**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**x QUARTERLY      REPORT      PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**For      the quarterly period ended March 31, 2008**

**OR**

**o TRANSITION      REPORT      PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**Commission      File Number 000-50962**

| **ATLANTIC                COAST FEDERAL CORPORATION**                                |
|--------------------------------------------------------------------------------------|
| (Exact                name of registrant as specified in its                charter) |

| **FEDERAL**                                                                   |   | **59-3764686**                                         |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification Number) |

| **505                Haines Avenue****Waycross,                Georgia** |   |  **31501**           |
|--------------------------------------------------------------------------|--------|---------------------------|
| (Address                of principal Executive Offices)                  |   | (Zip                Code) |

| Class                                        | Outstanding                at May 7, 2008 |
|----------------------------------------------|-------------------------------------------|
| Common                Stock, $0.01 Par Value | 13,142,142                shares          |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**Form      10-Q Quarterly Report**

**Table      of Contents**

|                                             |                                                                                                                      | Page Number |
|--------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|------------------|
| **PART                I. FINANCIAL INFORMATION** |                                                                                                                      |
|                                             |                                                                                                                      |             |
| Item                1.                           | Financial                Statements                                                                                       | 2                |
| Item                2.                           | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations | 12               |
| Item                3.                           | Quantitative                and Qualitative Disclosures about Market Risk                                                 | 22               |
| Item                4.                           | Controls                and Procedures                                                                                    | 23               |
|                                             |                                                                                                                      |             |
| **PART                II. OTHER INFORMATION**    |                                                                                                                      |
|                                             |                                                                                                                      |             |
| Item                1.                           | Legal                Proceedings                                                                                          | 24               |
| Item                1A                           | Risk                Factors                                                                                               | 24               |
| Item                2.                           | Unregistered                Sales of Equity Securities and Use of Proceeds                                                | 24               |
| Item                3.                           | Defaults                upon Senior Securities                                                                            | 24               |
| Item                4.                           | Submission                of Matters to a Vote of Security Holders                                                        | 24               |
| Item                5.                           | Other                Information                                                                                          | 24               |
| Item                6.                           | Exhibits                                                                                                                  | 24               |
|                                             |                                                                                                                      |             |
| Form                10-Q                         | Signature                Page                                                                                             | 25               |
|                                             |                                                                                                                      |             |
| Ex-31.1                                          | Section                302 Certification of CEO                                                                           | 26               |
| Ex-31.2                                          | Section                302 Certification of CFO                                                                           | 27               |
| Ex-32                                            | Section                906 Certification of CEO and CFO                                                                   | 28               |

----

**Part      I. Financial Information**

**ATLANTIC      COAST FEDERAL CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

**March      31, 2008 (unaudited) and December 31, 2007**

**(Dollars      in Thousands, Except Share Information)**

|                                                                                                                                                                          |   | 2008   |    | 2007   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
| ASSETS                                                                                                                                                                        |   |   |    |   |   |   |   |
| Cash                and due from financial institutions                                                                                                                       |   | $      | 6,796   |   | $      | 4,726 |   |
| Short-term                interest earning deposits                                                                                                                           |   |   | 30,200  |   |   | 24,584 |   |
| Total                cash and cash equivalents                                                                                                                                |   |   | 36,996  |   |   | 29,310 |   |
| Securities                available for sale                                                                                                                                  |   |   | 159,797 |   |   | 134,216 |   |
| Real                estate mortgages held for sale                                                                                                                            |   |   | 469     |   |   | 640 |   |
| Loans,                net of allowance of $6,433 at March 31, 2008 and $6,482 at December                31,                2007                                              |   |   | 697,905 |   |   | 703,513 |   |
| Federal                Home Loan Bank stock                                                                                                                                   |   |   | 9,445   |   |   | 9,293 |   |
| Accrued                interest receivable                                                                                                                                    |   |   | 4,113   |   |   | 4,080 |   |
| Land,                premises and equipment                                                                                                                                   |   |   | 17,603  |   |   | 16,973 |   |
| Bank                owned life insurance                                                                                                                                      |   |   | 22,436  |   |   | 22,227 |   |
| Other                real estate owned                                                                                                                                        |   |   | 2,020   |   |   | 1,726 |   |
| Goodwill                                                                                                                                                                      |   |   | 2,661   |   |   | 2,661 |   |
| Other                assets                                                                                                                                                   |   |   | 7,119   |   |   | 6,387 |   |
|                                                                                                                                                                          |   |   |    |   |   |   |   |
| Total                assets                                                                                                                                                   |   | $      | 960,564 |   | $      | 931,026 |   |
|                                                                                                                                                                          |   |   |    |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                                                           |   |   |    |   |   |   |   |
| Deposits                                                                                                                                                                      |   |   |    |   |   |   |   |
| Non-interest-bearing                demand                                                                                                                                    |   | $      | 40,471  |   | $      | 35,284 |   |
| Interest-bearing                demand                                                                                                                                        |   |   | 50,879  |   |   | 45,893 |   |
| Savings                and money market                                                                                                                                       |   |   | 176,770 |   |   | 184,899 |   |
| Time                                                                                                                                                                          |   |   | 334,528 |   |   | 316,654 |   |
| Total                deposits                                                                                                                                                 |   |   | 602,648 |   |   | 582,730 |   |
| Securities                sold under agreements to repurchase                                                                                                                 |   |   | 87,800  |   |   | 78,500 |   |
| Federal                Home Loan Bank advances                                                                                                                                |   |   | 172,529 |   |   | 173,000 |   |
| Accrued                expenses and other liabilities                                                                                                                         |   |   | 8,015   |   |   | 6,990 |   |
| Total                liabilities                                                                                                                                              |   |   | 870,992 |   |   | 841,220 |   |
|                                                                                                                                                                          |   |   |    |   |   |   |   |
| Commitments                and contingencies                                                                                                                                  |   |   | -       |   |   | - |   |
|                                                                                                                                                                          |   |   |    |   |   |   |   |
| Preferred                stock: $0.01 par value; 2,000,000 shares authorized none                issued                                                                       |   |   | -       |   |   | - |   |
| Common                stock: $0.01 par value; 18,000,000 shares authorized, shares issued                of                14,813,469 at March 31, 2008 and December 31, 2007 |   |   | 148     |   |   | 148 |   |
| Additional                paid in capital                                                                                                                                     |   |   | 59,356  |   |   | 59,082 |   |
| Unearned                employee stock ownership plan (ESOP) shares of 267,674 at March 31,                2008                and 279,312 at December 31, 2007               |   |   | (2,677  | )      |   | (2,793 | ) |
| Retained                earnings                                                                                                                                              |   |   | 50,513  |   |   | 51,182 |   |
| Accumulated                other comprehensive income                                                                                                                         |   |   | 725     |   |   | 104 |   |
| Treasury                stock, at cost, 1,188,546 shares at March 31, 2008 and 1,131,867                at                December 31, 2007                                   |   |   | (18,493 | )      |   | (17,917 | ) |
| Total                stockholders' equity                                                                                                                                     |   |   | 89,572  |   |   | 89,806 |   |
|                                                                                                                                                                          |   |   |    |   |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                     |   | $      | 960,564 |   | $      | 931,026 |   |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**CONSOLIDATED      STATEMENTS OF INCOME**

