UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
                        For the quarterly period ended September 30, 2006
                                                       ---------------------

[ ] TRANSITION 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                (IRS Employer Identification No.)
incorporation or organization)

                 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)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Indicate by check mark whether the registration is a shell company (as defined
in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

                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 after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date

      As of November 10, 2006 the Registrant had outstanding 2,768,317 shares of
      common stock

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                Number
                                                                                ------
<S>                                                                               <C>
PART I - FINANCIAL INFORMATION

        Item 1:  Financial Statements

                 Consolidated Statements of Financial Condition
                 at September 30, 2006 and December 31, 2005 (Unaudited)          1

                 Consolidated Statements of Income and Comprehensive
                 Income for the Three months and Nine months Ended
                 September 30, 2006 and 2005 (Unaudited)                          2

                 Consolidated Statements of Cash Flows for the Nine months
                 Ended September 30, 2006 and 2005 (Unaudited)                    3

                 Notes to Consolidated Financial Statements                       4 - 9

        Item 2:  Management's Discussion and Analysis or
                 Plan of Operation                                                10 - 16

        Item 3:  Controls and Procedures                                          17

PART II - OTHER INFORMATION

        1.       Legal Proceedings                                                18

        2.       Unregistered Sales of Equity Securities and Use of Proceeds      18

        3.       Defaults upon Senior Securities                                  18

        4.       Submission of Matters to a Vote of Securities Holders            18

        5.       Other Information                                                18

        6.       Exhibits                                                         18-19

SIGNATURES                                                                        20

<PAGE>

                         PART I - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS
                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (Unaudited)

                                                                             September 30,     December 31,
ASSETS                                                                           2006              2005
------                                                                      -------------------------------

Cash and amounts due from depository institutions                           $   1,993,756     $   2,457,712
Interest earning deposits in other banks                                        1,638,921         2,103,511
Federal Funds sold                                                              2,100,000           350,000
                                                                            -------------------------------
    Cash and cash equivalents                                                   5,732,677         4,911,223

Investment securities held to maturity, fair value of $6,877,745 as
of September 30, 2006 and $7,692,019 in 2005                                    6,989,526         7,808,507
Mortgage-backed securities held to maturity, fair value of
$26,411,325 as of September 30, 2006 and $25,327,841 in 2005                   26,862,248        25,633,274
Loans receivable                                                              106,264,109        96,591,008
Premises and equipment                                                          2,929,794         2,807,623
Federal Home Loan Bank (FHLB) of New York stock                                 1,502,400           978,400
Interest receivable                                                               690,501           654,744
Bank owned life insurance                                                       3,715,016         3,607,353
Other assets                                                                    1,350,897           960,433
                                                                            -------------------------------
    Total assets                                                            $ 156,037,168     $ 143,952,565
                                                                            -------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Liabilities:
------------
Deposits                                                                    $ 109,485,671     $ 109,217,654
FHLB of New York Advances                                                      28,335,727        16,969,464
Advance payments by borrowers for taxes and insurance                             546,393           325,478
Other liabilities                                                               1,481,574         1,407,347
                                                                            -------------------------------
     Total liabilities                                                        139,849,365       127,919,943
                                                                            -------------------------------
Stockholders' equity:
---------------------
Preferred stock $0.01 par value, 1,000,000 shares authorized;
     none issued and outstanding                                                       --                --

Common stock $0.01 par value, 9,000,000 shares authorized; 2,799,657 and
     2,545,464 issued; and 2,768,317 and 2,534,064
     shares outstanding, respectively                                              27,998            25,455
Additional paid in capital                                                     12,037,458         9,741,564
Retained earnings, substantially restricted                                     4,969,770         6,988,292
Unearned employees' stock ownership plan ("ESOP") shares                         (592,198)         (617,824)
Treasury stock - 31,340 shares and 11,400 shares, respectively                   (255,225)         (104,865)
                                                                            -------------------------------
    Total stockholders' equity                                                 16,187,803        16,032,622
                                                                            -------------------------------

    Total liabilities and stockholders' equity                              $ 156,037,168     $ 143,952,565

                                                                            -------------------------------
</TABLE>

See notes to consolidated financial statements.


                                       1
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        Three months Ended          Nine months Ended
                                                                     ------------------------    ------------------------
                                                                           September 30,               September 30,
                                                                     ------------------------    ------------------------
                                                                        2006          2005          2006          2005
                                                                     ------------------------    ------------------------
<S>                                                                  <C>           <C>           <C>           <C>
Interest income
   Loans                                                             $1,732,122    $1,468,297    $4,892,736    $4,362,002
   Mortgage-backed securities                                           415,207       305,800     1,172,155       877,052
   Investments                                                          105,694       110,345       321,245       326,981
   Other interest earning assets                                         23,505        43,597       103,984       108,413
                                                                     ------------------------    ------------------------
          Total interest income                                       2,276,528     1,928,039     6,490,120     5,674,448
                                                                     ------------------------    ------------------------

Interest expense on deposits                                            622,470       510,144     1,729,804     1,467,393
Interest expense on FHLB advances                                       350,281        48,004       860,832        73,282
                                                                     ------------------------    ------------------------
          Total interest expense                                        972,751       558,148     2,590,636     1,540,675
                                                                     ------------------------    ------------------------

Net interest income                                                   1,303,777     1,369,891     3,899,484     4,133,773
Provision for loan losses                                                   595         8,224        48,544        19,111
                                                                     ------------------------    ------------------------
          Net interest income after provision for loan losses         1,303,182     1,361,667     3,850,940     4,114,662
                                                                     ------------------------    ------------------------

Non-interest income:
   Fees and service charges                                              39,639        49,653       135,234       146,177
   BOLI investment income                                                36,449            --       107,663            --
   Miscellaneous                                                            569         1,728         3,928        10,072
                                                                     ------------------------    ------------------------
          Total non-interest income                                      76,657        51,381       246,825       156,249
                                                                     ------------------------    ------------------------

