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| ATLANTIC COAST FEDERAL CORPORATION(Exact name of registrant as specified in its charter) |
|------------------------------------------------------------------------------------------|
|                                                                                     |   |   |
| FEDERAL(State or other jurisdiction of incorporation or organization)                    |   |  59-3764686(I.R.S. Employer Identification Number) |
|                                                                                     |   |   |
| 505 Haines AvenueWaycross, Georgia(Address of principal Executive Offices)               |   |  31501(Zip Code) |

| Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer  o | Smaller Reporting Company x |
|---------------------------|---------------------|------------------------------------|-----------------------------|

| Class                         | Outstanding at May 11, 2009 |
|-------------------------------|-----------------------------|
| Common Stock, $0.01 Par Value | 13,444,436 shares           |

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ATLANTIC 

|                                  | Page Number                                                                                 |
|---------------------------------------|---------------------------------------------------------------------------------------------|
|                                  |                                                                                        |   |
| Item 1.                               | Financial Statements                                                                        | 3 |
| Item 2.                               | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 3.                               | Quantitative and Qualitative Disclosures about Market Risk                                  | 27 |
| Item 4.                               | Controls and Procedures                                                                     | 28 |
|                                  |                                                                                        |   |
| PART II.  OTHER INFORMATION |
|                                  |                                                                                        |   |
| Item 1.                               | Legal Proceedings                                                                           | 29 |
| Item 1A.                              | Risk Factors                                                                                | 29 |
| Item 2.                               | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 29 |
| Item 3.                               | Defaults upon Senior Securities                                                             | 29 |
| Item 4.                               | Submission of Matters to a Vote of Security Holders                                         | 29 |
| Item 5.                               | Other Information                                                                           | 29 |
| Item 6.                               | Exhibits                                                                                    | 29 |
|                                  |                                                                                        |   |
| Form 10-Q                             | Signature Page                                                                              | 30 |
|                                  |                                                                                        |   |
| Ex-31.1                               | Section 302 Certification of CEO                                                            | 31 |
| Ex-31.2                               | Section 302 Certification of CFO                                                            | 32 |
| Ex-32                                 | Section 906 Certification of CEO and CFO                                                    | 33 |

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Table of Contents

PART 

|                                                                                                                                        |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                                                                                                                        |   | 2009      |    |   | 2008         |   |
| ASSETS                                                                                                                                      |   |      |    |   |         |   |
| Cash and due from financial institutions                                                                                                    |   | $         | 8,149   |   |         | $      | 10,025 |   |
| Short-term interest earning deposits                                                                                                        |   |      | 27,241  |   |         |   | 24,033 |   |
| Total cash and cash equivalents                                                                                                             |   |      | 35,390  |   |         |   | 34,058 |   |
| Securities available for sale                                                                                                               |   |      | 169,764 |   |         |   | 147,474 |   |
| Real estate mortgages held for sale                                                                                                         |   |      | 4,266   |   |         |   | 736 |   |
| Loans, net of allowance of $14,424 at March 31, 2009   and $10,598 at December 31, 2008                                      |   |      | 711,687 |   |         |   | 741,879 |   |
| Federal Home Loan Bank stock                                                                                                                |   |      | 10,124  |   |         |   | 9,996 |   |
| Accrued interest receivable                                                                                                                 |   |      | 3,804   |   |         |   | 3,934 |   |
| Land, premises and equipment                                                                                                                |   |      | 16,487  |   |         |   | 16,562 |   |
| Bank owned life insurance                                                                                                                   |   |      | 22,349  |   |         |   | 22,173 |   |
| Other real estate owned                                                                                                                     |   |      | 2,680   |   |         |   | 3,332 |   |
| Goodwill                                                                                                                                    |   |      | 2,811   |   |         |   | 2,811 |   |
| Other assets (includes deferred tax asset of $8,256 at March 31, 2009  and $7,727 at December 31, 2008                            |   |      | 15,689  |   |         |   | 13,134 |   |
|                                                                                                                                        |   |      |    |   |         |   |   |   |
| Total assets                                                                                                                                |   | $         | 995,051 |   |         | $      | 996,089 |   |
|                                                                                                                                        |   |      |    |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                        |   |      |    |   |         |   |   |   |
| Deposits                                                                                                                                    |   |      |    |   |         |   |   |   |
| Non-interest-bearing demand                                                                                                                 |   | $         | 37,522  |   |         | $      | 33,192 |   |
| Interest-bearing demand                                                                                                                     |   |      | 72,251  |   |         |   | 67,714 |   |
| Savings and money market                                                                                                                    |   |      | 176,256 |   |         |   | 164,388 |   |
| Time                                                                                                                                        |   |      | 347,878 |   |         |   | 359,312 |   |
| Total deposits                                                                                                                              |   |      | 633,907 |   |         |   | 624,606 |   |
| Federal Home Loan Bank advances                                                                                                             |   |      | 177,623 |   |         |   | 184,850 |   |
| Securities sold under agreements to repurchase                                                                                              |   |      | 92,800  |   |         |   | 92,800 |   |
| Accrued expenses and other liabilities                                                                                                      |   |      | 9,864   |   |         |   | 9,873 |   |
| Total liabilities                                                                                                                           |   |      | 914,194 |   |         |   | 912,129 |   |
|                                                                                                                                        |   |      |    |   |         |   |   |   |
| 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, 2009 and December 31, 2008 |   |      | 148     |   |         |   | 148 |   |
| Additional paid in capital                                                                                                                  |   |      | 60,228  |   |         |   | 60,061 |   |
| Unearned employee stock ownership plan (ESOP) shares of 221,122 at March 31, 2009 and 232,760 at December 31, 2008                          |   |      | (2,211  | )      |         |   | (2,328 | ) |
| Retained earnings                                                                                                                           |   |      | 43,096  |   |         |   | 46,201 |   |
| Accumulated other comprehensive loss                                                                                                        |   |      | (557    | )      |         |   | (308 | ) |
|                                                                                                                                        |   |      |    |   |         |   |   |   |
| Treasury stock, at cost, 1,369,033 shares at March 31, 2009 and 1,361,633 at December 31, 2008                                              |   |      | (19,847 | )      |         |   | (19,814 | ) |
| Total stockholders' equity                                                                                                                  |   |      | 80,857  |   |         |   | 83,960 |   |
|                                                                                                                                        |   |      |    |   |         |   |   |   |
| Total liabilities and stockholders' equity                                                                                                  |   | $         | 995,051 |   |         | $      | 996,089 |   |

