Attached files

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EX-23.1 - EX-23.1 - Bluegreen Vacations Holding Corpg26703exv23w1.htm
EX-10.3 - EX-10.3 - Bluegreen Vacations Holding Corpg26703exv10w3.htm
EX-32.2 - EX-32.2 - Bluegreen Vacations Holding Corpg26703exv32w2.htm
EX-99.1 - EX-99.1 - Bluegreen Vacations Holding Corpg26703exv99w1.htm
EX-23.2 - EX-23.2 - Bluegreen Vacations Holding Corpg26703exv23w2.htm
EX-21.1 - EX-21.1 - Bluegreen Vacations Holding Corpg26703exv21w1.htm
EX-32.1 - EX-32.1 - Bluegreen Vacations Holding Corpg26703exv32w1.htm
EX-31.2 - EX-31.2 - Bluegreen Vacations Holding Corpg26703exv31w2.htm
EX-31.1 - EX-31.1 - Bluegreen Vacations Holding Corpg26703exv31w1.htm
EX-32.3 - EX-32.3 - Bluegreen Vacations Holding Corpg26703exv32w3.htm
EX-31.3 - EX-31.3 - Bluegreen Vacations Holding Corpg26703exv31w3.htm
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
     
þ   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2010
     
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)   (I.R.S Employer Identification No.)
     
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)
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par Value
Class B Common Stock, $.01 par Value
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
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 þ
        (Do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO þ
On June 30, 2010, the aggregate market value of the registrant’s voting common equity held by non-affiliates was $24.9 million computed by reference to the closing price of the registrant’s Class A Common Stock on such date. The registrant does not have any non-voting common equity.
The number of outstanding shares of each of the registrant’s classes of common stock, as of March 28, 2011 was as follows:
Class A Common Stock, $.01 par value: 68,521,497 shares outstanding
Class B Common Stock, $.01 par value: 6,859,751 shares outstanding
Documents Incorporated by Reference
Portions of the registrant’s Definitive Proxy Statement on Schedule 14A relating to the registrant’s 2011 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.
The audited financial statements of Bluegreen Corporation for the three years ended December 31, 2010 are incorporated by reference into Part II, Item 8 of this Form 10-K and are filed as Exhibit 99.1 to this Form 10-K.
 
 


 

BFC Financial Corporation
Annual Report on Form 10-K for the Year Ended December 31, 2010
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PART I
ITEM 1. BUSINESS
          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 BFC Financial Corporation (“BFC” and, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or 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. 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.
          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 more specifically to us. Risks and uncertainties associated with BFC, including its wholly-owned Woodbridge 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;
 
    BFC has negative cash flow and limited sources of cash which may present certain risks to its ongoing operations;
 
    the impact of economic, competitive and other factors affecting the Company and its subsidiaries, and their operations, markets, products and services;
 
    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;
 
    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;
 
    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 the risk 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;
 
    strategic alternatives being evaluated by entities in which the Company has investments may not ultimately be pursued or consummated on terms expected or 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 restrictions 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 risk that negotiations and agreements relating to the resolution of Woodbridge’s indebtedness and releases under any or all of the debt may not be obtained;

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    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;
 
    the preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions, and any changes in estimates, judgments and assumptions used could have a material adverse impact on our financial condition 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;
 
    uncertainties regarding enacted or currently proposed legislation regarding regulation of companies within the financial services industry, including bank holding companies, and the potential impact of such legislation on our operations and the operations of BankAtlantic Bancorp, as well as the risk that BFC will be required by the OTS to enter into a Cease and Desist Order with respect to its ownership of BankAtlantic Bancorp;
 
    the risks related to litigation and other legal proceedings against BFC and its subsidiaries, including the costs and expenses of such proceedings, including legal and other professional fees, as well as the impact of any finding of liability or damages on our financial condition and operating results; 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, but are not limited to:
    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’s 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 its collateral is located;
 
    the risks of additional charge-offs, impairments and required increases in BankAtlantic Bancorp’s allowance for loan losses associated with the economy;
 
    the impact of regulatory proceedings and litigation regarding overdraft fees;
 
    the risks associated with maintaining compliance with the Cease and Desist Orders entered into by BankAtlantic Bancorp and BankAtlantic, including risks that compliance will adversely impact operations, risks associated with failing to comply with regulatory mandates and the risk of imposition of additional regulatory requirements and/or fines;
 
    the uncertain impact of legal proceedings on BankAtlantic Bancorp’s financial condition or operations including the risk that the securities class action litigation verdict may not be overturned on appeal;
 
    the risk that changes in interest rates and the effects of, and changes in, trade, monetary and fiscal policies and laws including their impact on BankAtlantic’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 BankAtlantic Bancorp’s activities and ability to raise capital;
 
    the sale of BankAtlantic’s Tampa branches may not be completed as announced or at all and may not have the positive financial impact currently anticipated;
 
    BankAtlantic Bancorp’s expense reduction initiatives may not be successful and additional cost savings may not be achieved;
 
    BankAtlantic Bancorp may raise additional capital and such capital may be highly dilutive to BankAtlantic Bancorp’s shareholders, including BFC, or may not be available, and depending on the number of shares issued, BankAtlantic Bancorp’s ability to use its net operating loss carryforwards against taxable income may be limited;
 
    the risks associated with the impact of periodic valuation testing of goodwill, deferred tax assets and other assets; and
 
    BankAtlantic Bancorp’s success at managing the risks involved in the foregoing.
          With respect to BFC’s 52% owned subsidiary, Bluegreen, the risks and uncertainties include, but are not limited to:

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    the overall state of the economy, interest rates and the availability of financing may 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;
 
    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;
 
    Bluegreen’s results of operations and financial condition in the past have been and may in the future continue to be adversely impacted if its estimates concerning its notes receivable are incorrect;
 
    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 continued decline in real estate values and the deterioration of real estate sales;
 
    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;
 
    Bluegreen’s exploration of strategic alternatives for its Bluegreen Communities involves a number of risks;
 
    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’s initiatives to increase the amount of cash received upon sales of VOI’s and to achieve selling and marketing efficiencies in its Bluegreen Resorts segment may not be successful;
 
    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, and results of audits of Bluegreen’s tax returns or those of its subsidiaries may have a material and adverse impact on its financial condition;
 
    low consumer demand for homesites has had and may continue to have an adverse impact on Bluegreen’s Communities segment;
 
    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, and 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;
 
    the loss of the services of Bluegreen’s key management and personnel could adversely affect its business; and
 
    Bluegreen’s success at managing the risks involved in the foregoing.
     In addition to the risks and factors identified above and in PART I, Item 1A of this report, reference is also made to other risks and factors detailed in reports filed by the Company, BankAtlantic Bancorp and Bluegreen with the Securities and Exchange Commission (the “SEC”). The Company cautions that the foregoing factors are not exclusive.
The Company
          We are a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), and a non-controlling interest in Benihana, Inc. (“Benihana”). 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 of December 31, 2010, we had total consolidated assets of approximately $5.8 billion and shareholders’ equity attributable to BFC of approximately $142.9 million.

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          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. 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 the future, we will consider other 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. During March 2011, Bluegreen announced its intention to evaluate strategic alternatives for the Bluegreen Communities division, including a possible sale of the division or disposition of its assets. Each company has engaged advisors to assist it in pursuing strategic alternatives. BFC is supportive of Benihana and Bluegreen in achieving their objectives.
          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, “Woodbridge” 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 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. See Note 3 of the “Notes to Consolidated Financial Statements” for additional information about the merger.
          On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares, or 52%, of Bluegreen’s outstanding stock. As a result of the purchase, we hold a controlling interest in Bluegreen and, since November 16, 2009, we have consolidated Bluegreen’s results into our financial statements. Any reference to Bluegreen’s results of operations for 2009 includes only 45 days of activity for Bluegreen relating to the period from November 16, 2009, the date of the share purchase, through December 31, 2009 (the “Bluegreen Interim Period”). Prior to November 16, 2009, our approximate 29% equity investment in Bluegreen was accounted for under the equity method. See Note 4 of the “Notes to Consolidated Financial Statements” for additional information about the Bluegreen share acquisition on November 16, 2009.
          In addition to our merger with Woodbridge and our acquisition of additional shares of Bluegreen’s common stock, we also increased our investment in BankAtlantic Bancorp during 2009 and 2010 through our participation in shareholder rights offerings engaged in by BankAtlantic Bancorp during the years. Specifically, we exercised subscription rights in BankAtlantic Bancorp’s rights offerings to purchase an aggregate of 14.9 million shares of BankAtlantic Bancorp’s Class A Common Stock during the third quarter of 2009 and 10.0 million shares of BankAtlantic Bancorp’s Class A Common Stock during June and July 2010. In the aggregate, these purchases increased our ownership interest in BankAtlantic Bancorp from approximately 30% to 45% and our voting interest in BankAtlantic Bancorp from approximately 59% to 71%.
          As a holding company with controlling positions in BankAtlantic Bancorp and Bluegreen, generally accepted accounting principles (“GAAP”) requires the consolidation of the financial results of both entities. As a consequence, the assets and liabilities of both entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including Woodbridge, 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. The recognition by BFC of income from controlled entities is determined based on the total

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percent of economic ownership in those entities. At December 31, 2010, we owned approximately 52% of Bluegreen’s common stock and had an approximately 45% ownership interest and 71% voting interest in BankAtlantic Bancorp.
Available Information
          Our corporate website is www.bfcfinancial.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, are available free of charge through our website, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The Company’s Internet website and the information contained on or connected to it are not incorporated into this Annual Report on Form 10-K.
Recent Developments
          Deconsolidation of Certain Subsidiaries of Core — In early 2010, we made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. As of the date of this filing, Core has relinquished virtually all of the land it had owned in both Florida and South Carolina to its lenders and, in turn, was released from the debt obligations associated therewith. See “Business Segments — Real Estate Operations” below for further information about the deconsolidation of certain subsidiaries of Core.
          BankAtlantic Bancorp and BankAtlantic — On February 23, 2011, BankAtlantic Bancorp and BankAtlantic each entered into a Stipulation and Consent to Issuance of Order to Cease and Desist with the OTS. See “Business Segments — Financial Services” below for further information about these orders and the requirements and restrictions that they impose on BankAtlantic Bancorp and BankAtlantic.
          BFC Parent Company (“BFC Parent”) — BFC Parent has committed that it will not, without the prior written non-objection of the OTS, incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with BankAtlantic’s compliance requirements applicable to it; declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter; or enter into any new agreements, contracts or arrangements or materially modify any existing agreements, contracts or arrangements with BankAtlantic not consistent with past practices.
Business Segments
          The Company’s business activities currently consist of (i) Real Estate and Other Activities and (ii) Financial Services. We currently report the results of operations through six reportable segments: These segments include the following four reportable segments which comprise our Real Estate and Other Activities: BFC Activities; Real Estate Operations; and Bluegreen Resorts and Bluegreen Communities, the segments through which Bluegreen’s results of operations are reported. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and contain the other two reportable segments: BankAtlantic and BankAtlantic Bancorp Parent Company.
          The presentation and allocation of the assets, liabilities and results of operations of each segment may not reflect the actual economic costs of the segment as a stand-alone business. If a different basis of allocation were utilized, the relative contributions of the segment might differ but, in management’s view, the relative trends in segments would not likely be impacted. See also Item 7 of this report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 34 of the “Notes to Consolidated Financial Statements” contained in Item 8 of this report for a discussion of trends, results of operations, and other relevant information on each segment.

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Real Estate and Other Activities
          Our Real Estate and Other business activities include four business segments: BFC Activities, Real Estate Operations, and Bluegreen’s two business segments, Bluegreen Resorts and Bluegreen Communities.
          BFC Activities
          The BFC Activities segment consists of BFC operations, our investment in Benihana, and the other operations 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 human resources, risk management, investor relations, executive office administration and other services to BankAtlantic Bancorp and Bluegreen. BFC Activities also includes investments made by BFC/CCC, Inc., our wholly owned subsidiary (“BFC/CCC”).
Investment in Benihana
          Benihana is a NASDAQ-listed company with two classes of common shares: Common Stock (BNHN) and Class A Common Stock (BNHNA). We own 800,000 shares of Benihana Series B Convertible Preferred Stock (“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 per share of Convertible Preferred Stock, 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 approximate 19% voting interest and an approximate 9% economic interest in Benihana. 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 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. At December 31, 2010, the closing price of Benihana’s Common Stock was $8.01 per share. The market value of the 800,000 shares of Convertible Preferred Stock we own if converted to Benihana’s Common Stock at December 31, 2010 would have been approximately $12.6 million. During July 2010, Benihana announced its intention to engage in a formal review of strategic alternative in the event that a sale transaction is consummated, the Company would receive a minimum of $20 million in consideration for its shares of the Convertible Preferred Stock.
          In December 2008, the Company performed an impairment evaluation of its investment in the Convertible Preferred Stock and determined that there was an other-than-temporary decline of approximately $3.6 million and, accordingly, the investment was written down to its fair value at that time of approximately $16.4 million. Concurrent with management’s evaluation of the impairment of this investment at December 31, 2008, it made the determination to reclassify this investment from investment securities to investment securities available for sale. At December 31, 2010, the Company’s estimated fair value of its investment in Benihana’s Convertible Preferred Stock was approximately $21.1 million. BFC will continue to monitor this investment to determine whether any further other-than-temporary impairment charges may be required in future periods. The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana’s Convertible Preferred Stock.
Other Operations
          Other operations include the consolidated operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), a restaurant operator and franchisor engaged in the quick service and organic food industries, and the activities of Snapper Creek Equity Management, LLC (“Snapper Creek”), and other investments and joint ventures.
          During the third quarter of 2009, we exercised our option to purchase 521,740 shares of Series B Convertible Preferred Stock of Pizza Fusion at a price of $1.15 per share, or an aggregate purchase price of $600,000, resulting in an ownership interest of approximately 45% in Pizza Fusion. On January 15, 2010, we purchased an additional 307,692 shares of Pizza Fusion’s common stock in Pizza Fusion’s offering, in a private placement transaction, of up to $3 million of its common stock at a purchase price of $1.30 per share, or an aggregate purchase price of $400,000. In connection with that purchase, we also received warrants to purchase an additional 61,538 shares of Pizza Fusion’s common stock at an exercise price of $1.56 per share. As of December 31, 2010, Pizza Fusion had 18 restaurants,

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including 1 restaurant owned by Pizza Fusion and 17 franchised restaurants, operating in seven states and Saudi Arabia and had entered into franchise agreements for an additional 7 stores. Pizza Fusion has faced several challenges, including the effect of the current economic downturn on consumer spending patterns and the tightening of the credit markets on the ability of new franchisees to obtain financing. During 2009, the Company performed its annual review of goodwill for impairment and determined that the discounted value of estimated cash flows was below the carrying value of its investment in Pizza Fusion, resulting in a write-off of the entire $2.0 million of goodwill relating to this investment. Pizza Fusion is in its early stages and it will require additional financial support in order to continue operations under its current business plan. Pizza Fusion’s audited financial statements for its fiscal year ended September 30, 2010 included a going concern opinion. We currently have no plans to make a further investment in Pizza Fusion and Pizza Fusion has not recently been successful in its efforts to raise additional capital.
          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 losses was included in the BFC Activities segment. Historically, the cost of the Bluegreen investment was adjusted to recognize our interest in Bluegreen’s earnings or losses. The difference between a) our ownership percentage in Bluegreen multiplied by its earnings and b) the amount of our equity in earnings of Bluegreen as reflected in our financial statements related to the amortization or accretion of purchase accounting adjustments made at the time of the initial acquisition of Bluegreen’s common stock in 2002 and a basis difference due to impairment charges recorded on the investment, as described in Note 16 of the “Notes to Consolidated Financial Statements”.

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          Real Estate Operations
          The Real Estate Operations segment is comprised of the operations of Woodbridge and the subsidiaries through which Woodbridge historically conducted its real estate business activities. It currently includes the operations of 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, LLC (“Cypress Creek Holdings”), which engages in leasing activities. The Real Estate Operations segment also includes the business activities of Core, until the fourth quarter of 2010, at which time certain subsidiaries of Core were deconsolidated from our financial statements as discussed below.
Core Communities
          Historically, the activities of Core Communities focused on the development of a master-planned community in Port St. Lucie, Florida called Tradition, Florida and a community outside of Hardeeville, South Carolina called Tradition Hilton Head. Until 2009, Tradition, Florida was in active development as was Tradition Hilton Head, although in a much earlier stage.
          During 2010, demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.
          In December 2010, Core and one of its subsidiaries entered agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefor, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.
          On June 10, 2010, Core sold its two commercial leasing projects (sometimes referred to herein as the “Projects”) to Inland Real Estate Acquisition, Inc. (“Inland”) for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. The sale resulted in net cash proceeds to Core of approximately $1.5 million. See Note 6 for further information regarding the Projects.
Carolina Oak
          In 2007, Woodbridge acquired from Levitt and Sons LLC, a former wholly-owned subsidiary of Woodbridge (“Levitt and Sons”), all of the outstanding membership interests in Carolina Oak, a South Carolina limited liability company (formerly known as Levitt and Sons of Jasper County, LLC). As a result of the significant challenges faced

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during 2009, Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, the inventory of real estate at Carolina Oak was reviewed for impairment and a $16.7 million impairment charge was recorded 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. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.
Cypress Creek Holdings
          Since 2005, Cypress Creek Holdings has owned an 80,000 square foot office building in Fort Lauderdale, Florida. The building was previously 50% occupied by an unaffiliated third party pursuant to a lease which expired in March 2010. The tenant opted not to renew the lease and vacated the space as of March 31, 2010. All efforts to lease the space to date have been unsuccessful. As of December 31, 2010 and 2009, we evaluated the value of the office building for impairment in accordance with the accounting guidance for the impairment or disposal of long-lived assets and determined that the carrying value exceeded the fair value. Accordingly, during 2010 and 2009, the Company recognized impairment charges related to the office building of $3.9 million and $4.3 million, respectively. During the first quarter of 2011, Cypress Creek Holdings’ lender with respect to the office building agreed to permit Cypress Creek Holdings to pursue a short sale of the building. Whether a lease or sale will ultimately be consummated and Cypress Creek Holdings’ obligations to the lender in the event of a short sale are uncertain at this time.
Levitt and Sons
          Acquired in December 1999, Levitt and Sons was a developer of single family homes and town home communities for active adults and families in Florida, Georgia, Tennessee and South Carolina. Increased inventory levels combined with weakened consumer demand for housing and tightened credit requirements negatively affected sales, deliveries and margins throughout the homebuilding industry. Levitt and Sons experienced decreased orders, decreased margins and increased cancellation rates on homes in backlog. Excess supply, particularly in Florida, in combination with a reduction in demand resulting from tightened credit requirements and reductions in credit availability, as well as buyers’ fears about the direction of the market, exerted continuous downward pricing pressure for residential homes.
          On November 9, 2007 (the “Petition Date”), Levitt and Sons and substantially all of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”).
          In connection with the filing of the Chapter 11 Cases, we deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from our financial results of operations. As a result of the deconsolidation of Levitt and Sons, we recorded our interest in Levitt and Sons under the cost method of accounting. During June 2008, Woodbridge entered into a settlement agreement (the “Settlement Agreement”) with the Debtors and the Joint Committee of Unsecured Creditors appointed in the Chapter 11 Cases (the “Joint Committee”). Pursuant to the Settlement Agreement, as it was subsequently amended, Woodbridge agreed to (i) pay $8 million to the Debtors’ bankruptcy estates (sometimes referred to herein as the “Debtors’ Estate”), (ii) place $4.5 million in a release fund to be disbursed to third party creditors in exchange for a third party release and injunction, (iii) make a $300,000 payment to a deposit holders fund and (iv) share a percentage of any tax refund attributable to periods prior to the bankruptcy with the Debtors’ Estate. In addition, Woodbridge agreed to waive and release substantially all of the claims it had against the Debtors, including administrative expense claims through July 2008, and the Debtors (joined by the Joint Committee) agreed to waive and release any claims they had against Woodbridge and its affiliates. 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, as amended. No appeal or rehearing of the court’s order was filed by any party, and the settlement was consummated on March 3, 2009,

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at which time payment was made in accordance with the terms and conditions of the Settlement Agreement, as amended. Under the cost method of 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 the fourth quarter of 2009, we accrued approximately $10.7 million in connection with a portion of a tax refund of which the Debtors’ Estate is entitled to pursuant to the Settlement Agreement. As a result, the gain on settlement of investment in subsidiary for the year ended December 31, 2009 was $29.7 million. Additionally, in the second quarter of 2010, we increased the $10.7 million accrual by approximately $1.0 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. We have placed into escrow approximately $8.4 million, which represents the portion of the tax refund received to date from the IRS that is payable to the Debtors’ Estate. At December 31, 2010, this amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition.
Bluegreen
          On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares, or 52%, of Bluegreen’s common stock. As a result of the purchase, we hold a controlling interest in Bluegreen and, accordingly, have consolidated Bluegreen’s results since November 16, 2009 into our financial statements.
          Bluegreen is a leading provider of “Colorful Places to Live and Play™” through two divisions: Bluegreen Resorts and Bluegreen Communities. In 2010, Bluegreen Resorts sales represented 96% of Bluegreen’s system-wide sales while Bluegreen Communities represented 4% of sales. Bluegreen Resorts markets, sells and manages real estate-based vacation ownership interests (“VOIs”) in resorts generally located in popular, high-volume, “drive-to” vacation destinations, which were developed or acquired by Bluegreen or developed by others. Bluegreen Resorts also provides fee-based services to third party resort developers and timeshare property owners’ associations. These services include selling and marketing third-party developers’ VOIs, mortgage servicing, construction management, title, and resort management. Bluegreen Communities acquires, develops and subdivides property and markets residential land home sites. The majority of these home sites are sold directly to retail customers who seek to build a home, in some cases on properties featuring a golf course and related amenities. On March 24, 2011, Bluegreen announced that Bluegreen had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There can be no assurance, however, regarding the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to Bluegreen’s financial condition and operating results or otherwise achieve the benefits Bluegreen expects to realize from the transaction.
          Bluegreen Resorts
          From its inception in 1994, Bluegreen Resorts has been involved in the vacation ownership industry. As of December 31, 2010, Bluegreen were selling VOIs in the Bluegreen Vacation Club at 20 sales offices at resorts located in the United States and Aruba. Bluegreen believes the Bluegreen Vacation Club allows its VOI owners to customize their vacation experience in a more flexible manner than traditional fixed-week vacation ownership programs. A deeded real estate interest in a Bluegreen Vacation Club VOI in any of Bluegreen resorts entitles the buyer to an annual or biennial allotment of “points” in perpetuity. Club members may use their points to stay in one of 27 Bluegreen Vacation Club — Club Resorts and 29 other Club Associated Resorts as well as having access to other vacation options, including cruises and stays at over 4,000 resorts offered through Resort Condominiums International, LLC (“RCI”), an unaffiliated external exchange network. Club members who acquired or upgraded their VOIs on or after November 1, 2007 also have access to 21 Shell Vacation Club (“Shell”) resorts, through Bluegreen’s Select Connections™ joint venture with Shell. Shell is an unaffiliated privately-held resort developer.
          During 2010, Bluegreen continued to expand its fee-based service business. Bluegreen believes that it can leverage its expertise in sales and marketing, mortgage servicing, fee-based management services, title and construction management by offering these fee-based services to third party timeshare developers and property owners’ associations. Bluegreen fee-based services business generates positive cash flows and typically requires less capital investment than its traditional vacation ownership business.

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          Since Bluegreen’s inception, it has generated approximately 353,000 VOI sales transactions, which include over 9,000 VOI sales transactions on behalf of third party developers. Bluegreen Resorts’ estimated remaining life-of-project sales of Bluegreen-owned inventory at December 31, 2010, were approximately $2.9 billion, (this includes approximately $1.0 billion of which relates to fully developed inventory). For the year ended December 31, 2010, Bluegreen Resorts recognized system-wide sales segment operating profit of $290.3 million and $63.7 million, respectively. The 2010 segment operating profit reflects a non-cash charge of $21.2 million to increase the allowance for loan losses on our VOI notes receivable generated prior to November 1, 2008 (the date we implemented Fair Isaac Corporation (“FICO®”)-based credit underwriting standards).
          Bluegreen also offers a Sampler program that allows purchasers of this product to enjoy substantially the same amenities, activities and services offered to Bluegreen Vacation Club members during a trial period which is generally one or two years. Bluegreen believes that it benefits from the sampler program as it gives them an opportunity to market their VOIs to customers when they use their trial memberships at Bluegreen resorts and to recapture a portion of the costs incurred in connection with the initial marketing to prospective customers.
          In addition to the sampler program described above, Bluegreen Resorts uses a variety of methods to attract prospective purchasers of VOIs including marketing of mini-vacations either through face-to-face contact at retail and leisure locations or through telemarketing campaigns and marketing to current owners of VOIs.
          Purchasers of VOIs are required to make a down payment of at least 10% of the VOI sales price and, subject to meeting eligibility requirements, may finance the balance of the sales price over a period of up to ten years. As part of Bluegreen’s continued efforts to improve its cash flows from operations, beginning in 2009, Bluegreen began incentivizing its sales associates to encourage higher cash down payments, and as a result, Bluegreen has increased both the percentage of its sales that are 100% cash and its average down payment on financed sales. Including down payments received on financed sales, 54% of Bluegreen’s 2010 sales were paid in cash within approximately 30 days from the contract date. Due to a significant reduction of liquidity in the receivable-backed credit markets commencing in the fourth quarter of 2008, and due to Bluegreen’s continued desire to manage efficiencies in its timeshare marketing costs, Bluegreen purposely and significantly reduced its sales volumes in the fourth quarter of 2008. Since that time, Bluegreen has and intends to continue to adjust its sales volumes based on available liquidity in the receivable credit markets, the success of Bluegreen’s efforts to increase the amount of cash paid at or shortly after the time that sales contracts are entered into and its ability to achieve desired levels of marketing efficiencies.
          As of December 31, 2010, Bluegreen’s VOI receivables portfolio totaled approximately $705.4 million in principal amount.
          To maintain liquidity associated with Bluegreen’s VOI receivables, Bluegreen has historically had credit facilities pursuant to which it pledged or sold its consumer notes receivable. From time to time, Bluegreen also engages in private placement securitization transactions and similar arrangements to pay down all or a portion of its note receivable credit facilities. During 2010, Bluegreen successfully entered into new credit facilities, renewed or extended certain of its existing credit facilities, and completed two term securitization transactions. The challenging credit markets have negatively impacted Bluegreen’s financing activities in recent years compared to historical levels. While the credit markets appear to be recovering and Bluegreen entered into term securitizations and new financing facilities during 2010 as described further in Bluegreen’s Liquidity and Capital Resources above, the number of banks and other finance companies in the market to provide “warehouse” lines of credit for timeshare receivables have decreased in recent years as several firms have left the space. Bluegreen continues to actively pursue additional credit facility capacity, capital markets transactions and alternative financing solutions, and hopes that its business model and financial profile will position Bluegreen to maintain its existing credit relationships as well as attract new sources of capital.
          Bluegreen Communities
          Bluegreen Communities acquires, develops and subdivides property and marketing residential land home sites. The majority of homesites are sold directly to retail customers who seek to build a home generally in the future (in some cases on properties featuring a golf course and other related amenities). Bluegreen Communities has historically sought to acquire and develop land near major metropolitan centers, but outside the perimeter of intense subdivision development, and in popular retirement areas.
          Our Bluegreen Communities’ business has been, and continues to be, adversely impacted by the deterioration in the real estate market. Beginning in the fourth quarter of 2008 and in response to the challenging economic

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environment, Bluegreen focused its efforts on selling homesites in completed sections of its communities and a result, significantly reduced its overall spending on development activities. Bluegreen has also significantly reduced prices on certain of its homesites in an attempt to increase sales activity. The carrying value of Bluegreen Communities inventory was $78.2 million as of December 31, 2010. For the year ended December 31, 2010, Bluegreen Communities recognized sales of $12.0 million and generated a segment operating loss of $26.9 million. The operating loss reflects non-cash impairment charges of $14.9 million associated with the write-down of the inventory balances of certain phases of its projects.
          As of December 31, 2010, Bluegreen Communities was actively engaged in marketing and selling homesites directly to retail consumers in communities primarily located in Texas, Georgia, and North Carolina. Bluegreen marketing of communities focuses on internet advertising, consumer and broker outreach programs and billboards.
          Bluegreen also currently owns and operates two daily fee golf courses which Bluegreen believes increase the marketability of adjacent homesites and communities.
          On March 24, 2011, Bluegreen announced that Bluegreen had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There can be no assurance, however, regarding the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to Bluegreen’s financial condition and operating results or otherwise achieve the benefits Bluegreen expects to realize from the transaction.

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Financial Services
(BankAtlantic Bancorp)
Financial Services
          Our Financial Services business activities are comprised of the operations of BankAtlantic Bancorp. BankAtlantic Bancorp presents its results in two reportable segments and its results of operations are consolidated with BFC Financial Corporation. The only assets available to BFC Financial Corporation from BankAtlantic Bancorp are dividends when and if declared and paid by BankAtlantic Bancorp. BankAtlantic Bancorp is a separate public company and its management prepared the following Item 1. Business regarding BankAtlantic Bancorp which was included in BankAtlantic Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission. Accordingly, references to “the Company”, “the Parent Company”, “we”, “us” or “our” in the following discussion under the caption “Financial Services” are references to BankAtlantic Bancorp and its subsidiaries, and are not references to BFC , Woodbridge or Bluegreen.
          BankAtlantic Bancorp is a Florida-based bank holding company and owns BankAtlantic and its subsidiaries. BankAtlantic provides a full line of products and services encompassing retail and business banking.
Recent Developments
          On February 23, 2011, the Parent Company and BankAtlantic each entered into a Stipulation and Consent to Issuance of Order to Cease and Desist with the Office of Thrift Supervision (“OTS”), the Parent Company’s and BankAtlantic’s primary regulator. The Order to Cease and Desist to which the Parent Company is subject is referred to as the “Company Order,” the Order to Cease and Desist to which BankAtlantic is subject is referred to as the “Bank Order” and the Company Order and Bank Order are referred to collectively as the “Orders.” The OTS issued the Orders due primarily to the Company’s losses over the past three years, high levels of classified assets and inadequate levels of capital based on BankAtlantic’s risk profile as determined by the OTS’s recent examination. Under the terms of the Company Order, the Parent Company is required to submit written plans to the OTS on or prior to March 31, 2011 that will address, among other things, how the Parent Company intends to maintain and enhance its and BankAtlantic’s capital and set forth the Parent Company’s business plan for the year ending December 31, 2011. In addition, the Parent Company is prohibited from taking certain actions without receiving the prior written non-objection of the OTS, including, without limitation, declaring or paying any dividends or other capital distributions and incurring certain indebtedness. The Parent Company is also required to ensure BankAtlantic’s compliance with the terms of the Bank Order as well as all applicable laws, rules, regulations and agency guidance.
          BankAtlantic is required to attain by June 30, 2011 and maintain a tier 1 (core) capital ratio equal to or greater than 8% and a total risk-based capital ratio equal to or greater than 14%. At December 31, 2010, BankAtlantic had a tier 1 (core) capital ratio of 6.22% and a total risk-based capital ratio of 11.72%. The Parent Company and BankAtlantic will seek to meet the higher capital requirements through the expected net gain upon consummation of its Tampa branch sale anticipated to close June 2011 (subject to regulatory approvals and customary conditions) and through other efforts that may include the issuance of its Class A Common Stock through a public or private offering. Based on asset reductions associated with the Tampa branch sale and deposit levels as of December 31, 2010, BankAtlantic estimates that the Tampa transaction will add over 130 basis points (1.30%) to its regulatory capital ratios. While BankAtlantic is taking steps to achieve the capital ratios set forth in the Bank Order by June 30, 2011, such ratios may not be attained by that date or at all.
          BankAtlantic is also required to, among other things, revise certain of its plans, programs and policies and submit to the OTS certain written plans, including a capital plan, a contingency plan (only in the event it fails to timely attain and maintain the increased capital ratio requirements), a revised business plan and a plan to reduce BankAtlantic’s delinquent loans and non-performing and other “problem” assets. In addition, the Bank Order requires BankAtlantic to limit its asset growth and restricts BankAtlantic from originating or purchasing new commercial real estate loans or entering into certain material agreements, in each case without receiving the prior written non-objection of the OTS. Separately, the OTS has confirmed that it has no objection to the origination of new loans to facilitate the sale of certain assets, the renewal, extension, modification of existing commercial real estate loans or the funding on existing commitments of commercial real estate loans, subject in each case to compliance with applicable regulations and BankAtlantic’s policies. The Bank Order also imposes restrictions on BankAtlantic’s ability to pay dividends and other distributions.
          The Orders also include certain restrictions on compensation paid to the senior executive officers of the Company and BankAtlantic, and restrictions on agreements with affiliates. The Orders became effective on February 23, 2011 and will remain in effect until terminated, modified or suspended by the OTS.

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Financial Services
(BankAtlantic Bancorp)
BankAtlantic
          BankAtlantic is a federally-chartered, federally-insured savings bank organized in 1952. It is one of the largest financial institutions headquartered in Florida and provides traditional retail banking services and a wide range of business banking products and related financial services through a network of branches in southeast Florida and the Tampa Bay area, primarily in the metropolitan areas surrounding the cities of Miami, Ft. Lauderdale, West Palm Beach and Tampa, which are located in the heavily-populated Florida counties of Miami-Dade, Broward, Palm Beach, Hillsborough and Pinellas. In January 2011, BankAtlantic entered into a purchase and assumption agreement with PNC Financial Services Group Inc. (“PNC”) to sell its Tampa branches and related facilities in order to concentrate its efforts on its core markets in southeast Florida. The transaction, which is subject to regulatory approvals and other customary closing conditions, is anticipated to close in June 2011.
          BankAtlantic’s primary business activities include:
    attracting checking and savings deposits from individuals and business customers,
 
    originating commercial non-mortgage, consumer and small business loans,
 
    holding and actively managing its commercial real estate loan portfolio,
 
    purchasing wholesale residential loans, and
 
    purchasing investments including primarily mortgage-backed and municipal securities and tax certificates.
          BankAtlantic’s business strategy
          BankAtlantic began its “Florida’s Most Convenient Bank” strategy in 2002, when it introduced seven-day banking in Florida. This banking initiative contributed to a significant increase in core deposits (demand deposit accounts, NOW checking accounts and savings accounts). BankAtlantic’s core deposits increased from approximately $600 million as of December 31, 2001 to $2.8 billion as of December 31, 2010. Additionally, while the increase in core deposits during 2009 and 2010 may reflect, in part, favorable market conditions generally, we believe that the implementation of new strategies in 2008 further extend our visibility in the market and increased customer loyalty contributed significantly to the increase in core deposit balances.
          Over the past three years, management has implemented initiatives with a view to managing capital in the current adverse economic environment. These initiatives primarily included reducing risk-based asset levels through loan and securities repayments in the ordinary course, reducing total assets, eliminating cash dividends to the Parent Company and reducing expenses. These initiatives, while important to maintaining capital ratios, have also had the effect of negatively impacting results from operations as the reduction in asset levels resulted in a reduction of earning assets adversely impacting our net interest income. BankAtlantic’s regulatory capital ratios have also been enhanced through capital contributions from the Parent Company. During the years ended December 31, 2010, 2009 and 2008, the Parent Company contributed capital of $28 million, $105 million and $65 million, respectively, to BankAtlantic. As a result of the contributions and BankAtlantic’s core operations, BankAtlantic was able to maintain the following capital ratios over the past three years:
                                 
            For the Years Ended December 31,  
            2010     2009     2008  
Total risk-based capital
    %       11.72       12.56       11.63  
Tier 1 risk-based capital
    %       9.68       10.63       9.80  
Tier 1/core capital
    %       6.22       7.58       6.80  
          As described in “Recent Developments,” BankAtlantic will be required pursuant to the Bank Order to maintain a core capital ratio of 8% and a total risk based capital ratio of 14% as of June 30, 2011. BankAtlantic’s regulatory capital requirements were raised based on the determination by the OTS that BankAtlantic had inadequate capital given its level of criticized assets and its concentration of high risk commercial real estate and construction loans as well as excessive losses over the past three years.
          The economic recession and the substantial decline in real estate values throughout the United States, and particularly in Florida, have had an adverse impact on the credit quality of BankAtlantic’s loan portfolio.

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Financial Services
(BankAtlantic Bancorp)
BankAtlantic’s non-performing assets increased from $197.9 million at December 31, 2007 to $438.9 million at December 31, 2010. In response, we have taken steps to attempt to address credit risk which included:
    Focused efforts and enhanced staffing relating to loan work-outs, collection processes and valuations;
 
    Ceased originating land and residential acquisition, development and construction loans;
 
    Substantially reduced home equity loan originations through underwriting requirements based on lower loan to value ratios;
 
    Froze certain home equity loan unused lines of credit based on declines in borrower credit scores or the market value of loan collateral; and
 
    Transferred certain non-performing commercial real estate loans to the Parent Company in March 2008 in exchange for $94.8 million.
          BankAtlantic continued initiatives to decrease operating expenses during 2010. These initiatives included, among others, lowering advertising and marketing expenditures, reducing store and call center hours, consolidating back-office operations and staffing levels, and renegotiating vendor contracts. During 2011, management intends to seek additional efficiencies through the sale of its Tampa branches. BankAtlantic is also continuing to evaluate its products and services as well as its delivery systems and back-office support infrastructure with a view toward enhancing its operational efficiency.
          As part of BankAtlantic’s efforts to diversify its loan portfolio and reduce its concentration on commercial real estate and construction loans, BankAtlantic’s loan originations during 2010 were focused on small business and commercial non-mortgage loans originated through its retail and lending networks. BankAtlantic anticipates that it will continue to emphasize small business and commercial non-real estate lending and that the percentage represented by its commercial real estate and residential mortgage loan portfolio balances will decline during 2011, through the scheduled repayment of existing loans and the fact that BankAtlantic is generally not originating new commercial real estate loans.
          Loan products
          BankAtlantic offers a number of lending products. Historically, primary lending products have included residential loans, commercial real estate loans, consumer loans, and small business and commercial non-mortgage loans.
          Residential: BankAtlantic purchases residential loans in the secondary markets that have been originated by other institutions. These loans, which are serviced by independent servicers, are secured by properties located throughout the United States. Residential loans are typically purchased in bulk and are generally non-conforming loans under agency guidelines due primarily to the size of the individual loans (“jumbo loans”). Some of the purchased residential loans are interest-only loans. These loans result in possible future increases in a borrower’s loan payments when the contractually required repayments increase due to interest rate adjustments or when required amortization of the principal amount commences. These payment increases could affect a borrower’s ability to repay the loan and result in increased defaults and losses. At December 31, 2010, BankAtlantic’s residential loan portfolio included $550.2 million of interest-only loans, $52.1 million of which will become fully amortizing and have interest rates reset in 2011. The credit scores and loan-to-value ratios for interest-only loans are similar to those of amortizing loans. BankAtlantic sought to manage the credit risk associated with these loans by limiting purchases of interest-only loans to those originated to borrowers that it believed to be credit worthy and with loan-to-value and total debt to income ratios within agency guidelines. BankAtlantic did not purchase or originate sub-prime, option-arm, “pick-a-payment” or negative amortizing residential loans. Loans in the purchased residential loan portfolio generally do not have prepayment penalties. As part of its initiative to reduce assets with a view toward improving liquidity and regulatory capital ratios, BankAtlantic purchased $9.9 million and $6.5 million of these loans during 2010 and 2009, respectively.
          BankAtlantic originates residential loans to customers that are then sold on a servicing released basis to a correspondent. It also originates and holds certain residential loans, which are made primarily to “low to moderate income” borrowers in accordance with requirements of the Community Reinvestment Act. The underwriting of these loans generally follows government agency guidelines and independent appraisers typically perform on-site inspections and valuations of the collateral.
          Commercial Real Estate: BankAtlantic provided commercial real estate loans for acquisition, development and construction of various types of properties including office buildings, retail shopping centers, residential construction and other non-residential properties. BankAtlantic also provided loans to acquire or refinance existing income-producing properties. These loans were primarily secured by property located in Florida. Commercial real

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Financial Services
(BankAtlantic Bancorp)
estate loans were generally originated in amounts based upon the appraised value of the collateral or estimated cost to construct, generally had a loan-to value ratio at the time of origination of less than 80%, and generally required that one or more of the principals of the borrowing entity guaranteed these loans. Most of these loans have variable interest rates and are indexed to either prime or LIBOR rates. Due to high concentrations of commercial real estate and construction loans in BankAtlantic’s loan portfolio, BankAtlantic ceased the origination of commercial real estate loans during the year ended December 31, 2010. Additionally, pursuant to the Bank Order, BankAtlantic has agreed to cease the purchase or origination of new commercial real estate loans unless it receives the prior written non-objection of the OTS Regional Director. However, BankAtlantic may originate new loans to facilitate the sale of nonperforming assets or criticized assets, fund commercial real estate loan commitments entered into before November 1, 2010, make protective advances for taxes and insurance and renew, extend or modify existing commercial real estate loans, provided that such funding complies with regulatory underwriting guidelines and BankAtlantic’s lending policies.
          BankAtlantic’s commercial real estate loan portfolio is divided into four loan classes; commercial residential, commercial owner occupied, commercial land, and commercial other.
          Commercial residential real estate loans have resulted in significant losses to BankAtlantic. This class of loans is divided into three categories — builder land bank loans, land acquisition and development loans, and land acquisition, development and construction loans. The builder land bank loan category consists of land loans to borrowers who have or had land purchase option agreements with regional and/or national builders. These loans were originally underwritten based on projected sales of the developed lots to the builders/option holders, and timely repayment of the loans is primarily dependent upon the sale of the property pursuant to the options. If the lots are not sold as originally anticipated, the borrowers may not be in a position to service the loans, with the likely result being an increase in loan losses in this category. The land acquisition and development loan category consists of loans secured by residential land which was intended to be developed by the borrower and sold to homebuilders. We believe that the underwriting on these loans was generally more stringent than builder land bank loans, as an option agreement with a regional or national builder did not exist at the origination date. The land acquisition, development and construction loans are secured by residential land which was intended to be fully developed by the borrower who also might have plans to construct homes on the property. These loans generally involved property with a longer investment and development horizon, and were guaranteed by the borrower or individuals so it was expected that the borrower would have the ability to service the debt for a longer period of time. However, based on the declines in value in the Florida real estate market, all loans collateralized by Florida real estate expose the Bank to significant risk.
          Commercial real estate owner occupied loans are also real estate collateralized loans; however, the primary source of repayment is the cash flow from the business operated on the premises of the collateralized property.
          Commercial real estate land loans include loans secured by the sale of land and commercial land held for investment purposes. These loans are generally to borrowers that intend to expand the zoning of the property and ultimately sell the property to developers. These loans are considered higher risk than owner occupied or loans with income producing collateral as the repayment of the loan is dependent on the sale of the collateral or the financial strength of the borrower or guarantors.
          Commercial other real estate loans are primarily secured by income producing property which includes shopping centers, office buildings, self storage facilities, and warehouses.
          BankAtlantic has sold participations in certain commercial real estate loans that it originated. BankAtlantic administers the loans and provides participants periodic reports on the progress of the project for which the loan was made. Major decisions regarding the loans are made by the participants on either a majority or unanimous basis. As a result, BankAtlantic generally cannot significantly modify the loans without either majority or unanimous consent of the participants. BankAtlantic’s sale of loan participations has the effect of reducing its exposure on individual projects, and was required in some cases in order to comply with the regulatory “loans to one borrower” limitations. BankAtlantic has also purchased commercial real estate loan participations from other financial institutions, and in such cases BankAtlantic may not be in a position to control decisions made with respect to the loans.

