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, 2006

                                       OR

              [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                        Commission File Number 000-51208

                         BROOKLYN FEDERAL BANCORP, INC.
             (Exact name of registrant as specified in its charter)

            FEDERAL                                            20-2659598
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)

81 Court Street
Brooklyn, New York                                                  11201
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code (718) 855-8500.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES |X| NO |_|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer or a  non-accelerated  filer (as defined in Rule 12b-2 of the
Exchange Act). Large Accelerated Filer |_| Accelerated Filer |_| Non-accelerated
Filer |X|

Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act). YES |_| NO |X|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.

          Class                                      Outstanding at May 12, 2006
Common Stock,  $.01 Par Value                                  13,225,000


<PAGE>


                         BROOKLYN FEDERAL BANCORP, INC.

                           FORM 10-Q QUARTERLY REPORT

                                TABLE OF CONTENTS


                                     PART I.

<TABLE>
<CAPTION>
                                                                                                        Page Number
<S>             <C>                                                                                              <C>
Item 1.         Financial Statements .........................................................................    1
Item 2.         Management's Discussion and Analysis of Financial Condition
                 and Results of Operations....................................................................    8
Item 3.         Quantitative and Qualitative Disclosures About Market Risk....................................   18
Item 4.         Controls and Procedures.......................................................................   19

                                    PART II.

Item 1.         Legal Proceedings.............................................................................   19
Item 1A.        Risk Factors..................................................................................   19
Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds...................................   19
Item 3.         Defaults Upon Senior Securities...............................................................   19
Item 4.         Submission of Matters to a Vote of Security Holders...........................................   20
Item 5.         Other Information.............................................................................   20
Item 6.         Exhibits......................................................................................   21

Signature Page     ...........................................................................................   22
</TABLE>


<PAGE>

                                     PART I

ITEM 1.  FINANCIAL STATEMENTS

                  BROOKLYN FEDERAL BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                      MARCH 31, 2006 AND SEPTEMBER 30, 2005
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                   ASSETS                                     MARCH 31,  SEPTEMBER 30,
                                                                                2006        2005
                                                                             ---------    ---------
                                                                            (UNAUDITED)
<S>                                                                          <C>          <C>
Cash and due from banks (including interest-earning balances of $7,834 and
  $5,531, respectively)                                                      $   9,773    $   8,384
Term deposits                                                                    4,075         --
Certificates of deposit                                                          8,162        9,268
Securities available-for-sale                                                    4,267        4,190
Securities held-to-maturity:
  Mortgage-backed securities (estimated fair value of $95,281 and $93,884,
     respectively)                                                              98,545       95,964

  Other (estimated fair value of $3,194 and $3,569, respectively)                3,217        3,610
Loans held-for-sale                                                             22,822        8,603
Loans                                                                          195,429      196,585
     Less: Allowance for loan losses                                             1,436        1,321
                                                                             ---------    ---------
             Net loans                                                         193,993      195,264
Federal Home Loan Bank ("FHLB") of New York stock, at cost                         904        1,002
Accrued interest receivable                                                      1,688        1,470
Premises and equipment, net                                                      1,363        1,542
Bank owned life insurance                                                        8,443        8,280
Prepaid expenses and other assets                                                3,123        3,281
                                                                             ---------    ---------
         Total assets                                                        $ 360,375    $ 340,858
                                                                             =========    =========

                    LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits:
      Demand accounts                                                        $ 124,756    $ 128,021
      Certificates of deposit                                                  144,203      123,613
                                                                             ---------    ---------
         Total deposits                                                        268,959      251,634
  Borrowings:
      Short-term FHLB of New York advances                                       3,136        2,250
      Long-term FHLB of New York advances                                        5,721        5,857
  Advance payments by borrowers for taxes and insurance                          2,097        2,118
  Accrued expenses and other liabilities                                         3,007        3,790
                                                                             ---------    ---------
         Total liabilities                                                     282,920      265,649
                                                                             ---------    ---------
Stockholders' equity:
     Preferred stock, $0.01 par value, 1,000,000 shares authorized;
          none issued                                                             --           --
      Common stock, $0.01 par value, 20,000,000 shares authorized;
           13,225,000 issued and outstanding                                       132          132
      Additional paid-in capital                                                37,783       37,773
      Retained earnings - substantially restricted                              42,542       40,388
      Unallocated common stock held by employee stock
           ownership plan ("ESOP")                                              (2,949)      (3,038)
      Accumulated other comprehensive loss:
           Net unrealized loss on securities, net of tax                           (53)         (46)
                                                                             ---------    ---------
              Total stockholders' equity                                        77,455       75,209
                                                                             ---------    ---------
         Total liabilities and stockholders' equity                          $ 360,375    $ 340,858
                                                                             =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       1
<PAGE>


                  BROOKLYN FEDERAL BANCORP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
                                                                          MARCH 31,                       MARCH 31,
                                                                -----------------------------   -----------------------------
                                                                     2006            2005            2006            2005
                                                                -------------   -------------   -------------   -------------
<S>                                                             <C>             <C>             <C>             <C>
Interest income:
   First mortgage and other loans                               $       4,048   $       2,838   $       7,751   $       5,768
   Mortgage-backed securities                                             936             936           1,772           1,844
   Other securities and interest-earning assets                           291             215             630             335
                                                                -------------   -------------   -------------   -------------
     Total interest income                                              5,275           3,989          10,153           7,947
                                                                -------------   -------------   -------------   -------------

Interest expense:
   Deposits                                                             1,622           1,090           3,070           2,113
   Borrowings                                                              87              71             172             136
                                                                -------------   -------------   -------------   -------------
     Total interest expense                                             1,709           1,161           3,242           2,249
                                                                -------------   -------------   -------------   -------------

Net interest income before provision for loan losses                    3,566           2,828           6,911           5,698
Provision for loan losses                                                 128              22             115              36
                                                                -------------   -------------   -------------   -------------
     Net interest income after provision for loan losses                3,438           2,806           6,796           5,662
                                                                -------------   -------------   -------------   -------------

Non-interest income:
   Banking fees and service charges                                       348             352             865             776
   Net gain on sale of loans held-for-sale                                 13              --              39               5
   Other                                                                  185             120             351             294
                                                                -------------   -------------   -------------   -------------
     Total non-interest income                                            546             472           1,255           1,075
                                                                -------------   -------------   -------------   -------------

Non-interest expense:
   Compensation and fringe benefits                                     1,529           1,224           3,039           2,552
   Occupancy and equipment                                                287             224             540             448
   Other                                                                  528             401           1,024             822
                                                                -------------   -------------   -------------   -------------
     Total non-interest expense                                         2,344           1,849           4,603           3,822
                                                                -------------   -------------   -------------   -------------