Non-interest expenses:
   Salaries and employee benefits                                       705,899       754,419     2,187,839     2,282,642
   Net occupancy expense of premises                                    114,949       128,809       386,194       380,306
   Equipment                                                            136,841       134,381       407,171       391,980
   Directors' fees                                                       89,319        48,752       293,932       135,890
   Legal fees                                                             9,423         7,942        51,021        38,324
   Audit and accounting fees                                             28,500        24,493        75,045        74,993
   Advertising                                                            5,156         4,941        16,391        18,923
   Federal insurance premium                                              3,834         4,273        11,800        13,476
   Other insurance premium                                               42,232        40,256       123,982       132,122
   Miscellaneous                                                         95,194        94,088       325,726       297,760
                                                                     ------------------------    ------------------------
        Total non-interest expenses                                   1,231,347     1,242,354     3,879,101     3,766,416
                                                                     ------------------------    ------------------------

Income before income taxes                                              148,492       170,694       218,664       504,495
Income taxes                                                             50,286        70,097        81,928       215,134
                                                                     ------------------------    ------------------------
Net income and comprehensive income                                  $   98,206    $  100,597    $  136,736    $  289,361

                                                                     ------------------------    ------------------------

Net income per common share - Basic and diluted                      $     0.04    $     0.04    $     0.05    $     0.11
Weighted average number of shares outstanding - Basic and diluted     2,685,311     2,648,989     2,690,858     2,657,845
</TABLE>

See notes to consolidated financial statements.


                                       2
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Nine months Ended September 30,
                                                              -------------------------------
                                                                  2006               2005
                                                              -------------------------------
<S>                                                           <C>                <C>
Cash flows from operating activities:
  Net income                                                  $    136,736       $    289,361
     Depreciation and amortization of premises and
        equipment                                                  123,439             85,149
     Net amortization of premiums, discounts and
        deferred loan fees and cost                               (123,553)          (101,541)
     Provision for loan losses                                      48,544             19,111
     MRP amortization                                               75,642             50,734
     Stock option amortization                                      64,732                 --
     (Increase) in accrued interest receivable                     (35,757)           (25,636)
     (Increase) in cash surrender value of Bank Owned
      Life Insurance (BOLI)                                       (107,663)                --
     (Increase) decrease in other assets                          (390,464)             4,820
     Increase in other liabilities                                  74,227            375,849
     ESOP Shares committed to be released                           31,435             33,054
                                                              -------------------------------
        Net cash (used in) provided by operating activities       (102,682)           730,901
                                                              -------------------------------

Cash flows from investing activities:
     Proceeds from calls and maturities of investment
        securities held to maturity                                822,193          1,142,884
     Principal repayment on mortgage-backed securities
        held to maturity                                         4,498,666          3,584,744
     Purchases of mortgage-backed securities
        held to maturity                                        (5,776,928)        (6,615,917)
     Purchases of loan participation interest                   (7,739,835)        (2,425,000)
     Net change in loans receivable                             (1,812,181)         1,116,272
     Additions to premises and equipment                          (245,610)          (366,013)
     Purchase of FHLB of New York stock                           (524,000)          (180,800)
                                                              -------------------------------
        Net cash  (used in) investing activities               (10,777,695)        (3,743,830)
                                                              -------------------------------

Cash flows from financing activities:
     Net  increase (decrease) in deposits                          268,017         (4,559,494)
     Advances from FHLB of New York                             49,200,000         10,638,935
     Repayment of advances from FHLB of New York               (37,833,737)                --
     Increase  in advance payments by borrowers
         for taxes and insurance                                   220,915            200,775
     Cash dividend paid to stockholders                             (3,004)            (3,680)
     Purchase of treasury stock                                   (150,360)          (180,245)
                                                              -------------------------------
        Net cash provided by financing activities               11,701,831          6,096,291
                                                              -------------------------------
Net increase in cash and cash equivalents                          821,454          3,083,362
Cash and cash equivalents - beginning                            4,911,223          6,215,474
                                                              -------------------------------

Cash and cash equivalents - ending                            $  5,732,677       $  9,298,836
                                                              ===============================
Supplemental disclosure of cash flow information
  Cash paid during the year for:
     Interest                                                 $  2,544,413       $  1,516,946
                                                              -------------------------------
     Income taxes                                             $    134,131       $    215,134
                                                              -------------------------------
</TABLE>

See notes to consolidated financial statements.


                                       3
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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-QSB 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 and nine months
ended  September 30, 2006, are not  necessarily  indicative of the results which
may be expected for the entire year.

NOTE 3. NET INCOME PER COMMON SHARE
-----------------------------------

Net income per common  share was  computed by dividing  net income for the three
months and nine months ended  September 30, 2006 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.

NOTE 4. CRITICAL ACCOUNTING POLICIES
------------------------------------

We consider 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.  Since
there  has  been no  material  shift  in the loan  portfolio,  the  level of the
allowance  for loan losses has changed  primarily  due to changes in the size of
the loan portfolio and the level of  nonperforming  loans. We have 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 we believe that we use 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  changes in
economic conditions and other factors. In addition, the regulatory  authorities,
as an  integral  part of their  examination  process,  periodically  review  our
allowance for loan losses. Such agencies may require us to recognize adjustments
to the allowance based on their judgments about information available to them at
the time of their examinations.


