger pursuant to which Woodbridge became a wholly-owned subsidiary of BFC. During the fourth quarter of 2009, our ownership interest in Bluegreen increased to 52% as a result of the purchase of an additional 23% interest in Bluegreen. The acquisition of this control position in Bluegreen resulted in a “bargain purchase gain” under generally accepted accounting principles (“GAAP”) of approximately $183.1 million in the fourth quarter of 2009. We have also increased our investment in BankAtlantic Bancorp through our participation in BankAtlantic Bancorp’s rights offerings to its shareholders during the third quarter of 2009 and the second quarter of 2010, which in the aggregate increased our economic interest in BankAtlantic Bancorp to 45% and our voting interest in BankAtlantic Bancorp to 71%. In addition, we have taken actions to restructure Core in recognition of the continued depressed real estate market and Core’s inability to meet its obligations. In the future, we will consider other such opportunities that could alter our ownership in our affiliates or seek to make opportunistic investments outside of our existing portfolio; however, we do not currently have pre-determined parameters as to the industry or structure of any future investment. In furtherance of our goals, we will continue to evaluate various financing transactions that may present themselves, including raising additional debt or equity as well as other alternative sources of new capital.
     During July 2010, Benihana announced its intention to engage in a formal review of strategic alternatives, including a possible sale of the company. BFC is supportive of Benihana in achieving its objectives.
     On June 18, 2010, BankAtlantic Bancorp commenced a rights offering (the “Rights Offering”) to its shareholders of record as of the close of business on June 14, 2010 (the “Record Date”). In the Rights Offering, BankAtlantic Bancorp distributed to each eligible shareholder 0.327 subscription rights for each share of BankAtlantic Bancorp’s Class A Common Stock and Class B Common Stock owned as of the close of business on the Record Date. Fractional subscription rights were rounded up to the next largest whole number. Each subscription right entitled the holder thereof to purchase one share of BankAtlantic Bancorp’s Class A Common Stock at the purchase price of $1.50 per share. Shareholders who exercised their Basic Subscription Rights in full were also given the opportunity to request to purchase any additional shares of BankAtlantic Bancorp’s Class A Common Stock that remained unsubscribed at the expiration of the Rights Offering at the same $1.50 per share purchase price, subject to certain determinations and allocations. The Rights Offering expired on July 20, 2010.

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     During June 2010, BFC exercised its basic subscription rights, in full, amounting to 5,986,865 shares of BankAtlantic Bancorp’s Class A Common Stock, and requested to purchase an additional 4,013,135 shares of BankAtlantic Bancorp’s Class A Common Stock to the extent available. In connection with the exercise of its subscription rights, BFC delivered to BankAtlantic Bancorp $15.0 million in cash, which represented the full purchase price for all of the shares subscribed for by BFC. In exchange, BFC was issued 4,697,184 shares of BankAtlantic Bancorp’s Class A Common Stock on June 28, 2010, which represented a portion of its basic subscription rights exercise. The issuance of these shares increased BFC’s ownership interest in BankAtlantic Bancorp from 37% to 43% and BFC’s voting interest in BankAtlantic Bancorp from 66% to 69%. The balance of BFC’s subscription was treated as an advance to BankAtlantic Bancorp, as evidenced by a related $8.0 million promissory note executed by BankAtlantic Bancorp in favor of BFC. The promissory note had a scheduled maturity of July 30, 2010 and was payable in cash or shares of BankAtlantic Bancorp’s Class A Common Stock issuable to BFC in connection with its exercise of subscription rights in the Rights Offering. The promissory note was eliminated in consolidation as of June 30, 2010. See Note 21 of the “Notes to Unaudited Consolidated Financial Statements” for further information regarding the promissory note. In July 2010, in connection with the completion of the Rights Offering, the promissory note was satisfied in accordance with its terms through the issuance to BFC of the additional 5,302,816 shares of BankAtlantic Bancorp’s Class A Common Stock subscribed for by BFC in the Rights Offering, which increased BFC’s ownership interest in BankAtlantic Bancorp to 45% and BFC’s voting interest in BankAtlantic Bancorp to 71%.
     As previously disclosed, on September 21, 2009, we consummated our merger with Woodbridge Holdings Corporation pursuant to which Woodbridge Holdings Corporation merged with and into Woodbridge Holdings, LLC, our wholly-owned subsidiary which continued as the surviving company of the merger and the successor entity to Woodbridge Holdings Corporation. Pursuant to the terms of the merger, which was approved by each company’s shareholders at their respective meetings held on September 21, 2009, each outstanding share of Woodbridge’s Class A Common Stock (other than those held by Dissenting Holders) automatically converted into the right to receive 3.47 shares of our Class A Common Stock. Shares otherwise issuable to us attributable to the shares of Woodbridge’s Class A Common Stock and Class B Common Stock owned by us were canceled in connection with the merger. As a result of the merger, Woodbridge Holdings Corporation’s separate corporate existence ceased and its Class A Common Stock is no longer publicly traded.
     On November 16, 2009, approximately 7.4 million shares of common stock of Bluegreen were purchased for an aggregate purchase price of approximately $23 million. We previously owned approximately 9.5 million shares of Bluegreen’s common stock and, as a result, our ownership interest in Bluegreen increased from 29% of Bluegreen’s outstanding common stock to approximately 52%. Accordingly, we now have a controlling interest in Bluegreen and, under GAAP, Bluegreen’s results since the November 16, 2009 acquisition date are consolidated in our financial statements. Prior to November 16, 2009, our approximate 29% equity investment in Bluegreen was accounted for using the equity method.
     GAAP requires that BFC consolidate the financial results of the entities in which it has a controlling interest. As a consequence, the assets and liabilities of all such entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including BankAtlantic Bancorp, Bluegreen, Woodbridge and Core, are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution from those entities, which may be limited or restricted. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At June 30, 2010, BFC owned an approximately 43% ownership interest and an approximately 69% voting interest in BankAtlantic Bancorp, and approximately 52% of Bluegreen’s common stock.
     On February 20, 2009, the Bankruptcy Court presiding over the Chapter 11 cases entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Official Committee of Unsecured Creditors. That order also approved the settlement pursuant to the settlement agreement that was entered into with the Joint Committee of Unsecured Creditors. No appeal or rehearing of the Bankruptcy Court’s order was filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the settlement agreement. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the settlement agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary. Pursuant to the settlement agreement, we agreed to share a percentage of any tax refund attributable to periods prior to the bankruptcy with the Debtors Estate. In the fourth quarter of 2009, we accrued approximately $10.7 million in connection with the portion of the tax refund which may be payable to the Debtors Estate pursuant to the settlement agreement. As a result, the gain on settlement of investment in subsidiary for the year ended December 31, 2009 was reduced to $29.7 million. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.1 million representing the portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service (“IRS”) guidance that will likely be required to be paid to the Debtors Estate pursuant to the Settlement Agreement. As of June 30, 2010, we had accrued a liability of approximately $11.8 million which represents a portion of tax refunds to be shared with the Debtors Estate pursuant to the settlement agreement.

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     In December 2009, Core Communities reinitiated efforts to sell two of its commercial leasing projects (the “Projects”) and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Due to this decision, the assets associated with the Projects were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations in the Consolidated Statements of Operations. On June 10, 2010, Core sold the Projects to Inland Real Estate Acquisition, Inc. (“Inland”) for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for further information.
     On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance associated with the consolidation of variable interest entities (“VIEs”) and the accounting guidance for transfers of financial assets. The adoption of these standards resulted in Bluegreen consolidating seven of its special purpose finance entities and BankAtlantic Bancorp consolidating its joint venture that conducts a factoring business. For further information, see Note 2 of the “Notes to Unaudited Consolidated Financial Statements”.
     As a result of the Woodbridge merger on September 21, 2009 and the Bluegreen share acquisition on November 16, 2009, the Company reorganized its reportable segments to better align its segments with the current operations of its businesses. The Company’s business activities currently consist of (i) Real Estate and Other Activities and (ii) Financial Services. The Company currently reports the results of operations of its business activities through six reportable segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, and the two reportable segments through which Financial Services activities are conducted, BankAtlantic and BankAtlantic Bancorp Parent Company. As a result of this reorganization, our BFC Activities segment now includes activities formerly reported in the Woodbridge Other Operations segment, and our Real Estate Operations segment is comprised of what was previously identified as the Land Division. Bluegreen’s results of operations since November 16, 2009 are reported through the Bluegreen Resorts and Bluegreen Communities segments. Prior to November 16, 2009, when we owned approximately 9.5 million shares of Bluegreen’s common stock, representing approximately 29% of such stock, the investment in Bluegreen was accounted for using the equity method of accounting, and our interest in Bluegreen’s earnings and losses was included in our BFC Activities segment. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and are reported in two segments: BankAtlantic and BankAtlantic Bancorp Parent Company.
Forward Looking Statements
     Except for historical information contained herein, the matters discussed in this document contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. When used in this document and in any documents incorporated by reference herein, the words “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and similar expressions identify certain of such forward-looking statements. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. When considering those forward-looking statements, the reader should keep in mind the risks, uncertainties and other cautionary statements made in this report and our other filings with the Securities and Exchange Commission (“SEC”), including those discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The reader should not place undue reliance on any forward-looking statement, which speaks only as of the date made. This document also contains information regarding the past performance of our investments and the reader should note that prior or current performance of investments and acquisitions is not a guarantee or indication of future performance.

