q12009-10q.htm

Exhibit No.

Exhibit Description

Exhibit (3) (i)

Articles of Incorporation of the Company incorporated by reference to Exhibit (3) to the Form 10-QSB for the quarter ended September 30, 1999, filed with the SEC on November 12, 1999.

Exhibit (3) (ii)

Amended Articles of Incorporation of the Company, adopted by the Shareholders of the Company on May 3, 2000, incorporated by reference to Exhibit 3(v) to the Form 10-KSB for the year ended December 31, 2005, filed with the SEC on March 31, 2006.

Exhibit (3) (iii)

Restated Bylaws of the Company, incorporated by reference to Exhibit 99.1 to the Form 8K filed with the SEC on April 6, 2009.

Exhibit (10) (i)

Employment Agreement dated January 12, 2007 by and among Kim D. Saunders, the Company and the Bank, incorporated by reference to Exhibit 99.1 to the Form 8-K filed with the SEC on January 18, 2007.

10-Q 1 q12009-10q.htm 3-31-09 10Q q12009-10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

Commission file number 0-27307

North Carolina

56-1980549

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

2634 Durham Chapel Hill Blvd., Durham, NC 27707-2800

(Address of Principal Executive Offices)

(919) 687-7800

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the previous 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of May 13, 2009, there were 2,031,227 shares outstanding of the issuer’s common stock, no par value.

M&F BANCORP, INC

Table of Contents
PART I	1
FINANCIAL INFORMATION	1
Notes to Consolidated Financial Statements	5
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3 — Quantitative and Qualitative Disclosures about Market Risk	21
Item 4 — Controls and Procedures	22
PART II	22
OTHER INFORMATION	22
Item 1 — Legal Proceedings	22
Item 1a – Risk Factors	22
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3 — Defaults Upon Senior Securities	22
Item 4 — Submission of Matters to a Vote of Security Holders	22
Item 5 — Other Information	22
Item 6 — Exhibits	22
SIGNATURES	23

M&F BANCORP, INC.

PART I

FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)			March 31, 2009	December 31, 2008
			(Unaudited)

ASSETS

	Cash and cash equivalents		$5,504	$13,776
	Investment securities available for sale, at fair value		27,245	32,503
	Other invested assets		747	1,613
	Loans		211,436	208,411
		Allowances for loan losses	(3,032)	(2,962)
		Loans, net	208,404	205,449
	Interest receivable		1,161	1,278
	Bank premises and equipment, net		4,883	4,973
	Cash surrender value of bank-owned life insurance		5,346	5,298
	Other real estate owned		1,175	1,175
	Income taxes, net		3,915	4,272
	Other assets		1,245	1,281
TOTAL ASSETS			$259,625	$271,618
LIABILITIES AND STOCKHOLDERS' EQUITY
	Deposits
		Interest-bearing deposits	$182,358	$176,585
		Noninterest-bearing deposits	40,766	39,982
		Total deposits	223,124	216,567
	Other borrowings		6,412	25,046
	Other liabilities		5,366	5,686
		Total liabilities	234,902	247,299
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
		Common stock, no par value, 5,000,000 shares authorized; 2,031,337 shares issued and outstanding as of March 31, 2009 and December 31, 2008.	8,732	8,732
		Retained earnings	17,278	16,972
		Accumulated other comprehensive loss	(1,287)	(1,385)
		Total stockholders' equity	24,723	24,319
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$259,625	$271,618

See notes to consolidated financial statements.

M&F BANCORP, INC

CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)
(Dollars in thousands except per share data)			2009	2008
Interest income:
	Loans, including fees		$ 3,280	$ 2,529
	Investment securities, including dividends
		Taxable	220	336
		Tax-exempt	126	156
	Other		8	91
		Total interest income	3,634	3,112
Interest expense:
	Deposits		863	970
	Borrowings		34	152
		Total interest expense	897	1,122
		Net interest income	2,737	1,990
		Less provision for loan losses	59	17
		Net interest income after provision for loan losses	2,678	1,973
Noninterest income:
	Service charges		423	343
	Rental income		69	61
	Cash surrender value of life insurance		48	49
	Realized gain on sale of securities		62	5
	Realized gain (loss) on sale of other real estate owned		1	(3)
	Other income (loss)		1	(2)
		Total noninterest income	604	453
Noninterest expense:
	Salaries and employee benefits		1,502	1,216
	Occupancy and equipment		488	379
	Directors fees		84	73
	Marketing		41	165
	Professional fees		244	338
	Information technology		156	174
	Acquisition-related expenses		-	177
	Other		363	278
		Total noninterest expense	2,878	2,800
		Income (loss) before income taxes	404	(374)
		Income tax expense (benefit)	98	(173)
		Income (loss) before extraordinary gain from acquisition	306	(201)
	Extraordinary gain, bargain purchase from acquisition		-	1,775
		Net income	$ 306	$ 1,574