                                       4
<PAGE>

NOTE 5. RETIREMENT PLANS - COMPONENTS OF NET PERIODIC PENSION COST
------------------------------------------------------------------

Periodic pension expense was as follows:

<TABLE>
<CAPTION>
                                                   Three months Ended             Nine months Ended
                                                      September 30,                 September 30,
                                                -------------------------     -------------------------
                                                   2006           2005           2006           2005
                                                -------------------------     -------------------------
<S>                                             <C>            <C>            <C>            <C>
Service Cost                                    $   43,121     $   42,962     $  129,363     $  128,886
Interest Cost                                       62,996         56,549        188,988        169,647
Expected return on assets                          (46,233)       (43,364)      (138,699)      (130,092)
Amortization of past service cost                   (2,750)        (2,750)        (8,250)        (8,250)
Amortization of unrecognized net (gain) loss        15,551         18,400         46,653         55,200
                                                -------------------------     -------------------------
   Net periodic benefit cost                    $   72,685     $   71,797     $  218,055     $  215,391
                                                -------------------------     -------------------------
</TABLE>

NOTE 6. STOCK COMPENSATION PLANS
--------------------------------

The Company has two stock-related compensation plans, including stock option and
restricted  stock  plans,  which  are  described  in  Note  11 to the  Company's
Consolidated  Financial  Statements included in its Annual Report on Form 10-KSB
for the fiscal year ended  December 31,  2005.  Through  December 31, 2005,  the
Company  accounted  for its stock  option and  restricted  stock plans using the
intrinsic value method set forth in Accounting  Principles Board Opinion No. 25,
"Accounting  for  Stock  Issued  to  Employees,"  ("APB  No.  25")  and  related
interpretations for these plans. Under APB No. 25, generally,  when the exercise
price of the Company's  stock options equaled the market price of the underlying
stock on the date of the grant,  no  compensation  expense was  recognized.  The
Company adopted SFAS No. 123R, using the modified-prospective transition method,
beginning on January 1, 2006 and, therefore,  began to expense the fair value of
all options over their remaining  vesting periods to the extent the options were
not fully vested as of the adoption  date and began to expense the fair value of
all share-based  compensation  granted subsequent to December 31, 2005, over its
requisite service periods.

SFAS No. 123R also requires the benefits of realized tax deductions in excess of
previously  recognized tax benefits on compensation  expense to be reported as a
financing cash flow rather than an operating cash flow, as previously  required.
In  accordance  with Staff  Accounting  Bulletin  ("SAB") No.  107,  the Company
classified  share-based  compensation for employee and non-employee directors to
correspond with the same line item as the cash compensation paid to employees.

Options vest over an eight-year service period.  Compensation expense recognized
for all options is  recognized  over the awards'  respective  requisite  service
periods.  The fair values relating to all options granted prior to calendar 2005
were  estimated  using  the   Black-Scholes   option  pricing  model.   Expected
volatilities are based on historical  volatility of our stock and other factors,
such as implied market volatility. We used historical exercise data based on the
age at grant of the option holder to estimate the options'  expected term, which
represents  the  period of time that the  options  granted  are  expected  to be
outstanding.  We anticipated  the future option holding periods to be similar to
the historical option holding periods. The risk-free rate for periods within the
contractual  life of the  option is based on the U.S.  Treasury  yield  curve in
effect at the time of grant.  We  recognize  compensation  expense  for the fair
values of these awards, which have graded vesting, on a straight-line basis over
the requisite service period of the awards. There were no options granted during
the three months and nine months ended September 30, 2006 and 2005 respectively.

Restricted shares vest over an eight-year  period.  The fair value of restricted
shares under the Company's  restricted  stock plans is determined by the product
of the number of shares granted and the grant date market price of the Company's
common stock. The fair value of restricted shares is expensed on a straight-line
basis over the requisite service period of eight years.


                                       5
<PAGE>

During the three months ended September 30, 2006, the Company  recorded  $33,000
of share-based compensation expense, which was comprised of stock option expense
of $17,000 and restricted stock expense of $16,000. During the nine months ended
September 30, 2006, the Company  recorded  $140,000 of share-based  compensation
expense,  which was comprised of stock option  expense of $65,000 and restricted
stock  expense of $75,000.  The  Company  estimates  it will record  share-based
compensation expense of approximately $173,000 in fiscal 2006.

      The following table illustrates the impact of share-based  compensation on
reported amounts:

<TABLE>
<CAPTION>
                                         Three months ended             Nine month ended
                                         September 30, 2006            September 30, 2006
                                                     Impact of                     Impact of
                                                    Share-Based                   Share-Based
                                                    Compensation                  Compensation
                                     As Reported      Expense      As Reported      Expense
                                     ------------   ------------   ------------   ------------
<S>                                  <C>            <C>            <C>            <C>
Income before taxes                  $    148,492   $     33,048   $    218,664   $    140,373

Income from continuing operations              --             --             --             --

Net Income                                 98,206         22,709        136,736         95,198

Earnings per Share:

         Basic                       $      0.037   $       .008   $      0.051   $      0.035
                                     ------------   ------------   ------------   ------------

         Diluted                     $      0.037   $       .008   $      0.051   $      0.035
                                     ------------   ------------   ------------   ------------
</TABLE>

      A summary of the Company's stock option  activity and related  information
for its option  plans for the nine  months  ended  September  30,  2006,  was as
follows:

<TABLE>
<CAPTION>
                                                                    Weighted
                                                      Weighted       Average       Aggregate
                                                      Average       Remaining      Intrinsic
                                                      Exercise     Contractual       Value
                                         Options       Price          Term          (000's)
                                        ---------    ----------   -------------   -----------
<S>                                       <C>         <C>           <C>            <C>
Outstanding at December 31, 2005          139,745     $   9.71              --           --

    Granted                                    --           --              --           --

    Exercised                                  --           --              --           --

    Forfeited                                  --           --              --           --
                                        ---------

Outstanding at September 30, 2006         139,745     $   9.71      6.25 years     $      0
                                        =========

Exercisable at September 30, 2006          21,136     $   9.71      6.25 years     $      0
</TABLE>


                                       6
<PAGE>

      A summary of the status of the Company's nonvested options as of September
30, 2006 and  changes  during the nine  months  ended  September  30,  2006,  is
presented below:

                                                                       Weighted
                                                                       Average
                                                                      Grant Date
                                                         Options      Fair Value
                                                        ---------     ----------

Nonvested at December 31, 2005                           122,277       $   9.71

    Granted                                                   --             --

    Vested                                                (3,668)      $   9.71

    Forfeited                                                 --             --
                                                        --------

Nonvested at September 30, 2006                          118,609       $   9.71
                                                        ========

      Expected future  compensation  expense  relating to the 118,609  nonvested
options outstanding as of September 30, 2006 is $420,000 over a weighted-average
period of 6.25 years.