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     Some factors which may affect the accuracy of the forward-looking statements apply generally to the financial services, real estate, resort development and vacation ownership, and restaurant industries, while other factors apply directly to us. Risks and uncertainties associated with BFC, including its wholly-owned Woodbridge Holdings, LLC subsidiary, include, but are not limited to:
    risks associated with the Company’s current business strategy, including the risk that BFC will not be in a position to provide strategic support to its affiliated entities or that such support will not achieve the anticipated benefits and may negatively impact our cash flow;
 
    BFC’s shareholders’ interests may be diluted if additional shares of BFC’s common stock are issued, and BFC’s public company investments may be diluted if BankAtlantic Bancorp, Bluegreen or Benihana issue additional shares of its stock;
 
    the risk that creditors of the Company’s subsidiaries or other third parties may seek to recover distributions or dividends made by such subsidiaries or other amounts owed by such subsidiaries from their respective parent companies, including BFC;
 
    the impact of economic, competitive and other factors affecting the Company and its subsidiaries, and their operations, markets, products and services;
 
    adverse conditions in the stock market, the public debt market and other capital markets and the impact of such conditions on the activities of the Company and its subsidiaries;
 
    the impact of the current economic downturn on the price and liquidity of BFC’s common stock and on BFC’s ability to obtain additional capital, including that if BFC needs or otherwise believes it is advisable to issue debt or equity securities to fund its operations, it may not be possible to issue any such securities on favorable terms, if at all;
 
    the performance of entities in which the Company has made investments may not be profitable or their results as anticipated;
 
    BFC is dependent upon dividends from its subsidiaries to fund its operations, and currently BankAtlantic Bancorp is prohibited from paying dividends and may not pay dividends in the future, whether as a result of such restriction continuing in the future or otherwise, and Bluegreen has historically not paid dividends on its common stock, and even if paid, BFC has historically experienced and may continue to experience negative cash flow;
 
    the uncertainty regarding the amount of cash that will be required to be paid to Woodbridge shareholders who exercised appraisal rights in connection with Woodbridge’s merger with BFC;
 
    the risks related to the indebtedness of Woodbridge and its subsidiaries, including the risks relating to the indebtedness currently in default and the risk that negotiations relating to the resolution of the indebtedness and the release from the obligations under any or all of the debt may not be successful;
 
    the risks relating to Core’s liquidity, cash position and ability to continue operations, including the risk that Core could be obligated to make additional payments under its outstanding development bonds, or incur additional impairment charges and losses beyond those already incurred;
 
    the risk that Core’s restructuring activities could result in the lenders choosing to foreclose on any property which serves as collateral for defaulted loans or take other remedial actions available to them, and Core could incur additional impairment charges and losses beyond those already incurred;
 
    risks associated with the securities we hold directly or indirectly, including the risk that we may record further impairment charges with respect to such securities in the event trading prices decline in the future;
 
    risks associated with the accounting for the Bluegreen share acquisition, including the estimates and analyses used to determine the final evaluation of the inventory of Bluegreen as of the acquisition date and the effect, if any, on the amount of the $183.1 million bargain purchase gain recorded at December 31, 2009;
 
    the preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions, and our financial condition and operating results may be materially impacted in the future if our estimates, judgments or assumptions prove to be incorrect;
 
    risks relating to our investment in Benihana, including the risk that Benihana may not be successful in its efforts to explore strategic alternatives, including the sale of Benihana, and the risk that any such strategic alternative, if consummated, may not have a favorable impact on our investment in Benihana or otherwise on our financial condition, cash position and operating results;
 
    the risk that the amount of any tax refund that we may receive in the future may be less than expected or received later than expected;

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    the risks related to litigation and other legal proceedings against BFC and its subsidiaries, including the costs and expenses of such proceedings, as well as the risk associated with a finding of liability or damages; and
 
    the Company’s success at managing the risks involved in the foregoing.
     With respect to BFC’s subsidiary, BankAtlantic Bancorp, and its subsidiary, BankAtlantic, the risks and uncertainties include:
    the impact of economic, competitive and other factors affecting BankAtlantic Bancorp and its operations, markets, products and services, including the impact of the changing regulatory environment, a continued or deepening recession, continued decreases in real estate values, and increased unemployment or sustained high unemployment rates on its business generally, BankAtlantic’s regulatory capital ratios, the ability of its borrowers to service their obligations and its customers to maintain account balances and the value of collateral securing its loans;
 
    credit risks and loan losses, and the related sufficiency of the allowance for loan losses, including the impact on the credit quality of BankAtlantic Bancorp loans (including those held in the asset workout subsidiary of BankAtlantic Bancorp) of a sustained downturn in the economy and in the real estate market and other changes in the real estate markets in BankAtlantic Bancorp’s trade area and where collateral is located;
 
    the quality of BankAtlantic Bancorp’s real estate based loans including its residential land acquisition and development loans (including Builder land bank loans, Land acquisition and development loans and Land acquisition, development and construction loans) as well as Commercial land loans, other Commercial real estate loans; and Residential loans and Consumer loans; and conditions specifically in those market sectors;
 
    the quality of BankAtlantic Bancorp’s Commercial business loans and conditions specifically in that market sector;
 
    the risks of additional charge-offs, impairments and required increases in BankAtlantic Bancorp allowance for loan losses especially if the economy and real estate markets in Florida do not improve;
 
    the impact of additional regulation and litigation regarding overdraft fees;
 
    changes in interest rates and the effects of, and changes in, trade, monetary and fiscal policies and laws including their impact on the bank’s net interest margin;
 
    adverse conditions in the stock market, the public debt market and other financial and credit markets and the impact of such conditions on our activities, the value of our assets and on the ability of our borrowers to service their debt obligations and maintain account balances;
 
    BankAtlantic’s initiatives or strategies not resulting in the growth of core deposits or profitability;
 
    BankAtlantic Bancorp may not be able to sell its Tampa operations on acceptable terms or at all;
 
    BankAtlantic Bancorp expense reduction initiatives may not be successful and additional cost savings may not be achieved;
 
    BankAtlantic Bancorp may seek to raise additional capital and such capital may be highly dilutive to BankAtlantic Bancorp’s shareholders or may not be available;
 
    the impact of periodic valuation testing of goodwill, deferred tax assets and other assets;
 
    past performance, actual or estimated new account openings and balance growth may not be indicative of future results; and
 
    BankAtlantic Bancorp success at managing the risks involved in the foregoing.
     With respect to Bluegreen Corporation, the risks and uncertainties include, but are not limited to:
    the state of the economy, generally, interest rates and the availability of financing affect Bluegreen’s ability to market vacation ownership interests (“VOIs”) and residential homesites;
 
    Bluegreen would incur substantial losses and its liquidity position could be adversely impacted if the customers it finances default on their obligations;
 
    Bluegreen’s business plan historically has depended on its ability to sell or borrow against its notes receivable to support its liquidity and profitability;
 
    while Bluegreen has attempted to restructure its business to reduce its need for and reliance on financing for liquidity in the short term, there is no assurance that such restructuring will be successful or that its business and profitability will not otherwise continue to depend on its ability to obtain financing, which may not be available on favorable terms, or at all;

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    Bluegreen’s results of operations and financial condition could be adversely impacted if its estimates concerning its notes receivable are incorrect, and its new credit underwriting standards may not have the anticipated favorable impact on performance;
 
    Bluegreen’s future success depends on its ability to market its products successfully and efficiently;
 
    Bluegreen is subject to the risks of the real estate market and the risks associated with real estate development, including the decline in real estate values and the deterioration of real estate sales;
 
    Bluegreen’s adoption on January 1, 2010, of the accounting guidance requiring the consolidation of its special purpose finance entities had a material adverse impact on its net worth, leverage, and book value per share, and could have an adverse impact on its profits in the future;
 
    Bluegreen may not be successful in increasing or expanding its fee-based services relationships and its fee-based service activities may not be profitable, which may have an adverse impact on its results of operations and financial condition;
 
    claims for development-related defects could adversely affect Bluegreen’s financial condition and operating results;
 
    the resale market for VOIs could adversely affect Bluegreen’s business;
 
    Bluegreen may be adversely affected by extensive federal, state and local laws and regulations and changes in applicable laws and regulations, including with respect to the imposition of additional taxes on operations. In addition, results of audits of Bluegreen’s tax returns or those of its subsidiaries may have a material and adverse impact on its financial condition;
 
    environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on Bluegreen’s business;
 
    the ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain, renew, or extend credit facilities, debt, or otherwise raise capital;
 
    in the near term, Bluegreen has significant debt maturing and advance periods expiring on its receivable-backed credit facilities, which could adversely impact its liquidity position, and, it may not be successful in refinancing or renewing the debt on favorable terms, if at all;
 
