e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the Quarter Ended June 30, 2010

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

Commission File Number
001-09071

BFC Financial Corporation

(Exact name of registrant as specified in its charter)


Florida		59-2022148

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)


2100 West Cypress Creek Road
Fort Lauderdale, Florida		33309

(Address of Principal executive office)		(Zip Code)

(954) 940-4900

(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



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

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

YES o NO x

The number of shares outstanding of each of the registrant’s classes of common stock as of August 9, 2010 is as follows:

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

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

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


	June 30,			December 31,
	2010			2009
ASSETS
Cash and cash equivalents	$	500,422			316,080
Interest bearing deposits at other financial institutions		33,863			—
Restricted cash		50,618			24,020
Securities available for sale, at fair value		327,246			346,375
Derivatives, at fair value		638			—
Investment securities at cost or amortized cost (fair value: $1,981 in 2010 and $9,654 in 2009)		1,981			9,654
Current income tax receivable		8,390			64,006
Tax certificates, net of allowance of $8,175 in 2010 and $6,781 in 2009		139,731			110,991
Federal Home Loan Bank (“FHLB”) stock, at cost which approximates fair value		48,751			48,751
Loans held for sale		5,861			4,547
Loans receivable, net of allowance for loan losses of $187,862 in 2010 and $187,218 in 2009		3,371,577			3,678,894
Notes receivable including gross securitized notes, net of allowance of $67,051 in 2010 and $3,986 in 2009		620,498			277,274
Retained interest in notes receivable sold		—			26,340
Accrued interest receivable		23,837			32,279
Real estate inventory		482,898			494,291
Real estate owned and other repossessed assets		55,412			46,477
Investments in unconsolidated affiliates		12,486			15,272
Properties and equipment, net		278,433			289,209
Goodwill		12,241			12,241
Intangible assets, net		79,136			81,686
Assets held for sale		—			71,900
Other assets		96,246			96,750

Total assets	$	6,150,265			6,047,037


Assets of consolidated variable interest entities (“ VIEs”) included in total assets above
Restricted cash	$	33,011
Securitized notes receivable, gross		567,818

Total assets of consolidated VIEs	$	600,829


LIABILITIES AND EQUITY
Liabilities:
Interest bearing deposits	$	3,085,772			3,133,360
Non-interest bearing deposits		898,708			815,458

Total deposits		3,984,480			3,948,818
Advances from FHLB		115,000			282,012
Securities sold under agreements to repurchase		24,724			24,468
Short-term borrowings		2,071			2,803
Receivable-backed notes payable		592,533			237,416
Notes and mortgage notes payable and other borrowings		369,510			395,361
Junior subordinated debentures		453,829			447,211
Deferred income taxes		33,548			31,204
Liabilities related to assets held for sale		—			76,351
Other liabilities		234,849			186,453

Total liabilities		5,810,544			5,632,097


Commitments and contingencies

Preferred stock of $.01 par value; authorized - 10,000,000 shares:
Redeemable 5% Cumulative Preferred Stock — $.01 par value; authorized 15,000 shares; issued and outstanding 15,000 shares with a redemption value of $1,000 per share		11,029			11,029


Equity:
Class A common stock of $.01 par value, authorized 150,000,000 shares; issued and outstanding 68,521,497 in 2010 and 2009		685			685
Class B common stock of $.01 par value, authorized 20,000,000 shares; issued and outstanding 6,859,251 in 2010 and 6,854,251 in 2009		69			69
Additional paid-in capital		229,857			227,934
(Accumulated deficit) retained earnings		(22,919	)		16,608
Accumulated other comprehensive income (loss)		2,850			(237	)

Total BFC Financial Corporation (“BFC”) shareholders’ equity		210,542			245,059
Noncontrolling interests		118,150			158,852

Total equity		328,692			403,911

Total liabilities and equity	$	6,150,265			6,047,037


Liabilities of consolidated VIEs included in total liabilities above
Receivable-backed notes payable	$	485,946

Total liabilities of consolidated VIEs	$	485,946

See Notes to Unaudited Consolidated Financial Statements.

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


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenues
Real Estate and Other:
Sales of real estate, net of estimated uncollectibles	$	53,575			1,767			72,170			3,194
Other resorts and communities operations revenue		16,922			—			32,943			—
Other revenues		12,892			869			24,079			1,761
Interest income		30,171			—			60,182			—

		113,560			2,636			189,374			4,955


Financial Services:
Interest income		43,648			57,479			91,735			120,387
Service charges on deposits		15,502			19,347			30,550			38,032
Other service charges and fees		7,739			8,059			15,117			15,084
Securities activities, net		312			692			3,450			5,132
Other non-interest income		2,491			3,279			5,017			5,929

		69,692			88,856			145,869			184,564


Total revenues		183,252			91,492			335,243			189,519


Costs and Expenses
Real Estate and Other:
Cost of sales of real estate		13,644			1,301			22,540			1,994
Cost of sales of other resorts and communities operations		12,365			—			25,055			—
Interest expense		20,069			3,230			40,000			5,478
Selling, general and administrative expenses		62,266			11,274			116,604			22,229

		108,344			15,805			204,199			29,701


Financial Services:
Interest expense		9,951			20,814			21,795			45,573
Provision for loan losses		48,553			43,494			79,308			87,771
Employee compensation and benefits		25,155			25,935			50,533			54,741
Occupancy and equipment		13,745			14,842			27,327			29,753
Advertising and promotion		2,239			1,979			4,183			4,811
Check losses		521			991			953			1,835
Professional fees		4,824			2,695			7,711			6,021
Supplies and postage		921			999			1,919			2,003
Telecommunication		662			586			1,196			1,284
Cost associated with debt redemption		53			1,441			60			2,032
Provision for tax certificates		2,134			1,414			2,867			2,900
Restructuring charges and exit activities		1,726			1,406			1,726			3,281
Impairment of goodwill		—			—			—			8,541
Impairment of real estate owned		1,221			411			1,364			623
FDIC special assessment		—			2,428			—			2,428
Other expenses		9,060			7,466			16,432			14,896

		120,765			126,901			217,374			268,493

Total costs and expenses		229,109			142,706			421,573			298,194

(Loss) gain on settlement of investment in Woodbridge’s subsidiary		(1,135	)		—			(1,135	)		40,369
Gain on sale of asset		275			—			275			—
Equity in earnings from unconsolidated affiliates		276			10,755			469			17,250
Impairment of unconsolidated affiliates		—			—			—			(20,401	)
Impairment of investments		—			—			—			(2,396	)
Other income		924			794			1,362			1,759

Loss from continuing operations before income taxes		(45,517	)		(39,665	)		(85,359	)		(72,094	)
Less: Provision (benefit) for income taxes		392			—			(4,199	)		—

Loss from continuing operations		(45,909	)		(39,665	)		(81,160	)		(72,094	)
Income from discontinued operations		2,714			139			2,465			3,536

Net loss		(43,195	)		(39,526	)		(78,695	)		(68,558	)
Less: Net loss attributable to noncontrolling interests		(27,015	)		(26,617	)		(41,680	)		(45,246	)

Net loss attributable to BFC		(16,180	)		(12,909	)		(37,015	)		(23,312	)
Preferred stock dividends		(187	)		(187	)		(375	)		(375	)

Net loss allocable to common stock	$	(16,367	)		(13,096	)		(37,390	)		(23,687	)

See Notes to Unaudited Consolidated Financial Statements.

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


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Basic and Diluted (Loss) Earnings Per Common Share
Attributable to BFC (Note 22):
Basic (Loss) Earnings Per Common Share
Loss per share from continuing operations	$	(0.26	)		(0.29	)		(0.53	)		(0.55	)
Earnings per share from discontinued operations		0.04			—			0.03			0.03

Net loss per common share	$	(0.22	)		(0.29	)		(0.50	)		(0.52	)


Diluted (Loss) Earnings Per Common Share
Loss per share from continuing operations	$	(0.26	)		(0.29	)		(0.53	)		(0.55	)
Earnings per share from discontinued operations		0.04			—			0.03			0.03

Net loss per common share	$	(0.22	)		(0.29	)		(0.50	)		(0.52	)


Basic weighted average number of common shares outstanding		75,379			45,126			75,378			45,120


Diluted weighted average number of common and common equivalent shares outstanding		75,379			45,126			75,378			45,120


Amounts attributable to BFC common shareholders:
Loss from continuing operations	$	(19,081	)		(13,129	)		(39,855	)		(24,788	)
Income from discontinued operations		2,714			33			2,465			1,101

Net loss attributable to BFC common shareholders	$	(16,367	)		(13,096	)		(37,390	)		(23,687	)

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Consolidated Statement of Changes in Equity — Unaudited
For the Six Months Ended June 30, 2010
(In thousands)


														Accumulated
														Other
											(Accumulated			Compre-			Total			Non-
	Shares of Common				Class A		Class B		Additional		Deficit)			hensive			BFC			controlling
	Stock Outstanding				Common		Common		Paid-in		Retained			Income			Shareholders’			Interest in			Total
	Class A		Class B		Stock		Stock		Capital		Earnings			(Loss)			Equity			Subsidiaries			Equity
Balance, December 31, 2009		68,521		6,854	$	685	$	69	$	227,934	$	16,608		$	(237	)	$	245,059		$	158,852		$	403,911
Cumulative effect of change in accounting principle (Note 2)		—		—		—		—		—		(2,137	)		925			(1,212	)		(811	)		(2,023	)

Balance beginning of year, as adjusted					$	685	$	69	$	227,934	$	14,471		$	688		$	243,847		$	158,041		$	401,888
Net loss		—		—		—		—		—		(37,015	)					(37,015	)		(41,680	)		(78,695	)
Other comprehensive income (loss)		—		—		—		—		—		—			2,162			2,162			(226	)		1,936
Issuance of Class B Common Stock from exercise of options		—		5		—		—		2		—			—			2			—			2
Net effect of subsidiaries’ capital transactions attributable to BFC		—		—		—		—		1,249		—			—			1,249			—			1,249
Noncontrolling interest net effect of subsidiaries’ capital transactions		—		—		—		—		—		—			—			—			2,015			2,015
Cash dividends on 5% Preferred Stock		—		—		—		—		—		(375	)		—			(375	)		—			(375	)
Share-based compensation related to stock options		—		—		—		—		672		—			—			672			—			672

Balance, June 30, 2010		68,521		6,859	$	685	$	69	$	229,857	$	(22,919	)	$	2,850		$	210,542		$	118,150		$	328,692

See Notes to Unaudited Consolidated Financial Statements.