      A summary of the status of the Company's restricted shares as of September
30, 2006 and  changes  during the nine  months  ended  September  30,  2006,  is
presented below:

                                                                       Weighted
                                                                       Average
                                                       Restricted     Grant Date
                                                         Shares       Fair Value
                                                       ----------     ----------
Nonvested at December 31, 2005                            48,762       $   9.71

    Granted                                                   --             --

    Vested                                                (2,925)      $   9.71

    Forfeited                                                 --             --
                                                        --------

Nonvested at September 30, 2006                           45,837       $   9.71
                                                        ========

      Expected future  compensation  expense  relating to the 45,837  restricted
shares at September 30, 2006 is $390,000 over a weighted-average  period of 6.25
years.


                                       7
<PAGE>

      For purposes of pro forma  disclosures,  the  estimated  fair value of the
stock options and  restricted  stock plans were  amortized to expense over their
assumed  vesting  periods.  The following  table  illustrates  the effect on net
income  and  earnings  per  share if the  Company  had  applied  the fair  value
recognition provisions of SFAS No. 123, to all stock-related compensation.

<TABLE>
<CAPTION>
                                                       Three months ended     Nine months ended
                                                       September 30, 2005     September 30, 2005
                                                       ------------------     ------------------
<S>                                                        <C>                    <C>
Net income, as reported                                    $  100,597             $  289,361

Add: Stock-related compensation expense included in
   reported net income, net of income taxes                     8,958                 27,899

Deduct: Stock-related compensation expense
   determined under the fair value method, net of
   income taxes                                               (25,489)               (76,467)
                                                           ----------             ----------

Pro forma net income                                       $   84,066             $  240,793
                                                           ----------             ----------

Earnings per share:

      Basic, as reported                                   $    0.038             $    0.109

      Basic, pro forma                                          0.032                  0.091

      Diluted, as reported                                      0.038                  0.109

      Diluted, pro forma                                        0.032                  0.091
</TABLE>

NOTE 7. - EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
----------------------------------------------------

      In  July  2006,  FASB  issued   Interpretation   No.  48  "Accounting  for
Uncertainty in Income Taxes - An  Interpretation  of FASB Statement No 109" (FIN
48), which  clarifies the accounting  for  uncertainty in tax positions.  FIN 48
requires that an entity  recognize in its financial  statements  the impact of a
tax position only if the entity has determined,  based upon the technical merits
of the tax  position,  that  the tax  position  would  more  likely  than not be
sustained  upon  an  examination  by  the  appropriate  taxing  authority.   The
provisions of FIN 48 are effective for fiscal years beginning after December 15,
2006, with the cumulative effect of the change in accounting  principle recorded
as an adjustment to opening retained earnings.  We are currently  evaluating the
impact of adopting FIN 48 on our consolidated financial statements.

      In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments" ("SFAS No. 155"). SFAS No. 155 amends FASB
Statement No. 133 and FASB Statement No. 140, and improves the financial
reporting of certain hybrid financial instruments by requiring more consistent
accounting that eliminates exemptions and provides a means to simplify the
accounting for these instruments. Specifically, SFAS No. 155 allows financial
instruments that have embedded derivatives to be accounted for as a whole
(eliminating the need to bifurcate the derivative from its host) if the holder
elects to account for the whole instrument on a fair value basis. SFAS No. 155
is effective for all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006.
The Company is required to adopt the provisions of SFAS No. 155, as applicable,
beginning in fiscal year 2007. Management does not believe the adoption is SFAS
No. 155 will have a material impact on the Company's consolidated financial
position and results of operations.


                                       8
<PAGE>

      In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets - An Amendment of FASB Statement No. 140" ("SFAS 156"). SFAS
156 requires that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable. The statement
permits, but does not require, the subsequent measurement of servicing assets
and servicing liabilities at fair value. SFAS 156 is effective as of the
beginning of an entity's first fiscal year that begins after September 15, 2006,
which for the Company will be as of the beginning of fiscal 2007. The Company
does not believe that the adoption of SFAS 156 will have a significant effect on
its consolidated financial statements.

      In September 2006, the FASB issued FASB Statement No. 157, Fair Value
Measurements, which defines fair value, establishes a framework for measuring
fair value under GAAP, and expands disclosures about fair value measurements.
FASB Statements No. 157 applies to other accounting pronouncements that require
or permit fair value measurements. The new guidance is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and for
interim periods within those fiscal years. We are currently evaluating the
potential impact, if any, of the adoption of FASB Statement No. 157 on our
consolidated financial position, results of operations and cash flows.

      On September 29, 2006 the Financial Accounting Standard FASB issued SFAS
No. 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans ("SFAS 158"), which amends SFAS 87 and SFAS 106 to require
recognition of the over funded or under funded status of pension and other
postretirement benefit plans on the balance sheet. Under SFAS 158, gains and
losses, prior service costs and credits, and any remaining transition amounts
under SFAS 87 and SFAS 106 that have not yet been recognized through net
periodic benefit cost will be recognized in accumulated other comprehensive
income, net of tax effects, until they are amortized as a component of net
periodic cost. The measurement date - the date at which the benefit obligation
and plan assets are measured - is required to be the company's fiscal year end.
SFAS 158 is effective for publicly - held companies for fiscal years ending
after December 15, 2006, except for the measurement date provisions, which are
effective for fiscal years ending after December 15, 2008. The Company is
currently analyzing the effects of SFAS 158 but does not expect its
implementation will have a significant impact on the Company's consolidated
financial conditions or results of operations.

      On September 13, 2006, the Securities and Exchange Commission "SEC" issue
Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 provides interpretive
guidance on how the effects of the carryover or reversal of prior year
misstatements should be considered in quantifying a potential current year
misstatement. Prior to SAB 108, Companies might evaluate the materiality of
financial-statement misstatements using either the income statement or balance
sheet approach, with the income statement approach focusing on new misstatements
added in the current year, and the balance sheet approach focusing on the
cumulative amount of misstatement present in a company's balance sheet.
Misstatements that would be material under one approach could be viewed as
immaterial under another approach, and not be corrected. SAB 108 now requires
that companies view financial statement misstatements as material if they are
material according to either the income statement or balance sheet approach. The
Company has analyzed SAB 108 and determined that its adoption will have no
impact on the consolidated reported results of operations or financial
condition.