Income before provision for income taxes                                1,640           1,429           3,448           2,915
Provision for income taxes                                                615             559           1,294           1,097
                                                                -------------   -------------   -------------   -------------
     Net income                                                 $       1,025   $         870   $       2,154   $       1,818
                                                                =============   =============   =============   =============
     Earnings per share:
          Basic                                                         $0.08             N/A           $0.17             N/A
          Diluted                                                       $0.08             N/A           $0.17             N/A
     Average common shares outstanding:
          Basic                                                    12,927,482             N/A      12,925,320             N/A
          Diluted                                                  12,927,482             N/A      12,925,320             N/A
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

                  BROOKLYN FEDERAL BANCORP, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                    SIX MONTHS ENDED MARCH 31, 2006 AND 2005
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      RETAINED                     ACCUMULATED
                                                       ADDITIONAL     EARNINGS-     UNALLOCATED      OTHER
                                                         PAID-IN      SUBSTANTIAL   COMMON STOCK  COMPREHENSIVE
                                         COMMON STOCK    CAPITAL      RESTRICTED    HELD BY ESOP      LOSS          TOTAL
                                           --------      --------      --------      --------       --------       --------
<S>                                        <C>           <C>           <C>           <C>            <C>            <C>
BALANCE SEPTEMBER 30, 2004                 $   --        $   --        $ 36,608      $   --         $    (15)      $ 36,593

Comprehensive income:
    Net income                                 --            --           1,818          --             --            1,818
    Net unrealized loss on securities          --            --            --            --              (17)           (17)
                                                                                                                   --------
          Comprehensive income                                                                                        1,801
                                           --------      --------      --------      --------       --------       --------
BALANCE MARCH 31, 2005                     $   --        $   --        $ 38,426      $   --         $    (32)      $ 38,394
                                           ========      ========      ========      ========       ========       ========

BALANCE SEPTEMBER 30, 2005                 $    132      $ 37,773      $ 40,388      $ (3,038)      $    (46)      $ 75,209

Comprehensive income:
    Net income                                 --            --           2,154          --             --            2,154
    Net unrealized loss on securities          --            --            --            --               (7)            (7)
                                                                                                                   --------
          Comprehensive income                                                                                        2,147
                                                                                                                   --------
Allocation of ESOP stock                       --              10          --              89           --               99
                                           --------      --------      --------      --------       --------       --------
BALANCE MARCH 31, 2006                     $    132      $ 37,783      $ 42,542      $ (2,949)      $    (53)      $ 77,455
                                           ========      ========      ========      ========       ========       ========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>


                  BROOKLYN FEDERAL BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED MARCH 31, 2006 AND 2005
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                               FOR THE SIX MONTHS ENDED
                                                                                                       MARCH 31,
                                                                                                -----------------------
                                                                                                 2006           2005
                                                                                                --------       --------
<S>                                                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                                                 $  2,154       $  1,818
     Adjustments to reconcile net income to net cash provided by operating activities:
         ESOP expense                                                                                 99           --
         Depreciation and amortization                                                               189            146
         Provision for loan losses                                                                   115             36
         Income from bank-owned life insurance                                                      (148)           (63)
         Increase (decrease) in deferred loan fees, net                                               76            (48)
         Amortization of premiums, net of accretion of discounts                                      34            250
         Accretion of discount on certificates of deposit                                             (1)          --
         Originations of loans held-for-sale                                                     (25,256)          (394)
         Proceeds from sales of loans held-for-sale                                                5,380            399
         Principal repayments on loans held-for-sale                                                  10           --
         Net gain on sales of loans held-for-sale                                                    (39)            (5)
         Increase in accrued interest receivable                                                    (218)           (19)
         Deferred income tax benefit                                                                 (81)           (16)
         Decrease (increase) in prepaid expenses and other assets                                    244            (31)
         (Decrease) increase in accrued expenses and other liabilities                              (783)             9
                                                                                                --------       --------
              Net cash (used in) provided by operating activities                                (18,225)         2,082
                                                                                                --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Repayments in excess of loan originations (loan originations in excess of repayments)           870        (14,908)
     Proceeds from sale of loan participation interests                                            8,896          5,140
     Purchase of loans receivable                                                                 (3,000)        (1,725)
     Principal repayments on mortgage-backed securities held-to-maturity                          16,128         14,580
     Purchases of mortgage-backed securities held-to-maturity                                    (18,746)        (2,928)
     Maturities and principal pay downs of other securities held-to-maturity                         396            219
     Purchases of securities available-for-sale                                                      (89)           (67)
     Purchases of certificates of deposit                                                         (2,286)          --
     Maturities of certificates of deposit                                                         3,393            300
     Sales (purchase) of FHLB of New York stock                                                       98            (15)
     Purchases of bank-owned life insurance                                                          (15)          --
     Purchases of premises and equipment                                                             (10)           (89)
                                                                                                --------       --------
             Net cash provided by investing activities                                             5,635            507
                                                                                                --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Increase in deposits                                                                         17,325          5,453
     Proceeds from FHLB of New York advances                                                       2,000          3,957
     Payments of FHLB of New York advances                                                        (1,250)        (3,000)
     (Decrease) increase in advance payments by borrowers for taxes and insurance                    (21)            68
     Stock subscription proceeds                                                                    --           55,674
                                                                                                --------       --------
             Net cash provided by financing activities                                            18,054         62,152
                                                                                                --------       --------
             Net increase in cash and cash equivalents                                             5,464         64,741
Cash and cash equivalents at beginning of year                                                     8,384          7,904
                                                                                                --------       --------
Cash and cash equivalents at end of period                                                      $ 13,848       $ 72,645
                                                                                                ========       ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period
     for:
         Interest                                                                               $  3,205       $  2,260
         Taxes                                                                                     1,315            752
     Other:
         Mortgage loans held-to-maturity transferred to held-for-sale                              1,524           --
         Mortgage loans held-for-sale transferred to held-to-maturity                                658           --
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

                  BROOKLYN FEDERAL BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

         Brooklyn Federal Bancorp, Inc. (the "Company") was formed to serve as
the stock holding company for Brooklyn Federal Savings Bank (the "Bank") as part
of the Bank's reorganization into the mutual holding company structure. For a
further discussion of the Company's formation and operations, see the Company's
Registration Statement on Form S-1, as amended, declared effective by the
Securities and Exchange Commission (the "SEC") on February 11, 2005 (File Number
333-121580). The Company completed its initial public offering on April 5, 2005
(see Note 2). Based upon the foregoing, the Unaudited Interim Financial
Statements filed as part of this quarterly report are those of the Bank and its
subsidiaries through March 31, 2005 and for the Company, the Bank and its
subsidiaries (collectively, the "Company") thereafter. All significant
inter-company balances and transactions have been eliminated in consolidation.

         The unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with instructions for Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all adjustments
(all of which are normal and recurring in nature) considered necessary for a
fair presentation have been included. Operating results for the three month and
six month periods ended March 31, 2006 are not necessarily indicative of the
results that may be expected for the year ending September 30, 2006. The
Company's consolidated financial statements, as presented in the Company's Form
10-K for the year ended September 30, 2005, should be read in conjunction with
these statements.

