Flatbush Federal Bancorp, Inc. Reports Earnings for Quarter and Year Ended December 31, 2009

BROOKLYN, N.Y., Feb. 12 /PRNewswire-FirstCall/ -- Flatbush Federal Bancorp, Inc. (the "Company"), (OTC Bulletin Board: FLTB), the holding company of Flatbush Federal Savings and Loan Association (the "Association"), announced a consolidated net loss of $220,000, or $0.08 per share, for the quarter ended December 31, 2009 as compared to consolidated net income of $60,000, or $0.02 per share, for the same quarter in 2008.  Net income for the year ended December 31, 2009 was $195,000, or $0.07 per share, compared to $149,000 or $0.06 per share for the year ended December 31, 2008, an increase of $46,000, or 30.9%.

The Company's assets at December 31, 2009 were $156.0 million compared to $149.7 million at December 31, 2008, an increase of $6.3 million or 4.2%. Loans receivable increased $12.8 million or 13.0%, to $111.0 million at December 31, 2009 from $98.2 million at December 31, 2008. Mortgage-backed securities decreased $4.6 million or 14.0%, to $28.3 million at December 31, 2009 from $32.9 million at December 31, 2008. Cash and cash equivalents decreased $2.2 million, or 28.6%, to $5.5 million at December 31, 2009 from $7.7 million at December 31, 2008.  

Total deposits increased $13.5 million, or 13.3%, to $115.2 million at December 31, 2009 from $101.7 million at December 31, 2008. Borrowings from the Federal Home Loan Bank of New York (FHLB) decreased $5.7 million, or 19.9%, to $22.9 million at December 30, 2009 from $28.6 million at December 31, 2008.

Total stockholders' equity increased $599,000, or 4.1%, to $15.2 million at December 31, 2009 from $14.6 million at December 31, 2008. The increase to stockholders' equity reflects net income of $195,000, amortization of $19,000 of unearned ESOP shares, amortization of $41,000 of restricted stock awards for the Company's Stock-Based Incentive Program, amortization of $42,000 of stock option awards and a decrease of $306,000 of accumulated other comprehensive loss. This was partially offset by $4,000 of repurchased shares under the stock repurchase program.

On August 30, 2007, the Company approved a stock repurchase program and authorized the repurchase of up to 50,000 shares of the Company's outstanding shares of common stock.  Stock repurchases have been made from time to time and may be effected through open market purchases, block trades and in privately negotiated transactions.  Repurchased stock is held as treasury stock and will be available for general corporate purposes.  During the quarter ended December 31, 2009, the Company did not repurchase shares. As of December 31, 2009, a total of 12,750 shares have been repurchased at a weighted average price of $4.44.

INCOME INFORMATION -- Three month periods ended December 31, 2009 and 2008

Net income decreased by $280,000 to a loss of $220,000 for the quarter ended December 31, 2009 compared to a net income of $60,000 for the same quarter in 2008. The decrease in net income for the quarter was primarily the result of increases of $576,000 in provision for loan loss, $2,000 in interest expense on deposits, $34,000 in non-interest expense, and decreases of $8,000 in non-interest income, partially offset by an increase of $87,000 in interest income and decreases of $132,000 in interest expense on borrowings from the FHLB and $121,000 in income tax expense. The increase in provision for loan loss during the quarter was primarily due to a specific loan loss reserve of $463,000 on a $1.5 million construction loan participation. This loan was classified as substandard during the quarter ended December 31, 2009. The remaining $113,000 in the provision provided for an increased allowance for loan loss considered appropriate to the increase of non-performing loans.  Non-performing loans to total assets increased by 202 basis points to 2.57% on December 31, 2009, from 0.55%  on December 31, 2008, and 83 basis points from 1.74% on September 30, 2009.

Non-interest expense included an increase in Federal Deposit Insurance Premiums of $28,000 to $43,000 for the three months ended December 31, 2009 from $15,000 for the three months ended December 31, 2008 primarily due to higher premiums and assessments.