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Table of Contents

|                                                                     |   | Three months ended March 31, |   |
|--------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                     |   | 2009                         |   |   | 2008 |   |
| Interest and dividend income                                             |   |                         |   |   |   |   |
| Loans, including fees                                                    |   | $                            | 10,823 |   |   | $ | 11,634 |   |
| Securities and interest-earning deposits in other financial institutions |   |                         | 2,003  |   |   |   | 2,394 |   |
| Total interest and dividend income                                       |   |                         | 12,826 |   |   |   | 14,028 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Interest expense                                                         |   |                         |   |   |   |   |   |   |
| Deposits                                                                 |   |                         | 4,557  |   |   |   | 5,552 |   |
| Federal Home Loan Bank advances                                          |   |                         | 1,712  |   |   |   | 1,795 |   |
| Securities sold under agreements to repurchase                           |   |                         | 983    |   |   |   | 862 |   |
| Total interest expense                                                   |   |                         | 7,252  |   |   |   | 8,209 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Net interest income                                                      |   |                         | 5,574  |   |   |   | 5,819 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Provision for loan losses                                                |   |                         | 5,812  |   |   |   | 1,561 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Net interest (expense) income after provision for loan losses            |   |                         | (238   | ) |   |   | 4,258 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Noninterest income                                                       |   |                         |   |   |   |   |   |   |
| Service charges and fees                                                 |   |                         | 992    |   |   |   | 1,176 |   |
| Gain on sale of real estate mortgages held for sale                      |   |                         | 185    |   |   |   | - |   |
| Gain (loss) on securities available for sale                             |   |                         | (78    | ) |   |   | 65 |   |
| Loss on sale of foreclosed assets                                        |   |                         | (705   | ) |   |   | (19 | ) |
| Gain on redemption of Visa class B common stock                          |   |                         | -      |   |   |   | 79 |   |
| Commission income                                                        |   |                         | 65     |   |   |   | 82 |   |
| Interchange fees                                                         |   |                         | 215    |   |   |   | 220 |   |
| Bank owned life insurance earnings                                       |   |                         | 175    |   |   |   | 209 |   |
| Other                                                                    |   |                         | (14    | ) |   |   | 21 |   |
|                                                                     |   |                         | 835    |   |   |   | 1,833 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Noninterest expense                                                      |   |                         |   |   |   |   |   |   |
| Compensation and benefits                                                |   |                         | 2,575  |   |   |   | 3,280 |   |
| Occupancy and equipment                                                  |   |                         | 621    |   |   |   | 642 |   |
| Data processing                                                          |   |                         | 260    |   |   |   | 278 |   |
| Advertising                                                              |   |                         | 95     |   |   |   | 154 |   |
| Outside professional services                                            |   |                         | 425    |   |   |   | 551 |   |
| Interchange charges                                                      |   |                         | 70     |   |   |   | 80 |   |
| Collection expense and repossessed asset losses                          |   |                         | 204    |   |   |   | 142 |   |
| Telephone                                                                |   |                         | 141    |   |   |   | 162 |   |
| Other                                                                    |   |                         | 924    |   |   |   | 865 |   |
|                                                                     |   |                         | 5,315  |   |   |   | 6,154 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Loss before income tax benefit                                           |   |                         | (4,718 | ) |   |   | (63 | ) |
|                                                                     |   |                         |   |   |   |   |   |   |
| Income tax benefit                                                       |   |                         | (1,657 | ) |   |   | (87 | ) |
|                                                                     |   |                         |   |   |   |   |   |   |
| Net (loss) income                                                        |   | $                            | (3,061 | ) |   | $ | 24 |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| (Loss) earnings per common share:                                        |   |                         |   |   |   |   |   |   |
| Basic                                                                    |   | $                            | (0.23  | ) |   | $ | - |   |
| Diluted                                                                  |   | $                            | (0.23  | ) |   | $ | - |   |
|                                                                     |   |                         |   |   |   |   |   |   |
| Dividends declared per common share                                      |   | $                            | 0.01   |   |   | $ | 0.15 |   |

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Table of Contents

|                                                       |   | COMMONSTOCK |   |   | ADDITIONALPAID INCAPITAL |   |   | UNEARNEDESOPSTOCK |   |   | RETAINEDEARNINGS |   |   | ACCUMULATEDOTHERCOMPREHENSIVEINCOME (LOSS) |   |   | TREASURYSTOCK |   |   | TOTALEQUITY |   |
|------------------------------------------------------------|--------|-------------|--------|--------|--------------------------|--------|--------|-------------------|--------|--------|------------------|--------|--------|--------------------------------------------|--------|--------|---------------|--------|--------|-------------|--------|
| For the three months ended March 31, 2009                  |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |
| Balance at January 1, 2009                                 |   | $           | 148    |   |                     | $      | 60,061 |              |   | $      | (2,328           | )      |   | $                                          | 46,201 |   |          | $      | (308   | )           |   | $ | (19,814 | ) |   | $ | 83,960 |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| ESOP shares earned, 11,638 shares                          |   |        | -      |   |                     |   | (77    | )                 |   |   | 117              |   |   |                                       | -      |   |          |   | -      |        |   |   | - |   |   |   | 40 |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Management restricted stock expense                        |   |        | -      |   |                     |   | 161    |              |   |   | -                |   |   |                                       | -      |   |          |   | -      |        |   |   | - |   |   |   | 161 |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Stock options expense                                      |   |        | -      |   |                     |   | 79     |              |   |   | -                |   |   |                                       | -      |   |          |   | -      |        |   |   | - |   |   |   | 79 |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Dividends declared ( $0.01 per share)                      |   |        | -      |   |                     |   | -      |              |   |   | -                |   |   |                                       | (45    | )      |          |   | -      |        |   |   | - |   |   |   | (45 | ) |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Director's deferred compensation                           |   |        | -      |   |                     |   | 4      |              |   |   | -                |   |   |                                       | -      |   |          |   | -      |        |   |   | (4 | ) |   |   | - |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Treasury stock  purchased at cost, 7,400 shares  |   |        | -      |   |                     |   | -      |              |   |   | -                |   |   |                                       | -      |   |          |   | -      |        |   |   | (29 | ) |   |   | (29 | ) |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Comprehensive income:                                      |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Net income                                                 |   |        | -      |   |                     |   | -      |              |   |   | -                |   |   |                                       | (3,061 | )      |          |   | -      |        |   |   | - |   |   |   | (3,061 | ) |
| Other comprehensive (loss) income                          |   |        | -      |   |                     |   | -      |              |   |   | -                |   |   |                                       | -      |   |          |   | (249   | )           |   |   | - |   |   |   | (249 | ) |
| Total comprehensive income                                 |   |        | -      |   |                     |   | -      |              |   |   | -                |   |   |                                       | (3,061 | )      |          |   | (249   | )           |   |   | - |   |   |   | (3,310 | ) |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Balance at March 31, 2009                                  |   | $           | 148    |   |                     | $      | 60,228 |              |   | $      | (2,211           | )      |   | $                                          | 43,095 |   |          | $      | (557   | )           |   | $ | (19,847 | ) |   | $ | 80,856 |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| 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 |   |
|                                                       |   |        |   |   |                     |   |   |              |   |   |             |   |   |                                       |   |   |          |   |   |        |   |   |   |   |   |   |   |   |
| Dividend declared ($0.15 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 (loss) 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 |   |