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


	For the Six Months Ended
	June 30,
	2010			2009
Net cash provided by operating activities	$	176,257			11,017

Investing activities:
Purchase of interest-bearing deposits in other financial institutions		(33,863	)		—
Proceeds from redemption and maturity of investment securities and tax certificates		68,993			98,569
Purchase of investment securities and tax certificates		(93,142	)		(107,816	)
Purchase of securities available for sale		(84,762	)		—
Proceeds from sales of securities available for sale		73,540			205,679
Proceeds from maturities of securities available for sale		64,943			80,047
Decrease in restricted cash		9,160			13,443
Cash paid in settlement of Woodbridge subsidiary’s bankruptcy		—			(12,430	)
Purchases of FHLB stock		—			(2,295	)
Redemption of FHLB stock		—			8,151
Investments in unconsolidated affiliates		—			(630	)
Distributions from unconsolidated affiliates		85			398
Net decrease in loans		183,598			185,352
Proceeds from the sale of loans receivable		26,871			5,427
Improvements to real estate owned		(800	)		(577	)
Proceeds from sales of real estate owned		12,362			1,372
Proceeds from the sale of assets		75,305			—
Disposals of office properties and equipment		528			144
Purchases of office property and equipment		(4,101	)		(2,072	)
Investment in of acquisition of Pizza Fusion		—			3,000

Net cash provided by investing activities		298,717			475,762

Financing activities:
Net increase in deposits		35,662			135,251
Prepayment of FHLB advances		(2,061	)		(526,032	)
Net (repayments) proceeds from FHLB advances		(165,000	)		154,000
Decrease in short-term borrowings		(476	)		(254,658	)
Prepayment of notes and bonds payable		(661	)		—
Repayment of notes, mortgage notes and bonds payable		(178,600	)		(1,656	)
Proceeds from notes, mortgage notes and bonds payable		21,508			132
Payments for debt issuance costs		(958	)		(294	)
Preferred stock dividends paid		(375	)		(375	)
Purchase and retirement of Woodbridge common stock		—			(13	)
Payments for the issuance costs of BankAtlantic Bancorp Class A common stock		(118	)		—
BankAtlantic Bancorp common stock dividends paid to non-BFC shareholders		—			(198	)
Proceeds from the exercise of BFC stock options		2			—
Proceeds from the issuance of common stock in Pizza Fusion		783			—
BankAtlantic Bancorp non-controlling interest distributions		(338	)		—

Net cash used in financing activities		(290,632	)		(493,843	)

Increase (decrease) in cash and cash equivalents		184,342			(7,064	)
Cash and cash equivalents at beginning of period		316,080			278,937

Cash and cash equivalents at end of period	$	500,422			271,873

See Notes to Unaudited Consolidated Financial Statements.

BFC Financial Corporation
Notes to Unaudited Consolidated Financial Statements

1. Presentation of Interim Financial Statements

BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we”, “us”, “our” or the “Company”) is a diversified holding company whose principal holdings include a controlling interest in BankAtlantic Bancorp, Inc. and its subsidiaries, including BankAtlantic (“BankAtlantic Bancorp”), a controlling interest in Bluegreen Corporation and its subsidiaries (“Bluegreen”), a controlling interest in Core Communities, LLC (“Core” or “Core Communities”) and a non-controlling interest in Benihana, Inc. (“Benihana”). As a result of its position as the controlling shareholder of BankAtlantic Bancorp, BFC is a “unitary savings bank holding company” regulated by the Office of Thrift Supervision (“OTS”).

As previously disclosed, on September 21, 2009, BFC consummated its merger with Woodbridge Holdings Corporation pursuant to which Woodbridge Holdings Corporation merged with and into Woodbridge Holdings, LLC (“Woodbridge”), BFC’s wholly-owned subsidiary which continued as the surviving company of the merger and the successor entity to Woodbridge Holdings Corporation. As a result of the merger, Woodbridge Holdings Corporation’s separate corporate existence ceased and its Class A Common Stock is no longer publicly traded.

On November 16, 2009, an additional 7.4 million shares of the common stock of Bluegreen was purchased for an aggregate purchase price of approximately $23 million. As a result, our ownership interest increased to approximately 16.9 million shares, or approximately 52%, of Bluegreen’s outstanding common stock. Accordingly, we are now deemed to have a controlling interest in Bluegreen and, under generally accepted accounting principles (“GAAP”), Bluegreen’s results since November 16, 2009, the date of the share purchase, are consolidated in BFC’s financial statements. Prior to November 16, 2009, the approximate 29% equity investment in Bluegreen was accounted for using the equity method. See Note 4 for additional information about the Bluegreen share acquisition.

GAAP requires that BFC consolidate the financial results of the entities in which it has controlling interest. As a consequence, the assets and liabilities of all such entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of the consolidated entities, including BankAtlantic Bancorp, Bluegreen, Woodbridge and Core are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution from those entities. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At June 30, 2010, we owned approximately 43% of BankAtlantic Bancorp’s Class A and Class B common stock, representing in the aggregate approximately 69% of BankAtlantic Bancorp’s total voting power, and approximately 52% of Bluegreen’s common stock. See Note 4 for information regarding our participation in BankAtlantic Bancorp’s recently completed rights offering to its shareholders.

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments, which include normal recurring adjustments, as are necessary for a fair statement of the Company’s consolidated financial condition at June 30, 2010, the consolidated results of operations, comprehensive loss and cash flows for the three and six months ended June 30, 2010 and 2009, and the changes in consolidated equity for the six months ended June 30, 2010. Operating results for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. All significant inter-company balances and transactions have been eliminated in consolidation.

Certain amounts for prior periods have been reclassified to conform to the current period’s presentation.

As a result of the Woodbridge merger on September 21, 2009 and the Bluegreen share acquisition on November 16, 2009, the Company reorganized its reportable segments to better align its segments with the current operations of its businesses. The Company’s business activities currently consist of (i) Real Estate and Other Activities and (ii) Financial Services Activities. The Company currently reports the results of operations of these business activities through six reportable segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. As a result of this reorganization, our BFC Activities segment now includes activities formerly reported in the Woodbridge Other Operations segment and our Real Estate Operations segment is comprised of what was previously identified as the Land Division.

In December 2009, Core Communities reinitiated efforts to sell two of its commercial leasing projects (the “Projects”) and began soliciting bids from several potential buyers to purchase assets associated with the Projects. Due to this decision, the assets associated with the Projects were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations in the Consolidated Statements of Operations. On June 10, 2010, Core sold the Projects to Inland Real Estate Acquisition, Inc. (“Inland”) for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. See Note 5 for further information.

On February 28, 2007, BankAtlantic Bancorp completed the sale to Stifel Financial Corp (“Stifel”) of Ryan Beck Holdings, Inc. (“Ryan Beck”), a subsidiary of BankAtlantic Bancorp engaged in retail and institutional brokerage and investment banking. Under the terms of the Ryan Beck sales agreement, BankAtlantic Bancorp received additional consideration based on Ryan Beck revenues over the two year period following the closing of the sale. Included in the Company’s Consolidated Statement of Operations in discontinued operations for the six months ended June 30, 2009 was $4.2 million of earn-out consideration.

2. Cumulative Effect of Change in Accounting Principle

On January 1, 2010, BFC, Bluegreen and BankAtlantic Bancorp adopted an amendment to the accounting guidance for transfers of financial assets and an amendment to the accounting guidance associated with the consolidation of VIEs. As a result of the adoption of these accounting standards, Bluegreen consolidated seven existing special purpose finance entities (“QSPEs”) associated with prior securitization transactions which previously qualified for off-balance sheet sales treatment, and BankAtlantic Bancorp consolidated its joint venture that conducts a factoring business. Accordingly, Bluegreen’s special purpose finance entities and BankAtlantic Bancorp’s factoring joint venture are now consolidated in BFC’s financial statements. The consolidation of Bluegreen’s special purpose finance entities resulted in a one-time non-cash after-tax reduction to retained earnings of $2.1 million. No charges were recorded to retained earnings in connection with the consolidation of BankAtlantic Bancorp’s factoring joint venture.

The consolidation of Bluegreen’s special purpose finance entities also resulted in the following impacts to BFC’s Consolidated Statement of Financial Condition at January 1, 2010: (1) assets increased by $413.8 million, primarily representing the consolidation of notes receivable, net of allowance, partially offset by the elimination of retained interests; (2) liabilities increased by $416.1 million, primarily representing the consolidation of non-recourse debt obligations to securitization investors, partially offset by the elimination of certain deferred tax liabilities; and (3) total equity decreased by approximately $2.3 million, including a decrease to noncontrolling interest of approximately $1.1 million.

The impact of the adoption of the change in accounting principle on the related assets, related liabilities, noncontrolling interests and total equity are as follows (in thousands):


			Consolidation
						BankAtlantic
	December 31,		Bluegreen’s			Bancorp’s						January 1,
	2009		QSPEs			Joint Venture (1)			Total			2010

Restricted cash	$	24,020		36,518			—			36,518		60,538
Loans receivable		3,678,894		—			3,214			3,214		3,682,108
Notes receivable		277,274		377,265			—			377,265		654,539
Real estate inventory		494,291		16,403			—			16,403		510,694
Retained interest in notes receivable sold		26,340		(26,340	)		—			(26,340	)	—
Investment in unconsolidated affiliates		15,272		—			(3,256	)		(3,256	)	12,016
Other assets		96,750		9,970			367			10,337		107,087

Change in related assets	$	4,612,841		413,816			325			414,141		5,026,982


Other liabilities	$	186,453		3,544			18			3,562		190,015
Deferred income taxes		31,204		1,233			—			1,233		32,437
Receivable -backed notes payable		237,416		411,369			—			411,369		648,785

Change in related liabilities	$	455,073		416,146			18			416,164		871,237


Total BFC’s shareholders’ equity	$	245,059		(1,212	)		—			(1,212	)	243,847
Noncontrolling interests		158,852		(1,118	)		307			(811	)	158,041

Total equity	$	403,911		(2,330	)		307			(2,023	)	401,888


(1)		As a result of the adoption of the accounting guidance associated with the consolidation of VIEs, we consolidated BankAtlantic Bancorp’s factoring joint venture, BankAtlantic Business Capital, LLC (“BBC”). Prior to January 1, 2010, the investment in BBC was accounted for using the equity method of accounting.

3. Liquidity

BFC

Except as otherwise noted, the debts and obligations of BankAtlantic Bancorp, Bluegreen, Woodbridge and Core are not direct obligations of BFC and generally are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash, short-term investments, dividends or distributions from subsidiaries and dividends from Benihana. As discussed further in this report, recent tax law changes have resulted in the receipt of significant tax refunds.

We may use our available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments, fund operations or repurchase shares of our Class A Common Stock pursuant to our share repurchase program. The current program authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. No shares were repurchased during the six months ended June 30, 2010 or the year ended December 31, 2009. As discussed further in this report, during June and July 2010, BFC acquired an aggregate of 10,000,000 shares of BankAtlantic Bancorp’s Class A Common Stock for an aggregate purchase price of $15 million as a result of its exercise of subscription rights distributed in BankAtlantic Bancorp’s recently completed rights offering to its shareholders.

Since March 2009, BFC has not received cash dividends from BankAtlantic Bancorp and does not expect to receive cash dividends from BankAtlantic Bancorp for the foreseeable future because BankAtlantic Bancorp is currently prohibited from paying dividends on its common stock. Furthermore, certain of Bluegreen’s credit facilities contain terms which may limit the payment of cash dividends.

We believe that our current financial condition and credit relationships, together with anticipated cash from operating activities and other sources of funds, including tax refunds and proceeds from the disposition of certain properties or investments, will provide for anticipated near-term liquidity needs. With respect to long-term liquidity requirements, BFC may also seek to raise funds through the issuance of long-term secured or unsecured indebtedness, equity and/or debt securities or through the sale of assets; however, there is no assurance that any of these alternatives will be available to BFC on attractive terms, or at all.

Woodbridge

The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure and while there may have been an issue with respect to compliance with certain covenants in the loan agreements, we do not believe that an event of default had occurred as was alleged. Woodbridge continues to seek a satisfactory conclusion with regard to the debt, however, the outcome of these efforts and the litigation is uncertain.