                                       9
<PAGE>

ITEM 2

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            ---------------------------------------------------------

Forward-Looking Statement

      This Form 10-QSB 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 September 30, 2006 and December 31, 2005

      The Company's assets at September 30, 2006 were $156.0 million compared to
$144.0 million at December 31, 2005, an increase of $12.0 million, or 8.3%. Cash
and cash equivalents  increased $822,000, or 16.7%, to $5.7 million at September
30, 2006 from $4.9 million at December 31, 2005. Investment securities decreased
$819,000 due to repayments, or 10.5%, to $7.0 million at September 30, 2006 from
$7.8 million at December 31, 2005.  Mortgage-backed  securities  increased  $1.3
million,  or 5.1%,  to $26.9 million at September 30, 2006 from $25.6 million as
of December 31, 2005. In addition,  loans receivable  increased $9.7 million, or
10.0%, to $106.3 million at September 30, 2006 from $96.6 million as of December
31, 2005.

      Total deposits increased $268,000, or 0.2%, to $109.5 million at September
30, 2006 from $109.2  million at December  31, 2005.  As of September  30, 2006,
borrowings  from Federal Home Loan Bank of New York were $28.3 million  compared
to $17.0  million as of December  31,  2005,  an increase of $11.3  million,  or
66.5%.  Management  continued  to  invest  the  borrowings  in loans  receivable
consisting of residential, commercial, construction and mixed-use properties and
mortgage-backed  securities  resulting  in a net  increase  of $1.3  million  in
mortgage-backed securities, and an increase of $9.7 million in loans receivable.
Prepayments in investment securities resulted in the net decrease of $819,000.

      Total stockholders'  equity increased $155,000,  or 1.0%, to $16.2 million
at September 30, 2006 from $16.0 million at December 31, 2005.

      On June 30,  2005,  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 is held as treasury stock and will be
available  for general  corporate  purposes.  As of September  30, 2006,  31,340
shares were acquired at a weighted average price of $8.14 per share.

Comparison  of Operating  Results for the Three Months Ended  September 30, 2006
and September 30, 2005

      General.  Net income  decreased  by $3,000,  or 3.0%,  to $98,000  for the
quarter ended September 30, 2006 from $101,000 for the same quarter in 2005. The
decrease in earnings for the quarter was  primarily due to increases of $112,000
in interest  expense on deposits and $302,000 in interest expense on FHLB of New
York borrowings, partially offset by an increase of $348,000 in interest income,
an  increase  of $25,000  in  non-interest  income  and a decrease  of $7,000 in
provision  for loan loss,  an $11,000  decrease  in  non-interest  expense and a
decrease of $20,000 in income taxes.

      Interest  Income.  Interest income increased  $348,000,  or 18.0%, to $2.3
million  for the quarter  ended  September  30,  2006 from $1.9  million for the
quarter ended  September 30, 2005. We attribute the increase in interest  income
to a higher average yield on a larger interest earning asset base. For the three
months ended


                                       10
<PAGE>

September 30, 2006, the average  balance of $143.4  million in  interest-earning
assets earned an average yield of 6.35% compared to 5.85% on an average  balance
of $131.7 million for the three months ended September 30, 2005.

      Interest income on loans increased $264,000, or 18.0%, to $1.7 million for
the quarter  ended  September  30, 2006 from $1.5 million for the quarter  ended
September  30, 2005.  The average  balance of loans  increased  $11.1 million to
$104.9  million for the quarter ended  September 30, 2006 from $93.8 million for
the quarter ended September 30, 2005. The average yield on loans increased by 35
basis points to 6.61% for the quarter  ended  September  30, 2006 from 6.26% for
the quarter ended September 30, 2005.

      Interest  income on  mortgage-backed  securities  increased  $109,000,  or
35.6%,  to $415,000 for the quarter  ended  September 30, 2006 from $306,000 for
the quarter ended  September 30, 2005.  The average  balance of  mortgage-backed
securities  increased  $3.6  million  to $27.3  million  for the  quarter  ended
September 30, 2006 from $23.7 million for the quarter ended  September 30, 2005.
The average  yield  increased by 92 basis points to 6.08% for the quarter  ended
September 30, 2006 from 5.16% for the same period in 2005.

      Interest income on investment  securities  decreased  $4,000,  or 3.6%, to
$106,000 for the quarter ended  September 30, 2006 from $110,000 for the quarter
ended September 30, 2005. The average balance of investment securities decreased
$618,000  to $8.5  million for the quarter  ended  September  30, 2006 from $9.1
million for the quarter  ended  September  30, 2005.  As a partial  offset,  the
average yield on investment securities increased by 15 basis points to 4.99% for
the quarter ended  September 30, 2006 from 4.84% for the quarter ended September
30, 2005.

      Interest   income   on   other    interest-earning    assets,    primarily
interest-earning  deposits and federal funds sold,  decreased $20,000, or 45.5%,
to $24,000 for the quarter ended September 30, 2006 from $44,000 for the quarter
ended  September 30, 2005.  The average yield on other  interest  earning assets
increased by 3 basis points to 3.44% for the quarter  ended  September  30, 2006
from 3.41% for the quarter  ended  September  30, 2005.  The average  balance of
other  interest  earning  assets  decreased $2.5 million to $2.7 million for the
quarter  ended  September  30,  2006 from $5.2  million  for the  quarter  ended
September 30, 2005.

      Interest Expense. Total interest expense, comprised of interest expense on
deposits and interest expense on FHLB of New York advances,  increased $415,000,
or 74.4%, to $973,000 for the quarter ended September 30, 2006 from $558,000 for
the quarter  ended  September  30, 2005.  The average  cost of  interest-bearing
liabilities  increased  by 101  basis  points  to 2.97%  for the  quarter  ended
September  30, 2006 from 1.96% for the quarter  ended  September  30, 2005.  The
average  balance of  interest-bearing  liabilities  increased  $16.8  million to
$131.0 million for the quarter ended  September 30, 2006 from $114.2 million for
the quarter ended September 30, 2005.