    Bluegreen’s financial statements are prepared based on certain estimates, including those related to future cash flows which in turn are based upon expectations of its performance given current and projected forecasts of the economy and real estate markets in general. Bluegreen’s results and financial condition may be materially and adversely impacted if the adverse conditions in the real estate market continue for longer than expected or deteriorate further or if its performance does not otherwise meet its expectations; and
 
    the loss of the services of Bluegreen’s key management and personnel could adversely affect its business.
     In addition to the risks and factors identified above, reference is also made to other risks and factors detailed in reports filed by the Company, BankAtlantic Bancorp and Bluegreen with the SEC.
Critical Accounting Policies
     Management views critical accounting policies as accounting policies that are important to the understanding of our financial statements and also involve estimates and judgments about inherently uncertain matters. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated statements of financial condition and assumptions that affect the recognition of income and expenses on the consolidated statements of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in subsequent periods relate to the determination of the allowance for loan losses, evaluation of goodwill and other intangible assets for impairment, the valuation of real estate acquired in connection with foreclosure or in satisfaction of loans, the valuation of real estate held for development and sale and its impairment reserves, revenue and cost recognition on percent complete projects, estimated costs to complete construction, the valuation of investments in unconsolidated subsidiaries, the valuation of the fair value of assets and liabilities in the application of the acquisition method of accounting, accounting for deferred tax asset valuation allowance, accounting for uncertain tax positions, accounting for contingencies, and assumptions used in the valuation of stock based compensation. The accounting policies that we have identified as critical accounting policies are: (i) allowance for loan losses and notes receivables; (ii) impairment of goodwill and long-lived assets; (iii) valuation of securities as well as the determination of other-than-temporary declines in value; (iv) accounting for business combinations, including the valuation of the fair value of assets and liabilities in the application of the acquisition method of accounting; (v) the valuation of real estate; (vi) revenue and cost recognition on percentage of completion; (vii) estimated cost to complete construction; (viii) the valuation of equity method investments; (ix) accounting for deferred tax asset valuation allowance; and (x) accounting for contingencies. For a more detailed discussion of these critical accounting policies see “Critical Accounting Policies” appearing in our Annual Report on Form 10-K for the year ended December 31, 2009.

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New Accounting Pronouncements
     See Note 25 of the “Notes to Unaudited Consolidated Financial Statements” included under Item 1 of this report for a discussion of new accounting pronouncements applicable to the Company and its subsidiaries.
Summary of Consolidated Results of Operations
     The table below sets forth the Company’s summarized results of operations (in thousands):
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Income (loss) from operations:
                               
Real Estate and Other
  $ 5,341       (1,309 )     (9,389 )     12,873  
Financial Services
    (51,250 )     (38,356 )     (71,771 )     (84,967 )
 
                       
Loss from continuing operations
    (45,909 )     (39,665 )     (81,160 )     (72,094 )
Income from discontinued operations
    2,714       139       2,465       3,536  
 
                       
Net loss
    (43,195 )     (39,526 )     (78,695 )     (68,558 )
Less: Net loss attributable to noncontrolling interests
    (27,015 )     (26,617 )     (41,680 )     (45,246 )
 
                       
Net loss attributable to BFC
    (16,180 )     (12,909 )     (37,015 )     (23,312 )
5% Preferred stock dividends
    (187 )     (187 )     (375 )     (375 )
 
                       
Net loss allocable to common stock
  $ (16,367 )     (13,096 )     (37,390 )     (23,687 )
 
                       
     Consolidated net loss for the three and six months ended June 30, 2010 was $16.2 million and $37.0 million compared with a net loss of $12.9 million and $23.3 million, respectively, for the same periods in 2009. The results from discontinued operations relate to Ryan Beck and Core Communities commercial leasing projects, as discussed further in Note 5 of the “Notes to Unaudited Consolidated Financial Statements”.
     The 5% Preferred Stock dividend represents the dividends paid by the Company on its 5% Cumulative Preferred Stock.
     The results of our business segments and other information on each segment are discussed below in BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company.
Consolidated Financial Condition
     Total assets at June 30, 2010 and December 31, 2009 were $6.2 billion and $6.0 billion, respectively. On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities associated with prior securitization transactions that previously qualified for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. Accordingly, Bluegreen’s consolidated special purpose finance entities and BankAtlantic Bancorp’s consolidated factoring joint venture are now consolidated in BFC’s financial statements. The consolidation of Bluegreen’s special purpose finance entities resulted in a one-time non-cash after-tax reduction to retained earnings of $2.1 million. No charges were recorded in connection with consolidation of BankAtlantic Bancorp’s factoring joint venture. The adoption of this change in accounting principle also resulted in the following impacts to the Company’s Consolidated Statement of Financial Condition at January 1, 2010: (1) assets increased by $414.1 million, primarily representing the consolidation of notes receivable, net of allowance, partially offset by the elimination of Bluegreen’s retained interests; (2) liabilities increased by $416.2 million, primarily representing the consolidation of non-recourse debt obligations associated with third parties, partially offset by the

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elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.0 million, including a decrease of approximately $811,000 to noncontrolling interests (see Note 2 of the “Notes to Unaudited Consolidated Financial Statements” for further information). Other than such increases and decreases, the changes in components of total assets from December 31, 2009 to June 30, 2010 were primarily comprised of:
    an increase in cash and cash equivalents primarily reflecting a $191.2 million increase in BankAtlantic Bancorp’s cash balances at the Federal Reserve Bank associated with daily cash management activities. For the six months ended June 30, 2010, cash provided by operations was approximately $176.3 million, cash provided by investing activities was approximately $298.7 million and cash used in financing activities was approximately $290.6 million;
 
    an increase in BankAtlantic Bancorp’s interest-bearing deposits at other financial institutions associated with the investment of excess cash as yields on certificates of deposit at federally insured financial institutions were higher than alternative short term investment yields;
 
    a decrease in securities available for sale reflecting BankAtlantic Bancorp’s sale of $43.8 million of mortgage-backed securities, as well as repayments partially offset by a $50 million purchase of federal agency debt securities;
 
    an increase in derivatives associated with a foreign currency derivative position executed during the second quarter of 2010 as an economic hedge of foreign currency used in BankAtlantic’s ATM cruise ship operations;
 
    a decrease in current income tax receivables primarily resulting from the receipt of income tax refunds associated with recent tax law changes which extended the net operating loss carry-back period from two years to up to five years;
 
    an increase in BankAtlantic Bancorp’s tax certificate balances primarily relating to the purchase of $93.1 million of tax certificates during the second quarter of 2010;
 
    a decrease in BankAtlantic Bancorp’s loan receivable balances associated with $80.6 million of charge-offs, $19.3 million of loans transferred to REO, $45.8 million from the sale of loans and repayments of loans in the normal course of business combined with a significant decline in loan originations and purchases;
 
    a decrease in accrued interest receivable primarily resulting from tax certificate activities and lower loan balances at BankAtlantic Bancorp;
 
    a decrease in real estate inventory primarily resulting from the sale of a BankAtlantic Bancorp property;
 
    an increase in BankAtlantic Bancorp’s real estate owned and other repossessed assets associated with residential and commercial loan foreclosures; and
 
    a decrease in assets held for sale resulting from the sale of Core’s Projects in June 2010. See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for further information.
     The Company’s total liabilities at June 30, 2010 were $5.8 billion compared to $5.6 billion at December 31, 2009. Other than increases due to the change in accounting principle at January 1, 2010, the primary changes in components of total liabilities from December 31, 2009 to June 30, 2010 were summarized below:
    a decrease in BankAtlantic’s interest bearing deposit account balances associated with a $210.6 million decline in certificate of deposit balances partially offset by higher interest-bearing checking and savings account balances;
 
    an increase in BankAtlantic’s non-interest-bearing deposit balances primarily due to increased customer balances in checking accounts;
 
    lower FHLB advances at BankAtlantic due to repayments using proceeds from the sales of securities and loan repayments and increases in deposit account balances;
 
    an increase in BankAtlantic Bancorp’s junior subordinated debentures due to interest deferrals;
 
    an increase in other liabilities associated with $30.0 million of securities purchased pending settlement at BankAtlantic Bancorp; and
 
    a decrease in liabilities related to assets held for sale resulting from the sale of Core’s Projects in June 2010. See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for further information.

