UNITED
STATES


SECURITIES AND
EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





(Mark
One)


xQUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
quarterly period ended  March
31, 2008





oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT


For the
transition period from __________ to ___________





Commission
File Number:  0-503777





FLATBUSH FEDERAL
BANCORP, INC.


(Exact
name of small business issuer as specified in this charter)





FEDERAL
            11-3700733





(State
      or other jurisdiction of incorporation or organization)
            (IRS
      Employer Identification No.)





2146
NOSTRAND AVENUE, BROOKLYN, NEW YORK  11210


(Address
of principal executive offices)





(718)
859-6800


(Issuer’s
telephone number)









(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 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 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 oNon-accelerated filer (Do not check if a smaller reporting company) 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).  YesoNox





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS





Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. Yes [  ]  No
[  ]





APPLICABLE
ONLY TO CORPORATE ISSUERS


As
of  May 13,
2008 the Registrant had outstanding 2,744,597 shares of
common stock.













FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES





INDEX





PageNumberPART
      I – FINANCIAL INFORMATIONItem
      1:
            
            Financial StatementsConsolidated
      Statements of Financial Conditionat March 31, 2008 and
      December 31, 2007 (Unaudited)
            
            1Consolidated
      Statements of Income for the Three monthsended March 31,
      2008 and 2007 (Unaudited)
            
            2Consolidated
      Statements of Comprehensive
      Income for theThree
      months ended March 31, 2008 and 2007
      (Unaudited)
            
            3Consolidated
      Statements of
      Cash Flows for the Three monthsended March 31,
      2008 and 2007 (Unaudited)
            
            4Notes to Consolidated Financial Statements
      (Unaudited)
            
            5 – 6Item
      2:
            
            Management’s Discussion and Analysis of Financial Condition
      and Results of Operation
            
            7 – 11Item
      3:
            
            Quantitative and Qualitative Disclosure About Market
      Risk
            
            11Item
      4T:
            
            Controls and Procedures
            
            12PART
      II – OTHER INFORMATIONItem
      1:
            
            Legal Proceedings
            
            13Item
      1A:
            
            Risk Factors
            
            13Item
      2:
            
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            
            13Item
      3:
            
            Defaults upon Senior Securities
            
            13Item
      4:
            
            Submission of Matters to a Vote of Securities
      Holders
            
            13Item
      5:
            
            Other Information
            
            13Item
      6:
            
            Exhibits
            
            14SIGNATURES
            
            
            
            15










PART I – FINANCIAL INFORMATION


ITEM 1 –
FINANCIAL STATEMENTS


FLATBUSH
FEDERAL BANCORP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION


(Unaudited)




March31,
            
            
            December 31,ASSETS
            
            2008
            
            
            2007Cash and amounts due from
      depository institutions
            
            $
            2,126,567
            
            
            $
            1,830,973Interest earning deposits in other
      banks
            
            
            1,211,645
            
            
            
            686,607Federal Funds
      sold
            
            
            6,000,000
            
            
            
            2,450,000Cash and cash
      equivalents
            
            
            9,338,212
            
            
            
            4,967,580Investment securities held to
      maturity; fair value of $4,000,060in 2008and $6,499,390in 2007
            
            
            3,996,620
            
            
            
            6,491,188Mortgage-backed securities held to
      maturity; fair value of $24,851,017in 2008and $25,205,441in 2007
            
            
            24,628,630
            
            
            
            25,350,593Loans receivable,net of allowance for loan losses
      of $202,520in 2008and $202,388in 2007
            
            
            97,960,520
            
            
            
            101,482,925Premises and
      equipment
            
            
            2,734,627
            
            
            
            2,778,177Federal Home Loan Bank ofNew Yorkstock
            
            
            1,386,600
            
            
            
            1,512,900Accrued interest
      receivable
            
            
            606,574
            
            
            
            698,270Bank owned life
      insurance
            
            
            3,940,819
            
            
            
            3,901,624Other
assets
            
            
            1,610,377
            
            
            
            1,655,244Total
assets
            
            $
            146,202,979
            
            
            $
            148,838,501LIABILITIES
      AND STOCKHOLDERS’ EQUITYLiabilities:Deposits:Non-interest
      bearing
            
            $
            4,709,744
            
            
            $
            3,835,685Interest
      bearing
            
            
            97,867,979
            
            
            
            98,835,840Total
    Deposits
            
            
            102,577,723
            
            
            
            102,671,525Federal Home Loan Bank ofNew Yorkadvances
            
            
            25,444,775
            
            
            
            28,252,084Advance payments by borrowers for
      taxes and insurance
            
            
            671,499
            
            
            
            421,399Otherliabilities
            
            
            2,012,825
            
            
            
            1,931,875Total
      liabilities
            
            
            130,706,822
            
            
            
            133,276,883Stockholders’
      equity:Preferred stock $0.01 par value,
      1,000,000 shares authorized; none issued and
      outstanding
            
            
            ---
            
            
            
            ---Common stock $0.01 par
      value;  authorized 9,000,000 shares; issued (2008 and 2007) 2,799,657 shares;outstanding(2008 and 2007)2,744,597shares
            
