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Actionable news in ACFC: Atlantic Coast Federal Corporation,

Atlantic Coast Federal: Executive Vice President And Chief Financial Officer

The following excerpt is from the company's SEC filing.

(904) 998-5501

Atlantic coast Financial CORPORATION

REPORts significantly HIGHER earnings for the first quarter of 2016

JACKSONVILLE, Fla. (April 27, 2016) – Atlantic Coast Financial Corporation (Atlantic Coast or the Company, NASDAQ: ACFC), the holding company for Atlantic Coast Bank (the Bank), today reported that earnings per diluted share increased to $0.10 for the first quarter ended March 31, 2016, from $0.03 for the first quarter last year.

The Company's results for the first quarter of 2016 included a gain on the sale of investment securities in February 2016 totaling $0.8 milli on. The investment securities transaction added approximately $0.5 million to net income, or $0.03 per diluted share for the first quarter of 2016. Excluding the transaction, core earnings per diluted share of $0.07 for the first quarter of 2016 more than doubled from $0.03 per diluted share for the first quarter last year. Core earnings per diluted share is a non-GAAP financial measure, and a reconciliation of GAAP to non-GAAP financial measures is presented on page 4.

Commenting on the Company's results, John K. Stephens, Jr., President and Chief Executive Officer, said, "The strength of our first quarter results reflected a number of factors, including an increase in total loans over the course of the quarter, due to solid production in all of our lines of business. Also contributing to our earnings momentum was a significant gain on the sale of investment securities and ongoing, across-the-board improvements in key credit quality metrics.

Our employees have continued to focus on building strong relationships across our markets, laying the groundwork for new business opportunities for Atlantic Coast everyday. Considering our earnings growth, credit quality and strong capital position, as well as the dedication of our team to continually enhance the role we play in banking for the communities we serve, we believe Atlantic Coast is well-positioned for success throughout the remainder of 2016, which will further benefit both our customers and stockholders."

Other significant highlights of the first quarter of 2016 include:

Net interest income improved to $6.1 million for the three months ended March 31, 2016, from $4.4 million for the three months ended March 31, 2015. Additionally, net interest spread and net interest margin improved to 2.88% and 2.99%, respectively, for the three months ended March 31, 2016, from 2.40% and 2.62%, respectively, for the same quarter last year.

Total loans (including portfolio loans, loans held-for-sale, and warehouse loans held-for-investment) increased 10% to $721.5 million at March 31, 2016, from $654.2 million at December 31, 2015, primarily reflecting originations in all lines of business and supplemented by selective loan acquisitions.

Nonperforming assets, as a percentage of total assets, decreased to 0.86% at March 31, 2016, from 0.87% at December 31, 2015, and 1.16% at March 31, 2015.

Total assets increased to $893.0 million at March 31, 2016, from $857.2 million at December 31, 2015, primarily due to an increase in loans during the quarter, which was partially offset by a decrease in investment securities.

-MORE-

ACFC Reports First Quarter Results

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The Bank's ratios of total risk-based capital to risk-weighted assets and Tier 1 (core) capital to adjusted total assets were 13.08% and 9.20%, respectively, at March 31, 2016, and each continued to exceed the levels – 10% and 5%, respectively – currently required for the Bank to be considered well-capitalized.

Tracy L. Keegan, Executive Vice President and Chief Financial Officer, added, "The first quarter of 2016 was the ninth consecutive profitable quarter for Atlantic Coast. During the quarter, we continued to strengthen our balance sheet and expand net interest spread and net interst margin, which were up 48 and 37 basis points, respectively, compared with that of the same period in 2015. As a result, our net interest income increased 38% compared with the first quarter of 2015, while earnings per diluted share grew 233% on a comparable basis. Additionally, during the quarter, the market provided us with an opportunity to sell certain investment securities with low fixed-rate yields, which we expect will improve our long-term interest rate risk position. As our growth and earnings strategies pay off, we continue to gain momentum across our market footprint and create greater value for our stockholders."

Bank Regulatory Capital

Key Capital Measures

March 31,

2016

Dec. 31,

2015

Sept. 30,

June 30,

Total risk-based capital ratio

(to risk-weighted assets)

Common equity tier 1 (core) risk-based

capital ratio (to risk-weighted assets)

Tier 1 (core) risk-based capital ratio

Tier 1 (core) capital ratio

(to adjusted total assets)

The gradual decrease in capital ratios over the past year primarily reflected growth in the Bank's balance sheet, especially with respect to portfolio loans, which resulted in an increase in risk-weighted assets and adjusted total assets, partially offset by an increase in capital.

Credit Quality

Dec. 31,

Sept. 30,

June 30,

(Dollars in millions)

Nonperforming loans

Nonperforming loans to total portfolio loans

Other real estate owned

Nonperforming assets to total assets

Troubled debt restructurings

performing for less than 12 months

under terms of modification

Total nonperforming assets and

troubled debt restructurings

performing for less than 12 months

performing for more than 12 months

Overall, the Company's credit quality remains strong, as the number and balance of loans reclassified to nonperforming and other real estate owned (OREO) have stabilized. Nonperforming assets at March 31, 2016, were slightly higher than those at December 31, 2015, due to additional loans being reclassified to nonperforming, where were partially offset by principal reductions and loan payoffs of existing nonperforming loans. Nonperforming assets at March 31, 2016, were lower than those at March 31, 2015, primarily due to net reductions of OREO, partially offset by a slight increase in nonperforming loans.

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Provision / Allowance for Loan Losses

At and for the

Three Months Ended

Provision for portfolio loan losses

Allowance for portfolio loan losses

Allowance for portfolio loan losses to total portfolio loans

Allowance for portfolio loan losses to nonperforming loans

174.50

183.31

162.98

Net charge-offs

Net charge-offs to average outstanding portfolio loans

The provision for portfolio loan losses was relatively unchanged in the first quarter of 2016 compared with that of the first and fourth quarters of 2015, reflecting solid economic conditions in the Company's markets during the current year, which has led to continued low levels of net charge-offs over the past 12 months. The increase in the allowance for portfolio loan losses at March 31, 2016, from December 31, 2015 and March 31, 2015, primarily was attributable to loan growth, which reflected an approximately equal mix of organic growth and loan purchases, partially offset by principal amortization and increased prepayments of one- to four-family residential mortgages and home equity loans. Management believes the allowance for portfolio loan losses as of March 31, 2016, is sufficient to absorb losses in portfolio loans as of the end of the period. The decline in net charge-offs in the first quarter of 2016 compared with those of the same quarter in 2015 primarily reflected a decrease in charge-offs in one- to four-family residential loans and home equity loans, partially offset by an increase in charge-offs in consumer loans, including auto loans and manufactured home loans.

Net Interest Income

Net interest margin

Yield on investment securities

Yield on loans

Total cost of funds

Average cost of deposits

Rates paid on borrowed funds

The increase in net interest margin during the first quarter of 2016 compared with net interest margin for the prior year first quarter primarily reflected a decrease in rates paid on borrowed funds, as the Company benefited from the prepayment and restructuring of some of its high-cost wholesale debt during the second quarter of 2015. Also contributing to the increase in net interest margin was an increase in higher-margin interest-earning assets outstanding, as the Company redeployed excess liquidity to grow its portfolio loans, loans held-for-sale, and warehouse loans held-for-investment.

Noninterest Income / Noninterest Expense/ Income Tax Expense

Noninterest income

Noninterest expense

Income tax expense

The increase in noninterest income for the first quarter of 2016 compared with noninterest income for the first and fourth quarters of 2015 primarily reflected higher gains on the sale of investment securities. The increase in noninterest expense during the first quarter of 2016 compared with noninterest expense for the first quarter of 2015 reflected increased incentive compensation costs associated with the Company's continuing growth strategies. The decrease in noninterest expense during the first quarter of 2016 compared with the fourth quarter of 2015 was due to a decrease in foreclosed asset expense, partially offset by an increase in incentive compensation costs.

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The increase in income tax expense for the first quarter of 2016 compared with income tax expense for the first and fourth quarters of 2015 reflected increased income from operations.

In conjunction with the Company's recent expansion into additional attractive markets in Florida, Atlantic Coast completed the sale of its retail branch in Garden City, Georgia, after the end of the first quarter of 2016, in order to better align its footprint with long-term strategic goals. The branch sale did not have a material impact on the Company's assets, loan portfolio or earnings. Despite this sale, the Company intends to increase its commercial banking and mortgage origination efforts in the Savannah, Georgia market.

Use of Non-GAAP Financial Measures

This press release includes the discussion of non-GAAP financial measures: core earnings and core earnings per diluted share. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future financial performance, financial position, or cashflows that either excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP). Core earnings and core earnings per diluted share are terms that are not defined by GAAP and should be viewed in addition to, and not in lieu of, net income and income per diluted share on a GAAP basis. Core earnings excludes the effects of certain transactions that occurred during the period, as detailed in the following reconciliation of these measures.

Net income, as reported

Less the gain on the sale of investment securities

Plus the OREO Write-down

Adjusted net income (core earnings)

Income per diluted share, as reported

Adjusted income per diluted share (core earnings per diluted share)

_________________________

May not foot due to rounding.

Atlantic Coast management believes that the non-GAAP financial measures, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Atlantic Coast management also believes that the non-GAAP financial measures enhance the ability of investors to analyze the Company's business trends and to understand the Company's performance. In addition, the Company may utilize non-GAAP financial measures as guides in forecasting, budgeting and long-term planning processes and to measure operating performance for some management compensation purposes. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

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About the Company

Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community-oriented financial institution serving the Northeast Florida, Central Florida and Southeast Georgia markets. Investors may obtain additional information about Atlantic Coast Financial Corporation on the Internet at www.AtlanticCoastBank.net, under Investor Relations.