**(Dollars      in Thousands, Except Share Information)**

**(unaudited)**

|                                                                                                   |   | Three months ended March 31, |   |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                   |   | 2008                                             |   | 2007 |   |
| Interest                and dividend income                                                            |   |                                             |   |   |   |   |   |
| Loans,                including fees                                                                   |   | $                                                | 11,634 |   | $ | 11,052 |   |
| Securities                and interest-earning deposits in other financial                institutions |   |                                             | 2,394  |   |   | 2,204 |   |
| Total                interest and dividend income                                                      |   |                                             | 14,028 |   |   | 13,256 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Interest                expense                                                                        |   |                                             |   |   |   |   |   |
| Deposits                                                                                               |   |                                             | 5,552  |   |   | 5,820 |   |
| Federal                Home Loan Bank advances                                                         |   |                                             | 1,795  |   |   | 1,608 |   |
| Securities                sold under agreements to repurchase                                          |   |                                             | 862    |   |   | 475 |   |
| Total                interest expense                                                                  |   |                                             | 8,209  |   |   | 7,903 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Net                interest income                                                                     |   |                                             | 5,819  |   |   | 5,353 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Provision                for loan losses                                                               |   |                                             | 1,561  |   |   | 296 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Net                interest income after provision for loan losses                                     |   |                                             | 4,258  |   |   | 5,057 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Noninterest                income                                                                      |   |                                             |   |   |   |   |   |
| Service                charges and fees                                                                |   |                                             | 1,176  |   |   | 1,228 |   |
| Gain                on sale of real estate mortgages held for sale                                     |   |                                             | -      |   |   | 10 |   |
| (Loss)                gain on sale of foreclosed assets                                                |   |                                             | (19    | ) |   | 7 |   |
| Gain                (loss) on sale of securities available for sale                                    |   |                                             | 65     |   |   | (8 | ) |
| Gain                on redemption of Visa class B common stock                                         |   |                                             | 79     |   |   | - |   |
| Commission                income                                                                       |   |                                             | 82     |   |   | 74 |   |
| Interchange                fees                                                                        |   |                                             | 220    |   |   | 210 |   |
| Bank                owned life insurance earnings                                                      |   |                                             | 209    |   |   | 211 |   |
| Other                                                                                                  |   |                                             | 21     |   |   | 98 |   |
|                                                                                                   |   |                                             | 1,833  |   |   | 1,830 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Noninterest                expense                                                                     |   |                                             |   |   |   |   |   |
| Compensation                and benefits                                                               |   |                                             | 3,280  |   |   | 3,016 |   |
| Occupancy                and equipment                                                                 |   |                                             | 642    |   |   | 588 |   |
| Data                processing                                                                         |   |                                             | 278    |   |   | 335 |   |
| Advertising                                                                                            |   |                                             | 154    |   |   | 146 |   |
| Outside                professional services                                                           |   |                                             | 551    |   |   | 631 |   |
| Interchange                charges                                                                     |   |                                             | 80     |   |   | 100 |   |
| Collection                expense and repossessed asset losses                                         |   |                                             | 142    |   |   | 47 |   |
| Telephone                                                                                              |   |                                             | 162    |   |   | 113 |   |
| Other                                                                                                  |   |                                             | 865    |   |   | 759 |   |
|                                                                                                   |   |                                             | 6,154  |   |   | 5,735 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| (Loss)                income before income tax expense                                                 |   |                                             | (63    | ) |   | 1,152 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Income                tax (benefit) expense                                                            |   |                                             | (87    | ) |   | 367 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Net                income                                                                              |   | $                                                | 24     |   | $ | 785 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Earnings                per common share:                                                              |   |                                             |   |   |   |   |   |
| Basic                                                                                                  |   | $                                                | -      |   | $ | 0.06 |   |
| Diluted                                                                                                |   | $                                                | -      |   | $ | 0.06 |   |
|                                                                                                   |   |                                             |   |   |   |   |   |
| Dividends                declared per common share                                                     |   | $                                                | 0.15   |   | $ | 0.13 |   |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