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Table of Contents

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|                                                                          |   | Three months ended March 31, |    |
|-------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                          |   | 2009                         |    |   | 2008 |   |
|                                                                          |   |                         |    |   |   |   |
| Cash flows from operating activities                                          |   |                         |    |   |   |   |
| Net (loss) income                                                             |   |                         | (3,061  | ) |   |   | 24 |   |
| Adjustments to reconcile net income to to net cash from operating activities: |   |                         |    |   |   |   |   |   |
| Provision for loan losses                                                     |   |                         | 5,812   |   |   |   | 1,561 |   |
| Gain on sale of real estate mortgages held for sale                           |   |                         | (185    | ) |   |   | - |   |
| Loans originated for sale                                                     |   |                         | (14,292 | ) |   |   | (1,817 | ) |
| Proceeds from loan sales                                                      |   |                         | 23,891  |   |   |   | 1,990 |   |
| Loss on sale of other real estate owned                                       |   |                         | 705     |   |   |   | 19 |   |
| (Gain) loss on securities available for sale                                  |   |                         | 78      |   |   |   | (65 | ) |
| Loss on disposal of equipment                                                 |   |                         | 10      |   |   |   | - |   |
| ESOP compensation expense                                                     |   |                         | 40      |   |   |   | 116 |   |
| Share-based compensation expense                                              |   |                         | 240     |   |   |   | 262 |   |
| Net depreciation and amortization                                             |   |                         | 395     |   |   |   | 595 |   |
| Net change in accrued interest receivable                                     |   |                         | 130     |   |   |   | (33 | ) |
| (Increase) in cash surrender value of bank owned life insurance               |   |                         | (176    | ) |   |   | (209 | ) |
| Net change in other assets                                                    |   |                         | (2,389  | ) |   |   | (1,092 | ) |
| Net change in accrued expenses and other liabilities                          |   |                         | (9      | ) |   |   | 1,024 |   |
| Net cash from operating activites                                             |   |                         | 11,189  |   |   |   | 2,375 |   |
|                                                                          |   |                         |    |   |   |   |   |   |
| Cash flows from investing activities                                          |   |                         |    |   |   |   |   |   |
| Proceeds from maturities and payments of securites available for sale         |   |                         | 10,180  |   |   |   | 12,349 |   |
| Proceeds from the sales of securities available for sale                      |   |                         | 18,471  |   |   |   | 6,374 |   |
| Purchase of securities available for sale                                     |   |                         | (51,451 | ) |   |   | (43,338 | ) |
| Net change in loans                                                           |   |                         | 10,529  |   |   |   | 3,484 |   |
| Expenditures on premises and equipment                                        |   |                         | (191    | ) |   |   | (963 | ) |
| Proceeds from the sale of other real estate owned                             |   |                         | 732     |   |   |   | 67 |   |
| Purchase of FHLB stock                                                        |   |                         | (1,028  | ) |   |   | (152 | ) |
| Redemption of FHLB stock                                                      |   |                         | 900     |   |   |   | - |   |
| Net cash from investing activities                                            |   |                         | (11,858 | ) |   |   | (22,179 | ) |

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|                                                            |   | Three months ended March 31, |    |
|-----------------------------------------------------------------|--------|------------------------------|---------|
|                                                            |   | 2009                         |    |   | 2008 |   |
|                                                            |   |                         |    |   |   |   |
| Cash flows from financing activities                            |   |                         |    |   |   |   |
| Net increase in deposits                                        |   | $                            | 9,301   |   |   | $ | 19,918 |   |
| FHLB advances                                                   |   |                         | 20,000  |   |   |   | 23,000 |   |
| Proceeds from sale of securities under agreements to repurchase |   |                         | -       |   |   |   | 9,300 |   |
| Repayment of FHLB advances                                      |   |                         | (27,226 | ) |   |   | (23,471 | ) |
| Shares relinquished                                             |   |                         | -       |   |   |   | (25 | ) |
| Treasury stock repurchased                                      |   |                         | (29     | ) |   |   | (539 | ) |
| Dividends paid                                                  |   |                         | (45     | ) |   |   | (693 | ) |
| Net cash from financing activities                              |   |                         | 2,001   |   |   |   | 27,490 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Net change in cash and cash equivalents                         |   |                         | 1,332   |   |   |   | 7,686 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Cash and equivalents beginning of period                        |   |                         | 34,058  |   |   |   | 29,310 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Cash and equivalents at end of period                           |   | $                            | 35,390  |   |   | $ | 36,996 |   |
|                                                            |   |                         |    |   |   |   |   |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Supplemental information:                                       |   |                         |    |   |   |   |   |   |
| Interest paid                                                   |   | $                            | 7,276   |   |   | $ | 8,408 |   |
| Income tax paid (refund)                                        |   |                         | 15      |   |   |   | (26 | ) |
|                                                            |   |                         |    |   |   |   |   |   |
| Supplemental noncash disclosures:                               |   |                         |    |   |   |   |   |   |
| Loans transferred to other real estate                          |   | $                            | 785     |   |   | $ | 380 |   |

