UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the Quarter Ended June 30, 2010

OR

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

Commission File Number
001-09071

BFC Financial Corporation

(Exact name of registrant as specified in its charter)

Florida		59-2022148
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

2100 West Cypress Creek Road
Fort Lauderdale, Florida		33309
(Address of Principal executive office)		(Zip Code)

(954) 940-4900

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

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

YES x     NO o

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

YES o     NO o

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

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

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

YES o     NO x

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

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

 

 

BFC Financial Corporation

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION
		Item 1.		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

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 Statements of Comprehensive Loss — Unaudited
(In thousands)

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

See Notes to Unaudited Consolidated Financial Statements.

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
Consolidated Statements of Cash Flows — Unaudited
(In thousands)

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

See Notes to Unaudited Consolidated Financial Statements.

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

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

     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

     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

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

		Three Months Ended June 30, 2009
						Benihana
						Convertible				Equity
		Other Bonds				Preferred Stock				Securities				Total
Beginning Balance		$	250				16,384				1,252				17,886
Total gains and losses (realized/unrealized)
Included in earnings			—				—				(1,378	)			(1,378	)
Included in other comprehensive income			—				4,127				336				4,463
Purchases, issuances, and settlements			—				—				—				—
Transfers in and/or out of Level 3			—				—				—				—
Ending balance		$	250				20,511				210				20,971

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

		For the Six Months Ended June 30, 2010
		Retained
		Interests in								Benihana
		Notes				Other				Convertible				Equity
		Receivable Sold				Bonds				Preferred Stock				Securities				Total
Beginning Balance		$	26,340				250				17,766				—				44,356
Total gains and losses (realized/unrealized) Included in earnings			—				—				—				—				—
Cumulative effect of change in accounting principle (1)			(26,340	)			—				—				—				(26,340	)
Included in other comprehensive income			—				—				2,393				—				2,393
Purchases, issuances, and settlements			—				—				—				—				—
Transfers in and/or out of Level 3			—				—				—				—				—
Balance at June 30, 2010		$	—				250				20,159				—				20,409

(1)

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

		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