**For      the Three Months Ended March 31, 2008 and March 31, 2007**

**(Dollars      in Thousands, Except Share Information)**

**(unaudited)**

----

|                                                            |   |       |   |                       |   |         |   |         |   | **ACCUMULATED**   |   |         |   |       |   |
|-----------------------------------------------------------------|--------|------------|--------|----------------------------|--------|--------------|--------|--------------|--------|-------------------|--------|--------------|--------|------------|--------|
|                                                            |   |       |   | **ADDITIONAL**             |   | **UNEARNED** |   |         |   | **OTHER**         |   |         |   |       |   |
|                                                            |   | **COMMON** |   | **PAID                IN** |   | **ESOP**     |   | **RETAINED** |   | **COMPREHENSIVE** |   | **TREASURY** |   | **TOTAL**  |   |
|                                                            |   | **STOCK**  |   | **CAPITAL**                |   | **STOCK**    |   | **EARNINGS** |   | **INCOME**        |   | **STOCK**    |   | **EQUITY** |   |
| For                the three months ended March 31, 2008        |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Balance                at January 1, 2008                       |   | $          | 148    |                       | $      | 59,082       |   | $            | (2,793 | )                 | $      | 51,182       |   | $          | 104    |   | $ | (17,917 | ) | $ | 89,806 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| ESOP                shares earned, 11,638 shares                |   |       | -      |                       |   | -            |   |         | 116    |              |   | -            |   |       | -      |   |   | - |   |   | 116 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Management                restricted stock expense              |   |       | -      |                       |   | 176          |   |         | -      |              |   | -            |   |       | -      |   |   | - |   |   | 176 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Stock                options expense                            |   |       | -      |                       |   | 86           |   |         | -      |              |   | -            |   |       | -      |   |   | - |   |   | 86 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Dividends                declared ( $.15 per share)             |   |       | -      |                       |   | -            |   |         | -      |              |   | (693         | )      |       | -      |   |   | - |   |   | (693 | ) |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Director's                deferred compensation                 |   |       | -      |                       |   | 5            |   |         | -      |              |   | -            |   |       | -      |   |   | (5 | ) |   | - |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Shares                relinquished                              |   |       | -      |                       |   | 7            |   |         | -      |              |   | -            |   |       | -      |   |   | (32 | ) |   | (25 | ) |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Treasury                stock purchased at cost, 53,685 shares  |   |       | -      |                       |   | -            |   |         | -      |              |   | -            |   |       | -      |   |   | (539 | ) |   | (539 | ) |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Comprehensive                income:                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Net                income                                       |   |       | -      |                       |   | -            |   |         | -      |              |   | 24           |   |       | -      |   |   | - |   |   | 24 |   |
| Other                comprehensive income                       |   |       | -      |                       |   | -            |   |         | -      |              |   | -            |   |       | 621    |   |   | - |   |   | 621 |   |
| Total                comprehensive income                       |   |       | -      |                       |   | -            |   |         | -      |              |   | 24           |   |       | 621    |   |   | - |   |   | 645 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Balance                at March 31, 2008                        |   | $          | 148    |                       | $      | 59,356       |   | $            | (2,677 | )                 | $      | 50,513       |   | $          | 725    |   | $ | (18,493 | ) | $ | 89,572 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| For                the three months ended March 31, 2007        |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Balance                at January 1, 2007                       |   | $          | 148    |                       | $      | 57,708       |   | $            | (3,259 | )                 | $      | 52,711       |   | $          | (204   | ) | $  | (16,017 | ) | $ | 91,087 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| ESOP                shares earned, 11,638 shares                |   |       | -      |                       |   | 95           |   |         | 117    |              |   | -            |   |       | -      |   |   | - |   |   | 212 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Stock                options exercised                          |   |       | -      |                       |   | (6           | )      |         | -      |              |   | -            |   |       | -      |   |   | 52 |   |   | 46 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Management                restricted stock expense              |   |       | -      |                       |   | 167          |   |         | -      |              |   | -            |   |       | -      |   |   | - |   |   | 167 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Stock                options expense                            |   |       | -      |                       |   | 179          |   |         | -      |              |   | -            |   |       | -      |   |   | (97 | ) |   | 82 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Dividend                declared ($.13 per share)               |   |       | -      |                       |   | -            |   |         | -      |              |   | (601         | )      |       | -      |   |   | - |   |   | (601 | ) |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Director's                deferred compensation                 |   |       | -      |                       |   | 18           |   |         | -      |              |   | -            |   |       | -      |   |   | (18 | ) |   | - |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Treasury                stock purchased at cost, 105,838 shares |   |       | -      |                       |   | -            |   |         | -      |              |   | -            |   |       | -      |   |   | (1,967 | ) |   | (1,967 | ) |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Comprehensive                income:                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Net                income                                       |   |       | -      |                       |   | -            |   |         | -      |              |   | 785          |   |       | -      |   |   | - |   |   | 785 |   |
| Other                comprehensive income                       |   |       | -      |                       |   | -            |   |         | -      |              |   | -            |   |       | 140    |   |   | - |   |   | 140 |   |
| Total                comprehensive income                       |   |       | -      |                       |   | -            |   |         | -      |              |   | 785          |   |       | 140    |   |   | - |   |   | 925 |   |
|                                                            |   |       |   |                       |   |         |   |         |   |              |   |         |   |       |   |   |   |   |   |   |   |   |
| Balance                at March 31, 2007                        |   | $          | 148    |                       | $      | 58,161       |   | $            | (3,142 | )                 | $      | 52,895       |   | $          | (64    | ) | $ | (18,047 | ) | $ | 89,951 |   |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Dollars      in Thousands)**

**(unaudited)**

----

|                                                                                                        |   | Three months ended March 31, |    |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                                        |   | 2008                                             |    | 2007 |   |
|                                                                                                        |   |                                             |    |   |   |
| Cash                flows from operating activities                                                         |   |                                             |    |   |   |   |   |
| Net                income                                                                                   |   | $                                                | 24      |   | $ | 785 |   |
| Adjustments                to reconcile net income to to net cash from operating                activities: |   |                                             |    |   |   |   |   |
| Provision                for loan losses                                                                    |   |                                             | 1,561   |   |   | 296 |   |
| Gain                on sale of real estate mortgages held for sale                                          |   |                                             | -       |   |   | (10 | ) |
| Loans                originated for sale                                                                    |   |                                             | (1,817  | ) |   | (28,932 | ) |
| Proceeds                from loan sales                                                                     |   |                                             | 1,990   |   |   | 24,915 |   |
| Loss                (gain) on sale of other real estate owned                                               |   |                                             | 19      |   |   | (7 | ) |
| (Gain)                loss on sale of securities available for sale                                         |   |                                             | (65     | ) |   | 8 |   |
| Loss                on disposal of equipment                                                                |   |                                             | -       |   |   | 117 |   |
| ESOP                compensation expense                                                                    |   |                                             | 116     |   |   | 212 |   |
| Share-based                compensation expense                                                             |   |                                             | 262     |   |   | 249 |   |
| Net                depreciation and amortization                                                            |   |                                             | 595     |   |   | 401 |   |
| Net                change in accrued interest receivable                                                    |   |                                             | (33     | ) |   | (120 | ) |
| Increase                in cash surrender value of bank owned life insurance                                |   |                                             | (209    | ) |   | (211 | ) |
| Net                change in other assets                                                                   |   |                                             | (1,092  | ) |   | 57 |   |
| Net                change in accrued expenses and other liabilities                                         |   |                                             | 1,024   |   |   | 591 |   |
| Net                cash from operating activites                                                            |   |                                             | 2,375   |   |   | (1,649 | ) |
|                                                                                                        |   |                                             |    |   |   |   |   |
| Cash                flows from investing activities                                                         |   |                                             |    |   |   |   |   |
| Proceeds                from maturities and payments of securites available for                sale         |   |                                             | 12,349  |   |   | 4,321 |   |
| Proceeds                from the sales of securities available for sale                                     |   |                                             | 6,374   |   |   | 5,681 |   |
| Purchase                of securities available for sale                                                    |   |                                             | (43,338 | ) |   | (39,964 | ) |
| Loans                purchased                                                                              |   |                                             | -       |   |   | (3,138 | ) |
| Net                change in loans                                                                          |   |                                             | 3,484   |   |   | (483 | ) |
| Expenditures                on premises and equipment                                                       |   |                                             | (963    | ) |   | (250 | ) |
| Proceeds                from the sale of other real estate owned                                            |   |                                             | 67      |   |   | 119 |   |
| Purchase                of FHLB stock                                                                       |   |                                             | (152    | ) |   | (40 | ) |
| Net                change in other investments                                                              |   |                                             | -       |   |   | 500 |   |
| Net                cash from investing activities                                                           |   |                                             | (22,179 | ) |   | (33,254 | ) |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Dollars      in Thousands)**