NOTE 2 - COMPLETION OF PLAN OF CONVERSION AND REORGANIZATION

         On November 9, 2004, the Board of Directors adopted a plan of
reorganization pursuant to which the Bank would convert to a stock savings bank
under a two-tier mutual holding company structure. As part of this plan, the
Bank established a federally-chartered mutual holding company known as BFS
Bancorp, MHC. Upon consummation of the plan of reorganization, the Bank became a
federally-chartered stock savings bank, wholly-owned by the Company. BFS
Bancorp, MHC owns approximately 70% of the Company.

         Effective February 11, 2005, the Company received approval from both
the SEC and the Office of Thrift Supervision to proceed with its planned stock
offering equal to the pro forma market value of the Company and its
subsidiaries, after giving effect to the offering. The offering closed April 5,
2005 and the net proceeds from the offering were approximately $37.9 million
(gross proceeds of $39.7 million for the issuance of 3,967,500 shares, less
offering costs of approximately $1.8 million). The Company also issued 9,257,500
shares to BFS Bancorp, MHC, resulting in a total of 13,225,000 shares issued and
outstanding after completion of the reorganization. BFS Bancorp, MHC owns 70% of
the Company's outstanding shares. A

                                       5
<PAGE>

portion of the proceeds were used to fund the ESOP, which purchased 317,400
shares of the Company's common stock at a cost of $3.2 million on April 5, 2005.

NOTE 3 - USE OF ESTIMATES

         The preparation of consolidated financial statements, in conformity
with accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements, and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from current estimates. Estimates associated with the
allowance for loan losses and the fair values of securities are particularly
susceptible to material change in the near term.

NOTE 4 - IMPACT OF CERTAIN ACCOUNTING PRONOUNCEMENTS

         In December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"),
which requires entities to measure the cost of employee services received in
exchange for any award of equity instruments based on the grant-date fair value
of the award (with limited exceptions). The cost is recognized as an expense
over the period during which the employee is required to provide service in
exchange for the award, which is usually the vesting period. The scope of SFAS
No. 123R includes the recognition and retention plan and the stock option plan
the Company expects to adopt. As a public company, the Company will be required
to adopt SFAS No. 123R in its first reporting period beginning after June 15,
2005 (i.e., the quarter beginning October 1, 2005). For shares awarded under the
recognition and retention plan, the Company will generally recognize the
grant-date fair value of the shares as compensation expense on a straight-line
basis over the applicable vesting period. For options granted under the stock
option plan, the Company will generally recognize the grant-date fair value of
the options as compensation expense on a straight-line basis over the applicable
vesting period. This accounting treatment differs significantly from the
previous accounting for fixed stock options under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," which generally
required expense recognition only when the exercise price of the option was less
than the market price of the underlying stock on the grant date. As required by
SFAS No. 123R, the Company will estimate the fair value of its stock options on
each grant date, using an appropriate valuation approach such as the
Black-Scholes option pricing model. SFAS No. 123R did not change existing
accounting principles applicable to employee stock ownership plans.

         FASB Staff Position No. FAS 115-1 and FAS 124-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments" (the
"FSP"), was issued in November 2005 and addresses the determination of when an
investment is considered impaired; whether the impairment is other than
temporary; and how to measure an impairment loss. The FSP also addresses
accounting considerations subsequent to the recognition of an
other-than-temporary impairment on a debt security, and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. The FSP replaces the impairment guidance in
EITF Issue No. 03-1 with references to existing authoritative literature
concerning other-than-temporary determinations (principally

                                       6
<PAGE>

SFAS No. 115 and SEC Staff Accounting Bulletin 59). Under the FSP, impairment
losses must be recognized in earnings equal to the entire difference between the
security's cost and its fair value at the financial statement date, without
considering partial recoveries subsequent to that date. The FSP also requires
that an investor recognize an other-than-temporary impairment loss when a
decision to sell a security has been made and the investor does not expect the
fair value of the security to fully recover prior to the expected time of sale.
The FSP is effective for reporting periods beginning after December 15, 2005.
The Company does not expect that the application of the FSP will have a material
impact on its financial condition, results of operations or financial statement
disclosures.

         In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections," or SFAS No. 154, which replaces APB Opinion No. 20,
"Accounting Changes," or APB No. 20, and SFAS No. 3, "Reporting Account Changes
in Interim Financial Statements," and changes the requirements for the
accounting for and reporting of a change in accounting principle. SFAS No. 154
applies to all voluntary changes in accounting principle and to changes required
by an accounting pronouncement when the pronouncement does not include specific
transition provisions. SFAS No. 154 requires retrospective application of
changes in accounting principle to prior periods' financial statements unless it
is impracticable to determine either the period-specific effects or the
cumulative effect of the change. APB No. 20 previously required that most
voluntary changes in accounting principles be recognized by including the
cumulative effect of the change in net income for the period of the change in
accounting principle. SFAS No. 154 carries forward without change the guidance
contained in APB No. 20 for reporting the correction of an error in previously
issued financial statements and a change in accounting estimate. SFAS No. 154
also carries forward the guidance in APB No. 20 requiring justification of a
change in accounting principle on the basis of preferability. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005, with early adoption permitted. The adoption
of this statement is not expected to have an impact on the Company's financial
conditions or results of operations.

         In December 2003, the Accounting Standards Executive Committee
("AcSEC") issued Statement of Position ("SOP") 03-3, "ACCOUNTING FOR CERTAIN
LOANS OR DEBT SECURITIES ACQUIRED IN A TRANSFER." The SOP is effective for loans
acquired in fiscal years beginning after December 15, 2004. The SOP addresses
accounting for differences between contractual cash flows and cash flows
expected to be collected from an investor's initial investment in loans or debt
securities (loans) acquired in a transfer if those differences are attributable,
at least in part, to credit quality. The SOP applies to loans acquired in
business combinations but does not apply to loans originated by the Company.
Management does not believe the provisions of this standard will have a material
impact on the Company's results of operations or financial condition.

         On March 9, 2004, the SEC issued Staff Accounting Bulletin ("SAB") No.
105, APPLICATION OF ACCOUNTING PRINCIPLES TO LOAN COMMITMENTS. SAB No. 105
requires that when a company is recognizing and valuing a loan commitment at
fair value, only differences between the guaranteed interest rate in the loan
commitment and a market interest rate should be included. Any expected future
cash flows related to the customer relationships or loan servicing should be
excluded from the fair value measurement. The expected future cash flows that
are excluded from the fair-value determination include anticipated fees for
servicing the funded

                                       7
<PAGE>

loan, late-payment charges, other ancillary fees, or other cash flows from
servicing rights. The guidance in SAB No. 105 is effective for mortgage-loan
commitments that are accounted for as derivatives and are entered into after
March 31, 2004. The adoption of the provisions of this standard did not have any
impact on the results of operations.