            
            27,998
            
            
            
            27,998Paid-in capital
            
            
            12,460,561
            
            
            
            12,441,913Retained
      earnings
            
            
            5,008,383
            
            
            
            5,117,100Unearned employees’ stock
      ownership plan (ESOP) shares
            
            
            (539,887
            )
            
            
            (548,605
            )Treasury stock,55,060shares
            
            
            (418,650
            )
            
            
            (418,650
            )Accumulated other comprehensive
      loss
            
            
            (1,042,248
            )
            
            
            (1,058,138
            )Total stockholders’
      equity
            
            
            15,496,157
            
            
            
            15,561,618Total liabilities and
      stockholders’ equity
            
            $
            146,202,979
            
            
            $
            148,838,501




See notes
to consolidated financial statements.





1





FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF INCOME


(Unaudited)




Three monthsendedMarch31,2008
            
            
            2007Interest
    IncomeLoans, including
      fees
            
            $
            1,572,501
            
            
            $
            1,782,521Mortgage-backed
      securities
            
            
            343,243
            
            
            
            365,109Investments
            
            
            103,196
            
            
            
            115,394Other interest earning
      assets
            
            
            44,791
            
            
            
            31,046Totalinterestincome
            
            
            2,063,731
            
            
            
            2,294,070Interest
      ExpenseDeposits
            
            
            714,231
            
            
            
            687,661Borrowings
            
            
            309,519
            
            
            
            389,875Total interest
      expense
            
            
            1,023,750
            
            
            
            1,077,536Net Interest
      Income
            
            
            1,039,981
            
            
            
            1,216,534Provision for loan
      losses
            
            
            -
            
            
            
            2,056Net interest income after
      provision for loan losses
            
            
            1,039,981
            
            
            
            1,214,478Non-interest
      incomeFees and service
      charges
            
            
            26,878
            
            
            
            36,114BOLI income
            
            
            39,195
            
            
            
            36,166Life insurance
      proceeds
            
            
            -
            
            
            
            500,000Other
            
            
            465
            
            
            
            460Total non-interest
      income
            
            
            66,538
            
            
            
            572,740Non-interest
      expensesSalaries and employee
      benefits
            
            
            570,109
            
            
            
            687,072Net occupancy expense of
      premises
            
            
            126,537
            
            
            
            118,725Equipment
            
            
            124,480
            
            
            
            131,132Directors’
      compensation
            
            
            42,572
            
            
            
            326,501Professional
      fees
            
            
            82,441
            
            
            
            41,802Other insurance
      premiums
            
            
            36,738
            
            
            
            39,112Other
            
            
            119,047
            
            
            
            114,333Total non-interest
      expenses
            
            
            1,101,924
            
            
            
            1,458,677Income before income
      taxes
            
            
            4,595
            
            
            
            328,541Income taxes(benefit)
            
            
            2,466
            
            
            
            (54,792
            )Net income
            
            $
            2,129
            
            
            $
            383,333Net incomeper common share – Basic and
      diluted
            
            $
            0.001
            
            
            $
            0.143Weighted average number of shares
      outstanding – Basic and diluted
            
            
            2,643,551
            
            
            
            2,675,233




See notes to consolidated financial
statements.





2





FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME


(Unaudited)





Three
      months ended March 31,2008
            
            
            2007Net
      Income
            
            $
            2,129
            
            
            $
            383,333Other
      comprehensive income, net of income taxes:Benefit
      Plans, net of deferred income taxes of $12,570, and
$17,560
            
            
            15,890
            
            
            
            24,400Comprehensive
      income
            
            $
            18,019
            
            
            $
            407,733




See notes to consolidated financial
statements.





3





FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)




Three months ended March
      31,2008
            
            
            2007Cash flow from operating
      activities:Net income
            
            $
            2,129
            
            
            $
            383,333Adjustments to reconcile net
      income to net cash provided by operating
      activities:Depreciation and amortization of
      premises and equipment
            
            
            45,525
            
            
            
            45,133Net amortization of premiums,
      discounts and deferred loan fees and costs
            
            
            (44,064
            )
            
            
            (21,276
            )Provision for loan
      losses
            
            
            -
            
            
            
            2,056ESOP shares committed to be
      released
            
            
            6,804
            
            
            
            10,036MRP
      amortization
            
            
            10,146
            
            
            
            145,435Stock option
      amortization
            
            
            10,416
            
            
            
            140,689Decrease in accrued interest
      receivable
            
            
            91,696
            
            
            
            39,058Increase in cash surrender value
      of BOLI
            
            
            (39,195
            )
            
            
            (29,045
            )Decrease (increase) in other
      assets
            
            
            33,431
            
            
            
            (507,629
            )Decrease in other
      liabilities
            
            
            (2,570
            )
            
            
            (19,881
            )Net cash provided by operating
      activities
            
            
            114,318
            
            
            
            187,909Cash flow from investing
      activities:Proceeds from calls and maturities
      of investment securities held to maturity
            
            
            2,500,000
            
            
            