**(unaudited)**

----

|                                                                           |   | Three months ended March 31, |    |
|--------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                           |   | 2008                                             |    | 2007 |   |
|                                                                           |   |                                             |    |   |   |
| Cash                flows from financing activities                            |   |                                             |    |   |   |   |   |
| Net                increase in deposits                                        |   | $                                                | 19,918  |   | $ | 21,149 |   |
| FHLB                advances                                                   |   |                                             | 23,000  |   |   | 10,000 |   |
| Proceeds                from sale of securities under agreements to repurchase |   |                                             | 9,300   |   |   | 24,500 |   |
| Repayment                of FHLB advances                                      |   |                                             | (23,471 | ) |   | (12,000 | ) |
| Proceeds                from exercise of stock options, including tax benefit  |   |                                             | -       |   |   | 46 |   |
| Shares                relinquished                                             |   |                                             | (25     | ) |   | - |   |
| Treasury                stock repurchased                                      |   |                                             | (539    | ) |   | (1,967 | ) |
| Dividends                paid                                                  |   |                                             | (693    | ) |   | (568 | ) |
| Net                cash from financing activities                              |   |                                             | 27,490  |   |   | 41,160 |   |
|                                                                           |   |                                             |    |   |   |   |   |
| Net                change in cash and cash equivalents                         |   |                                             | 7,686   |   |   | 6,257 |   |
|                                                                           |   |                                             |    |   |   |   |   |
| Cash                and equivalents beginning of period                        |   |                                             | 29,310  |   |   | 41,057 |   |
|                                                                           |   |                                             |    |   |   |   |   |
| Cash                and equivalents at end of period                           |   | $                                                | 36,996  |   | $ | 47,314 |   |
|                                                                           |   |                                             |    |   |   |   |   |
| Supplemental                information:                                       |   |                                             |    |   |   |   |   |
| Interest                paid                                                   |   | $                                                | 8,408   |   | $ | 7,784 |   |
| Income                tax (refund) paid                                        |   |                                             | (26     | ) |   | 50 |   |
|                                                                           |   |                                             |    |   |   |   |   |
| Supplemental                noncash disclosures:                               |   |                                             |    |   |   |   |   |
| Loans                transferred to other real estate                          |   | $                                                | 380     |   | $ | 758 |   |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**CONDENSED      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**March      31, 2008**

**(Unaudited)**

**NOTE      1. BASIS OF PRESENTATION**

**NOTE      2. USE OF ESTIMATES**

**NOTE      3. IMPACT OF CERTAIN ACCOUNTING PRONOUNCEMENTS**

*Fair      Value Measurements*
*Effective      Date of FASB Statement No. 157*

----

**NOTE      3. IMPACT OF CERTAIN ACCOUNTING PRONOUNCEMENTS**

*The      Fair Value Option for Financial Assets and Financial      Liabilities*

**NOTE      4. AVAILABLE FOR SALE SECURITIES**

**NOTE      5. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE**

|                                                        |   | (Dollars in Thousands) |   |
|-------------------------------------------------------------|--------|----------------------------------|--------|
| Average                daily balance during the period      |   | $                                | 81,362 |   |
| Average                interest rate during the period      |   |                             | 4.24   | % |
| Maximum                month-end balance                    |   | $                                | 87,800 |   |
| Weighted                average interest rate at period end |   |                             | 4.10   | % |

**NOTE      6. DIVIDENDS**

----

**NOTE      6. DIVIDENDS**

**NOTE      7. EARNINGS PER COMMON SHARE**

|                                                                     |   | For the three months |       |
|--------------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                                     |   | ended                March 31,      |       |
|                                                                     |   | 2008                                |       | 2007 |   |
| Basic                                                                    |   |                                |       |   |   |   |   |
| Net                income                                                |   | $                                   | 24         |   | $ | 785 |   |
| Weighted                average common shares outstanding                |   |                                | 13,658,662 |   |   | 13,754,774 |   |
| Less:                Average unallocated ESOP shares                     |   |                                | (279,312   | ) |   | (325,864 | ) |
| Average                unvested restricted stock awards                  |   |                                | (177,890   | ) |   | (227,362 | ) |
|                                                                     |   |                                |       |   |   |   |   |
| Average                common shares outstanding                         |   |                                | 13,201,460 |   |   | 13,201,548 |   |
|                                                                     |   |                                |       |   |   |   |   |
| Basic                earnings per common share                           |   | $                                   | 0.00       |   | $ | 0.06 |   |
|                                                                     |   |                                |       |   |   |   |   |
| Diluted                                                                  |   |                                |       |   |   |   |   |
| Net                Income                                                |   | $                                   | 24         |   | $ | 785 |   |
|                                                                     |   |                                |       |   |   |   |   |
| Average                common shares outstanding                         |   |                                | 13,201,460 |   |   | 13,201,548 |   |
| Add:Dilutive                effects of assumed exercise of stock options |   |                                | -          |   |   | 67,125 |   |
| Dilutive                effects of full vesting of stock awards          |   |                                | 68,341     |   |   | 98,278 |   |
|                                                                     |   |                                |       |   |   |   |   |
| Average                shares and dilutive potential common shares       |   |                                | 13,269,801 |   |   | 13,366,951 |   |
|                                                                     |   |                                |       |   |   |   |   |
| Diluted                earnings per common share                         |   | $                                   | 0.00       |   | $ | 0.06 |   |