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|                                                      |   | 2009                   |   |
|-----------------------------------------------------------|--------|------------------------|--------|
|                                                      |   | (Dollars in Thousands) |   |
| Notional amounts                                          |   | $                      | 50,000 |   |
| Weighted average pay rates (3 month LIBOR, 2.50% floor)   |   |                   | 2.50   | % |
| Weighted average receive rates (3 month LIBOR, 4.37% cap) |   |                   | 1.22   | % |
| Weighted average maturity                                 |   |                   | 2.0    |   |

|                                                                            | Liability Interest Rate Swaps          |   |
|---------------------------------------------------------------------------------|----------------------------------------|--------|
|                                                                            | March 31, 2009                         |   | December 31, 2008 |   |
|                                                                            | (Dollars in thousands)                 |   |
|                                                                            | Balance Sheet                          |   |   |   | Balance Sheet |   |   |   |
|                                                                            | Location                               |   | Fair Value |   | Location |   | Fair Value |   |
| Interest rate swaps not designated as hedging instruments under SFAS 133:       |                                   |   |   |   |   |   |   |   |
| Interest rate contracts                                                         | Accrued expenses and other liabilities |   | $ | 594 |   | Accrued expenses and other liabilities |   | $ | 618 |   |
|                                                                            |                                   |   |   |   |   |   |   |   |   |   |
| Total interest rate swaps not designated as hedging instruments under SFAS 133: |                                   |   |   |   |   |   |   |   |   |   |
| Total interest rate swaps                                                       |                                   |   | $ | 594 |   |   |   | $ | 618 |   |

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|                                                                      |                       |   | Three Months Ended           |   |
|---------------------------------------------------------------------------|----------------------------|--------|------------------------------|--------|
|                                                                      |                       |   | March 31, 2009               |   |   | March 31, 2008 |   |
|                                                                      | Location of Gain or (Loss) |   | (Dollars in thousands)       |   |
|                                                                      | Recognized in Non-interest |   | Amount of the Gain or (Loss) |   |
|                                                                      | Income                     |   | Recognized in Income         |   |
| Interest rate swaps not designated as hedging instruments under SFAS 133: |                       |   |                         |   |   |   |   |
| Interest rate contracts                                                   | Other                      |   | $                            | 24     |   |   | $ | - |   |
|                                                                      |                       |   |                         |   |   |   |   |   |   |
| Total                                                                     |                       |   | $                            | 24     |   |   | $ | - |   |

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|                                                      |   | For the three months |       |
|-----------------------------------------------------------|--------|----------------------|------------|
|                                                      |   | ended March 31,      |       |
|                                                      |   | 2009                 |       |   | 2008 |   |
| Basic                                                     |   |                 |       |   |   |   |
| Net (loss) income                                         |   | $                    | (3,061     | ) |   | $ | 24 |   |
| Weighted average common shares outstanding                |   |                 | 13,435,116 |   |   |   | 13,658,662 |   |
| Less: Average unallocated ESOP shares                     |   |                 | (232,760   | ) |   |   | (279,312 | ) |
| Average unvested restricted stock awards                  |   |                 | (110,817   | ) |   |   | (177,890 | ) |
|                                                      |   |                 |       |   |   |   |   |   |
| Average shares                                            |   |                 | 13,091,539 |   |   |   | 13,201,460 |   |
|                                                      |   |                 |       |   |   |   |   |   |
| Basic (loss) earnings per common share                    |   | $                    | (0.23      | ) |   | $ | 0.00 |   |
|                                                      |   |                 |       |   |   |   |   |   |
|                                                      |   |                 |       |   |   |   |   |   |
| Diluted                                                   |   |                 |       |   |   |   |   |   |
| Net (loss) income                                         |   | $                    | (3,061     | ) |   | $ | 24 |   |
| Weighted average common shares outstanding                |   |                 |       |   |   |   |   |   |
| per common share                                          |   |                 | 13,091,539 |   |   |   | 13,201,460 |   |
| Add:Dilutive effects of assumed exercise of stock options |   |                 | -          |   |   |   |   |   |
| Dilutive effects of full vesting of stock awards          |   |                 | -          |   |   |   | 68,341 |   |
|                                                      |   |                 |       |   |   |   |   |   |
| Average shares and dilutive potential common shares       |   |                 | 13,091,539 |   |   |   | 13,269,801 |   |
|                                                      |   |                 |       |   |   |   |   |   |
| Diluted (loss) earnings per common share                  |   | $                    | (0.23      | ) |   | $ | 0.00 |   |

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|                                                                          |   | (Dollars in Thousands)       |   |
|-------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                          |   | Three months ended March 31, |   |
|                                                                          |   | 2009                         |   |   | 2008 |   |
|                                                                          |   |                         |   |   |   |   |
| Unrealized holding (gains) losses on  securities available for sale |   | $                            | (494   | ) |   | $ | 1,044 |   |
| Less reclassification adjustments for (gains) losses recognized in income     |   |                         | 78     |   |   |   | (65 | ) |
| Net unrealized losses (gains)                                                 |   |                         | (416   | ) |   |   | 979 |   |
| Tax effect                                                                    |   |                         | 167    |   |   |   | (358 | ) |
| Other comprehensive income (loss)                                             |   | $                            | 621    |   |   |   |   |   |