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BFC Activities
BFC Activities
     “BFC Activities” consists primarily of (i) BFC operations, (ii) our investment in Benihana and (iii) Woodbridge other operations.
     BFC operations primarily consist of our corporate overhead and general and administrative expenses, the financial results of a venture partnership that BFC controls and other equity investments, as well as income and expenses associated with shared service operations in the areas of human resources, risk management, investor relations, executive office administration and other services that BFC provides to BankAtlantic Bancorp and Bluegreen. BFC operations also include investments made by BFC/CCC, Inc. Woodbridge other operations consists of the operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), a restaurant franchisor operating within the quick service and organic food industries, and the activities of Cypress Creek Capital Holdings, LLC (“Cypress Creek Capital”) and Snapper Creek Equity Management, LLC (“Snapper Creek”). Prior to November 16, 2009, when we acquired additional shares of Bluegreen’s common stock giving us a controlling interest in Bluegreen, Woodbridge other operations included an equity investment in Bluegreen.
     The discussion that follows reflects the operations and related matters of BFC Activities (in thousands).
                                                 
    For the Three Months     Change     For the Six Months     Change  
    Ended June 30,     2010 vs.     Ended June 30,     2010 vs.  
    2010     2009     2009     2010     2009     2009  
Revenues
                                               
Other revenues
  $ 482       202       280       869       501       368  
 
                                   
 
    482       202       280       869       501       368  
 
                                   
 
                                               
Cost and Expenses
                                               
Cost of sales of real estate
          17       (17 )           17       (17 )
Interest expense, net
    1,643       1,883       (240 )     3,481       2,772       709  
Selling, general and administrative expenses
    7,141       7,550       (409 )     13,628       14,543       (915 )
 
                                   
 
    8,784       9,450       (666 )     17,109       17,332       (223 )
 
                                   
(Loss) gain on settlement of investment in Woodbridge’s subsidiary
    (1,135 )           (1,135 )     (1,135 )     26,985       (28,120 )
Equity in earnings (loss) from unconsolidated affiliates
    4       10,697       (10,693 )     (27 )     16,962       (16,989 )
Impairment of unconsolidated affiliates
                            (20,401 )     20,401  
Impairment of investments
                            (2,396 )     2,396  
Other income
    1,772       1,434       338       3,166       2,879       287  
 
                                   
(Loss) income from continuing operations before income taxes
    (7,661 )     2,883       (10,544 )     (14,236 )     7,198       (21,434 )
Less: Benefit for income taxes
    (5,449 )           (5,449 )     (5,647 )           (5,647 )
 
                                   
Net (loss) income
  $ (2,212 )     2,883       (5,095 )     (8,589 )     7,198       (15,787 )
 
                                   
     Other revenues for the three and six months ended June 30, 2010 relate to franchise revenues generated by Pizza Fusion totaling $482,000 and $869,000 compared to $202,000 and $501,000, respectively, for the same periods in 2009.
     Interest expense consists of interest incurred less interest capitalized. Interest incurred totaled $1.6 million and $3.5 million for the three and six months ended June 30, 2010 compared with $1.9 million and $3.7 million for the same periods in 2009. No interest was capitalized during the three or six months ended June 30, 2010 or the three months ended June 30, 2009, while interest capitalized during the six months ended June 30, 2009 totaled $931,000. This resulted in net interest expense of $1.6 million and $3.5 million during the three and six months ended June 30, 2010, respectively, compared to $1.9 million and $2.8 million, respectively, of net interest expense in the same 2009 periods.
     General and administrative expenses decreased $409,000 to $7.1 million for the three months ended June 30, 2010 from $7.6 million for the same period in 2009. For the six months ended June 30, 2010, general and administrative expenses decreased $915,000 to $13.6 million from $14.5 million for the same period in 2009. The decrease in general and administrative expenses during the six months ended June 30, 2010, was primarily attributable to lower severance charges and lower bonuses offset in part by higher accrued audit fees incurred during 2010 relating to the 2009 year-end audit, increased professional services and a write-off of intangible assets related to Pizza Fusion. Included in the general and administrative expenses for the six months ended June 30, 2010 is management advisory service fees earned in connection with an agreement with Bluegreen (See Note 21 of the “Notes to Unaudited Consolidated Financial Statements” for further information).

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BFC Activities
     Prior to the consolidation of Bluegreen into our consolidated financial statements on November 16, 2009, we accounted for our investment in Bluegreen under the equity method of accounting. Our interest in Bluegreen’s earnings during the three and six months ended June 30, 2009 was $10.7 million and $17.1 million, respectively (after the amortization of approximately $8.6 million and $13.9 million for the three and six months ended June 30, 2009, respectively, related to the change in the basis as a result of impairment charges on this investment). During the six months ended June 30, 2009, we recorded $20.4 million of impairment charges relating to our equity method investment in Bluegreen.
     During the six months ended June 30, 2009, we recorded impairment charges of $2.4 million on our investment in Office Depot’s common stock. The Company sold its remaining shares of Office Depot’s common stock during the fourth quarter of 2009.
     During the second quarter of 2010, we recognized a tax benefit of approximately $5.4 million resulting from an expected additional tax refund due to a recent change in IRS guidance, of which approximately $1.1 million may be payable to the Levitt and Sons’ estate. The $1.1 million was recorded in the (loss) gain on settlement of investment in Woodbridge’s subsidiary and is subject to change pending a final review of the $5.4 million expected tax refund by the IRS. The gain on settlement of investment in Woodbridge’s subsidiary during the six months ended June 30, 2009 reflected the reversal into income of the loss in excess of investment in Levitt and Sons after Levitt and Sons’ bankruptcy was finalized. The reversal resulted in a $40.4 million gain on a consolidated basis in the first quarter of 2009, of which $27 million was recorded in the BFC Activities segment.
2008 and 2007 Step acquisitions — Purchase Accounting
     BFC’s acquisitions in 2008 and 2007 of additional shares of BankAtlantic Bancorp’s and Woodbridge’s Class A Common Stock, respectively, were accounted for as step acquisitions under the purchase method of accounting then in effect. Accordingly, the assets and liabilities acquired were revalued to reflect market values at the respective dates of acquisition. The discounts and premiums arising as a result of such revaluations are generally being accreted or amortized, net of tax, over the remaining life of the assets and liabilities. The net impact of such accretion, amortization and other effects of purchase accounting decreased our consolidated net loss for the three months ended June 30, 2010 by approximately $23,000 and increased our consolidated net loss for the six months ended June 30, 2010 by approximately $62,000. The net impact also decreased our consolidated net loss for the three and six months ended June 30, 2009 by approximately $91,000 and $760,000, respectively.
BFC Activities- Liquidity and Capital Resources
     As of June 30, 2010 and December 31, 2009, we had cash, cash equivalents and short-term investments totaling approximately $46 million and $45 million, respectively. The increase in cash, cash equivalents and short term investments at June 30, 2010 compared to December 31, 2009 primarily resulted from the receipt of an income tax refund of approximately $29.2 million. This increase was offset by cash used to fund BFC’s operating and general and administrative expenses and to purchase shares of BankAtlantic Bancorp’s Class A Common Stock in BankAtlantic Bancorp’s Rights Offering as described below.
     On June 18, 2010, BankAtlantic Bancorp commenced a rights offering (the “Rights Offering”) to its shareholders of record as of the close of business on June 14, 2010 (the “Record Date”). In the Rights Offering, BankAtlantic Bancorp distributed to each eligible shareholder 0.327 subscription rights for each share of BankAtlantic Bancorp’s Class A Common Stock and Class B Common Stock owned as of the close of business on the Record Date. Fractional subscription rights were rounded up to the next largest whole number. Each subscription right entitled the holder thereof to purchase one share of BankAtlantic Bancorp’s Class A Common Stock at the purchase price of $1.50 per share. Shareholders who exercised their basic subscription rights in full were also given the opportunity to request to purchase any additional shares of BankAtlantic Bancorp’s Class A Common Stock that remained unsubscribed for at the expiration of the Rights Offering at the same $1.50 per share purchase price, subject to certain determinations and allocations. The Rights Offering expired on July 20, 2010.
     During June 2010, BFC exercised its basic subscription rights, in full, amounting to 5,986,865 shares of BankAtlantic Bancorp’s Class A Common Stock, and requested to purchase an additional 4,013,135 shares of BankAtlantic Bancorp’s Class A Common Stock to the extent available. In connection with the exercise of its subscription rights, BFC delivered to BankAtlantic Bancorp $15.0 million in cash, which represented the full purchase price for all of the shares subscribed for by BFC. In exchange, BFC was issued 4,697,184 shares of BankAtlantic Bancorp’s Class A Common Stock on June 28, 2010, which represented a portion of its basic subscription rights exercise. The issuance of these shares increased BFC’s ownership interest in BankAtlantic Bancorp from 37% to 43% and BFC’s voting interest in BankAtlantic Bancorp from 66% to 69%. The balance of BFC’s subscription was treated as an advance to BankAtlantic Bancorp, as evidenced by a related $8.0 million promissory note executed by BankAtlantic Bancorp in favor of BFC. The promissory note had a scheduled maturity of July 30, 2010 and was payable in cash or shares of BankAtlantic Bancorp’s Class A Common Stock issuable to BFC in connection with its exercise of subscription rights in the Rights Offering. The promissory note was eliminated in consolidation as of June 30, 2010. See Note 21 of the “Notes to Unaudited Consolidated Financial Statements”, Certain Relationships and Related Party Transactions, for further information regarding the promissory note. In July 2010, in connection with the completion of the Rights Offering, the promissory note was satisfied in accordance with its terms through the issuance to BFC of the additional 5,302,816 shares of BankAtlantic Bancorp’s Class A Common Stock subscribed for by BFC in the Rights Offering, which increased BFC’s ownership interest in BankAtlantic Bancorp to 45% and BFC’s voting interest in BankAtlantic Bancorp to 71%.