            -Principal repayments on
      mortgage-backed securities held to maturity
            
            
            1,234,668
            
            
            
            1,094,320Purchases of mortgage-backed
      securities held to maturity
            
            
            (493,108
            )
            
            
            (983,255
            )Purchases of loan participation
      interests
            
            
            (407,093
            )
            
            
            (939,465
            )Net change in loans
      receivable
            
            
            3,948,533
            
            
            
            519,050Additions to premises and
      equipment
            
            
            (1,975
            )
            
            
            (29,424
            )Redemption (purchase) of Federal
      Home Loan Bank ofNew
      Yorkstock
            
            
            126,300
            
            
            
            (29,100
            )Net cash provided by (used in)
      investing activities
            
            
            6,907,325
            
            
            
            (367,874
            )Cash flow from financing
      activities:Net  (decrease) increase
      in deposits
            
            
            (93,802
            )
            
            
            1,302,021Advances from Federal Home Loan
      Bank ofNew
      York
            
            
            2,000,000
            
            
            
            1,800,000Repayment of advances from Federal
      Home Loan Bank ofNew
      York
            
            
            (2,807,309
            )
            
            
            (353,368
            )Net change to short-term
      borrowings
            
            
            (2,000,000
            )
            
            
            (800,000
            )Increase  in advance
      payments by borrowers for taxes and insurance
            
            
            250,100
            
            
            
            224,232Purchase of treasury
      stock
            
            
            -
            
            
            
            (17,663
            )Net cash (used in) provided by
      financing activities
            
            
            (2,651,011
            )
            
            
            2,155,222Net increase in cash and cash
      equivalents
            
            
            4,370,632
            
            
            
            1,975,257Cash and cash equivalents –
      beginning
            
            
            4,967,580
            
            
            
            4,006,886Cash and cash equivalents –
      ending
            
            $
            9,338,212
            
            
            $
            5,982,143Supplemental disclosure of cash
      flow informationCash paid during the year
      for:Interest
            
            $
            1,030,365
            
            
            $
            1,094,135Income
taxes
            
            $
            400
            
            
            $
            43,681




See notes
to consolidated financial statements.





4





FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS




(Unaudited)




NOTE
1.  PRINCIPLES OF CONSOLIDATION




The
consolidated financial statements include the accounts of Flatbush Federal
Bancorp, Inc. (the “Company”), the Flatbush Federal Savings and Loan Association
(the “Association”) and the Association’s subsidiary Flatbush REIT,
Inc.  The Company’s business is conducted principally through the
Association.  All significant intercompany accounts and transactions
have been eliminated in consolidation.




NOTE 2.  BASIS OF
PRESENTATION




The
accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and Regulation S-X and do not include
information or footnotes necessary for a complete presentation of financial
condition, results of operations and cash flows in accordance with U.S.
generally accepted accounting principles.  However, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the consolidated financial statements have
been included.  The results of operations for the three months ended
March 31, 2008, are not necessarily indicative of the results which may be
expected for the entire year.




NOTE 3.
ENDORSEMENT  SPLIT-DOLLAR LIFE INSURANCE
ARRANGEMENTS.




On
January 1, 2008, the Company changed its accounting policy and recognized a
cumulative-effect adjustment to retained earnings totaling $110,846 related to
accounting for certain endorsement split-dollar life insurance arrangements in
connection with the adoption of Emerging Issues Task Force (“EITF”) Issue No.
06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects
of Endorsement Split Dollar Life Insurance Arrangements.”




NOTE 4.  NET
INCOME PER COMMON SHARE




Net
income per common share was computed by dividing net income for the three months
ended March 31, 2008 and 2007 by the weighted average number of shares of common
stock outstanding adjusted for unearned shares of the ESOP.  Stock
options and restricted stock awards granted are considered common stock
equivalents and therefore considered in diluted net income per share
calculations, if dilutive, using the treasury stock method. At and for the three
months ended March 31, 2008, there was no anti-dilutive effect of stock
options.




NOTE 5.  CRITICAL
ACCOUNTING POLICIES




The
Company considers accounting policies involving significant judgments and
assumptions by management that have, or could have, a material impact on the
carrying value of certain assets or on income to be critical accounting
policies.  Material estimates that are particularly susceptible to
significant changes relate to the determination of the allowance for loan
losses.  Determining the amount of the allowance for loan losses
necessarily involves a high degree of judgment.  Management reviews
the level of the allowance on a quarterly basis, at a minimum, and establishes
the provision for loan losses based on the composition of the loan portfolio,
delinquency levels, loss experience, economic conditions, and other factors
related to the collectibility of the loan portfolio. Management has allocated
the allowance among categories of loan types as well as classification status at
each period-end date.  Assumptions and allocation percentages based on
loan types and classification status have been consistently
applied.  Management regularly evaluates various risk factors related
to the loan portfolio, such as type of loan, underlying collateral and payment
status, and the corresponding allowance allocation percentages.