Basic and diluted earnings per share of common stock:
		Income (loss) before extraordinary gain from acquisition	$ 0.15	$ (0.12)
		Extraordinary gain, bargain purchase from acquisition	-	1.05
		Net income	$ 0.15	$ 0.93
Weighted average shares of common stock outstanding:
	Basic		2,031,337	1,697,042
	Diluted		2,031,337	1,697,042
Dividends per share of common stock			$ -	$ 0.05

See notes to consolidated financial statements.

M&F BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)					Accumulated
		Number			Other
		of	Common	Retained	Comprehensive
(Dollars in thousands)		Shares	Stock	Earnings	Loss	Total
Balances as of January 1, 2008		1,685,646	$ 5,901	$ 16,459	$ (358)	$ 22,002
Comprehensive income:
	Net income			1,574		1,574
	Other comprehensive income				194	194
	Total comprehensive income					1,768
Acquisition of Mutual Community Savings
	Bank, Inc., SSB ("MCSB")	345,691	2,831			2,831
Dividends declared ($0.05 per share)				(84)		(84)
Balances as of March 31, 2008		2,031,337	$ 8,732	$ 17,949	$ (164)	$ 26,517

Balances as of January 1, 2009		2,031,337	$ 8,732	$ 16,972	$ (1,385)	$ 24,319
Comprehensive income:
	Net income			306		306
	Other comprehensive income				98	98
	Total comprehensive income					404

Balances as of March 31, 2009		2,031,337	$ 8,732	$ 17,278	$ (1,287)	$ 24,723
See notes to consolidated financial statements.

M&F BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)

(Dollars in thousands)			2009	2008
Cash flows from operating activities:
	Net income		$ 306	$ 1,574
	Adjustments to reconcile net income to net cash
	provided by operating activities:
		Extraordinary gain, bargain purchase from acquisition	-	(1,775)
		Provision for loan losses	59	17
		Depreciation and amortization	164	106
		Amortization of premiums/discounts on investments, net	6	6
		Purchase accounting amortization and accretion, net	43	-
		Deferred loan origination fees, net	24	(2)
		Gains on sale of available for sale securities	(62)	(5)
		(Gain) loss on sale of other real estate owned	(1)	3
		Increase in cash surrender value of life insurance	(48)	(49)
	Changes in:
		Accrued interest receivable and other assets	449	724
		Other liabilities	(322)	(366)
		Net cash provided by operating activities	618	233
Cash flows from investing activities:
	Cash received in acquisition of MCSB, net		-	13,916
	Activity in available-for-sale securities:
		Sales	4,165	-
		Maturities, prepayments and calls	2,914	7,367
		Principal collections	1,348	640
		Purchases	(2,086)	-
	Net increase in loans		(3,081)	(4,295)
	Purchases of bank premises and equipment		(73)	(66)
	Proceeds from sale of other real estate owned		-	29
		Net cash provided by investing activities	3,187	17,591
Cash flows from financing activities:
	Net decrease in deposits		6,557	322
	Proceeds from other borrowings		32,400	300
	Repayments of other borrowings		(51,034)	(10,018)
	Cash dividends		-	(84)
		Net cash used in financing activities	(12,077)	(9,480)

		Net (decrease) increase in cash and cash equivalents	(8,272)	8,344

Cash and cash equivalents as of the beginning of the period			13,776	18,172

Cash and cash equivalents as of the end of the period			$ 5,504	$ 26,516

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during period for:
	Interest		$ 820	$ 844
	Income taxes		-	70

See notes to consolidated financial statements.