         On September 30, 2004, the FASB issued Staff Position No. EITF Issue
03-1-1, "Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1, The Meaning
of Other-Than-Temporary Impairment and its Application to Certain Investments,"
which delayed the effective date of the measurement and recognition guidance
contained in Emerging Issues Task Force ("EITF") Issue No. 03-1. As originally
issued, EITF Issue No. 03-1 provided guidance for evaluating whether an
investment is other-than-temporarily impaired and was to be effective for
other-than-temporary impairment evaluations made in reporting periods beginning
after June 15, 2004 (July 1, 2004 for the Company). On June 29, 2005, the FASB
directed its staff to issue Staff Position No. FAS 115-1, "The Meaning of
Other-Than-Temporary-Impairment and Its Application to Certain Investments,"
which will supersede EITF Issue No. 03-1 and be effective for impairment
analyses conducted in periods beginning after September 15, 2005. Staff Position
No. FAS 115-1 will replace the guidance in EITF Issue No. 03-1 with references
to existing authoritative literature concerning other-than-temporary impairments
and clarify that an investor should recognize an impairment loss no later than
when the impairment is deemed other-than-temporary, even if a decision to sell
the investment has not been made. The Company does not expect that the issuance
of Staff Position No. FAS 115-1 will have a material effect on its financial
condition or results of operations.

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

FORWARD-LOOKING STATEMENTS

         When used in this quarterly report and in future filings by the Company
with the Securities and Exchange Commission, in the Company'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 the Company's market area, changes in policies
by regulatory agencies, fluctuations in interest rates, demand for loans in the
Company's market area, changes in the position of banking regulators on the
adequacy of the Company's 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.

         The Company 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 the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from those
anticipated or projected.


                                       8
<PAGE>

         The Company 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.

         The Company completed its stock offering on April 5, 2005, raising
$39.7 million in gross proceeds and approximately $37.9 million in net proceeds.
The Company issued a total of 3,967,500 shares of its common stock to public
stockholders and 9,257,500 shares of its common stock to its parent, BFS
Bancorp, MHC. The offering proceeds were invested on a short-term basis in
liquid investments, namely, certificates of deposits, FHLB of New York term
deposits and FHLB of New York overnight investments. A portion of the proceeds
were used to fund the employee stock ownership plan, which purchased 317,400
shares of the Company's common stock at a cost of $3.2 million during the
quarter ended June 30, 2005. The Company continues to redeploy a portion of the
offering proceeds in longer-term securities and funding new loans.

GENERAL

         The Company's results of operations depend mainly on its net interest
income, which is the difference between the interest income earned on its loan
and investment portfolios and interest expense paid on its deposits and borrowed
funds. Results of operations are also affected by fee income from banking
operations, provisions for loan losses, gains (losses) on sales of loans and
securities available-for-sale and other miscellaneous income. The Company's
non-interest expenses consist primarily of compensation and employee benefits,
office occupancy, technology, marketing, general administrative expenses and
income tax expense.

         The Company's results of operations are also significantly affected by
general economic and competitive conditions, particularly with respect to
changes in interest rates, government policies and actions of regulatory
authorities. Future changes in applicable laws, regulations or government
policies may materially affect the Company's financial condition and results of
operations.

CRITICAL ACCOUNTING POLICIES

         The Company considers accounting policies that require management to
exercise significant judgment or discretion or make significant assumptions that
have, or could have, a material impact on the carrying value of certain assets
or on income, to be critical accounting policies. The Company considers the
following to be its critical accounting policies:

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is the
estimated amount considered necessary to cover credit losses inherent in the
loan portfolio at the balance sheet date. The allowance is established through
the provision for loan losses which is charged against income. In determining
the allowance for loan losses, management makes significant estimates and has
identified this policy as one of the most critical for the Company. The
methodology for determining the allowance for loan losses is considered a
critical accounting policy by management due to the high degree of judgment
involved, the subjectivity of the assumptions utilized and the potential for
changes in the economic environment that could result in changes to the amount
of the recorded allowance for loan losses.

                                       9
<PAGE>

         As a substantial amount of the Company's loan portfolio is
collateralized by real estate, appraisals of the underlying value of property
securing loans and discounted cash flow valuations of properties are critical in
determining the amount of the allowance required for specific loans. Assumptions
for appraisals and discounted cash flow valuations are instrumental in
determining the value of properties. Overly optimistic assumptions or negative
changes to assumptions could significantly impact the valuation of a property
securing a loan and the related allowance determined. The assumptions supporting
such appraisals and discounted cash flow valuations are carefully reviewed by
management to determine that the resulting values reasonably reflect amounts
realizable on the related loans.

         Management performs a quarterly evaluation of the adequacy of the
allowance for loan losses. Consideration is given to a variety of factors in
establishing this estimate including, but not limited to, current economic
conditions, delinquency statistics, geographic and industry concentrations, the
adequacy of the underlying collateral, the financial strength of the borrower,
results of internal and external loan reviews and other relevant factors. This
evaluation is inherently subjective as it requires material estimates that may
be susceptible to significant revision based on changes in economic and real
estate market conditions.

         The analysis of the allowance for loan losses has two components:
specific and general allocations. Specific allocations are made for loans that
are determined to be impaired. Impairment is measured by determining the present
value of expected future cash flows or, for collateral-dependent loans, the fair
value of the collateral adjusted for market conditions and selling expenses. The
general allocation is determined by segregating the remaining loans by type of
loan, risk rating (if applicable) and payment history. The Company also analyzes
historical loss experience, delinquency trends, general economic conditions and
geographic and industry concentrations. This analysis establishes factors that
are applied to the loan groups to determine the amount of the general
allocations. Actual loan losses may be significantly more than the allowance for
loan losses the Company has established which could have a material negative
effect on its financial results.

         DEFERRED INCOME TAXES. The Company uses the asset and liability method
of accounting for income taxes. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. If current available information raises doubt as to the
realization of the deferred tax assets, a valuation allowance is established.
The Company considers the determination of this valuation allowance to be a
critical accounting policy because of the need to exercise significant judgment
in evaluating the amount and timing of recognition of deferred tax liabilities
and assets, including projections of future taxable income. These judgments and
estimates are reviewed on a continual basis as regulatory and business factors
change. A valuation allowance for deferredtax assets may be required if the
amount of taxes recoverable through loss carry-back declines, or if the Company
projects lower levels of future taxable income. Such a valuation allowance would
be established through a charge to income tax expense, which would adversely
affect the Company's operating results.


                                       10
<PAGE>

BUSINESS STRATEGY

         Our business strategy is to operate as a well-capitalized and
profitable community bank dedicated to providing quality customer service. Our
business strategy historically has been to emphasize one- to four-family
residential mortgage lending. While we will continue to engage in this type of
lending, management has determined to broaden the range of our products and
services to enhance profitability, consistent with safety and soundness. In
recent years, we have significantly expanded our multi-family, commercial real
estate and construction lending. We have also introduced additional products and
services, such as debit cards and internet banking. We cannot assure you that we
will successfully implement our business strategy.

