As filed with the Securities and Exchange Commission on October 10, 2007

Registration No. 333-144149

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

TO THE

FORM S-1

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

ATLANTIC COAST FINANCIAL CORPORATION AND
ATLANTIC COAST FEDERAL EMPLOYEES’ SAVINGS AND PROFIT SHARING PLAN AND TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland		6712		Being Applied For
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

505 Haines Avenue
Waycross, Georgia 31501
(800) 342-2824
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant’s Principal Executive Offices)

Robert J. Larison, Jr.
505 Haines Avenue
Waycross, Georgia 31501
(800) 342-2824
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Agent for Service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: þ

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

CALCULATION OF REGISTRATION FEE

Proposed maximum

Proposed maximum

Title of each class of

Amount to be

offering price

aggregate

Amount of

securities to be registered

registered

per share

offering price

registration fee

Common Stock, $0.01 par value per share

27,973,782 shares

$10.00

$279,737,820(1)

$8,588(3)

Participation Interests

825,000 interests

(2)

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

     PROSPECTUS

ATLANTIC COAST FINANCIAL CORPORATION

(Proposed Holding Company for Atlantic Coast Bank)
Up to 15,525,000 Shares of Common Stock
(Subject to Increase to up to 17,853,750 Shares)

          Atlantic Coast Financial Corporation, a Maryland corporation, is offering shares of common stock for sale in connection with the conversion of Atlantic Coast Federal, MHC from the mutual to the stock form of organization. The shares of common stock we are offering represent the ownership interest in Atlantic Coast Federal Corporation currently owned by Atlantic Coast Federal, MHC. In addition, at the conclusion of the conversion and offering, existing shares of Atlantic Coast Federal Corporation common stock currently held by the public will be exchanged for shares of common stock of Atlantic Coast Financial Corporation. All shares of common stock are being offered for sale at a price of $10.00 per share. Purchasers will not pay a commission to purchase shares of common stock in the offering. Atlantic Coast Federal Corporation’s common stock is currently listed on the Nasdaq Global Market under the trading symbol “ACFC.” We expect that Atlantic Coast Financial Corporation’s shares of common stock will trade on the Nasdaq Global Market under the trading symbol “ACFCD” for a period of 20 trading days after the completion of the offering. Thereafter, Atlantic Coast Financial Corporation’s trading symbol will revert to “ACFC.”

     If you are or were a depositor of Atlantic Coast Bank:

	•		You have priority rights to purchase shares of our common stock if (1) you had at least $50.00 on deposit at Atlantic Coast Bank at the close of business on March 31, 2006; (2) you had at least $50.00 on deposit at Atlantic Coast Bank at the close of business on September 30, 2007; or (3) you were a depositor of Atlantic Coast Bank on October 5, 2007.

     If you are currently a stockholder of Atlantic Coast Federal Corporation:

	•		You may have the opportunity to purchase additional shares of our common stock in the offering after priority orders are filled.
	•		Each of your shares of common stock will be exchanged at the conclusion of the offering for between 1.31466 and 1.77866 new shares (subject to adjustment to up to 2.04545 new shares) of common stock of Atlantic Coast Financial Corporation to maintain approximately your existing percentage ownership in Atlantic Coast Federal Corporation excluding additional purchases of shares of common stock in the offering.

     If you fit neither of the categories above, but are interested in purchasing shares of our common stock:

•

You may have the opportunity to purchase shares of common stock after priority orders in the preceding categories are filled.

          We are offering up to 15,525,000 shares of common stock for sale on a best efforts basis. We may sell up to 17,853,750 shares of common stock because of regulatory considerations, demand for the shares of common stock or changes in financial market conditions, without resoliciting purchasers. In addition to the shares we are selling in the offering, we also will simultaneously issue up to 8,800,027 shares of common stock to public stockholders of Atlantic Coast Federal Corporation in exchange for their existing shares. The number of shares to be issued in the exchange may be increased to up to 10,120,032 shares of common stock, if we sell 17,853,750 shares of common stock in the offering. We must sell a minimum of 11,475,000 shares in the offering and issue 6,504,368 shares in the exchange in order to complete the offering and the exchange of existing shares of common stock.

          The minimum number of shares of common stock you may order is 25. The offering is expected to expire at 11:00 a.m., Eastern Time, on [Expiration Date]. We may extend this expiration date without notice to you until [Extension Date #1], unless the Office of Thrift Supervision approves a later date, which may not be beyond [Extension Date #2]. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [Extension Date #1], or the number of shares of common stock to be sold is increased to more than 17,853,750 shares or decreased to less than 11,475,000 shares. If the subscription and community offerings are terminated, purchasers will have their funds returned promptly, with interest. If the offering is extended beyond [Extension Date #1] or there is a change in the offering range, we will resolicit purchasers, and you will have the opportunity to maintain, change or cancel your order. If you do not provide us with a written indication of your intent, your order will be cancelled and your funds will be returned to you, with interest. Funds received prior to the completion of the offering up to the minimum of the offering range will be held in a segregated account at Atlantic Coast Bank. Funds received in excess of the minimum of the offering range may be maintained in a segregated account at Atlantic Coast Bank or, at our discretion, at another federally insured depository institution. However, in no event will we maintain more than one escrow account. All funds received will earn interest calculated at Atlantic Coast Bank’s passbook savings rate, which is currently 0.30% per annum. Stifel, Nicolaus & Company, Incorporated will assist us in selling our shares of common stock on a best efforts basis in the subscription and community offerings. We may also offer shares of common stock not subscribed for in the subscription and community offerings in a syndicated offering through a syndicate of selected dealers with Stifel, Nicolaus & Company, Incorporated serving as sole book running manger and FTN Midwest Securities Corp. serving as a co-manager. Stifel, Nicolaus & Company, Incorporated and FTN Midwest Securities Corp. are not required to purchase any shares of the common stock that are being offered for sale.

OFFERING SUMMARY
Price: $10.00 per share

		Minimum				Midpoint				Maximum				Adjusted Maximum
Number of shares			11,475,000				13,500,000				15,525,000				17,853,750
Gross offering proceeds		$	114,750,000			$	135,000,000			$	155,250,000			$	178,537,500
Estimated offering expenses excluding selling agent commissions and expenses		$	1,350,000			$	1,350,000			$	1,350,000			$	1,350,000
Selling agent commissions and expenses (1)		$	1,042,979			$	1,185,741			$	1,328,504			$	1,492,681
Net proceeds		$	112,357,021			$	132,464,259			$	152,571,496			$	175,694,819
Net proceeds per share		$	9.79			$	9.81			$	9.83			$	9.84

This investment involves a degree of risk, including the possible loss of principal.

Please read “Risk Factors” beginning on page 20.

          These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission, the Office of Thrift Supervision, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

STIFEL NICOLAUS

For assistance, please contact the Stock Information Center at (877) 565-8569.

The date of this prospectus is October___, 2007.

TABLE OF CONTENTS

		Page
SUMMARY			1
RISK FACTORS			20
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF ATLANTIC COAST FEDERAL CORPORATION AND SUBSIDIARIES			29
FORWARD-LOOKING STATEMENTS			32
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING			33
OUR POLICY REGARDING DIVIDENDS			35
MARKET FOR THE COMMON STOCK			36
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE			38
CAPITALIZATION			39
PRO FORMA DATA			41
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			46
BUSINESS OF ATLANTIC COAST FEDERAL CORPORATION AND ATLANTIC COAST FINANCIAL CORPORATION			83
BUSINESS OF ATLANTIC COAST BANK			84
SUPERVISION AND REGULATION			110
TAXATION			119
MANAGEMENT			120
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS			143
THE CONVERSION AND OFFERING			144
COMPARISON OF STOCKHOLDERS’ RIGHTS FOR EXISTING STOCKHOLDERS OF ATLANTIC COAST FEDERAL CORPORATION			168
RESTRICTIONS ON ACQUISITION OF ATLANTIC COAST FINANCIAL CORPORATION			175
DESCRIPTION OF CAPITAL STOCK OF ATLANTIC COAST FINANCIAL CORPORATION FOLLOWING THE CONVERSION			178
TRANSFER AGENT			180
EXPERTS			180
LEGAL MATTERS			180
WHERE YOU CAN FIND ADDITIONAL INFORMATION			180
ATLANTIC COAST FEDERAL CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

SUMMARY

          The following summary explains the significant aspects of the conversion, the offering and the exchange of existing shares of Atlantic Coast Federal Corporation common stock for new shares of Atlantic Coast Financial Corporation common stock. It may not contain all of the information that is important to you. For additional information before making an investment decision, you should read this prospectus carefully, including the consolidated financial statements, the notes to the consolidated financial statements, and the section entitled “Risk Factors.”

The Companies

          Atlantic Coast Financial Corporation

          Atlantic Coast Financial Corporation is a newly-formed Maryland corporation that was incorporated on June 22, 2007 to be the successor corporation to Atlantic Coast Federal Corporation upon completion of the conversion. Atlantic Coast Financial Corporation will own all of the outstanding shares of common stock of Atlantic Coast Bank upon completion of the conversion.

          Atlantic Coast Financial Corporation’s executive offices are located at 505 Haines Avenue, Waycross, Georgia 31501. Our telephone number at this address is (800) 342-2824.

          Atlantic Coast Federal, MHC

          Atlantic Coast Federal, MHC is the federally chartered mutual holding company of Atlantic Coast Federal Corporation. Atlantic Coast Federal, MHC’s principal business activity is the ownership of 8,728,500 shares of common stock of Atlantic Coast Federal Corporation, or 63.8% of the issued and outstanding shares as of June 30, 2007. The remaining 4,947,571 shares of Atlantic Coast Federal Corporation common stock were held by the public. After the completion of the conversion, Atlantic Coast Federal, MHC will cease to exist.

          Atlantic Coast Federal Corporation

          Atlantic Coast Federal Corporation is a federally chartered corporation that owns all of the outstanding common stock of Atlantic Coast Bank. At June 30, 2007, Atlantic Coast Federal Corporation had consolidated assets of approximately $898.4 million, deposits of $598.1 million and stockholders’ equity of $89.1 million. After the completion of the conversion, Atlantic Coast Federal Corporation will cease to exist, and will be succeeded by Atlantic Coast Financial Corporation, a new Maryland corporation formed to be Atlantic Coast Federal Corporation’s successor corporation. As of June 30, 2007, Atlantic Coast Federal Corporation had 13,676,071 shares of common stock issued and outstanding.

          Atlantic Coast Bank

          Atlantic Coast Bank is a federally chartered savings association headquartered in Waycross, Georgia. It was originally founded in 1939 as a credit union to serve the employees of the Atlantic Coast Line Railroad and converted to a federal mutual savings association in 2000. Atlantic Coast Bank reorganized into the mutual holding company structure in 2003 and became the wholly owned subsidiary of Atlantic Coast Federal Corporation. Atlantic Coast Bank conducts its business from thirteen full-service banking offices, one drive-up facility and one regional center in Florida.

          Atlantic Coast Bank’s principal business activity has historically been the origination of mortgage loans secured by one- to four-family residential real estate as well as consumer loans. In the past few years, Atlantic Coast Bank has begun to emphasize the origination of commercial real estate loans, both permanent and construction. Atlantic Coast Bank offers a variety of deposit accounts, including passbook savings, commercial checking and certificates of deposit, and emphasizes personal and efficient service for its customers. See “Business of Atlantic Coast Bank—General.”

Our Current Organizational Structure

          In October 2004, Atlantic Coast Federal Corporation completed a minority stock offering by selling 40% of its shares of common stock to depositors of Atlantic Coast Bank. The majority of the outstanding shares of common stock of Atlantic Coast Federal Corporation are owned by Atlantic Coast Federal, MHC, which is a mutual holding company with no stockholders. Atlantic Coast Federal Corporation owns 100% of the outstanding shares of common stock of Atlantic Coast Bank.

          Pursuant to the terms of Atlantic Coast Federal, MHC’s plan of conversion and reorganization, Atlantic Coast Federal, MHC will convert from the mutual holding company to the stock holding company corporate structure. As part of the conversion, we are offering for sale in a subscription offering, and possibly in a community and/or a syndicated community offering, the majority ownership interest of Atlantic Coast Federal Corporation that is currently owned by Atlantic Coast Federal, MHC. Upon the completion of the conversion and offering, Atlantic Coast Federal, MHC will cease to exist, and we will complete the transition from partial to full public stock ownership. Upon completion of the conversion, existing public stockholders of Atlantic Coast Federal Corporation will receive shares of common stock of Atlantic Coast Financial Corporation in exchange for their shares of Atlantic Coast Federal Corporation common stock in order to maintain the public stockholders’ existing percentage ownership in our organization (excluding any new shares purchased by them in the offering).