As previously disclosed, under Florida law, holders of Woodbridge’s Class A Common Stock who did not vote to approve the merger between Woodbridge and BFC and properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares as determined in accordance with the provisions of Florida law in lieu of the shares of BFC’s Class A Common Stock that they would otherwise have been entitled to receive. Dissenting Holders, who collectively held approximately 4.2 million shares of Woodbridge’s Class A Common Stock, have rejected Woodbridge’s offer of $1.10 per share and requested payment for their shares based on their respective fair value estimates of Woodbridge’s Class A Common Stock. Woodbridge is currently a party to legal proceedings relating to the Dissenting Holders appraisal process. In December 2009, a $4.6 million liability was recorded with a corresponding reduction to additional paid-in capital, which is reflected in the Company’s Consolidated Statements of Financial Condition representing in the aggregate Woodbridge’s offer to the Dissenting Holders. However, the appraisal rights litigation is currently ongoing and its outcome is uncertain. As a result, there is no assurance as to the amount of the payment that will ultimately be required to be made to the Dissenting Holders, which amount may be greater than the $4.6 million that we have accrued.

Core Communities

During 2009, the recession continued and the demand for residential and commercial inventory showed no signs of recovery, particularly in the geographic regions where Core’s properties are located. The decrease in land sales in 2009 and continued cash flow deficits contributed to, among other things, the deterioration of Core’s liquidity. As a result, Core severely limited its development expenditures in Tradition, Florida and has completely discontinued development activity in Tradition Hilton Head. Its assets have been impaired significantly and in an effort to bring about an orderly liquidation without a bankruptcy filing, Core commenced negotiations with all of its lenders and is seeking to liquidate its assets in an orderly way. Core is currently in default under the terms of all of its outstanding debt totaling approximately $139.2 million. Core continues to pursue all options with its lenders, including offering deeds in lieu and other similar transactions wherein Core would relinquish title to substantially all of its assets. During February 2010, with Core’s concurrence, a significant portion of the land in Tradition Hilton Head was placed under the control of a court appointed receiver. In connection with the receivership, Core entered into a separate agreement with the lender that, among other things, grants Core a right of first refusal to purchase the $25.3 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory that had a net carrying value of $33 million, net of impairment charges during 2009 of approximately $29.6 million. Separately, on April 7, 2010 and April 8, 2010, another of Core’s lenders filed a foreclosure action in South Carolina and Florida, respectively, seeking foreclosure of mortgage loans totaling approximately $113.8 million, plus additional interest and costs and expenses, including attorneys’ fees. Core is currently in negotiations with the lender regarding, among other things, accelerating the foreclosure actions, granting the lender a perfected first lien and security interest in certain additional Core subsidiaries, and releasing and indemnifying Core from any future obligations. As of June 30, 2010, the net carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of foreclosure proceedings was $82 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge during the six months ended June 30, 2010. While negotiations with its lenders continue, there is no assurance that Core will be successful in reaching any agreement with its lenders with respect to resolution of its obligations.

Core is also a party to a certain Development Agreement with the city of Hardeeville, SC, under which Core is obligated to fund $1 million towards the building of a fire station. Funding was scheduled in three installments: the first installment of $100,000 was due on October 21, 2009; the second installment of $450,000 was due on January 1, 2010; and the final installment of $450,000 was due on April 1, 2010. Additionally, Core was obligated to fund certain staffing costs of $200,000 under the terms of this agreement. Core did not pay any of the required installments and has not funded the $200,000 payment for staffing. On November 5, 2009, Core received a notice of default from the city for nonpayment. In the event that Core is unable to obtain additional funds to make these payments, it may be unable to cure the default on its obligation to the city, which could result in a loss of entitlements associated with the development project.

On June 10, 2010, Core sold the Projects to Inland for approximately $75.4 million. As a result of the sale, Core realized a gain on sale of discontinued operations of approximately $2.6 million in the second quarter of 2010. The sale resulted in net cash proceeds to Core of approximately $1.5 million. See Note 5 for further information regarding the Projects.

Based on an ongoing evaluation of its cost structure and in light of current market conditions, Core reduced its head count by 41 employees during 2009, resulting in approximately $1.3 million of severance charges recorded during the fourth quarter of 2009. In the three and six months ended June 30, 2010, severance related payments at Core totaled approximately $378,000 and $1.0 million, respectively.

The negative impact of the adverse real estate market conditions on Core, together with Core’s limited liquidity, have caused substantial doubt regarding Core’s ability to continue as a going concern if Woodbridge chooses not to provide Core with the cash needed to meet its obligations when and as they arise. Woodbridge has not committed to fund any of Core’s obligations or cash requirements, and it is not currently anticipated that Woodbridge will provide additional funds to Core. As a result, the consolidated financial statements and the financial information provided for Core do not include any adjustments that might result from the outcome of this uncertainty. See Note 19 for Core’s results which are reported in the Real Estate Operations segment.

BankAtlantic Bancorp and BankAtlantic

Both BankAtlantic Bancorp Parent Company and BankAtlantic actively manage their liquidity and cash flow needs. BankAtlantic Bancorp Parent Company had cash of $8.4 million as of June 30, 2010, does not have debt maturing until March 2032 and has the ability to defer interest payments on its junior subordinated debentures until December 2013; however, based on current interest rates, accrued and unpaid interest of approximately $72.6 million would be due in December 2013 if interest is deferred until that date. BankAtlantic Bancorp Parent Company’s operating expenses for the three and six months ended June 30, 2010 were $3.4 million and $5.0 million, respectively, and $1.9 million and $3.6 million for the three and six months ended June 30, 2009, respectively. BankAtlantic’s liquidity is dependent, in part, on its ability to maintain or increase deposit levels and the availability of borrowings under its lines of credit and Treasury and Federal Reserve lending programs. As of June 30, 2010, BankAtlantic had $454 million of cash and approximately $788 million of available unused borrowings, consisting of $588 million of unused FHLB line of credit capacity, $191 million of unpledged securities, and $9 million of available borrowing capacity at the Federal Reserve. However, such available borrowings are subject to periodic reviews and may be terminated, suspended or reduced at any time. Additionally, interest rate changes, additional collateral requirements, disruptions in the capital markets or deterioration in BankAtlantic’s financial condition may reduce the amounts it is able to borrow or make terms of the borrowings and deposits less favorable. As a result, there is a risk that the cost of funds will increase or that the availability of funding sources may decrease.

The substantial uncertainties throughout the Florida and national economies and the U.S. banking industry coupled with current market conditions have adversely affected BankAtlantic Bancorp’s and BankAtlantic’s results. As of June 30, 2010, BankAtlantic’s capital was in excess of all regulatory “well capitalized” levels. However, the OTS, in its discretion, can at any time require an institution to maintain capital amounts and ratios above the established “well capitalized” requirements based on its view of the risk profile of the specific institution. BankAtlantic’s communications with the OTS include providing information on an ad-hoc, one-time or regular basis related to areas of regulatory oversight and bank operations. As part of such communications, BankAtlantic has provided to its regulators forecasts, strategic business plans and other information relating to anticipated asset balances, asset quality, capital levels, expenses, anticipated earnings, levels of brokered deposits and liquidity, and has indicated that BankAtlantic has no plans to pay dividends to BankAtlantic Bancorp Parent Company. If higher capital requirements are imposed by its regulators, BankAtlantic could be required to raise additional capital. If BankAtlantic is required to raise additional capital, there is no assurance that BankAtlantic Bancorp Parent Company or BankAtlantic would be successful in raising the additional capital on favorable terms or at all and it may involve the issuance of securities in transactions highly dilutive to BankAtlantic Bancorp’s existing shareholders, including BFC. Although BankAtlantic Bancorp and BankAtlantic have experienced operating losses since June 2007, BankAtlantic maintains capital at “well capitalized” levels and BankAtlantic Bancorp Parent Company believes that it maintains sufficient liquidity to fund operations at least through June 30, 2011. However, if unanticipated market factors emerge and/or BankAtlantic Bancorp is unable to execute its plans or if BankAtlantic or BankAtlantic Bancorp requires capital and BankAtlantic Bancorp is unable to raise capital, it could have a material adverse impact on BFC’s business, results of operations and financial condition.

4. Share Acquisitions

Bluegreen Share Acquisition

On November 16, 2009, approximately 7.4 million shares of common stock of Bluegreen were purchased for an aggregate purchase price of approximately $23 million, increasing our interest from 9.5 million shares, or 29%, of Bluegreen’s common stock to 16.9 million shares, or 52%, of Bluegreen’s common stock which represents a controlling interest in Bluegreen. As a result, the Company consolidates all of Bluegreen’s wholly-owned subsidiaries and entities in which Bluegreen holds a controlling financial interest. The Company also consolidates Bluegreen/Big Cedar Vacations, LLC (the “Bluegreen/Big Cedar Joint Venture”), in which Bluegreen holds a 51% equity interest, has an active role as the day-to-day manager of its activities, and has majority voting control of its management committee. The operating results of Bluegreen are included in the Company’s Bluegreen Resorts and Bluegreen Communities segments.

As part of the accounting for the November 2009 Bluegreen share acquisition, management is continuing to evaluate the fair value of Bluegreen’s inventory and certain of Bluegreen’s contracts, and as such, certain amounts at December 31, 2009 and June 30, 2010 are estimates and are subject to revision as more detailed analyses are completed and additional information becomes available. Any change resulting from the final evaluation of the inventory and contracts of Bluegreen as of the acquisition date may change the amount of the $183.1 million “bargain purchase gain” recorded during the fourth quarter of 2009.

Additional Shares Purchased in BankAtlantic Bancorp’s Rights Offering

On June 18, 2010, BankAtlantic Bancorp commenced a rights offering (the “Rights Offering”) to its shareholders of record as of the close of business on June 14, 2010 (the “Record Date”). In the Rights Offering, BankAtlantic Bancorp distributed to each eligible shareholder 0.327 subscription rights for each share of BankAtlantic Bancorp’s Class A Common Stock and Class B Common Stock owned as of the close of business on the Record Date. Fractional subscription rights were rounded up to the next largest whole number. Each subscription right entitled the holder thereof to purchase one share of BankAtlantic Bancorp’s Class A Common Stock at the purchase price of $1.50 per share. Shareholders who exercised their basic subscription rights in full were also given the opportunity to request to purchase any additional shares of BankAtlantic Bancorp’s Class A Common Stock that remained unsubscribed for at the expiration of the Rights Offering at the same $1.50 per share purchase price, subject to certain determinations and allocations. The Rights Offering expired on July 20, 2010.

During June 2010, BFC exercised its basic subscription rights, in full, amounting to 5,986,865 shares of BankAtlantic Bancorp’s Class A Common Stock, and requested to purchase an additional 4,013,135 shares of BankAtlantic Bancorp’s Class A Common Stock to the extent available. In connection with the exercise of its subscription rights, BFC delivered to BankAtlantic Bancorp $15.0 million in cash, which represented the full purchase price for all of the shares subscribed for by BFC. In exchange, BFC was issued 4,697,184 shares of BankAtlantic Bancorp’s Class A Common Stock on June 28, 2010, which represented a portion of its basic subscription rights exercise. The issuance of these shares increased BFC’s ownership interest in BankAtlantic Bancorp from 37% to 43% and BFC’s voting interest in BankAtlantic Bancorp from 66% to 69%. The balance of BFC’s subscription was treated as an advance to BankAtlantic Bancorp, as evidenced by a related $8.0 million promissory note executed by BankAtlantic Bancorp in favor of BFC. The promissory note had a scheduled maturity of July 30, 2010 and was payable in cash or shares of BankAtlantic Bancorp’s Class A Common Stock issuable to BFC in connection with its exercise of subscription rights in the Rights Offering. The promissory note was eliminated in consolidation as of June 30, 2010. See Note 21, Certain Relationships and Related Party Transactions, for further information regarding the promissory note. In July 2010, in connection with the completion of the Rights Offering, the promissory note was satisfied in accordance with its terms through the issuance to BFC of the additional 5,302,816 shares of BankAtlantic Bancorp’s Class A Common Stock subscribed for by BFC in the Rights Offering, which increased BFC’s ownership interest in BankAtlantic Bancorp to 45% and BFC’s voting interest in BankAtlantic Bancorp to 71%.