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|                          |   | Fair Value Measurements at March 31, 2009 Using:    |    |
|-------------------------------|--------|-----------------------------------------------------|---------|
|                          |   | March 31, 2009                                      |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                          |   | (Dollars in Thousands)                              |    |
| Assets:                       |   |                                                |    |   |   |   |   |   |   |   |   |   |
| Available for sale securities |   | $                                                   | 169,764 |   |   | $ | 7,668 |   |   | $ | 162,096 |   |   | $ | - |   |
| Liabilities:                  |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap            |   | $                                                   | (594    | ) |   | $ | - |   |   | $ | (594 | ) |   | $ | - |   |
|                          |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Fair Value Measurements at December 31, 2008 Using: |    |
|                          |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | December 31, 2008                                   |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                          |   | (Dollars in Thousands)                              |    |
| Assets:                       |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale securities |   | $                                                   | 147,474 |   |   | $ | 8,693 |   |   | $ | 138,781 |   |   | $ | - |   |
| Liabilities:                  |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap            |   | $                                                   | (618    | ) |   | $ | - |   |   | $ | (618 | ) |   | $ | - |   |

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|                                        |   |                                             |   |                                                          |   |                                         |   |                                     |   |
|---------------------------------------------|--------|--------------------------------------------------|--------|---------------------------------------------------------------|--------|----------------------------------------------|--------|------------------------------------------|--------|
|                                        |   | Fair Value Measurements at March 31, 2009 Using: |   |
|                                        |   | March 31, 2009                                   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |   |
|                                        |   | (Dollars in Thousands)                           |   |
| Assets:                                     |   |                                             |   |                                                          |   |                                         |   |                                     |   |
| Other real estate owned                     |   | $                                                | 2,680  |                                                          |   |                                         |   |                                     | $      | 2,680 |   |
| Impaired loans – collateral dependent |   |                                             | 20,770 |                                                          |   |                                         |   |                                     |   | 20,770 |   |
| Total assets at fair value                  |   | $                                                | 23,450 |                                                          |   |                                         |   |                                     | $      | 23,450 |   |

|                                                            |   | Assets |   |   | Liabilities |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|-------------|--------|
| Fair value, January 1, 2009                                     |   | $      | 17,279 |   |        | $      | - |   |
| Total realized and unrealized gains (losses) included in income |   |   | (2,959 | )      |        |   | - |   |
| Proceeds, net                                                   |   |   | (732   | )      |        |   | - |   |
| Transfers in and/or out of level 3                              |   |   | 9,862  |   |        |   | - |   |
| Fair value, March 31, 2009                                      |   | $      | 23,450 |   |        | $      | - |   |

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|                                               |   | March 31,              |    |   | December 31, |   |    | Increase (decrease) |   |
|----------------------------------------------------|--------|------------------------|---------|--------|--------------|--------|---------|---------------------|--------|
|                                               |   | 2009                   |    |   | 2008         |   |    | Dollars             |   |   | Percentage |   |
| Assets                                             |   | (Dollars in Thousands) |    |
| Cash and cash equivalents                          |   | $                      | 35,390  |   |         | $      | 34,058  |                |   | $ | 1,332 |   |   |   | 3.9 | % |
| Securitites available for sale                     |   |                   | 169,764 |   |         |   | 147,474 |                |   |   | 22,290 |   |   |   | 15.1 | % |
| Loans                                              |   |                   | 726,111 |   |         |   | 752,477 |                |   |   | (26,366 | ) |   |   | -3.5 | % |
| Allowance for loan losses                          |   |                   | (14,424 | )      |         |   | (10,598 | )                   |   |   | (3,826 | ) |   |   | 36.1 | % |
| Loans, net                                         |   |                   | 711,687 |   |         |   | 741,879 |                |   |   | (30,192 | ) |   |   | -4.1 | % |
| Real estate mortgages held for sale                |   |                   | 4,266   |   |         |   | 736     |                |   |   | 3,530 |   |   |   | 479.6 | % |
| Other assets                                       |   |                   | 73,944  |   |         |   | 71,942  |                |   |   | 2,002 |   |   |   | 2.8 | % |
| Total assets                                       |   | $                      | 995,051 |   |         | $      | 996,089 |                |   | $ | (1,038 | ) |   |   | -0.1 | % |
|                                               |   |                   |    |   |         |   |    |                |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' equity               |   |                   |    |   |         |   |    |                |   |   |   |   |   |   |   |   |
| Deposits                                           |   |                   |    |   |         |   |    |                |   |   |   |   |   |   |   |   |
| Non-interest bearing demand                        |   | $                      | 37,522  |   |         | $      | 33,192  |                |   | $ | 4,330 |   |   |   | 13.0 | % |
| Interest bearing demand                            |   |                   | 72,251  |   |         |   | 67,714  |                |   |   | 4,537 |   |   |   | 6.7 | % |
| Savings and money market                           |   |                   | 176,256 |   |         |   | 164,388 |                |   |   | 11,868 |   |   |   | 7.2 | % |
| Time                                               |   |                   | 347,878 |   |         |   | 359,312 |                |   |   | (11,434 | ) |   |   | -3.2 | % |
|       Total deposits |   |                   | 633,907 |   |         |   | 624,606 |                |   |   | 9,301 |   |   |   | 1.5 | % |
| Federal Home Loan Bank advances                    |   |                   | 177,623 |   |         |   | 184,850 |                |   |   | (7,227 | ) |   |   | -3.9 | % |
| Securities sold under agreements to repurchase     |   |                   | 92,800  |   |         |   | 92,800  |                |   |   | - |   |   |   | 0.0 | % |
| Accrued expenses and other liabilities             |   |                   | 9,864   |   |         |   | 9,873   |                |   |   | (9 | ) |   |   | -0.1 | % |
| Total liabilities                                  |   |                   | 914,194 |   |         |   | 912,129 |                |   |   | 2,065 |   |   |   | 0.2 | % |
|  Stockholders' equity                         |   |                   | 80,857  |   |         |   | 83,960  |                |   |   | (3,103 | ) |   |   | -3.7 | % |
| Total liabilities and stockholders' equity         |   | $                      | 995,051 |   |         | $      | 996,089 |                |   | $ | (1,038 | ) |   |   | -0.1 | % |