      Interest expense on deposits increased $112,000, or 22.0%, to $622,000 for
the quarter  ended  September  30,  2006 from  $510,000  for the  quarter  ended
September 30, 2005. The average cost of  interest-bearing  deposits increased by
53 basis points to 2.42% for the quarter ended September 30, 2006 from 1.89% for
the quarter ended  September 30, 2005,  reflecting  the upward trend of interest
rates on deposits.  However,  the average balance of  interest-bearing  deposits
decreased  $5.3 million to $103.0  million for the quarter  ended  September 30,
2006 from $108.3 million for the quarter ended September 30, 2005.

      Interest  expense  on FHLB of New  York  advances  increased  $302,000  to
$350,000 for the quarter  ended  September 30, 2006 from $48,000 for the quarter
ended  September  30,  2005.  The  average  cost of FHLB  of New  York  advances
increased by 178 basis points to 5.02% for the quarter ended  September 30, 2006
from 3.24% for the quarter ended September 30, 2005. The average balance of FHLB
of New York  advances  increased  $22.0 million to $27.9 million for the quarter
ended  September 30, 2006 from $5.9 million for the quarter ended  September 30,
2005.

      Net Interest Income.  Net interest income decreased  $66,000,  or 4.8%, to
$1.3 million for the quarter ended  September 30, 2006 from $1.3 million for the
same  quarter in 2005.  The  Company's  interest  rate  spread was 3.38% for the
quarter  ended  September  30,  2006  compared  to 3.89% for the  quarter  ended
September 30, 2005, a decrease of 51 basis points. The Company's interest margin
for the quarter  ended  September  30, 2006 was 3.64%  compared to 4.16% for the
quarter ended  September  30, 2005, a decrease of 52 basis  points.  The Company
attributes  the  decrease in interest  rate  spread and  interest  margin to the
higher cost of interest-bearing liabilities.


                                       11
<PAGE>

      Provision for Loan Losses. Provision for loan losses, which are charged to
operations,  are  established at a level  necessary to absorb known and inherent
losses that are both  probable  and  reasonably  estimatable  at the date of the
financial statements.  In evaluating the level of the allowance for loan losses,
management  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  our
evaluation of these factors,  the Company recorded a provision of $1,000 for the
quarter ended  September 30, 2006.  For the quarter ended  September 30, 2005, a
provision of $8,000 was recorded.  The  Company's  provision for loan losses was
established to address  probable and estimable  losses in the Company's SBA loan
portfolio,  as well as inherent  losses that are probable and estimatable in the
Company's   larger  loan  portfolio   consisting  of  residential,   commercial,
construction,  and mixed-use properties.  The recorded provision for loan losses
for the quarter ended  September 30, 2006 included  calculations of probable and
estimatable  losses  in  current  and   non-delinquent   loans  in  residential,
commercial, construction and mixed-use properties. The level of the allowance at
September 30, 2006 is based on estimates,  and the ultimate losses may vary from
the estimates.

      Non-Interest  Income.  Non-interest income increased $26,000, or 51.0%, to
$77,000 for the quarter  ended  September  30, 2006 from $51,000 for the quarter
ended  September  30, 2005.  We  attribute  this to increases of $36,000 in Bank
Owned Life Insurance income, which was partially offset by a decrease of $10,000
in fees and service charges.

      Non-Interest Expense.  Non-interest expense decreased $11,000, or 0.9%, to
$1.2  million for the quarter  ended  September  30,  2006.  The net decrease of
$11,000 to  non-interest  expense is  primarily  attributable  to  decreases  to
salaries and employee benefits and net occupancy expense of premises,  partially
offset by increases to director's  compensation,  equipment expense, legal fees,
audit and  accounting  expenses,  other  insurance  premiums  and  miscellaneous
expenses.  Director's  compensation  increased $40,000, or 81.6%, to $89,000 for
the three  months ended  September  30, 2006 from $49,000 for the same period in
2005.  The increase to  director's  expense  included fees for board of director
nominating  and executive  committee  meetings,  as well as the expense of stock
options which was not applicable for the quarter ended September 30, 2005.

      Income Tax Expense. The provision for income taxes decreased $20,000, or
28.6%, to $50,000 for the quarter ended September 30, 2006 from $70,000 for the
same quarter in 2005. The income tax expense is based on the level of income
before taxes of $148,000 and minimum taxes payable for New York State and New
York City for the quarter ended September 30, 2006 compared to $171,000 for the
quarter ended September 30, 2005. The reduction in tax rates for the quarter
ended September 30, 2006 as compared to the same period for September 30, 2005,
was mainly due to non-taxable Bank Owned Life Insurance (BOLI) investment income
which was not applicable for the quarter ended September 30, 2005.

Comparison of Operating Results for the Nine Months Ended September 30, 2006 and
September 30, 2005

      General. Net income decreased $152,000, or 52.6%, to $137,000 for the nine
months  ended  September  30,  2006  from  $289,000  for the nine  months  ended
September  30, 2005.  The decrease in earnings was primarily due to increases of
$262,000 in interest expense on deposits, $788,000 in interest expense from FHLB
of New York  advances,  $29,000 in  provision  of loan  losses,  and $113,000 in
non-interest  expenses.  This,  however,  was offset in part by an  increase  of
$816,000 in interest income, an increase of $91,000 in non-interest  income, and
a decrease of $133,000 in income taxes.

      Interest  Income.  Interest income increased  $816,000,  or 14.4%, to $6.5
million  for nine months  ended  September  30, 2006 from $5.7  million for nine
months ended  September 30, 2005. The average yield on  interest-earning  assets
increased by 40 basis points to 6.17% for nine months ended  September  30, 2006
from 5.77% for the same period in 2005. The average balance of  interest-earning
assets  increased $9.1 million to $140.2 million for nine months ended September
30, 2006 from $131.1 million for nine months ended September 30, 2005.