BFC’s acquisition of shares of BankAtlantic Bancorp’s Class A Common Stock in the Rights Offering is being accounted for as an equity transaction in accordance with Financial Accounting Standards Board (“FASB”) authoritative guidance in connection with noncontrolling interests in consolidated financial statements which provides that changes in a parent’s ownership interest which do not result in the parent losing its controlling interest are reported as equity transactions.

5. Discontinued Operations

Real Estate

Core Communities

In December 2009, Core Communities reinitiated efforts to sell the Projects and began soliciting bids from several potential buyers for the immediate sale of the Projects in their present condition. Due to this decision, the assets associated with the Projects were classified as discontinued operations for all periods presented in accordance with the accounting guidance for the disposal of long-lived assets.

The assets were reclassified as assets held for sale and the liabilities related to these assets were reclassified as liabilities related to assets held for sale in the Consolidated Statements of Financial Condition. Additionally, the results of operations for the Projects were reclassified to income from discontinued operations in the Consolidated Statements of Operations. Depreciation related to these assets held for sale ceased in December 2009. The Company elected not to separate these assets in the Consolidated Statements of Cash Flows for the periods presented. Management reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that an impairment charge was necessary to write down the aggregate carrying value of the Projects to fair value less the estimated costs to sell and, accordingly, recorded an impairment charge of approximately $13.6 million in the fourth quarter of 2009.

On June 10, 2010, Core sold the Projects to Inland for approximately $75.4 million. As a result of the sale, a gain on sale of discontinued operations of approximately $2.6 million was realized in the second quarter of 2010. In connection with the sale, the lender reduced the outstanding balance of the loans related to the assets held for sale by approximately $800,000 as a result of negotiations with the lender. Core used the proceeds from the sale to Inland to repay these loans. As a result, Core was released from its obligations with the lender.

The following table summarizes information regarding the assets held for sale and liabilities related to the assets held for sale for the Projects (in thousands):


	June 30,		December 31,
	2010		2009

Restricted cash	$	—		538
Property and equipment, net		—		61,588
Other assets		—		9,774

Assets held for sale	$	—		71,900


Accounts payable, accrued liabilities and other	$	—		1,602
Notes and mortgage payable		—		74,749

Liabilities related to assets held for sale	$	—		76,351

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


	For the Three Months Ended				For the Six Months Ended
	June 30,		June 30,		June 30,			June 30,
	2010		2009		2010			2009

Revenue and other income	$	1,117		2,181		2,951			4,183
Costs and expenses		1,020		2,042		3,103			4,848

Income (loss) before income taxes		97		139		(152	)		(665	)
Gain on sale of discontinued operations		2,617		—		2,617			—
(Provision) benefit for income taxes		—		—		—			—

Income (loss) from discontinued operations	$	2,714		139		2,465			(665	)

Financial Services

On February 28, 2007, BankAtlantic Bancorp sold Ryan Beck to Stifel. The Stifel sales agreement provided for contingent earn-out payments, payable in cash or shares of Stifel common stock, at Stifel’s election, based on certain defined Ryan Beck revenues over the two-year period immediately following the Ryan Beck sale, which ended on February 28, 2009. The contingent earn-out payments were accounted for when earned as additional proceeds from the sale of Ryan Beck common stock. BankAtlantic Bancorp received additional earn-out consideration of $4.2 million during the six months ended June 30, 2009. The $4.2 million of earn-out consideration is included as discontinued operations in the Company’s Consolidated Statements of Operations for the six months ended June 30, 2009.

6. Fair Value Measurement

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three main valuation techniques to measuring the fair value of assets and liabilities: the market approach, the income approach and the cost approach. The accounting literature defines an input fair value hierarchy that has three broad levels and gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The valuation techniques are summarized below:

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The income approach uses financial models to convert future amounts to a single present amount. These valuation techniques include present value and option-pricing models.

The cost approach is based on the amount that currently would be required to replace the service capacity of an asset. This technique is often referred to as current replacement costs.

The input fair value hierarchy is summarized below:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at each reporting date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly (for example, a principal-to-principal market); inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The following table presents major categories of the Company’s assets measured at fair value on a recurring basis at June 30, 2010 (in thousands):


			Fair Value Measurements using
			Quoted prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
Description	2010		(Level 1)		(Level 2)		(Level 3)
Mortgage-backed securities	$	135,573		—		135,573		—
REMICS (1)		87,270		—		87,270		—
Agency bonds		50,101		—		50,101		—
Municipal bonds		570		—		570		—
Other bonds		250		—		—		250
Foreign currency put options		638		638		—		—
Benihana Convertible Preferred Stock		20,159		—		—		20,159
Other equity securities		33,323		33,323		—		—

Total	$	327,884		33,961		273,514		20,409


(1)		Real estate mortgage investment conduits (REMICS) are pass-through entities that hold residential loans. Investors in these entities are issued ownership interests in the entities in the form of a bond. The securities are guaranteed by government agencies.

The following table presents major categories of the Company’s assets measured at fair value on a recurring basis as of December 31, 2009 (in thousands):


			Quoted prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
Description	2009		(Level 1)		(Level 2)		(Level 3)
Mortgage-backed securities	$	211,945		—		211,945		—
REMICS (1)		107,347		—		107,347		—
Other bonds		250		—		—		250
Benihana Convertible Preferred Stock		17,766		—		—		17,766
Other equity securities		9,067		9,067		—		—

Total securities available for sale at fair value		346,375		9,067		319,292		18,016
Retained interest in notes receivable sold		26,340		—		—		26,340

Total	$	372,715		9,067		319,292		44,356


(1)		Real estate mortgage investment conduits (REMICS) are pass-through entities that hold residential loans. Investors in these entities are issued ownership interests in the entities in the form of a bond. The securities are guaranteed by government agencies.

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

The following table presents major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2010 (in thousands):


	For the Three Months Ended June 30, 2010
			Benihana
			Convertible
	Other Bonds		Preferred Stock			Total

Beginning Balance	$	250		20,247			20,497
Total gains and losses (realized/unrealized)
Included in earnings		—		—			—
Included in other comprehensive income		—		(88	)		(88	)
Purchases, issuances, and settlements		—		—			—
Transfers in and/or out of Level 3		—		—			—

Balance at June 30, 2010	$	250		20,159			20,409


	Three Months Ended June 30, 2009
			Benihana
			Convertible		Equity
	Other Bonds		Preferred Stock		Securities			Total

Beginning Balance	$	250		16,384		1,252			17,886
Total gains and losses (realized/unrealized)
Included in earnings		—		—		(1,378	)		(1,378	)
Included in other comprehensive income		—		4,127		336			4,463
Purchases, issuances, and settlements		—		—		—			—
Transfers in and/or out of Level 3		—		—		—			—

Ending balance	$	250		20,511		210			20,971

The following tables present major categories of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2010 and 2009 (in thousands):


	For the Six Months Ended June 30, 2010
	Retained
	Interests in					Benihana
	Notes			Other		Convertible		Equity
	Receivable Sold			Bonds		Preferred Stock		Securities		Total

Beginning Balance	$	26,340			250		17,766		—		44,356
Total gains and losses (realized/unrealized) Included in earnings		—			—		—		—		—
Cumulative effect of change in accounting principle (1)		(26,340	)		—		—		—		(26,340	)
Included in other comprehensive income		—			—		2,393		—		2,393
Purchases, issuances, and settlements		—			—		—		—		—
Transfers in and/or out of Level 3		—			—		—		—		—

Balance at June 30, 2010	$	—			250		20,159		—		20,409

(1)

Retained interests in notes receivable sold was eliminated upon a change in accounting principle. For further information see Note 2.


	For the Six Months Ended June 30, 2009
			Benihana
	Other		Convertible		Equity
	Bonds		Preferred Stock		Securities			Total

Beginning Balance	$	250		16,426		1,588			18,264
Total gains and losses (realized/unrealized)
Included in earnings		—		—		(1,378	)		(1,378	)
Included in other comprehensive income		—		4,085		—			4,085
Purchases, issuances, and settlements		—		—		—			—
Transfers in and/or out of Level 3		—		—		—			—

Ending balance	$	250		20,511		210			20,971

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

The fair values of agency bonds, municipal bonds mortgage-backed and real estate mortgage conduit securities are estimated using independent pricing sources and matrix pricing. Matrix pricing uses a market approach valuation technique and Level 2 valuation inputs as quoted market prices are not available for the specific securities that BankAtlantic Bancorp owns. The independent pricing sources value these securities using observable market inputs including: benchmark yields, reported trades, broker/dealer quotes, issuer spreads and other reference data in the secondary institutional market which is the principal market for these types of assets. To validate fair values obtained from the pricing sources, BankAtlantic Bancorp reviews fair value estimates obtained from brokers, investment advisors and others to determine the reasonableness of the fair values obtained from independent pricing sources. BankAtlantic Bancorp reviews any price that it determines may not be reasonable and requires the pricing sources to explain the differences in fair value or reevaluate its fair value.

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

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

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

The following table presents major categories of assets measured at fair value on a non-recurring basis as of June 30, 2010 (in thousands):


			Fair Value Measurements Using
			Quoted prices in
			Active Markets		Significant		Significant
			for Identical		Other Observable		Unobservable
	June 30,		Assets		Inputs		Inputs		Total
Description	2010		(Level 1)		(Level 2)		(Level 3)		Impairments

Loans measured for impairment using the fair value of the underlying collateral	$	302,199		—		—		302,199		74,584
Impaired real estate owned		6,578		—		—		6,578		1,364
Impaired real estate held for sale		3,490		—		—		3,490		1,532

Total	$	312,267		—		—		312,267		77,480

The following table presents major categories of assets measured at fair value on a non-recurring basis as of June 30, 2009 (in thousands):


			Fair Value Measurements Using
			Quoted prices in
			Active Markets		Significant		Significant
			for Identical		Other Observable		Unobservable
	June 30,		Assets		Inputs		Inputs		Total
Description	2009		(Level 1)		(Level 2)		(Level 3)		Impairments

Loans measured for impairment using the fair value of the underlying collateral	$	177,326		—		—		177,326		37,744
Impaired real estate owned		2,955		—		—		2,955		623
Impaired real estate held for sale		2,130		—		—		2,130		33
Impaired goodwill		—		—		—		—		8,541
Investment in Bluegreen		23,984		23,984		—		—		20,401

Total	$	206,395		23,984		—		182,411		67,342

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

Loans Receivable Measured For Impairment

Impaired loans receivable are generally valued based on the fair value of the underlying collateral. BankAtlantic Bancorp primarily uses third party appraisals to assist in measuring non-homogenous impaired loans. These appraisals generally use the market or income approach valuation technique and use market observable data to formulate an opinion of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral or properties, and these values may also be adjusted for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans receivable, judgment on market conditions is used to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed, and the amount of time required to sell out the real estate project may be derived from current appraisals of similar projects. As a consequence, the calculation of the fair value of the collateral uses Level 3 inputs. BankAtlantic Bancorp generally uses third party broker price opinions or an automated valuation service to measure the fair value of the collateral for impaired homogenous loans in the establishment of specific reserves or charge-downs when these loans become 120 days delinquent. The third party valuations from real estate professionals use Level 3 inputs in the determination of the fair values.