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|                                 |   |                   |    |   |             |   |   |              |   |   |             |   |
|--------------------------------------|--------|------------------------|---------|--------|------------------|--------|--------|-------------------|--------|--------|------------------|--------|
|                                 |   | March 31, 2009         |    |   | % of total loans |   |   | December 31, 2008 |   |   | % of total loans |   |
| Real estate loans:                   |   | (Dollars In Thousands) |    |
| One-to-four family                   |   | $                      | 352,951 |   |             |   | 49.2   | %                 |   | $      | 370,783          |   |   |   | 49.9 | % |
| Commercial                           |   |                   | 82,600  |   |             |   | 11.5   | %                 |   |   | 84,134           |   |   |   | 11.3 | % |
| Other ( land & multifamily)      |   |                   | 43,281  |   |             |   | 6.0    | %                 |   |   | 43,901           |   |   |   | 5.9 | % |
| Total real estate loans              |   |                   | 478,832 |   |             |   | 66.7   | %                 |   |   | 498,818          |   |   |   | 67.1 | % |
|                                 |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| Real estate construction loans:      |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| One-to-four family                   |   |                   | 8,484   |   |             |   | 1.2    | %                 |   |   | 8,974            |   |   |   | 1.2 | % |
| Commercial                           |   |                   | 10,831  |   |             |   | 1.5    | %                 |   |   | 10,883           |   |   |   | 1.5 | % |
| Acquisition & development        |   |                   | 5,018   |   |             |   | 0.7    | %                 |   |   | 5,008            |   |   |   | 0.6 | % |
| Total real estate construction loans |   |                   | 24,333  |   |             |   | 3.4    | %                 |   |   | 24,865           |   |   |   | 3.3 | % |
|                                 |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| Other loans:                         |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| Home equity                          |   |                   | 106,411 |   |             |   | 14.8   | %                 |   |   | 107,525          |   |   |   | 14.5 | % |
| Consumer                             |   |                   | 83,404  |   |             |   | 11.6   | %                 |   |   | 87,162           |   |   |   | 11.7 | % |
| Commercial                           |   |                   | 24,375  |   |             |   | 3.5    | %                 |   |   | 25,273           |   |   |   | 3.4 | % |
| Total other loans                    |   |                   | 214,190 |   |             |   | 29.9   | %                 |   |   | 219,960          |   |   |   | 29.6 | % |
|                                 |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| Total loans                          |   |                   | 717,355 |   |             |   | 100    | %                 |   |   | 743,643          |   |   |   | 100 | % |
|                                 |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| Allowance for loan losses            |   |                   | (14,424 | )      |             |   |   |              |   |   | (10,598          | )      |   |   |   |   |
| Net deferred loan costs              |   |                   | 8,614   |   |             |   |   |              |   |   | 8,662            |   |   |   |   |   |
| Premiums on purchased loans          |   |                   | 142     |   |             |   |   |              |   |   | 172              |   |   |   |   |   |
|                                 |   |                   |    |   |             |   |   |              |   |   |             |   |   |   |   |   |
| Loans, net                           |   | $                      | 711,687 |   |             |   |   |              |   | $      | 741,879          |   |   |   |   |   |

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|                      |   | At March 31,           |   |   | At December 31, |   |
|---------------------------|--------|------------------------|--------|--------|-----------------|--------|
|                      |   | 2009                   |   |   | 2008            |   |
|                      |   | (Dollars in Thousands) |   |
|                      |   |                   |   |   |            |   |
| Beginning balance         |   | $                      | 10,598 |   |            | $      | 8,603 |   |
| Loans charged-off         |   |                   | (2,331 | )      |            |   | (2,938 | ) |
| Recoveries                |   |                   | 345    |   |            |   | 224 |   |
| Net charge-offs           |   |                   | (1,986 | )      |            |   | (2,714 | ) |
|                      |   |                   |   |   |            |   |   |   |
| Provision for loan losses |   |                   | 5,812  |   |            |   | 4,709 |   |
|                      |   |                   |   |   |            |   |   |   |
| Ending balance            |   | $                      | 14,424 |   |            | $      | 10,598 |   |

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|                                         |   | (Dollars in Thousands) |   |
|----------------------------------------------|--------|------------------------|--------|
| Average daily balance during the period      |   | $                      | 92,800 |   |
| Average interest rate during the period      |   |                   | 4.27   | % |
| Maximum month-end balance                    |   | $                      | 92,800 |   |
| Weighted average interest rate at period end |   |                   | 4.27   | % |