Although
management believes that it uses the best information available to establish the
allowance for loan losses, future additions to the allowance may be necessary
based on estimates that are susceptible to change as a result of





5








NOTE
6.  RETIREMENT PLANS – COMPONENTS OF  NET PERIODIC PENSION
COST




Periodic
pension expense was as follows:




Three months
      endedMarch 31,2008
            
            
            2007Service
Cost
            
            $
            24,151
            
            
            $
            48,242Interest
    Cost
            
            
            82,145
            
            
            
            73,542Expected return on
      assets
            
            
            (104,895
            )
            
            
            (86,391
            )Amortization of past service
      cost
            
            
            (15,799
            )
            
            
            -Amortization of unrecognized net
      loss
            
            
            36,497
            
            
            
            30,369Net periodic benefit
      cost
            
            $
            22,099
            
            
            $
            65,762







Periodic
pension expense for other plans was as follows:




Three months
      endedMarch 31,2008
            
            
            2007Service Cost/Interest
      Cost
            
            $
            25,004
            
            
            $
            24,346Amortization of unrecognized
      transition obligation
            
            
            1,134
            
            
            
            4,268Amortization of past service
      cost
            
            
            5,278
            
            
            
            5,278Amortization of unrecognized net
      loss
            
            
            1,350
            
            
            
            2,045Net periodic benefit
      cost
            
            $
            32,766
            
            
            $
            35,937








NOTE 7.  RECENT
ACCOUNTING PRONOUNCEMENTS





In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133”
(Statement 161). Statement 161 requires entities that utilize derivative
instruments to provide qualitative disclosures about their objectives and
strategies for using such instruments, as well as any details of
credit-risk-related contingent features contained within
derivatives.  Statement 161 also requires entities to disclose
additional information about the amounts and location of derivatives located
within the financial statements, how the provisions of SFAS 133 have been
applied, and the impact that hedges have on an entity’s financial position,
financial performance, and cash flows.  Statement 161 is effective for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged.  The Company is currently evaluating the
potential impact the new pronouncement will have on its consolidated financial
statements.





In
February 2008, the FASB issued a FASB Staff Position (FSP) FAS 140-3,
“Accounting for Transfers of Financial Assets and Repurchase Financing
Transactions.” This FSP addresses the issue of whether or not these transactions
should be viewed as two separate transactions or as one “linked”
transaction.  The FSP includes a “rebuttable presumption” that
presumes linkage of the two transactions unless the presumption can be overcome
by meeting certain criteria.  The FSP will be effective for fiscal
years beginning after November 15, 2008 and will apply only to original
transfers made after that date; early adoption will not be
allowed.  The Company is currently evaluating the potential impact the
new pronouncement will have on its consolidated financial
statements.





6





ITEM 2


FLATBUSH
FEDERAL BANCORP, INC. AND SUBSIDIARIES


MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION




Forward-Looking
Statements




This Form
10-Q may include certain forward-looking statements based on current management
expectations.  The Company’s actual results could differ materially
from those management expectations.  Factors that could cause future
results to vary from current management expectations include, but are not
limited to, general economic conditions, legislative and regulatory changes,
monetary and fiscal policies of the federal government, changes in tax policies,
rates and regulations of federal, state and local tax authorities, changes in
interest rates, deposit flows, the cost of funds, demand for loan products,
demand for financial services, competition, changes in the quality or
composition of loan and investment portfolios of the Company, changes in
accounting principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting the Company’s operations,
markets, products, services and prices.




Comparison
of Financial Condition at March 31, 2008 and December 31, 2007




The
Company’s assets as of March 31, 2008 were $146.2 million compared to $148.8
million at December 31, 2007, a decrease of $2.6 million, or
1.7%.  Loans receivable decreased $3.5 million, or 3.4%, to $98.0
million at March 31, 2008 from $101.5 million at December 31, 2007.
Mortgage-backed securities decreased $722,000, or 2.8%, to $24.6 million at
March 31, 2008 from $25.4 million as of December 31, 2007. Investment securities
decreased $2.5 million, or 38.5% to $4.0 million as of March 31, 2008 from $6.5
million as of December 31, 2007. Cash and cash equivalents increased $4.3
million, or 86.0%, to $9.3 million at March 31, 2008 from $5.0 million at
December 31, 2007.





Total
deposits decreased $94,000, or 0.1%, to $102.6 million at March 31, 2008 from
$102.7 million as of December 31, 2007.  As of March 31, 2008,
borrowings from the Federal Home Loan Bank of New York (“FHLB”) were $25.4
million compared to $28.3 million as of December 31, 2007, a decrease of $2.8
million, or 10.0%.





Total
stockholders’ equity decreased $65,000 to $15.5 million at March 31, 2008 from
$15.6 million at December 31, 2007.





On August
30, 2007, the Company approved a  stock repurchase program and
authorized  the repurchase of up to 50,000 shares of the Company’s
outstanding shares of common stock. Stock repurchases will be made from time to
time and may be effected through open market purchases, block trades and in
privately negotiated transactions.  Repurchased stock will be held as
treasury stock and will be available for general corporate
purposes.  During the quarter ended March 31, 2008, the Company did
not repurchase any shares. As of  March 31, 2008, 5,060 shares were
acquired at a weighted average price of $5.67 per share.