         Highlights of our business strategy are as follows:

         o        REMAINING A COMMUNITY ORIENTED INSTITUTION. We were
                  established in Brooklyn, New York in 1887, and we have been
                  operating continuously since that time. We have been, and
                  continue to be, committed to meeting the financial needs of
                  the communities in which we operate, and we are dedicated to
                  providing quality personal service to our customers. Although
                  historically our principal business activity has been
                  accepting deposits from the public and using those funds to
                  originate one- to four-family mortgage loans, in recent years
                  we have been originating a wider variety of residential and
                  commercial real estate loan products to meet the needs of our
                  customers. If such loans do not satisfy our criteria for
                  retention in our loan portfolio, they generally can be sold in
                  the secondary market.

         o        CONTINUING TO INCREASE OUR MULTI-FAMILY, COMMERCIAL REAL
                  ESTATE AND CONSTRUCTION LENDING. Historically, we have
                  emphasized one- to four-family residential lending within our
                  market area. While one- to four-family loan originations
                  remain an important form of loans because of our expertise
                  with this type of lending, in the past five years we have
                  emphasized the origination of loans secured by multi-family
                  properties and commercial real estate and construction loans
                  as a means of increasing our interest and fee income.
                  Multi-family, commercial real estate and construction lending
                  generally expose a lender to greater credit risk than loans
                  secured by one- to four-family real estate. The repayment of
                  multi-family, commercial real estate and construction loans
                  depends upon the business and financial condition of the
                  borrower and, in the case of construction loans, on the
                  economic viability of projects financed. Consequently, we,
                  like other financial institutions, generally charge higher
                  rates of interest for these types of loans compared to one- to
                  four-family residential loans. We have invested in a new loan
                  servicing system and additional personnel to allow us to
                  service these types of loans more efficiently.

         o        INCREASING OUR REAL ESTATE LENDING CAPACITY. The additional
                  capital raised in the stock offering increased our lending
                  capacity by enabling us to originate more loans and loans with
                  larger balances. This permits us to serve borrowers with
                  larger lending needs and to originate larger loans than we
                  have originated in the past.

                                       11
<PAGE>

         o        UTILIZING THE NET PROCEEDS WE RECEIVED IN THE OFFERING TO
                  BETTER MANAGE OUR INTEREST RATE RISK AND GROW OUR ASSETS. With
                  long-term interest rates at low levels, we have managed our
                  interest rate risk by maintaining a significant percentage of
                  our assets in short-term liquid assets, such as cash and cash
                  equivalents, short-term investment securities and
                  mortgage-related securities that provide significant cash
                  flows. This strategy positioned us to reinvest our short-term
                  liquid assets in higher yielding loans and investments once
                  interest rates began to rise. During the recent period of
                  rising short-term interest rates, we have been able to
                  increase interest income on our short-term liquid assets,
                  while still reducing security investments and redeploying
                  those funds to loan originations. Continuing to maintain a
                  high level of short-term liquid assets, however, generates
                  less interest income than would have been generated if we had
                  invested in longer-term loans and investments. At March 31,
                  2006, $13.8 million, or 3.8% of our assets, was invested in
                  cash and cash equivalents, and $11.4 million, or 3.2% of our
                  assets, was invested in certificates of deposit and securities
                  that mature within three years.

                  The net proceeds from the stock offering increased our capital
                  and provided management with greater flexibility to manage
                  interest rate risk and increase our interest-earning assets,
                  including our investment in longer-term, higher yielding loans
                  and securities.

         o        FACILITATE GROWTH THROUGH DE NOVO BRANCHING. We have
                  established financial, geographic and other criteria to
                  evaluate potential new branch offices in our market area. We
                  anticipate being able to use part of the net proceeds of the
                  stock offering to finance the expansion of our branch network.
                  While we continue to review potential branch sites, there can
                  be no assurance as to whether or when we will open such
                  offices.

         o        MAINTAINING HIGH ASSET QUALITY. We have focused on improving
                  and maintaining strong asset quality by following conservative
                  underwriting criteria, and primarily originating loans secured
                  by real estate.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2006 AND SEPTEMBER 30, 2005

         TOTAL ASSETS. Total assets increased by $19.5 million, or 5.7%, to
$360.4 million at March 31, 2006, from $340.9 million at September 30, 2005.
This increase was primarily the result of the funds received from depositors
which were redeployed into loan originations, purchases of mortgage-backed
securities and purchases of term deposits, offset in part by decreases in
investments of certificates of deposit and repayments on the loan portfolio.

         CASH AND CASH EQUIVALENTS. Cash and cash equivalents, which is
comprised of cash, due from banks and term deposits, increased $5.4 million to
$13.8 million, or 65.2% at March 31, 2006, from $8.4 million at September 30,
2005. This increase in short-term liquidity was primarily due to the purchases
of term deposits from the FHLB of New York. The Company did not have any
investments in term deposits at September 30, 2005.


                                       12
<PAGE>

         INVESTMENT IN CERTIFICATES OF DEPOSIT. Certificates of deposit
decreased $1.1 million, or 11.9%, to $8.2 million at March 31, 2006, from $9.3
million at September 30, 2005. The decrease in these short-term investments was
primarily due to maturities of $3.4 million, offset in part by new investment
purchases of $2.3 million.

         SECURITIES. Securities investments, which represents securities
available-for-sale and securities held-to-maturity, increased $2.2 million, or
2.2%, to $106.0 million at March 31, 2006, from $103.8 million at September 30,
2005. This increase was due to purchases of $18.7 million in mortgage-backed
securities, offset in part by repayments of $16.5 million in mortgage-backed and
other securities.

         NET LOANS. Net loans before allowance for loan losses and including
loans held-for-sale, increased $13.1 million, or 6.4%, to $218.3 million at
March 31, 2006, from $205.2 million at September 30, 2005, primarily due to
increases of $7.6 million in multi-family loans, $4.9 million in construction
loans, $3.5 million in land loans and $1.1 million in one-to-four family
mortgage loans, offset in part by reductions of $4.0 million in commercial
mortgages and other loans.

         The Company had one non-accrual loan with an outstanding balance of
approximately $190,000 at March 31, 2006 and September 30, 2005. This
non-accrual loan is on a multi-family apartment building for which the Bank
established a specific loss allowance and classified this loan as doubtful.

         A multi-family loan, located in Brooklyn, New York, with an outstanding
principal of $746,000, was classified as substandard during the quarter ended
June 30, 2005 and remained classified as substandard at March 31, 2006. The
principal outstanding balance on this loan was $697,000 at March 31, 2006. The
property suffered structural damage due to construction at an adjoining lot,
although loan payments have remained current, management has placed the loan on
substandard status due to concerns about the property damage and the borrower's
ability to make future contractual payments.

         PREPAID EXPENSES AND OTHER ASSETS. Prepaid expenses and other assets
including bank-owned life insurance increased $5,000, to $11.6 million at March
31, 2006, from $11.6 million at September 30, 2005. This increase was mainly due
to increases in bank-owned life insurance of $163,000 and an increase in
deferred tax assets of $81,000, offset in part by reductions in miscellaneous
other assets of $239,000.