          The following diagram shows our current organizational structure:

Our Organizational Structure Following the Conversion and Offering

          After the conversion and offering are completed, we will be organized as a fully public holding company, as follows:

Business Strategy

          Our goal is to operate as a well-capitalized and profitable financial institution. We seek to accomplish this goal by:

	•		Increasing our commercial real estate, commercial and residential construction, commercial business loans and home equity lending while maintaining a moderate growth of one- to four-family residential real estate loans through originations, purchases and sales of such loans;
	•		Expanding through mergers and acquisitions primarily in northeastern Florida and southeastern Georgia. We have no current understandings or agreements for any specific merger or acquisition;
	•		Continuing to improve our profitability by: (1) maintaining a portfolio of securities with investments, including mortgage-backed securities, that enable us to balance investment risk, rate of return and liquidity needs, (2) managing operating expenses while providing high-quality customer service, (3) purchasing one- to four-family residential mortgage loans for the purpose of supplementing our internal loan production and managing our interest rate risk, and (4) capitalizing on the profitability and growth opportunities in our retail banking network by expanding individual customer relationships and focusing on targeted market segments; and
	•		Continuing our branch expansion by building or leasing new branch facilities or by acquiring branches from other financial institutions primarily in northeastern Florida. For more detail on our plans to establish new branches, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy—Branch Expansion.”

          See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy” for a more detailed discussion of our business strategy.

Reasons for the Conversion and Offering

          Our Board of Directors decided at this time to convert to a fully public stock form of ownership and conduct the offering in order to increase our capital position following the deployment of the capital raised in Atlantic Coast Federal Corporation’s minority offering in 2004. Completing the conversion and offering is necessary for us to continue to grow and execute our business strategy. We believe that the conversion and offering and the increased capital resources that will result from the sale of our shares of common stock will provide us with the flexibility to:

	•		support internal growth through lending in the communities we serve;
	•		finance the acquisition of financial institutions or other financial service companies primarily in northeastern Florida and southeastern Georgia, although we do not currently have any understandings or agreements regarding any specific acquisition transaction;
	•		acquire branches from other financial institutions or build or lease new branch facilities primarily in northeastern Florida;
	•		enhance existing products and services, and support the development of new products and services by investing, for example, in technology to support expansion of our commercial real estate lending and our commercial deposit products;
	•		improve the liquidity of our shares of common stock and enhance stockholder returns through higher earnings and more flexible capital management strategies; and
	•		use the additional capital for other general corporate purposes.

Terms of the Conversion and Offering

          Pursuant to Atlantic Coast Federal, MHC’s plan of conversion and reorganization, our organization will convert from a partially public to a fully public form of holding company structure. In connection with the conversion, we are selling shares of common stock that represent the ownership interest in Atlantic Coast Federal Corporation currently held by Atlantic Coast Federal, MHC.

          We are offering between 11,475,000 and 15,525,000 shares of common stock to eligible depositors of Atlantic Coast Bank, to our tax-qualified employee benefit plans, including our employee stock ownership plan and, to the extent shares remain available, to natural persons residing in Chatham, Coffee and Ware Counties, Georgia and Clay, Columbia, Duval, Nassau and St. Johns Counties, Florida, to our existing public stockholders and to the general public. The number of shares of common stock to be sold may be increased to up to 17,853,750 as a result of regulatory considerations, demand for our shares, or changes in the market for financial institution stocks. Unless the number of shares of common stock to be offered is increased to more than 17,853,750 shares or decreased to fewer than 11,475,000 shares, or the offering is extended beyond [Extension Date #1], purchasers will not have the opportunity to modify or cancel their stock orders once submitted. If the number of shares of common stock to be sold is increased to more than 17,853,750 shares or decreased to fewer than 11,475,000 shares, or if the offering is extended beyond [Extension Date #1], purchasers will have the opportunity to maintain, cancel or change their orders for common stock during a designated resolicitation period or have their funds

returned promptly with interest. If you do not provide us with written indication of your intent, your stock order will be cancelled, your funds will be returned to you with interest calculated at Atlantic Coast Bank’s passbook savings rate and any deposit account withdrawal authorizations will be cancelled.

          The purchase price of each share of common stock to be offered for sale in the offering is $10.00. All investors will pay the same purchase price per share. Investors will not be charged a commission to purchase shares of common stock in the offering. Stifel, Nicolaus & Company, Incorporated, our financial advisor and selling agent in the offering, will use its best efforts to assist us in selling shares of our common stock. Stifel, Nicolaus & Company, Incorporated is not obligated to purchase any shares of common stock in the offering.

Persons Who May Order Shares of Common Stock in the Offering

          We are offering the shares of common stock in a “subscription offering” in the following descending order of priority:

	(i)		First, to depositors with accounts at Atlantic Coast Bank with aggregate balances of at least $50 at the close of business on March 31, 2006.
	(ii)		Second, to our tax-qualified employee benefit plans, including our employee stock ownership plan and 401(k) plan, which will receive nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering.
	(iii)		Third, to depositors with accounts at Atlantic Coast Bank with aggregate balances of at least $50 at the close of business on September 30, 2007.
	(iv)		Fourth, to depositors of Atlantic Coast Bank at the close of business on October 5, 2007.

          Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering,” with a preference given first to natural persons residing in Chatham, Coffee and Ware Counties, Georgia and Clay, Columbia, Duval, Nassau and St. Johns Counties, Florida, and then to Atlantic Coast Federal Corporation public stockholders as of October 5, 2007. The community offering, if held, may begin concurrently with, during or promptly after the subscription offering, as we may determine at any time. We also may offer for sale shares of common stock not purchased in the subscription offering or community offering through a “syndicated community offering,” with Stifel, Nicolaus & Company, Incorporated as sole book running manager and FTN Midwest Securities Corp. as a co-manager. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated community offering. Any determination to accept or reject purchase orders in the community offering and the syndicated community offering will be based on the facts and circumstances available to management at the time of the determination.

          If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first to categories in the subscription offering in accordance with Atlantic Coast Federal, MHC’s plan of conversion and reorganization. A detailed description of share allocation procedures can be found in the section of this prospectus entitled “The Conversion and Offering.”

How We Intend to Use the Proceeds From the Offering

          We estimate that the aggregate net proceeds from the offering will be between $112.4 million and $152.6 million, or $175.7 million if the offering range is increased by 15%. Atlantic Coast Financial

Corporation intends to retain between $49.3 million and $67.0 million of the net proceeds, or $77.1 million if the offering range is increased by 15% (excluding the portion of the net proceeds loaned to our employee stock ownership plan). Approximately $56.2 million to $76.3 million of the net proceeds (or $87.8 million if the offering range is increased by 15%) will be invested in Atlantic Coast Bank.

          A portion of the net proceeds retained by Atlantic Coast Financial Corporation will be loaned to our employee stock ownership plan to fund its purchase of shares of common stock in the offering (between 688,500 shares and 931,500 shares, or 1,071,225 shares if the offering is increased by 15%). The employee stock ownership plan was established in connection with our 2004 minority stock issuance. As of June 30, 2007, there were 325,684 shares remaining unallocated in the plan. The remainder of the net proceeds may be used for general corporate purposes, including paying cash dividends or repurchasing shares of our common stock. Funds invested in Atlantic Coast Bank will be used to support increased lending and new products and services.

          The net proceeds retained by Atlantic Coast Financial Corporation and Atlantic Coast Bank may also be used for future business expansion such as acquisitions of banking or financial services companies primarily in northeastern Florida and southeastern Georgia, dividends, additional branch offices primarily in northeastern Florida and for general corporate purposes. We currently have no arrangements or understandings regarding any specific transaction.

          We anticipate using a portion of the net proceeds to fund two branch expansion efforts consisting of a new branch located in St. Johns County and a new corporate headquarters located in Jacksonville with completion expected in 2008 and 2009, respectively. The estimated cost of the St. Johns branch is anticipated to range from $900,000 to $1.6 million. Our estimated cost for the new headquarters has not been determined since this project is still in the early development stage. The cost of establishing a branch will depend upon many factors such as whether the facility is owned or leased, the location of the branch, the size of the facility and the type of improvements and furnishings used in the facility. There can be no assurance that our costs will not be more or less than the estimate for the St. Johns branch. Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities.

          Please see the section of this prospectus entitled “How We Intend to Use the Proceeds From the Offering” for more information on the proposed use of the net proceeds from the offering.

How We Determined the Offering Range, the Exchange Ratio and the $10.00 Per Share Stock Price

          The offering range and exchange ratio are based on an independent appraisal of the estimated market value of Atlantic Coast Financial Corporation, assuming the conversion, the exchange and the offering are completed. RP Financial, LC., an appraisal firm experienced in appraisals of financial institutions, has estimated that, as of September 28, 2007, this pro forma market value ranged from $179.8 million to $243.3 million, with a midpoint of $211.5 million. Based on this valuation, the ownership interest of Atlantic Coast Federal, MHC being sold in the offering and the $10.00 per share price, the number of shares of common stock being offered for sale by Atlantic Coast Financial Corporation will range from 11,475,000 shares to 15,525,000 shares. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The exchange ratio will range from 1.31466 shares at the minimum of the offering range to 1.77866 shares at the maximum of the offering range in order to preserve the existing percentage ownership of public stockholders in our organization (excluding any new shares purchased by them in the offering). The independent appraisal is based in part on Atlantic Coast Federal Corporation’s financial condition and results of operations, the pro forma impact of the additional capital raised by the sale of shares of common stock in the offering, and an analysis of a peer group of ten publicly traded savings bank and

thrift holding companies that RP Financial, LC. considered comparable to Atlantic Coast Federal Corporation.

          The independent appraisal does not indicate actual market value. Do not assume or expect that the estimated valuation as indicated above means that, after the conversion and offering, the shares of our common stock will trade at or above the $10.00 purchase price.

          The following table presents a summary of selected pricing ratios for the peer group companies, Atlantic Coast Financial Corporation (on a pro forma basis) and Atlantic Coast Federal Corporation (on a historical basis). The pricing ratios are based on earnings and other information as of and for the twelve months ended June 30, 2007 and stock price information as of September 28, 2007, as reflected in RP Financial, LC.’s appraisal report, dated September 28, 2007. Compared to the average pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 7.3% on a price-to-book value basis and a discount of 19.4% on a price-to-tangible book value basis, and a premium of 112.6% on a price-to-core earnings basis.

          Our Board of Directors, in reviewing and approving the independent appraisal, considered the range of price-to-core earnings multiples, the range of price-to-book value and price-to-tangible book value ratios at the different ranges of shares of common stock to be sold in the offering, and did not consider one valuation approach to be more important than the other. Instead, in approving the independent appraisal, the Board of Directors concluded that these ranges represented the appropriate balance of the three approaches to establishing our estimated valuation range, and the number of shares of common stock to be sold, in comparison to the peer group institutions. Specifically, in approving the independent appraisal, the Board of Directors believed that we would not be able to sell our shares at a price-to-book and price-to-tangible book value that was in line with the peer group without unreasonably exceeding the peer group on a price-to-core earnings basis. The estimated appraised value and the resulting discount/premium took into consideration the potential financial impact of the conversion and offering as well as the trading price of Atlantic Coast Federal Corporation common stock, which decreased from $19.23 per share on May 6, 2007, the closing price on the last trading day immediately preceding the announcement of the conversion, to $15.11 per share, the trading price on September 28, 2007, the effective date of the independent appraisal.

		Price-to-core earnings				Price-to-book				Price-to-tangible
		multiple				value ratio				book value ratio
Atlantic Coast Financial Corporation (on a pro forma basis, assuming completion of the conversion)
Minimum			30.65x				93.82	%			95.24	%
Midpoint			33.86x				100.76	%			102.15	%
Maximum			36.69x				106.59	%			107.94	%
Maximum, as adjusted			39.58x				112.24	%			113.54	%
Valuation of peer group companies, as of September 28, 2007
Averages			17.26x				115.02	%			133.96	%
Medians			14.33x				113.34	%			131.61	%

          RP Financial, LC. will update the independent appraisal prior to the completion of the conversion. If the estimated appraised value changes to either below $179.8 million or above $279.7 million, we will resolicit persons who submitted stock orders. See “The Conversion and Offering—Stock Pricing and Number of Shares to be Issued.”

After-Market Performance Information Provided by Independent Appraiser

          The following table presents selected stock price performance information for all conversions of mutual holding companies to stock holding companies, commonly referred to as “second-step” conversions, completed between January 1, 2005 and September 28, 2007. The companies for which the stock price performance is presented completed their conversions in different market conditions than Atlantic Coast Financial Corporation and may have issued more or less than the 63.8% ownership interest of Atlantic Coast Federal, MHC being offered by Atlantic Coast Financial Corporation in the offering. In addition, the companies may have no similarities to Atlantic Coast Financial Corporation with regard to the market in which Atlantic Coast Financial Corporation competes, earnings quality or growth potential, among other factors. The information shown in the following table was not included in the independent appraisal report; however, RP Financial, LC. did consider the after-market trading performance of any transaction that was completed within the three months prior to the September 28, 2007 valuation date used in the appraisal.

										Price Performance From Initial Trading Date
																						Through
		Conversion								% Change				% Change				% Change				September 28,
Institution		Date				Exchange				1 day				1 week				4 weeks				2007
Abington Bancorp, Inc. (ABBC)			06/28/07			Nasdaq					(4.0	)%			(1.6	)%			(6.6	)%			(2.5	)%
People’s United Financial, Inc. (PBCT)			04/16/07			Nasdaq					3.8				2.0				0.9				(13.6	)
Osage Bancshares, Inc. (OSBK)			01/18/07			Nasdaq					(0.5	)			(0.5	)			(2.5	)			(11.3	)
Westfield Financial, Inc. (WFD)			01/04/07			Nasdaq					7.0				7.5				9.9				(2.9	)
Citizens Community Bancorp, Inc. (CZWI)			11/01/06			Nasdaq					(2.5	)			(1.0	)			(2.5	)			(5.5	)
Liberty Bancorp, Inc. (LBCP)			07/24/06			Nasdaq					2.5				1.0				(0.8	)			7.1
First Clover Leaf Financial Corp. (FCLF)			07/11/06			Nasdaq					3.9				6.0				9.8				10.1
Monadnock Bancorp, Inc. (MNKB)			06/29/06			Otcbb					—				(5.0	)			(15.6	)			(17.5	)
New England Bancshares, Inc. (NEBS)			12/29/05			Nasdaq					6.6				7.0				7.0				15.0
American Bancorp of New Jersey, Inc. (ABNJ)			10/06/05			Nasdaq					1.6				(2.0	)			0.1				8.7
Hudson City Bancorp, Inc. (HCBK)			06/07/05			Nasdaq					9.6				10.7				15.5				53.8
First Federal of Northern Michigan (FFNM)			04/04/05			Nasdaq					(5.1	)			(7.0	)			(16.0	)			(19.7	)
Rome Bancorp, Inc. (ROME)			03/31/05			Nasdaq					0.5				(2.0	)			(5.6	)			18.6
						Averages					1.8	%			1.2	%			(0.5	)%			3.1	%

          The table above presents only short-term historical information on stock price performance, which may not be indicative of the long-term performance of such stock prices. The table above is also not intended to predict how our shares of common stock may perform following the offering. The historical information in the tables may not be meaningful to you because the data were calculated using a small sample and the transactions from which the data were derived occurred primarily during a low market interest rate environment, during which time the trading prices for financial institution stocks typically increase.

          You should bear in mind that stock price appreciation or depreciation is affected by many factors. There can be no assurance that our stock price will not trade at or below $10.00 per share. Before you make an investment decision, we urge you to read this entire prospectus carefully, including, but not limited to, the section entitled “Risk Factors” beginning on page 20.

Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion

          Employee Stock Ownership Plan. Our tax-qualified employee stock ownership plan expects to purchase up to 6.0% of the shares of common stock we sell in the offering, or 931,500 shares of common stock, assuming we sell the maximum number of the shares proposed to be sold which when combined

with the existing shares held by the employee stock ownership plan will be less than 8.0% of the shares outstanding following the conversion as required by Office of Thrift Supervision Regulations. If we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase shares over this maximum, up to a total of 6.0% of the shares of common stock sold in the offering. We reserve the right to purchase shares of common stock in the open market following the offering in order to fund all or a portion of the employee stock ownership plan. This plan is a tax-qualified retirement plan for the benefit of all our employees that was established in 2004 in connection with our minority stock offering and that, as of June 30, 2007, had 302,588 shares remaining unearned under this plan. Assuming the employee stock ownership plan purchases 931,500 shares in the offering, we will recognize additional compensation expense of approximately $466,000 annually (or approximately $289,000 after tax) over a 20-year period, assuming the loan to the employee stock ownership plan has a 20-year term and the shares of common stock have a fair market value of $10.00 per share for the full 20-year period. The existing employee stock ownership plan loan with a 10-year term that was made in 2004 will be consolidated with the new loan. As a result of the consolidation of the two loans with a 20-year term, we anticipate that the annual debt service will be approximately the same as the 2004 loan. If, in the future, the shares of common stock have a fair market value greater or less than $10.00, the compensation expense will increase or decrease accordingly.

          Stock-Based Incentive Plan. We also intend to implement a new stock-based incentive plan no earlier than six months after completion of the conversion. Stockholder approval of this plan will be required. If adopted within 12 months following the completion of the conversion, the stock-based incentive plan will reserve a number of shares up to 3.0% of the shares of common stock sold in the offering, or up to 465,851 shares of common stock at the maximum of the offering range, for awards of restricted stock to key employees and directors, at no cost to the recipients, in order to ensure that the aggregate number of restricted shares of common stock subject to the new stock-based incentive plan and the 2005 Recognition and Retention Plan does not exceed 4.0% of the shares outstanding (including shares issued in exchange for existing shares of Atlantic Coast Federal Corporation) following completion of the conversion as required by Office of Thrift Supervision Regulations. If the shares of common stock awarded under the stock-based incentive plan come from authorized but unissued shares of common stock, stockholders would experience dilution of up to approximately 1.9% in their ownership interest in Atlantic Coast Financial Corporation. If adopted within 12 months following the completion of the conversion, the stock-based incentive plan will also reserve a number of shares up to 7.5% of the shares of common stock sold in the offering, or up to 1,164,629 shares of common stock at the maximum of the offering range, for grants of stock options to key employees and directors in order to ensure that the aggregate number of shares reserved does not exceed 10.0% of the shares outstanding (including shares issued in exchange for existing shares of Atlantic Coast Federal Corporation) following completion of the conversion as required by Office of Thrift Supervision Regulations. If the shares of common stock issued upon the exercise of options come from authorized but unissued shares of common stock, stockholders would experience dilution of approximately 4.6% in their ownership interest in Atlantic Coast Financial Corporation. Restricted stock awards and stock option grants made under this plan would be subject to vesting over a period of not less than five years. If the stock-based incentive plan is adopted more than one year after the completion of the conversion, awards of restricted stock or grants of stock options under the plan may exceed 3.0% and 7.5%, respectively, of the shares sold in the offering and have a shorter vesting period. For a description of our current stock benefit plans, see “Management—Benefit Plans.”

          The following table summarizes the number of shares of common stock and the aggregate dollar value of grants that are expected under the new stock-based incentive plan as a result of the conversion. The table also shows the dilution to stockholders if all such shares are issued from authorized but unissued shares, instead of shares purchased in the open market. A portion of the stock grants shown in the table below may be made to non-management employees.

		Number of Shares to be Granted or Purchased(1)												Dilution				Value of Grants (2)
										As a				Resulting
										Percentage				From
		At				At				of Common				Issuance of				At				At
		Minimum of				Maximum				Stock to be				Shares for				Minimum				Maximum
		Offering				of Offering				Sold in the				Stock Benefit				of Offering				of Offering
		Range				Range				Offering				Plans				Range				Range
Employee stock ownership plan			688,500				931,500				6.0	%			—	%		$	6,885,000			$	9,315,000
Restricted stock awards			344,325				465,851				3.0				1.9	(3)			3,443,250				4,658,510
Stock options			860,812				1,164,629				7.5				4.6	(3)			1,893,786				2,562,183
Total			1,893,637				2,561,980				16.5	%			6.3	%		$	12,222,036			$	16,535,693

          We may fund our plans through open market purchases, as opposed to new issuance of common stock; however, if any options previously granted under our existing 2005 Stock Option Plan are exercised during the first year following completion of the offering, they will be funded with newly-issued shares as the Office of Thrift Supervision regulations do not permit us to repurchase our shares during the first year following the completion of this offering except to fund the grants of restricted stock under the stock-based incentive plan or under extraordinary circumstances. We have been advised by the staff of the Office of Thrift Supervision that the exercise of outstanding options and cancellation of treasury shares in the conversion will not constitute an extraordinary circumstance or a compelling business purpose for satisfying this test.

          The following table presents information as of June 30, 2007 regarding our existing employee stock ownership plan, our 2005 Stock Option Plan, our 2005 Recognition and Retention Plan, our proposed employee stock ownership plan purchases and our proposed stock-based incentive plan. The table below assumes that 24,325,027 shares are outstanding after the offering, which includes the sale of 15,525,000 shares in the offering at the maximum of the offering range and the issuance of 8,800,027 shares in exchange for shares of Atlantic Coast Federal Corporation using an exchange ratio of 1.77866. It also assumes that the value of the stock is $10.00 per share.

												Percentage of
												Shares
												Outstanding
								Estimated Value of				After the
Existing and New Stock Benefit Plans		Participants		Shares				Shares				Conversion
Existing employee stock ownership plan shares		Employees			828,001	(1)		$	8,280,010				3.4	%
New employee stock ownership plan shares		Employees			931,500				9,315,000				3.8
Total employee stock ownership plan shares		Employees			1,759,501				17,595,010				7.2
Existing shares of restricted stock		Directors, Officers and Employees			507,151	(2)			5,071,510	(3)			2.1
New shares of restricted stock		Directors, Officers and Employees			465,851				4,658,510				1.9
Total shares of restricted stock		Directors, Officers and Employees			973,002				9,730,020				4.0
Existing stock options		Directors, Officers and Employees			1,248,635	(4)			2,746,997	(5)			5.1
New stock options		Directors, Officers and Employees			1,164,629				2,562,183	(5)			4.8
Total stock options		Directors, Officers and Employees			2,413,264				5,309,180				9.9
Total of stock benefit plans					5,145,767			$	32,634,210				21.1	%

          The value of the restricted shares awarded under the stock-based incentive plan will be based on the market value of Atlantic Coast Financial Corporation’s common stock at the time the shares are awarded. The stock-based incentive plan is subject to stockholder approval, and cannot be implemented until at least six months after completion of the conversion and offering. The following table presents the total value of all shares that would be available for award and issuance under the new stock-based incentive plan, assuming the shares are awarded when the market price of our common stock ranges from $8.00 per share to $14.00 per share.

														535,729 Shares
		344,325 Shares				405,088 Shares				465,851 Shares				Awarded
		Awarded				Awarded				Awarded				at Maximum of Range,
Share Price		at Minimum of Range				at Midpoint of Range				at Maximum of Range				As Adjusted
$  8.00		$	2,754,600			$	3,240,704			$	3,726,808			$	4,285,832
10.00			3,443,250				4,050,880				4,658,510				5,357,290
12.00			4,131,900				4,861,056				5,590,212				6,428,748
14.00			4,820,550				5,671,232				6,521,914				7,500,206

          The grant-date fair value of the options granted under the new stock-based incentive plan will be based in part on the price of shares of common stock of Atlantic Coast Financial Corporation at the time the options are granted. The value will also depend on the various assumptions utilized in the option pricing model ultimately adopted. The following table presents the total estimated value of the options to be available for grant under the stock-based incentive plan, assuming the market price and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per share.

										1,012,721 Options				1,164,629 Options				1,339,323 Options
		Grant-Date Fair				860,812 Options at				at Midpoint of				at Maximum of				at Maximum of
Exercise Price		Value Per Option				Minimum of Range				Range				Range				Range, As Adjusted
$  8.00		$	1.76			$	1,515,029			$	1,782,388			$	2,049,747			$	2,357,208
10.00			2.20				1,893,786				2,227,986				2,562,183				2,946,510
12.00			2.64				2,272,543				2,673,583				3,074,620				3,535,812
14.00			3.08				2,651,300				3,119,180				3,587,057				4,125,114

          The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not trade at or below $10.00 per share. Before you make an investment decision, we urge you to read this entire prospectus carefully, including, but not limited to, the section entitled “Risk Factors” beginning on page 20.

The Exchange of Existing Shares of Atlantic Coast Federal Corporation Common Stock

          If you are a stockholder of Atlantic Coast Federal Corporation as of the conclusion of the conversion, your shares will be canceled and exchanged for shares of common stock of Atlantic Coast Financial Corporation. The number of shares of common stock you receive will be based on an exchange ratio determined as of the conclusion of the conversion, which will depend upon our final appraised value. The number of shares you receive will not be based on the market price of our currently outstanding Atlantic Coast Federal Corporation shares. Instead, the exchange ratio will ensure that existing public stockholders of Atlantic Coast Federal Corporation will own the same percentage of Atlantic Coast Financial Corporation’s common stock after the conversion and offering exclusive of their purchase of any additional shares of common stock in the offering and their receipt of cash in lieu of fractional exchange shares. The following table shows how the exchange ratio will adjust, based on the valuation of Atlantic Coast Financial Corporation and the number of shares of common stock issued in the offering. The table also shows the number of whole shares of Atlantic Coast Financial Corporation common stock a hypothetical owner of Atlantic Coast Federal Corporation common stock would receive in exchange for 100 shares of Atlantic Coast Federal Corporation common stock owned at the consummation of the conversion, depending on the number of shares of common stock sold in the offering.

																		Total Shares of
										New Shares to be								Common Stock
										Exchanged for Existing								to be												New Shares
										Shares of Atlantic								Outstanding												That Would be
		New Shares to be Sold								Coast Federal								after the								Equivalent Per				Received for
		in This Offering								Corporation								Conversion and				Exchange				Share Current				100 Existing
		Amount				Percent				Amount				Percent				Offering				Ratio				Market Price(1)				Shares
Minimum			11,475,000				63.8	%			6,504,368				36.2	%			17,979,368				1.31466			$	13.15				131
Midpoint			13,500,000				63.8	%			7,652,198				36.2	%			21,152,198				1.54666				15.47				154
Maximum			15,525,000				63.8	%			8,800,027				36.2	%			24,325,027				1.77866				17.79				177
15% above Maximum			17,853,750				63.8	%			10,120,032				36.2	%			27,973,782				2.04545				20.45				204

          If you own shares of Atlantic Coast Federal Corporation common stock through a brokerage account in “street name,” you do not need to take any action to exchange your shares of common stock. Your shares will be automatically exchanged. If you hold Atlantic Coast Federal Corporation stock certificate(s), you will receive a transmittal form with instructions on how to surrender your stock certificate(s) after consummation of the conversion. New certificate(s) of Atlantic Coast Financial Corporation common stock will be mailed to you within five business days after the exchange agent receives your properly executed transmittal form and your Atlantic Coast Federal Corporation stock certificate(s). You should not submit a stock certificate for exchange until you receive a transmittal form.

          No fractional shares of Atlantic Coast Financial Corporation common stock will be issued to any public stockholder of Atlantic Coast Federal Corporation. For each fractional share that would otherwise be issued, Atlantic Coast Financial Corporation will pay in cash an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the $10.00 per share purchase price of the common stock in the offering.

          Outstanding options to purchase shares of Atlantic Coast Federal Corporation common stock also will convert into and become options to purchase new shares of Atlantic Coast Financial Corporation common stock. The number of shares of common stock to be received upon exercise of these options will be determined pursuant to the exchange ratio. The aggregate exercise price, duration and vesting schedule of these options will not be affected by the conversion. At June 30, 2007, there were 543,095 outstanding options to purchase shares of Atlantic Coast Federal Corporation common stock, 103,524 of which have vested. Such options will be converted into options to purchase 713,985 shares of common stock at the minimum of the offering range and 965,981 shares of common stock at the maximum of the offering range. Because Office of Thrift Supervision regulations prohibit us from repurchasing our common stock during the first year following the conversion unless compelling business reasons exist for such repurchases, we may use authorized but unissued shares to fund option exercises that occur during the first year following the conversion. If all existing options were exercised for authorized, but unissued shares of common stock following the conversion, stockholders would experience dilution of approximately 5.0% at the minimum of the offering range and 5.0% at the maximum of the offering range.

Limits on How Much Common Stock You May Purchase

          The minimum number of shares of common stock that may be purchased in the offering is 25.

If you are not currently a Atlantic Coast Federal Corporation stockholder –

          No person may purchase more than $750,000 (75,000 shares) of common stock. If any of the following persons purchases shares of common stock, their purchases, in all categories of the offering combined, when aggregated with your purchases, cannot exceed $1.5 million (150,000 shares) of common stock:

	•		your spouse or relatives of you or your spouse living in your house;
	•		companies, trusts or other entities in which you are a trustee, have a controlling beneficial interest or hold a senior position; or
	•		other persons who may be your associates or persons acting in concert with you.

          Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying deposit accounts registered to the same address will be subject to the overall purchase limitation of $1.5 million (150,000 shares) in all categories of the offering combined.

          See the detailed description of purchase limitations and definitions of “acting in concert” and “associate” in “The Conversion and Offering—Limitations on Common Stock Purchases.”

          If you are currently a Atlantic Coast Federal Corporation stockholder –

          In addition to the above purchase limitations, there is an ownership limitation for stockholders other than our employee stock ownership plan. Shares of common stock that you purchase in the offering individually and together with persons described above, plus any shares you and they receive in exchange for existing shares of Atlantic Coast Federal Corporation common stock, may not exceed 5% of the total shares of common stock to be issued and outstanding after the completion of the conversion.

          Subject to Office of Thrift Supervision approval, we may increase or decrease the purchase and ownership limitations at any time.

How You May Purchase Shares of Common Stock

          In the subscription offering and community offering, you may pay for your shares only by:

	(i)		personal check, bank check or money order made payable directly to Atlantic Coast Financial Corporation; or
	(ii)		authorizing us to withdraw funds from the types of Atlantic Coast Bank deposit accounts designated on the stock order form.

          Atlantic Coast Bank is not permitted to lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not use an Atlantic Coast Bank line of credit check or any type of third party check or wire transfer to pay for shares of common stock. Please do not submit cash.

          You may purchase shares of common stock in the offering by delivering a signed and completed original stock order form, together with full payment payable to Atlantic Coast Financial Corporation or authorization to withdraw funds from one or more of your Atlantic Coast Bank deposit accounts, provided that we receive the stock order form before 11:00 a.m., Eastern Time, on [Expiration Date], which is the end of the offering period. Checks and money orders will be immediately deposited in a segregated account with Atlantic Coast Bank or another insured depository institution upon receipt. We will pay interest calculated at Atlantic Coast Bank’s passbook savings rate from the date funds are received until completion or termination of the conversion. On your stock order form, you may not authorize direct withdrawal from an Atlantic Coast Bank individual retirement account. If you wish to use funds in an individual retirement account to purchase shares of our common stock, please see “—Using Individual Retirement Account Funds to Purchase Shares” below. You may not designate a withdrawal from Atlantic Coast Bank accounts with check-writing privileges. Please provide a check instead.

          Withdrawals from certificates of deposit to purchase shares of common stock in the offering may be made without incurring an early withdrawal penalty. If a withdrawal results in a certificate of deposit account with a balance less than the applicable minimum balance requirement, the certificate of deposit will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current passbook savings rate subsequent to the withdrawal. All funds authorized for withdrawal from

deposit accounts at Atlantic Coast Bank must be available in the accounts at the time the stock order is received. However, funds will not be withdrawn from an account until the completion of the offering and will earn interest at the applicable deposit account rate until that time. A hold will be placed on those funds when your stock order is received, making the designated funds unavailable to you.

          We are not required to accept copies or facsimiles of stock order forms. By signing the stock order form, you are acknowledging both receipt of this prospectus and that the shares of common stock are not deposits or savings accounts that are federally insured or otherwise guaranteed by Atlantic Coast Bank, Atlantic Coast Financial Corporation or the federal government.

Submitting Your Order in the Subscription and Community Offerings

          You may submit your stock order form by mail using the order reply envelope provided, by overnight courier to the indicated address on the stock order form, or by delivery to our Stock Information Center, which is located in our banking office at 10328 Deerwood Park Blvd., Jacksonville, Florida. Stock order forms may not be delivered to other Atlantic Coast Bank offices. Once submitted, your order is irrevocable unless the offering is terminated or extended beyond [Extension Date #1] or the number of shares of common stock to be sold is increased to more than 17,853,750 shares or decreased to fewer than 11,475,000 shares.

Using Individual Retirement Account Funds to Purchase Shares

          You may be able to subscribe for shares of common stock using funds in your individual retirement account. However, shares of common stock must be held in a self-directed retirement account, such as those offered by a brokerage firm. By regulation, Atlantic Coast Bank’s individual retirement accounts are not self-directed, so they cannot be invested in our common stock. If you wish to use some or all of the funds in your Atlantic Coast Bank individual retirement account, the applicable funds must be transferred to a self-directed account maintained by an independent trustee, such as a brokerage firm. If you do not have such an account, you will need to establish one before placing your stock order. An annual administrative fee may be payable to the independent trustee. Because individual circumstances differ and processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the [Expiration Date] offering deadline, for assistance with purchases using your individual retirement account or other retirement account that you may have at Atlantic Coast Bank or elsewhere. Whether you may use such funds for the purchase of shares in the offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

Delivery of Stock Certificates

          Certificates representing shares of common stock sold in the subscription and community offerings will be mailed by regular mail to the persons entitled thereto at the certificate registration address noted on the stock order form, as soon as practicable following consummation of the offering and receipt of all necessary regulatory approvals. It is possible that, until certificates for the common stock are delivered, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading.

You May Not Sell or Transfer Your Subscription Rights

          Office of Thrift Supervision regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or

transfer your subscription rights. We intend to take legal action, including reporting persons to federal agencies, against anyone who we believe has sold or transferred his or her subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights. On the stock order form, you may not add the names of others for joint stock registration who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. You may add only those who were eligible to purchase shares of common stock in the subscription offering at your date of eligibility. In addition, the stock order form requires that you list all deposit accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation, in the event of an oversubscription.

Deadline for Orders of Common Stock

          If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment for the shares of common stock, must be received (not postmarked) by the Stock Information Center located in our banking office at 10328 Deerwood Park Blvd., Jacksonville, Florida no later than 11:00 a.m., Eastern Time, on [Expiration Date].

          Once submitted, your order is irrevocable unless the offering is terminated or extended or the number of shares to be issued increases to more than 17,853,750 shares or decreases to less than 11,475,000 shares. We may extend the [Expiration Date] expiration date, without notice to you, until [Extension Date #1] . If the offering is extended beyond [Extension Date #1] , or if the offering range is increased or decreased, we will be required to resolicit purchasers before proceeding with the offering. In either of these cases, purchasers will have the right to maintain, change or cancel their orders. If we do not receive a written response from a purchaser to any resolicitation, the purchaser’s order will be cancelled and all funds received will be returned promptly with interest, and deposit account withdrawal authorizations will be cancelled. No extension may last longer than 90 days. All extensions, in the aggregate, may not last beyond [Extension Date #2] .

          Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 11:00 a.m., Eastern Time, on [Expiration Date], whether or not we have been able to locate each person entitled to subscription rights.

          TO ENSURE THAT EACH PERSON RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF THE OFFERING IN ACCORDANCE WITH FEDERAL LAW, NO PROSPECTUS WILL BE MAILED ANY LATER THAN FIVE DAYS PRIOR TO THE OFFERING EXPIRATION DATE OR HAND-DELIVERED ANY LATER THAN TWO DAYS PRIOR TO THE OFFERING EXPIRATION DATE.

Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares

          If we do not receive orders for at least 11,475,000 shares of common stock in the subscription, community and/or syndicated community offering, we may take several steps in order to issue the minimum number of shares of common stock in the offering range. Specifically, we may:

	•		increase the purchase and ownership limitations; and/or
	•		seek regulatory approval to extend the offering beyond the [Extension Date #1] expiration date, provided that any such extension will require us to resolicit subscriptions received in the offering.

Alternatively, we may terminate the offering, return funds with interest and cancel deposit account withdrawal authorizations.

Purchases by Officers and Directors

          We expect our directors and executive officers, together with their associates, to purchase 213,450 shares of common stock in the offering. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. Following the conversion, our directors and executive officers, together with their associates, are expected to own 1,263,973 shares of common stock, or 6.0% of our total outstanding shares of common stock at the midpoint of the offering range, including shares they receive in exchange for shares they currently own in Atlantic Coast Federal Corporation.

Market for Common Stock

          Publicly held shares of Atlantic Coast Federal Corporation’s common stock trade on the Nasdaq Global Market under the symbol “ACFC.” Upon completion of the conversion, the shares of common stock of Atlantic Coast Financial Corporation will replace Atlantic Coast Federal Corporation’s existing shares. We expect that Atlantic Coast Financial Corporation’s shares of common stock will trade on the Nasdaq Global Market under the trading symbol “ACFCD” for a period of 20 trading days after the completion of the offering. Thereafter, our trading symbol will revert to “ACFC.” In order to list our common stock on the Nasdaq Global Market, we are required to have at least three broker-dealers who will make a market in our common stock. Atlantic Coast Federal Corporation currently has 16 registered market makers. There can be no assurance that persons purchasing shares of common stock in the offering will be able to sell their shares at or above the $10.00 price per share.

Our Dividend Policy

          As of June 30, 2007, Atlantic Coast Federal Corporation currently paid a quarterly cash dividend of $0.14 per share, which equals $0.56 per share on an annualized basis. After the conversion, we intend to continue to pay cash dividends on a quarterly basis. After adjustment for the exchange ratio, we expect the annual dividends to equal $0.43, $0.36, $0.31 and $0.27 per share at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively, which represents an annual dividend yield of 4.3%, 3.6%, 3.1% and 2.7%, at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively, based upon a price of $10.00 per share. The amount of dividends that we intend to pay after the conversion will preserve the dividend amount that Atlantic Coast Federal Corporation stockholders currently receive, as adjusted to reflect the exchange ratio. However, the dividend rate and the continued payment of dividends will depend on a number of factors, including our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. No assurance can be given that we will continue to pay dividends or that they will not be reduced or eliminated in the future.

          See “Selected Consolidated Financial and Other Data of Atlantic Coast Federal Corporation and Subsidiaries” and “Market for the Common Stock” for information regarding our historical dividend payments.

Tax Consequences

          As a general matter, the conversion will not be a taxable transaction for federal or state income tax purposes to Atlantic Coast Federal, MHC, Atlantic Coast Federal Corporation, Atlantic Coast Bank, Atlantic Coast Financial Corporation, persons eligible to subscribe in the subscription offering, or existing

stockholders of Atlantic Coast Federal Corporation. Existing stockholders of Atlantic Coast Federal Corporation who receive cash in lieu of fractional share interests in shares of Atlantic Coast Financial Corporation common stock will recognize a gain or loss equal to the difference between the cash received and the tax basis of the fractional share.

Conditions to Completion of the Conversion

          We cannot complete the conversion and offering unless:

	•		The plan of conversion and reorganization is approved by at least a majority of votes eligible to be cast by members of Atlantic Coast Federal, MHC (depositors of Atlantic Coast Bank as of October 5, 2007);
	•		The plan of conversion and reorganization is approved by a vote of at least two-thirds of the outstanding shares of common stock of Atlantic Coast Federal Corporation, including shares held by Atlantic Coast Federal, MHC (because Atlantic Coast Federal, MHC owns more than 50% of the outstanding shares of Atlantic Coast Federal Corporation common stock, we expect that Atlantic Coast Federal, MHC will control the outcome of this vote);
	•		The plan of conversion and reorganization is approved by vote of at least a majority of the outstanding shares of common stock of Atlantic Coast Federal Corporation, excluding those shares held by Atlantic Coast Federal, MHC;
	•		We sell at least the minimum number of shares of common stock offered; and
	•		We receive the final approval of the Office of Thrift Supervision to complete the conversion and offering, however, such approval does not constitute a recommendation or endorsement of the plan of conversion and reorganization by that agency.

          Atlantic Coast Federal, MHC intends to vote its ownership interest in favor of the plan of conversion and reorganization. At August 31, 2007, Atlantic Coast Federal, MHC owned 63.8% of the outstanding shares of common stock of Atlantic Coast Federal Corporation. The directors and executive officers of Atlantic Coast Federal Corporation and their affiliates owned 679,225 shares of Atlantic Coast Federal Corporation, or 4.9% of the outstanding shares of common stock as of August 31, 2007. They have indicated their intention to vote those shares in favor of the plan of conversion and reorganization.

Decrease in Stockholders’ Rights for Existing Stockholders of Atlantic Coast Federal Corporation

          As a result of the conversion, existing stockholders of Atlantic Coast Federal Corporation will become stockholders of Atlantic Coast Financial Corporation. Some rights of stockholders of Atlantic Coast Financial Corporation will be reduced compared to the rights stockholders currently have in Atlantic Coast Federal Corporation. The reduction in stockholder rights results from differences between the federal and Maryland charters and bylaws, and from distinctions between federal and Maryland law. Many of the differences in stockholder rights under the articles of incorporation and bylaws of Atlantic Coast Financial Corporation are not mandated by Maryland law but have been chosen by management as being in the best interests of Atlantic Coast Financial Corporation and all of its stockholders. The differences in stockholder rights in the articles of incorporation and bylaws of Atlantic Coast Financial Corporation include the following: (i) approval by at least 80% of outstanding shares required to remove a director for cause; (ii) greater lead time required for stockholders to submit proposals for new business or nominate directors; (iii) approval by at least 80% of outstanding shares required to amend the articles of incorporation and bylaws; (iv) a residency requirement for directors; and (v) approval by at least 80%

of outstanding shares required to approve business combinations involving an interested stockholder. See “Comparison of Stockholders’ Rights For Existing Stockholders of Atlantic Coast Federal Corporation” for a discussion of these differences.

How You Can Obtain Additional Information – Stock Information Center

          Our banking office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, please call or visit our Stock Information Center, located in our banking office at 10328 Deerwood Park Blvd., Jacksonville, Florida. The Stock Information Center is open Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern Time. The Stock Information Center will be closed weekends and bank holidays. Other Atlantic Coast Bank offices will not accept stock order forms or proxy cards. The Stock Information Center’s toll-free telephone number is (877) 565-8569.

RISK FACTORS

          You should consider carefully the following risk factors in evaluating an investment in the shares of common stock.

Risks Related to Our Business

The Loan Portfolio Possesses Increased Risk Due To Our Rapid Growth And The Overall Unseasoned Nature Of The Portfolio.

          From December 31, 2002 to June 30, 2007, the gross balance of our loan portfolio has grown from $384.3 million to $670.2 million, an increase of 74.4%. Much of this growth is in one- to four-family residential properties generally located throughout southeastern Georgia and northeastern Florida. As a result of this rapid growth, a significant portion of the loan portfolio is unseasoned, with the risk that these loans may not have had sufficient time to perform to properly indicate the potential magnitude of losses. During this time frame, we have also continued to experience a historically low interest rate environment. The unseasoned adjustable rate loans have not, therefore, been subject to an interest rate environment that causes them to adjust to the maximum level. Adjustable rate loans possess repayment risks resulting from potentially increasing payment obligations by the borrower as a result of repricing. At June 30, 2007, our loan portfolio included $226.9 million in adjustable rate one- to four-family residential real estate loans that made up 33.9% of the loan portfolio.

The Current Interest Rate Environment Has Had And Will Have An Adverse Effect On Our Net Interest Income.

          Net income is the amount by which net interest income and non-interest income exceeds non-interest expenses and the provision for loan losses. Net interest income makes up a majority of our income and is based on the difference between:

	•		the interest income we earn on our interest-earning assets, such as loans and securities; and
	•		the interest we pay on our interest-bearing liabilities, such as deposits and borrowings.

          A substantial percentage of our interest-earning assets, such as residential mortgage loans, have longer maturities than our interest-bearing liabilities, which consist primarily of certificates of deposit and borrowings. As a result, our net interest income is adversely affected if the average cost of our interest-bearing liabilities increases more rapidly than the average yield on our interest-earning assets.

          Long-term interest rates are normally higher than short-term interest rates. An “inverted yield curve” occurs when short-term interest rates are higher than long-term interest rates. The current inverted yield curve interest rate environment has had a negative impact on our net interest rate spread and net interest margin resulting in lower net interest income. An inverted/flat yield curve environment for an extended duration will continue to reduce our profitability. Our average net interest rate spread (the difference between the weighted-average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities) decreased to 2.6% for the year ended December 31, 2006 from 2.6% and 3.3% for the years ended December 31, 2005 and 2004, respectively, and our net interest margin (net interest income as a percent of average interest-earning assets) decreased to 3.0% for the year ended December 31, 2006 from 3.1% and 3.6% for the years ended December 31, 2005 and 2004, respectively. For the six months ended June 30, 2007, our net interest rate spread and net interest margin were 2.24% and 2.67%, respectively. We expect that our net interest rate spread and net interest margin will continue to compress in the current interest rate environment, which will have a negative effect on our profitability in 2007.

See “Selected Financial and Other Data of Atlantic Coast Federal Corporation and Subsidiaries” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management.”

Our Operating Expenses Are High As A Percentage Of Our Net Interest Income and Non-Interest Income, Making It More Difficult To Maintain Profitability.

          Our non-interest expense, which consists primarily of the costs associated with operating our business, represents a high percentage of the income we generate. The cost of generating our income is measured by our efficiency ratio, which represents non-interest expense divided by the sum of our net interest income and our non-interest income. Our efficiency ratio has been affected by our efforts to expand our branch network and the corresponding infrastructure, as well as by the inverted yield curve, which affects our ability to originate loans with interest rates sufficiently in excess of our deposit and borrowing costs. If we are able to lower our efficiency ratio, our ability to generate income from our operations will be more effective. For the years ended December 31, 2006 and 2005, our efficiency ratios were 73.1% and 69.9%, respectively. Generally, this means that we spent $0.73 and $0.70 during 2006 and 2005 to generate $1.00 of income. This reflects a trend where our efficiency ratio has deteriorated from 63.5% to 73.1% for the five-year period ended December 31, 2006. For the six months ended June 30, 2007 and 2006, our efficiency ratio was 80.6% and 71.2% respectively. Following the conversion and offering, we intend to implement stock benefit plans which will further affect our efficiency ratio through increased compensation expense. We anticipate that the net proceeds from the offering will allow us to increase our interest earning assets (such as loans and investments) and our interest income, which should improve our efficiency ratio.

The Loan Portfolio Possesses Increased Risk Due To Our Growing Number Of Commercial Real Estate, Commercial Business And Construction Loans Which Could Increase Our Level Of Provision For Loan Losses.

          Our outstanding commercial real estate, commercial business and construction loans accounted for approximately 17.6% of the total loan portfolio as of June 30, 2007. Generally, management considers these types of loans to involve a higher degree of risk compared to permanent first mortgage loans on one- to four-family, owner occupied residential properties. These loans have higher risks than permanent loans secured by residential real estate for the following reasons:

	•		Commercial Real Estate and Commercial Business Loans. Repayment is dependent on income being generated by the rental property or business in amounts sufficient to cover operating expenses and debt service.
	•		Commercial and Multi-Family Construction Loans. Repayment is dependent upon the completion of the project and income being generated by the rental property or business in amounts sufficient to cover operating expenses and debt service.
	•		Single Family Construction Loans. Repayment is dependent upon the successful completion of the project and the ability of the borrower to repay the loan from the sale of the property or obtaining permanent financing.

          Management plans to increase emphasis on higher net interest margin products such as: construction, commercial business and commercial real estate loans, while maintaining a moderate growth of one- to four-family residential real estate loans. As such, management may determine it necessary to increase the level of provision for loan losses. Increased provisions for loan losses would negatively affect our results of operation.

If The Allowance For Loan Losses Is Not Sufficient To Cover Actual Losses, Income May Be Negatively Affected.

          In the event that loan customers do not repay their loans according to their terms and the collateral security for the payments of these loans is insufficient to pay any remaining loan balance, we may experience significant loan losses. Such credit risk is inherent in the lending business, and failure to adequately assess such credit risk could have a material adverse affect on our financial condition and results of operations. Management makes various assumptions and judgments about the collectibility of the loan portfolio, including the creditworthiness of the borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of the loans. In determining the amount of the allowance for loans losses, management reviews the loan portfolio and Atlantic Coast Bank’s historical loss and delinquency experience, as well as overall economic conditions. If management’s assumptions are incorrect, the allowance for loan losses may be insufficient to cover probable incurred losses in the loan portfolio, resulting in additions to the allowance. The allowance for loan losses is also periodically reviewed by the Office of Thrift Supervision, who may disagree with the allowance and require us to increase such amount. Additions to the allowance for loans losses would be made through increased provisions for loan losses and would negatively affect our results of operations. At June 30, 2007, our allowance for loan losses was $5.1 million, or 0.75% of total loans and 161.2% of non-performing loans.

We Depend On Our Management Team To Implement Our Business Strategy And Execute Successful Operations And We Could Be Harmed By The Loss Of Their Services.

          We are dependent upon the services of our senior management team. Our strategy and operations are directed by the senior management team, approximately one-third of whom have joined us since 2004 and each of whom has over 10 years of financial institution experience. Currently, only the president and chief executive officer, who has served in such position since 1983, and the chief administrative officer, have an employment contract. Any loss of the services of the president and chief executive officer or other members of the management team could impact our ability to implement our business strategy, and have a material adverse effect on our results of operations and our ability to compete in our markets.

Future Changes in Interest Rates Could Reduce Our Net Income.

          To be profitable, we must earn more money in interest received on loans and investments than what we pay in interest to depositors and lenders. The Federal Reserve Board increased the Federal Funds rate four times during 2006, from 4.25% to 5.25%, with all increases occurring during the first six months of 2006. On September 18, 2007, the Federal Reserve Board reduced the Federal Funds rate to 4.75%. The Federal Funds rate has a direct correlation to general rates of interest, including our interest-bearing deposits. Atlantic Coast Bank’s mix of asset and liabilities are considered to be sensitive to interest rate changes. Accordingly, if interest rates rise, net interest income could be reduced because interest paid on interest-bearing liabilities, including deposits and borrowings, increases more quickly than interest received on interest-earning assets, including loans and mortgage-backed and related securities. In addition, rising interest rates may negatively affect income because higher rates may reduce the demand for loans and the value of mortgage-related and investment securities. However, in a declining rate environment, we may be susceptible to the prepayment or refinancing of high rate loans, which could reduce net interest income.

Strong Competition In Our Primary Market Area May Reduce Our Ability To Attract And Retain Deposits And Also Increase Our Cost of Funds.

          We operate in a very competitive market for the attraction of deposits, the primary source of our funding. Historically, our most direct competition for deposits has come from credit unions, community

banks, large commercial banks and thrift institutions within our primary market areas. In recent years competition has also come from institutions that largely deliver their services over the internet. Such competitors have the competitive advantage of lower infrastructure costs. Particularly in times of extremely low or extremely high interest rates, we have faced significant competition for investors’ funds from short-term money market securities and other corporate and government securities. During periods of regularly increasing interest rates, competition for interest bearing deposits increases as customers, particularly time deposit customers, tend to move their accounts between competing businesses to obtain the highest rates in the market. As a result, Atlantic Coast Bank incurs a higher cost of funds in an effort to attract and retain customer deposits. We strive to grow our lower cost deposits, such as non-interest bearing checking accounts, in order to reduce our cost of funds.

Strong Competition In Our Primary Market Area May Reduce Our Ability To Obtain Loans And Also Decrease Our Yield On Loans.

          We are located in a competitive market that affects our ability to obtain loans through origination or purchase as well as originating them at rates that provide an attractive yield. Competition for loans comes principally from mortgage bankers, commercial banks, other thrift institutions, nationally based homebuilders and credit unions. Internet based lenders have also become a greater competitive factor in recent years. Such competition for the origination and purchase of loans may limit future growth and earnings prospects.

If Economic Conditions Deteriorate In Our Primary Market Areas of Jacksonville, Florida And Ware County, Georgia, Our Results Of Operations And Financial Condition Could Be Adversely Impacted As Borrowers’ Ability To Repay Loans Declines And The Value Of The Collateral Securing Loans Decreases.

          Our financial results may be adversely affected by changes in prevailing economic conditions, including decreases in real estate values, changes in interest rates which may cause a decrease in interest rate spreads, adverse employment conditions, the monetary and fiscal policies of the federal and the Georgia and Florida state governments and other significant external events. As of June 30, 2007, approximately 66.6% of our loan portfolio consists of loans secured by one- to four-family residences. About 27.4% of these loans are secured by real estate located in Georgia, predominately in Ware County, the county in which Waycross, Georgia is located. As of the same date, about 64.5% of our one– to four-family residential loan portfolio is secured by real estate located in Florida, primarily in the Jacksonville, Florida, metropolitan area. Due to the significant portion of real estate loans in these areas in the loan portfolio, decreases in real estate values could adversely affect the value of property used as collateral. In the event that we are required to foreclose on a property securing a mortgage loan or pursue other remedies in order to protect our investment, there can be no assurance that we will recover funds in an amount equal to any remaining loan balance as a result of prevailing general economic or local conditions, real estate values and other factors associated with the ownership of real property. As a result, the market value of the real estate or other collateral underlying the loans may not, at any given time, be sufficient to satisfy the outstanding principal amount of the loans. Consequently, we would sustain loan losses and potentially incur a higher provision for loan loss expense. Adverse changes in the economy may also have a negative effect on the ability of borrowers to make timely repayments of their loans, which would have an adverse impact on earnings.

Future Economic Growth In Our Florida Market Area Is Likely To Be More Moderate.

          Since 2000, the Jacksonville metropolitan area has been one of the fastest growing economies in the United States. Consequently, the area has experienced substantial growth in population, new business formation and public works spending. Due to the moderation of economic growth and migration into our

market area and the downturn in the real estate market, management believes that growth in our market area will be moderate in the near term. As of June 30, 2007, growth in our one- to four-family residential mortgages, as a percentage of total loans, was virtually flat compared to the year-end 2006 balance. Growth in the first mortgage loan portfolio has been negatively impacted by a slowing in residential real estate sales activity in our markets. Sales of existing one- to four-family homes have decreased approximately 24.0% from the second quarter of 2006 to the second quarter of 2007. We expect this trend to continue in 2007. A decrease in existing and new home sales decreases lending opportunities and may negatively affect our income. In addition, the Jacksonville metropolitan area has the 15^th highest foreclosure rate of one- to four-family residences in the United States. Some of our commercial real estate loans secured by properties in the early stages of development could also be adversely effected by a downturn in Florida’s real estate market or in general economic conditions. Further declines in the real estate market could have a significant effect on the Florida economy, thus negatively affecting our customer funds on deposit, loan demand and our branch expansion efforts.

We Operate In A Highly Regulated Environment And May Be Adversely Affected By Changes In Laws And Regulations.

          Atlantic Coast Bank is subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, its chartering authority, and by the Federal Deposit Insurance Corporation, which insures Atlantic Coast Bank’s deposits. As a savings and loan holding company, we are subject to regulation and supervision by the Office of Thrift Supervision. Such regulation and supervision govern the activities in which financial institutions and their holding companies may engage and are intended primarily for the protection of the federal deposit insurance fund and depositors. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operations of financial institutions, the classification of assets by financial institutions and the adequacy of financial institutions’ allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, could have a material impact on Atlantic Coast Bank and Atlantic Coast Federal Corporation or its successor.

          Atlantic Coast Bank’s operations are also subject to extensive regulation by other federal, state and local governmental authorities, and are subject to various laws and judicial and administrative decisions that impose requirements and restrictions on operations. These laws, rules and regulations are frequently changed by legislative and regulatory authorities. There can be no assurance that changes to existing laws, rules and regulations, or any other new laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect the business, financial condition or prospects.

Risks Related to the Conversion and Offering

The Future Price Of The Shares Of Common Stock May Be Less Than The $10.00 Purchase Price Per Share In The Offering.

          We cannot assure you that if you purchase shares of common stock in the offering you will be able to sell them later at or above the $10.00 purchase price in the offering. In several cases, shares of common stock issued by newly converted savings institutions or mutual holding companies have traded below the price at which such shares were sold in the offering conducted by those companies. The aggregate purchase price of the shares of common stock sold in the offering will be based on an independent appraisal. The independent appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The independent appraisal is based on certain estimates, assumptions and projections, all of which are subject

to change from time to time. After our shares begin trading, the trading price of our common stock will be determined by the marketplace, and may be influenced by many factors, including prevailing interest rates, the overall performance of the economy, investor perceptions of Atlantic Coast Financial Corporation and the outlook for the financial institutions industry in general.

Our Failure To Utilize Effectively The Net Proceeds Of The Offering Could Reduce Our Return On Stockholders’ Equity And Our Return On Assets And Negatively Impact The Value Of Our Common Stock.

          Atlantic Coast Financial Corporation intends to contribute between $56.2 million and $76.3 million of the net proceeds of the offering (or $87.8 million at the adjusted maximum of the offering range) to Atlantic Coast Bank. Atlantic Coast Financial Corporation may use the remaining net proceeds to invest in short-term investments, repurchase shares of common stock, pay dividends or for other general corporate purposes. Atlantic Coast Financial Corporation also expects to use a portion of the net proceeds it retains to fund a loan for the purchase of shares of common stock in the offering by the employee stock ownership plan. Atlantic Coast Bank may use the net proceeds it receives to fund new loans, purchase investment securities, acquire financial institutions or financial services companies, build new branches or acquire branches or for other general corporate purposes. With the exception of the loan to the employee stock ownership plan, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have significant flexibility in determining the amount of the net proceeds we apply to different uses and the timing of such applications. We have not established a timetable for the effective deployment of the net proceeds, and we cannot predict how long we will require to effectively deploy the net proceeds.

          Additionally, net income divided by average stockholders’ equity, known as “return on equity” and net income divided by average total assets, known as “return on assets,” are ratios many investors use to compare the performance of a financial institution to its peers. Our return on equity ratio for the six months ended June 30, 2007 and for the year ended December 31, 2006 was 3.11% and 5.48%, respectively, compared to an average of 5.18% for all publicly traded savings institutions as of September 28, 2007. Our return on assets ratio for the six months ended June 30, 2007 and for the year ended December 31, 2006 was 0.32% and 0.66%, respectively, compared to an average of 0.54% for all publicly traded savings institutions as of September 28, 2007. Our return on equity has decreased from 6.05% for the year ended December 31, 2004 to 5.48% for the year ended December 31, 2006. Our return on assets, however, has increased from 0.56% for the year ended December 31, 2004 to 0.66% for the year ended December 31, 2006. Until we can increase our net interest income and non-interest income and effectively deploy the additional capital raised in the offering, we expect our return on equity and our return on assets to be below the industry average, which may negatively affect the value of our common stock.

The Ownership Interest Of Management And Employees Could Enable Insiders To Prevent A Merger That May Provide Stockholders A Premium For Their Shares.

          The shares of common stock that our directors and officers intend to purchase in the offering, when combined with the shares that they will receive in the exchange for their existing shares of Atlantic Coast Federal Corporation common stock is expected to result in management and the board controlling approximately 6.0% of our outstanding shares of common stock at the midpoint of the offering range. As of August 31, 2007, directors and officers owned 4.9% of the outstanding shares of Atlantic Coast Federal Corporation common stock. These shares, when combined with the 6.0% of the shares in the offering expected to be purchased by our employee stock ownership plan, will result in management and employees controlling a significant percentage of our common stock. If these individuals were to act together, they could have significant influence over the outcome of any stockholder vote. This voting power may discourage a potential sale of Atlantic Coast Financial Corporation that our stockholders may

desire. In addition, the total voting power of management and employees could, in the future, exceed 16.5% of our outstanding shares of common stock if a stock-based incentive plan is adopted in the future. Such voting power could enable management and employees as a group to defeat any stockholder matter that requires an 80% vote, including removal of directors, and certain amendments to our articles of incorporation and bylaws.

There May Be a Limited Market For Our Common Stock, Which May Lower Our Stock Price And Make It More Difficult For Investors To Sell Their Shares Of Our Common Stock.

          We currently trade on the Nasdaq Global Market and plan to continue to do so following the conversion. However, we cannot guarantee that the shares of common stock will be regularly traded. Even if a liquid market develops for our common stock, there is no assurance that it can be maintained. An active, orderly trading market depends on the presence and participation of willing buyers and sellers which neither Atlantic Coast Financial Corporation nor the market makers in the common stock can control. This may affect your ability to sell your shares on short notice, and the sale of a large number of shares at one time could temporarily depress the market price of our common stock. For these reasons, our common stock should not be viewed as a short-term investment.

          Additionally, the aggregate purchase price of common stock sold in the offering is based on an independent appraisal. After our shares begin trading, the marketplace will determine the price per share, which may be influenced by various factors, such as prevailing interest rates, investor perceptions of Atlantic Coast Financial Corporation, economic conditions and the outlook for financial institutions. Price fluctuations may be unrelated to the operating performance of particular companies. In several cases, due to market volatility, shares of common stock of newly converted savings institutions traded below the price at which the shares were sold in the companies’ initial public offerings. We cannot assure you that, after the conversion, the trading price of our common stock will be at or above $10.00.

The Implementation Of The Stock-Based Incentive Plan May Dilute Your Ownership Interest.

          We intend to adopt a new stock-based incentive plan following the conversion and offering, subject to receipt of stockholder approval. This stock-based incentive plan may be funded either through open market purchases or from the issuance of authorized but unissued shares of common stock of Atlantic Coast Financial Corporation. While our intention is to fund this plan through open market purchases, stockholders would experience a reduction in ownership interest totaling 6.3% at the maximum of the offering range in the event newly issued shares of our common stock are used to fund stock options or shares of restricted common stock under the plan in an amount equal to up to 7.5% and 3.0%, respectively, of the shares sold in the offering. In the event we adopt the plan within one year following the conversion, shares of restricted stock to be issued and options to be granted under the stock-based incentive plan will be limited in order to ensure that the aggregate number of shares of restricted common stock and option awards subject to the new stock-based incentive plan and the 2005 Recognition and Retention Plan and the 2005 Stock Option Plan do not exceed 4.0% and 10.0%, respectively, of the total shares outstanding (including shares issued by Atlantic Coast Financial Corporation in exchange for existing shares of Atlantic Coast Federal Corporation) following completion of the conversion and the offering.

Additional Expenses Following The Conversion From The Compensation And Benefit Expenses Associated With The Implementation Of The New Stock-Based Incentive Benefit Plan Will Adversely Affect Our Profitability.

          We intend to adopt a new stock-based incentive plan after the offering under which plan participants would be awarded restricted shares of our common stock (at no cost to them) or options to

purchase shares of our common stock. If the stock-based incentive plan is implemented and approved by stockholders within one year of the completion of the conversion and offering, the number of restricted shares of common stock or options granted under any initial stock-based incentive plan may not exceed 3.0% and 7.5%, respectively, of the shares sold in the conversion and offering. If we award restricted shares of common stock or grant options in excess of these amounts under a stock-based incentive plan adopted more than one year after the completion of the conversion and offering, our costs would increase further.

          Following the conversion and offering, our non-interest expenses are likely to increase as we will recognize additional annual employee compensation and benefit expenses stemming from the shares granted to employees and executives under our stock-based incentive plan. We cannot predict the actual amount of these new stock-related compensation and benefit expenses because applicable accounting practices require that expenses be based on the fair market value of the shares of common stock at specific points in the future; however, we expect them to be material. In addition, we would recognize expense for our employee stock ownership plan when shares are committed to be released to participants’ accounts (i.e., as the loan used to acquire these shares is repaid) and would recognize expense for restricted stock awards and stock options over the vesting period of awards made to recipients. The expense in the first year following the conversion and offering has been estimated to be approximately $466,000 ($289,000 after tax) at the maximum of the offering range as set forth in the pro forma financial information under “Pro Forma Data,” assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the price of our common stock. For further discussion of our proposed stock-based plans, see “Management—Benefit Plans.”

Various Factors May Make Takeover Attempts More Difficult To Achieve.

          Our Board of Directors has no current intention to sell control of Atlantic Coast Financial Corporation. Provisions of our articles of incorporation and bylaws, federal regulations, Maryland law and various other factors may make it more difficult for companies or persons to acquire control of Atlantic Coast Financial Corporation without the consent of our Board of Directors. You may want a takeover attempt to succeed because, for example, a potential acquiror could offer a premium over the then prevailing price of our common stock. The factors that may discourage takeover attempts or make them more difficult include:

	•		Office of Thrift Supervision Regulations. Office of Thrift Supervision Regulations prohibit, for three years following the completion of a conversion, the direct or indirect acquisition of more than 10% of any class of equity security of a converted savings institution or its holding company without the prior approval of the Office of Thrift Supervision.
	•		Articles of incorporation and statutory provisions. Provisions of the articles of incorporation and bylaws of Atlantic Coast Financial Corporation and Maryland law may make it more difficult and expensive to pursue a takeover attempt which management opposes, even if the takeover is favored by a majority of our stockholders. These provisions also would make it more difficult to remove our current Board of Directors or management, or to elect new directors. Specifically, our articles of incorporation provide that certain mergers or acquisitions must be approved by stockholders owning at least 80% of our shares of common stock, unless the transaction has been approved by a majority of the disinterested directors or certain fair price and procedure requirements have been satisfied. Additional provisions include limitations on voting rights of beneficial owners of more than 10% of our common stock, the election of directors to staggered terms of three years and not permitting cumulative voting in the election of

			directors. Our bylaws also contain provisions regarding the timing and content of stockholder proposals and nominations and qualification for service on the Board of Directors.
	•		Issuance of stock options and restricted stock. We also intend to issue stock options and shares of restricted stock to key employees and directors that will require payments to them in connection with a change in control of Atlantic Coast Financial Corporation. These payments may have the effect of increasing the costs of acquiring Atlantic Coast Financial Corporation, thereby discouraging future takeover attempts.

The Rights Of Existing Stockholders Of Atlantic Coast Federal Corporation Will Be Reduced Under Atlantic Coast Financial Corporation’s Articles Of Incorporation And Bylaws.

          As a result of the conversion, existing stockholders of Atlantic Coast Federal Corporation will become stockholders of Atlantic Coast Financial Corporation. Some rights of stockholders of Atlantic Coast Financial Corporation will be reduced compared to the rights stockholders currently have in Atlantic Coast Federal Corporation. Many of the differences in stockholder rights under our articles of incorporation and bylaws, while not mandated by Maryland law, are permitted and have been chosen by management as being in the best interests of Atlantic Coast Financial Corporation and all of our stockholders.

          For example, current stockholders must submit nominations for election of directors at an annual meeting of stockholders and any new business to be taken up at such a meeting by filing the proposal in writing with Atlantic Coast Federal Corporation at least five days before the date of any such meeting. However, Atlantic Coast Financial Corporation’s bylaws generally provide that any stockholder desiring to make a nomination for the election of directors or a proposal for new business at an annual meeting of stockholders must submit written notice to Atlantic Coast Financial Corporation at least 90 days prior to the anniversary date of the mailing of proxy materials in connection with the immediately preceding annual meeting of stockholders. Similarly, under the current federal charter, special meetings of stockholders may be called by the holders of not less than one-tenth of the outstanding capital stock entitled to vote at the meeting. However, Atlantic Coast Financial Corporation’s bylaws provide that special meetings of the stockholders may be called by the president, by a majority of the whole board, or upon the written request of stockholders entitled to cast at least a majority of all votes. See “Comparison of Stockholders’ Rights for Existing Stockholders of Atlantic Coast Federal Corporation” for a discussion of these differences.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
OF
ATLANTIC COAST FEDERAL CORPORATION AND SUBSIDIARIES

          The summary financial information presented below is derived in part from the consolidated financial statements of Atlantic Coast Federal Corporation. The following is only a summary and you should read it in conjunction with the consolidated financial statements and notes beginning on page F-1. The information at December 31, 2006 and 2005 and for the years ended December 31, 2006, 2005 and 2004 is derived in part from the audited consolidated financial statements of Atlantic Coast Federal Corporation that appear in this prospectus. The information at December 31, 2004, 2003 and 2002 and for the years ended December 31, 2003 and 2002 is derived in part from audited consolidated financial statements that do not appear in this prospectus. The operating data for the six months ended June 30, 2007 and 2006 and the financial condition data at June 30, 2007 were not audited. However, in the opinion of management of Atlantic Coast Federal Corporation, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the unaudited periods have been made. No adjustments were made other than normal recurring entries. The results of operations for the six months ended June 30, 2007 are not necessarily indicative of the results of operations that may be expected for the entire year.

		At
		June 30,				At December 31,
		2007				2006				2005				2004				2003				2002
		(In Thousands)
Selected Consolidated Financial Condition Data:
Total assets		$	898,415			$	843,079			$	744,116			$	637,678			$	498,417			$	447,721
Cash and cash equivalents			40,036				41,057				37,959				25,708				8,996				13,975
Securities available for sale, at fair value			126,857				99,231				71,965				53,363				26,039				28,599
Loans receivable, net			668,837				639,517				580,441				517,711				435,622				379,778
Federal Home Loan Bank of Atlanta stock, at cost			7,988				7,948				7,074				5,511				3,082				2,305
Deposits			598,091				573,052				516,321				435,683				392,256				360,880
Total borrowings			205,500				173,000				129,000				100,314				60,971				45,443
Total stockholders’ equity			89,097				91,087				92,918				98,700				43,218				38,924

		Six Months Ended
		June 30,								Years Ended December 31,
		2007				2006				2006				2005				2004				2003				2002
		(Dollars in Thousands, except per share amounts)
Selected Consolidated Operating Data:
Total interest income		$	27,022			$	21,670			$	46,407			$	37,254			$	31,772			$	31,212			$	30,813
Total interest expense			16,131				11,012				24,747				17,139				11,643				11,781				13,035
Net interest income			10,891				10,658				21,660				20,115				20,129				19,431				17,778
Provision for loan losses			805				280				475				2,121				2,975				4,238				3,683
Net interest income after provision for loan losses			10,086				10,378				21,185				17,994				17,154				15,193				14,095
Non-interest income			3,888				4,077				8,005				7,937				5,207				7,533				5,388
Non-interest expense			11,919				10,488				21,679				19,616				17,256				15,911				14,711
Income before income tax expense			2,055				3,967				7,511				6,315				5,105				6,815				4,772
Income tax expense(1)			635				1,266				2,382				1,290				1,815				2,398				1,585
Net income		$	1,420			$	2,701			$	5,129			$	5,025			$	3,290			$	4,417			$	3,187
Earnings per share:
Basic		$	0.11			$	0.20			$	0.38			$	0.36			$	0.33			$	0.51			$	—
Earnings per share:
Diluted		$	0.11			$	0.20			$	0.38			$	0.36			$	0.33			$	0.51			$	—

		At or For the Six
		Months Ended
		June 30,								At or For the Years Ended December 31,
		2007				2006				2006				2005				2004				2003				2002
Selected Consolidated Financial Ratios and Other Data:
Performance Ratios:
Return on assets (ratio of net income to average total assets)(2)			0.32	%			0.71	%			0.66	%			0.71	%			0.56	%			0.91	%			0.76	%
Return on equity (ratio of net income to average equity)(2)			3.11	%			5.80	%			5.48	%			5.07	%			6.05	%			10.77	%			8.49	%
Dividend payout ratio(2)(3)			245.45	%			95.00	%			110.53	%			72.22	%			—	%			—	%			—	%
Average interest rate spread(2)(4)			2.24	%			2.62	%			2.55	%			2.62	%			3.29	%			3.98	%			4.06	%
Net interest margin(2)(5)			2.67	%			3.04	%			2.99	%			3.06	%			3.64	%			4.25	%			4.45	%
Efficiency ratio(6)			80.65	%			71.18	%			73.08	%			69.93	%			68.11	%			59.01	%			63.50	%
Operating expense to average total assets(2)			2.72	%			2.77	%			2.78	%			2.78	%			2.95	%			3.28	%			3.50	%
Average interest-earning assets to average interest-bearing liabilities			110.70	%			113.39	%			113.01	%			116.92	%			116.63	%			110.55	%			112.03	%
Asset Quality Ratios:
Non-performing assets to total assets			0.55	%			0.53	%			0.40	%			0.39	%			1.09	%			1.73	%			0.90	%
Non-performing loans to total loans			0.47	%			0.62	%			0.48	%			0.45	%			1.28	%			1.72	%			0.75	%
Allowance for loan losses to non-performing loans			161.24	%			121.20	%			154.21	%			175.36	%			59.42	%			87.13	%			161.96	%
Allowance for loan losses to total loans			0.75	%			0.75	%			0.73	%			0.78	%			0.75	%			1.47	%			1.20	%
Net charge-offs to average outstanding loans			0.14	%			0.08	%			0.06	%			0.27	%			1.16	%			0.57	%			0.76	%
Capital Ratios:
Total capital to risk-weighted assets			12.6	%			14.6	%			13.8	%			15.7	%			17.4	%			12.9	%			12.6	%
Tier I capital to risk-weighted assets			11.8	%			13.8	%			13.1	%			15.0	%			16.8	%			11.7	%			11.4	%
Tier I capital to average assets			8.1	%			9.8	%			9.3	%			10.0	%			11.6	%			8.1	%			8.4	%
Average equity to average assets			10.43	%			12.29	%			12.00	%			14.07	%			9.29	%			8.46	%			8.93	%
Other Data:
Number of full service offices			13				13				13				12				12				12				10
Number of loans			13,529				13,599				14,679				15,151				15,840				15,378				16,558
Number of deposit accounts(7)			45,174				46,243				49,896				51,738				56,962				65,954				68,253

		For the Six Months
		Ended June 30,								For the Years Ended December 31,
		2007				2006				2006				2005				2004				2003				2002
		(In thousands)
Dividends paid to public stockholders		$	1,249			$	962			$	2,048			$	1,384			$	—			$	—			$	—
Dividends paid to Atlantic Coast Federal, MHC			—				—				—				524				—				—				—
Total dividends paid		$	1,249			$	962			$	2,048			$	1,908			$	—			$	—			$	—

FORWARD-LOOKING STATEMENTS

          This prospectus contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

	•		statements of our goals, intentions and expectations;
	•		statements regarding our business plans, prospects, growth and operating strategies;
	•		statements regarding the asset quality of our loan and investment portfolios; and
	•		estimates of our risks and future costs and benefits.

          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 assumptions with respect to future business strategies and decisions that are subject to change.

          The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

	•		general economic conditions, either nationally or in our market areas, that are worse than expected;
	•		competition among depository and other financial institutions;
	•		inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;
	•		adverse changes in the securities markets;
	•		changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
	•		our ability to enter new markets successfully and capitalize on growth opportunities;
	•		our ability to successfully integrate acquired entities, if any;
	•		changes in consumer spending, borrowing and savings habits;
	•		changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the Financial Accounting Standards Board; and
	•		changes in our organization, compensation and benefit plans.

          Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 20.

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

          Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the aggregate net proceeds will be between $112.4 million and $152.6 million, or $175.7 million if the offering range is increased by 15%. Atlantic Coast Financial Corporation expects to contribute to Atlantic Coast Bank not less than 50% of the net proceeds. We intend to retain between $49.3 million and $67.0 million of the net proceeds, or $77.1 million if the offering range is increased by 15% (excluding the portion of the net proceeds loaned to our employee stock ownership plan). Between $6.9 million and $9.3 million, or $10.7 million if the offering range is increased by 15%, will be used for the loan to the employee stock ownership plan to fund its purchase of shares of common stock in the offering.