      Interest income on loans increased  $531,000 or 12.2%, to $4.9 million for
nine months  ended  September  30, 2006 from $4.4  million for nine months ended
September  30,  2005.  The average  balance of loans  increased  $6.6 million to
$100.9  million for nine months ended  September 30, 2006 from $94.3 million for
nine months ended


                                       12
<PAGE>

September 30, 2005.  The average yield on loans  increased by 30 basis points to
6.47% for the nine months  ended  September  30, 2006 from 6.17% for nine months
ended September 30, 2005.

      Interest  income on  mortgage-backed  securities  increased  $295,000,  or
33.6%,  to $1.2 million for nine months ended  September  30, 2006 from $877,000
for nine months ended September 30, 2005. The average balance of mortgage-backed
securities  increased  $5.6  million  to $27.7  million  for nine  months  ended
September 30, 2006 from $22.1 million for nine months ended  September 30, 2005.
The average yield on mortgage-backed  securities increased by 35 basis points to
5.65% from 5.30% during the comparative period.

      Interest income on investment  securities  decreased  $6,000,  or 1.8%, to
$321,000 for nine months ended  September 30, 2006 from $327,000 for nine months
ended September 30, 2005. The average balance of investment securities decreased
$963,000  to $8.5  million for nine months  ended  September  30, 2006 from $9.5
million  for the same period in 2005.  As a partial  offset,  the average  yield
increased by 43 basis points to 5.03% for nine months ended  September  30, 2006
from 4.60% for nine months ended September 30, 2005.

      Interest income on other interest-earning assets,  consisting primarily of
interest-earning  deposits and federal funds sold, decreased $4,000, or 3.7%, to
$104,000 for nine months ended  September 30, 2006 from $108,000 for nine months
ended September 30, 2005. The average balance of other  interest-earning  assets
decreased $2.2 million to $3.1 million for nine months ended  September 30, 2006
from $5.3 million for the comparable  period in 2005. As a partial  offset,  the
average  yield  increased  by 174 basis  points to 4.46% for nine  months  ended
September 30, 2006 from 2.72% for nine months ended September 30, 2005.

      Interest Expense. Total interest expense, comprised of interest expense on
deposits  and  interest  expense on FHLB of New York  advances,  increased  $1.1
million, or 73.3%, to $2.6 million for nine months ended September 30, 2006 from
$1.5  million for nine months  ended  September  30,  2005.  The average cost of
interest-bearing  liabilities  increased  by 88 basis  points  to 2.70% for nine
months  ended  September  30,  2006  from  1.82%  for the same  period  in 2005.
Additionally,  the average  balance of  interest-bearing  liabilities  increased
$14.9  million to $128.0  million for nine months ended  September 30, 2006 from
$113.1 million for nine months ended September 30, 2005.

      Interest expense on deposits increased $262,000, or 17.9%, to $1.7 million
for nine months ended September 30, 2006 from $1.5 million for nine months ended
September 30, 2005. The average cost of  interest-bearing  deposits increased by
45 basis points to 2.22% from 1.77% during the comparative periods. However, the
average balance of  interest-bearing  deposits  decreased $6.2 million to $104.1
million for nine months  ended  September  30, 2006 from $110.3  million for the
nine months ended September 30, 2005.

      Interest  expense  on FHLB of New York  advances  increased  $789,000,  or
1,080.8%,  to $862,000 for the nine months ended September 30, 2006 from $73,000
for the nine months ended September 30, 2005. The average balance of FHLB of New
York advances increased $21.1 million to $23.9 million for the nine months ended
September  30, 2006 from $2.8  million for the nine months ended  September  30,
2005.  The  average  cost of FHLB of New York  advances  increased  by 129 basis
points to 4.80% for the nine months ended  September 30, 2006 from 3.51% for the
nine months ended September 30, 2005.

      Net Interest Income. Net interest income decreased  $235,000,  or 5.7%, to
$3.9 million for the nine months ended  September 30, 2006 from $4.1 million for
the nine months ended  September 30, 2005.  The  Company's  interest rate spread
decreased by 49 basis points to 3.47% for the nine months  ended  September  30,
2006 from 3.96% for the nine months ended  September  30, 2005.  Similarly,  the
interest  margin  decreased  by 49 basis  points to 3.71% for nine months  ended
September 30, 2006 from 4.20% for the nine months ended September 30, 2005.

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


                                       13
<PAGE>

information  becomes  available  or  as  future  events  change.  Based  on  our
evaluation of these factors, the Company recorded a provision for loan losses of
$49,000 for the nine months ended September 30, 2006, as compared to a provision
of $19,000 for the nine months ended  September 30, 2005. The Company  provision
for loan losses was established to address  probable and  estimatable  losses in
the  Company's SBA loan  portfolio as well as inherent  losses that are probable
and  estimable  in  our  larger  loan  portfolio   consisting  of   residential,
commercial,  construction and mixed-use properties. The recorded increase in the
provision for loan losses for the nine months ended  September 30, 2006 included
calculations  of probable and estimatable  losses in current and  non-delinquent
loans in our loan  portfolio.  For nine months ended  September  30,  2006,  the
increase to provision  for loan losses was  attributed  in part to the growth of
the Company's loan  portfolio.  The level of the allowance at September 30, 2006
is based on estimates, and the ultimate losses may vary from the estimates.

      Non-Interest  Income.  Non-interest income increased by $91,000, or 58.3%,
to $247,000 for the nine months ended  September  30, 2006 from $156,000 for the
nine months ended  September  30, 2005.  The increase was caused by increases of
$108,000 in Bank Owned Life Insurance  income,  which was partially  offset by a
decrease  of $11,000 in fees and  service  charges  and $6,000 in  miscellaneous
income.

      Non-Interest Expense. Non-interest expense increased $113,000, or 3.0%, to
$3.9 million for the nine months ended  September 30, 2006 from $3.8 million for
the same period in 2005. The increase in non-interest expense is attributable to
increases in directors' compensation,  occupancy expense, equipment, legal fees,
and miscellaneous expense, which, however, were partially offset by decreases in
salary and employee benefits,  advertising,  federal insurance premium and other
insurance premiums.  Director's  compensation  increased $158,000, or 116.2%, to
$294,000 for the nine months ended September 30, 2006 from $136,000 for the same
period in 2005. The increase in director's  expense included the accrual for the
accelerated  vesting of benefits due to the death of a Flatbush Federal director
during the nine months ended  September  30, 2006.  The expense in stock options
was not applicable for the nine months ended September 30, 2005.