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Financial Services
(BankAtlantic Bancorp)
          Standby Letters of Credit and Commitments: Standby letters of credit are conditional commitments issued by BankAtlantic to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is the same as extending loans to customers. BankAtlantic may hold certificates of deposit, liens on corporate assets and liens on residential and commercial property as collateral for letters of credit. BankAtlantic issues commitments for commercial real estate and commercial non-mortgage loans.
          Commercial non-mortgage loans: These loans are generally business loans secured by the receivables, inventory, equipment, and/or general corporate assets of the borrowers. These loans generally have variable interest rates that are Prime or LIBOR based and are typically originated for terms ranging from one to five years.
          Consumer: Consumer loans primarily consist of loans to individuals originated through BankAtlantic’s retail network. Approximately 97% of consumer loans are home equity lines of credit secured by a first or second mortgage on the primary residence of the borrower, substantially all of which is located in Florida. Approximately 26% of home equity lines of credit balances are secured by a first mortgage on the property. Home equity lines of credit have prime-based interest rates and generally mature in 15 years. Other consumer loans generally have fixed interest rates with terms ranging from one to five years. The credit quality of consumer loans is adversely impacted by increases in the unemployment rate and declining real estate values. During the past three years, BankAtlantic experienced higher than historical losses in this portfolio as a result of deteriorating economic conditions in Florida. In an attempt to address this issue, BankAtlantic has adopted more stringent underwriting criteria for consumer loans which has had the effect of significantly reducing consumer loan originations.
          Small Business: BankAtlantic originates small business loans to companies located primarily in markets within BankAtlantic’s branch network. Small business loans are primarily originated on a secured basis and do not generally exceed $2.0 million. These loans are generally originated with maturities ranging from one to three years or are due upon demand. Lines of credit extended to small businesses are due upon demand. Small business loans have either fixed or variable prime-based interest rates.
          The composition of the loan portfolio was (in millions):
                                                                                 
    As of December 31,  
    2010     2009     2008     2007     2006  
    Amount     Pct     Amount     Pct     Amount     Pct     Amount     Pct     Amount     Pct  
Loans receivable:
                                                                               
Real estate loans:
                                                                               
Residential
  $ 1,222       40.31       1,550       42.35       1,930       45.34       2,156       47.66       2,151       46.81  
Consumer — home equity
    604       19.92       670       18.31       719       16.89       676       14.94       562       12.23  
Construction and development
    145       4.78       223       6.09       301       7.07       416       9.20       475       10.34  
Commercial
    744       24.54       897       24.51       930       21.85       882       19.49       973       21.17  
Small business
    203       6.70       213       5.82       219       5.14       212       4.69       187       4.07  
Other loans:
                                                                               
Commercial non-mortgage
    134       4.42       154       4.21       143       3.36       131       2.9       157       3.42  
Small business non-mortgage
    99       3.26       99       2.70       108       2.54       106       2.34       98       2.13  
Consumer
    19       0.63       21       0.57       26       0.61       31       0.68       26       0.57  
Loans held for sale
    21       0.69       4       0.11       3       0.07       4       0.09       9       0.20  
                     
Total
    3,191       105.26       3,831       104.67       4,379       102.87       4,614       101.99       4,638       100.94  
                     
Adjustments:
                                                                               
Unearned discounts (premiums)
    (2 )     (0.06 )     (3 )     (0.08 )     (3 )     (0.07 )     (4 )     (0.09 )     (1 )     (0.02 )
Allowance for loan losses
    161       5.31       174       4.75       125       2.94       94       2.08       44       0.96  
                     
Total loans receivable, net
  $ 3,032       100.00       3,660       100.00       4,257       100.00       4,524       100.00       4,595       100.00  
                     
          At March 31, 2008, BankAtlantic transferred $101.5 million of non-performing commercial loans to a subsidiary of the Parent Company. These loans are not reported in the above table as of December 31, 2010, 2009 and 2008.

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Financial Services
(BankAtlantic Bancorp)
          Included in BankAtlantic’s commercial and construction and development loan portfolios were the following commercial residential loans (in millions):
                                 
    As of December 31,  
    2010     2009     2008     2007  
Builder land bank loans
  $ 10       44       62       150  
Land acquisition and development loans
    119       172       210       245  
Land acquisition, development and construction loans
    4       11       32       108  
     
Total commercial residential loans
  $ 133       227       304       503  
     
          Investments
          Securities available for sale: BankAtlantic invests in obligations of, or securities guaranteed by the U.S. government or its agencies. These include mortgage-backed securities and real estate mortgage investment conduits (“REMICs”). BankAtlantic’s securities available for sale portfolio at December 31, 2010 reflects a decision to seek high credit quality and securities guaranteed by government sponsored enterprises in an attempt to minimize credit risk in its investment portfolio to the extent possible. During 2010, BankAtlantic began investing in municipal and agency securities that mature in less than two years. These short-term investments carried higher yields than alternative short-term investments. The available for sale securities portfolio serves as a source of liquidity as well as a means to moderate the effects of interest rate changes. The decision to purchase and sell securities from time to time is based upon a current assessment of the economy, the interest rate environment, and capital and liquidity strategies and requirements. BankAtlantic’s investment portfolio does not include credit default swaps, commercial paper, collateralized debt obligations, structured investment vehicles, auction rate securities, trust preferred securities or equity securities in Fannie Mae or Freddie Mac.
          Tax Certificates: Tax certificates are evidences of tax obligations that are sold through auctions or bulk sales by various state and local taxing authorities. A tax obligation arises when the property owner fails to timely pay the real estate taxes on the property. Certain municipalities bulk sale their entire tax certificates for the prior year by auctioning the portfolio to the highest bidder instead of auctioning each certificate separately. Tax certificates represent a priority lien against the real property for the delinquent real estate taxes. The minimum repayment to satisfy the lien is the certificate amount plus the interest accrued through the redemption date, plus applicable penalties, fees and costs. Tax certificates have no payment schedule or stated maturity. If the certificate holder does not file for the deed within established time frames, the certificate may become null and void and lose its value. BankAtlantic’s experience with this type of investment has generally been favorable because the rates earned are generally higher than many alternative investments and substantial repayments typically occur over a one-year period. During 2008, BankAtlantic discontinued acquiring tax certificates through bulk acquisitions as it experienced higher than historical losses from these types of acquisitions. During 2009 and 2010, BankAtlantic purchased tax certificates primarily in Florida and expects that the majority of tax certificates it acquires in 2011 will be in Florida.

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Financial Services
(BankAtlantic Bancorp)
          The composition, yields and maturities of BankAtlantic’s securities available for sale, investment securities and tax certificates were as follows (dollars in thousands):
                                                                 
                                            Corporate                
            Treasury                     Mortgage-     Bond             Weighted  
    Tax     and     Tax-Exempt     Taxable     Backed     and             Average  
    Certificates     Agencies     Securities     Securities     Securities     Other     Total     Yield  
December 31, 2010
                                                               
Maturity: (1)
                                                               
One year or less
  $ 34,725             160,395       19,922                   215,042       1.70 %
After one through five years
    56,013       60,143       1,728             216             118,100       3.24  
After five through ten years
                              24,406             24,406       3.64  
After ten years
                              156,261             156,261       2.57  
     
Fair values (2)
  $ 90,738       60,143       162,123       19,922       180,883             513,809       2.41 %
     
Amortized cost (2)
  $ 89,789       60,000       162,113       19,936       171,253               503,091       3.37 %
     
Weighted average yield based on fair values
    5.46       5.66       0.95       1.32       3.41             2.41          
Weighted average maturity (yrs)
    2.1       2.7       0.50       0.53       20.58             7.88          
               
December 31, 2009
                                                               
Fair values (2)
  $ 112,472                         319,292       250       432,014       4.00 %
     
Amortized cost (2)
  $ 110,991                         307,314       250       418,555       5.35 %
     
December 31, 2008
                                                               
Fair values (2)
  $ 224,434                         699,224       250       923,908       5.25 %
     
Amortized cost (2)
  $ 213,534                         687,344       250       901,128       6.00 %
     
 
(1)   Except for tax certificates, maturities are based upon contractual maturities. Tax certificates do not have stated maturities, and estimates in the above table are based upon historical repayment experience (generally 2 years).
 
(2)   Equity and tax exempt securities held by the Parent Company with a cost of $1.5 million, $1.5 million and $3.6 million and a fair value of $1.5 million, $1.5 million and $4.1 million, at December 31, 2010, 2009 and 2008, respectively, were excluded from the above table. At December 31, 2010, equities held by BankAtlantic with a cost of $1.3 million and a fair value of $1.3 million were excluded from the above table.
          A summary of the amortized cost and gross unrealized appreciation or depreciation of estimated fair value of tax certificates and securities available for sale follows (in thousands):
                                 
    December 31, 2010 (1)  
            Gross     Gross        
    Amortized     Unrealized     Unrealized     Estimated  
    Cost     Appreciation     Depreciation     Fair Value  
Tax certificates:
                               
Cost equals market
  $ 89,789       949             90,738  
Securities available for sale:
                               
Investment securities:
                               
Cost equals market
                       
Market over cost
    76,436       41             76,477  
Cost over market
    105,613             (45 )     105,568  
Mortgage-backed securities :
                               
Cost equals market
                       
Market over cost
    231,253       9,773             241,026  
Cost over market
                       
     
Total
  $ 503,091       10,763       (45 )     513,809  
     
 
(1)   The above table excludes equity securities held by the Parent Company with a cost and fair value of $1.5 million at December 31, 2010 and equities held by BankAtlantic with a cost and fair value of $1.3 million at December 31, 2010.

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Financial Services
(BankAtlantic Bancorp)
          Deposit products and borrowed funds:
          Deposits: BankAtlantic offers checking and savings accounts to individuals and business customers. These include commercial demand deposit accounts, retail demand deposit accounts, savings accounts, money market accounts, certificates of deposit, various NOW accounts and IRA and Keogh retirement accounts. BankAtlantic also obtains deposits from municipalities. BankAtlantic solicited deposits from customers in its geographic market through marketing and relationship banking activities primarily conducted through its sales force and store network. BankAtlantic primarily solicited deposits at its branches (or stores) through its “Florida’s Most Convenient Bank” initiative and more recently through its relationship marketing strategy. The Dodd-Frank Wall Street Reform and Consumer Protection Act permanently raised the maximum standard deposit insurance to $250,000 per depositor and the Act provides full deposit insurance coverage on non-interest bearing deposit accounts until January 1, 2013. See note 19 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s deposit accounts.
          Federal Home Loan Bank (“FHLB”) Advances: BankAtlantic is a member of the FHLB of Atlanta and can obtain secured advances from the FHLB of Atlanta. These advances can be collateralized by a security lien against its residential loans, certain commercial loans, consumer home equity loans and securities. In addition, BankAtlantic must maintain certain levels of FHLB stock based upon outstanding advances. See note 20 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s FHLB Advances.
          Other Short-Term Borrowings: BankAtlantic’s short-term borrowings generally consist of securities sold under agreements to repurchase and treasury tax and loan borrowings.
    Securities sold under agreements to repurchase include a sale of a portion of its current investment portfolio (usually mortgage-backed securities and REMICs) at a negotiated rate and an agreement to repurchase the same assets on a specified future date. BankAtlantic issues repurchase agreements to institutions and to its customers. These transactions are collateralized by securities in its investment portfolio but are not insured by the Federal Deposit Insurance Corporation (“FDIC”). See note 21 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s securities sold under agreements to repurchase borrowings.
 
    Treasury tax and loan borrowings represent BankAtlantic’s participation in the Federal Reserve Treasury Investment Program. Under this program, the Federal Reserve places funds with BankAtlantic obtained from treasury tax and loan payments received by financial institutions. See note 22 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s treasury tax and loan borrowings.
          BankAtlantic’s other borrowings have floating interest rates and consist of mortgage-backed bond and subordinated debentures. See note 23 to the “Notes to Consolidated Financial Statements” for more information regarding BankAtlantic’s other borrowings.
Parent Company
          The Parent Company’s operations primarily consist of financing the capital needs of BankAtlantic and its subsidiaries and management of the asset work-out subsidiary. In March 2008, the Parent Company used a portion of the proceeds obtained from the sale of Ryan Beck to Stifel to purchase from BankAtlantic $101.5 million of non-performing loans at BankAtlantic’s carrying value. These loans are held in an asset workout subsidiary wholly-owned by the Parent Company, which has entered into an agreement with BankAtlantic pursuant to which BankAtlantic services the transferred non-performing loans. The Parent also has arrangements with BFC Financial Corporation (“BFC”) for BFC to provide certain human resources, insurance management, investor relations, real estate advisory services and other administrative services to the Parent and its subsidiaries. The largest expense of the Parent Company is interest expense on junior subordinated debentures issued in connection with trust preferred securities. The Company has the right to defer quarterly payments of interest on the junior subordinated debentures for a period not to exceed 20 consecutive quarters without default or penalty. During all four quarters of 2009 and 2010 and during the first quarter of 2011, the Company notified the trustees under its junior subordinated debentures that it has elected to defer its quarterly interest payments. During the deferral period, the respective trusts suspend the declaration and payment of dividends on the trust preferred securities. Additionally, during the deferral period, the Company may not pay dividends on or repurchase its common stock. The Parent Company deferred the interest and dividend payments in order to preserve its liquidity in response to current economic conditions.

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Financial Services
(BankAtlantic Bancorp)
          The Parent Company had the following cash and investments as of December 31, 2010 (in thousands). We may not receive proceeds equal to the estimated fair value upon the liquidation of the private investment securities.
                         
    As of December 31, 2010  
            Gross        
    Carrying     Unrealized     Estimated  
(in thousands)   Value     Depreciation     Fair Value  
Cash and cash equivalents
  $ 12,226             12,226  
Securities available for sale
    10       2       8  
Private investment securities
    1,500             1,500  
     
Total
  $ 13,736       2       13,734  
     
          The Parent Company’s work-out subsidiary had the following loans and real estate owned as of December 31, 2010:
         
(in millions)   Amount  
Commercial residential real estate loans
  $ 10  
Commercial other
    7  
 
     
Total commercial loans
    17  
Real estate owned
    10  
 
     
Total loans and real estate owned
  $ 27  
 
     

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Employees
          Management believes that its relations with its employees are satisfactory. The Company currently maintains employee benefit programs that are considered by management to be generally competitive with programs provided by other major employers in its markets.
          As of December 31, 2010, the Company and its subsidiaries had approximately 5,084 employees, including 44 employees at BFC Parent and BFC Shared Service operations, 5 employees supporting Woodbridge and its subsidiaries, 8 employees supporting BankAtlantic Bancorp Parent Company, 1,202 employees supporting BankAtlantic (including 162 part time employees) and 3825 employees supporting Bluegreen, of which 355 were located in Bluegreen’s headquarters in Boca Raton, Florida and 3,470 were located in regional field offices throughout the United States and Aruba. The field personnel at Bluegreen include 85 field employees supporting Bluegreen Communities and 3,385 field employees supporting Bluegreen Resorts. Five Bluegreen employees in New Jersey are represented by a collective bargaining unit.
Competition
Bluegreen
          Bluegreen Resorts competes with various high profile and well-established operators, many of which have greater liquidity and financial resources than Bluegreen. Many of the world’s most recognized lodging, hospitality and entertainment companies develop and sell VOIs in resort properties. Major companies that now operate or are developing or planning to develop vacation ownership resorts directly or through subsidiaries include Marriott International, Inc., the Walt Disney Company, Hilton Hotels Corporation, Hyatt Corporation, Four Seasons Hotels and Resorts, Starwood Hotels and Resorts Worldwide, Inc. and Wyndham Worldwide Corporation. Bluegreen Resorts also competes with numerous other smaller owners and operators of vacation ownership resorts. In addition to competing for sales leads, prospects and fee-based service clients, Bluegreen Resorts competes with other VOI developers for marketing, sales, and resort management personnel. Bluegreen Communities competes with builders, developers and others for the acquisition of property and with local, regional and national developers, homebuilders and others with respect to the sale of homesites. Bluegreen will compete with others on the basis of its reputation and the price, location and quality of the product it offers for sale.
BankAtlantic Bancorp
          The banking and financial services industry is very competitive and is in a transition period. The financial services industry continues to experience a severe downturn and increased competition in the marketplace. We expect continued consolidation in the financial services industry creating larger financial institutions. Our primary method of competition is emphasis on relationship banking, customer service and convenience.
          BankAtlantic faces substantial competition for both loans and deposits. Competition for loans comes principally from other banks, savings institutions and other lenders. This competition could decrease the number and size of loans that BankAtlantic makes and the interest rates and fees that it receives on these loans.
          BankAtlantic competes for deposits with banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds and mutual funds, many of which are uninsured. These competitors may offer higher interest rates than BankAtlantic, which could decrease the deposits that BankAtlantic attracts or require BankAtlantic to increase its rates to attract new deposits. Increased competition for deposits could increase BankAtlantic’s cost of funds, reduce its net interest margin and adversely affect its results of operations.
Regulation
BFC
          The Company owns approximately 44% of the outstanding shares of BankAtlantic Bancorp’s Class A Common Stock and all of BankAtlantic Bancorp’s Class B Common Stock, which in the aggregate represents an approximately 45% equity interest and 71% voting interest in BankAtlantic Bancorp. BankAtlantic Bancorp is the holding company of BankAtlantic by virtue of its ownership of 100% of BankAtlantic’s outstanding common stock. Accordingly, each of BFC and BankAtlantic Bancorp is a unitary savings and loan holding company subject to regulatory oversight and examination by the OTS, including normal supervision and reporting requirements. Therefore, the regulations discussed below relating to BankAtlantic Bancorp are also applicable to BFC. Additionally, the Company, BankAtlantic Bancorp and Bluegreen are each subject to the reporting and other requirements of the Exchange Act.

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          BFC, on a parent company only basis, may not, without the prior written non-objection of the OTS:
  (i)   incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with BankAtlantic’s compliance requirements applicable to it;
 
  (ii)   declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter; or
 
  (iii)   enter into any new agreements, contracts or arrangements or materially modify any existing agreements, contracts or arrangements with BankAtlantic not consistent with past practices.
          BFC has also committed to the OTS that it will develop an enterprise risk management function that assesses and evaluates the risks within the holding company.
Regulation of Federal Savings Associations
Holding Company
          We and BankAtlantic Bancorp are each a unitary savings and loan holding company within the meaning of the Home Owners’ Loan Act (“HOLA”), as amended, or HOLA. As such, we are each registered with the Office of Thrift Supervision (“OTS”), and are each subject to OTS regulations, examinations, supervision and reporting requirements. In addition, the OTS has enforcement authority over each of us. Among other things, this authority permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the financial safety, soundness or stability of a subsidiary savings association. Recent changes in the law will, during 2011, shift principal regulatory jurisdiction over BankAtlantic Bancorp and BFC to the Federal Reserve. Management is in the process of evaluating the potential practical implications of this shift in regulatory jurisdiction, such as possible changes in how regulators will examine BankAtlantic Bancorp and BFC and what new or different standards they may apply. As a result of this shift, management expects that BFC and BankAtlantic Bancorp, at its parent company level, will at some point be subject to minimum capital ratios for the first time. To date, regulators have not announced specifics about the change in regulatory jurisdiction in enough detail that would allow management to understand what the consequences of the shift will be.
          HOLA prohibits a savings and loan holding company, directly or indirectly, or through one or more subsidiaries, from:
    acquiring another savings institution or its holding company without prior written approval of the OTS;
 
    acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary savings institution, a non-subsidiary holding company, or a non-subsidiary company engaged in activities other than those permitted by HOLA; or
 
    acquiring or retaining control of a depository institution that is not insured by the FDIC.
          In evaluating an application by a holding company to acquire a savings institution, the OTS must consider the financial and managerial resources and future prospects of the company and savings institution involved, the effect of the acquisition on the risk to the insurance funds, the convenience and needs of the community and competitive factors.
          As a unitary savings and loan holding company, neither BFC nor BankAtlantic Bancorp is generally restricted under existing laws as to the types of business activities in which it may engage, provided that BankAtlantic continues to satisfy the Qualified Thrift Lender, or QTL, test. See “Regulation of Federal Savings Associations — BankAtlantic — QTL Test” for a discussion of the QTL requirements. If either BFC or BankAtlantic Bancorp was to make a non-supervisory acquisition of another savings institution or of a savings institution that meets the QTL test and is deemed to be a savings institution by the OTS and that will be held as a separate subsidiary, then BFC or BankAtlantic Bancorp, as the case may be, would become a multiple savings and loan holding company within the meaning of HOLA and would be subject to limitations on the types of business activities in which it can engage. HOLA limits the activities of a multiple savings institution holding company and its non-insured institution subsidiaries primarily to activities permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act, subject to the prior approval of the OTS, and to other activities authorized by OTS regulation.

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          Transactions between BankAtlantic, including any of BankAtlantic’s subsidiaries, and BFC, BankAtlantic Bancorp or any other affiliate of BankAtlantic, are subject to various conditions and limitations. See “Regulation of Federal Savings Associations — BankAtlantic — Transactions with Related Parties.” Pursuant to the Bank Order, BankAtlantic must seek approval from the OTS prior to any declaration of the payment of any dividends or other capital distributions. See “Regulation of Federal Savings Associations — BankAtlantic — Limitation on Capital Distributions” and Note 2 to the “Notes to Consolidated Financial Statements”.
          The following discussion is intended to be a summary of the material banking statutes and regulations applicable to BFC, BankAtlantic Bancorp and BankAtlantic, and it does not purport to be a comprehensive description of such statutes and regulations, nor does it include every federal and state statute and regulation applicable to BFC, BankAtlantic Bancorp and BankAtlantic.
The Dodd-Frank Act
          On July 21, 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act is expected to have a broad impact on the financial services industry, imposing significant regulatory and compliance changes, including the designation of certain financial companies as systemically significant, the imposition of increased capital, leverage, and liquidity requirements, and numerous other provisions designed to improve supervision and oversight of, and strengthen the safety and soundness within, the financial services sector. Additionally, the Dodd-Frank Act establishes a new framework of authority to conduct systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, or Council, the Federal Reserve, the Office of the Comptroller of the Currency (the “OCC”), and the FDIC. Of particular relevance to BFC and BankAtlantic Bancorp, the Dodd-Frank Act makes fundamental changes to the federal supervisory oversight structure for federal thrifts and savings and loan holding companies.
          The following items provide a brief description of certain provisions of the Dodd-Frank Act.
    Principal changes for federal thrifts and savings and loan holding companies. The Dodd-Frank Act preserves the charter for federal thrifts, but will eliminate the OTS as the primary federal regulator for federal thrifts and savings and loan holding companies. The OTS will be abolished by April 2012 and its functions and personnel distributed among the OCC, FDIC, and the Federal Reserve. Primary jurisdiction for the supervision and regulation of federal thrifts, including BankAtlantic, will be transferred to the OCC; supervision and regulation of savings and loan holding companies, including BFC and BankAtlantic Bancorp, will be transferred to the Federal Reserve. Although the Dodd-Frank Act maintains the federal thrift charter, it eliminates certain benefits of the charter and imposes new penalties for failure to comply with the QTL test. Under the Dodd-Frank Act, risk-based and leverage capital standards currently applicable to U.S. insured depository institutions will be imposed on U.S. bank holding companies and savings and loan holding companies, and depository institutions and their holding companies will be subject to minimum risk-based and leverage capital requirements on a consolidated basis. In addition, the Dodd-Frank Act requires that savings and loan holding companies be well-capitalized and well managed in the same manner as bank holding companies in order to engage in the expanded financial activities permissible only for a financial holding company.
 
    Source of strength. The Dodd-Frank Act requires all companies, including savings and loan holding companies, that directly or indirectly control an insured depository institution to serve as a source of strength for the institution. Under this requirement, regulations may seek to require BFC and/or BankAtlantic Bancorp to provide financial assistance to BankAtlantic.
 
    Limitation on federal preemption. The Dodd-Frank Act significantly reduces the ability of national banks and federal thrifts to rely upon federal preemption of state consumer financial laws. Although the OCC, as the new primary regulator of federal thrifts, will have the ability to make preemption determinations where certain conditions are met, the broad rollback of federal preemption has the potential to create a patchwork of federal and state compliance obligations. This could, in turn, result in significant new regulatory requirements applicable to BFC, BankAtlantic Bancorp and BankAtlantic, potentially significant changes in our operations and increases in our compliance costs. It could also result in uncertainty concerning compliance, with attendant regulatory and litigation risks.

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    Mortgage loan origination and risk retention. The Dodd-Frank Act contains additional regulatory requirements that may affect our operations and result in increased compliance costs. For example, the Dodd-Frank Act imposes new standards for mortgage loan originations on all lenders, including banks and thrifts, in an effort to require steps to verify a borrower’s ability to repay. In addition, the Dodd-Frank Act generally requires lenders or securitizers to retain an economic interest in the credit risk relating to loans the lender sells or mortgage and other asset-backed securities that the securitizer issues. The risk retention requirement generally will be 5%, but could be increased or decreased by regulation.
 
    Imposition of restrictions on certain activities. The Dodd-Frank Act requires new regulations for the over-the-counter derivatives market, including requirements for clearing, exchange trading, capital, margin, and reporting. Additionally, the Dodd-Frank Act requires that certain swaps and derivatives activities be “pushed out” of insured depository institutions and conducted in non-bank affiliates, significantly restricts the ability of a member of a depository institution holding company group to invest in or sponsor certain private funds, and broadly restricts such entities from engaging in “proprietary trading,” subject to limited exemptions. These restrictions may affect our ability to manage certain risks in our business.
    Expanded FDIC resolution authority. While insured depository institutions are currently subject to the FDIC’s resolution process, the Dodd-Frank Act creates a new mechanism for the FDIC to conduct the orderly liquidation of certain “covered financial companies,” including bank and thrift holding companies and systemically significant non-bank financial companies. Upon certain findings being made, the FDIC may be appointed receiver for a covered financial company, and would be tasked with conducting an orderly liquidation of the entity. The FDIC liquidation process is modeled on the existing Federal Deposit Insurance Act, or FDI Act, bank resolution regulations, and generally gives the FDIC more discretion than in the traditional bankruptcy context.
 
    Consumer Financial Protection Bureau (CFPB). The Dodd-Frank Act creates a new independent CFPB within the Federal Reserve. The CFPB is tasked with establishing and implementing rules and regulations under certain federal consumer protection laws with respect to the conduct of providers of certain consumer financial products and services. The CFPB has rulemaking authority over many of the statutes governing products and services offered to bank and thrift consumers. For banking organizations with assets of $10 billion or more, the CFPB has exclusive rule making and examination, and primary enforcement authority under federal consumer financial law. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB. Compliance with any such new regulations would increase our cost of operations.
 
    Deposit insurance. The Dodd-Frank Act makes permanent the general $250,000 deposit insurance limit for insured deposits. The Dodd-Frank Act also extends until January 1, 2013, federal deposit coverage for the full net amount held by depositors in non-interest bearing transaction accounts. Amendments to the FDI Act also revise the assessment base against which an insured depository institution’s deposit insurance premiums paid to the Deposit Insurance Fund (“DIF”) will be calculated. Under the amendments, the assessment base will no longer be the institution’s deposit base, but rather its average consolidated total assets less its average tangible equity. Additionally, the Dodd-Frank Act makes changes to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds. Several of these provisions could increase the FDIC deposit insurance premiums paid by BankAtlantic.
 
    Transactions with affiliates and insiders. The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered credit transactions must be satisfied. Insider transaction limitations are expanded through the strengthening of loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivatives transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors.
 
    Enhanced lending limits. The Dodd-Frank Act strengthens the existing limits on a depository institution’s credit exposure to one borrower. Federal banking law currently limits a federal thrift’s ability to extend credit

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      to one person (or group of related persons) in an amount exceeding certain thresholds. The Dodd-Frank Act expands the scope of these restrictions to include credit exposure arising from derivative transactions, repurchase agreements, and securities lending and borrowing transactions.
 
    Corporate governance. The Dodd-Frank Act addresses many investor protection, corporate governance and executive compensation matters that will affect most U.S. publicly traded companies. The Dodd-Frank Act: (1) grants stockholders of U.S. publicly traded companies an advisory vote on executive compensation; (2) enhances independence requirements for compensation committee members; (3) requires companies listed on national securities exchanges to adopt incentive-based compensation clawback policies for executive officers; and (4) provides the SEC with authority to adopt proxy access rules that would allow stockholders of publicly traded companies to nominate candidates for election as directors and to have those nominees included in a company’s proxy materials.
          Many of the requirements of the Dodd-Frank Act will be implemented over time and most will be subject to regulations adopted over the course of several years. Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full extent of the impact such requirements will have on our operations is uncertain. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to our business practices, impose more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements may negatively impact our results of operations and financial condition.
          BankAtlantic
          BankAtlantic is a federal savings association and is subject to extensive regulation, examination, and supervision by the OTS, as its chartering agency and primary regulator, and the FDIC, as its deposit insurer. BankAtlantic’s deposit accounts are insured up to applicable limits by the FDIC, which is administered by the FDIC. BankAtlantic must file reports with the OTS and the FDIC concerning its activities and financial condition. Additionally, BankAtlantic must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other depository institutions, and must submit applications or notices prior to forming certain types of subsidiaries or engaging in certain activities through its subsidiaries. The OTS and the FDIC conduct periodic examinations to assess BankAtlantic’s safety and soundness and compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which a savings association can engage and is intended primarily for the protection of the insurance fund and depositors. The OTS and the FDIC have significant discretion in connection with their supervisory and enforcement activities and examination policies. Any change in such applicable activities or policies, whether by the OTS, the FDIC or Congress, could have a material adverse impact on BFC, BankAtlantic Bancorp and BankAtlantic, and the operations of each company.
          Recent changes in law will shift principal regulatory jurisdiction over thrift institutions, including BankAtlantic (and as discussed above, BFC and BankAtlantic Bancorp) from the OTS to the OCC during 2011. We are in the process of evaluating the potential implications of this shift in regulatory jurisdiction, such as possible changes in how BankAtlantic’s regulators will examine it and what new or different standards they may apply to BankAtlantic. Because BankAtlantic does not have plans to convert to a national bank, we currently believe the existing OTS regulations will initially continue to apply to BankAtlantic, although the OCC may decide to modify these regulations.
          The following discussion is intended to be a summary of the material banking statutes and regulations applicable to BankAtlantic, and it does not purport to be a comprehensive description of such statutes and regulations, nor does it include every federal and state statute and regulation applicable to BankAtlantic. See “Regulation of Federal Savings Associations-Holding Company-The Dodd-Frank Act” for a summary of the Dodd-Frank Act.
          Business Activities. BankAtlantic derives its lending and investment powers from HOLA and the regulations of the OTS thereunder. Under these laws and regulations, BankAtlantic may invest in:
    mortgage loans secured by residential and commercial real estate;
 
    commercial and consumer loans;
 
    certain types of debt securities; and
 
    certain other assets.

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          BankAtlantic may also establish service corporations to engage in activities not otherwise permissible for BankAtlantic, including certain real estate equity investments and securities and insurance brokerage. These investment powers are subject to limitations, including, among others, limitations that require debt securities acquired by BankAtlantic to meet certain rating criteria and that limit BankAtlantic’s aggregate investment in various types of loans to certain percentages of capital and/or assets.
          Loans to One Borrower. Under HOLA, savings associations are generally subject to the same limits on loans to one borrower as are imposed on national banks. Generally, under these limits, the total amount of loans and extensions of credit made by a savings association to one borrower or related group of borrowers outstanding at one time and not fully secured by collateral may not exceed 15% of the savings association’s unimpaired capital and unimpaired surplus. In addition to, and separate from, the 15% limitation, the total amount of loans and extensions of credit made by a savings association to one borrower or related group of borrowers outstanding at one time and fully secured by readily-marketable collateral may not exceed 10% of the savings association’s unimpaired capital and unimpaired surplus. Readily-marketable collateral includes certain debt and equity securities and bullion, but generally does not include real estate. At December 31, 2010, BankAtlantic’s limit on loans to one borrower was approximately $57.0 million. At December 31, 2010, BankAtlantic’s largest aggregate amount of loans to one borrower was approximately $35.6 million and the second largest borrower had an aggregate balance of approximately $32.1 million.
          QTL Test. HOLA requires a savings association to meet a QTL test by maintaining at least 65% of its “portfolio assets” in certain “qualified thrift investments” on a monthly average basis in at least nine months out of every twelve months. A savings association that fails the QTL test must either operate under certain restrictions on its activities or convert to a bank charter. The Dodd-Frank Act imposes additional restrictions on the ability of any savings association that fails to become or remain a QTL to pay dividends. Specifically, the savings association is not only subject to the general dividend restrictions as would apply to a national bank (as under prior law), but also is prohibited from paying dividends at all (regardless of financial condition) unless required to meet the obligations of a company that controls the thrift, permissible for a national bank and specifically approved by the OCC and the Federal Reserve. In addition, violations of the QTL test now are treated as violations of federal banking laws subject to enforcement action. At December 31, 2010, BankAtlantic maintained approximately 73% of its portfolio assets in qualified thrift investments. BankAtlantic had also satisfied the QTL test in each of the nine months prior to December 2010 and, therefore, was a QTL.
          Capital Requirements. OTS regulations generally require savings associations to meet three minimum capital standards:
    a tangible capital requirement for savings associations to have tangible capital in an amount equal to at least 1.5% of adjusted total assets;
 
    a leverage ratio requirement:
    for savings associations assigned the highest composite rating of 1, to have core capital in an amount equal to at least 3% of adjusted total assets; or
 
    for savings associations assigned any other composite rating, to have core capital in an amount equal to at least 4% of adjusted total assets, or a higher percentage if warranted by the particular circumstances or risk profile of the savings association; and
    a risk-based capital requirement for savings associations to have capital in an amount equal to at least 8% of risk-weighted assets.
          In determining the amount of risk-weighted assets for purposes of the risk-based capital requirement, a savings association must compute its risk-based assets by multiplying its assets and certain off-balance sheet items by risk-weights assigned by the OTS capital regulations. The OTS monitors the risk management of individual institutions. The OTS may impose an individual minimum capital requirement on institutions that it believes exhibit a higher degree of risk.
          See Note 27 to the “Notes to the Consolidated Financial Statements” for actual capital amounts and ratios and a discussion of the increased capital ratios required by the Bank Order.
          There currently are no regulatory capital requirements directly applicable to BFC or BankAtlantic Bancorp as unitary savings and loan holding companies apart from the regulatory capital requirements for savings associations that are applicable to BankAtlantic. As a result of the Dodd-Frank Act, the risk-based and leverage capital standards

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currently applicable to U.S. insured depository institutions and U.S. bank holding companies will in the future become applicable to savings and loan holding companies. The Dodd-Frank Act generally authorizes the Federal Reserve to promulgate capital requirements for savings and loan holding companies.
          Limitation on Capital Distributions. The OTS regulations impose limitations upon certain capital distributions by savings associations, such as certain cash dividends, payments to repurchase or otherwise acquire its shares, payments to shareholders of another institution in a cash-out merger and other distributions charged against capital.
          The OTS regulates all capital distributions by BankAtlantic directly or indirectly to BankAtlantic Bancorp, including dividend payments generally. BankAtlantic currently must file an application to receive the approval of the OTS for a proposed capital distribution, as the total amount of all of BankAtlantic’s capital distributions (including any proposed capital distribution) for the applicable calendar year exceeds BankAtlantic’s net income for that year-to-date period plus BankAtlantic’s retained net income for the preceding two years.
          Regulations restrict the payment of dividends by financial institutions if, after paying those dividends, it would fail to meet the required minimum levels under risk-based capital guidelines and the minimum leverage and tangible capital ratio requirements, or in the event the financial institution was notified by regulators that it was in need of more than normal supervision. Under the FDI Act, an insured depository institution, such as BankAtlantic, is prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become “undercapitalized.” Payment of dividends by BankAtlantic also may be restricted at any time at the discretion of the appropriate regulator if it deems the payment to constitute an unsafe and unsound banking practice. Additionally, the Dodd-Frank Act imposes additional restrictions on the ability of any savings association that fails to become or remain a QTL to pay dividends. The Bank Order and the Company Order current prohibit BankAtlantic and BankAtlantic Bancorp from paying dividends or other capital distributions without the prior written non-objection of the Regional Director of the OTS. In addition, BFC has committed that it will not, without the prior written non-objection of the OTS, pay any dividends or make any other capital distributions other than dividends on BFC’s 5% preferred stock consistent with its historical practice.
          Liquidity. BankAtlantic is required to maintain sufficient liquidity to ensure its safe and sound operation, in accordance with OTS regulations.
          Assessments. The OTS charges assessments to recover the costs of examining savings associations and their affiliates, processing applications and other filings, and covering direct and indirect expenses in regulating savings associations and their affiliates. These assessments are based on three components:
    the size of the savings association, on which the basic assessment is based;
 
    the savings association’s supervisory condition, which results in an additional assessment based on a percentage of the basic assessment for any savings association with a composite rating of 3, 4 or 5 in its most recent safety and soundness examination; and
 
    the complexity of the savings association’s operations, which results in an additional assessment based on a percentage of the basic assessment for any savings association that has more than $1 billion in trust assets that it administers, loans that it services for others or assets covered by its recourse obligations or direct credit substitutes.
          These assessments are paid semi-annually. During the year ended December 31, 2010, assessment expense was approximately $1.3 million. The Dodd-Frank Act provides various agencies with the authority to assess additional supervision fees.
          Branching. Subject to certain limitations, HOLA and the OTS regulations permit federally chartered savings associations to establish branches in any state or territory of the United States. Pursuant to the Bank Order, BankAtlantic must limit its asset growth, unless it receives the prior written non-objection of the OTS.
          Community Reinvestment. Under the Community Reinvestment Act, or CRA, a savings institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA requires the OTS to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by the institution. This assessment focuses on three tests:
    a lending test, to evaluate the institution’s record of making loans in its designated assessment areas;
 
    an investment test, to evaluate the institution’s record of investing in community development projects, affordable housing, and programs benefiting low or moderate income individuals and businesses; and
 
    a service test, to evaluate the institution’s delivery of banking services throughout its designated assessment area.