          A summary of the anticipated net proceeds at the minimum, midpoint, maximum and adjusted maximum of the offering range and distribution of the net proceeds is as follows:

		Based Upon the Sale at $10.00 Per Share of
																										Maximum, As
		Minimum								Midpoint								Maximum								Adjusted
		11,475,000 Shares								13,500,000 Shares								15,525,000 Shares								17,853,750 Shares (1)
						Percent								Percent								Percent								Percent of
						of Net								of Net								of Net								Net
		Amount				Proceeds				Amount				Proceeds				Amount				Proceeds				Amount				Proceeds
		(Dollars in thousands)
Offering proceeds		$	114,750							$	135,000							$	155,250							$	178,538
Less offering expenses			2,393								2,536								2,679								2,843
Net offering proceeds		$	112,357				100.0	%		$	132,464				100.0	%		$	152,571				100.0	%		$	175,695				100.0	%
Distribution of net proceeds:
To Atlantic Coast Bank		$	56,179				50.0	%		$	66,232				50.0	%		$	76,286				50.0	%		$	87,848				50.0	%
To fund loan to employee stock ownership plan		$	6,885				6.1	%		$	8,100				6.1	%		$	9,315				6.1	%		$	10,712				6.1	%
Retained by Atlantic Coast Financial Corporation		$	49,293				43.9	%		$	58,132				43.9	%		$	66,970				43.9	%		$	77,135				43.9	%

          Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of Atlantic Coast Bank’s deposits. The net proceeds may vary because total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription and community offerings.

Atlantic Coast Financial Corporation May Use the Proceeds it Retains From the Offering:

	•		to fund a loan to the employee stock ownership plan to purchase shares of common stock in the offering;
	•		to finance the acquisition of financial institutions or other financial service companies as opportunities arise, particularly in northeastern Florida or southeastern Georgia, although we do not currently have any agreements or understandings regarding any specific acquisition transaction and it is impossible to determine when, if ever, such opportunities may arise;
	•		to pay cash dividends to stockholders;

	•		to repurchase shares of our common stock for, among other things, the funding of our stock-based incentive plan;
	•		to invest in securities; and
	•		for other general corporate purposes.

          Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities.

          Under current Office of Thrift Supervision regulations, we may not repurchase shares of our common stock during the first year following the completion of the conversion, except when extraordinary circumstances exist and with prior regulatory approval.

Atlantic Coast Bank May Use the Net Proceeds it Receives From the Offering:

	•		to fund new loans, including commercial real estate, commercial and residential construction loans, commercial business loans, one- to four-family residential mortgage loans and consumer loans;
	•		to acquire other financial institutions or other financial services companies as opportunities arise, particularly in northeastern Florida or southeastern Georgia, although we do not currently have any agreements or understandings regarding any acquisition transaction and it is impossible to determine when, if ever, such opportunities may arise;
	•		to expand its retail banking franchise by acquiring branches from other financial institutions or by building or leasing new branches primarily in northeastern Florida;
	•		to enhance existing products and services and to support the development of new products and services by investing, for example, in technology to support expansion of our commercial real estate lending and our commercial deposit products;
	•		to fund initiatives to improve the effectiveness and profitability of our retail banking network such as improving the delivery of financial services through our internet banking website and our call center;
	•		to invest in securities; and
	•		for other general corporate purposes.

          Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities. Our business strategy for the deployment of the net proceeds raised in the offering is discussed in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy.”

          We anticipate using a portion of the net proceeds to fund two branch expansion efforts consisting of a new branch located in St. Johns County and a new corporate headquarters located in Jacksonville with completion expected in 2008 and 2009, respectively. The estimated cost of the St. Johns branch is anticipated to range from $900,000 to $1.6 million. Our estimated cost for the new headquarters has not been determined since this project is still in the early development stage. The cost of establishing a branch

will depend upon many factors such as whether the facility is owned or leased, the location of the branch, the size of the facility and the type of improvements and furnishings used in the facility. There can be no assurance that our costs will not be more or less than the estimate for the St. Johns branch.

          We expect our return on equity to be relatively low until we are able to utilize effectively the additional capital raised in the offering. Until we can increase our net interest income and non-interest income, we expect our return on equity to continue to be below the industry average, which may negatively affect the value of our common stock. See “Risk Factors—Our Failure To Utilize Effectively The Net Proceeds Of The Offering Could Reduce Our Return on Stockholders’ Equity And Our Return On Assets And Negatively Impact The Value Of Our Common Stock.”

OUR POLICY REGARDING DIVIDENDS

          Atlantic Coast Federal Corporation currently pays a quarterly cash dividend of $0.14 per share, which equals $0.56 per share on an annualized basis. After the conversion, we intend to continue to pay cash dividends on a quarterly basis. After adjustment for the exchange ratio, we expect the annual dividends to equal $0.43, $0.36, $0.31 and $0.27 per share at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively, which represents an annual dividend yield of 4.3%, 3.6%, 3.1% and 2.7% at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively, based upon a stock price of $10.00 per share. The amount of dividends that we intend to pay to our stockholders following the conversion is intended to preserve the per share dividend amount, adjusted to reflect the exchange ratio, that our stockholders currently receive on their shares of Atlantic Coast Federal Corporation common stock. However, the dividend rate and the continued payment of dividends will depend on a number of factors including our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. We cannot assure you that we will not reduce or eliminate dividends in the future.

          Under the rules of the Office of Thrift Supervision, Atlantic Coast Bank will not be permitted to pay dividends on its capital stock to Atlantic Coast Financial Corporation, its sole stockholder, if Atlantic Coast Bank’s stockholder’s equity would be reduced below the amount of the liquidation account established in connection with the conversion. In addition, Atlantic Coast Bank will not be permitted to make a capital distribution if, after making such distribution, it would be undercapitalized. See “The Conversion and Offering—Liquidation Rights.” For information concerning additional federal and state law and regulations regarding the ability of Atlantic Coast Bank to make capital distributions, including the payment of dividends to Atlantic Coast Financial Corporation, see “Taxation—Federal Taxation” and “Supervision and Regulation—Federal Banking Regulation.”

          Unlike Atlantic Coast Bank, we are not restricted by Office of Thrift Supervision regulations on the payment of dividends to our stockholders, although the source of dividends will depend on the net proceeds retained by us and earnings and dividends from Atlantic Coast Bank. However, we will be subject to state law limitations on the payment of dividends. Maryland law generally limits dividends to an amount equal to the excess of our capital surplus over payments that would be owed upon dissolution to stockholders whose preferential rights upon dissolution are superior to those receiving the dividend, and to an amount that would not make us insolvent.

          Finally, pursuant to Office of Thrift Supervision regulations, during the three-year period following the conversion, we will not take any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.

          See “Selected Consolidated Financial and Other Data of Atlantic Coast Federal Corporation and Subsidiary” and “Market for the Common Stock” for information regarding our historical dividend payments.

MARKET FOR THE COMMON STOCK

          Atlantic Coast Federal Corporation’s common stock currently trades on the Nasdaq Global Market under the symbol “ACFC.” Upon completion of the conversion and offering, the shares of common stock of Atlantic Coast Financial Corporation will replace Atlantic Coast Federal Corporation’s shares of common stock. We expect that Atlantic Coast Financial Corporation’s shares of common stock will trade on the Nasdaq Global Market under the trading symbol “ACFCD” for a period of 20 trading days after the completion of the offering. Thereafter, our trading symbol will revert to “ACFC.” In order to list our common stock on the Nasdaq Global Market, we are required to have at least three broker-dealers who will make a market in our common stock. Atlantic Coast Federal Corporation currently has 16 registered market makers.

          The development of a public market having the desirable characteristics of depth, liquidity and orderliness depends on the existence of willing buyers and sellers, the presence of which is not within our control or that of any market maker. The number of active buyers and sellers of our common stock at any particular time may be limited, which may have an adverse effect on the price at which our common stock can be sold. There can be no assurance that persons purchasing the common stock will be able to sell their shares at or above the $10.00 price per share in the offering. Purchasers of our common stock should have a long-term investment intent and should recognize that there may be a limited trading market in our common stock.

          The following table sets forth the high and low trading prices for shares of Atlantic Coast Federal Corporation common stock and cash dividends paid per share for the periods indicated. As of June 30, 2007, there were 4,947,571 shares of Atlantic Coast Federal Corporation common stock issued and outstanding (excluding shares held by Atlantic Coast Federal, MHC). In connection with the conversion, each existing publicly held share of common stock of Atlantic Coast Federal Corporation will be converted into a right to receive a number of shares of Atlantic Coast Financial Corporation common stock, based upon the exchange ratio that is described in other sections of this prospectus. See “The Conversion and Offering—Share Exchange Ratio for Current Stockholders.”

Year Ending December 31, 2007		High				Low				Dividend Paid Per Share
Fourth quarter (through____)		$				$				$
Third quarter			15.80				12.42				0.15
Second quarter			20.06				15.78				0.14
First quarter			19.10				17.18				0.13

Year Ended December 31, 2006		High				Low				Dividend Paid Per Share
Fourth quarter		$	18.40			$	17.31			$	0.12
Third quarter			18.33				14.90				0.11
Second quarter			15.99				14.29				0.10
First quarter			14.80				14.05				0.09

Year Ended December 31, 2005		High				Low				Dividend Paid Per Share
Fourth quarter		$	14.85			$	13.20			$	0.08
Third quarter			14.55				12.21				0.07
Second quarter			12.65				10.69				0.06
First quarter			14.00				12.21				0.05

          On May 6, 2007, the business day immediately preceding the public announcement of the conversion, and on May 7, 2007, the closing prices of Atlantic Coast Federal Corporation common stock as reported on the Nasdaq Global Market were $19.23 per share and $19.72 per share, respectively. At September 7, 2007, Atlantic Coast Federal Corporation had approximately 476 stockholders of record. On the effective date of the conversion, all publicly held shares of Atlantic Coast Federal Corporation common stock, including shares of common stock held by our officers and directors, will be converted automatically into and become the right to receive a number of shares of Atlantic Coast Financial Corporation common stock determined pursuant to the exchange ratio. See “The Conversion and Offering—Share Exchange Ratio for Current Stockholders.” Options to purchase shares of Atlantic Coast Federal Corporation common stock will be converted into options to purchase a number of shares of Atlantic Coast Financial Corporation common stock determined pursuant to the exchange ratio, for the same aggregate exercise price. See “Beneficial Ownership of Common Stock.”

HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

          At June 30, 2007, Atlantic Coast Bank exceeded all of the applicable regulatory capital requirements. The table below sets forth the historical equity capital and regulatory capital of Atlantic Coast Bank at June 30, 2007, and the pro forma regulatory capital of Atlantic Coast Bank, after giving effect to the sale of Atlantic Coast Financial Corporation’s shares of common stock at a $10.00 per share purchase price. Accordingly, the table assumes the receipt by Atlantic Coast Bank of between $56.2 million and $76.3 million (and $87.8 million if the offering amount of the offering range is increased by 15%) of the net offering proceeds at the minimum and maximum of the offering range, respectively.

										Pro Forma at June 30, 2007 Based Upon the Sale at $10.00 Per Share
		Atlantic Coast Bank																																17,853,750 Shares
		Historical at June 30,								11,475,000 Shares								13,500,000 Shares								15,525,000 Shares								(Maximum of Range,
		2007								(Minimum of Range)								(Midpoint of Range)								(Maximum of Range)								as Adjusted)(1)
						Percent of								Percent of								Percent of								Percent of								Percent of
		Amount				Assets (2)				Amount				Assets (2)				Amount				Assets (2)				Amount				Assets (2)				Amount				Assets (2)
		(Dollars in thousands)
Equity capital		$	73,737				8.28	%		$	123,549				13.04	%		$	132,387				13.82	%		$	141,226				14.59	%		$	151,390				15.46	%
Core (leverage) capital		$	72,239				8.12	%		$	122,051				12.90	%		$	130,889				13.69	%		$	139,728				14.46	%		$	149,892				15.33	%
Core (leverage) requirement (3)			35,578				4.00				37,846				4.00				38,248				4.00				38,650				4.00				39,112				4.00
Excess		$	36,661				4.12	%		$	84,205				8.90	%		$	92,641				9.69	%		$	101,078				10.46	%		$	110,780				11.33	%
Tier 1 risk-based capital (4)		$	72,239				11.85	%		$	122,051				19.47	%		$	130,889				20.81	%		$	139,728				22.15	%		$	149,892				23.67	%
Tier 1 requirement			24,386				4.00				25,078				4.00				25,158				4.00				25,238				4.00				25,331				4.00
Excess		$	47,853				7.85	%		$	96,973				15.47	%		$	105,731				16.81	%		$	114,489				18.15	%		$	124,561				19.67	%
Total risk-based capital (4)		$	76,717				12.58	%		$	127,122				20.28	%		$	135,960				21.62	%		$	144,799				22.95	%		$	154,963				24.47	%
Risk-based requirement			48,772				8.00				50,155				8.00				50,316				8.00				50,477				8.00				50,662				8.00
Excess		$	27,945				4.58	%		$	76,966				12.28	%		$	85,644				13.62	%		$	94,322				14.95	%		$	104,301				16.47	%
Reconciliation of capital infused into Atlantic Coast Bank:
Net proceeds										$	56,179							$	66,232							$	76,286							$	87,848
Add: Atlantic Coast Federal, MHC capital consolidation											518								518								518								518
Less:
Common stock acquired by employee stock ownership plan											6,885								8,100								9,315								10,712
Pro forma increase in GAAP and regulatory capital										$	49,812							$	58,650							$	67,489							$	77,654