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Atlantic Coast Federal Corporation Announces Certain Preliminary Year-End 2010 Financial Information

Atlantic Coast Federal Corporation (NASDAQ: ACFC) (the "Company"), the holding company for Atlantic Coast Bank (the "Bank"), today announced certain preliminary year-end 2010 financial information in advance of the launch of the assisted broker phase of its second-step conversion and offering. As previously announced in December 2010, the Company's stockholders and the members of Atlantic Coast Federal, MHC (the "MHC") have approved the MHC's Plan of Conversion and Reorganization and extended the Atlantic Coast Financial Corporation (successor to the Company in the second-step conversion) community offering to January 21, 2011.

During the fourth quarter of 2010, the Company took actions to mitigate future potential losses on (1) a $7.5 million loan relationship and (2) the Company's residential mortgage loan portfolio. As a result of these actions, the Company will add approximately $3.8 million to its reserves for loan losses in the fourth quarter, including a $1.6 million specific reserve due to recent adverse developments with the $7.5 million commercial lending relationship. This relationship, consisting of two loans and a line of credit secured by the borrower's facilities, inventory and accounts receivable, was performing at September 30, 2010. While classified as substandard at September 30, 2010, due to its reliance on guarantors for debt service payment, it was not considered impaired at that time; thus, no specific reserves had been established. However, during December 2010, the borrower filed for bankruptcy, and the loans were placed on non-performing status. The Bankruptcy Court has provided for monthly adequate protection payments on the loans equal to 70% of the contractual payments, the first of which has been received. Separately, the Company is also providing additional reserves of $2.2 million resulting from a review of the effect of the slowdown in the foreclosure process in Florida and the estimated impact on collateral valuations in the one-to-four family residential loan portfolio.

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