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          The OTS assigns institutions a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” The CRA requires all institutions to disclose their CRA ratings to the public. BankAtlantic received a “satisfactory” rating in its most recent CRA evaluation. Regulations also require all institutions to disclose certain agreements that are in fulfillment of the CRA. BankAtlantic has no such agreements in place at this time.
          Transactions with Related Parties. BankAtlantic’s authority to engage in transactions with its “affiliates” is limited by Sections 23A and 23B of the Federal Reserve Act, or FRA, by Regulation W of the Federal Reserve Board, or FRB, implementing Sections 23A and 23B of the FRA, and by OTS regulations. BankAtlantic’s authority to engage in transactions with affiliates is further limited under the Bank Order. The applicable OTS regulations for savings associations regarding transactions with affiliates generally conform to the requirements of Regulation W, which is applicable to national banks. In general, an affiliate of a savings association is any company that controls, is controlled by, or is under common control with, the savings association, other than the savings association’s subsidiaries. For instance, BFC and BankAtlantic Bancorp are deemed affiliates of BankAtlantic under these regulations.
          Generally, Section 23A limits the extent to which a savings association may engage in “covered transactions” with any one affiliate to an amount equal to 10% of the savings association’s capital stock and surplus, and contains an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of the savings association’s capital stock and surplus. A covered transaction generally includes:
    making or renewing a loan or other extension of credit to an affiliate;
 
    purchasing, or investing in, a security issued by an affiliate;
 
    purchasing an asset from an affiliate;
 
    accepting a security issued by an affiliate as collateral for a loan or other extension of credit to any person or entity; and
 
    issuing a guarantee, acceptance or letter of credit on behalf of an affiliate.
          Section 23A also establishes specific collateral requirements for loans or extensions of credit to, or guarantees, or acceptances of letters of credit issued on behalf of, an affiliate. Section 23B requires covered transactions and certain other transactions to be on terms and under circumstances, including credit standards, that are substantially the same, or at least as favorable to the savings association, as those prevailing at the time for transactions with or involving non-affiliates. Additionally, under the OTS regulations, a savings association is prohibited from:
    making a loan or other extension of credit to an affiliate that is engaged in any non-bank holding company activity; and
 
    purchasing, or investing in, securities issued by an affiliate that is not a subsidiary.
          Sections 22(g) and 22(h) of the FRA, Regulation O of the FRB, Section 402 of the Sarbanes-Oxley Act of 2002, and OTS regulations impose limitations on loans and extensions of credit from BankAtlantic, BankAtlantic Bancorp and BFC to their executive officers, directors, controlling shareholders and their related interests. The applicable OTS regulations for savings associations regarding loans by a savings association to its executive officers, directors and principal shareholders generally conform to the requirements of Regulation O, which is applicable to national banks. The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates under Section 23A and Section 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and an increase the amount of time for which collateral requirements regarding covered transactions must be satisfied. The ability of the Federal Reserve to grant exemptions from these restrictions is also narrowed by the Dodd-Frank Act, including by requiring coordination with other bank regulators.
          Enforcement. Under the FDI Act, the OTS has primary enforcement responsibility over savings associations and has the authority to bring enforcement action against all “institution-affiliated parties,” including any controlling stockholder or any shareholder, attorney, appraiser and accountant who knowingly or recklessly participates in any violation of applicable law or regulation, breach of fiduciary duty, or certain other wrongful actions that have, or are likely to have, a significant adverse effect on an insured savings association or cause it more than minimal loss. In addition, the FDIC has back-up authority to take enforcement action for unsafe and unsound practices. Formal enforcement action can include the issuance of a capital directive, cease and desist order, removal of officers and/or directors, institution of proceedings for receivership or conservatorship and termination of deposit insurance. As

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previously disclosed, BankAtlantic and BankAtlantic Bancorp have entered into the Bank Order and the Company Order, respectively, and BFC may in the future be required to enter into a Cease and Desist Order with the OTS based on the condition of BankAtlantic. BankAtlantic and BankAtlantic Bancorp have agreed pursuant to the Bank Order and the Company Order, and BFC committed to the OTS, that no new arrangements may be entered into with affiliates without required prior regulatory notice.
          Examination. A savings institution must demonstrate to the OTS its ability to manage its compliance responsibilities by establishing an effective and comprehensive oversight and monitoring program. The degree of compliance oversight and monitoring by the institution’s management impacts the scope and intensity of the OTS’ examinations of the institution. Institutions with significant management oversight and monitoring of compliance will generally receive less extensive OTS examinations than institutions with less oversight.
          Standards for Safety and Soundness. Pursuant to the requirements of the FDI Act, the OTS, together with the other federal bank regulatory agencies, has adopted the Interagency Guidelines Establishing Standards for Safety and Soundness, (the “Guidelines”.) The Guidelines establish general safety and soundness standards relating to internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits. In general, the Guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the Guidelines. If the OTS determines that a savings association fails to meet any standard established by the Guidelines, then the OTS may require the savings association to submit to the OTS an acceptable plan to achieve compliance. If a savings association fails to comply, the OTS may seek an enforcement order in judicial proceedings and impose civil monetary penalties.
          Shared National Credit Program. The Shared National Credit Program is an interagency program, established in 1977, to provide a periodic credit risk assessment of the largest and most complex syndicated loans held or agented by financial institutions subject to supervision by a federal bank regulatory agency. The Shared National Credit Program is administered by the FRB, FDIC, OTS and the OCC. The Shared National Credit Program covers any loan or loan commitment of at least $20 million (i) which is shared under a formal lending agreement by three or more unaffiliated financial institutions or (ii) a portion of which is sold to two or more unaffiliated financial institutions with the purchasing financial institutions assuming their pro rata share of the credit risk. The Shared National Credit Program is designed to provide uniformity and efficiency in the federal banking agencies’ analysis and rating of the largest and most complex credit facilities in the country by avoiding duplicate credit reviews and ensuring consistency in rating determinations. The federal banking agencies use a combination of statistical and judgmental sampling techniques to select borrowers for review each year. The selected borrowers are reviewed and the credit quality rating assigned by the applicable federal banking agency’s examination team will be reported to each financial institution that participates in the loan as of the examination date. The assigned ratings are used during examinations of the other financial institutions to avoid duplicate reviews and ensure consistent treatment of these loans. BankAtlantic has entered into participations with respect to certain of its loans and has acquired participations in the loans of other financial institutions which are subject to this program and accordingly these loans may be subject to this additional review.
          Real Estate Lending Standards. The OTS and the other federal banking agencies adopted regulations to prescribe standards for extensions of credit that are secured by liens on or interests in real estate or are made for the purpose of financing the construction of improvements on real estate. The OTS regulations require each savings association to establish and maintain written internal real estate lending standards that are consistent with OTS guidelines and with safe and sound banking practices and which are appropriate to the size of the savings association and the nature and scope of its real estate lending activities.
          Prompt Corrective Regulatory Action. Under the OTS Prompt Corrective Action (“PCA”) Regulations, the OTS is required to take certain, and is authorized to take other, supervisory actions against undercapitalized savings associations, such as requiring compliance with a capital restoration plan, restricting asset growth, acquisitions, branching and new lines of business and, in extreme cases, appointment of a receiver or conservator. The severity of the action required or authorized to be taken increases as a savings association’s capital deteriorates. Under PCA regulations, savings associations are classified into five categories of capitalization as “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” Generally, a savings association is categorized as “well capitalized” if:

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    its total capital is at least 10% of its risk-weighted assets;
 
    its core capital is at least 6% of its risk-weighted assets;
 
    its core capital is at least 5% of its adjusted total assets; and
 
    it is not subject to any written agreement, order, capital directive or prompt corrective action directive issued by the OTS, or certain regulations, to meet or maintain a specific capital level for any capital measure.
          BankAtlantic’s regulatory capital amounts and ratios met the OTS “well capitalized” category during the year ended December 31, 2010. However, the Bank Order requires that BankAtlantic maintain capital ratios that exceed the PCA “well capitalized” amounts and ratios. For a discussion on required capital ratios and amounts pursuant to the Bank Order, see Note 2 to the “Notes to Consolidated Financial Statements.”
          By January 2012, the OCC will assume the OTS’ powers with respect to federal savings associations (like BankAtlantic), as well as rule making authority over all savings associations (except for the limited rulemaking authority transferred to the Federal Reserve). Although the federal banking agencies have substantially similar capital adequacy standards and utilize the same accounting standards, some differences in capital standards exist, such as the regulatory treatment of noncumulative perpetual preferred stock and the risk-weightings assigned to certain assets.
          OTS regulations do not require savings and loan holding companies, such as BankAtlantic Bancorp, to maintain specific minimum capital ratios. As a result of the Dodd-Frank Act, risk-based and leverage capital standards currently applicable to U.S. insured depository institutions and U.S. bank holding companies will in the future become applicable to savings and loan holding companies such as BankAtlantic Bancorp. The Dodd-Frank Act generally authorizes the Federal Reserve to promulgate capital requirements for savings and loan holding companies.
          In addition, the Dodd-Frank Act requires the federal banking agencies to adopt capital requirements which address the risks that the activities of an institution poses to the institution and public and private stakeholders. The federal banking agencies may change existing capital guidelines or adopt new capital guidelines in the future pursuant to the Dodd-Frank Act or other regulatory or supervisory changes.
          Insurance of Deposit Accounts. Savings associations are subject to a risk-based assessment system for determining the deposit insurance assessments to be paid by them.
          Until December 31, 2006, the FDIC had assigned each savings institution to one of three capital categories based on the savings institution’s financial information as of its most recent quarterly financial report filed with the applicable bank regulatory agency prior to the assessment period. The FDIC had also assigned each savings institution to one of three supervisory subcategories within each capital category based upon a supervisory evaluation provided to the FDIC by the savings institution’s primary federal regulator and information that the FDIC determined to be relevant to the savings institution’s financial condition and the risk posed to the previously existing deposit insurance funds. A savings institution’s deposit insurance assessment rate depended on the capital category and supervisory subcategory to which it was assigned. Insurance assessment rates ranged from 0.00% of deposits for a savings institution in the highest category (i.e., well capitalized and financially sound, with no more than a few minor weaknesses) to 0.27% of deposits for a savings institution in the lowest category (i.e., undercapitalized and substantial supervisory concern).
          On January 1, 2007, the Federal Deposit Insurance Reform Act of 2005, or the Reform Act, became effective. The Reform Act, among other things, merged the Bank Insurance Fund and the Savings Association Insurance Fund, both of which were administered by the FDIC, into a new fund administered by the FDIC, the DIF, and increased the coverage limit for certain retirement plan deposits to $250,000, but maintained the basic insurance coverage limit of $100,000 for other depositors. On October 3, 2008, the Emergency Economic Stabilization Act of 2008, or the Stabilization Act, temporarily raised the basic insurance coverage limit to $250,000. The Dodd-Frank Act makes permanent the $250,000 insurance limit for insured deposits. Also as a result of the Dodd-Frank Act, unlimited coverage for non-interest bearing demand transaction accounts will be provided until January 1, 2013.
          As a result of the Reform Act, the FDIC now assigns each savings institution to one of four risk categories based upon the savings institution’s capital evaluation and supervisory evaluation. The capital evaluation is based upon financial information as of the savings institution’s most recent quarterly financial report filed with the applicable bank regulatory agency at the end of each quarterly assessment period. The supervisory evaluation is based upon the results of examination findings by the savings institution’s primary federal regulator and information that the FDIC has determined to be relevant to the savings institution’s financial condition and the risk posed to the DIF. A savings institution’s deposit insurance base assessment rate depends on the risk category to which it is assigned. In April 2009, the FDIC implemented regulations to improve the way its insurance base assessment rates differentiate risk among

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insured institutions and make the risk-based system fairer by limiting the subsidization of riskier institutions by safer institutions. The Dodd-Frank Act changes the way an insured depository institution’s deposit insurance premiums are calculated. Because the new base assessment under the Dodd-Frank Act is larger than the current insurance base assessment, the proposed assessment rates are lower than the current rates. The insurance base assessment will no longer be the way an insured depository institution’s deposit premiums are calculated. For the quarter which began January 1, 2011, insurance base assessment rates range from 12 cents per $100 (but could be as low as 7 cents per $100, after computing applicable adjustments) in assessable deposits for a savings institution in the least risk category to 45 cents per $100 (but could be as high as 77.5 cents per $100, after computing applicable adjustments) in assessable deposits for a savings institution in the most risk category. BankAtlantic’s FDIC deposit insurance premium increased from $2.8 million for the year ended December 31, 2008 to $10.1 million for the same 2010 period. BankAtlantic expects its FDIC insurance premium to further increase during 2011 from the amounts assessed during 2010 based on its last OTS examination report.
          The FDIC is authorized to raise the assessment rates in certain circumstances, which would affect savings institutions in all risk categories. The FDIC is also authorized to impose special assessments. The FDIC has exercised its authority to raise assessment rates and impose special assessments several times in the past, including a $2.4 million assessment during 2009. There was no corresponding assessment during 2010. The FDIC could raise rates and impose special assessments in the future. Increases in deposit insurance premiums and the imposition of special assessments would have an adverse effect on our earnings. Amendments to the FDI Act also revise the assessment base against which an insured depository institution’s deposit insurance premiums paid to DIF will be calculated. Under the amendments, the assessment base will no longer be the institution’s deposit base, but rather its average consolidated total assets less its average tangible equity. Additionally, the Dodd-Frank Act makes changes to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds.
          Continued action by the FDIC to replenish the DIF as well as the changes contained in the Dodd-Frank Act may result in higher assessment rates, which could reduce our profitability or otherwise negatively impact our operations.
          Privacy and Security Protection. BankAtlantic is subject to regulations implementing the privacy and security protection provisions of the Gramm-Leach-Bliley Act, or GLBA. These regulations require a savings association to disclose to its customers and consumers its policy and practices with respect to the privacy, and sharing with nonaffiliated third parties, of its customers and consumers’ “nonpublic personal information.” Additionally, in certain instances, BankAtlantic is required to provide its customers and consumers’ with the ability to “opt-out” of having BankAtlantic share their nonpublic personal information with nonaffiliated third parties. These regulations also require savings associations to maintain policies and procedures to safeguard their customers and consumers’ nonpublic personal information. BankAtlantic has policies and procedures designed to comply with GLBA and applicable privacy and security regulations.
          Insurance Activities. BankAtlantic is generally permitted to engage in certain insurance activities through its subsidiaries. OTS regulations implemented pursuant to GLBA prohibit, among other things, depository institutions from conditioning the extension of credit to individuals upon either the purchase of an insurance product or annuity or an agreement by the consumer not to purchase an insurance product or annuity from an entity that is not affiliated with the depository institution. The regulations also require prior disclosure of this prohibition to potential insurance product or annuity customers.
          Federal Home Loan Bank System. BankAtlantic is a member of the Federal Home Loan Bank, or FHLB, of Atlanta, which is one of the twelve regional FHLB’s composing the FHLB system. Each FHLB provides a central credit facility primarily for its member institutions as well as other entities involved in home mortgage lending. Any advances from a FHLB must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for residential housing finance. As a member of the FHLB of Atlanta, BankAtlantic is required to acquire and hold shares of capital stock in the FHLB of Atlanta. BankAtlantic was in compliance with this requirement with an investment in FHLB of Atlanta stock at December 31, 2010 of approximately $43.6 million. During the year ended December 31, 2010, the FHLB of Atlanta paid dividends of approximately $0.1 million on the capital stock held by BankAtlantic.

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          Federal Reserve System. BankAtlantic is subject to provisions of the FRA and the FRB’s regulations, pursuant to which depository institutions may be required to maintain non-interest-earning reserves against their deposit accounts and certain other liabilities. Currently, federal savings associations must maintain reserves against transaction accounts (primarily NOW and regular interest and non-interest bearing checking accounts). The FRB regulations establish the specific rates of reserves that must be maintained, which are subject to adjustment by the FRB. BankAtlantic is currently in compliance with those reserve requirements. The required reserves must be maintained in the form of vault cash, a non-interest-bearing account at a Federal Reserve Bank, or a pass-through account as defined by the FRB. The FRB pays targeted federal funds rates on the required reserves which are lower than the yield on our traditional investments.
          Anti-Terrorism and Anti-Money Laundering Regulations. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, provides the federal government with additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. By way of amendments to the Bank Secrecy Act, or BSA, the USA PATRIOT Act puts in place measures intended to encourage information sharing among bank regulatory and law enforcement agencies. In addition, certain provisions of the USA PATRIOT Act impose affirmative obligations on a broad range of financial institutions, including savings associations.
          Among other requirements, the USA PATRIOT Act and the related OTS regulations require savings associations to establish anti-money laundering programs that include, at a minimum:
    internal policies, procedures and controls designed to implement and maintain the savings association’s compliance with all of the requirements of the USA PATRIOT Act, the BSA and related laws and regulations;
 
    systems and procedures for monitoring and reporting of suspicious transactions and activities;
 
    a designated compliance officer;
 
    employee training;
 
    an independent audit function to test the anti-money laundering program;
 
    procedures to verify the identity of each customer upon the opening of accounts; and
 
    heightened due diligence policies, procedures and controls applicable to certain foreign accounts and relationships.
          Additionally, the USA PATRIOT Act requires each financial institution to develop a customer identification program, or CIP, as part of its anti-money laundering program. The key components of the CIP are identification, verification, government list comparison, notice and record retention. The purpose of the CIP is to enable the financial institution to determine the true identity and anticipated account activity of each customer. To make this determination, among other things, the financial institution must collect certain information from customers at the time they enter into the customer relationship with the financial institution. This information must be verified within a reasonable time through documentary and non-documentary methods. Furthermore, all customers must be screened against any CIP-related government lists of known or suspected terrorists.
          The USA Patriot Act established the Office of Foreign Assets Control (“OFAC”), which is a division of the Treasury Department, and is responsible for helping to ensure that United States entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress. OFAC has sent banking regulatory agencies lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts. If BankAtlantic identifies a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze or reject such account or transaction, evaluate the need to file a suspicious activity report and notify the Financial Crimes Enforcement Network (“FinCEN”).
          Consumer Protection. BankAtlantic is subject to federal and state consumer protection statutes and regulations, including the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act, the Fair Debt Collection Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Gramm-Leach-Biley Act, the Real Estate Settlement Procedures Act, the Right to Financial Privacy Act, the Home Mortgage Disclosure Act, laws regarding unfair and deceptive trade practices; and usury laws. Among other things, these acts:

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  require lenders to disclose credit terms in meaningful and consistent ways;
 
  require financial institutions to establish policies and procedures regarding identity theft and notify customers of certain information concerning their credit reporting;
 
  prohibit discrimination against an applicant in any consumer or business credit transaction;
 
  prohibit discrimination in housing-related lending activities;
 
  require certain lender banks to collect and report applicant and borrower data regarding loans for home purchase or improvement projects;
 
  require lenders to provide borrowers with information regarding the nature and cost of real estate settlements;
 
  prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; and
 
  prescribe penalties for violations of the requirements of consumer protection statutes and regulations.
          Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those listed above. These federal, state and local laws regulate the manner in which financial institutions deal with customers when taking deposits, making loans, or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability. The creation of the CFPB by the Dodd-Frank Act is likely to lead to enhanced and strengthened enforcement of consumer financial protection laws.
Bluegreen
          The vacation ownership and real estate industries are subject to extensive and complex federal, state, and local governmental regulation. Bluegreen is subject to various federal, state, local and foreign environmental, zoning, consumer protection and other statutes and regulations regarding the acquisition, subdivision, marketing and sale of real estate and VOIs and various aspects of its financing operations. On a federal level, the Federal Trade Commission has taken an active regulatory role through the Federal Trade Commission Act, which prohibits unfair or deceptive acts or unfair competition in interstate commerce. In addition, many states have what are known as “Little FTC Acts” that apply to intrastate activity. In addition to the laws applicable to its customer financing and other operations discussed below, Bluegreen is or may be subject to the Fair Housing Act and various other federal statutes and regulations. Bluegreen is also subject to various foreign laws with respect to La Cabana Beach and Racquet Club in Oranjestad, Aruba and Blue Water Resort in Nassau, Bahamas. In addition, there can be no assurance that in the future, VOIs will not be deemed to be securities subject to regulation as such, which could have a material adverse effect on Bluegreen. There is no assurance that the cost of complying with applicable laws and regulations will not be significant or that we will maintain compliance at all times with all applicable laws, including those discussed below. Any failure to comply with current or future applicable laws or regulations could have a material adverse effect on Bluegreen.
          Bluegreen’s customer financing activities are also subject to extensive regulation, which can include, but are not limited to: the Truth-in-Lending Act and Regulation Z; the Fair Housing Act; the Fair Debt Collection Practices Act; the Equal Credit Opportunity Act and Regulation B; the Electronic Funds Transfer Act and Regulation E; the Home Mortgage Disclosure Act and Regulation C; Unfair or Deceptive Acts or Practices and Regulation AA; the Patriot Act; the Right to Financial Privacy Act; the Gramm-Leach-Bliley Act; the Fair and Accurate Credit Transactions Act; and anti-money laundering laws, among others.

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ITEM 1A. RISK FACTORS
We have in the past incurred cash flow deficits at the BFC parent company (“BFC Parent”) level which we expect will continue in the future.
          BFC is engaged in making investments in operating businesses. In the past, BFC Parent has not had revenue generating operating activities and has incurred cash flow deficits. We expect to continue to incur cash flow deficits in the foreseeable future. We have financed operating cash flow deficits with available working capital, issuances of equity or debt securities, and with dividends from our subsidiaries, which we have been dependent upon to fund our operations. Currently, BankAtlantic Bancorp is restricted from paying dividends and these restrictions will continue for the foreseeable future. In addition, Bluegreen has historically not paid dividends on its common stock. As a result, if cash flow is not sufficient to fund our operating expenses in the future, we may be forced to continue to reduce operating expenses, to liquidate some of our investments or to seek to fund our operations from the proceeds of additional equity or debt financing. There is no assurance that any such financing would be available on commercially reasonable terms, if at all, or that we would not be forced to liquidate our investments at depressed prices.
Adverse conditions and events where our investments are currently concentrated or in the industries in which our subsidiaries operate could continue to adversely impact our results and future growth.
          BankAtlantic Bancorp’s business, the location of BankAtlantic’s branches and the real estate collateralizing its commercial real estate loans and home equity loans, as well as our operations, are concentrated in Florida. The downturn in economic conditions generally and the economy of Florida in particular has adversely impacted our results and operations. Further, Florida is subject to the risks of natural disasters, such as tropical storms and hurricanes. The continued impact of the economic downturn, natural disasters or adverse changes in laws or regulations applicable to us or the companies in which we hold investments could impact our operating results and financial condition. These factors may particularly affect the credit quality of BankAtlantic’s assets, the desirability of our properties and the financial condition and performance of our customers. In addition, Bluegreen’s operations, which are primarily conducted within the vacation ownership and real estate industry, have also been adversely impacted by the current economic downturn. The persistence or further deterioration of the current adverse economic conditions could have a material adverse effect on our business and results of operations.
Our activities and our subsidiaries’ activities are subject to a wide range of regulatory requirements applicable to financial institutions and holding companies, and noncompliance with such regulations could have a material adverse effect on our business.
          The Company and BankAtlantic Bancorp are each grandfathered unitary savings and loan holding companies and have broad authority to engage in various types of business activities. However, the OTS, our primary regulator, can stop either of us from engaging in activities or limit those activities if it determines that there is reasonable cause to believe that the continuation of any particular activity constitutes a serious risk to the financial safety, soundness or stability of BankAtlantic. Unlike bank holding companies, as unitary savings and loan holding companies, BFC and BankAtlantic Bancorp are not currently subject to capital requirements. However, it is anticipated that capital requirements will in the future be imposed on savings and loan holding companies. In addition, future regulations may be adopted which may affect BFC’s operations or ability to continue to engage in certain of its current activities.
Regulatory restrictions, BankAtlantic’s performance or the terms of indebtedness limit or restrict BankAtlantic Bancorp’s and Bluegreen’s ability to pay dividends which may impact our cash flow.
          At December 31, 2010, we held approximately 52% and 45% of the outstanding common stock of Bluegreen and BankAtlantic Bancorp, respectively.
          BankAtlantic Bancorp is a separate publicly traded company whose Board of Directors includes a majority of independent directors as required by the listing standards of the New York Stock Exchange. Dividends by BankAtlantic Bancorp are subject to a number of conditions, including the cash flow and profitability of BankAtlantic Bancorp, declaration of dividends by BankAtlantic Bancorp’s Board of Directors, compliance with the terms of outstanding indebtedness, and regulatory restrictions applicable to BankAtlantic Bancorp and BankAtlantic. Decisions made by BankAtlantic Bancorp’s Board are not within our control and may not be made in our best interests. On February 23,

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2011, BankAtlantic Bancorp entered into the Company Order which, among other things, restricts BankAtlantic Bancorp’s ability to pay dividends or make any other capital distributions without receiving the prior written non-objection of the OTS. In addition, during February 2009, BankAtlantic Bancorp elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt. BankAtlantic Bancorp is permitted to defer quarterly interest payments for up to 20 consecutive quarters. During the deferral period, BankAtlantic Bancorp is prohibited from paying dividends to its shareholders, including BFC. While BankAtlantic Bancorp can end the deferral period at any time, BankAtlantic Bancorp has indicated that it anticipates that it may continue to defer such interest payments for the foreseeable future. Accordingly, BFC does not expect to receive dividends from BankAtlantic Bancorp for the foreseeable future.
          Bluegreen is a separate publicly traded company whose Board of Directors includes a majority of independent directors as required by the listing standards of the New York Stock Exchange. Decisions made by Bluegreen’s Board are not within our control and may not be made in our best interests. Bluegreen has not paid cash dividends during the three years ending December 31, 2010. Future dividends from Bluegreen are subject to approval by Bluegreen’s Board and will depend upon, among other factors, Bluegreen’s results of operations, financial condition and operating and capital needs. Bluegreen may also be limited contractually from paying dividends by the terms of its credit facilities. Accordingly, it is unlikely that BFC will receive dividends from Bluegreen for the foreseeable future.
We are subject to the risks faced by the companies in which we currently hold investments.
          Our primary holdings consist of our direct and indirect investments in BankAtlantic Bancorp, Bluegreen, and Benihana. As a result, we are subject to the risks faced by these companies in their respective industries. Each has been adversely affected by a downturn in the economy, loss of consumer confidence and disruptions in the credit markets. Our current business plan includes a focus on providing strategic support to the companies within our consolidated group, and in which we hold investments. Such support may include further investments in one or more of those companies. Any such additional investments will further expose us to the risks faced by those companies.
We will be required to make a cash payment to shareholders of Woodbridge who exercised appraisal rights in connection with our merger.
          Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share in cash, or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. As of the date of this filing, one Dissenting Holder which held approximately 400,000 shares of Woodbridge’s Class A Common Stock had withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective views of the fair value of Woodbridge’s Class A Common Stock prior to the merger. 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. As a result, there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders and such amount may be greater than the $4.6 million that is currently accrued. Any significant increase in the obligation to Dissenting Holders who exercised their appraisal rights could have a material adverse effect on our financial condition.
Dividends and distributions from our subsidiaries to their respective parent companies may be subject to claims in the future from creditors of the subsidiary.
          Subsidiaries have in the past and may in the future make dividends or distributions to their parent companies. Dividend payments and other distributions by a subsidiary to its parent company may, in certain circumstances, be

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subject to claims made by creditors of the subsidiary which made the payment or distribution. Any such claim, if successful, may have a material and adverse impact on the financial condition of the parent company against which the claim was brought.
There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP. Any changes in estimates, judgments and assumptions used could have a material adverse effect on our financial position and operating results.
          The consolidated financial statements included in the periodic reports we file with the SEC, including those included as part of this Annual Report on Form 10-K, are prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions that affect reported amounts of assets (including goodwill and other intangible assets), liabilities and related reserves, revenues, expenses and income. This includes estimates, judgments and assumptions for assessing the amortization /accretion of purchase accounting fair value differences and the future value of goodwill and other intangible assets pursuant to applicable accounting guidance. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. However, estimates, judgments and assumptions are inherently subject to change in the future. As a result, our estimates, judgments and assumptions may prove to be incorrect and our actual results may differ from these estimates under different assumptions or conditions. If any estimates, judgments or assumptions change in the future, or our actual results differ from our estimates or assumptions, we may be required to record additional expenses or impairment charges, which would be recorded as a charge against our earnings and could have a material adverse impact on our financial condition and operating results.
Certain members of our Board of Directors and certain of our executive officers are also directors and executive officers of our affiliates.
          Alan B. Levan, our Chairman and Chief Executive Officer, and John E. Abdo, our Vice Chairman, are also members of the Boards of Directors and/or executive officers of BankAtlantic Bancorp, BankAtlantic, Bluegreen and Benihana. Neither Mr. Levan nor Mr. Abdo is obligated to allocate a specific amount of time to the management of the Company, and they may devote more time and attention to the operations of our affiliates than they devote directly to our operations. Jarett S. Levan, a member of our Board of Directors, is the President of BankAtlantic Bancorp and the Chief Executive Officer of BankAtlantic and a member of the Board of each of them, and D. Keith Cobb, a member of our Board of Directors, is a member of the Boards of Directors of BankAtlantic Bancorp and BankAtlantic.
Risks Associated with Our Investments in the Restaurant Industry
We have an investment in preferred shares of Benihana which are convertible to shares of Benihana’s Common Stock. Benihana operates 97 restaurants in the United States, including 63 Benihana Teppanyaki restaurants, nine Haru sushi restaurants and 25 RA Sushi Bar restaurants. In addition, 23 franchised Benihana teppanyaki restaurants operate in the United States, Latin America and the Caribbean. We also have an investment in Pizza Fusion, a restaurant operator and franchisor engaged in the organic and quick service food industries. As such, we are subject to the risks faced by these companies and the value of our investments will be influenced by the financial performance of these companies. Some of the risk factors common to the restaurant industry which might affect the performance of these companies include:
    the current economic downturn has adversely impacted consumer spending patterns and has had negative effects on consumer discretionary spending;
 
    the limited availability and high cost of credit may continue or deteriorate further;
 
    higher than normal food costs may adversely impact our results of operations;
 
    existing or new restaurants may not perform as expected;
 
    the inability to construct new restaurants and remodel existing restaurants within projected budgets and time periods;
 
    increases in the minimum wage;
 
    increases in unemployment;
 
    intense competition in the restaurant industry;
 
    the food service industry is affected by litigation and publicity concerning food quality, health and other issues, which could cause customers to avoid a particular restaurant, result in significant liabilities or litigation costs or damage reputation or brand recognition; and
 
    implementing growth and renovation strategies may strain available resources.

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          In addition, Pizza Fusion is a relatively new company and requires additional financial support in order to continue its operations under its current business plan. Pizza Fusion’s audited financial statements for its fiscal year ended September 30, 2010 included a going concern opinion. We currently have no plans to make a further investment in Pizza Fusion and Pizza Fusion has not recently been successful in raising additional capital. If Pizza Fusion’s business or prospects do not improve, if it is unable to raise required capital to fund its operations or if it otherwise is required to curtail or cease its operations, we may suffer a total loss of our investment in Pizza Fusion.
Our portfolio of equity securities and our investments in BankAtlantic Bancorp, Benihana and Bluegreen subjects us to equity pricing risks.
          Because BankAtlantic Bancorp and Bluegreen are consolidated in the Company’s financial statements, the decline in the market price of their stock would not impact the Company’s consolidated financial statements. However, a decline in the market price of the securities of either of these companies would likely have an adverse effect on the market price of our common stock. The market price of our common stock and our equity securities are important to our valuation and ability to obtain equity or debt financing.
          We also have an investment in Benihana Series B Convertible Preferred Stock (“Benihana Preferred Stock”) for which no current market exists (unless converted into Common Stock). The 800,000 shares of Benihana Preferred Stock owned by the Company are convertible into 1,578,943 shares of Benihana Common Stock. At December 31, 2010, if converted, the aggregate market value of such shares would have been $12.6 million. The ability to realize or liquidate this investment will depend on future market and economic conditions, the ability to register our sale of shares of Benihana’s Common Stock in the event of the conversion of our shares of Benihana Convertible Preferred stock and the possible sale of Benihana, all of which are subject to significant risk.
Our net operating loss carryforwards that existed at the time of our merger with Woodbridge will be substantially limited.
          We have experienced and continue to experience net operating losses. Under the Internal Revenue Code, we may utilize our net operating loss carryforwards in certain circumstances to offset future taxable income and to reduce federal income tax liability, subject to certain requirements and restrictions. Our merger with Woodbridge, which was consummated on September 21, 2009, resulted in an “ownership change”, as defined in Section 382 of the Internal Revenue Code. As a result, our ability in the future to use our historic net operating loss carryforwards will be substantially limited, which could have a negative impact on our financial position and results of operations. We believe that BFC may utilize Woodbridge’s net operating loss carryforwards following the merger of the companies on September 21, 2009. Accordingly, in September 2009, our Board of Directors adopted a shareholder rights plan designed to preserve shareholder value and protect our ability to use Woodbridge’s net operating loss carryforwards by providing a deterrent to holders of less than 5% of our common stock from acquiring a 5% or greater ownership interest in our common stock. However, there is no assurance that the shareholder rights plan will successfully prevent against an “ownership change” or otherwise preserve our ability to utilize our net operating loss carryforwards to offset any future taxable income, nor is there any assurance that we will be in a position to utilize our net operating loss carryforwards in the future even if we do not experience an “ownership change.”
We may issue additional securities in the future.
          Other than our commitment to the OTS, there is generally no restriction on our ability to issue debt or equity securities which are pari passu or have a preference over our common stock. Authorized but unissued shares of our capital stock are available for issuance from time to time at the discretion of our Board of Directors, including issuances in connection with acquisitions, and any such issuance may be dilutive to our shareholders. There is also no restriction on the ability of BankAtlantic Bancorp or Bluegreen to issue additional capital stock or on Bluegreen’s ability to incur additional indebtedness. Any future securities issuances by BankAtlantic Bancorp or Bluegreen may dilute our economic investment or voting interest in those companies.

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Our control position may adversely affect the market price of BankAtlantic Bancorp’s Class A Common Stock and Bluegreen’s common stock.
          As of December 31, 2010, we owned all of BankAtlantic Bancorp’s issued and outstanding Class B Common Stock and approximately 27.3 million shares, or approximately 44%, of BankAtlantic Bancorp’s issued and outstanding Class A Common Stock, representing approximately 71% of BankAtlantic Bancorp’s total voting power. Additionally, we own approximately 16.9 million shares, or approximately 52%, of Bluegreen’s issued and outstanding common stock. Accordingly, we hold a controlling position with respect to BankAtlantic Bancorp and Bluegreen and have the voting power to significantly influence the outcome of any shareholder vote of the companies, except with respect to BankAtlantic Bancorp in those limited circumstances where Florida law mandates separate class votes. Our control position may have an adverse effect on the market prices of BankAtlantic Bancorp’s Class A Common Stock and Bluegreen’s common stock.
Alan B. Levan And John E. Abdo’s control position may adversely affect the market price of our common stock.
          Alan B. Levan, our Chairman of the Board of Directors and Chief Executive Officer, and John E. Abdo, our Vice Chairman of the Board of Directors, may be deemed to beneficially own shares of our common stock, including shares that may be acquired pursuant to the exercise of stock options, representing approximately 71.6% of our total voting power. These shares consist of 10,931,215 shares, or 15.9%, of our Class A Common Stock and 6,521,228 shares, or 87.3%, of our Class B Common Stock. Additionally, Alan B. Levan and John E. Abdo have agreed to vote their shares of our Class B Common Stock in favor of the election of the other to our Board of Directors for so long as they are willing and able to serve as directors of the Company. Further, John E. Abdo has agreed, subject to certain exceptions, not to transfer certain of his shares of our Class B Common Stock and to obtain the consent of Alan B. Levan prior to the conversion of certain of his shares of our Class B Common Stock into shares of our Class A Common Stock. Since our Class A Common Stock and Class B Common Stock vote as a single class on most matters, Alan B. Levan and John E. Abdo effectively have the voting power to control the outcome of any shareholder vote (except in those limited circumstances where Florida law mandates that the holders of our Class A Common Stock vote as a separate class) and to elect the members of our Board of Directors. Alan B. Levan and John E. Abdo’s control position may have an adverse effect on the market price of our common stock. Alan B. Levan’s and John E. Abdo’s interests may conflict with the interests of our other shareholders.
The terms of our Articles of Incorporation, which establish fixed relative voting percentages between our Class A Common Stock and Class B Common Stock, may not be well accepted by the market.
          Our Class A Common Stock and Class B Common Stock generally vote together as a single class. The Class A Common Stock possesses in the aggregate 22% of the total voting power of all our common stock and the Class B Common Stock possesses in the aggregate the remaining 78% of the total voting power. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, at which time the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53% and the Class B Common Stock will have the remaining 47%. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 500,000 shares, at which time the fixed voting percentages will be eliminated. These changes in the relative voting power represented by each class of our common stock are based only on the number of shares of Class B Common Stock outstanding. Thus issuances of Class A Common Stock will have no effect on these provisions. If additional shares of Class A Common Stock are issued, the disparity between the equity interest represented by the Class B Common Stock and its voting power will widen. While the amendment creating this capital structure was approved by our shareholders, the fixed voting percentage provisions are somewhat unique. If the market does not view this structure favorably, the trading price and market for our Class A Common Stock would be adversely affected.
The loss of the services of our key management and personnel could adversely affect our business.
          Our ability to successfully implement our business strategy will depend on our ability to attract and retain experienced and knowledgeable management and other professional staff. There is no assurance that we will be successful in attracting and retaining key management personnel.

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We are subject to litigation against BFC and its subsidiaries, and the impact of any finding of liability or damages could adversely impact our financial condition and operating results.
          We and our subsidiaries are subject to legal proceedings as described in Item 3, “Legal Proceedings” in this report. While we believe, we have meritorious defenses in the pending legal actions, the ultimate outcomes of these matters are uncertain. Judgments against, or damages, fines or penalties imposed on, us or our subsidiaries in these actions may have a material adverse impact on our operating results and financial condition.
The default by Woodbridge under the terms of its outstanding indebtedness has resulted in acceleration of the debt and may result in a judgment against Woodbridge.
          A lender with respect to approximately $37.2 million of debt that is collateralized by property owned by Carolina Oak and with respect to which Woodbridge is the obligor previously declared the debt to be in default. Woodbridge disputed the fact that an event of default occurred under the terms of its indebtedness. Through a series of events, the loan was eventually sold to an investor group. The parties have since participated in a court-ordered mediation, agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.
We are subject to environmental laws related to our real estate activities and the cost of compliance could adversely affect our business.
          As a current or previous owner or operator of real property, we may be liable under federal, state, and local environmental laws, ordinances and regulations for the costs of removal or remediation of hazardous or toxic substances on, under or in the property. These laws often impose liability whether or not we knew of, or were responsible for, the presence of such hazardous or toxic substances. The cost of investigating, remediation or removing such hazardous or toxic substances may be substantial.
Levitt and Sons had surety bonds on most of their projects, some of which were subject to indemnity by Woodbridge.
          Levitt and Sons had $33.3 million in surety bonds relating 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 it executed. At December 31, 2010, we had a $0.5 million in surety bonds accrual related to certain Levitt and Sons bonds where management believes it to be probable that Woodbridge will be required to reimburse the surety under applicable indemnity agreements. 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 the previous accrued amount. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay.