Comparison
of Operating Results for the Three Months Ended March 31, 2008 and March 31,
2007




General.Net
income decreased by $381,000, to $2,000 for the quarter ended March 31, 2008
from $383,000 for the same quarter in 2007.  The decrease in net
income for the quarter was primarily due to  decreases of $230,000 in
total interest income, and $506,000 in non-interest income, and increases of
$27,000 in interest expense on deposits, and $57,000 in income taxes. These,
however, were partially offset by decreases of $80,000 in interest expense on
borrowings from the FHLB of New York, $357,000 in non-interest expense, and
$2,000 in provision for loan losses.





Interest Income.
Interest income decreased $230,000, or 10.0%, to $2.1 million for the quarter
ended March 31, 2008 from $2.3 million for the quarter ended March 31, 2007. The
decrease in interest income can be primarily attributed to a lower interest
earning asset base combined with a lower average yield.  For the three
months ended March 31, 2008 the average balance of $136.4 million in
interest-earning assets earned an average yield of 6.05% compared to an average
yield of 6.33% on an average balance of $144.9 million for the three months
ended March 31, 2007.





7





Interest
income on loans decreased $210,000, or 11.8%, to $1.6 million for the quarter
ended March 31, 2008 from $1.8 million for the same quarter in
2007.  The average balance of loans decreased $7.7 million to $98.9
million for the quarter ended March 31, 2008 from $106.6 million for the quarter
ended March 31, 2007.  The average yield on loans decreased by 33
basis points to 6.36% for the quarter ended March 31, 2008 from 6.69% for the
quarter ended March 31, 2007.




Interest
income on mortgage-backed securities decreased $22,000, or 6.0%, to $343,000 for
the quarter ended March 31, 2008 from $365,000 for the quarter ended March 31,
2007.  The average balance of mortgage-backed securities decreased
$1.8 million to $25.0 million for the quarter ended March 31, 2008 from $26.8
million for the quarter ended March 31, 2007.  The average yield
increased by four basis points to 5.49% for the quarter ended March 31, 2008
from 5.45% for the same period in 2007.




Interest
income on investment securities decreased $12,000, or 10.4%, to $103,000 for the
quarter ended March 31, 2008 from $115,000 for the quarter ended March 31,
2007.  The average yield on investment securities increased 177 basis
points to 7.13% for the quarter ended March 31, 2008 from 5.36% for the quarter
ended March 31, 2007.  The average balance of investment securities
decreased by $2.8 million to $5.8 million for the quarter ended March 31, 2008
from $8.6 million for the quarter ended March 31, 2007.




Interest
income on other interest-earning assets, primarily interest-earning deposits and
federal funds sold, increased $14,000, or 44.2%, to $45,000 for the quarter
ended March 31, 2008 from $31,000 for the quarter ended March 31, 2007. The
average balance of other interest earning assets increased $3.8 million to $6.7
million for the quarter ended March 31, 2008 from $2.9 million for the quarter
ended March 31, 2007. As a partial offset, the    average
yield on other interest earning assets decreased by 159 basis points to 2.67%
for the quarter ended March 31, 2008 from 4.26% for the quarter ended March 31,
2007.




Interest
Expense.Total interest expense, comprised of interest
expense on deposits and interest expense on FHLB advances, decreased $54,000, or
5.0%, to $1.0 million for the quarter ended March 31, 2008 from $1.1 million for
the quarter ended March 31, 2007. The average balance of interest-bearing
liabilities decreased $7.6 million to $125.2 million for the quarter ended March
31, 2008 from $132.8 million for the quarter ended March 31, 2007. The average
cost of interest-bearing liabilities increased by two basis points to 3.27% for
the quarter ended March 31, 2008 from 3.25% for the quarter ended March 31,
2007.




Interest
expense on deposits increased $27,000, or 3.8%, to $714,000 for the quarter
ended March 31, 2008 from $688,000 for the quarter ended March 31,
2007.  The average cost of interest-bearing deposits increased by 21
basis points to 2.91% for the quarter ended March 31, 2008 from 2.70% for the
quarter ended March 31, 2007, reflecting the upward trend of interest rates on
deposits due to competitive pressures.  However, the average balance
of interest-bearing deposits decreased $3.6 million to $98.2 million for the
quarter ended March 31, 2008 from $101.8 million for the quarter ended March 31,
2007.




Interest
expense on FHLB advances decreased $80,000, or 20.5%, to $310,000 for the
quarter ended March 31, 2008, from $390,000 for the quarter ended March 31,
2007.  The average balance of FHLB advances decreased $3.9 million to
$27.0 million for the quarter ended March 31, 2008, from $30.9 million for the
quarter ended March 31, 2007. The average cost of FHLB advances decreased by 46
basis points to 4.58% for the quarter ended March 31, 2008, from 5.04% for the
quarter ended March 31, 2007.