      Income Tax Expense.  The provision for income taxes decreased  $133,000 to
$82,000 for the nine months ended  September 30, 2006 from $215,000 for the nine
months ended  September 30, 2005. The decrease in income tax expense  reflects a
decrease in income before taxes to $219,000 for the nine months ended  September
30, 2006 from $504,000 for nine months ended  September 30, 2005.  The reduction
in tax rates for the nine  months  ended  September  30, 2006 as compared to the
same period for September  30, 2005,  was mainly due to  non-taxable  Bank Owned
Life Insurance  (BOLI)  investment  income which was not applicable for the nine
months ended September 30, 2005.

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
4.16% during the month of September 2006. 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,  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 $106.3
million  and  $96.6  million  at  September  30,  2006 and  December  31,  2005,
respectively. Mortgage-backed and investment securities held to maturity totaled
$33.9  million and $33.4  million at  September  30, 2006 and December 31, 2005,
respectively. In addition to funding new loans and


                                       14
<PAGE>

mortgage-backed   and  investment   securities   purchases   through   operating
activities,  such  activities  were funded by principal  repayments  on existing
loans,  mortgage-backed  securities,  maturities  of investment  securities  and
advances from 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 of New York  which  provide  an  additional  source of  funds.  At
September 30, 2006, our FHLB of New York borrowings totaled $28.3 million.

      The Association  anticipates  that it will have sufficient funds available
to meet its current loan commitments and obligations. At September 30, 2006, the
Association had outstanding  commitments to originate or purchase loans of $12.2
million.  Certificates  of  deposit  scheduled  to mature in one year or less at
September 30, 2006, totaled $44.9 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
September 30, 2006, as compared to the minimum regulatory capital requirements:

<TABLE>
<CAPTION>
                                                         Minimal Capital    Under Prompt corrective
                                      Actual              Requirements        Actions Prospective
                              ---------------------------------------------------------------------
                                 Amount      Ratio      Amount      Ratio      Amount      Ratio
                                 ------      -----      ------      -----      ------      -----
                                                     (Dollars in Thousands)
<S>                             <C>          <C>       <C>           <C>      <C>          <C>
Total Capital                   $15,367      19.2%     $ 6,411       8.0%     $ 8,014      10.0%
(to risk-weighted assets)

Tier Capital                     15,180      18.9%          --        --        4,808       6.0%
(to risk-weighted assets)

Core (Tier 1) Capital            15,264       9.8%       6,243       4.0%       7,804       5.0%
(to adjusted total assets)

Tangible Capital                 15,264       9.8%       2,341       1.5%          --        --
(to adjusted total assets)
</TABLE>

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 during a
period of falling interest rates, a negative gap within shorter maturities would
result in an increase in net interest income while a positive gap within shorter
maturities would result in a decrease in net interest income.


                                       15
<PAGE>

      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  June  30,  2006,  the  most  recent  date  the
Association's NPV was calculated by the OTS.

<TABLE>
<CAPTION>
                                                                   Net Portfolio Value as a
                                                                Percentage of Present Value of
                              Net Portfolio Value                           Assets
Change in            --------------------------------------    --------------------------------
Interest Rates       Estimated    Amount of      Percent of                  Change in Basis
(basis points)       NPV          Change         Change        NPV Ratio     Points
                     ---------    ---------      ----------    ---------     ------------------
                     (Dollars in Thousands)
<S>                  <C>          <C>            <C>           <C>           <C>
+300                 $ 9,653      $ (10,407)     (52%)          6.85%        (610) basis points
+200                  12,968         (7,092)     (35%)          8.92%        (403) basis points
+100                  16,495         (3,565)     (18%)         10.99%        (196) basis points
  0                   20,060             --       --           12.95%                 --
-100                  23,001          2,941       15%          14.45%          150 basis points
-200                  23,735          3,676       18%          14.71%          176 basis points
</TABLE>

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 our
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
our 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.


                                       16
<PAGE>

                                     ITEM 3
                 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 September 30, 2006 internal  controls
by the Company,  including any corrective actions with regard to any significant
deficiencies or material weaknesses.


                                       17
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings
        -----------------

        Neither the Company nor the Association is 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 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. 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 September 30, 2006, 30,000 shares
        have been repurchased with repurchases in the third quarter described in
        the following table:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                          Company Purchases of Common Stock
---------------------------------------------------------------------------------------------------------------------
                                                                                                         Maximum
                                                                                 Total number of       number (or
                                                                                      shares           approximate
                                                                                   purchased as     dollar value) of
                                                                                     part of        shares that may
                                                                                     publicly       yet be purchased
                                            Total number of     Average price    announced plans     under the plans
              Period                        shares purchased    paid per share     or programs        or programs
---------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                <C>               <C>                <C>
July 1, 2006 through July 31, 2006                  --                 --             23,400             26,600
---------------------------------------------------------------------------------------------------------------------
August 1, 2006 through August 31, 2006              --                 --             23,400             26,600
---------------------------------------------------------------------------------------------------------------------
Sept. 1, 2006 through Sept. 30, 2006             6,600              $7.81             30,000             20,000
---------------------------------------------------------------------------------------------------------------------
</TABLE>

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

ITEM 6. Exhibits
        --------

        The following Exhibits are filed as part of this report.

            11    Computation of earnings per share

            31.1  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).


                                       18
<PAGE>

            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).


                                       19
<PAGE>

                                   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:   November 14, 2006               By: /s/ Jesus R. Adia
      ---------------------                 -------------------------------
                                            Jesus R. Adia
                                            President and
                                            Chief Executive Officer


Date:   November 14, 2006               By: /s/ John S. Lotardo
      ---------------------                 -------------------------------
                                            John S. Lotardo
                                            Executive Vice President and
                                            Chief Financial Officer


                                       20