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RISKS RELATED TO BLUEGREEN
          Bluegreen presents its results in two reportable segments. Bluegreen’s results of operations for the Bluegreen Interim Period are consolidated in BFC Financial Corporation’s financial statements. Bluegreen is a separate public company and its management prepared the following discussion regarding Bluegreen which was included in Bluegreen’s Annual Report on Form 10-K for the year ended December 31, 2010 which was filed with the Securities and Exchange Commission on March 31, 2011. Accordingly, references to “we”, “us” or “our” in this section are references to Bluegreen and its subsidiaries, and are not references to BFC, Woodbridge, or BankAtlantic Bancorp.
The overall state of the economy, interest rates and the availability of financing affect our ability to market VOIs and residential homesites.
Our business has been adversely affected by unfavorable general economic and industry conditions, including high unemployment rates and job insecurity, declines in discretionary spending, housing values and availability of financing, and geopolitical conflicts. If recent recovery trends do not continue or, economic conditions deteriorate, our business and results may be adversely impacted, particularly if financing for us or for our customers is unavailable or if changes in general economic conditions adversely affect our customers’ ability to pay amounts owed under our notes receivable. Further, because our operations are conducted mainly within the vacation ownership industry, any adverse changes affecting the industry, such as an oversupply of vacation ownership units, a reduction in demand for such units, changes in travel and vacation patterns, changes in governmental regulation of the industry, continued disruptions in the credit markets and unavailability of financing, imposition of increased taxes by governmental authorities, the declaration of bankruptcy and/or credit defaults by other vacation ownership companies and negative publicity for the industry, could also have a material adverse effect on our business.
We would incur substantial losses and our liquidity position could be adversely impacted if the customers we finance default on their obligations.
Prior to December 15, 2008, we did not perform credit checks on the purchasers of our VOIs in connection with our financing of their purchases. Effective December 15, 2008, we implemented a FICO® score-based credit underwriting program, and we enhanced this credit underwriting program during January 2010. While our loan portfolio originated after December 15, 2008 has experienced defaults at a lower rate than loans originated prior to that date, there is no assurance that our FICO® score-based underwriting standards will result in decreased default rates or otherwise result in the improved performance of our receivables. The conditions in the mortgage industry, including both credit sources as well as borrowers’ financial profiles, have deteriorated in recent years. As of December 31, 2010, approximately 4.8% of our vacation ownership receivables and approximately 11.5% of residential land receivables were more than 30 days past due. Although in many cases we may have recourse against a buyer for the unpaid purchase price, certain states have laws that limit our ability to recover personal judgments against customers who have defaulted on their loans or the cost of doing so may not be justified. Historically, we have generally not pursued such recourse against our customers. In the case of our VOI receivables, if we are unable to collect the defaulted amount due, we traditionally have terminated the customer’s interest in the Bluegreen Vacation Club and then remarketed the recovered VOI. Irrespective of our remedy in the event of a default, we cannot recover the marketing, selling and administrative costs associated with the original sale. In addition, we will need to incur such costs again in order to resell the VOI or homesite. In 2010, we recorded charges of approximately $69.7 million to increase our provision for loan losses. If default rates for our borrowers remain at current levels or increase, it may require an increase in the provision for loan losses. In addition, it may cause buyers of, or lenders whose loans are secured by, our VOI notes receivable to reduce the amount of availability under receivables purchase and credit facilities, or to increase the interest costs associated with such facilities. In such an event, the cost of financing may increase and we may not be able to secure financing on terms acceptable to us, if at all, which would adversely affect our earnings, financial position and liquidity.
Under the terms of our pledged and receivable sale facilities, we may be required, under certain circumstances, to replace receivables or to pay down the loan to within permitted loan-to-value ratios. Additionally, the terms of our securitization-type transactions i.) require us to repurchase or replace loans if we breach any of the representations and warranties we made at the time we sold the receivables and ii.) include provisions that in the event of defaults by customers in excess of stated thresholds would require substantially all of our cash flow from our retained interest in the receivable portfolios sold to be paid to the parties who purchased the receivables from us. In addition, we guaranteed certain payments under the Legacy Securitization (described in further detail in Note 23 to the Consolidated Financial Statements). Substantially all of the timeshare receivables backing the notes subject to the

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Legacy Securitization were generated prior to December 15, 2008, when we implemented our FICO score-based credit underwriting program, and relate to loans to borrowers with FICO® scores below 600.
While we have attempted to restructure our business to reduce our need for and reliance on financing for liquidity in the short term, there is no assurance that such restructuring will be successful or that our business and profitability will not otherwise continue to depend on our ability to obtain financing, which may not be available on favorable terms, or at all.
We offer financing of up to 90% of the purchase price to purchasers of our VOIs and homesites. However, we incur selling, marketing and administrative cash expenditures prior to and concurrent with the sale. These costs generally exceed the down payment we receive at the time of the sale. Accordingly, our ability to borrow against or sell the notes receivable we receive from our customers has been a critical factor in our continued liquidity, and we therefore have historically depended on funds from our credit facilities and securitization transactions to finance our operations. The disruption in the credit markets since 2007 has made obtaining additional and replacement external sources of liquidity more difficult and more costly. The number of banks and other finance companies willing to provide “warehouse” lines of credit for timeshare receivables has decreased in recent years. In addition, the term securitization market has become unavailable for extended periods of time in the past. If our pledged receivables facilities terminate or expire and we are unable to extend them or replace them with comparable facilities, or if we are unable to continue to participate in securitization-type transactions and “warehouse” facilities on acceptable terms, our liquidity, cash flow, and profitability would be materially and adversely affected.
In addition, financing for real estate acquisition and development and the capital markets for corporate debt have been limited. In response to these conditions, during 2008, we adopted initiatives which included limiting sales and encouraging higher down payments on sales, in an attempt to conserve cash. We also have increased our focus on expanding our fee-based service business. However, there is no assurance that our implementation of these initiatives will enhance our financial position or otherwise be successful. If these initiatives do not have their intended results, our financial condition may be materially and adversely impacted.
In addition, notwithstanding our implementation of the initiatives implemented since 2008 to improve our cash position, we anticipate that we will continue to seek and use external sources of liquidity, including funds that we obtain pursuant to additional borrowings under our existing credit facilities, under credit facilities that we may obtain in the future, under securitizations in which we may participate in the future or pursuant to other borrowing arrangements, to:
    support our operations;
 
    finance the acquisition and development of VOI inventory and residential land;
 
    finance a substantial percentage of our sales; and
 
    satisfy our debt and other obligations.
Our ability to service or to refinance our indebtedness or to obtain additional financing (including our ability to consummate future term securitizations) depends on the credit markets and on our future performance, which is subject to a number of factors, including the success of our business, results of operations, leverage, financial condition and business prospects, prevailing interest rates, general economic conditions and perceptions about the residential land and vacation ownership industries. We have approximately $52.4 million of indebtedness which becomes due during 2011. Historically, much of our debt has been renewed or refinanced in the ordinary course of business. But there is no assurance that we will be able to obtain sufficient external sources of liquidity on attractive terms, or at all, or otherwise renew, extend or refinance a significant portion of our outstanding debt. Any of these occurrences may have a material and adverse impact on our liquidity and financial condition.
Our future success depends on our ability to market our products successfully and efficiently.
We compete for customers with other hotel and resort properties and vacation ownership resorts. The identification of sales prospects and leads, and the marketing of our products to them are essential to our success. We have incurred and will continue to incur the expenses associated with marketing programs in advance of closing sales to the leads that we identify. If our lead identification and marketing efforts do not yield enough leads or we are unable to successfully convert sales leads to sales, we may be unable to recover the expense of our marketing programs and systems and our business would be adversely affected.

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We are 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.
Real estate markets are cyclical in nature and highly sensitive to changes in national and regional economic conditions, including:
    levels of unemployment;
 
    levels of discretionary disposable income;
 
    levels of consumer confidence;
 
    the availability of financing;
 
    overbuilding or decreases in demand;
 
    interest rates; and
 
    federal, state and local taxation methods.
The adverse trends experienced in the real estate market since 2007 have exerted pressure upon our Bluegreen Communities and Bluegreen Resorts divisions. Particularly, low consumer demand for homesites has had, and may continue to have, an adverse impact on Bluegreen Communities’ operations. Further, while general economic trends have recently shown signs of improvement, a deterioration in general economic conditions or continued adverse conditions in the real estate market would have a material adverse effect on our business.
To the extent we decide to acquire more real estate inventory in the future for eventual sale by Bluegreen Resorts or Bluegreen Communities, the availability of land at favorable prices at that time will be critical to our profitability and the ability to cover our significant selling, general and administrative expenses, cost of capital and other expenses. If we are unable to acquire such land or, in the case of Bluegreen Resorts, resort properties, at a favorable cost, it could have an adverse impact on our results of operations. While we believe that the property we have purchased at our adjusted carrying amounts will generate appropriate margins, land prices remain significantly below historical levels, and the projects we acquired prior to or during the recent economic downturn may have been purchased at higher price levels than available in the current market.
The profitability of our real estate development activities is also impacted by the cost of construction materials and services. Should the cost of construction materials and services rise, the ultimate cost of our Bluegreen Resorts’ and Bluegreen Communities’ inventories when developed could increase and have a material, adverse impact on our results of operations.
We may not be successful in increasing or expanding our fee-based services relationships, and our fee-based service activities may not be profitable, which may have an adverse impact on our results of operations and financial condition.
In July 2009, we began offering fee-based marketing and sales services to third-party developers. During 2010, we continued to expand our fee-based service business, which we believe enables us to leverage our expertise in sales and marketing, resort management, mortgage servicing, construction management and title services. We currently intend for our fee-based services to become an increasing portion of our resorts business over time as they generally produce positive cash flow and typically require less capital investment than our traditional vacation ownership business. We have attempted to structure these activities to cover our costs and generate a profit. However, our fee-based services business remains relatively new and we have limited experience in its pricing and operation. In addition, while our fee-based marketing and sales services do not require us to use our receivable credit facility capacity, our clients do typically have to maintain their own receivable-backed credit facilities. Should our clients not be able to maintain said facilities, our fee-based marketing and sales business could be materially adversely impacted. Alternatively, we could attempt to structure other arrangements where we would utilize our receivable credit facilities in order to provide fee-based marketing and sales services, which would reduce the credit otherwise available to us. In addition, when we perform fee-based sales and marketing services, we sell VOIs in a resort developed by a third party as an interest in the Bluegreen Vacation Club. This subjects us to a number of risks typically associated with selling products developed by others under your own brand name, including litigation risks. Additionally, demand for the third party resorts may be below our expectations and the third party developers may not satisfy their obligations. While we attempt to mitigate these risks by performing due diligence on the resorts in which we sell VOIs and by typically performing resort management services at those resorts, there is no assurance that we will be successful in mitigating or managing the risks, which may have a material and adverse impact on our results of operations and financial condition. For these and

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other reasons, certain of which may be beyond our control, there is no assurance that we will be successful in increasing our fee-based services relationships or operating our fee-based services business on a profitable basis, and any failure to do so would have a material adverse impact on our results of operations and financial condition.
Our results of operations and financial condition may be materially and adversely impacted if Bluegreen Resorts does not continue to participate in exchange networks or its customers are not satisfied with the networks in which it participates.
All of our VOI resorts are currently affiliated with RCI, and most of our Club Resorts have been awarded RCI’s highest designation (Gold Crown). A VOI owner’s participation in the RCI exchange network allows an owner to exchange their annual VOI for occupancy at over 4,000 participating resorts, based upon availability and the owner payment of a variable exchange fee. In 2010, approximately 6% of our owners utilized the RCI exchange network for an exchange of two or more nights. We also have a joint venture with Shell, called Select Connections™, which currently gives Bluegreen Vacation Club members who acquired or upgraded their VOIs on or after November 1, 2007 access to 21 Shell resorts and provides members of Shell access to Bluegreen Vacation Club resorts. In addition, certain Bluegreen Vacation Club members may use their points for a variety of hotel stays, RV site stays within the Coast to Coast network, or various cruise vacations. There is no assurance that our resorts will continue to participate in the RCI or Select Connections™ exchange networks in which they currently participate or through which Bluegreen Vacation Club members have access to alternative vacation destinations. There is also no assurance that any or all of these networks will continue to operate effectively or that our customers will continue to be satisfied with the networks. If any of these events should occur, our results of operations and financial condition may be materially and adversely impacted.
Our exploration of strategic alternatives for Bluegreen Communities involves a number of risks.
On March 24, 2011, we announced that we had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There is no assurance regarding the timing or success of pursuing any of the alternatives we may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to our financial condition and operating results or otherwise achieve the benefits hoped to be realized from the transaction. Further, the strategic review process may divert management’s attention from our other business activities, result in the loss of key employees, result in decreased consumer demand or other unforeseen consequences. To the extent that additional market information is obtained during the strategic review process which indicates that the carrying value of our Communities’ inventory exceeds its fair value, additional impairment charges relating to the value of the inventory may result. The occurrence of any of these events could have a material and adverse impact on our financial condition and operating results.
Claims for development-related defects could adversely affect our financial condition and operating results.
We engage third-party contractors to construct our resorts and to develop our communities. However, our customers may assert claims against us for construction defects or other perceived development defects, including, without limitation, structural integrity, the presence of mold as a result of leaks or other defects, water intrusion, asbestos, electrical issues, plumbing issues, road construction, water and sewer defects and defects in the engineering of amenities. In addition, certain state and local laws may impose liability on property developers with respect to development defects discovered in the future. We could have to accrue a significant portion of the cost to repair such defects in the quarter when such defects arise or when the repair costs are reasonably estimable. A significant number of claims for development-related defects could adversely affect our liquidity, financial condition and operating results.
The resale market for VOIs could adversely affect our business.
Based on our experience at our resorts and at destination resorts owned by third parties, we believe that resales of VOIs generally are made at net sales prices below their original customer purchase prices. The relatively lower sales prices are partly attributable to the high marketing and sales costs associated with the initial sales of such VOIs. Accordingly, the initial purchase of a VOI may be less attractive to prospective buyers. Also, buyers who seek to resell their VOIs compete with our efforts to sell our VOIs. While VOI resale clearing houses or brokers currently do not have a material impact on our business, if a secondary market for VOIs were to become more organized and liquid, the resulting availability of resale VOIs at lower prices could adversely affect our sales prices and the number of sales we can close, which in turn would adversely affect our business and results of operations.

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We 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 our tax returns or those of our subsidiaries may have a material and adverse impact on our financial condition.
The federal government and the states and local jurisdictions in which we operate have enacted extensive regulations that affect the manner in which we market and sell VOIs and homesites and conduct our other business operations. In addition, many states have adopted specific laws and regulations regarding the sale of VOIs and homesites. Many states, including Florida and South Carolina, where some of our resorts are located, extensively regulate the creation and management of timeshare resorts, the marketing and sale of timeshare properties, the escrow of purchaser funds prior to the completion of construction and closing, the content and use of advertising materials and promotional offers, the delivery of an offering memorandum and the creation and operation of exchange programs and multi-site timeshare plan reservation systems. Moreover, with regard to sales conducted in South Carolina, the closing of real estate and mortgage loan transactions must be conducted under the supervision of an attorney licensed in South Carolina and otherwise in accordance with South Carolina’s Time Sharing Transaction Procedures Act. Most states also have other laws that regulate our activities, such as:
    timeshare project registration laws;
 
    real estate licensure laws;
 
    mortgage licensure laws;
 
    sellers of travel licensure laws;
 
    anti-fraud laws;
 
    consumer protection laws;
 
    telemarketing laws;
 
    prize, gift and sweepstakes laws; and
 
    consumer credit laws.
We currently are authorized to market and sell VOIs and homesites in all states in which our operations are currently conducted. If our agents or employees violate applicable regulations or licensing requirements, their acts or omissions could cause the states where the violations occurred to revoke or refuse to renew our licenses, render our sales contracts void or voidable, or impose fines on us based on past activities. See “Item 3 — Legal Proceedings.”
In addition, the federal government and the states and local jurisdictions in which we conduct business have generally enacted extensive regulations relating to direct marketing and telemarketing, including the federal government’s national “Do Not Call” list. The regulations have impacted our marketing of VOIs, and we have taken steps in an attempt to decrease our dependence on restricted calls. However, these steps have increased and are expected to continue to increase our marketing costs. We cannot predict the impact that these legislative initiatives or any other legislative measures that may be proposed or enacted in the future may have on our marketing strategies and results. Further, from time to time, complaints are filed against the Company by individuals claiming that they received calls in violation of the regulation.
Currently, most states have taxed VOIs as real estate, imposing property taxes that are billed to the respective property owners’ associations that maintain the related resorts and have not sought to impose sales tax upon the sale of the VOI or accommodations tax upon the use of the VOI. From time to time, however, various states have attempted to promulgate new laws or apply existing laws impacting the taxation of vacation ownership interests to require that sales or accommodations taxes be collected. Should new state or local laws be implemented or interpreted to impose sales or accommodations taxes on VOIs, our resorts business could be materially adversely affected.
From time to time, consumers file complaints against us in the ordinary course of our business. We could be required to incur significant costs to resolve these complaints or enter into consents with regulators regarding our activities. There is no assurance that we will remain in material compliance with all applicable federal, state and local laws and regulations, or that violations of applicable laws will not have adverse implications for us, including negative public relations, potential litigation and regulatory sanctions. The expense, negative publicity and potential sanctions associated with any failure to comply with applicable laws or regulations could have a material adverse effect on our results of operations, liquidity or financial position.
In addition, there is no assurance that, in the future, VOIs will not be deemed to be securities under federal or state law and therefore subject to applicable securities regulation, which could have a material adverse effect on us due to, among other things, the cost of compliance with such regulations.

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Environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on our business.
Under various federal, state and local laws, ordinances and regulations, as well as common law, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances, including mold, located on, in or emanating from property that we own, lease or operate, as well as related costs of investigation and property damage at such property. These laws often impose liability without regard to whether we knew of, or were responsible for, the presence of the hazardous or toxic substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect our ability to sell or lease our property or to borrow money using such real property or receivables generated from the sale of such real property as collateral. Noncompliance with environmental, health or safety requirements may require us to cease or alter operations at one or more of our properties. Further, we may be subject to common law claims by third parties based on damages and costs resulting from violations of environmental regulations or from contamination associated with one or more of our properties.
The ratings of third-party rating agencies could adversely impact our ability to obtain, renew, or extend credit facilities, debt, or otherwise raise capital.
Rating agencies from time to time review prior corporate and specific transaction ratings in light of tightened ratings criteria. In connection with any decisions by rating agencies to downgrade their original ratings on certain bond classes in our securitizations, holders of such bonds may be required to sell bonds in the market place and such sales could occur at a discount, which could impact the perceived value of such bonds and our ability to sell future bonds at favorable terms, if at all.
In addition, if rating agencies were to downgrade our corporate credit ratings, our ability to raise capital and/or issue debt at favorable terms or at all could be adversely impacted. Such a downgrade could materially adversely affect our liquidity, financial condition and results of operations.
There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with generally accepted accounting principles (“GAAP”). Any changes in estimates, judgments and assumptions used could have a material adverse impact on our operating results and financial condition.
The consolidated financial statements included in this Annual Report on Form 10-K are prepared in accordance with GAAP, which involves making estimates, judgments and assumptions. These estimates, judgments and assumptions include, but are not limited to, those related to future cash flows which in turn are based upon expectations of our performance given current and projected forecasts of the economy in general and the real estate markets. If any estimates, judgments or assumptions change in the future, including in the event the adverse conditions in the real estate market continue for longer than expected or deteriorate further or if our performance does not otherwise meet our expectations, we may be required to record impairment charges against our earnings, which could have a material adverse impact on our operating results and financial condition. In addition, GAAP requirements as to how certain estimates are made may result, for example, in asset valuations which ultimately would not be realized if we were to attempt to sell the asset.
The loss of the services of our key management and personnel could adversely affect our business.
Our ability to successfully implement our business strategy will depend on our ability to attract and retain experienced and knowledgeable management and other professional staff. There is no assurance that we will be successful in attracting and retaining key management personnel.
BFC Financial Corporation holds a majority of our outstanding common stock, which may adversely affect the market price of our common stock.
BFC Financial Corporation (“BFC”) beneficially owns 16,922,953 shares, or approximately 52%, of our issued and outstanding common stock. As a result, BFC is in a position to elect our Board of Directors and significantly influence the outcome of any shareholder vote. This control position may have an adverse effect on the market price of our common stock. Alan B. Levan, our Chairman, and John E. Abdo, our Vice Chairman, are also Chairman and Vice Chairman, respectively, of BFC.

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RISKS RELATED TO BANKATLANTIC BANCORP AND BANKATLANTIC
Financial Services Risk Factors
          Our Financial Services activities consist of BankAtlantic Bancorp (and its federal savings bank subsidiary, BankAtlantic), whose results of operations are consolidated with BFC. The only assets available to BFC from BankAtlantic Bancorp are dividends when and if declared and paid by BankAtlantic Bancorp. BankAtlantic Bancorp is a separate public company and its management prepared the following discussion which was included in BankAtlantic Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010 which was filed with the Securities and Exchange Commission on March 31, 2011. Accordingly, references to “the Company”, “the Parent Company”, “we”, “us” or “our” in this section under the caption “Financial Services” are references to BankAtlantic Bancorp and its subsidiaries, and are not references to BFC Financial Corporation, Bluegreen Corporation or Woodbridge.
Failure to comply with the Cease and Desist Orders could result in further regulatory action and/or fines and efforts to comply with the Orders could have a material adverse effect on our business and results of operations.
          On February 23, 2011, the Parent Company entered into the Company Order and BankAtlantic entered into the Bank Order with the OTS, the Parent Company’s and BankAtlantic’s primary regulator (See “Business-Recent Developments” for a description of the terms of the Orders).
          Any material failure by the Company or BankAtlantic to comply with the terms of the Orders could result in additional enforcement actions by the OTS and/or the imposition of fines. For example, if BankAtlantic does not meet the capital ratio requirements in the Bank Order, BankAtlantic would be required to submit a contingency plan that is acceptable to the OTS and that would detail steps to be taken by BankAtlantic that would lead to a potential sale of BankAtlantic. BankAtlantic would be required to implement the contingency plan upon written notification from the OTS. Further, efforts to comply with the Orders may have material adverse effects on the operations and financial condition of the Company.
Our recent financial performance and the regulatory actions by the OTS, combined with continued capital and credit market volatility, may adversely affect our ability to access capital and may have a material adverse effect on our business, financial condition and results of operations.
          The Company has incurred losses of $145.5 million, $185.8 million and $202.6 million during the years ended December 31, 2010, December 31, 2009 and December 31, 2008, respectively. As part of its efforts to maintain regulatory capital ratios, BankAtlantic has reduced its assets and repaid borrowings. However, the reduction of earning asset balances has resulted in reduced income, while at the same time BankAtlantic has experienced significant credit losses.
          The Parent Company contributed $28 million and $105 million to the capital of BankAtlantic during the years ended December 31, 2010 and December 31, 2009, respectively. At December 31, 2010, the Parent Company had $12.2 million of liquid assets. While a wholly-owned work-out subsidiary of the Parent Company also holds a portfolio of approximately $13.7 million of non-performing loans, net of reserves, $2.8 million of performing loans and $10.2 million of real estate owned which it could seek to liquidate, the Parent Company’s sources of funds to continue to support BankAtlantic are limited.
          The Parent Company’s ability to contribute additional capital to BankAtlantic will depend on its ability to raise capital in the secondary markets and on its ability to liquidate its portfolio of non-performing loans and real estate owned. Its ability to raise additional capital will depend on, among other things, conditions in the financial markets at the time, which are outside of our control, and our financial condition, results of operations and prospects. The entry into the Orders may also make it more difficult to raise additional capital. Such capital may not be available to us on acceptable terms or at all. The Parent Company may not be able to provide additional capital, as needed, to BankAtlantic and BankAtlantic may not be able to raise needed capital directly. The failure to obtain capital in amounts needed to meet the higher capital requirements under the Bank Order would cause BankAtlantic to fail to comply with the Bank Order and may have a material adverse effect on our results of operation and financial condition.

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          In light of the need for the Parent Company to be in a position to provide capital to BankAtlantic, as well as the anticipated imposition of capital requirements on thrift holding companies under the Dodd-Frank Act, the Parent Company has and will continue to evaluate raising additional funds through the issuance of securities. Any such financing could be obtained through additional public offerings, private offerings, in privately negotiated transactions, through a rights offering or otherwise. We could also pursue these financings at the Parent Company level or directly at BankAtlantic or both. Issuances of equity directly at BankAtlantic would dilute the Parent Company’s interest in BankAtlantic. During February 2010, we filed a shelf registration statement with the SEC registering up to $75 million of our Class A Common Stock and/or other securities in the future. We currently have $55 million remaining on this shelf registration statement. Additionally, in September 2010, the Parent Company filed a separate registration statement on Form S-1 with the SEC for registering $125 million of Class A Common Stock. The Form S-1 registration statement has not yet been declared effective. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. The terms and pricing of any future transaction by the Parent Company or BankAtlantic could result in additional substantial dilution to our existing shareholders. As a result, our shareholders bear the risks of future offerings at the Parent Company level reducing the price of our Class A Common Stock, and diluting their holdings in the Company, and future offerings directly at BankAtlantic diluting the Parent Company’s interest in BankAtlantic. Additionally, depending on the amount of shares issued in any future offering, the Company’s ability to use its NOLs in future periods may be substantially limited.
The decline in the Florida real estate market has adversely affected, and may continue to adversely affect, our earnings and financial condition.
          The continued deterioration of economic conditions in the Florida residential real estate market, including the continued decline in median home prices year-over-year in all major metropolitan areas in Florida, and the downturn in the Florida commercial real estate market, resulted in a substantial increase in BankAtlantic’s non-performing assets and provision for loan losses over the past three years. The housing industry has been in a substantial and prolonged downturn reflecting, in part, decreased availability of mortgage financing for residential home buyers, reduced demand for new construction resulting in a significant over-supply of housing inventory and increased foreclosure rates. Additionally, the deteriorating condition of the Florida economy and these adverse market conditions have negatively impacted the commercial non-residential real estate market. BankAtlantic’s earnings and financial condition were adversely impacted over the past three years as the majority of its loans are secured by real estate in Florida. We expect that our earnings and financial condition will continue to be unfavorably impacted if market conditions do not improve or deteriorate further in Florida. At December 31, 2010, BankAtlantic’s loan portfolio included $305.7 million of non-accrual loans concentrated in Florida.
Our loan portfolio is concentrated in loans secured by real estate, a majority of which are located in Florida, which makes us very susceptible to credit losses given the current depressed real estate market.
          Conditions in the United States real estate market have deteriorated significantly beginning in 2007, particularly in Florida, BankAtlantic’s primary lending area. BankAtlantic’s loan portfolio is concentrated in commercial real estate loans (most of which are located in Florida and many of which involve residential land development), residential mortgages (nationwide), and consumer home-equity loans (throughout BankAtlantic’s markets in Florida). BankAtlantic has a heightened exposure to credit losses that may arise from this concentration as a result of the significant downturn in the Florida real estate markets. At December 31, 2010, BankAtlantic’s loan portfolio included $2.1 billion of loans concentrated in Florida, which represented approximately 64% of its loan portfolio.
          We believe that BankAtlantic’s commercial residential loan portfolio has exposure to further declines in the Florida real estate market. As of December 31, 2010: (i) the “builder land bank loan” category held by BankAtlantic consisted of 4 loans aggregating $10.6 million, all of which were on non-accrual; (ii) the “land acquisition and development loan” category held by BankAtlantic consisted of 24 loans aggregating $118.8 million, of which thirteen loans totaling $61.9 million were on non-accrual; (iii) the “land acquisition, development and construction loan” category held by BankAtlantic consisted of 3 loans aggregating $3.5 million, none of which were on non-accrual.
          In addition to the loans described above, during 2008, the Parent Company formed an asset workout subsidiary which acquired non-performing commercial residential real estate loans from BankAtlantic. The balance of these non-performing loans as of December 31, 2010 was $14.5 million, including $3.7 million, $3.6 million and $1.6 million of “builder land bank loans”, “land acquisition and development loans”, and “land acquisition, development and construction loans”, respectively.

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          Market conditions have resulted in, and may in the future result in, our commercial real estate borrowers having difficulty selling lots or homes in their developments for an extended period, which in turn could result in an increase in residential construction loan delinquencies and non-accrual balances. Additionally, if the current depressed economic environment continues or deteriorates further, collateral values may decline further which likely would result in increased credit losses in these loans.
          Included in the commercial and construction and development real estate loan portfolio are approximately $781.6 million of commercial non-residential and commercial land loans. A borrower’s ability to repay commercial land loans is dependent on the success of the real estate project. A borrower’s ability to repay commercial non-residential loans is dependent upon maintaining tenants through the life of the loan or the borrower’s successful operation of a business. Weak economic conditions may impair a borrower’s business operations and typically slow the execution of new leases. Such economic conditions may also lead to existing lease turnover. As a result of these factors, vacancy rates for retail, office and industrial space are expected to continue to rise in 2011 which could result in falling rents. The combination of these factors could result in further deterioration in real estate market conditions and BankAtlantic may recognize higher credit losses on these loans, which would adversely affect our results of operations and financial condition.
          BankAtlantic’s commercial real estate loan portfolio includes 10 large lending relationships totaling $266 million, including relationships with unaffiliated borrowers involving lending commitments in each case in excess of $20 million. Defaults by any of these borrowers could have a material adverse effect on BankAtlantic’s results.
The Parent Company has deferred interest on its outstanding junior subordinated debentures and anticipates that it will continue to defer this interest for the foreseeable future, which could adversely affect its financial condition and liquidity.
          The Parent Company began deferring interest on all of its $294 million of junior subordinated debentures as of March 2009 which resulted in the deferral and accrual of $28.2 million of regularly scheduled quarterly interest payments that would otherwise have been paid during the years ended December 31, 2010 and 2009. The terms of the junior subordinated debentures allow the Parent Company to defer interest payments for up to 20 consecutive quarterly periods, and the Parent Company anticipates that it will continue to defer such interest for the foreseeable future. During the deferral period, interest continues to accrue on the junior subordinated debentures, as well as on the deferred interest, at the relevant stated coupon rate, and at the end of the deferral period, the Parent Company will be required to pay all interest accrued during the deferral period. In the event that the Parent Company elects to defer interest on its junior subordinated debentures for the full 20 consecutive quarterly periods permitted under the terms of the junior subordinated debentures, the Parent Company would owe approximately $74 million of accrued interest as of December 31, 2013 (based on average interest rates applicable at December 31, 2010, which were at historically low interest rate levels). As most of the outstanding junior subordinated debentures bear interest at rates that are indexed to LIBOR, if LIBOR rates increase, the interest that would accrue during the deferral period would be significantly higher and likewise increase the amount the Parent Company would owe at the conclusion of the deferral period.
BankAtlantic obtained a significant portion of its non-interest income through service charges on core deposit accounts, and recent legislation designed to limit service charges could reduce our fee income.
          BankAtlantic’s deposit account growth has generated a substantial amount of service charge income. The largest component of this service charge income historically has been overdraft fees. Changes in banking regulations, in particular the Federal Reserve’s new rules prohibiting banks from automatically enrolling customers in overdraft protection programs, which became effective July 1, 2010, had a significant adverse impact on our service charge income during the year ended December 31, 2010 and this impact is expected to continue in 2011. Additionally, the Dodd-Frank Act has established a consumer protection agency which may further limit the assessment of overdraft fees. Changes in customer behavior, modification of our service charge practices as well as increased competition from other financial institutions could also result in declines in deposit accounts or in overdraft frequency resulting in a decline in service charge income. Further, the downturn in the Florida economy could result in the inability to collect overdraft fees. The reduction in deposit account fee income during 2010 had an adverse impact on our earnings and further reductions during 2011 would likewise impact our earnings.

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The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may have a material effect on our operations.
          On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, which imposes significant regulatory and compliance changes. Currently, we believe the key effects of the Dodd-Frank Act on our business are:
    changes to the thrift supervisory structure, including the elimination of the Office of Thrift Supervision and the transfer of oversight of federally chartered thrift institutions to the OCC;
 
    changes to regulatory capital requirements at the holding company level;
 
    creation of new government regulatory agencies;
 
    limitations on federal preemption;
 
    limitations on debit card interchange fees;
 
    changes in insured depository institution regulations; and
 
    mortgage loan origination and risk retention.
          Many provisions of the Dodd-Frank Act remain subject to regulatory rulemaking and implementation, the effects of which are not yet known. As a result, it is difficult to gauge the ultimate impact of certain provisions of the Dodd-Frank Act because the implementation of many concepts is left to regulatory agencies. For example, the Consumer Financial Protection Bureau (CFPB) is given the power to adopt new regulations to protect consumers and is given control over existing consumer protection regulations adopted by federal banking regulators.
          The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements or with any future changes in laws or regulations may negatively impact our results of operations and financial condition. See “Regulation of Federal Savings Associations-BankAtlantic-The Dodd-Frank Act” for a more detailed description of the Dodd-Frank Act.
Deposit insurance premium assessments may increase substantially, which would adversely affect expenses.
          BankAtlantic’s FDIC deposit insurance expense for the year ended December 31, 2010 was $10.1 million. As a result of recent economic conditions and the enactment of the Dodd-Frank Act, the FDIC has increased the deposit insurance assessment rates and raised deposit premiums for insured depository institutions. In addition, BankAtlantic’s annual insurance rates are expected to increase in 2011 based on the results of its latest regulatory risk profile. BankAtlantic’s prepaid insurance assessment was $22.0 million at December 31, 2010. If the economy worsens and the number of bank failures significantly increase, or if the FDIC otherwise determines that increased premiums are necessary, BankAtlantic may be required to pay additional FDIC specific assessments or incur increased annual insurance rates which would increase our expenses and adversely impact our results.
The Parent Company and BankAtlantic are each subject to significant regulation and the Company’s activities and the activities of the Company’s subsidiaries, including BankAtlantic, are subject to regulatory requirements that could have a material adverse effect on the Company’s business.
          The Parent Company is a “grandfathered” unitary savings and loan holding company and has broad authority to engage in various types of business activities. The OTS, among other things, can prevent us from engaging in activities or limit those activities if it determines that there is reasonable cause to believe that the continuation of any particular activity constitutes a serious risk to the financial safety, soundness or stability of BankAtlantic.
          Unlike bank holding companies, as a unitary savings and loan holding company, we have not historically been subject to capital requirements. However, capital requirements may be imposed on savings and loan holding companies in the future. The Dodd-Frank Act may, among other things, eliminate the status of a “savings and loan holding company” and require us to register as a bank holding company, which would subject us to regulatory capital requirements. Further, the regulatory bodies having authority over us may adopt regulations in the future that would affect our operations, including our ability to engage in certain transactions or activities.

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An increase in BankAtlantic’s allowance for loan losses will result in reduced earnings.
          As a lender, BankAtlantic is exposed to the risk that its customers will be unable to repay their loans according to their terms and that any collateral securing the payment of their loans will not be sufficient to assure full repayment. BankAtlantic’s management evaluates the collectability of BankAtlantic’s loan portfolio and provides an allowance for loan losses that it believes is adequate based upon such factors as:
    the risk characteristics of various classifications of loans;
 
    previous loan loss experience;
 
    specific loans that have probable loss potential;
 
    delinquency trends;
 
    estimated fair value of the collateral;
 
    current economic conditions;
 
    the views of its regulators; and
 
    geographic and industry loan concentrations.
          Many of these factors are difficult to predict or estimate accurately, particularly in a changing economic environment. The process of determining the estimated losses inherent in BankAtlantic’s loan portfolio requires subjective and complex judgments and the level of uncertainty concerning economic conditions may adversely affect BankAtlantic’s ability to estimate the losses which may be incurred in its loan portfolio. If BankAtlantic’s evaluation is incorrect and borrower defaults cause losses exceeding the portion of the allowance for loan losses allocated to those loans, or if BankAtlantic perceives adverse trends that require it to significantly increase its allowance for loan losses in the future, our earnings could be significantly and adversely affected.
          At December 31, 2010, BankAtlantic’s allowance for loan losses was $161.3 million which represented approximately 5.08% of total loans and 43.5% of non-performing loans.
BankAtlantic’s interest-only residential loans expose it to greater credit risks.
          As of December 31, 2010, approximately $550.2 million of BankAtlantic’s purchased residential loan portfolio consisted of interest-only loans, representing approximately 45% of the total purchased residential loan portfolio. While these loans are not considered sub-prime or negative amortizing loans, these loans have reduced initial loan payments with the potential for significant increases in monthly loan payments in subsequent periods, even if interest rates do not rise, as required amortization of the principal commences. During the year ended December 31, 2011, approximately $52.1 million of the loans in this portfolio will begin principal amortization. Monthly loan payments also increase if interest rates increase. This presents a potential repayment risk if the borrower is unable to meet the higher debt service obligations or refinance the loan. As previously noted, current economic conditions in the residential real estate markets and the mortgage finance markets have made it more difficult for borrowers to refinance their mortgages which also increases our exposure to loss.
Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future.
          At December 31, 2010 and 2009, the Company’s non-performing loans totaled $385.5 million and $331.0 million, or 12.0% and 9.0% of our loan portfolio, respectively. At December 31, 2010 and 2009, the Company’s non-performing assets (which include non-performing loans and foreclosed real estate) were $463.6 million and $379.7 million, or 10.3% and 7.9% of our total assets, respectively. In addition, the Company had approximately $38.2 million and $72.9 million in accruing loans that were 30-89 days delinquent at December 31, 2010 and 2009, respectively. Our non-performing assets adversely affect our net income in various ways. Until economic and real estate market conditions improve, particularly in Florida but also nationally, we expect to continue to incur additional losses relating to an increase in non-performing loans and non-performing assets. We generally do not record interest income on non-performing loans or real estate owned. When we receive the collateral in foreclosures or similar proceedings, we are required to mark the related collateral to the then fair market value, generally based on appraisals of the property obtained by us, which often results in an additional loss. These loans and real estate owned also increase our risk profile, and increases in the level of non-performing loans and non-performing assets impact our regulators’ view of appropriate capital levels, which was the major contributing factor to the imposition by the OTS of the Orders. Our regulators will likely require us to maintain enhanced capital levels until, at a minimum, our levels of non-performing loans and assets are substantially reduced. While we seek to manage our nonperforming assets, decreases in the value of these assets or

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deterioration in our borrowers’ financial condition, which is often impacted by economic and market conditions beyond our control, could adversely affect our business, results of operations and financial condition. In addition, the resolution of non-performing assets requires significant commitments of management time.
BankAtlantic’s consumer loan portfolio is concentrated in home equity loans collateralized by Florida properties primarily located in the markets where BankAtlantic operates its branch network.
          The decline in residential real estate prices and higher unemployment throughout Florida has, over the past three years, resulted in an increase in mortgage delinquencies and higher foreclosure rates. Additionally, in response to the turmoil in the credit markets, financial institutions have tightened underwriting standards which has limited borrowers’ ability to refinance. These conditions have adversely impacted delinquencies and credit loss trends in BankAtlantic’s home equity loan portfolio and it does not currently appear that these conditions will improve significantly in the near term. Approximately 74% of the loans in BankAtlantic’s home equity portfolio are residential second mortgages that exhibit higher loss severity than residential first mortgages. If current economic conditions do not improve and home prices continue to fall, BankAtlantic may continue to experience higher credit losses from this loan portfolio. Since the collateral for this portfolio consists primarily of second mortgages, it is unlikely that BankAtlantic will be successful in recovering all or any portion of its loan proceeds in the event of a default unless BankAtlantic is prepared to repay the first mortgage and such repayment and the costs associated with a foreclosure are justified by the value of the property.
Changes in interest rates could adversely affect our net interest income and profitability.
          The majority of BankAtlantic’s assets and liabilities are monetary in nature. As a result, the earnings and growth of BankAtlantic are significantly affected by interest rates, which are subject to the influence of economic conditions generally, both domestic and foreign, events in the capital markets and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve Board. The nature and timing of any changes in such policies or general economic conditions and their effect on BankAtlantic cannot be controlled and are extremely difficult to predict. Changes in interest rates can impact BankAtlantic’s net interest income as well as the valuation of its assets and liabilities.
          Banking is an industry that depends to a large extent on its net interest income. Net interest income is the difference between:
    interest income on interest-earning assets, such as loans; and
 
    interest expense on interest-bearing liabilities, such as deposits.
          Changes in interest rates can have differing effects on BankAtlantic’s net interest income. In particular, changes in market interest rates, changes in the relationships between short-term and long-term market interest rates, or the yield curve, or changes in the relationships between different interest rate indices can affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income and therefore reduce BankAtlantic’s net interest income. While BankAtlantic has attempted to structure its asset and liability management strategies to mitigate the impact on net interest income of changes in market interest rates, BankAtlantic may not be successful in doing so.
          Loan and mortgage-backed securities prepayment decisions are also affected by interest rates. Loan and securities prepayments generally accelerate as interest rates fall. Prepayments in a declining interest rate environment reduce BankAtlantic’s net interest income and adversely affect its earnings because:
    it amortizes premiums on acquired loans and securities, and if loans or securities are prepaid, the unamortized premium will be charged off; and
 
    the yields it earns on the investment of funds that it receives from prepaid loans and securities are generally less than the yields that it earned on the prepaid loans.
          Significant loan prepayments in BankAtlantic’s mortgage and investment portfolios in the future could have an adverse effect on BankAtlantic’s earnings as proceeds from the repayment of loans may be reinvested in loans with lower interest rates. Additionally, increased prepayments associated with purchased residential loans may result in increased amortization of premiums on acquired loans, which would reduce BankAtlantic’s interest income.

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          In a rising interest rate environment, loan and securities prepayments generally decline, resulting in yields that are less than the current market yields. In addition, the credit risks of loans with adjustable rate mortgages may worsen as interest rates rise and debt service obligations increase.
          BankAtlantic uses a computer model using standard industry software to assist it in its efforts to quantify BankAtlantic’s interest rate risk. The model measures the potential impact of gradual and abrupt changes in interest rates on BankAtlantic’s net interest income. While management would attempt to respond to the projected impact on net interest income, management’s efforts may not be successful.
BankAtlantic is subject to liquidity risk as its loans are funded by its deposits.
          Like all financial institutions, BankAtlantic’s assets are primarily funded through its customer deposits and changes in interest rates, availability of alternative investment opportunities, a loss of confidence in financial institutions in general or BankAtlantic in particular, and other factors may make deposit gathering more difficult. If BankAtlantic experiences decreases in deposit levels, it may need to increase its borrowings, which may not be available in sufficient amounts, or liquidate a portion of its assets, which may not be readily saleable. Additionally, interest rate changes or further disruptions in the capital markets may make the terms of borrowings and deposits less favorable. For a further discussion on liquidity, refer to “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources.”
BankAtlantic has significantly reduced operating expenses over the past three years and BankAtlantic may not be able to continue to reduce expenses without adversely impacting its operations.
          BankAtlantic’s operating expenses have declined from $330.6 million for the year ended December 31, 2008 to $236.3 million for the year ended December 31, 2010. BankAtlantic reorganized its operations during this period and significantly reduced operating expenses while focusing on its core businesses and seeking to maintain quality customer service. While management is focused on reducing overall expenses, BankAtlantic may not be successful in efforts to further reduce expenses or to maintain its current expense structure. BankAtlantic’s inability to reduce or maintain its current expense structure may have an adverse impact on our results.
Prior to 2009, the Parent Company relied on dividends from BankAtlantic to service its debt and pay dividends, but no dividends from BankAtlantic are anticipated or contemplated for the foreseeable future.
          BankAtlantic has not paid a dividend to the Parent Company since September 2008 and the Bank Order prohibits BankAtlantic from paying dividends to the Parent Company without the prior written non-objection of the OTS. As such, BankAtlantic does not intend to pay dividends to the Parent Company for the foreseeable future. For a further discussion refer to “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources.”
The cost and outcome of pending legal proceedings may impact our results of operations.
          BankAtlantic Bancorp, BankAtlantic and their subsidiaries are currently parties in ongoing litigation, legal and regulatory proceedings which have resulted in a significant increase in non-interest expense relating to legal and other professional fees. Pending proceedings include class action securities litigation, an SEC investigation, the Orders and an overdraft fee investigation, as well as litigation arising out of our banking operations including workouts and foreclosures, potential class actions by customers relating to service and overdraft fees assessed to their accounts, and legal proceedings associated with our tax certificate business and relationships with third party tax certificate ventures. While, based on current information, we believe that we have meritorious defenses in these proceedings, we anticipate continued elevated legal and related costs as parties to the actions and the ultimate outcomes of the matters are uncertain. Additionally, our insurance carrier for claims under our director and officer liability insurance denied insurance coverage for the class action securities litigation on the grounds that the jury found intentional wrongful acts by certain senior executive officers of the Company. While the Company disputes the validity of the denial of coverage, the Company does not expect to receive additional reimbursements for litigation costs associated with class action securities litigation unless it is successful in contesting the denial of insurance coverage. The insurer and the Company have agreed to a tolling agreement where neither party will take legal action related to the insurance coverage dispute through September 1, 2011 or a later date if extended. As such, if the Company is not successful in the appeals process, a potential securities litigation unfavorable judgment could have a material adverse impact on the Company’s financial statements.