M&F BANCORP, INC

Notes to Consolidated Financial Statements

1.	Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include the accounts and transactions of M&F Bancorp, Inc. (the “Company”) and its wholly-owned bank subsidiary, Mechanics and Farmers Bank (the “Bank”). All significant inter-company accounts and transactions have been eliminated in consolidation. The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial statements and in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. The accompanying Consolidated Financial Statements are unaudited except for the balance sheet as of December 31, 2008, which was derived from the Company’s audited consolidated Annual Report on Form 10-K.

The Consolidated Financial Statements included herein do not include all the information and notes required by U.S. GAAP and should be read in conjunction with the Consolidated Financial Statements and the related notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2008.

In the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position, results of operations and cash flows in the Consolidated Financial Statements. The unaudited operating results for the periods presented may not be indicative of annual results.

Reclassification—Certain amounts in the Consolidated Financial Statements for the three months ended March 31, 2008 have been reclassified to conform to the 2009 presentation. This has no impact on reported amounts of net income. The common stock from the Acquisition of Mutual Community Savings Bank (“MCSB”) has been changed from the amount reported on Form 10-Q as of March 31, 2008, to agree to the common stock reported in the annual report filed on Form 10-K as of December 31, 2008. The change is reflective of the reserve for the dissenting shareholder.

New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) has issued FASB Staff Position (“FSP”) No. FAS 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets. (“SFAS No. 132(R)-1”). This FSP amends FASB Statement No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. Per the FSP, the objectives of the disclosures about plan assets in an employer’s defined benefit pension or other postretirement plan are to provide users of financial statements with an understanding of:

·	How investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies;

·	The major categories of plan assets;

·	The inputs and valuation techniques used to measure the fair value of plan assets;

·	The effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period; and

·	Significant concentrations of risk within plan assets.

The disclosures about plan assets required by the FSP are to be provided for fiscal years ending after December 15, 2009, with earlier application permitted. The Company does not expect the adoption of SFAS No. 123(R)-1 to have a significant impact on the Company’s financial condition or results of operations.

In December 2007, the FASB issued Statement of SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R), among other things, establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired business, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. The Company is required to adopt

M&F BANCORP, INC

SFAS No. 141(R) for all business combinations for which the acquisition date is on or after January 1, 2009. This standard will change our accounting treatment for business combinations on a prospective basis.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51 (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards for non-controlling interests in a subsidiary and for the deconsolidation of a subsidiary. Minority interests will be re-characterized as non-controlling interests and classified as a component of equity. It also establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary and requires expanded disclosures. This statement is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. On January 1, 2009, the Company adopted SFAS No. 160, which has not had a significant impact on the Company’s financial condition or results of operations.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS No. 162”). This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. GAAP. This Statement shall be effective 60 days following the Securities and Exchange Commission (“SEC”) approval of the Public Company Accounting Oversight Board (“PCAOB”) amendments to Auditing (United States) Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not believe the adoption of SFAS No. 162 will have a significant impact on the Company’s financial condition or results of operations.

On April 9, 2009, the FASB issued as final the following three staff positions related to mark-to-market accounting and accounting for impaired securities:

FASB Staff Position No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP No. 157-4”), provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. Additionally, FSP No. 157-4 provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP No. 157-4 stresses that even though there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation techniques used to measure the fair value of the asset or liability, the main objective of fair value accounting measurements remains the same. As defined by the FSP, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date under current market conditions. Additionally, FSP No. 157-4 amends FASB Statement No. 157’s required disclosures. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, although early adoption is permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP No. 157-4 will have a significant impact on the Company’s financial condition or results of operations.

FASB Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP No. 107-1 and APB 28-1”), amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The FSP also amends Accounting Principles Board Opinion No. 28, Interim Financial Reporting to require those disclosures in summarized financial information at interim reporting periods. The new standard is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP No. 107-1 and APB 28-1 will have a significant impact on the Company’s financial condition or results of operations.