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BFC Activities
     Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen, Woodbridge and Core are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, short-term investments, dividends or distributions from our subsidiaries and dividends from Benihana. In connection with recent tax law changes, we received approximately $29.2 million of tax refunds and expect to receive an additional approximately $10.8 million when the final review is completed by the Internal Revenue Service. Pursuant to the Levitt and Sons’ bankruptcy settlement agreement, we agreed that a portion of the tax refund attributable to the Debtors Estate for periods prior to the bankruptcy would be paid to the estate, and it is estimated that approximately $11.8 million will be paid to the estate pursuant to this agreement.
     We will use our available funds to fund operations and meet our obligations, we may also use available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments, or repurchase shares of our common stock pursuant to our share repurchase program.
     Since March 2009, BFC has not received cash dividends from BankAtlantic Bancorp and does not expect to receive cash dividends from BankAtlantic Bancorp for the foreseeable future because BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock. Furthermore, certain of Bluegreen’s credit facilities contain terms which might limit the payment of cash dividends.
     We believe that our current financial condition and credit relationships, together with anticipated cash flows from operating activities and other sources of funds, including tax refunds and proceeds from the disposition of certain properties or investments, will provide for anticipated near-term liquidity needs. With respect to long-term liquidity requirements, in addition to the foregoing, BFC may also seek to raise funds through the issuance of long-term secured or unsecured indebtedness, equity and/or debt securities or through the sale of assets; however, there is no assurance that any of these alternatives will be available to BFC on attractive terms, or at all.
     On September 21, 2009, our Board of Directors approved a share repurchase program which authorizes the repurchase of up to 20,000,000 shares of Class A and Class B Common Stock at an aggregate cost of no more than $10 million. The share repurchase program replaced our $10 million repurchase program that our Board of Directors approved in October 2006 which placed a limitation on the number of shares which could be repurchased under the program at 1,750,000 shares of Class A Common Stock. The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the six months ended June 30, 2010 or the year ended December 31, 2009.
     The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure, and while there may have been an issue with respect to compliance with certain covenants in the loan agreements, we do not believe that an event of default had occurred as was alleged. Woodbridge continues to seek satisfactory conclusion with regard to the debt; however, the outcome of these efforts and the litigation is uncertain.

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BFC Activities
     During 2008, Woodbridge entered into a settlement agreement, as amended (the “Settlement Agreement”), with the Debtors and the Joint Committee of Unsecured Creditors (the “Joint Committee”) appointed in the Chapter 11 cases related to the Levitt and Sons bankruptcy filing. Pursuant to the Settlement Agreement, among other things, (i) Woodbridge agreed to pay $8 million to the Debtors’ bankruptcy estates, establish a $4.5 million release fund to be disbursed to third party creditors in exchange for a third party release and injunction, pay an additional $300,000 to a deposit holders fund and waive and release substantially all of the claims it had against the Debtors, including its administrative expense claims through July 2008, and (ii) the Debtors (joined by the Joint Committee) agreed to waive and release any claims they had against Woodbridge and its affiliates. The Settlement Agreement also provided that if, within one year after the Bankruptcy Court’s confirmation of the Settlement Agreement, Section 172 of the Internal Revenue Code was amended to permit a carry back of tax losses from calendar years 2007 or 2008 to one or more years preceding calendar year 2005, then Woodbridge would share a portion of any resulting tax refund with the Debtors and the Joint Committee based on an agreed upon formula. The Settlement Agreement was subject to a number of conditions, including the approval of the Bankruptcy Court. On February 20, 2009, the Bankruptcy Court entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Joint Committee. That order also approved the settlement pursuant to the Settlement Agreement. No appeal or rehearing of the Bankruptcy Court’s order was timely filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the Settlement Agreement. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the Settlement Agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary.
     In November 2009, the Workers, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted and extended the net operating loss (“NOL”) carry-back period from two years to up to five years for the 2008 or the 2009 tax years and as a result, the Act allows us to increase our NOL carryback period to as much as five years for NOLs generated in 2008 or 2009 and obtain refunds of taxes paid in the newly included carryback years. The amount of the expected refund to the Company has been determined to be approximately $40.0 million, of which approximately $29.2 million has been received. The balance of the tax refund claim of approximately $10.8 million will most likely be paid when the Internal Revenue Service completes its review. As described above, under the terms of the Settlement Agreement, a portion of the refund, upon receipt, will be payable to the Levitt and Sons estate. Accordingly, in the fourth quarter of 2009, we accrued approximately $10.7 million in connection with the portion of the tax refund which may be payable to the Debtors Estate pursuant to the Settlement Agreement. The gain on settlement of investment in subsidiary of $40.4 million recorded in the first quarter of 2009 was reduced by the $10.7 million accrual recorded in the fourth quarter of 2009 resulting in a $29.7 million gain on settlement of investment in subsidiary for the year ended December 31, 2009. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.1 million, representing the portion of an additional tax refund which we expect to receive due to a recent change in Internal Revenue Service guidance that will likely be required to be paid to the Debtors Estate pursuant to the Settlement Agreement. As of June 30, 2010, we had accrued a liability of approximately $11.8 million which represents a portion of tax refunds to be shared with the Debtors Estate pursuant to the settlement agreement.
     As discussed above, on September 21, 2009, BFC and Woodbridge consummated their previously announced merger pursuant to which Woodbridge merged with BFC. In connection with the merger, Dissenting Holders who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock exercised their appraisal rights and are entitled to receive an amount equal to the fair value of their shares calculated in accordance with Florida law. The Dissenting Holders have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain, and there is no assurance as to the amount of cash that we will be required to pay to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.
     The Company owns 800,000 shares of Benihana’s Convertible Preferred Stock, which it purchased for $25.00 per share. The Convertible Preferred Stock is convertible into Benihana’s common stock. Based on the number of currently outstanding shares of Benihana’s capital stock, the Convertible Preferred Stock, if converted, would represent an approximate 19% voting interest and an approximate 9% economic interest in Benihana’s capital stock. The Company has the right to receive cumulative quarterly dividends on its shares of Benihana’s Convertible Preferred Stock at an annual rate equal to 5% or $1.25 per share, payable on the last day of each calendar quarter. It is anticipated that the Company will continue to receive approximately $250,000 per quarter in dividends on Benihana’s Convertible Preferred Stock. The Convertible Preferred Stock is subject to mandatory redemption of $20 million plus accumulated dividends on July 2, 2014 unless we elect to extend the mandatory redemption date to a date not later than July 2, 2024.

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BFC Activities
     On June 21, 2004, the Company sold 15,000 shares of its 5% Preferred Stock to an investor group in a private offering. The Company’s 5% Preferred Stock has a stated value of $1,000 per share. The shares of 5% Preferred Stock may be redeemed at the option of the Company, from time to time, at redemption prices ranging from $1,025 per share for the year 2010 to $1,000 per share for the year 2015 and thereafter. The 5% Preferred Stock liquidation preference is equal to its stated value of $1,000 per share plus any accumulated and unpaid dividends or an amount equal to the applicable redemption price in a voluntary liquidation or winding up of the Company. Holders of the 5% Preferred Stock have no voting rights, except as provided by Florida law, and are entitled to receive, when and as declared by the Company’s Board of Directors, cumulative quarterly cash dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance. Since June 2004, the Company has paid quarterly dividends on the 5% Preferred Stock of $187,500. On December 17, 2008, the Company amended certain of the previously designated relative rights, preferences and limitations of the Company’s 5% Preferred Stock. The amendment eliminated the right of the holders of the 5% Preferred Stock to convert their shares of Preferred Stock into shares of the Company’s Class A Common Stock. The amendment also requires the Company to redeem shares of the 5% Preferred Stock with the net proceeds it receives in the event (i) the Company sells any of its shares of Benihana’s Convertible Preferred Stock, (ii) the Company sells any shares of Benihana’s Common Stock received upon conversion of Benihana’s Convertible Preferred Stock or (iii) Benihana redeems any shares of its Convertible Preferred Stock owned by the Company. Additionally, in the event the Company defaults on its obligation to make dividend payments on its 5% Preferred Stock, the amendment entitles the holders of the 5% Preferred Stock, in place of the Company, to receive directly from Benihana certain payments on the shares of Benihana’s Convertible Preferred Stock owned by the Company or on the shares of Benihana’s Common Stock received by the Company upon conversion of Benihana’s Convertible Preferred Stock.
     A wholly-owned subsidiary of BFC/CCC has a 10% interest in a limited liability company that owns two commercial properties in Hillsborough County, Florida. At June 30, 2010 and December 31, 2009, the carrying amount of this investment was approximately $673,000 and $690,000, respectively, which is included in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the commercial properties in November 2006, BFC and the unaffiliated member each guaranteed the payment of up to a maximum of $5.0 million for certain environmental indemnities and specific obligations that are not related to the financial performance of the assets. BFC and the unaffiliated member also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates.
     A wholly-owned subsidiary of BFC/CCC has a 50% limited partner interest in a limited partnership that has a 10% interest in a limited liability company that owns an office building in Tampa, Florida. At June 30, 2010 and December 31, 2009, the carrying amount of this investment was approximately $310,000 and $319,000, respectively, which is included in investments in unconsolidated affiliates in the Company’s Consolidated Statements of Financial Condition. In connection with the purchase of the office building by the limited liability company in June 2007, BFC guaranteed the payment of certain environmental indemnities and specific obligations that are not related to the financial performance of the asset up to a maximum of $15.0 million, or $25.0 million in the event of any petition or involuntary proceeding under the U.S. Bankruptcy Code or similar state insolvency laws or in the event of any transfer of interests not in accordance with the loan documents. BFC and the unaffiliated members also entered into a cross indemnification agreement which limits BFC’s obligations under the guarantee to acts of BFC and its affiliates.
     No amounts are recorded in the Company’s financial statements for the obligations associated with the above guarantees based on the potential indemnification by unaffiliated members and the limit of the specific obligations to non-financial matters.