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Further reductions in BankAtlantic’s assets may adversely affect our earnings and/or operations.
          BankAtlantic has reduced its assets and repaid borrowings in order to improve its liquidity and regulatory capital ratios. The reduction of earning asset balances has reduced our net interest income. Our net interest income was $163.3 million for the year ended December 31, 2009 and $151.3 million for the year ended December 31, 2010. The reduction in net interest income from earning asset reductions has previously been offset by lower operating expenses in prior periods. Our ability to further reduce expenses without adversely affecting our operations may be limited and as a result, further reductions in our earning asset balances in future periods may adversely affect earnings and/or operations.
Adverse market conditions have affected and may continue to affect the financial services industry as well as our business and results of operations.
          Our financial condition and results of operations have been, and may continue to be, adversely impacted as a result of the downturn in the U.S. housing and commercial real estate markets and general economic conditions. Dramatic declines in the national and, in particular, Florida housing markets over the past three years, with falling home prices and increasing foreclosures and unemployment, have negatively impacted the credit performance of our loans and resulted in significant asset impairments at all financial institutions, including government-sponsored entities, major commercial and investment banks, and regional and community financial institutions including BankAtlantic. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. The continuing economic pressure on consumers and lack of confidence in the financial markets has adversely affected and may continue to adversely affect our business, financial condition and results of operations. Further negative market and economic developments may cause adverse changes in payment patterns, causing increases in delinquencies and default rates, which may impact our charge-offs and provisions for loan losses. Continuing economic deterioration that affects household and/or corporate incomes could also result in reduced demand for credit or fee-based products and services. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on BankAtlantic and others in the financial services industry. In particular, we may face the following risks in connection with these events:
    BankAtlantic’s borrowers may be unable to make timely repayments of their loans, or the value of real estate collateral securing the payment of such loans may continue to decrease which could result in increased delinquencies, foreclosures and customer bankruptcies, any of which would increase levels of non-performing loans resulting in significant credit losses, and increased expenses and could have a material adverse effect on our operating results.
 
    Further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations, may result in an inability to borrow on favorable terms or at all from other financial institutions or government entities.
 
    Increased regulation of the industry may increase costs, decrease fee income and limit BankAtlantic’s activities and operations.
 
    Increased competition among financial services companies based on the recent consolidation of competing financial institutions and the conversion of investment banks into bank holding companies may adversely affect BankAtlantic’s ability to competitively market its products and services.
 
    BankAtlantic may be required to pay higher FDIC deposit premiums and assessments.
 
    Continued asset valuation declines could adversely impact our credit losses and result in additional impairments of goodwill and other assets.
Our loan portfolio subjects us to high levels of credit and counterparty risk.
          We are exposed to the risk that our borrowers or counter-parties may default on their obligations. Credit risk arises through the extension of loans, certain securities, letters of credit, and financial guarantees and through counter-party exposure on trading and wholesale loan transactions. In an attempt to manage this risk, we seek to establish policies and procedures to manage both on and off-balance sheet (primarily loan commitments) credit risk.
          BankAtlantic reviews the creditworthiness of individual borrowers or counter-parties, and limits are established for the total credit exposure to any one borrower or counter-party; however, such limits may not have the effect of adequately limiting credit exposure. In addition, when deciding whether to extend credit or enter into other

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transactions with customers and counterparties, we often rely on information furnished to us by such customers and counterparties, including financial statements and other financial information, and representations of the customers and counterparties that relates to the accuracy and completeness of the information. While we take all actions we deem necessary to ensure the accuracy of the information provided to us, all the information provided to us may not be accurate or we may not successfully identify all information needed to fully assess the risk which may expose us to increased credit risk and counterparty risk.
          BankAtlantic also enters into participation agreements with or acquires participation interests from other lenders to limit its credit risk, but will continue to be subject to risks with respect to its interest in the loan, as well as not being in a position to make independent determinations with respect to its interest. Further, the majority of BankAtlantic’s residential loans are serviced by others. The servicing agreements may restrict BankAtlantic’s ability to initiate work-out and modification arrangements with borrowers which could adversely impact BankAtlantic’s ability to minimize losses on non-performing loans.
          The Company is also exposed to credit and counterparty risks with respect to loans held in its asset workout subsidiary.
Adverse events in Florida, where our business is currently concentrated, could adversely impact our results and future growth.
          BankAtlantic’s business, the location of its stores, the primary source of repayment for its small business loans and the real estate collateralizing its commercial real estate loans (and the loans held by our asset workout subsidiary) and its consumer home equity loans are primarily concentrated in Florida. As a result, we are exposed to geographic risks as increasing unemployment, declines in the housing industry and declines in the real estate market have generally been more severe in Florida than in the rest of the country. Adverse changes in laws and regulations in Florida would have a greater negative impact on our revenues, financial condition and business than on similar institutions in markets outside of Florida. Further, the State of Florida is subject to the risks of natural disasters such as tropical storms and hurricanes, which may disrupt our operations, adversely impact the ability of our borrowers to timely repay their loans and the value of any collateral held by us, or otherwise have an adverse effect on our results of operations. The severity and impact of tropical storms, hurricanes and other weather related events are unpredictable.
Risks Related to Our Common Stock
The Company is controlled by BFC Financial Corporation and its controlling shareholders and this control position may adversely affect the market price of the Company’s Class A Common Stock.
          As of December 31, 2010, BFC Financial Corporation (“BFC”) owned all of the Company’s issued and outstanding Class B Common Stock and 27,333,428 shares, or approximately 43%, of the Company’s issued and outstanding Class A Common Stock. BFC’s holdings represent approximately 71% of the Company’s total voting power. Additionally, Alan B. Levan, our Chairman and Chief Executive Officer, and John E. Abdo, our Vice Chairman, beneficially own shares of BFC’s Class A and Class B Common Stock representing approximately 71.6% of BFC’s total voting power. The Company’s Class A Common Stock and Class B Common Stock vote as a single group on most matters. Accordingly, BFC, directly, and Messrs. Levan and Abdo, indirectly through BFC, are in a position to control the Company, elect the Company’s Board of Directors and significantly influence the outcome of any shareholder vote, except in those limited circumstances where Florida law mandates that the holders of the Company’s Class A Common Stock vote as a separate class. This control position may have an adverse effect on the market price of the Company’s Class A Common Stock.
BFC can reduce its economic interest in us and still maintain voting control.
          Our Class A Common Stock and Class B Common Stock generally vote together as a single class, with our Class A Common Stock possessing a fixed 53% of the aggregate voting power of all of our common stock and our Class B Common Stock possessing a fixed 47% of such aggregate voting power. Our Class B Common Stock currently represents approximately 2% of our common equity and 47% of our total voting power. As a result, the voting power of our Class B Common Stock does not bear a direct relationship to the economic interest represented by the shares. Any issuance of shares of our Class A Common Stock will further dilute the relative economic interest of our Class B Common Stock, but will not decrease the voting power represented by our Class B Common Stock. Further, our Restated Articles of Incorporation provide that these relative voting percentages will remain fixed until such time as

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BFC and its affiliates own less than 487,613 shares of our Class B Common Stock, which is approximately 50% of the number of shares of our Class B Common Stock that BFC now owns, even if additional shares of our Class A Common Stock are issued. Therefore, BFC may sell up to approximately 50% of its shares of our Class B Common Stock (after converting those shares to Class A Common Stock), and significantly reduce its economic interest in us, while still maintaining its voting power. If BFC were to take this action, it would widen the disparity between the equity interest represented by our Class B Common Stock and its voting power. Any conversion of shares of our Class B Common Stock into shares of our Class A Common Stock would further dilute the voting interests of the holders of our Class A Common Stock.
Provisions in our charter documents may make it difficult for a third party to acquire us and could depress the price of our Class A Common Stock.
          Our Restated Articles of Incorporation and Amended and Restated Bylaws contain provisions that could delay, defer or prevent a change of control of the Company or our management. These provisions could make it more difficult for shareholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our Class A Common Stock. These provisions include:
    the provisions in our Restated Articles of Incorporation regarding the voting rights of our Class B Common Stock;
 
    the authority of our board of directors to issue additional shares of common or preferred stock and to fix the relative rights and preferences of the preferred stock without additional shareholder approval;
 
    the division of our board of directors into three classes of directors with three-year staggered terms; and
 
    advance notice procedures to be complied with by shareholders in order to make shareholder proposals or nominate directors.
A sustained decline in the Company’s Class A Common Stock price may result in the delisting of its Class A Common Stock from the New York Stock Exchange.
          The Company’s Class A Common Stock currently trades on the New York Stock Exchange. Like many other companies involved in the financial services industry over the last several years, the trading price of the Company’s Class A Common Stock has experienced a substantial decline. A listed company would be deemed to be below compliance with the continued listing standards of the New York Stock Exchange if, among other things, the listed company’s average closing price was less than $1.00 over a consecutive 30 trading day period or the listed company’s average market capitalization was less than $15 million over a consecutive 30 trading day period. As of February 28, 2011, the average market price of the Company’s Class A Common Stock over the prior 30 trading day period was approximately $1.06, and the Company’s average market capitalization over that period was approximately $65 million. However, the market price of the Company’s Class A Common Stock is subject to significant volatility and it may decrease in the future so as to cause the Company not to comply with the New York Stock Exchange’s requirement for continued listing.
          If the Company does not meet the requirements for continued listing, then the Company’s Class A Common Stock will be delisted from the New York Stock Exchange. In such case, the Company would attempt to cause its Class A Common Stock to be eligible for quotation on the OTC Bulletin Board. However, in such event, the trading price of the Company’s Class A Common Stock would likely be adversely impacted, it may become more difficult for the holders of the Company’s Class A Common Stock to sell or purchase shares of the Company’s Class A Common Stock, and it may become more difficult for the Company to raise capital, which could materially and adversely impact our business, prospects, financial condition and results of operations.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
None

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ITEM 2. PROPERTIES
          The principal executive offices of BFC, Woodbridge, BankAtlantic Bancorp and BankAtlantic are located at 2100 West Cypress Creek Road, Fort Lauderdale, Florida, 33309. The property is owned by BankAtlantic. BFC and BFC Shared Service Corporation (“BFC Shared Service”) lease office space within the building from BankAtlantic, and Woodbridge sub-leases certain office space from BFC.
          We own an office building located at 2200 West Cypress Creek Road, Fort Lauderdale, Florida 33309. We continue to seek to sell the building or lease the vacant space available at this office building to third parties, including to affiliates.
          Bluegreen’s principal executive office is located in Boca Raton, Florida in approximately 158,838 square feet of leased space. At December 31, 2010, Bluegreen also maintained sales offices at 20 of its resorts, as well as regional administrative offices in Orlando, Florida and Indianapolis, Indiana for its Resorts division. In addition, Bluegreen maintains five regional sales/administrative offices for its Communities division.
          The following table sets forth, with respect to BankAtlantic, owned and leased branches by region at December 31, 2010:
                                 
    Miami -             Palm        
    Dade     Broward     Beach     Tampa  
Owned full-service branches
    9       13       25       7  
Leased full-service branches
    10       11       5       5  
Ground leased full-service branches (1)
    3       3       1       7  
 
                       
Total full-service branches
    22       27       31       19  
 
                       
 
                               
Lease expiration dates
    2011-2020       2011-2015       2011-2016       2011-2023  
 
                       
Ground lease expiration dates
    2026-2027       2017-2072       2026       2026-2032  
 
                       
 
(1)   Branches in which BankAtlantic owns the building and leases the land.
          The following table sets forth BankAtlantic’s leased drive-through facilities and leased back-office facilities by region at December 31, 2010:
                                         
    Miami -             Palm             Orlando /  
    Dade     Broward     Beach     Tampa     Jacksonville  
Leased drive-through facilities
    1       2                    
 
                             
Leased drive through expiration dates
    2015       2011-2014                    
 
                             
Leased back-office facilities
    1                   2       1  
 
                             
Leased back-office expiration dates
    2018                   2012-2014       2013  
 
                             
          In January 2011, BankAtlantic entered into an agreement with PNC Bank to sell its 19 branches and two related facilities in Tampa. The transaction is anticipated to close in June 2011, and is subject to regulatory approvals and other customary terms and conditions. The 19 affected branches will operate normally through completion of the transaction.
          In prior years, BankAtlantic had acquired land and executed operating leases for store expansion. As of December 31, 2010, BankAtlantic is seeking to sublease the leased properties, and sell the parcels of land which were not used for branch expansion. The following table sets forth the executed leases and land purchased for store expansion as of December 31, 2010:
                                         
    Miami -             Palm     Tampa     Orlando /  
    Dade     Broward     Beach     Bay     Jacksonville  
Executed leases held for sublease
          2       1       4       2  
 
                             
Executed lease expiration dates
          2013-2030       2028       2028-2048       2028-2029  
 
                             
Land held for sale
                1       1       4  
 
                             

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ITEM 3. LEGAL PROCEEDINGS
BFC and its Wholly Owned Subsidiaries
Woodbridge Holdings, LLC v. Prescott Group Aggressive Small Cap Master Fund, G.P., Cede & Co., William J. Maeck, Ravenswood Investments III, L.P., and The Ravenswood Investment Company, Circuit Court, 17th Judicial Circuit, Broward County, Florida
          Under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve our merger with Woodbridge and who properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares (as determined in accordance with the provisions of Florida law) in lieu of the shares of BFC’s Class A Common Stock which they would otherwise have been entitled to receive. Dissenting Holders, who owned in the aggregate approximately 4.6 million shares of Woodbridge’s Class A Common Stock, provided written notice to Woodbridge regarding their intent to exercise their appraisal rights. In accordance with Florida law, Woodbridge provided written notices and required forms to the Dissenting Holders setting forth, among other things, its determination that the fair value of Woodbridge’s Class A Common Stock immediately prior to the effectiveness of the merger was $1.10 per share. Dissenting Holders were required to return their appraisal forms by November 10, 2009 and indicate on their appraisal forms whether the Dissenting Holder chose to (i) accept Woodbridge’s offer of $1.10 per share or (ii) demand payment of the fair value estimate determined by the Dissenting Holder plus interest. One Dissenting Holder, which held approximately 400,000 shares of Woodbridge’s Class A Common Stock, has withdrawn its shares from the appraisal rights process, while the remaining Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. In December 2009, the Company recorded a $4.6 million liability with a corresponding reduction to additional paid-in capital representing, in the aggregate, Woodbridge’s offer to the Dissenting Holders. The appraisal rights litigation thereafter commenced and is currently ongoing. The outcome of the litigation is uncertain and there is no assurance as to the amount of cash that will be required to be paid to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.
National Bank of South Carolina v. Core Communities of South Carolina, LLC, et al., South Carolina Court of Common Pleas, Fourteenth Judicial Circuit
On January 13, 2010, National Bank of South Carolina filed a complaint in the South Carolina Court of Common Pleas, Fourteenth Judicial Circuit, to commence foreclosure proceedings related to property at Tradition Hilton Head which served as collateral under a note and mortgage executed and delivered by Core South Carolina, LLC, a wholly owned subsidiary of Core, in favor of the lender. Core was secondarily liable as a guarantor for the loan, and Synovus Bank (successor by merger to National Bank of South Carolina) commenced an action to enforce Core’s guarantee. With Core’s concurrence, the property which served as collateral for the loan was placed under the control of a court-appointed receiver. During December 2010, Core and Core South Carolina, on the one hand, and Synovus Bank, on the other hand, executed agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, which resolved the pending litigation and foreclosure disputes between them. Pursuant to the agreements, (i) Core South Carolina transferred to Synovus Bank all of Core South Carolina’s right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property which had a book value as of September 30, 2010 of approximately $1.0 million, and (ii) Synovus Bank released Core and Core South Carolina from any claims arising from or relating to the loan.
Investors Warranty of America, Inc. v. Core Communities of South Carolina, LLC and Core Communities, LLC, et. al., Circuit Court, Jasper County, South Carolina, and Investors Warranty of America, Inc. v. Core Communities, LLC and Horizons Acquisition 5, LLC, Circuit Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida
On April 7, 2010, Investors Warranty of America filed a complaint with the Circuit Court of Jasper County, South Carolina to commence foreclosure proceedings related to property at Tradition Hilton Head which served as collateral for a loan to Core and its subsidiary with a balance of approximately $27.2 million at March 31, 2010. On April 8, 2010, Investors Warranty of America filed a complaint with the Circuit Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida to commence foreclosure proceedings related to property at Tradition, Florida which served as collateral for a loan to Core and its subsidiary with a balance of approximately $86.5 million at March 31,

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2010. Investors Warranty of America subsequently assigned and conveyed its interests in both the Florida and South Carolina loan facilities to PSL Acquisitions, LLC (“PSLA”).On November 8, 2010, Core and its applicable subsidiaries, on the one hand, and PSLA, on the other hand, executed an agreement to resolve the disputes between them. Pursuant to the agreement, Core and its subsidiaries (i) pledged additional collateral to PSLA consisting of membership interests in certain subsidiaries of Core, (ii) granted security interests in the acreage owned by the subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land, (iii) agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and (iv) agreed to an entry into consensual judgments of foreclosure in both foreclosure actions. PSLA agreed not to enforce a deficiency judgment against Core and, in February 2011, has released Core, BFC and each of their affiliates from any claims arising from or relating to the loans.
AmTrust Bank v. Woodbridge Holdings, LLC and Carolina Oak Homes, LLC, United States District Court for the Southern District of Florida
          During November 2009, AmTrust Bank filed a two count complaint against Woodbridge and Carolina Oak, alleging default under a promissory note and breach of a guaranty related to an approximately $37.2 million loan that is collateralized by property owned by Carolina Oak. During December 2009, the OTS closed AmTrust and appointed the FDIC as receiver. On March 3, 2010, the FDIC filed a motion to substitute as the real party in interest and filed a notice of removal. The FDIC subsequently sold the loan to an investor group. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.
Robert D. Dance, individually and on behalf of all others similarly situated v. Woodbridge Holdings Corp. (formerly known as Levitt Corp.), Alan B. Levan, and George P. Scanlon, Case No. 08-60111-Civ-Graham/O’Sullivan, Southern District of Florida
          On January 25, 2008, plaintiff Robert D. Dance filed a purported class action complaint as a putative purchaser of securities against Woodbridge and certain of its officers and directors, asserting claims under the federal securities law and seeking damages. This action was filed in the United States District Court for the Southern District of Florida and is captioned Dance v. Levitt Corp. et al., No. 08-CV-60111-DLG. The securities litigation purports to be brought on behalf of all purchasers of Woodbridge’s securities beginning on January 31, 2007 and ending on August 14, 2007. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by issuing a series of false and/or misleading statements regarding financial results, prospects and condition.
Westchester Fire Insurance Company vs. City of Brooksville, United States District Court, Middle District of Florida, Tampa Division, Case No. 8:09 CV 00062-T23 TBM
          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 amount of the bonds in the approximate amount of $5.4 million. Woodbridge 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. In August 2010, Woodbridge was granted a motion for summary judgment. Subsequent to the motion being granted, the municipality appealed the decision.

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Bluegreen Corporation
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 $0.7 million 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 have vigorously opposed, and intend 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 we will be successful in contesting the current assessment.
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 brought cross-claims for breach of the underlying purchase and sale contract. The seller’s complaint, as amended, includes a fraud allegation, contends that Bluegreen failed to perform under the terms of the purchase and sale contract and claims entitlement to the full 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 are entitled to a return of the full escrow deposit. A trial date of May 31, 2011 has been set for this matter. Bluegreen believes the seller’s allegations are without merit and intends to vigorously defend this claim.
The Office of the Attorney General for the State of Florida (the “AGSF”) has advised Bluegreen that it has accumulated a number of consumer complaints over the past six years against Bluegreen and/or its affiliates related to its timeshare sales and marketing, and has requested that Bluegreen respond on a collective basis as to how it had or would resolve the complaints. Bluegreen has determined that many of these complaints were previously addressed and/or resolved by Bluegreen. The AGSF has also requested that Bluegreen enter into a written agreement in which the parties establish a process and timeframe for determining consumer eligibility for relief (including where applicable monetary restitution, if any). Bluegreen does not believe this matter will have a material effect on Bluegreen’s results of operations, financial condition or its sales and marketing activities in Florida.
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 Cause No. 28769, 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. 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. 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 Southwest. On September 15, 2010 the Court heard oral arguments on whether to reverse or affirm the Appellate Court’s decision. No information is available as to when the Texas Supreme Court will render a decision on the appeal.

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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., in the 284th Judicial District of Montgomery County, Texas, the plaintiffs brought suit 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 sought material damages and the payment of costs to remediate the lake. On September 10, 2010, a tentative settlement of this matter was reached, pursuant to which Bluegreen agreed to pay $0.3 million to provide for improvements to the fish habitat and general usability of the lake environment. The settlement agreement has since been fully executed and as of December 31, 2010 Bluegreen has paid $0.2 million of the agreed upon settlement payment. Bluegreen has accrued the remaining $0.1 million due. Improvements to the lake are ongoing and Bluegreen will disburse the remaining funds as they are needed to complete the improvements.
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, in the United States District Court for the Southern District of Georgia, Brunswick Division, the 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. The plaintiffs 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, the 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 intend to vigorously defend the lawsuit.
On June 3, 2010, in Cause No. 16-2009-CA-008028, styled Community Cable Service, LLC v. Bluegreen Communities of Georgia, LLC and Sanctuary Cove at St. Andrews Sound Community Association, Inc., a/k/a Sanctuary Cove Home Developers Association, Inc., in the Circuit Court of the Fourth Judicial Circuit in and for Duval County, Florida, the plaintiffs filed suit alleging breach by Bluegreen Communities of Georgia and the community association of a bulk cable TV services contract at Bluegreen’s Sanctuary Cove single family residential community being developed in Waverly, Georgia. In its complaint, the plaintiffs alleged that approximately $0.2 million in unpaid bulk cable fees are due from the defendants, and that the non-payment of fees will continue to accrue on a monthly basis. Bluegreen and the community association allege incomplete performance under the contract by the plaintiffs and that the cable system installed was inferior and did not comply with the requirements of the contract. The case went to mediation on September 20, 2010, but no resolution was reached. A trial date has been set for May 5, 2011 in this matter. Bluegreen intends to vigorously defend the lawsuit.
Other Matters
In addition to the matters disclosed above, from time to time in the ordinary course of business we receive individual consumer complaints, as well as complaints received through regulatory and consumer agencies, including Offices of State Attorney Generals. We take these matters seriously and attempt to resolve any such issues as they arise.
Additionally, Bluegreen becomes subject to claims or proceedings from time to time relating to the purchase, subdivision, sale or financing of real estate. From time to time, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties.
BankAtlantic Bancorp
In re BankAtlantic Bancorp, Inc. Securities Litigation, No. 0:07-cv-61542-UU, United States District Court, Southern District of Florida
          On October 29, 2007, Joseph C. Hubbard filed a class action in the United States District Court for the Southern District of Florida against BankAtlantic Bancorp and four of its current or former officers. The Defendants in this action are BankAtlantic Bancorp, Inc., James A. White, Valerie C. Toalson, Jarett S. Levan, John E. Abdo and Alan B. Levan. The Complaint, which was later amended, alleges that during the purported class period of November 9,

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2005 through October 25, 2007, BankAtlantic Bancorp and the named officers knowingly and/or recklessly made misrepresentations of material fact regarding BankAtlantic and specifically BankAtlantic’s loan portfolio and allowance for loan losses. The Complaint sought to assert claims for violations of the Securities Exchange Act of 1934 and Rule 10b-5 and unspecified damages. On December 12, 2007, the Court consolidated into Hubbard a separately filed action captioned Alarm Specialties, Inc. v. BankAtlantic Bancorp, Inc., No. 0:07—cv-61623-WPD. On February 5, 2008, the Court appointed State-Boston Retirement System lead plaintiff and Lubaton Sucharow LLP to serve as lead counsel pursuant to the provisions of the Private Securities Litigation Reform Act.
          On November 18, 2010, a jury returned a verdict awarding $2.41 per share to shareholders who purchased shares of BankAtlantic Bancorp’s Class A Common Stock during the period of April 26, 2007 to October 26, 2007 and retained those shares until the end of the period. The jury rejected the plaintiffs’ claim for the six month period from October 19, 2006 to April 25, 2007. Plaintiffs prior to the beginning of the trial abandoned any claim for any prior period. BankAtlantic Bancorp has filed motions to set aside the verdict, which are fully briefed, and the judge has indicated that if those are denied she will certify issues to the United States Court of Appeals to the Eleventh Circuit before any judgment is entered or claims are satisfied.
          BankAtlantic Bancorp intends to vigorously prosecute post-trial motions and an appeal and then subsequently assert all meritorious available defenses in any claims process.
D.W. Hugo, individually and on behalf of Nominal Defendant BankAtlantic Bancorp, Inc. vs. BankAtlantic Bancorp, Inc., Alan B. Levan, Jarett S. Levan, Jay C. McClung, Marcia K. Snyder, Valerie Toalson, James A. White, John E. Abdo, D. Keith Cobb, Steven M. Coldren, and David A. Lieberman, Case No. 0:08-cv-61018-UU, United States District Court, Southern District of Florida
          On July 2, 2008, D.W. Hugo filed a purported class action which was brought as a derivative action on behalf of BankAtlantic Bancorp pursuant to Florida laws in the United States District Court, Southern District of Florida against BankAtlantic Bancorp and the above listed officers and directors. The Complaint alleges that the individual defendants breached their fiduciary duties by engaging in certain lending practices with respect to BankAtlantic Bancorp’s Commercial Real Estate Loan Portfolio. The Complaint further alleges that BankAtlantic Bancorp’s public filings and statements did not fully disclose the risks associated with the Commercial Real Estate Loan Portfolio and seeks damages on behalf of BankAtlantic Bancorp. This shareholder derivative action is based on the same factual allegations made in BankAtlantic Bancorp, Inc. Securities Litigation and has been stayed pending final resolution of that case. BankAtlantic Bancorp believes the claims to be without merit and intends to vigorously defend this action.
Albert R. Feldman, Derivatively on behalf of Nominal Defendant BankAtlantic Bancorp, Inc. v. Alan B. Levan, et al., Case No. 0846795 07
          On December 2, 2008, the Circuit Court for Broward County stayed a separately filed action captioned Albert R. Feldman, Derivatively on behalf of Nominal Defendant BankAtlantic Bancorp, Inc. vs. Alan B. Levan, et al., Case No. 0846795 07. The Feldman case is a derivative case with allegations virtually identical to those made in the Hugo case. The court granted the motion to stay the action pending further order of the court and allowing any party to move for relief from the stay, provided the moving party gives at least thirty days’ written notice to all of the non-moving parties. BankAtlantic Bancorp believes the claims to be without merit and intends to vigorously defend the actions.
Wilmine Almonor, individually and on behalf of all others similarly situated, vs. BankAtlantic Bancorp, Inc., Steven M. Coldren, Mary E. Ginestra, Willis N. Holcombe, Jarett S. Levan, John E. Abdo, David A. Lieberman, Charlie C. Winningham II, D. Keith Cobb, Bruno L. DiGiulian, Alan B. Levan, James A. White, the Security Plus Plan Committee, and Unknown Fiduciary Defendants 1-50, No. 0:07-cv-61862- DMM, United States District Court, Southern District of Florida.
          On December 20, 2007, Wilmine Almonor filed a purported class action in the United States District Court for the Southern District of Florida against BankAtlantic Bancorp and the above-listed officers, directors, employees, and organizations. The Complaint alleges that during the purported class period of November 9, 2005 to present, BankAtlantic Bancorp and the individual defendants violated the Employment Retirement Income Security Act (“ERISA”) by permitting company employees to choose to invest in BankAtlantic Bancorp’s Class A common stock in light of the facts alleged in BankAtlantic Bancorp, Inc. securities lawsuit. The Complaint seeks to assert claims for breach of fiduciary duties, the duty to provide accurate information, the duty to avoid conflicts of interest under ERISA and seeks unspecified damages. On February 18, 2009, the Plaintiff filed a Second Amended Complaint, which, for the

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first time, identified by name the following additional Defendants that Plaintiff had previously attempted to identify by position: Anne B. Chervony, Lewis F. Sarrica, Susan D. McGregor, Jeff Callan, Patricia Lefebvre, Jeffrey Mindling, Tim Watson, Gino Martone, Jose Valle, Juan Carlos Ortigosa, Gerry Lachnicht, Victoria Bloomenfeld, Rita McManus, and Kathleen Youlden.
          On July 14, 2009, the Court granted in part Defendants’ motion to dismiss the Second Amended Complaint, dismissing the following individual Defendants from Count II: Lewis Sarrica, Susan McGregor, Patricia Lefebvre, Jeffrey Mindling and Gerry Lachnicht. On July 28, 2009, the Court denied Plaintiff’s motion for class certification. On January 13, 2010, the Court ruled that the Plaintiff’s status as a Plan representative threatens the interests of the Plan, and in turn other Plan participants, and threatens the integrity of the judicial process. The court denied the Plaintiff’s request to proceed as a Plan representative and accordingly, the case was limited to the Plaintiff’s individual claim. On June 2, 2010, the parties entered a stipulation of dismissal with prejudice with respect to the Plaintiff’s individual claim and on that same date, the court entered an order of dismissal with respect to those claims.
Jordan Arizmendi, et al., individually and on behalf of all others similarly situated, v. BankAtlantic, Case No. 09-059341 (19), Circuit Court of the 17th Judicial Circuit for Broward County, Florida.
          On November 8, 2010, two pending class action cases against BankAtlantic — Farrington v. BankAtlantic, and Rothman v. BankAtlantic — were consolidated, and a Consolidated Amended Class Action Complaint (“Complaint”) was filed. New purported named plaintiffs were added, and the case is now styled as Jordan Arizmendi, et al., individually and on behalf of all others similarly situated, v. BankAtlantic. The Complaint, which asserts claims for breach of contract and breach of the duty of good faith and fair dealing, alleges that the Bank improperly re-sequenced debit card transactions, improperly assessed overdraft fees on positive balances, and improperly imposed sustained overdraft fees on customers one day sooner than provided for under the applicable account agreement.
SEC Investigation
          In October 2008, BankAtlantic Bancorp received a notice of investigation from the Securities and Exchange Commission, Miami Regional Office and at that time and subsequently, have received subpoenas for information. The subpoenas request a broad range of documents relating to, among other matters, recent and pending litigation to which BankAtlantic Bancorp is or was a party, certain of BankAtlantic Bancorp’s non-performing, non-accrual and charged-off loans, BankAtlantic Bancorp’s cost saving measures, loan classifications, BankAtlantic Bancorp’s asset workout subsidiary, any purchases or sales of BankAtlantic Bancorp’s common stock by officers or directors of BankAtlantic Bancorp and communications with the OTS related to the Orders. Various current and former employees have also received subpoenas for documents and testimony. BankAtlantic Bancorp is fully cooperating with the SEC.
Office of Thrift Supervision Investigation
          On January 6, 2011, the Office of Thrift Supervision advised BankAtlantic that it had determined, subject to receipt of additional information from BankAtlantic, that BankAtlantic engaged in deceptive and unfair practices in violation of Section 5 of the Federal Trade Commission Act relating to certain of BankAtlantic’s deposit-related products. The OTS provided BankAtlantic the opportunity to respond with any additional or clarifying information, and BankAtlantic submitted a written response to the OTS on February 7, 2011 addressing the OTS’s position.
          In the ordinary course of business, the Company and its subsidiaries are also parties to lawsuits as plaintiff or defendant involving its bank operations, lending, tax certificates activities and real estate activities. Additionally, from time to time, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties. 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.
ITEM 4. REMOVED AND RESERVED

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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
      Our Class A Common Stock and Class B Common Stock have substantially identical terms, except as follows:
 
    Holders of our Class A Common Stock are entitled to one vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of the total voting power. Holders of Class B Common Stock have the remaining 78% of the total voting power. If the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53% and the Class B Common Stock will have the remaining 47%. If the number of shares of Class B Common Stock outstanding decreases to 500,000, the fixed voting percentages will be eliminated, and holders of our Class A Common Stock and holders of our Class B Common Stock will each be entitled to one vote per share.
 
    Each share of Class B Common Stock is convertible at the option of the holder thereof into one share of Class A Common Stock.
          In addition to any other approval required by Florida law, the foregoing voting structure may not be amended without the approval of holders of a majority of the outstanding shares of our Class B Common Stock, voting as a separate class.
Market Information
          Our Class A Common Stock is quoted on the Pink Sheets Electronic Quotation Service (“Pink Sheets”) under the ticker symbol “BFCF.PK.” Our Class B Common Stock is quoted on the OTC Bulletin Board under the ticker symbol “BFCFB.OB.”
          The following table sets forth, for the indicated periods, (i) the high and low trading prices for our Class A Common Stock as quoted on the Pink Sheets and (ii) the high and low trading prices for our Class B Common Stock as reported by the National Association of Securities Dealers Automated Quotation System. The over-the-counter stock prices do not include retail mark-ups, mark-downs or commissions.
                                 
    Class A Common Stock     Class B Common Stock  
    High     Low     High     Low  
2009
                               
First Quarter
  $ 0.32     $ 0.06     $ 0.25     $ 0.25  
Second Quarter
  $ 0.51     $ 0.16     $ 0.51     $ 0.25  
Third Quarter
  $ 0.70     $ 0.26     $ 0.40     $ 0.30  
Fourth Quarter
  $ 0.74     $ 0.31     $ 1.24     $ 0.31  
 
                               
2010
                               
First Quarter
  $ 0.55     $ 0.26     $ 0.65     $ 0.60  
Second Quarter
  $ 0.99     $ 0.39     $ 1.25     $ 0.85  
Third Quarter
  $ 0.44     $ 0.30     $ 0.85     $ 0.85  
Fourth Quarter
  $ 0.38     $ 0.20     $ 0.85     $ 0.35  
Holders
          On March 25, 2011, there were approximately 672 record holders of our Class A Common Stock and approximately 441 record holders of our Class B Common Stock.

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Dividends
          We have never paid cash dividends on our common stock. In addition, we recently committed that we will not, without the prior written non-objection of the OTS, declare or pay any dividends or other capital distributions on our common stock.
          See also “Management’s Discussion and Analysis of Financial Condition and Operating Results” and Note 2 of the consolidated financial statements for a discussion regarding restrictions on the ability of BankAtlantic Bancorp, BankAtlantic and Bluegreen to pay dividends to holders of their common stock.
Issuer Purchases of Equity Securities
          On September 21, 2009, BFC’s 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. This program replaces the $10 million repurchase program that BFC’s 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. In 2008, BFC repurchased 100,000 shares of Class A Common Stock at an aggregate cost of $54,000 under the prior program. 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 for the year ended December 31, 2010 or 2009.

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ITEM 6. SELECTED FINANCIAL DATA
          The following table sets forth selected consolidated financial data as of and for the years ended December 31, 2006 through 2010. Certain selected financial data presented below is derived from our consolidated financial statements. This table is a summary and should be read in conjunction with the consolidated financial statements and related notes thereto which are included elsewhere in this report.
(Dollars in thousands, except for per share data)
                                         
    For the Years Ended December 31,  
Statement of Operations Data:   2010     2009     2008     2007     2006  
            As Revised (e)                          
Revenues
                                       
Real Estate and Other
  $ 398,480       54,279       16,870       415,881       573,574  
Financial Services
    284,196       354,087       449,571       520,793       507,746  
 
                             
 
    682,676       408,366       466,441       936,674       1,081,320  
 
                             
 
                                       
Costs and Expenses
                                       
Real Estate and Other
    451,779       207,295       76,470       711,073       617,211  
Financial Services
    426,856       573,467       634,970       579,458       474,311  
 
                             
 
    878,635       780,762       711,440       1,290,531       1,091,522  
 
                             
 
                                       
Gain on bargain purchase of Bluegreen
          182,849                    
(Loss) gain on settlement of investment in Woodbridge’s subsidiary
    (977 )     29,679                    
Gain on extinguishment of debt
    13,049                          
Equity in (loss) earnings from unconsolidated affiliates
    (851 )     33,381       15,064       12,724       10,935  
Impairment of unconsolidated affiliates
          (31,181 )     (96,579 )            
Impairment on investment
          (2,396 )     (15,548 )            
Other income
    2,691       9,763       9,826       17,183       11,479  
 
                             
(Loss) income from continuing operations before income taxes
    (182,047 )     (150,301 )     (332,236 )     (323,950 )     12,212  
Less: (Benefit) provision for income taxes
    105       (68,900 )     15,763       (70,246 )     (516 )
 
                             
(Loss) income from continuing operations
    (182,152 )     (81,401 )     (347,999 )     (253,704 )     12,728  
Discontinued operations
    1,965       (11,931 )     19,388       8,799       (10,554 )
Extraordinary gain
                9,145       2,403        
 
                             
Net (loss) income
    (180,187 )     (93,332 )     (319,466 )     (242,502 )     2,174  
Less: Net (loss) income attributable to noncontrolling interests
    (76,339 )     (120,611 )     (260,567 )     (212,043 )     4,395  
 
                             
Net (loss) income attributable to BFC
    (103,848 )     27,279       (58,899 )     (30,459 )     (2,221 )
Preferred Stock dividends
    (750 )     (750 )     (750 )     (750 )     (750 )
 
                             
Net (loss) income allocable to common stock
  $ (104,598 )     26,529       (59,649 )     (31,209 )     (2,971 )
 
                             
 
                                       
Common Share Data (a), (b) (c)
Basic (Loss) Earnings Per Common Share
                                       
(Loss) earnings per share from continuing operations
  $ (1.42 )     0.71       (1.63 )     (0.90 )     (0.04 )
Earnings (loss) per share from discontinued operations
    0.03       (0.24 )     0.11       0.03       (0.05 )
Earnings per share from extraordinary gain
                0.20       0.06        
 
                             
Net (loss) income per common share
  $ (1.39 )     0.47       (1.32 )     (0.81 )     (0.09 )
 
                             
 
                                       
Diluted (Loss) Earnings Per Common Share
                                       
(Loss) earnings per share from continuing operations
  $ (1.42 )     0.71       (1.63 )     (0.90 )     (0.04 )
Earnings (loss) per share from discontinued operations
    0.03       (0.24 )     0.11       0.03       (0.05 )
Earnings per share from extraordinary gain
                0.20       0.06        
 
                             
Net (loss) income per common share
  $ (1.39 )     0.47       (1.32 )     (0.81 )     (0.09 )
 
                             
 
                                       
Basic weighted average number of common shares outstanding
    75,379       57,235       45,097       38,778       33,249  
 
                             
Diluted weighted average number of common and common equivalent shares outstanding
    75,379       57,235       45,097       38,778       33,249  
 
                             

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Item 6. Selected Financial Data — continued
(Dollars in thousands)
                                         
    December 31,  
Balance Sheet (at period end)   2010     2009     2008     2007     2006  
            As Revised (e)                          
Loans, loans held for sale and notes receivable, net
  $ 3,614,455       3,963,086       4,317,645       4,528,538       4,603,505  
Real estate inventory
  $ 343,497       484,927       268,763       270,229       847,492  
Securities
  $ 556,842       467,520       979,417       1,191,173       1,081,980  
Total assets
  $ 5,813,066       6,042,101       6,395,582       7,114,433       7,605,766  
Deposits
  $ 3,891,190       3,948,818       3,919,796       3,953,405       3,867,036  
Securities sold under agreements to repurchase and federal funds purchased
  $ 22,764       27,271       279,726       159,905       128,411  
Other borrowings (d)
  $ 1,440,353       1,362,000       1,556,362       1,992,718       2,398,662  
BFC shareholders’ equity
  $ 142,872       245,083       112,867       184,037       177,585  
Noncontrolling interests
  $ 78,256       159,312       262,554       558,950       698,323  
Total equity
  $ 221,128       404,395       375,421       742,987       875,908  
 
(a)   Since its inception, BFC has not paid any cash dividends on its common stock.
 