----

**NOTE      8. OTHER COMPREHENSIVE INCOME **

|                                                                                                          |   | 2008                                  |   | 2007   |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|--------|
|                                                                                                          |   | (Dollars                in Thousands) |   |
| Unrealized                holding gains on                 securities available for sale                 |   | $                                     | 1,044  |   | $      | 215 |   |
| Less                reclassification adjustments for (gains)                 losses recognized in income |   |                                  | (65    | )      |   | 8 |   |
| Net                unrealized gains                                                                           |   |                                  | 979    |   |   | 223 |   |
| Tax                effect                                                                                     |   |                                  | (358   | )      |   | (83 | ) |
| Other                comprehensive income                                                                     |   | $                                     | 621    |   | $      | 140 |   |

**NOTE      9 - FAIR VALUE **

----

**NOTE      9 - FAIR VALUE**

|                                         |   |                                         |    | Fair                Value Measurements at March 31, 2008 Using                                                                                               |   |
|----------------------------------------------|--------|----------------------------------------------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                         |   | March                31,                2008 |    | Quoted                Prices                in Active                Markets for                Identical                Assets(Level                1) |   |   |   | Significant                Other                Observable                Inputs                (Level                2) |   | Significant                Unobservable                Inputs                (Level                3) |   |
| Assets:                                      |   |                                         |    |                                                                                                                                                         |   | (Dollars                in Thousands) |   |   |   |   |   |
| Available                for sale securities |   | $                                            | 159,797 |                                                                                                                                                         | $      | 17,705 |   |   |   |   | $ | 142,092 |   | $ | - |   |

**NOTE      10. SUBSEQUENT EVENTS**

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**ITEM      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF      OPERATIONS**

**Forward-Looking      Statements**

*This      Form 10-Q contains forward-looking statements that are statements that are      not      historical or current facts. When used in this filing and in future filings      by      Atlantic Coast Federal Corporation with the Securities and Exchange Commission,      in Atlantic Coast Federal Corporation’s press releases or other public or      shareholder communications, or in oral statements made with the approval of      an      authorized executive officer, the words or phrases, “anticipate,” “would be,”“will allow,” “intends to,” “will likely result,” “are expected to,” will      continue,” “is anticipated,” “estimated,” “projected,” or similar expressions      are intended to identify, “forward looking statements.” Such statements are      subject to risks and uncertainties, including but not limited to changes in      economic conditions in Atlantic Coast Federal Corporation’s market area, changes      in policies by regulatory agencies, fluctuations in interest rates, demand      for      loans in Atlantic Coast Federal Corporation’s market area, changes in the      position of banking regulators on the adequacy of our allowance for loan losses,      and competition, all or some of which could cause actual results to differ      materially from historical earnings and those presently anticipated or      projected. *

*Atlantic      Coast Federal Corporation wishes to caution readers not to place undue reliance      on any such forward-looking statements, which speak only as of the date made,      and advise readers that various factors, including regional and national      economic conditions, substantial changes in levels of market interest rates,      credit and other risks of lending and investing activities, and competitive      and      regulatory factors, could affect Atlantic Coast Federal Corporation’s financial      performance and could cause Atlantic Coast Federal Corporation’s actual results      for future periods to differ materially from those anticipated or      projected.*

*Atlantic      Coast Federal Corporation does not undertake, and specifically disclaims any      obligation, to update any forward-looking statements to reflect occurrences      or      unanticipated events or circumstances after the date of such      statements.*

**Critical      Accounting Policies**

----

----

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

**General.      **

|                                                          |   | March                31,              |    | December                31, |   | Increase                (decrease) |   |
|---------------------------------------------------------------|--------|---------------------------------------|---------|-----------------------------|--------|------------------------------------|--------|
|                                                          |   | 2008                                  |    | 2007                        |   | Dollars                            |   | Percentage |   |
| Assets                                                        |   | (Dollars                in Thousands) |
| Cash                and cash equivalents                      |   | $                                     | 36,996  |                        | $      | 29,310                             |   | $ | 7,686 |   |   | 26.2 | % |
| Securitites                available for sale                 |   |                                  | 159,797 |                        |   | 134,216                            |   |   | 25,581 |   |   | 19.1 | % |
| Loans                                                         |   |                                  | 704,338 |                        |   | 709,995                            |   |   | (5,657 | ) |   | -0.8 | % |
| Allowance                for loan losses                      |   |                                  | (6,433  | )                           |   | (6,482                             | )      |   | 49 |   |   | -0.8 | % |
| Loans,                net                                     |   |                                  | 697,905 |                        |   | 703,513                            |   |   | (5,608 | ) |   | -0.8 | % |
| Real                estate mortgages held for sale            |   |                                  | 469     |                        |   | 640                                |   |   | (171 | ) |   | -26.7 | % |
| Other                assets                                   |   |                                  | 65,397  |                        |   | 63,347                             |   |   | 2,050 |   |   | 3.2 | % |
| Total                assets                                   |   | $                                     | 960,564 |                        | $      | 931,026                            |   | $ | 29,538 |   |   | 3.2 | % |
|                                                          |   |                                  |    |                        |   |                               |   |   |   |   |   |   |   |
| Liabilities                and Stockholders' equity           |   |                                  |    |                        |   |                               |   |   |   |   |   |   |   |
| Deposits                                                      |   |                                  |    |                        |   |                               |   |   |   |   |   |   |   |
| Non-interest                bearing demand                    |   | $                                     | 40,471  |                        | $      | 35,284                             |   | $ | 5,187 |   |   | 14.7 | % |
| Interest                bearing demand                        |   |                                  | 50,879  |                        |   | 45,893                             |   |   | 4,986 |   |   | 10.9 | % |
| Savings                and money market                       |   |                                  | 176,770 |                        |   | 184,899                            |   |   | (8,129 | ) |   | -4.4 | % |
| Time                                                          |   |                                  | 334,528 |                        |   | 316,654                            |   |   | 17,874 |   |   | 5.6 | % |
| Total                deposits                                 |   |                                  | 602,648 |                        |   | 582,730                            |   |   | 19,918 |   |   | 3.4 | % |
| Federal                Home Loan Bank advances                |   |                                  | 172,529 |                        |   | 173,000                            |   |   | (471 | ) |   | -0.3 | % |
| Securities                sold under agreements to repurchase |   |                                  | 87,800  |                        |   | 78,500                             |   |   | 9,300 |   |   | 11.8 | % |
| Accrued                expenses and other liabilities         |   |                                  | 8,015   |                        |   | 6,990                              |   |   | 1,025 |   |   | 14.7 | % |
| Total                liabilities                              |   |                                  | 870,992 |                        |   | 841,220                            |   |   | 29,772 |   |   | 3.5 | % |
| Stockholders'                equity                           |   |                                  | 89,572  |                        |   | 89,806                             |   |   | (234 | ) |   | -0.3 | % |
| Total                liabilities and stockholders' equity     |   | $                                     | 960,564 |                        | $      | 931,026                            |   | $ | 29,538 |   |   | 3.2 | % |