Impaired Real Estate Owned and Real Estate Held for Sale

Real estate is generally valued with the assistance of third party appraisals or broker price opinions. These appraisals generally use the market approach valuation technique and use market observable data to formulate an opinion of the fair value of the properties. However, the appraisers or brokers use professional judgments in determining the fair value of the properties and these values may also be adjusted for changes in market conditions subsequent to the valuation date. As a consequence of using broker price opinions and adjustments to appraisals, the fair values of the properties are considered a Level 3 valuation.

Impaired Goodwill

In determining the fair value of BankAtlantic Bancorp’s reporting units in the test of goodwill for impairment, BankAtlantic Bancorp uses discounted cash flow valuation techniques. This method requires assumptions for expected cash flows and applicable discount rates. The aggregate fair value of all reporting units derived from the above valuation methodology was compared to BankAtlantic Bancorp’s market capitalization adjusted for a control premium in order to determine the reasonableness of the financial model output. A control premium represents the value an investor would pay above minority interest transaction prices in order to obtain a controlling interest in the respective company. BankAtlantic Bancorp used financial projections over a period of time considered necessary to achieve a steady state of cash flows for each reporting unit. The primary assumptions in the projections include anticipated growth in loans, tax certificates, securities, interest rates and revenue. The discount rates are estimated based on a Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk and size premium adjustments specific to a particular reporting unit. The estimated fair value of a reporting unit is highly sensitive to changes in the discount rate and terminal value assumptions and, accordingly, minor changes in these assumptions could significantly impact the fair value assigned to a reporting unit. Future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. As a result of the significant judgments used in determining the fair value of the reporting units, the fair values of the reporting units use Level 3 inputs in the determination of fair value.

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

Financial Disclosures about Fair Value of Financial Instruments

The following table presents information for financial instruments at June 30, 2010 and December 31, 2009 (in thousands):


	June 30, 2010				December 31, 2009
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	500,422		500,422		316,080		316,080
Interest bearing deposits in other financial institutions		33,863		33,863		—		—
Restricted cash		50,618		50,618		24,020		24,020
Securities available for sale		327,246		327,246		346,375		346,375
Derivatives		638		638		—		—
Investment securities		1,981		1,981		9,654		9,654
Tax Certificates		139,731		142,302		110,991		112,472
Federal home loan bank stock		48,751		48,751		48,751		48,751
Retained interest in notes receivable sold		—		—		26,340		26,340
Loans receivable including loans held for sale, net		3,377,438		3,004,589		3,683,441		3,381,796
Notes receivable		620,498		655,000		277,274		277,274

Financial liabilities:
Deposits	$	3,984,480		3,987,121		3,948,818		3,950,840
Advances from FHLB		115,000		115,000		282,012		282,912
Securities sold under agreements to repurchase and short-term borrowings		26,795		26,795		27,271		27,271
Receivable-backed notes payable		592,533		580,318		237,416		237,416
Notes and mortgage notes payable and other borrowings		369,510		367,464		395,361		392,047
Mortgage payables associated with assets held for sale		—		—		74,749		74,749
Junior subordinated debentures		453,829		219,938		447,211		170,598

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

Interest bearing deposits in other financial institutions are certificates of deposits guaranteed by the FDIC with maturities of less than one year. Due to the FDIC guarantee and the short maturity of these certificates of deposit, the fair value of these deposits approximates the carrying value.

Fair values are estimated for loan portfolios with similar financial characteristics. Loans receivable are segregated by category, and each loan category is further segmented into fixed and adjustable interest rate categories and into performing and non-performing categories.

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

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

The fair value of Federal Home Loan Bank stock is its carrying amount.

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

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

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

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

The fair values of BankAtlantic’s subordinated debentures were based on discounted values of contractual cash flows at a market discount rate adjusted for non-performance risk.

The estimated fair values of notes and mortgage notes payable and other borrowings, including receivable-backed notes payable were based upon current rates and spreads it would pay to obtain similar borrowings and also used discounted values of contractual cash flows at a market discount rate.

The fair value of BankAtlantic Bancorp’s mortgage-backed bonds included in notes and mortgage notes payable and other borrowings as of December 31, 2009 was based on discounted values of contractual cash flows at a market discount rate. The mortgage-backed bonds were retired during the six months ended June 30, 2010 resulting in a $7,000 loss.

In determining the fair value of BankAtlantic Bancorp’s junior subordinated debentures, BankAtlantic Bancorp used NASDAQ price quotes available with respect to its $64.8 million of publicly traded trust preferred securities related to its junior subordinated debentures (“public debentures”). However, $250.4 million of the outstanding trust preferred securities related to its junior subordinated debentures are not traded, but are privately held in pools (“private debentures”) and with no liquidity or readily determinable source for valuation. BankAtlantic Bancorp has deferred the payment of interest with respect to all of its junior subordinated debentures as permitted by the terms of these securities. Based on the deferral status and the lack of liquidity and ability of a holder to actively sell such private debentures, the fair value of these private debentures may be subject to a greater discount to par and have a lower fair value than indicated by the public debenture price quotes. However, due to their private nature and the lack of a trading market, fair value of the private debentures was not readily determinable at June 30, 2010 and December 31, 2009, and as a practical alternative, BankAtlantic Bancorp used the NASDAQ price quotes of the public debentures to value its remaining outstanding junior subordinated debentures whether privately held or publicly traded.

The estimated fair value of Woodbridge’s and Bluegreen’s junior subordinated debentures as of June 30, 2010 and December 31, 2009 were based on a discounted value of contractual cash flows at a market discount rate or market price quotes from the over-the-counter bond market.

The carrying amount and fair values of BankAtlantic’s commitments to extend credit, standby letters of credit, financial guarantees and forward commitments are not considered significant. (See Note 20 for the contractual amounts of BankAtlantic’s financial instrument commitments.)

7. Securities Available for Sale

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


	As of June 30, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Government agency securities:
Mortgage-backed securities	$	127,159		8,414		—		135,573
Agency bonds		49,992		109		—		50,101
REMICS (1)		84,229		3,041		—		87,270

Total mortgage-backed securities		261,380		11,564		—		272,944

Investment securities:
Municipal bonds		574		—		4		570
Other bonds		250		—		—		250
Benihana Convertible Preferred Stock		16,426		3,733		—		20,159
Equity and other securities		33,151		174		2		33,323

Total investment securities		50,401		3,907		6		54,302

Total	$	311,781		15,471		6		327,246


	As of December 31, 2009
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Government agency securities:
Mortgage-backed securities	$	202,985		8,961		1		211,945
REMICS (1)		104,329		3,037		19		107,347

Total mortgage-backed securities		307,314		11,998		20		319,292

Investment securities:
Other bonds		250		—		—		250
Benihana Convertible Preferred Stock		16,426		1,340		—		17,766
Equity and other securities		8,947		126		6		9,067

Total investment securities		25,623		1,466		6		27,083

Total	$	332,937		13,464		26		346,375


(1)		REMICS are pass-through entities that hold residential loans. Investors in these entities are issued ownership interests in the entities in the form of a bond. The securities are guaranteed by government agencies.

The following tables show the gross unrealized losses and fair value of the Company’s securities available for sale with unrealized losses that are deemed temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2010 and December 31, 2009 (in thousands):


	As of June 30, 2010
	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses

Municipal bonds		570		(4	)		—		—			570		(4	)
Equity securities		—		—			8		(2	)		8		(2	)

Total available for sale securities:	$	570		(4	)		8		(2	)		578		(6	)


	As of December 31, 2009
	Less Than 12 Months					12 Months or Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses

Mortgage-backed securities	$	—		—			159		(1	)		159		(1	)
REMICS		—		—			21,934		(19	)		21,934		(19	)
Equity securities		4		(6	)		—		—			4		(6	)

Total available for sale securities:	$	4		(6	)		22,093		(20	)		22,097		(26	)

The unrealized losses on the equity securities and municipal bonds is insignificant. Accordingly, the Company does not consider these investments other-than-temporarily impaired at June 30, 2010.

Unrealized losses on debt securities outstanding greater than twelve months at December 31, 2009 were primarily the result of interest rate changes. These securities are guaranteed by government sponsored enterprises. These securities are of high credit quality, and management believes that these securities may recover their losses in the foreseeable future. Further, management does not currently intend to sell these debt securities and believes it will not be required to sell these debt securities before the price recovers.

The scheduled maturities of debt securities available for sale were (in thousands):


	Debt Securities
	Available for Sale
			Estimated
	Amortized		Fair
June 30, 2010 (1)	Cost		Value
Due within one year	$	718		718
Due after one year, but within five years		50,138		50,245
Due after five years, but within ten years		27,708		28,585
Due after ten years		183,640		194,216

Total	$	262,204		273,764


(1)		Scheduled maturities in the above table are based on contractual maturities but may vary significantly from actual maturities due to prepayments.

Included in Financial Services securities activities, net in the Company’s Consolidated Statements of Operations and Consolidated Statements of Cash Flows were (in thousands):


	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2010		2009		2010		2009
Gross gains on securities sales	$	—		2,070		3,138		6,510

Gross losses on securities sales		—		—		—		—

Proceed from sales of securities		—		43,277		46,911		205,679

Management reviews its investment portfolios for other-than-temporary declines in value quarterly. As a consequence of the BankAtlantic Bancorp’s review during 2009, the Company recognized $1.4 million of other-than-temporary declines in value related to an equity investment in an unrelated financial institution.

BFC — Benihana Investment

The Company owns 800,000 shares of Benihana’s Convertible Preferred Stock. The Convertible Preferred Stock is convertible into an aggregate of 1,578,943 shares of Benihana’s Common Stock at a conversion price of $12.67, subject to adjustment from time to time upon certain defined events. Based on the number of currently outstanding shares of Benihana’s capital stock, the Convertible Preferred Stock, if converted, would represent an approximately 19% voting interest and an approximately 9% economic interest in Benihana.

The Convertible Preferred Stock was acquired pursuant to an agreement with Benihana on June 8, 2004 to purchase an aggregate of 800,000 shares of Convertible Preferred Stock for $25.00 per share. The shares of the Convertible Preferred Stock have voting rights on an “as if converted” basis together with Benihana’s Common Stock on all matters put to a vote of the holders of Benihana’s Common Stock. The approval of a majority of the holders of the Convertible Preferred Stock then outstanding, voting as a single class, are required for certain events outside the ordinary course of business. Holders of the Convertible Preferred Stock are entitled to receive cumulative quarterly dividends at an annual rate equal to $1.25 per share, payable on the last day of each calendar quarter. The Convertible Preferred Stock is subject to mandatory redemption at the original issue price of $20 million plus accumulated dividends on July 2, 2014 unless BFC elects to extend the mandatory redemption date to a later date not to extend beyond July 2, 2024. At June 30, 2010, the closing price of Benihana’s Common Stock was $6.41 per share. The market value of the Convertible Preferred Stock if converted at June 30, 2010 would have been approximately $10.1 million.