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|                                                                    |   | For the three months ended March 31, |      |
|-------------------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                                    |   | 2009                                 |      |   | 2008 |   |
|                                                                    |   | (Dollars in Thousands)               |      |
|                                                                    |   | Average Balance                      |      |   | Interest |   |   | Average Yield /Cost |   |   | Average Balance |   |   | Interest |   |   | Average Yield /Cost |   |
| INTEREST-EARNING ASSETS                                                 |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable(1)                                                     |   | $                                    | 742,157   |   |   | $ | 10,823 |   |   |   | 5.83 | % |   | $ | 702,473 |   |   | $ | 11,634 |   |   |   | 6.62 | % |
| Securites(2)                                                            |   |                                 | 161,518   |   |   |   | 1,983 |   |   |   | 4.91 | % |   |   | 146,464 |   |   |   | 1,958 |   |   |   | 5.35 | % |
| Other interest-earning assets(3)                                        |   |                                 | 45,139    |   |   |   | 20 |   |   |   | 0.18 | % |   |   | 45,826 |   |   |   | 436 |   |   |   | 3.81 | % |
| Total interest-earning assets                                           |   |                                 | 948,814   |   |   |   | 12,826 |   |   |   | 5.41 | % |   |   | 894,763 |   |   |   | 14,028 |   |   |   | 6.28 | % |
| Non-interest earning assets                                             |   |                                 | 59,132    |   |   |   |   |   |   |   |   |   |   |   | 55,755 |   |   |   |   |   |   |   |   |   |
| Total assets                                                            |   | $                                    | 1,007,946 |   |   |   |   |   |   |   |   |   |   | $ | 950,518 |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST-BEARING LIABILITIES                                            |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings deposits                                                        |   | $                                    | 33,709    |   |   | $ | 32 |   |   |   | 0.38 | % |   | $ | 35,579 |   |   | $ | 33 |   |   |   | 0.37 | % |
| Interest bearing demand accounts                                        |   |                                 | 70,840    |   |   |   | 363 |   |   |   | 2.05 | % |   |   | 48,231 |   |   |   | 257 |   |   |   | 2.13 | % |
| Money market accounts                                                   |   |                                 | 136,404   |   |   |   | 727 |   |   |   | 2.13 | % |   |   | 144,239 |   |   |   | 1,200 |   |   |   | 3.33 | % |
| Time deposits                                                           |   |                                 | 350,610   |   |   |   | 3,435 |   |   |   | 3.92 | % |   |   | 332,595 |   |   |   | 4,062 |   |   |   | 4.89 | % |
| Federal Home Loan Bank advances                                         |   |                                 | 192,944   |   |   |   | 1,712 |   |   |   | 3.55 | % |   |   | 172,979 |   |   |   | 1,795 |   |   |   | 4.15 | % |
| Securities sold under agreements to repurchase                          |   |                                 | 92,800    |   |   |   | 983 |   |   |   | 4.24 | % |   |   | 81,362 |   |   |   | 862 |   |   |   | 4.24 | % |
| Total interest-bearing liabilities                                      |   |                                 | 877,307   |   |   |   | 7,252 |   |   |   | 3.31 | % |   |   | 814,985 |   |   |   | 8,209 |   |   |   | 4.02 | % |
| Non-interest bearing liabilities                                        |   |                                 | 48,090    |   |   |   |   |   |   |   |   |   |   |   | 45,200 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                       |   |                                 | 925,397   |   |   |   |   |   |   |   |   |   |   |   | 860,185 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                    |   |                                 | 82,549    |   |   |   |   |   |   |   |   |   |   |   | 90,333 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                              |   | $                                    | 1,007,946 |   |   |   |   |   |   |   |   |   |   | $ | 950,518 |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                     |   |                                 |      |   |   | $ | 5,574 |   |   |   |   |   |   |   |   |   |   | $ | 5,819 |   |   |   |   |   |
| Net interest spread                                                     |   |                                 |      |   |   |   |   |   |   |   | 2.10 | % |   |   |   |   |   |   |   |   |   |   | 2.25 | % |
| Net earning assets                                                      |   | $                                    | 71,507    |   |   |   |   |   |   |   |   |   |   | $ | 79,778 |   |   |   |   |   |   |   |   |   |
| Net interest margin(4)                                                  |   |                                 |      |   |   |   |   |   |   |   | 2.35 | % |   |   |   |   |   |   |   |   |   |   | 2.60 | % |
| Average interest-earning assets to average interest-bearing liabilities |   |                                 |      |   |   |   | 108.15 | % |   |   |   |   |   |   |   |   |   |   | 109.79 | % |   |   |   |   |

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|                                           |   | Increase/(Decrease)    |   |   | Total    |   |
|------------------------------------------------|--------|------------------------|--------|--------|----------|--------|
|                                           |   | Due to                 |   |   | Increase |   |
|                                           |   | Volume                 |   |   | Rate     |   |   | (Decrease) |   |
| INTEREST-EARNING ASSETS                        |   | (Dollars in Thousands) |   |
| Loans receivable                               |   | $                      | 632    |   |     | $      | (1,443 | ) |   | $ | (811 | ) |
| Securities                                     |   |                   | 192    |   |     |   | (167 | ) |   |   | 25 |   |
| Other interest-earning assets                  |   |                   | (6     | )      |     |   | (410 | ) |   |   | (416 | ) |
| Total interest-earning assets                  |   |                   | 818    |   |     |   | (2,020 | ) |   |   | (1,202 | ) |
|                                           |   |                   |   |   |     |   |   |   |   |   |   |   |
| INTEREST-BEARING LIABILITIES                   |   |                   |   |   |     |   |   |   |   |   |   |   |
| Savings deposits                               |   |                   | (1     | )      |     |   | - |   |   |   | (1 | ) |
| Interest bearing demand accounts               |   |                   | 116    |   |     |   | (10 | ) |   |   | 106 |   |
| Money market accounts                          |   |                   | (62    | )      |     |   | (411 | ) |   |   | (473 | ) |
| Time deposits                                  |   |                   | 211    |   |     |   | (838 | ) |   |   | (627 | ) |
| Federal Home Loan Bank advances                |   |                   | 194    |   |     |   | (277 | ) |   |   | (83 | ) |
| Securities sold under agreements to repurchase |   |                   | 121    |   |     |   | - |   |   |   | 121 |   |
| Total interest-bearing liabilities             |   |                   | 579    |   |     |   | (1,536 | ) |   |   | (957 | ) |
|                                           |   |                   |   |   |     |   |   |   |   |   |   |   |
| Net interest income                            |   | $                      | 239    |   |     | $      | (484 | ) |   | $ | (245 | ) |

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|                                                           |   |                   |   |   | Increase(decrease) |   |
|----------------------------------------------------------------|--------|------------------------|--------|--------|--------------------|--------|
|                                                           |   | 2009                   |   |   | 2008               |   |   | Dollars |   |   | Percentage |   |
|                                                           |   | (Dollars in Thousands) |   |
| Service charges and fees                                       |   | $                      | 992    |   |               | $      | 1,176 |   |   | $ | (184 | ) |   |   | -15.6 | % |
| Gain on sale of real estate mortgages  held for sale |   |                   | 185    |   |               |   | - |   |   |   | 185 |   |   |   | - |   |
| Loss on sale of foreclosed assets                              |   |                   | (705   | )      |               |   | (19 | ) |   |   | (686 | ) |   |   | 3610.5 | % |
| Gain (loss) on available for sale securities                   |   |                   | (78    | )      |               |   | 65 |   |   |   | (143 | ) |   |   | -220.0 | % |
| Gain on redemption of Visa class B common stock                |   |                   | -      |   |               |   | 79 |   |   |   | (79 | ) |   |   | -100.0 | % |
| Commission income                                              |   |                   | 65     |   |               |   | 82 |   |   |   | (17 | ) |   |   | -20.7 | % |
| Interchange fees                                               |   |                   | 215    |   |               |   | 220 |   |   |   | (5 | ) |   |   | -2.3 | % |
| Bank owned life insurance earnings                             |   |                   | 175    |   |               |   | 209 |   |   |   | (34 | ) |   |   | -16.3 | % |
| Other                                                          |   |                   | (14    | )      |               |   | 21 |   |   |   | (35 | ) |   |   | -166.7 | % |
|                                                           |   | $                      | 835    |   |               | $      | 1,833 |   |   | $ | (998 | ) |   |   | -54.4 | % |