Forward-looking Statements

Statements in this press release that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions and estimates of future performance and economic conditions, and involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally are identifiable by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "plans," "intends," "projects," "targets," "estimates," "preliminary," or "anticipates" or the negative thereof or comparable terminology, or by discussion of strategy or goals or other future events, circumstances or effects. Moreover, forward-looking statements in this release include, but are not limited to, those relating to: our ability to generate new business opportunities; our expected performance in 2016; our ability to meet our customers' needs and create greater value for our stockholders; our ability to execute on our growth and earnings strategies; the improvement of our long-term interest rate risk position; and the allowance for portfolio loan losses being sufficient to absorb losses in respect of portfolio loans. The Company's consolidated financial results and the forward-looking statements could be affected by many factors, including but not limited to: general economic trends and changes in interest rates; increased competition; changes in demand for financial services; the state of the banking industry generally; uncertainties associated with newly developed or acquired operations; market disruptions; and cyber-security risks. Further information relating to factors that may impact the Company's results and forward-looking statements are disclosed in the Company's filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 39 of the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The forward-looking statements contained in this release are made as of the date of this release, and the Company disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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ATLANTIC COAST FINANCIAL CORPORATION

Statements of Operations (Unaudited)

(In thousands, except per share amounts)

Interest and dividend income:

Loans, including fees

Securities and interest-earning deposits in other financial institutions

Total interest and dividend income

Interest expense:

Deposits

Securities sold under agreements to repurchase

Federal Home Loan Bank advances

Total interest expense

Net interest income after provision for portfolio loan losses

Noninterest income:

Service charges and fees

Gain on sale of loans held-for-sale

Gain (loss) on sale of securities available-for-sale

Bank owned life insurance earnings

Interchange fees

Total noninterest income

Noninterest expense:

Compensation and benefits

Occupancy and equipment

FDIC insurance premiums

Foreclosed assets, net

Data processing

Outside professional services

Collection expense and repossessed asset losses

Total noninterest expense

Income before income tax expense

Net income per basic and diluted share

Basic and diluted weighted average shares outstanding

15,415

15,399

15,398

Page 7

Balance Sheets (Unaudited)

(Dollars in thousands)

ASSETS

Cash and due from financial institutions

Short-term interest-earning deposits

23,873

17,473

14,124

Total cash and cash equivalents

29,093

23,581

18,124

Investment securities:

Securities available-for-sale

81,447

120,110

115,891

Securities held-to-maturity

17,517

Total investment securities

133,408

Portfolio loans, net of allowance of $7,774, $7,745 and $7,150, respectively

640,250

603,507

460,977

Other loans:

Loans held-for-sale

Warehouse loans held-for-investment

75,230

44,074

79,295

Total other loans

81,208

50,665

84,643

Federal Home Loan Bank stock, at cost

11,683

Land, premises and equipment, net

15,339

15,472

14,659

17,187

17,070

16,708

Accrued interest receivable

Deferred tax assets, net

Other assets

892,962

857,198

743,656

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Noninterest-bearing demand

52,125

47,208

47,285

Interest-bearing demand

108,613

105,159

66,496

Savings and money markets

174,594

171,664

177,890

215,294

231,790

158,090

Total deposits

550,626

555,821

449,761

Securities sold under agreements to purchase

66,300

256,120

207,543

150,000

Accrued expenses and other liabilities

Total liabilities

810,130

776,460

670,019

Common stock, additional paid-in capital, retained deficit, and other equity

83,627

82,070

74,743

Accumulated other comprehensive loss

(1,332

(1,106

Total stockholders' equity

82,832

80,738

73,637

Total liabilities and stockholders' equity

Page 8

Selected Consolidated Financial Ratios and Other Data (Unaudited)

Three Months Ended March 31,

Interest rate

Net interest spread

Average balances

Portfolio loans receivable, net

623,855

448,663

Total interest-earning assets

813,465

675,744

860,244

710,110

553,978

444,576

Total interest-bearing liabilities

724,649

587,554

777,646

636,080

Stockholders' equity

82,598

74,030

Performance ratios (annualized)

Return on average total assets

Return on average stockholders' equity

Ratio of operating expenses to average total assets

Credit and liquidity ratios

Impaired loans

36,441

36,467

Allowance for loan losses to nonperforming loans

Allowance for loan losses to total portfolio loans

Net charge-offs to average outstanding portfolio loans (annualized)

Ratio of gross portfolio loans to total deposits

117.69

104.08

Capital ratios

Tangible stockholders' equity to tangible assets

Average stockholders' equity to average total assets

Tangible book value per share

Stock price per share

Stock price per share to tangible book value per share

113.09

Non-GAAP financial measure. Because the Company does not currently have any intangible assets, tangible stockholders' equity is equal to stockholders' equity, tangible assets is equal to assets, and tangible book value is equal to book value. Accordingly, no reconciliations are required for these measures.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Atlantic Coast Federal Corporation releases salary data. CEO received compensation of $493,557 334,5 - April 19, 2016
DEPARTURE OF DIRECTORS OR PRINCIPAL - April 7, 2016
CHANGES IN REGISTRANTS CERTIFYING - April 1, 2016