FASB Staff Position No. 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP No. 115-2 and 124-2”), amends the other-than-temporary guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments in debt and equity securities in the financial statements. FSP No. 115-2 and 124-2 does not amend existing recognition and measurement guidance related to other-than-temporary impairment. FSP No. 115-2 and 124-2 requires that unless there is an intent or requirement to sell a debt security, only the amount of the estimated credit loss is recorded through earnings, while the remaining mark-to-market loss is recognized as a component of equity through other comprehensive income. Additionally, FSP No. 115-2 and 124-2 enhances required

(Unaudited)		Pro Forma Consolidated
		Results of Operations
		For the Three Months Ended
		March 31,
		2008
(Dollars in thousands, except per share data)

Net interest income		$2,391
Provision for loan losses		174
Noninterest income		2,347
Noninterest expense		3,898
Tax expense (benefit)		(173)
Net income after taxes and before extraordinary gain		839
Extraordinary gain, bargain purchase		1,775
Net income (loss)		$2,614

Income per share of common stock before extraordinary gain:
	Basic and diluted	$0.49

Income per share of common stock after extraordinary gain:
	Basic and diluted	$1.54

Weighted average shares of common stock:
	Basic and diluted	1,697,042

(Unaudited)	Ended March 31,
(Dollars in thousands)	2009		2008
Allowance for loan losses:
Balance at beginning of year	$2,962		$1,897
Adjustment for loans acquired	-		681
Loans charged off:
Consumer	-		3
Consumer real estate mortgage	1		-
Other	13		17
Total charge-offs	14		20
Recoveries of loans previously charged off:
Commercial	$18		$-
Consumer	1		1
Consumer real estate mortgage	2		3
Other	4		2
Total recoveries	25		6
Net loans (recovered) charged off	(11)		14
Provision for loan losses	59		17
Ending balance	$3,032	(1)	$2,581

(1) The allowance for loan losses does not include the amount reserved for off-balance sheet items which is reflected in Other Liabilities.

(Unaudited)	Cash Balance Plan		SERP		Total
(Dollars in thousands)	2009	2008	2009	2008	2009	2008

Service cost	$29	27	$-	$-	$29	$27
Interest cost	63	62	28	29	91	91
Expected return on plan assets	(50)	(76)	-	-	(50)	(76)
Amortization of prior service costs	-	(4)	1	1	1	(3)
Amortization of net loss	45	7	-	-	45	7
Net periodic cost	$87	$16	$29	$30	$116	$46

(Unaudited)			Quoted Prices in	Significant Other	Significant
(Dollars in thousands)			Active Markets for	Observable	Unobservable
			Identical Assets	Inputs	Inputs
Description		March 31, 2009	(Level 1)	(Level 2)	(Level 3)
Recurring:
	Available for sale securities	$27,245	$-	$27,245	$-
	Other invested assets	747	-	747	-
Non-recurring:
	Other invested assets	166	-	-	166
	Other real estate owned	1,175	-	-	1,175
	Impaired loans	4,877	-	-	4,877
	Total	$34,210	$-	$27,992	$6,218

(Unaudited)	As of and for the Three Months
	Ended March 31,
(Dollars in thousands)	2009		2008
Selected Balance Sheet Data
Cash and due from banks	$5,504		$26,516
Securities	27,245		40,140
Gross loans	211,436		193,396
Allowance for loan losses	(3,032)		(2,582)
Total Assets	259,625		276,929
Deposits	223,124		221,690
Borrowings	6,412		23,348
Shareholders' equity	24,723		26,675

(Dollars in thousands)
Summary of Operations
Interest income	3,634		3,112
Interest expense	897		1,122
Net interest income	2,737		1,990
Provision for loan losses	59		17
Net interest income after provision for loan losses	2,678		1,973
Noninterest income	604		453
Noninterest expense	2,878		2,800
Pre-tax net (loss) income before extraordinary gain	404		(374)
Income tax (benefit) expense before extraordinary gain	98		(173)
Extraordinary gain	-		1,775
Net income	306		1,574

	For the Three Months Ended
	March 31,
	2009		2008
Per Share Data
Before extraordinary gain:
Net (loss) income-basic and diluted	$0.15		$(0.12)
After extraordinary gain:
Net income-basic and diluted	$0.15		$0.93
Dividends (1)	-		0.05
Book value per share	12.17		15.72
Average common shares outstanding	2,031,337		1,697,042

Selected Ratios
Before extraordinary gain:
Return (loss) on average assets	0.46	%	(0.37)	%
Return (loss) on average shareholders' equity	4.94		(3.60)
After extraordinary gain:
Return on average assets	0.46	%	0.72	%
Return on average shareholders' equity	4.94		7.05
Average shareholders' equity to average total assets	9.38		10.14
Net interest margin (2)	4.60		4.32