|                               |   |                   |   |   | Increase(decrease) |   |
|------------------------------------|--------|------------------------|--------|--------|--------------------|--------|
|                               |   | 2009                   |   |   | 2008               |   |   | Dollars |   |   | Percentage |   |
|                               |   | (Dollars in Thousands) |   |   |               |   |
| Compensation and benefits          |   | $                      | 2,575  |   |               | $      | 3,280 |   |   | $ | (705 | ) |   |   | -21.5 | % |
| Occupancy and equipment            |   |                   | 621    |   |               |   | 642 |   |   |   | (21 | ) |   |   | -3.3 | % |
| Data processing                    |   |                   | 260    |   |               |   | 278 |   |   |   | (18 | ) |   |   | -6.5 | % |
| Advertising                        |   |                   | 95     |   |               |   | 154 |   |   |   | (59 | ) |   |   | -38.3 | % |
| Outside professional services      |   |                   | 425    |   |               |   | 551 |   |   |   | (126 | ) |   |   | -22.9 | % |
| Interchange charges                |   |                   | 70     |   |               |   | 80 |   |   |   | (10 | ) |   |   | -12.5 | % |
| Collection expense and repossessed |   |                   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
|  asset losses                 |   |                   | 204    |   |               |   | 142 |   |   |   | 62 |   |   |   | 43.7 | % |
| Telephone                          |   |                   | 141    |   |               |   | 162 |   |   |   | (21 | ) |   |   | -13.0 | % |
| Other                              |   |                   | 924    |   |               |   | 865 |   |   |   | 59 |   |   |   | 6.8 | % |
|                               |   | $                      | 5,315  |   |               | $      | 6,154 |   |   | $ | (839 | ) |   |   | -13.6 | % |

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ITEM 

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|                                                       |   | Economic Value of Equity and Duration of Assets and Liabilities at March 31, 2009 |       |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|------------|
|                                                       |   | Change in Interest Rate                                                           |       |
|                                                       |   | Decrease                                                                          |       |   | Decrease |   |   | Decrease |   |   | Increase |   |   | Increase |   |   | Increase |   |
|                                                       |   | 3%                                                                                |       |   | 2% |   |   | 1% |   |   | 1% |   |   | 2% |   |   | 3% |   |
|                                                       |   |                                                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Duration of assets(1)                                      |   |                                                                              | 1.88       |   |   |   | 2.21 |   |   |   | 2.44 |   |   |   | 2.93 |   |   |   | 2.99 |   |   |   | 3.14 |   |
| Duration of liabilities(1)                                 |   |                                                                              | 2.11       |   |   |   | 2.22 |   |   |   | 3.11 |   |   |   | 3.06 |   |   |   | 2.98 |   |   |   | 2.83 |   |
| Differential in duration                                   |   |                                                                              | -0.23      |   |   |   | 0.01 |   |   |   | -0.67 |   |   |   | -0.13 |   |   |   | 0.01 |   |   |   | 0.31 |   |
|                                                       |   |                                                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount of change in  Economic Value of Equity(2) |   | $                                                                                 | (6,861,506 | ) |   | $ | (180,467 | ) |   | $ | (6,696,658 | ) |   | $ | 1,298,103 |   |   | $ | (242,369 | ) |   | $ | (9,284,107 | ) |
| Percentage change in Economic Value of Equity(2)           |   |                                                                              | -7.20      | % |   |   | -0.19 | % |   |   | -7.03 | % |   |   | 1.36 | % |   |   | -0.25 | % |   |   | -9.74 | % |

ITEM 

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| Item 1. | Legal Proceedings |
|---------|-------------------|

| Item 1A. | Risk Factors |
|----------|--------------|

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
|---------|-------------------------------------------------------------|

| 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, 2009 through January 31, 2009   |   |                             | 4,600  |   |                         | $      | 4.11   |                                                                             |   |   | 4,600                                                                          |   |   |   | 175,134 |   |
|                                       |   |                             |   |   |                         |   |   |                                                                             |   |   |                                                                           |   |   |   |   |   |
| February 1, 2009 through February 28, 2009 |   |                             | 2,800  |   |                         |   | 3.52   |                                                                             |   |   | 2,800                                                                          |   |   |   | 172,334 |   |
|                                       |   |                             |   |   |                         |   |   |                                                                             |   |   |                                                                           |   |   |   |   |   |
| March 1, 2009 through March 31, 2009       |   |                             | -      |   |                         |   | -      |                                                                             |   |   | -                                                                              |   |   |   | 172,334 |   |
|                                       |   |                             |   |   |                         |   |   |                                                                             |   |   |                                                                           |   |   |   |   |   |
| Total                                      |   |                             | 7,400  |   |                         | $      | 3.89   |                                                                             |   |   | 7,400                                                                          |   |   |   | 172,334 |   |

| Item 3. | Defaults Upon Senior Securities |
|---------|---------------------------------|

| Item 4. | Submission of Matters to a Vote of Security Holders |
|---------|-----------------------------------------------------|

| Item 5. | Other Information |
|---------|-------------------|

| Item 6. | Exhibits |
|---------|----------|

|   | a. | Exhibits |
|--------|----|----------|

|   | 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 |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------|

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ATLANTIC 

|                          | ATLANTIC COAST FEDERAL CORPORATION               |
|-------------------------------|--------------------------------------------------|
|                          | (Registrant)                                     |
|                          |                                             |   |
|                          |                                             |   |
| Date:  May 14, 2009 | /s/   Robert J. Larison, Jr.      |   |
|                          | Robert J. Larison, Jr., President and Chief      |
|                          | Executive Officer                                |
|                          |                                             |   |
|                          |                                             |   |
| Date:  May 14, 2009 | /s/   Dawna R. Miller             |   |
|                          | Dawna R. Miller, Senior Vice–President and |
|                          | Chief Financial Officer                          |

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