At June 30, 2010, the Company’s estimated fair value of its investment in Benihana’s Convertible Preferred Stock was approximately $20.2 million, which includes a gross unrealized gain of approximately $2.4 million for the six months ended June 30, 2010. The estimated fair value of the Company’s investment in Benihana’s Convertible Preferred Stock was assessed using the income approach with Level 3 inputs by discounting future cash flows at a market discount rate combined with the fair value of the underlying shares of Benihana’s Common Stock that BFC would receive upon conversion of its shares of Benihana’s Convertible Preferred Stock.

8. Derivatives

During the three months ended June 30, 2010, BankAtlantic expanded its cruise ship automated teller machine (“ATM”) operations and began dispensing foreign currency from certain ATMs on cruise ships. At June 30, 2010, BankAtlantic had $6.5 million of foreign currency in cruise ship ATMs and recognized a $0.7 million foreign currency unrealized exchange loss which is included in Financial Services — other non-interest income in the Company’s Consolidated Statement of Operations. BankAtlantic purchased foreign currency put options as an economic hedge for the foreign currency in its cruise ship ATMs. The terms of the put options and the fair value as of June 30, 2010 were as follows (in thousands, except strike price):


Contract		Expiration	Strike				Fair
Amount		Date	Price		Premium		Value
€	2,800	Nov-10	$	1.34	$	166		333
	1,600	Dec-10		1.34		104		200
	400	Jan-11		1.34		28		53
	400	Apr-11		1.34		31		52

€	5,200				$	329		638

Included in Financial Services — securities activities, net in the Company’s Consolidated Statement of Operations was $0.3 million of unrealized gains associated with the above put options for the three and six months ended June 30, 2010. The put options were included in derivatives in the Company’s Consolidated Statement of Financial Condition as of June 30, 2010.

9. Loans Receivable

The consolidated loan portfolio consisted of the following (in thousands):


	June 30,			December 31,
	2010			2009
Real estate loans:
Residential	$	1,385,403			1,538,906
Builder land loans		23,482			57,807
Land acquisition and development		150,305			182,235
Land acquisition, development and construction		14,327			26,184
Construction and development		180,469			211,809
Commercial		707,850			688,386
Consumer — home equity		633,126			669,690
Small business		211,829			213,591
Other loans:
Commercial business		129,648			155,226
Small business — non-mortgage		95,717			99,113
Consumer loans		19,300			15,935
Deposit overdrafts		5,701			4,816

Total gross loans		3,557,157			3,863,698

Adjustments:
Premiums, discounts and net deferred fees		2,282			2,414
Allowance for loan losses		(187,862	)		(187,218	)

Loans receivable — net	$	3,371,577			3,678,894

Loans held for sale	$	5,861			4,547

Loans held for sale at June 30, 2010 and December 31, 2009 are loans originated with the assistance of an independent mortgage company. The mortgage company provides processing and closing assistance to BankAtlantic. Pursuant to an agreement between the parties, the mortgage company purchases the loans from BankAtlantic within a defined period of time after the date of funding. BankAtlantic earns the interest income during the period that BankAtlantic owns the loan. Gains from the sale of loans held for sale were $87,000 and $141,000 for the three and six months ended June 30, 2010, respectively, and were $151,000 and $263,000 for the three and six months ended June 30, 2009, respectively.

BankAtlantic Bancorp sold a land acquisition and development loan during the three months ended June 30, 2010, for net proceeds of $450,000 resulting in net charge-offs of $453,000. During the six months ended June 30, 2010 BankAtlantic Bancorp sold builder land bank loans and land acquisition and development loans for net proceeds of $26.9 million resulting in charge-offs of $20.1 million. Since BankAtlantic Bancorp had previously established $17.7 million of specific valuation allowances on these loans as of December 31, 2009, BankAtlantic Bancorp incurred a $2.4 million additional writedown in connection with the sales.

Undisbursed loans in process consisted of the following components (in thousands):


	June 30,		December 31,
	2010		2009
Construction and development	$	33,403		43,432
Commercial		30,159		25,696

Total undisbursed loans in process	$	63,562		69,128

Allowance for Loan Losses (in thousands):


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Balance, beginning of period	$	177,597			158,397			187,218			137,257
Loans charged-off		(39,167	)		(30,332	)		(80,590	)		(54,261	)
Recoveries of loans previously charged-off		879			661			1,926			1,453

Net charge-offs		(38,288	)		(29,671	)		(78,664	)		(52,808	)
Provision for loan losses		48,553			43,494			79,308			87,771

Balance, end of period	$	187,862			172,220			187,862			172,220

The following summarizes impaired loans (in thousands):


	June 30, 2010				December 31, 2009
	Gross				Gross
	Recorded		Specific		Recorded		Specific
	Investment		Allowances		Investment		Allowances

Impaired loans with specific valuation allowances	$	368,312		101,100		249,477		70,485
Impaired loans without specific valuation allowances		208,734		—		196,018		—

Total	$	577,046		101,100		445,495		70,485

Impaired loans without specific valuation allowances represent loans that were written-down to the fair value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the carrying value of the loan, loans in which the present value of the cash flows discounted at the loan’s effective interest rate was equal to or greater than the carrying value of the loan, or large groups of smaller-balance homogeneous loans that are collectively measured for impairment.

BankAtlantic Bancorp continuously monitors collateral dependent loans and performs an impairment analysis on these loans quarterly. Generally, a full appraisal is obtained when a real estate loan is evaluated for impairment and an updated full appraisal is obtained within one year from the prior appraisal date, or earlier if management deems it appropriate based on significant changes in market conditions. In instances where a property is in the process of foreclosure, an updated appraisal may be postponed beyond one year, as an appraisal is required on the date of foreclosure; however, such loans are subject to quarterly impairment analyses. Included in total impaired loans as of June 30, 2010 was $396.8 million of collateral dependent loans, of which $197.7 million were measured for impairment using current appraisals and $199.1 million were measured by adjusting appraisals that were less than one year old, as appropriate, to reflect changes in market conditions subsequent to the last appraisal date. Appraised values were adjusted down by an aggregate amount of $37.2 million to reflect current market conditions on 30 loans due to property value declines since the last appraisal dates.

As of June 30, 2010, impaired loans with specific valuation allowances had been previously written down by $88.3 million and impaired loans without specific valuation allowances had been previously written down by $58.6 million. BankAtlantic had commitments to lend $5.3 million of additional funds on impaired loans as of June 30, 2010.

Interest income which would have been recorded under the contractual terms of impaired loans and the interest income actually recognized were (in thousands):


	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2010			2009			2010			2009

Contracted interest income	$	6,388			6,408			12,065			11,505
Interest income recognized		(769	)		(734	)		(1,013	)		(1,428	)

Foregone interest income	$	5,619			5,674			11,052			10,077

10. Notes Receivable

The table below sets forth information relating to Bluegreen notes receivable (in thousands):


	June 30,			December 31,
	2010			2009

Notes receivable, gross	$	756,307			356,133
Discount on notes receivable		(68,758	)		(74,873	)

Notes receivable, net of discount		687,549			281,260
Allowance for loan losses		(67,051	)		(3,986	)

Notes receivable, net	$	620,498			277,274

The accretable portion of the discount on the purchase price related to notes receivable acquired in connection with the Bluegreen share purchase on November 16, 2009 is being accreted using the effective interest method and recognized as interest income over the life of the loans. As a result, the Company recognized $3.3 million and $5.8 million, respectively, for the three and six months ended June 30, 2010 relating to the accretion of such discount.

The table below sets forth the activity in the allowance for uncollectible notes receivable during the six months ended June 30, 2010 (in thousands):


Balance at December 31, 2009	$	3,986
One-time impact of the amendment to the accounting guidance for transfer of financial assets and the amendment to the accounting guidance for the consolidation of VIEs (see Note 2)		86,252
Provision for loan losses		11,995
Write-offs of uncollectible receivables		(35,182	)

Balance at June 30, 2010	$	67,051

All of Bluegreen’s vacation ownership interests (“VOIs”) notes receivable, which comprise the majority of the notes receivable, bear interest at fixed rates. The weighted-average interest rate charged on loans secured by VOIs was 15.2% and 14.9% at June 30, 2010 and December 31, 2009, respectively. Approximately 85% of Bluegreen’s notes receivable secured by home sites bear interest at variable rates, while the balance bears interest at fixed rates. The weighted-average interest rate charged on notes receivable secured by home sites was 7.9% and 8.8% at June 30, 2010 and December 31, 2009, respectively.

Bluegreen’s VOI notes receivable are generally secured by property located in Florida, Louisiana, Nevada, New Jersey, Michigan, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia, Wisconsin, and Aruba. The majority of Bluegreen Communities notes receivables are secured by home sites in Georgia, Texas, and Virginia.

11. Variable Interest Entities — Bluegreen

In accordance with the guidance for the consolidation of variable interest entities, Bluegreen analyzes its variable interests, including loans, guarantees, and equity investments, to determine if an entity in which it has a variable interest is a variable interest entity. Bluegreen’s analysis includes both quantitative and qualitative reviews. Bluegreen bases its quantitative analysis on the forecasted cash flows of the entity, and it bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability, and relevant financial agreements. Bluegreen also uses qualitative analyses to determine if it must consolidate a variable interest entity as the primary beneficiary.

Bluegreen sells, without recourse, through special purpose finance entities, VOI notes receivable originated by Bluegreen Resorts. These transactions are designed to provide liquidity for Bluegreen and transfer the economic risks and certain of the benefits of the notes receivable to third parties. In a securitization, various classes of debt securities are issued by the special purpose finance entities that are generally collateralized by a single tranche of transferred assets, which consist of VOI notes receivable. Bluegreen services the notes receivable for a fee. With each securitization, Bluegreen generally retains a portion of the securities.

Pursuant to generally accepted accounting principles that were in effect prior to 2010, seven of Bluegreen’s eight special purpose finance entities met the definition of a qualified special purpose entity, and Bluegreen was not required to consolidate those seven entities in its financial statements. Upon the adoption of the new accounting guidance related to transfers of financial assets (see Note 2 for additional information), Bluegreen was required to evaluate these entities for consolidation. Since Bluegreen created these entities to serve as a financing vehicle for holding assets and related liabilities, and the entities have no equity investment at risk, they are considered variable interest entities. Furthermore, since Bluegreen continues to service the notes and retain rights to receive benefits that are potentially significant to the entities, Bluegreen concluded that it is the entities’ primary beneficiary and, therefore, now consolidates these entities into its financial statements. Please see Note 2 for the impact of initial consolidation of these entities.

At June 30, 2010, the principal balance of VOI notes receivable included within the Company’s Consolidated Statement of Financial Condition that are restricted to satisfy obligations of the variable interest entities’ obligations totaled $567.8 million. In addition, approximately $33.0 million of Bluegreen’s restricted cash is held in accounts for the benefit of the variable interest entities. Further, at June 30, 2010, the carrying amount of the consolidated liabilities included within the Company’s Consolidated Statement of Financial Condition for these variable interest entities totaled $485.9 million, comprised of non-recourse receivable-backed notes payable. The debt of these entities is generally non-recourse to Bluegreen. See Note 15, Receivable-Backed Notes Payable, below.

Under the terms of Bluegreen’s timeshare note sales, Bluegreen has the right at its option to repurchase or substitute for defaulted mortgage notes at the outstanding principal balance plus accrued interest or, in some facilities, at 24% of the original sale price associated with the defaulted mortgage note. The transaction documents typically limit such repurchases or substitutions to 15-20% of the receivables originally funded into the transaction. Voluntary repurchases or substitutions by Bluegreen of defaulted notes during the six months ended June 30, 2010 were $24.3 million.