**Cash      and cash equivalents**

**Securities      available for sale**

----

**Loans**

|                                                |   | March 31, 2008              |    | % of total loans |   | December 31, 2007 |   | % of total loans |    |
|-----------------------------------------------------|--------|---------------------------------------|---------|---------------------------------|--------|-----------------------------|--------|---------------------------------|---------|
| Real estate                loans:              |   | (Dollars                In Thousands) |    |
| One-to-four                family                   |   | $                                     | 378,128 |                            |   | 54.0                        | %      | $                               | 377,956 |   |   | 53.5 | % |
| Commercial                                          |   |                                  | 69,833  |                            |   | 9.9                         | %      |                            | 74,748  |   |   | 10.6 | % |
| Other                ( Land & Multifamily)      |   |                                  | 40,610  |                            |   | 5.8                         | %      |                            | 40,698  |   |   | 5.8 | % |
| Total                real estate loans              |   |                                  | 488,571 |                            |   | 69.7                        | %      |                            | 493,402 |   |   | 69.9 | % |
|                                                |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| Real                estate construction loans:      |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| One-to-four                family                   |   |                                  | 8,817   |                            |   | 1.3                         | %      |                            | 13,448  |   |   | 1.9 | % |
| Commercial                                          |   |                                  | 12,474  |                            |   | 1.8                         | %      |                            | 11,129  |   |   | 1.6 | % |
| Acquisition                & Development        |   |                                  | 5,215   |                            |   | 0.7                         | %      |                            | 5,329   |   |   | 0.8 | % |
| Total                real estate construction loans |   |                                  | 26,506  |                            |   | 3.8                         | %      |                            | 29,906  |   |   | 4.2 | % |
|                                                |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| Other                loans:                         |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| Home                equity                          |   |                                  | 99,036  |                            |   | 14.2                        | %      |                            | 98,410  |   |   | 13.9 | % |
| Consumer                                            |   |                                  | 65,211  |                            |   | 9.3                         | %      |                            | 64,673  |   |   | 9.2 | % |
| Commercial                                          |   |                                  | 21,212  |                            |   | 3.0                         | %      |                            | 20,009  |   |   | 2.8 | % |
| Total                other loans                    |   |                                  | 185,459 |                            |   | 26.5                        | %      |                            | 183,092 |   |   | 25.9 | % |
|                                                |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| Total                loans                          |   |                                  | 700,536 |                            |   | 100                         | %      |                            | 706,400 |   |   | 100 | % |
|                                                |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| Allowance                for loan losses            |   |                                  | (6,433  | )                               |   |                        |   |                            | (6,482  | ) |   |   |   |
| Net                deferred loan costs              |   |                                  | 3,524   |                            |   |                        |   |                            | 3,256   |   |   |   |   |
| Premiums                on purchased loans          |   |                                  | 278     |                            |   |                        |   |                            | 339     |   |   |   |   |
|                                                |   |                                  |    |                            |   |                        |   |                            |    |   |   |   |   |
| Loans,                net                           |   | $                                     | 697,905 |                            |   |                        |   | $                               | 703,513 |   |   |   |   |

----

**Allowance      for loan losse**

|                                     |   | At March 31, 2008      |   | At March 31, 2007 |   |
|------------------------------------------|--------|---------------------------------------|--------|----------------------------------|--------|
|                                     |   | (Dollars                in Thousands) |   |
|                                     |   |                                  |   |                             |   |
| Beginning                balance         |   | $                                     | 6,482  |                             | $      | 4,705 |   |
| Loans                charged-off         |   |                                  | (1,785 | )                                |   | (424 | ) |
| Recoveries                               |   |                                  | 175    |                             |   | 276 |   |
| Net                charge-offs           |   |                                  | (1,610 | )                                |   | (148 | ) |
|                                     |   |                                  |   |                             |   |   |   |
| Provision                for loan losses |   |                                  | 1,561  |                             |   | 296 |   |
|                                     |   |                                  |   |                             |   |   |   |
| Ending                balance            |   | $                                     | 6,433  |                             | $      | 4,853 |   |