INCOME INFORMATION -- Years ended December 31, 2009 and 2008

On February 26, 2009, the Company froze its defined benefit pension plan (the "Plan") effective March 31, 2009.  The freezing of the Plan is consistent with ongoing cost reduction strategies, including a discontinuation of accrual of future service cost in the defined benefit pension plan and fully preserving retirement benefits employees have earned as of March 31, 2009. As a result of freezing the plan, the Company recognized a pre-tax curtailment credit of $416,000, net of actuarial expenses, ($230,000 net of taxes) in the year ended December 31, 2009.

Net income increased $46,000, or 30.9%, to $195,000 for the year ended December 31, 2009 from $149,000 for the year ended December 31, 2008.  The increase in net income for the year ended December 31, 2009 was primarily due to an increase of $296,000 in interest income and decreases of $127,000 in interest expense on deposits, $235,000 in interest expense on borrowings from the FHLB of New York and $168,000 in non-interest expense, which were partially offset by increases of $649,000 in provision for loan losses and $65,000 in income taxes and decreases of $66,000 in non-interest income. Non-interest expense included a decrease in salaries and employee benefits of $384,000 to $1.9 million for the year ended December 31, 2009 from $2.3 million for the year ended December 31, 2008 primarily due to the pre-tax curtailment credit of $416,000, net of actuarial expenses, resulting from the freezing of the Plan.

In addition, non-interest expense included an increase in Federal Deposit Insurance of $202,000 to $228,000 for the year ended December 31, 2009 from $26,000 for the year ended December 31, 2008 primarily due to an increase in premiums and assessments.

Other financial information is included in the table that follows.  All information is unaudited.

This press release may contain certain "forward-looking statements" which may be identified by the use of such words as "believe," "expect," "intend," "anticipate," "should," "planned," "estimated," and "potential."  Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that 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 and other loans, real estate values, and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services.

    
    
                              DECEMBER 31,           DECEMBER 31,
                                 2009                   2008
    
                              ------------           ------------
                                        (in thousands)
    Total Assets                 $155,979               $149,651
    Loans Receivable              110,988                 98,241
    Mortgage-backed
     Securities                    28,340                 32,926
    Deposits                      115,168                101,676
    Borrowings                     22,851                 28,593
    Stockholders' Equity           15,233                 14,634
    
    
                          AT OR FOR THE THREE        AT OR FOR THE YEAR
                         MONTHS ENDED DECEMBER 31,    ENDED DECEMBER 31,
                          2009              2008      2009         2008
                         ------            ------    ------       ------
                                           (in thousands)
    Total Interest
     Income             $2,053            $1,966    $8,250       $7,954
    Total Interest 
     Expense               700               830     3,255        3,617
    Net Interest  
     Income              1,353             1,136     4,995        4,337
    Provision For
     Loan Loss             576                 -       649            -
    Non-interest
     Income                 61                69       261          327
    Non-interest
     Expense             1,154             1,120     4,280        4,448
    Income Tax 
     (Benefit) expense     (95)               26       132           67
    Net (Loss) income    $(220)              $60      $195         $149
    
    PERFORMANCE RATIOS
    
    Return on Average
     Assets              (0.56%)            0.16%     0.13%        0.10%
    Return on Average
     Equity              (5.75%)            1.56%     1.29%        0.96%
    Interest Rate
     Spread               3.56%             3.12%     3.26%        2.98%
    
    ASSET QUALITY RATIOS
    
    Allowance for Loan
     Losses to Total
     Loans Receivable     0.75%             0.19%     0.75%        0.19%
    Non-performing
     Loans to Total
     Assets               2.57%             0.55%     2.57%        0.55%
    
    CAPITAL RATIO
    
    Association's Core
     Tier 1 Capital
     to Adjusted
     Total Assets        10.42%            10.86%
    

SOURCE Flatbush Federal Bancorp, Inc.