MFBP M and F Bancorp Inc (PK)

M&F Bancorp, Inc. (OTCBB:MFBP), the parent company of Mechanics and Farmers Bank (�M&F Bank�), today reported net income for the three months ended September 30, 2008 of $0.1 million compared to $0.4 million for the three months ended September 30, 2007. Earnings per share on a fully diluted basis was $0.05 for the three months ended September 30, 2008 compared to $0.25 per share for the three months ended September 30, 2007. Net income was $1.3 million, or $0.69 per share, for the nine months ended September 30, 2008 compared to $0.9 million, or $0.55 per share for the nine months ended September 30, 2007. The�results for the nine months ended September 30, 2008 reflect a year to date extraordinary gain of $1.8 million from the acquisition of Mutual Community Savings Bank, Inc., SSB (�MCSB�) in March 2008. �In light of recent events in the national and international economy, as well as the banking industry as a whole, we are very pleased with our profitability after incurring significant costs during the first two quarters of 2008 in acquiring and absorbing MCSB. I believe that the Bank is performing very well with 11.0% in organic growth in our loan portfolio this year and stable relationships with our deposit customers in spite of competitive pressures in our five service areas of Charlotte, Durham, Greensboro, Raleigh and Winston-Salem. We also participate in the CDARS� program which has enabled us to provide full FDIC insurance coverage up to $50 million if desired for our customers� deposit relationships,� said Kim D. Saunders, President and CEO. M&F Bank is proudly celebrating a century of service to its community this year. It is one of very few banks in North Carolina that is designated as a Community Development Financial Institution (�CDFI� Bank) and is recognized as such for its record of service in distressed communities. As part of its expression of gratitude for 100 years of business success,�the Company�provided the opportunity for a chance to win a grand prize of $100,000 through its year-long �100 years/100 grand� promotion. In August, upon the anniversary of the opening of the Bank�s first office on Parrish Street in Durham, the promotion culminated with a luncheon and drawing for the�grand prize. M&F Bank has had an unbroken record of profitability for 100 consecutive years, including keeping its doors open throughout the Great Depression. �During these uncertain economic times, it is reassuring to the Bank�s customers to work with an institution with such a great legacy and community commitment,� Saunders added. Total assets increased 23.3%, or $51.8 million, to $274.0 million as of September 30, 2008 from $222.2 million at December 31, 2007. Total assets acquired from MCSB were $64.6 million. Cash and cash equivalents increased $1.8 million or 9.8%, to $20.0 million as of September 30, 2008, compared to $18.2 million at December 31, 2007. Loans increased 40.3%, or $58.8 million, to $204.9 million as of September 30, 2008, from $146.1 million as of December 31, 2007. The�Bank continues to increase its loan portfolio through organic growth, with a net increase of $16.1 million�during the first nine months of 2008. Deposits increased 28.4%, or $48.9 million, to $220.9 million as of September 30, 2008 from $172.1 million at December 31, 2007. Net income for the three months ended September 30, 2008, decreased $0.3 million, to net income of $0.1 million, compared to net income of $0.4 million for the same period in 2007. For the three months ended September 30, 2008 interest income increased $0.3 million when compared to the three month period ended September 30, 2007�and interest expense decreased $0.4 million resulting in an improvement in net interest income of $0.7 million. The primary driver of the decrease in net income was increased non-interest expense of $1.1 million in the quarter ended September 30, 2008�compared to�the same period in 2007. Reflected in this increase�are the higher costs associated with the larger institution after the acquisition of MCSB, as well as the added costs of dual operating systems. Net income for the nine months ended September 30, 2008, increased $0.4 million, or 40.9%, to $1.3 million, compared to net income of $0.9 million for the same period in 2007. The increase is primarily a result of a $1.8 million extraordinary gain from application of a credit excess in the�acquisition of MCSB. Net income from operations decreased $1.5 million to a loss of $0.5 million primarily as a result of a $2.4 million increase in noninterest expense during the nine month period ended September 30, 2008 compared to the same period in 2007. Non-interest expense increased 31.4% for the nine months ended September 30, 2008 as compared to the same period in 2007, in part the result of the addition of former MCSB employees, together with the Company�s decision to reassess its staffing needs after the acquisition of MCSB, resulting in temporary increased salary expense and the accrual�of severance benefits for those employees whose positions were eliminated effective June 30, 2008 totaling $0.4 million. During the nine months ended September 30, 2008, the Company completed a review of premises and equipment and recorded an expense of $0.3 million ($0.2 million net of taxes, or $0.11 per share), for a change in estimated useful lives of long-lived assets. Noninterest expenses also increased due to duplication of systems during the integration of MCSB resulting in increased information technology costs of $0.5 million in the nine months ended September 30, 2008 compared to the same period in 2007, legal fees, audit fees and increasing professional fees by approximately $0.5 million in the nine months ended September 30, 2008. M&F Bancorp, Inc., a bank holding company with assets of approximately $274.0 million as of September 30, 2008, is the parent company of Mechanics and Farmers Bank. The Company�s common stock is quoted in the over-the-counter market through the OTC Bulletin Board under the symbol �MFBP.� Mechanics and Farmers Bank has banking service centers in Raleigh, Durham, Greensboro, Winston-Salem and Charlotte. For additional information, contact M&F Bank Corporate Headquarters, 2634 Durham Chapel Hill Blvd., Durham, North Carolina at 919-687-7800, or visit www.mfbonline.com. This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company and M&F Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of the Company and M&F Bank and on the information available to management at the time that these disclosures were prepared. These statements can be identified by the use of words like �expect,� �anticipate,� �estimate� and �believe,� variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Neither the Company nor M&F Bank undertakes an obligation to update any forward-looking statements. Additional information is detailed in the Company�s filings with the Securities and Exchange Commission, and is available at www.sec.gov.