         DEPOSITS. Deposits increased by $17.3 million, or 6.9%, to $269.0
million at March 31, 2006, from $251.6 million at September 30, 2005. The
increase was primarily due to the Bank's introduction of new certificate of
deposit products and an increase in retail jumbo certificates of deposit.

         BORROWED FUNDS. Total funds borrowed, from the FHLB of New York,
increased $750,000, or 9.3%, to $8.9 million at March 31, 2006, from $8.1
million at September 30, 2005. The additional borrowings were used to fund
investment securities purchases.

         ACCRUED EXPENSES AND OTHER LIABILITIES. Accrued expenses and other
liabilities decreased $783,000, or 20.7%, to $3.0 million at March 31, 2006,
from $3.8 million at September 30, 2005. This decrease was primarily due to the
payment of mortgage payables approximating

                                       13
<PAGE>

$775,000 and other accrued expenses of approximately $259,000, offset in part by
additional accruals for the Supplemental Executive Retirement Plan (the "SERP")
of $249,000.

         STOCKHOLDERS' EQUITY. Stockholders' equity increased by $2.3 million,
or 3.0%, to $77.5 million at March 31, 2006, from $75.2 million at September 30,
2005. The primary reason for the increase is the result of increased net income
for the period.

         LIQUIDITY AND CAPITAL RESOURCES. The Company maintains liquid assets at
levels it considers adequate to meet its liquidity needs. The Company adjusts
its liquidity levels to fund deposit outflows, pay real estate taxes on mortgage
loans, repay its borrowings and to fund loan commitments. The Company also
adjusts liquidity as appropriate to meet asset and liability management
objectives.

         The Company's primary sources of liquidity are deposits, amortization
and prepayment of loans and mortgage-backed securities, maturities of investment
securities and other short-term investments, and earnings and funds provided
from operations, as well as access to FHLB of New York advances. While scheduled
principal repayments on loans and mortgage-backed securities are a relatively
predictable source of funds, deposit flows and loan prepayments are greatly
influenced by market interest rates, economic conditions, and rates offered by
the Company's competition. The Company sets the interest rates on its deposits
to maintain a desired level of total deposits. In addition, the Company invests
excess funds in short-term interest-earning assets, which provide liquidity to
meet lending requirements.

         A significant portion of the Company's liquidity consists of cash and
cash equivalents, which are a product of its operating, investing and financing
activities. At March 31, 2006, $13.8 million or 3.8% of the Company's assets
were invested in cash and cash equivalents. The Company's primary recurring
sources of cash are principal repayments on loans, proceeds from the calls and
maturities of investment securities, principal repayments of mortgage-backed
securities and increases in deposit accounts. Currently, the Company sells
longer-term mortgage loans, and the Company syndicates and sells participation
interests in portions of its multi-family, commercial real estate and
construction loans. Such activity is expected to continue so long as it meets
the Company's operational and financial needs. In addition, the Company invests
excess funds in short-term interest-earning assets and other assets, which
provide liquidity to meet the Company's lending requirements. Investments in
certificates of deposit and short-term investment securities (maturing in less
than three years) totaled $11.4 million at March 31, 2006. As of March 31, 2006,
the Company had $8.9 million in borrowings outstanding from the FHLB of New York
and access to additional FHLB of New York advances.

         At March 31, 2006, the Company had approximately $119.1 million in loan
commitments outstanding, which included $31.7 million in undisbursed
construction loans, $925,000 in one- to four- family loans, $1.3 million in
unused home equity lines of credit, $7.2 million in commercial real estate lines
of credit and $78.0 million to originate multi-family and nonresidential
mortgage loans. The Company also had commitments to sell one- to four-family
mortgage loans of $670,000. Certificates of deposit due within one year of March
31, 2006 totaled $98.3 million, or 65.0% of certificates of deposit. If these
maturing deposits do not remain with the Company, the Company will be required
to seek other sources of funds, including other certificates of deposit and
borrowings. Depending on market conditions, the

                                       14
<PAGE>

Company may be required to pay higher rates on such deposits or other borrowings
than the Company currently pays on the certificates of deposit due on or before
March 31, 2007. Management believes, however, based on past experience, that a
significant portion of its certificates of deposit will remain with the Company.
The Company has the ability to attract and retain deposits by adjusting the
interest rates offered.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND
2005

         NET INCOME. Net income increased $155,000, or 17.8%, to $1.0 million
for the three months ended March 31, 2006, from $870,000 for the three months
ended March 31, 2005. The primary reasons for the increase were a $1.3 million
increase in interest income and a $74,000 increase in non-interest income,
offset in part by a $548,000 increase in interest expense, a $495,000 increase
in non-interest expense, a $106,000 increase in the provision for loan losses
and an increase of $56,000 in the provision for income taxes.

         NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before provision for loan losses increased by $738,000, or 26.1% to $3.6
million for the three months ended March 31, 2006, from $2.8 million for the
three months ended March 31, 2005. The increase in net interest income resulted
primarily from an increase in the average balance of interest-earning assets of
$35.6 million and a 19 basis points increase in the Bank's net interest rate
spread to 3.52% for the three months ended March 31, 2006, from 3.33% for the
three months ended March 31, 2005. The Bank's net interest margin increased 48
basis points to 4.17% in the current quarter from 3.69% a year earlier.

         INTEREST INCOME. Interest income increased $1.3 million, or 32.2%, to
$5.3 million for the three months ended March 31, 2006, from $4.0 million for
the three months ended March 31, 2005. Interest income on loans increased by
$1.2 million, or 42.6%, to $4.0 million for the three months ended March 31,
2006, from $2.8 million for the three months ended March 31, 2005. The primary
reasons for the increase in interest income on loans were a $1.2 million
increase in commercial real estate loan income, construction loan and other loan
income. The average balance of the loan portfolio increased by $46.3 million to
$214.9 million for the three months ended March 31, 2006, from $168.6 million
for the three months ended March 31, 2005. The average yield on loans increased
81 basis points to 7.54% for the three months ended March 31, 2006, from 6.73%
for the three months ended March 31, 2005. Interest income on investment
securities and other interest-earning assets increased by $76,000, or 6.6%, to
$1.2 million for the three months ended March 31, 2006, from $1.1 million for
the three months ended March 31, 2005. The increase in interest income on
investment securities and other interest-earning assets was primarily due to an
increase of 52 basis points in the average yield to 3.86% for the quarter ended
March 31, 2006, compared to the average yield of 3.34% for the quarter ended
March 31, 2005, offset in part by a decrease in the average balance of $10.7
million, or 7.8%, to $127.3 million for the quarter ended March 31, 2006, from
$138.0 million for the quarter ended March 31, 2005.

         INTEREST EXPENSE. Interest expense increased $548,000 to $1.7 million,
or 47.2% for the three months ended March 31, 2006, from $1.2 million for the
three months ended March 31, 2005. The increase was primarily the result of a
$532,000 increase in interest expense on deposits and a $16,000 increase in
interest expense on borrowed funds, reflecting an increase in

                                       15
<PAGE>

the average cost of 78 basis points to 2.65% for the three months ended March
31, 2006, from 1.87% for the three months ended March 31, 2005.

         PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses was
$128,000 for the three months ended March 31, 2006 and $22,000 for the three
months ended March 31, 2005. The primary reason for this increase was due to the
growth in the loan portfolio. The allowance for loan losses as of March 31, 2006
represented 0.66% of total loans, compared to 0.54% of total loans as of March
31, 2005.

         NON-INTEREST INCOME. Non-interest income increased by $74,000, or
15.7%, to $546,000 for the three months ended March 31, 2006, from $472,000 for
the three months ended March 31, 2005. The increase was primarily due to
increases in bank owned life insurance of $51,000, miscellaneous fees and income
of $13,000, loan fees and service charges of $7,000 and net gain on sale of
loans held for sale of $13,000, offset in part by a decrease of approximately
$10,000 in miscellaneous income and fees for other banking products.

         NON-INTEREST EXPENSE. Non-interest expense increased by $495,000, or
26.8%, to $2.3 million for the three months ended March 31, 2006, from $1.8
million for the three months ended March 31, 2005. The increase resulted
primarily from a $305,000 increase in compensation and fringe benefits, which
included increases of $127,000 in salary costs, $69,000 for the Supplemental
Executive Retirement Plan, $60,000 for the employee pension and ESOP plans and
$49,000 in other officer and employee expenses. The increase in non-interest
expense also includes increases in professional fees of $69,000, $63,000 for
occupancy and equipment, $15,000 in data processing service bureau expense and
other expenses of $43,000 including advertising, office supplies and printing,
insurance and other operating expenses.

         INCOME TAXES. Income tax expense increased $56,000, or 10.0%, to
$615,000 for the three months ended March 31, 2006, from $559,000 for the three
months ended March 31, 2005. The primary reason for the increase in 2006 was an
increase in net income before taxes. The effective tax rate for the three months
ending March 31, 2006 was 37.5% compared to a 39.1% rate for the same period in
2005.

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 2006 AND 2005

         NET INCOME. Net income increased $336,000, or 18.5%, to $2.2 million
for the six months ended March 31, 2006, from $1.8 million for the same period
in 2005. The increase was primarily the result of a $1.2 million increase in the
Bank's net interest income and a $180,000 increase in non-interest income,
offset in part by increases of $79,000 in provision for loan losses, $781,000 in
non-interest expense and $197,000 in provision for income taxes.

         NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before provision for loan losses increased by $1.2 million, or 21.3%, to
$6.9 million for the six months ended March 31, 2006, from $5.7 million for the
six months ended March 31, 2005. The increase in net interest income resulted
primarily from an increase in the average balance of interest-earning assets of
$37.7 million, or 12.5% to $339.2 million for the six months ended March 31,
2006, from $301.5 million in 2005, offset in part by a 2 basis point decrease in
the net interest rate spread to 3.45% for the six months ended March 31, 2006,
from 3.47% for the six months

                                       16
<PAGE>

ended March 31, 2005. The Bank's net interest margin increased 29 basis points
to 4.07% in the six months ended March 31, 2006, from 3.78% for the same period
in 2005.

         INTEREST INCOME. Interest income increased $2.2 million, or 27.8%, to
$10.1 million for the six months ended March 31, 2006, from $7.9 million for the
six months ended March 31, 2005. Interest income on mortgage and other loans
increased $2.0 million, or 34.4%, to $7.8 million for the six months ended March
31, 2006, from $5.8 million for the six months ended March 31, 2005. The primary
reasons for the increase in interest income on loans were a $1.9 million
increase in commercial real estate and multi-family loan income and a $139,000
increase in construction loan income, offset in part by a decrease in the Bank's
one- to four-family mortgage loan and other loan income of $22,000. The average
balance of the loan portfolio increased $44.0 million, or 26.4%, to $210.3
million for the six months ended March 31, 2006, from $166.3 million for the
same period in 2005. The average yield of loans increased 44 basis points to
7.37% for the six month period ended March 31, 2006, from 6.93% for the same
period in 2005. Interest income on investment securities and other
interest-earning assets increased by $223,000, or 10.2%, to $2.4 million for the
six months ended March 31, 2006, from $2.2 million for the six months ended
March 31, 2005. The increase in interest income on investment securities and
other interest-earning assets was primarily due to a 50 basis point increase in
yield to 3.73% for the period ending March 31, 2006 compared to a 3.23% yield
for the same period in 2005, offset in part by a decrease in average balance of
$6.2 million, or 4.6%, to $128.9 million for the six months ended March 31,
2006, from $135.1 million for the six months ended March 31, 2005.

         INTEREST EXPENSE. Interest expense increased $993,000, or 44.2%, to
$3.2 million for the six months ended March 31, 2006, from $2.2 million for the
six months ended March 31, 2005. The increase was primarily the result of a
$957,000 increase in interest expense on deposits and a $36,000 increase in
interest expense on borrowed funds, reflecting a 74 basis point increase in the
average cost to 2.54% for the six months ended March 31, 2006, from 1.80% for
the same period in 2005.

         PROVISION FOR LOAN LOSSES. The provision for loan losses was $115,000
for the six months ended March 31, 2006 and $36,000 for the six months ended
March 31, 2005. The allowance for loan losses as of March 31, 2006 represented
0.66% of total loans, compared to 0.54% of total loans as of March 31, 2005.

         NON-INTEREST INCOME. Non-interest income increased by $180,000, or
16.7%, to $1.3 million for the six months ended March 31, 2006, from $1.1
million for the six months ended March 31, 2005. The reasons for the increase
are increases in mortgage and other loan fees of $108,000, bank owned life
insurance income of $85,000 and net gains on sale of mortgage loans of $34,000,
partially offset by decreases in deposit related fees of $18,000 and other
miscellaneous income of $29,000.

         NON-INTEREST EXPENSE. Non-interest expense increased by $781,000, or
20.4%, to $4.6 million for the six months ended March 31, 2006, from $3.8
million for the six months ended March 31, 2005. The increase resulted primarily
from a $487,000 increase in compensation and fringe benefits, which included
increases of $186,000 for the Supplemental Executive Retirement Plan, $124,000
for the employee pension and ESOP plans, $98,000 in salary costs for new
employees and increases in base salaries for certain officers and employees

                                       17
<PAGE>

and $79,000 in other officer and employee expenses which include health
insurance and other miscellaneous employee expenses. The increase in
non-interest expenses also reflects increases in occupancy and equipment
expenses of $92,000, data processing service bureau expense of $22,000,
professional fees of $108,000 and other operating expenses of $72,000.

         INCOME TAXES. Income tax expense increased $197,000, or 18.0%, to $1.3
million for the six months ended March 31, 2006, from $1.1 million for the six
months ended March 31, 2005. The increase resulted primarily from increased net
income before taxes. The effective tax rate for the six months ended March 31,
2006 and 2005 was 37.5% and 37.6%, respectively.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The majority of the Company's assets and liabilities are monetary in
nature. Consequently, the Company's most significant form of market risk is
interest rate risk. The Company's assets, consisting primarily of mortgage
loans, have longer maturities than the Company's liabilities, consisting
primarily of deposits. As a result, a principal part of the Company's business
strategy is to manage interest rate risk and reduce the exposure of its net
interest income to changes in market interest rates. Accordingly, the Company's
board of directors has approved guidelines for managing the interest rate risk
inherent in its assets and liabilities, given the Company's business strategy,
operating environment, capital, liquidity and performance objectives. Senior
management monitors the level of interest rate risk on a regular basis and the
audit committee of the board of directors meets as needed to review the
Company's asset/liability policies and interest rate risk position.

         The Company seeks to manage its interest rate risk in order to minimize
the exposure of its earnings and capital to changes in interest rates. During
the low interest rate environment that has existed in recent years, the Company
has implemented the following strategies to manage its interest rate risk: (i)
maintaining a high level of short-term liquid assets invested in cash and cash
equivalents, short-term securities and mortgage-related securities that provide
significant cash flows; (ii) generally selling longer-term mortgage loans; and
(iii) lengthening the average term of the Bank's certificates of deposit. By
investing in short-term, liquid instruments, the Company believes it is better
positioned to react to increases in market interest rates. However, investments
in shorter-term securities and cash and cash equivalents generally bear lower
yields than longer-term investments. Thus, during the recent sustained period of
low interest rates, the Bank's strategy of investing in liquid instruments has
resulted in lower levels of interest income than would have resulted from
investing in longer-term loans and investments. The net proceeds from the stock
offering increased the Company's capital and provided management with greater
flexibility to manage its interest rate risk. In particular, management intends
to leverage the capital the Company received to increase interest-earning
assets. Management intends to lengthen the maturity of the Company's
earning-assets as interest rates increase, which in turn should result in a
higher yielding portfolio of interest-earning assets. There have been no
material changes in the Company's interest rate risk since September 30, 2005.

                                       18
<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES

         An evaluation was performed under the supervision and with the
participation of the Company's management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
the Company's disclosure controls and procedures (as defined in Rule 13a-15(e)
or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended)
as of March 31, 2006. Based on such evaluation, the Company's Chief Executive
Officer and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and regulations and are
operating in an effective manner.

         No change in the Company's internal controls over financial reporting
(as defined in Rules 13a-15(f) or 15(d)-15(f) under the Securities Exchange Act
of 1934) occurred during the most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         There is no material pending legal proceedings to which the Company or
its subsidiaries is a party other than ordinary routine litigation incidental to
their respective businesses.

ITEM 1A. RISK FACTORS

         There are no material changes to the risk factors as previously
disclosed in the Company's Form 10-K for the year ended September 30, 2005 as
filed with the SEC on December 29, 2005.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         The Company completed its stock offering on April 5, 2005, raising
$39.7 million in gross proceeds and approximately $37.9 million in net proceeds.
The Company issued a total of 3,967,500 shares of its common stock to public
stockholders and 9,257,500 shares of its common stock to its parent, BFS
Bancorp, MHC.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

                                       19
<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          The Annual Meeting of Stockholders was held on April 11, 2006. The
matters considered and voted on by the Company's stockholders at the annual
meeting and the vote of the stockholders were as follows:

         MATTER 1. The election of directors, each for a three-year term.

<TABLE>
<CAPTION>
----------------------------- --------------------- ---------- ------------------------------ ----------
            NAME                      FOR               %                WITHHOLD                 %
----------------------------- --------------------- ---------- ------------------------------ ----------
<S>                                <C>                <C>                 <C>                    <C>
Angelo J. Di Lorenzo               12,550,767         99.7                35,162                 0.3
----------------------------- --------------------- ---------- ------------------------------ ----------
Vincent E. Caccese                 12,539,024         99.6                46,905                 0.4
----------------------------- --------------------- ---------- ------------------------------ ----------
</TABLE>

         MATTER 2. The approval of the Brooklyn Federal Bancorp, Inc. 2006
Stock-Based Incentive Plan.

<TABLE>
<CAPTION>
----------------- --------- ------------------ -------- ---------------- --------- -------------------- -------
      FOR            %           AGAINST          %         ABSTAIN         %           NON-VOTE          %
----------------- --------- ------------------ -------- ---------------- --------- -------------------- -------
<S>                 <C>          <C>             <C>        <C>            <C>          <C>              <C>
   11,019,338       98.2         201,127         1.8        23,018         0.0          1,342,446        0.0
----------------- --------- ------------------ -------- ---------------- --------- -------------------- -------
</TABLE>

           MATTER 3. The ratification of the appointment of Beard Miller Company
LLP as the independent auditors of the Company for the fiscal year ending
September 30, 2006.

<TABLE>
<CAPTION>
------------------ ---------- --------------------- ---------- ------------------------------ ----------
       FOR             %            AGAINST             %                 ABSTAIN                 %
------------------ ---------- --------------------- ---------- ------------------------------ ----------
<S>                  <C>             <C>               <C>                <C>                    <C>
   12,534,287        99.7            34,194            0.3                17,448                 0.0
------------------ ---------- --------------------- ---------- ------------------------------ ----------
</TABLE>


ITEM 5.  OTHER INFORMATION

         On February 21, 2006 the Company executed employment agreements between
the Company and Marc Leno, Senior Vice President and Chief Lending Officer of
the Bank, and Marilyn Alberici, Senior Vice President and Loan Servicing Manager
of the Bank. These employment agreements were effective as of February 1, 2006.

         Under the terms of the two-year employment agreements, the initial base
salaries for Mr. Leno and Ms. Alberici are $142,000 and $110,100 respectively.
In addition to the base salary, each agreement provides for, among other things,
participation in bonus programs and other employee pension benefit and fringe
benefit plans applicable to executive employees. Mr. Leno's or Ms. Alberici's
employment may be terminated for cause at any time, in which event he or she
would have no right to receive compensation or other benefits for any period
after termination.

                                       20
<PAGE>

ITEM 6.  EXHIBITS

         31.1     Certification of Chief Executive Officer Pursuant to Rule
                  13a-14(a)/15d-14(a)

         31.2     Certification of Chief Financial Officer Pursuant to Rule
                  13a-14(a)/15d-14(a)

         32.1     Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

         32.2     Certification of Chief Financial Officer Pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

                                       21
<PAGE>

                                   SIGNATURES

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


                                  BROOKLYN FEDERAL BANCORP, INC.
                                  (Registrant)


Date: May 15, 2006                /S/ ANGELO J. DI LORENZO
                                  ----------------------------------------------
                                  Angelo J. Di Lorenzo
                                  President and Chief Executive Officer


Date:  May 15, 2006               /S/ RICHARD A. KIELTY
                                  ----------------------------------------------
                                  Richard A. Kielty
                                  Executive Vice President and
                                  Chief Financial Officer


                                       22