(b)   While the Company has two classes of common stock outstanding, the two-class method is not presented because the Company’s capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes.
 
(c)   Prior to the merger of I.R.E. Realty Advisory Group, Inc. (“I.R.E. RAG”) with and into the Company during November 2007, the 4,764,285 shares of the Company’s Class A Common Stock and 500,000 shares of the Company’s Class B Common Stock that were owned by I.R.E. RAG were considered outstanding. However, because the Company owned 45.5% of the outstanding common stock of I.R.E. RAG, 2,165,367 shares of Class A Common Stock and 227,250 shares of Class B Common Stock were eliminated from the number of shares outstanding for purposes of computing earnings per share.
 
(d)   Other borrowings include advances from FHLB, notes and mortgage notes payable, and other borrowings, receivable-backed notes payable and junior subordinated debentures.
 
(e)   See Notes 1 of the “Notes to Consolidated Financial Statements” for additional information about our revisions to the Company’s consolidated financial statements.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
          BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) is a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), and a non-controlling interest in Benihana, Inc. (“Benihana”). 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 of December 31, 2010, BFC and its subsidiaries had total consolidated assets and liabilities of approximately $5.8 billion and $5.6 billion, respectively and total equity of approximately $221.1 million, including noncontrolling interests equity of approximately $78.3 million.
          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. 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 the future, we will consider other 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. During March 2011, Bluegreen announced its intention to evaluate strategic alternatives for the Bluegreen Communities division, including a possible sale of Bluegreen Communities. Each company has engaged advisors to assist it in pursuing strategic alternatives. BFC is supportive of Benihana and Bluegreen in achieving their objectives.
          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, “Woodbridge” 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 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. See Note 3 of the “Notes to Consolidated Financial Statements” for additional information about the merger.
          On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares, or 52%, of Bluegreen’s outstanding stock. As a result of the purchase, we hold a controlling interest in Bluegreen and, since November 16, 2009, we have consolidated Bluegreen’s results into our financial statements. Any reference to Bluegreen’s results of operations for 2009 includes only 45 days of activity for Bluegreen relating to the period from November 16, 2009, the date of the share purchase, through December 31, 2009 (the “Bluegreen Interim Period”). Prior to November 16, 2009, our approximate 29% equity investment in Bluegreen was accounted for under the equity method. See Note 4 of the “Notes to Consolidated Financial Statements” for additional information about the Bluegreen share acquisition on November 16, 2009.

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          In addition to our merger with Woodbridge and our acquisition of additional shares of Bluegreen’s common stock, we also increased our investment in BankAtlantic Bancorp during 2009 and 2010 through our participation in shareholder rights offerings engaged in by BankAtlantic Bancorp during the years. Specifically, we exercised subscription rights in BankAtlantic Bancorp’s rights offerings to purchase an aggregate of 14.9 million shares of BankAtlantic Bancorp’s Class A Common Stock during the third quarter of 2009 and 10.0 million shares of BankAtlantic Bancorp’s Class A Common Stock during June and July 2010. In the aggregate, these purchases increased our ownership interest in BankAtlantic Bancorp from approximately 30% to 45% and our voting interest in BankAtlantic Bancorp from approximately 59% to 71%.
          As a holding company with controlling positions in BankAtlantic Bancorp and Bluegreen, generally accepted accounting principles (“GAAP”) requires the consolidation of the financial results of both entities. As a consequence, the assets and liabilities of both entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including Woodbridge, 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. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At December 31, 2010, we owned approximately 52% of Bluegreen’s common stock and had an approximately 45% ownership interest and 71% voting interest in BankAtlantic Bancorp.
          During 2010, the following developments had significant financial impact:
          Deconsolidation of Certain Subsidiaries of Core —In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with its lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.
          In December 2010, Core and one of its subsidiaries entered agreements, including, without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefore, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.
          Revisions to Consolidated Financial Statements — The allocation of the Bluegreen purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and is subject to change within the measurement period as valuations are finalized. If the amounts are changed within the measurement period in a business combination, then the adjustment to change these provisional amounts are retrospectively adjusted as of the date of acquisition. Additionally, any offset relating to amortization/accretion is also retrospectively adjusted in the appropriate periods. The company finalized the valuations in the fourth quarter of 2010. These adjustments resulted in a decrease in total assets and total liabilities of approximately $3.4 million and $3.0 million, respectively, and a decrease in total equity of approximately $0.4 million. Furthermore, the net income attributable to BFC decreased by approximately $289,000 and earnings per share from continuing operations decreased by approximately $0.01 per common share. For

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further discussion on such adjustments, see Note 4 — Share Acquisitions of the “Notes to Consolidated Financial Statements”.
     Additionally, during the fourth quarter, management identified certain errors in its previously reported financial statements for 2010 and 2009. Because these errors are not material to the Company’s financial statements for 2010 or 2009, individually or in the aggregate, the Company corrected these errors as revisions to its quarterly financial statements in 2010 and its December 31, 2009 financial statements. These adjustments include entries to correct errors in the following areas: the recognition of interest income associated with the acquired notes receivable in accordance with the accounting guidance Loans and Debt Securities with Deteriorated Credit Quality; an adjustment to the provision for loan losses for the acquired notes receivable; interest expense recognition for notes payable of certain defaulted debt at Core Communities and Carolina Oak at the defaulted interest rate, where the stated interest rate was previously used; the recognition of income tax benefits associated with unrealized gains in accumulated other comprehensive income; and an adjustment to deferred taxes to correct an impairment to real estate inventory which was reflected post the acquisition date and accounted for as a temporary difference, which should have been included in the determination of deferred taxes at the acquisition date, November 16, 2009, as part of the Bluegreen purchase price allocation.
     The impact for the three months ended March 31, 2010, was an increase to sales of real estate of $10.2 million, net of allowance, a decrease to interest income of $5.8 million, an increase to interest expense of $1.3 million, and a decrease in income tax benefit of $653,000. The impact for the three months ended June 30, 2010, was an increase to sales of real estate of $12.3 million, net of allowance, a decrease to interest income of $6.5 million, an increase to interest expense of $1.3 million, and an increase in income tax provision of $2.2 million. The impact for the three months ended September 30, 2010, was a decrease to sales of real estate of $5.8 million, net of allowance, an increase to interest income of $2.6 million, a decrease to interest expense of $3.2 million, and an increase in income tax benefit of $1.8 million. For further discussion on such adjustments, see Note 40 — Selected Quarterly Results (Unaudited). The Company will correct these amounts in future filings when it discloses them as comparable periods.
     The impact for the six months ended June 30, 2010, was an increase to sales of real estate of $22.5 million, net of allowance, a decrease to interest income of $ 12.3 million, an increase to interest expense of $2.6 million, and an income tax benefit of $2.9 million.
     The impact for the nine months ended September 30, 2010 was an increase to sales of real estate of $16.8 million, net of allowance, a decrease to interest income of $9.7 million, a decrease to interest expense of $471,000, and an income tax provision of $1.1 million.
     The impact of these adjustments for 2009 was an increase to sales of real estate of $2.4 million, an increase to interest expense of $579,000, an increase to the bargain purchase gain of $4.2 million, and an income tax benefit related to other comprehensive income of $2.8 million.
          Additional recent developments and related financial matters are discussed below.
BFC Financial Corporation Summary of Consolidated Results of Operations
The table below sets forth the Company’s summarized results of operations (in thousands):
                         
    For the Years Ended December 31,  
    2010     2009     2008  
            As Revised          
Real Estate and Other
  $ (38,159 )     106,876       (128,755 )
Financial Services
    (143,993 )     (188,277 )     (219,244 )
 
                 
Loss from continuing operations
    (182,152 )     (81,401 )     (347,999 )
Discontinued operations, less income tax
    1,965       (11,931 )     19,388  
Extraordinary gain, net of income tax
                9,145  
 
                 
Net loss
    (180,187 )     (93,332 )     (319,466 )
Less: Net loss attributable to noncontrolling interests
    (76,339 )     (120,611 )     (260,567 )
 
                 
Net (loss) income attributable to BFC
    (103,848 )     27,279       (58,899 )
5% Preferred stock dividends
    (750 )     (750 )     (750 )
 
                 
Net (loss) income allocable to common stock
  $ (104,598 )     26,529       (59,649 )
 
                 
          The Company reported a net loss attributable to BFC of $103.8 million in 2010, as compared to net income attributable to BFC of $27.3 million in 2009 and net loss attributable to BFC of $58.9 million in 2008. Results for the years ended December 31, 2010, 2009 and 2008 include $2.0 million of income, an $11.9 million loss and $19.4 million of income, respectively, related to discontinued operations, which were associated with Ryan Beck and Core Communities commercial leasing projects, as discussed further in Note 6 of the “Notes to Consolidated Financial Statements”. Real Estate and Other results for 2009 include an approximately $182.8 million bargain purchase gain associated with Bluegreen’s share acquisition on November 16, 2009. See Note 4 of the “Notes to Consolidated Financial Statements”.
          The Company’s Real Estate and Other business activities are reported in four segments which are i) BFC Activities ii) Real Estate Operations, iii) Bluegreen Communities and iv) Bluegreen Resorts. BFC’s consolidated financial statements include the results of operations of Bluegreen from November 16, 2009 (when we acquired a controlling interest in Bluegreen) through December 31, 2009. Accordingly, Bluegreen’s results of operations since November 16, 2009 are reported through the Bluegreen Resorts and Bluegreen Communities segments. Prior to

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November 16, 2009, we owned approximately 9.5 million shares of Bluegreen’s common stock representing approximately 29% of such stock, and the investment in Bluegreen was accounted for under the equity method of accounting. Our interest in Bluegreen’s earnings and losses prior to November 16, 2009 are 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 presentation and allocation of the assets, liabilities and results of operations of each segment may not reflect the actual economic costs of the segment as a stand-alone business. If a different basis of allocation were utilized, the relative contributions of the segments might differ but, in management’s view, the relative trends in segments would not likely be impacted.
          The results of our business segments and other information related to each segment are discussed below in BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. See also Note 34 of the “Notes to Consolidated Financial Statements” contained in Item 8 of this report.

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Consolidated Financial Condition
Consolidated Assets and Liabilities
          Total assets at December 31, 2010 and 2009 were $5.8 billion and $6.0 billion, respectively. The changes in components of total assets between December 31, 2009 and December 31, 2010 are summarized below. 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 $2.4 million and the following impacts to the Company’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 Bluegreen’s retained interests; (2) liabilities increased by $416.7 million, primarily representing the consolidation of non-recourse debt obligations associated with third parties, partially offset by the elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.9 million, including a decrease of approximately $1.5 million to noncontrolling interests (see Note 5 of the “Notes to Consolidated Financial Statements” for further information). The consolidation of BankAtlantic Bancorp’s factoring joint venture did not have any impact on our consolidated financial statements other than a decrease in investments in unconsolidated affiliates. Other than such increases and decreases, the changes in components of total assets from December 31, 2009 to December 31, 2010 were primarily comprised of:
    an increase in BankAtlantic Bancorp’s interest-bearing deposits in other banks primarily reflecting $284 million of higher cash balances at the Federal Reserve Bank and investments in $46 million of short-term time deposits at other banks;
 
    an increase in securities available for sale reflecting BankAtlantic Bancorp’s purchase of $182 million of agency and municipal securities that mature in less than one year partially offset by the sale of $44 million of mortgage-backed securities as well as repayments;
 
    a decrease in BankAtlantic Bancorp’s tax certificate balances primarily relating to redemptions, partially offset by the purchase of $102 million of tax certificates during 2010;
 
    a decline in BankAtlantic Bancorp’s FHLB stock related to lower FHLB advance borrowings;
 
    an increase in BankAtlantic Bancorp’s loans held for sale associated with the transfer of commercial real estate loans into the held for sale classification;
 
    a decrease in BankAtlantic Bancorp’s loans receivable balances associated with $166 million of net-charge-offs, $61 million of loans transferred to real estate owned, $112 million of loan sales and repayments of loans in the ordinary course of business combined with a significant decline in loan originations and purchases;
 
    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;
 
    a decrease in real estate inventory of $121.9 million at Core due to the relinquishment of title to substantially all of the land both in Florida and South Carolina to its lenders, and a decrease in real estate inventory reflecting a sale of $6.5 million at BankAtlantic,
 
    an increase in real estate owned associated with BankAtlantic Bancorp’s commercial real estate and residential loan foreclosures;
 
    a decrease in BankAtlantic Bancorp’s accrued interest receivables primarily resulting from tax certificate activities and lower loan balances partially offset by higher securities available for sale accrued interest receivable associated with the purchases of agency and municipal securities;
 
    a decrease in office properties and equipment resulting from BankAtlantic Bancorp’s depreciation and the transfer of BankAtlantic Bancorp’s $31.5 million of fixed assets to assets held for sale net of impairments in connection with its decision to seek a buyer for its Tampa branch network;
 
    additional decreases in properties and equipment due to an impairment charge of $3.9 million to an office building located in Fort Lauderdale, Florida and the transfer of Core’s irrigation facilities in settlement of its debt obligations in Florida and South Carolina;
 
    an increase in BankAtlantic Bancorp’s assets held for sale associated with cash and fixed assets transferred to held for sale upon the announcement that BankAtlantic intended to seek a buyer for its Tampa branches; and
 
    a decrease in assets held for sale from discontinued operations resulting from the sale of Core’s Projects in June 2010;

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          The Company’s total liabilities at each of December 31, 2010 and 2009 were $5.6 billion. Other than increases due to the above described change in accounting principle at January 1, 2010, the primary changes in components of total liabilities are summarized below:
    a decrease in BankAtlantic’s interest bearing deposit account balances associated with the transfer of $255.6 million of Tampa-based interest-bearing deposits to deposits held for sale and lower time deposits partially offset by higher interest bearing checking account balances reflecting the historically low interest rate environment during 2010;
 
    a decrease in BankAtlantic’s non-interest-bearing deposit balances primarily due to the transfer of $85.5 million of Tampa-based non-interest bearing deposits to held for sale and higher average balances per customer account;
 
    lower FHLB advances at BankAtlantic and short term borrowings due to repayments using proceeds from the loan repayments;
 
    a decrease in notes and mortgages notes payable and other borrowings at Core of approximately $112.3 million due to debt settlement agreements with its lenders to relinquish properties that serve as collateral for the debts and ownership interest in certain subsidiaries (see Notes 2 and 23 of the Notes to Consolidated Financial Statements), and a decrease in BankAtlantic Bancorp’s bonds payable associated with the repayment of a $0.7 million mortgage-backed bond;
 
    an increase in BankAtlantic Bancorp’s junior subordinated debentures liability due to interest deferrals; and
 
    a decrease in liabilities related to assets held for sale from discontinued operations resulting from the sale of Core’s Projects in June 2010.
Redeemable 5% Cumulative Preferred Stock
          On June 7, 2004, the Board of Directors of the Company designated 15,000 shares of the Company’s preferred stock as 5% Cumulative Preferred Stock (“5% Preferred Stock”). On June 21, 2004, the Company sold all 15,000 shares of the 5% Preferred Stock to an investor group in a private offering.
          The 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 (the “Redemption Price”) ranging from $1,025 per share during 2011 to $1,000 per share during and after 2015. 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 Redemption Price in a voluntary liquidation or winding up of the Company. Holders of the 5% Preferred Stock 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, payable quarterly. Since June 2004, the Company has paid quarterly dividends on the 5% Preferred Stock of $187,500. The 5% Preferred Stock has no voting rights except as required by Florida law.
          On December 17, 2008, the Company amended its Articles of Incorporation (the “Amendment”) to change 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 5% 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 Series B Convertible Preferred Stock (the “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 Benihana’s Convertible Preferred Stock owned by the Company. Additionally, in the event the Company defaults on its obligation to make dividend payments on the 5% Preferred Stock, the Amendment entitles the holders of BFC’s 5% Preferred Stock 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.
          In December 2008, based on an analysis of the 5% Preferred Stock after giving effect to the Amendment, the Company determined that the 5% Preferred Stock met the requirements to be re-classified outside of permanent equity at its fair value at the effective date of the Amendment of approximately $11.0 million into the mezzanine category as Redeemable 5% Cumulative Preferred Stock. The remaining amount of approximately $4.0 million continues to be

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classified in Additional Paid in Capital in the Company’s Consolidated Statements of Financial Condition. The fair value of the 5% Preferred Stock was calculated by using an income approach by discounting estimated cash flows at a market discount rate.
Noncontrolling Interest
          The following table summarizes the noncontrolling interests held by others in our subsidiaries (in thousands):
                 
    December 31,  
    2010     2009  
            As Revised  
BankAtlantic Bancorp
  $ 7,823       88,910  
Bluegreen
    44,362       42,731  
Joint ventures
    26,071       27,671  
 
           
 
  $ 78,256       159,312  
 
           
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 statement 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, the valuation of real estate acquired in connection with foreclosure or in satisfaction of loans, the valuation of the fair value of assets and liabilities in the application of the acquisition method of accounting, evaluation of goodwill and other intangible assets for impairment, the valuation of real estate and its impairment reserves, revenue and cost recognition on percent complete projects, estimated costs to complete construction, the valuation of investments in unconsolidated subsidiaries, 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 receivable; (ii) the valuation of retained interests in notes receivable sold and the related gains on sales of notes receivable; (iii) Bluegreen acquired notes receivable; (iv) impairment of goodwill and long-lived assets; (v) valuation of securities as well as the determination of other-than-temporary declines in value; (vi) accounting for business combinations; (vii) the valuation of real estate; (viii) revenue and cost recognition on percent complete projects; (ix) estimated cost to complete construction; (x) accounting for deferred tax asset valuation allowance; and (xi) accounting for contingencies . See also Note 1, Summary of Significant Accounting Policies, of the “Notes to Consolidated Financial Statements” included in Item 8 of this report for a detailed discussion of our significant accounting policies.
Business Combinations
          In December 2007, the FASB revised its authoritative guidance for business combinations which significantly changed the accounting for business combinations. Under this guidance, subject to limited exceptions, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value. Additionally, due diligence and transaction costs incurred to effect a business combination are expensed as incurred, as opposed to being capitalized as part of the acquisition purchase price. This guidance also includes a substantial number of new disclosure requirements. The Company adopted this guidance on January 1, 2009.
          The Company accounts for its acquisitions in accordance with the accounting guidance for business combinations. If the Company makes a “bargain purchase”, the Company recognizes a gain in the income statement on the acquisition date. A bargain purchase is a business combination in which the amounts of the identifiable net assets acquired and the liabilities assumed, as measured on the acquisition date in accordance with the accounting guidance for business combinations, exceeds the aggregate of (i) the consideration transferred, as measured in accordance with the accounting guidance, which generally requires acquisition date fair value; (ii) the fair value of any non-controlling interest in the acquiree, and (iii) in a business combination achieved in stages, the acquisition date fair value of the Company’s previously held equity interest in the acquiree. This allocation process requires extensive use of estimates

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and assumptions, including estimates of future cash flows to be generated by the acquired assets. The Company may utilize independent third parties to assist the Company in assessing market conditions when appropriate. The Company is also required to periodically review these judgments and estimates and adjust them accordingly. If conditions change from those expected, it is possible that the results could change in future periods. Certain identifiable intangible assets, such as management contracts, are not amortized, but instead are reviewed for impairment on at least an annual basis, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company accounted for the acquisition of a controlling interest in Bluegreen in November 2009 as a bargain purchase. Accordingly, judgments regarding the value of Bluegreen’s assets and liabilities as of the acquisition date have had, and may continue to have, a significant impact on the Company’s operating results.
          The Company accounted for the acquisition of a controlling interest in Bluegreen in November 2009 in accordance with the accounting guidance of business combinations. As part of the accounting for the November 2009 Bluegreen share acquisition, management was required to evaluate the fair value of Bluegreen’s inventory and certain of Bluegreen’s contracts. Based on preliminary estimates made as part of the evaluation, the Company recorded a $183.1 million “bargain purchase gain” during the fourth quarter of 2009. However, as previously disclosed, the allocation of the purchase price was based on preliminary estimates of the fair value of Bluegreen’s inventory and contracts, and is subject to change within the measurement period as valuations are finalized. If the amounts are changed within the measurement period in a business combination, then the adjustment to change these provisional amounts are retrospectively adjusted as of the date of acquisition. Additionally, any offset relating to amortization/accretion is also retrospectively adjusted in the appropriate periods. During the fourth quarter of 2010, the Company adjusted the preliminary value assigned to the assets and liabilities of Bluegreen in order to reflect additional information obtained since the acquisition date. These adjustments resulted in a decrease in total assets and total liabilities of approximately $3.4 million and $3.0 million, respectively, and a decrease in total equity of approximately $0.4 million. Furthermore, the net income attributable to BFC decreased by approximately $289,000 and earnings per share from continuing operations decreased by approximately $0.01 per common share.
Fair Value Measurements
          We are required to disclose the fair value of our investments under accounting guidance for fair value measurements. Based on this accounting guidance, fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, this accounting guidance establishes a three-tier fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The three-tier fair value hierarchy prioritizes the inputs used in measuring fair value as follows:
    Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;
 
    Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
 
    Level 3. Unobservable inputs, when there is little or no market data, which require the reporting entity to develop its own assumptions.
          In determining fair value, we are sometimes required to use various valuation techniques. When valuation techniques other than those described as Level 1 are utilized, management must make estimates and judgments in determining the fair value for its investments. The degree to which management’s estimates and judgments is required is generally dependent upon the market pricing available for the investments, the availability of observable inputs, the frequency of trading in the investments and the investment’s complexity. If we make different judgments regarding unobservable inputs, we could potentially reach different conclusions regarding the fair value of our investments.

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Intangible Assets
          We evaluate our intangible assets when events and circumstances indicate that assets may be impaired and when the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The carrying value of these assets is dependent upon estimates of future earnings that they are expected to generate. If cash flows decrease significantly, intangible assets may be impaired and would be written down to their fair value. The estimates of useful lives and expected cash flows require us to make significant judgments regarding future periods that are subject to outside factors.
          Intangible assets include management contracts in the amount of $63 million at December 31, 2010, which were originated in connection with the November 16, 2009 acquisition of a controlling interest in Bluegreen. Such management contracts are not amortized, but instead are reviewed for impairment at least annually, or if events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
          At December 31, 2010 and 2009, other intangible assets also consist of core deposit intangible assets of approximately $12.7 million and $16.2 million, respectively, which were initially recorded at fair value and then amortized over the average life of the respective assets, ranging from 7 years to 10 years.
Revenue Recognition and Inventory Cost Allocation
          The Company’s revenue and all related costs and expenses from house and land sales are recognized at the time that closing has occurred, when title and possession of the property and the risks and rewards of ownership transfer to the buyer, and when the Company does not have a substantial continuing involvement in accordance with the accounting guidance for sales of real estate. In order to properly match revenues with expenses, the Company estimates construction and land development costs incurred and to be incurred, but not paid at the time of closing. Estimated costs to complete are determined for each closed home and land sale based upon historical data with respect to similar product types and geographical areas and allocated to closings along with actual costs incurred based on a relative sales value approach. To the extent the estimated costs to complete have significantly changed, the Company will adjust cost of sales in the current period for the impact on cost of sales of previously sold homes and land to ensure a consistent margin of sales is maintained.
          Revenue is recognized for certain land sales on the percentage-of-completion method when the land sale takes place prior to all contracted work being completed. Pursuant to the requirements of the accounting guidance for sales of real estate, if the seller has some continuing involvement with the property and does not transfer substantially all of the risks and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the seller’s continuing involvement. In the case of land sales, this involvement typically consists of final development activities. The Company recognizes revenue and related costs as work progresses using the percentage of completion method, which relies on estimates of total expected costs to complete required work. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs at the time of sale. Actual revenues and costs to complete construction in the future could differ from current estimates. If the estimates of development costs remaining to be completed are significantly different from actual amounts, then the revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.
          In accordance with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Codification Standards (“ACS”) 970-605, Real Estate-Revenue Recognition, Bluegreen recognizes revenue on VOI and homesite sales when a minimum of 10% of the sales price has been received in cash (buyer’s commitment), the legal rescission period has expired, collectibility of the receivable representing the remainder of the sales price is reasonably assured and it has completed substantially all of its obligations with respect to any development related to the real estate sold. Bluegreen believes its methodology to estimate the collectibility of the receivables representing the remainder of the sales price of real estate sold is reasonably reliable. See the further discussion of Bluegreen’s policies regarding the estimation of credit losses on notes receivable below. Should Bluegreen become unable to reasonably estimate the collectibility of receivables, it may have to defer the recognition of sales and its results of operations could be negatively impacted. Under timeshare accounting rules, the buyer’s minimum cash down payment towards the purchase of VOIs is met only if the cash down payment received, reduced by the value of certain incentives provided to the buyer at the time of sale, is at least 10% of the sales price. If, after consideration of the value of the incentive, the total down payment received from the buyer is less than 10% of the sales price, the VOI sale, and the related cost of sales and direct selling expenses, are deferred until such time that sufficient cash is received from the customer, generally through

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receipt of mortgage payments. Changes to the quantity, type, or value of sales incentives that Bluegreen provides to buyers of VOIs may result in additional VOI sales being deferred, which could materially adversely impact Bluegreen’s results of operations.
          In cases where all development has not been substantially completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of accounting. Should Bluegreen’s estimates of the total anticipated cost of completing Bluegreen Resorts’ or Bluegreen Communities’ projects increase, Bluegreen may be required to defer a greater amount of revenue or may be required to defer revenue for a longer period of time, which could materially adversely impact its results of operations.
          The timeshare accounting rules require the use of the relative sales value method for relieving VOI inventory and recording cost of sales. Under the relative sales value method, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage—the ratio of total estimated development cost to total estimated VOI revenue, including the estimated incremental revenue from the resale of repossessed VOI inventory, generally as a result of the default of the related receivable. For Communities’ real estate projects, costs are allocated to individual homesites in the Communities’ projects based on the relative estimated sales value of each homesite without regard to defaults or repossessed inventory. Under this method, the allocated cost of a homesite is relieved from inventory and recognized as cost of sales upon recognition of the related sale. Should Bluegreen’s estimates of the sales values of its VOI and homesite inventories differ materially from their ultimate selling prices, Bluegreen’s gross profit could be adversely impacted.
          Fee-Based Sales Commissions and Other Operations Revenue
          In addition to sales of real estate, Bluegreen also generates revenue from the activities listed below. The table provides a brief description of the applicable revenue recognition policy:
     
Activity   Revenue is recognized as:
Fee-based sales commissions
  The sale transaction with the VOI purchaser is consummated in accordance with the terms of the agreement with the third-party developer and the related consumer rescission period has passed.
 
   
Resort Management and service fees
  Management services are rendered. (1)
 
   
Resort title fees
  Escrow amounts are released and title documents are completed.
 
   
Rental and sampler program
  Guests complete stays at the resorts. Rental and sampler program proceeds are classified as a reduction to “cost of other resort and communities operations”.
 
   
Communities realty commissions
  Sales of third-party-owned real estate are completed.
 
   
Golf course and ski hill daily fees
  Services are provided.
 
(1)   In connection with its management of the property owner’s associations, among other things, Bluegreen acts as agent for the property owner’s association to operate the respective resorts as provided under the management agreement. In certain cases, the personnel at the resort are Bluegreen employees. The property owners’ association bears all of the economic costs of such personnel and generally pays Bluegreen in advance of, or simultaneously to, the payment of payroll. In accordance with the accounting guidance for reporting revenues gross versus net, reimbursements from the property owners’ associations relating to direct pass-through costs are recorded net of the related expenses.
Allowance for Loan Losses on VOI Notes Receivables
          Bluegreen records an estimate of expected uncollectibility on VOI notes receivable as a reduction of revenue at the time of recognition of a timeshare sale. Estimates of uncollectible VOI notes receivable are based on historical uncollectibles for similar VOI notes receivable over the applicable historical period, using a technique referred to as static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of those notes.

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          Bluegreen also considers certain qualitative data, including the aging of the respective receivables, current default trends by origination year, current economic conditions, and the FICO scores of the buyers. Additionally, under timeshare accounting requirements, no consideration is given for future recoveries of defaulted inventory in the estimate of uncollectible VOI notes receivable. Bluegreen reviews the reserve for loan losses on at least a quarterly basis. If defaults increase, results of operations could be materially adversely impacted. During 2010, Bluegreen recorded $21.2 million of charges as a result of changing the estimate of future loan losses on loans originated prior to implementation of FICO® score-based credit underwriting standards in December of 2008.
          Acquired Notes Receivable-As part of the Bluegreen share acquisition, the Company acquired assets including a pool of notes receivable consisting principally of homogenous consumer timeshare loans originated by Bluegreen. Consistent with the accounting guidance, the Company has elected an accounting policy based on expected cash flows including, following the guidance on maintaining the integrity of a pool of multiple loans accounted for as a single asset. The loans have common risk characteristics as defined in the accounting guidance Loans and Debt Securities with Deteriorated Credit Quality, including similar risk ratings, as defined and monitored by risk rating agencies, term, purpose and similar collateral type (Vacation Ownership Interests (“VOI’s”)). The Company evaluates the pool of loans accounted for as a single asset for indications of further impairment. Purchased loans are considered to be impaired if the Company does not expect to receive all contractually required cash flows due to concerns about credit quality. The excess of the cash flows expected to be collected measured as of the acquisition date, over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan using a level yield methodology. The difference between contractually required payments as of the acquisition date and the cash flows expected to be collected is referred to as the nonaccretable difference.
          Subsequent decreases to expected principal cash flows result in a charge to provision for credit losses and a corresponding increase to a valuation allowance included in the allowance for loan losses. Subsequent increases in expected principal cash flows result in a recovery of any previously recorded allowance for loan losses, to the extent applicable, and a reclassification from nonaccretable difference to accretable yield for any remaining increase. Changes in expected interest cash flows may result in reclassifications to/from the nonaccretable difference. Loan disposals, which may include receipt of payments in full from the borrower or foreclosure, result in removal of the loan from the loan pool at its allocated carrying amount.
Retained Interest in Notes Receivable Sold
          Bluegreen periodically sells notes receivable originated by its vacation ownership business in connection with the sale of VOIs. In connection with such transactions, Bluegreen retains interest in the notes receivable sold. Prior to the adoption of Accounting Standards Update (“ASU”) 2009-17, these retained interests were reported as assets and treated as available-for-sale investments and, accordingly, carried at fair value. Changes in the fair values of the retained interests in notes receivable sold considered temporary were included in its shareholders’ equity as accumulated other comprehensive income, net of income taxes. The portion of other-than-temporary declines in fair value that represented credit losses were charged to operations.
          Subsequent to the adoption of ASU 2009-17 Bluegreen consolidated special purpose finance entities associated with prior securitization transactions that previously qualified for off-balance-sheet sales treatment and as a result, the retained interests were eliminated. See Note 5 for additional information related to the impact of the adoption of ASU 2009-17.
Allowance for loan losses
          The allowance for loan losses is maintained at an amount that BankAtlantic Bancorp believes to be a reasonable estimate of probable losses inherent in its loan portfolio. BankAtlantic Bancorp has developed policies and procedures for evaluating its allowance for loan losses which considers all information available to BankAtlantic Bancorp. However, BankAtlantic Bancorp relies on estimates and judgments regarding issues where the outcome is unknown. As a consequence, if circumstances differ and the amount of losses actually realized in BankAtlantic Bancorp’s loan portfolio could be significantly higher or lower from its estimates and judgments, the allowance for loan losses may decrease or increase significantly.
          The calculation of BankAtlantic Bancorp’s allowance for loan losses consists of two components. The first component requires identifying impaired loans based on BankAtlantic Bancorp’s management classification and, if necessary, assigning a valuation allowance to the impaired loans. Valuation allowances are established using

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BankAtlantic Bancorp’s management estimates of the fair value of collateral or based on valuation models that present value estimated expected future cash flows discounted at the loans effective interest rate. These valuations are based on available information and require estimates and subjective judgments about fair values of the collateral or expected future cash flows. Most of BankAtlantic Bancorp’s loans do not have an observable market price, and an estimate of the collection of contractual cash flows is based on the judgment of management. It is likely that materially different results would be obtained if different assumptions or conditions were to prevail. As a consequence of the estimates and assumptions required to calculate the first component of the allowance for loan losses, a change in these highly uncertain estimates could have a materially favorable or unfavorable impact on our financial condition and results of operations.
          The second component of the allowance for loan losses requires BankAtlantic Bancorp to group loans that have similar credit risk characteristics so as to form a basis for estimating probable losses inherent in the group of loans based on historical loss percentages and delinquency trends as it relates to the group. BankAtlantic Bancorp’s management assigns a quantitative allowance to these groups of loans by utilizing historical loss experiences. BankAtlantic Bancorp’s management uses its judgment to determine the length of the time used in the historical loss experience. During the year ended December 31, 2008, management used a 2 year loss experience to calculate the loss experience. However, due to the rapid decline in economic conditions and real estate values, during 2009, management shortened its historical loss experience by portfolio to between six months and one year, in order to reflect the current heighted loss experience in the quantitative allowance. The shortened historical loss experience assumption remained throughout 2010. The historical loss period is selected based on management’s judgment and a change in this loss period may result in material changes to the quantitative loss allowance. BankAtlantic Bancorp’s management also assigns a qualitative allowance to these groups of loans in order to adjust the historical data, if necessary, for qualitative factors that exist currently that were not present in the historical data. These qualitative factors include delinquency trends, actual loan classification migration trends, economic and business conditions, concentration of credit risk, loan-to-value ratios, non-performing loan trends and external factors. In deriving the qualitative allowance BankAtlantic Bancorp’s management uses significant judgment to qualitatively adjust the historical loss experiences for current trends that existed at period end that were not reflected in the calculated historical loss ratios and to adjust the allowance for the changes in the current economic climate compared to the economic environment that existed historically. A subsequent change in data trends or the external environment may result in material changes in this component of the allowance from period to period.
          Management believes that the allowance for loan losses reflects a reasonable estimate of incurred credit losses as of the statement of financial condition date. As of December 31, 2010, BankAtlantic Bancorp’s allowance for loan losses was $162.1 million. See “Provision for Loan Losses” for a discussion of the amounts of BankAtlantic Bancorp’s allowance assigned to each loan product. The estimated allowance, which was derived from the above methodology, may be significantly different from actual realized losses. Actual losses incurred in the future are highly dependent upon future events, including the economies of geographic areas in which BankAtlantic Bancorp holds loans, especially in Florida. These factors are beyond management’s control. Accordingly, BankAtlantic Bancorp may incur credit losses in excess of the amounts estimated by its allowance for loan losses. In addition, various regulatory agencies, as an integral part of their examination process, periodically review its allowance for loan losses. Such agencies may require BankAtlantic Bancorp to recognize additions to the allowance based on its judgments and information available to them at the time of their examination and such judgments may differ from management’s judgment.
          BankAtlantic Bancorp analyzes its loan portfolio quarterly by monitoring the loan mix, credit quality, loan-to-value ratios, concentration by geographical area, vintage, historical trends and economic conditions. As a consequence, the allowance for loan losses estimates will change from period to period. During the three year period ended December 31, 2006, real estate markets experienced significant price increases accompanied by an abundance of available mortgage financing. Additionally, based on historical loss experience during that time, BankAtlantic Bancorp’s credit policies focused its loan production on collateral based loans and the discontinuation of certain loan products. These factors, other internal metrics and external market factors favorably impacted their provision for loan losses and allowance for loan losses during the years ended December 31, 2006. Conversely, during the four years ended December 31, 2010, the real estate market (and particularly the residential real estate market) and general economic conditions, both nationally and in Florida, rapidly deteriorated with significant reductions in the market prices and volume of residential real estate sold, plummeting collateral values, dramatic increases in unemployment and severe tightening of credit availability to borrowers. The impact of these rapidly deteriorating real estate market conditions and adverse economic conditions on our loan portfolios resulted in a significant increase in the ratio of allowance for loan losses to total loans from 0.94% at December 31, 2006 to 5.08% at December 31, 2010. We believe that our performance in subsequent periods will be highly sensitive to changes in the Florida real estate market as well

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as the length of the current downturn in real estate valuation, availability of mortgage financing and the severity of unemployment in Florida and nationally. If the current negative real estate and economic conditions continue or deteriorate further BankAtlantic Bancorp is likely to experience significantly increased credit losses.
Valuation of investment securities
          We record our securities available for sale and derivative instruments in our statement of financial condition at fair value. We also disclose fair value estimates in our statement of financial condition for investment securities at cost. We generally use market and income approach valuation techniques and a fair value hierarchy to prioritize the inputs used in valuation techniques. Our policy is to use quoted market prices (Level 1 inputs) when available. However quoted market prices are not available for BankAtlantic Bancorp’s mortgage-backed securities, REMIC’s, other securities and certain equity securities, which therefore requires the use of Level 2 or Level 3 inputs. The classification of assumptions as Level 2 or Level 3 inputs is based on judgments and the classification of the inputs could change based on the availability of observable market data.
          BankAtlantic Bancorp subscribes to a third-party service to assist it in determining the fair value of mortgage-backed securities and real estate mortgage conduits. The estimated fair value of these securities at December 31, 2010 was $241.0 million. Matrix pricing are used to value these securities as identical securities that are not traded on active markets. Matrix pricing computes the fair value of mortgage-backed securities and real estate mortgage conduits based on the coupon rate, maturity date and estimates of future repayment rates obtained from trades of securities with similar characteristics and from market data obtained from brokers. BankAtlantic Bancorp considers the above inputs Level 2. Upon the sale of securities, BankAtlantic Bancorp back-tests the values obtained from matrix pricing for reasonableness. The valuations obtained from matrix pricing are not actual transactions and may not reflect the actual amount that would be realized upon sale. While the interest rate and prepayment assumptions used in matrix pricing are representative of assumptions that BankAtlantic Bancorp believes market participants would use in valuing these securities, different assumptions may result in significantly different results. Additionally, current observable data may not be available in subsequent periods which would cause BankAtlantic Bancorp to utilize Level 3 inputs to value these securities. The mortgage-backed and REMIC securities that BankAtlantic owns are government agency guaranteed with minimal credit risk. These securities are of high credit quality and BankAtlantic believes could be liquidated in the near future; however, the price obtained upon sale could be higher or lower than the fair value obtained through matrix pricing. In light of the current volatility and uncertainty in credit markets, it is difficult to estimate with accuracy the price that could be obtained for these securities and the time that it could take to sell them in an orderly transaction.
Other-than-temporary impairment of securities
          We perform an evaluation on a quarterly basis to determine if any of our equity investments and debt securities are other-than-temporarily impaired. In making this determination, we consider the extent and duration of the impairment, the nature and financial condition of the issuer and our ability and intent to hold securities for a period sufficient to allow for any anticipated recovery in market value. If an equity security is determined to be other-than-temporarily impaired, we record an impairment loss as a charge to income for the period in which the impairment loss is determined to exist, resulting in a reduction to our earnings for that period. If a debt security is determined to be other-than-temporarily impaired, we record an impairment loss as a charge to income if we intend to sell the securities before they recover or if we do not expect to recover the securities historical cost due to credit loss. Management exercises significant judgment in estimating the amount of specific valuation allowances in an impairment which is generally based on the present value of expected cash flows. As of December 31, 2010, BankAtlantic Bancorp had $105.6 million of impaired securities with an unrealized loss of $48,000. There is no assurance that we will not determine that we have additional impaired securities in the future, particularly as a result of current market uncertainties and the challenging economic and credit market conditions.

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Impairment of Goodwill and Long Lived Assets
Goodwill Impairment
          We test goodwill for impairment annually or when events or circumstances occur that may result in goodwill impairment during interim periods. On the BankAtlantic Bancorp level, the test requires BankAtlantic Bancorp to determine the fair value of its reporting units and compare the reporting units’ fair value to its carrying value. BankAtlantic Bancorp’s reporting units are comprised of Community Banking, Commercial Lending, Tax Certificate Operations, Capital Services and Investment Operations. The fair values of the reporting units are estimated using discounted cash flow present value valuation models and market multiple techniques.
          While management of BankAtlantic Bancorp believes the sources utilized to arrive at the fair value estimates are reliable, different sources or methods could have yielded different fair value estimates. These fair value estimates require a significant amount of judgment. If the fair value of a reporting unit is below the carrying amount, a second step of the goodwill impairment test is performed. This second step requires BankAtlantic Bancorp to determine the fair value of all assets (recognized and unrecognized) and liabilities in a manner similar to a business combination purchase price allocation. Since there is no active market for many of BankAtlantic Bancorp’s assets, management derives the fair value of the majority of these assets using net present value models. As a consequence, BankAtlantic Bancorp’s management estimates rely on assumptions and judgments regarding issues where the outcome is unknown and, as a result, actual results or values may differ significantly from these estimates. Additionally, declines in the market capitalization of BankAtlantic Bancorp’s common stock affect the aggregate fair value of the reporting units. Changes in management’s valuation of BankAtlantic Bancorp reporting units and the underlying assets as well as declines in BankAtlantic Bancorp’s market capitalization may affect future earnings through the recognition of additional goodwill impairment charges.
          During the years ended December 31, 2009 and 2008, goodwill impairment charges for BankAtlantic Bancorp were approximately $8.5 million (net of a purchase accounting adjustment from step acquisition of approximately $0.6 million) and $48.3 million, respectively. As of December 31, 2010, the remaining goodwill was $12.2 million.
          In determining the fair value of the reporting units, BankAtlantic Bancorp used a combination of discounted cash flow techniques and market multiple methodologies. These methods utilize assumptions for expected cash flows, discount rates, and comparable financial institutions to determine market multiples. The aggregate fair value of all reporting units derived from the above valuation techniques 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 subject company. The values separately derived from each valuation technique (i.e., discounted cash flow and market multiples) were used to develop an overall estimate of a reporting unit’s fair value. Different weighting of the various fair value techniques could result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value. 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 were anticipated loan and deposit growth, interest rates and revenue growth. The discount rates were estimated based on the 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. Minor changes in these assumptions could impact significantly 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.
          When the estimated fair value of a reporting unit is below the carrying value, goodwill may be impaired, and the second step of the goodwill impairment evaluation is performed. The second step involves calculating the implied fair value of the reporting unit’s goodwill. The implied fair value of goodwill is determined in the same manner as it is determined in a business combination. The fair value of the reporting unit’s assets and liabilities, including previously unrecognized intangible assets, is individually determined. The excess fair value of the reporting unit over the fair value of the reporting unit’s net assets is the implied goodwill. Significant judgment and estimates are involved in estimating the fair value of the assets and liabilities of the reporting unit.