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Real Estate
Real Estate Operations Segment
     The Real Estate Operations segment includes the subsidiaries through which Woodbridge historically conducted its real estate business activities. These activities are concentrated in Florida and South Carolina and have included the development and sale of land, the construction and sale of single family homes and townhomes and the leasing of commercial properties and office space, and include the operations of Core, Carolina Oak, which engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008, and Cypress Creek Holdings, which engages in leasing activities.
     Woodbridge’s operations historically were concentrated in the real estate industry which is cyclical in nature. During 2009 and the six months ended June 30, 2010, the real estate markets continued to experience a significant downturn. Demand for residential and commercial inventory in Florida and South Carolina remained weak and land sales continued to decline. The decrease in land sales and continued cash flow deficits contributed to, among other things, the deterioration of Core’s liquidity. As a result, Core severely limited its development expenditures in Tradition, Florida and completely discontinued development activity in Tradition Hilton Head. The value of Core’s assets were significantly impaired, resulting in impairment charges relating to those assets of $78.0 million during 2009, which included $13.6 million of impairment charges related to assets held for sale. Core is currently in default under the terms of all of its indebtedness having an aggregate outstanding principal amount of $139.2 million. See “Core’s Liquidity and Capital Resources” below for more information regarding the status of Core’s outstanding indebtedness.
     As a consequence of the reduced activity at Core and in light of current market conditions, management made the decision to further reduce Core’s headcount by 41 employees in 2009 and recorded severance charges of approximately $1.3 million in the fourth quarter of 2009.
Real Estate Operations
                                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(In thousands)   2010     2009     Change     2010     12009     Change  
         
Revenues:
                                               
Sales of real estate
  $ 2,455       1,728       727       2,455       3,155       (700 )
Other revenues
    297       675       (378 )     934       1,277       (343 )
 
                                   
Total revenues
    2,752       2,403       349       3,389       4,432       (1,043 )
 
                                   
 
                                               
Costs and expenses:
                                               
Cost of sales of real estate
    2,175       1,269       906       2,175       1,962       213  
Selling, general and administrative expenses
    1,802       4,211       (2,409 )     4,461       8,649       (4,188 )
Interest expense
    1,867       1,347       520       3,850       2,706       1,144  
 
                                   
Total costs and expenses
    5,844       6,827       (983 )     10,486       13,317       (2,831 )
 
                                   
 
                                               
Gain on sale of real estate assets
    275             275       275             275  
Interest and other income
    433       126       307       486       410       76  
 
                                   
Loss from continuing operations before income taxes
    (2,384 )     (4,298 )     1,914       (6,336 )     (8,475 )     2,139  
Benefit for income taxes
                                   
 
                                   
Loss from continuing operations
    (2,384 )     (4,298 )     1,914       (6,336 )     (8,475 )     2,139  
 
                                               
Discontinued operations:
                                               
Income (loss) from discontinued operations, net of tax
    2,714       139       2,575       2,465       (665 )     3,130  
 
                                   
Net income (loss)
  $ 330       (4,159 )     4,489       (3,871 )     (9,140 )     5,269  
 
                                   

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For the Three Months Ended June 30, 2010 Compared to the Same 2009 Period
     Revenues from sales of real estate for the three months ended June 30, 2010 and 2009 were primarily comprised of land and home sales, and recognition of deferred revenue. During the three months ended June 30, 2010, we sold approximately 8 acres, which generated revenues of approximately $2.5 million, compared to the sale of approximately 3 acres, which generated revenues of approximately $424,000 in the same 2009 period. We did not recognize deferred revenue on previously sold land in the three months ended June 30, 2010, compared to approximately $1.1 million recognized in the three months ended June 30, 2009. Additionally, we earned $320,000 in revenues from sales of real estate as a result of one home sold in the three months ended June 30, 2009, compared to no home sales in the same 2010 period.
     Other revenues decreased to $297,000 for the three months ended June 30, 2010 from $675,000 for the same period in 2009. The decrease was due to lower rental income as a tenant did not renew its lease agreement which expired in March 2010.
     Cost of sales of real estate increased to $2.2 million for the three months ended June 30, 2010 from $1.3 million for the same 2009 period. The increase in cost of sales of real estate was mainly due to an increase in sales of real estate at Core in the three months ended June 30, 2010 compared to the same 2009 period. The increase was partially offset by a decrease in the recognition of deferred revenue in the second quarter of 2010 compared to the same 2009 period as no deferred revenue was recognized in 2010.
     Selling, general and administrative expenses decreased to $1.8 million for the three months ended June 30, 2010 from $4.2 million for the same 2009 period. The decrease reflects the overall slowdown of activities at Core, including specifically lower compensation and benefits expense and lower office related expenses reflecting a lower headcount as a result of reductions in force at Core in 2009, lower sales and marketing expenses as neither Core nor Carolina Oak engaged in advertising activities in the quarter ended June 30, 2010, and lower developer expenses related to property owner associations in Tradition, Florida.
     Interest incurred totaled $1.9 million for the three months ended June 30 2010 and $2.0 million for the same 2009 period. No interest was capitalized in the three months ended June 30, 2010 while interest capitalized totaled $673,000 for the three months ended June 30, 2009. Net interest expense increased in the three months ended June 30, 2010 compared to the same period in 2009 primarily as a result of the Company’s decision to cease capitalizing interest in light of the significantly reduced development activities in Florida and the suspension of development activities in South Carolina. The increase was partially offset by lower interest rates for the three months ended June 30, 2010 compared to the same period in 2009. Historically, the capitalized interest allocated to inventory is charged to cost of sales as land and homes are sold. Cost of sales of real estate for the three months ended June 30, 2010 and 2009 did not include any significant amounts of previously capitalized interest.
     Interest and other income increased to $433,000 during three months ended June 30, 2010 from $126,000 during the same period in 2009. This increase was mainly due to fees reimbursed to us during the three months ended June 30, 2010 associated with a land sale in Tradition, Florida, as well as fees received in connection with sales made in prior periods.
     Income from discontinued operations, all of which related to Core’s Projects, increased to $2.7 million in the three months ended June 30, 2010 from $139,000 in the same period in 2009. The increase was due to a gain of approximately $2.6 million recorded in connection with the sale of the Projects in June 2010. See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for further information.
For the Six Months Ended June 30, 2010 Compared to the Same 2009 Period
     During the six months ended June 30, 2010, we sold approximately 8 acres, which generated revenues of approximately $2.5 million, compared to the sale of approximately 13 acres, which generated revenues of approximately $1.1 million in the same 2009 period. We did not recognize deferred revenue on previously sold land in the six months ended June 30, 2010, compared to approximately $1.9 million in the six months ended June 30, 2009. Additionally, we earned $320,000 in revenues from sales of real estate as a result of 1 home sold in the six months ended June 30, 2009, compared to no home sales in the same 2010 period.