12. Real Estate Inventory

Real estate held for development and sale consisted of the following (in thousands):


	June 30,		December 31,
	2010		2009
Land and land development costs	$	244,344		264,454
Bluegreen Resorts		231,508		222,026
Other costs		518		552
Land and facilities held for sale		6,528		7,259

Total	$	482,898		494,291

Inventory consisted of the combined real estate assets of Bluegreen Resorts, Bluegreen Communities, Core Communities, Carolina Oak, and BankAtlantic Bancorp’s land facilities held for sale.

As a result of Bluegreen’s continued low sales volume, reduced prices, and the impact of reduced sales on the forecasted sell-out period of its communities projects, the Company recorded non-cash charges to cost of real estate sales of approximately $3.3 million, net of purchase accounting adjustments, during the six months ended June 30, 2010, to write-down the inventory balances of certain phases of Bluegreen’s completed communities properties, to their estimated fair value less costs to sell.

13. Investments in Unconsolidated Affiliates

As previously discussed, approximately 7.4 million additional shares of Bluegreen’s common stock were purchased on November 16, 2009, increasing our ownership in Bluegreen to 16.9 million shares, or 52%, of Bluegreen’s outstanding common stock. As a result of the purchase, the Company has a controlling interest in Bluegreen and, accordingly, has consolidated Bluegreen’s results since November 16, 2009 into the Company’s financial statements.

Prior to November 16, 2009, the investment in Bluegreen was accounted for using the equity method of accounting. The cost of the Bluegreen investment was adjusted to recognize the Company’s interest in Bluegreen’s earnings or losses. The difference between a) the Company’s ownership percentage in Bluegreen multiplied by its earnings and b) the amount of the Company’s equity in earnings of Bluegreen as reflected in the Company’s financial statements related to the amortization or accretion of purchase accounting made at the time of the initial acquisition of Bluegreen’s common stock and a basis difference due to impairment charges recorded on the investment in Bluegreen, as described below. During the six months ended June 30, 2009, the Company recorded a $20.4 million impairment charge relating to our investment in Bluegreen. No impairment charges were recorded during the quarter ended June 30, 2009.

The following table shows the reconciliation of the Company’s pro rata share of Bluegreen’s net income to the Company’s share of total earnings from Bluegreen for the three and six months ended June 30, 2009, prior to our consolidation of Bluegreen in November 2009 (in thousands):


	Three Months Ended		Six Months Ended
	June 30, 2009		June 30, 2009

Pro rata share of Bluegreen’s net income	$	2,076		3,158
Amortization of basis difference (a)		8,638		13,892

Total earnings from Bluegreen Corporation	$	10,714		17,050


(a)		As a result of the impairment charges previously taken under the equity method prior to our consolidation of Bluegreen in November 2009, a basis difference was created between the investment in Bluegreen and the underlying assets and liabilities carried on the books of Bluegreen. Therefore, earnings from Bluegreen were adjusted each period to reflect the amortization of this basis difference. As such, a methodology was established to allocate the impairment loss to the relative estimates of the fair value of Bluegreen’s underlying assets based upon the position that the impairment loss was a reflection of the perceived value of these underlying assets. The appropriate amortization was calculated based on the estimated useful lives of the underlying assets and other relevant data associated with each asset category.

14. Goodwill

The Company tests goodwill for potential impairment annually or during interim periods if impairment indicators exist. In response to the deteriorating economic and real estate environments and the effects that the external environment had on BankAtlantic Bancorp’s business units, BankAtlantic reduced its asset balances with a view toward strengthening its regulatory capital ratios and revised its projected operating results to reflect a smaller organization. Based on the results of an interim goodwill impairment evaluation undertaken during the first quarter of 2009, an impairment charge of $8.5 million, net of purchase accounting from the step acquisition of approximately $0.6 million, was recorded during the three months ended March 31, 2009. Management did not perform a goodwill impairment test as of June 30, 2009 as there were no significant changes in impairment indicators during the period. No such impairments were recorded during the six months ended June 30, 2010.

15. Notes and Mortgage Notes Payable and Other Borrowings

Woodbridge

The development activities at Carolina Oak, which is within Tradition Hilton Head, were suspended in the fourth quarter of 2008 as a result of, among other things, an overall softening of demand for new homes and a decline in the overall economy. In 2009, the housing industry continued to face significant challenges and Woodbridge made the decision to cease all activities at Carolina Oak. In the fourth quarter of 2009, we reviewed the inventory of real estate at Carolina Oak for impairment and as a result, recorded a $16.7 million impairment charge to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $10.8 million. Woodbridge is the obligor under a $37.2 million loan that is collateralized by the Carolina Oak property. During 2009, the lender declared the loan to be in default and filed an action for foreclosure and while there may have been an issue with respect to compliance with certain covenants in the loan agreements, we do not believe that an event of default had occurred as was alleged. Woodbridge continues to seek a satisfactory conclusion with regard to the debt; however, the outcome of these efforts and the litigation is uncertain.

Core

Core is currently in default under the terms of all of its outstanding debt totaling approximately $139.2 million. Core continues to pursue all options with its lenders, including offering deeds in lieu and other similar transactions wherein Core would relinquish title to substantially all of its assets. During February 2010, with Core’s concurrence, a significant portion of the land in Tradition Hilton Head was placed under the control of a court appointed receiver. In connection with the receivership, Core entered into a separate agreement with the lender that, among other things, grants Core a right of first refusal to purchase the $25.3 million loan in the event that the lender decides to sell the loan to a third party. This loan is collateralized by inventory that had a net carrying value of $33 million, net of impairment charges during 2009 of approximately $29.6 million. Separately, on April 7, 2010 and April 8, 2010, another of Core’s lenders filed a foreclosure action in South Carolina and Florida, respectively, seeking foreclosure of mortgage loans totaling approximately $113.8 million, plus additional interest and costs and expenses, including attorneys’ fees. Core is currently in negotiations with the lender regarding, among other things, accelerating the foreclosure actions, granting the lender a perfected first lien and security interest in certain additional Core subsidiaries, and releasing and indemnifying Core from any future obligations. As of June 30, 2010, the net carrying value of Core’s inventory collateralizing the defaulted loans that are the subject of foreclosure proceedings was $82 million, net of impairment charges during 2009 of approximately $33.7 million. There was no impairment charge during the six months ended June 30, 2010. While negotiations with its lenders continue, there is no assurance that Core will be successful in reaching any agreement with its lenders with respect to resolution of its obligations.

Bluegreen

Bluegreen’s pledged assets under its facilities and notes payable as of June 30, 2010 and December 31, 2009 had a carrying amount of approximately $388.5 million and $336.6 million, respectively.

The GMAC AD&C Facility. During the six months ended June 30, 2010, Bluegreen repaid $15.9 million of the outstanding balance under this facility.

H4BG Communities Facility. During April 2010, GMAC assigned all rights, title, and interest in the GMAC Communities Facility to H4BG, LP. This assignment did not affect any of the material financial terms of the loan agreement. During the six months ended June 30, 2010, Bluegreen repaid $3.2 million on this facility.

The Wachovia Notes Payable. On April 30, 2010, Bluegreen executed an agreement with Wells Fargo Bank, N.A., the parent company of Wachovia (“Wells Fargo”), to refinance the remaining $21.9 million outstanding under the Wachovia Notes Payable into a new term loan. See Wells Fargo Term Loan below for further details.

The Wachovia Line-of-Credit. On April 30, 2010, the remaining $14.5 million outstanding was refinanced by Wells Fargo. See Wells Fargo Term Loan below for further details.

The Wells Fargo Term Loan. On April 30, 2010, Bluegreen entered into a definitive agreement with Wells Fargo, which amended, restated and consolidated Bluegreen’s notes payable to Wachovia and the line-of-credit issued by Wachovia into a single term loan with Wells Fargo (the “Wells Fargo Term Loan”). The notes payable and line of credit which were consolidated into the Wells Fargo Term Loan had a total outstanding balance of $36.4 million as of April 30, 2010. In connection with the closing of the Wells Fargo Term Loan, Bluegreen made a principal payment of $0.4 million, reducing the balance to $36.0 million, and paid accrued interest on the existing Wachovia debt. The interest rate on the Wells Fargo Term Loan at June 30, 2010 was 7.22%. Principal payments are effected through agreed-upon release prices as real estate collateralizing the Wells Fargo Term Loan is sold, subject to minimum remaining required amortization of $4.4 million in 2010, $10.6 million in 2011 and $20.2 million in 2012. In addition to the resort projects previously pledged as collateral for the various notes payable to Wachovia, Bluegreen pledged additional timeshare interests, resorts real estate, and the residual interests in certain of Bluegreen’s sold VOI notes receivables as collateral for the Wells Fargo Term Loan. Wells Fargo has the right to receive as additional collateral, the residual interest in one future transaction which creates such a retained interest. During the six months ended June 30, 2010, Bluegreen repaid $1.2 million on this facility.

Receivable-Backed Notes Payable

Bluegreen’s pledged receivables under its receivable-backed notes payable as of June 30, 2010 and December 31, 2009 had a principal balance before purchase accounting adjustments of approximately $695.7 million and $292.9 million, respectively.

Liberty Bank Facility. During the six months ended June 30, 2010, Bluegreen pledged $22.9 million of VOI notes receivable to this facility and received cash proceeds of $20.6 million. Bluegreen also made repayments of $8.9 million on the facility during the six months ended June 30, 2010. In July 2010, Bluegreen transferred $4.7 million of VOI notes receivable to Liberty and received cash proceeds of $4.2 million.

GE Bluegreen/Big Cedar Receivables Facility. During the six months ended June 30, 2010, Bluegreen repaid $4.6 million on this facility.

The Wells Fargo Facility. During the six months ended June 30, 2010, Bluegreen repaid $7.1 million on this facility.

BB&T Purchase Facility. During the six months ended June 30, 2010, Bluegreen made repayments of $17.5 million on the facility and did not pledge any additional VOI notes receivable to this facility. On June 29, 2010, BB&T extended the revolving advance period of the facility to August 30, 2010, with any further extension being subject to BB&T approval. No other significant changes were made to the terms of the facility in connection with this extension.

As discussed further in Notes 2 and 11 above, on January 1, 2010, Bluegreen consolidated seven of its special purpose finance entities and associated receivable-backed notes payable. These entities and their associated debt were not required to be consolidated during periods prior to January 1, 2010. Historically, Bluegreen has been a party to a number of securitization-type transactions, in which it sold receivables to one of its special purpose finance entities which, in turn, sold the receivables either directly to third parties or to a trust established for the transaction. The receivables were sold on a non-recourse basis (except for breaches of certain representations and warranties). Under these arrangements, the cash payments received from obligors on the receivables sold are generally applied monthly to pay fees to service providers, make interest and principal payments to investors, and fund required reserves, if any, with the remaining balance of such cash retained by Bluegreen; however, to the extent the portfolio of receivables fails to satisfy specified performance criteria (as may occur due to an increase in default rates or loan loss severity) or other trigger events, the funds received from obligors are distributed on an accelerated basis to investors. Depending on the circumstances and the transaction, the application of the accelerated payment formula may be permanent or temporary until the trigger event is cured. As of June 30, 2010, Bluegreen was in compliance with all applicable terms and no trigger events had occurred.