Net Interest
Income.Net interest income decreased $177,000, or 14.5%, to
$1.0 million for the quarter ended March 31, 2008 from $1.2 million for the same
quarter in 2007.  The interest rate spread was 2.78% for the quarter
ended March 31, 2008 compared to 3.08% for the quarter ended March 31, 2007, a
decrease of 30 basis points.  Interest margin for the quarter ended
March 31, 2008 was 3.05% compared to 3.36% for the quarter ended March 31, 2007,
a decrease of 31 basis points.  The decrease in interest rate spread
and interest margin can be attributed to the higher cost of interest-bearing
deposits as well as the decrease in the average balance and average yield of
loans receivable.




Provision for Loan
Losses.The Company establishes provisions for loan losses,
which are charged to operations, at a level necessary to absorb known and
inherent losses that are both probable and reasonably estimable at the date of
the financial statements.  In evaluating the level of the allowance
for loan losses, management





8




considers historical loss
experience, the types of loans and the amount of loans in the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, the
estimated value of any underlying collateral, and prevailing economic
conditions.  This evaluation is inherently subjective as it requires
estimates that are susceptible to significant revision as more information
becomes available or as future events change.  Based on the evaluation
of these factors, no provision was recorded for the three months ended March 31,
2008.  For the three months ended March 31, 2007, a provision of
$2,000 was recorded.  The provision for loan losses was established to
address probable and estimable losses in the loan portfolio.  The
level of the allowance at March 31, 2008 is based on estimates, and the ultimate
losses may vary from the estimates.  Non-performing loans increased to
$79,000, or 0.05% of total assets as of March 31, 2008, from $78,000 or 0.05% of
total assets as of March 31, 2007.




Non-Interest
Income.Non-interest income decreased $506,000, to $67,000 for
the quarter ended March 31, 2008 from $573,000 for the quarter ended March 31,
2007.  This was primarily attributable to the life insurance proceeds
of $500,000 received during the quarter ended March 31, 2007 and a decrease in
fees and service charges of $9,000.  As a partial offset, income from
BOLI increased by $3,000.




Non-Interest Expenses.  Non-interest expenses decreased $357,000, or 24.5%, to $1.1
million for the quarter ended March 31, 2008 from $1.5 million for the quarter
ended March 31, 2007.  The net decrease of $357,000 in non-interest
expense is primarily attributable to decreases to salaries and employee
benefits, director’s compensation, equipment, and other insurance premiums,
which were partially offset by increases in net occupancy expense of premises,
professional fees and other expenses. Director’s compensation decreased by
$284,000 to $43,000 for the three months ended March 31, 2008, from $327,000 for
the three months ended March 31, 2007. The decrease is primarily attributed to
the one-time accrual of $221,000 for the accelerated vesting of stock options
and restricted stock due to the death of former Flatbush Federal Bancorp Inc.
CEO and President, Anthony J. Monteverdi, the one-time accrual of $35,000 for
the accelerated vesting of stock options and restricted stock due to the
retirement of director John F. Antoniello during the quarter ended March 31,
2007, and  the reduction of outside directors to five at March 31,
2008 from seven at March 31, 2007. Salaries and employee benefits decreased
$117,000 to $570,000 for the three months ended March 31, 2008, from $687,000
for the three months ended March 31, 2007, primarily due to the reduction in
staff and employee pension expense as a result of an amendment, effective May 1,
2007, to the Flatbush Federal Savings and Loan Defined Benefit Pension Plan.
Professional fees increased $41,000 to $83,000 for the three months ended March
31, 2008, from $42,000 for the three months ended March 31, 2007, primarily due
to the additional fees for the compliance with the Sarbanes-Oxley Act,
Section  404.




Income Tax
Expense.  The provision for income taxes increased $57,000, to
$2,000 for the quarter ended March 31, 2008 from a benefit of $55,000 for the
same quarter in 2007.




Liquidity
and Capital Resources




The
Association is required to maintain levels of liquid assets under the Office of
Thrift Supervision (the “OTS”) regulations sufficient to ensure the
Association’s safe and sound operation.  The Association’s liquidity
averaged 10.16% during the month of March 2008.  The Association
adjusts its liquidity levels in order to meet funding needs for deposit
outflows, payment of real estate taxes from escrow accounts on mortgage loans,
repayment of borrowings, when applicable, and loan funding commitments. The
Association also adjusts its liquidity level as appropriate to meet its
asset/liability objectives.




The
Association’s primary sources of funds are deposits, borrowings, amortization
and prepayments of loans and mortgage-backed securities, maturities of
investment securities and funds provided from operations.  While
scheduled loan and mortgage-backed securities amortization and maturing
investment securities are a relatively predictable source of funds, deposit
flows and loan and mortgage-backed securities prepayments are greatly influenced
by market interest rates, economic conditions and competition.




The
Association’s liquidity, represented by cash and cash equivalents, is a product
of its operating, investing and financing activities.




The
primary sources of investing activity are lending and the purchase of investment
securities and mortgage-backed securities.  Net loans totaled $98.0
million and $101.5 million at March 31, 2008 and December 31, 2007,
respectively.  Mortgage-backed and investment securities held to
maturity totaled $28.7 million





9




and $31.8 million at March
31, 2008 and December 31, 2007, respectively.  In addition to
funding new loans and mortgage-backed and investment securities purchases
through operating and financing activities, such activities were funded by
principal repayments on existing loans, mortgage-backed securities, maturities
of investment securities and advances from the FHLB.