**Deposits**

**Securities      sold under agreements to repurchase.**

----

**Federal      Home Loan Bank advances**

**Stockholders’      equity**

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

**General**
** **

----

**Average      Balances, Net Interest Income, Yields Earned and Rates Paid**

|                                                                                                  |   | For the three months ended March 31, |    |
|-------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                                                                  |   | 2008                                                               |    | 2007 |   |
|                                                                                                  |   | (Dollars                in Thousands)                              |    |
|                                                                                                  |   | Average Balance                                               |    | Interest |   | Average Yield /Cost |   | Average Balance |   | Interest |   | Average Yield /Cost |   |
|                                                                                                  |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |
| INTEREST-EARNING                ASSETS                                                                |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                receivable(1)                                                                    |   | $                                                                  | 702,473 |   | $ | 11,634 |   |   | 6.62 | % | $ | 644,187 |   | $ | 11,052 |   |   | 6.86 | % |
| Securites(2)                                                                                          |   |                                                               | 146,464 |   |   | 1,958 |   |   | 5.35 | % |   | 112,372 |   |   | 1,487 |   |   | 5.29 | % |
| Other                interest-earning assets(3)                                                       |   |                                                               | 45,826  |   |   | 436 |   |   | 3.81 | % |   | 54,064 |   |   | 717 |   |   | 5.31 | % |
| Total                interest-earning assets                                                          |   |                                                               | 894,763 |   |   | 14,028 |   |   | 6.27 | % |   | 810,623 |   |   | 13,256 |   |   | 6.56 | % |
| Non-interest                earning assets                                                            |   |                                                               | 55,755  |   |   |   |   |   |   |   |   | 52,503 |   |   |   |   |   |   |   |
| Total                assets                                                                           |   | $                                                                  | 950,518 |   |   |   |   |   |   |   | $ | 863,126 |   |   |   |   |   |   |   |
|                                                                                                  |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST-BEARING                LIABILITIES                                                           |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                deposits                                                                       |   | $                                                                  | 35,579  |   | $ | 33 |   |   | 0.37 | % | $ | 41,832 |   | $ | 44 |   |   | 0.42 | % |
| Interest                bearing demand accounts                                                       |   |                                                               | 48,231  |   |   | 257 |   |   | 2.13 | % |   | 51,048 |   |   | 390 |   |   | 3.06 | % |
| Money                market accounts                                                                  |   |                                                               | 144,239 |   |   | 1,200 |   |   | 3.33 | % |   | 131,124 |   |   | 1,497 |   |   | 4.57 | % |
| Time                deposits                                                                          |   |                                                               | 332,595 |   |   | 4,062 |   |   | 4.89 | % |   | 316,666 |   |   | 3,888 |   |   | 4.91 | % |
| Federal                Home Loan Bank advances                                                        |   |                                                               | 172,979 |   |   | 1,795 |   |   | 4.15 | % |   | 143,644 |   |   | 1,608 |   |   | 4.48 | % |
| Securities                sold under agreements to repurchase                                         |   |                                                               | 81,362  |   |   | 862 |   |   | 4.24 | % |   | 42,228 |   |   | 475 |   |   | 4.50 | % |
| Total                interest-bearing liabilities                                                     |   |                                                               | 814,986 |   |   | 8,209 |   |   | 4.03 | % |   | 726,542 |   |   | 7,903 |   |   | 4.34 | % |
| Non-interest                bearing liabilities                                                       |   |                                                               | 45,199  |   |   |   |   |   |   |   |   | 46,162 |   |   |   |   |   |   |   |
| Total                liabilities                                                                      |   |                                                               | 860,185 |   |   |   |   |   |   |   |   | 772,704 |   |   |   |   |   |   |   |
| Stockholders'                equity                                                                   |   |                                                               | 90,333  |   |   |   |   |   |   |   |   | 90,422 |   |   |   |   |   |   |   |
| Total                liabilities and stockholders' equity                                             |   | $                                                                  | 950,518 |   |   |   |   |   |   |   | $ | 863,126 |   |   |   |   |   |   |   |
|                                                                                                  |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income                                                                    |   |                                                               |    |   | $ | 5,819 |   |   |   |   |   |   |   | $ | 5,353 |   |   |   |   |
| Net                interest spread                                                                    |   |                                                               |    |   |   |   |   |   | 2.24 | % |   |   |   |   |   |   |   | 2.22 | % |
| Net                earning assets                                                                     |   | $                                                                  | 79,777  |   |   |   |   |   |   |   | $ | 84,081 |   |   |   |   |   |   |   |
| Net                interest margin(4)                                                                 |   |                                                               |    |   |   |   |   |   | 2.60 | % |   |   |   |   |   |   |   | 2.64 | % |
| Average                interest-earning assets to average interest-bearing                liabilities |   |                                                               |    |   |   | 109.79 | % |   |   |   |   |   |   |   | 111.57 | % |   |   |   |

| (1) | Calculated                net of deferred loan fees and loss reserve. Nonaccrual loans included                as                loans carrying a zero yield    |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Calculated                based on carrying value. Not full tax equivalents, as the numbers                would                not change materially from those presented in the                table. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes                Federal Home Loan Bank stock at cost and term deposits with other                financial institutions.    |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Net                interest income divided by average interest-earning assets.         |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

----

**Rate/Volume      Analysis**

|                                                          |   | Increase/(Decrease)                   |   | Total    |   |
|---------------------------------------------------------------|--------|---------------------------------------|--------|----------|--------|
|                                                          |   | Due to                           |   | Increase |   |
|                                                          |   | Volume                                |   | Rate     |   | (Decrease) |   |
| **INTEREST-EARNING ASSETS**                              |   | (Dollars                in Thousands) |   |
| Loans                receivable                               |   | $                                     | 975    |     | $      | (393 | ) | $ | 582 |   |
| Securities                                                    |   |                                  | 455    |     |   | 15 |   |   | 470 |   |
| Other                interest-earning assets                  |   |                                  | (98    | )        |   | (182 | ) |   | (280 | ) |
| Total                interest-earning assets                  |   |                                  | 1,332  |     |   | (560 | ) |   | 772 |   |
|                                                          |   |                                  |   |     |   |   |   |   |   |   |
| **INTEREST-BEARING                LIABILITIES**               |   |                                  |   |     |   |   |   |   |   |   |
| Savings                deposits                               |   |                                  | (6     | )        |   | (5 | ) |   | (11 | ) |
| Interest                bearing demand accounts               |   |                                  | (20    | )        |   | (113 | ) |   | (133 | ) |
| Money                market accounts                          |   |                                  | 139    |     |   | (436 | ) |   | (297 | ) |
| Time                deposits                                  |   |                                  | 194    |     |   | (21 | ) |   | 173 |   |
| Federal                Home Loan Bank advances                |   |                                  | 311    |     |   | (124 | ) |   | 187 |   |
| Securities                sold under agreements to repurchase |   |                                  | 416    |     |   | (29 | ) |   | 387 |   |
| Total                interest-bearing liabilities             |   |                                  | 1,034  |     |   | (728 | ) |   | 306 |   |
|                                                          |   |                                  |   |     |   |   |   |   |   |   |
| Net                interest income                            |   | $                                     | 298    |     | $      | 168 |   | $ | 466 |   |

**Interest      income. **

**Interest      expense.**

----

**Net      interest income. **

**Provision      for loan losses. **

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**Non-interest      income**

|                                                               |   |                                  |   |   |   | Increase(decrease) |   |
|--------------------------------------------------------------------|--------|---------------------------------------|--------|--------|--------|--------------------|--------|
|                                                               |   | 2008                                  |   | 2007   |   | Dollars            |   | Percentage |   |
|                                                               |   | (Dollars                in Thousands) |   |
| Service                charges and fees                            |   | $                                     | 1,176  |   | $      | 1,228              |   | $ | (52 | ) |   | -4.2 | % |
| Gain                on sale of real estate mortgages held for sale |   |                                  | -      |   |   | 10                 |   |   | (10 | ) |   | -100.0 | % |
| (Loss)                gain on sale of foreclosed assets            |   |                                  | (19    | )      |   | 7                  |   |   | (26 | ) |   | -371.4 | % |
| Gain                (loss) on available for sale securities        |   |                                  | 65     |   |   | (8                 | )      |   | 73 |   |   | -912.5 | % |
| Gain                on redemption of Visa class B common stock     |   |                                  | 79     |   |   | -                  |   |   | 79 |   |   | n/a |   |
| Commission                income                                   |   |                                  | 82     |   |   | 74                 |   |   | 8 |   |   | 10.8 | % |
| Interchange                fees                                    |   |                                  | 220    |   |   | 210                |   |   | 10 |   |   | 4.8 | % |
| Bank                owned life insurance earnings                  |   |                                  | 209    |   |   | 211                |   |   | (2 | ) |   | -0.9 | % |
| Other                                                              |   |                                  | 21     |   |   | 98                 |   |   | (77 | ) |   | -78.6 | % |
|                                                               |   | $                                     | 1,833  |   | $      | 1,830              |   | $ | 3 |   |   | 0.2 | % |