The table below sets forth the balances as of June 30, 2010 of Bluegreen’s receivable-back notes payable facilities (in thousands):


Non-recourse receivable-backed notes	As of
payable previously reported as off-balance	June 30, 2010
sheet (1):	Debt Balance		Interest Rate
BB&T Purchase Facility	$	113,799		5.75	%
GE 2004 Facility		11,080		7.16	%
2004 Term Securitization		22,772		5.27	%
2005 Term Securitization		65,140		5.98	%
GE 2006 Facility		55,995		7.35	%
2006 Term Securitization		59,875		6.16	%
2007 Term Securitization		113,830		7.32	%
2008 Term Securitization		43,455		7.88	%

Total	$	485,946


(1)		With the exception of the BB&T Purchase Facility, non-recourse receivable-backed notes payable were reported off-balance sheet prior to January 1, 2010.

Junior Subordinated Debentures

As more fully described in Note 23 “Junior Subordinated Debentures” to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, some of the Company’s subsidiaries have formed statutory business trusts (collectively, the “Trusts”), each of which issued trust preferred securities and invested the proceeds thereof in its junior subordinated debentures. The Trusts are variable interest entities in which the Company’s subsidiaries are not the primary beneficiaries as defined by the accounting guidance for consolidation. Accordingly, the Company does not consolidate the operations of the Trusts; instead, the Trusts are accounted for under the equity method of accounting.

On March 30, 2010, the interest rate on the securities issued by Levitt Capital Trust (“LCT”) I contractually changed from a fixed-rate of 8.11% to a variable rate equal to the 3-month LIBOR + 3.85% (4.38% as of June 30, 2010).

On July 30, 2010, the interest rate on the securities issued by the LCT II contractually changed from a fixed-rate of 8.09% to a variable rate equal to the 3-month LIBOR + 3.80%.

On March 30, 2010, the interest rate on the securities issued by Bluegreen Statutory Trust (“BST”) I contractually changed from a fixed-rate of 9.160% to a variable rate equal to the 3-month LIBOR + 4.90% (5.43% as of June 30, 2010).

On July 30, 2010, the interest rate on the securities issued by BST II and BST III contractually changed from a fixed-rate of 9.158% and 9.193%, respectively, to a variable rate equal to the 3-month LIBOR + 4.85%.

16. Development Bonds Payable

In connection with the development of certain of Core’s projects, community development, special assessment or improvement districts were established that may have utilized tax-exempt bond financing to fund construction or acquisition of certain on-site and off-site infrastructure improvements near or at these communities. The obligation to pay principal and interest on the bonds issued by the districts is assigned to each parcel within the district, and a priority assessment lien may be placed on benefited parcels to provide security for the debt service. The bonds, including interest and redemption premiums, if any, and the associated priority lien on the property are typically payable, secured and satisfied by revenues, fees, or assessments levied on the property benefited. Core is required to pay the revenues, fees, and assessments levied by the districts on the properties it still owns that are benefited by the improvements. Core may also be required to pay down a specified portion of the bonds at the time each unit or parcel is sold. The costs of these obligations are capitalized to inventory during the development period and recognized as cost of sales when the properties are sold.

Core’s bond financing at June 30, 2010 and December 31, 2009 consisted of district bonds totaling $218.7 million at each of these dates with outstanding amounts of approximately $173. 8 million and $170.8 million, respectively. Bond obligations at June 30, 2010 mature in 2035 and 2040. As of June 30, 2010, Core owned approximately 4% of the property subject to assessments within the community development district and approximately 91% of the property subject to assessments within the special assessment district. During the three months ended June 30, 2010 and 2009, Core recorded a liability of approximately $66,000 and $158,000, respectively, in assessments on property owned by it in the districts. During the six months ended June 30, 2010 and 2009, Core recorded a liability of approximately $225,000 and $317,000, respectively, in assessments on property owned by it in the districts. Core is responsible for any assessed amounts until the underlying property is sold and will continue to be responsible for the annual assessments through the maturity dates of the respective bonds issued if the property is never sold. Based on Core’s approximate 91% ownership interest in property within the special assessment district as of June 30, 2010, it will be responsible for the payment of approximately $10 million in assessments by March 2011. If Core sells land within the special assessment district and reduces its ownership percentage, the potential payment of approximately $10 million would decrease in relation to the decrease in the ownership percentage. In addition, Core has guaranteed payments for assessments under the district bonds in Tradition, Florida which would require funding if future assessments to be allocated to property owners are insufficient to repay the bonds. Management has evaluated this exposure based upon the criteria in accounting guidance for contingencies, and has determined that there have been no substantive changes to the projected density or land use in the development subject to the bond which would make it probable that Core would have to fund future shortfalls in assessments pursuant to the guarantees.

A liability was recorded for the estimated developer obligations that are fixed and determinable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user. At June 30, 2010, the liability related to developer obligations associated with Core’s ownership of the property was $175,000 after the sale of Core’s commercial leasing projects in June 2010 (See Note 5 for information relating to the sale). At December 31, 2009, the liability related to developer obligations was $3.3 million, of which $3.1 million was included in the liabilities related to assets held for sale in the accompanying Consolidated Statements of Financial Condition as of December 31, 2009.

17. Interest Expense

The following table is a summary of the Company’s consolidated interest expense and the amounts capitalized (in thousands):


	For the Three Months Ended,						For the Six Months Ended,
	June 30,						June 30,
	2010			2009			2010			2009
Real Estate and Other:
Interest incurred on borrowings	$	20,183			3,881			40,185			7,763
Interest capitalized		(114	)		(651	)		(185	)		(2,285	)

		20,069			3,230			40,000			5,478


Financial Services:
Interest on deposits		6,021			11,527			13,078			24,514
Interest on advances from FHLB		1			5,082			959			12,246
Interest on short term borrowings		7			19			15			191
Interest on debentures and bonds payable		3,922			4,186			7,743			8,622

		9,951			20,814			21,795			45,573

Total interest expense	$	30,020			24,044			61,795			51,051

18. Noncontrolling Interests

The following table summarizes the noncontrolling interests held by others in the Company’s subsidiaries at June 30, 2010 and December 31, 2009 (in thousands):


	June 30,		December 31,
	2010		2009
BankAtlantic Bancorp	$	44,175		88,910
Bluegreen		42,726		41,905
Joint ventures		31,249		28,037

	$	118,150		158,852

The following table summarizes the noncontrolling interests (loss) earnings recognized by others with respect to the Company’s subsidiaries for the three and six months ended June 30, 2010 and 2009 (in thousands):


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Noncontrolling interest —
Continuing Operations:
BankAtlantic Bancorp	$	(32,336	)		(26,868	)		(45,355	)		(59,517	)
Woodbridge		—			412			—			12,322
Bluegreen		4,096			—			1,300			—
Joint ventures		1,225			(267	)		2,375			(486	)

	$	(27,015	)		(26,723	)		(41,680	)		(47,681	)


Noncontrolling interest —
Discontinued Operations:
BankAtlantic Bancorp	$	—			—			—			2,943
Woodbridge		—			106			—			(508	)

	$	—			106			—			2,435

Net Loss Attributable to Noncontrolling Interests	$	(27,015	)		(26,617	)		(41,680	)		(45,246	)

19. Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment.

The information provided for segment reporting is based on internal reports utilized by management of the Company and its respective subsidiaries. The presentation and allocation of assets and results of operations may not reflect the actual economic costs of the segments as stand alone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ but the relative trends in segments’ operating results would, in management’s view, likely not be impacted.

As a result of the Woodbridge merger on September 21, 2009 and the Bluegreen share acquisition on November 16, 2009, the Company reorganized its reportable segments to better align its segment reporting with the current operations of its businesses. The Company’s business activities currently consist of (i) Real Estate and Other activities and (ii) Financial Services activities. These business activities are reported through six segments: BFC Activities, Real Estate Operations, Bluegreen Resorts, Bluegreen Communities, BankAtlantic and BankAtlantic Bancorp Parent Company. As a result of this reorganization, our BFC Activities segment now includes, in addition to other activities historically included in this segment, Woodbridge Other Operations (which was previously a separate segment). Our Real Estate Operations segment is now comprised of what was previously identified as our Land Division, including the real estate business activities of Core Communities and Carolina Oak.

BFC’s consolidated financial statements include the results of operations of Bluegreen since November 16, 2009 when we acquired a controlling interest in Bluegreen, and Bluegreen’s results of operations are reported through the Bluegreen Resorts and Bluegreen Communities segments. Prior to November 16, 2009, we owned approximately 9.5 million shares of Bluegreen’s common stock, representing approximately 29% of such stock, the investment in Bluegreen was accounted for under the equity method of accounting, and our interest in Bluegreen’s earnings and losses was included in our BFC Activities segment. The Company’s Financial Services business activities include BankAtlantic Bancorp’s results of operations and are reported in two segments: BankAtlantic and BankAtlantic Bancorp Parent Company.

The accounting policies of the segments are generally the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Intersegment transactions are eliminated in consolidation. The Company evaluates segment performance based on its segment net income (loss).

The following summarizes the aggregation of the Company’s operating segments into reportable segments:

BFC Activities

The BFC Activities segment consists of BFC operations, our investment in Benihana, and other operations of Woodbridge described below. BFC operations primarily consist of our corporate overhead and general and administrative expenses, including the expenses of Woodbridge, the financial results of a venture partnership that BFC controls and other equity investments, as well as income and expenses associated with BFC’s shared service operations which provides services in the areas of human resources, risk management, investor relations, executive office administration and other services to BankAtlantic Bancorp and Bluegreen. This segment also includes investments made by BFC/CCC, Inc., our wholly owned subsidiary (“BFC/CCC”). Other operations includes the consolidated operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), a restaurant franchisor operating within the quick service and organic food industries, the activities of Cypress Creek Capital Holdings, LLC (“Cypress Creek Capital”) and Snapper Creek Equity Management, LLC (“Snapper Creek”) and other investments. In addition, prior to obtaining a controlling interest in Bluegreen on November 16, 2009, we accounted for our investment in Bluegreen under the equity method of accounting and our interest in Bluegreen’s earnings or loss was included in the BFC Activities segment.


PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements:

		Consolidated Statements of Financial Condition as of June 30, 2010 and December 31, 2009 — Unaudited	3

		Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2010 and 2009 — Unaudited	4

		Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2010 and 2009 — Unaudited	6

		Consolidated Statement of Changes in Equity for the Six Months Ended June 30, 2010 — Unaudited	7

		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 — Unaudited	8

		Notes to Unaudited Consolidated Financial Statements	10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53

	Item 4T.	Controls and Procedures	107

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	108

	Item 1A.	Risk Factors	108

	Item 6.	Exhibits	108

	SIGNATURES
EX-31.1
EX-31.2
EX-31.3
EX-32.1
EX-32.2
EX-32.3


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net loss	$	(43,195	)		(39,526	)		(78,695	)		(68,558	)


Other comprehensive income, net of tax:
Unrealized gains on securities available for sale		1,636			6,705			5,075			13,721
Unrealized gains associated with investment in unconsolidated affiliates		—			132			—			605
Pro-Rata share of cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests in notes receivable sold		—			(1,251	)		—			(1,251	)
Realized gains reclassified into net loss		—			(693	)		(3,139	)		(2,737	)

Other comprehensive income		1,636			4,893			1,936			10,338


Comprehensive loss		(41,559	)		(34,633	)		(76,759	)		(58,220	)
Less: Comprehensive loss attributable to noncontrolling interests		(25,849	)		(25,864	)		(41,906	)		(40,604	)

Total comprehensive loss attributable to BFC	$	(15,710	)		(8,769	)		(34,853	)		(17,616	)


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

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents