10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2011

OR

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

For the transition period from ___________________ to ______________________

Commission File Number: 000-50377

Flatbush Federal Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Federal	11-3700733
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2146 Nostrand Avenue, Brooklyn, New York	11210
(Address of Principal Executive Offices)	(Zip Code)

(718) 859-6800 

(Registrant’s Telephone Number Including Area Code)

 Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  £  No  S  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes  £  No  S 

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  S No  £ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (229.405) of this chapter during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes S  No  £ 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K of any amendment to this Form 10-K.  S 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  £	Accelerated filer  £
Non-accelerated filer    £ (Do not check if a smaller reporting company)	Smaller reporting company S

Indicate by check mark whether the registrant is a shell company. Yes  £  No  S 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the price at which the common equity was last sold on the OTC Bulletin Board as of the last business day of the registrant’s most recently completed second fiscal quarter was 6,263,495.

The number of shares outstanding of the registrant’s common stock was 2,736,907 as of March 26, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

1.	Annual Report to Shareholders for the fiscal year ended December 31, 2011 (Part II).
2.	Proxy Statement for the 2012 Annual Meeting of Shareholders (Part III).

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FLATBUSH FEDERAL BANCORP, INC.

2011 FORM 10-K

TABLE OF CONTENTS

PART I		Page No.
Item 1.	Business	1
Item 1A.	Risk Factors	32
Item 1B.	Unresolved Staff Comments	32
Item 2.	Properties	32
Item 3.	Legal Proceedings	32
Item 4.	Mine Safety Disclosures	32
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33-34
Item 6.	Selected Financial Data	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8.	Financial Statements and Supplementary Data	34
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	35
Item 9A.	Controls and Procedures	35-36
Item 9B.	Other Information	36
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	37
Item 11.	Executive Compensation	37
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	37
Item 13.	Certain Relationships and Related Transactions, and Director Independence	37
Item 14.	Principal Accounting Fees and Services	37
PART IV
Item 15.	Exhibits and Financial Statement Schedules	38-40
SIGNATURES		41

PART I

ITEM 1. BUSINESS

Forward Looking Statements

This Annual Report contains certain “forward-looking statements” which may be identified by the use of words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential.” All statements other than statements of historical fact are statements that could be forward-looking statements. Examples of forward-looking statements include, but are not limited to, estimates with respect to the Company’s financial condition, results of operations and business. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to various factors which could cause actual results to differ materially from these estimates and most other statements that are not historical in nature. These factors include, but are not limited to, general and local economic conditions, changes in interest rates, deposit flows, demand for mortgage, commercial and other loans, real estate values, competition, changes in accounting principles, policies, or guidelines, changes in legislation or regulation, and other economic, competitive, governmental, regulatory, and technological factors affecting operations, pricing products and services. These forward-looking statements speak only as of the date hereof, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware.

Flatbush Federal Bancorp, Inc.

Flatbush Federal Bancorp, Inc. (the “Company”) is a Federal corporation which was organized in 2003 as part of the mutual holding company reorganization of Flatbush Federal Savings & Loan Association (the “Association”). The Company’s principal asset is its investment in Flatbush Federal Savings & Loan Association. The Company is a majority owned subsidiary of Flatbush Federal Bancorp, MHC (“Flatbush MHC”), a Federally-chartered mutual holding company. Flatbush MHC owned 1,484,208 shares of common stock, or 54.23% of the outstanding shares of the common stock at December 31, 2011. At December 31, 2011, the Company had consolidated assets of $142.7 million, deposits of $114.9 million and stockholders’ equity of $14.6 million. The Company’s executive office is located at 2146 Nostrand Avenue, Brooklyn, New York 11210 and its telephone number is (718) 859-6800.

On March 13, 2012, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and between (i) Northfield Bank, Northfield Bancorp, Inc. (“Northfield Bancorp”), and Northfield Bancorp, MHC, and (ii) the Company, the Association and Flatbush Federal Bancorp, MHC. The Merger Agreement provides, among other things, that as a result of the merger of the Company into Northfield Bancorp (the “Mid-Tier Merger”), each outstanding share of the Company’s common stock will be converted into the right to receive 0.4748 shares of Northfield Bancorp common stock. The Merger Agreement contains a number of customary representations and warranties by the parties regarding certain aspects of their respective businesses, financial condition, structure and other facts pertinent to the Merger that are customary for a transaction of this kind. The obligation of the parties to complete the Merger is subject to various customary conditions. If the Merger is terminated under specified situations in the Merger Agreement (because the Company accepts a proposal to be acquired that is superior to the one contained in the Merger Agreement, enters into an agreement related to such a proposal and terminates the Merger Agreement, or fails to make, withdraws, modifies or qualifies its recommendation regarding the Merger Agreement), the Company may be required to pay a termination

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fee to Northfield Bancorp of approximately $700,000. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was included in a Form 8-K filed with the Securities and Exchange Commission on March 15, 2012.

Flatbush Federal Savings & Loan Association

General. The Association’s principal business consists of attracting retail deposits from the general public in the areas surrounding its three locations in Brooklyn, New York and investing those deposits, together with funds generated from operations, primarily in one- to four-family residential mortgage loans, commercial real estate loans, construction loans, investment securities, and mortgage-backed securities. The Association’s revenues are derived principally from the interest on loans and securities, loan origination and servicing fees, bank owned life insurance (“BOLI”) income, and service charges and fees collected on deposit accounts. The Association’s primary sources of funds are deposits, principal and interest payments on loans and securities, and borrowings.

Competition. The Association faces intense competition within its market area both in making loans and attracting deposits. The New York City area has a high concentration of financial institutions including large money center and regional banks, community banks and credit unions. Some of the Association’s competitors offer products and services that the Association does not currently offer, such as trust services and private banking. As of December 31, 2011, the Association’s market share of deposits represented less than one half of one percent of deposits in Kings County.

The Association’s competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms and credit unions. The Association faces additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies. The primary focus is to build and develop profitable customer relationships across all lines of business while maintaining a role as a community bank.

Market Area. The Association operates in an urban market area that has a stable population and household base. The Association’s primary lending area is concentrated in Brooklyn, as well as the other four boroughs of New York City, and Long Island, New York. One- to four-family residential real estate in the Association’s market area is characterized by a large number of attached and semi-detached houses, including a number of two- and three-family homes and condominium apartments. Most of the deposit customers are residents of the greater New York metropolitan area. The economy of the market area is characterized by a large number of small retail establishments. The Association’s customer base is comprised of middle-income households, and to a lesser extent, low-to-moderate-income households.

Lending Activities. Historically, the Association’s principal lending activity has been the origination of first mortgage loans for the purchase or refinancing of one- to four-family residential real property as well as multi-family and commercial real estate loans. Historically, the Association retained all loans that it originated. However, beginning in 2002 the Association sold a limited number of its one- to four-family loans, on a servicing retained basis, to the Federal Home Loan Bank of New York. No loans were sold during the year ended December 31, 2011. One- to four-family residential real estate mortgage loans represented $66.7 million, or 68.31%, of our loan portfolio at December 31, 2011. The Association also offers commercial real estate loans, multifamily loans, condominium loans and construction loans secured by real estate. Construction loans totaled $2.7 million, or 2.76% of the total loan portfolio at December 31, 2011. Commercial real estate loans totaled $21.9 million, or 22.43% of the total loan portfolio at December 31, 2011. Multi-family real estate loans totaled $5.7 million, or 5.89% of the total loan portfolio at December 31, 2011. On a limited basis, non-real estate secured loans are originated and consist of passbook loans and credit card loans.

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Loan Portfolio Composition. The following table sets forth the composition of the Association’s loan portfolio by type of loan as of the dates indicated, including a reconciliation of gross loans receivable after consideration of loans in process, the allowance for loan losses and net deferred fees.

	At December 31,
	2011					2010
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Real Estate Loans:
One- to four-family	$	66,681		68.31	%	$	71,830		65.84	%
Multi-family		5,749		5.89			5,890		5.40
Commercial		21,901		22.43			22,975		21.06
Construction		2,692		2.76			7,792		7.14
Land		387		0.40			393		0.36
Total real estate loans		97,410		99.79			108,880		99.80
Other Loans:
Unsecured Business		40		0.04			20		0.02
Passbook or certificate		37		0.04			39		0.04
Home equity		87		0.09			113		0.10
Credit cards		37		0.04			47		0.04
Total other loans		201		0.21			219		0.20
Total loans		97,611		100.00	%		109,099		100.00	%
Less:
Loans in process		105					895
Allowance for loan losses		2,247					1,649
Deferred loan fees		97					77
		2,449					2,621
Total loans receivable, net	$	95,162				$	106,478

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Maturity of Loan Portfolio. The following table shows the remaining contractual maturity of loans at December 31, 2011. The table does not include the effect of possible prepayments or due on sale clause payments.

	One-to Four-Family		Multi-Family		Commercial Real Estate		Construction		Land		Passbook or Certificate		Home Equity			Credit Cards		Unsecured Business			Total
	(Dollars in thousands)
One year or less	$	362	$	—	$	2,858	$	2,692	$	—	$	37	$	8		$	37	$	—	$	5,994
After one year:
1 to 3 years		2,567		—		1,844		—		387		—		6			—		40		4,844
3 to 5 years		1,661		83		2,494		—		—		—							—		4,238
5 to 10 years		13,138		3,944		11,213		—		—		—		73			—		—		28,368
10 to 20 years		8,981		1,287		3,492		—		—		—		—			—		—		13,760
More than 20 years		39,972		435		—		—		—		—		—			—		—		40,407
Total due after one year		66,319		5,749		19,043		—		387		37		79			—		—		91,617
Total loans		66,681		5,749		21,901		2,692		387		37		87			37		40		97,611
Less:
Loans in process		—		—		—		105		—		—		—			—		—		105
Allowance for loan losses		436		35		1,280		452		42							2				2,247
Deferred loan fees		64		11		25		—		—		—		(3	)		—		—		97
Total loans receivable, net	$	66,181	$	5,703	$	20,596	$	2,135	$	345	$	37	$	90		$	35	$	40	$	95,162

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The total amount of loans due after December 31, 2012 that have fixed interest rates is $65.7 million, and the total amount of loans due after such date which have floating or adjustable interest rates is $25.9 million. Of the $19.0 million of commercial real estate loans due after December 31, 2012, 13.5% have fixed interest rates and 86.5 % have adjustable interest rates. At December 31, 2011, there were no construction loans due after December 31, 2012.

One-to Four-Family Residential Loans. The Association’s lending activity includes the origination of one- to four-family residential mortgage loans that are primarily secured by properties located in Brooklyn, as well as the other four boroughs of New York City, and Long Island, New York. At December 31, 2011, approximately $66.7 million, or 68.31% of our loan portfolio, consisted of one- to- four-family residential loans. Generally, one- to four-family residential mortgage loans are originated in amounts up to 80% of the lesser of the appraised value or purchase price of the property. Private mortgage insurance is required on loans with a loan-to-value ratio in excess of 80%. The Association will not make loans with a loan-to-value ratio in excess of 95% for loans secured by single family homes and 90% for loans secured by two- to four-family properties. Fixed-rate loans are originated for terms of 15 and 30 years. At December 31, 2011, the Association’s largest loan secured by one- to four-family real estate had a principal balance of $874,000 and was secured by a one-family residence. This loan was non-performing and past due over 90 days.

The Association also offers adjustable-rate mortgage loans with one, two, three and five year adjustment periods based on changes in a designated United States Treasury index. During the year ended December 31, 2011, the Association originated one adjustable rate mortgage for $700,000. In general, the adjustable rate mortgage loans provide for maximum rate adjustments of 200 basis points per adjustment, with a lifetime maximum adjustment of 600 basis points. Adjustable rate mortgage loans amortize over terms of up to 30 years.

Adjustable rate mortgage loans decrease the risk associated with changes in market interest rates by periodically repricing, but involve other risks because, as interest rates increase, the underlying payments by the borrower increase, thus increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustment of the contractual interest rate is also limited by the maximum periodic and lifetime interest rate adjustments permitted by the loan documents, and therefore, is potentially limited in effectiveness during periods of rapidly rising interest rates. At December 31, 2011, $4.5 million, or 6.7% of the Association’s one- to four-family residential loans had adjustable rates of interest.

All one- to four-family residential mortgage loans that the Association originates include “due-on-sale” clauses, which give the Association the right to declare a loan immediately due and payable in the event that, among other things, the borrower sells or otherwise disposes of the real property subject to the mortgage and the loan is not repaid.

Regulations limit the amount that a savings association may lend relative to the appraised value of the real estate securing the loan, as determined by an appraisal of the property at the time the loan is originated. For all loans, the Association utilizes outside independent appraisers approved by the board of directors. All borrowers are required to obtain title insurance. The Association also requires homeowner’s insurance and fire and casualty insurance and, where circumstances warrant, flood insurance on properties securing real estate loans.

Multi-Family Real Estate Loans. Loans secured by multi-family real estate totaled approximately $5.7 million, or 5.89% of the total loan portfolio at December 31, 2011. Multi-family real estate loans generally are secured by rental properties. Substantially all multi-family real estate loans are secured by properties located within the Association’s lending area. At December 31, 2011, the

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Association had sixteen multi-family loans with an average principal balance of $359,000, and the largest multi-family real estate loan had a principal balance of $815,000. All of the loans secured by multi-family real estate properties are performing in accordance with their terms. Multi-family real estate loans generally are offered with adjustable interest rates that adjust after five years. Multi-family loans are originated for terms of up to 15 years. Multi-family real estate loan adjustments are tied to the prime rate as reported in The Wall Street Journal, or the FHLB five year advance rate.

The Association considers a number of factors in originating multi-family real estate loans. Management evaluates the qualifications and financial condition of the borrower (including credit history), profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the qualifications of the borrower, management considers the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with the Association and other financial institutions. In evaluating the property securing the loan, the factors considered include the net operating income of the mortgaged property before debt service and depreciation, the debt service coverage ratio (the ratio of net operating income to debt service) to ensure that it is at least 125% of the debt service, and the ratio of the loan amount to the appraised value of the mortgaged property. Multi-family real estate loans are originated in amounts up to 75% of the appraised value of the mortgaged property securing the loan. All multi-family loans are appraised by outside independent appraisers approved by the board of directors. An environmental inspection, performed by an independent environmental engineer approved by the board of directors, may be required on certain loans. Personal guarantees may be obtained from multi-family real estate borrowers.

Loans secured by multi-family real estate generally involve a greater degree of credit risk than one- to four-family residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family real estate typically depends upon the successful operation of the real estate property securing the loan. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

Commercial Real Estate Loans. At December 31, 2011, $21.9 million, or 22.43% of the total loan portfolio consisted of commercial real estate loans. Commercial real estate loans are secured by office buildings, mixed use properties and other commercial properties. The Association generally originates adjustable rate commercial real estate loans, as well as balloon maturity loans, with maximum terms of up to 15 years. The maximum loan-to-value ratio of commercial real estate loans is 75%. At December 31, 2011, the Association had 39 commercial real estate loans with an average outstanding balance of $562,000. At December 31, 2011, the Association’s largest loan secured by commercial real estate was a $1.9 million loan. At December 31, 2011, this loan was performing in accordance with its terms. At December 31, 2011, three loans totaling $1.8 million, secured by commercial real estate were not performing in accordance their terms.

The Association considers a number of factors in originating commercial real estate loans. Management evaluates the qualifications and financial condition of the borrower (including credit history), profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the qualifications of the borrower, management considers the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with the Association and other financial institutions. In evaluating the property securing the loan, the factors management considered include the net operating income of the mortgaged property before debt service and depreciation, the debt service coverage ratio (the ratio of net

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operating income to debt service) to ensure that it is at least 125% of the debt service, and the ratio of the loan amount to the appraised value of the mortgaged property. All commercial real estate loans are appraised by outside independent appraisers approved by the board of directors. An environmental inspection is performed by an independent environmental engineer approved by the board of directors. Personal guarantees may be obtained from commercial real estate borrowers.

Loans secured by commercial real estate generally are larger than one- to four-family residential loans and involve greater credit risk. Commercial real estate loans often involve large loan balances to single borrowers or groups of related borrowers. Repayment of these loans depends to a large degree on the results of operations and management of the properties securing the loans or the businesses conducted on such property, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general.

Construction Loans. At December 31, 2011, $2.7 million, or 2.76% of the Association’s total loan portfolio consisted of construction loans. Construction loans are originated by the Association which currently offers adjustable-rate multi-family construction loans. The Association also participates in construction loans with adjustable rates for the construction of multifamily and non-residential real estate. At December 31, 2011, the largest construction loan was a $1.4 million participation of which $1.1 was advanced. The loan was non-performing and has a $309,000 specific valuation allowance. Construction loans have interest rates that adjust monthly and require the payment of interest only during the construction period. Construction loans will generally be made in amounts of up to 75% of the lower of the appraisal value of the property, or the actual cost of the improvements. Funds are disbursed in accordance with a schedule reflecting the completion of portions of the project. At December 31, 2011, the Association’s construction loans are secured by properties located in Brooklyn, Queens, Long Island and Manhattan.

Construction loans generally involve a greater degree of credit risk than one- to four-family residential mortgage loans. The risk of loss on a construction loan depends upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost of construction. If the estimated cost of construction is inaccurate, funds may have to be advanced beyond the original amount committed in order to protect the value of the property. An environmental inspection is performed by an independent environmental engineer.

In addition, because construction loans primarily consist of participation loans, the Company relies on other parties to document the loans. As a result, the Company has less control over the initial underwriting and monitoring of these loans.

Other Loans. The Association offers a variety of loans secured by real estate, or by property other than real estate. These loans include loans secured by deposits, home equity loans, and credit cards secured by deposit accounts, as well as unsecured credit cards and business loans. At December 31, 2011, these other loans totaled $201,000, or 0.21% of the total loan portfolio.

Origination and Servicing of Loans. Historically, the Association has originated mortgage loans pursuant to underwriting standards that generally conform with the Fannie Mae and Freddie Mac guidelines. Loan origination activities are primarily concentrated in Brooklyn, as well as the other four boroughs of New York City, and Long Island, New York. Properties securing real estate and construction loans are primarily located in Brooklyn, Queens, Long Island and Manhattan. New loans are generated primarily from walk-in customers, customer referrals, a network of mortgage brokers, and other parties with whom the Association does business, and from the efforts of employees and advertising. Loan applications are underwritten and processed at the main office. The Association services all loans that it originates. 

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The following table shows the loan originations, purchases, sales and repayment activities for the periods indicated.

	Years Ended December 31,
	2011			2010
	(In Thousands)
Beginning of period	$	106,478		$	110,988
Originations by Type:
Real estate:
One- to four-family		4,503			1,609
Multi-family		—			1,700
Commercial		1,141			3,276
Construction		100			250
Other loans:
Unsecured business		20			—
Passbook or certificate		—			11
Home equity		—			—
Credit cards		76			97
Total originations		5,840			6,943
Purchases:
Real estate:
Construction		150			1,996
Total purchases		150			1,996
Sales and Repayments:
Real estate:
Principal repayments		(16,718	)		(12,661	)
Total reductions		(16,718	)		(12,661	)
Change in other items, net		(588	)		(788	)
Net (decrease)		(11,316	)		(4,510	)
End of period	$	95,162		$	106,478

Loan Approval Procedures and Authority. The loan approval process is intended to assess the borrower’s ability to repay the loan, the viability of the loan, and the adequacy of the value of the property that will secure the loan. To assess the borrower’s ability to repay, the Association reviews the employment and credit history and information on the historical and projected income and expenses of mortgagors or if applicable, the historical and projected income and expenses of the property. All loans are approved by the Board of Directors.

The Association requires appraisals of all real property securing loans, and if applicable, environmental inspections. Appraisals are performed by independent licensed appraisers. All appraisers are approved by the Board of Directors. The Association requires fire and extended coverage insurance in amounts at least equal to the principal amount of the loan.

Non-performing and Problem Assets

After a mortgage loan becomes 10 days past due, a computer generated late notice is delivered to the borrower. A second late notice is sent once the loan becomes 16 days past due. When a loan becomes 30 days delinquent, a delinquency notice is sent to the borrower and an attempt is made to make personal contact with the borrower by letter or telephone from the head of the collection department to establish an acceptable repayment schedule. When a mortgage loan is 90 days delinquent and no acceptable resolution has been reached, the loan is placed in foreclosure and the property collateral is appraised and inspected. Management is authorized to begin foreclosure proceedings on any loan after determining that it is prudent to do so. 

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Mortgage loans are reviewed on a regular basis and such loans, with the exception of loans guaranteed by the Federal Housing Administration, may be placed on non-accrual status when they become delinquent 90 days or more. When loans are placed on a non-accrual status, unpaid accrued interest is fully reserved, and further income is recognized only to the extent received. Loans guaranteed by the Federal Housing Administration may be placed on non-accrual status when they become delinquent 120 days or more.

 Non-performing Loans. At December 31, 2011, $8.2 million, or 8.39%, of the Association’s total loans were non-performing loans.

Non-performing Assets. The table below sets forth the amounts and categories of the non-performing assets at the dates indicated. Delinquent loans that are 90 days or more past due are generally considered non-performing assets. There were no restructured loans past due 90 days or more, or in a nonaccrual status at December 31, 2011. At December 31, 2011, non-accruing loans consisted of twelve one-to-four-family residential loans of $4.2 million with a corresponding $124,000 of specific valuation allowance, three commercial real estate loans of $1.8 million with a corresponding $615,000 of specific valuation allowance and two construction loan participations of $2.2 million with a corresponding $407,000 of specific valuation allowance.

	At December 31,
	2011			2010
	(Dollars in Thousands)
Non-accruing loans:
One- to four-family real estate	$	4,230		$	3,801
Commercial real estate		1,779			2,597
Construction		2,176			2,041
Credit cards		—			4
Total non-performing loans		8,185			8,443
Other real estate owned		744			—
Total non-performing assets	$	8,929		$	8,443
Peforming troubled debt restructurings	$	1,300		$	387
Total non-performing assets as a percentage of total assets		6.26	%		5.74	%
Total non-performing loans as a percent of total loans		8.39	%		7.74	%

For the years ended December 31, 2011 and 2010, gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to $768,000 and $530,000, respectively. Interest income recognized on such loans subsequent to their non-accrual status was $49,000 for the year ended December 31, 2011. No interest income was recognized on such loans subsequent to their non-accrual status for the year ended December 31, 2010.

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Delinquent Loans. The following table sets forth the loan delinquencies by type, by amount and by percentage of type at the dates indicated.

	At December 31, 2011										At December 31, 2010
	60-89 Days					90 Days or More					60-89 Days					90 Days or More
	Number of Loans		Principal Balance of Loans			Number of Loans		Principal Balance of Loans			Number of Loans		Principal Balance of Loans			Number of Loans		Principal Balance of Loans
	(Dollars in Thousands)
Real Estate loans:
One- to four-family		—		—			12	$	4,230			1	$	132			11	$	3,801
Multi-family		—		—			—		—			—		—			—		—
Commercial real estate		—		—			3		1,779			—		—			4		2,597
Construction		—		—			2		2,176			—		—			2		2,041
Land		—		—			—		—			—		—			—		—
Total		—		—			17		8,185			1		132			17		8,439
Other loans:
Unsecured business		—		—			—		—			—		—			—		—
Passbook or certificate		—		—			—		—			—		—			—		—
Home equity		—		—			—		—			1		14			—		—
Credit cards		1		3			—		—			1		3			3		4
Total other loans		1		3			—		—			2		17			3		4
Total delinquent loans		1	$	3			17	$	8,185			3	$	149			20	$	8,443
Delinquent loans to total loans				0.003	%				8.39	%				0.14	%				8.65	%

Classified Assets. Office of the Comptroller of the Currency regulations and the Association’s Asset Classification Policy provide that loans and other assets considered to be of lesser quality be classified as “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Management classifies an asset as “special mention” if the asset has a potential weakness that warrants management’s close attention. While such assets are not impaired, management has concluded that if the potential weakness in the asset is not addressed, the value of the asset may deteriorate, adversely affecting the repayment of the asset.

An insured institution is required to establish general allowances for loan losses in an amount deemed prudent by management for loans classified substandard or doubtful, as well as for other problem loans. General allowances represent loss allowances which have been established to recognize the inherent losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of the amount of the asset so classified or to charge off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by bank regulators that can order the establishment of additional general or specific loss allowances.

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On the basis of management’s review of its assets, at December 31, 2011 the Association had classified $4.2 million in one- to four-family residential loans, $2.3 million in commercial real estate loans and $2.6 million in construction loan participations, respectively, as substandard and $1.7 million in one to four family residential loans and $515,000 in construction and land loan participations as special mention. The substandard construction loans of $2.6 million have specific valuation allowances of $407,000. The substandard one-to four-family residential loans of $4.2 million have valuation allowances of $124,000. The substandard commercial real estate loans of $2.3 million have valuation allowances of $623,000

The loan portfolio is reviewed on a regular basis to determine whether any loans require classification in accordance with applicable regulations. Not all classified assets constitute non-performing assets.

Allowance for Loan Losses

The Association’s allowance for loan losses is maintained at a level necessary to absorb loan losses which are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of loan activities, along with the general economic and real estate market conditions. Management utilizes a two-tier approach: (1) identification of impaired loans and establishment of specific loss allowances on such loans; and (2) establishment of general valuation allowances on the remainder of the loan portfolio. Management maintains a loan review system, which allows for a periodic review of the loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that the Association will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. Management does not aggregate such loans for evaluation purposes. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions, management’s judgment and losses which are probable and reasonably estimable. The allowance is increased through provisions charged against current earnings and recoveries of previously charged-off loans. Loans which are determined to be uncollectible are charged against the allowance. While management uses available information to recognize probable and reasonably estimable loan losses, future loss provisions may be necessary based on changing economic conditions. The allowance for loan losses as of December 31, 2011 is maintained at a level that represents management’s best estimate of losses inherent in the loan portfolio, and such losses were both probable and reasonably estimable.

Payments received on impaired loans are applied to principal. The Association had 21 loans totaling $9.6 million deemed to be impaired at December 31, 2011, and had 21 loans totaling $9.0 million deemed to be impaired at December 31, 2010. Impaired loans consisted of four construction loan participations of $2.2 million having $407,000 of specific valuation allowance, with a net balance of $1.8 million, four commercial real estate loans of $2.3 million having $623,000 of specific allowances, with a net balance of $1.7 million and 15 residential real estate loans of $5.1 million having specific allowances of $260,000 with a net balance of $4.9 million.

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In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, will periodically review the allowance for loan losses. The OCC may require that the Association recognize additions to the allowance based on its evaluation of information available to it at the time of the examination.

Allowance for Loan Losses. The following table analyzes changes in the allowance for the periods presented.

	Years Ended December 31,
	2011			2010
	(Dollars In Thousands)
Balance at beginning of period	$	1,649		$	829
Charge-offs:
One- to four-family		45			—
Commercial		248			—
Construction		813			—
Credit cards		7			1
Total charge-offs		1,113			1
Recoveries		—			1
Net charge-offs		—			—
Additions charged to operations		1,711			821
Ending balance	$	2,247		$	1,649
Ratio of non-performing loans to total assets at the end of period		5.74	%		5.74	%
Ratio of net charge-offs during the period to loans outstanding during the period		1.11	%		0.00	%
Ratio of allowance for loan losses to loans outstanding		2.30	%		1.52	%

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Allocation of Allowance for Loan Losses. The following table presents an analysis of the allocation of the allowance for loan losses at the dates indicated. The allocation of the allowance to each category is not necessarily indicative of future loss in any particular category and does not restrict the use of the allowance to absorb losses in other categories. The total amount of loan loss allowance of $2.2 million as of year ended December 31, 2011 includes specific valuation allowances of $1.3 million. The total amount of loan loss allowance of $1.6 million for the year ended December 31, 2010 includes specific valuation allowances of $898,000.

	At December 31,
	2011							2010
	Amount of Loan Loss Allowance		Loan Amounts By Category		Percent of Loan Amount in Each Category to Total Loans			Amount of Loan Loss Allowance		Loan Amounts By Category		Percent of Loan Amount in Each Category to Total Loans
	(Dollars in Thousands)
One- to four-family	$	436	$	66,681		68.31	%	$	214	$	71,830		65.84	%
Multi-family		35		5,749		5.89			36		5,890		5.40
Commercial		1,280		21,901		22.43			583		22,975		21.06
Construction		452		2,692		2.80			796		7,792		7.14
Land		42		387		0.40			14		393		0.36
Passbook or certificate		—		37		0.04			—		39		0.04
Home equity		—		87		0.09			—		113		0.10
Credit cards		2		36		0.04			6		47		0.04
Unsecured business		—		40		0.04			—		20		0.02
Total	$	2,247	$	97,610		100.00	%	$	1,649	$	109,099		100.00	%

Each quarter, management evaluates the total balance of the allowance for loan losses based on several factors that are not loan specific, but are reflective of the inherent losses in the loan portfolio. This process includes, but is not limited to, a periodic review of loan collectability in light of historical experience, the nature and volume of loan activity, conditions that may affect the ability of the borrower to repay, underlying value of collateral, if applicable, and economic conditions in the Association’s immediate market area. First, loans are grouped by delinquency status. All loans 90 days or more delinquent are evaluated individually, based primarily on the value of the collateral securing the loan. Specific loss allowances are established as required by this analysis. All loans for which a specific loss allowance has not been assigned are segregated by type and delinquency status and a loss allowance is established by using loss experience data and management’s judgment concerning other matters it considers significant. The allowance is allocated to each category of loan based on the results of the above analysis. Small differences between the allocated balances and recorded allowances are reflected as unallocated to absorb losses resulting from the inherent imprecision involved in the loss analysis process.

This analysis process is inherently subjective, as it requires estimates that are susceptible to revisions as more information becomes available. Although management believes that it has established the allowance at levels to absorb probable and estimable losses, future additions may be necessary if economic or other conditions in the future differ from the current environment.

Investments

Investments and Mortgage-Backed Securities. The Association’s investment portfolio at December 31, 2011 consisted of $4.3 million in corporate bonds held-to-maturity, $698,000 in Federal Home Loan Bank of New York stock and $6.9 million in other interest-earning assets, consisting of deposits at other financial institutions and federal funds sold. The investment policy objectives are to

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primarily maintain liquidity within the guidelines established by the board of directors while earning a return and minimizing principle risk. At December 31, 2011, the Association did not hold investments in any single entity (other than United States Government or agency sponsored entities) that had an aggregate book value in excess of 10% of its stockholder’s equity.

The following table sets forth the carrying value of the investment portfolio at the dates indicated. The Federal Home Loan Bank stock has no stated maturity, and the interest-bearing deposits with other institutions are payable on demand.

	At December 31,
	2011					2010
	Carrying   Value		% of Total			Carrying   Value		% of Total
	(Dollars in Thousands)
Investment securities
Federal Home Loan Bank stock	$	698		9.15	%	$	808		10.88	%
Other interest-earning assets:
Interest-earning deposits		1,180		15.47	%		1,066		14.36	%
Federal funds sold		5,750		75.38	%		5,550		74.76	%
Total other interest-earning assets		6,930		90.85	%		6,616		89.12	%
Total	$	7,628		100.00	%	$	7,424		100.00	%

The Association also invests in mortgage-backed securities, which are classified as held to maturity. At December 31, 2011, the mortgage-backed securities portfolio totaled $21.4 million, or 15.00% of total assets, and consisted of $21.1 million in fixed-rate mortgage-backed securities guaranteed by Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), and $267,000 in adjustable rate mortgage-backed securities guaranteed by GNMA, FNMA or FHLMC.

The following table sets forth the composition of the securities held to maturity at the dates indicated.

	At December 31,
	2011					2010
	Carrying   Value		% of   Total			Carrying   Value		% of   Total
	(Dollars in Thousands)
Corporate bonds	$	4,347		16.88	%	$	—		—	%
Mortgage-backed securities held to maturity (1):
GNMA	$	5,343		20.75	%	$	1,941		8.91	%
FNMA		12,778		49.63	%		15,301		70.25	%
FHLMC		3,280		12.74	%		4,538		20.84	%
Total	$	25,748		100.00	%	$	21,780		100.00	%

(1) Mortgage-backed securities classified as held to maturity are reported at amortized cost.

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The composition and maturities of the corporate bond and mortgage-backed securities portfolio as of December 31, 2011, are indicated in the following table.

	Due
	Less Than   1 Year					1 to 5   Years					5 to 10   Years					Over   10 Years					Total Investment Securities
	Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Market Value
	(Dollars In Thousands)
Mortgage-backed securities	$	—		—	%	$	46		5.13	%	$	141		5.23	%	$	21,214		4.84	%	$	21,401		4.84	%	$	22,949
Corporate bonds	$	—		—		$	2,596		2.59	%	$	1,751		3.28	%	$	—		—		$	4,347		2.87	%	$	4,453

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The following table shows security purchase and repayment activities of the Association for the periods indicated. The Association did not sell any securities during the periods indicated.

	Years Ended December 31,
	2011			2010
	(Dollars in Thousands)
Purchases:
Adjustable-rate	$	—		$	—
Fixed-rate		9,415			1,250
Total purchases		9,415			1,250
Principal repayments		(5,535	)		(7,944	)
Accretion, net		89			134
Net increase (decrease)	$	3,969		$	(6,560	)

Sources of Funds

General. Deposits have traditionally been the primary source of funds for use in lending and investment activities. In addition to deposits, funds are derived from scheduled loan payments, investment maturities, loan prepayments and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. Borrowings from the Federal Home Loan Bank of New York may be used in the short-term to compensate for reductions in deposits and to fund loan growth.

Deposits. Deposits are not actively solicited outside of the New York City metropolitan area, and substantially all of the depositors are persons who work or reside in Brooklyn, New York. The Association offers a selection of deposit instruments, including demand deposits consisting of non-interest bearing and NOW accounts, passbook savings and club accounts, and fixed-term certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. The Association does not accept brokered deposits.

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. Personalized customer service and long-standing relationships with customers are relied upon to attract and retain deposits.

The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts offered allows the Association to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, management believes the deposits in the Association are relatively stable. However, the ability to attract and maintain certificates of deposit, and the rates paid on these deposits have been and will continue to be significantly affected by market conditions. At December 31, 2011, $76.1 million, or 66.20% of deposit accounts were certificates of deposit, of which $59.8 million have maturities of one year or less.

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Deposit Accounts. The following table sets forth the dollar amount of deposits in the various types of deposit programs offered as of the dates indicated.

	At December 31,
	2011					2010
	Weighted Average Rate			Amount		Weighted Average Rate			Amount
	(Dollars in Thousands)
Demand deposits:
Non-interest-bearing		—	%	$	5,198		—	%	$	5,319
NOW		0.30			321		0.30			319
					5,519					5,638
Passbook and club accounts		0.33			33,323		0.33			34,691
Certificates of deposit		1.71			76,081		1.86			76,745
Total		1.23	%	$	114,923		1.32	%	$	117,074

Deposit Activity. The following table sets forth the deposit activities for the periods indicated.

	Years Ended December 31,
	2011			2010
	(Dollars In Thousands)
Beginning balance	$	117,074		$	115,168
Net (withdrawals) deposits		(3,587	)		176
Interest credited on deposit accounts		1,436			1,730
Ending balance	$	114,923		$	117,074
Net (decrease) increase	$	(2,151	)	$	1,906
Percent (decrease) increase		(1.84	)%		1.65	%

Certificates of Deposit. The following table indicates the amount of Certificates of Deposit as of December 31, 2011, by time remaining until maturity.

	Three months or less		Over three months to six months		Over six months to twelve months		Over twelve months		Total
	(Dollars in Thousands)
Certificates of deposit:
Less than $100,000	$	10,690	$	10,460	$	9,931	$	9,016	$	40,097
$100,000 or more		7,471		8,641		12,650		7,222		35,984
Total	$	18,161	$	19,101	$	22,581	$	16,238	$	76,081

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Time Deposit Maturity Schedule. The following table presents, by rate category, the remaining period to maturity of time deposit accounts outstanding as of December 31, 2011 (Dollars in thousands).

Quarter Ending	Less than 1.00%			1.00% to 2.00%			2.01% to 3.00%			3.01% to 4.00%			4.01% to 5.00%			5.01% to 6.00%			TOTAL
March 31, 2012	$	5,470		$	11,865		$	404		$	163		$	259		$	—		$	18,161
June 30, 2012		4,339			13,106			1,243			133			159			121			19,101
September 30, 2012		1,388			6,771			911			—			307			2,411			11,788
December 31, 2012		2,318			7,339			60			30			417			629			10,793
March 31, 2013		45			1,444			54			404			576			68			2,591
June 30, 2013		—			2,441			600			338			200			8			3,587
September 30, 2013		—			834			239			36			126			—			1,235
December 31, 2013		—			745			—			—			124			78			947
Thereafter		—			3,331			2,602			1,405			456			84			7,878
Total	$	13,560		$	47,876		$	6,113		$	2,509		$	2,624		$	3,399		$	76,081
Percentage of total		17.82	%		62.93	%		8.03	%		3.30	%		3.45	%		4.47	%

Borrowings. The Association may obtain advances from the Federal Home Loan Bank of New York upon the security of the common stock owned in the Federal Home Loan Bank and its qualifying residential mortgage loans and mortgage-backed securities, provided certain standards related to creditworthiness are met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. All borrowings consisted solely of fixed interest rate advances from Federal Home Loan Bank of New York. As of December 31, 2011, the outstanding amount of these advances totaled $10.1 million. See Note 8 to the Consolidated Financial Statements included hereto in Exhibit 13.

Subsidiary Activities

Federal regulations permit federal savings associations to invest in the capital stock, obligations or other specified types of securities of subsidiaries (referred to as “service corporations”) and to make loans to such subsidiaries and joint ventures in which such subsidiaries are participants in an aggregate amount not exceeding 2% of the association’s assets, plus an additional 1% of assets if the amount over 2% is used for specified community or inner-city development purposes. In addition, federal regulations permit associations to make specified types of loans to such subsidiaries (other than special purpose finance subsidiaries) in which the association owns more than 10% of the stock, in an aggregate amount not exceeding 50% of the association’s regulatory capital if the association’s regulatory capital is in compliance with applicable regulations.

Flatbush Federal has one active subsidiary, Flatbush REIT, Inc. Flatbush REIT, Inc. was incorporated in 2001 as a special purpose real estate investment trust under New York law. Flatbush REIT, Inc. holds a portion of our mortgage related assets. At December 31, 2011, Flatbush REIT, Inc. held $14.3 million in loans.

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FEDERAL AND STATE TAXATION

Federal Taxation

General. Flatbush Federal Bancorp, Inc. and Flatbush Federal Savings and Loan Association are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. Flatbush Federal Savings and Loan Association’s tax returns have not been audited during the past five years. The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to Flatbush Federal Bancorp, Inc. or Flatbush Federal Savings and Loan Association.

Method of Accounting. For Federal income tax purposes, Flatbush Federal Savings and Loan Association currently reports its income and expenses on the accrual method of accounting and uses a tax year ending December 31 for filing its federal income tax returns.

Bad Debt Reserves. Prior to the Small Business Protection Act of 1996 (the “1996 Act”), Flatbush Federal Savings and Loan Association was permitted to establish a reserve for bad debts and to make annual additions to the reserve. These additions could, within specified formula limits, be deducted in arriving at our taxable income. Flatbush Federal Savings and Loan Association was required to use the specific charge off method in computing its bad debt deduction beginning with its 1996 federal tax return. Savings institutions were required to recapture any excess reserves over those established as of December 31, 1987 (base year reserve). Flatbush Federal Savings and Loan Association had approximately $3.4 million of pre-1988 bad debt reserves that are subject to recapture. During 2010, amendments of the New York State and New York City’s tax law and ordinance conformed the bad debt deduction to the deduction allowed under the Federal income tax law for taxable years beginning on or after January 1, 2010.

Taxable Distributions and Recapture. Prior to the 1996 Act, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income if Flatbush Federal Savings and Loan Association failed to meet certain thrift asset and definitional tests. Federal legislation has eliminated these thrift related recapture rules.

At December 31, 2011, our total federal pre-1988 base year reserve was approximately $3.4 million. Under current law, pre-1988 base year reserves remain subject to recapture if Flatbush Federal Savings and Loan Association makes certain non-dividend distributions, repurchases any of its stock, pays dividends in excess of tax earnings and profits, or ceases to maintain a bank charter.

Alternative Minimum Tax. The Internal Revenue Code of 1986, as amended (the “Code”), imposes an alternative minimum tax (“AMT”) at a rate of 20% on a base of regular taxable income plus certain tax preferences (“alternative minimum taxable income” or “AMTI”). The AMT is payable to the extent such AMTI is in excess of an exemption amount and the AMT exceeds the regular income tax. Net operating losses can offset no more than 90% of AMTI. Certain payments of AMT may be used as credits against regular tax liabilities in future years. At December 31, 2011, Flatbush Federal Savings and Loan Association had no AMT credits for carryover.

Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. At December 31, 2011, Flatbush Federal Savings and Loan Association had $634,000 in net operating loss carry forwards for federal income tax purposes and $1.1 million for New York State and New York City purposes.

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Corporate Dividends-Received Deduction. Flatbush Federal Bancorp, Inc. may exclude from its income 100% of dividends received from Flatbush Federal Savings and Loan Association as a member of the same affiliated group of corporations. The corporate dividends-received deduction is 80% in the case of dividends received from corporations with which a corporate recipient does not file a consolidated return, and corporations which own less than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received or accrued on their behalf.

State Taxation

New York State Taxation. Flatbush Federal Bancorp, Inc. and Flatbush Federal Savings and Loan Association will report income on a calendar year basis to New York State. New York State franchise tax on corporations is imposed in an amount equal to the greater of (a) 7.1% of “entire net income” allocable to New York State, (b) 3% of “alternative entire net income” allocable to New York State, (c) 0.01% of the average value of assets allocable to New York State, or (d) nominal minimum tax. Entire net income is based on Federal taxable income, subject to certain modifications. Alternative entire net income is equal to entire net income without certain modifications. 

Personnel

As of December 31, 2011, the Company had 36 full-time employees and one part-time employee. The employees are not represented by any collective bargaining group. Management believes that the Company has good relations with its employees. 

SUPERVISION AND REGULATION

General

The Association is examined and supervised by the Office of the Comptroller of the Currency (“OCC”) and subject to the regulation of the Federal Deposit Insurance Corporation (“FDIC”). This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the FDIC’s deposit insurance funds and depositors. Under this system of federal regulation, financial institutions are periodically examined to ensure that they satisfy applicable standards with respect to their capital adequacy, assets, management, earnings, liquidity and sensitivity to market interest rates. Following completion of its examination, the federal agency critiques the institution’s operations and assigns its rating (known as an institution’s CAMELS rating). Under federal law, an institution may not disclose its CAMELS rating to the public. The Association also is a member of and owns stock in the Federal Home Loan Bank of New York, which is one of the twelve regional banks in the Federal Home Loan Bank System. The Association also is regulated to a lesser extent by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), governing reserves to be maintained against deposits and other matters. The Association’s relationship with its depositors and borrowers also is regulated to a great extent by both federal and state laws, especially in matters concerning the ownership of deposit accounts and the form and content of the Association’s mortgage documents.

Historically, the Office of Thrift Supervision (“OTS”) examined the Association and prepared reports for the consideration of its board of directors on any operating deficiencies. As of July 21, 2011, the OTS ceased operations pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and regulation and supervision of the Association was transferred to the OCC and regulation and supervision of Flatbush MHC and the Company was transferred to the Federal Reserve Board.

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The Dodd-Frank Act also provided for the creation of a new agency, the Consumer Financial Protection Bureau (“CFPB”), as an independent bureau of the Federal Reserve, to take over the implementation of federal consumer financial protection and fair lending laws from the depository institution regulators. However, institutions of $10 billion or fewer in assets will continue to be examined for compliance with such laws and regulations by, and subject to the primary enforcement authority of, the prudential regulator rather than the CFPB.

Certain regulatory requirements applicable to the Association, the Company and Flatbush MHC are referred to below or appear elsewhere in this Form 10-K. This regulatory discussion, however, does not purport to be an exhaustive treatment of applicable laws and regulations. Any change in these laws or regulations, whether by the FDIC, the OCC, the Federal Reserve or Congress, could have a material adverse impact on the Association, the Company and Flatbush MHC operations.

In addition to eliminating the OTS and creating the CFPB, the Dodd-Frank Act, among other things, requires changes in the way that institutions are assessed for deposit insurance, mandated the imposition of consolidated capital requirements on savings and loan holding companies, required that originators of securitized loans retain a percentage of the risk for the transferred loans, directed the Federal Reserve to regulate pricing of certain debit card interchange fees, reduces the federal preemption afforded to federal savings associations and contained a number of reforms related to mortgage originations. Many of the provisions of the Dodd-Frank Act contain delayed effective dates and/or require the issuance of regulations. As a result, it will be some time before their impact on operations can be assessed by management. However, there is significant possibility that the Dodd-Frank Act will, at a minimum, result in an increased regulatory burden and higher compliance, operating, and possibly, interest costs for the Company and the Bank.

Federal Banking Regulation

Business Activities. A federal savings association derives its lending and investment powers from the Home Owners’ Loan Act, as amended, and the regulations of the OCC. Under these laws and regulations, the Association may invest in mortgage loans secured by residential and commercial real estate, commercial business and consumer loans, certain types of debt securities and certain other assets. Certain types of lending, such as commercial and consumer loans, are subject to an aggregate limit calculated as a specified percentage of the Association’s capital or assets. The Association also may establish subsidiaries that may engage in activities not otherwise permissible for the Association, including real estate investment and securities and insurance brokerage.

The Dodd-Frank Act authorized, for the first time, the payment of interest on commercial checking accounts effective July 21, 2011.

Capital Requirements. OCC regulations require savings associations to meet three minimum capital standards: a 1.5% tangible capital ratio, a 4% leverage ratio (3% for associations receiving the highest rating on the CAMELS rating system) and an 8% risk-based capital ratio. The prompt corrective action standards discussed below, in effect, establish a minimum 2% tangible capital standard.

The risk-based capital standard for savings associations requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%, assigned by the

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OCC based on the risks believed inherent in the type of asset. Core capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital currently include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

At December 31, 2011, the Association’s capital exceeded all applicable requirements.

Loans-to-One Borrower. A federal savings association generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2011, the Association was in compliance with the loans-to-one borrower limitations.

Qualified Thrift Lender Test. As a federal savings association, the Association is subject to a qualified thrift lender test (“QTL test”). Under the QTL test, the Association must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” in at least nine of the most recent 12 month period. “Portfolio assets” generally means total assets of a savings institution, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the savings association’s business.

“Qualified thrift investments” includes various types of loans made for residential and housing purposes, investments related to such purposes, including certain mortgage-backed and related securities, and loans for personal, family, household and certain other purposes up to a limit of 20% of portfolio assets. “Qualified thrift investments” also include 100% of an institution’s credit card loans, education loans and small business loans. The Association also may satisfy the QTL test by qualifying as a “domestic building and loan association” as defined in the Internal Revenue Code.

A savings association that fails the QTL test must operate under specified restrictions, including as to dividends. The Dodd-Frank Act made noncompliance with the QTL test potentially subject to agency enforcement action for violation of law. At December 31, 2011, the Association maintained approximately 74.10% of its portfolio assets in qualified thrift investments.

Capital Distributions. OCC regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to the capital account. A savings association must file an application for approval of a capital distribution if:

• the total capital distributions for the applicable calendar year exceed the sum of the association’s net income for that year to date plus the association’s retained net income for the preceding two years;

• the association would not be at least adequately capitalized following the distribution;

• the distribution would violate any applicable statute, regulation, agreement or OCC-imposed condition; or

• the association is not eligible for expedited treatment of its filings.

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Even if an application is not otherwise required, every savings association that is a subsidiary of a holding company must still file a notice with the Federal Reserve at least 30 days before the board of directors declares a dividend or approves a capital distribution with an informational copy of the notice sent to the OCC.

The regulators may disapprove a notice or application if:

• the association would be undercapitalized following the distribution;

• the proposed capital distribution raises safety and soundness concerns; or

• the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

In addition, the Federal Deposit Insurance Act provides that an insured depository institution shall not make any capital distribution, if after making such distribution the institution would be undercapitalized.

Liquidity. A federal savings association is required to maintain a sufficient amount of liquid assets to ensure its safe and sound operation.

Community Reinvestment Act and Fair Lending Laws. All savings associations have a responsibility under the Community Reinvestment Act and related regulations of the OCC to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In connection with its examination of a federal savings association, the Office of the Comptroller of the Currency is required to assess the association’s record of compliance with the Community Reinvestment Act. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. An association’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or restrictions on its activities. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies and the Department of Justice. The Association received a satisfactory Community Reinvestment Act rating in its most recent federal examination.

Transactions with Related Parties. A federal savings association’s authority to engage in transactions with its “affiliates” is limited by OCC regulations and by Sections 23A and 23B of the Federal Reserve Act (the “FRA”). The term “affiliates” for these purposes generally means any company that controls, is controlled by, or is under common control with an institution. The Compapny is an affiliate of Flatbush Federal Savings and Loan Association. In general, transactions with affiliates must be on terms that are as favorable to the association as comparable transactions with non-affiliates. In addition, certain types of these transactions are restricted to an aggregate percentage of the association’s capital. Collateral in specified amounts must usually be provided by affiliates in order to receive loans from the association. In addition, federal law prohibits a savings association from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary.

The Association’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the FRA and Regulation O of the Federal Reserve. Among other things,

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these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features, and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Association’s capital. In addition, extensions of credit in excess of certain limits must be approved by the Association’s Board of Directors.

Enforcement. The Office of the Comptroller of the Currency has primary enforcement responsibility over federal savings institutions and has the authority to bring enforcement action against all “institution-affiliated parties,” including stockholders, and attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution, receivership, conservatorship or the termination of deposit insurance. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The FDIC also has the authority to recommend to the OCC that enforcement action be taken with respect to a particular savings institution. If action is not taken by the OCC, the FDIC has authority to take action under specified circumstances.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to implement the safety and soundness standards required under federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal controls and information systems, internal audit systems, credit underwriting, loan documentation, interest rate risk exposure, asset growth, compensation, fees and benefits. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to submit a compliance plan.

Prompt Corrective Action Regulations. Under the prompt corrective action regulations, the OCC is required and authorized to take supervisory actions against undercapitalized savings associations. For this purpose, a savings association is placed in one of the following five categories based on the association’s capital:

• well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and 10% total risk-based capital);

• adequately capitalized (at least 4% leverage capital, 4% Tier 1 risk-based capital and 8% total risk-based capital);

• undercapitalized (less than 8% total risk-based capital, 4% Tier 1 risk-based capital or 3% leverage capital);

• significantly undercapitalized (less than 6% total risk-based capital, 3% Tier 1 risk-based capital or 3% leverage capital); and

• critically undercapitalized (less than 2% tangible capital).

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Generally, the banking regulator is required to appoint a receiver or conservator for an association that is “critically undercapitalized” within specific time frames. The regulations also provide that a capital restoration plan must be filed with the OCC within 45 days of the date an association receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” the performance of which must be guaranteed by any company controlling the association up to specified limits. In addition, numerous mandatory supervisory actions become immediately applicable to the association, including, but not limited to, restrictions on growth, investment activities, capital distributions and affiliate transactions. The OCC may also take any one of a number of discretionary supervisory actions against undercapitalized associations, including the issuance of a capital directive and the replacement of senior executive officers and directors.

At December 31, 2011, the Association met the criteria for being considered “well-capitalized.”

 Insurance of Deposit Accounts. The Association’s deposits are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC. The Dodd-Frank Act made permanent the previous temporary increase in deposit insurance coverage from $100,000 to $250,000 per depositor.

Under the FDIC’s existing risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky institutions paying lower assessments. An institution’s assessment rate depends upon the category to which it is assigned, and certain adjustments specified by FDIC regulations. Assessment rates, as adjusted, previously ranged from seven to 77.5 basis points of assessable deposits. On February 7, 2011, the FDIC issued final rules, effective April 1, 2011, implementing changes to the assessment rules resulting from the Dodd-Frank Act. Initially, the base assessment rates will range from two and one-half to 45 basis points of total average assets less tangible capital (rather than deposits). The rate schedules will automatically adjust in the future when the DIF reaches certain milestones. No institution may pay a dividend if in default of the federal deposit insurance assessment. 

The FDIC imposed on all insured institutions a special emergency assessment of five basis points of total assets minus Tier 1 capital (as of June 30, 2009), capped at ten basis points of an institution’s deposit assessment base, in order to cover losses to the DIF. That special assessment was collected on September 30, 2009. The FDIC provided for similar assessment during the final two quarters of 2009, if deemed necessary.

However, in lieu of further special assessments, the FDIC required insured institutions to prepay estimated quarterly risk-based assessments for the fourth quarter of 2009 through the fourth quarter of 2012. The estimated assessments which included an assumed annual base increase of 5%, were recorded as a prepaid expense asset as of December 31, 2009, and each quarter thereafter, a charge to earnings is recorded for each regulator assessment with an offsetting credit to the prepaid asset. The Association’s prepayment for 2010, 2011 and 2012 amounted to $599,901. 

The Dodd-Frank Act increased the minimum target DIF ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must seek to achieve the 1.35% ratio by September 30, 2020. Insured institutions with assets of $10 billion or more are supposed to fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio, instead leaving it to the discretion of the FDIC. The FDIC has exercised that discretion by establishing a long range fund ratio of 2%.

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The FDIC has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Association. Management cannot predict what insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition or violation that might lead to termination of the Association’s deposit insurance. 

In addition to the FDIC assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, with the approval of the FDIC, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended December 31, 2011, the annualized FICO assessment was equal to 0.68 basis points of total average assets less tangible capital.

In October 2008, the FDIC announced the Transaction Account Guarantee Program as part of the FDIC’s Temporary Liquidity Guarantee Program. Under the Transaction Account Guarantee Program, any participating depository institution was able to provide full deposit insurance coverage for non-interest bearing transaction accounts, regardless of the dollar amount. The Association participated in the Transaction Account Guarantee Program until the program, as extended, expired on December 31, 2010. The Dodd-Frank Act extended unlimited deposit insurance coverage for certain non-interest bearing transaction accounts until December 31, 2012.

Prohibitions Against Tying Arrangements. Federal savings associations are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Federal Home Loan Bank System. The Association is a member of the Federal Home Loan Bank System (“FHLB”), which consists of 12 regional Federal Home Loan Banks. The FHLB provides a central credit facility primarily for member institutions. As a member, the Association is required to acquire and hold specified shares of capital stock in the Federal Home Loan Bank of New York. As of December 31, 2011, Flatbush Federal was in compliance with this requirement.

The dividend yield from Federal Home Loan Bank stock was 4.84% for the year ended December 31, 2011. The Federal Home Loan Bank of New York paid quarterly dividends in 2011 and 2010 totaling $36,000 and $58,000, respectively. No assurance can be given that it will pay any dividends in the future.

Federal Reserve System

The Federal Reserve Board regulations require savings associations to maintain non-interest-earning reserves against their transaction accounts, such as negotiable order of withdrawal and regular checking accounts. At December 31, 2011, Flatbush Federal was in compliance with these reserve requirements.

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The USA PATRIOT Act

In response to the events of September 11, 2001, Congress enacted in 2001 the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the “USA PATRIOT Act,” which was signed into law on October 26, 2001. The USA PATRIOT Act gives the federal government new powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) contains a range of corporate accounting and reporting reforms that are intended to address corporate and accounting fraud. In addition to the establishment of a new accounting oversight board that will enforce auditing, quality control and independence standards and will be funded by fees from all publicly traded companies, the Sarbanes-Oxley Act places certain restrictions on the scope of services that may be provided by accounting firms to their public company audit clients. Any non-audit services being provided to a public company audit client will require preapproval by the company’s audit committee. In addition, the Sarbanes-Oxley Act makes certain changes to the requirements for audit partner rotation after a period of time. The Sarbanes-Oxley Act requires chief executive officers and chief financial officers, or their equivalent, to certify to the accuracy of periodic reports filed with the Securities and Exchange Commission (“SEC”), subject to civil and criminal penalties if they knowingly or willingly violate this certification requirement. In addition, under the Sarbanes-Oxley Act, counsel will be required to report evidence of a material violation of the securities laws or a breach of fiduciary duty by a company to its chief executive officer or its chief legal officer, and, if such officer does not appropriately respond, to report such evidence to the audit committee or other similar committee of the board of directors or the board itself.

Under the Sarbanes-Oxley Act, longer prison terms will apply to corporate executives who violate federal securities laws; the period during which certain types of suits can be brought against a company or its officers is extended; and bonuses issued to top executives prior to restatement of a company’s financial statements are now subject to disgorgement if such restatement was due to corporate misconduct. Executives are also prohibited from insider trading during retirement plan “blackout” periods, and loans to company executives (other than loans by financial institutions permitted by federal rules and regulations) are restricted. In addition, a provision directs that civil penalties levied by the SEC as a result of any judicial or administrative action under the Act be deposited to a fund for the benefit of harmed investors. The Federal Accounts for Investor Restitution provision also requires the SEC to develop methods of improving collection rates. The legislation accelerates the time frame for disclosures by public companies, as they must immediately disclose any material changes in their financial condition or operations. Directors and executive officers must also provide information for most changes in ownership in a company’s securities within two business days of the change.

The Sarbanes-Oxley Act also increases the oversight of, and codifies certain requirements relating to audit committees of public companies and how they interact with the company’s “registered public accounting firm.” Audit Committee members must be independent and are absolutely barred from accepting consulting, advisory or other compensatory fees from the issuer. In addition, companies must disclose whether at least one member of the committee is a “financial expert” (as such term will be defined by the Securities and Exchange Commission) and if not, why not. Under the Sarbanes-Oxley Act, a company’s registered public accounting firm will be prohibited from performing statutorily mandated audit services for a company if such company’s chief executive officer, chief financial officer, comptroller, chief accounting officer or any person serving in equivalent positions had been employed by such firm and participated in the audit of such company during the one-year period preceding the audit

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initiation date. The Sarbanes-Oxley Act also prohibits any officer or director of a company or any other person acting under their direction from taking any action to fraudulently influence, coerce, manipulate or mislead any independent accountant engaged in the audit of the company’s financial statements for the purpose of rendering the financial statements materially misleading. The Sarbanes-Oxley Act also requires the SEC to prescribe rules requiring inclusion of any internal control report and assessment by management in the annual report to shareholders.

Management has incurred certain costs and continues to evaluate the estimated cost of ongoing compliance with the Sarbanes-Oxley Act.

Holding Company Regulation

General. Flatbush, MHC and the Company are nondiversified savings and loan holding companies within the meaning of the Home Owners’ Loan Act, and are subject to Federal Reserve Board regulations, examinations, supervision and reporting requirements. In addition, the Federal Reserve Board has enforcement authority over the Company and Flatbush MHC, and their subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to the Association. As federal corporations, the Company and Flatbush MHC are generally not subject to state business organization laws.

Permitted Activities. Pursuant to Section 10(o) of the Home Owners’ Loan Act and Federal Reserve Board regulations and policy, a mutual holding company and a federally chartered mid-tier holding company such as the Company and Flatbush MHC, may engage in the following activities: (i) investing in the stock of a savings association; (ii) acquiring a mutual association through the merger of such association into a savings association subsidiary of such holding company or an interim savings association subsidiary of such holding company; (iii) merging with or acquiring another holding company, one of whose subsidiaries is a savings association; (iv) investing in a corporation, the capital stock of which is available for purchase by a savings association under federal law or under the law of any state where the subsidiary savings association or associations share their home offices; (v) furnishing or performing management services for a savings association subsidiary of such company; (vi) holding, managing or liquidating assets owned or acquired from a savings subsidiary of such company; (vii) holding or managing properties used or occupied by a savings association subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix) any other activity (A) that the Federal Reserve, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the Federal Reserve, by regulation, prohibits or limits any such activity for savings and loan holding companies; or (B) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987; (x) any activity permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act, including securities and insurance underwriting; and (xi) purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such savings and loan holding company is approved by the Federal Reserve. If a mutual holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in activities listed in (i) through (xi) above, and has a period of two years to cease any nonconforming activities and divest of any nonconforming investments.

The Home Owners’ Loan Act prohibits a savings and loan holding company, including the Company and Flatbush MHC, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings institution or holding company thereof, without prior written approval of the Federal Reserve. It also prohibits the acquisition or retention of, with certain exceptions, more than 5% of a nonsubsidiary company engaged in activities other than those permitted by the Home Owners’

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Loan Act; or acquiring or retaining control of an institution that is not federally insured. In evaluating applications by holding companies to acquire savings institutions, the Federal Reserve must consider the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance fund, the convenience and needs of the community and competitive factors.

The Federal Reserve is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies, and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Waivers of Dividends by Flatbush Federal Bancorp, MHC. The Dodd-Frank Act addressed the issue of dividend waivers in the context of the transfer of the supervision of savings and loan holding companies from the OTS to the Federal Reserve. The Dodd-Frank Act specified that dividends may be waived if certain conditions are met, including that the Federal Reserve does not object after being given written notice of the dividend and proposed waiver. The Dodd-Frank Act indicates that the Federal Reserve may not object to such a waiver (i) if the mutual holding company involved has, prior to December 1, 2009, reorganized into a mutual holding company structure, engaged in a minority stock offering and waived dividends; (ii) the board of directors of the mutual holding company expressly determines that a waiver of the dividend is consistent with its fiduciary duties to members and (iii) the waiver would not be detrimental to the safe and sound operation of the savings association subsidiaries of the holding company. Flatbush MHC was formed, engaged in a minority stock offering (through the Company) and waived dividends prior to December 1, 2009. The Federal Reserve Board has not previously permitted dividend waivers by bank holding companies that are mutuals and may object to dividend waivers involving mutual savings and loan holding companies, notwithstanding the referenced language in the Dodd-Frank Act.

Capital. Savings and loan holding companies are not currently subject to specific regulatory capital requirements. The Dodd-Frank Act, however, requires the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to insured institutions themselves. That will eliminate the inclusion of certain instruments, such as trust preferred securities, from Tier 1 capital. Instruments issued by mutual holding companies before May 19, 2010 will be grandfathered. There is a five year transition period from the July 21, 2010 date of enactment of the Dodd-Frank Act before the capital requirements will apply to savings and loan holding companies.

Source of Strength. The Dodd-Frank Act also extends the “source of strength” doctrine to savings and loan holding companies. The regulatory agencies must promulgate regulations implementing the “source of strength” policy that requires holding companies act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

Conversion of Flatbush Federal Bancorp, MHC to Stock Form. Federal regulations permit Flatbush MHC to convert from the mutual form of organization to the capital stock form of organization (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur, and the Board of Directors has no current intention or plan to undertake a Conversion Transaction. In a Conversion Transaction, a new holding company would be formed as the successor to the Company (the “New Holding Company”), Flatbush MHC’s corporate existence would end, and certain depositors of the Association would receive the right to subscribe for additional shares of the New Holding

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Company. In a Conversion Transaction, each share of common stock held by stockholders other than Flatbush Federal Bancorp, MHC (“Minority Stockholders”) would be automatically converted into a number of shares of common stock of the New Holding Company determined pursuant to an exchange ratio that ensures that Minority Stockholders own the same percentage of common stock in the New Holding Company as they owned in the Company immediately prior to the Conversion Transaction. Under federal regulations, Minority Stockholders would not be diluted because of any dividends waived by Flatbush MHC (and waived dividends would not be considered in determining an appropriate exchange ratio), in the event Flatbush MHC converts to stock form. The total number of shares held by Minority Stockholders after a Conversion Transaction also would be increased by any purchases by Minority Stockholders in the stock offering conducted as part of the Conversion Transaction.

The Dodd-Frank Act provides that waived dividends will not be considered in determining the appropriate exchange ratio after the transfer of responsibilities from the Office of Thrift Supervision to the Federal Reserve Board, provided that the mutual holding company involved was formed, engaged in a minority offering and waived dividends prior to December 1, 2009. Flatbush MHC was formed, engaged in a minority stock offering (through the Company) and waived dividend prior to December 1, 2009.

Federal Securities Laws

The Company’s common stock is registered with the SEC under the Securities Exchange Act of 1934. The Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

The Company common stock held by persons who are affiliates (generally officers, directors and principal stockholders) of the Company may not be resold without registration or unless sold in accordance with certain resale restrictions. If the Company meets specified current public information requirements, each affiliate of the Company is able to sell in the public market, without registration, a limited number of shares in any three-month period.

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Executive Officers of the Company

Listed below is information, as of December 31, 2011, concerning the Company’s executive officers. There are no arrangements or understandings between the Company and any of the persons named below with respect to which he was or is to be selected as an officer.

Name	Age	Position and Term
Jesus R. Adia	58	President and Chief Executive Officer
John S. Lotardo	50	Chief Financial Officer and Controller

Availability of Annual Report on Form 10-K

The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s Public Reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on its public reference room. In addition, our SEC filings are available to the public at the SEC’s web site at http://www.sec.gov and on the website at http://www.flatbush.com. The Company has included the SEC’s web address and our web address as inactive textual references only. 

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ITEM 1A. RISK FACTORS

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

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

ITEM 2. PROPERTIES

Properties

The following table provides certain information with respect to our offices as of December 31, 2011:

Location	Leased or Owned	Year Acquired or Leased
Main Office 2146 Nostrand Avenue Brooklyn, NY 11210	Owned1	1963
Branch Office 6410 18th Avenue Brooklyn, NY 11204	Owned	2005
Branch Office 518 Brighton Beach Avenue Brooklyn, NY 11235	Leased	1976

¹ On January 13, 2012, the Company completed the sale of its main office building and adjoining real estate located at 2146 Nostrand Avenue, Brooklyn, New York 11210 and are in the process of establishing a new branch located as disclosed in a Form 8-K filed on January 18, 2012.

The net book value of our premises, land and equipment was approximately $2.4 million at December 31, 2011.

ITEM 3. LEGAL PROCEEDINGS

We are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of our business. At December 31, 2011, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF SECURITIES

The Company’s Common Stock is traded on the over-the-counter bulletin board under the symbol “FLTB.”

As of December 31, 2011, there were 2,799,657 shares of Company common stock issued and 2,736,907 common shares outstanding and approximately 460 stockholders of record. Of the total outstanding shares, 1,484,208 were held by Flatbush Federal Bancorp, MHC and 1,252,699 were held by other shareholders.

The following table sets forth the range of the high and low bid prices of the Company’s Common Stock for the periods presented. The Company declared 10% stock dividends on February 23, 2006 and March 22, 2005. The Company has never issued a cash dividend.

	Prices of Common Stock
	High		Low
Calendar Quarter Ended
December 31, 2011	$	4.00	$	3.15
September 30, 2011	$	5.00	$	3.50
June 30, 2011	$	5.60	$	4.70
March 31, 2011	$	6.00	$	5.40
December 31, 2010	$	6.00	$	5.15
September 30, 2010	$	6.97	$	4.20
June 30, 2010	$	5.25	$	4.11
March 31, 2010	$	4.55	$	3.70

Set forth below is information, as of December 31, 2011 regarding equity compensation plans categorized by those plans that have been approved by stockholders and those plans that have not been approved by stockholders.

Plan	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights			Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2)	Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plan
Equity compensation plans approved by stockholders	82,378	(1)	$	9.71	57,357
Equity compensation plans not approved by stockholders	—			—	—
Total	82,378		$	9.71	57,357

(1)	Consists of options to purchase 82,378 shares of common stock under the 2004 Plan. In addition to these outstanding options, restricted stock awards of 3,798 shares were non-vested under the 2004 Plan as of December 31, 2011. The shares reflect the 10% stock dividends paid to all stockholders on April 25, 2005 and March 29, 2006.
(2)	The weighted average exercise price, following the 10% stock dividends paid on April 25, 2005 and March 29, 2006, reflects the exercise price of $9.71 per share for options granted under the 2004 Plan.

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On June 30, 2005, the Board of Directors approved a stock repurchase program and authorized the repurchase of up to 50,000 shares of the Company’s outstanding shares of common stock. This repurchase program was completed on December 7, 2007 with 50,000 shares having been repurchased. On August 30, 2007, the Company approved a second stock repurchase program and authorized the repurchase of up to 50,000 shares of the Company’s outstanding shares of common stock. Stock repurchases will be made from time to time and may be effected through open market purchases, block trades and in privately negotiated transactions. Repurchased stock will be held as treasury stock and will be available for general corporate purposes. As of December 31, 2011, 12,750 total shares have been repurchased by the Company under the second repurchase program. During the quarter ended December 31, 2011, no shares were repurchased. These total repurchased shares do not include the stock dividend shares of 1,340 which, along with the repurchased shares, are held as treasury stock. 

Company Purchases of Common Stock
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 (or approximate dollar value) of shares that may yet be purchased under the plans or programs
October 1, 2011 through October 31, 2011		—	$	—		62,750		37,250
November 1, 2011 through November 30, 2011		—		—		62,750		37,250
December 1, 2011 through December 31, 2011		—		—		62,750		37,250

ITEM 6. SELECTED FINANCIAL DATA

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

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is incorporated by reference to our Annual Report to Shareholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated by reference to our Annual Report to Shareholders.

34

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEMS 9A. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the fiscal year (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective in timely alerting management to material information relating to the Company (including the Bank) required to be included in our periodic SEC filings.

(b) Management’s Annual Report on Internal Control over Financial Reporting.

Management of the Company and the Bank are responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s system of internal control is designed under the supervision of management, including our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of the Company’s consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles (“GAAP”).

Our internal control over financial reporting including policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, provide reasonable assurance that receipts and expenditures are made only in accordance with the authorization of management and the Board of Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections on any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with policies and procedures may deteriorate.

As of December 31, 2011, management assessed the effectiveness of the Company’s internal control over financial reporting based upon the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon its assessment, management believes that the Company’s internal control over financial reporting as of December 31, 2011 is effective using these criteria. This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting, pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

35

(c) Changes in Internal Controls over Financial Reporting.

There were no significant changes made in our internal controls during the period covered by this report or, to our knowledge, in other factors that has materially affected or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

See the Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

ITEM 9B. OTHER INFORMATION

None.

36

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The Company has adopted a Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics may be accessed on the Company’s website at www.flatbush.com. We will disclose on our website any amendments to or waivers from any provision of our Code of Ethics that applies to any of the directors or officers.

Information concerning Directors of the Company is incorporated herein by reference from our definitive Proxy Statement (the “Proxy Statement”), specifically in the section captioned “Proposal I—Election of Directors.” [In addition, see “Executive Officers of the Company” in Item 1 for information concerning our executive officers.] Information concerning compliance with Section 16(a) of the Exchange Act is incorporated herein by reference from our Proxy Statement, specifically captioned as “Section 16(a) Beneficial Ownership Reporting Compliance.” Information regarding the Company’s Audit Committee is incorporated herein by reference from our Proxy Statement, specifically captioned as “Audit Committee.” Information regarding the Company’s nomination process to the Board of Directors is incorporated by reference from our Proxy statement, specifically in the section captioned “Proposal I – Election of Directors.”

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation is incorporated herein by reference from our Proxy Statement, specifically the section captioned “Executive Compensation.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information concerning security ownership of certain owners and management is incorporated herein by reference from our Proxy Statement, specifically the section captioned “Voting Securities and Principal Holder Thereof.”

Information regarding equity compensation plans categorized by those plans that have been approved by stockholders and those plans that have not been approved by stockholders is incorporated herein by reference from Item 5 of this Annual Report on Form 10-K. 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information concerning relationships and transactions is incorporated herein by reference from our Proxy Statement, specifically the section captioned “Transactions with Certain Related Persons.” Information concerning Director independence is incorporated herein by reference from our proxy statement, specifically the section captioned “Director Independence.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information concerning principal accounting fees and services is incorporated herein by reference from our Proxy Statement, specifically the section captioned “Proposal II-Ratification of Appointment of Auditors.”

37

PART IV

ITEM 15. EXHIBITS

The exhibits and financial statement schedules filed as a part of this Form 10-K are as follows:

(a)(1)	Financial Statements
	•	Report of Independent Registered Public Accounting Firm
	•	Consolidated Statements of Financial Condition at December 31, 2011 and 2010
	•	Consolidated Statements of Operations for the Years Ended December 31, 2011 and 2010
	•	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2011 and 2010
	•	Consolidated Statements of Cash Flows for the Years Ended December 31, 2011 and 2010
	•	Notes to Consolidated Financial Statements.
(a)(2)	Financial Statement Schedules
	No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.
(a)(3)	Exhibits

2.1	Agreement and Plan of Merger by and among (i) Northfield Savings Bank, Northfield Bancorp, Inc. and Northfield Bancorp, MHC, and (ii) Flatbush Federal Savings and Loan Association, Flatbush Federal Bancorp, Inc. and Flatbush Federal Bancorp, MHC.*
2.2	Second Amendment to Purchase Agreement. **
3.1	Federal Stock Charter of Flatbush Federal Bancorp, Inc. ***
3.2	Bylaws of Flatbush Federal Bancorp, Inc., as amended. ***
4	Form of common stock certificate of Flatbush Federal Bancorp, Inc. ***
10.1	Deferred Compensation Plan for Anthony J. Monteverdi. ****
10.2	Flatbush Federal Savings & Loan Association Amended and Restated Directors Retirement Plan. *****
10.3	Employee Stock Ownership Plan. ***

38

10.4	Amended and Restated Employment Agreement for Jesus R. Adia. *****
10.5	Amended and Restated Employment Agreement for John S. Lotardo. *****
10.6	Amended and Restated Executive Supplemental Retirement Income Agreement for Jesus R. Adia. *****
10.7	Amended and Restated Executive Supplemental Retirement Income Agreement for John S. Lotardo**, ***
13	Annual Report to Stockholders
21	Subsidiaries of the Registrant
23	Consent of ParenteBeard LLC
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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from Flatbush Federal Bancorp, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 formatted in XBRL: (1) Consolidated Statements of Financial Condition as of December 31, 2011 and 2010; (2) Consolidated Statements of Operations for the years ended December 31, 2011 and 2010; (3) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011 and 2010; (4) Consolidated Statements of Cash Flow for the years ended December 31, 2011 and 2010; and (5) Notes to Consolidated Financial Statements.******

*	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, originally filed as an exhibit to Form 8-K with the Securities and Exchange Commission on March 15, 2012.
**	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2011 filed as an exhibit on Form 8-K with the Securities and Exchange Commission on March 29, 2011.
***	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2011, originally filed with the Securities and Exchange Commission on June 27, 2003.

39

****	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on March 31, 2009.
*****	Denotes management contract or compensatory plan.
******	These interactive data files are being furnished as part of this Annual Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Flatbush Federal Bancorp, Inc.
Date: March 30, 2012	By:	/s/ Jesus R. Adia
		Jesus R. Adia
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Jesus R. Adia	By:	/s/ John S. Lotardo
	Jesus R. Adia		John S. Lotardo,
	Chairman of the Board President and Chief Executive Officer (Principal Executive Officer)		EVP and Chief Financial Officer (Principal Financial and Accounting Officer)
Date: March 30, 2012		Date: March 30, 2012
By:	/s/ D. John Antoniello	By:	/s/ Michael J. Lincks
	D. John Antoniello		Michael J. Lincks
	Director		Director
Date: March 30, 2012		Date: March 30, 2012
By:	/s/ Patricia A. McKinley Scanlan	By:	/s/ Alfred S. Pantaleone
	Patricia A. McKinley		Alfred S. Pantaleone
	Director		Director
Date: March 30, 2012		Date: March 30, 2012
By:	/s/ Charles J. Vorbach
	Charles J. Vorbach
	Director
Date: March 30, 2012

41

EXHIBIT INDEX

2.1	Agreement and Plan of Merger by and among (i) Northfield Savings Bank, Northfield Bancorp, Inc. and Northfield Bancorp, MHC, and (ii) Flatbush Federal Savings and Loan Association, Flatbush Federal Bancorp, Inc. and Flatbush Federal Bancorp, MHC.*
2.2	Second Amendment to Purchase Agreement. **
3.1	Federal Stock Charter of Flatbush Federal Bancorp, Inc. ***
3.2	Bylaws of Flatbush Federal Bancorp, Inc.***
4	Form of common stock certificate of Flatbush Federal Bancorp, Inc. ***
10.1	Deferred Compensation Plan for Anthony J. Monteverdi. ****
10.2	Flatbush Federal Savings & Loan Association Amended and Restated Directors Retirement Plan. *****
10.3	Employee Stock Ownership Plan. ****
10.4	Amended and Restated Employment Agreement for Jesus R. Adia. *****
10.5	Amended and Restated Employment Agreement for John S. Lotardo. *****
10.6	Amended and Restated Executive Supplemental Retirement Income Agreement for Jesus R. Adia. *****
10.7	Amended and Restated Executive Supplemental Retirement Income Agreement for John S. Lotardo. *****
13	Annual Report to Stockholders
21	Subsidiaries of the Registrant
23	Consent of ParenteBeard LLC
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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

42

101 The following financial information from Flatbush Federal Bancorp, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 formatted in XBRL: (1) Consolidated Statements of Financial Condition as of December 31, 2011 and 2010; (2) Consolidated Statements of Operations for the years ended December 31, 2011 and 2010; (3) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011 and 2010; (4) Consolidated Statements of Cash Flow for the years ended December 31, 2011 and 2010; and (5) Notes to Consolidated Financial Statements.******

*	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, originally filed as an exhibit to Form 8-K with the Securities and Exchange Commission on March 15, 2012.
**	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2011 filed as an exhibit on Form 8-K with the Securities and Exchange Commission on March 29, 2011.
***	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2011 originally filed with the Securities and Exchange Commission on June 27, 2003.
****	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on March 31, 2009.
*****	Denotes management contract or compensatory plan.
******	These interactive data files are being furnished as part of this Annual Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

43

EX-13

EXHIBIT 13

ANNUAL REPORT TO STOCKHOLDERS

Selected Consolidated Financial Information and Other Data

The following information is derived from the audited consolidated financial statements of Flatbush Federal Bancorp, Inc. (the “Company”). For additional information about the Company and Flatbush Federal Savings and Loan Association, (the “Association”) a more detailed presentation is made in the “Management’s Discussion and Analysis,” the Consolidated Financial Statements of the Company and the related notes included in this Annual Report.

Selected Financial Condition Data:	At December 31,
(In thousands)	2011		2010
Total assets	$	142,714	$	147,019
Loans receivable, net (1)		95,162		106,478
Securities held to maturity		25,749		21,780
Cash and cash equivalents		8,801		8,184
Deposits		114,923		117,074
Borrowings		10,082		12,043
Stockholders’ equity		14,560		15,754

___________________________________

(1) Net of allowance for loan losses and deferred loan fees.

Selected Operating Data:	For the Years Ended December 31
(In thousands, except per share data)		2011			2010
Total interest income	$	6,806		$	7,962
Total interest expense		1,554			2,050
Net interest income		5,252			5,912
Provision for loan losses		1,711			821
Non-interest income		283			254
Non-interest expense		5,094			4,746
Income tax (benefit) expense		(632	)		156
Net (loss) income	$	(638	)	$	441
Net (loss) income per common share – basic and diluted	$	(0.24	)	$	0.17

Exhibit 13 -1

Selected Financial Ratios and Other Data: 

	At or for the Years Ended December 31,
	2011			2010
Performance Ratios:
Return on average assets (1)		(0.44	%)		0.29	%
Return on average equity		(4.15	%)		2.81	%
Net yield on average interest-earning assets		5.21	%		5.63	%
Net yield on average interest-bearing liabilities		1.29	%		1.59	%
Net interest rate spread (2)		3.92	%		4.04	%
Net interest margin (3)		4.02	%		4.18	%
Average interest-earning assets to average interest- bearing liabilities		1.08	x		1.10	x
Capital Ratios:
Average stockholders equity to average assets		10.72	%		10.26	%
Tier 1 core ratio (to adjusted total assets)		11.52	%		11.45	%
Total risk-based capital ratio		19.88	%		20.30	%
Asset Quality Ratios:
Allowance for loan losses to gross loans outstanding		2.30	%		1.52	%
Non-performing loans to total loans		8.39	%		7.74	%
Non-performing assets to total assets		6.26	%		5.74	%
Other Data:
Number of full-service offices		3			3

___________________________________
(1)	Ratio of net income to average total assets.
(2)	The difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(3)	Net interest income divided by average interest-earning assets.

Exhibit 13 -2

Management’s Discussion and Analysis of Financial Condition

and Results of Operation

The Company is a federal corporation, which was organized in 2003 as part of the mutual holding company reorganization of the Association. The Company’s principal asset is its investment in the Association. The Company is a majority owned subsidiary of Flatbush Federal Bancorp, MHC, (“Flatbush MHC”) a federally chartered mutual holding company. At December 31, 2011, 1,484,208 shares of the Company’s common stock were held by its Flatbush MHC, and 1,252,699 shares were held by shareholders other than Flatbush MHC. At December 31, 2011, the Company had consolidated assets of $142.7 million, deposits of $114.9 million and stockholders’ equity of $14.6 million.

On January 13, 2012, the Company consummated the sale of the Association’s main branch building and a portion of adjoining real estate to a third party for consideration of $10,136,000 and recognized a pre-tax gain of $9,072,000. This transaction is more fully described in Note 20 to the consolidated financial statements.

On March 13, 2012, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and between (i) Northfield Bank, Northfield Bancorp, Inc. (“Northfield Bancorp”), and Northfield Bancorp, MHC, and (ii) the Company, the Association and Flatbush Federal Bancorp, MHC. The Merger Agreement provides, among other things, that as a result of the merger of the Company into Northfield Bancorp (the “Mid-Tier Merger”), each outstanding share of the Company’s common stock will be converted into the right to receive 0.4748 shares of Northfield Bancorp common stock. The Merger Agreement contains a number of customary representations and warranties by the parties regarding certain aspects of their respective businesses, financial condition, structure and other facts pertinent to the Merger that are customary for a transaction of this kind. The obligation of the parties to complete the Merger is subject to various customary conditions. If the Merger is terminated under specified situations in the Merger Agreement (because the Company accepts a proposal to be acquired that is superior to the one contained in the Merger Agreement, enters into an agreement related to such a proposal and terminates the Merger Agreement, or fails to make, withdraws, modifies or qualifies its recommendation regarding the Merger Agreement), the Company may be required to pay a termination fee to Northfield Bancorp of approximately $700,000. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was included in a Form 8-K filed with the Securities and Exchange Commission on March 15, 2012.

General

The results of operations depend primarily on the Company’s net interest income. Net interest income is the difference between the interest income earned on interest-earning assets, consisting primarily of loans, investment securities, mortgage-backed securities and other interest-earning assets (primarily cash and cash equivalents), and the interest paid on interest-bearing liabilities, consisting of NOW accounts, passbook and club accounts, savings accounts, time deposits and borrowings. The results of operations also are affected by provisions for loan losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of fees and service charges, increases to the cash surrender value of bank owned life insurance and miscellaneous other income (consisting of fees for minimum balance requirements, dormant deposit accounts, fees charged to third parties for document requests and sale of money orders and travelers checks). Non-interest expense currently consists primarily of salaries and employee benefits, equipment, occupancy costs, data processing, deposit insurance premiums, other insurance premiums, and other operating expenses (consisting of legal fees, director compensation, postage, stationery, professional fees and other operational expenses). The Company’s results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Exhibit 13 -3

Critical Accounting Policies

The Company considers accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. The Company considers allowance for loan losses, benefit plan assumptions and deferred income taxes to be 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.

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 loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.

The analysis 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 weighting (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 allowance. Actual loan losses may be significantly more than the loan loss allowance established which could have a material negative effect on the Company’s financial results.

Pension Plan Assumptions. Our pension plan costs are calculated using actuarial concepts, as required under accounting for defined benefit pension and other post retirement plans. Pension expense and the determination of our projected pension liability are based upon two critical assumptions: the discount rate and the expected return on plan assets. We evaluate each of these critical assumptions annually. Other assumptions impact the determination of pension expense and the projected liability including the primary employee demographics, such as retirement patterns, employee turnover, mortality rates, and estimated employer compensation increases. These factors, along with the critical assumptions, are carefully reviewed by management each year in consultation with our pension plan consultants and actuaries. Further information about our pension plan assumptions, the plan’s funded status, and other plan information is included in Note 11 to Consolidated Financial Statements.

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. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. 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. The Company exercises significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets, including projections of future taxable income. These judgments are reviewed on a continual basis as regulatory and business factors change.

Exhibit 13 -4

Comparison of Financial Condition at December 31, 2011 and 2010

The Company’s total assets at December 31, 2011 were $142.7 million compared to $147.0 million at December 31, 2010, a decrease of $4.3 million, or 2.9%. Loans receivable decreased $11.3 million, or 10.6%, to $95.2 million at December 31, 2011 from $106.5 million at December 31, 2010. Demand for one-to four-family residential mortgage loans decreased primarily due to the economic recession, high unemployment rate and declining real estate values. In addition, mortgage-backed securities decreased $379,000, or 1.7%, to $21.4 million at December 31, 2011 from $21.8 million as of December 31, 2010. Investment securities increased and totaled $4.3 million due to purchases during the quarters ended June 30 and September 30, 2011. Cash and cash equivalents increased $617,000, or 7.5%, to $8.8 million at December 31, 2011 from $8.2 million at December 31, 2010.

Total deposits decreased $2.2 million, or 1.9%, to $114.9 million at December 31, 2011 from $117.1 million at December 31, 2010. Borrowings from the Federal Home Loan Bank of New York decreased $1.9 million, or 15.8%, to $10.1 million at December 31, 2011 from $12.0 million at December 31, 2010. The Company borrows from the Federal Home Loan Bank of New York to fund loan commitments, securities purchases and savings withdrawals.

Total stockholders’ equity decreased $1.2 million, or 7.6%, to $14.6 million at December 31, 2011 from $15.8 million at December 31, 2010. The decrease to stockholders’ equity reflects a net loss of $638,000 and an increase of $662,000 of accumulated other comprehensive loss. This was partially offset by amortization of $25,000 of unearned ESOP shares, amortization of $41,000 of restricted stock awards for the Company’s Stock-Based Incentive Program (the “Plan”) and amortization of $41,000 of stock option awards. No shares were repurchased during the year ended December 31, 2011.

On June 30, 2005, the Company approved a stock repurchase program and authorized the repurchase of up to 50,000 shares of the Company’s outstanding shares of common stock. This repurchase program was completed on December 7, 2007 with 50,000 shares repurchased. On August 30, 2007, the Company approved a second stock repurchase program and authorized the repurchase of up to an additional 50,000 shares of the Company’s outstanding shares of common stock. Stock repurchases will be made from time to time and may be effected through open market purchases, block trades and in privately negotiated transactions. Repurchased stock will be held as treasury stock and will be available for general corporate purposes. As of December 31, 2011, a total of 12,750 shares have been acquired at a weighted average price of $4.44 per share pursuant to the second stock repurchase program. No repurchases were made for the years ended December 31, 2011 and 2010.

Comparison of Operating Results for the Years Ended December 31, 2011 and 2010

General. Net income decreased by $1.1 million, to a loss of $638,000 for the year ended December 31, 2011 from income of $441,000 for the year ended December 31, 2010. Lower yield on interest earning assets, partially offset by lower cost of deposits and borrowings, caused the Company’s net interest margin to decrease by 16 basis points from 4.18% in 2010 to 4.02% in 2011.

Interest Income. Interest income decreased by $1.16 million or 12.6%, to $6.81 million for the year ended December 31, 2011 from $7.96 million for the year ended December 31, 2010. The decrease in interest income resulted from decreases of income of $899,000 from loans receivable, $295,000 from mortgage-backed securities, and $2,000 from other interest earning assets, partially offset by an increase

Exhibit 13 -5

of $40,000 from investment securities. More generally, the decrease in interest income was attributable to a decrease of $10.8 million in the average balance of interest earning assets to $130.7 million for the year ended December 31, 2011 from $141.5 million for the year ended December 31, 2010 and a 42 basis point decrease in the average yield on interest earning assets.

Interest income on loans receivable decreased $899,000 or 13.8 %, to $5.6 million for the year ended December 31, 2011 from $6.5 million for the comparable period in 2010. The decrease resulted from a lower average balance of $100.7 million for the year ended December 31, 2011, from an average balance of $110.9 million for the year ended December 31, 2010 and a lower average yield of 5.58% for the year ended December 31, 2011 from an average yield of 5.88% for the year ended December 31, 2010.

Interest income from mortgage-backed securities decreased $295,000, or 21.4%, to $1.1 million for the year ended December 31, 2011 from $1.4 million for the year ended December 31, 2010. This decrease reflects a $2.3 million decrease in the average balance of mortgage-backed securities to $21.6 million for the year ended December 31, 2011 from $23.9 million for the same period in 2010 and an decrease in the average yield of 74 basis points to 5.03% for the year ended December 31, 2011 from 5.77% for the year ended December 31, 2010.

Interest income from investment securities increased $40,000, or 69.0%, to $98,000 for the year ended December 31, 2011 from $58,000 for the year ended December 31, 2010. The increase resulted from an increase of $2.4 million in the average balance in investment securities to $3.4 million for the year ended December 31, 2011 from an average balance of $1.0 million for the year ended December 31, 2010, partially offset by a decrease of 292 basis points to 2.86% in the average yield for the year ended December 31, 2011 from an average yield of 5.78% for the year ended December 31, 2010.

Interest income on other interest-earning assets, primarily interest-earning deposits and federal funds sold, decreased $2,000, or 33.3%, to $4,000 for the year ended December 31, 2011 from $6,000 for the year ended December 31, 2010. The decrease was attributable to the decrease of $747,000 in the average balance of interest earning deposits of $5.0 million for the year ended December 31, 2011 from $5.7 million for the year ended December 31, 2010.

Interest Expense. Total interest expense decreased $496,000, or 24.2%, to $1.6 million for the year ended December 31, 2011 from $2.1 million for the year ended December 31, 2010. The decrease in interest expense resulted from a decrease of 30 basis points in the average cost of interest-bearing liabilities to 1.29% for the year ended December 31, 2011 from 1.59% for the year ended December 31, 2010, and a $8.7 million decrease in the average balance of interest-bearing liabilities to $120.6 million for the year ended December 31, 2011 from $129.3 million for the year ended December 31, 2010. In addition, the average balance of interest-bearing deposits decreased $2.9 million to $109.7 million with an average cost of 1.31% for the year ended December 31, 2011 from $112.6 million with an average cost of 1.54% for the year ended December 31, 2010. In addition, the decrease in interest expense resulted from a decrease of $5.8 million in the average balance of Federal Home Loan Bank of New York advances to $10.9 million, with an average cost of 1.07%, for the year ended December 31, 2011, compared to $16.7 million and 1.92% for the year ended December 31, 2010. The average balance of certificates of deposit decreased by $2.9 million to $75.1 million with an average cost of 1.74% in 2011, as compared with an average balance of $78.0 million with an average cost of 2.06% in 2010. The average balance for savings and club accounts decreased by $2,000 to $34.2 million with an average cost of 0.37% in 2011, as compared to $34.2 million with an average cost of 0.37% in 2010. The average balance of interest-bearing demand deposits decreased by $26,000 to $332,000 with an average cost of 0.33% in 2011 from $358,000 with an average cost of 0.34% in 2010.

Exhibit 13 -6

Net Interest Income. Net interest income decreased $660,000, or 11.2%, to $5.3 million for 2011 from $5.9 million for 2010. The Company’s interest rate spread decreased by 12 basis points to 3.92% in 2011 from 4.04% in 2010. Additionally, the Company’s interest margin decreased by 16 basis points to 4.02% in 2011 from 4.18% in 2010.

Provision for Loan Losses. The Company establishes provisions for loan losses, which are charged to operations, at a level necessary to absorb known and inherent losses that are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information, and prevailing economic conditions. Prevailing national and local economic conditions are reflected in the continued high unemployment rate and depressed real estate values. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. Based on its evaluation of these factors, management made a provision of $1.7 million for the year ended December 31, 2011, as compared to a provision of $821,000 for the year ended December 31, 2010. The increase in provision for loan loss during the year was primarily due to increased specific loan loss reserves on construction loan participations, commercial real estate loans, one-to four-family residential loans and credit card loans, as well as an increase in general allowance for loan loss considered appropriate due to the increase of non-performing loans and to address inherent losses that are probable and estimable in the loan portfolio. Management used the same methodology and generally similar assumptions in assessing the allowance for both years. The allowance for loan losses was $2.2 million, or 2.30% of total loans outstanding at December 31, 2011, as compared with $1.6 million, or 1.51% of total loans outstanding at December 31, 2010. Non-performing loans to total assets was 574 basis points on December 31, 2011 and December 31, 2010. The level of the allowance is based on estimates, and the ultimate losses may vary from the estimates.

Management evaluates the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. Although management believes that it uses the best information available to establish the allowance for loan losses, future additions to the allowance may be necessary based on estimates that are susceptible to change as a result of changes in economic conditions and other factors. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, will periodically review the allowance for loan losses. The Office of the Comptroller of the Currency may require the Association to make adjustments to the allowance based on its judgments about information available to it at the time of its examination.

Non-Interest Income. Non-interest income increased by $29,000, or 11.4%, to $283,000 in 2011 from $254,000 in 2010. This increase was primarily due to increases in fees and service charges and miscellaneous income.

Exhibit 13 -7

Non-Interest Expense. Non-interest expense increased by $347,000, or 7.3% to $5.1 million in 2011 from $4.7 million in 2010. The increase was caused primarily by increases in net occupancy expense to $625,000 from $496,000, equipment expenses to $624,000 from $477,000, director’s compensation to $199,000 from $186,000, professional fees to $412,000 from $340,000 and insurance premiums to $185,000 from $139,000, partially offset by decreases in federal deposit insurance premiums to $153,000 from $206,000 Equipment expense increased $147,000 to $624,000 for the year ended December 31, 2011, from $477,000 for the year ended December 31, 2010 primarily due to data center deconversion costs. Net occupancy expense of premises increased $129,000 to $625,000 for the year ended December 31, 2011, from $496,000 for the year ended December 31, 2010 primarily due to the loss of rental income from an expired property lease that was not renewed due to the pending sale of the property, along with new leasing terms for an existing branch location. Professional fees increased $72,000 to $412,000 for the year ended December 31, 2011, from $340,000 for the year ended December 31, 2010 primarily due to increased legal and accounting expenses. Insurance premiums increased $46,000 to $185,000 for the year ended December 31, 2011, from $139,000 for the year ended December 31, 2010 primarily due to additional insurance required for the increased other real estate owned. Federal deposit insurance premiums decreased $53,000 to $153,000 for the year ended December 31, 2011, from $206,000 for the year ended December 31, 2010 primarily due to premium calculation changes.

Income Tax Expense. The provision for income taxes decreased $788,000 to a benefit of $632,000 in 2011 from an expense of $156,000 in 2010. The decrease in the income tax expense is primarily due to the decrease in income before taxes of $1.9 million to a loss of $1.3 million in 2011 from income of $597,000 in 2010.

Exhibit 13 -8

Average Balance Sheet

The following table presents for the periods indicated the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, expressed both in dollars and rates. No tax equivalent adjustments were made. All average balances are monthly average balances. Non-accruing loans have been included in the table as loans carrying a zero yield. The amortization of loan fees is included in computing interest income; however, such fees are not material.

	At December 31,					Years Ended December 31,
	2011					2011								2010
	Outstanding   Balance		Yield/   Rate			Average Outstanding Balance		Interest Earned/ Paid			Yield/ Rate			Average Outstanding   Balance			Interest Earned/ Paid		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable(1)	$	95,162		5.42	%	$	100,678		5,619			5.58	%	$	110,909	$	6,518			5.88	%
Mortgage-backed securities		21,401		4.84	%		21,572		1,085			5.03	%		23,896		1,380			5.77	%
Investment securities(2) (3)		5,046		2.50	%		3,431		98			2.86	%		1,011		58			5.78	%
Other interest-earning assets		6,930		0.01	%		4,980		4			0.08	%		5,727		6			0.10	%
Total interest-earning assets		128,538		5.34	%		130,661		6,806			5.21	%		141,543		7,962			5.63	%
Non-interest earning assets		14,176					12,986								11,475
Total assets	$	142,714				$	143,647							$	153,018
Interest-bearing liabilities:
NOW accounts	$	321		0.30	%		332		1			0.33	%	$	358		1			0.34	%
Savings and club		33,323		0.33	%		34,243		127			0.37	%		34,245		126			0.37	%
Certificates of deposit		76,081		1.71	%		75,130		1,309			1.74	%		77,994		1,603			2.06	%
Total interest-bearing deposits		109,725		1.29	%		109,704		1,437			1.31	%		112,596		1,730			1.54	%
Federal Home Loan Bank Advances		10,082		0.79	%		10,935		117			1.07	%		16,660		320			1.92	%
Total interest-bearing liabilities		119,806		1.24	%		120,640		1,554			1.29	%		129,256		2,050			1.59	%
Non-interest bearing liabilities:
Demand deposit		5,198					5,252								5,486
Other liabilities		3,150					2,360								2,583
Total non-interest-bearing liabilities		8,348					7,612								8,069
Total liabilities		128,154					128,252								137,325
Stockholders’ Equity		14,560					15,395								15,692
Total liabilities and equity	$	142,714				$	143,647							$	153,018
Net interest income								$	5,252							$	5,912
Interest rate spread(4)				4.09	%							3.92	%							4.04	%
Net interest-earning assets	$	8,732				$	10,021							$	12,286
Net interest margin(5)												4.02	%							4.18	%
Ratio of interest earning assets to interest bearing liabilities									1.08	x							1.10	x

_________________________________ 

(1)	Loans receivable are net of the allowance for loan losses.
(2)	None of the reported income is exempt from Federal income taxes.
(3)	Includes stock in Federal Home Loan Bank of New York which is reflected at the most recent quarterly dividend rate.
(4)	Net interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities.
(5)	Net interest margin represents net interest income as a percentage of interest earning assets.

Exhibit 13 -9

Rate/Volume Analysis

The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to changes in outstanding balances and those due to the changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

	Years Ended December 31,
	2011 vs. 2010
	Increase/(Decrease) Due to						Total   Increase
	Volume			Rate			(Decrease)
	(Dollars in thousands)
Interest income:
Loans receivable	$	(579	)	$	(320	)	$	(899	)
Mortgage-backed securities		(127	)		(168	)		(295	)
Investment securities		51			(11	)		40
Other interest-earning assets		(1	)		(1	)		(2	)
Total interest income		(656	)		(500	)		(1,156	)
Interest expense:
Demand deposits		—			—			—
Passbook and club accounts		1			—			1
Certificates of deposit		(63	)		(231	)		(294	)
Federal Home Loan Bank advances		(88	)		(115	)		(203	)
Total interest expense		(150	)		(346	)		(496	)
Net interest income	$	(506	)	$	(154	)	$	(660	)

Management of Market Risk

General. The majority of the Company’s assets and liabilities are monetary in nature. Consequently, the most significant form of market risk is interest rate risk. The Company’s assets, consisting primarily of mortgage loans, have longer maturities than its liabilities, consisting primarily of deposits and borrowings. As a result, a principal part of the business strategy is to manage interest rate risk and reduce the exposure of net interest income to changes in market interest rates. Accordingly, the board of directors has established an Asset/Liability Management Committee which is responsible for evaluating the interest rate risk inherent in the assets and liabilities, for determining the level of risk that is appropriate given the business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Management Committee, which consists of senior management operating under a policy adopted by the board of directors, meets as needed to review the asset/liability policies and interest rate risk position.

Exhibit 13 -10

The Company has sought to manage its interest rate risk in order to minimize the exposure of 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 liquid interest-earning assets invested in cash and cash equivalents; (ii) offering a variety of adjustable rate loan products, including one year adjustable rate mortgage loans and construction loans, and short-term fixed rate home equity loans. Cash and cash equivalents, deposits and borrowings from the Federal Home Loan Bank may be used to fund loan commitments, investments and other general corporate purposes. By investing in short-term, liquid instruments, management believes the Company 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 strategy of investment in liquid instruments has resulted in lower levels of interest income than would have been obtained by investing in longer-term loans and investments.

 Net Portfolio Value. We use a net portfolio value analysis prepared by the OCC to review our level of interest rate risk. Such analysis measures interest rate risk by computing changes in net portfolio value of our cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. Net portfolio value represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market risk-sensitive instruments in the event of a sudden and sustained 50 to 300 basis point increase or 50 and 100 basis point decrease in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement. Because of the low level of market interest rates, these analyses are not performed for decreases of more than 100 basis points.

The following table, which is based on information that we provide to the OCC, presents the change in the net portfolio value of the Association at December 31, 2011, which is the most recent date for which information is available, that would occur in the event of an immediate change in interest rates based on OCC assumptions, with no effect given to any steps that we might take to counteract that change.

	Net Portfolio Value							Net Portfolio Value as a Percentage of Present Value of Assets
Change in Interest Rates (basis points)		Estimated NPV		Amount of Change		Percent of Change			NPV Ratio		Change in Basis Points
	(Dollars in Thousands)
+300	$	15,740	$	(5,807	)	(27	)%		10.89	%		(325	)bp
+200	$	18,644	$	(2,903	)	(13	)%		12.59	%		(155	)bp
+100	$	20,624	$	(923	)	(4	)%		13.68	%		(46	)bp
+50	$	21,187	$	(360	)	(2	)%		13.97	%		(17	)bp
0	$	21,547		—		—	%		14.13	%		—
-50	$	21,496	$	(51	)	—	%		14.09	%		(5	)bp
-100	$	21,517	$	(30	)	—	%		14.09	%		(5	)bp

The table above indicates that at December 31, 2011, in the event of a 100 basis point decrease in interest rates, the Company would experience a minimal decrease in net portfolio value. In the event of a 100 basis point increase in interest rates, the Company would experience a 4.00% decrease in net portfolio value.

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.

Exhibit 13 -11

In this regard, the net portfolio value table presented assumes that the composition of interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on its net interest income and will differ from actual results.

Liquidity. The Company maintains liquid assets at levels considered adequate to meet its liquidity needs. The liquidity ratio averaged 6.94% for the year ended December 31, 2011. Liquidity levels are adjusted to fund deposit outflows, pay real estate taxes on mortgage loans, fund loan commitments and take advantage of investment opportunities. As appropriate, the Company also adjusts liquidity to meet asset and liability management objectives. At December 31, 2011, cash and cash equivalents totaled $8.8 million.

The Company’s primary sources of liquidity are deposits, borrowings, 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. 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 competition. Interest rates on deposits are set to maintain a desired level of total deposits. In addition, excess funds are invested 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 management’s operating, investing and financing activities. At December 31, 2011, $8.8 million of assets were invested in cash and cash equivalents. The primary 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. As of December 31, 2011, there were no short-term investment securities.

Deposit flows are generally affected by the level of interest rates, the interest rates and products offered by local competitors, and other factors. Total deposits decreased $2.2 million to $114.9 million at December 31, 2011 from $117.1 million as of December 31, 2010.

Liquidity management is both a daily and long-term function of business management. If the Company requires funds beyond its ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of New York which provides an additional source of funds. At December 31, 2011, the Company had $10.1 million in advances from the Federal Home Loan Bank of New York, and had an available borrowing limit of $48.2 million.

At December 31, 2011, the Company had outstanding commitments to originate loans of $405,000. At December 31, 2011, certificates of deposit scheduled to mature in less than one year totaled $59.8 million. Based on prior experience, management believes that a significant portion of such deposits will remain, although there can be no assurance that this will be the case. In the event a significant portion of deposits are not retained, management will have to utilize other funding sources, such as Federal Home Loan Bank of New York advances in order to maintain the Company’s level of assets. Alternatively, management could reduce the level of liquid assets, such as cash and cash equivalents. In addition, the cost of such deposits may be significantly higher if market interest rates are higher at the time of renewal.

Exhibit 13 -12

Contractual Obligations and Off-Balance Sheet Arrangements
 

The following table sets forth the Company’s contractual obligations at December 31, 2011. Amounts shown do not include anticipated contributions to the Company’s defined benefit plans.

Payment Due by Period
Contractual Obligations	Total		Less than One year		More than One year to Three years		More than three years to Five years		More than Five years
	(in thousands)
FHLB Advances	$	10,082	$	10,035	$	47	$	—	$	—
Certificates of Deposit		76,081		59,843		12,677		2,597		964
Lease Obligations		2,970		285		587		611		1,487
Total	$	89,133	$	70,163	$	13,311	$	3,208	$	2,451

In the normal course of business, the Association enters into off-balance sheet arrangements consisting of commitments to fund loans. At December 31, 2011, these commitments totaled $405,000, which expire in three months or less. See Note 14 to the Consolidated Financial Statements for more information.

Impact of Inflation and Changing Prices

The consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of the Company’s operations. Unlike industrial companies, the Company’s assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.

Exhibit 13 -13

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Flatbush Federal Bancorp, Inc.

Brooklyn, New York

We have audited the accompanying consolidated statements of financial condition of Flatbush Federal Bancorp, Inc. (the “Company”) and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Flatbush Federal Bancorp, Inc, and Subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ ParenteBeard LLC

ParenteBeard LLC

Clark, New Jersey

March 30, 2012

Exhibit 13-14

Flatbush Federal Bancorp, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

	December 31,
	2011			2010
Assets
Cash and amounts due from depository institutions	$	1,871,605		$	1,568,478
Interest-earning deposits in other banks		1,179,582			1,065,862
Federal funds sold		5,750,000			5,550,000
Cash and Cash Equivalents		8,801,187			8,184,340
Securities held to maturity, fair value of $27,402,087 in 2011 and $23,084,343 in 2010		25,748,582			21,779,811
Loans receivable, net of allowance for loan losses of $2,247,171 in 2011 and $1,649,319 in 2010		95,161,715			106,477,978
Other real estate owned		743,830			—
Premises and equipment		2,377,057			2,287,820
Federal Home Loan Bank of New York stock		698,200			807,900
Accrued interest receivable		554,307			607,089
Bank owned life insurance		4,523,252			4,371,605
Other assets		4,106,279			2,502,199
Total Assets	$	142,714,409		$	147,018,742
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Non-interest bearing	$	5,197,945		$	5,319,364
Interest bearing		109,724,623			111,754,193
Total Deposits		114,922,568			117,073,557
Advances from Federal Home Loan Bank of New York		10,081,574			12,042,583
Advance payments by borrowers for taxes and insurance		190,155			333,023
Other liabilities		2,960,087			1,816,062
Total Liabilities		128,154,384			131,265,225
Stockholders’ Equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.01 par value; authorized 9,000,000 shares; issued 2,799,657 shares; outstanding 2,736,907 shares		27,998			27,998
Paid-in capital		12,725,312			12,653,326
Retained earnings		5,152,987			5,791,170
Unearned employees’ stock ownership plan (ESOP) shares		(409,108	)		(443,983	)
Treasury stock, 62,750 shares, at cost		(446,534	)		(446,534	)
Accumulated other comprehensive loss		(2,490,630	)		(1,828,460	)
Total Stockholders’ Equity		14,560,025			15,753,517
Total Liabilities and Stockholders’ Equity	$	142,714,409		$	147,018,742

See notes to consolidated financial statements. 

Exhibit 13-15

Flatbush Federal Bancorp, Inc. and Subsidiaries

Consolidated Statements of Operations

	Years Ended December 31,
	2011			2010
Interest Income
Loans, including fees	$	5,619,225		$	6,518,077
Investment securities		98,256			58,471
Mortgage-backed securities held to maturity		1,085,135			1,379,515
Other interest-earning assets		3,549			5,716
Total Interest Income		6,806,165			7,961,779
Interest Expense
Deposits		1,436,290			1,730,343
Borrowings		117,481			319,712
Total Interest Expense		1,553,771			2,050,055
Net Interest Income		5,252,394			5,911,724
Provision for Loan Losses		1,711,252			821,476
Net Interest Income after Provision for Loan Losses		3,541,142			5,090,248
Non-Interest Income
Fees and service charges		109,156			99,431
Bank owned life insurance		151,647			151,623
Other		22,578			2,682
Total Non-Interest Income		283,381			253,736
Non-Interest Expense
Salaries and employee benefits		2,411,215			2,409,953
Net occupancy expense of premises		625,132			496,257
Equipment		624,162			477,069
Directors’ compensation		199,432			185,605
Professional fees		411,945			340,045
Insurance premiums		185,330			139,164
Federal deposit insurance premiums		152,894			205,826
Other		484,197			492,587
Total Non-Interest Expense		5,094,307			4,746,506
(Loss) Income before Income Tax (Benefit) Expense		(1,269,784	)		597,478
Income Tax (Benefit) Expense		(631,601	)		156,249
Net (Loss) Income	$	(638,183	)	$	441,229
Net (Loss) Income per Common Share
Basic and diluted	$	(0.24	)	$	0.17
Weighted Average Number of Shares Outstanding
Basic and diluted		2,672,129			2,666,861

See notes to consolidated financial statements. 

Exhibit 13-16

Flatbush Federal Bancorp, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2011 and 2010

	Common Stock		Paid-In Capital			Retained Earnings			Unearned ESOP Shares			Treasury Stock			Accumulated Other Comprehensive Loss			Total
Balance December 31, 2009	$	27,998	$	12,581,519		$	5,349,941		$	(478,857	)	$	(446,534	)	$	(1,801,114	)	$	15,232,953
Comprehensive Income:
Net income		—		—			441,229			—			—			—			441,229
Benefit Plans, net of deferred income taxes of $19,680		—		—			—			—			—			(27,346	)		(27,346	)
Comprehensive income		—		—			—			—			—			—			413,883
Amortization of MRP		—		40,584			—			—			—			—			40,584
Stock option expense		—		41,412			—			—			—			—			41,412
ESOP shares committed to be released		—		(10,189	)		—			34,874			—			—			24,685
Balance December 31, 2010		27,998		12,653,326			5,791,170			(443,983	)		(446,534	)		(1,828,460	)		15,753,517
Comprehensive Loss:
Net loss		—		—			(638,183	)		—			—			—			(638,183	)
Benefit Plans, net of deferred
Income taxes of ($476,546)		—		—			—			—			—			(662,170	)		(662,170	)
Comprehensive loss		—		—			—			—			—			—			(1,300,353	)
Amortization of MRP		—		40,584			—			—			—			—			40,584
Stock option expense		—		41,412			—			—			—			—			41,412
ESOP shares committed to be released		—		(10,010	)		—			34,875			—			—			24,865
Balance December 31, 2011	$	27,998	$	12,725,312		$	5,152,987		$	(409,108	)	$	(446,534	)	$	(2,490,630	)	$	14,560,025

See notes to consolidated financial statements. 

Exhibit 13-17

Flatbush Federal Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2011			2010
Cash Flows from Operating Activities
Net (loss) income	$	(638,183	)	$	441,229
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		120,488			171,870
Net accretion of premiums, discounts and deferred loan fees and costs		(26,538	)		(166,560	)
Deferred income tax (benefit)		(673,979	)		(382,660	)
Provision for loan losses		1,711,252			821,476
ESOP shares committed to be released		24,865			24,685
MRP amortization		40,584			40,584
Stock option expense		41,412			41,412
Decrease in accrued interest receivable		52,782			50,463
Increase in cash surrender value of bank owned life insurance		(151,647	)		(151,623	)
(Increase) decrease in other assets		(453,555	)		501,168
Increase (decrease) in other liabilities		5,309			(665,642	)
Net Cash Provided by Operating Activities		52,790			726,402
Cash Flows from Investing Activities
Purchase of investment securities held to maturity		(4,357,242	)		—
Principal repayments on mortgage-backed securities held to maturity		5,535,214			7,943,767
Purchase of mortgage-backed securities held to maturity		(5,150,439	)		(1,250,010	)
Purchase of loan participation interests		(150,403	)		(1,996,402	)
Net change in loans receivable		9,041,818			5,717,552
Additions to premises and equipment		(209,725	)		(19,377	)
Redemption of Federal Home Loan Bank of New York stock		109,700			467,000
Net Cash Provided by Investing Activities		4,818,923			10,862,530
Cash Flows from Financing Activities
Net (decrease) increase in deposits		(2,150,989	)		1,905,837
Repayment of advances from Federal Home Loan Bank of New York		(3,461,009	)		(2,808,898	)
Net change to short-term borrowings		1,500,000			(8,000,000	)
(Decrease) increase in advance payments by borrowers for taxes and insurance		(142,868	)		40,442
Net Cash Used in Financing Activities		(4,254,866	)		(8,862,619	)
Net Increase in Cash and Cash Equivalents		616,847			2,726,313
Cash and Cash Equivalents – Beginning		8,184,340			5,458,027
Cash and Cash Equivalents – Ending	$	8,801,187		$	8,184,340
Supplementary Cash Flows Information
Cash paid during the year for:
Interest	$	1,577,000		$	2,071,098
Income taxes, net of refunds	$	370,850		$	121,110
Acquisition of real estate owned in settlement of loan receivable	$	743,830		$	—

See notes to consolidated financial statements.

Exhibit 13-18

Note 1 - Summary of Significant Accounting Policies

Nature of Operations and Basis of Financial Statement Presentation

The consolidated financial statements include accounts of Flatbush Bancorp Inc. (the “Company”), Flatbush Federal Savings and Loan Association (the “Association”) and the Association’s subsidiary, Flatbush REIT, Inc. (the “REIT”), a corporation principally engaged in investing in loans secured by real estate. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. At both December 31, 2011 and 2010, 54.23%, of the Company’s common stock was owned by Flatbush Federal MHC, a mutual holding company.

The Company’s primary business is the ownership and operation of the Association. The Association’s principal business consists of attracting retail deposits from the general public in the areas surrounding its various locations in Brooklyn, New York and investing those deposits, together with funds generated from operations and borrowings, primarily in one-to four-family residential mortgage loans, real estate construction loans and various securities. One-to four-family residential real estate in the Association’s market areas is characterized by a large number of attached and semi-detached homes, including a number of two- and three-family homes and cooperative apartments. Revenues are derived principally from interest on loans and securities, loan origination and servicing fees, and service charges and fees collected on deposit accounts. The primary sources of funds are deposits, principal and interest payments on loans and securities, and borrowings.

The Association’s lending area is concentrated in the neighborhoods surrounding the Association’s office locations in Brooklyn, New York. Most of the deposit customers are residents of the greater New York metropolitan area.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the determination of the projected pension liabilities and the amount of deferred taxes which are more likely than not to be realized. Management believes that the allowance for loan losses and projected pension liability are adequate and that all deferred taxes are more likely than not to be realized. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions in the market area. The determination of the projected pension liability and related pension expense is based upon assumptions regarding the discount rate and expected return on plan assets, as well as employee demographics, such as retirement patterns, employee turnover, mortality rates and estimated employee compensation increases. The assessment of the amount of deferred tax assets more likely than not to be realized is based upon projected future taxable income, which is subject to continual revisions for updated information.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Association’s allowance for loan losses. Such agencies may require the Association to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

Exhibit 13-19

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 1 - Summary of Significant Accounting Policies (Continued)

The Company follows the Financial Accounting Standards Board (“FASB”) guidance on subsequent events, which establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued. The guidance sets forth the period after the balance sheet date during which management of the reporting entity, should evaluate events or transactions that may occur for potential recognition in the financial statements, identifies the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosure that should be made about events or transactions that occur after the balance sheet date. In preparing these consolidated financial statements, the Company evaluated the events that occurred between January 1, 2011 and the date these consolidated financial statements were issued.

On January 13, 2012, the Company consummated the sale of the Association’s main branch building and a portion of adjoining real estate to a third party for consideration of $10,136,000 and recognized a pre-tax gain of $9,072,000. This transaction is more fully described in Note 20 to the consolidated financial statements.

On March 13, 2012, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and between (i) Northfield Bank, Northfield Bancorp, Inc. (“Northfield Bancorp”), and Northfield Bancorp, MHC, and (ii) the Company, the Association and Flatbush Federal Bancorp, MHC. The Merger Agreement provides, among other things, that as a result of the merger of the Company into Northfield Bancorp (the “Mid-Tier Merger”), each outstanding share of the Company’s common stock will be converted into the right to receive 0.4748 shares of Northfield Bancorp common stock. The Merger Agreement contains a number of customary representations and warranties by the parties regarding certain aspects of their respective businesses, financial condition, structure and other facts pertinent to the Merger that are customary for a transaction of this kind. The obligation of the parties to complete the Merger is subject to various customary conditions. If the Merger is terminated under specified situations in the Merger Agreement (because the Company accepts a proposal to be acquired that is superior to the one contained in the Merger Agreement, enters into an agreement related to such a proposal and terminates the Merger Agreement, or fails to make, withdraws, modifies or qualifies its recommendation regarding the Merger Agreement), the Company may be required to pay a termination fee to Northfield Bancorp of approximately $700,000. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was included in a Form 8-K filed with the Securities and Exchange Commission on March 15, 2012.

Cash and Cash Equivalents

Cash and cash equivalents include cash and amounts due from depository institutions, interest-bearing deposits in other banks, term deposits with original maturities of three months or less, and federal funds sold. Generally, federal funds are sold for one-day periods.

Investment and Mortgage-Backed Securities

Investments in debt securities that the Association has the positive intent and ability to hold to maturity are classified as held to maturity securities and reported at amortized cost. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized holding gains and losses included in earnings. Debt and equity securities not classified as trading securities nor as held to maturity securities are classified as available for sale securities and reported at fair value, with unrealized holding gains or losses, net of deferred income taxes, reported in the accumulated other comprehensive loss component of stockholders’ equity. The Company has no securities classified as available for sale or trading securities.

Exhibit 13-20

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 1 - Summary of Significant Accounting Policies (Continued)

Premiums and discounts on all securities are amortized/accreted using the interest method. Interest income on securities, which includes amortization of premiums and accretion of discounts, is recognized in the consolidated financial statements when earned. The adjusted cost basis of an identified security sold or called is used for determining security gains and losses recognized in the consolidated statements of income.

Individual securities are considered impaired when the fair value of such security is less than its amortized cost. The Company evaluates all securities with unrealized losses quarterly to determine if such impairments are temporary or “other-than-temporary” in accordance with applicable accounting guidance. The Company accounts for temporary impairments based upon security classification as either available for sale or held to maturity. Temporary impairments on available for sale securities are recognized on a tax-effected basis, through other comprehensive income (loss) with offsetting entries adjusting the carrying value of the securities and the balance of deferred income taxes. Temporary impairments of held to maturity securities are not recognized in the consolidated financial statements; however information concerning the amount and duration of impairments on held to maturity securities is disclosed in the notes to the consolidated financial statements.

Other-than-temporary impairments on securities that the Company has decided to sell or will more likely than not be required to sell prior to the full recovery of their fair value to a level to, or exceeding amortized cost are recognized in earnings. Otherwise, the other-than-temporary impairment is bifurcated into credit related and noncredit-related components. The credit related impairment generally represents the amount by which the present value of the cash flows expected to be collected on a debt security falls below its amortized cost. The noncredit-related component represents the remaining portion of the impairment not otherwise designated as credit-related. Credit related other-than-temporary impairments are recognized in earnings while noncredit-related other-than-temporary impairments are recognized, net of deferred income taxes, in other comprehensive income (loss).

Federal Home Loan Bank of New York Stock

Federal Home Loan Bank of New York (“FHLB”) stock, which represents a required investment in the common stock of a correspondent bank, is carried at cost.

Management evaluates the FHLB stock for impairment in accordance with guidance on accounting by certain entities that lend to or finance the activities of others. Management’s determination of whether this investment is impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

Management believes no impairment charge is necessary related to the FHLB stock as of December 31, 2011.

Exhibit 13-21

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 1 - Summary of Significant Accounting Policies (Continued)

Loans Receivable

Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan origination fees and costs. The Association defers loan origination fees and certain direct loan origination costs and accretes/amortizes such amounts as an adjustment of yield over the contractual lives of the related loans.

Interest is recognized by use of the accrual method. An allowance for uncollectible interest on loans is maintained based on management’s evaluation of collectibility. The allowance is established by a charge to interest income. Income is subsequently recognized only to the extent that cash payments are received until, in management’s judgment, the borrower’s ability to make periodic interest and principal payments is probable, in which case the loan is returned to an accrual status.

Allowance for Loan Losses

An allowance for loan losses is maintained at a level necessary to absorb loan losses which are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of its loan activities, along with general economic and real estate market conditions. The Association utilizes a two tier approach: (1) identification of impaired loans and establishment of specific loss allowances on such loans; and (2) establishment of general valuation allowances on the remainder of its loan portfolio. The Association maintains a loan review system which allows for a periodic review of its loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, types of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified loans based on a review of such information. A loan evaluated for impairment is deemed to be impaired when, based on current information and events, it is probable that the Association will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. The Association does not aggregate such loans for evaluation purposes. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions and management’s judgment.

The allowance is increased through provisions charged against current earnings and recoveries of previously charged off loans. Loans which are determined to be uncollectible are charged against the allowance. Although management believes that specific and general loan loss allowances are established to absorb losses which are both probable and reasonably estimable, actual losses are dependent upon future events and, as such, further additions to the level of specific and general loan loss allowances may be necessary.

Payments received on impaired loans are applied to principal.

Concentration of Risk

The Association’s lending activities are concentrated in loans secured by real estate located in the State of New York.

Exhibit 13-22

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 1 - Summary of Significant Accounting Policies (Continued)

Advertising

Advertising expense, which totaled $13,000 and $16,000, during the years ended December 31, 2011 and 2010, respectively, is recorded as incurred and included in other non-interest expenses.

Premises and Equipment

Premises and equipment are comprised of land, at cost, and building, building improvements, leasehold improvements and furniture, fixtures and equipment, at cost, less accumulated depreciation and amortization computed on the straight-line method over the following estimated useful lives:

	Years
Building and improvements	5 – 50
Leasehold improvements	Shorter of term of lease or useful life
Furniture, fixtures and equipment	5 – 10

Significant renewals and betterments are charged to the premises and equipment account. Maintenance and repairs are charged to expense in the year incurred. Rental income is netted against occupancy expense in the consolidated statements of income.

Bank Owned Life Insurance (BOLI)

The Company has an investment in BOLI to help offset the rising cost of employee benefits. BOLI is accounted for using the cash surrender value method and is recorded at its realizable value. The income from BOLI is recorded as other non-interest income.

Income Taxes

The Company and the Association file consolidated federal, state and city income tax returns. Income taxes are allocated to the Company and the Association based upon the contribution of their respective income or loss to the consolidated return. The REIT files a separate federal, state and city income tax return and pays its own taxes.

Federal, state and city income taxes have been provided on the basis of reported income. The amounts reflected on the tax return differ from these provisions due principally to temporary differences in the reporting of certain items for financial reporting and income tax reporting purposes. The tax effect of these temporary differences is accounted as deferred taxes applicable to future periods. Deferred income tax expense or benefit is determined by recognizing deferred tax assets and liabilities for the estimated 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. The realization of deferred tax assets is assessed and a valuation allowance provided, when necessary, for that portion of the asset which is not likely to be realized.

Exhibit 13-23

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 1 - Summary of Significant Accounting Policies (Continued)

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements in accordance with accounting guidance which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the Company’s evaluation, no significant income tax uncertainties have been identified. Therefore, the Company recognized no adjustment for unrecognized income tax benefits for the years ended December 31, 2011 and 2010. Our policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income. The amount of interest and penalties for the years ended December 31, 2011 and 2010 was immaterial. The tax years subject to examination by the taxing authorities are the years ended December 31, 2010, 2009 and 2008.

Benefit Plans

The Company has a non-contributory defined benefit pension plan covering all eligible employees. The benefits are based on years of service and employees’ compensation. The benefit plan is funded in conformance with funding requirements of applicable government regulations. The Company also has an unfunded Postretirement Benefit Plan, a Supplemental Retirement Plan for executives and a Directors Retirement plan. Prior service costs for these plans generally are amortized over the estimated remaining service periods of participants.

The Company uses the corridor approach in the valuation of the defined benefit plan and other plans. The corridor approach defers all actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions. For the defined benefit pension plan, these unrecognized gains and losses are amortized when net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year.

Stock-Based Compensation Plans

The Company has two stock-related compensation plans, including stock options and restricted stock plans, which are described in Note 11 to the Company’s Consolidated Financial Statements. The Company expenses the fair value of all share-based compensation granted over its requisite service periods.

Options vest over an eight-year service period. Upon exercise of vested options, management expects to draw on treasury stock as the source of shares. The fair values relating to all options granted were estimated using the Black-Scholes option pricing model. Expected volatilities are based on historical volatility of our stock and other factors, such as implied market volatility. The Company used historical exercise dates based on the age at grant of the option holder to estimate the options’ expected term, which represent the period of time that the options granted are expected to be outstanding. The Company anticipated the future option holding periods to be similar to the historical option holding periods. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield was based on the Company’s history and expectations of dividend payouts. The Company recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards. There were no options granted during the years ended December 31, 2011 and 2010.

Exhibit 13-24

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 1 - Summary of Significant Accounting Policies (Continued)

Interest-Rate Risk

The Association is principally engaged in the business of attracting deposits from the general public and using these deposits, together with other funds, to make loans secured by real estate and, to a lesser extent, to purchase investment and mortgage-backed securities. The potential for interest-rate risk exists as a result of the generally shorter duration of interest-sensitive liabilities compared to the generally longer duration of interest-sensitive assets. In a rising rate environment, liabilities will reprice faster than assets, thereby reducing net interest income. For this reason, management regularly monitors the maturity structure of the Association’s interest-earning assets and interest-bearing liabilities in order to measure its level of interest-rate risk and to plan for future volatility.

Net Income per Common Share

Basic net income per common share was computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for unearned shares of the ESOP. Stock options and restricted stock awards granted are considered common stock equivalents and therefore considered in diluted net income per common share calculations, if dilutive, using the treasury stock method. During the years ended December 31, 2011 and 2010, all outstanding stock options and unvested restricted stock were anti-dilutive.

Transfer of Financial Assets

Transfer of financial assets, including loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Association; (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and (3) the Association does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Association has entered into off-balance sheet financial instruments consisting of commitments to extend credit. Such financial instruments are recorded in the consolidated statements of financial condition when they are funded.

Comprehensive Income

Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrecognized net loss or gain, unrecognized past service cost or unrecognized past transition obligation on defined benefit plans and post retirement plans, are reported as a separate component of the equity section of the consolidated statements of financial condition, such items, along with net income are components of comprehensive income.

Reclassification

Certain amounts as of and for the year ended December 31, 2010 have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on net income for 2010.

Exhibit 13-25

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 2 - Securities Held to Maturity

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government National Mortgage Association	$	5,342,679	$	322,917	$	—	$	5,665,596
Federal National Mortgage Association		12,778,385		1,068,213		—		13,846,598
Federal Home Loan Mortgage Corporation		3,280,117		175,596		19,303		3,436,410
Total Mortgage-Backed Securities		21,401,181		1,566,727		19,303		22,948,604
Corporate Debt		4,347,401		135,320		29,238		4,453,483
	$	25,748,582	$	1,702,046	$	48,561	$	27,402,087

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government National Mortgage Association	$	1,941,011	$	130,052	$	—	$	2,071,063
Federal National Mortgage Association		15,301,382		1,043,256		10,719		16,333,919
Federal Home Loan Mortgage Corporation		4,537,418		152,331		10,388		4,679,361
Total Mortgage-Backed Securities	$	21,779,811	$	1,325,639	$	21,107	$	23,084,343

Exhibit 13-26

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 2 - Securities Held to Maturity (Continued)

The age of unrealized losses and fair value of related mortgage-backed securities held to maturity are as follows:

		Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2011
Federal Home Loan Mortgage Corporation	$	581,132	$	17,427	$	119,298	$	1,876	$	700,430	$	19,303
Corporate debt		888,807		29,238		—		—		888,807		29,238
	$	1,469,939	$	46,665	$	119,298	$	1,876	$	1,589,237	$	48,541
December 31, 2010:
Federal National Mortgage Association	$	487,785	$	10,719	$	—	$	—	$	487,785	$	10,719
Federal Home Loan Mortgage Corporation		53,835		418		553,080		9,970		606,915		10,388
	$	541,620	$	11,137	$	553,080	$	9,970	$	1,094,700	$	21,107

Management does not believe that any of the individual unrealized losses at December 31, 2011 and 2010, represent other-than-temporary impairment. The unrealized losses reported on securities at December 31, 2011 relate to four corporate debt securities and four Federal Home Loan Mortgage Corporation mortgage-backed securities. These unrealized losses are due to changes in interest rates. The Company does not intend to sell these securities and it is not more-likely-than-not that the Company would be required to sell these securities prior to full recovery of fair value to a level which equals or exceeds amortized cost.

Exhibit 13-27

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 2 - Securities Held to Maturity (Continued)

The amortized cost and estimated fair value of securities at December 31, 2011, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers generally have the right to prepay obligations.

		Amortized Cost		Estimated Fair Value
Due within one year	$	—	$	—
Due after one year through five years		2,642,522		2,642,172
Due after five years through ten years		1,892,474		2,003,927
Due after ten years		21,213,586		22,755,988
	$	25,748,582	$	27,402,087

All mortgage-backed securities are U.S. Government Agencies backed and collateralized by residential mortgages.

There were no sales of securities held to maturity during the years ended December 31, 2011 and 2010.

At December 31, 2011 and 2010, mortgage-backed securities with amortized cost of approximately $8,719,000 and $10,702,000, respectively, and fair value of $9,087,000, and $11,265,000, respectively, were pledged to Federal Home Loan Bank of New York to secure borrowings.

Exhibit 13-28

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 3 - Loans Receivable

	December 31,
	2011			2010
Real estate mortgage:
One-to four-family	$	66,681,058		$	71,830,671
Multi family		5,749,132			5,889,520
Commercial		21,900,604			22,974,795
		94,330,794			100,694,986
Real estate construction		2,691,719			7,791,750
Land loan		386,827			393,266
Unsecured Business Loan		40,000			20,000
Consumer:
Home equity loans		87,425			112,744
Passbook or certificate		36,830			38,730
Credit cards		36,677			47,326
		160,932			198,800
Total Loans		97,610,272			109,098,802
Loans in process		(104,671	)		(894,569	)
Allowance for loan losses		(2,247,171	)		(1,649,319	)
Deferred loan fees, net		(96,715	)		(76,936	)
		(2,448,557	)		(2,620,824	)
Total Loan Receivable, Net	$	95,161,715		$	106,477,978

Exhibit 13-29

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

The following table summarizes the primary segments of the allowance for loan losses (“ALLL”) and activity therein, segregated into the amounts required for loans individually evaluated for impairment and the amounts required for loans collectively evaluated for impairment as of and for the years ended December 31, 2011 and 2010.

	Construction, Land and Unsecured Business Loan			Commercial Real Estate			Residential Multifamily Real Estate			Residential One-to four- Family Real Estate			Credit Card			Home Equity		Passbook Loans		Total
	(Dollars in thousands)
Allowance for loan losses:
Year ended December 31, 2011:
Beginning Balance	$	810		$	583		$	36		$	214		$	6		$	—	$	—	$	1,649
Charge-offs		(813	)		(248	)		—			(45	)		(8	)		—		—	$	(1,113	)
Provision		498			945			(1	)		266			4			—		—	$	1,711
Ending Balance	$	495		$	1,280		$	35		$	436		$	2		$	—	$	—	$	2,247

Exhibit 13-30

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

	Construction, Land and Unsecured Business Loan		Commercial Real Estate		Residential Multifamily Real Estate		Residential One-to four-family Real Estate		Credit Card		Home Equity		Passbook Loan		Total
	(Dollars in thousands)
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	407	$	623	$	—	$	260	$	—	$	—	$	—	$	1,290
Ending balance: collectively evaluated for impairment	$	88	$	656	$	35	$	176	$	2	$	—	$	—	$	957
Loan receivables:
Ending balance	$	3,118	$	21,901	$	5,749	$	66,681	$	37	$	87	$	37	$	97,610
Ending balance: individually evaluated for impairment	$	2,176	$	2,325	$	—	$	5,143	$	—	$	—	$	—	$	9,644
Ending balance: collectively evaluated for impairment	$	942	$	19,575	$	5,749	$	61,538	$	37	$	87	$	37	$	87,965

Exhibit 13-31

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

	Construction, Land and Unsecured Business Loan		Commercial Real Estate		Residential Multifamily Real Estate		Residential One-to four- Family Real Estate		Credit Card			Home Equity		Passbook Loans		Total
	(Dollars in thousands)
Allowance for loan losses:
Year ended December 31, 2010:
Beginning Balances	$	555	$	173	$	13	$	85	$	3		$	—	$	—	$	829
Charge-offs		—		—		—		—		(1	)		—		—		(1	)
Provision		255		410		23		129		4			—		—		821
Ending Balance	$	810	$	583	$	36	$	214	$	6		$	—	$	—	$	1,649

Exhibit 13-32

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

	Construction, Land and Unsecured Business Loan		Commercial Real Estate		Residential Multifamily Real Estate		Residential One-to four-family Real Estate		Credit Card		Home Equity		Passbook Loan		Total
	(Dollars in thousands)
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	627	$	207	$	—	$	60	$	4	$	—	$	—	$	898
Ending balance: collectively evaluated for impairment	$	183	$	376	$	36	$	154	$	2	$	—	$	—	$	751
Loan receivables:
Ending balance	$	8,205	$	22,975	$	5,890	$	71,830	$	47	$	113	$	39	$	109,099
Ending balance: individually evaluated for impairment	$	2,040	$	3,156	$	—	$	3,801	$	4	$	—	$	—	$	9,001
Ending balance: collectively evaluated for impairment	$	6,165	$	19,819	$	5,890	$	68,029	$	43	$	113	$	39	$	100,098

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for, commercial real estate loans and commercial construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

Exhibit 13-33

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. The estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral.

For loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual smaller balance residential mortgage loans, home equity loans and other consumer loans for impairment disclosures, unless such loans are the subject of a troubled debt restructuring agreement.

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of December 31, 2011 and 2010.

	Impaired Loans With Specific Allowances				Impaired Loans With No Specific Allowances		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
	(Dollars in thousands)
December 31, 2011:
Construction and land	$	2,176	$	407	$	—	$	2,176	$	2,176
Commercial Real Estate		2,297		623		29		2,325		2,325
Residential one-to four-family Real Estate		2,239		260		2,904		5,143		5,143
Credit Card		—		—		3		3		3
Total impaired loans	$	6,712	$	1,290	$	2,936	$	9,648	$	9,648

Exhibit 13-34

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

	Impaired Loans With Specific Allowances				Impaired Loans With No Specific Allowances		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
	(Dollars in thousands)
December 31, 2010:
Construction and land	$	2,040	$	627	$	—	$	2,040	$	2,040
Commercial Real Estate		2,143		207		1,013		3,156		3,156
Residential one-to four-family Real Estate		1,480		60		2,321		3,801		3,801
Credit Card		4		4		—		4		4
Total impaired loans	$	5,667	$	898	$	3,334	$	9,001	$	9,001

The following table presents the average recorded investment and interest income recognized on impaired loans during the period of impairment during the year ended December 31, 2011.

	Year ended December 31, 2011
	Average Recorded Investment		Interest Income Recorded
	(Dollars in thousands)
Construction and land	$	2,962	$	—
Commercial Real Estate		2,600		36
Residential one-to four-family Real Estate		4,299		29
Credit Card		2		—
Total	$	9,863	$	65

During the years ended December 31, 2010, the average investment in impaired loans was $5,523,000 No interest income was collected in 2010 on these loans during the time of impairment.

At December 31, 2011 and 2010, 90.00%, and 100% respectively, of impaired loan balances were measured for impairment based on the fair value of the loan’s collateral.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of substandard, doubtful, loss and special mention. An asset is

Exhibit 13-35

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated special mention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans which are not classified as noted above are rated “pass”.

In addition, Federal regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management’s comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.

The following table presents the classes of the loan portfolio summarized by the pass category and the criticized categories of special mention, substandard and doubtful within the internal risk rating system as of December 31, 2011 and 2010.

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2011	(Dollars in thousands)
Construction and land	$	—	$	515	$	2,563	$	—	$	3,079
Commercial real estate		19,575		—		2,325		—		21,901
Residential mortgage multifamily real estate		5,749		—		—		—		5,749
Residential mortgage one-to four-family real estate		60,732		1,720		4,230				66,681
Unsecured business loan		40		—		—		—		40
Credit card		37		—				—		37
Home equity		87		—		—		—		87
Passbook loan		37		—		—		—		37
Total	$	86,257	$	2,235	$	9,118	$	—	$	97,610

Exhibit 13-36

Flatbush Federal Bancorp, Inc. and Subsidiaries

3 - Loans Receivable (Continued)

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2010	(Dollars in thousands)
Construction and land	$	3,790	$	2,355	$	2,040	$	—	$	8,185
Commercial real estate		19,819		—		3,156		—		22,975
Residential mortgage multifamily real estate		5,890		—		—		—		5,890
Residential mortgage one-to four-family real estate		66,963		1,066		3,801		—		71,830
Unsecured business loan		20		—		—		—		20
Credit card		43		—		4		—		47
Home equity		113		—		—		—		113
Passbook loan		39		—		—		—		39
Total	$	96,677	$	3,421	$	9,001	$	—	$	109,099

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of December 31, 2011 and 2010:

	Current		30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Total Loans Receivable		Non-Accrual
	(Dollars in thousands)
December 31, 2011:
Construction and land	$	387	$	515	$	—	$	2,176	$	2,692	$	3,079	$	2,176
Commercial real estate		20,122		—		—		1,779		1,779		21,901		1,779
Unsecured Business Loan		40		—		—		—		—		40		—
Residential Multi family Real Estate		5,749		—		—		—		—		5,749		—
Residential One-to four-family Real Estate		60,438		2,014				4,230		6,244		66,681		4,230
Credit Card		33		—		3		—		3		37		—
Home Equity		87		—		—		—		—		87		—
Passbook Loan		37		—		—		—		—		37		—
Total	$	86,893	$	2,529	$	3	$	8,185	$	10,717	$	97,610	$	8,185

Exhibit 13-37

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 3 - Loans Receivable (Continued)

	Current		30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Total Loans Receivable		Non-Accrual
	(Dollars in thousands)
December 31, 2010:
Construction and land	$	6,144	$	—	$	—	$	2,041	$	2,041	$	8,185	$	2,041
Commercial real estate		20,378		—		—		2,597		2,597		22,975		2,597
Unsecured Business Loan		20		—		—		—		—		20		—
Residential Multi family Real Estate		5,890		—		—		—		—		5,890		—
Residential One-to four-family Real Estate		65,985		1,912		132		3,801		5,845		71,830		3,801
Credit Card		40		—		3		4		7		47		4
Home Equity		99		—		14		—		14		113		—
Passbook Loan		39		—		—		—		—		39		—
Total	$	98,595	$	1,912	$	149	$	8,443	$	10,504	$	109,099	$	8,443

The Association may grant a concession or modification for economic or legal reasons related to a borrower’s financial condition that it would not otherwise consider resulting in a modified loan which is then identified as a troubled debt restructuring (TDR). The Association may modify loans through rate reductions, extensions of maturity, interest only payments, or payment modifications to better match the timing of cash flows due under the modified terms with the cash flows from the borrowers’ operations. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculation the Company’s allowance for loan losses.

The Association identifies loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower’s financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future.

Exhibit 13-38

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 3 - Loans Receivable (Continued)

The following table reflects information regarding troubled debt restructurings for the year ended December 31, 2011:

		Pre-		Post
		Modification		Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Contracts	Investments		Investments
Troubled debt restructurings:
Residential mortgage	3	$	819,085	$	777,229

There were no troubled debt restructuring which subsequently defaulted during 2011.

Loans whose terms are modified are classified as troubled debt restructurings if the Association grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

The Association has granted loans to its directors and officers and to their associates. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of these loans was $775,000 and $804,000 at December 31, 2011 and 2010, respectively. During the year December 31, 2011, no new related party loans were made.

Note 4 - Loan Servicing

The Association originated loans held for sale and sold them, with servicing retained, to the FHLB under the Mortgage Partnership Finance Program. The conditions for sale include a credit enhancement liability as determined at the time of sale. The FHLB pays the Association a fee for credit enhancement as the loans are paid down. At December 31, 2011 and 2010, the potential contingent liability for credit enhancement amounted to $84,000, which is not recorded in the consolidated financial statements. The total loans serviced under this program amounted to approximately $359,000 and $398,000 at December 31, 2011 and 2010, respectively, which amounts are also not included in the consolidated financial statements. In accordance with guidelines for regulatory capital computations, the contingent liability has been subtracted to compute regulatory capital (see Note 9). No loans were sold to the FHLB during the years ended December 31, 2011 and 2010.

Exhibit 13-39

Flatbush Federal Bancorp, Inc. and Subsidiaries

Custodial escrow balances maintained in connection with loans serviced under this program amounted to approximately $530 and $1,064 at December 31, 2011 and 2010, respectively, and are included in the consolidated statements of financial condition as demand deposits.

Note 5 - Premises and Equipment

	December 31,
	2011			2010
Land	$	919,753		$	919,753
Buildings and improvements		2,368,327			2,363,327
Accumulated depreciation		(1,201,304	)		(1,146,718	)
		1,167,023			1,221,609
Leasehold improvements		203,518			203,518
Accumulated amortization		(131,259	)		(115,192	)
		72,259			88,326
Furniture, fixtures and equipment		709,889			500,164
Accumulated depreciation		(491,867	)		(442,032	)
		218,022			58,132
	$	2,377,057		$	2,287,820

Note 6 - Accrued Interest Receivable

	2011		2010
Loans	$	428,893	$	511,517
Securities held to maturity		125,414		95,572
	$	554,307	$	607,089

Exhibit 13-40

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 7 – Deposits

	December 31,
	2011					2010
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Demand deposits:
Non-interest bearing	$	5,197,945		0.00	%	$	5,319,364		0.00	%
NOW		320,676		0.30	%		318,607		0.30	%
		5,518,621					5,637,971
Passbook and club accounts		33,322,694		0.33	%		34,690,578		0.33	%
Certificates of deposit		76,081,253		1.71	%		76,745,008		1.86	%
	$	114,922,568		1.23	%	$	117,073,557		1.32	%

The scheduled maturities of certificates of deposit are as follows (in thousands):

	At December 31,
	2011
Year Ending December 31,
2012	$	59,843
2013		8,360
2014		4,317
2015		1,563
2016		1,034
Thereafter		964
	$	76,081

Certificates of deposit with balances of $100,000 or more totaled approximately $35,993,000 and $33,844,000 at December 31, 2011 and 2010, respectively. Deposits in excess of $250,000 are generally not insured by FDIC.

Exhibit 13-41

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 7 - Deposits (Continued)

Interest expense on deposits is summarized as follows:

	Years Ended December 31,
	2011		2010
Demand	$	1,080	$	1,230
Passbook and club		127,220		125,710
Certificates of deposit		1,307,990		1,603,403
	$	1,436,290	$	1,730,343

Note 8 - Advances from Federal Home Loan Bank of New York

	December 31,
	2011					2010
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Amortizing Loans:
Principal repayment in
Years ended December 31,
2011	$	—		—	%	$	1,461,007		4.80	%
2012		1,034,952		4.78			1,034,954		4.78
2013		46,622		5.25			46,622		5.25
Total amortizing loans		1,081,574		4.80	%		2,542,583		4.80	%
Term loans:
Due within one year	$	9,000,000		0.31	%		9,500,000		1.13	%
Total Advances	$	10,081,574		0.79	%	$	12,042,583		1.90	%

The carrying value of collateral pledged for the above advances was as follows (in thousands):

	December 31,
	2011		2010
Loans receivable	$	46,145	$	50,566
Mortgage-backed securities		8,719		10,702
	$	54,864	$	61,268

Exhibit 13-42

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 9 - Regulatory Capital

The Association is subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Association. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines that involve quantitative measures of Association’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Association’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Association to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted total assets (as defined). The following tables present a reconciliation of capital per GAAP and regulatory capital and information as to the Association’s capital levels at the dates presented:

	December 31,
	2011			2010
	(In Thousands)
GAAP capital	$	13,772		$	14,881
Accumulated other comprehensive loss		2,491			1,829
Tier 1 (Core) capital		16,263			16,710
General valuation allowance		957			751
Low-level recourse adjustment		(84	)		(84	)
Total Regulatory Capital	$	17,137		$	17,377

Exhibit 13-43

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 9 - Regulatory Capital (Continued)

	Actual					For Capital Adequacy Purposes					To be Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
December 31, 2011:
Total capital (to risk-weighted assets)	$	17,137		19.88	%	$	≥6,895		≥8.00	%	$	≥8,619		≥10.00	%
Tier 1 capital (to risk-weighted assets) (1)		16,179		18.77	%		≥—		≥—			≥5,171		≥6.00	%
Core (Tier 1) capital (to adjusted total assets)		16,263		11.52	%		≥5,645		≥4.00	%		≥7,056		≥5.00	%
Tangible capital (to adjusted total assets)		16,263		11.52	%		≥2,117		≥1.50	%		≥—		≥—	%
December 31, 2010:
Total capital (to risk-weighted assets)	$	17,377		20.30	%	$	≥6,847		≥8.00	%	$	≥8,558		≥10.00	%
Tier 1 capital (to risk-weighted assets) (1)		16,626		19.43	%		≥—		≥—			≥5,135		≥6.00	%
Core (Tier 1) capital (to adjusted total assets)		16,710		11.45	%		≥5,836		≥4.00	%		≥7,295		≥5.00	%
Tangible capital (to adjusted total assets)	$	16,710		11.45	%	$	≥2,188		≥1.50	%	$	≥—		≥—	%

(1) Net of contingent liability credit enhancement of $84,000.

The most recent notification from the Association’s primary regulator categorized the Association as well-capitalized under the regulatory framework for prompt corrective action. There are no conditions existing, or events which have occurred since this notification that management believes have changed the Association’s category.

Note 10 – Stock Repurchase Program

In July 2005, the Company’s Board of Directors authorized a repurchase program of its common stock for up to 50,000 shares which was completed. On August 30, 2007, the Company approved a second stock repurchase program and authorized the repurchase of up to 50,000 shares of the Company’s outstanding shares of common stock. As of December 31, 2011 and 2010, the Company had repurchased 62,750 shares of common stock. No shares were repurchased in 2011 and 2010.

Exhibit 13-44

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans

Pension Plan

The Association maintains a defined benefit pension plan (the “Plan”) covering all employees who have met the Plan’s eligibility requirements. The Association’s policy is to fund the Plan annually with the minimum contribution deductible for Federal income tax purposes.

On February 26, 2009, the Company froze its defined benefit pension plan effective March 31, 2009. The freezing of the Plan is consistent with ongoing cost reduction strategies and shift focus on future savings of retirement benefit expense. The changes included a discontinuation of accrual of future service cost in the defined benefit pension plan and fully preserving retirement benefits that employees will have earned as of March 31, 2009.

The following table sets forth the Plan’s funded status:

	December 31,
	2011			2010
Change in benefit obligation:
Benefit obligation - beginning	$	5,647,829		$	5,235,702
Service cost		—			—
Interest cost		304,864			305,372
Actuarial loss		647,643			394,924
Benefits Payments		(285,580	)		(288,169	)
Benefit obligation - ending	$	6,314,756		$	5,647,829
Change in plan assets:
Fair value of assets - beginning	$	5,621,314		$	4,838,494
Actual return on plan assets		(81,112	)		570,989
Annuity Payments		(285,580	)		(288,169	)
Contributions		—			500,000
Fair value of assets - ending	$	5,254,622		$	5,621,314

Exhibit 13-45

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Pension Plan (Continued)

	December 31,
	2011			2010
Reconciliation of funded status:
Accumulated benefit obligation	$	(6,314,756	)	$	(5,647,829	)
Projected benefit obligation		(6,314,756	)		(5,647,829	)
Fair value of assets		5,254,622			5,621,314
Funded status	$	(1,060,134	)	$	(26,515	)
Valuation assumptions:
Discount rate		4.40	%		5.54	%
Rate of return on long-term assets		8.00	%		9.00	%

	Years Ended December 31,
	2011			2010
Net periodic pension expense:
Service cost	$	—		$	—
Interest cost		304,864			305,372
Expected return on assets		(492,880	)		(424,680	)
Amortization of unrecognized net loss		242,712			229,604
Total Net Periodic Pension Expense Included in Salaries and Employee Benefits	$	54,696		$	110,296
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Rate of return on long-term assets		9.00	%		9.00	%

The Association expects to make a contribution of $1,500,000 during 2012.

The Plan has invested in following categories of investments:

	December 31,
	2011			2010
Equity/mutual funds	61.98		%	64.98		%
Fixed income		38.02	%		35.02	%
		100.00	%		100.00	%

Exhibit 13-46

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Pension Plan (Continued)

The long-term investment objective is to allocate the Plan’s assets to a range of approximately 65% equities, and 35% bond funds to achieve an optimal risk/reward profile. Based on an analysis of the current market environment, the Company projects a 4% return from fixed income and a 7% return from equities, for an overall expected return of approximately 6%. The long-term rate of return on assets assumption is set based on historical returns earned by equities and fixed income securities, adjusted to reflect expectations of future returns as applied to the Plan’s actual target allocation of asset classes. Equities and fixed income securities are assumed to earn real rates of return in the ranges of 5 - 9% and 2 - 6%, respectively. Additionally, the long-term inflation rate is projected to be 3%. When these overall return expectations are applied to a typical plan’s target allocation, the result is an expected return of 7% to 11%.

The fair values of the Company’s pension plan assets at December 31, 2011 and 2010, by asset category (see Note 16 for the definitions of Levels), are as follows:

December 31, 2011	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Asset Category:
Mutual funds – Equity:
Large-Cap Value (a)	$	470,534	$	470,534	$	—	$	—
Small-Cap Core (b)		620,538		620,538		—		—
		1,091,072		1,091,072				—
Common/Collective Trusts – Equity:
Large-Cap Core (c)		556,298		—		556,298		—
Large-Cap Value (d)		274,036		—		274,036		—
Large-Cap Growth (e)		756,620		—		756,620		—
International Growth (f)		578,759		—		578,759		—
		2,165,713		—		2,165,713		—
Common/Collective Trusts – Fixed Income:
Market Duration Fixed (g)		1,997,836		—		1,997,836		—
	$	5,254,622	$	1,091,072	$	4,163,550		—

(a)	This category consists of investments whose sector and industry exposures are maintained within a narrow band around Russell 1000 index. The portfolio holds approximately 150 stocks.
(b)	This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 index. The portfolio will typically hold more than 150 stocks.
(c)	This fund tracks the performance of the S&P 500 Index by purchasing the securities represented in the Index in approximately the same weightings as the Index.
(d)	This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.
(e)	This category consists of a portfolio of between 45 and 65 stocks that will typically overweight technology and health care.
(f)	This category consists of a broadly diversified portfolio of non-U.S. domiciled stocks. The portfolio will typically hold more than 200 stocks with 0%-35% invested in emerging markets securities.
(g)	This category consists of an index fund that tracks the Barclays Capital U.S. Aggregate Bond index. The fund invests in Treasury, agency, corporate, mortgage-backed and asset-backed securities.

Exhibit 13-47

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Pension Plan (Continued)

December 31, 2010	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Asset Category:
Mutual funds – Equity:
Large-Cap Value (a)	$	507,220	$	507,220	$	—	$	—
Small-Cap Core (b)		673,134		673,134		—		—
		1,180,354		1,180,354		—		—
Common/Collective Trusts – Equity:
Large-Cap Core (c)		578,123		—		578,123		—
Large-Cap Value (d)		293,325		—		293,325		—
Large-Cap Growth (e)		829,019		—		829,019		—
International Growth (f)		772,022		—		772,022		—
		2,472,489		—		2,472,489		—
Common/Collective Trusts – Fixed Income:
Market Duration Fixed (g)		1,968,471		—		1,968,471		—
	$	5,621,314	$	1,180,354	$	4,440,960	$	—

(a)	This category consists of investments whose sector and industry exposures are maintained within a narrow band around Russell 1000 index. The portfolio holds approximately 150 stocks.
(b)	This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 index. The portfolio will typically hold more than 150 stocks.
(c)	This fund tracks the performance of the S&P 500 Index by purchasing the securities represented in the Index in approximately the same weightings as the Index.
(d)	This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.
(e)	This category consists of a portfolio of between 45 and 65 stocks that will typically overweight technology and health care.
(f)	This category consists of a broadly diversified portfolio of non-U.S. domiciled stocks. The portfolio will typically hold more than 200 stocks with 0%-35% invested in emerging markets securities.
(g)	This category consists of an index fund that tracks the Barclays Capital U.S. Aggregate Bond index. The fund invests in Treasury, agency, corporate, mortgage-backed and asset-backed securities.

Expected benefit payments under the Plan are as follows:

Year Ended December 31,
2012	$	283,899
2013		290,982
2014		309,678
2015		330,145
2016		347,612
2017-2021		1,966,674

Exhibit 13-48

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Pension Plan (Continued)

At December 31, 2011, unrecognized net loss amounted to $3,895,593, which is included in accumulated other comprehensive loss. At December 31, 2010, unrecognized net loss amounted to $2,916,670 and was included in accumulated other comprehensive loss. For the year ending December 31, 2012, $382,216 of net loss is expected to be amortized in pension expense.

Postretirement Benefits

The Association provides certain health care and life insurance benefits to employees retired as of January 1, 1995. The following tables set forth the Plan’s funded status and the components of net postretirement benefit cost:

	December 31,
	2011			2010
Changes in benefit obligations:
Benefit obligation - beginning	$	237,044		$	237,867
Interest cost		12,480			13,584
Unrecognized net loss (gain) amortization		235			6,187
Benefits paid		(19,922	)		(20,594	)
Benefit obligation - ending	$	229,837		$	237,044
Reconciliation of funded status:
Accumulated benefit obligation	$	(229,837	)	$	(237,044	)
Postretirement benefit obligation	$	(229,837	)	$	(237,044	)
Valuation assumptions:
Discount rate		4.40	%		5.54	%

Exhibit 13-49

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Postretirement Benefits (Continued)

	Years Ended December 31,
	2011			2010
Net periodic expense:
Unrecognized net loss amortization	$	5,180		$	4,732
Interest cost		12,480			13,584
Unrecognized past service liability		3,824			3,824
Net postretirement benefit cost included in salaries and employee benefits	$	21,484		$	22,140
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Current medical trend		9.00	%		9.00	%
Ultimate medical trend		5.00	%		5.00	%

The Plan is unfunded. It is estimated that contributions of approximately $23,330 will be made during the year ending December 31, 2012. Expected benefit payments under the Plan are as follows:

Year Ended December 31,
	2012	$	23,330
	2013		23,836
	2014		24,008
	2015		23,807
	2016		23,150
	2017-2021		97,933

At the year ended December 31, 2011, a medical cost trend rate of 8.0%, was estimated. For the year ended December 31, 2010, a medical cost trend of 9.00% was estimated. Increasing the assumed medical cost trend by one percent in each year would increase the accumulated postretirement benefit obligation as of December 31, 2011 and 2010, by $13,000 and $14,000, respectively. The aggregate of the service and interest components of net periodic postretirement benefit cost for the years ended December 31, 2011 and 2010 were not affected.

At December 31, 2011, unrecognized prior service cost and unrecognized net loss amounted to $23,692 and $65,479, respectively, and were included in accumulated other comprehensive loss. At December 31, 2010, unrecognized prior service cost and unrecognized net loss amounted to $27,516 and $70,424, respectively, and were included in accumulated other comprehensive loss. For the year ended December 31, 2012, $5,304 of net loss and $3,824 of prior service cost are expected to be amortized in post-retirement benefit expense.

Exhibit 13-50

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Supplemental Employee Retirement Plan (“SERP”)

	December 31,
	2011			2010
Changes in benefit obligations:
Benefit obligation - beginning	$	740,644		$	742,790
Service cost		13,552			11,448
Interest cost		38,456			41,776
Actuarial loss(gain)		139,702			37,630
Benefits paid		(93,000	)		(93,000	)
Benefit obligation - ending	$	839,354		$	740,644
Reconciliation of funded status:
Accumulated benefit obligation	$	(733,033	)	$	(678,084	)
Projected benefit obligation	$	(839,354	)	$	(740,644	)
Fair value of assets		—			—
Funded status	$	(839,354	)	$	(740,644	)
Valuation assumptions:
Discount rate		4.40	%		5.54	%
Salary increase rate		3.00	%		3.00	%

	Years Ended December 31,
	2011			2010
Net periodic expense:
Service cost	$	13,552		$	11,448
Interest cost		38,456			41,776
Unrecognized past service liability		11,776			11,776
Net SERP cost included in salaries and employee benefits	$	63,784		$	65,000
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Salary increase rate		3.00	%		3.00	%

Exhibit 13-51

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Supplemental Employee Retirement Plan (“SERP”) (Continued)

The Plan is unfunded. It is estimated that contributions of approximately $93,185 will be made during the year ending December 31, 2012. Expected benefit payments under the Plan are as follows:

Year Ended December 31,
	2012	$	93,185
	2013		93,398
	2014		96,541
	2015		101,054
	2016		13,542
	2017-2021		170,938

At December 31, 2011, unrecognized prior service cost and unrecognized net loss amounted to $69,848 and $193,165, respectively, and were included in accumulated other comprehensive loss. At December 31, 2010, unrecognized prior service cost and unrecognized net loss of $81,624 and $51,680, respectively, were included in accumulated other comprehensive loss. For the year ended December 31, 2012, $11,776 of prior service cost and $13,520 of unrecognized net loss is expected to be amortized in SERP expense.

Retirement Plan for Directors

	December 31,
	2011			2010
Changes in benefit obligations:
Benefit obligation – beginning	$	209,088		$	210,030
Service cost		8,444			7,248
Interest cost		11,164			11,768
Actuarial loss (gains)		42,005			7,042
Benefits paid		(19,300	)		(27,000	)
Benefit obligation - ending	$	251,401		$	209,088
Reconciliation of funded status:
Accumulated benefit obligation	$	(190,213	)	$	(166,620	)
Projected benefit obligation	$	(251,401	)	$	(209,088	)
Market value of assets		—			—
Funded status	$	(251,401	)	$	(209,088	)
Valuation assumptions:
Discount rate		4.00	%		5.54	%
Salary increase rate		3.00	%		3.00	%

Exhibit 13-52

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Retirement Plan for Directors (Continued)

	Year Ended December 31,
	2011			2010
Net periodic expense:
Service cost	$	8,444		$	7,248
Interest cost		11,164			11,768
Unrecognized (gain)		(2,360	)		(3,000	)
Unrecognized past service liability		5,512			5,512
Net cost included in directors’ compensation	$	22,760		$	21,528
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Salary increase rate		3.00	%		3.00	%

The Plan is unfunded. It is estimated that contributions of approximately $1,786 will be made during the year ending December 31, 2012. Expected benefit payments under the Plan are as follows:

Year Ended December 31,
	2012	$	1,786
	2013		3,591
	2014		17,813
	2015		18,222
	2016		18,694
	2017-2021		71,454

Exhibit 13-53

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Retirement Plan for Directors (Continued)

At December 31, 2011, unrecognized prior service cost and unrecognized net gain amounted to $42,275 and $7,320, respectively, and are included in accumulated other comprehensive loss. At December 31, 2010, unrecognized prior service cost and unrecognized net gain of $47,787 and $51,685, respectively, were included in accumulated other comprehensive loss. For the year ended December 31, 2012, $5,512 of prior service cost is expected to be amortized in expense.

ESOP

The Company has established an ESOP for all eligible employees. The ESOP used $696,160 of proceeds from a term loan from the Company to purchase 105,294 shares (adjusted for the February, 2005 and March, 2006 stock dividends) of Company common stock in the initial offering. The term loan from the Company to the ESOP is payable over 20 years. Interest on the term loan is payable monthly, commencing on November 1, 2003, at the rate of 5.5% per annum. The Association intends to make discretionary contributions to the ESOP which will be equal to principal and interest payments required from the ESOP on the term loan. Shares purchased with the loan proceeds are initially pledged as collateral for the term loan and are held in a suspense account for future allocation among participants. Contributions to the ESOP and shares released from the suspense account will be allocated among the participants on the basis of compensation, as described by the ESOP, in the year of allocation. During the years ended December 31, 2011 and 2010, the Association made cash contributions of $57,000 to the ESOP, of which $29,000 and $28,000, respectively, was applied to loan principal. At December 31, 2011 and 2010, the loan had an outstanding balance of $495,000 and $524,000, respectively.

The ESOP shares pledged as collateral are reported as unearned ESOP shares in the consolidated statements of financial condition. As shares are committed to be released from collateral, the Company records compensation expense equal to the current market price of the shares, and the shares become outstanding for net income per common share computations. Dividends on allocated ESOP shares are recorded as a reduction of stockholders’ equity. Contributions equivalent to dividends on unallocated ESOP shares are recorded as a reduction of debt. ESOP compensation expense was $25,000 and $25,000 for the years ended December 31, 2011 and 2010, respectively, which is included in salary and employee benefits.

The ESOP shares are summarized as follows:

	December 31,
	2011		2010
Unearned shares		61,858		67,123
Shares committed to be released		—		—
Shares released		35,232		29,967
Shares distributed		8,204		8,204
		105,294		105,294
Fair value of unearned shares	$	194,853	$	402,738

Exhibit 13-54

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Restricted Stock Awards

Restricted Stock Awards under the Stock-Based Incentive Plan are granted in the form of Company common stock, and vest over a period of eight years (12.5% annually from the date of grant). The Restricted Stock Awards become fully vested upon the death or disability of the holder. At December 31, 2011 and 2010, there were no shares remaining available for future restricted stock awards.

The following is a summary of the status of the Company’s non-vested restricted shares for the years ended December 31, 2011 and 2010:

	Restricted Shares		Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2009		11,398	$	9.71
Vesting		3,800		9.71
Non-vested as of December 31, 2010		7,598		9.71
Vesting		3,800		9.71
Non-vested as of December 31, 2011		3,798	$	9.71

No shares were granted or forfeited during the years ended December 31, 2011 and 2010. During both the years ended December 31, 2011 and 2010, the Company recorded $41,000 of stock-based compensation expense and the income tax benefit attributed to this expense was $17,000 during each year. Expected future compensation expense relating to the 3,798 non-vested restricted share awards as of December 31, 2011 is $41,000 over a weighted average period of 1 year.

Stock Options

Stock Options granted under the Stock-Based Incentive Plan may be either options that qualify as incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or non-statutory options. Options granted will vest and will be exercisable on a cumulative basis in equal installments at the rate of 12.5% per year commencing one year after the grant date. All options granted will be exercisable in the event the optionee terminates his employment due to death or disability. The options expire ten years from the date of grant. At December 31, 2011 and 2010, there were 57,357 shares available for future option grants.

Exhibit 13-55

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 11 - Benefit Plans (Continued)

Stock Options (Continued)

A summary of stock option activity follows:

	Number of Stock Options		Weighted Average Exercise price
Balance at December 31, 2009		82,378	$	9.71
Granted		—
Exercised		—
Forfeited		—
Balance at December 31, 2010		82,378		9.71
Granted		—
Exercised		—
Forfeited		—
Balance at December 31, 2011		82,378	$	9.71
Exercisable at December 31, 2011		75,503	$	9.71

During both the years ended December 31, 2011 and 2010, the Company recorded $41,000 for stock option expense and the tax benefit attributed to non-qualified stock option expense was $3,000 in each year.

Expected future compensation expense relating to the 6,875 nonvested options outstanding as of December 31, 2011 is $27,843 over a weighted-average period of 1 year.

At December 31, 2011 and 2010, the intrinsic value of stock options outstanding and stock options exercisable amounted to $0 and the weighted average remaining contractual term was 3 and 4 years, respectively. At and for the years ended December 31, 2011 and 2010, there was no dilutive effect of stock options.

Note 12 - Income Taxes

The Association qualifies as a savings and loan association under the provisions of the Internal Revenue Code and, therefore, was permitted, prior to January 1, 1996, to deduct from Federal taxable income an allowance for bad debts based on eight percent of taxable income before such deduction, less certain adjustments, subject to certain limitations. Beginning January 1, 1996, the Association, for Federal income tax purposes, must calculate its tax bad debt deduction using either the experience or the specific charge off method. Retained earnings at December 31, 2011 and 2010, include approximately $3,368,000 of such bad debt deductions for which income taxes have not been provided. During 2010, amendments of the New York State and New York City’s tax law and ordinance conformed the bad debt deduction to the deduction allowed under the Federal income tax law for taxable years beginning on or after January 1, 2010.

Exhibit 13-56

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 12 - Income Taxes (Continued)

The components of income taxes are summarized as follows:

	Years Ended December 31,
	2011			2010
Current income tax expense:
Federal	$	7,610		$	435,949
State and city		34,768			102,960
		42,378			538,909
Deferred income tax (benefit):
Federal		(307,983	)		(220,694	)
State and city		(365,996	)		(161,966	)
		(673,979	)		(382,660	)
	$	(631,601	)	$	156,249

The following table presents a reconciliation between reported income taxes and the income taxes which would be computed by applying the applicable Federal income tax rate of 34% to consolidated (loss) income before income taxes:

	Years Ended December 31,
	2011			2010
Federal income tax (benefit) expense	$	(431,726	)	$	203,143
(Decreases) increases in income taxes resulting from:
New York State and City taxes, net of federal income tax effect		(218,610	)		(38,944	)
BOLI income and other non-taxable items		(18,735	)		(7,950	)
Income Tax (Benefit) Expense	$	(631,601	)	$	156,249
Effective Income Tax Rate		49.74	%		26.15	%

Exhibit 13-57

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 12 - Income Taxes (Continued)

The income tax effects of existing temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are as follows:

	December 31,
	2011		2010
Deferred income tax assets:
Allowance for loan losses	$	1,013,995	$	686,302
Non-accrual interest		437,777		276,891
Depreciation		73,902		134,011
Deferred compensation		308,592		309,342
Benefit plans		774,357		346,695
Net operating loss carry forward		341,961		—
Other		86		46,904
		2,950,670		1,800,145
Deferred income tax liabilities		—		—
Net Deferred Income Tax Asset Included in Other Assets	$	2,950,670	$	1,800,145

At December 31, 2011, the Company had net operating loss carry forwards of $634,000 for federal purposes and $1.1 million for New York State and New York City purposes. As a result of the $9.1 million gain recognized on the January 2012 building sale (discussed in Notes 1 and 20 to these consolidated financial statements), the Company expects to fully utilize all net operating loss carry forwards in 2012.

Exhibit 13-58

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 13 – Comprehensive Income

The components of accumulated other comprehensive loss included in stockholders’ equity are as follows:

	December 31,
	2011			2010
Pension plan:
Unrecognized net loss	$	(3,895,593	)	$	(2,916,670	)
Postretirement benefits:
Unrecognized net loss		(65,479	)		(70,424	)
Unrecognized prior service cost		(23,692	)		(27,516	)
SERP:
Unrecognized net loss		(193,165	)		(51,680	)
Unrecognized prior service cost		(69,848	)		(81,624	)
Retirement Plan for Directors:
Unrecognized net gain		7,320			51,685
Prior service cost		(42,275	)		(47,787	)
Accumulated comprehensive loss before taxes		(4,282,732	)		(3,144,016	)
Tax Effect		1,792,102			1,315,556
Accumulated other comprehensive loss	$	(2,490,630	)	$	(1,828,460	)

Exhibit 13-59

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 13 – Comprehensive Income (Continued)

The components of other comprehensive loss and related tax effect is presented in the following table:

	Years Ended December 31,
	2011			2010
Pension plan:
Net (loss)	$	(978,923	)	$	(19,011	)
Postretirement benefits:
Net gain (loss)		4,945			(1,455	)
Prior service cost		3,824			3,824
SERP:
Net (loss)		(141,485	)		(37,630	)
Prior service cost		11,776			11,776
Retirement Plan for Directors:
Net (loss)		(44,365	)		(10,042	)
Prior service cost		5,512			5,512
Other comprehensive (loss) before taxes		(1,138,716	)		(47,026	)
Tax effect		476,546			19,680
Other comprehensive (loss)		(662,170	)	$	(27,346	)

Note 14 - Commitments

The Association is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contract or notional amounts of those instruments reflect the extent of involvement the Association has in particular classes of financial instruments.

The Association’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Association uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Exhibit 13-60

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 14 - Commitments (Continued)

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The total commitment amounts do not necessarily represent future cash requirements. The Association evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Association upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but primarily includes residential and income-producing real estate.

The Association has outstanding various commitments to originate or purchase loans as follows:

	December 31,
	2011		2010
Mortgage loans	$	405,000	$	2,244,000
Secured credit cards		136,223		131,000
	$	541,223	$	2,375,000

At December 31, 2011, the outstanding mortgage loan commitments included $405,000 for fixed interest rates at 4.75%.

At December 31, 2010, the outstanding mortgage loan commitments included $1,644,000 for fixed interest rates ranging from 4.25% to 5.75% and $600,000 for adjustable interest rates at 5.50%.

Rentals, including related expenses, under long-term operating leases for certain branch offices amounted to approximately $201,000 and $116,000 for the years ended December 31, 2011 and 2010, respectively. At December 31, 2011, the minimum rental commitments under all noncancellable leases with initial or remaining terms of more than one year are as follows:

Year Ended December 31,	Amount
2012	$	284,699
2013		290,396
2014		296,201
2015		302,125
2016		308,930
Thereafter		1,487,513

The Company and the Association also have, in the normal course of business, commitments for services and supplies. Management does not anticipate losses on any of these transactions.

Exhibit 13-61

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 15 - Contingencies

The Company and the Association are parties to litigation which arises primarily in the ordinary course of business. In the opinion of management, the ultimate disposition of such litigation should not have a material effect on the consolidated financial position or operations of the Company.

Note 16 - Fair Value Measurements and Fair Values of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Association could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective year-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amount reported at each year-end.

FASB’s guidance on fair value measurement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance does not require any new fair value measurements. The definition of fair value retains the exchange price notion in earlier definitions of fair value. The guidance clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company had no assets which are required to be measured on a recurring basis at December 31, 2011 and 2010.

Exhibit 13-62

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 16 - Fair Value Measurements and Fair Values of Financial Instruments (Continued)

For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:

Description	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
	(In Thousands)
Impaired Loans
December 31, 2011	$	5,422	$	—	$	—	$	5,422
December 31, 2010	$	4,769	$	—	$	—	$	4,769

The Company had no liabilities which are required to be measured on a recurring or non-recurring basis at December 31, 2011 and 2010.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at December 31, 2011 and 2010:

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Securities

The fair value of securities held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loan Receivable (Carried at Cost)

The fair value of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Exhibit 13-63

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 16 - Fair Value Measurements and Fair Values of Financial Instruments (Continued)

Impaired Loans

Impaired loans are those for which the Company has measured and recorded impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Accrued Interest Receivable

The carrying amounts reported in the balance sheet for accrued interest receivable approximate those assets’ fair values.

Federal Home Loan Bank of New York (FHLB) Stock (Carried at Cost)

The carrying amount of restricted investment in FHLB stock approximates fair value, and considers the limited marketability of such securities.

Deposit Liabilities (Carried at Cost)

The fair value disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings (Carried at Cost)

The carrying amounts of short-term borrowings approximate their fair values.

Long-Term Borrowings (Carried at Cost)

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Accrued Interest Payable

The carrying amounts reported in the balance sheet for accrued interest payable approximate the assets’ fair values.

Exhibit 13-64

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 16 - Fair Value Measurements and Fair Values of Financial Instruments (Continued)

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair value for the Association’s off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing.

As of December 31, 2011 and 2010, the fair value of commitments to extend credit were not considered to be material.

The estimated fair values of the Association’s financial instruments were as follows at December 31, 2011 and 2010.

	December 31,
	2011				2010
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	8,801	$	8,801	$	8,184	$	8,184
Securities held to maturity		25,749		27,402		21,780		23,084
FHLB stock		698		698		808		808
Loans receivable		95,162		101,557		106,478		112,166
Accrued interest receivable		554		554		607		607
Financial liabilities:
Deposits		114,923		116,442		117,074		118,460
Advances from FHLB		10,082		10,113		12,043		12,209
Accrued interest payable		5		5		28		28

Exhibit 13-65

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 17 - Parent Only Financial Information

The Company operates its wholly owned subsidiary, the Association. The earnings of the Association are recognized by the Company under the equity method of accounting. The following are the condensed financial statements for the Company (Parent Company only) as of and for the years ended December 31, 2011 and 2010.

CONDENSED STATEMENTS OF FINANCIAL CONDITION
	December 31,
	2011		2010
Assets
Cash and cash equivalents	$	124,408	$	227,008
Investment in the Association		13,772,427		14,881,231
ESOP loan receivable		494,736		523,959
Other assets		191,457		125,530
Total Assets	$	14,583,028	$	15,757,728
Liabilities and Stockholders’ Equity
Other liabilities	$	23,003	$	4,211
Stockholders’ equity		14,560,025		15,753,517
Total Liabilities and Stockholders’ Equity	$	14,583,028	$	15,757,728

CONDENSED STATEMENTS OF INCOME
	Years Ended December 31,
	2011			2010
Interest income	$	29,529		$	31,765
Undistributed earnings (distribution in excess of earnings) of Association		(553,496	)		474,794
		(523,967	)		506,559
Non-interest expenses		157,842			93,507
(Loss) income before Income Tax Benefit		(681,809	)		413,052
Income tax benefit		(43,626	)		(28,177	)
Net (Loss) Income	$	(638,183	)	$	441,229

Exhibit 13-66

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 17 - Parent Only Financial Information (Continued)

CONDENSED STATEMENTS OF CASH FLOWS
	Years Ended December 31,
	2011			2010
Cash Flows from Operating Activities
Net income	$	(638,183	)	$	441,229
Undistributed earnings (distribution in excess of earnings) of Association		553,496			(474,794	)
Increase in other assets		(65,927	)		(30,927	)
(Decrease) increase in other liabilities		18,791			(3,154	)
Net Cash (Used in) Operating Activities		(131,823	)		(67,646	)
Cash Flows from Investing Activities
Repayments ESOP loan receivable		29,223			27,669
Net (Decrease) in Cash and Cash Equivalents		(102,600	)		(39,977	)
Cash and Cash Equivalents - Beginning		227,008			266,985
Cash and Cash Equivalents - Ending	$	124,408		$	227,008

Exhibit 13-67

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 18 - Quarterly Financial Data (Unaudited)

	Year Ended December 31, 2011
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In Thousands, Except Per Share Data)
Interest income	$	1,763		$	1,712		$	1,662		$	1,669
Interest expense		412			388			378			376
Net Interest Income		1,351			1,324			1,284			1,293
Provision for loan losses		139			1,564			—			8
Net Interest Income (loss) after Provision for Loan Losses		1,212			(240	)		1,284			1,285
Non-interest income		63			96			62			62
Non-interest expenses		1,252			1,201			1,385			1,256
Income (loss) before Income Tax Expense (Benefit)		23			(1,345	)		(39	)		91
Income tax expense (benefit)		(13	)		(548	)		(19	)		(52	)
Net Income (loss)	$	36		$	(797	)	$	(20	)	$	143
Net income (loss) per common share, basic and diluted	$	0.01		$	(0.30	)	$	(0.01	)	$	(0.05	)

Exhibit 13-68

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 18 - Quarterly Financial Data (Unaudited) (Continued)

	Year Ended December 31, 2010
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In Thousands, Except Per Share Data)
Interest income	$	2,087	$	2,004	$	1,988	$	1,883
Interest expense		557		531		499		463
Net Interest Income		1,530		1,473		1,489		1,420
Provision for loan losses		154		134		100		433
Net Interest Income after Provision for Loan Losses		1,376		1,339		1,389		987
Non-interest income		63		65		64		61
Non-interest expenses		1,212		1,194		1,171		1,170
Income (loss) before Income Tax
Expense (Benefit)		227		210		282		(122	)
Income tax expense (benefit)		87		64		32		(27	)
Net Income (loss)	$	140	$	146	$	250	$	(95	)
Net income (loss) per common share, basic and diluted	$	0.05	$	0.05	$	0.09	$	(0.04	)

Note 19 - Recent Accounting Pronouncements

The following is a summary of recently issued authoritative pronouncements that could have an impact on the accounting, reporting, and/or disclosure of the consolidated financial information of the Company.

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, “Comprehensive Income - Presentation of Comprehensive Income”. The provisions of this ASU amend FASB Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income,” to facilitate the continued alignment of U.S. GAAP with International Accounting Standards. The ASU prohibits the presentation of the components of comprehensive income in the statement of stockholder’s equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate, but consecutive, statements of net income and other comprehensive income. Under previous GAAP, all 3 presentations were acceptable. Regardless of the presentation selected, the Reporting Entity is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements.

Exhibit 13-69

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 19 - Recent Accounting Pronouncements (Continued)

The FASB subsequently issued ASU 2011-12, which defers the presentation of all reclassification adjustments while the FASB considers the operational concerns raised with regard to this presentation, as well as whether or not this presentation meets the needs of financial statement users. Until the FASB has reached a decision, reporting entities should continue to present reclassifications out of accumulated other comprehensive income consistent with pre-existing requirements.

The provision to prepare either a combined statement of comprehensive income or separate, but consecutive, statements of net income and other comprehensive income remains in effect for fiscal years and interim periods beginning after December 15, 2011 for public companies, and for fiscal years ending after December 15, 2012 for nonpublic companies. As the two remaining options for presentation existed prior to the issuance of this ASU, early adoption is permitted. The Company does not expect the adoption of these pronouncements to have a material impact on consolidated operations or financial position.

The FASB issued ASU 2011-04 to amend FASB ASC Topic 820, Fair Value Measurements, to bring U.S. GAAP for fair value measurements in line with International Accounting Standards. The ASU clarifies existing guidance for items such as: the application of the highest and best use concept to non-financial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity’s stockholder’s equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The ASU also creates an exception to Topic 820 for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. The ASU also allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the ASU contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2011. For nonpublic entities, the ASU is effective for annual periods beginning after December 15, 2011. The Company does not expect the adoption of these pronouncements to have a material impact on consolidated operations or financial position.

Note 20 – Property Sale

During 2010, the Company entered into an agreement (the “Agreement”) to sell its current main branch building and a portion of Flatbush Federal’s adjoining real estate to a third party (the “Purchaser”) (the “Transfer”). Under the Agreement, Purchaser would acquire Flatbush Federal’s current main branch building located at 2146 Nostrand Avenue, Brooklyn, New York (“Property A”). In addition thereto, the Purchaser would take title to 2158 Nostrand Avenue, Brooklyn, New York (“Property B”), and an approximately 12,305 square foot parcel (“Property C”) of a larger adjoining parking lot (“Lot 124”) abutting parts of Nostrand Avenue and Hillel Place, Brooklyn, New York (Property A, Property B, and Property C are collectively, the “Properties”).

Exhibit 13-70

Flatbush Federal Bancorp, Inc. and Subsidiaries

Note 20 – Property Sale (Continued)

On March 24, 2011, the Company and the Purchaser entered into an amendment to the Agreement. The significant terms of the Agreement, as amended, are as follows:

1.	The Purchaser was required to subdivide Lot 124 (of which Property C forms a part of) into two separate tax lots or parcels (the “Subdivision”). Lot 124 consists of (i) Parcel C and (ii) a 3,100 square foot parcel which abuts Hillel Place (the “Retained Property”). Flatbush Federal will retain title to the Retained Parcel, which will become the site of a new branch building (“Branch Building”).
2.	The Transfer must close (the “Closing”) five (5) days after the date the Subdivision has been approved and new tax lot numbers are assigned to Property C and the Retained Property.
3.	The Purchaser is obligated to complete construction of and deliver to the Company a building containing a 3,000 square foot ground floor bank branch, a cellar, and three (3) additional floors of office space. In consideration of constructing the three (3) additional floors of office space, the Purchaser shall receive a credit at the Closing.
4.	One of the principals of the Purchaser will personally guarantee the Purchaser’s obligation to deliver the bank branch and office building to Flatbush Federal.

The Company plans to use the additional three (3) floors of office space (consisting of approximately 7,125 of additional square feet) for its executive and administrative offices.

The transfer closed on January 13, 2012; at that date the Company received $6,340,000 in cash and a building valued at $3,176,000 and recorded a pre-tax gain of $9,073,000.

Upon the Closing, Flatbush Federal began leasing back Property A on an interim basis for its continued use as a temporary bank branch (the “Branch Lease”) for one ($1.00) dollar per year. Flatbush Federal must relocate to the new Branch Building no later than 45 days after the Purchaser completes the construction of the Branch Building and if applicable, the Purchaser’s contractor has completed construction of the interior build-out and delivers to Flatbush Federal a temporary certificate of occupancy for the Branch Building, Bank branch expansion and interior build-out. At that time, the Branch Lease will terminate, and Flatbush Federal will open the Branch Building for business as its new bank branch.

Exhibit 13-71

Flatbush Federal Bancorp, Inc. and Subsidiaries

Directors and Executive Officers

Directors

Jesus R. Adia

Chairman of the Board,

President and Chief Executive Officer,

Flatbush Federal Bancorp, Inc. and

Flatbush Federal Savings and Loan Association

D. John Antoniello

President of Anbro Supply Company, an

industrial supply company

Patricia Ann McKinley Scanlan

Marketing Professional for a Long Island-based newspaper

New York State real estate agent

Alfred S. Pantaleone

Retired, formerly Deputy Executive Director of

the New York City Board of Elections

Charles J. Vorbach

President of John L. Vorbach Co., Inc., an insurance

brokerage and consulting business

Michael J. Lincks

Certified Public Accountant and a private investor

Executive Officers

Jesus R. Adia

President and Chief Executive Officer

John S. Lotardo

Executive Vice President and Chief Financial Officer

Exhibit 13-72

Flatbush Federal Bancorp, Inc. and Subsidiaries

Shareholder Information

Annual Meeting

The Annual Meeting of Shareholders will be held at 2146 Nostrand Avenue, Brooklyn, NY 11210 on May 24, 2012 at 11:00 a.m.

Stock Listing

Over-the-Counter Bulletin Board under the symbol “FLTB”

Special Counsel

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue, NW, Suite 780

Washington, D.C. 20015

Independent Auditors

ParenteBeard LLC

100 Walnut Avenue, Suite 200

Clark, NJ 07066

Transfer Agent and Registrar

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

(800) 368-5948

Please contact our transfer agent directly for assistance in changing your address, elimination of duplicate mailing, transferring stock, or replacing lost, stolen or destroyed stock certificates.

Annual Report on Form 10-K

A copy of the Company’s Form 10-K for the fiscal year ended December 31, 2011 as filed with the Securities and Exchange Commission is available without charge to shareholders by written request to the Company. It may also be accessed on our website at: www.flatbush.com

Exhibit 13-73

Flatbush Federal Bancorp, Inc. and Subsidiaries

Market Information

The Company’s Common Stock is traded on the Over-the-Counter Bulletin Board under the symbol “FLTB.”

The following table sets forth the range of the high and low bid prices of the Company’s Common Stock since December 31, 2009, and is based upon information provided on the Yahoo Finance website. The Company declared 10% stock dividends on February 23, 2006 and March 22, 2005.

	Prices of Common Stock
	High		Low
Calendar Quarter Ended
December 31, 2011	$	4.00	$	3.15
September 30, 2011	$	5.00	$	3.50
June 30, 2011	$	5.60	$	4.70
March 31, 2011	$	6.00	$	5.40
December 31, 2010	$	6.00	$	5.15
September 30, 2010	$	6.97	$	4.20
June 30, 2010	$	5.25	$	4.11
March 31, 2010	$	4.55	$	3.70

As of December 31, 2011, the Company had 460 stockholders of record.

Exhibit 13-74

EX-21.0

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Exhibit 21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Subsidiary	Ownership	State of Incorporation
Flatbush Federal Savings and Loan Association	100%	Federal

Exhibit 21

EX-23.0

EXHIBIT 23

CONSENT OF PARENTEBEARD LLC

Exhibit 23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-123670) of Flatbush Federal Bancorp, Inc. (the “Company”) of our report dated March 30, 2012, relating to the Company’s consolidated financial statements, which appears in this Annual Report on Form 10-K.

/s/ ParenteBeard LLC

Clark, New Jersey

March 30, 2012

Exhibit 23

EX-31.1

EXHIBITS 31.1 and 31.2

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	I, Jesus R. Adia, certify that:
1.	I have reviewed this annual report on Form 10-K of Flatbush Federal Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state  a material fact necessary to make the statements made, in light of the circumstances under which such  statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report,  fairly present in all material respects the financial condition, results of operations and cash flows of the  registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and  internal control over financial reporting (as defined Exchange Act Rules 13a-15(f) and 15d-15(f)) for the  registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and  procedures to be designed under our supervision, to ensure that material information relating to the  registrant, including its consolidated subsidiaries, is made known to us by others within those  entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over  financial reporting to be designed under our supervision, to provide reasonable assurance  regarding the reliability of financial reporting and the preparation of financial statements for  external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in  this report our conclusions about the effectiveness of the disclosure controls and procedures, as of  the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that  occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in  the case of an annual report) that has materially affected, or is reasonably likely to materially  affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of  internal control over financial reporting, to the registrant’s auditors and the audit committee of the  registrant’s board of directors:
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 30, 2012	/s/ Jesus R. Adia
Date	Jesus R. Adia
	President and Chief Executive Officer

Exhibit 31.1

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	I, John S. Lotardo, certify that:
1.	I have reviewed this annual report on Form 10-K of Flatbush Federal Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state  a material fact necessary to make the statements made, in light of the circumstances under which such  statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report,  fairly present in all material respects the financial condition, results of operations and cash flows of the  registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and  internal control over financial reporting (as defined Exchange Act Rules 13a-15(f) and 15d-15(f)) for the  registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and  procedures to be designed under our supervision, to ensure that material information relating to the  registrant, including its consolidated subsidiaries, is made known to us by others within those  entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over  financial reporting to be designed under our supervision, to provide reasonable assurance  regarding the reliability of financial reporting and the preparation of financial statements for  external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in  this report our conclusions about the effectiveness of the disclosure controls and procedures, as of  the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that  occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in  the case of an annual report) that has materially affected, or is reasonably likely to materially  affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of  internal control over financial reporting, to the registrant’s auditors and the audit committee of the  registrant’s board of directors:
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control  over financial reporting which are reasonably likely to adversely affect the registrant’s ability to  record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 30, 2012	/s/ John S. Lotardo
Date	John S. Lotardo
	Executive Vice President and Chief Financial Officer

Exhibit 31.2

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32

Exhibit 32

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Flatbush Federal Bancorp, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2011 as filed with the Securities and Exchange Commission (the “Report”), we, Jesus R. Adia, President and Chief Executive Officer, and John S. Lotardo, Executive Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in the Report.

March 30, 2012	/s/ Jesus R. Adia
Date	Jesus R. Adia
	President and Chief Executive Officer
March 30, 2012	/s/ John S. Lotardo
Date	John S. Lotardo
	EVP and Chief Financial Officer

Exhibit 32

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Data (Unaudited) [Abstract]

Quarterly Financial Data (Unaudited)

Note 18 - Quarterly Financial Data (Unaudited)

	Year Ended December 31, 2011
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In Thousands, Except Per Share Data)
Interest income	$	1,763		$	1,712		$	1,662		$	1,669
Interest expense		412			388			378			376
Net Interest Income		1,351			1,324			1,284			1,293
Provision for loan losses		139			1,564			—			8
Net Interest Income (loss) after Provision for Loan Losses		1,212			(240	)		1,284			1,285
Non-interest income		63			96			62			62
Non-interest expenses		1,252			1,201			1,385			1,256
Income (loss) before Income Tax Expense (Benefit)		23			(1,345	)		(39	)		91
Income tax expense (benefit)		(13	)		(548	)		(19	)		(52	)
Net Income (loss)	$	36		$	(797	)	$	(20	)	$	143
Net income (loss) per common share, basic and diluted	$	0.01		$	(0.30	)	$	(0.01	)	$	(0.05	)

	Year Ended December 31, 2010
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In Thousands, Except Per Share Data)
Interest income	$	2,087	$	2,004	$	1,988	$	1,883
Interest expense		557		531		499		463
Net Interest Income		1,530		1,473		1,489		1,420
Provision for loan losses		154		134		100		433
Net Interest Income after Provision for Loan Losses		1,376		1,339		1,389		987
Non-interest income		63		65		64		61
Non-interest expenses		1,212		1,194		1,171		1,170
Income (loss) before Income Tax
Expense (Benefit)		227		210		282		(122	)
Income tax expense (benefit)		87		64		32		(27	)
Net Income (loss)	$	140	$	146	$	250	$	(95	)
Net income (loss) per common share, basic and diluted	$	0.05	$	0.05	$	0.09	$	(0.04	)

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Securities Held to Maturity

12 Months Ended

Dec. 31, 2011

Securities Held to Maturity [Abstract]

Securities Held to Maturity

Note 2 - Securities Held to Maturity

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government National Mortgage Association	$	5,342,679	$	322,917	$	—	$	5,665,596
Federal National Mortgage Association		12,778,385		1,068,213		—		13,846,598
Federal Home Loan Mortgage Corporation		3,280,117		175,596		19,303		3,436,410
Total Mortgage-Backed Securities		21,401,181		1,566,727		19,303		22,948,604
Corporate Debt		4,347,401		135,320		29,238		4,453,483
	$	25,748,582	$	1,702,046	$	48,561	$	27,402,087

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Government National Mortgage Association	$	1,941,011	$	130,052	$	—	$	2,071,063
Federal National Mortgage Association		15,301,382		1,043,256		10,719		16,333,919
Federal Home Loan Mortgage Corporation		4,537,418		152,331		10,388		4,679,361
Total Mortgage-Backed Securities	$	21,779,811	$	1,325,639	$	21,107	$	23,084,343

The age of unrealized losses and fair value of related mortgage-backed securities held to maturity are as follows:

		Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2011
Federal Home Loan Mortgage Corporation	$	581,132	$	17,427	$	119,298	$	1,876	$	700,430	$	19,303
Corporate debt		888,807		29,238		—		—		888,807		29,238
	$	1,469,939	$	46,665	$	119,298	$	1,876	$	1,589,237	$	48,541
December 31, 2010:
Federal National Mortgage Association	$	487,785	$	10,719	$	—	$	—	$	487,785	$	10,719
Federal Home Loan Mortgage Corporation		53,835		418		553,080		9,970		606,915		10,388
	$	541,620	$	11,137	$	553,080	$	9,970	$	1,094,700	$	21,107

Management does not believe that any of the individual unrealized losses at December 31, 2011 and 2010, represent other-than-temporary impairment. The unrealized losses reported on securities at December 31, 2011 relate to four corporate debt securities and four Federal Home Loan Mortgage Corporation mortgage-backed securities. These unrealized losses are due to changes in interest rates. The Company does not intend to sell these securities and it is not more-likely-than-not that the Company would be required to sell these securities prior to full recovery of fair value to a level which equals or exceeds amortized cost.

The amortized cost and estimated fair value of securities at December 31, 2011, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers generally have the right to prepay obligations.

		Amortized Cost		Estimated Fair Value
Due within one year	$	—	$	—
Due after one year through five years		2,642,522		2,642,172
Due after five years through ten years		1,892,474		2,003,927
Due after ten years		21,213,586		22,755,988
	$	25,748,582	$	27,402,087

All mortgage-backed securities are U.S. Government Agencies backed and collateralized by residential mortgages.

There were no sales of securities held to maturity during the years ended December 31, 2011 and 2010.

At December 31, 2011 and 2010, mortgage-backed securities with amortized cost of approximately $8,719,000 and $10,702,000, respectively, and fair value of $9,087,000, and $11,265,000, respectively, were pledged to Federal Home Loan Bank of New York to secure borrowings.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 - Summary of Significant Accounting Policies

Nature of Operations and Basis of Financial Statement Presentation

The consolidated financial statements include accounts of Flatbush Bancorp Inc. (the "Company"), Flatbush Federal Savings and Loan Association (the "Association") and the Association's subsidiary, Flatbush REIT, Inc. (the "REIT"), a corporation principally engaged in investing in loans secured by real estate. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All significant intercompany accounts and transactions have been eliminated in consolidation. At both December 31, 2011 and 2010, 54.23%, of the Company's common stock was owned by Flatbush Federal MHC, a mutual holding company.

The Company's primary business is the ownership and operation of the Association. The Association's principal business consists of attracting retail deposits from the general public in the areas surrounding its various locations in Brooklyn, New York and investing those deposits, together with funds generated from operations and borrowings, primarily in one-to four-family residential mortgage loans, real estate construction loans and various securities. One-to four-family residential real estate in the Association's market areas is characterized by a large number of attached and semi-detached homes, including a number of two- and three-family homes and cooperative apartments. Revenues are derived principally from interest on loans and securities, loan origination and servicing fees, and service charges and fees collected on deposit accounts. The primary sources of funds are deposits, principal and interest payments on loans and securities, and borrowings.

The Association's lending area is concentrated in the neighborhoods surrounding the Association's office locations in Brooklyn, New York. Most of the deposit customers are residents of the greater New York metropolitan area.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the determination of the projected pension liabilities and the amount of deferred taxes which are more likely than not to be realized. Management believes that the allowance for loan losses and projected pension liability are adequate and that all deferred taxes are more likely than not to be realized. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions in the market area. The determination of the projected pension liability and related pension expense is based upon assumptions regarding the discount rate and expected return on plan assets, as well as employee demographics, such as retirement patterns, employee turnover, mortality rates and estimated employee compensation increases. The assessment of the amount of deferred tax assets more likely than not to be realized is based upon projected future taxable income, which is subject to continual revisions for updated information.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Association's allowance for loan losses. Such agencies may require the Association to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The Company follows the Financial Accounting Standards Board ("FASB") guidance on subsequent events, which establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued. The guidance sets forth the period after the balance sheet date during which management of the reporting entity, should evaluate events or transactions that may occur for potential recognition in the financial statements, identifies the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosure that should be made about events or transactions that occur after the balance sheet date. In preparing these consolidated financial statements, the Company evaluated the events that occurred between January 1, 2011 and the date these consolidated financial statements were issued.

On January 13, 2012, the Company consummated the sale of the Association's main branch building and a portion of adjoining real estate to a third party for consideration of $10,136,000 and recognized a pre-tax gain of $9,072,000. This transaction is more fully described in Note 20 to the consolidated financial statements.

On March 13, 2012, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and between (i) Northfield Bank, Northfield Bancorp, Inc. ("Northfield Bancorp"), and Northfield Bancorp, MHC, and (ii) the Company, the Association and Flatbush Federal Bancorp, MHC. The Merger Agreement provides, among other things, that as a result of the merger of the Company into Northfield Bancorp (the "Mid-Tier Merger"), each outstanding share of the Company's common stock will be converted into the right to receive 0.4748 shares of Northfield Bancorp common stock. The Merger Agreement contains a number of customary representations and warranties by the parties regarding certain aspects of their respective businesses, financial condition, structure and other facts pertinent to the Merger that are customary for a transaction of this kind. The obligation of the parties to complete the Merger is subject to various customary conditions. If the Merger is terminated under specified situations in the Merger Agreement (because the Company accepts a proposal to be acquired that is superior to the one contained in the Merger Agreement, enters into an agreement related to such a proposal and terminates the Merger Agreement, or fails to make, withdraws, modifies or qualifies its recommendation regarding the Merger Agreement), the Company may be required to pay a termination fee to Northfield Bancorp of approximately $700,000. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was included in a Form 8-K filed with the Securities and Exchange Commission on March 15, 2012.

Cash and Cash Equivalents

Cash and cash equivalents include cash and amounts due from depository institutions, interest-bearing deposits in other banks, term deposits with original maturities of three months or less, and federal funds sold. Generally, federal funds are sold for one-day periods.

Investment and Mortgage-Backed Securities

Investments in debt securities that the Association has the positive intent and ability to hold to maturity are classified as held to maturity securities and reported at amortized cost. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized holding gains and losses included in earnings. Debt and equity securities not classified as trading securities nor as held to maturity securities are classified as available for sale securities and reported at fair value, with unrealized holding gains or losses, net of deferred income taxes, reported in the accumulated other comprehensive loss component of stockholders' equity. The Company has no securities classified as available for sale or trading securities.

Premiums and discounts on all securities are amortized/accreted using the interest method. Interest income on securities, which includes amortization of premiums and accretion of discounts, is recognized in the consolidated financial statements when earned. The adjusted cost basis of an identified security sold or called is used for determining security gains and losses recognized in the consolidated statements of income.

Individual securities are considered impaired when the fair value of such security is less than its amortized cost. The Company evaluates all securities with unrealized losses quarterly to determine if such impairments are temporary or "other-than-temporary" in accordance with applicable accounting guidance. The Company accounts for temporary impairments based upon security classification as either available for sale or held to maturity. Temporary impairments on available for sale securities are recognized on a tax-effected basis, through other comprehensive income (loss) with offsetting entries adjusting the carrying value of the securities and the balance of deferred income taxes. Temporary impairments of held to maturity securities are not recognized in the consolidated financial statements; however information concerning the amount and duration of impairments on held to maturity securities is disclosed in the notes to the consolidated financial statements.

Other-than-temporary impairments on securities that the Company has decided to sell or will more likely than not be required to sell prior to the full recovery of their fair value to a level to, or exceeding amortized cost are recognized in earnings. Otherwise, the other-than-temporary impairment is bifurcated into credit related and noncredit-related components. The credit related impairment generally represents the amount by which the present value of the cash flows expected to be collected on a debt security falls below its amortized cost. The noncredit-related component represents the remaining portion of the impairment not otherwise designated as credit-related. Credit related other-than-temporary impairments are recognized in earnings while noncredit-related other-than-temporary impairments are recognized, net of deferred income taxes, in other comprehensive income (loss).

Federal Home Loan Bank of New York Stock

Federal Home Loan Bank of New York ("FHLB") stock, which represents a required investment in the common stock of a correspondent bank, is carried at cost.

Management evaluates the FHLB stock for impairment in accordance with guidance on accounting by certain entities that lend to or finance the activities of others. Management's determination of whether this investment is impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

Management believes no impairment charge is necessary related to the FHLB stock as of December 31, 2011.

Loans Receivable

Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan origination fees and costs. The Association defers loan origination fees and certain direct loan origination costs and accretes/amortizes such amounts as an adjustment of yield over the contractual lives of the related loans.

Interest is recognized by use of the accrual method. An allowance for uncollectible interest on loans is maintained based on management's evaluation of collectibility. The allowance is established by a charge to interest income. Income is subsequently recognized only to the extent that cash payments are received until, in management's judgment, the borrower's ability to make periodic interest and principal payments is probable, in which case the loan is returned to an accrual status.

Allowance for Loan Losses

An allowance for loan losses is maintained at a level necessary to absorb loan losses which are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of its loan activities, along with general economic and real estate market conditions. The Association utilizes a two tier approach: (1) identification of impaired loans and establishment of specific loss allowances on such loans; and (2) establishment of general valuation allowances on the remainder of its loan portfolio. The Association maintains a loan review system which allows for a periodic review of its loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, types of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified loans based on a review of such information. A loan evaluated for impairment is deemed to be impaired when, based on current information and events, it is probable that the Association will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. The Association does not aggregate such loans for evaluation purposes. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions and management's judgment.

The allowance is increased through provisions charged against current earnings and recoveries of previously charged off loans. Loans which are determined to be uncollectible are charged against the allowance. Although management believes that specific and general loan loss allowances are established to absorb losses which are both probable and reasonably estimable, actual losses are dependent upon future events and, as such, further additions to the level of specific and general loan loss allowances may be necessary.

Payments received on impaired loans are applied to principal.

Concentration of Risk

The Association's lending activities are concentrated in loans secured by real estate located in the State of New York.

Advertising

Advertising expense, which totaled $13,000 and $16,000, during the years ended December 31, 2011 and 2010, respectively, is recorded as incurred and included in other non-interest expenses.

Premises and Equipment

Premises and equipment are comprised of land, at cost, and building, building improvements, leasehold improvements and furniture, fixtures and equipment, at cost, less accumulated depreciation and amortization computed on the straight-line method over the following estimated useful lives:

	Years
Building and improvements	5 – 50
Leasehold improvements	Shorter of term of lease or useful life
Furniture, fixtures and equipment	5 – 10

Significant renewals and betterments are charged to the premises and equipment account. Maintenance and repairs are charged to expense in the year incurred. Rental income is netted against occupancy expense in the consolidated statements of income.

Bank Owned Life Insurance (BOLI)

The Company has an investment in BOLI to help offset the rising cost of employee benefits. BOLI is accounted for using the cash surrender value method and is recorded at its realizable value. The income from BOLI is recorded as other non-interest income.

Income Taxes

The Company and the Association file consolidated federal, state and city income tax returns. Income taxes are allocated to the Company and the Association based upon the contribution of their respective income or loss to the consolidated return. The REIT files a separate federal, state and city income tax return and pays its own taxes.

Federal, state and city income taxes have been provided on the basis of reported income. The amounts reflected on the tax return differ from these provisions due principally to temporary differences in the reporting of certain items for financial reporting and income tax reporting purposes. The tax effect of these temporary differences is accounted as deferred taxes applicable to future periods. Deferred income tax expense or benefit is determined by recognizing deferred tax assets and liabilities for the estimated 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. The realization of deferred tax assets is assessed and a valuation allowance provided, when necessary, for that portion of the asset which is not likely to be realized.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements in accordance with accounting guidance which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the Company's evaluation, no significant income tax uncertainties have been identified. Therefore, the Company recognized no adjustment for unrecognized income tax benefits for the years ended December 31, 2011 and 2010. Our policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income. The amount of interest and penalties for the years ended December 31, 2011 and 2010 was immaterial. The tax years subject to examination by the taxing authorities are the years ended December 31, 2010, 2009 and 2008.

Benefit Plans

The Company has a non-contributory defined benefit pension plan covering all eligible employees. The benefits are based on years of service and employees' compensation. The benefit plan is funded in conformance with funding requirements of applicable government regulations. The Company also has an unfunded Postretirement Benefit Plan, a Supplemental Retirement Plan for executives and a Directors Retirement plan. Prior service costs for these plans generally are amortized over the estimated remaining service periods of participants.

The Company uses the corridor approach in the valuation of the defined benefit plan and other plans. The corridor approach defers all actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions. For the defined benefit pension plan, these unrecognized gains and losses are amortized when net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year.

Stock-Based Compensation Plans

The Company has two stock-related compensation plans, including stock options and restricted stock plans, which are described in Note 11 to the Company's Consolidated Financial Statements. The Company expenses the fair value of all share-based compensation granted over its requisite service periods.

Options vest over an eight-year service period. Upon exercise of vested options, management expects to draw on treasury stock as the source of shares. The fair values relating to all options granted were estimated using the Black-Scholes option pricing model. Expected volatilities are based on historical volatility of our stock and other factors, such as implied market volatility. The Company used historical exercise dates based on the age at grant of the option holder to estimate the options' expected term, which represent the period of time that the options granted are expected to be outstanding. The Company anticipated the future option holding periods to be similar to the historical option holding periods. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield was based on the Company's history and expectations of dividend payouts. The Company recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards. There were no options granted during the years ended December 31, 2011 and 2010.

Interest-Rate Risk

The Association is principally engaged in the business of attracting deposits from the general public and using these deposits, together with other funds, to make loans secured by real estate and, to a lesser extent, to purchase investment and mortgage-backed securities. The potential for interest-rate risk exists as a result of the generally shorter duration of interest-sensitive liabilities compared to the generally longer duration of interest-sensitive assets. In a rising rate environment, liabilities will reprice faster than assets, thereby reducing net interest income. For this reason, management regularly monitors the maturity structure of the Association's interest-earning assets and interest-bearing liabilities in order to measure its level of interest-rate risk and to plan for future volatility.

Net Income per Common Share

Basic net income per common share was computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for unearned shares of the ESOP. Stock options and restricted stock awards granted are considered common stock equivalents and therefore considered in diluted net income per common share calculations, if dilutive, using the treasury stock method. During the years ended December 31, 2011 and 2010, all outstanding stock options and unvested restricted stock were anti-dilutive.

Transfer of Financial Assets

Transfer of financial assets, including loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Association; (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and (3) the Association does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Association has entered into off-balance sheet financial instruments consisting of commitments to extend credit. Such financial instruments are recorded in the consolidated statements of financial condition when they are funded.

Comprehensive Income

Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrecognized net loss or gain, unrecognized past service cost or unrecognized past transition obligation on defined benefit plans and post retirement plans, are reported as a separate component of the equity section of the consolidated statements of financial condition, such items, along with net income are components of comprehensive income.

Reclassification

Certain amounts as of and for the year ended December 31, 2010 have been reclassified to conform to the current year's presentation. These reclassifications had no impact on net income for 2010.

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Consolidated Statements of Financial Condition (USD $)	Dec. 31, 2011	Dec. 31, 2010
Assets
Cash and amounts due from depository institutions	$ 1,871,605	$ 1,568,478
Interest-earning deposits in other banks	1,179,582	1,065,862
Federal funds sold	5,750,000	5,550,000
Cash and Cash Equivalents	8,801,187	8,184,340
Securities held to maturity, fair value of $27,402,087 in 2011 and $23,084,343 in 2010	25,748,582	21,779,811
Loans receivable, net of allowance for loan losses of $2,247,171 in 2011 and $1,649,319 in 2010	95,161,715	106,477,978
Other real estate owned	743,830
Premises and equipment	2,377,057	2,287,820
Federal Home Loan Bank of New York stock	698,200	807,900
Accrued interest receivable	554,307	607,089
Bank owned life insurance	4,523,252	4,371,605
Other assets	4,106,279	2,502,199
Total Assets	142,714,409	147,018,742
Liabilities
Deposits: Non-interest bearing	5,197,945	5,319,364
Deposits: Interest bearing	109,724,623	111,754,193
Total Deposits	114,922,568	117,073,557
Advances from Federal Home Loan Bank of New York	10,081,574	12,042,583
Advance payments by borrowers for taxes and insurance	190,155	333,023
Other liabilities	2,960,087	1,816,062
Total Liabilities	128,154,384	131,265,225
Stockholders' Equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; non issued and outstanding
Common stock, $0.01 par value; authorized 9,000,000 shares; issued 2,799,657 shares; outstanding 2,736,907 shares	27,998	27,998
Paid-in Capital	12,725,312	12,653,326
Retained earnings	5,152,987	5,791,170
Unearned employees' stock ownership plan (ESOP) shares	(409,108)	(443,983)
Treasury stock, 62,750 shares, at cost	(446,534)	(446,534)
Accumulated other comprehensive loss	(2,490,630)	(1,828,460)
Total Stockholders' Equity	14,560,025	15,753,517
Total Liabilities and Stockholders' Equity	$ 142,714,409	$ 147,018,742

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Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statements of Stockholders' Equity
Benefit Plan, taxes	$ (476,546)	$ 19,680

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Contingencies

12 Months Ended

Dec. 31, 2011

Contingencies [Abstract]

Contingencies

Note 15 - Contingencies

The Company and the Association are parties to litigation which arises primarily in the ordinary course of business. In the opinion of management, the ultimate disposition of such litigation should not have a material effect on the consolidated financial position or operations of the Company.

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Parent Only Financial Information

12 Months Ended

Dec. 31, 2011

Parent Only Financial Information [Abstract]

Parent Only Financial Information

Note 17 - Parent Only Financial Information

The Company operates its wholly owned subsidiary, the Association. The earnings of the Association are recognized by the Company under the equity method of accounting. The following are the condensed financial statements for the Company (Parent Company only) as of and for the years ended December 31, 2011 and 2010.

CONDENSED STATEMENTS OF FINANCIAL CONDITION
	December 31,
	2011		2010
Assets
Cash and cash equivalents	$	124,408	$	227,008
Investment in the Association		13,772,427		14,881,231
ESOP loan receivable		494,736		523,959
Other assets		191,457		125,530
Total Assets	$	14,583,028	$	15,757,728
Liabilities and Stockholders' Equity
Other liabilities	$	23,003	$	4,211
Stockholders' equity		14,560,025		15,753,517
Total Liabilities and Stockholders' Equity	$	14,583,028	$	15,757,728

CONDENSED STATEMENTS OF INCOME
	Years Ended December 31,
	2011			2010
Interest income	$	29,529		$	31,765
Undistributed earnings (distribution in excess of earnings) of Association		(553,496	)		474,794
		(523,967	)		506,559
Non-interest expenses		157,842			93,507
(Loss) income before Income Tax Benefit		(681,809	)		413,052
Income tax benefit		(43,626	)		(28,177	)
Net (Loss) Income	$	(638,183	)	$	441,229

CONDENSED STATEMENTS OF CASH FLOWS
	Years Ended December 31,
	2011			2010
Cash Flows from Operating Activities
Net income	$	(638,183	)	$	441,229
Undistributed earnings (distribution in excess of earnings) of Association		553,496			(474,794	)
Increase in other assets		(65,927	)		(30,927	)
(Decrease) increase in other liabilities		18,791			(3,154	)
Net Cash (Used in) Operating Activities		(131,823	)		(67,646	)
Cash Flows from Investing Activities
Repayments ESOP loan receivable		29,223			27,669
Net (Decrease) in Cash and Cash Equivalents		(102,600	)		(39,977	)
Cash and Cash Equivalents - Beginning		227,008			266,985
Cash and Cash Equivalents - Ending	$	124,408		$	227,008

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (638,183)	$ 441,229
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment	120,488	171,870
Net accretion of premiums, discounts and deferred loan fees and costs	(26,538)	(166,560)
Deferred income tax (benefit)	(673,979)	(382,660)
Provision for loan losses	1,711,252	821,476
ESOP shares committed to be released	24,865	24,685
MRP amortization	40,584	40,584
Stock option expense	41,412	41,412
Decrease in accrued interest receivable	52,782	50,463
Increase in cash surrender value of bank owned life insurance	(151,647)	(151,623)
(Increase) decrease in other assets	(453,555)	501,168
Increase (decrease) in other liabilities	5,309	(665,642)
Net Cash Provided by Operating Activities	52,790	726,402
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities held to maturity	(4,357,242)
Principal repayments on mortgage-backed securities held to maturity	5,535,214	7,943,767
Purchase of mortgage-backed securities held to maturity	(5,150,439)	(1,250,010)
Purchases of loan participation interests	(150,403)	(1,996,402)
Net change in loans receivable	9,041,818	5,717,552
Additions to premises and equipment	(209,725)	(19,377)
Redemption of Federal Home Loan Bank of New York stock	109,700	467,000
Net Cash Provided by Investing Activities	4,818,923	10,862,530
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits	(2,150,989)	1,905,837
Repayment of advances from Federal Home Loan Bank of New York	(3,461,009)	(2,808,898)
Net change to short-term borrowings	1,500,000	(8,000,000)
(Decrease) increase in advance payments by borrowers for taxes and insurance	(142,868)	40,442
Net Cash Used in Financing Activities	(4,254,866)	(8,862,619)
Net Increase in Cash and Cash Equivalents	616,847	2,726,313
CASH AND CASH EQUIVALENTS - BEGINNING	8,184,340	5,458,027
CASH AND CASH EQUIVALENTS - ENDING	8,801,187	8,184,340
SUPPLEMENTARY CASH FLOWS INFORMATION
Cash paid during the year for: Interest	1,577,000	2,071,098
Cash paid during the year for: Income taxes, net of refunds	370,850	121,110
Acquisition of real estate owned in settlement of loan receivable	$ 743,830

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Consolidated Statements of Financial Condition (Parenthetical) (USD $)	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statements of Financial Condition [Abstract]
Held-to-maturity securities, Fair value	$ 27,402,087	$ 23,084,343
Loans receivable, Allowance	$ 2,247,171	$ 1,649,319
Preferred stock, Par value	$ 0.01	$ 0.01
Preferred stock, Shares authorized	1,000,000	1,000,000
Preferred stock, Shares issued	0	0
Preferred stock, Shares outstanding	0	0
Common stock, Par value	$ 0.01	$ 0.01
Common stock, Shares authorized	9,000,000	9,000,000
Common stock, Shares issued	2,799,657	2,799,657
Common stock, Shares outstanding	2,736,907	2,736,907
Treasury stock, shares	62,750	62,750

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Stock Repurchase Program

12 Months Ended

Dec. 31, 2011

Stock Repurchase Program [Abstract]

Stock Repurchase Program

Note 10 – Stock Repurchase Program

In July 2005, the Company's Board of Directors authorized a repurchase program of its common stock for up to 50,000 shares which was completed. On August 30, 2007, the Company approved a second stock repurchase program and authorized the repurchase of up to 50,000 shares of the Company's outstanding shares of common stock. As of December 31, 2011 and 2010, the Company had repurchased 62,750 shares of common stock. No shares were repurchased in 2011 and 2010.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2011	Mar. 26, 2012	Jun. 30, 2011
Document and Entity Information
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2011
Entity Registrant Name	FLATBUSH FEDERAL BANCORP INC
Entity Central Index Key	0001243496
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,736,907
Entity Well-known Seasoned Issuer	No
Entity Public Float			$ 6,263,495
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No

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Benefit Plans

12 Months Ended

Dec. 31, 2011

Benefit Plans [Abstract]

Benefit Plans

Note 11 - Benefit Plans

Pension Plan

The Association maintains a defined benefit pension plan (the "Plan") covering all employees who have met the Plan's eligibility requirements. The Association's policy is to fund the Plan annually with the minimum contribution deductible for Federal income tax purposes.

On February 26, 2009, the Company froze its defined benefit pension plan effective March 31, 2009. The freezing of the Plan is consistent with ongoing cost reduction strategies and shift focus on future savings of retirement benefit expense. The changes included a discontinuation of accrual of future service cost in the defined benefit pension plan and fully preserving retirement benefits that employees will have earned as of March 31, 2009.

The following table sets forth the Plan's funded status:

	December 31,
	2011			2010
Change in benefit obligation:
Benefit obligation - beginning	$	5,647,829		$	5,235,702
Service cost		—			—
Interest cost		304,864			305,372
Actuarial loss		647,643			394,924
Benefits Payments		(285,580	)		(288,169	)
Benefit obligation - ending	$	6,314,756		$	5,647,829
Change in plan assets:
Fair value of assets - beginning	$	5,621,314		$	4,838,494
Actual return on plan assets		(81,112	)		570,989
Annuity Payments		(285,580	)		(288,169	)
Contributions		—			500,000
Fair value of assets - ending	$	5,254,622		$	5,621,314

	December 31,
	2011			2010
Reconciliation of funded status:
Accumulated benefit obligation	$	(6,314,756	)	$	(5,647,829	)
Projected benefit obligation		(6,314,756	)		(5,647,829	)
Fair value of assets		5,254,622			5,621,314
Funded status	$	(1,060,134	)	$	(26,515	)
Valuation assumptions:
Discount rate		4.40	%		5.54	%
Rate of return on long-term assets		8.00	%		9.00	%

	Years Ended December 31,
	2011			2010
Net periodic pension expense:
Service cost	$	—		$	—
Interest cost		304,864			305,372
Expected return on assets		(492,880	)		(424,680	)
Amortization of unrecognized net loss		242,712			229,604
Total Net Periodic Pension Expense Included in Salaries and Employee Benefits	$	54,696		$	110,296
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Rate of return on long-term assets		9.00	%		9.00	%

The Association expects to make a contribution of $1,500,000 during 2012.

The Plan has invested in following categories of investments:

	December 31,
	2011			2010
Equity/mutual funds	61.98		%	64.98		%
Fixed income		38.02	%		35.02	%
		100.00	%		100.00	%

The long-term investment objective is to allocate the Plan's assets to a range of approximately 65% equities, and 35% bond funds to achieve an optimal risk/reward profile. Based on an analysis of the current market environment, the Company projects a 4% return from fixed income and a 7% return from equities, for an overall expected return of approximately 6%. The long-term rate of return on assets assumption is set based on historical returns earned by equities and fixed income securities, adjusted to reflect expectations of future returns as applied to the Plan's actual target allocation of asset classes. Equities and fixed income securities are assumed to earn real rates of return in the ranges of 5 - 9% and 2 - 6%, respectively. Additionally, the long-term inflation rate is projected to be 3%. When these overall return expectations are applied to a typical plan's target allocation, the result is an expected return of 7% to 11%.

The fair values of the Company's pension plan assets at December 31, 2011 and 2010, by asset category (see Note 16 for the definitions of Levels), are as follows:

December 31, 2011	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Asset Category:
Mutual funds – Equity:
Large-Cap Value (a)	$	470,534	$	470,534	$	—	$	—
Small-Cap Core (b)		620,538		620,538		—		—
		1,091,072		1,091,072				—
Common/Collective Trusts – Equity:
Large-Cap Core (c)		556,298		—		556,298		—
Large-Cap Value (d)		274,036		—		274,036		—
Large-Cap Growth (e)		756,620		—		756,620		—
International Growth (f)		578,759		—		578,759		—
		2,165,713		—		2,165,713		—
Common/Collective Trusts – Fixed Income:
Market Duration Fixed (g)		1,997,836		—		1,997,836		—
	$	5,254,622	$	1,091,072	$	4,163,550		—

(a)	This category consists of investments whose sector and industry exposures are maintained within a narrow band around Russell 1000 index. The portfolio holds approximately 150 stocks.
(b)	This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 index. The portfolio will typically hold more than 150 stocks.
(c)	This fund tracks the performance of the S&P 500 Index by purchasing the securities represented in the Index in approximately the same weightings as the Index.
(d)	This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.
(e)	This category consists of a portfolio of between 45 and 65 stocks that will typically overweight technology and health care.
(f)	This category consists of a broadly diversified portfolio of non-U.S. domiciled stocks. The portfolio will typically hold more than 200 stocks with 0%-35% invested in emerging markets securities.
(g)	This category consists of an index fund that tracks the Barclays Capital U.S. Aggregate Bond index. The fund invests in Treasury, agency, corporate, mortgage-backed and asset-backed securities.

December 31, 2010	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Asset Category:
Mutual funds – Equity:
Large-Cap Value (a)	$	507,220	$	507,220	$	—	$	—
Small-Cap Core (b)		673,134		673,134		—		—
		1,180,354		1,180,354		—		—
Common/Collective Trusts – Equity:
Large-Cap Core (c)		578,123		—		578,123		—
Large-Cap Value (d)		293,325		—		293,325		—
Large-Cap Growth (e)		829,019		—		829,019		—
International Growth (f)		772,022		—		772,022		—
		2,472,489		—		2,472,489		—
Common/Collective Trusts – Fixed Income:
Market Duration Fixed (g)		1,968,471		—		1,968,471		—
	$	5,621,314	$	1,180,354	$	4,440,960	$	—

(a)	This category consists of investments whose sector and industry exposures are maintained within a narrow band around Russell 1000 index. The portfolio holds approximately 150 stocks.
(b)	This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 index. The portfolio will typically hold more than 150 stocks.
(c)	This fund tracks the performance of the S&P 500 Index by purchasing the securities represented in the Index in approximately the same weightings as the Index.
(d)	This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.
(e)	This category consists of a portfolio of between 45 and 65 stocks that will typically overweight technology and health care.
(f)	This category consists of a broadly diversified portfolio of non-U.S. domiciled stocks. The portfolio will typically hold more than 200 stocks with 0%-35% invested in emerging markets securities.
(g)	This category consists of an index fund that tracks the Barclays Capital U.S. Aggregate Bond index. The fund invests in Treasury, agency, corporate, mortgage-backed and asset-backed securities.

Expected benefit payments under the Plan are as follows:

Year Ended December 31,
2012	$	283,899
2013		290,982
2014		309,678
2015		330,145
2016		347,612
2017-2021		1,966,674

At December 31, 2011, unrecognized net loss amounted to $3,895,593, which is included in accumulated other comprehensive loss. At December 31, 2010, unrecognized net loss amounted to $2,916,670 and was included in accumulated other comprehensive loss. For the year ending December 31, 2012, $382,216 of net loss is expected to be amortized in pension expense.

Postretirement Benefits

The Association provides certain health care and life insurance benefits to employees retired as of January 1, 1995. The following tables set forth the Plan's funded status and the components of net postretirement benefit cost:

	December 31,
	2011			2010
Changes in benefit obligations:
Benefit obligation - beginning	$	237,044		$	237,867
Interest cost		12,480			13,584
Unrecognized net loss (gain) amortization		235			6,187
Benefits paid		(19,922	)		(20,594	)
Benefit obligation - ending	$	229,837		$	237,044
Reconciliation of funded status:
Accumulated benefit obligation	$	(229,837	)	$	(237,044	)
Postretirement benefit obligation	$	(229,837	)	$	(237,044	)
Valuation assumptions:
Discount rate		4.40	%		5.54	%

	Years Ended December 31,
	2011			2010
Net periodic expense:
Unrecognized net loss amortization	$	5,180		$	4,732
Interest cost		12,480			13,584
Unrecognized past service liability		3,824			3,824
Net postretirement benefit cost included in salaries and employee benefits	$	21,484		$	22,140
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Current medical trend		9.00	%		9.00	%
Ultimate medical trend		5.00	%		5.00	%

The Plan is unfunded. It is estimated that contributions of approximately $23,330 will be made during the year ending December 31, 2012. Expected benefit payments under the Plan are as follows:

Year Ended December 31,
	2012	$	23,330
	2013		23,836
	2014		24,008
	2015		23,807
	2016		23,150
	2017-2021		97,933

At the year ended December 31, 2011, a medical cost trend rate of 8.0%, was estimated. For the year ended December 31, 2010, a medical cost trend of 9.00% was estimated. Increasing the assumed medical cost trend by one percent in each year would increase the accumulated postretirement benefit obligation as of December 31, 2011 and 2010, by $13,000 and $14,000, respectively. The aggregate of the service and interest components of net periodic postretirement benefit cost for the years ended December 31, 2011 and 2010 were not affected.

At December 31, 2011, unrecognized prior service cost and unrecognized net loss amounted to $23,692 and $65,479, respectively, and were included in accumulated other comprehensive loss. At December 31, 2010, unrecognized prior service cost and unrecognized net loss amounted to $27,516 and $70,424, respectively, and were included in accumulated other comprehensive loss. For the year ended December 31, 2012, $5,304 of net loss and $3,824 of prior service cost are expected to be amortized in post-retirement benefit expense.

Supplemental Employee Retirement Plan ("SERP")

	December 31,
	2011			2010
Changes in benefit obligations:
Benefit obligation - beginning	$	740,644		$	742,790
Service cost		13,552			11,448
Interest cost		38,456			41,776
Actuarial loss(gain)		139,702			37,630
Benefits paid		(93,000	)		(93,000	)
Benefit obligation - ending	$	839,354		$	740,644
Reconciliation of funded status:
Accumulated benefit obligation	$	(733,033	)	$	(678,084	)
Projected benefit obligation	$	(839,354	)	$	(740,644	)
Fair value of assets		—			—
Funded status	$	(839,354	)	$	(740,644	)
Valuation assumptions:
Discount rate		4.40	%		5.54	%
Salary increase rate		3.00	%		3.00	%

	Years Ended December 31,
	2011			2010
Net periodic expense:
Service cost	$	13,552		$	11,448
Interest cost		38,456			41,776
Unrecognized past service liability		11,776			11,776
Net SERP cost included in salaries and employee benefits	$	63,784		$	65,000
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Salary increase rate		3.00	%		3.00	%

The Plan is unfunded. It is estimated that contributions of approximately $93,185 will be made during the year ending December 31, 2012. Expected benefit payments under the Plan are as follows:

Year Ended December 31,
	2012	$	93,185
	2013		93,398
	2014		96,541
	2015		101,054
	2016		13,542
	2017-2021		170,938

At December 31, 2011, unrecognized prior service cost and unrecognized net loss amounted to $69,848 and $193,165, respectively, and were included in accumulated other comprehensive loss. At December 31, 2010, unrecognized prior service cost and unrecognized net loss of $81,624 and $51,680, respectively, were included in accumulated other comprehensive loss. For the year ended December 31, 2012, $11,776 of prior service cost and $13,520 of unrecognized net loss is expected to be amortized in SERP expense.

Retirement Plan for Directors

	December 31,
	2011			2010
Changes in benefit obligations:
Benefit obligation – beginning	$	209,088		$	210,030
Service cost		8,444			7,248
Interest cost		11,164			11,768
Actuarial loss (gains)		42,005			7,042
Benefits paid		(19,300	)		(27,000	)
Benefit obligation - ending	$	251,401		$	209,088
Reconciliation of funded status:
Accumulated benefit obligation	$	(190,213	)	$	(166,620	)
Projected benefit obligation	$	(251,401	)	$	(209,088	)
Market value of assets		—			—
Funded status	$	(251,401	)	$	(209,088	)
Valuation assumptions:
Discount rate		4.00	%		5.54	%
Salary increase rate		3.00	%		3.00	%

	Year Ended December 31,
	2011			2010
Net periodic expense:
Service cost	$	8,444		$	7,248
Interest cost		11,164			11,768
Unrecognized (gain)		(2,360	)		(3,000	)
Unrecognized past service liability		5,512			5,512
Net cost included in directors' compensation	$	22,760		$	21,528
Valuation assumptions:
Discount rate		5.54	%		6.00	%
Salary increase rate		3.00	%		3.00	%

The Plan is unfunded. It is estimated that contributions of approximately $1,786 will be made during the year ending December 31, 2012. Expected benefit payments under the Plan are as follows:

Year Ended December 31,
	2012	$	1,786
	2013		3,591
	2014		17,813
	2015		18,222
	2016		18,694
	2017-2021		71,454

At December 31, 2011, unrecognized prior service cost and unrecognized net gain amounted to $42,275 and $7,320, respectively, and are included in accumulated other comprehensive loss. At December 31, 2010, unrecognized prior service cost and unrecognized net gain of $47,787 and $51,685, respectively, were included in accumulated other comprehensive loss. For the year ended December 31, 2012, $5,512 of prior service cost is expected to be amortized in expense.

ESOP

The Company has established an ESOP for all eligible employees. The ESOP used $696,160 of proceeds from a term loan from the Company to purchase 105,294 shares (adjusted for the February, 2005 and March, 2006 stock dividends) of Company common stock in the initial offering. The term loan from the Company to the ESOP is payable over 20 years. Interest on the term loan is payable monthly, commencing on November 1, 2003, at the rate of 5.5% per annum. The Association intends to make discretionary contributions to the ESOP which will be equal to principal and interest payments required from the ESOP on the term loan. Shares purchased with the loan proceeds are initially pledged as collateral for the term loan and are held in a suspense account for future allocation among participants. Contributions to the ESOP and shares released from the suspense account will be allocated among the participants on the basis of compensation, as described by the ESOP, in the year of allocation. During the years ended December 31, 2011 and 2010, the Association made cash contributions of $57,000 to the ESOP, of which $29,000 and $28,000, respectively, was applied to loan principal. At December 31, 2011 and 2010, the loan had an outstanding balance of $495,000 and $524,000, respectively.

The ESOP shares pledged as collateral are reported as unearned ESOP shares in the consolidated statements of financial condition. As shares are committed to be released from collateral, the Company records compensation expense equal to the current market price of the shares, and the shares become outstanding for net income per common share computations. Dividends on allocated ESOP shares are recorded as a reduction of stockholders' equity. Contributions equivalent to dividends on unallocated ESOP shares are recorded as a reduction of debt. ESOP compensation expense was $25,000 and $25,000 for the years ended December 31, 2011 and 2010, respectively, which is included in salary and employee benefits.

The ESOP shares are summarized as follows:

	December 31,
	2011		2010
Unearned shares		61,858		67,123
Shares committed to be released		—		—
Shares released		35,232		29,967
Shares distributed		8,204		8,204
		105,294		105,294
Fair value of unearned shares	$	194,853	$	402,738

Restricted Stock Awards

Restricted Stock Awards under the Stock-Based Incentive Plan are granted in the form of Company common stock, and vest over a period of eight years (12.5% annually from the date of grant). The Restricted Stock Awards become fully vested upon the death or disability of the holder. At December 31, 2011 and 2010, there were no shares remaining available for future restricted stock awards.

The following is a summary of the status of the Company's non-vested restricted shares for the years ended December 31, 2011 and 2010:

	Restricted Shares		Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2009		11,398	$	9.71
Vesting		3,800		9.71
Non-vested as of December 31, 2010		7,598		9.71
Vesting		3,800		9.71
Non-vested as of December 31, 2011		3,798	$	9.71

No shares were granted or forfeited during the years ended December 31, 2011 and 2010. During both the years ended December 31, 2011 and 2010, the Company recorded $41,000 of stock-based compensation expense and the income tax benefit attributed to this expense was $17,000 during each year. Expected future compensation expense relating to the 3,798 non-vested restricted share awards as of December 31, 2011 is $41,000 over a weighted average period of 1 year.

Stock Options

Stock Options granted under the Stock-Based Incentive Plan may be either options that qualify as incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or non-statutory options. Options granted will vest and will be exercisable on a cumulative basis in equal installments at the rate of 12.5% per year commencing one year after the grant date. All options granted will be exercisable in the event the optionee terminates his employment due to death or disability. The options expire ten years from the date of grant. At December 31, 2011 and 2010, there were 57,357 shares available for future option grants.

A summary of stock option activity follows:

	Number of Stock Options		Weighted Average Exercise price
Balance at December 31, 2009		82,378	$	9.71
Granted		—
Exercised		—
Forfeited		—
Balance at December 31, 2010		82,378		9.71
Granted		—
Exercised		—
Forfeited		—
Balance at December 31, 2011		82,378	$	9.71
Exercisable at December 31, 2011		75,503	$	9.71

During both the years ended December 31, 2011 and 2010, the Company recorded $41,000 for stock option expense and the tax benefit attributed to non-qualified stock option expense was $3,000 in each year.

Expected future compensation expense relating to the 6,875 nonvested options outstanding as of December 31, 2011 is $27,843 over a weighted-average period of 1 year.

At December 31, 2011 and 2010, the intrinsic value of stock options outstanding and stock options exercisable amounted to $0 and the weighted average remaining contractual term was 3 and 4 years, respectively. At and for the years ended December 31, 2011 and 2010, there was no dilutive effect of stock options.

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Consolidated Statements of Operations (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Interest Income
Loans, including fees	$ 5,619,225	$ 6,518,077
Investment securities	98,256	58,471
Mortgage-backed securities held to maturity	1,085,135	1,379,515
Other interest-earning assets	3,549	5,716
Total Interest Income	6,806,165	7,961,779
Interest Expense
Deposits	1,436,290	1,730,343
Borrowings	117,481	319,712
Total Interest Expense	1,553,771	2,050,055
Net Interest Income	5,252,394	5,911,724
Provision for Loan Losses	1,711,252	821,476
Net Interest Income After Provision for Loan Losses	3,541,142	5,090,248
Non-Interest Income
Fees and service charges	109,156	99,431
Bank owned life insurance	151,647	151,623
Other	22,578	2,682
Total Non-Interest Income	283,381	253,736
Non-Interest Expense
Salaries and employee benefits	2,411,215	2,409,953
Net occupancy expense of premises	625,132	496,257
Equipment	624,162	477,069
Directors' compensation	199,432	185,605
Professional fees	411,945	340,045
Insurance premiums	185,330	139,164
Federal deposit insurance premiums	152,894	205,826
Other	484,197	492,587
Total Non-Interest Expense	5,094,307	4,746,506
(Loss) Income before Income Tax (Benefit) Expense	(1,269,784)	597,478
Income Tax (Benefit) Expense	(631,601)	156,249
Net (Loss) Income	$ (638,183)	$ 441,229
Net (Loss) Income per Common Share Basic and diluted	$ (0.24)	$ 0.17
Weighted average number of shares outstanding Basic and diluted	2,672,129	2,666,861

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Premises and Equipment

12 Months Ended

Dec. 31, 2011

Property, Plant and Equipment [Abstract]

Premises and Equipment

Note 5 - Premises and Equipment

	December 31,
	2011			2010
Land	$	919,753		$	919,753
Buildings and improvements		2,368,327			2,363,327
Accumulated depreciation		(1,201,304	)		(1,146,718	)
		1,167,023			1,221,609
Leasehold improvements		203,518			203,518
Accumulated amortization		(131,259	)		(115,192	)
		72,259			88,326
Furniture, fixtures and equipment		709,889			500,164
Accumulated depreciation		(491,867	)		(442,032	)
		218,022			58,132
	$	2,377,057		$	2,287,820

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Loan Servicing

12 Months Ended

Dec. 31, 2011

Loan Servicing [Abstract]

Loan Servicing

Note 4 - Loan Servicing

The Association originated loans held for sale and sold them, with servicing retained, to the FHLB under the Mortgage Partnership Finance Program. The conditions for sale include a credit enhancement liability as determined at the time of sale. The FHLB pays the Association a fee for credit enhancement as the loans are paid down. At December 31, 2011 and 2010, the potential contingent liability for credit enhancement amounted to $84,000, which is not recorded in the consolidated financial statements. The total loans serviced under this program amounted to approximately $359,000 and $398,000 at December 31, 2011 and 2010, respectively, which amounts are also not included in the consolidated financial statements. In accordance with guidelines for regulatory capital computations, the contingent liability has been subtracted to compute regulatory capital (see Note 9). No loans were sold to the FHLB during the years ended December 31, 2011 and 2010.

Custodial escrow balances maintained in connection with loans serviced under this program amounted to approximately $530 and $1,064 at December 31, 2011 and 2010, respectively, and are included in the consolidated statements of financial condition as demand deposits.

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Fair Value Measurements and Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Value Measurements and Fair Values of Financial Instruments [Abstract]

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Note 16 - Fair Value Measurements and Fair Values of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company's financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Association could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective year-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amount reported at each year-end.

FASB's guidance on fair value measurement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance does not require any new fair value measurements. The definition of fair value retains the exchange price notion in earlier definitions of fair value. The guidance clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset's or liability's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company had no assets which are required to be measured on a recurring basis at December 31, 2011 and 2010.

For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used are as follows:

Description	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
	(In Thousands)
Impaired Loans
December 31, 2011	$	5,422	$	—	$	—	$	5,422
December 31, 2010	$	4,769	$	—	$	—	$	4,769

The Company had no liabilities which are required to be measured on a recurring or non-recurring basis at December 31, 2011 and 2010.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company's financial instruments at December 31, 2011 and 2010:

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets' fair values.

Securities

The fair value of securities held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted prices.

Loan Receivable (Carried at Cost)

The fair value of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans

Impaired loans are those for which the Company has measured and recorded impairment generally based on the fair value of the loan's collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Accrued Interest Receivable

The carrying amounts reported in the balance sheet for accrued interest receivable approximate those assets' fair values.

Federal Home Loan Bank of New York (FHLB) Stock (Carried at Cost)

The carrying amount of restricted investment in FHLB stock approximates fair value, and considers the limited marketability of such securities.

Deposit Liabilities (Carried at Cost)

The fair value disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings (Carried at Cost)

The carrying amounts of short-term borrowings approximate their fair values.

Long-Term Borrowings (Carried at Cost)

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Accrued Interest Payable

The carrying amounts reported in the balance sheet for accrued interest payable approximate the assets' fair values.

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair value for the Association's off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties' credit standing.

As of December 31, 2011 and 2010, the fair value of commitments to extend credit were not considered to be material.

The estimated fair values of the Association's financial instruments were as follows at December 31, 2011 and 2010.

	December 31,
	2011				2010
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	8,801	$	8,801	$	8,184	$	8,184
Securities held to maturity		25,749		27,402		21,780		23,084
FHLB stock		698		698		808		808
Loans receivable		95,162		101,557		106,478		112,166
Accrued interest receivable		554		554		607		607
Financial liabilities:
Deposits		114,923		116,442		117,074		118,460
Advances from FHLB		10,082		10,113		12,043		12,209
Accrued interest payable		5		5		28		28

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 - Income Taxes

The Association qualifies as a savings and loan association under the provisions of the Internal Revenue Code and, therefore, was permitted, prior to January 1, 1996, to deduct from Federal taxable income an allowance for bad debts based on eight percent of taxable income before such deduction, less certain adjustments, subject to certain limitations. Beginning January 1, 1996, the Association, for Federal income tax purposes, must calculate its tax bad debt deduction using either the experience or the specific charge off method. Retained earnings at December 31, 2011 and 2010, include approximately $3,368,000 of such bad debt deductions for which income taxes have not been provided. During 2010, amendments of the New York State and New York City's tax law and ordinance conformed the bad debt deduction to the deduction allowed under the Federal income tax law for taxable years beginning on or after January 1, 2010.

The components of income taxes are summarized as follows:

	Years Ended December 31,
	2011			2010
Current income tax expense:
Federal	$	7,610		$	435,949
State and city		34,768			102,960
		42,378			538,909
Deferred income tax (benefit):
Federal		(307,983	)		(220,694	)
State and city		(365,996	)		(161,966	)
		(673,979	)		(382,660	)
	$	(631,601	)	$	156,249

The following table presents a reconciliation between reported income taxes and the income taxes which would be computed by applying the applicable Federal income tax rate of 34% to consolidated (loss) income before income taxes:

	Years Ended December 31,
	2011			2010
Federal income tax (benefit) expense	$	(431,726	)	$	203,143
(Decreases) increases in income taxes resulting from:
New York State and City taxes, net of federal income tax effect		(218,610	)		(38,944	)
BOLI income and other non-taxable items		(18,735	)		(7,950	)
Income Tax (Benefit) Expense	$	(631,601	)	$	156,249
Effective Income Tax Rate		49.74	%		26.15	%

The income tax effects of existing temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are as follows:

	December 31,
	2011		2010
Deferred income tax assets:
Allowance for loan losses	$	1,013,995	$	686,302
Non-accrual interest		437,777		276,891
Depreciation		73,902		134,011
Deferred compensation		308,592		309,342
Benefit plans		774,357		346,695
Net operating loss carry forward		341,961		—
Other		86		46,904
		2,950,670		1,800,145
Deferred income tax liabilities		—		—
Net Deferred Income Tax Asset Included in Other Assets	$	2,950,670	$	1,800,145

At December 31, 2011, the Company had net operating loss carry forwards of $634,000 for federal purposes and $1.1 million for New York State and New York City purposes. As a result of the $9.1 million gain recognized on the January 2012 building sale (discussed in Notes 1 and 20 to these consolidated financial statements), the Company expects to fully utilize all net operating loss carry forwards in 2012.

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Advances from Federal Home Loan Bank of New York

12 Months Ended

Dec. 31, 2011

Advances from Federal Home Loan Bank of New York [Abstract]

Advances from Federal Home Loan Bank of New York

Note 8 - Advances from Federal Home Loan Bank of New York

	December 31,
	2011					2010
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Amortizing Loans:
Principal repayment in
Years ended December 31,
2011	$	—		—	%	$	1,461,007		4.80	%
2012		1,034,952		4.78			1,034,954		4.78
2013		46,622		5.25			46,622		5.25
Total amortizing loans		1,081,574		4.80	%		2,542,583		4.80	%
Term loans:
Due within one year	$	9,000,000		0.31	%		9,500,000		1.13	%
Total Advances	$	10,081,574		0.79	%	$	12,042,583		1.90	%

The carrying value of collateral pledged for the above advances was as follows (in thousands):

	December 31,
	2011		2010
Loans receivable	$	46,145	$	50,566
Mortgage-backed securities		8,719		10,702
	$	54,864	$	61,268

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Accrued Interest Receivable

12 Months Ended

Dec. 31, 2011

Accrued Interest Receivable [Abstract]

Accrued Interest Receivable

Note 6 - Accrued Interest Receivable

	2011		2010
Loans	$	428,893	$	511,517
Securities held to maturity		125,414		95,572
	$	554,307	$	607,089

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Deposits

12 Months Ended

Dec. 31, 2011

Deposits [Abstract]

Deposits

Note 7 – Deposits

	December 31,
	2011					2010
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Demand deposits:
Non-interest bearing	$	5,197,945		0.00	%	$	5,319,364		0.00	%
NOW		320,676		0.30	%		318,607		0.30	%
		5,518,621					5,637,971
Passbook and club accounts		33,322,694		0.33	%		34,690,578		0.33	%
Certificates of deposit		76,081,253		1.71	%		76,745,008		1.86	%
	$	114,922,568		1.23	%	$	117,073,557		1.32	%

The scheduled maturities of certificates of deposit are as follows (in thousands):

	At December 31,
	2011
Year Ending December 31,
2012	$	59,843
2013		8,360
2014		4,317
2015		1,563
2016		1,034
Thereafter		964
	$	76,081

Certificates of deposit with balances of $100,000 or more totaled approximately $35,993,000 and $33,844,000 at December 31, 2011 and 2010, respectively. Deposits in excess of $250,000 are generally not insured by FDIC.

Interest expense on deposits is summarized as follows:

	Years Ended December 31,
	2011		2010
Demand	$	1,080	$	1,230
Passbook and club		127,220		125,710
Certificates of deposit		1,307,990		1,603,403
	$	1,436,290	$	1,730,343

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Regulatory Capital

12 Months Ended

Dec. 31, 2011

Regulatory Capital [Abstract]

Regulatory Capital

Note 9 - Regulatory Capital

The Association is subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Association. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines that involve quantitative measures of Association's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Association's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Association to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted total assets (as defined). The following tables present a reconciliation of capital per GAAP and regulatory capital and information as to the Association's capital levels at the dates presented:

	December 31,
	2011			2010
	(In Thousands)
GAAP capital	$	13,772		$	14,881
Accumulated other comprehensive loss		2,491			1,829
Tier 1 (Core) capital		16,263			16,710
General valuation allowance		957			751
Low-level recourse adjustment		(84	)		(84	)
Total Regulatory Capital	$	17,137		$	17,377

	Actual					For Capital Adequacy Purposes					To be Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
December 31, 2011:
Total capital (to risk-weighted assets)	$	17,137		19.88	%	$	≥6,895		≥8.00	%	$	≥8,619		≥10.00	%
Tier 1 capital (to risk-weighted assets) (1)		16,179		18.77	%		≥—		≥—			≥5,171		≥6.00	%
Core (Tier 1) capital (to adjusted total assets)		16,263		11.52	%		≥5,645		≥4.00	%		≥7,056		≥5.00	%
Tangible capital (to adjusted total assets)		16,263		11.52	%		≥2,117		≥1.50	%		≥—		≥—	%
December 31, 2010:
Total capital (to risk-weighted assets)	$	17,377		20.30	%	$	≥6,847		≥8.00	%	$	≥8,558		≥10.00	%
Tier 1 capital (to risk-weighted assets) (1)		16,626		19.43	%		≥—		≥—			≥5,135		≥6.00	%
Core (Tier 1) capital (to adjusted total assets)		16,710		11.45	%		≥5,836		≥4.00	%		≥7,295		≥5.00	%
Tangible capital (to adjusted total assets)	$	16,710		11.45	%	$	≥2,188		≥1.50	%	$	≥—		≥—	%

(1) Net of contingent liability credit enhancement of $84,000.

The most recent notification from the Association's primary regulator categorized the Association as well-capitalized under the regulatory framework for prompt corrective action. There are no conditions existing, or events which have occurred since this notification that management believes have changed the Association's category.

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Commitments

12 Months Ended

Dec. 31, 2011

Commitments [Abstract]

Commitments

Note 14 - Commitments

The Association is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contract or notional amounts of those instruments reflect the extent of involvement the Association has in particular classes of financial instruments.

The Association's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Association uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The total commitment amounts do not necessarily represent future cash requirements. The Association evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Association upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies but primarily includes residential and income-producing real estate.

The Association has outstanding various commitments to originate or purchase loans as follows:

	December 31,
	2011		2010
Mortgage loans	$	405,000	$	2,244,000
Secured credit cards		136,223		131,000
	$	541,223	$	2,375,000

At December 31, 2011, the outstanding mortgage loan commitments included $405,000 for fixed interest rates at 4.75%.

At December 31, 2010, the outstanding mortgage loan commitments included $1,644,000 for fixed interest rates ranging from 4.25% to 5.75% and $600,000 for adjustable interest rates at 5.50%.

Rentals, including related expenses, under long-term operating leases for certain branch offices amounted to approximately $201,000 and $116,000 for the years ended December 31, 2011 and 2010, respectively. At December 31, 2011, the minimum rental commitments under all noncancellable leases with initial or remaining terms of more than one year are as follows:

Year Ended December 31,	Amount
2012	$	284,699
2013		290,396
2014		296,201
2015		302,125
2016		308,930
Thereafter		1,487,513

The Company and the Association also have, in the normal course of business, commitments for services and supplies. Management does not anticipate losses on any of these transactions.

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2011

Recent Accounting Pronoucements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

Note 19 - Recent Accounting Pronouncements

The following is a summary of recently issued authoritative pronouncements that could have an impact on the accounting, reporting, and/or disclosure of the consolidated financial information of the Company.

The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-05, "Comprehensive Income - Presentation of Comprehensive Income". The provisions of this ASU amend FASB Accounting Standards Codification ("ASC") Topic 220, "Comprehensive Income," to facilitate the continued alignment of U.S. GAAP with International Accounting Standards. The ASU prohibits the presentation of the components of comprehensive income in the statement of stockholder's equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate, but consecutive, statements of net income and other comprehensive income. Under previous GAAP, all 3 presentations were acceptable. Regardless of the presentation selected, the Reporting Entity is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements.

The FASB subsequently issued ASU 2011-12, which defers the presentation of all reclassification adjustments while the FASB considers the operational concerns raised with regard to this presentation, as well as whether or not this presentation meets the needs of financial statement users. Until the FASB has reached a decision, reporting entities should continue to present reclassifications out of accumulated other comprehensive income consistent with pre-existing requirements.

The provision to prepare either a combined statement of comprehensive income or separate, but consecutive, statements of net income and other comprehensive income remains in effect for fiscal years and interim periods beginning after December 15, 2011 for public companies, and for fiscal years ending after December 15, 2012 for nonpublic companies. As the two remaining options for presentation existed prior to the issuance of this ASU, early adoption is permitted. The Company does not expect the adoption of these pronouncements to have a material impact on consolidated operations or financial position.

The FASB issued ASU 2011-04 to amend FASB ASC Topic 820, Fair Value Measurements, to bring U.S. GAAP for fair value measurements in line with International Accounting Standards. The ASU clarifies existing guidance for items such as: the application of the highest and best use concept to non-financial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity's stockholder's equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The ASU also creates an exception to Topic 820 for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. The ASU also allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the ASU contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2011. For nonpublic entities, the ASU is effective for annual periods beginning after December 15, 2011. The Company does not expect the adoption of these pronouncements to have a material impact on consolidated operations or financial position.

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Consolidated Statements of Stockholders' Equity (USD $)	Common Stock [Member]	Paid-in Capital [Member]	Retained Earnings [Member]	Unearned ESOP Shares [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at Dec. 31, 2009	$ 27,998	$ 12,581,519	$ 5,349,941	$ (478,857)	$ (446,534)	$ (1,801,114)	$ 15,232,953
Comprehensive Income (Loss):
Net income (loss)			441,229				441,229
Benefit Plans, net of deferred income taxes						(27,346)	(27,346)
Comprehensive income (loss)							413,883
Amortization of MRP		40,584					40,584
Stock option expense		41,412					41,412
ESOP shares committed to be released		(10,189)		34,874			24,685
Balance at Dec. 31, 2010	27,998	12,653,326	5,791,170	(443,983)	(446,534)	(1,828,460)	15,753,517
Comprehensive Income (Loss):
Net income (loss)			(638,183)				(638,183)
Benefit Plans, net of deferred income taxes						(662,170)	(662,170)
Comprehensive income (loss)							(1,300,353)
Amortization of MRP		40,584					40,584
Stock option expense		41,412					41,412
ESOP shares committed to be released		(10,010)		34,875			24,865
Balance at Dec. 31, 2011	$ 27,998	$ 12,725,312	$ 5,152,987	$ (409,108)	$ (446,534)	$ (2,490,630)	$ 14,560,025

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Loans Receivable

12 Months Ended

Dec. 31, 2011

Loans Receivable [Abstract]

LOANS RECEIVABLE

Note 3 - Loans Receivable

	December 31,
	2011			2010
Real estate mortgage:
One-to four-family	$	66,681,058		$	71,830,671
Multi family		5,749,132			5,889,520
Commercial		21,900,604			22,974,795
		94,330,794			100,694,986
Real estate construction		2,691,719			7,791,750
Land loan		386,827			393,266
Unsecured Business Loan		40,000			20,000
Consumer:
Home equity loans		87,425			112,744
Passbook or certificate		36,830			38,730
Credit cards		36,677			47,326
		160,932			198,800
Total Loans		97,610,272			109,098,802
Loans in process		(104,671	)		(894,569	)
Allowance for loan losses		(2,247,171	)		(1,649,319	)
Deferred loan fees, net		(96,715	)		(76,936	)
		(2,448,557	)		(2,620,824	)
Total Loan Receivable, Net	$	95,161,715		$	106,477,978

The following table summarizes the primary segments of the allowance for loan losses ("ALLL") and activity therein, segregated into the amounts required for loans individually evaluated for impairment and the amounts required for loans collectively evaluated for impairment as of and for the years ended December 31, 2011 and 2010.

	Construction, Land and Unsecured Business Loan			Commercial Real Estate			Residential Multifamily Real Estate			Residential One-to four- Family Real Estate			Credit Card			Home Equity		Passbook Loans		Total
	(Dollars in thousands)
Allowance for loan losses:
Year ended December 31, 2011:
Beginning Balance	$	810		$	583		$	36		$	214		$	6		$	—	$	—	$	1,649
Charge-offs		(813	)		(248	)		—			(45	)		(8	)		—		—	$	(1,113	)
Provision		498			945			(1	)		266			4			—		—	$	1,711
Ending Balance	$	495		$	1,280		$	35		$	436		$	2		$	—	$	—	$	2,247

	Construction, Land and Unsecured Business Loan		Commercial Real Estate		Residential Multifamily Real Estate		Residential One-to four-family Real Estate		Credit Card		Home Equity		Passbook Loan		Total
	(Dollars in thousands)
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	407	$	623	$	—	$	260	$	—	$	—	$	—	$	1,290
Ending balance: collectively evaluated for impairment	$	88	$	656	$	35	$	176	$	2	$	—	$	—	$	957
Loan receivables:
Ending balance	$	3,118	$	21,901	$	5,749	$	66,681	$	37	$	87	$	37	$	97,610
Ending balance: individually evaluated for impairment	$	2,176	$	2,325	$	—	$	5,143	$	—	$	—	$	—	$	9,644
Ending balance: collectively evaluated for impairment	$	942	$	19,575	$	5,749	$	61,538	$	37	$	87	$	37	$	87,965

	Construction, Land and Unsecured Business Loan		Commercial Real Estate		Residential Multifamily Real Estate		Residential One-to four- Family Real Estate		Credit Card			Home Equity		Passbook Loans		Total
	(Dollars in thousands)
Allowance for loan losses:
Year ended December 31, 2010:
Beginning Balances	$	555	$	173	$	13	$	85	$	3		$	—	$	—	$	829
Charge-offs		—		—		—		—		(1	)		—		—		(1	)
Provision		255		410		23		129		4			—		—		821
Ending Balance	$	810	$	583	$	36	$	214	$	6		$	—	$	—	$	1,649

	Construction, Land and Unsecured Business Loan		Commercial Real Estate		Residential Multifamily Real Estate		Residential One-to four-family Real Estate		Credit Card		Home Equity		Passbook Loan		Total
	(Dollars in thousands)
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	627	$	207	$	—	$	60	$	4	$	—	$	—	$	898
Ending balance: collectively evaluated for impairment	$	183	$	376	$	36	$	154	$	2	$	—	$	—	$	751
Loan receivables:
Ending balance	$	8,205	$	22,975	$	5,890	$	71,830	$	47	$	113	$	39	$	109,099
Ending balance: individually evaluated for impairment	$	2,040	$	3,156	$	—	$	3,801	$	4	$	—	$	—	$	9,001
Ending balance: collectively evaluated for impairment	$	6,165	$	19,819	$	5,890	$	68,029	$	43	$	113	$	39	$	100,098

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for, commercial real estate loans and commercial construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent.

An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. The estimated fair values of substantially all of the Company's impaired loans are measured based on the estimated fair value of the loan's collateral.

For loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual smaller balance residential mortgage loans, home equity loans and other consumer loans for impairment disclosures, unless such loans are the subject of a troubled debt restructuring agreement.

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of December 31, 2011 and 2010.

	Impaired Loans With Specific Allowances				Impaired Loans With No Specific Allowances		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
	(Dollars in thousands)
December 31, 2011:
Construction and land	$	2,176	$	407	$	—	$	2,176	$	2,176
Commercial Real Estate		2,297		623		29		2,325		2,325
Residential one-to four-family Real Estate		2,239		260		2,904		5,143		5,143
Credit Card		—		—		3		3		3
Total impaired loans	$	6,712	$	1,290	$	2,936	$	9,648	$	9,648

	Impaired Loans With Specific Allowances				Impaired Loans With No Specific Allowances		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
	(Dollars in thousands)
December 31, 2010:
Construction and land	$	2,040	$	627	$	—	$	2,040	$	2,040
Commercial Real Estate		2,143		207		1,013		3,156		3,156
Residential one-to four-family Real Estate		1,480		60		2,321		3,801		3,801
Credit Card		4		4		—		4		4
Total impaired loans	$	5,667	$	898	$	3,334	$	9,001	$	9,001

The following table presents the average recorded investment and interest income recognized on impaired loans during the period of impairment during the year ended December 31, 2011.

	Year ended December 31, 2011
	Average Recorded Investment		Interest Income Recorded
	(Dollars in thousands)
Construction and land	$	2,962	$	—
Commercial Real Estate		2,600		36
Residential one-to four-family Real Estate		4,299		29
Credit Card		2		—
Total	$	9,863	$	65

During the years ended December 31, 2010, the average investment in impaired loans was $5,523,000 No interest income was collected in 2010 on these loans during the time of impairment.

At December 31, 2011 and 2010, 90.00%, and 100% respectively, of impaired loan balances were measured for impairment based on the fair value of the loan's collateral.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower's overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of substandard, doubtful, loss and special mention. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated special mention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans which are not classified as noted above are rated "pass".

In addition, Federal regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses and may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management's comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.

The following table presents the classes of the loan portfolio summarized by the pass category and the criticized categories of special mention, substandard and doubtful within the internal risk rating system as of December 31, 2011 and 2010.

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2011	(Dollars in thousands)
Construction and land	$	—	$	515	$	2,563	$	—	$	3,079
Commercial real estate		19,575		—		2,325		—		21,901
Residential mortgage multifamily real estate		5,749		—		—		—		5,749
Residential mortgage one-to four-family real estate		60,732		1,720		4,230				66,681
Unsecured business loan		40		—		—		—		40
Credit card		37		—				—		37
Home equity		87		—		—		—		87
Passbook loan		37		—		—		—		37
Total	$	86,257	$	2,235	$	9,118	$	—	$	97,610

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2010	(Dollars in thousands)
Construction and land	$	3,790	$	2,355	$	2,040	$	—	$	8,185
Commercial real estate		19,819		—		3,156		—		22,975
Residential mortgage multifamily real estate		5,890		—		—		—		5,890
Residential mortgage one-to four-family real estate		66,963		1,066		3,801		—		71,830
Unsecured business loan		20		—		—		—		20
Credit card		43		—		4		—		47
Home equity		113		—		—		—		113
Passbook loan		39		—		—		—		39
Total	$	96,677	$	3,421	$	9,001	$	—	$	109,099

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of December 31, 2011 and 2010:

	Current		30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Total Loans Receivable		Non-Accrual
	(Dollars in thousands)
December 31, 2011:
Construction and land	$	387	$	515	$	—	$	2,176	$	2,692	$	3,079	$	2,176
Commercial real estate		20,122		—		—		1,779		1,779		21,901		1,779
Unsecured Business Loan		40		—		—		—		—		40		—
Residential Multi family Real Estate		5,749		—		—		—		—		5,749		—
Residential One-to four-family Real Estate		60,438		2,014				4,230		6,244		66,681		4,230
Credit Card		33		—		3		—		3		37		—
Home Equity		87		—		—		—		—		87		—
Passbook Loan		37		—		—		—		—		37		—
Total	$	86,893	$	2,529	$	3	$	8,185	$	10,717	$	97,610	$	8,185

	Current		30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Total Loans Receivable		Non-Accrual
	(Dollars in thousands)
December 31, 2010:
Construction and land	$	6,144	$	—	$	—	$	2,041	$	2,041	$	8,185	$	2,041
Commercial real estate		20,378		—		—		2,597		2,597		22,975		2,597
Unsecured Business Loan		20		—		—		—		—		20		—
Residential Multi family Real Estate		5,890		—		—		—		—		5,890		—
Residential One-to four-family Real Estate		65,985		1,912		132		3,801		5,845		71,830		3,801
Credit Card		40		—		3		4		7		47		4
Home Equity		99		—		14		—		14		113		—
Passbook Loan		39		—		—		—		—		39		—
Total	$	98,595	$	1,912	$	149	$	8,443	$	10,504	$	109,099	$	8,443

The Association may grant a concession or modification for economic or legal reasons related to a borrower's financial condition that it would not otherwise consider resulting in a modified loan which is then identified as a troubled debt restructuring (TDR). The Association may modify loans through rate reductions, extensions of maturity, interest only payments, or payment modifications to better match the timing of cash flows due under the modified terms with the cash flows from the borrowers' operations. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculation the Company's allowance for loan losses.

The Association identifies loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower's financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future.

The following table reflects information regarding troubled debt restructurings for the year ended December 31, 2011:

		Pre-		Post
		Modification		Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Contracts	Investments		Investments
Troubled debt restructurings:
Residential mortgage	3	$	819,085	$	777,229

There were no troubled debt restructuring which subsequently defaulted during 2011.

Loans whose terms are modified are classified as troubled debt restructurings if the Association grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan's stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

The Association has granted loans to its directors and officers and to their associates. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of these loans was $775,000 and $804,000 at December 31, 2011 and 2010, respectively. During the year December 31, 2011, no new related party loans were made.

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Property Sale

12 Months Ended

Dec. 31, 2011

Property Sale [Abstract]

PROPERTY SALE

Note 20 – Property Sale

During 2010, the Company entered into an agreement (the "Agreement") to sell its current main branch building and a portion of Flatbush Federal's adjoining real estate to a third party (the "Purchaser") (the "Transfer"). Under the Agreement, Purchaser would acquire Flatbush Federal's current main branch building located at 2146 Nostrand Avenue, Brooklyn, New York ("Property A"). In addition thereto, the Purchaser would take title to 2158 Nostrand Avenue, Brooklyn, New York ("Property B"), and an approximately 12,305 square foot parcel ("Property C") of a larger adjoining parking lot ("Lot 124") abutting parts of Nostrand Avenue and Hillel Place, Brooklyn, New York (Property A, Property B, and Property C are collectively, the "Properties").

On March 24, 2011, the Company and the Purchaser entered into an amendment to the Agreement. The significant terms of the Agreement, as amended, are as follows:

1.	The Purchaser was required to subdivide Lot 124 (of which Property C forms a part of) into two separate tax lots or parcels (the "Subdivision"). Lot 124 consists of (i) Parcel C and (ii) a 3,100 square foot parcel which abuts Hillel Place (the "Retained Property"). Flatbush Federal will retain title to the Retained Parcel, which will become the site of a new branch building ("Branch Building").
2.	The Transfer must close (the "Closing") five (5) days after the date the Subdivision has been approved and new tax lot numbers are assigned to Property C and the Retained Property.
3.	The Purchaser is obligated to complete construction of and deliver to the Company a building containing a 3,000 square foot ground floor bank branch, a cellar, and three (3) additional floors of office space. In consideration of constructing the three (3) additional floors of office space, the Purchaser shall receive a credit at the Closing.
4.	One of the principals of the Purchaser will personally guarantee the Purchaser's obligation to deliver the bank branch and office building to Flatbush Federal.

The Company plans to use the additional three (3) floors of office space (consisting of approximately 7,125 of additional square feet) for its executive and administrative offices.

The transfer closed on January 13, 2012; at that date the Company received $6,340,000 in cash and a building valued at $3,176,000 and recorded a pre-tax gain of $9,073,000.

Upon the Closing, Flatbush Federal began leasing back Property A on an interim basis for its continued use as a temporary bank branch (the "Branch Lease") for one ($1.00) dollar per year. Flatbush Federal must relocate to the new Branch Building no later than 45 days after the Purchaser completes the construction of the Branch Building and if applicable, the Purchaser's contractor has completed construction of the interior build-out and delivers to Flatbush Federal a temporary certificate of occupancy for the Branch Building, Bank branch expansion and interior build-out. At that time, the Branch Lease will terminate, and Flatbush Federal will open the Branch Building for business as its new bank branch.

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Comprehensive Income

12 Months Ended

Dec. 31, 2011

Comprehensive Income[Abstract]

Comprehensive Income

Note 13 – Comprehensive Income

The components of accumulated other comprehensive loss included in stockholders' equity are as follows:

	December 31,
	2011			2010
Pension plan:
Unrecognized net loss	$	(3,895,593	)	$	(2,916,670	)
Postretirement benefits:
Unrecognized net loss		(65,479	)		(70,424	)
Unrecognized prior service cost		(23,692	)		(27,516	)
SERP:
Unrecognized net loss		(193,165	)		(51,680	)
Unrecognized prior service cost		(69,848	)		(81,624	)
Retirement Plan for Directors:
Unrecognized net gain		7,320			51,685
Prior service cost		(42,275	)		(47,787	)
Accumulated comprehensive loss before taxes		(4,282,732	)		(3,144,016	)
Tax Effect		1,792,102			1,315,556
Accumulated other comprehensive loss	$	(2,490,630	)	$	(1,828,460	)

The components of other comprehensive loss and related tax effect is presented in the following table:

	Years Ended December 31,
	2011			2010
Pension plan:
Net (loss)	$	(978,923	)	$	(19,011	)
Postretirement benefits:
Net gain (loss)		4,945			(1,455	)
Prior service cost		3,824			3,824
SERP:
Net (loss)		(141,485	)		(37,630	)
Prior service cost		11,776			11,776
Retirement Plan for Directors:
Net (loss)		(44,365	)		(10,042	)
Prior service cost		5,512			5,512
Other comprehensive (loss) before taxes		(1,138,716	)		(47,026	)
Tax effect		476,546			19,680
Other comprehensive (loss)		(662,170	)	$	(27,346	)