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          The value of the implied goodwill is highly sensitive to the estimated fair value of the reporting unit’s net assets. The fair value of the reporting unit’s net assets is estimated using a variety of valuation techniques, including the following:
    recent data observed in the market, including for similar assets,
 
    cash flow modeling based on projected cash flows and market discount rates, and
 
    estimated fair value of the underlying loan collateral.
          The estimated fair values reflect assumptions regarding how a market participant would value the net assets and includes appropriate credit, liquidity, and market risk premiums that are indicative of the current environment. If the implied fair value of the goodwill for the reporting unit exceeds the carrying value of the goodwill for the reporting unit, no goodwill impairment is recorded. Changes in the estimated fair value of the individual assets and liabilities may result in a different amount of implied goodwill, and the amount of goodwill impairment, if any. Future changes in the fair value of the reporting unit’s net assets may result in future goodwill impairment.
Impairment of Long-lived Assets
          Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When testing a long-lived asset for recoverability, it may be necessary to review estimated lives and adjust the depreciation period. Changes in circumstances and the estimates of future cash flows, as well as evaluating estimated lives of long-lived assets, are subjective and involve a significant amount of judgment. A change in the estimated life of a long-lived asset may substantially change depreciation and amortization expense in subsequent periods. At the BankAtlantic Bancorp level, for purposes of recognition and measurement of an impairment loss, BankAtlantic Bancorp is required to group long-lived assets at the lowest level for which identifiable cash flows are independent of other assets. These cash flows are based on projections from management reports which are based on subjective interdepartmental allocations. Real estate inventory and other long-lived real estate assets are evaluated for impairment on a project-by-project basis. Fair values are not available for many of our long-lived assets, and estimates must be based on available information, including prices of similar assets and present value valuation techniques using Level 3 unobservable inputs. Long-lived assets subject to the above impairment analysis include property and equipment, internal-use software, real estate inventory and real estate owned.
          We generally utilize broker price opinions, third party offers to purchase, discounted cash flows or third party appraisals to assist us in determining the fair value of real estate inventory, operating lease contracts and real estate owned. The appraiser or brokers use professional judgment in determining the fair value of the properties and we may also adjust these values for changes in market conditions subsequent to the valuation date when current appraisals are not available. The assumptions used to calculate the fair values are generally Level 3 inputs and are highly subjective and extremely sensitive to changes in market conditions. The amount ultimately realized upon the sale of these properties or the termination of operating leases may be significantly different than the recorded amounts. The assumptions used are representative of assumptions that we believe market participants would use in determining fair value of these assets or lease contracts, but different assumptions may result in significantly different results. BankAtlantic Bancorp also validates its assumptions by comparing completed transactions with its prior period fair value estimates and may check its assumptions against multiple valuation sources. The outstanding balance of real estate owned and real estate inventory was $74.5 million and $343.5 million, respectively, as of December 31, 2010. The minimum lease payments of operating lease contracts executed for BankAtlantic’s branch expansion were $27.4 million at December 31, 2010. Future events, including declines in real estate values, may result in additional impairments of long-lived assets or operating leases.
Accounting for Deferred Tax Asset Valuation Allowance
          The Company reviews the carrying amount of its deferred tax assets quarterly to determine if the establishment of a valuation allowance is necessary. If, based on the available evidence, it is more-likely-than-not that all or a portion of the Company’s deferred tax assets will not be realized, a deferred tax valuation allowance would be established. Consideration is given to all positive and negative evidence related to the realization of the deferred tax assets.
          In evaluating the available evidence, management considers historical financial performance, expectation of future earnings, length of statutory carry forward periods, experience with operating loss and tax credit carry forwards not expiring unused, tax planning strategies and timing of reversals of temporary differences. Significant judgment is

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required in assessing future earnings trends and the timing of reversals of temporary differences. The Company’s evaluation is based on current tax laws as well as management’s expectations of future performance based on its strategic initiatives. Changes in existing tax laws and future results differing from expectations may result in significant changes in the deferred tax assets valuation allowance.
          Based on our evaluation as of December 31, 2010, 2009 and 2008, a net deferred tax asset valuation allowance was established for the entire amount of the Company and its subsidiaries’ net deferred tax assets as the realization of these assets did not meet the more-likely-than-not criteria of the Accounting Standards Codification (“ASC”). During the fourth quarter of 2008, market conditions in the financial services industry significantly deteriorated with the bankruptcies and government bail-outs of large financial services entities. This market turmoil led to a tightening of credit, lack of consumer confidence, increased market volatility and widespread reduction in business activity. These economic conditions, as well as the continued deterioration in real estate markets, especially in Florida, adversely effected BankAtlantic’s business. As a consequence of the worsening economic conditions during the fourth quarter of 2008, it appeared more-likely-than-not that the Company and its subsidiaries would not realize its deferred tax assets resulting in a deferred tax asset valuation allowance for the entire amount of its net deferred tax assets. During the year ended December 31, 2010, the Company recognized significant losses and economic conditions, while showing signs of recovery, did not significantly improve, resulting in the Company and its subsidiaries maintaining its deferred tax valuation allowance for the entire amount of its deferred tax asset. However, significant judgment is required in evaluating the positive and negative evidence for the establishment of the deferred tax asset valuation allowance, and if future events differ from expectations or if there are changes in the tax laws, a substantial portion or the entire deferred tax asset benefit may be realized in the future. The Company’s net deferred tax assets can be carried forward for 20 years and applied to offset future taxable income. In November 2009, net operating loss tax laws changed enabling the Company’s subsidiaries to recognize a benefit in the aggregate of approximately $66.3 million associated with the Company’s 2009 taxable loss. The Company’s subsidiaries received part of the cash proceeds from the net operating loss carryback during the year ended December 31, 2010, and the Company expects to receive an additional $10.8 million when the final review is completed by the Internal Revenue Service. See Note 25 of the Notes to Consolidated Financial Statements for additional information.
Impact of Inflation
          The financial statements and related financial data and notes presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.
          Unlike most industrial companies, virtually all of the Company’s and its subsidiaries’ assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general price levels. Although interest rates generally move in the same direction as inflation, the magnitude of such changes varies. Furthermore, as it relates to Bluegreen, increases in Bluegreen’s construction and development costs would result in increases in the sales price of its VOIs. There is no assurance that Bluegreen will be able to increase or maintain the current level of its sales prices or that increased construction costs will not have a material adverse impact on Bluegreen’s gross margin. In addition, inflation is often accompanied by higher interest rates which could have a negative impact on consumer demand and the costs of financing activities. Rising interest rates as well as increased materials and labor costs may reduce margins.

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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, 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 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 operator and franchisor engaged in the quick service and organic food industries, and the activities of Snapper Creek Equity Management, LLC (“Snapper Creek”).
          On November 16, 2009, we purchased approximately 7.4 million additional shares of Bluegreen’s common stock for an aggregate purchase price of approximately $23 million, which increased our ownership in Bluegreen from 9.5 million shares, or 29%, to 16.9 million shares or 52%. As a result of the purchase, we have a controlling interest in Bluegreen and, accordingly, have consolidated Bluegreen’s results since November 16, 2009 into our financial statements and include those results in the Bluegreen Resorts and Bluegreen Communities segments. Prior to November 16, 2009, Woodbridge other operations included an equity investment in Bluegreen.
          The discussion that follows reflects the operations and related matters of BFC Activities (in thousands).
                                         
                            Change     Change  
    For the Years Ended December 31,     2010 vs.     2009 vs.  
    2010     2009     2008     2009     2008  
        (As Revised)              
Revenues
                                       
Other revenues
  $ 1,781       1,296             485       1,296  
 
                             
 
    1,781       1,296             485       1,296  
 
                             
Cost and Expenses
                                       
Cost of sales of real estate
          7,749       59       (7,749 )     7,690  
Interest expense, net
    6,264       6,511       7,641       (247 )     (1,130 )
Impairment of goodwill
          2,001             (2,001 )     2,001  
Selling, general and administrative expenses
    25,602       30,388       36,886       (4,786 )     (6,498 )
 
                             
 
    31,866       46,649       44,586       (14,783 )     2,063  
Gain on bargain purchase of Bluegreen
          182,849             (182,849 )     182,849  
(Loss) gain on settlement of investment in Woodbridge’s subsidiary
    (977 )     16,296             (17,273 )     16,296  
Equity in (loss) earnings from unconsolidated affiliates
    (2,045 )     32,276       8,844       (34,321 )     23,432  
Impairment of unconsolidated affiliates
          (31,181 )     (96,579 )     31,181       65,398  
Impairment of investments
          (2,396 )     (15,548 )     2,396       13,152  
Investment gains
          6,654       2,076       (6,654 )     4,578  
Other income
    6,481       5,775       8,970       706       (3,195 )
 
                             
(Loss) income from continuing operations before income taxes
    (26,626 )     164,920       (136,823 )     (191,546 )     301,743  
Less: Benefit for income taxes
    (7,097 )     (35,503 )     (14,887 )     28,406       (20,616 )
 
                             
(Loss) income from continuing operations
    (19,529 )     200,423       (121,936 )     (219,952 )     322,359  
Extraordinary gain
                9,145             (9,145 )
 
                             
Net (loss) income
  $ (19,529 )     200,423       (112,791 )     (219,952 )     313,214  
 
                             
For the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009
          Other revenues for the years ended December 31, 2010 and 2009 related to franchise revenues generated by Pizza Fusion totaling $1.8 million and $1.3 million, respectively.
          Cost of sales of real estate for the year ended December 31, 2009 was $7.7 million as a result of capitalized interest written-off in connection with the impairment charges of inventory of real estate recorded in Core and Carolina Oak.

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BFC Activities
          General and administrative expenses decreased $4.8 million to $25.6 million for the year ended December 31, 2010 from $30.4 million for 2009. The decrease in general and administrative expenses in 2010 was primarily attributable to lower compensation and benefits expense and the elimination of public company related costs since the merger of Woodbridge and BFC in 2009. This was offset in part by higher accrued audit fees incurred during 2010 and a write-off of intangible assets related to Pizza Fusion in 2009. Included in general and administrative expenses are fees earned in connection with certain management advisory services provided by a wholly owned subsidiary of BFC.
          Interest expense consists of interest incurred less interest capitalized. Interest incurred totaled $6.3 million and $7.4 million for the years ended December 31, 2010 and 2009, respectively. No interest was capitalized for the year ended December 31, 2010 while $931,000 was capitalized for 2009. This resulted in interest expense of $6.3 million in the year ended December 31, 2010, compared to $6.5 million in 2009.
          During the year ended December 31, 2009, we wrote-off the full $2.0 million of goodwill related to our investment in Pizza Fusion.
          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 period from January 1 through November 16, 2009 was $32.3 million (after the amortization of approximately $28.4 million related to the change in the basis as a result of the impairment charges on this investment during the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009). We reviewed our investment in Bluegreen for impairment on a quarterly basis or as events or circumstances warranted for other-than-temporary declines in value. Based on the results of the evaluations of the investment in Bluegreen, we recorded an other-than-temporary impairment charge of approximately $31.2 million during the year ended December 31, 2009.
          During the year ended December 31, 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.
          The increase in other income for the year ended December 31, 2010 compared to the same period in 2009 was primarily due real estate advisory fees. In June 2010, BankAtlantic Bancorp Parent Company and BankAtlantic 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. During the year ended December 31, 2010, BFC recognized approximately $787,000 of real estate advisory service fees under this agreement.
          During the second quarter of 2010, we recognized a tax benefit of approximately $7.6 million resulting from an expected additional tax refund of approximately $5.8 million due to a recent change in IRS guidance, approximately $1.0 million of which we anticipate paying to the Debtors’ Estate pursuant to the Settlement Agreement related to the Chapter 11 Cases, and a tax benefit of $1.8 million associated with a reduction in the deferred tax valuation allowance from continuing operations to reflect the future taxable income associated with unrealized gains in accumulated other comprehensive income. The $1.0 million expected to be paid to the Debtors’ Estates 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 $5.8 million expected tax refund by the IRS. The gain on settlement of investment in Woodbridge’s subsidiary during the year ended December 31, 2009 reflected the reversal into income of the loss in excess of investment in Levitt and Sons after the settlement of Levitt and Sons’ bankruptcy was finalized, which resulted in a $40.4 million gain on a consolidated basis in the first quarter of 2009. The $40.4 million gain was reduced by the $10.7 million accrual, representing the portion of the tax refund due to the Levitt and Sons’ estate, resulting in a $29.7 million gain on settlement of investment in Woodbridge’s subsidiary, of which $16.3 million was recorded in the BFC Activities segment.
For the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
          Cost of sales of real estate for the year ended December 31, 2009 increased to $7.7 million as a result of a capitalized interest write-off recorded in connection with the impairment charges of inventory of real estate recorded in Core and Carolina Oak. Cost of sales of real estate for the year ended December 31, 2008 was $59,000 and related to the expensing of interest previously capitalized as a result of sales at Core and Carolina Oak.

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          General and administrative expenses decreased $6.5 million to $30.4 million for the year ended December 31, 2009 compared to $36.9 million for 2008. The decrease was attributable to lower professional services as we incurred costs associated with certain of our securities investments in the year ended December 31, 2008 while these costs were not incurred in the year ended December 31, 2009, and lower severance charges related to the reductions in workforce associated with the bankruptcy filing of Levitt and Sons. In addition, we also had lower insurance costs, as Levitt and Sons’ related insurance costs were not incurred after June 30, 2008, and lower incentive expenses. These decreases were offset in part by incurred franchise expenses related to Pizza Fusion in the year ended December 31, 2009, compared to no franchise expenses in 2008 period as we acquired Pizza Fusion in September 2008.
          Interest incurred totaled $7.4 million and $8.6 million for the years ended December 31, 2009 and 2008, respectively, while interest capitalized totaled $931,000 for the year ended December 31, 2009 and $927,000 for 2008. This resulted in interest expense of $6.5 million in the year ended December 31, 2009, compared to $7.6 million in 2008. The decrease in interest expense was mainly due to the repayment of an intersegment loan in June 2008, which resulted in lower interest expense in 2009, and lower interest rates in 2009 compared to 2008.
          During the year ended December 31, 2009, we wrote-off the full amount of goodwill related to our investment in Pizza Fusion in the amount of $2.0 million.
          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 period from January 1 through November 16, 2009 was $32.3 million (after the amortization of approximately $28.4 million related to the change in the basis as a result of the impairment charges on this investment during the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009. For the year ended December 31, 2008, our interest in Bluegreen’s earnings was $8.8 million (after the amortization of approximately $9.2 million related to the change in the basis as a result of the impairment charge on this investment at September 30, 2008). We reviewed our investment in Bluegreen for impairment on a quarterly basis or as events or circumstances warranted for other-than-temporary declines in value. Based on the results of the evaluations of the investment in Bluegreen, other-than-temporary impairment charges of approximately $31.2 million and $94.4 million were recorded during the years ended December 31, 2009 and 2008, respectively. In the year ended December 31, 2007, no other-than-temporary charges related to the investment in Bluegreen were recorded.
          Investment gains were approximately $6.7 million for the year ended December 31, 2009 compared to $2.1 million in 2008. This increase was primarily due to a gain related to the sale of our shares in Office Depot during 2009. This was offset by a realized gain on the sale of publicly traded equity securities in 2008 of approximately $796,000 by venture partnership that BFC controls.
          The decrease in other income for the year ended December 31, 2009 compared to the same period in 2008 was primarily due to a decline in interest income from approximately $1.6 million for the year ended December 31, 2009 compared to $3.8 million in 2008. This decrease was primarily due to lower cash balances and lower interest rates in 2009 compared to 2008.
          Income tax benefit includes the amount of the expected refund from the Department of the Treasury of approximately $34.6 million. In November 2009, the Workers, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted. The Act includes a provision that allows most businesses to elect to increase the net operating loss (“NOLs”) carryback period from two years under current law to as much as five years for NOLs generated in either 2008 or 2009 (but not both). BFC anticipates that this election will benefit the Company by allowing it to carryback Woodbridge’s NOLs that were generated in 2008 and obtain refunds of taxes paid in the carryback years.
2008 Step acquisitions — Purchase Accounting
          BFC’s acquisition in 2008 of additional shares of BankAtlantic Bancorp’s Class A Common Stock, was accounted for as a step acquisition under the purchase method of accounting then in effect. Accordingly, the assets and liabilities acquired were revalued to reflect market values at the date of acquisition. The discounts and premiums arising as a result of such revaluation are generally being accreted or amortized, net of tax, over the remaining life of the assets and liabilities.

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          In 2010, the net impact of purchase accounting decreased our consolidated net loss by approximately $1.2 million, of which $2.4 million, $728,000 and $189,000 related to BankAtlantic Bancorp’s loans receivable, properties and equipment and other assets, respectively, partially offset by the effect of purchase accounting associated with core deposit intangible asset of approximately $2.3 million. In 2009, the net impact of purchase accounting increased our consolidated net loss by approximately $5.9 million, including an $8.9 million loss due to the purchase accounting associated with Core’s real estate impairment, partially offset by the effect of purchase accounting associated with property and equipment of approximately $1.2 million, loans receivable of approximately $2.2 million and goodwill of approximately $583,000. In 2008, the net impact of purchase accounting decreased our consolidated net loss by approximately $8.4 million, of which approximately $4.7 million and $1.7 million was due to effects of purchase accounting associated with the investment in Bluegreen and goodwill, respectively.
BFC Activities- Liquidity and Capital Resources
          As of December 31, 2010 and 2009, we had cash, cash equivalents and short-term investments totaling approximately $29 million and $45 million, respectively. The decrease in cash, cash equivalents and short-term investments was due to BFC’s operating and general and administrative expenses, junior subordinated debentures interest payments of approximately $6.0 million, and the purchase of shares of BankAtlantic Bancorp’s Class A Common Stock in BankAtlantic Bancorp’s 2010 rights offering to its shareholders. This decrease was offset in part by the receipt of an income tax refund, net of amounts owed to the Levitt and Sons bankruptcy estate resulting from recent tax law changes as discussed below.
          During 2010, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock in connection with the exercise of subscription rights granted to it in BankAtlantic Bancorp’s rights offering. The aggregate purchase price for those shares was $15.0 million. BFC exercised its basic subscription rights to purchase 5,986,865 shares, and the remaining 4,013,135 shares were acquired by BFC pursuant to its over-subscription request. The shares acquired in the rights offering increased BFC’s ownership interest in BankAtlantic Bancorp by approximately 8% to 45% and BFC’s voting interest in BankAtlantic Bancorp by approximately 5% to 71%.
          Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen and Woodbridge are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, short-term investments, dividends or distributions from our subsidiaries and dividends from Benihana. As discussed further in this report, recent tax law changes have resulted in the receipt of significant tax refunds. We have 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 Settlement Agreement relating to the Chapter 11 Cases, 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 $11.7 million will be paid to the Debtors’ Estate pursuant to the Settlement 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. BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock without first receiving a written non-objection from the OTS. In addition, during February 2009, BankAtlantic Bancorp elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt. BankAtlantic Bancorp is permitted to defer quarterly interest payments for up to 20 consecutive quarters. During the deferral period, BankAtlantic Bancorp is prohibited from paying dividends to its shareholders, including BFC. While BankAtlantic Bancorp can end the deferral period at any time, BankAtlantic Bancorp has indicated that it anticipates that it may continue to defer such interest payments for the foreseeable future. Furthermore, BFC has not received cash dividends from Bluegreen and does not expect to receive cash dividends from Bluegreen in the foreseeable future. Certain of Bluegreen’s credit facilities contain terms which may limit the payment of cash dividends.
          BFC, on a parent company only basis, has committed that it will not, without the prior written non-objection of the OTS, (i) incur, issue, renew or roll over any current lines of credit, guarantee the debt of any other entity or otherwise incur any additional debt, except as contemplated by BFC’s business plan or in connection with

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BankAtlantic’s compliance requirements applicable to it or (ii) declare or make any dividends or other capital distributions other than dividends payable on BFC’s currently outstanding preferred stock of approximately $187,500 a quarter.
          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 incurrence of long-term secured or unsecured indebtedness (subject to compliance with its commitment to the OTS), the issuance of 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 year ended December 31, 2010 or 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. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.
          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 Levitt and Sons bankruptcy estates (the “Debtors Estate”), 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.

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          In November 2009, the Workers, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted. The Act extended the net operating loss (“NOL”) carry-back period from two years to up to five years for the 2008 and 2009 tax years and, as a result, allowed 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 will be payable to the Debtors 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 $1.0 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 December 31, 2010, we have a liability of approximately $11.7 million, representing the portion of tax refunds to be shared with the Debtors Estate pursuant to the Settlement Agreement. As of December 31, 2010, $8.4 million of the $11.7 million portion of the tax refund to be paid to the Debtors Estate was received and placed in an escrow account. The $8.4 million amount is included as restricted cash in the Company’s Consolidated Statement of Financial Condition.
          On September 21, 2009, BFC and Woodbridge consummated their 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. 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 receives 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. 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. Benihana is currently considering strategic alternatives, including a possible sale of the company. In the event that a sale transaction is consummated the Company would receive a minimum of $20 million in consideration for its shares of the Convertible Preferred Stock.
          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 2011 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.

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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 owned two commercial properties in Hillsborough County, Florida. During the fourth quarter of 2010, the limited liability company recorded an impairment charge related to these properties, $1.9 million of which was recognized by BFC/CCC’s wholly-owned subsidiary. The $1.9 million impairment charge exceeded the carrying value of our investment. At December 31, 2010, the Company classified the negative basis of the investment of approximately $1.3 million in other liabilities on the Company’s Consolidated Statement of Financial Condition. At December 31, 2009, the carrying amount of this investment was approximately $690,000, and is included as an asset 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. On March 25, 2011, the limited liability company reached a settlement with its lender and has conveyed the commercial properties securing the loan via a deed in lieu of foreclosure. BFC and BFC/CCC’s wholly-owned subsidiary were released from all obligations and guarantees related to the two commercial properties.
          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 December 31, 2010 and 2009, the carrying amount of this investment was approximately $282,000 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 this guarantee 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 Operations Segment
          The Real Estate Operations segment includes the subsidiaries through which Woodbridge historically conducted its real estate business activities. These activities were concentrated in Florida and South Carolina and included the development and sale of land, the construction and sale of single family homes and townhomes and the leasing of commercial properties through Core prior to its liquidation in 2010 and Carolina Oak, which was engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008. The Real Estate Operations segment includes the operations of 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 2010, the demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefor, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with accounting guidance for consolidation, a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million was recorded and is included in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011.
          In December 2010, Core and one of its subsidiaries entered agreements, including without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefor, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.
          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. Accordingly, the results of operations for the Projects are included in the Company’s Consolidated Statements of Operations in discontinued operations. On June 10, 2010, Core sold the Projects for approximately $75.4 million. As a result of the sale, a $2.6 million gain on sale of discontinued operations was realized in the second quarter of 2010. See Note 6 of the “Notes to Consolidated Financial Statements” for further information.
          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. While there may have been an issue with respect to compliance with certain covenants in the loan documents, we do not believe that an event of default occurred. Through participation in a court-ordered mediation of this matter, the parties agreed to tentative terms to settle the matter and are currently negotiating a formal settlement

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agreement. It is currently expected that this settlement agreement, if finalized, will provide for (i) Woodbridge to pay $2.5 million to the investor group, (ii) Carolina Oak to convey to the investor group the real property securing the loan via a stipulated foreclosure or deed in lieu, (iii) the investor group to release Woodbridge and Carolina Oak from their obligations relating to the debt or, alternatively, to agree not to pursue certain remedies, including a deficiency judgment, that would otherwise be available to them, in each case subject to certain conditions, and (iv) the litigation to be dismissed. There is no assurance that the settlement will be finalized on the contemplated terms, or at all.
Real Estate Operations
                                         
                            Change     Change  
    For the years ended December 31,     2010 vs     2009 vs  
    2010     2009     2008     2009     2008  
    (As Revised)                  
Revenues:
                                       
Sales of real estate
  $ 2,739       6,605       13,752       (3,866 )     (7,147 )
Other revenues
    1,397       2,312       3,033       (915 )     (721 )
 
                             
 
    4,136       8,917       16,785       (4,781 )     (7,868 )
 
                             
 
                                       
Costs and expenses:
                                       
Cost of sales of real estate
    23,232       82,105       22,724       (58,873 )     59,381  
Interest expense, net
    12,745       6,293       2,075       6,452       4,218  
Selling, general and administrative expenses
    9,481       16,451       20,648       (6,970 )     (4,197 )
Other expense
    3,889       5,433             (1,544 )     5,433  
 
                             
Total costs and expenses
    49,347       110,282       45,447       (60,935 )     64,835  
 
                             
 
                                       
Gain on extinguishment of debt
    13,049                   13,049        
Interest income and other income
    892       526       3,341       366       (2,815 )
 
                             
Loss before income taxes
    (31,270 )     (100,839 )     (25,321 )     69,569       (75,518 )
(Provision) benefit for income taxes
                             
 
                             
Loss from continuing operations, net of taxes
    (31,270 )     (100,839 )     (25,321 )     69,569       (75,518 )
Discontinued operations:
                                       
Net income (loss) from discontinued operations, net of taxes
    2,465       (15,632 )     2,783       18,097       (18,415 )
 
                             
Net loss
  $ (28,805 )     (116,471 )     (22,538 )     87,666       (93,933 )
 
                             
For the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009
          Revenues from sales of real estate decreased to $2.7 million for the year ended December 31, 2010 from $6.6 million for 2009. During the year ended December 31, 2010, Core sold approximately 8 acres, generating revenues of approximately $2.5 million, compared to the sale of approximately 13 acres, which generated revenues of approximately $1.1 million in 2009. Core did not recognize deferred revenue for the year ended December 31, 2010, but recognized approximately $5.3 million on previously sold land for the year ended December 31, 2009. Core did not recognize any look back revenue for the year ended December 31, 2010 while an insignificant amount was recognized for the same period in 2009. There were no home sales at Carolina Oak in the year ended December 31, 2010. During 2009, Carolina Oak generated $320,000 in revenues from the sale of 1 unit.
          Other revenues decreased to $1.4 million for the year ended December 31, 2010 compared to $2.3 million for 2009. The decrease was primarily 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 for the year ended December 31, 2010 decreased to $23.2 million from $82.1 million for 2009 due to the recognition of lower impairment charges associated with inventory of real estate and decreased sales and selling efforts during 2010. We recorded approximately $20.8 million of impairment charges in 2010 compared to $80.3 million in 2009. Costs of sales of real estate before impairment charges for the years ended December 31, 2010 and 2009 were $2.4 million and $1.8 million, respectively.

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          Selling, general and administrative expenses decreased to $9.5 million for the year ended December 31, 2010 from $16.4 million in 2009. The decrease reflected the ceasing of real estate activities at Core, including specifically lower compensation and benefits expense and lower office related expenses reflecting a reduction in force at Core in 2009 and 2010, lower sales and marketing expenses as neither Core nor Carolina Oak engaged in advertising activities for the year ended December 31, 2010, and lower developer expenses related to property owner associations in Tradition, Florida. In addition, there was lower severance expense at Core for the year ended December 31, 2010 compared to 2009. These decreases were slightly offset by an increase in professional services related to the restructuring and property tax expenses in the year ended December 31, 2010 compared to 2009.
          Gain on extinguishment of debt consists of the above described $13.0 million gain attributable to the troubled debt restructuring relating to the resolution of a $25 million loan made to a subsidiary of Core, as to which Core was secondarily liable as a guarantor. See Note 2 of the “Notes to Consolidated Financial Statements” for further details.
          Interest incurred totaled $12.7 million for the year ended December 31, 2010 and $8.3 million for 2009 period. No interest was capitalized in the year ended December 31, 2010 compared to $2.0 for 2009 period. During the year ended December 31, 2010, we recorded interest expense at the default rate of interest in accordance with the terms of our loan agreements. Additionally, during the third quarter of 2009, the Company ceased capitalizing interest in light of the significantly reduced development activities in Florida and the suspended development activities in South Carolina. These factors resulted in a net higher interest expense recognized in the year ended December 31, 2010 compared to 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 year ended December 31, 2010 and 2009 did not include any significant amounts of previously capitalized interest.
          Other expense decreased to $3.9 million for the year ended December 31, 2010 from $5.4 million in 2009. The decrease was primarily due to lower impairment charges related to property and equipment held at Cypress Creek Holdings and Core recorded for the year ended December 31, 2010 compared to 2009.
          Income from discontinued operations, all of which related to Core’s Projects, increased to $2.5 million in the year ended December 31, 2010 from a loss of $15.6 million in 2009. The increase includes the impact of a gain of approximately $2.6 million recorded in connection with the sale of the Projects in June 2010.
For the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
          Revenues from sales of real estate decreased to $6.6 million for the year ended December 31, 2009 from $13.8 million for 2008. Revenues from sales of real estate for the years ended December 31, 2009 and 2008 were comprised of land and home sales, recognition of deferred revenue and look back revenue. During the year ended December 31, 2009, Core sold approximately 13 acres, generating revenues of approximately $1.1 million, compared to the sale of approximately 35 acres, which generated revenues of approximately $9.1 million, net of deferred revenue, in 2008. Core recognized deferred revenue on previously sold land of approximately $5.3 million for the year ended December 31, 2009, compared to approximately $1.9 million in 2008. Look back revenues for the years ended December 31, 2009 and 2008 were approximately $32,000 and $145,000, respectively. We also earned $320,000 in revenues in 2009 from sales of real estate as a result of 1 unit sold in Carolina Oak, compared to revenues from sales of real estate of $2.5 million in 2008 as a result of 8 units sold in Carolina Oak.
          Other revenues decreased to $2.3 million for the year ended December 31, 2009 compared to $3.0 million for 2008. The decrease in other revenues was primarily due to a decrease in marketing fees collected at Core Communities and fewer impact fees earned in 2009 compared to 2008.
          Cost of sales of real estate increased to $82.1 million for the year ended December 31, 2009 from $22.7 million for 2008 due to impairment charges of $80.3 million associated with inventory of real estate recorded in 2009 compared to $13.7 million in impairment charges of inventory of real estate in 2008. Costs of sales of real estate before impairment charges for the years ended December 31, 2009 and 2008 were $1.8 million and $9.0 million, respectively.

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The decrease in cost of sales of real estate excluding impairment charges was due to a decrease in sales of real estate at Core and Carolina Oak in 2009 compared to 2008.
          Selling, general and administrative expenses decreased to $16.4 million for the year ended December 31, 2009 from $20.6 million for 2008. The decrease was a result of, among other things, lower sales and marketing expenses as a result of a reduced marketing budget, lower developer expenses related to property owner associations in Tradition, Florida, lower compensation and benefits expense, and lower office related expenses. These decreases were partially offset by an increase in severance charges as a result of reductions in force at Core in 2009 and an increase in property tax expense.
          Interest incurred totaled $8.3 million for the year ended December 31, 2009 and $11.0 million for 2008. Interest capitalized totaled $2.0 million for the year ended December 31, 2009 and $8.9 million for 2008. Net interest expense increased in the year ended December 31, 2009 compared to the year ended December 31, 2008 primarily as a result of the Company’s decision to stop the capitalization of interest in light of the significantly reduced development activities in Florida and the ceasing of development activities in South Carolina. The increase was partially offset by lower interest rates during the year ended December 31, 2009 compared to 2008. Historically, the capitalized interest allocated to inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2009 and 2008 included previously capitalized interest of approximately $64,000 and $268,000, respectively.
          Interest and other income decreased to $526,000 during 2009 from $3.3 million during 2008. This decrease was primarily due to lower forfeited deposits received in 2009, and the repayment of an intersegment loan in June 2008, of which the related interest was eliminated in consolidation.
          Income from discontinued operations, which relates to the income generated by Core’s Projects, decreased to a loss of $15.6 million in the year ended December 31, 2009 from income of $2.8 million in 2008. The decrease was mainly due to impairment charges in the amount of $13.6 million recorded in the year ended December 31, 2009 compared to no impairment charges recorded in 2008. In addition, three ground lease parcels comprised of approximately 5 acres were sold in 2008 and were accounted for as discontinued operations and resulted in a $2.5 million gain on sale of real estate assets for the year ended December 31, 2008, compared to no comparable sales in discontinued operations in 2009.
          The value of acres subject to third party sales contracts was approximately $2.5 million at December 31, 2009 compared to $1.1 million at December 31, 2008. While backlog is not an exclusive indicator of future sales activity, it provides an indication of potential future sales activity.
Real Estate Operations-Liquidity and Capital Resources
          At December 31, 2010 and December 31, 2009, Core had cash and cash equivalents of $1.0 million and $2.9 million, respectively. Cash decreased by $1.9 million during the year ended December 31, 2010 primarily due to the payment of Core’s general and administrative expenses, including legal and professional fees and severance payments in connection with the winding up of Core’s operations in Florida and South Carolina. Legal and professional fees include payments to the receiver for services related to the settlement of Core’s defaulted debt with its lenders.
          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 ceased all development in Tradition, Florida and Tradition Hilton Head. In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core and worked cooperatively with various lenders to achieve that objective. During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of mortgage loans totaling approximately $113.9 million collateralized by property in Florida and South Carolina. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the acreage owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which is undeveloped raw land.

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Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. In consideration therefore, the lender agreed not to enforce a deficiency judgment against Core and, during February 2011, released Core from any other claims arising from or relating to the loans. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure. In connection therewith and in accordance with the accounting guidance for consolidation, Woodbridge recorded a guarantee obligation “deferred gain on settlement of investment in subsidiary” of $11.3 million in the Company’s Consolidated Statement of Financial Condition as of December 31, 2010. The deferred gain on settlement of investment in subsidiary was recognized into income in the Company’s Consolidated Statement of Operations at the time Core received its general release of liability in February 2011. See Notes 2 and 23 of the “Notes to Consolidated Financial Statements” for further information.
          In December 2010, Core and one of its subsidiaries entered agreements, including without limitation, a Deed in Lieu of Foreclosure Agreement, with one of their lenders which resolved the foreclosure proceedings commenced by the lender related to property at Tradition Hilton Head which served as collateral for a $25 million loan. Pursuant to the agreements, Core’s subsidiary transferred to the lender all of its right, title and interest in and to the property which served as collateral for the loan as well as certain additional real and personal property. In consideration therefor, the lender released Core and its subsidiary from any claims arising from or relating to the loan. In accordance with applicable accounting guidance, this transaction was accounted for as a troubled debt restructuring and, accordingly, a $13.0 million gain on debt extinguishment was recognized in the accompanying Consolidated Statement of Operations for the year ended December 31, 2010.
          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. Accordingly, the results of operations for the Projects are included in the Company’s Consolidated Statements of Operations in discontinued operations. On June 10, 2010, Core sold the Projects for approximately $75.4 million. As a result of the sale, a $2.6 million gain on sale of discontinued operations was realized in the second quarter of 2010. See Note 6 of the “Notes to Consolidated Financial Statements” for further information.
Off Balance Sheet Arrangements and Contractual Obligations
          The following table summarizes our Real Estate and Other contractual obligations (excluding Bluegreen) as of December 31, 2010 (in thousands):
                                         
            Less than 12     13-36     37-60     More than 60  
Category (1)   Total     months     Months     Months     Months  
Long Term Debt Obligations
  $ 160,861       64,654       503       10,652       85,052  
Operating Lease Obligations
    342       251       72       19        
     
Total Obligations
  $ 161,203       64,905       575       10,671       85,052  
     
 
(1)   Long-term 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. Long-term debt obligations and long-term debt obligations include defaulted loans totaling approximately $64.4 million as of December 31, 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 2 of the “Notes to Consolidated Financial Statements” included in Item 8 of this report for more information regarding the defaulted loans.
 
(2)   These amounts represent scheduled principal payments.
          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.

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          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. 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 December 31, 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 $348,000 and $532,000 during the year ended December 31, 2009 and 2008, respectively, in accordance with the indemnity agreement for bond claims paid during the period. No reimbursements were made in the year ended December 31, 2010. 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 the previous accrued amount. 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. Based on claims made by the municipality on the bonds, the surety requested that Woodbridge post a $4.0 million escrow deposit while the matter was being litigated. While Woodbridge did not believe that the municipality had the right to demand payment under the bonds, Woodbridge complied with that request. In August 2010, a motion for summary judgment was entered in Woodbridge’s favor terminating any obligations under the bonds. The municipality has appealed the decision.

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Bluegreen
The Company’s consolidated financial statements for the year ended December 31, 2010 and for the Interim Period (the period from November 16, 2009, the date on which the Company acquired additional shares of Bluegreen’s common stock resulting in the Company having a controlling interest in Bluegreen, through December 31, 2009) include the results of operations of Bluegreen. Bluegreen’s results of operations are reported through two reportable segments, which are Bluegreen Resorts and Bluegreen Communities. Prior to November 16, 2009, our earnings attributable to Bluegreen were reported as part of Woodbridge other operations, which is currently included in the BFC Activities segment. Bluegreen is a separate public company, and the following discussion is derived from or includes disclosure prepared by Bluegreen’s management and included in its Annual Report on Form 10-K for the year ended December 31, 2010. Accordingly, unless noted to the contrary or the context otherwise requires, references to the “Company”, “we”, “us” or “our” in the following discussion are references to Bluegreen and its subsidiaries, and are not references to BFC.
          Bluegreen’s 2010 results reflect an increased focus on its fee-based service business and its continuing efforts to improve cash flows from operations through initiatives designed to increase cash received upon sales of VOIs and to achieve selling and marketing efficiencies in its Bluegreen Resorts segment. While Bluegreen believes that its cash flows from operations and its Bluegreen Resorts business operating results reflect the success of these efforts, the Bluegreen Communities business continued to be impacted by low consumer demand for homesites. On March 24, 2011, Bluegreen announced that it has engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. There can be no assurance, however, the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that such alternatives, if pursued and ultimately consummated, will result in improvements to its financial condition and operating results or otherwise achieve the benefits Bluegreen expects to realize from the transaction.
          As discussed in Note 2 to our consolidated financial statements, Bluegreen adopted ASU 2009-16 and ASU 2009-17 effective January 1, 2010, which resulted in consolidation of the special purpose finance entities associated with past securitization transactions which were previously reported “off-balance sheet.” In addition to the material changes to Bluegreen’s consolidated balance sheet, the consolidation of these special purpose finance entities impacted our Consolidated Statement of Operations during 2010, by increasing Bluegreen’s interest income from VOI notes receivable and increasing interest expense on notes payable compared to prior periods. Bluegreen’s statements of operations for the years ended December 31, 2009 and 2008 and its balance sheet as of December 31, 2009 have not been retrospectively adjusted to reflect the adoption of ASU 2009-16 and ASU 2009-17. Therefore, 2010 results will not be comparable to prior period amounts, particularly with regards to: vacation ownership sales and services; interest expense and interest income.
During the year ended December 31, 2010:
    Bluegreen generated “free cash flow” (cash flow from operating and investing activities) of $158.0 million.
 
    VOI system-wide sales, which include sales of third-party developer inventory, totaled $290.3 million.
 
    Bluegreen’s sales and marketing fee-based service business sold $78.8 million of third-party developer inventory and earned sales and marketing commissions of $53.0 million. Including Bluegreen’s resort management, resort title, construction management and other operations, Bluegreen’s total resort fee-based services revenues were $118.9 million in 2010.
 
    Bluegreen recorded a non-cash charge of $21.2 million to increase the allowance for loan losses on its VOI notes receivable generated prior to December 15, 2008 (the date Bluegreen implemented FICO®-score based credit underwriting standards), as Bluegreen now anticipates that lower FICO® receivables may experience higher losses later in their contractual term than originally estimated.
 
    Bluegreen Communities business generated a segment operating loss of $26.9 million.
 
    Bluegreen successfully completed the securitization of $162.3 million of VOI notes receivable.