**Non-interest      expense**

|                                                           |   |                                  |   |   |   | Increase(decrease) |   |
|----------------------------------------------------------------|--------|---------------------------------------|--------|--------|--------|--------------------|--------|
|                                                           |   | 2008                                  |   | 2007   |   | Dollars            |   | Percentage |   |
|                                                           |   | (Dollars                in Thousands) |   |
| Compensation                and benefits                       |   | $                                     | 3,280  |   | $      | 3,016              |   | $ | 264 |   |   | 8.8 | % |
| Occupancy                and equipment                         |   |                                  | 642    |   |   | 588                |   |   | 54 |   |   | 9.2 | % |
| Data                processing                                 |   |                                  | 278    |   |   | 335                |   |   | (57 | ) |   | -17.0 | % |
| Advertising                                                    |   |                                  | 154    |   |   | 146                |   |   | 8 |   |   | 5.5 | % |
| Outside                professional services                   |   |                                  | 551    |   |   | 631                |   |   | (80 | ) |   | -12.7 | % |
| Interchange                charges                             |   |                                  | 80     |   |   | 100                |   |   | (20 | ) |   | -20.0 | % |
| Collection                expense and repossessed asset losses |   |                                  | 142    |   |   | 47                 |   |   | 95 |   |   | 202.1 | % |
| Telephone                                                      |   |                                  | 162    |   |   | 113                |   |   | 49 |   |   | 43.4 | % |
| Other                                                          |   |                                  | 865    |   |   | 759                |   |   | 106 |   |   | 14.0 | % |
|                                                           |   | $                                     | 6,154  |   | $      | 5,735              |   | $ | 419 |   |   | 7.3 | % |

**Income      tax expense.**

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**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

|                                                            |   | Economic Value of Equity and Duration of Assets and Liabilities at March 31, 2008 |       |
|-----------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                            |   | Change                in Interest Rate                                                                                                             |       |
|                                                            |   | Decrease 3%                                                                                                                                   |       | Decrease 2% |   | Decrease 1% |   | Increase 1% |   | Increase 2% |   | Increase 3% |   |
|                                                            |   |                                                                                                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Duration                of assets(1)                            |   |                                                                                                                                               | 3.16       |   |   | 2.92 |   |   | 2.67 |   |   | 2.66 |   |   | 2.64 |   |   | 2.64 |   |
| Duration                of liabilities(1)                       |   |                                                                                                                                               | 2.66       |   |   | 2.66 |   |   | 2.29 |   |   | 2.53 |   |   | 2.42 |   |   | 2.42 |   |
| Differential                in duration                         |   |                                                                                                                                               | 0.5        |   |   | 0.26 |   |   | 0.38 |   |   | 0.13 |   |   | 0.22 |   |   | 0.22 |   |
|                                                            |   |                                                                                                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                of change in Economic Value of Equity(2)  |   | $                                                                                                                                                  | 14,485,561 |   | $ | 4,951,816 |   | $ | 3,650,511 |   | $ | (1,233,956 | ) | $ | (4,310,561 | ) | $ | (6,465,841 | ) |
| Percentage                change in Economic Value of Equity(2) |   |                                                                                                                                               | 15.09      | % |   | 2.50 | % |   | 3.19 | % |   | -1.29 | % |   | -4.49 | % |   | -6.73 | % |

| (1) | Expressed                as number of years before asset/liability reprices to achieve stated                rate                of interest rate increase. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Represents                the cumulative five year pre-tax impact on the Company’s equity due to                increased or (decreased) net interest margin. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**ITEM      4. CONTROLS AND PROCEDURES**

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**FORM      10-Q**

**March      31, 2008**

**Part      II - Other Information**

| Period                                                    |   | 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 of Shares that May Yet Be Purchased Under the Plans or Programs |   |
|-----------------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                      |   |                                                 |   |                                             |   |                                                                                                                                         |   |                                                                                                                                            |   |
| January                1, 2008 through January 31, 2008   |   |                                                 | -      |                                             |   | -                                                                                                                                            |   |                                                                                                                                            | -      |   |   | 182,646 |   |
|                                                      |   |                                                 |   |                                             |   |                                                                                                                                         |   |                                                                                                                                            |   |   |   |   |   |
| February                1, 2008 through February 29, 2008 |   |                                                 | 38,785 |                                             |   | 10.07                                                                                                                                        |   |                                                                                                                                            | 38,785 |   |   | 143,861 |   |
|                                                      |   |                                                 |   |                                             |   |                                                                                                                                         |   |                                                                                                                                            |   |   |   |   |   |
| March                1, 2008 through March 31, 2008       |   |                                                 | 14,900 |                                             |   | 10.00                                                                                                                                        |   |                                                                                                                                            | 14,900 |   |   | 128,961 |   |
|                                                      |   |                                                 |   |                                             |   |                                                                                                                                         |   |                                                                                                                                            |   |   |   |   |   |
| Total                                                     |   |                                                 | 53,685 |                                             | $      | 10.05                                                                                                                                        |   |                                                                                                                                            | 53,685 |   |   | 128,961 |   |

| 31.1 | Certification                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                                               |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 | Certification                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                                               |
| 32.  | Certification                of Chief Executive Officer and Chief Financial Officer of Atlantic                Coast                Federal Corporation pursuant to Section                906 |

----

**ATLANTIC      COAST FEDERAL CORPORATION**

**FORM      10-Q**

**March      31, 2008**

**Part      II - Other Information**

**Signatures**

|                              |   | ATLANTIC                COAST FEDERAL CORPORATION          |
|-----------------------------------|--------|------------------------------------------------------------|
|                              |   | (Registrant)                                               |
|                              |   |                                                       |
| Date:                May 14, 2008 |   | /s/                Robert                J. Larison, Jr.   |
|                              |   | Robert                J. Larison, Jr., President and Chief |
|                              |   | Executive                Officer                           |
|                              |   |                                                       |
| Date:                May 14, 2008 |   | /s/                Dawna                R. Miller          |
|                              |   | Dawna                R. Miller, Senior Vice-President and  |
|                              |   | Chief                Financial Officer                     |

----