Liquidity
management is both a daily and long-term function of business
management.  Excess liquidity is generally invested in short-term
investments, such as federal funds and interest-bearing deposits.  If
the Association requires funds beyond its ability to generate them internally,
borrowing agreements exist with the FHLB which provides an additional source of
funds.  At March 31, 2008, the Company had $25.4 million in advances
from the FHLB, and had a total remaining available borrowing limit of $56.2
million.  At December 31, 2007, advances from the FHLB totaled $28.3
million.




The
Association anticipates that it will have sufficient funds available to meet its
current loan commitments and obligations.  At March 31, 2008, the
Association had outstanding commitments to originate or purchase loans
of  $4.3 million.  Certificates of deposit scheduled to
mature in one year or less at March 31, 2008, totaled $48.1
million.  Management believes that, based upon its experience and the
Association’s deposit flow history, a significant portion of such deposits will
remain with the Association.




Under OTS
regulations, three separate measurements of capital adequacy (the “Capital
Rule”) are required.  The Capital Rule requires each savings
institution to maintain tangible capital equal to at least 1.5% and core capital
equal to 4.0% of its adjusted total assets.  The Capital rule further
requires each savings institution to maintain total capital equal to at least
8.0% of its risk-weighted assets.




The
following table sets forth the Association’s capital position at March 31, 2008,
as compared to the minimum regulatory capital requirements:




Actual
            
            Minimal Capital
      Requirements
            
            Under Prompt Corrective Actions
      ProvisionsAmount
            
            Ratio
            
            Amount
            
            Ratio
            
            Amount
            
            Ratio(Dollars in
      Thousands)Total
    Capital
            $15,937
            
            21.4%
            
            $>5,948
            
            >8.0%
            
            $>7,436
            
            >10.0%(to risk-weighted
      assets)Tier 1
    Capital
            15,758
            
            21.2%
            
            >
      -
            
            >
      -
            
            >4,461
            
            >  6.0%(to risk-weighted
      assets)Core (Tier 1)
      Capital
            15,842
            
            10.9%
            
            > 5,818
            
            >4.0%
            
            >7,273
            
            >  5.0%(to adjusted total
      assets)Tangible
      Capital
            15,842
            
            10.9%
            
            > 2,182
            
            >1.5%
            
            >-
            
            >-(to adjusted total
      assets)





Management
of Interest Rate Risk




The
ability to maximize net interest income largely depends upon maintaining a
positive interest rate spread during periods of fluctuating market interest
rates.  Interest rate sensitivity is a measure of the difference
between amounts of interest-earning assets and interest-bearing liabilities
which either reprice or mature within a given period of time.  The
difference, or the interest rate repricing “gap”, provides an indication of the
extent to which an institution’s interest rate spread will be affected by
changes in interest rates.  A gap is considered positive when the
amount of interest-rate sensitive assets exceeds the amount of interest-rate
sensitive liabilities, and is considered negative when the amount of
interest-rate sensitive liabilities exceeds the amount of interest-rate
sensitive assets.  Generally, during a period of rising interest
rates, a negative gap within shorter maturities would adversely affect net
interest income, while a positive gap within shorter maturities would result in
an increase in net interest income, and




10








The
Association’s current investment strategy is to maintain an overall securities
portfolio that provides a source of liquidity and that contributes to the
Association’s overall profitability and asset mix within given quality and
maturity considerations.




Net
Portfolio Value




The
Association’s interest rate sensitivity is monitored by management through the
use of the OTS model which estimates the change in the Association’s net
portfolio value (“NPV”) over a range of interest rate scenarios.  NPV
is the present value of expected cash flows from assets, liabilities, and
off-balance sheet contracts.  The NPV ratio, under any interest rate
scenario, is defined as the NPV in that scenario divided by the market value of
assets in the same scenario. The OTS produces its analysis based upon data
submitted on the Association’s quarterly Thrift Financial Reports. The following
table sets forth the Association’s NPV as of December 31, 2007, the most recent
date the Association’s NPV was calculated by the OTS.




Net
      Portfolio Value
              
              
              Net
      Portfolio Value as a Percentage of Present Value of
      AssetsChange
      in Interest Rates
                  (basis
      points)
              
              Estimated
                  NPV
              
              
              Amount
      of
                  Change
              
              
              Percent
      of
                  Change
              
              
              NPV
                  Ratio
              
              
              Change
      in
                  Basis
      Points(Dollars
      in Thousands)+300
              
              $
              11,493
              
              
              $
              (7,930
              )
              
              
              (41%)
              
              
              
              8.04%
              
              
              
              -454+200
              
              
              14,469
              
              
              
              (4,954
              )
              
              
              (26%)
              
              
              
              9.84%
              
              
              
              -274+100
              
              
              17,295
              
              
              
              (2,128
              )
              
              
              (11%)
              
              
              
              11.45%
              
              
              
              -113+
      50
              
              
              18,489
              
              
              