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     Other revenues decreased to $934,000 for the six months ended June 30, 2010 from $1.3 million for the same period in 2009. The decrease was due to lower rental income as a tenant did not renew its lease agreement which expired in March 2010.
     Cost of sales of real estate remained relatively unchanged totaling $2.2 million for the six months ended June 30, 2010 and $2.0 million for the same 2009 period. Costs of sales related to land sales were higher in the six months ended June 30, 2010 compared to the same 2009 period, offset by a decrease in the recognition of deferred revenue in the six months ended June 30, 2010 compared to the same 2009 period as no deferred revenue was recognized in 2010.
     Selling, general and administrative expenses decreased to $4.5 million for the six months ended June 30, 2010 from $8.6 million for the same 2009 period. The decrease reflects the overall slowdown of activities at Core , including specifically lower compensation and benefits expense and lower office related expenses reflecting a lower headcount as a result of reductions in force at Core in 2009, lower sales and marketing expenses as neither Core nor Carolina Oak engaged in advertising activities in the six months ended June 30, 2010, and lower developer expenses related to property owner associations in Tradition, Florida. In addition, there was lower severance expense at Core in the six months ended June 30, 2010 compared to the same 2009 period. These decreases were slightly offset by an increase in professional services and property tax expenses in the six months ended June 30, 2010 compared to the same 2009 period
     Interest incurred totaled $3.8 million for the six months ended June 30 2010 and $4.1 million for the same 2009 period. No interest was capitalized in the six months ended June 30, 2010 while interest capitalized totaled $1.4 million for the six months ended June 30, 2009. Net interest expense increased in the six months ended June 30, 2010 compared to the same period in 2009 primarily as a result of the Company’s decision to cease capitalizing interest in light of the significantly reduced development activities in Florida and the suspension of development activities in South Carolina. The increase was partially offset by lower interest rates for the six months ended June 30, 2010 compared to the same period in 2009. Historically, the capitalized interest allocated to inventory is charged to cost of sales as land and homes are sold. Cost of sales of real estate for the six months ended June 30, 2010 and 2009 did not include any significant amounts of previously capitalized interest.
     Interest and other income increased to $486,000 during the six months ended June 30, 2010 from $410,000 during the same period in 2009. This increase was mainly due to consulting fees reimbursed to us during the six months ended June 30, 2010 associated with a land sale in Tradition, Florida as well as fees received in connection with sales made in prior periods. The increase was partially offset by lower forfeited deposits as no deposits were forfeited in the six months ended June 30, 2010.
     Income from discontinued operations, all of which related to Core’s Projects, increased to $2.5 million in the six months ended June 30, 2010 from a loss of $665,000 in the same period in 2009. The increase was due to a gain of approximately $2.6 million recorded in connection with the sale of the Projects in June 2010. See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for further information.
Core’s Liquidity and Capital Resources
     At June 30, 2010 and December 31, 2009, Core had cash and cash equivalents of $5.1 million and $2.9 million, respectively. Cash increased by $2.2 million during the six months ended June 30, 2010 mainly due to the receipt of cash proceeds from a land sale comprising approximately 8 acres in Tradition, Florida and net cash proceeds from the sale of the commercial leasing projects, partially offset by cash used to fund Core’s general and administrative expenses and severance payments related to its recent reduction in work force. At June 30, 2010, Core had no immediate availability under its various lines of credit.
     During 2009, the recession continued and the demand for residential and commercial inventory showed no significant signs of recovery, particularly in the geographic regions where Core’s properties are located. The decrease in land sales and continued cash flow deficits contributed to, among other things, the deterioration of Core’s liquidity. As a result, Core severely limited its development expenditures in Tradition, Florida and has completely discontinued development activity in Tradition Hilton Head. Its assets have been impaired significantly and in an effort to bring about an orderly liquidation without a bankruptcy filing, Core commenced negotiations with all of its lenders and is seeking to liquidate its assets in an orderly way. Core is currently in default under the terms of all of its outstanding debt totaling approximately $139.2 million. Core continues to pursue all options with its lenders, including offering deeds in lieu and other similar transactions wherein Core would relinquish title to

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substantially all of its assets. During February, 2010, with Core’s concurrence, a significant portion of the land in Tradition Hilton Head had been placed under the control of a court appointed receiver. In connection with the receivership, Core entered into a separate agreement with the lender that, among other things, grants Core a right of first refusal to purchase the $25.3 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory that had a net carrying value of $33 million, net of impairment charges during 2009 of approximately $29.6 million. Separately, on April 7, 2010 and April 8, 2010, another of Core’s lenders filed a foreclosure action in South Carolina and Florida, respectively, seeking foreclosure of mortgage loans totaling approximately $113.8 million, plus additional interest, costs and expenses, including attorney’s fees. Core is currently in negotiations with the lender, regarding, among other things, accelerating the foreclosure actions, granting the lender a perfected first lien and security interest in certain additional Core subsidiaries, and releasing and indemnifying Core from any future obligations. As of June 30, 2010, the net carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of these foreclosure proceedings was $82 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge in the six months ended June 30, 2010. While negotiations with its lenders continue, there is no assurance that Core will be successful in reaching any agreement with its lenders with respect to resolution of its obligations.
     In December 2009, Core reinitiated efforts to sell the Projects and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Due to this decision, the assets associated with the Projects were classified as discontinued operations for all periods presented in accordance with the accounting guidance for the disposal of long-lived assets. On June 10, 2010, Core completed the sale of the Projects to Inland with a sales price of approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. The sale resulted in net cash proceeds to Core of approximately $1.5 million. See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for further information.
     Core is also a party to a certain Development Agreement with the city of Hardeeville, SC, under which Core is obligated to fund $1 million towards the building of a fire station. Funding was scheduled in three installments: the first installment of $100,000 was due on October 21, 2009; the second installment of $450,000 was due on January 1, 2010; and the final installment of $450,000 was due on April 1, 2010. Additionally, Core was obligated to fund certain staffing costs of $200,000 under the terms of this agreement. Core did not pay any of the required installments and has not funded the $200,000 payment for staffing. On November 5, 2009, Core received a notice of default from the city for non payment. In the event that Core is unable to obtain additional funds to make these payments, it may be unable to cure the default on its obligation to the city, which could result in a loss of entitlements associated with the development project.
     Based on an ongoing evaluation of its cost structure and in light of current market conditions, Core reduced its head count by 41 employees during 2009, resulting in approximately $1.3 million in severance charges which were recorded during the fourth quarter of 2009. In the three and six months ended June 30, 2010, severance related payments at Core totaled approximately $378,000 and $1.0 million, respectively.
     The negative impact of the adverse real estate market conditions on Core, together with Core’s limited liquidity, have caused substantial doubt regarding Core’s ability to continue as a going concern if Woodbridge chooses not to provide Core with the cash needed to meet its obligations when and as they arise. Woodbridge has not committed to fund any of Core’s obligations or cash requirements, and it is not currently anticipated that Woodbridge will provide any funds to Core. As a result, the consolidated financial statements and the financial information provided for Core do not include any adjustments that might result from the outcome of this uncertainty. Core’s results are reported in the Real Estate Operations segment. See Note 19 of the “Notes to Unaudited Consolidated Financial Statements” included in Item 1 of this report.
Off Balance Sheet Arrangements and Contractual Obligations
     In connection with the development of certain of Core’s projects, community development, special assessment or improvement districts have been established and may utilize tax-exempt bond financing to fund construction or acquisition of certain on-site and off-site infrastructure improvements near or at these communities. If these improvement districts were not established, Core would need to fund community infrastructure development out of operating cash flow or through sources of financing or capital, or be forced to delay its development activity. The obligation to pay principal and interest on the bonds issued by the districts is assigned to each parcel within the district, and a priority assessment lien may be placed on benefited parcels to provide security for the debt service. The bonds, including interest and redemption premiums, if any, and the associated priority lien on the property are typically payable, secured and satisfied by revenues, fees, or assessments levied on the property benefited. Core pays a portion of the revenues, fees, and assessments levied by the districts on the properties it still owns that are benefited by the improvements. Core may also be required to pay down a specified portion of the bonds at the time each unit or parcel is sold. The costs of these obligations are capitalized to inventory during the development period and recognized as cost of sales when the properties are sold.

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     Core’s bond financing at June 30, 2010 and December 31, 2009 consisted of district bonds totaling $218.7 million at each of these dates with outstanding amounts of approximately $173.8 million and $170.8 million, respectively. Bond obligations at June 30, 2010 mature in 2035 and 2040. As of June 30, 2010, Core owned approximately 4% of the property subject to assessments within the community development district and approximately 91% of the property subject to assessments within the special assessment district. During the three months ended June 30, 2010 and 2009, Core recorded a liability of approximately $66,000 and $158,000, respectively, in assessments on property owned by it in the districts. During the six months ended June 30, 2010 and 2009, Core recorded a liability of approximately $225,000 and $317,000, respectively, in assessments on property owned by it in the districts. Core is responsible for any assessed amounts until the underlying property is sold and will continue to be responsible for the annual assessments through the maturity dates of the respective bonds issued if the property is never sold. Based on Core’s approximate 91% ownership of property within the special assessment district as of June 30, 2010, it will be responsible for the payment of approximately $10 million in assessments by March 2011. If Core sells land within the special assessment district and reduces its ownership percentage, the potential payment of approximately $10 million would decrease in relation to the decrease in the ownership percentage. In addition, Core has guaranteed payments for assessments under the district bonds in Tradition, Florida which would require funding if future assessments to be allocated to property owners are insufficient to repay the bonds. Management has evaluated this exposure based upon the criteria in accounting guidance for contingencies, and has determined that there have been no substantive changes to the projected density or land use in the development subject to the bond which would make it probable that Core would have to fund future shortfalls in assessments.
     In accordance with accounting guidance for real estate, the Company records a liability for the estimated developer obligations that are fixed and determinable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user. At June 30, 2010, the liability related to developer obligations associated with Core’s ownership of the property was $175,000 after the sale of Core’s commercial leasing projects in June 2010 (See Note 5 of the “Notes to Unaudited Consolidated Financial Statements” for information relating to the sale). At December 31, 2009, the liability related to developer obligations was $3.3 million, of which $3.1 million was included in the liabilities related to assets held for sale in the accompanying consolidated statement of financial condition as of December 31, 2009.
     The following table summarizes our Real Estate and Other contractual obligations (excluding Bluegreen) as of June 30, 2010 (in thousands):
                                         
    Payments due by period  
            Less than     13 - 36     37 - 60     More than  
Category (1)   Total     12 Months     Months     Months     60 Months  
 
Debt obligations (2)
  $ 273,077       176,580       496       10,790       85,211  
Operating lease obligations
    710       475       176       59        
Severance related termination obligations
    159       159                    
 
                             
Total obligations
  $ 273,946       177,214       672       10,849       85,211  
 
                             
 
(1)   Debt obligations consist of notes, mortgage notes and bonds payable and junior subordinated debentures. Operating lease obligations consist of lease commitments. The timing of contractual payments for debt obligations assumes the exercise of all extensions available at our sole discretion. Debt obligations include defaulted loans totaling approximately $176.4 million as of June 30, 2010, of which repayment of the outstanding debt was accelerated by the lender and is currently being shown as immediately due and payable in less than 12 months. See Note 3 of the “Notes to Unaudited Consolidated Financial Statements” included in Item 1 of this report for more information regarding the defaulted loans.
 