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          Bluegreen believes its fee-based service business enables Bluegreen to leverage its management, sales and marketing, mortgage servicing, title and construction experience to generate fee-based-service relationships with third parties. Bluegreen’s provision of these services requires significantly less capital investment than its traditional vacation ownership business. Bluegreen began selling and marketing third party vacation ownership inventory in July of 2009, and during 2010, Bluegreen sold $78.8 million, of third-party inventory and earned sales and marketing commissions of approximately $53.0 million. At December 31, 2010, Bluegreen had six fee-based sales and marketing service contracts as compared to four at December 31, 2009. In addition to the sales and marketing of third-party VOIs, Bluegreen also generated fee-based income by providing resort and reservation management services, title services, construction consulting services (where Bluegreen manages the construction, design and development of VOI inventory for third parties), and mortgage servicing of the VOI notes originated from the sales of certain of the third-party VOIs. Bluegreen’s goal is for fee-based services to become an increasing portion of its resorts business over time, however, there is no assurance that this will be the case.
          Additionally, consistent with Bluegreen’s initiatives to improve liquidity, Bluegreen further increased both the percentage of its sales that are 100% cash and its average down payment on financed sales. Including down payments received on financed sales, 54% of Bluegreen’s sales were received in cash within approximately 30 days from the contract date in 2010. Refer to Liquidity and Capital Resources section below for additional information.
          Bluegreen believes that its other resort fee-based services and finance operations represent recurring cash-generating sources of income which do not require material liquidity support from the credit markets. Bluegreen also believes, based on anticipated sales levels, that it has adequate timeshare inventory to satisfy its projected sales for a number of years. However, Bluegreen Resorts’ sales and marketing operations are materially dependent on the availability of liquidity in the credit markets, as further discussed in the Liquidity and Capital Resources section below. Due to a significant reduction of liquidity in the receivable-backed credit markets commencing in the fourth quarter of 2008, and due to Bluegreen’s continued desire to manage efficiencies of its timeshare marketing costs, Bluegreen purposely and significantly reduced its sales volumes in the fourth quarter of 2008 and thereafter. Since that time, Bluegreen has and intends to continue to adjust its sales volumes based on available liquidity in the receivable credit markets, its level of cash sales and its ability to achieve desired levels of marketing efficiencies.
          Bluegreen’s Communities business has been, and continues to be, adversely impacted by the deterioration in the real estate markets. Bluegreen has experienced a material decrease in demand, and a significant decrease in sales volume. Bluegreen has significantly reduced prices on certain of its homesites in an attempt to increase sales activity. During 2010, Bluegreen recorded non-cash impairment charges of $14.9 million to write down the carrying amount of certain phases of its communities properties to their estimated fair value less cost to sell. On March 24, 2011, Bluegreen announced that it had engaged advisors to explore strategic alternatives for Bluegreen Communities, including the possible sale of the division. There can be no assurance, however, regarding the timing or whether Bluegreen will elect to pursue any of the strategic alternatives Bluegreen may consider, or that any such alternatives, if pursued and ultimately consummated, will result in improvements to Bluegreen’s financial condition and operating results or otherwise achieve the benefits it may expect to realize from the transaction. In the event that adverse conditions in the real estate market continue or deteriorate further, the carrying value of its Bluegreen Communities inventory would be reevaluated and could result in additional material impairment charges. Impairment charges may also be required to the extent that additional market information obtained during the strategic review process indicates that the carrying value of Bluegreen’s Communities inventory exceeds its fair value.
          Bluegreen has historically experienced and expect to continue to experience seasonal fluctuations in its gross revenues and results of operations. This seasonality may result in fluctuations in its quarterly operating results. Although Bluegreen typically sees more potential customers at its sales offices during the quarters ending in June and September, ultimate recognition of the resulting sales during these periods may be delayed due to down payment requirements for recognition of real estate sales under GAAP or due to the timing of development and the requirement that Bluegreen uses the percentage-of-completion method of accounting.
          Bluegreen believes that relatively high unemployment in the United States and adverse economic conditions in general have adversely impacted, and may continue to adversely impact, the performance of its notes receivable portfolio in the form of relatively higher defaults and lower prepayment rates than have historically been experienced. Bluegreen’s estimates regarding its allowance for loan losses involves interpretation of historical data, assumptions relative to the impact of loan seasoning, prepayments and estimates of the effect of the higher default experience over the past two years on remaining performance. To the extent that these estimates change, Bluegreen’s results of

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operations could be adversely affected. As a result of changes in Bluegreen’s estimates related to the future performance of loans originated prior to its implementation of FICO® score-based credit underwriting standards in December 2008, during 2010 Bluegreen recorded charges of $21.2 million. Bluegreen anticipates that its FICO® score-based credit underwriting standards on new loan originations which were implemented in December 2008 and enhanced in January 2010 and higher levels of customer equity in the existing loan portfolio will have a favorable impact on the performance of the portfolio over time, although there is no assurance that this will be the case. While Bluegreen believes its notes receivable are adequately reserved at this time, there can be no assurance that future defaults will occur at expected levels. If the future performance of its loans varies from Bluegreen’s expectations and estimates, additional charges may be required in the future.
          Bluegreen reviews financial information, allocates resources and manages its business as two segments, Bluegreen Resorts and Bluegreen Communities. The information reviewed is based on internal reports and excludes an allocation of general and administrative expenses attributable to corporate overhead. The information provided is based on a managements approach and is used by us for the purpose of tracking trends and changes in results. It does not reflect the actual economic costs, contributions or results of operations of the segments as stand-alone businesses. If a different basis of presentation or allocation were utilized, the relative contributions of the segments might differ but the relative trends, in Bluegreen’s view, would likely not be materially impacted.

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Bluegreen Segments Financial Results
          The following tables include Bluegreen’s financial results for the year ended December 31, 2010 and the Bluegreen Interim Period (from November 16, 2009 to December 31, 2009). No comparative analysis was performed as Bluegreen’s results prior to November 16, 2009 are not included in the financial results below, but rather our earnings attributable to Bluegreen were reported in our BFC Activities segment.
Twelve months Ended December 31, 2010
                                                 
    Bluegreen Resorts     Bluegreen Communities     Total  
            Percentage             Percentage             Percentage  
    Amount     of Sale     Amount     of Sale     Amount     of Sale  
    ( in thousands, except percentage)  
System-wide sales (1)
  $ 290,280               12,003               302,283          
Changes in sales deferred under timeshare accounting rules
    818                             818          
Estimated uncollectible VOI notes receivable
    (24,441 )                           (24,441 )        
 
                                   
System-wide sales, net
    266,657       100 %     12,003       100 %     278,660       100 %
 
                                               
Less: Sales of third party VOIs
    (78,805 )     -30 %                 (78,805 )     -28 %
Adjustment to allowance for loan losses
    (21,228 )     -8 %                 (21,228 )     -8 %
 
                                   
Sales of real estate
    166,624       62 %*     12,003       100 %     178,627       64 %*
Cost of real estate sales
    (19,862 )     -11 %*     (23,552 )     -196 %     (43,414 )     -22 %*
 
                                   
Gross profit
    146,762       89 %     (11,549 )     -96 %     135,213       78 %
Fee-based sales commission
    52,966       20 %                 52,966       19 %
Other resort fee-based services revenue
    65,979       25 %                 65,979       24 %
Other revenues
                1,696       14 %     1,696       1 %
Cost of other operations
                (3,514 )     -29 %     (3,514 )     -1 %
Cost of other resort fee-based services
    (46,863 )     -18 %                 (46,863 )     -17 %
Selling and marketing expenses
    (139,770 )     -52 %     (4,684 )     -39 %     (144,454 )     -52 %
Segment general and administrative expenses(2)
    (15,341 )     -6 %     (8,839 )     -74 %     (24,180 )     -9 %
 
                                   
Segment operating profit
  $ 63,733       24 %     (26,890 )     -224 %     36,843       13 %
 
                                   
 
*   Percentages for cost of real estate sales and gross profit are calculated as a percentage of sales of real estate.
 
(1)   Includes sales of VOI’s made on behalf of third parties, which are effected through the same process as the sale of Bluegreen’s vacation ownership inventory, and involve similar selling and marketing costs.
 
(2)   General and administrative expenses attributable to corporate overhead have been excluded from the tables. Corporate general and administrative expenses (excluding mortgage operations) totaled $42.5 million for the Bluegreen Interim Period. (See “Corporate General and Administrative Expenses” below for further discussion).

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Bluegreen Interim Period:
                                                 
    Bluegreen Resorts     Bluegreen Communities     Total  
            Percentage             Percentage             Percentage  
    Amount     of Sale     Amount     of Sale     Amount     of Sale  
    ( in thousands, except percentage)  
 
  (As Revised)                           (As Revised)        
System-wide sales (1)
  $ 29,538               3,139               32,677          
Estimated uncollectible VOI notes receivable
    (3,041 )                           (3,041 )        
 
                                   
System-wide sales, net
    26,497       100 %     3,139       100 %     29,636       100 %
 
                                               
Less: Sales of third party VOIs
                                               
Adjustment to allowance for loan losses
    (8,875 )     -33 %                 (8,875 )     -30 %
 
                                   
Sales of real estate
    17,622       67 %     3,139       100 %     20,761       70 %
Cost of real estate sales
    (3,118 )     -18 %*     (1,788 )     -57 %     (4,906 )     -24 %*
 
                                   
Gross profit
    14,504       82 %*     1,351       43 %     15,855       76 %*
Fee-based sales commission
    5,354       20 %                 5,354       18 %
Other resort fee-based services revenue
    5,239       20 %                 5,239       18 %
Other revenues
                593       19 %     593       2 %
Cost of other operations
                (1,480 )     -47 %     (1,480 )     -5 %
Cost of other resort fee-based services
    (3,538 )     -13 %                 (3,538 )     -12 %
Selling and marketing expenses
    (14,334 )     -54 %     (1,023 )     -33 %     (15,357 )     -52 %
Segment general and administrative expenses (2)
    (1,441 )     -5 %     (2,715 )     -86 %     (4,156 )     -14 %
 
                                   
Segment operating profit
  $ 5,784       22 %     (3,274 )     -104 %     2,510       8 %
 
                                   
 
  Percentages for cost of real estate sales and gross profit are calculated as a percentage of sales of real estate.
 
(1)   Includes sales of VOI’s made on behalf of third parties, which are effected through the same process as the sale of Bluegreen’s vacation ownership inventory, and involve similar selling and marketing costs.
 
(2)   General and administrative expenses attributable to corporate overhead have been excluded from the tables. Corporate general and administrative expenses (excluding mortgage operations) totaled $4.0 million for the Bluegreen Interim Period. (See “Corporate General and Administrative Expenses” below for further discussion).
Bluegreen Resorts — Year ended December 31, 2010 compared to the Interim Period December 31, 2009
Resort Sales and Marketing
          System-wide sales of VOIs. System-wide sales of VOIs, include sales of Bluegreen-owned VOIs as well as sales of VOIs made on behalf of third parties. Bluegreen began selling and marketing vacation ownership inventory on behalf of third parties for a fee (one of our “fee-based services”) in July of 2009. The sales on behalf of third parties are transacted through the same selling and marketing process used to sell its owned VOI inventory.

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The following table sets forth certain information for sales of both Bluegreen VOIs and VOI sales made on behalf of outside developers for a fee for the periods indicated. The information is provided before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with timeshare accounting rules:
                 
    For the Year Ended        
    2010     Interim Period  
Number of sales offices at period-end
    20       21  
Number of Bluegreen VOI sales transactions
    18,504       1,625  
Number of sales made on behalf of outside developers for a fee
    6,526       694  
Total number of VOI sales transactions
    24,930       2,319  
Average sales price per transaction
  $ 12,006       11,703  
Number of total prospectus tours
    160,281       16,140  
Sale-to-tour conversion ratio — total prospects
    15.6 %     14.4 %
Number of new prospects tours
    92,847       5,974  
Sale-to-tour conversion ratio — new prospects
    10.6 %     10.9 %
          Sales of Real Estate. Sales of Bluegreen Resorts real estate were $166.6 million in 2010. Sales of Bluegreen Resorts real estate represent sales of Bluegreen owned VOIs, as adjusted by changes in sales deferred under timeshare accounting rules, the impact of estimated uncollectible VOI notes receivable and adjustment to allowance for loan losses described below.
          Sales of Bluegreen-owned VOIs are impacted by the timing of when a sale meets the criteria for revenue recognition. Sales of Bluegreen-owned VOIs that do not meet the revenue recognition criteria as of the end of a period are deferred to a future period until such time as the revenue recognition criteria are met. During 2010, due to timing of revenue recognition Bluegreen realized a net recognition of approximately $0.8 million of sales, due to the timing of revenue recognition.
          VOI revenue is reduced by Bluegreen’s estimate of future uncollectible VOI notes receivable. Estimated losses for uncollectible VOI notes receivable vary with the amount of financed sales during the period, and changes in Bluegreen’s estimates of future note receivable performance for newly originated loans and the future performance of its existing loan portfolio. During the years ended December 31, 2010, Bluegreen reduced revenue by $24.4 million for the estimated future uncollectibles on loans originated in these periods.
          Additionally, during 2010, Bluegreen recorded charges of $21.2 million to increase its allowance for uncollectible notes receivable in connection with the lower FICO® score loans generated prior to November 1, 2008, the date at which Bluegreen implemented FICO® score-based credit standards. In connection with Bluegreen’s analysis of loan performance performed during 2010, Bluegreen concluded that these lower FICO® score loans have not experienced the same benefit of seasoning as other loans in the same vintage historically have, thus resulting in the probability of higher future defaults on such loans. While Bluegreen believes its notes receivable are adequately reserved at this time, there can be no assurance that defaults have stabilized or that they will not increase.
          Sales of Bluegreen Resorts real estate (prior to changes in sales deferred under timeshare accounting rules, the impact of estimated uncollectible VOI notes receivable and adjustment to allowance for loan losses described above) were $211.5 million in 2010.
          Cost of Real Estate Sales. Bluegreen Resorts’ cost of sales was $19.9 million in 2010. Cost of sales varies between periods based on the sales volumes, the relative costs of the specific VOIs sold in each respective period and the size of the point packages of the VOIs sold. Additionally, cost of sales during 2010 was impacted by the decrease in the overall carrying cost of Bluegreen’s VOI inventory due to the adoption of ASU 2009-16 and ASU 2009-17, effective January 1, 2010. In addition, the increase in Bluegreen’s loan loss reserve during 2010 impacted Bluegreen’s future projected product margins, which decreased the carrying cost of inventory in accordance with applicable timeshare accounting rules.

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          During the year ended December 31, 2010, Bluegreen Resorts’ gross profit percentage was 89%. The gross profit percentage during 2010 was affected by the carrying cost of Bluegreen’s VOI inventory as a result of the adoption of the new accounting standards on January 1, 2010 as described above.
          Fee-Based Sales Commission Revenue. As described above, in July 2009, Bluegreen began selling and marketing third parties’ vacation ownership inventory for a fee. Bluegreen earned commissions for the sales of third-party inventory upon the closing of the respective sales transaction.
          During the year ended December 31 2010, Bluegreen sold $78.8 million of third-party developer inventory and earned sales and marketing commissions of $53.0 million. Based on an allocation of selling, marketing and segment general and administrative expenses to these sales, Bluegreen believes it generated approximately $10.8 million in pre-tax profits by providing these sales and marketing fee-based services during the year ended December 2010. Bluegreen anticipates that fee-based services will be a greater portion of its revenues in the future, although there is no assurance that this will be the case.
          Selling and Marketing Expenses. Selling and marketing expenses for Bluegreen Resorts were $139.8 million during 2010. Selling and marketing expenses in 2010 reflected expanded marketing activity consistent with the increase in Bluegreen’s system-wide sales of VOIs. As a percentage of system-wide sales, net, selling and marketing expenses was 52% during 2010. Overall sale-to-tour ratios decreased slightly during 2010 and sales to owners, which carry a relatively lower marketing cost, accounted for 58% of system-wide sales during 2010.
          General and Administrative Expenses. General and administrative expenses for Bluegreen Resorts were $15.3 million during 2010. General and administrative expenses for Bluegreen Resorts during 2010 includes additional spending required to support the increased level of sales activity. As a percentage of system-wide sales, net, general and administrative expenses was at 6% during 2010.
Other Resort Fee-Based Services
The following sets forth the pre-tax profit generated by Bluegreen’s other resort fee-based services (in thousands):
                 
    For the Year Ended        
    2010     Interim Period  
Fee-based management services
  $ 24,756       2,725  
Title operations
    7,182       442  
Net carrying cost of developer inventory
    (8,561 )     (392 )
 
               
Other
    (4,261 )     (313 )
 
           
Total
  $ 19,116       2,462  
 
           
          Other Resort Fee-Based Services Revenue. Bluegreen’s other resort fee-based services revenue consists primarily of fees earned for providing management services and fees earned for providing title services for VOI transactions. In exchange for fees, Bluegreen provides management services to the Bluegreen Vacation Club and to a majority of the property owners’ associations of the Club Resorts and Club Associate Resorts. In connection with Bluegreen’s management services provided to Bluegreen Vacation Club, Bluegreen manages the club reservation system, and provides owner services as well as billing and collections services.
          Revenues generated by other resort fee-based services were $66.0 million during 2010. Revenues related to other resort fee-based services in 2010 reflects additional fees earned by providing services to more VOI owners and from managing more timeshare resorts on behalf of property owners’ associations. As of December 31, 2010, Bluegreen managed 41 timeshare resort properties and hotels. Additionally, Bluegreen’s revenues related to title services increased due to a reduction in its processing back-log and the increase in the number of system-wide VOI sales transactions.

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          Bluegreen intends to continue to pursue its efforts to provide resort management and title services to resort developers and others, on a cash-fee basis. While there is no assurance that Bluegreen will be successful, Bluegreen hopes that this will become an increasing portion of its business over time.
          Cost of Other Resort Fee-Based Services. Cost of other resort fee-based services was $46.9 million in 2010. The cost during 2010 includes additional service volumes as described above. Additionally, the carrying costs of Bluegreen’s VOI inventory includes maintenance fees and developer subsidies on VOIs in Bluegreen-owned inventory, paid to the property owners’ associations that maintain the resorts. Bluegreen partially mitigates this expense, to the extent possible, through the rental of its owned VOIs. Accordingly, the net carrying cost of developer inventory fluctuates with the number of VOIs Bluegreen holds and the number of resorts subject to developer subsidy arrangements, as well as revenue realized from rental and sampler activity. During 2010, the carrying cost of Bluegreen’s developer inventory totaled approximately $20.5 million and was offset by rental and sampler revenues, net of expenses, of $11.9 million during 2010.
Bluegreen Communities — Year ended December 31, 2010 compared to the Interim Period
          The table below sets forth the number of homesites sold by Bluegreen Communities and the average sales price per homesite for the periods indicated, before giving effect to the percentage-of-completion method of accounting, and excluding sales of bulk parcels:
                 
    Year ended  
    December 31,     Interim  
    2010     Period  
Number of homesites sold
    239       50  
Average sales price per homesite
  $ 61,071     $ 66,004  
          Sales at Bluegreen Communities have been, and continue to be, adversely impacted by the weakening of the economy in general and the deterioration of the real estate markets, in particular. Bluegreen has experienced continued low demand, especially for its higher priced premium homesites. In response to the deterioration in the real estate markets and in order to stay competitive in certain markets where its competitors have in certain communities aggressively reduced prices, Bluegreen has significantly reduced prices on completed homesites. In addition, during 2009, Bluegreen substantially sold out of certain of its communities, which also contributed to the decrease in sales in 2010.
          On March 24, 2011, Bluegreen announced that it had engaged advisors to explore strategic alternatives for Bluegreen Communities, including the possible sale of the division. There can be no assurance regarding the timing or success these efforts, or that any such alternatives, if pursued and ultimately consummated, will improve Bluegreen’s financial condition and operating results or otherwise achieve the benefits it may expect to result from the transaction. In the event that adverse conditions in the real estate market continue or deteriorate further, the carrying value of Bluegreen Communities’ inventory would be reevaluated and could result in additional material impairment charges. Impairment charges may also be required to the extent that additional market information obtained during the strategic review process indicates that the carrying value of Bluegreen’s Communities inventory exceeds its fair value.
          Bluegreen Communities’ sales during 2010 reflected the application of the percentage-of-completion method of accounting. Excluding the impact of percentage-of-completion method of accounting, Bluegreen Communities sales during 2010 decreased.
          Bluegreen Communities’ homesite inventory consists of substantially completed homesites held for sale and land held for the future development of additional homesites. As a result of Bluegreen’s continued depressed sales volume, reduced prices, and the impact of current sales levels on the forecasted sell-out period of its projects, during the year ended December 31, 2010, Bluegreen recorded non-cash charges to cost of real estate sales of approximately $14.9, net of purchase accounting adjustments, to write-down the carrying amount of certain phases of its properties to their estimated fair value, less costs to sell, if applicable. Bluegreen calculated the estimated fair value less costs to sell of these properties based on its analysis of their estimated future cash flows, discounted at rates commensurate with the inherent risk. Bluegreen estimated future cash flows based upon what they believe to be market participants’

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expectations of future performance, given current and projected forecasts of the economy and real estate markets in general as well as the forecasted sell-out periods for each community. As of December 31, 2010, Bluegreen evaluated the carrying value of its Bluegreen Communities inventory (carrying value was $78.2 million, net of purchase accounting adjustments, as of December 31, 2010) based upon the probability-weighted average cash flows at various outcomes, including to develop and sell such inventory as retail homesites or to execute on various strategic alternatives which Bluegreen may pursue in the near term. Based on the sales prices currently being realized on its homesites and forecasts of sales pace, Bluegreen believes that its Bluegreen Communities’ inventory carrying value is appropriate. Should the adverse conditions in the real estate markets where Bluegreen operates continue longer than forecasted or deteriorate further, or if its performance does not otherwise meet Bluegreen’s expectations, or estimates change as they explore strategic alternatives, additional material charges may be recorded.
          In addition to the inventory charges described above, during 2010, Bluegreen Communities’ gross margins were negatively impacted by additional reductions in sales prices of certain completed homesites. Variations in cost structures and the market pricing of homesites available for sale as well as the opening of phases of projects, which include premium homesites (e.g., water frontage, preferred views, larger acreage homesites, etc.), also impact the gross margin of Bluegreen Communities from period to period.
          Other operations of Bluegreen Communities’ business historically included the operation of several daily fee golf courses, as well as realty resale operations at several of our residential land communities. On December 30, 2009, Bluegreen sold four of its golf courses located in North Carolina and Virginia and have reported the operating results of these golf courses as discontinued operations. Bluegreen continues to own and operate two golf courses.
          During 2010 Bluegreen continued to focus its marketing efforts on internet, billboards, and regionally based advertising. While Bluegreen believes this focus will lead to an increase in interest in its properties, Bluegreen continues to experience relatively lower sales conversion rates. Bluegreen Communities’ total selling and marketing expenses during 2010 remained level with the expenses incurred during 2009. As a percentage of sales, selling and marketing expenses were 39% during 2010 representing an increase over historical amounts. The increase in selling and marketing expenses as a percentage of sales in 2010 is the result of lower sales in 2010.
          Bluegreen Communities’ general and administrative expenses during 2010 included costs to settle litigation and a higher proportion of real estate taxes being expensed as incurred rather than capitalized into inventory due to reduced construction and development spending.
Finance Operations
          As of December 31, 2010, Bluegreen’s finance operations included the excess interest spread earned on $668.4 million of notes receivable. This amount reflects the consolidation on January 1, 2010 of notes receivable held by special purpose finance entities that were previously not consolidated by Bluegreen in accordance with then-prevailing generally accepted accounting principles.

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          Profit from Notes Receivable Portfolio and Mortgage Servicing Operations. The following table details the sources of income and related expenses associated with Bluegreen’s notes receivable portfolio (in thousands):
                 
    For the Year Ended        
    2010     Interim Period  
Interest income:
               
VOI notes receivable
  $ 93,425       10,169  
Retained interest on notes receivable sold
          2,027  
Other
    189       (14 )
 
           
Total interest income
    93,614       12,182  
 
           
 
               
Servicing fee income
               
Fee-based services
    191        
 
           
Total income
    93,805       12,182  
 
           
 
               
Interest expense:
               
Receivable-backed notes payable
    42,289       5,328  
Cost of mortgage servicing operations
    2,349        
 
           
Total expense
    44,638       5,328  
 
           
 
               
 
  $ 49,167       6,854  
 
           
          Interest income on notes receivable during 2010 reflects a higher average balance of Bluegreen’s vacation ownership notes receivable and to a lesser extent, higher interest rates charged on timeshare loans originated after November 1, 2008. As discussed above, the average balances of Bluegreen’s notes receivable increased during 2010 as a result of the consolidation of notes receivable held by seven of Bluegreen’s special purpose finance entities that were previously reported “off-balance-sheet.” Accordingly, Bluegreen previously did not recognize interest income on such notes receivable, but instead recognized interest income through the accretion of interest on its retained interests in the notes held by these entities.
          Mortgage Servicing Operations. Bluegreen’s mortgage servicing operations include processing payments, and collection of notes receivable owned by Bluegreen, as well as on notes receivable owned by third parties. In addition, Bluegreen’s mortgage servicing operations facilitate the monetization of its VOI notes receivable through its various credit facilities, as well as perform monthly reporting activities for Bluegreen’s lenders and receivable investors. Prior to the adoption of ASU 2009-16 and ASU 2009-17 on January 1, 2010, Bluegreen recognized servicing fee income for providing mortgage servicing for notes receivable that had been sold to off-balance-sheet special purpose finance entities and for providing loan services to third-party portfolio owners on a cash-fee basis. Effective January 1, 2010, Bluegreen ceased recognizing servicing fee income for providing mortgage servicing to its special purpose finance entities as such entities are now consolidated by Bluegreen. While Bluegreen still receives mortgage servicing fees for servicing its securitized notes receivable, these amounts are now accounted for as a component of interest income.
          During 2010, servicing fee income represented mortgage servicing fees earned for servicing the loan portfolio of a third-party developer in connection with one of Bluegreen’s fee-based services arrangements. As of December 31, 2010, the total amount of notes receivable serviced by Bluegreen under this arrangement was $23.8 million.
          Interest Expense. Interest expense on receivable-backed notes payable in 2010 reflects a higher average debt balance of additional non-recourse receivable-backed debt recorded on Bluegreen’s balance sheet as a result of the consolidation of seven special purpose finance entities as of January 1, 2010. As of December 31, 2010, the outstanding balance of the non-recourse receivable-backed debt previously reported “off-balance sheet” was $328.6 million.

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          Bluegreen’s other interest expense, which is mainly comprised of interest on lines of credit and notes payable and our subordinated debentures, was $22.6 million during 2010.
          Other interest expense during 2010 reflects a lower average debt balance as a result of the repayment of Bluegreen’s lines-of-credit and notes payable and lower interest rates on its junior subordinated debentures, which was offset by higher interest rates on certain extensions to its existing debt agreements.
          Bluegreen’s effective cost of borrowing was 7.46% during 2010.
          A portion of Bluegreen’s interest expense, which directly relates to interest on development spending, is capitalized to construction in progress. Interest expense capitalized to construction in progress varies based upon the amount of construction and development spending during the period. Total interest expense capitalized to construction in progress was insignificant during 2010 due to a significantly reduced level of construction and development spending during the period.
Corporate General and Administrative Expenses. Bluegreen’s corporate general and administrative expenses consist primarily of expenses associated with administering the various support functions at its corporate headquarters, including accounting, human resources, information technology, treasury, and legal. Overall corporate and general administrative costs may fluctuate between periods for various reasons, including but not limited to the timing of professional services and litigation expenses. In addition, consistent with Bluegreen’s segment reporting treatment, changes in the payroll accrual between reporting periods for the entire company are recorded as corporate general and administrative expense. Corporate general and administrative expenses, excluding mortgage servicing operations, were $42.5 million for 2010, which reflected lower litigation costs, the benefit of higher than expected forfeitures on certain stock grants and lower company-wide benefit costs.
Non-controlling Interests in Income of Consolidated Subsidiary. Bluegreen includes the results of operations and financial position of Bluegreen/Big Cedar Vacations, LLC (the “Subsidiary”), its 51%-owned subsidiary, in its consolidated financial statements. The non-controlling interests in income of consolidated subsidiary is the portion of Bluegreen’s consolidated pre-tax income that is attributable to Big Cedar, LLC, the unaffiliated 49% interest holder in the Subsidiary. Non-controlling interests in income of consolidated subsidiary was $8.8 million for 2010.
Provision (Benefit) for Income Taxes. Bluegreen’s annual effective tax rate has historically ranged between 35% and 40%, based upon the mix of taxable earnings among the various states in which Bluegreen operates.
Bluegreen’s Liquidity and Capital Resources
     Bluegreen’s primary sources of funds from internal operations are: (i) cash sales, (ii) down payments on homesite and VOI sales which are financed, (iii) proceeds from the sale of, or borrowings collateralized by, notes receivable, including cash received from its residual interests in such transactions, (iv) cash from finance operations, including principal and interest payments received on the purchase money mortgage loans arising from sales of VOIs and homesites and mortgage servicing fees, and (v) net cash generated from sales and marketing fee-based services and other resort fee-based services, including its resorts management operations, and other communities operations.
     Sales of VOIs accounted for 96% of Bluegreen’s system-wide sales during 2010. As a result of initiatives implemented in the fourth quarter of 2008, Bluegreen has in recent years realized higher down payments and a higher percentage of cash sales in connection with VOI sales compared to prior years. Including down payments received on financed sales, 54% of Bluegreen’s VOI sales were paid in cash within approximately 30 days from the contract date.
     While the vacation ownership business has historically been capital intensive, Bluegreen’s principal goals in the current environment are to emphasize the generation of “free cash flow” (defined as cash flow from operating and

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investing activities) by i) incentivizing its sales associates to generate higher percentages of Bluegreen’s sales in cash compared to historical levels; ii) maintaining sales volumes that allow it to focus on what Bluegreen believes to be the most efficient marketing channels available to it; iii) minimizing capital and inventory expenditures; and iv) utilizing its sales and marketing, mortgage servicing, resort management services, title and construction expertise to pursue fee-based-service business relationships that require minimal up-front capital investment and have the potential to produce strong cash flows for Bluegreen.
          Historically, Bluegreen’s business model has depended on the availability of credit in the commercial markets. VOI sales are generally dependent upon Bluegreen providing financing to its buyers. Bluegreen’s ability to sell and/or borrow against its notes receivable from VOI buyers is a critical factor in its continued liquidity. When Bluegreen sells VOIs, a financed buyer is only required to pay a minimum of 10% to 20% of the purchase price in cash at the time of sale; however, selling, marketing, and administrative expenses attributable to the sale are primarily cash expenses that generally exceed the buyer’s minimum required down-payment. Accordingly, having financing facilities available for the hypothecation, sale, or transfer of these vacation ownership receivables is a critical factor in Bluegreen’s ability to meet its short and long-term cash needs. Historically, Bluegreen has relied on its ability to sell receivables in the term securitization market in order to generate liquidity and create capacity in its receivable facilities. In addition, maintaining adequate VOI inventory to sell and pursue growth into new markets has historically required Bluegreen to incur debt for the acquisition, construction and development of new resorts. Although Bluegreen believes that it currently has adequate completed VOIs in inventory to satisfy its needs for the next several years, and therefore, expect acquisition and development expenditures to remain at current levels in the near future, Bluegreen may decide to acquire or develop more inventory in the future, which would increase its acquisition and development expenditures and may require it to incur additional debt.
          During 2010, Bluegreen successfully renewed and extended several of its existing credit facilities. Bluegreen also entered into a $20.0 million timeshare receivables hypothecation facility with National Bank of Arizona and a $20.0 million timeshare receivables purchase facility with Quorum Federal Credit Union. Additionally, Bluegreen successfully completed two securitization transactions. In September of 2010, Bluegreen securitized $36.1 million of the lowest FICO® score loans previously financed by the BB&T purchase facility for gross proceeds of $24.3 million and in December of 2010, Bluegreen securitized an additional $126.2 million of its higher-FICO® score loans for gross proceeds of $107.6 million, a portion of which was used to repay all amounts then outstanding under the Company’s existing receivables purchase facility with BB&T.
          The challenging credit markets have negatively impacted Bluegreen’s financing activities in recent years compared to historical levels. While the credit markets appear to be recovering and Bluegreen consummated term securitizations and entered into new financing facilities during 2010, the number of banks and other finance companies in the market which provide “warehouse” lines of credit for timeshare receivables has decreased. There is no assurance that Bluegreen will be able to renew its existing receivable-backed lines of credit when their current advance periods expire or secure new future financing for its VOI notes receivable on acceptable terms, if at all. In addition, the securitization market has become unavailable for extended periods of time in the past and there can be no assurances that it will not become unavailable to Bluegreen in the future.
          Further, while Bluegreen may seek to raise additional debt or equity financing in the future to fund operations or repay outstanding debt, there is no assurance that such financing will be available to Bluegreen on favorable terms or at all. If Bluegreen’s efforts are unsuccessful, its liquidity would be significantly adversely impacted. In light of the current trading price of Bluegreen’s common stock, financing involving the issuance of Bluegreen’s common stock or securities convertible into its common stock would be highly dilutive to Bluegreen’s existing shareholders.
          Bluegreen’s levels of debt and debt service requirements have several important effects on its operations, including the following: (i) Bluegreen’s significant cash requirements to service debt reduces the funds available for operations and future business opportunities and increases its vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii) Bluegreen’s leverage position increases its vulnerability to economic and competitive pressures; (iii) the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to Bluegreen’s indebtedness requires Bluegreen to meet certain financial tests and restrict its ability to, among other things, borrow additional funds, dispose of assets, make investments, or pay cash dividends on or repurchase common stock; and (iv) Bluegreen’s leverage position may limit funds available for working capital, capital expenditures, acquisitions and general corporate purposes. Certain of Bluegreen’s financing arrangements materially limit its ability to pay cash dividends on its common stock or its ability to repurchase shares in

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the near term. Certain of Bluegreen’s competitors operate on a less leveraged basis and have greater operating and financial flexibility than Bluegreen.
Credit Facilities
          The following is a discussion of Bluegreen’s material purchase and credit facilities, including those that were important sources of its liquidity as of December 31, 2010. These facilities do not constitute all of Bluegreen’s outstanding indebtedness as of December 31, 2010. Bluegreen’s other indebtedness includes outstanding junior subordinated debentures, borrowings collateralized by real estate inventories that were not incurred pursuant to a significant credit facility, and capital leases.
Credit Facilities for Bluegreen Receivables with Future Availability
          Bluegreen maintains various credit facilities with financial institutions that provide receivable financing for its operations. Bluegreen had the following credit facilities with future availability as of December 31, 2010 (in thousands):
                                         
                            Advance        
            Outstanding     Availability     Period     Borrowing  
            Balance     as of     Expiration;     Rate; Rate as  
    Borrowing     As of December     December 31,     Borrowing     of December  
    Limit     31, 2010     2010     Maturity     31, 2010  
BB&T Purchase Facility(1)
  $ 75,000     $     $ 75,000     December 2011;
September 2023
  Prime Rate +2.00%(2); 5.25%%
Quorum Facility
    20,000       108       19,892     December 2011;
December 2030
  8.00%
 
                                 
 
                                       
 
  $ 95,000     $ 108     $ 94,892                  
 
                                 
Bluegreen had the following credit facilities with future availability as of February 28, 2011 (in thousands):
                                         
            Outstanding                    
            Balance     Availability     Advance Period     Borrowing Rate;  
            As of     as of     Expiration;     Rate as of  
    Borrowing     February 28,     February     Borrowing     February 28,  
    Limit     2011     28, 2011     Maturity     2011  
BB&T Purchase Facility(1)
  $ 75,000     $ 1,026     $ 73,974     December 2011;
September 2023
    Prime Rate +2.00%(2); 5.25%
Quorum Facility
    20,000       706       19,294     December 2011;
December 2030
  8.00%
NBA Receivables Facility(3)
    20,000       17,290       2,710     June 2011;
June 2018
  LIBOR+5.25%; 6.75%(5)
Liberty Bank Facility(4)
    60,000       46,978       13,022     February 2013;
February 2016
  Prime Rate +2.25%; 6.50%(6)
 
                                 
 
  $ 175,000     $ 66,000     $ 109,000                  
 
                                 
 
(1)   Facility is revolving during the advance period, providing additional availability as the facility is paid down, subject to eligible collateral and applicable terms and conditions.
 
(2)   The borrowing rate is subject to tiered increases once the outstanding balance equals or exceeds $25.0 million, subject to a maximum interest rate of the Prime Rate plus 3.5%, once the facility equals or exceeds $50.0 million.

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(3)    We have received a term sheet to amend our existing National Bank of Arizona (“NBA”) facility to allow us to pledge additional timeshare receivables up to the borrowing limit, with the additional advances not to exceed $5.0 million. There can be no assurances that we will close on this amendment on favorable terms, if at all.
 
(4)    In February of 2011, we revised the terms of and extended the revolving advance period of the Liberty Bank Facility with certain existing participants in the Liberty-led syndicate. In addition to the $ 47.0 million outstanding to the extending participants reflected in this table, an additional $ 17.4 million is outstanding as of February 28, 2011 to the other participants. This amount outstanding to the other participants does not reduce the availability under the extended Liberty Bank Facility. See Other Outstanding Receivable-Backed Notes Payable below for further information regarding the terms of this amendment and extension.
 
(5)    Interest charged on this facility is subject to a floor of 6.75%
 
(6)    Interest charged on this facility is subject to a floor of 6.50%
BB&T Purchase Facility. Bluegreen has a $75.0 million timeshare notes receivable purchase facility with Branch Banking and Trust Company (“BB&T”) (the “BB&T Purchase Facility”). The BB&T Purchase Facility provides a revolving advance period through December 17, 2011. The interest rates on future advances under the facility are the Prime Rate plus 2.0%, subject to tiered increases once the outstanding balance equals or exceeds $25.0 million, subject to a maximum interest rate of the Prime Rate plus 3.5%, once the facility equals or exceeds $50.0 million. Additionally, Bluegreen receive all of the excess cash flows generated by the timeshare receivables transferred to BB&T under the facility (excess meaning after customary payment of fees, interest and principal under the facility). The BB&T Purchase Facility provides for the financing of its timeshare receivables at an advance rate of 67.5%, subject to the terms of the facility.
          While ownership of the receivables is transferred for legal purposes, the transfers of receivables under the facility are accounted for as secured borrowings. Accordingly, the receivables are reflected as assets and the associated obligations are reflected as liabilities on Bluegreen’s balance sheet. The BB&T Purchase Facility is nonrecourse and is not guaranteed by us.
          As of December 31, 2010, the entire $75.0 million facility was available to be drawn upon, subject to eligible collateral and what Bluegreen believes to be customary terms and conditions.
          Quorum Facility. On December 22, 2010, we entered into a new timeshare receivables purchase facility (the “Quorum Facility”) with Quorum Federal Credit Union (“Quorum”). The Quorum Facility allows for the sale of timeshare notes receivable on a non-recourse basis, pursuant to the terms of the facility and subject to certain conditions precedent. Quorum has agreed to purchase eligible timeshare receivables or certain of its subsidiaries up to an aggregate $20.0 million purchase price through December 22, 2011. The terms of the Quorum Facility reflect an 80% advance rate and at a program fee rate of 8% per annum through August 31, 2001, and at terms to be agreed upon through December 22, 2011. Eligibility requirements for receivables sold include, amongst others, that the obligors under the timeshare notes receivable sold be members of Quorum at the time of the note sale. The Quorum Facility contemplates the ability of Quorum to purchase additional receivables subject to advance rates, fees and other terms to be agreed upon from time to time over and above the initial $20.0 million commitment, pursuant to the terms of the facility and subject to certain conditions precedent. Bluegreen will receive all of the excess cash flows generated by the receivables transferred to Quorum under the facility (excess meaning after customary payment of fees and return of amounts invested by Quorum under the facility on a pro-rata basis as borrowers make payments on their timeshare loans).
Other Outstanding Receivable-Backed Notes Payable
          Bluegreen has outstanding obligations under various receivable-backed credit facilities that have no remaining future availability as the advance periods have expired. Bluegreen had the following outstanding balances under such credit facilities as of December 31, 2010 (in thousands):

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    Balance as of             Borrowing Rate;  
    December 31,     Borrowing     Rate as of December  
    2010     Maturity     31, 2010  
Liberty Bank Facility
  $ 67,514     August 27, 2014     Prime + 2.25%;
6.50 % (1)
GE Bluegreen/Big Cedar Facility
    23,877     August 16, 2016     30 day LIBOR+1.75%;
2.01%
Legacy Securitization (2)
    22,960     September 2, 2025     12%(2)
RFA Receivables Facility
    3,159     February 15, 2015     30 day LIBOR+4.00%;
4.26%
NBA Receivable Facility
    18,351       September 30, 2017       30 Day LIBOR +
5.25%; 6.75% (3)
Non-recourse Securitization Debt
    436,271     Varies   Varies
 
                     
 
  $ 572,132                  
 
                     
 
(1)   Interest charged on this facility is subject to a floor of 6.50%
 
(2)   Legacy Securitization debt bears interest at a coupon rate of 12% and was issued at a discount resulting in an effective yield of 18.5%. The associated debt balance is presented net of the discount of $2.6 million.
 
(3)   Interest charged on this facility is subject to a floor of 6.75%
          Liberty Bank Facility. As of December 31, 2010, Bluegreen had a $75.0 million revolving timeshare receivables hypothecation facility with a syndicate of lenders led by Liberty Bank and assembled by Wellington Financial (