              (934
              )
              
              
              (5%)
              
              
              
              12.09%
              
              
              
              -
      480
              
              
              19,423
              
              
              
              —
              
              
              
              —
              
              
              
              12.58%
              
              
              
              —-
      50
              
              
              20,054
              
              
              
              632
              
              
              
              3%
              
              
              
              12.88%
              
              
              
              +
      30-100
              
              
              20,416
              
              
              
              993
              
              
              
              5%
              
              
              
              13.03%
              
              
              
              +
      45-200
              
              
              20,587
              
              
              
              1,164
              
              
              
              6%
              
              
              
              13.01%
              
              
              
              + 44





Certain
shortcomings are inherent in the methodology used in the above interest rate
risk measurement.  Modeling changes in net portfolio value require
making certain assumptions that may or may not reflect the manner in which
actual yields and costs respond to changes in market interest
rates.  In this regard, the net portfolio value table presented
assumes that the composition of interest-sensitive assets and liabilities
existing at the beginning of a period remains constant over the period being
measured, and assumes that a particular change in interest rates is reflected
uniformly across the yield curve regardless of the duration or repricing of
specific assets and liabilities.  Accordingly, although the net
portfolio value table provides an indication of the Association’s interest rate
risk exposure at a particular point in time, such measurements are not intended
to and do not provide a precise forecast of the effect of changes in market
interest rates on its net interest income and will differ from actual
results.




ITEM 3. Quantitative and Qualitative
Disclosure About Market Risk




As a
smaller reporting company is not required to provide the information required of
this item.




11




ITEM 4T. FLATBUSH FEDERAL BANCORP,
INC. AND SUBSIDIARIES CONTROLS AND PROCEDURES







As of the
end of the period covered by this report, based on an evaluation of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities and Exchange Act of 1934), each of the Chief
Executive Officer and the Chief Financial Officer of the Company has concluded
that the Company’s disclosure controls and procedures are effective to ensure
that information required to be disclosed by the Company in its Exchange Act
reports is recorded, processed, summarized and reported within the applicable
time periods specified by the SEC’s rules and forms.




There
were no significant changes in the Company’s internal controls or in any other
factors which could significantly affect those controls subsequent to the date
of the most recent evaluation of the March 31, 2008 internal controls by the
Company, including any corrective actions with regard to any significant
deficiencies or material weaknesses.





12





FLATBUSH
FEDERAL BANCORP, INC. AND SUBSIDIARIES





PART
II – OTHER INFORMATION








ITEM 1.     Legal
Proceedings





The
Company is not involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of business, which involve
amounts in the aggregate believed by management to be immaterial to the
financial condition of the Company and the Association.





ITEM 1A. Risk
Factors





A
smaller reporting company is not required to provide the information required of
this item.





ITEM 2.     Unregistered Sales of Equity
Securities and Use of Proceeds





On June
30, 2005, the Board of Directors approved a stock repurchase program and
authorized the repurchase of up to 50,000 shares of the Company's outstanding
shares of common stock. On August 30, 2007, the Company approved a second stock
repurchase program and authorized  the repurchase of up to 50,000
shares of the Company’s outstanding shares of common stock.  Stock
repurchases will be made from time to time and may be effected through open
market purchases, block trades and in privately negotiated transactions.
Repurchased stock will be held as treasury stock and will be available for
general corporate purposes. As of March 31, 2008, 53,720 total shares have been
repurchased by the Company. No shares were repurchased in the quarter ended
March 31, 2008. These total repurchased shares do not include the stock dividend
shares of 1,340 which, along with the repurchased shares, are held as treasury
stock.





Company
      Purchases of Common StockPeriod
            
            Total
      number of shares purchased
            
            
            Average
      price paid per share
            
            
            Total
      number of shares purchased as part of publicly announced plans or
      programs
            
            
            Maximum
      number (or approximate dollar value) of shares that may yet be purchased
      under the plans or programsJanuary
      1, 2008 through January 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            53,720
            
            
            
            46,280February
      1, 2008 through February 29, 2008
            
            
            -
            
            
            
            -
            
            
            
            53,720
            
            
            
            46,280March
      1, 2008 through March 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            53,720
            
            
            
            46,280





ITEM 3.     Defaults Upon Senior
Securities





Not
applicable.





ITEM 4.     Submission of Matters to a
Vote of Security Holders





None





ITEM 5.     Other
Information





None





13





ITEM 6.     Exhibits





The
following Exhibits are filed as part of this report.





11.0
            
            Computation
      of earnings per share31.1
            
            Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 (filed herewith).31.2
            
            Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley
      Act of 2002 (filed herewith).32.1
            
            Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to 18
      U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (filed
herewith).




14





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.








FLATBUSH
      FEDERAL BANCORP, INC.Date:
            May
      15, 2008
            
            
            By:
            /s/ Jesus R. AdiaJesus
      R. AdiaPresident
      and Chief Executive OfficerDate:
            May 15, 2008
            
            By:
            /s/  John S.
    LotardoJohn
      S. LotardoExecutive
      Vice President and Chief  Financial
  Officer







15