(2)   These amounts represent scheduled principal payments.

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     In addition to the above contractual obligations, we have $2.4 million in unrecognized tax benefits in accordance with accounting guidance for uncertainty in income taxes, which provides guidance for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on a tax return.
     At each of June 30, 2010 and December 31, 2009, Core had outstanding surety bonds of approximately $860,000, which were related primarily to its obligations to various governmental entities to construct improvements in its various communities. It is estimated that approximately $495,000 of work remains to complete these improvements and it is not currently anticipated that any outstanding surety bonds will be drawn upon.
     Levitt and Sons had approximately $33.3 million of surety bonds related to its ongoing projects at the time of the filing of the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, Woodbridge could be responsible for up to $7.6 million plus costs and expenses in accordance with the surety indemnity agreements executed by Woodbridge. At June 30, 2010 and December 31, 2009, Woodbridge had $490,000 and $527,000, respectively, in surety bond accruals related to certain bonds where management believes it to be probable that Woodbridge will be required to reimburse the surety under applicable indemnity agreements. Woodbridge reimbursed the surety approximately $37,000 during the six months ended June 30, 2009, in accordance with the indemnity agreement for bond claims paid during the period, while no reimbursements were made in the six months ended June 30, 2010. In addition, no reimbursements were made in the three months ended June 30, 2010 or 2009. It is unclear whether and to what extent the remaining outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Woodbridge may be responsible for additional amounts beyond this accrual. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay. In September 2008, a surety filed a lawsuit to require Woodbridge to post collateral against a portion of the surety bonds exposure in connection with demands made by a municipality. Woodbridge believes that the municipality does not have the right to demand payment under the bonds and Woodbridge initiated a lawsuit against the municipality. However, based on claims made on the bonds, the surety requested that Woodbridge post a $4.0 million escrow deposit while the matter is being litigated with the municipality and Woodbridge complied with that request. In August 2010, Woodbridge was granted a motion for summary judgment terminating any obligations under the bonds. It is anticipated that the municipality will seek rehearing and, if it is denied, will prosecute an appeal of the court’s decision.
Bluegreen
Bluegreen’s results of operations for the three and six months ended June 30, 2010 are reported through two reportable segments which are Bluegreen Resorts and Bluegreen Communities. For the three and six months ended June 30, 2009, our earnings attributable to Bluegreen were reported as part of Woodbridge other operations which continues to be included in the BFC Activities segment.
     Bluegreen’s results for the three and six months ended June 30, 2010 reflect its continued efforts to improve its cash flows from operations by targeting higher cash from sales of VOIs by continuing to improve its selling and marketing efficiencies in its Resorts Division and by efforts to increase its cash fee-based service businesses. While its cash flows from operations and its Resorts Division segment operating margin reflects the success of these efforts, the Communities Division continued to be impacted by low consumer demand for homesites.
     During the three months ended June 30, 2010:
    The Bluegreen Communities Division generated a segment operating loss of approximately $4.1 million.
 
    Bluegreen’s fee-based service business sold $18.2 million of third-party developer inventory and earned sales and marketing commissions of $12.1 million.
 
    Bluegreen’s adoption of the amendment to the accounting guidance associated with the consolidation of VIE’s on January 1, 2010, resulted in its consolidation of seven existing special purpose financing entities that are associated with past securitization transactions. In addition to the changes to the Company’s Consolidated Statement of Financial Condition (see Note 2 of the “Notes to the Unaudited Consolidated Financial Statements"), the consolidation of these special purpose finance entities impacted the Statement of Operations during the three months ended June 30, 2010 by increasing Bluegreen’s interest income from VOI notes receivable and increasing interest expense on notes payable, compared to prior periods.

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     As discussed further under “Liquidity and Capital Resources”, Bluegreen Resorts sales and marketing operations are materially dependent on the availability of liquidity in the credit markets. Historically, Bluegreen has provided financing to a significant portion of its Bluegreen Resorts customers. Such financing typically involves the consumer making a minimum 10% cash down payment, with the balance being financed by Bluegreen over a ten-year period. As Bluegreen Resorts’ selling, general and administrative expenses typically exceed the cash down payment, Bluegreen has historically maintained credit facilities pursuant to which Bluegreen pledged or sold its consumer note receivables. Furthermore, Bluegreen also engaged in private placement term securitization transactions or similar arrangements to periodically pay down all or a portion of its note receivable credit facilities.
     There has been and continues to be an unprecedented disruption in the credit markets that has made obtaining additional and replacement external sources of liquidity more difficult and, if available, more expensive. The term securitization market continues to be limited and, as a result, Bluegreen believes that financial institutions have been and continue to be more cautious about entering into new credit facilities for the purpose of providing financing on consumer receivables. Several lenders to the timeshare industry, including certain of Bluegreen’s lenders, have announced that they will either be exiting the timeshare finance business or will not be entering into new financing commitments for the foreseeable future. In addition, financing for real estate acquisition and development and the capital markets for corporate debt have generally been unavailable to Bluegreen.
     While Bluegreen believes that the market for its Resorts product remains relatively strong, Bluegreen is continuing to deemphasize its sales operations to conserve cash because of the uncertainties in the credit markets. In an effort to conserve cash and availability under its note receivable credit facilities, Bluegreen implemented strategic initiatives which have included closing certain sales offices; eliminating what Bluegreen identified as lower-efficiency marketing programs; emphasizing cash sales and higher cash down payments as well as pursuing its cash fee-based services business; reducing overhead, including eliminating a significant number of staff positions across a variety of areas at multiple locations; reducing capital expenditures; limiting sales to borrowers who meet Bluegreen’s FICO® score-based underwriting standards; and increasing interest rates on new sales transactions for which Bluegreen provides financing. Bluegreen’s goal was, and continues to be, to limit the amount of VOI sales while increasing the ultimate profitability of the sales it makes. Additional information on Bluegreen’s strategic initiatives is provided in “Liquidity and Capital Resources” below.
     Bluegreen continues to actively pursue additional credit facility capacity, capital markets transactions and alternative financing solutions, and hopes that the steps being taken will position Bluegreen to maintain its existing credit relationships as well as attract new sources of capital. Regardless of the state of the credit markets, Bluegreen believes that its resorts management and finance operations will continue to represent recurring cash-generating sources of income which do not require material liquidity support from the credit markets. Further, Bluegreen believes that it has adequate timeshare inventory to satisfy its projected sales for 2010 and, based on anticipated sales levels, for a number of years thereafter.
     While the vacation ownership business has historically been capital intensive, Bluegreen’s goal is to leverage its sales and marketing, mortgage servicing, fee-based management services, title and construction expertise to generate fee-based-service relationships with third parties that produce positive cash flows and require less capital investment. During the three months ended June 30, 2010, Bluegreen sold $18.2 million of third-party inventory and earned sales and marketing commissions of approximately $12.1 million, as well as title fees on such transactions. During the six months ended June 30, 2010, Bluegreen sold $34.0 million of third-party inventory and earned sales and marketing commissions of approximately $22.3 million, as well as title fees on such transactions. No such sales occurred for the same periods in 2009, as Bluegreen did not begin selling third party developer inventory until July 2009. Bluegreen also provides fee-based management services, resort design and development services, and mortgage services under certain of these arrangements, all for cash fees. Bluegreen intends to pursue additional fee-based service relationships, and while there is no assurance that this will be the case, Bluegreen believes that these activities will become an increasing portion of its business over time.
     Bluegreen Communities business has been, and continues to be, adversely impacted by the deterioration in the real estate markets. Demand for its homesites has decreased as well as sales volume. Bluegreen has significantly reduced prices on certain of its completed homesites in an attempt to increase sales activity and certain of its Communities’ inventories have been written down to fair value less costs to sell. There can be no assurances that future changes in Bluegreen’s intentions, expectations, or pricing will not result in future material charges or adjustments to the carrying amount of its inventory or otherwise adversely impact its results a