(1) see Note 6 of the Consolidated Financial Statements
(2) on a tax equivalent basis

Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)	2009					2008
(Dollars in thousands)	Average Balance	Amount Earned/Paid		Average Rate		Average Balance	Amount Earned/Paid		Average Rate
Assets
Loans receivable (1):	$208,672	$3,280		6.29	%	$149,217	$2,569		6.89	%
Taxable securities (2)	19,925	220		4.42		26,044	336		5.16
Nontaxable securities (2) (3)	12,173	126		6.27		15,449	157		6.16
Federal funds sold and other interest on short-term investments	3,198	8		1.00		4,808	91		7.57
Total interest earning assets	243,968	3,634		6.05	%	195,518	3,153		6.66	%
Cash and due from banks	6,055					10,959
Other assets	17,143					15,473
Allowance for loan losses	(2,973)					(1,816)
Total assets	$264,193					$220,134

Liabilities and Equity
Savings deposits	$30,403	$25		0.33	%	$27,144	$37		0.55	%
Interest-bearing demand deposits	48,687	132		1.08		42,894	224		2.09
Time deposits	104,283	704		2.70		74,233	708		3.82
Total interest-bearing deposits	183,373	861		1.88		144,271	969		2.69
Borrowings	9,837	34		1.38		14,400	152		4.22
Total interest-bearing liabilities	193,210	895		1.85	%	158,671	1,121		2.83	%
Non-interest-bearing deposits	41,238					34,999
Other liabilities	4,960					4,143
Total liabilities	239,408					197,813
Shareholders' equity	24,785					22,321
Total liabilities and shareholders' equity	$264,193					$220,134

Net interest income		$2,739					$2,032

Tax equivalent adjustment (3)		65					81
Tax equivalent net interest income		$2,804					$2,113
Net interest spread (4)				4.20	%				3.83	%
Net interest margin (5)		4.60	%				4.32	%

(1) Loans receivable include nonaccrual loans for which accrual of interest has not been recorded.
(2) The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.
(3) The tax equivalent rate is computed using a federal tax rate of 34.0%.
(4) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(5) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets.

(Unaudited)	March 31, 2009

			For Capital
			Adequacy		To Be Well
	Actual		Purposes		Capitalized
(Dollars in thousands)	Amount	Ratio	Amount	Ratio	Amount	Ratio

Total capital (to risk weighted assets)
The Company	$26,351	11.20%	$18,831	8.00%	$23,538	10.00%
The Bank	$26,496	11.29%	$18,778	8.00%	$23,472	10.00%

Tier 1 (to risk weighted assets)
The Company	$23,409	9.95%	$9,415	4.00%	$14,123	6.00%
The Bank	$23,562	10.04%	$9,389	4.00%	$14,083	6.00%

Tier 1 (to Average total assets)
The Company	$23,409	8.84%	$10,594	4.00%	$13,243	5.00%
The Bank	$23,562	8.92%	$10,568	4.00%	$13,210	5.00%

Exhibit (10) (ii)			Agreement and Plan of Reorganization and Merger by and among the Company, the Bank and MCSB, dated August 9, 2007, incorporated by reference to Exhibit 2.1 to the Form 8-K, filed with the SEC on August 10, 2007.
Exhibit (31) (i)			Certification of Kim D. Saunders.
Exhibit (31) (ii)			Certification of Lyn Hittle.
Exhibit (32)			Certification pursuant to 18 U.S.C 1350.

			M&F Bancorp, Inc.
Date:	May 13, 2009	By:	/s/ Kim D. Saunders
			Kim D. Saunders
			President and Chief Executive Officer

Date:	May 13, 2009	By:	/s/ Lyn Hittle
			Lyn Hittle
			Chief Financial Officer

(Unaudited)	March 31, 2009			December 31, 2008
(Dollars in thousands)	Amount	% of Total		Amount	% of Total
Commercial	$9,257	4.38	%	$9,035	4.34	%
Real estate construction	9,509	4.50		7,877	3.78
Consumer	2,725	1.29		3,686	1.77
Commercial real estate	140,596	66.50		141,512	67.90
Consumer real estate mortgage	45,702	21.62		45,297	21.73
Other	3,647	1.71		1,004	0.48
	$211,436	100.00	%	$208,411	100.00	%