On October 16, 2007 the Company’s Board of Directors approved a cash dividend of $0.05 per share of common stock, which represents a 25.0% increase, or $0.01, from the dividend paid on August 30, 2007.The dividend was paid to stockholders of record as of November 15, 2007. In 2007, Brooklyn Federal Savings Bank celebrated its 120th year. Since being chartered in 1887, the Bank has been dedicated to meeting the savings and borrowing needs of the communities it serves. We have reached out and helped meet the credit needs of all segments of these communities, while continuing to operate in a safe and sound manner. After 120 years, the hallmark of this organization continues to be solid capital strength, good earnings, a diversified business strategy and a reputation for excellent service. We sincerely hope you share the feeling of pride in our organization, and look forward with us to an exciting future. Our objective has been and will continue to be to sustain earnings in a fluctuating interest rate environment by carefully structuring our assets and diversifying our investments. Our investment decisions are affected by our desire to maintain a satisfactory interest rate risk position, as well as excellent loan quality, while increasing our income at the same time. Credit quality is always a priority, and we will continue to maintain the Bank’s loan loss reserves at appropriate levels. At Brooklyn Federal Savings Bank, we believe that growth in deposits and loans should always be done in a sound and profitable manner. Our Bank’s growth resulted from a constant focus on relationship banking. Our products are competitive and our strategy is to provide quality customer service under the leadership of an experienced team of bankers. Since we entered the equity markets, the price of our common stock went from $10.00 at inception to a high of $15.50 on May 31, 2007. As of January 3, 2008, our stock price closed at $12.65. The developing subprime mortgage loan crisis and market perceptions regarding the risk to mortgage lenders have resulted in a lack of stock market confidence in financial institutions. Unfortunately, these conditions have also had an adverse affect on our Company’s stock price despite the fact that we do not originate subprime loans and do not participate in predatory lending. To the contrary, our asset quality remains strong. From an operating standpoint, we intend to continue our program of controlled growth, conservative underwriting of loans and investments, managing interest rate risk and monitoring our costs. We believe that these efforts will increase our capital strength and overall value to our shareholders. Brooklyn Federal Savings Bank recently announced plans to open a full service branch in Commack, Long Island. We expect to open this branch in early 2008. Our mission for Brooklyn Federal Bancorp is to enhance shareholder value over the long term by dedicating our resources to helping our customers achieve their financial goals. The vision for Brooklyn Federal Savings Bank is to become our market’s community bank of choice. The strength and character of Brooklyn Federal Bancorp comes from our people. Our employees are experienced and dedicated to our organization, and they average over 14 years of service per employee. Each employee is recruited and trained to offer professional, friendly and knowledgeable advice to our customers. We want to build long term relationships that will add value to our customers’ financial decisions. At the September 2007 Board of Directors meeting, Robert J.A. Zito, an attorney, was elected to our Board of Directors. At the October 2007 Board of Directors meeting, Arthur R. Williams, a certified public accountant, was elected to the Board. They are both highly respected businessmen and will contribute greatly to the future success of our Company. At the Company’s December 18, 2007 Board meeting, President and Chief Executive Officer Angelo J.Di Lorenzo relinquished his title of President. He was then elected Vice Chairman and retained his position of Chief Executive Officer. Richard A. Kielty, Executive Vice President and Chief Financial Officer, was promoted to President and Chief Operating Officer. Mr. Kielty will continue to report to Mr. DiLorenzo in his new role. Ralph Walther, Vice President and Controller, was promoted to Chief Financial Officer. All executive changes were effective as of January 1, 2008. John A. Loconsolo noted, “We are very appreciative of the excellent service and commitment that Mr.Di Lorenzo has made in his 46 years of service to Brooklyn Federal Savings Bank and believe we havenow taken an important step in our management succession plan in the promotion of Mr. Kielty.” Mr.Di Lorenzo said, “I am grateful for the opportunity to have headed the organization for the past 35 yearsand look forward to my continued partnership with Richard. I believe Mr. Kielty is ready, willing and ableto take our organization to new levels of success. I also believe Mr. Walther will serve as an able Chief Financial Officer.” All of us at Brooklyn Federal consider it a privilege to serve the interest of our stockholders. As challenging as the upcoming year may be, we look forward to continuing our progress toward meeting our goals. We will concentrate on what is most important to our stockholders: value, growth and financial stability. Our challenge for fiscal year 2008 will be to continue to guide Brooklyn Federal on a course that will deliver the best financial services to our customers and continued returns for our stockholders. We hope to accomplish this by increasing our earnings without incurring unreasonable risk. Sincerely,
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